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EXHIBIT 10.3
RECEIVABLES PURCHASE AGREEMENT
DATED AS OF DECEMBER 17, 1998
AMONG
BLUE BISON FUNDING CORP.,
AS SELLER,
SUNTERRA CORPORATION
AS INITIAL SERVICER,
▇▇▇▇▇▇ CAPITAL CORPORATION,
AS PURCHASER,
AND
SOCIETE GENERALE,
AS AGENT
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TABLE OF CONTENTS
SECTION PAGE
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ARTICLE I
THE COMMITMENT; PURCHASE AND REINVESTMENT LIMITS
1.01 Commitment............................................................2
1.02 Purchase and Reinvestment Limits......................................2
1.03 Making Purchases from Seller..........................................2
1.04 Number of Yield Periods...............................................3
1.05 Commitment Termination Date...........................................3
1.06 Purchase and Reinvestment Termination Date............................3
1.07 Voluntary Termination of Commitment or
Reduction of Facility Limit...........................................3
ARTICLE II
UNDIVIDED INTEREST AND PURCHASER'S SHARE
2.01 Undivided Interest....................................................4
2.02 Investment............................................................5
2.03 Net Pool Balance......................................................5
2.04 Loss Reserve..........................................................5
ARTICLE III
SETTLEMENTS
3.01 Establishment and Use of Accounts.....................................6
3.02 Settlement and Reinvestment Procedures................................7
3.03 Special Settlement Procedures; Reduction of
Investment, etc.......................................................9
3.04 Reporting............................................................11
3.05 Payments and Computations, etc.......................................12
3.06 Dividing or Combining Undivided Interests............................12
ARTICLE IV
FEES AND YIELD PROTECTION
4.01 Fees.................................................................13
4.02 Yield Protection.....................................................13
ARTICLE V
CONDITIONS OF PURCHASES
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TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
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5.01 Conditions Precedent to Initial Purchase.............................16
5.02 Conditions Precedent to All Purchases and
Reinvestments........................................................18
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 Representations and Warranties of Seller.............................19
6.02 Representations and Warranties of Sunterra...........................26
ARTICLE VII
GENERAL COVENANTS OF SELLER AND SERVICER
7.01 Affirmative Covenants of Seller and Sunterra.........................30
7.02 Reporting Requirements of Seller.....................................36
7.03 Negative Covenants of Seller.........................................37
ARTICLE VIII
ADMINISTRATION AND COLLECTION
8.01 Designation of Servicer..............................................41
8.02 Duties of Servicer and Seller........................................42
8.03 Rights of the Account Agent..........................................45
8.04 Responsibilities of Seller...........................................47
8.05 Certain Responsibilities of Sunterra.................................47
8.06 Further Action Evidencing Purchases..................................48
ARTICLE IX
SECURITY INTEREST
9.01 Grant of Security Interest...........................................48
9.02 Further Assurances...................................................49
9.03 Remedies.............................................................49
ARTICLE X
LIQUIDATION EVENTS
10.01 Liquidation Events...................................................49
10.02 Remedies.............................................................51
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE XI
THE AGENT
11.01 Authorization and Action.............................................52
11.02 Exculpation..........................................................52
11.03 Agent and Affiliates.................................................53
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST
12.01 Restrictions on Assignments..........................................53
12.02 Rights of Assignee...................................................54
12.03 Evidence of Assignment; Endorsement on
Certificate.........................................................54
ARTICLE XIII
INDEMNIFICATION
13.01 Indemnity by Seller..................................................55
ARTICLE XIV
MISCELLANEOUS
14.01 Amendments, etc......................................................58
14.02 Notices, etc.........................................................59
14.03 No Waiver; Remedies..................................................59
14.04 Binding Effect; Survival.............................................59
14.05 Costs, Expenses and Taxes............................................60
14.06 No Proceedings.......................................................61
14.07 Captions and Cross References........................................61
14.08 Integration..........................................................61
14.09 Confidentiality......................................................61
14.10 Governing Law........................................................62
14.11 Waiver of Jury Trial.................................................62
14.12 Execution in Counterparts............................................62
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TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
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APPENDICES
APPENDIX A Definitions
SCHEDULES
SCHEDULE 6.01(f) Description of Proceedings of Seller
SCHEDULE 6.01(m) List of Offices of Seller and Servicer
Where Records are Kept
SCHEDULE 6.01(n) List of Account Banks
SCHEDULE 6.01(q) List of Trade Names
SCHEDULE 6.02(f) Description of Proceedings of Sunterra
SCHEDULE 7.01(f) Description of Credit and Collection Policies
SCHEDULE A List of Vacation Ownership Resorts
SCHEDULE B List of Market Areas
EXHIBITS
EXHIBIT 1.03(a) Notice of Purchase
EXHIBIT 3.05(a) Form of Periodic Report
EXHIBIT 5.01(a) Form of Certificate
EXHIBIT 5.01(h)(i) [Reserved]
EXHIBIT 5.01(h)(ii) Form of Collection Account Agreement
EXHIBIT 5.01(h)(iii) Form of Reserve Account Agreement
EXHIBIT 5.01(i)(i) Form of Opinions of Willkie, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
EXHIBIT 5.01(i)(ii) Form of Opinions of General Counsels
EXHIBIT 5.01(i)(iii) Form of Opinions of Local Counsels
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RECEIVABLES PURCHASE AGREEMENT
dated as of December 17, 1998
THIS IS A RECEIVABLES PURCHASE AGREEMENT among BLUE BISON FUNDING CORP.,
a Delaware corporation ("Seller"), SUNTERRA CORPORATION, a Maryland corporation
("Sunterra"), as the initial Servicer, ▇▇▇▇▇▇ CAPITAL CORPORATION, a Delaware
corporation, as purchaser (in such capacity, together with its successors and
assigns in such capacity, the "Purchaser") and SOCIETE GENERALE, a banking
corporation organized under the laws of France, acting through its Chicago
Branch ("SG"), as agent for Purchaser (in such capacity, together with its
successors and assigns in such capacity, the "Agent"). Unless otherwise
indicated, capitalized terms used in this Agreement are defined in Appendix A.
Background
1. Seller is a party to a Purchase and Sale Agreement with Sunterra,
pursuant to which Seller has purchased, and expects to purchase Receivables from
Sunterra. Seller intends to sell interests, herein called Undivided Interests,
in Pool Receivables. Seller and Purchaser have agreed, on the terms and subject
to the conditions contained in this Agreement, that Purchaser will purchase such
Undivided Interests from Seller from time to time during the term of this
Agreement.
2. Seller and Purchaser have also agreed that, on the terms and subject
to the conditions set forth in this Agreement, certain of the Collections
related to such Undivided Interests shall be reinvested in additional undivided
interests in Pool Receivables.
3. Seller, Purchaser and the Agent have asked Sunterra to undertake
certain collecting and servicing responsibilities in respect of the Receivables
and Sunterra, as initial Servicer, is willing to undertake such
responsibilities.
4. SG has been requested, and is willing, to act as the Agent.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
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ARTICLE I
THE COMMITMENT; PURCHASE AND REINVESTMENT LIMITS
1.01 Commitment. On the terms and subject to the conditions set forth in
this Agreement (including Article V), Purchaser agrees to make Purchases and
Reinvestments from time to time from the date hereof to the Commitment
Termination Date as follows:
(a) Purchases. Purchaser shall purchase from Seller Undivided
Interests (as defined in Section 2.01). Each such purchase is herein
called a "Purchase".
(b) Reinvestments. Pursuant to Section 3.02(a), Purchaser shall
make reinvestments in Pool Receivables (herein called "Reinvestments")
by permitting Servicer to reinvest certain of the Collections in
additional undivided interests in Pool Receivables.
Purchaser's obligation to make such Purchases and Reinvestments is herein called
the "Commitment".
1.02 Purchase and Reinvestment Limits. Under no circumstances shall
Purchaser be obligated to make any Purchase or Reinvestment to the extent that,
after giving effect to such Purchase or Reinvestment, as the case may be:
(a) Facility Limit. The Aggregate Investment would exceed an
amount equal to $100,000,000 as such amounts may be reduced pursuant to
Section 1.07 (such amounts, as so reduced, herein being called the
"Facility Limit").
(b) Aggregate Undivided Interest Limit. The Aggregate Undivided
Interest (expressed as a percentage) would exceed 100% (the "Aggregate
Undivided Interest Limit").
1.03 Making Purchases from Seller.
(a) Notice of Purchase. Each Purchase shall be made on a
Business Day pursuant to a notice substantially in the form of Exhibit
1.03(a) from Seller to the Agent and shall be received by the Agent not
later than 2:00 p.m. (New York City time) on the second Business Day
before the date of such Purchase. Each such notice of a Purchase shall
specify the desired amount and date of such Purchase and the desired
duration of the initial Yield Period for the resulting Undivided
Interest, which amount shall not be less than $1,000,000. The Agent
shall select the duration of such initial, and each subsequent, Yield
Period in its discretion; provided that the Agent shall use reasonable
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efforts, taking into account market conditions, to accommodate Seller's
preferences.
(b) Amount of Purchase. The amount of each Purchase shall be
equal to the lesser of (x) the amount proposed by Seller pursuant to
Section 1.03(a) and (y) the maximum amount permitted under Section 1.02.
(c) Funding of Purchase. On the date of each Purchase, Purchaser
shall, upon satisfaction of the applicable conditions set forth in
Article V, make available to the Agent at its office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ in Chicago, Illinois not later than 1:00 p.m. (New York City
time), the amount in payment of its Purchase in same day funds and,
after receipt by the Agent of such funds, the Agent will immediately
transfer such funds to the Collection Account or such other account
designated by the Seller.
1.04 Number of Yield Periods. Unless otherwise consented to by the
Agent, the number of Yield Periods hereunder at any one time, after giving
effect to any Purchase, or any division or combination of Undivided Interests,
shall not exceed 8.
1.05 Commitment Termination Date. The "Commitment Termination Date"
shall be the earlier to occur of (i) December 17, 2001 (such date, as the same
may be extended pursuant to this Section 1.05, being herein called the
"Scheduled Commitment Termination Date"), and (ii) the date on which the
Commitment is terminated pursuant to Section 1.06, 1.07, or 10.02.
1.06 Purchase and Reinvestment Termination Date. The Commitment shall
terminate with respect to Purchases and Reinvestments, and Purchaser shall have
no obligation to make any further Purchases or Reinvestments hereunder, upon the
termination of either (i) the Banks' commitments under the Standby Purchase
Agreement or (ii) the Enhancement Bank's commitment under the Enhancement
Agreement. Purchaser agrees to give Seller at least 30 days' prior written
notice of the termination of the Commitment with respect to Purchases and
Reinvestments pursuant to the foregoing sentence.
1.07 Voluntary Termination of Commitment or Reduction of Facility Limit.
Seller may, upon at least ten Business Days' notice to the Agent, terminate the
Commitment in whole or reduce in part the unused portion of the Facility Limit;
provided, however, that (a) each partial reduction shall be in an amount equal
to $5,000,000 or an integral multiple thereof and (b) after giving effect to any
partial reduction, the remaining Facility Limit will not be less than
$25,000,000.
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ARTICLE II
UNDIVIDED INTEREST AND PURCHASER'S SHARE
2.01 Undivided Interest.
(a) Definition and Computation of Undivided Interest. For
purposes of this Agreement, "Undivided Interest" means an undivided
ownership interest, expressed as a floating percentage determined from
time to time, in (A) all then outstanding Pool Receivables, (B) all
rights to, but not the obligations under, all Related Security with
respect to such Pool Receivables, and (C) all Collections with respect
to, and other proceeds of, such Pool Receivables and Related Security.
Each Undivided Interest shall be computed as follows:
UI = I + LR
------
NPB
where:
UI = the Undivided Interest at any time;
I = the Investment in such Undivided Interest at such
time, as determined pursuant to Section 2.02;
LR = the Loss Reserve for such Undivided Interest at
such time, as determined pursuant to Section 2.04;
and
NPB = the Net Pool Balance at such time, as determined
pursuant to Section 2.03.
The "related" Undivided Interest with respect to any of the foregoing
items shall mean the Undivided Interest as to which such item is
calculated.
(b) Frequency of Computation of Purchaser's Interest. Each
Undivided Interest initially shall be computed as of the opening of
Servicer's business on the date of the Purchase of such Undivided
Interest from Seller. Thereafter, such Undivided Interest shall be
recomputed as of the opening of business on any day on which the
Aggregate Investment shall be increased and upon receipt of each
Periodic Report using the information in such Periodic Report. In
addition, until such Undivided Interest shall be reduced to zero, such
Undivided Interest shall be deemed to be recomputed automatically as of
the close of Servicer's business on each day (other than a day on which
an actual recomputation is done), and, as so recomputed, shall
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constitute the percentage ownership interest held by Purchaser on such
day in the Pool Receivables. Such Undivided Interest shall become zero
at such time as (i) the Purchaser shall have received the accrued Earned
Return for such Undivided Interest, shall have recovered the Investment
in such Undivided Interest and shall have received all other amounts
payable to Purchaser pursuant to this Agreement in respect of such
Undivided Interest, (ii) the Agent shall have received all amounts
payable to the Agent pursuant to this Agreement, (iii) Servicer shall
have received the accrued Servicer's Fee allocated to such Undivided
Interest and (iv) all other amounts payable by the Seller in connection
with such Undivided Interest are paid. Each Undivided Interest shall
remain constant, and the Net Pool Balance shall be deemed to remain
constant for purposes of computing such Undivided Interest, from the
time as of which any such computation or recomputation is made until the
time as of which the next such recomputation, if any, shall be made.
2.02 Investment.
(a) Subject to subsection (b), the "Investment" in an Undivided
Interest at any time means an amount equal to
(i) the sum of the original Dollar amount paid by
Purchaser to Seller for such Undivided Interest at the time
Purchaser acquired it by Purchase pursuant to Section 1.03, less
(ii) the aggregate amount of Collections of Pool
Receivables theretofore received and actually distributed to
Purchaser on account of such Investment pursuant to Section
3.02(a) and (b).
(b) If at any time any distribution of any portion of such
Collections is rescinded or must otherwise be returned for any reason,
the Investment shall not be considered reduced to the extent of such
rescission or return.
(c) The "related" Investment with regard to a Yield Period or
Undivided Interest (or portion thereof) means the Investment calculated
with regard to such Yield Period or Undivided Interest (or such
portion), as the case may be.
2.03 Net Pool Balance. The "Net Pool Balance" at any time means an
amount equal to the aggregate Unpaid Balance of the Eligible Receivables in the
Receivables Pool at such time.
2.04 Loss Reserve. The "Loss Reserve" for any Undivided Interest on any
day means an amount determined as follows:
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LR = LRP x I
where
LR = the Loss Reserve for such Undivided Interest at
the time of computation;
LRP = the "Loss Reserve Percentage" which, as to each
Undivided Interest at the time of such computation,
shall be an amount equal to (a) 5%, divided by (b) 1,
minus 5%; and
I = the Investment in such Undivided Interest at the
time of such computation, as determined pursuant to
Section 2.02.
ARTICLE III
SETTLEMENTS
3.01 Establishment and Use of Accounts.
(a) Collection Account. Seller hereby agrees to establish and
maintain a Collection Account on or before the first Purchase hereunder.
The Collection Account shall be used to receive Collections (directly or
via transfer from the Lockbox Accounts) and for the other purposes
described in the Transaction Documents. Servicer shall cause all
Collections to be deposited into such Collection Account on the day on
which such Collections are available cash funds. No funds other than
Collections or Purchases shall be deposited or transferred into such
Collection Account.
(b) Lockbox Accounts. Seller has established the Lockbox
Accounts listed on Schedule 6.01(n) (and the related post office boxes).
The Lockbox Accounts shall be used to receive Collections.
(c) Reserve Account. Seller hereby agrees to establish and
maintain a Reserve Account on or before the first Purchase hereunder.
The Reserve Account shall be used to receive transfers of certain
amounts of Collections pursuant to Section 3.02(b) and for other
purposes described in Section 3.03(d). No funds other than Collections
and proceeds from the sale by the Seller to the Purchaser of Undivided
Interests shall be transferred or deposited into the Reserve Account.
All funds on deposit in the Reserve Account shall, subject to Section
3.03(e) be invested by the Servicer (and at the direction of Seller so
long as no
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Liquidation Event shall have occurred and be continuing) in Permitted
Investments. All income and gain or loss realized from any such
investment shall be credited or debited (as applicable) to the Reserve
Account.
(d) Agent's Account. The Agent hereby agrees to establish the
Agent's Account on or before the date of the first Purchase hereunder.
The Agent's Account shall be used to receive payments of amounts that
are to be distributed by the Agent to itself and/or to Purchaser, and
for the other purposes described in the Transaction Documents.
3.02 Settlement and Reinvestment Procedures.
(a) Settlement Procedures for Principal Collections. The
Servicer shall, on each day on which Collections of Principal
Receivables are received (or deemed received) by the Seller or Servicer
or are deposited into the Lockbox Accounts, transfer such Collections
therefrom and deposit such Collections into the Collection Account. The
Servicer shall apply such Collections as follows:
(i) on each Funding Date, if such day is not a
Liquidation Day, subject to clause (ii) below and upon the
satisfaction of the conditions set forth in Section 5.02, such
Principal Collections allocable to each Undivided Interest shall
be reinvested on such Funding Date by the Servicer by means of a
Reinvestment in the related Undivided Interest and shall be paid
to the Seller, thereby causing a recomputation of such Undivided
Interest pursuant to Section 2.01; provided, that if the
conditions set forth in Section 5.02 are not satisfied on such
Funding Date, such Principal Collections shall not be reinvested
but shall be held on deposit in the Collection Account and
applied in accordance with clause (ii) below; and
(ii) during the Liquidation Period (or during any
Settlement Period that Collections are held on deposit in the
Collection Account pursuant to the proviso to clause (i) above),
all Principal Collections on deposit in the Collection Account
shall be held on deposit in the Collection Account and
transferred by the Servicer from the Collection Account to the
Agent's Account on each Settlement Date with respect to each
Undivided Interest, and shall be applied by the Agent to the
payment of the amounts, and in the priorities described in
clause second through clause sixth of Section 3.02(b) (after
giving effect to the application of Collections of Finance
Charge Receivables and amounts withdrawn from the Reserve
Account to pay such amounts
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in accordance therewith); provided, that so long as the
Commitment Termination Date has not occurred, if any Principal
Collections are held in the Collection Account pursuant to the
proviso to clause (i) above and have not otherwise been
transferred to the Agent's Account and thereafter the conditions
set forth in Section 5.02 are satisfied or are waived by the
Agent, such previously set aside amounts shall be reinvested in
accordance with the preceding clause (i) on the day of such
subsequent satisfaction or waiver.
(b) Settlement Procedure for Finance Charge Collections. The
Servicer shall, on each day on which Collections of Finance Charge
Receivables are received (or deemed received) by the Seller or Servicer
or are deposited into the Lockbox Accounts, transfer such Collections
therefrom and deposit such Collections into the Collection Account. The
Servicer shall set aside and hold such Collections in trust within the
Collection Account for payment on the following dates and in the
following order of priority: first, to the Servicer on each Month End
Date in payment of the accrued and unpaid Servicing Fees payable for the
calendar month then ended (plus, if applicable, any accrued and unpaid
Servicing Fees payable for any prior calendar months); second, to the
Agent's Account for the payment, on each Settlement Date with respect to
each Undivided Interest, of the Earned Return which accrued on such
Undivided Interest for the Settlement Period ending on such date (plus,
if applicable, the amount of Earned Return accrued and unpaid for any
prior Settlement Periods with respect to such Undivided Interest and to
the extent permitted by law, interest thereon); third, to the Agent's
Account on each Month End Date, for the payment of all Fees accrued
during the month then ended; fourth, during the Liquidation Period, to
the Agent's Account, on each Settlement Date with respect to each
Undivided Interest, to reduce the Aggregate Investment to zero; fifth,
to the Agent's Account for the payment, on each Settlement Date with
respect to each Undivided Interest, of all amounts payable pursuant to
Section 4.02 in respect of such Undivided Interest; sixth, to the
Agent's Account for the payment, on each Settlement Date with respect to
each Undivided Interest, of all other Obligations then payable by the
Seller to Purchaser or the Agent under the Transaction Documents;
seventh, to the Reserve Account, on each Settlement Date with respect to
each Undivided Interest, such amount as shall be necessary to cause the
amount on deposit therein to be equal to the Reserve Account Required
Amount (after giving effect to all payments to be made therefrom on such
Settlement Date pursuant to Section 3.03(d)); and eighth, so long as no
Liquidation Event or
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Unmatured Liquidation Event shall be continuing, the balance, if any, to
be paid to Seller.
(c) Order of Distribution. Upon receipt of funds deposited into
the Agent's Account pursuant to paragraphs (a) and (b) of this Section
3.02, the Agent shall distribute such funds for the purposes and in the
order of priority set forth in such paragraphs (a) and (b), as
applicable.
3.03 Special Settlement Procedures; Reduction of Investment, etc.
(a) Deemed Collections. If on any day
(i) the Unpaid Balance of any Pool Receivable is reduced
or cancelled as a result of a setoff in respect of any claim by
the Obligor thereof against Seller, Sunterra or any Affiliate of
Sunterra (whether such claim arises out of the same or a related
or unrelated transaction);
(ii) any of the representations or warranties of Seller
or Sunterra set forth in Section 6.01(k) or (t) is no longer
true with respect to a Receivable; or
(iii) the related title insurance policy with respect to
any Pool Receivable shall not have been issued within 60 days
from the date such Pool Receivable first became a Pool
Receivable;
then, on such day, Seller shall be deemed to have received a Collection
of the relevant Receivable(s) in the amount of the Unpaid Balance (or
portion thereof) of such Receivable(s), together with accrued and unpaid
interest thereon.
On or before the fifteenth day after the Month End Date of each month
that contains one or more days on which Seller is deemed to have
received such a Collection, Seller shall transfer an amount equal to the
aggregate amount of such deemed Collections to Servicer and Servicer
shall distribute such transferred amount in the manner set forth in
Section 3.02, as if such transferred amount actually had been received
by Seller or Servicer on the date of such transfer from the Obligors of
such Pool Receivables and as if such transferred amount actually had
been deposited into a Lockbox Account on the date of such transfer.
(b) Seller's Reduction of Investment. If at any ▇▇▇▇ ▇▇▇▇▇▇
shall wish to cause the reduction of the Investment in an Undivided
Interest (but not to commence the
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liquidation, or reduction to zero, of all Undivided Interests), such
reduction shall be made as follows:
(i) Seller shall give the Agent at least three Business
Days' prior written notice thereof (including the amount of such
proposed reduction and the proposed date on which such reduction
will commence),
(ii) on the proposed date of commencement of such
reduction and on each day thereafter, Servicer shall stop
reinvesting Principal Collections allocable to such Undivided
Interest until the amount thereof not so reinvested shall equal
the desired amount of reduction, and
(iii) Servicer shall hold such Principal Collections for
the benefit of Purchaser in the Collection Account, for payment
to the Agent on the next following Settlement Date or, subject
to Seller's obligation pursuant to Section 4.03, any other date
with respect to such Undivided Interest,
and the Investment in such Undivided Interest shall be deemed reduced in
the amount to be paid to the Agent only when in fact so paid and
allocated by the Agent to the Investment in such Undivided Interest;
provided that
(A) the amount of any such reduction shall be not less
than $1,000,000, and the Investment in such Undivided Interest
after giving effect to such reduction shall be not less than
$1,000,000 unless such Investment shall have been reduced to
zero),
(B) Seller shall use reasonable efforts to attempt to
choose a reduction amount, and the date of commencement thereof,
so that such reduction shall commence and conclude in the same
Yield Period, and
(C) if two or more Undivided Interests shall be
outstanding at the time of any proposed reduction, such proposed
reduction shall be applied, unless the Agent shall consent
otherwise, to the Undivided Interest with the shortest remaining
Yield Period.
(c) Allocations of Obligor Payments. Except as otherwise
required by law, all Collections received from a particular Obligor in
respect of any Receivable shall be applied to the Receivables payable by
such Obligor in the order of the age of such Receivables, starting with
the oldest such Receivable.
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(d) Use of Reserve Account. If on any date sufficient Finance
Charge Collections are not available in the Collection Account for
application to payment of the amounts described in Section 3.02(b)
clause first through sixth on the dates specified therein, the Servicer
shall withdraw from the Reserve Account an amount equal to the lesser of
(i) such amounts and (ii) the amount on deposit in the Reserve Account,
and shall apply the funds so withdrawn to the payment of such amounts in
the order of priority set forth in Section 3.02(b). In addition, during
the Liquidation Period on the date that a Receivable becomes a Defaulted
Receivable, the Servicer shall withdraw from the Reserve Account an
amount equal to the aggregate Unpaid Balance of such Defaulted
Receivable and apply it pursuant to Section 3.02(a)(ii) as a Principal
Collection. To the extent the amount on deposit in the Reserve Account
exceeds the Reserve Account Required Amount (after giving effect to all
payments to be made therefrom and all deposits thereto on any date of
distribution pursuant to this Section 3.03(d)), so long as no
Liquidation Event or Unmatured Liquidation Event shall have occurred or
be continuing, the Servicer shall transfer such excess amount to the
Seller. On the date after the Commitment Termination Date when the
Aggregate Undivided Interest shall have been reduced to zero and all
Obligations of Seller shall have been fully and finally paid and
performed, the Servicer shall pay to Seller any funds remaining in the
Reserve Account.
(e) Permitted Investments. Any amount in the Collection Account
and the Reserve Account, as the case may be, may be invested by Seller
(or Servicer on Seller's behalf) in Permitted Investments; provided,
however, that such investments shall mature not later than one Business
Day next preceding the Settlement Date for any Undivided Interest next
succeeding the date of such investment. All amounts earned on Permitted
Investments shall be for the account of the Seller.
3.04 Reporting.
(a) No later than 11:00 a.m., New York City time, on the second
Business Day before the date of each Purchase other than the initial
Purchase hereunder, as a condition precedent to each such Purchase,
Servicer shall prepare and forward to the Agent a certificate containing
a calculation of (i) the Net Pool Balance (the calculation of which
shall be based upon the information contained in the most recent
Periodic Report) and (ii) the Aggregate Investment and the Loss Reserve
(in each case, after giving effect, on a pro forma basis, to such
Purchase).
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(b) On or prior to the fifteenth day of each month, Servicer
shall prepare and forward to the Agent a Periodic Report relating to all
outstanding Pool Receivables and all Undivided Interests owned by
Purchaser, as of the close of business of Servicer on the immediately
preceding Month End Date.
3.05 Payments and Computations, etc.
(a) All amounts to be paid or deposited into the Agent's Account
by Seller or Servicer hereunder shall be paid or deposited in accordance
with the terms hereof no later than 1:00 p.m. (New York City time) on
the day when due in lawful money of the United States of America in same
day funds.
(b) Seller or Servicer, as applicable, shall, to the extent
permitted by law, pay to the Agent (for the benefit of Purchaser or the
Agent, as the case may be) interest on all amounts not paid or deposited
when due hereunder, such interest to be calculated at the Default Rate
from (and including) the date due and payable to the date paid and such
interest shall be payable on demand; provided, however, that the
applicable interest rate shall not at any time exceed the maximum rate
permitted by applicable law.
(c) All computations of interest, Earned Return and any fees
hereunder shall be made on the basis of a year of 360 days for the
actual number of days (including the first day but excluding the last
day) elapsed.
3.06 Dividing or Combining Undivided Interests.
(a) Division of Undivided Interests. The Agent may at any time,
as of the last day of any Yield Period for any then existing Undivided
Interest, divide such existing Undivided Interest on such last day into
two or more new Undivided Interests, each such new Undivided Interest
having an Investment as designated by the Agent and all such new
Undivided Interests collectively having aggregate Investments equal to
the Investment in such existing Undivided Interest.
(b) Combination of Undivided Interests. The Agent may at any
time, as of the last day of any Yield Period for two or more existing
Undivided Interests, on or before the date of any proposed Purchase of
an Undivided Interest pursuant to Section 1.01 by Purchaser, on such
last day or such date of Purchase, as the case may be, combine into one
new Undivided Interest such existing and/or proposed Undivided
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Interests or any combination thereof, such new Undivided Interest having
an Investment equal to the aggregate Investments of such Undivided
Interests so combined.
(c) Effect of Division or Combination. On and after any division
or combination of Undivided Interests as described above, each of the
new Undivided Interests resulting from such division, or the new
Undivided Interest resulting from such combination, as the case may be,
shall be a separate Undivided Interest having an Investment as set forth
above, and shall take the place of such existing Undivided Interest or
Undivided Interests or proposed Undivided Interest, as the case may be,
in each case under and for all purposes of this Agreement.
ARTICLE IV
FEES AND YIELD PROTECTION
4.01 Fees. Seller shall pay to Purchaser for its own account such fees
on such dates and in such amounts as set forth in the agreement of even date
herewith between the Agent and Seller (as such agreement may be amended,
restated, supplemented or modified from time to time, the "Fee Letter").
4.02 Yield Protection.
(a) If (i) Regulation D, (ii) any law or regulation relating to
deposit insurance or (iii) any Regulatory Change occurring after the
date hereof
(A) shall subject an Affected Party to any tax (other
than income tax), duty or other charge with respect to the
Certificate, any Undivided Interest owned by or funded by it, or
any obligations or right to make Purchases or Reinvestments or
to provide funding therefor, or shall change the basis of
taxation of payments to the Affected Party of any Investments or
Earned Return owned by, owed to or funded by it or any other
amounts due under this Agreement or any of the other Transaction
Documents in respect of the Certificate, any Undivided Interest
owned by or funded by it or its obligations or rights, if any,
to make Purchases or Reinvestments or to provide funding
therefor (except for changes in the rate of tax on the overall
net income of such Affected Party); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the
Federal Reserve Board, but excluding any reserve included in the
determination of Earned
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Return), special deposit or similar requirement against assets
of any Affected Party, deposits or obligations with or for the
account of any Affected Party or with or for the account of any
Affiliate (or entity deemed by the Federal Reserve Board to be
an Affiliate) of any Affected Party, or credit extended by any
Affected Party; or
(C) shall change the amount of capital maintained or
required or requested or directed to be maintained by any
Affected Party; or
(D) shall impose any other condition affecting the
Certificate, any Undivided Interest owned or funded by any
Affected Party or its obligations or rights, if any, to make
Purchases or Reinvestments or to provide funding therefor;
and the result of any of the foregoing is or would be
(x) to increase the cost to (or in the case of
Regulation D referred to above or any law or regulation relating
to deposit insurance, to impose a cost on) (I) an Affected Party
of funding or making or maintaining any Purchases or
Reinvestments, any purchases, reinvestments, or loans or other
extensions of credit under the Stand-by Purchase Agreement, or
any commitment of such Affected Party with respect to any of the
foregoing, or (II) the Agent for continuing its or Seller's
relationship with Purchaser,
(y) to reduce the amount of any sum received or
receivable by an Affected Party under this Agreement or the
Certificate, or under the Stand-by Purchase Agreement or the
Enhancement Agreement with respect thereto, or
(z) in the sole determination of such Affected Party, to
reduce the rate of return on such Affected Party's capital as a
consequence of its obligations hereunder or arising in
connection herewith to a level below that which such Affected
Party could otherwise have achieved,
then within thirty days after demand by such Affected Party (which
demand shall be accompanied by a statement setting forth the basis of
such demand), Seller shall pay to the Agent (for the benefit of such
Affected Party) such additional amount or amounts as will compensate
such Affected Party for such additional or increased cost or such
reduction.
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(b) In determining any amount provided for or referred to in
this Section 4.02, an Affected Party may use any reasonable averaging
and attribution methods that it shall deem applicable. When making a
claim under this Section 4.02, each Affected Party shall submit to
Seller a statement as to such increased cost or reduced return
(including calculation thereof in reasonable detail), which statement
shall, in the absence of manifest error, constitute conclusive evidence
of such increased cost or reduced return.
Notwithstanding Seller's obligation to pay additional amounts or amounts
necessary to compensate any Affected Party pursuant to this Section 4.02, and
except in the case of any such Regulatory Change having retroactive effect, the
Seller shall not be required to pay such additional amounts to the extent such
amounts relate to periods prior to three months before the Seller's receipt of
demand therefor.
(c) If any of the events requiring payments of additional
amounts by the Seller under this Section 4.02 occurs and the applicable
Affected Party shall have made a demand for such payment hereunder, the
applicable Affected Party shall take such steps as may be reasonable
(consistent with its internal policy and legal and regulatory
restrictions) to (i) change the jurisdiction of its funding office if
such change would avoid the Seller being required to pay any additional
amount or (ii)otherwise mitigate the effects of Regulation D, any law or
regulation relating to deposit insurance or any Regulatory Change as set
forth in this Section 4.02, above, in either case so long as such change
or steps to mitigate, as applicable, would not increase any cost to any
Affected Party or be otherwise disadvantageous to any Affected Party.
4.03 Funding Losses. Seller hereby agrees that upon demand by any
Affected Party (which demand shall be accompanied by a statement setting forth
the basis for the calculations of the amount being claimed) Seller will
indemnify such Affected Party against any net loss or reasonable expense which
such Affected Party may sustain or incur (including, without limitation, any net
loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Affected Party to fund or maintain any
Undivided Interest), as reasonably determined by such Affected Party, as a
result of (a) any payment of any Investment or Earned Return thereon on a date
other than the Settlement Date for such Undivided Interest, or (b) any failure
of Seller to sell any Undivided Interest to Purchaser on a date specified
therefor in a related notice of Purchase delivered pursuant to Section 1.03(a).
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Such written statement shall, in the absence of manifest error, be rebuttably
presumptive evidence of the subject matter thereof.
ARTICLE V
CONDITIONS OF PURCHASES
5.01 Conditions Precedent to Initial Purchase. The initial Purchase
hereunder is subject to the condition precedent that the Agent shall have
received, on or before the date of such Purchase, the following, each (unless
otherwise indicated) dated such date and in form and substance satisfactory to
the Agent:
(a) A Certificate;
(b) A copy of the resolutions of the Board of Directors of each
of Seller and Sunterra approving each Transaction Document to be
delivered by it and the transactions contemplated thereby, certified by
the respective Secretary or Assistant Secretary an officer of each such
Person;
(c) Good standing certificates for each of Seller and Sunterra
issued as of a date not earlier than 30 days prior to such initial
Purchase by the Secretary of State of the jurisdiction of such Person's
incorporation or formation and the jurisdiction of such Person's
principal place of business;
(d) A certificate of the Secretary or Assistant Secretary of
each of Seller and Sunterra certifying the names and true signatures of
the officers authorized on such Person's behalf to sign the Transaction
Documents to be delivered by it (on which certificate Purchaser and the
Agent may conclusively rely until such time as the Agent shall receive
from such Person a revised certificate meeting the requirements of this
subsection (d));
(e) The certificate of incorporation or other organizational
document of each of Seller and Sunterra, duly certified by the Secretary
of State of the jurisdiction of such Person's incorporation or formation
as of a recent date acceptable to the Agent, together with a copy of the
by-laws or other governing document of each of Seller and Sunterra, each
duly certified by the Secretary or an Assistant Secretary of such
Person;
(f) On or prior to the date of the initial Purchase, (i) duly
executed financing statements naming each Originator as debtor and
Sunterra as secured party, (ii)
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duly executed financing statements naming Sunterra as debtor and Seller
as secured party, and the Purchaser as assignee of Seller, and (iii)
duly executed financing statements naming Seller as the debtor and
Purchaser as secured party, of the Receivables and related rights and,
in the case of the financing statements naming Seller, as debtor, an
undivided interest therein and of the other rights, instruments and
moneys specified in Section 9.01, or other, similar instruments or
documents, as may be necessary or, in the opinion of the Agent,
desirable under the UCC of all appropriate jurisdictions or any
comparable law of all appropriate jurisdictions to perfect Seller's
interests and Purchaser's interests in all Receivables and Undivided
Interests, as the case may be, and such other rights, accounts,
instruments and moneys in which an interest may be assigned to Purchaser
hereunder;
(g) A written search report from a Person reasonably
satisfactory to the Agent listing all effective financing statements
that name Seller, Sunterra or any Originator as debtor or assignor and
that are filed in the jurisdictions in which filings are to be made
pursuant to subsection (f) above, together with copies of such financing
statements (none of which, except for those described in subsection (f)
above, shall cover any Receivable), and tax and judgment lien search
reports from a Person reasonably satisfactory to the Agent showing no
evidence of such liens filed against Seller, Sunterra or any Originator;
(h) Duly executed copies of (i) the Collection Account Agreement
with the Collection Account Bank and (ii) the Reserve Account Agreement
with the Reserve Account Bank;
(i) Favorable opinions from: (i) Willkie, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
special counsel to Seller, Sunterra and each Originator, substantially
in the forms attached hereto as Exhibit 5.01(i)(i), (ii) General
Counsels of Seller, Sunterra and each Originator, substantially in the
forms attached hereto as Exhibit 5.01(i)(ii) and (iii) Local Counsels of
Seller, Sunterra and each Originator, substantially in the forms
attached hereto as Exhibit 5.01(i)(iii);
(j) Such powers of attorney as the Agent shall reasonably
request to enable the Agent to collect all amounts due under any and all
Receivables following a Liquidation Event;
(k) A Periodic Report calculated as of the most recent Month End
Date;
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(l) Evidence (i) of the execution and delivery by each of the
parties thereto of each of the Transaction Documents and all documents,
agreements and instruments contemplated thereby (which evidence shall
include copies, either original or facsimile, of each of such documents,
instruments and agreements), (ii) that each of the conditions precedent
to the Transaction Documents has been satisfied to the Agent's
satisfaction and (iii) that the initial purchases under the Purchase and
Sale Agreement have been consummated;
(m) The fees payable to the Agent pursuant to the Fee Letter,
together with all costs and expenses due and payable pursuant to Section
14.05, if then invoiced;
(n) Original UCC-3 financing statements that are duly executed
and that shall effect, upon filing, the termination of all financing
statements relating to the Receivables;
(o) A certificate from an authorized officer of Sunterra and an
authorized officer of Seller as to the satisfaction of the conditions
set forth in Section 5.02;
(p) A written statement from each of ▇▇▇▇▇'▇ and S&P confirming
that the transactions contemplated by this Agreement will not result in
a downgrade or withdrawal of the current ratings of the Commercial Paper
Notes;
(q) Completion of a satisfactory due diligence review by the
Agent of Seller, Servicer and each Originator;
(r) Evidence satisfactory to the Agent of the execution and
delivery by each of the parties thereto of the Interest Rate Protection
Agreement; and
(s) Evidence satisfactory to the Agent that the Custodian shall
have taken possession pursuant to the Custodial Agreement of all Loan
Documents (including the Notes) relating to the initial Pool Receivables
to be sold by Sunterra to the Seller pursuant to the Purchase and Sale
Agreement on the Closing Date.
5.02 Conditions Precedent to All Purchases and Reinvestments. Each
Purchase (including the initial Purchase) and each Reinvestment shall be subject
to the further conditions precedent (collectively, "Conditions Precedent" and
individually, a "Condition Precedent") that on the date of such Purchase or
Reinvestment the following statements shall be true (and in the case of
paragraph (a) through (d) below, Seller by accepting the amount of such Purchase
or by receiving the proceeds of such
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Reinvestment, as the case may be, shall be deemed to have represented and
warranted that):
(a) The representations and warranties contained in Section 6.01
are true and correct on and as of such day with the same effect as
though made on and as of such day and shall be deemed to have been made
on such day;
(b) No event has occurred and is continuing, or would result
from such Purchase or Reinvestment, that constitutes a Liquidation Event
or an Unmatured Liquidation Event;
(c) After giving effect to each proposed Purchase or
Reinvestment, the Aggregate Investment will not exceed the Facility
Limit and the Aggregate Undivided Interest will not exceed the Aggregate
Undivided Interest Limit;
(d) The Commitment Termination Date has not occurred; and
(e) The Agent shall have received evidence that the Custodian
shall have taken possession on behalf of the Purchaser pursuant to the
Custodial Agreement of all Loan Documents (including the Notes) relating
to the Receivables to be included in the Receivables Pool with respect
to such Purchase or Reinvestment.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 Representations and Warranties of Seller. In order to induce
Purchaser and the Agent to enter into this Agreement and to make Purchases and
Reinvestments hereunder, Seller hereby represents and warrants to Purchaser and
the Agent as follows:
(a) Organization and Good Standing. It has been duly organized
and is validly existing as a corporation in good standing under the laws
of its state of incorporation, with power and authority to own its
properties and to conduct its business as such properties are presently
owned and such business is presently conducted.
(b) Due Qualification. It is duly licensed or qualified to do
business as a foreign corporation in good standing in each jurisdiction
in which (i) the ownership or lease of its property or the conduct of
its business requires such licensing or qualification, and (ii) the
failure to be so licensed or qualified would be reasonably likely to
have a Material Adverse Effect.
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(c) Power and Authority; Due Authorization. It has (i) all
necessary power, authority and legal right to (A) execute, deliver and
perform its obligations under this Agreement, the Certificate and each
other Transaction Document to which it is a party, and (B) sell and
assign Undivided Interests on the terms and subject to the conditions
herein provided and (ii) duly authorized by all necessary corporate
action such execution, delivery and performance of this Agreement and
the other Transaction Documents to which it is a party and the sale and
assignment of Undivided Interests on the terms and conditions herein
provided. Seller had at all relevant times, and now has, all necessary
power, authority and legal right to acquire and own the Receivables, to
sell and assign Undivided Interests, and to incur obligations hereunder.
(d) Binding Obligations. Each Purchase made pursuant to this
Agreement shall constitute a valid sale, transfer, and assignment of the
relevant Undivided Interests to Purchaser, or (as provided in Article
IX) the assignment of a first priority security interest in the Pool
Receivables and Related Security, in either case, which has been
perfected and is enforceable against creditors of, and purchasers from,
Seller; and this Agreement constitutes, and each other Transaction
Document to be signed by Seller when duly executed and delivered will
constitute, a legal, valid and binding obligation of Seller enforceable
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium, or
other similar laws affecting the enforcement of creditors' rights
generally, and by general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents and
the fulfillment of the terms hereof does not (i) conflict with, result
in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time or both) a default under (A) the
articles or certificate of incorporation or by-laws of Seller, or (B)
any indenture, loan agreement, receivables purchase agreement, mortgage,
deed of trust, or other material agreement or instrument to which Seller
is a party or by which it or any of its properties is bound, (ii) result
in or require the creation or imposition of any Adverse Claim upon any
of Seller's properties pursuant to the terms of any such indenture, loan
agreement, receivables purchase agreement, mortgage, deed of trust, or
other agreement or instrument, other than the Transaction
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Documents, or (iii) violate any law or any order, rule, or regulation
applicable to Seller of any court or of any federal, state or foreign
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over Seller or any of its
properties.
(f) No Proceedings. Except as described in Schedule 6.01(f),
(i) there is no order, judgment, decree, injunction,
stipulation or consent order of or with any court or other
government authority to which Seller is subject, and there is no
action, suit, arbitration, regulatory proceeding or other
litigation, proceeding, or to Seller's knowledge, governmental
investigation pending, or to Seller's knowledge, overtly
threatened in writing, before or by any court, regulatory body,
administrative agency or other tribunal or governmental
instrumentality, against Seller that if adversely determined,
could reasonably be expected to have a Material Adverse Effect;
and
(ii) there is no action, suit, proceeding, arbitration,
regulatory, or to Seller's knowledge, governmental
investigation, pending or, to Seller's knowledge, overtly
threatened in writing, before or by any court, regulatory body,
administrative agency, or other tribunal or governmental
instrumentality (A) asserting the invalidity of this Agreement,
the Certificate or any other Transaction Document, (B) seeking
to prevent the sale and assignment of any Undivided Interest,
the issuance of the Certificate or the consummation of any of
the other transactions contemplated by this Agreement or any
other Transaction Document, or (C) seeking to adversely affect
the federal income tax attributes of the Undivided Interests.
(g) Bulk Sales Act. No transaction contemplated by this
Agreement or any of the other Transaction Documents requires compliance
with, or will be subject to avoidance under, any bulk sales act or
similar law.
(h) Government Approvals. Except for the filing of the UCC
financing statements referred to in Article V, all of which, at the time
required in Article V, shall have been duly made and shall be in full
force and effect, no authorization or approval or other action by, and
no notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by
Seller of any Transaction Document to which
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it is a party, except for authorization, approvals, or other actions
which have been obtained or taken, as applicable, and except for notice
or filings which have been given or completed, as applicable.
(i) Financial Condition. Since the date hereof, no event has
occurred that has had, or is reasonably likely to have, a Material
Adverse Effect.
(j) Margin Regulations. No use of any funds obtained by Seller
under this Agreement will conflict with or contravene any of Regulations
T, U and X promulgated by the Federal Reserve Board.
(k) Quality of Title. Each Receivable in which an Undivided
Interest is to be sold to Purchaser (together with the Related Security
for such Undivided Interest) shall be owned by Seller free and clear of
any Adverse Claim (other than (A) any Adverse Claim arising solely as
the result of any action taken by Purchaser or by the Agent and, (B) in
the case of the Related Security constituting the Mortgage on the
Vacation Interest securing a Mortgage Loan, (i) any mechanics and
materialmen's lien thereon, (ii) the lien of any condominium, homeowners
or timeshare association with respect to any annual maintenance fees or
the lien of real property taxes, ground rents, water charges, sewer
rents and assessments not yet delinquent or accruing interest or
penalties, and (iii) covenants, conditions and restrictions, rights of
way, easements and other matters of public record, none of which,
individually or in the aggregate, materially interferes with the current
use or operation of such Vacation Interest or the security intended to
be provided by the related Mortgage or with the Obligor's ability to pay
its obligations under the related Mortgage Loan when they become due, or
materially and adversely affects the value of such Vacation Interest).
When Purchaser makes a Purchase or Reinvestment it shall acquire and
shall continue to maintain (at all times when the Aggregate Undivided
Interest is not zero) a valid and upon the completion of the necessary
action, perfected, first priority undivided fractional interest to the
extent of its Undivided Interest in each Receivable and in the Related
Security and Collections with respect thereto, free and clear of any
Adverse Claim (other than any Adverse Claim arising solely as the result
of any action taken by Purchaser or by the Agent). No effective
financing statement or other instrument similar in effect covering any
Receivable, any interest therein, or the Related Security or Collections
with respect thereto is on file in any recording office except for
financing statements that may be filed (i) in favor of Sunterra or any
Originator in accordance with the Timeshare Loans, (ii) in favor of
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Seller in accordance with the Purchase and Sale Agreement, (iii) in
favor of Purchaser or the Agent in accordance with this Agreement, or
(iv) in connection with any Adverse Claim arising solely as the result
of any action taken by Purchaser (or any assignee thereof) or by the
Agent.
(l) Accuracy of Information. All written information heretofore
or contemporaneously furnished by Seller to Purchaser or the Agent for
purposes of, or in connection with, this Agreement and all other
Transaction Documents or any transaction contemplated hereby or thereby
is, and all other such factual, written information hereafter furnished
(if prepared by Seller or, if not prepared by Seller, to the extent that
information contained therein was supplied by Seller) by Seller to
Purchaser or the Agent pursuant to, or in connection with, this
Agreement and the other Transaction Documents, including, without
limitation, each Periodic Report and financial statement, when taken as
a whole with any other documents delivered within a reasonable time will
be, true and accurate in all material respects on the date as of which
such information is dated or certified, and will not contain any
material misstatement of fact or be incomplete by omitting to state a
material fact necessary to make the statements contained therein, in
light of the circumstances in which they were made, not misleading on
the date as of which such information is dated or certified.
(m) Offices. The principal places of business and chief
executive offices of Seller are located at the address referred to in
Section 14.02, and the offices where Seller keeps all its books, records
and documents evidencing Receivables, the related Timeshare Loans and
all other agreements related to such Receivables are located at the
addresses specified in Schedule 6.01(m) (or at such other locations,
notified to the Agent in accordance with Section 7.01(e), in
jurisdictions where all action required by Section 8.06 has been taken
and completed).
(n) Lockbox Accounts. The names and addresses of all the Lockbox
Banks and other Account Banks, together with the account numbers of the
lockbox accounts and other accounts at such Account Banks, are specified
in Schedule 6.01(n) (or have been notified to the Agent in accordance
with Section 7.03(d)).
(o) Capitalization. The authorized capital stock of Seller
consists of 1,000 shares of common stock, no par value ("Seller Common
Stock"), all of which shares are currently issued and outstanding. All
of such outstanding shares of Seller Common Stock are validly issued,
fully paid
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and nonassessable and are owned (beneficially and of record) by Sunterra
free and clear of any Adverse Claims.
(p) Licenses, Contingent Liabilities, and Labor Controversies.
(i) Seller has not failed to obtain any licenses,
permits, franchises or other governmental authorizations
necessary to the ownership of its properties or to the conduct
of its business, which violation or failure to obtain could
reasonable be expected to have a Material Adverse Effect.
(ii) There are no labor controversies pending against
Seller, Sunterra or any Originator that have had (or are
reasonably likely to have) a Material Adverse Effect.
(iii) Other than any liability incident to any
litigation or proceedings described in Section 6.01(f), Seller
has no contingent liabilities not provided for or disclosed in
its financial statements that, individually or in the aggregate,
are material to Seller.
(q) Trade Names. Seller does not use any trade name other than
its actual corporate name and the trade names set forth in Schedule
6.01(q). From and after the date that fell five (5) years before the
date hereof, Seller has not been known by any legal name other than its
corporate name as of the date hereof, nor has any such Person been the
subject of any merger or other corporate reorganization, except as set
forth in Schedule 6.01(q).
(r) Taxes. Seller has filed all tax returns and reports required
by law to have been filed by it and has paid all taxes and governmental
charges thereby shown to be owing, except any such taxes or charges
which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its respective books.
(s) Compliance with Applicable Laws. Seller is in compliance
with the requirements of all applicable laws, rules, regulations, and
orders of all governmental authorities, including federal, state, local
or foreign, except for such breaches and failures to comply which,
individually or in the aggregate, would not be reasonably likely to have
a Material Adverse Effect.
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(t) Eligible Receivables. Each Receivable included in the
calculation of the Net Pool Balance as an Eligible Receivable on the
date of any Purchase or Reinvestment was an Eligible Receivable on such
date.
(u) Weighted Average Interest Rate. The weighted average
interest rate payable on the Eligible Receivables is greater than or
equal to 13.5%.
(v) Foreign Tax Liability. The Seller is not aware that any
Obligor has withheld any portion of payments with respect to any
Timeshare Loan because of the requirements of a foreign taxing authority
and no foreign taxing authority has contacted the Seller concerning a
withholding or other foreign tax liability.
(w) Investment Company. The Seller 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.
(x) Each homeowners association relating to each Vacation
Ownership Resort in which a Vacation Interest is located was duly
organized and is validly existing. Sunterra, an Affiliate thereof or a
Person approved in writing by the Agent, it being understood that any
Person managing a Vacation Ownership Resort on the date hereof or on the
Initial Closing Date and who has been disclosed to the Agent, shall been
deemed to have been approved by the Agent, manages each Vacation
Ownership Resort and performs services for such homeowners association,
pursuant to an agreement with such homeowners association, each of such
agreements being in full force and effect. A true and correct copy of
the management agreement between Sunterra or such Affiliate or Person
and such homeowners association has been furnished to the Agent.
Sunterra or such Affiliate or Person, as applicable, and the homeowners
association have performed in all material respects all obligations
under such agreements and are not in material default under such
agreements.
(y) The Vacation Ownership Resorts are insured through the
applicable homeowners associations, in the event of fire or other
casualty (other than earthquake, unless deemed necessary in the
reasonable judgment of the applicable Originator) for the full
replacement value thereof, and in the event that the Vacation Interest
related to a Timeshare Loan should suffer any loss covered by casualty
or other insurance, upon receipt of any insurance proceeds, such
homeowners associations are required, during the time such Vacation
Interests are covered by such insurance, under
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their applicable governing instruments either to repair or rebuild the
portions of the applicable Vacation Ownership Resorts or to pay such
proceeds to the holders of any Mortgages secured by a timeshare estate
in the portions of the applicable Vacation Ownership Resorts. Each such
homeowners association that is located in a designated flood plain
maintains flood insurance in an amount not less than the maximum level
available under the National Flood Insurance Act of 1968, as amended.
(z) Each Timeshare Loan secured by a Mortgage requires the
Obligor to pay all taxes, insurance premiums and maintenance costs with
respect to the related timeshare estate. Each Timeshare Loan secured by
a Right-to-Use Agreement requires the Obligor to pay all maintenance
costs with respect to the related timeshare estate. There are no
material outstanding liens or encumbrances of any kind affecting the
Vacation Interests, other than Permitted Encumbrances.
(aa) The Vacation Interests and related Vacation Ownership
Resorts are free of material damage and waste and there is no proceeding
pending or, to the best knowledge of the Seller, threatened for the
total or partial condemnation or taking of the Vacations Interests or
Vacation Ownership Resorts by eminent domain.
(bb) There is no condition presently existing, and to the best
knowledge of Seller, no event has occurred or failed to occur prior to
the date hereof, concerning a Vacation Ownership Resort relating to any
hazardous or toxic materials or condition, or other environmental
matters which would reasonably be expected to materially and adversely
affect the present use of such Vacation Ownership Resort or the
financial condition or business operations of the related homeowners'
association, or the value of the Notes, Timeshare Loans or Related
Rights.
(cc) Units Complete. All of the condominium units related to the
Timeshare Loans in the Vacation Ownership Resorts, located in buildings
as to which construction thereof has been completed, have been completed
as required by applicable state and local laws.
6.02 Representations and Warranties of Sunterra. In order to induce
Purchaser and the Agent to enter into this Agreement, Sunterra as initial
Servicer hereby represents and warrants to Purchaser and the Agent as follows:
(a) Organization and Good Standing. It has been duly organized
and is validly existing as a corporation in good
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standing under the laws of its state of incorporation, with power and
authority to own its properties and to conduct its business as such
properties are presently owned and such business is presently conducted.
(b) Due Qualification. It is duly licensed or qualified to do
business as a foreign corporation in good standing in each jurisdiction
in which (i) the ownership or lease of its property or the conduct of
its business requires such licensing or qualification, and (ii) the
failure to be so licensed or qualified would be reasonably expected to
have a Material Adverse Effect.
(c) Power and Authority; Due Authorization. It has (i) all
necessary power, authority and legal right to execute, deliver and
perform its obligations under this Agreement and each other Transaction
Document to which it is a party in its capacity as Servicer and (ii)
duly authorized by all necessary corporate action such execution,
delivery and performance of this Agreement and such other Transaction
Documents.
(d) Binding Obligations. This Agreement constitutes, and each
other Transaction Document to be signed by Sunterra, in its capacity as
Servicer when duly executed and delivered will constitute, a legal,
valid and binding obligation of Sunterra, in its capacity as Servicer,
enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, receivership,
moratorium, or other similar laws affecting the enforcement of
creditors' rights generally, and be general principles of equity,
regardless of whether such enforceability is considered in a proceeding
in equity or at law.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents to
which it is a party in its capacity as Servicer and the fulfillment of
the terms hereof does not (i) conflict with, result in any breach of any
of the terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under (A) the certificate of
incorporation or by-laws of Sunterra, or (B) any indenture, loan
agreement, receivables purchase agreement, mortgage, deed of trust, or
other material agreement or instrument to which Sunterra is a party or
by which it or any of its properties is bound, (ii) result in or require
the creation or imposition of any Adverse Claim upon any of its
properties pursuant to the terms of any such indenture, loan agreement,
receivables purchase agreement, mortgage, deed of trust, or other
agreement or instrument, other than
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the Transaction Documents, or (iii) violate any law or any order, rule,
or regulation applicable to Sunterra of any court or of any federal,
state or foreign regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over Sunterra or any of
its properties.
(f) No Proceedings. Except as described in Schedule 6.02(f),
(i) there is no order, judgment, decree, injunction,
stipulation or consent order of or with any court or other
government authority to which Sunterra is subject, and there is
no action, suit, arbitration, regulatory proceeding or other
litigation, proceeding or to Seller's knowledge, governmental
investigation pending or to Sunterra's knowledge, overtly
threatened in writing, before or by any court, regulatory body,
administrative agency or other tribunal or governmental
instrumentality, against Sunterra, that, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect; and
(ii) there is no action, suit, proceeding, arbitration,
regulatory, or to Seller's knowledge, governmental
investigation, pending or to Sunterra's knowledge, overtly
threatened in writing, before or by any court, regulatory body,
administrative agency, or other tribunal or governmental
instrumentality (A) asserting the invalidity of this Agreement
and other Transaction Document to which Sunterra is a party as
Servicer, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any other
Transaction Document to which Sunterra is a party as Servicer,
or (C) seeking any determination that could reasonably be
expected to have a Material Adverse Effect.
(g) Government Approvals. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution, delivery and
performance by Sunterra of any Transaction Document to which it is a
party in its capacity as Servicer, except for authorizations, approvals
or other actions which have been obtained or taken as applicable, and
except for notices or filings which have been given or completed, as
applicable.
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(h) Financial Condition.
(i) The consolidated balance sheets of Sunterra and its
consolidated subsidiaries as of December 31, 1997, and the
related statements of income and shareholders' equity of
Sunterra and its consolidated subsidiaries for the fiscal year
then ended certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, Sunterra's
independent accountants, copies of which will be furnished to
the Agent, present fairly in all material respects the
consolidated financial position of Sunterra and its consolidated
subsidiaries as at such date and the consolidated results of the
operations of Sunterra and its consolidated subsidiaries for the
period ended on such date, all in accordance with GAAP
consistently applied;
(ii) Since September 30, 1998, no event has occurred
that has had, or is reasonably likely to have, a Material
Adverse Effect; and
(iii) Sunterra has not and shall not fail (A) to make
any payment when due of any Indebtedness (other than any
Obligation constituting Indebtedness) of Sunterra, which
Indebtedness is in a principal amount, at any time in excess of
$500,000, or (B) in the performance or observance of any
material obligation or condition with respect to such
Indebtedness.
(i) Accuracy of Information. All written information heretofore
or contemporaneously furnished by Sunterra in its capacity as Servicer
to Purchaser or the Agent for purposes of, or in connection with, this
Agreement and all other Transaction Documents or any transaction
contemplated hereby or thereby is, and all other such factual, written
information hereafter furnished (if prepared by Sunterra in its capacity
as Servicer or, if not prepared by Sunterra in its capacity as Servicer,
to the extent that information contained therein was supplied by
Sunterra in its capacity as Servicer) by Sunterra in its capacity as
Servicer to Purchaser or the Agent pursuant to, or in connection with,
this Agreement and the other Transaction Documents, including, without
limitation, each Periodic Report and financial statement, will be, when
taken as a whole with any other documents delivered within a reasonable
time, true and accurate in all material respects on the date as of which
such information is dated or certified, and will not contain any
material misstatement of fact or be incomplete by omitting to state a
material fact necessary to make the statements contained therein, in
light of the circumstances
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in which they were made, not misleading on the date as of which such
information is dated or certified.
(j) Account Banks. The names and addresses of all the Account
Banks, together with the account numbers of the accounts at such Account
Banks, are specified in Schedule 6.01(n) (or have been notified to the
Agent in accordance with Section 7.03(d)).
(k) Taxes. Sunterra has filed all tax returns and reports
required by law to have been filed by it and has paid all taxes and
governmental charges thereby shown to be owing, except any such taxes or
charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its respective books.
(l) Compliance with Applicable Laws. Sunterra in its capacity as
Servicer is in compliance with the requirements of all applicable laws,
rules, regulations, and orders of all governmental authorities with
respect to the Receivables and the related Timeshare Loans, including
federal, state, local or foreign, except for such breaches and failures
to comply which, individually or in the aggregate, would not be
reasonably expected to have a Material Adverse Effect.
(m) Year 2000 Problem. The Servicer has reviewed the areas
within its business and operations which could be adversely affected by,
and has developed or is developing a program to address on a timely
basis, the risk that certain computer applications used by the Servicer
may be unable to recognize and perform properly date-sensitive functions
involving dates prior to and after December 31, 1999 (the "Year 2000
Problem"). The Year 2000 Problem will not result in any Material Adverse
Effect.
ARTICLE VII
GENERAL COVENANTS OF SELLER AND SERVICER
7.01 Affirmative Covenants of Seller and Sunterra. From the date hereof
until the first day, following the Commitment Termination Date, on which (i) all
Undivided Interests shall be reduced to zero, and (ii) all Obligations that have
ever been outstanding hereunder shall have been finally and fully paid and
performed, Seller and Sunterra (in its capacity as Servicer) each hereby
covenants and agrees with Purchaser and the Agent as to itself that, unless the
Agent shall otherwise consent in writing, it shall:
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(a) Compliance with Laws, Etc. Comply in all material respects
with all applicable laws, rules, regulations and orders of all
governmental authorities having jurisdiction over it.
(b) Preservation of Corporate Existence. Preserve and maintain
its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in
good standing as a foreign corporation in each jurisdiction where the
failure to preserve and maintain such existence, rights, franchises,
privileges and qualification would have a Material Adverse Effect.
(c) Audits. (i) At any time and from time to time during regular
business hours, upon two Business Days' prior written notice from the
Agent, permit the Agent (or such other Person who may be designated from
time to time by the Agent), or its agents or representatives, at
Seller's expense, (A) to examine and make copies of and abstracts from
all books, records and documents (including, without limitation,
computer tapes and disks) in its possession or under its control
relating to Receivables and the Undivided Interests, including, without
limitation, the related Timeshare Loans and purchase orders and other
agreements, and (B) to visit its offices and properties for the purpose
of examining such materials described in clause (i)(A) next above, and
to discuss matters relating to Receivables or its performance hereunder
with any of its appropriate or designated officers or employees having
knowledge of such matters; and (ii) without limiting the provisions of
clause (i) next above, from time to time during regular business hours,
upon two Business Days prior written notice from the Agent, permit
certified public accountants or other auditors acceptable to the Agent
to conduct, at Seller's or Sunterra's expense as the case may be, a
review of its books and records with respect to the Receivables.
Notwithstanding anything in this paragraph to the contrary, except in
connection with examinations and audits made pursuant to this paragraph
following the occurrence of a Liquidation Event or Unmatured Liquidation
Event, Seller or Sunterra, as the case may be, shall only be responsible
for expenses in connection with one examination or one audit (pursuant
to the terms of this paragraph) per year.
(d) Keeping of Records and Books of Account. Maintain and
implement (or cause the Servicer to maintain and implement)
administrative and operating procedures (including, without limitation,
an ability to recreate records evidencing Receivables in the event of
the destruction of the originals thereof), and keep and maintain
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(or cause the Servicer to keep and maintain), all documents, books,
records and other information which is reasonably necessary for the
collection of all Receivables (including, without limitation, records
adequate to permit the prompt identification of each new Receivable and
all Collections of, and adjustments to, each existing Receivable).
(e) Location of Records. Keep its principal place of business
and chief executive office, and the offices where it keeps its records
concerning the Receivables, all related Timeshare Loans and all other
agreements related to such Receivables (and all original documents
relating thereto), at its address(es) referred to in Section 6.01(m) in
the case of Seller, or Section 14.02 in the case of Sunterra, or, upon
30 days' prior written notice to the Agent, at such other locations in
jurisdictions in the United States where all action required by Section
8.06 shall have been taken and completed.
(f) Credit and Collection Policies. Comply in all material
respects with the Credit and Collection Policy in connection with each
Receivable and each Timeshare Loan related thereto.
(g) Collections.
(i) Promptly remit to the Lockbox Accounts all
Collections received by it; and
(ii) instruct all Obligors to cause all payments made
with respect to the Receivables to be deposited directly to one
or more lockboxes or Lockbox Accounts.
(h) Separate Corporate Existence. Each of Seller and Sunterra
hereby acknowledges that Purchaser and the Agent are entering into the
transactions contemplated by this Agreement in reliance upon Seller's
identity as a legal entity separate from Servicer, the Originators and
any Affiliate thereof. Therefore, from and after the date hereof, Seller
shall take all reasonable steps to continue Seller's identity as a
separate legal entity and to make it apparent to third Persons that
Seller is an entity with assets and liabilities distinct from those of
Servicer, any Originator and any Affiliate thereof, and is not a
division of Servicer, any Originator or any other Person. Without
limiting the generality of the foregoing and in addition to and
consistent with the covenant set forth in Section 7.01(b), Seller shall
take such actions as shall be required in order that:
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(i) Seller will be a limited purpose corporation whose
primary activities are restricted in its certificate of
incorporation to (A) purchasing Receivables from Sunterra,
owning, holding, selling, granting security interests, or
selling interests, in Receivables, Timeshare Loans, Related
Security and Collections purchased from Sunterra, entering into
agreements for the servicing of such Receivables, (B) hold,
pledge, transfer, issue and otherwise deal with securities (i)
that evidence an ownership interest in the Receivables and that
do not constitute indebtedness under the laws of the state
("State Law") which the Seller elects shall govern such
securities ("Equity Securities") or (ii) that represent debt
obligations of the Seller under State Law ("Debt Securities" and
collectively with the Equity Securities, the "Securities"), or
to sponsor trusts that issue such Securities. The Securities may
be further secured by reserve funds, guaranteed investment
contracts, letters of credit, insurance contracts, surety bonds
or any other form of credit enhancements and (C) conducting such
other activities as it deems necessary, appropriate, suitable or
convenient to carry out activities described in (i)(A) and
(i)(B) above;
(ii) Not less than one member of Seller's Board of
Directors (the "Independent Director") shall be an individual
who is not (A) an officer or employee of, or the direct or
indirect beneficial holder of any class of voting stock of, the
Seller, its immediate or ultimate parent or any subsidiaries or
affiliates thereof or (B) a member of the immediate family of
any such stockholder, officer, employee or other director of the
Seller or any affiliate thereof, provided, that the Independent
Director may serve in similar capacities for other "special
purpose entities" formed by Sunterra or its affiliates. As used
herein, the term "affiliate" means any person controlling, under
common control with, or controlled by the person in question,
and the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a person, whether through ownership
or voting securities, by contract or otherwise. If the
Independent Director resigns, dies or becomes incapacitated, or
such position is otherwise vacant, no action requiring the
unanimous affirmative vote of the board of directors shall be
taken until a successor Independent Director is elected and
qualified and approves such action. In the event of the death,
incapacity, or resignation of the Independent Director, or a
vacancy for any other
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reason, a successor Independent Director shall be appointed by
the remaining directors.
(iii) No Independent Director shall at any time serve as
a trustee in bankruptcy for any Affiliate of Servicer or any
Originator;
(iv) Any employee, consultant or agent of Seller will be
compensated from Seller's own bank accounts for services
provided to Seller except as provided herein in respect of the
Servicer's Fee. Seller will engage no agents other than an agent
for service of process and a Servicer for the Receivables, which
Servicer will be fully compensated for its services to Seller by
payment of the Servicer's Fee;
(v) Seller will contract with Servicer to perform for
Seller all operations required on a daily basis to service its
Receivables. Seller will pay Servicer a monthly fee based on the
level of Receivables being managed by Servicer. Seller will not
incur any material indirect or overhead expenses for items
shared between Seller and Servicer, any Originator or any other
Affiliate thereof that are not reflected in the Servicer's Fee.
To the extent, if any, that Seller, Servicer, any Originator and
any other Affiliate thereof share items of expenses not
reflected in the Servicer's Fee, such as legal, auditing and
other professional services, such expenses will be allocated to
the extent practical on the basis of actual use or the value of
services rendered, and otherwise on a basis reasonably related
to the actual use or the value of services rendered, it being
understood that Sunterra shall pay all reasonable expenses
relating to the preparation, negotiation, execution and delivery
of the Transaction Documents and the Stand-by Purchase Agreement
and any amendments thereto, including, without limitation,
legal, commitment, agency and other fees;
(vi) Seller's operating expenses will not be paid by
Servicer, any Originator or any Affiliate thereof;
(vii) Seller will have its own separate stationery and
telephone number;
(viii) Seller's books and records will be maintained
separately from those of Servicer, the Originators and any
Affiliate thereof;
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(ix) Any financial statements which are consolidated to
include Seller will contain detailed notes clearly stating that
(A) all of Seller's assets are owned by Seller and (B) Seller is
a separate corporate entity with creditors who have received
ownership and security interests in Seller's assets;
(x) Seller's assets will be maintained in a manner that
facilitates their identification and segregation from those of
Servicer, the Originators or any Affiliate thereof;
(xi) Seller will strictly observe corporate formalities
in its dealings with Servicer, the Originators and any Affiliate
thereof, and funds or other assets of Seller will not be
commingled with those of Servicer, the Originators or any
Affiliate thereof. Seller shall not maintain joint bank accounts
or other depository accounts to which Servicer, the Originators
or any Affiliate thereof (other than Sunterra in its capacity as
Servicer) has independent access. None of Seller's funds will at
any time be pooled with any funds of Servicer, any Originator or
any Affiliate thereof;
(xii) Seller shall pay to Servicer, each Originator or
the appropriate Affiliate thereof, as applicable, the marginal
increase (or, in the absence of such increase, the market amount
of its portion of) in the premium payable with respect to any
insurance policy that covers Seller and Servicer, any Originator
or any Affiliate thereof, but Seller shall not, directly or
indirectly, be named or enter into an agreement to be named, as
a direct or contingent beneficiary or loss payee, under any such
insurance policy, with respect to any amounts payable due to
occurrences or events related to Servicer, any Originator or any
Affiliate thereof (other than Seller); and
(xiii) Seller will maintain arm's length relationships
with Servicer, each Originator and any Affiliate thereof. Any
Person that renders or otherwise furnishes services to Seller
will be compensated by Seller at market rates for such services.
Seller will not be or will not hold itself out to be responsible
for the debts of Servicer, any Originator or any Affiliate
thereof or the decisions or actions respecting the daily
business and affairs of Servicer, any Originator or any
Affiliate thereof.
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(i) Post Office Boxes. Prior to the date hereof, Sunterra shall
deliver to the Agent a certificate from an authorized officer of
Sunterra to the effect that (i) the name of the renter of all post
office boxes into which Collections may from time to time be mailed have
been changed to the name of Seller (unless such post office boxes are in
the name of the relevant Lockbox Banks) and (ii) all relevant
postmasters have been notified that Servicer and the Agent are
authorized to collect mail delivered to such post office boxes (unless
such post office boxes are in the name of the relevant Lockbox Banks).
(j) Financial Covenants. In the event the Bank Revolver is
canceled or terminated and there is no replacement thereof at such time,
the financial covenants in effect in the Bank Revolver as of the date of
its cancellation or termination shall be deemed to be incorporated
herein by reference and Sunterra shall be deemed to make such covenants
for purposes of this Agreement until such time as a replacement for the
Bank Revolver becomes effective.
7.02 Reporting Requirements of Seller. From the date hereof until the
first day, following the Commitment Termination Date, on which (i) the Aggregate
Undivided Interest shall be reduced to zero, and (ii) all Obligations that have
ever been outstanding hereunder shall have been finally and fully paid and
performed, Seller will, unless Purchaser and the Agent shall otherwise consent
in writing, furnish to the Agent:
(a) Quarterly Financial Statements. As soon as available and in
any event within 45 days after the end of each of the first three
quarters of each fiscal year of Sunterra, and Seller, (i) copies of (A)
the unaudited consolidated balance sheet of Sunterra and its
consolidated subsidiaries, and (B) the unaudited balance sheet of
Seller, in each case as at the end of such period, together with
unaudited statements of earnings, stockholders' equity and cash flows
for such period and the portion of the fiscal year through such period,
each prepared in accordance with GAAP applied consistently throughout
the periods reflected therein and certified by the chief financial
officer, treasurer or chief accounting officer thereof (such officer
being herein called the "Financial Officer"), and (ii) a letter from the
Financial Officer certifying to the best knowledge of the Financial
Officer, that neither a Liquidation Event nor an Unmatured Liquidation
Event has occurred and is continuing;
(b) Annual Financial Statements. As soon as available and in any
event within 120 days after the end of each
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fiscal year of each of Sunterra, and Seller, a copy of (A) the
consolidated balance sheet of Sunterra and its consolidated
subsidiaries, (B) consolidating balance sheet of Sunterra, and (C) the
balance sheet of Sunterra and Seller, in each case as at the end of such
fiscal year, together with the related statements of earnings,
stockholders' equity and cash flows for such fiscal year, each prepared
in accordance with GAAP applied consistently throughout the periods
reflected therein, Sunterra's consolidated balance sheet and such
related statements to be certified without any Impermissible
Qualification by independent certified public accountants of
internationally recognized standing, and Seller's balance sheet and such
related statements to be certified by the Financial Officer thereof;
(c) Reports to Holders and Exchanges. In addition to the reports
required by subsections (a) and (b) next above, promptly upon the
Agent's request, copies of any reports or registration statements that
Sunterra or Seller files with the Securities and Exchange Commission or
any national securities exchange other than registration statements
relating to employee benefit plans;
(d) ERISA. Promptly after receiving notice of any Reportable
Event (as defined in Title IV of ERISA) with respect to Sunterra or any
Affiliate thereof, a copy of such notice;
(e) Liquidation Events. As soon as possible after the occurrence
of each Liquidation Event and each Unmatured Liquidation Event, a
written statement of the Financial Officer describing such event and the
action that Sunterra and Seller propose to take with respect thereto, in
each case in reasonable detail;
(f) Proceedings. As soon as reasonably practicable written
notice of (i) any litigation, investigation or proceeding of the type
described in Section 6.01(f) not previously disclosed to Purchaser and
the Agent and (ii) any material adverse development that has occurred
with respect to any such previously disclosed litigation, proceedings
and investigations, which in the case of (i) and (ii) would have a
Material Adverse Effect; and
(g) Other. Promptly, from time to time, such other information,
documents, records or reports (to the extent such other documents,
records or reports are in the possession of Sunterra or Seller, as
applicable) respecting the Receivables or the condition or operations,
financial or otherwise, of Sunterra or Seller as the Agent may from time
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to time reasonably request in order to protect the interests of the
Purchaser or the Agent under or as contemplated by this Agreement.
7.03 Negative Covenants of Seller. From the date hereof until the first
day, following the Commitment Termination Date, on which (i) all Undivided
Interests shall be reduced to zero and (ii) all Obligations that have ever been
outstanding hereunder shall have been finally and fully paid and performed,
Seller shall perform its Obligations under this Section 7.03 unless the Agent
shall otherwise consent in writing.
(a) Sales, Liens, Etc. Except as otherwise provided herein or in
the Purchase and Sale Agreement, Seller shall not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Adverse Claims upon or with respect to, any
Receivable, any Related Security, any of the other assets, accounts or
interests described in Section 9.01, or any related Timeshare Loan, or
any interest in any of the foregoing (including any right to receive
income from or in respect of any thereof); provided, however, that
Seller may, upon at least 10 Business Days written notice to the Agent,
sell and assign in a true sale, without recourse or representation or
warranty of any kind (other than a representation or warranty that such
Pool Receivables are free and clear of any security interest created by
Seller), Pool Receivables, related Timeshare Loans and Related Security
with respect thereto if (i) before and after giving effect to such sale
and assignment, (a) there shall not exist any Liquidation Event or
Unmatured Liquidation Event or (b) the sum of the Undivided Interests
shall not exceed the Aggregate Undivided Interest Limit, (ii) the
purchaser or assignee of such Pool Receivables agrees in writing that it
will not institute against Seller, or join any Person in instituting
against Seller, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceeding, or other proceeding under any federal or
state bankruptcy or similar law, for one year and one day after the date
following the Commitment Termination Date on which (x) all Undivided
Interests shall be reduced to zero and (y) all amounts owing to the
Purchaser, Agent, any Affected Party or Indemnified Party that have ever
been outstanding hereunder have been finally and fully paid and
performed, and (iii) prior to the completion of such transaction, an
authorized officer of Seller and Servicer certifies to the Agent that
the foregoing conditions described in clauses (i) and (ii) shall have
been satisfied in connection therewith and Seller delivers a pro forma
Periodic Report demonstrating satisfaction with the condition described
in clause (i)(b) above. Upon the satisfaction of the foregoing
conditions,
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all right, title and interest of the Purchaser in, to and under such
Receivables, related Timeshare Loans and Related Security shall
terminate and revert to the Seller, its successors and assigns, and,
upon the request of the Seller, its successors or assigns, and at the
cost and expense of the Seller, the Purchaser shall execute such UCC-3
financing statements and releases and other evidence of transfer as are
necessary or reasonably requested by Seller to terminate and remove of
record any documents constituting public notice of the interest in such
Pool Receivables, related Timeshare Loans and Related Security hereunder
being sold, transferred and assigned.
(b) Extension or Amendment of Receivables. Seller shall not
extend, amend or otherwise modify the terms of any Timeshare Loan
related to any Pool Receivable; provided, however, that so long as no
Liquidation Event has occurred and is continuing, the Seller may, in
accordance with the Credit and Collection Policy, extend or otherwise
modify the terms of any Defaulted Receivable in order to maximize
Collections thereon.
(c) Change in Business or Credit and Collection Policy. Seller
shall not make any material change in the character of its business or
materially alter its Credit and Collection Policy, which change would,
in either case, impair the collectibility of any Receivable.
(d) Addition of Account Bank or Change in Payment Instructions
to Obligors; Change in Account Banks. Seller shall not add or terminate
any bank as a Account Bank from those listed in Schedule 6.01(n) or make
any change in its instructions to Obligors regarding Collections, unless
(i) the Agent shall have received notice of such addition, termination
or change and duly executed counterparts of a Account Agreements with
each new Account Bank and copies of such instructions (which shall be in
form and substance acceptable to the Agent) and (ii) the Agent
previously shall have consented in writing to such addition, termination
or change.
(e) Mergers, Acquisitions, Sales, etc.
Seller shall not
(A) be a party to any merger or consolidation,
or directly or indirectly purchase or otherwise acquire,
whether in one or a series of transactions, all or
substantially all of the assets or any stock of any
class of, or any partnership or joint venture interest
in, any
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other Person, or sell, transfer, assign, convey or lease
any of its property and assets (including, without
limitation, any Receivable or any interest therein)
other than pursuant to this Agreement;
(B) make, incur or suffer to exist an investment
in, equity contribution to, loan, credit or advance to,
or payment obligation in respect of the deferred
purchase price of property from, any other Person,
except for Permitted Investments; or
(C) create any direct or indirect Subsidiary or
otherwise acquire direct or indirect ownership of any
equity interests in any other Person.
(f) Restricted Payments.
(i) General Restriction. Except in accordance with this
Section 7.03(f), Seller shall not (A) purchase or redeem any
shares of its capital stock, (B) declare or pay any Dividend or
set aside any funds for any such purpose, (C) prepay, purchase
or redeem any subordinated indebtedness of Seller, (D) lend or
advance any funds or (E) repay any loans or advances to, for or
from Sunterra or any Affiliate thereof. Actions of the type
described in this clause (i) are herein collectively called
"Restricted Payments".
(ii) Types of Permitted Payments. Subject to the
limitations set forth in clause (iii) below, Seller may make
Restricted Payments so long as such Restricted Payments are made
only to Sunterra and only in one or more of the following ways:
(A) Seller may make cash payments (including
prepayments) on the Company Note in accordance with its
terms; and
(B) if no amounts are then outstanding under the
Company Note, Seller may declare and pay Dividends.
(iii) Specific Restrictions. Seller may make Restricted
Payments only out of funds in the Collection Account or the
Lockbox Accounts that do not represent the Purchaser's Share of
any Collections. Furthermore, Seller shall not pay, make or
declare:
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(A) any Dividend if, after giving effect
thereto, Seller's Tangible Net Worth would be less than
$5,000,000;
(B) any Restricted Payment (including any
Dividend) if, after giving effect thereto a Liquidation
Event or Unmatured Liquidation Event shall have occurred
and be continuing.
(g) Amendments to Certain Documents. Seller shall not amend,
supplement, amend and restate, or otherwise modify the Purchase and Sale
Agreement, the Company Note, any Account Agreement, any agreement
between a Lockbox Bank and Seller and/or Sunterra which is referred to
in any Lockbox Agreement, the Custodial Agreement, or Seller's
certificate of incorporation or by-laws, except (A) in accordance with
the terms of such document, instrument or agreement and (B) with the
advance written consent of the Agent.
(h) Deposits to Special Accounts. Seller shall not deposit or
otherwise credit, or cause or permit to be so deposited or credited to
the Collection Account cash or cash proceeds other than Collections of
Pool Receivables.
(i) Incurrence of Indebtedness. Seller shall not (i) create,
incur or permit to exist, any Indebtedness or liability or (ii) cause or
permit to be issued for its account any letters of credit or bankers'
acceptances, except Indebtedness incurred pursuant to the Company Note
and liabilities incurred pursuant to or in connection with the
Transaction Documents.
ARTICLE VIII
ADMINISTRATION AND COLLECTION
8.01 Designation of Servicer.
(a) Sunterra as Initial Servicer. The servicing, administering
and collection of Pool Receivables shall be conducted by the Person
designated as Servicer hereunder ("Servicer") from time to time in
accordance with this Section 8.01. Until the Agent gives notice to
Sunterra of the designation of a new Servicer (the "Successor Notice"),
which notice may only be given at any time after the occurrence and
during the continuance of a Liquidation Event, Sunterra is hereby
designated as, and hereby agrees to perform the duties and obligations
of, Servicer pursuant to the terms hereof.
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(b) Successor Notice. Upon Sunterra's receipt of a Successor
Notice, Sunterra agrees that it will terminate its activities as
Servicer hereunder, and will cause each Sub- Servicer designated by the
Agent in such Successor Notice to terminate its activities in that
capacity, in a manner that the Agent indicates will facilitate the
transition of the performance of such activities to the new Servicer.
The Agent, or such other Person as the Agent shall designate, shall
assume each and all of the obligations of Sunterra (and each
Sub-Servicer) to service, administer and collect such Pool Receivables,
on the terms and subject to the conditions herein set forth, and
Sunterra shall use its best efforts (and shall cause each Sub-Servicer
to use its best efforts) to assist the Agent (or its designee) in
assuming such obligations.
(c) Subservicers. The Servicer shall, in accordance with a
subservicing agreement (each a "Sub-Servicer Agreement") reasonably
acceptable to the Agent, delegate its duties and obligations hereunder
to the Sub-Servicers; provided, that, (i) the Servicer shall remain
primarily liable for the performance of the duties and obligations so
delegated, (ii) the Seller, the Agent and the Purchaser shall have the
right to look solely to the Servicer for performance, and (iii) the
terms of any Sub-Servicer Agreement with each Sub-Servicer shall provide
that the Agent may terminate such agreement upon the termination of the
Servicer hereunder by giving notice of its desire to terminate such
agreement to the Servicer (and the Servicer shall provide appropriate
notice to each such Sub-Servicer).
(d) Servicer's Fee. Seller hereby agrees to pay to Servicer a
fee (the "Servicer's Fee") for each month (or portion thereof in which
such Person was acting as Servicer) from and including the date hereof
to but excluding the date on which all amounts payable under or in
connection with this Agreement and the Purchase and Sale Agreement have
been finally paid in full (and this Agreement and the Purchase and Sale
Agreement shall have terminated), in an amount calculated as follows:
(i) at any time when Sunterra (or any Affiliate thereof)
is Servicer, an amount equal to one-twelfth of 1.0% of aggregate
Unpaid Balance of Pool Receivables as measured on the latest
Month End Date referred to in the most recent Periodic Report
(or, for the period from and including the initial closing date
of the transactions contemplated hereby to (but excluding) the
date on which the first Periodic Report is delivered hereunder,
one-twelfth of 1.0% of the Aggregate
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Investment as measured at Servicer's close of business on such
closing date); or
(ii) on and after Servicer's request made at any time
when Sunterra (or any Affiliate thereof) is not Servicer, the
greater of (A) an amount calculated pursuant to the foregoing
clause (i) or (B) an alternative amount specified by Servicer
not exceeding 110% of the aggregate costs and expenses incurred
by Servicer during such month in connection with performing its
obligations under this Agreement and the other Transaction
Documents.
Such Servicer's Fee shall be paid out of Collections at the times specified in
Article III hereof.
8.02 Duties of Servicer and Seller.
(a) Appointment; Duties in General. Each of Seller, Purchaser
and the Agent hereby appoints Servicer, from time to time designated
pursuant to Section 8.01, as its agent to enforce their respective
rights and interests in and under the Pool Receivables, the Timeshare
Loans and the Related Security. Servicer shall take or cause to be taken
all such actions as may be necessary or advisable to collect each Pool
Receivable (or shall cause each Sub-Servicer to take or cause to be
taken all such actions as may be necessary or advisable to collect each
Pool Receivable sold by it to Seller) from time to time, all in
accordance with applicable laws, rules and regulations, with reasonable
care and diligence, and in accordance with the Credit and Collection
Policy.
(b) Additional Duties. In addition to any other customary
services which the Servicer may perform, the Servicer shall perform (or
shall cause each Sub-Servicer to perform) the following servicing and
collection activities:
(i) perform standard accounting services and general
record keeping services with respect to the Pool Receivables and
the related Timeshare Loans;
(ii) respond to any telephone or written inquiries of
Obligors concerning to the Pool Receivables and the related
Timeshare Loans;
(iii) keep Obligors informed of the proper place and
method of making payments with respect to the Pool Receivables
and the related Timeshare Loans;
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(iv) contact Obligors to effect collection and to
discourage delinquencies in the payment of to the Pool
Receivables and the related Timeshare Loans, doing so by any
lawful means, including, but not limited to the following: (A)
mailing of routine past due notices, (B) preparing and mailing
collection letters, (C) contacting delinquent Obligors by
telephone to encourage payment, (D) mailing of reminder notices
to delinquent Obligors, and (E) initiating and pursuing
termination or foreclosure actions deemed necessary by the
Servicer (or applicable Sub-Servicer);
(v) report tax information to Obligors as required by
law; and
(vi) take such other action as may be necessary or
appropriate in the discretion of the Servicer (or applicable
Sub-Servicer) for the purpose of collecting and transferring to
the Collection Account all payments received in respect of the
to the Pool Receivables and the related 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 Section 8.02.
(c) Allocation of Collections. Servicer shall apply all
Collections in accordance with Article III.
(d) Documents and Records. Servicer shall hold in trust for
Seller and Purchaser in accordance with their respective interests, all
documents, instruments and records (including, without limitation,
computer tapes or disks, and Timeshare Loans) that evidence or relate to
the Pool Receivables (other than those held by the Custodian) sold by
Sunterra to Seller.
(e) Authorization to Act as Seller's Agent. Seller hereby
appoints Servicer (but only for so long as Sunterra (or any Affiliate
thereof) is Servicer, in the case of clauses (i) and (iv) below) as its
agent for the following purposes: (i) selecting the amount of each
requested Purchase, (ii) specifying accounts to which payments are to be
made to Seller, (iii) making transfers among, deposits to and
withdrawals from the Accounts and other deposit accounts of Seller for
the purposes described in the Transaction Documents and (iv) arranging
payment by Seller of all fees, expenses, other Obligations and other
amounts payable under the Transaction Documents. Seller irrevocably
agrees that (A) it shall be bound by all actions taken by Servicer
pursuant to the preceding sentence, and (B) that Purchaser, the Agent,
the Collection Account Bank, the Lockbox Banks,
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the Reserve Account Bank and the banks holding all other deposit
accounts of Seller are entitled to accept submissions, determinations,
selections, specifications, transfers, deposits and withdrawal requests,
and payments from Servicer on behalf of Seller.
(f) Termination. The authorization of Servicer (and each
Sub-Servicer) under this Agreement shall terminate upon receipt by the
Agent, after the Commitment Termination Date, of an amount equal to (i)
the Aggregate Investment plus (ii) accrued Earned Return for each
Undivided Interest, plus (iii) all other amounts owed to Purchaser and
the Agent and (unless otherwise agreed to by Servicer and the Agent) to
Servicer under this Agreement.
(g) Agreement Not to Resign. Sunterra acknowledges that
Purchaser and the Agent have relied on Sunterra's agreement to act as
Servicer hereunder in their respective decisions to execute and deliver
the Transaction Documents. In recognition of the foregoing, Sunterra
agrees not to resign as Servicer voluntarily or, to the extent permitted
in the Sub-Servicing Agreements, permit any other Sub- Servicer to
resign voluntarily, unless Sunterra or any such Sub-Servicer is not
permitted by law to serve in such capacity, as evidenced by an opinion
of counsel to such effect, which opinion shall be satisfactory in form
and substance to the Agent.
8.03 Rights of the Account Agent.
(a) Notice to Obligors. At any time after the occurrence of and
during the continuation of a Liquidation Event, the Agent may notify the
Obligors of Receivables, or any of them, of the Purchaser's ownership of
Undivided Interests.
(b) Notice to Account Banks. At any time following the
occurrence of and during the continuation of a Liquidation Event the
Agent is hereby authorized to give notice to the Account Banks, as
provided in the Account Agreements, of the transfer to the Agent (for
the benefit of Purchaser) of dominion and control over the Accounts.
Seller hereby transfers to the Agent (for the benefit of Purchaser),
effective when the Agent shall give notice to the Account Banks as
provided in the Account Agreements, the exclusive dominion and control
over such Accounts, and shall take any further action that the Agent may
reasonably request to effect such transfer.
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(c) Rights on Servicer Transfer. At any time following the
designation of a Servicer other than Sunterra pursuant to Section 8.01:
(i) The Agent may direct any Obligors of Receivables to
pay all amounts payable under any Receivable directly to the
Agent or its designee.
(ii) The Agent may direct Sunterra to make payment of
all amounts payable to Seller under any Transaction Document to
which Sunterra is a party directly to the Agent or its designee.
(iii) Seller shall, at the Agent's request and at
Seller's expense, give notice of Purchaser's ownership of
Undivided Interests to each Obligor and direct that payments be
made directly to the Agent or its designee.
(iv) Seller and Sunterra shall, at the Agent's request,
(A) assemble all of the documents, instruments and other records
(including, without limitation, computer programs, tapes and
disks, and Timeshare Loans) which evidence the Pool Receivables,
and the related Timeshare Loans and Related Security, or which
are otherwise necessary or desirable to collect such Pool
Receivables, and shall make the same available to the Agent at a
place selected by the Agent or its designee, (B) segregate all
cash, checks and other instruments received by it from time to
time constituting Collections of Pool Receivables in a manner
acceptable to the Agent and shall, promptly upon receipt, remit
all such cash, checks and instruments, duly endorsed or with
duly executed instruments of transfer, to the Agent or its
designee and (C) permit any successor Servicer and its agents,
employees and assignees access to its respective facilities and
its books, records, documents and instruments (including,
without limitation, computer programs, tapes and disks, and
Timeshare Loans) related to Receivables.
(v) Each of Seller, Sunterra and Purchaser hereby
authorizes the Agent (to the extent necessary to enforce such
party's rights or obligations, as applicable, hereunder or under
any Transaction Document) to take any and all steps in Seller's
name and on behalf of Seller, Sunterra or Purchaser which are
necessary, in the reasonable determination of the Agent, to
collect all amounts due under any and all Receivables,
including, without limitation, indorsing Purchaser's, Seller's,
Sunterra's or any Originator's name on checks and other
instruments representing
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Collections and enforcing such Receivables, the related
Timeshare Loans, and the Related Security therefor.
(vi) Seller hereby irrevocably appoints the Agent (to
the extent necessary to enforce the Seller's obligations
hereunder or under any Transaction Document) to act as Seller's
attorney-in-fact, with full authority in the place and stead of
Seller and in the name of Seller or otherwise, at any time
following the delivery of a Successor Notice, to take any action
and to execute any instrument that the Agent, in its reasonable
determination, may deem necessary to accomplish the purposes of
this Agreement, including, without limitation:
(A) to ask, demand, collect, ▇▇▇ for, recover,
compromise, receive and give acquittance and receipts
for moneys due and to become due under or in respect of
any Receivable;
(B) to receive, indorse, and collect any drafts
or other instruments, documents and chattel paper
related to the Receivables or the Related Security, or
constituting Collections;
(C) to file any claims or take any action or
institute any proceedings which Agent, in its reasonable
determination, may deem necessary for the collection of
any of the Receivables or otherwise to enforce the
rights of the Seller and Purchaser with respect to any
of the Receivables; and
(D) to perform the affirmative obligations of
Seller under any Transaction Document.
Seller hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section 8.03(c) is irrevocable and coupled with an
interest.
8.04 Responsibilities of Seller. Anything herein to the contrary
notwithstanding:
(a) Seller shall perform and comply in all material respects
with all of its obligations (i) pursuant to the provisions, covenants
and other promises required to be observed by it under the Timeshare
Loans related to the Receivables and under all purchase orders and other
agreements and (ii) under the Purchase and Sale Agreement; and the
Agent's exercise of its rights hereunder shall not relieve Seller from
any such obligations.
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(b) Neither Purchaser nor the Agent shall have any obligation or
liability with respect to any Receivables, related Timeshare Loans or
any other related agreements, nor shall any of them be obligated to
perform any of the obligations thereunder.
(c) Seller hereby grants to Servicer an irrevocable power of
attorney, with full power of substitution, coupled with an interest, to
take in the name of Seller all steps which are necessary or advisable to
indorse, negotiate or otherwise realize on any writing or other right of
any kind held or transmitted by Seller or transmitted or received by
Purchaser or the Agent (whether or not from Seller) in connection with
any Receivable.
8.05 Certain Responsibilities of Sunterra. If at any time Sunterra shall
not be Servicer, Sunterra shall deliver all Collections received or deemed
received by it to the Agent promptly upon receipt or deemed receipt thereof and
the Agent shall distribute such Collections to the same extent as if such
Collections had actually been received from the related Obligor on the
applicable dates. So long as Sunterra shall hold any Collections required to be
paid to the Agent, it shall hold such Collections in trust (and, if the Agent
shall so request, separate and apart from its own funds) and shall clearly ▇▇▇▇
its records to reflect such trust. Sunterra hereby grants to the Agent an
irrevocable power of attorney, with full power of substitution, coupled with an
interest and exercisable at any time following the delivery of a Successor
Notice, to take in the name of Sunterra all steps necessary or advisable to
indorse, negotiate or otherwise realize on any writing or other right of any
kind held or transmitted by Sunterra or transmitted and received by Purchaser or
the Agent (whether or not from Sunterra) in connection with any Pool Receivable.
8.06 Further Action Evidencing Purchases.
(a) Each of Seller and Servicer agrees that from time to time at
Servicer's expense, it will promptly execute and deliver (or, cause the
relevant Sub-Servicer to execute and deliver) all further instruments
and documents, and take all further action, that the Agent may
reasonably request in order to perfect, protect or more fully evidence
the Purchases hereunder and the resulting Undivided Interests, or to
enable Purchaser or the Agent to exercise or enforce any of their
respective rights hereunder or under any other Transaction Document.
Without limiting the generality of the foregoing, upon the Agent's
request, Seller or Servicer will execute and file such financing or
continuation statements, or amendments thereto or assignments thereof,
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and such other instruments or notices, as may be necessary or
appropriate.
(b) Seller and Servicer hereby authorize the Agent to file one
or more financing or continuation statements, and amendments thereto and
assignments thereof, to maintain the perfection of its security or
ownership interest in the Receivables or the Related Security now
existing or hereafter arising in the name of Seller or Servicer. If
Seller or Servicer fails to perform any of its agreements or obligations
under any Transaction Document and does not remedy such failure within
the applicable cure period, if any, in the applicable Transaction
Document, the Agent may (but shall not be required to) itself perform,
or cause performance of, such agreement or obligation, and the expenses
of the Agent incurred in connection therewith shall be payable by Seller
as provided in Section 13.01.
ARTICLE IX
SECURITY INTEREST
9.01 Grant of Security Interest. To secure the prompt payment and
performance of all Obligations of Seller arising in connection with this
Agreement, the Certificate and each other Transaction Document, whether now or
hereafter existing, due or to become due, direct or indirect, or absolute or
contingent, including, without limitation, all Indemnified Amounts, all Earned
Returns, payments on account of Collections received or deemed to be received
and fees, Seller hereby assigns and grants to Purchaser a first priority
security interest in all of Seller's right, title and interest in, to and under
all of the following, whether now or hereafter existing: (a) all Pool
Receivables, all Related Security with respect to such Pool Receivables and all
Collections related thereto, (b) all of Seller's rights, remedies, powers and
privileges under, or in respect of, the Purchase and Sale Agreement and the
Interest Rate Protection Agreement, (c) all Accounts, all funds on deposit in
each of the Accounts and all certificates and instruments, if any, from time to
time evidencing such Accounts and funds on deposit therein, all investments made
with such funds, all claims thereunder or in connection therewith, and all
interest, dividends, moneys, instruments, securities and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the foregoing, and (d) all proceeds and amounts
received or receivable by Seller under any or all of the foregoing. This
Agreement shall constitute a security agreement under applicable law with regard
to the security interest granted pursuant to this Section 9.01.
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9.02 Further Assurances. The provisions of Section 8.06 shall apply to
the security interest granted under Section 9.01 as well as to the Purchases and
all Undivided Interests hereunder.
9.03 Remedies. Upon the occurrence of and during the continuance of a
Liquidation Event, Purchaser shall have, with respect to the collateral granted
pursuant to Section 9.01, and in addition to all other rights and remedies
available to Purchaser or the Agent under this Agreement or other applicable
law, (a) the right to apply Collections to payment of the obligations referred
to in Section 9.01 and (b) all the rights and remedies of a secured party upon
default under the UCC.
ARTICLE X
LIQUIDATION EVENTS
10.01 Liquidation Events. The following events shall be "Liquidation
Events" hereunder:
(a) Servicer, any Originator or Seller shall fail to make when
due any payment or deposit of any amount required to be paid or
deposited by it hereunder or under the other Principal Documents, which
failure shall remain unremedied for two Business Days after receipt by
the Seller, Servicer or such Originator, as the case may be, of written
or telephonic notice thereof from the Agent; or
(b) Servicer shall fail to perform or observe in any material
respect any term, covenant or agreement hereunder on its part to be
performed or observed (other than as referred to in clause (a) above)
and such failure shall remain unremedied for five days after it has
knowledge thereof or has received written notice thereof from the Agent;
or
(c) Any representation or warranty made or deemed to be made by
Servicer, any Originator or Seller (or any of their respective officers)
under or in connection with any Principal Document (including any
Periodic Report or other information or report delivered pursuant
hereto) shall prove to have been false or incorrect in any material
respect when made or deemed made and shall remain false or incorrect for
thirty days after it has knowledge thereof or has received written
notice thereof from the Agent; or
(d) Seller, Sunterra or any Originator shall fail to perform or
observe in any material respect any other term, covenant or agreement
contained in this Agreement or any
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other Principal Document on its part to be performed or observed and any
such failure shall remain unremedied for thirty days after it has
knowledge thereof or has received written notice thereof from the Agent;
or
(e) (i) A default shall have occurred in the payment when due
(after giving effect to any applicable grace period and the giving of
any required notice), whether by acceleration or otherwise, of any
Indebtedness (other than any Obligation constituting Indebtedness) of
Sunterra in excess of $500,000, or (ii) a default shall occur in the
performance or observance of any material obligation or condition with
respect to such Indebtedness if the effect of such default described in
this clause (ii) is to accelerate the maturity of any such Indebtedness;
or
(f) An Event of Bankruptcy shall have occurred and remain
continuing with respect to Seller, Sunterra or any Originator; or
(g) (i) The sum of the Aggregate Investment and the aggregate
Loss Reserves for all Undivided Interests shall at any time exceed the
sum of the Net Pool Balance, plus the Principal Collections held in
trust for the benefit of the Purchaser in the Collection Account
pursuant to Article III, or (ii) the amount of funds in the Reserve
Account are less than the Reserve Account Required Amount and such
condition shall continue unremedied for five (5) Business Days; or
(h) As of the last day of any calendar month, the rolling three
month average of the Default Ratios shall exceed 3.0%; or
(i) As of the last day of any calendar month, the Default Ratio
shall exceed 4.5%; or
(j) The Excess Yield for any two consecutive calendar months
shall be less than 3.0%; or
(k) As of the last day of any calendar month the Delinquency
Ratio shall exceed 9.0%; or
(l) (i) The Internal Revenue Service shall file notice of a lien
pursuant to Section 6323 of the Internal Revenue Code with regard to any
of the assets of Seller, any Originator or Sunterra or (ii) the Pension
Benefit Guaranty Corporation shall file notice of a lien pursuant to
Section 4068 of ERISA with regard to any of the assets of Seller,
Sunterra or such Originator; or
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(m) A Purchase and Sale Termination Event (as defined in the
Purchase and Sale Agreement) shall have occurred; or
(n) A Change in Control shall have occurred; or
(o) (i) Any Principal Document, or any security interest granted
thereunder, shall (except in accordance with its terms), in whole or in
part, terminate, cease to be effective or cease to be the legally valid,
binding and enforceable obligation of Seller, Servicer or any
Originator, or (ii) Seller, Servicer or any Originator shall, directly
or indirectly, contest in any manner such effectiveness, validity,
binding nature or enforceability; or (iii) any security interest
securing any Obligation shall not attach or shall, in whole or in part,
cease to be a perfected first priority security interest, subject only
to those exceptions expressly permitted herein; or
(p) The cessation of, or failure to create, a valid first
priority ownership interest of Purchaser, to the extent of the Aggregate
Undivided Interest in the Receivables Pool, Related Security,
Collections and other security contemplated hereby.
10.02 Remedies.
(a) Optional Liquidation. Upon the occurrence of a Liquidation
Event (other than a Liquidation Event described in subsection (f) of
Section 10.01), the Agent may, by notice to Seller, declare the
Commitment Termination Date to have occurred.
(b) Automatic Liquidation. Upon the occurrence of a Liquidation
Event described in subsection (f) of Section 10.01, the Commitment
Termination Date shall be deemed to have occurred automatically upon the
occurrence of such event; provided, however, that with respect to any
proceeding instituted against Seller pursuant to 11 U.S.C. Section 303
(an "Involuntary Federal Proceeding"), the settlement procedures
described in Section 3.02(a) shall become applicable upon the
commencement of such Proceeding or event and no further Purchases or
Reinvestments of Principal Collections shall be made.
(c) Additional Remedies. Upon any termination of the Commitment
pursuant to this Section 10.02, Purchaser and the Agent shall have, in
addition to all other rights and remedies under this Agreement or
otherwise, all other rights and remedies provided under the UCC of each
applicable jurisdiction and other applicable laws, which rights shall be
cumulative. Without limiting the foregoing or the
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general applicability of Article XIII hereof, the occurrence of a
Liquidation Event shall not deny to Purchaser or the Agent any remedy in
addition to termination of the Commitment to which any such Person may
be otherwise appropriately entitled, whether at law or in equity.
ARTICLE XI
THE AGENT
11.01 Authorization and Action. Purchaser hereby appoints SG as its
Agent under and for purposes of each Transaction Document, and authorizes the
Agent to act on its behalf under each Transaction Document and to exercise such
powers hereunder and thereunder as are delegated to the Agent by the terms
hereof and thereof, together with such powers as may be reasonably incidental
thereto.
11.02 Exculpation. Neither the Agent nor any of its directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
by it under or in connection with this Agreement (including, without limitation,
the servicing, administering or collecting Receivables pursuant to Section
8.01), except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, the Agent: (a) may consult
with legal counsel (including internal counsel and counsel for Seller and
Servicer), independent certified public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (b) makes no warranty or representation to Purchaser or any other
holder of any interest in Receivables and shall not be responsible to Purchaser
or any such other holder for any statements, warranties or representations made
in or in connection with any Transaction Document; (c) shall not have any duty
to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of any Transaction Document on the part of
Seller, Servicer or any Originator or to inspect the property (including the
books and records) of Seller, Servicer or any Originator; (d) shall not be
responsible to Purchaser or any other holder of any interest in Receivables for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of any Transaction Document; and (e) shall incur no liability under or
in respect of any Transaction Document by acting upon any notice (including
notice by telephone), consent, certificate or other instrument or writing (which
may be by facsimile or telex) believed by it in good faith to be genuine and
signed or sent by the proper party or parties.
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11.03 Agent and Affiliates. SG and any of its Affiliates may accept
deposits, lend money to and generally engage in any kind of business with
Seller, Sunterra , any Originator or any Obligor, any of their respective
Affiliates and any Person who may do business with or own securities of Seller,
Sunterra any Originator or any Obligor or any of their respective Affiliates,
all as if SG were not the Agent and without any duty to account therefor to
Purchaser or any other holder of an interest in Receivables.
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST
12.01 Restrictions on Assignments.
(a) None of Sunterra, Seller or Purchaser may assign its rights
hereunder or any interest herein without the prior written consent of
the Agent, and Purchaser may not assign any Undivided Interest (or
portion thereof) to any Person without the prior written consent of
Seller (which consent shall not be unreasonably withheld); provided,
however, that without the consent of Seller, Purchaser may (i) assign
and grant a security interest in any interest in, to and under any
Undivided Interest, this Agreement and any other Transaction Documents
to the Collateral Agent, and any successor in such capacity, to secure
▇▇▇▇▇▇'▇ obligations under or in connection with the Commercial Paper
Notes, the Stand-by Purchase Agreement, the Enhancement Agreement and
any letter of credit issued thereunder, and certain other obligations of
Purchaser incurred in connection with the funding of the Purchases and
Reinvestments hereunder or (ii) assign any interest in, to and under any
Undivided Interest to the Banks pursuant to the Stand-by Purchase
Agreement, in each case, which assignment and/or grant of a security
interest shall not be considered an "assignment" for purposes of Section
12.01(b) or Section 12.03 or, prior to the enforcement of such security
interest, for purposes of any other provision of this Agreement or (iii)
after the occurrence of a Liquidation Event may assign its rights
hereunder or any interest in any Undivided Interest to any Person.
(b) Seller agrees to advise the Agent within five Business Days
after notice to Seller of any proposed assignment by Purchaser of any
Undivided Interest (or portion thereof), not otherwise permitted under
subsection (a) of this Section 12.01, of Seller's consent or non-
consent to such assignment. If Seller does not consent to such
assignment, Purchaser may upon five days' notice to
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Seller assign such Undivided Interest (or portion thereof) to SG, any
Bank or any Affiliate of SG or any Bank. All of the aforementioned
assignments shall be upon such terms and conditions as Purchaser and the
assignee may mutually agree.
12.02 Rights of Assignee. Upon the assignment by Purchaser of any
Undivided Interest (or portion thereof) in accordance with this Article XII, the
assignee receiving such assignment shall have all of the rights of Purchaser
hereunder with respect to such Undivided Interest (or such portion thereof).
12.03 Evidence of Assignment; Endorsement on Certificate. Any assignment
of any Undivided Interest (or portion thereof) to any Person may be evidenced by
an instrument of assignment satisfactory to Purchaser, the Agent and the
assignee. Purchaser authorizes the Agent to, and the Agent agrees that it shall,
endorse the Certificate to reflect any assignments made pursuant to this Article
XII or otherwise.
ARTICLE XIII
INDEMNIFICATION
13.01 Indemnity by Seller.
(a) General Indemnity. Without limiting any other rights which
any such Person may have hereunder or under applicable law, Seller
hereby agrees to indemnify each of Purchaser, the Agent, the Banks,
Enhancement Bank, SG, and each of their respective Affiliates,
successors, transferees, participants and assigns and all officers,
directors, shareholders, controlling persons, employees and agents of
any of the foregoing (each of the foregoing Persons being individually
called an "Indemnified Party"), forthwith on demand, from and against
any and all damages, losses, claims, liabilities and related costs and
expenses, including reasonable attorneys' fees and disbursements (all of
the foregoing being collectively called "Indemnified Amounts") awarded
against or incurred by any of them arising out of or relating to any
Transaction Document or the transactions contemplated thereby or the use
of proceeds therefrom, including (without limitation) in respect of the
ownership or funding of any Undivided Interest or in respect of any
Receivable or any Timeshare Loan, excluding, however, (a) Indemnified
Amounts that have resulted from gross negligence or willful misconduct
on the part of such Indemnified Party, (b) non-payment by any Obligor of
an amount due and payable with respect to a Receivable due to the credit
of such Obligor (except as otherwise specifically provided in this
Agreement), (c) any violation by any
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Indemnified Party of any Requirement of Law, or (d) the operations or
administration of any Indemnified Party generally. Without limiting the
foregoing, Seller agrees to indemnify each Indemnified Party for
Indemnified Amounts arising out of or relating to:
(i) the failure of any Receivable included in the
calculation of the Net Pool Balance as an Eligible Receivable to
be an Eligible Receivable, the failure of any information
contained in a Periodic Report to be true and correct, or the
failure of any other information provided by Seller, Servicer or
any Originator with respect to Receivables, Related Security,
Collections or any Transaction Document to be true and correct;
(ii) the failure of any representation or warranty or
statement made or deemed made by Seller (or any officer thereof)
under or in connection with any Transaction Document to have
been true and correct in all respects when made;
(iii) the failure by Seller to comply with any
applicable law, rule or regulation with respect to any
Receivable or the related Timeshare Loan, or the nonconformity
of any Receivable or the related Timeshare Loan with any such
applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in
Purchaser an undivided fractional ownership interest, to the
extent of each Undivided Interest owned by it hereunder, in the
Pool Receivables and Related Security in, or purporting to be
in, the Receivables Pool, free and clear of any Adverse Claim,
other than an Adverse Claim arising solely as a result of an act
of Purchaser or the Agent, any assignee from Purchaser or the
Agent, whether existing at the time of any Purchase or
Reinvestment of such Undivided Interest or at any time
thereafter;
(v) the failure to file, or any delay in filing,
financing statements, Mortgages, assignments of Mortgage or
other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to
any Receivables, Timeshare Loans or Related Security in the
Receivables Pool, whether at the time of any Purchase or
Reinvestment or at any time thereafter;
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(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy) of the Obligor to the payment of any
Receivable or related Timeshare Loan in the Receivables Pool
(including, without limitation, a defense based on such
Receivable or the related Timeshare Loan, Mortgage or
Right-to-Use Agreement not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance
with its terms); except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium
or other similar laws affecting the enforcement of creditors'
rights generally, and by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(vii) any failure of Sunterra, as Servicer or otherwise,
to perform its duties or obligations in accordance with the
provisions of Article VIII, or any failure of Seller to perform
its duties or obligations in accordance with the applicable
provisions of the Transaction Documents;
(viii) any claim involving environmental liability that
arises out of or relates to Vacation Interest Property that is
the subject of any Receivable or the Related Security;
(ix) any tax (other than income tax) or governmental fee
or charge, and all interest and penalties thereon or with
respect thereto, and all reasonable out-of-pocket costs and
expenses, including the reasonable fees and expenses of counsel
in defending against the same, which may arise by reason of the
purchase or ownership of any Undivided Interest, or any other
interest in the Receivables or in the related Vacation Interest;
or
(x) any commingling of funds to which the Agent or the
Purchaser is entitled hereunder with any other funds.
(b) Indemnity by Sunterra. Without limiting any other rights
which any such person may have hereunder under applicable law, Sunterra
hereby agrees to indemnify each Indemnified Party, forthwith on
demand(to the extent such indemnification has not been provided by the
Seller pursuant to clause(a) of this Section 13.01 or any Originator
pursuant to a Sale Agreement), from and against any and all Indemnified
Amounts awarded against or incurred by any of them arising out of or
relating to:
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(i) the failure of any Receivable included in the
calculation of the Net Pool Balance as an Eligible Receivable to
be an Eligible Receivable, the failure of any information
contained in a Periodic Report to be true and correct, or the
failure of any other information provided by Sunterra with
respect to Receivables, Related Security, Collections or any
Transaction Document to be true and correct;
(ii) the failure of any representation or warranty or
statement made or deemed made, pursuant to Section 5.02, by
Sunterra (or any of its officers) under or in connection with
any Transaction Document to have been true and correct in all
respects when made;
(iii) the failure by Sunterra, in its capacity as
Servicer, to comply with any applicable law, rule or regulation
(including truth in lending, fair credit billing, usury, fair
credit reporting, equal credit opportunity, fair debt collection
practices and privacy) with respect to any Pool Receivable or
other related Mortgage Loan and Related Security;
(iv) any failure of Sunterra to perform its duties,
covenants and obligations in accordance with the applicable
provisions of the Transaction Documents;
(v) the failure to vest and maintain vested in Purchaser
an undivided fractional ownership interest, to the extent of
each Undivided Interest owned by it hereunder, in the Pool
Receivables in the Receivables Pool, free and clear of any
Adverse Claim, other than an Adverse Claim arising solely as a
result of an act of Purchaser or the Agent, any assignee from
Purchaser or the Agent, whether existing at the time of any
Purchase or Reinvestment of such Undivided Interest or at any
time thereafter; or
(vi) the failure to file, or any delay in filing,
financing statements, Mortgages, assignments of Mortgage or
other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to
any Receivables, Timeshare Loans or Related Security in, or
purporting to be in, the Receivables Pool, whether at the time
of any Purchase or Reinvestment or at any time thereafter.
(c) Contribution. If for any reason the indemnification provided
above in this Section 13.01 is
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unavailable to an Indemnified Party or is insufficient to hold an
Indemnified Party harmless, then Seller or Sunterra or both, as
applicable, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage or liability
in such proportion as is appropriate to reflect not only the relative
benefits received by such Indemnified Party, on the one hand, and Seller
or Sunterra or both, as applicable, on the other hand, but also the
relative fault of such Indemnified Party as well as any other relevant
equitable considerations.
ARTICLE XIV
MISCELLANEOUS
14.01 Amendments, etc. No amendment or waiver of any provision of this
Agreement nor consent to any departure by Seller or Servicer therefrom shall in
any event be effective unless the same shall be in writing and signed by (a)
Seller, Servicer, Purchaser and the Agent (with respect to an amendment) or (b)
Purchaser and the Agent (with respect to a waiver or consent by them) or Seller
or Servicer (as applicable) (with respect to a waiver or consent by it), as the
case may be, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
14.02 Notices, etc. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by certified
mail, postage prepaid, by overnight courier, or by facsimile, to the intended
party at the address or facsimile number of such party set forth under its name
on the signature pages of this Agreement (or the Purchase and Sale Agreement) or
at such other address or facsimile number as shall be designated by such party
in a written notice given to the other parties hereto in accordance with this
Section 14.02. All such notices and communications shall be effective, (a) if
personally delivered, when received, (b) if sent by certified mail, three
Business Days after having been deposited in the mail, postage prepaid, (c) if
sent by overnight courier, two Business Days after having been given to such
courier unless sooner received by the addressee, (d) if transmitted by
facsimile, when sent, receipt confirmed by telephone or electronic means, except
that notices and communications pursuant to Article I shall not be effective
until received.
14.03 No Waiver; Remedies. No failure on the part of the Agent, any
Affected Party, any Indemnified Party, Purchaser or any other holder of any
Undivided Interest to exercise, and no delay in exercising, any right hereunder
shall operate as a
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waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law. Without limiting the foregoing, SG is hereby
authorized by Seller and Sunterra at any time and from time to time after the
occurrence and during the continuance of a Liquidation Event, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, SG and such Bank to or for the credit or the
account of Seller or Sunterra, against any Obligation (including, if a
Liquidation Period has occurred and is continuing, all Obligations with respect
to the then current Settlement Period that are not yet due and payable) now or
hereafter existing under this Agreement, to the Agent, any Affected Party, any
Indemnified Party or Purchaser, or their respective successors and assigns.
14.04 Binding Effect; Survival. This Agreement shall be binding upon and
inure to the benefit of Seller, Servicer, Purchaser, the Agent and their
respective successors and assigns, and the provisions of Section 4.02 and
Article XIII shall inure to the benefit of the Affected Parties and the
Indemnified Parties, respectively, and their respective successors and assigns;
provided, however, that nothing in the foregoing shall be deemed to authorize
any assignment not permitted by Section 12.01. This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms, and shall remain in full force and effect until such time, after the
Commitment Termination Date, as all Undivided Interests shall have been reduced
to zero and all Obligations shall have been finally and fully paid and
performed. The rights and remedies with respect to any breach of any
representation and warranty made by Seller or Sunterra pursuant to Article VI
and the indemnification and payment provisions of Article XIII and Sections
4.02, 14.05 and 14.06 shall be continuing and shall survive any termination of
this Agreement.
14.05 Costs, Expenses and Taxes.
In addition to its obligations under Article XIII, Seller agrees to pay
on demand:
(i) all costs and expenses (including, without
limitation, the reasonable fees and expenses of counsel of
Purchaser, the Agent, SG and their respective Affiliates in
connection with (A) the preparation, execution and delivery of
this Agreement, the other Transaction Documents and the Stand-by
Purchase Agreement (and, in each case, all related certificates
and other documents), (B) the preparation, execution
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and delivery of any waiver, amendment or other modification to
this Agreement, the Stand-by Purchase Agreement any of the
Transaction Documents, and, in each case, all related
certificates and other documents, and (C) the enforcement of
this Agreement, the Certificate and the other Transaction
Documents or any claim of breach of contract, breach of warranty
or any other breach of this Agreement, the Certificate or any of
the other Transaction Documents or any tort claim relating to
any of the foregoing; and
(ii) all stamp and other similar taxes and fees payable
or determined to be payable in connection with the execution,
delivery, filing and recording of this Agreement, the
Certificate or the other Transaction Documents, and agrees to
indemnify each Indemnified Party against any liabilities with
respect to or resulting from any delay in paying or omission to
pay such taxes and fees.
14.06 No Proceedings. Each of Seller, Sunterra and SG (individually and
as the Agent) hereby agrees that it will not institute against Purchaser, or
join any other Person in instituting against Purchaser, any insolvency
proceeding (namely, any proceeding of the type referred to in the definition of
Event of Bankruptcy) so long as any Commercial Paper Notes issued by Purchaser
shall be outstanding or there shall not have elapsed one year plus one day since
the last day on which any such Commercial Paper Notes shall have been
outstanding.
14.07 Captions and Cross References. The various captions (including,
without limitation, the table of contents) in this Agreement are provided solely
for convenience of reference and shall not affect the meaning or interpretation
of any provision of this Agreement. Unless otherwise indicated, references in
this Agreement to any Section, Appendix, Schedule or Exhibit are to such Section
of or Appendix, Schedule or Exhibit to this Agreement, as the case may be, and
references in any Section, subsection, or clause to any subsection, clause or
subclause are to such subsection, clause or subclause of such Section,
subsection or clause.
14.08 Integration. This Agreement and the other Transaction Documents
contain a final and complete integration of all prior and contemporaneous
expressions by the parties hereto with respect to the subject matter hereof and
thereof and shall together constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof, superseding all
prior and contemporaneous oral or written understandings.
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14.09 Confidentiality. Unless otherwise required by applicable law, each
of the Seller and Servicer agrees to maintain the confidentiality of this
Agreement and the other Transaction Documents (including all drafts hereof and
thereof and all exhibits, schedules, annexes and attachments hereto and thereto)
in communications with third parties and otherwise; provided that this Agreement
may be disclosed to: (a) third parties to the extent such disclosure is made
pursuant to a written agreement of confidentiality in form and substance
reasonably satisfactory to the Agent and (b) the Seller's legal counsel and
auditors if they agree to hold it confidential. Unless otherwise required by
applicable law, each of the Agent and the Purchaser agrees to maintain the
confidentiality of all information regarding Sunterra and its Subsidiaries;
provided that such information may be disclosed to: (i) third parties to the
extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to Sunterra, (ii)
legal counsel and auditors of the Purchaser or the Agent if they agree to hold
it confidential, (iii) the rating agencies rating the Commercial Paper Notes to
the extent such information relates to the Receivables Pool or the transactions
contemplated by this Agreement, or if not so related, upon obtaining the prior
consent of Sunterra (such consent not to be unreasonably withheld), (iv) any
Bank or Enhancement Bank or potential Bank or Enhancement Bank to the extent
such information relates to the Receivables Pool or the transactions
contemplated by this Agreement, or if not so related, upon obtaining the prior
written consent of Sunterra (such consent not to be unreasonably withheld), (v)
any placement agent placing the Commercial Paper Notes, and (vi) any regulatory
authorities having jurisdiction over SG, the Purchaser, any Enhancement Bank or
any Bank.
14.10 Governing Law. THIS AGREEMENT, INCLUDING THE RIGHTS AND DUTIES OF
THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
14.11 Waiver of Jury Trial. EACH OF THE SELLER, SUNTERRA, THE AGENT AND
THE PURCHASER HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, THE
CERTIFICATE, ANY OTHER TRANSACTION DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT
OR DOCUMENT DELIVERED OR WHICH MAY BE IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR ARISING FROM OR RELATING TO ANY BANKING OR OTHER RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, THE CERTIFICATE OR ANY OTHER
TRANSACTION DOCUMENT AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT A JURY TRIAL.
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14.12 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BLUE BISON FUNDING CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Title: Vice President
----------------------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: 407/▇▇▇-▇▇▇▇
Facsimile: 407/532-1075
Attention: General Counsel
SUNTERRA CORPORATION,
as initial Servicer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Title: Vice President
----------------------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: 407/▇▇▇-▇▇▇▇
Facsimile: 407/532-1075
Attention: General Counsel
▇▇▇▇▇▇ CAPITAL CORPORATION,
as Purchaser
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
c/o AMACAR Group, L.L.C.
▇▇▇▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
S-1 Receivables Purchase Agreement
70
SOCIETE GENERALE,
as the Agent
By: Avi ▇. ▇▇▇▇▇
-------------------------------------
Name:
-----------------------------------
Title: Director
----------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name:
-----------------------------------
Title: Director
----------------------------------
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Asset Securitization Group
S-2 Receivables Purchase Agreement
71
APPENDIX A
DEFINITIONS
This is Appendix A to (i) the Purchase and Sale Agreement (as
hereinafter defined) and (ii) the Receivables Purchase Agreement, dated as of
December 17, 1998, among BLUE BISON FUNDING CORP., SUNTERRA CORPORATION, ▇▇▇▇▇▇
CAPITAL CORPORATION and SOCIETE GENERALE, as Agent (as amended, supplemented or
otherwise modified from time to time, the "Receivables Purchase Agreement").
A. Defined Terms. As used in the Purchase and Sale Agreement or the
Receivables Purchase Agreement, as the case may be (unless the context clearly
requires a different meaning), the following terms have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Account Agreements" means the Reserve Account Agreement and the
Collection Account Agreement.
"Account Banks" means the Lockbox Banks, the Collection Account Bank and
the Reserve Account Bank.
"Accounts" means the Lockbox Accounts, the Collection Account and the
Reserve Account.
"Adverse Claim" means a lien, security interest, charge, encumbrance, or
similar claim of any Person.
"Affected Party" means each of Purchaser, the Agent, each Bank, any
permitted assignee of Purchaser or any Bank, Enhancement Bank, and any assignee
of any of Enhancement Bank or SG.
"Affiliate" when used with respect to a Person means any other Person
controlling, controlled by, or under common control with, such Person.
"Affiliated Obligor" means an Obligor that is an Affiliate of another
Obligor.
"Agent" has the meaning set forth in the preamble to the Receivables
Purchase Agreement.
"Agent's Account" means that certain account #▇▇▇▇▇▇▇ maintained at
Societe Generale, Chicago, Illinois which account shall be in the name and under
the exclusive dominion and control of the Agent.
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"Aggregate Investment" at any time means the aggregate Dollar amount of
all Investments outstanding at such time.
"Aggregate Undivided Interest" means, at any time, the sum of all of the
Undivided Interests owned by Purchaser at such time.
"Aggregate Undivided Interest Limit" has the meaning set forth in
Section 1.02(b) of the Receivables Purchase Agreement.
"Agreement" means the Receivables Purchase Agreement, as amended,
amended and restated, supplemented or otherwise modified from time to time.
"Alternate Base Rate" means, on any date, a fluctuating rate of interest
per annum equal to the higher of
(a) the rate of interest most recently announced by SG at its
branch office in New York, New York as its reference rate; and
(b) the Federal Funds Rate most recently determined by SG plus
1.0% per annum.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by SG in connection with extensions of credit.
"Bank" means any one of, and "Banks" means all of, SG and the other
commercial lending institutions that are at any time parties to the Stand-by
Purchase Agreement.
"Bank Rate" for any Yield Period for the related Undivided Interest
means an interest rate per annum equal to the greater of (i) the sum of (a)
1.75% per annum, plus (b) the LIBOR Rate (Reserve Adjusted) for such Yield
Period and (ii) the sum of (a) 0.25% per annum, plus (b) Sunterra's maximum
non-default borrowing rate under the Bank Revolver; provided, however, that if
the Earned Return for any Undivided Interest shall have been calculated by
reference to the Bank Rate for a period of three years as a result of
non-availability of the Commercial Paper Rate, then the rate calculated pursuant
to clauses (i) and (ii) above shall be increased by 0.50% at the end of such
three year period and on each anniversary thereafter; provided, further, that
(A) with respect to the rate described in clause (i) above if (x) it shall
become unlawful for the Agent, any Bank or Enhancement Bank to obtain funds in
the offshore interbank eurodollar market in order to fund any Purchase or to
maintain any Undivided Interest, or if such funds shall not be reasonably
available to the Agent, any Bank or Enhancement Bank, or (y) there shall not be
time prior to commencement of an applicable
A-2
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Yield Period to determine a LIBOR Rate in accordance with its terms, or (B) if
the Seller shall have so requested, then the "Bank Rate" for any Yield Period
for such Undivided Interest shall be equal to the Alternate Base Rate.
"Bank Revolver" means that certain Credit Agreement entered into on
February 18, 1998, among Signature Resorts, Inc., certain lenders party thereto,
NationsBank of Texas, N.A., as administrative lender and SG, as documentation
agent, as amended from time to time.
"▇▇▇▇▇▇" means ▇▇▇▇▇▇ Capital Corporation, a Delaware corporation.
"Business Day" means a day on which both (a) the Agent is open for
business at its principal office in Chicago, Illinois and (b) commercial banks
in New York City are not authorized or required to be closed for business.
"Capital Lease" means any lease that, in accordance with GAAP, would be
deemed a capital lease.
"Certificate" means a certificate of assignment, by Seller to the Agent,
in the form of Exhibit 5.01(a) to the Receivables Purchase Agreement, evidencing
each Undivided Interest owned by Purchaser or an assignee thereof, as the same
may be amended, supplemented, amended and restated or otherwise modified from
time to time in accordance with the Receivables Purchase Agreement.
"Change in Control" means (a) Sunterra or any Affiliate thereof shall
fail to own one hundred percent (100%) of the issued and outstanding shares of
capital stock (including all warrants, options, conversion rights, and other
rights to purchase or convert into such stock) of Seller or (b) the occurrence
of any of the following events after the Closing Date: (A) any Person or Persons
acting together which would constitute a group (a "Group") for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any successor provision thereto, other than the Group whose nominees
constitute a majority of the board of directors of Sunterra as of the close of
business on the Closing Date, together with any Affiliates or thereof, shall
beneficially own (as defined in Rule 13d-3 of the Securities and Exchange
Commission under the Exchange Act or any successor provision thereto) at least
30% of the aggregate voting power of all classes of capital stock of Sunterra
entitled to vote generally in the election of directors of Sunterra; or (B) any
Person or Group, other than any Person whose nominees constitute a majority of
the board of directors of Sunterra as of the close of business on the Closing
Date, together with any Affiliates thereof, shall
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succeed in having sufficient of its or their nominees elected to the board of
directors of Sunterra, such that such nominees, when added to any existing
director remaining on the board of directors of Sunterra after such election
which is an Affiliate of such Group shall constitute a majority of the board of
directors of Sunterra.
"Closing Date" means the date of the initial Purchase under the
Receivables Purchase Agreement.
"Collateral Agent" means SG in its capacity as collateral agent under
the Security Agreement, dated as of December 6, 1991, as amended as of August 1,
1993, as the same may be further amended, supplemented, amended and restated or
otherwise modified from time to time between SG and ▇▇▇▇▇▇.
"Collection Account" means that certain bank account with the number,
and maintained at the location, set forth on Schedule 6.01(n) to the Receivables
Purchase Agreement, which is (i) in Seller's name, and (ii) pledged on a
first-priority basis to Purchaser pursuant to Section 9.01 of the Receivables
Purchase Agreement.
"Collections" means, with respect to any Pool Receivable and the related
Timeshare Loan, all funds that either are (a) received by Sunterra, Servicer or
Seller, from or on behalf of the related Obligors in payment of any amounts owed
(including, without limitation, principal, finance charges, late fees, interest
and all other amounts and charges) in respect of such Pool Receivable and the
related Timeshare Loan, (b) applied to such amounts owed by such Obligors
(including, without limitation, insurance payments (including any payments in
respect of a title insurance policy) or proceeds on account of any casualty loss
with respect to the related Vacation Interest and net proceeds of sale,
liquidation or other compulsory disposition of the related Vacation Interest or
other collateral or property of the Obligor or any other party directly or
indirectly liable for payment of such Receivable and the related Timeshare Loan,
(c) received from the counterparty pursuant to the Interest Rate Protection
Agreement or (d) received from the purchaser of any sale of any Receivable and
the related Timeshare Loan, including pursuant to Section 7.03(a).
"Collection Account Agreement" means an agreement, substantially in the
form of Exhibit 5.01(h)(ii) to the Receivables Purchase Agreement, among Seller,
Sunterra, the Agent and the Collection Account Bank, as the same may be amended,
supplemented, amended and restated, or otherwise modified from time to time in
accordance with the Receivables Purchase Agreement.
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"Collection Account Bank" means the bank holding the Collection Account.
"Commercial Paper Notes" means short-term promissory notes issued or to
be issued by Purchaser to fund its investments in accounts receivable or other
financial assets.
"Commercial Paper Rate" for any Yield Period for the related Undivided
Interest means a rate per annum equal to the sum of (i) the rate or, if more
than one rate, the weighted average of the rates per annum (determined by
converting to an interest-bearing equivalent rate per annum the discount rate
(or rates)) at which Commercial Paper Notes having a term equal to such Yield
Period and to be issued to fund the Purchase of or to maintain such Undivided
Interest (or portion thereof) by ▇▇▇▇▇▇ (including, without limitation, the
Investment and accrued and unpaid Earned Return) may be sold by any placement
agent or commercial paper dealer selected by the Agent, as agreed between each
such agent or dealer and the Agent, plus (ii) the commissions and other charges
charged by such placement agent or commercial paper dealer with respect to such
Commercial Paper Notes expressed as a percentage of the face amount of such
Commercial Paper Notes and converted to an interest-bearing equivalent rate per
annum.
"Commitment" has the meaning set forth in Section 1.01 of the
Receivables Purchase Agreement.
"Commitment Termination Date" has the meaning set forth in Section 1.05
of the Receivables Purchase Agreement.
"Company Note" has the meaning set forth in Section 3.2 of the Purchase
and Sale Agreement.
"Conditions Precedent" and "Condition Precedent" have the meanings set
forth in Section 5.02 of the Receivables Purchase Agreement.
"Credit and Collection Policy" means those credit and collection
policies and practices relating to Timeshare Loans and Receivables of Sunterra
and the Originators described in Schedule 7.01(f) to the Receivables Purchase
Agreement, as modified without violating Section 7.03(c) of the Receivables
Purchase Agreement.
"Custodial Agreement" means the Custody Agreement, dated as of December
17, 1998, among Seller, Purchaser and the Custodian, as the same may be amended,
amended and restated, supplemented or otherwise modified from time to time.
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"Custodian" means LaSalle National Bank, a national bank, acting in its
capacity as Custodian under the Custodial Agreement, and any successor thereto
thereunder.
"Default Rate" means the Alternate Base Rate, plus 2.5% per annum.
"Default Ratio" means twelve times the ratio (expressed as a percentage)
computed as of the last day of each calendar month by dividing (x) the aggregate
Unpaid Balance of all Principal Receivables that became Defaulted Receivables
during such calendar month by (y) the Net Pool Balance on such day.
"Defaulted Receivable" means without duplication, a Receivable: (a) as
to which payment (other than any late payment fee), or any part thereof remains
unpaid for more than 120 days after the original due date for such payment, (b)
with regard to the Obligor of which a matured or unmatured Event of Bankruptcy
has occurred, (c) which has been written off as uncollectible by Servicer or
which, consistent with the Credit and Collection Policy, should be written off
as uncollectible by Servicer or, (d) which has been accelerated and with respect
to which foreclosure or sale proceedings have been instituted and are
continuing.
"Delinquency Ratio" means the ratio (expressed as a percentage) computed
as of the last day of each calendar month, by dividing (a) the aggregate Unpaid
Balance of all Principal Receivables that were Delinquent Receivables on such
day, by (b) the Net Pool Balance on such day.
"Delinquent Receivable" means a Receivable, other than a Defaulted
Receivable, (a) as to which any payment (other than any late payment fee) or
part thereof remains unpaid for at least 60 days from the original due date for
such payment or (b) which, consistent with the Credit and Collection Policy,
should be classified as a Delinquent Receivable.
"Dividend" means any dividend or distribution (in cash, property or
obligations) on any shares of any class of Seller's capital stock or any
warrants, options or other rights with respect to shares of any class of
Seller's capital stock.
"Dollars" means dollars in lawful money of the United States of America.
"Earned Return" for any Undivided Interest for each day in a particular
Yield Period means an amount determined as follows:
ER = I x PR x 1/360;
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provided, however, that if, pursuant to the definition of "Purchaser
Rate", different Purchaser Rates would apply to different portions of an
Undivided Interest, then Earned Return shall be calculated separately
with respect to each such portion, and the Earned Return shall be the
sum of the Earned Return so calculated for such portions;
where:
ER = Earned Return for such Undivided Interest (or such portion)
accrued on such day;
I = the Investment in such Undivided Interest (or such portion)
on such day, as determined pursuant to Section 2.02; and
PR = the Purchaser Rate for such Undivided Interest (or such
portion) on such day.
No provision of this Agreement shall require the payment or permit the
collection of Earned Return in excess of the maximum permitted by
applicable law. If at any time a distribution of any portion of
Collections is rescinded or must otherwise be returned for any reason,
Earned Return for any Undivided Interest shall not be considered paid to
the extent of such rescission or return.
"Eligible Receivable" means, at any time, a Pool Receivable:
(a) the Obligor of which (i) is a United States resident;
(provided, that up to 10% of the Net Pool Balance may, at any time,
consist of otherwise Eligible Receivables the Obligors' of which are not
United States residents); (ii) is not a government or a governmental
subdivision, Affiliate or agency; and (iii) is not an Affiliate of
Sunterra, Seller or any Affiliate thereof;
(b) that is denominated and payable only in U.S. dollars in the
United States;
(c) the maturity of which is not greater than 121 months from
the date that the first payment on such Receivable is due;
(d) that arises as a result of a duly authorized Timeshare Loan
made by Sunterra or any Originator to an Obligor for the purchase of a
Vacation Interest in the ordinary course of Sunterra's or such
Originator's business, and that is, together with the related Mortgage
Note or Right-to-Use Agreement, as applicable, in full force and effect
and a legal, valid and binding obligation of the
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related Obligor, enforceable against such Obligor in accordance with its
terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, and by
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law), and is not subject
to any dispute, right of setoff, recoupment, counterclaim, or defense of
any kind, whether arising out of transactions concerning such Receivable
or otherwise, and no such right has been asserted with respect thereto;
(e) that has not been satisfied, cancelled, rescinded or
subordinated, in whole or in part, and no instrument has been executed
that would effect any such satisfaction, release, cancellation,
subordination or rescission;
(f) as to which all of the related Loan Documents are in the
possession of the Custodian;
(g) that satisfies all applicable requirements of the Credit and
Collection Policy;
(h) that, together with the Timeshare Loan related thereto, does
not contravene any laws, rules or regulations applicable thereto
(including, without limitation, laws, rules and regulations relating to
sales of timeshare estates, usury, truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and with respect to which no party to
the Timeshare Loan related thereto is in violation of any such law, rule
or regulation if such violation would impair the collectibility of such
Receivable;
(i) that is required to be paid in level monthly installments,
designed to fully amortize the principal amount of the related Timeshare
Loan over the scheduled term of such Timeshare Loan and bears simple
interest at a fixed rate for the life of such Timeshare Loan at least
equal to 12%;
(j) as to which the Seller owns full legal and equitable title
to such Receivable and the related Timeshare Loan, free and clear of any
Adverse Claims, and that together with the related Note and Related
Security therefor is freely assignable (including without any consent of
the related Obligor);
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(k) (A) if such Pool Receivable is related to a Mortgage Loan,
such Mortgage Loan is secured by a first mortgage or deed of trust on
the related Vacation Interest and such Mortgage has been duly filed and
recorded with all appropriate government authorities in all
jurisdictions in which such Mortgage is required to be filed and
recorded to create a valid, binding and enforceable first lien on the
related Vacation Interest and such Mortgage creates a valid, binding and
enforceable first lien on the related Vacation Interest, subject only to
Permitted Encumbrances, and (B) if such Pool Receivable is related to a
Membership Loan, such Membership Loan is secured, pursuant to a
Right-to-Use Agreement, by a membership interest in a Vacation Club and
a UCC financing statement in connection with such Right-to-Use Agreement
has been duly filed and recorded with all appropriate government
authorities in all jurisdictions in which such financing statement is
required to be filed and recorded to create a valid, binding and
enforceable first priority perfected security interest on the related
Vacation Interest and such financing statement together with such
Right-to-Use Agreement creates a valid, binding and enforceable first
priority perfected security interest on the related Vacation Interest,
subject only to Permitted Encumbrances;
(l) as to which the Purchaser shall have a valid and enforceable
undivided ownership or security interest therein and in the Related
Security and Collections with respect thereto, in each case free and
clear of any Adverse Claims except, in the case of Related Security
constituting a Mortgage on the related Vacation Interest, for Permitted
Encumbrances;
(m) that is not a Defaulted Receivable or a Delinquent
Receivable;
(n) the related Obligor of which has timely made at least one
payment due thereon (or, in the case of a Receivable related to an
Upgraded Loan, on the original Timeshare Loan being upgraded);
(o) the Unpaid Balance of which when combined with the Unpaid
Balance of all other Eligible Receivables included in the Receivables
Pool related to the Timeshare Loans made to finance the purchase of
Vacation Interests at any one Vacation Ownership Resort does not exceed
25% of the Net Pool Balance;
(p) with respect to which (i) if related to a Mortgage Loan, the
related Mortgage Notes, contracts, documents and other agreements
(including, subject to the proviso to
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paragraph (r) below, the related title insurance policy) and (ii) if
related to a Membership Loan, the related Note and Right-to-Use
Agreement have been duly executed and delivered or issued in accordance
with the terms thereof;
(q) the Unpaid Balance of which, when added to the aggregate
Unpaid Balance of all Pool Receivables payable by the related Obligor
does not exceed $50,000;
(r) if related to a Mortgage Loan the related Mortgage of which,
is covered by a form of lender's title insurance policy issued by a
title insurer qualified to do business in the jurisdiction where the
related Vacation Interest is located, insuring the related Originator
and its successors and assigns, as to the first priority Lien of the
related Mortgage in an amount equal to the original principal balance of
the related Mortgage Loan and (i) such lender's title insurance policy
is in full force and effect, (ii) no claims have been made under such
lender's title insurance policy and (iii) no prior holder of such
Mortgage Loan, including the Seller or any Originator, has done or
omitted to do anything which would impair the coverage of such lender's
title insurance policy; provided, however, that up to 5% of the Net Pool
Balance may consist of otherwise Eligible Receivables for which title
insurance policies covering the related Mortgage have not yet been
issued, so long as a commitment to issue such title insurance policies
exists at the time such Receivables are generated and such title
insurance policies are issued within 60 days from the date thereof;
(s) with respect to any Membership Loan, the Unpaid Balance of
which, when added to the aggregate Unpaid Balance of all Pool
Receivables related to Membership Loans does not exceed an amount to be
determined at the sole discretion of the Agent;
(t) which with respect to any Membership Loan, the Purchaser
shall have approved in writing, in its sole and absolute discretion, the
inclusion of such Membership Loan and the Purchaser shall have received
such additional certificates, opinions and forms of Loan Documents
related to such Membership Loan, as the Purchasers may reasonably
request; and
(u) the Unpaid Balance of which, when combined with the Unpaid
Balance of all other Eligible Receivables included in the Receivables
Pool that are part of the same Market Area, does not exceed (i) in the
case of each of the Williamsburg Market Area and the Orlando Market
Area, 40% of
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the Net Pool Balance; and (ii) in the case of the Greater Phoenix Market
Area, 30% of the Net Pool Balance.
"Enhancement Agreement" means and includes (a) the Enhancement
Agreement, dated as of December 6, 1991, as amended as of August 1, 1993,
between ▇▇▇▇▇▇ and SG and (b) any other agreement (other than the Stand-by
Purchase Agreement) hereafter entered into by ▇▇▇▇▇▇ providing for the issuance
of one or more letters of credit for the account of ▇▇▇▇▇▇, the making of loans
to ▇▇▇▇▇▇ or any other extensions of credit to or for the account of ▇▇▇▇▇▇ to
support all or any part of ▇▇▇▇▇▇'▇ payment obligations under its Commercial
Paper Notes or to provide an alternate means of funding ▇▇▇▇▇▇'▇ investments in
accounts receivable or other financial assets, in each case as amended,
supplemented or otherwise modified from time to time.
"Enhancement Bank" means and includes SG, as lender to ▇▇▇▇▇▇ and as
issuer of a letter of credit for ▇▇▇▇▇▇'▇ account, under the Enhancement
Agreement, and any other or additional bank or other financial institution now
or hereafter extending credit or having a commitment to extend credit to or for
the account of ▇▇▇▇▇▇ under the Enhancement Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with any
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Eurodollar Reserve Percentage" means, with respect to any Yield Period,
the then applicable percentage (expressed as a decimal) prescribed by the
Federal Reserve Board for determining reserve requirements applicable to
"Eurocurrency Liabilities" pursuant to Regulation D.
"Event of Bankruptcy" shall be deemed to have occurred with respect to a
Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up,
or composition or readjustment of debts of such Person, the appointment
of a trustee, receiver, custodian, liquidator, assignee, sequestrator or
the like for such Person or all or any substantial part of its assets,
or any similar action with respect to such Person under any law relating
to bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, and such case or proceeding shall continue
undismissed, or unstayed and in effect, for a period of 60 consecutive
days; or an order for relief in
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respect of such Person shall be entered in an involuntary case under the
federal bankruptcy laws or other similar laws now or hereafter in
effect; or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization,
debt arrangement, dissolution or other similar law now or hereafter in
effect, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) for, such Person or for any substantial part of
its property, or shall make any general assignment for the benefit of
creditors, or shall fail to, or admit in writing its inability to, pay
its debts generally as they become due, or, if a corporation or similar
entity, its board of directors shall vote to implement any of the
foregoing.
"Excess Yield" means the annualized percentage equivalent of a fraction
(computed as of the last day of each calendar month), the numerator of which is
the excess of (x) all Finance Charge Collections received and applied during
such calendar month over (y) the sum of the Servicing Fee, the Earned Returns
for all Undivided Interests, all Fees accrued during such calendar month and the
aggregate Unpaid Balance of all Principal Receivables that became Defaulted
Receivables during such calendar month, and the denominator of which is the
average aggregate Unpaid Balance of the Principal Receivables during such
calendar month.
"Facility Limit" has the meaning set forth in Section 1.02(a) of the
Receivables Purchase Agreement.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal (for each day during such period) to
(i) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not
a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(ii) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by SG from three federal funds brokers of
recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto or to the functions thereof.
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"Fee Letter" has the meaning set forth in Section 4.01 of the
Receivables Purchaser Agreement.
"Fees" means all fees payable pursuant to the Fee Letter.
"Finance Charge Collection" means, at any time, any Collections in
respect of a Finance Charge Receivable.
"Finance Charge Receivable" means, with respect to any Receivable and
the related Timeshare Loan, at any time, the amount of accrued and unpaid
interest, finance charges, late charges and other fees and charges with respect
to such Timeshare Loan.
"Financial Officer" has the meaning set forth in Section 7.02(a) of the
Receivables Purchase Agreement.
"Funding Date" means each date the Seller purchases Receivables from
Sunterra pursuant to the Purchase and Sale Agreement.
"GAAP" means generally accepted accounting principles in the United
States.
"Greater Phoenix Market Area" has the meaning set forth on Schedule B to
the Receivables Purchase Agreement.
"Guaranty" means any agreement, undertaking or arrangement by which any
Person guarantees, endorses, agrees to purchase or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the
indebtedness, obligation or any other liability of any other Person (other than
by endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial
statement, any qualification or exception to such opinion or certification:
(i) which is of a "going concern" or similar nature; or
(ii) which relates to the limited scope of examination of
matters relevant to such financial statement (other than any standard
qualification of such nature).
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"Indebtedness" means, with respect to any Person, at the time any
determination is to be made, without duplication (i) all Indebtedness for Money
Borrowed of that Person, (ii) that portion of obligations with respect to
Capital Leases which is properly classified as a liability on a balance sheet of
that Person in conformity with GAAP, (iii) notes payable of that Person and
drafts accepted by that Person representing extensions of credit whether or not
representing obligations for borrowed money, (iv) all indebtedness secured by
any Adverse Claim on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is nonrecourse to the credit of that Person, (v) all
Guaranties of that Person and (vi) the deferred purchase price of assets or
services which in accordance with GAAP would be shown as a liability on the
balance sheet of such Person.
"Indebtedness for Money Borrowed" means, with respect to any Person, at
the time any determination is to be made (i) all Indebtedness of such Person,
current or funded, secured or unsecured, incurred in connection with borrowings
(including the sale of debt securities) or the making available of credit or
funds to or on behalf of another Person, (ii) all Indebtedness of such Person
issued, incurred or assumed in respect of the purchase price of property and
(iii) all Capital Leases of such Person.
"Indemnified Amounts" has the meaning set forth in Section 13.01 of the
Receivables Purchase Agreement.
"Indemnified Party" has the meaning set forth in Section 13.01 of the
Receivables Purchase Agreement.
"Independent Director" has the meaning set forth in Section 7.01(h)(ii)
of the Receivables Purchase Agreement.
"Initial Closing Date" means the date on which the first purchases under
the Purchase and Sale Agreement shall occur.
"Interest Rate Protection Agreement" means the Rate Cap Transaction
letter agreement dated as of December 17, 1998, between the Seller and SG, as
amended, amended and restated or otherwise modified from time to time.
"Investment" has the meaning set forth in Section 2.02 of the
Receivables Purchase Agreement.
"Involuntary Federal Proceeding" has the meaning set forth in Section
10.02(b) of the Receivables Purchase Agreement.
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"LIBOR Rate (Reserve Adjusted)" means, with respect to any Yield Period
for any related Undivided Interest (or portion thereof), a rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant
to the following formula:
LIBOR Rate = LIBOR Rate
------------
(Reserve Adjusted) 1-Eurodollar
Reserve Percentage
where:
"LIBOR Rate" means, with respect to any Yield Period for any related
Undivided Interest (or portion thereof), the rate per annum at which Dollar
deposits in immediately available funds are offered to the LIBOR Office of the
Agent two LIBOR Business Days prior to the beginning of such period by prime
banks in the interbank eurodollar market at or about 10:00 a.m., London time for
delivery on the first day of such Yield Period, for the number of days comprised
therein and in an amount equal or comparable to the amount of the related
Investment in such Undivided Interest (or such portion) for such Yield Period.
"LIBOR Business Day" means a day (i) on which dealings in Dollars are
carried on in the eurodollar interbank market of the Agent's LIBOR Office and
(ii) which is neither a Saturday or Sunday nor a legal holiday on which banks
are required or authorized to be closed in New York.
"LIBOR Office" shall mean such office or offices through which the Agent
determines the LIBOR Rate. A LIBOR Office of the Agent may be, at the option of
the Agent, either a domestic or foreign office.
"Liquidation Commencement Date" means, in the event a Condition
Precedent is not satisfied, the date designated by notice from the Agent to
Seller.
"Liquidation Day" for any Undivided Interest means any of (a) each day
which occurs on or after the Liquidation Commencement Date and on or before the
Liquidation Termination Date, if any, (b) each day which occurs on or after the
Commitment Termination Date, or (c) each day which occurs on or after the day
Seller shall have given written notice to the Agent that it no longer wishes to
sell Undivided Interests to Purchaser.
"Liquidation Event" has the meaning set forth in Section 10.01 of the
Receivables Purchase Agreement.
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"Liquidation Period" means one or more successive Liquidation Days.
"Liquidation Termination Date" means the date, if any, that occurs after
a Liquidation Commencement Date and is designated as the "Liquidation
Termination Date" by the Agent (in its sole discretion) on at least one Business
Day's notice to Seller.
"Loan Documents" means with respect to each Timeshare Loan:
(i) an original Note, executed by the Obligor for such Timeshare
Loan, endorsed in blank (either directly on the Note or on an allonge
affixed thereto), by an authorized officer of Seller and showing a
complete chain of endorsements from the original payee of the Note to
the Purchaser.
"Pay to the order of ______________, without recourse",
or if an original Note is not available, a copy thereof
endorsed as described above and accompanied by an original executed
lost note affidavit;
(ii) (A) in the case of a Mortgage Loan an original Mortgage (or
a copy thereof) certified (which may be a blanket certification) by (x)
the public recording office, if available on the date of creation or (y)
by an authorized officer of the Seller or applicable Originator) with
evidence that such Mortgage has been recorded in the appropriate
recording office and (B) in the case of a Membership Loan, an original
Right-to-Use Agreement (or copy thereof) certified by an authorized
officer of the Seller with evidence that the appropriate financing
statements have been file in the appropriate filing offices;
(iii) (A) in the case of a Mortgage Loan an original assignment
of the Mortgage (which may be a part of a blanket assignment of more
than one Mortgage Loan), from the Seller to the Purchaser, in recordable
form but unrecorded, signed by an authorized officer of Seller and (B)
in the case of a Membership Loan, an original assignment of the UCC
financing Statement (which may be a part of a blanket assignment of more
than one Membership Loan) from the seller to the Purchaser, in
recordable form but unrecorded, signed by an authorized officer of the
Seller;
(iv) in the case of a Mortgage Loan, an original lender's title
insurance policy or master policy referencing such Mortgage Loan;
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(v) an original of each guarantee, assumption, modification or
substitution agreement, if any, which relates to the related Timeshare
Loan (or a copy thereof certified by an authorized officer of the Seller
to be a true and correct copy of such guarantee, assumption,
modification or substitution agreement); and
(vi) any amendments or modifications to any of the documents
referred to in clauses (i) through (v) above.
"Lockbox Accounts" means those certain bank accounts with the numbers,
and maintained at those certain locations, set forth on Schedule 6.01(n) to the
Receivables Purchase Agreement, each of which is pledged on a first-priority
basis to Purchaser pursuant to Section 9.01 of the Receivables Purchase
Agreement; and any bank account that is hereafter created in accordance with,
and to perform the function contemplated for "Lockbox Accounts" in, the
Receivables Purchase Agreement.
"Lockbox Bank" means any of the banks holding one or more Lockbox
Accounts for receiving Collections from Receivables.
"Loss Reserve" has the meaning set forth in Section 2.04 of the
Receivables Purchase Agreement.
"Loss Reserve Percentage" has the meaning set forth in Section 2.04 of
the Receivables Purchase Agreement.
"Market Area" means each of the groups of Vacation Ownership Resorts
listed on Schedule B to the Receivables Purchase Agreement and designated as
either the Williamsburg Market Area, the Orlando Market Area or the Greater
Phoenix Market Area.
"Material Adverse Effect" means, with respect to any event or
circumstance, a material adverse effect on:
(i) the assets, operations, business or financial condition of
Seller, Servicer or any Originator, as applicable; or
(ii) the ability of Servicer, Seller or any Originator, as
applicable, to perform its obligations under the Receivables Purchase
Agreement or any other Transaction Document or the performance of any
such obligations; or
(iii) the validity or enforceability of, or collectibility of
amounts payable under, the Receivables Purchase Agreement or any other
Transaction Document; or
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(iv) the status, existence, perfection or priority of
Purchaser's interest in the Receivables, including Purchaser's
unencumbered first priority interest therein.
"Membership Loan" means a loan evidenced by a Note and secured, pursuant
to a Right-to-Use Agreement, by a membership interest in a Vacation Club which
hold unencumbered fee title (or a long-term lease) to the related Vacation
Ownership Resorts.
"Month End Date" means the last day of each calendar month.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgage" means a mortgage, deed of trust, deed to secured debt or
other similar instrument securing a Mortgage Note.
"Mortgage Loan" means a loan that is secured by a Mortgage on a
timeshare fee estate in real property at any Vacation Ownership Resort.
"Mortgage Note" means, with respect to a Mortgage Loan, a promissory
note evidencing the indebtedness in respect of such Mortgage Loan.
"Net Pool Balance" has the meaning set forth in Section 2.03 of the
Receivables Purchase Agreement.
"Note" means (a) with respect to a Mortgage Loan, the Mortgage Note and
(b) with respect to a Membership Loan, the original note or other instrument of
indebtedness evidencing such Membership Loan.
"Obligations" means (i) all obligations of Seller, Servicer and each
Originator to Purchaser, the Agent, and their respective successors, permitted
transferees and assigns, arising in connection with the Transaction Documents,
and (ii) all obligations of Seller, Servicer and each Originator to any
Indemnified Party arising out of Section 13.01 of the Receivables Purchase
Agreement, in each case howsoever created, arising or evidenced, whether direct
or indirect, absolute or contingent, now or hereafter existing, or due or to
become due.
"Obligor" means with respect to any Receivable, the Person obligated to
make payments pursuant to the Timeshare Loan relating to such Receivable.
"Officer's Certificate" means a certificate from a Person signed by an
authorized officer of such Person.
"Originator" has the meaning set forth in each Sale Agreement.
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"Originator Note Assignment" means, the Note assignment, by Sunterra to
Seller, in the form of Exhibit A to the Purchase and Sale Agreement, as the same
may be amended, supplemented, amended and restated or otherwise modified from
time to time in accordance with the Purchase and Sale Agreement.
"Orlando Market Area" has the meaning set forth on Schedule B to the
Receivables Purchase Agreement.
"Periodic Report" means a report in substantially the form of Exhibit
3.05(a) to the Receivables Purchase Agreement.
"Permitted Encumbrances" means, with respect to a Mortgage Loan as to
any Vacation Interest subject to a Mortgage, (i) those liens and encumbrances
set forth in the related title insurance policy and (ii) those liens and
encumbrances arising subsequent to the date of such insurance policy which are
typically acceptable to institutional lenders making timeshare loans and which
do not materially interfere with the benefits of the security intended to be
provided by the applicable Mortgage.
"Permitted Investments" means:
(i) marketable obligations issued or directly and fully
guaranteed or insured as to full and timely payment by the United States
government or any agency or instrumentality thereof when such marketable
obligations are backed by the full faith and credit of the United States
government, but excluding any securities which are derivatives of such
obligations or any such obligations that are subject to a call or
prepayment prior to their maturity;
(ii) time deposits, bankers' acceptances and certificates of
deposit of any domestic commercial bank or any United States branch or
agency of a foreign commercial bank which (x) has capital, surplus and
undivided profits in excess of $100,000,000 and which has a commercial
paper or certificate of deposit rating meeting the requirements
specified in clause (iii) below (or equivalent long-term rating) or (y)
is set forth in a list (which may be updated from time to time) (A)
approved by the Agent and (B) with respect to which a written statement
has been obtained from each of Moody's and S&P to the effect that the
rating of the Commercial Paper Notes will not be downgraded or withdrawn
solely as a result of the acquisition of such investments;
(iii) commercial paper which is (x) rated at least as high as
the Commercial Paper Notes by Moody's and S&P, or (y) set forth in a
list (which may be updated from time to time) (A) approved by the Agent
and (B) with respect to which a written statement has been obtained from
each of
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Moody's and S&P to the effect that the rating of the Commercial Paper
Notes will not be downgraded or withdrawn solely as a result of the
acquisition of such investments;
(iv) secured repurchase obligations for underlying securities of
the types described in clauses (i) and (ii) above entered into with any
bank of the type described in clause (ii) above; and
(v) freely redeemable shares in money market funds which invest
solely in obligations, bankers' acceptances, time deposits, certificates
of deposit, repurchase agreements and commercial paper of the types
described in clause (i) through (iv) above, without regard to the
limitations as to the maturity of such obligations, bankers'
acceptances, time deposits, certificates of deposit, repurchase
agreements or commercial paper set forth, which money market funds are
rated "AAA" by Moody's and "AAAm" or "AAAm-g" by S&P.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture, government or any agency or political
subdivision thereof or any other entity.
"Pool Receivable" means a Receivable in the Receivables Pool. If, with
respect to any Undivided Interest, a Receivable is a Pool Receivable on or prior
to the Commitment Termination Date, such Receivable shall continue to be
considered a Pool Receivable with respect to such Undivided Interest at all
times thereafter.
"Principal Collections" means all Collections (other than Finance Charge
Collections).
"Principal Receivable" means, at any time, each Receivable then in the
Receivables Pool other than any Finance Charge Receivables therein.
"Principal Documents" the Receivables Purchase Agreement, the Fee
Letter, the Purchase and Sale Agreement, the Sale Agreements and the Company
Notes or any report (including any Periodic Report) delivered in connection with
the Receivables Purchase Agreement or the Purchase and Sale Agreement as any of
the foregoing may be amended, supplemented, amended and restated or otherwise
modified from time to time in accordance with the terms thereof.
"Program Fee" has the meaning set forth in the Fee Letter.
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"Purchase" has the meaning set forth in Section 1.01(a) of the
Receivables Purchase Agreement.
"Purchase and Sale Agreement" means that certain Purchase and Sale
Agreement, dated as of December 17, 1998, between the Seller and Sunterra, as
the same may be amended, supplemented, amended and restated or otherwise
modified from time to time in accordance with the terms thereof and with the
Receivables Purchase Agreement.
"Purchase and Sale Indemnified Party" has the meaning set forth in
Section 9.1 of the Purchase and Sale Agreement.
"Purchase and Sale Indemnified Amounts" has the meaning set forth in
Section 9.1 of the Purchase and Sale Agreement.
"Purchase and Sale Termination Date" has the meaning set forth in
Section 1.4 of the Purchase and Sale Agreement.
"Purchase and Sale Termination Event" has the meaning set forth in
Section 8.1 of the Purchase and Sale Agreement.
"Purchase Facility" has the meaning set forth in Section 1.1 of the
Purchase and Sale Agreement.
"Purchase Price" has the meaning set forth in Section 2.1 of the
Purchase and Sale Agreement.
"Purchaser" has the meaning set forth in the preamble to the Receivables
Purchase Agreement.
"Purchaser Rate" for any Yield Period for any related Undivided Interest
(or portion thereof) means:
(a) in the case of an Undivided Interest (or portion thereof)
other than one referred to in clause (b) or (c) of this definition, the
Commercial Paper Rate for such Undivided Interest (or such portion) for
such Yield Period;
(b) in the case of an Undivided Interest (or portion thereof)
funded pursuant to the Stand-by Purchase Agreement, the Bank Rate for
such Undivided Interest; and
(c) in the case of any Undivided Interest funded during the
continuance of a Liquidation Event, the Default Rate.
"Purchaser's Share" on any day with respect to each Undivided Interest
means an amount equal to the product of:
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(a) the amount of all such Collections received by Seller or
Servicer on such day, times
(b) (i) if such day is not a Liquidation Day, such Undivided
Interest (expressed as a decimal) on such day, or
(ii) if such day is a Liquidation Day, such Undivided
Interest (expressed as a decimal) on the day immediately
preceding the first Liquidation Day to have occurred during the
then current Liquidation Period, or, if higher such Undivided
Interest (expressed as a decimal) on such Liquidation Day;
provided that after such time as an Undivided Interest shall have been
reduced to zero, the Purchaser's Share of such Collections therefor
shall also equal zero.
"Receivable" means any right to payment from an Obligor, whether
constituting an account, chattel paper, instrument or a general intangible, in
respect of a Timeshare Loan, and includes the right to payment of any principal,
interest or finance charges and other obligations of such Obligor with respect
thereto.
"Receivables Pool" means at any time all outstanding Receivables that
have been transferred to Seller by Sunterra pursuant to the Purchase and Sale
Agreement on and after the Initial Closing Date to and including the Commitment
Termination Date.
"Regulation D" means Regulation D of the Federal Reserve Board, or any
other regulation of the Federal Reserve Board that prescribes reserve
requirements applicable to nonpersonal time deposits or "Eurocurrency
Liabilities" as presently defined in Regulation D, as in effect from time to
time.
"Regulatory Change" means, relative to any Affected Party
(a) any change in (or the adoption, implementation, change in,
phase-in or commencement of effectiveness of) any
(i) United States federal or state law or foreign law
applicable to such Affected Party;
(ii) regulation, interpretation, directive, requirement
or request (whether or not having the force of law) applicable
to such Affected Party of (A) any court, government authority
charged with the interpretation or administration of any law
referred to in clause (a)(i) or of (B) any fiscal, monetary or
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other authority having jurisdiction over such Affected Party; or
(iii) GAAP or regulatory accounting principles
applicable to such Affected Party and affecting the application
to such Affected Party of any law, regulation, interpretation,
directive, requirement or request referred to in clause (a)(i)
or (a)(ii) above; or
(b) any change in the application to such Affected Party of any
existing law, regulation, interpretation, directive, requirement,
request or accounting principles referred to in clause (a)(i), (a)(ii)
or (a)(iii) above.
"Reinvestment" has the meaning set forth in Section 1.01(b) of the
Receivables Purchase Agreement.
"Related Rights" has the meaning set forth in Section 1.1 of the
Purchase and Sale Agreement.
"Related Security" means, with respect to any Timeshare Loan and the
related Receivable:
(a) all of the interests in the Vacation Interest arising under
or in connection with the related Mortgage, Right-to-Use Agreement and
all other security interests or liens and property subject thereto from
time to time securing payment of such Timeshare Loan, together with all
mortgages, guarantees, financing statements, assignments, instruments,
leases and other agreements from time to time supporting or securing
such Timeshare Loan;
(b) the related Timeshare Note and other Timeshare Loan
Documents;
(c) all documents, books, records and other information
maintained with respect to such Receivable and the related Timeshare
Loan (including any payment report, environmental assessments and
appraisals);
(d) with respect to any Mortgage Loan any insurance policy,
including any primary mortgage insurance policy relating to such
Receivable and the related title insurance policy; and
(e) all proceeds, products, profits and rents of the foregoing.
"Report Date" means (i) the Initial Closing Date and (ii) the fifteenth
day of each calendar month following thereafter.
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"Reserve Account" means that certain bank account with the number, and
maintained at the location, set forth on Schedule 6.01(n) to the Receivables
Purchase Agreement, which is (i) in Seller's and Agent's name, and (ii) pledged
on a first priority basis to Purchaser pursuant to Section 9.01 of the
Receivables Purchase Agreement.
"Reserve Account Agreement" means a agreement, substantially in the form
of Exhibit 5.01 (h) (iii) to the Receivables Purchase Agreement, among Seller,
Sunterra, the Agent and the Reserve Account Bank, as the same may be amended,
supplemented, amended and restated, or otherwise modified from time to time in
accordance with the Receivables Purchase Agreement.
"Reserve Account Required Amount" means at any time, an amount (not to
exceed the Aggregate Investment) equal to the greater of (i) 5.0% of the Net
Pool Balance at such time, and (ii) $750,000; it being understood that the
Reserve Account shall be initially funded with proceeds from the initial
Purchase under the Receivables Purchase Agreement in an amount equal to $750,000
and thereafter, so long as the amount described in clause (i) above is greater
than the amount described in clause (ii) above, funds shall be deposited into
such Reserve Account pursuant to Section 3.02 of the Receivables Purchase
Agreement up to the amount described in clause (i) above.
"Reserve Account Bank" means the Bank holding the Reserve Account.
"Restricted Payment" has the meaning set forth in Section 7.03(f) of the
Receivables Purchase Agreement.
"Right-to-Use Agreement" means with respect to a Timeshare Loan not
secured by a Mortgage, the security agreement securing such Timeshare Loan.
"S&P" means Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies,
Inc.
"Sale Agreement" means the Sale Agreement dated as of December 17, 1998
between Sunterra and the Originators named therein, as amended, supplemented,
amended and restated or otherwise modified from time to time.
"Scheduled Commitment Termination Date" has the meaning set forth in
Section 1.05 of the Receivables Purchase Agreement.
"Seller" has the meaning set forth in the preamble to the Receivables
Purchase Agreement.
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"Seller Common Stock" has the meaning set forth in Section 6.01(o) of
the Receivables Purchase Agreement.
"Servicer" has the meaning set forth in Section 8.01(a) of the
Receivables Purchase Agreement.
"Servicer's Fee" has the meaning set forth in Section 8.01(d) of the
Receivables Purchase Agreement.
"Settlement" means the payments and other actions provided for on the
last day of each Settlement Period.
"Settlement Date" means the last day of each Settlement Period.
"Settlement Period" for any Undivided Interest means
(a) each period commencing on the first day of each Yield Period
for such Undivided Interest and ending on the last day of such Yield
Period; and
(b) on and after the Commitment Termination Date for such
Undivided Interest, such period (including, without limitation, a daily
period) as shall be selected from time to time by the Agent or, in the
absence of any such selection, each period of 30 days from the next
preceding Settlement Date;
provided, however, that
(i) with respect to any Yield Period of one day (as described in
clause (ii) of the proviso of the definition of "Yield Period"), the
related Settlement Period shall be the first day following such Yield
Period;
(ii) any Settlement Period which would otherwise end on a day
which is not a Business Day shall be extended to the next succeeding
Business Day; and
(iii) the last Settlement Period shall end on the date on which
all Undivided Interests have been reduced to zero.
"SG" has the meaning set forth in the preamble of the Receivables
Purchase Agreement.
"Solvent" means, with respect to any Person at any time, a condition
under which:
(i) the fair value and present fair saleable value of such
Person's total assets is, on the date of determination,
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greater than such Person's total liabilities (including contingent and
unliquidated liabilities) at such time;
(ii) the fair value and present fair saleable value of such
Person's assets is greater than the amount that will be required to pay
such Person's probable liability on its existing debts as they become
absolute and matured ("debts", for this purpose, includes all legal
liabilities, whether matured or unmatured, liquidated or unliquidated,
absolute, fixed, or contingent); and
(iii) such Person does not have unreasonably small capital with
which to engage in its current and in its anticipated business.
For purposes of this definition:
(A) the amount of a Person's contingent or unliquidated
liabilities at any time shall be that amount which, in light of all the
facts and circumstances then existing, represents the amount which can
reasonably be expected to become an actual or matured liability;
(B) the "fair value" of an asset shall be the amount which may
be realized within a reasonable time either through collection or sale
of such asset at its regular market value;
(C) the "regular market value" of an asset shall be the amount
which a capable and diligent business person could obtain for such asset
from an interested buyer who is willing to purchase such asset under
ordinary selling conditions; and
(D) the "present fair saleable value" of an asset means the
amount which can be obtained if such asset is sold with reasonable
promptness in an arm's length transaction in an existing and not
theoretical market.
"Stand-by Purchase Agreement" means and includes (a) the Stand-by
Purchase Agreement among ▇▇▇▇▇▇, as borrower, SG, as Servicing Agent for ▇▇▇▇▇▇
and as Liquidity Agent, and the Banks supporting ▇▇▇▇▇▇'▇ payment obligations
with respect to the Commercial Paper Notes issued to fund the purchase of
Undivided Interests hereunder, and (b) any other agreement hereafter entered
into by ▇▇▇▇▇▇ providing for the sale by ▇▇▇▇▇▇ of Undivided Interests (or
portions thereof), or the making of loans or other extensions of credit to
▇▇▇▇▇▇ secured by a security interest in specified Undivided Interests (or
portions thereof), to support all or part of ▇▇▇▇▇▇'▇ payment obligations under
the Commercial Paper Notes or to provide an alternate means of
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funding ▇▇▇▇▇▇'▇ investments in accounts receivable or other financial assets,
and under which the amount available from such sale or such extension of credit
is limited to an amount calculated by reference to the value or eligible unpaid
balance of such accounts receivable or other financial assets or any portion
thereof or the level of credit enhancement available with respect thereto, in
each case as amended, supplemented or otherwise modified from time to time.
"Sub-Servicer" means each of Concord Servicing Corporation, Finova
Portfolio Services, Inc. and ES Financial Corporation and any other Sub-Servicer
approved by the Agent and permitted under the terms of the Receivables Purchase
Agreement.
"Sub-Servicer Agreement" has the meaning set forth in Section 8.01(c) of
the Receivables Purchase Agreement.
"Subsidiary" means, with respect to any Person, any corporation of which
more than 50% of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.
"Successor Notice" has the meaning set forth in Section 8.01(a) of the
Receivables Purchase Agreement.
"Sunterra" has the meaning set forth in the preamble to the Receivables
Purchase Agreement.
"Tangible Net Worth" means, with respect to any Person, the net worth of
such Person after subtracting therefrom the aggregate amount of such Person's
intangible assets (other than Receivables), including, without limitation, good
will, franchises, licenses, patents, trademarks, trade names, copyrights,
service marks and brand names.
"Timeshare Loan" means either a Membership Loan or a Mortgage Loan.
"Total Revenues" means, with respect to any calendar month, the
aggregate gross amounts payable by the Obligors with respect to the Pool
Receivables generated during such calendar month.
"Transaction Documents" means the Receivables Purchase Agreement, the
Fee Letter, the Certificate, the Originator Note Assignment, the Purchase and
Sale Agreement, the Sale Agreements,
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the Company Note, the Collection Account Agreement, the Reserve Account
Agreement, the Lockbox Agreements, the Custodial Agreement, and all other
instruments, certificates, agreements, reports or documents delivered under or
in connection with the Receivables Purchase Agreement or the Purchase and Sale
Agreement as any of the foregoing may be amended, supplemented, amended and
restated, or otherwise modified from time to time in accordance with the terms
of the Purchase and Sale Agreement and the Receivables Purchase Agreement.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the applicable jurisdiction or jurisdictions.
"Undivided Interest" has the meaning set forth in Section 2.01 of the
Receivables Purchase Agreement.
"Unmatured Liquidation Event" means any event which, with the giving of
notice or lapse of time, or both, would become a Liquidation Event.
"Unpaid Balance" means (i) with respect to any Receivable or the related
Timeshare Loan at any time the unpaid principal amount thereof and (ii) with
respect to the Receivables Pool means at any time the aggregate unpaid principal
amount of all Receivables.
"Upgraded Loan" means the Timeshare Loan that results when an existing
Timeshare Loan with respect to an existing Obligor is prepaid in connection with
the creating of a new Timeshare Loan to such Obligor to finance the purchase by
such Obligor of (i) an additional Vacation Interest or (ii) a Vacation Interest
of greater value than the original Vacation Interest of such Obligor.
"Vacation Club" means a corporation which holds unencumbered title to
(or a long-term lease on) a Vacation Ownership Resort and issues membership
certificates evidencing ownership interests in the corporation, which permits
the owner of such membership certificates use an enjoyment of such Vacation
Ownership Resort.
"Vacation Interest" means (i) a timeshare fee estate in real property at
any Vacation Ownership Resort and (ii) a Membership Interest in a Vacation Club
which holds fee title or a long-term lease to the related Vacation Ownership
Resort.
"Vacation Ownership Resort" shall mean each of the vacation resorts
listed on Schedule A to the Receivables Purchase Agreement, as amended from time
to time in the sole discretion of the Agent.
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"Williamsburg Market Area" has the meaning set forth on Schedule B to
the Receivables Purchase Agreement.
"Year 2000 Problem" has the meaning set forth in Section 6.02(m) of the
Receivables Purchase Agreement.
"Yield Period" means with respect to any Undivided Interest
(or portion thereof):
(a) the period from (and including) the date of the initial
Purchase of such Undivided Interest (or such portion) to (but excluding)
the number of days (not to exceed 90 days) thereafter as the Agent shall
approve, pursuant to Section 1.03 or of the Receivables Purchase
Agreement; and
(b) thereafter, each period from (and including) the last day of
the immediately preceding Yield Period for such Undivided Interest (or
such portion) to (but excluding) the day falling such number of days
(not to exceed 90 days) thereafter as the Agent shall approve pursuant
to Section 1.03 of the Receivables Purchase Agreement.
provided, however, that
(i) any such Yield Period (other than a Yield Period consisting
of one day) which would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day (unless the
related Undivided Interest shall be accruing Earned Return at a rate
determined by reference to the LIBOR Rate (Reserve Adjusted), in which
case if such succeeding Business Day is in a different calendar month,
such Yield Period shall instead be shortened to the next preceding
Business Day);
(ii) in the case of Yield Periods of one day for any Undivided
Interest, (A) the initial Yield Period shall be the day of the related
Purchase; and (B) any subsequently occurring Yield Period which is one
day shall, if the immediately preceding Yield Period is more than one
day, be the last day of such immediately preceding Yield Period, and if
the immediately preceding Yield Period is one day, shall be the next day
following such immediately preceding Yield Period; and
(iii) any Yield Period for any Undivided Interest which
commences before the Commitment Termination Date for such Undivided
Interest and would otherwise end on a date occurring after such
Commitment Termination Date, such Yield Period shall end on such
Commitment Termination Date and the duration of each such Yield Period
which commences on or
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after the Commitment Termination Date for such Undivided Interest shall
be of such duration as shall be selected by the Agent.
The "related" Yield Period for any Undivided Interest at any time means the
Yield Period pursuant to which Earned Return is then accruing for such Undivided
Interest.
B. Other Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. All terms used in Article 9 of the
UCC in the State of Illinois, and not specifically defined herein, are used
herein as defined in such Article 9.
C. Computation of Time Periods. Unless otherwise stated in the Purchase
and Sale Agreement or the Receivables Purchase Agreement, as the case may be, in
the computation of a period of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each means "to but excluding".
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SCHEDULE A
LIST OF VACATION OWNERSHIP RESORTS
102
SCHEDULE B
LIST OF MARKET AREAS