VISTANA 1998-A TIMESHARE MORTGAGE CORP.
as Issuer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Trustee, Securities Intermediary, and Back-up Servicer
___________________________________
INDENTURE
Dated as of July 31, 1998
___________________________________
$31,973,000.00 5.891% TIMESHARE MORTGAGE-BACKED NOTES, SERIES 1998-A,
CLASS A
AND $34,180,583.90 6.282% TIMESHARE MORTGAGE-BACKED NOTES, SERIES 1998-A,
CLASS B
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
THE NOTES
Section 201. AUTHORIZATION OF NOTES.............................................................. 2
----------------------
Section 202. FORM OF NOTES....................................................................... 2
-------------
Section 203. EXECUTION; RECOURSE OBLIGATION...................................................... 7
------------------------------
Section 204. CERTIFICATE OF AUTHENTICATION....................................................... 7
-----------------------------
Section 205. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE OF NOTES........................ 7
------------------------------------------------------------
Section 206. ▇▇▇▇▇▇▇▇▇, DESTROYED, LOST AND STOLEN NOTES......................................... 9
-------------------------------------------
Section 207. RATABLY SECURED..................................................................... 10
---------------
Section 208. DELIVERY, ▇▇▇▇▇▇▇▇▇ AND CANCELLATION OF NOTES....................................... 10
---------------------------------------------
ARTICLE III
PAYMENT OF NOTES, STATEMENTS TO NOTEHOLDERS
Section 301. FLOW OF FUNDS....................................................................... 11
-------------
Section 302. RESERVE ACCOUNT..................................................................... 13
---------------
Section 303. THE LETTER OF CREDIT................................................................ 14
--------------------
Section 304. COLLECTION ACCOUNT.................................................................. 17
------------------
Section 305. INVESTMENT OF MONIES HELD IN THE COLLECTION ACCOUNT................................. 18
---------------------------------------------------
Section 306. REPORTS TO NOTEHOLDERS.............................................................. 19
----------------------
Section 307. RECORDS............................................................................. 19
-------
Section 308. LOCKBOX BANK; LOCKBOX ACCOUNT....................................................... 20
-----------------------------
Section 309. SECURITIES ACCOUNT.................................................................. 20
------------------
Section 310. SECURITIES INTERMEDIARY............................................................. 20
-----------------------
Section 311. TRUSTEE'S COVENANTS AS SECURED PARTY IN THE SECURITY ACCOUNTS....................... 22
-------------------------------------------------------------
Section 312. TRUSTEE'S COVENANTS AS BAILEE UNDER THE CUSTODIAL AGREEMENT......................... 23
-----------------------------------------------------------
Section 313. FAILURE OF SERVICER TO DELIVER SERVICER REPORT...................................... 23
----------------------------------------------
ARTICLE IV
COLLATERAL
Section 401. COLLATERAL.......................................................................... 24
----------
-i-
Section 402. GRANT OF SECURITY INTEREST.......................................................... 24
--------------------------
Section 403. MORTGAGE DOCUMENTS.................................................................. 25
------------------
Section 404. PRO RATA INTEREST................................................................... 25
-----------------
Section 405. RELEASE OF SECURITY INTEREST........................................................ 25
---------------------
ARTICLE V
SPECIAL PROVISIONS REGARDING
COLLATERAL
Section 501. ADMINISTRATION OF COLLATERAL........................................................ 26
----------------------------
Section 502. PAYMENTS OF COLLATERAL.............................................................. 28
----------------------
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 601. REPRESENTATIONS AND WARRANTIES OF THE ISSUER........................................ 29
--------------------------------------------
Section 602. AFFIRMATIVE COVENANTS OF THE ISSUER................................................. 35
-----------------------------------
Section 603. ISSUER'S NEGATIVE COVENANTS......................................................... 41
---------------------------
Section 604. REPRESENTATIONS AND WARRANTIES OF PROSPECTIVE NOTEHOLDERS........................... 44
---------------------------------------------------------
Section 605. CONSOLIDATION AND MERGER............................................................ 44
------------------------
Section 606. OTHER AGREEMENTS.................................................................... 44
----------------
ARTICLE VII
DISCHARGE OF INDENTURE
Section 701. FULL DISCHARGE...................................................................... 45
--------------
Section 702. OPTIONAL PREPAYMENT OF NOTES........................................................ 45
----------------------------
ARTICLE VIII
DEFAULT PROVISIONS AND REMEDIES
Section 801. EVENT OF DEFAULT.................................................................... 47
----------------
Section 802. ACCELERATION OF STATED MATURITY; RESCISSION AND ANNULMENT........................... 48
---------------------------------------------------------
Section 803. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE..................... 49
---------------------------------------------------------------
Section 804. REMEDIES............................................................................ 50
--------
Section 805. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.............................. 51
------------------------------------------------------
Section 806. POWER OF ATTORNEY; ALLOCATION OF MONEY COLLECTED.................................... 51
------------------------------------------------
Section 807. LIMITATION ON SUITS................................................................. 51
-------------------
Section 808. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND INTEREST.................... 52
----------------------------------------------------------------
-ii-
Section 809. RESTORATION OF RIGHTS AND REMEDIES.................................................. 52
----------------------------------
Section 810. RIGHTS AND REMEDIES CUMULATIVE...................................................... 53
------------------------------
Section 811. DELAY OR OMISSION NOT WAIVER........................................................ 53
----------------------------
Section 812. CONTROL BY HOLDERS.................................................................. 53
------------------
Section 813. WAIVER OF PAST DEFAULTS............................................................. 53
-----------------------
Section 814. UNDERTAKING FOR COSTS............................................................... 54
---------------------
Section 815. WAIVER OF STAY OR EXTENSION LAWS.................................................... 54
--------------------------------
Section 816. OPTIONAL PRESERVATION OF COLLATERAL................................................. 54
-----------------------------------
Section 817. SALE OF COLLATERAL.................................................................. 55
------------------
Section 818. ACTION ON NOTES..................................................................... 55
---------------
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 901. DUTIES OF TRUSTEE................................................................... 56
-----------------
Section 902. CERTAIN MATTERS AFFECTING THE TRUSTEE............................................... 57
-------------------------------------
Section 903. TRUSTEE NOT LIABLE.................................................................. 58
------------------
Section 904. TRUSTEE MAY OWN NOTES............................................................... 58
---------------------
Section 905. LIEN FOR TRUSTEE'S FEES AND EXPENSES................................................ 59
------------------------------------
Section 906. ELIGIBILITY REQUIREMENTS FOR TRUSTEE................................................ 59
------------------------------------
Section 907. RESIGNATION AND REMOVAL OF TRUSTEE.................................................. 59
----------------------------------
Section 908. SUCCESSOR TRUSTEE................................................................... 60
-----------------
Section 909. MERGER OR CONSOLIDATION OF TRUSTEE.................................................. 61
----------------------------------
Section 910. SEPARATE TRUSTEES, CO-TRUSTEES AND CUSTODIANS....................................... 61
---------------------------------------------
Section 911. REPRESENTATIONS AND WARRANTIES...................................................... 62
------------------------------
Section 912. TRUSTEE OFFICES..................................................................... 63
---------------
Section 913. NOTICE OF EVENT OF DEFAULT.......................................................... 63
--------------------------
Section 914. BACK-UP SERVICER AND SECURITIES INTERMEDIARY........................................ 63
--------------------------------------------
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 1001. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.................................. 64
--------------------------------------------------
Section 1002. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS..................................... 64
-----------------------------------------------
Section 1003. EXECUTION OF SUPPLEMENTAL INDENTURES................................................ 65
------------------------------------
Section 1004. EFFECT OF SUPPLEMENTAL INDENTURES................................................... 65
---------------------------------
Section 1005. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES....................................... 65
---------------------------------------------
Section 1006. NOTICE OF SUPPLEMENTAL INDENTURES................................................... 65
---------------------------------
Section 1007. BANK TO APPROVE AMENDMENTS.......................................................... 65
--------------------------
ARTICLE XI
HOLDERS LISTS
-iii-
Section 1101. ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS........................... 66
--------------------------------------------------------
Section 1102. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS............................. 66
------------------------------------------------------
ARTICLE XII
REPURCHASE AND SUBSTITUTION
Section 1201. OPTIONAL PURCHASE OR SUBSTITUTION BY ISSUER OR SERVICER............................ 67
-------------------------------------------------------
Section 1202. RELEASE OF PREDECESSOR MORTGAGE LOAN............................................... 67
------------------------------------
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 1301. COMPLIANCE CERTIFICATES AND OPINIONS............................................... 69
------------------------------------
Section 1302. FORM OF DOCUMENTS DELIVERED TO TRUSTEE............................................. 69
--------------------------------------
Section 1303. ACTS OF HOLDERS.................................................................... 70
---------------
Section 1304. Reserved........................................................................... 70
Section 1305. LIMITATION OF RIGHTS............................................................... 70
--------------------
Section 1306. SEVERABILITY....................................................................... 71
------------
Section 1307. NOTICES............................................................................ 71
-------
Section 1308. CAPTIONS........................................................................... 72
--------
Section 1309. GOVERNING LAW...................................................................... 72
-------------
Section 1310. NO PETITION........................................................................ 72
-----------
Section 1311. GENERAL INTERPRETIVE PRINCIPLES.................................................... 72
-------------------------------
Section 1312. THIRD PARTY BENEFICIARIES.......................................................... 72
-------------------------
Section 1313. BANK CONSENT AND DIRECTION RIGHTS.................................................. 72
---------------------------------
Section 1314. EFFECTIVE DATE OF TRANSACTION...................................................... 73
-----------------------------
Section 1315. CONFIDENTIALITY.................................................................... 73
---------------
EXHIBIT A - Instrument Schedule
EXHIBIT B - Transfer Certificate (Rule 144A)
EXHIBIT C - Transfer Certificate (other than Rule 144A) by an Institutional
Accredited Investor
EXHIBIT D - Form of Non-Recourse Release
EXHIBIT E - Form of Assignment of Mortgage
APPENDIX A - Definitions
-iv-
Indenture, dated as of July 31, 1998 (as amended or supplemented from
time to time as permitted hereby, the "Indenture"), between Vistana 1998-A
---------
Timeshare Mortgage Corp., a Delaware corporation (the "Issuer"), and Norwest
------
Bank Minnesota, National Association, a national banking association, as trustee
(the "Trustee"), securities intermediary (the "Securities Intermediary"), and
------- -----------------------
back-up Servicer (the "Back-up Servicer").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Issuer desires to issue its 5.891% Timeshare Mortgage-
Backed Notes, Series 1998-A, Class A and 6.282% Timeshare Mortgage-Backed Notes,
Series 1998-A, Class B (the "Notes") pursuant to this Indenture; and
-----
WHEREAS, the Notes will be limited-recourse obligations of the Issuer,
secured by the Collateral; and
WHEREAS, all acts and things have been done and performed which are
necessary to make the Notes, when executed by the Issuer, authenticated by the
Trustee and issued, the legal, valid and binding obligations of the Issuer,
enforceable in accordance with their terms, and to make this Indenture a valid
and binding agreement for the security of the Notes authenticated and delivered
under this Indenture;
NOW, THEREFORE, in consideration of the premises and of the covenants
and undertakings herein expressed, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Indenture shall have the meanings
assigned to such terms in Appendix A hereto.
ARTICLE II
THE NOTES
Section 201. Authorization of Notes. There shall be issued under,
-----------------------
and secured in accordance with, this Indenture the Notes which shall be
designated as the Issuer's 5.891% Timeshare Mortgage-Backed Notes, Series 1998-
A, Class A and 6.282% Timeshare Mortgage-Backed Notes, Series 1998-A, Class B,
in the initial aggregate principal amounts of $31,973,000.00 and $34,180,583.90,
respectively.
The Notes shall be initially issued in minimum denominations of
$1,000,000 and any amount in excess thereof.
Section 202. Form of Notes. The Notes issued under this Indenture
-------------
shall be substantially in the following form with such appropriate variations,
omissions, additions and insertions as are permitted or required by this
Indenture:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT
BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED, UNLESS SUCH TRANSFER IS MADE
TO A PERSON REASONABLY BELIEVED TO BE A QUALIFIED INSTITUTIONAL BUYER ("QIB")
UNDER RULE 144A, AS AMENDED ("RULE 144A") OR TO AN ACCREDITED INVESTOR UNDER
SECTION 501(a)(1), (2), (3) AND (7) OF THE SECURITIES ACT ("ACCREDITED
INSTITUTIONAL INVESTOR") IN A TRANSACTION WHICH DOES NOT REQUIRE REGISTRATION
UNDER THE SECURITIES ACT AND PURSUANT TO AN EFFECTIVE REGISTRATION OR
QUALIFICATION UNDER ANY STATE SECURITIES OR "BLUE SKY" LAWS, OR IN A TRANSACTION
WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION. IN ADDITION, SUCH
TRANSACTION MUST COMPLY WITH THE PROVISIONS SET FORTH IN SECTION 205 OF THE
INDENTURE. BECAUSE OF THE PROVISIONS FOR THE PAYMENT OF PRINCIPAL CONTAINED
HEREIN, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF. ANYONE PURCHASING THIS NOTE MAY ASCERTAIN THE
OUTSTANDING PRINCIPAL AMOUNT HEREOF BY INQUIRY OF THE TRUSTEE.
VISTANA 1998-A TIMESHARE MORTGAGE CORP.
____% TIMESHARE MORTGAGE-BACKED NOTE, SERIES 1998-A, CLASS __
$___________________ No. R-_______________
______________, 19___
KNOW ALL PERSONS BY THESE PRESENTS that Vistana 1998-A Timeshare
Mortgage Corp. (the "Issuer"), for value received, hereby promises (i) to pay to
------
_________________, or registered assigns, at the principal corporate trust
office of the Trustee named below, the principal sum of
____________________________________ Dollars ($_____________), which sum shall
be payable on the dates and in the amounts set forth in the
-2-
Indenture (the "Indenture") dated as of July 31, 1998 between the Issuer and
---------
Norwest Bank Minnesota, National Association (the "Trustee") and (ii) to pay
-------
interest on the outstanding principal amount of this Note at the rate of
________ and ________ percent (_____%) per annum on the dates set forth in the
Indenture. Capitalized terms not otherwise defined herein shall have the meaning
ascribed thereto in the Indenture.
Payment of the principal of and interest on this Note shall be made in
lawful money of the United States of America which at the time of payment is
legal tender for payment of public and private debts. Principal and interest
are payable on each Payment Date by wire transfer of immediately available funds
to the account designated on or prior to the immediately preceding Record Date
by the Holder of record as of such immediately preceding Record Date. The
Issuer shall, at all times and subject to the terms and conditions of the
Indenture, pay (on each Payment Date and on the final maturity date, whether by
acceleration or otherwise) interest on any unpaid amounts (provided, however,
that no interest shall be payable on Overdue Interest) owing pursuant to the
terms of the Indenture to the extent permitted by applicable law.
This Note is one of an authorized series of notes identified in the
title hereto and issued in the aggregate original principal amount of
$__________ (the "Notes"). The Notes are issued pursuant to the Indenture, to
-----
which Indenture reference is made for a statement of the respective rights,
limitations, duties and immunities of the Issuer, the Trustee and the Holders of
the Notes. The Notes and interest due thereon shall be a limited-recourse
obligation of the Issuer, and shall be secured by the Collateral and subject to
limitations set forth in the Indenture, for the equal and ratable benefit
(subject to the subordination provisions of the Indenture) of the Holders, from
time to time, of the Notes (the "Noteholders") and the Bank. No Person other
-----------
than the Issuer shall be liable for any obligation of the Issuer under the
Indenture or this Note or any losses incurred by the Holder of this Note other
than the Bank pursuant to, and only with respect to, the Letter of Credit.
This Note is transferable as provided in the Indenture, subject to
certain limitations therein contained, only upon the books for registration and
transfer kept by the Note Registrar, and only upon surrender of this Note for
transfer to the Trustee duly endorsed by, or accompanied by a written instrument
of transfer in form substantially similar to Exhibit B or Exhibit C of the
Indenture, as appropriate, reasonably satisfactory to the Trustee duly executed
by, the registered Holder hereof or his or her attorney duly authorized in
writing. No such transfer shall be so made unless such transfer is made either
to a person reasonably believed to be a QIB pursuant to Rule 144A, or to an
Accredited Institutional Investor in a transaction which does not require
registration under the Securities Act, and pursuant to an effective registration
or qualification under any State securities or "Blue Sky" laws, or in a
transaction which does not require such registration or qualification and the
Holder thereof delivers to the Trustee the certification required under the
Indenture with respect to the Securities Act and certain other matters, as set
forth in the applicable Exhibit to the Indenture. The Issuer, the Trustee and
each Holder by acceptance of this Note (and any Person that is a beneficial
owner of any interest in this Note, by virtue of such Person's acquisition of a
beneficial interest therein) agrees to treat this Note for purposes of federal,
state and local income or franchise taxes (and any other tax imposed on or
measured by income) as indebtedness. The Holder of this Note agrees that it
will cause any Person acquiring an interest in this Note through it to
acknowledge such Note's characterization as indebtedness and to agree to comply
with this Indenture as to treatment of the Notes as indebtedness for such tax
purposes.
-3-
The Notes are issuable as fully registered notes in the initial
minimum denomination of $1,000,000. No service charge will be made for any
registration of transfer or exchange of Notes, but payment of a sum sufficient
to cover any tax or other governmental charge may be required. The Trustee or
Issuer may require payment by the Holder of a sum sufficient to cover any tax
expense or other governmental charge payable in connection therewith.
The Issuer, the Trustee, the Servicer and any agent of the Issuer may
treat the person in whose name this Note is registered as the absolute owner
hereof for all purposes, and neither the Issuer, the Trustee, the Servicer nor
any other such agent shall be affected by notice to the contrary. Any reference
herein to the "Noteholder" or the "Holder" shall be deemed to include and apply
---------- ------
to every subsequent Holder of this Note including, but not limited to, any
Trustee.
If an Indenture Event of Default shall occur and be continuing, the
principal of and accrued interest on this Note may be declared to be due and
payable in the manner and with the effect provided in the Indenture. The Notes
are subject to prepayment upon the prepayment (whether voluntary or upon
acceleration) of any Mortgage Loan and, at the Issuer's option, on any Payment
Date succeeding a Collection Period at the end of which the aggregate Note
Balance for both classes of Notes is less than twenty percent (20%) of the
aggregate Note Balance for both classes of Notes on the Closing Date and under
other circumstances as provided in the Indenture. Reference is made to the
Indenture for all other provisions concerning mandatory and voluntary principal
and interest repayments, Collateral, prepayments, acceleration, subordination
and other material terms affecting this Note, including priority of payment as
between the Class A Notes and the Class B Notes.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof at any time with the consent of the Issuer, the Trustee,
certain of the Noteholders and the Bank. The Indenture also permits, with
certain exceptions as therein provided, the issuance of supplemental indentures
with the consent of certain of the Noteholders and the Bank, in certain
specifically described instances. Any consent given by a Holder of this Note
shall be conclusive and binding upon such Holder and on all future Holders of
this Note and of any Note issued in lieu hereof whether or not notation of such
consent is made upon this Note. Supplements and amendments to the Indenture may
be made only to the extent and in circumstances permitted by the Indenture.
The Holder of this Note shall have no right to enforce the provisions
of the Indenture against the Issuer or to institute action to enforce the
covenants, or to take any action with respect to a default under the Indenture,
or to institute, appear in or defend any suit or other proceedings with respect
thereto, except as provided under certain circumstances described in the
Indenture; provided, however, that nothing contained in the Indenture shall
affect or impair any right of enforcement conferred on the Holder hereof to
enforce any payment of the principal of and interest on this Note when due or to
require the Trustee to enforce and abide by the provisions of the Indenture;
provided further, that the Holder hereof hereby covenants and agrees that it
will not institute against the Issuer any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any federal or state bankruptcy or similar law, at any time other than at such
time as permitted by Section 1310 of the Indenture. By accepting this Note, the
Holder hereof irrevocably appoints the Trustee under the Indenture as its
attorney-in-fact for the Holder, vested with full power on behalf of the Holder,
to effect and enforce the rights of such Holder and the provisions of the
-4-
Indenture for the benefit of the Holder. The preceding sentence in no way shall
limit the right of the Holder hereof to demand payment hereunder or bring an
action to enforce payment hereof.
All terms and provisions of the Indenture are herein incorporated by
reference as if set forth herein in their entirety. AS PROVIDED IN THE
INDENTURE, THIS NOTE AND THE INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED, that all acts,
conditions and things required to exist, happen and be performed precedent to
the execution and delivery of the Indenture and the issuance of this Note and
the issue of which it is a part, do exist, have happened and have been timely
performed in regular form and manner as required by law.
Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature of one of its authorized officers, this Note
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
-5-
IN WITNESS WHEREOF, Vistana 1998-A Timeshare Mortgage Corp. has caused
this Note to be duly executed by __________________ on this _____ day of
______________, 19__.
VISTANA 1998-A TIMESHARE MORTGAGE
CORP.
By:_____________________________________
Name:
Its:
This Note is one of the Notes described in the within-mentioned
Indenture.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
By:____________________________________
Its Authorized Officer
-6-
Section 203. Execution; Recourse Obligation.
------------------------------
In case any officer of the Issuer or the Trustee whose signature shall
appear on the Notes shall cease to be an officer of the Issuer or the Trustee
before the authentication and delivery of such Notes, such signature or
facsimile signature shall nevertheless be valid and sufficient for all purposes.
At the written direction of the Issuer, the Trustee shall authenticate
and deliver the Notes. It shall not be necessary that the same authorized
signatory of the Trustee execute the certificate of authentication on each of
the Notes.
All Notes and the interest thereon shall be limited-recourse
obligations of the Issuer, secured by the Collateral. The Notes shall never
constitute obligations of the Trustee, the Bank, any Originator or of any
partner or any Affiliate of the Trustee, the Bank or any Originator (other than
the Issuer) or any officers, directors, employees or agents of any thereof, and
no recourse may be had under or upon any obligation, covenant or agreement of
this Indenture, or of any Notes, or for any claim based thereon or otherwise in
respect thereof, against any incorporator or against any past, present, or
future owner, partner of an owner or any officer, employee or director thereof
or of any successor entity, or any other Person, either directly or through the
Issuer, whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly agreed
that this Indenture and the obligations issued hereunder are solely obligations
of the Issuer, and that no such personal liability whatever shall attach to, or
is or shall be incurred by, any other Person under or by reason of this
Indenture or any Notes or implied therefrom, or for any claim based thereon or
in respect thereof, all such liability and any and all such claims being hereby
expressly waived and released as a condition of, and as a consideration for, the
execution of this Indenture and the issue of such Notes. No Person other than
the Issuer shall be liable for any obligation of the Issuer under this Indenture
or any Note or any losses incurred by the Holder of any Note other than the Bank
pursuant to, and only with respect to, the Letter of Credit.
Section 204. Certificate of Authentication. No Note shall be
-----------------------------
secured hereby or entitled to the benefit hereof or shall be or become valid or
obligatory for any purpose unless there shall be endorsed thereon a certificate
of authentication, substantially in the form as set forth in the form of Note in
Section 202 hereof, executed by the Trustee; and such certificate on any Note
issued by the Issuer shall be conclusive evidence and the only competent
evidence that it has been duly authenticated and delivered hereunder.
Section 205. Registration; Registration of Transfer and Exchange of
------------------------------------------------------
Notes.
-----
(a) Books and Records. The note registrar (the "Note Registrar")
----------------- --------------
shall keep at its principal office books (the "Note Register") for the
-------------
registration and transfer of the Notes. The Issuer hereby appoints the Trustee
as its initial Note Registrar and transfer agent to keep such books and make
such registrations and transfers as hereinafter set forth in this Section 205.
The names and addresses of the Holders of all Notes and all transfers of, and
the names and addresses of the transferees of, all Notes will be registered in
such register. Upon prior written request by the Rating Agency, the Trustee
will make reasonably available to the Rating Agency any information contained in
the Note Register. The Person in whose name any Note is registered shall be
deemed and treated
-7-
as the owner and Holder thereof for all purposes of this Indenture, and the
Trustee, the Bank and the Issuer shall not be affected by any notice or
knowledge to the contrary. If a Person other than the Trustee is appointed by
the Issuer to maintain the Note Register, the Issuer will give the Trustee
prompt written notice of such appointment and of the location, and any change in
the location, of the successor note registrar, and the Trustee shall have the
right to inspect the Note Register at all reasonable times and to obtain copies
thereof, and the Trustee shall have the right to rely upon a certificate
executed on behalf of the Note Registrar by an officer thereof as to the names
and addresses of the Holders of the Notes and the principal amounts and number
of such Notes.
(b) Note Register Lists. The Trustee shall preserve in as current a
-------------------
form as is reasonably practicable the most recent list available to it of the
names and addresses of Noteholders. If the Trustee is not the Note Registrar,
the Issuer shall furnish to the Trustee on each Determination Date and at such
other times as the Trustee may request in writing a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
Noteholders on the related Record Date or any other Record Dates.
(c) Noteholder Communication. If any Noteholder (herein referred to
------------------------
as an "applicant") applies in writing to the Trustee, and such application
states that the applicant desires to communicate with other Noteholders with
respect to their rights under this Indenture or under the Notes, then the
Trustee shall, within three Business Days after the receipt of such application,
afford such applicant(s) access to the information preserved at the time by the
Trustee in accordance with Section 205(b).
(d) Noteholder Disclosure of Addresses. Every Noteholder, by
----------------------------------
receiving and holding a Note, agrees with the Issuer and the Trustee that
neither the Issuer nor the Trustee nor any agent of either of them shall be held
accountable by reason of the disclosure of any of the names and addresses of the
Noteholders in accordance with Section 205(c), regardless of the source from
which such information was derived, and that the Trustee shall not be held
accountable by reason of providing any material pursuant to a request made under
Section 205(c).
(e) Payments to Registered Holders Only. Payments of Monthly
-----------------------------------
Principal, Overdue Principal, Monthly Interest and Overdue Interest on each Note
shall be payable on each Payment Date only to the registered Holder thereof on
the Record Date immediately preceding such Payment Date.
(f) Transfer Amounts. Any Note is transferable only upon the
----------------
surrender to the Trustee of such Note together with the certificates required
pursuant to Section 205(i) hereof. Upon satisfaction of the requirements set
forth in the preceding sentence, each Holder of a Note shall have the right,
upon surrender of such Note to the Trustee, to require a new Note or Notes to be
issued to it, in a minimum denomination of the lesser of (x) $1,000,000 or (y)
the entire principal balance of the Note being surrendered, in substitution of
the Note being surrendered.
(g) Service Charges. No service charge will be made for any
---------------
registration of transfer or exchange of Notes. The Trustee or the Issuer may
require payment by the holder of a sum sufficient to cover any tax expense or
other governmental charge payable in connection therewith.
-8-
(h) ERISA. Each Noteholder, by its acceptance of its Note,
-----
understands and acknowledges that the acquisition of Notes by an employee
benefit plan subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the provisions of Section 4975 of the Code (a "Plan"),
----- ----
could result in a prohibited transaction under ERISA or Section 4975 of the
Code, unless such acquisition is subject to a statutory or administrative
exemption.
(i) Permitted Transferees. No transfer of any Note shall be made
---------------------
unless such transfer is made to a Person reasonably believed to be either a QIB
that purchases for its own account or an Accredited Institutional Investor in a
transaction which does not require registration under the Securities Act and
pursuant to an effective registration or qualification under any State
securities or "Blue Sky" laws, or in a transaction which does not require such
registration or qualification. If such a transfer is to be made in reliance
upon an exemption from the Securities Act other than Rule 144A under the
Securities Act, the Trustee shall require the Prospective Owner to execute a
certificate substantially in the form of Exhibit C hereto. If such transfer is
to be made in reliance upon Rule 144A under the Securities Act, the Trustee
shall require the Prospective Owner to execute a certificate, substantially in
the form of Exhibit B hereto. The Issuer shall promptly furnish to any Holder,
or any Prospective Owners designated by a Holder, the information required to be
delivered to such Holder and Prospective Owner in connection with a resale of
the Notes to permit compliance with Rule 144A(d) in connection with such resale.
No Note may be subdivided (including any assignment or transfer of a
participation or beneficial interest therein) for resale or other transfer into
a unit smaller than a unit the initial offering price of which would have been
$1,000,000.
(j) Confidentiality. Each Holder, by acceptance of its Note, agrees
---------------
and covenants that it shall hold in confidence all Confidential Information.
Section 206. Mutilated, Destroyed, Lost and Stolen Notes. (a) If
-------------------------------------------
(i) any mutilated Note is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any Note, and
(ii) there is delivered to the Trustee such security or indemnity as it and the
Issuer may require to hold the Issuer, the Bank and the Trustee harmless (it
being understood that the unsecured indemnity of a Rated Institutional
Noteholder shall be satisfactory for such purpose), then, in the absence of
notice to the Issuer or the Trustee that such Note has been acquired by a bona
fide purchaser or a protected purchaser (within the meaning of Section 8-303 of
the UCC), the Issuer shall execute and the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a replacement Note of the same maturity and of like terms as the
mutilated, destroyed, lost or stolen Note; provided, however, that if any such
destroyed, lost or stolen Note, but not a mutilated Note, shall have become, or
within seven days shall be, due and payable, or shall have been called for
redemption, the Issuer may pay such destroyed, lost or stolen Note when so due
or payable instead of issuing a replacement Note.
(b) If, after the delivery of such replacement Note, or payment of a
destroyed, lost or stolen Note pursuant to the proviso to the preceding
sentence, a bona fide or protected purchaser of the original Note in lieu of
which such replacement Note was issued presents for payment such original Note,
the Issuer, the Trustee and the Bank shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer, the Trustee or the Bank in connection
therewith.
-9-
(c) The Trustee and Issuer may, for each new Note authenticated and
delivered under the provisions of this Section, require the advance payment by
the Noteholder of any tax or governmental charge which may be incurred by the
Trustee or Issuer. Any Note issued under the provisions of this Section in lieu
of any Note alleged to be destroyed, mutilated, lost or stolen, shall be equally
and proportionately entitled to the benefits of this Indenture with all other
Notes issued hereunder. The provisions of this Section 206 are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 207. Ratably Secured. Subject to the subordination
---------------
provisions herein (including the provisions of Section 301 as to priority of
payments), all Notes issued hereunder are and are to be, to the extent provided
in this Indenture, equally and ratably secured by this Indenture without
preference, priority or distinction on account of the actual time or times of
the authentication or delivery of the Notes so that, all Notes at any time
Outstanding (including Notes owned by an Originator or any of their Affiliates,
other than the Issuer) shall have the same right, lien and preference under this
Indenture and shall all be equally and ratably secured hereby with like effect
as if they had all been executed, authenticated and delivered simultaneously on
the date hereof.
Section 208. Delivery, Retention and Cancellation of Notes. Each
---------------------------------------------
Noteholder shall certify in writing to Issuer the Monthly Interest, Overdue
Interest (if any) and Ultimate Principal that such Holder anticipates receiving
as the final payment on its Note, provided that the Trustee shall have requested
such certification at least thirty (30) days prior to the final payment date.
Each Noteholder shall return such ▇▇▇▇▇▇'s Note to the Trustee within thirty
(30) days after receipt of written request for such return from the Trustee but
in no event earlier than the thirtieth (30/th/) day following the date on which
final payment due on such Note has been made. The Trustee is required, and
hereby agrees, to give such requests for certification and return of the Notes,
upon at least (5) days prior written request from Issuer to do so. The request
for certification and the request for return of the Note may be contained in the
same request from the Trustee. Any such Note as to which the Trustee has made
the final payment thereon shall be deemed cancelled and shall no longer be
Outstanding or outstanding for any purpose of this Indenture, whether or not
such Note is ever returned to the Trustee. Matured Notes delivered upon final
payment to the Trustee and any Notes transferred or exchanged for other Notes
shall be cancelled and destroyed by the Trustee and the Trustee shall promptly
deliver to the Issuer an affidavit confirming the destruction of any Notes. If
the Trustee, for its own account, shall acquire any of the Notes, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Notes. Notes which have been cancelled by the
Trustee shall be deemed paid and discharged for all purposes under this
Indenture.
-10-
ARTICLE III
PAYMENT OF NOTES, STATEMENTS TO NOTEHOLDERS
Section 301. Flow of Funds. The Trustee shall direct the bank or
-------------
trust company (the "Lockbox Bank") at which the lockbox account (the "Lockbox
------------ -------
Account") is established and maintained to remit on every other Business Day to
-------
the Collection Account all immediately available funds in the Lockbox Account
less any amounts designated in writing by Servicer as (i) Miscellaneous Amounts,
(ii) Misdirected Payments, or (iii) Late Fees. The Issuer will cause the
Servicer to remit to the Lockbox Account all amounts received by Servicer on or
in respect of the Mortgage Loans which are neither such Miscellaneous Amounts,
Misdirected Payments or Late Fees on or before the second Business Day after
receipt. The Trustee shall deposit into the Collection Account in accordance
with the Servicer Report amounts withdrawn from, first, the Reserve Account to
pay the shortfall, if any, that otherwise would occur on each Payment Date, in
amounts payable as Monthly Principal, Overdue Principal, Monthly Interest and
Overdue Interest after application of all the Available Amounts; and second,
from the Letter of Credit (to the extent of the LOC Amount available) such
amount as is required to pay any shortfall in Monthly Interest, Overdue
Interest, Monthly Principal, Overdue Principal, or, on the Stated Maturity Date
only, Ultimate Principal after application of all the Available Amounts and
amounts drawn from the Reserve Account pursuant to this sentence; provided that
amounts drawn from the Letter of Credit shall only be applied toward payment of
Monthly Interest, Overdue Interest, Monthly Principal or Overdue Principal and
(at the Stated Maturity Date) Ultimate Principal on the Notes after all amounts
on deposit in the Reserve Account have been depleted. In accordance with the
written notice delivered by the Bank to the Servicer of any amounts due and
owing to the Bank under the Reimbursement Agreement (which information the
Issuer shall cause the Servicer to include in the related Servicer Report), the
Trustee shall pay to the Bank on each Payment Date such amounts from the
Collection Account in accordance with the priority of payment established by the
provisions of this Section 301 as are specified in or attached to such Servicer
Report. The Trustee shall deposit all other amounts received by it during each
Collection Period in respect of the Mortgage Loans in such accounts as are
provided in this Indenture.
On each Payment Date, the Trustee shall disburse all Available Amounts
and, to the extent provided herein, amounts drawn under the Letter of Credit or
from the Reserve Account, in the amounts required, in the following order of
priority and in the amounts stated on the Servicer Report:
(i) to the Trustee, the Trustee Fee (including all amounts from all
investment income earned from the Determination Date related to such
Payment Date to the opening of Business on such Payment Date on the amounts
to be paid pursuant to clauses (ix) - (xii) of this Section 301 deposited
in the Collection Account) due to the Trustee on such Payment Date and any
expenses incurred by the Trustee relating to the Notes and in accordance
with this Indenture or Section 2.6 of the Lockbox Agreement;
(ii) to the Back-Up Servicer, if any, the Back-Up Servicing Fee due
to the Back-Up Servicer on or prior to such Payment Date;
-11-
(iii) to the Custodian, if any, the fee due to the Custodian as set
forth on Exhibit C to the Custodial Agreement due to the Custodian on or
prior to such Payment Date;
(iv) to the Servicer, any Servicing Fee that was, prior to such
Payment Date, due and payable but unpaid;
(v) to the Servicer, the Servicing Fee due to the Servicer on such
Payment Date;
(vi) to the Servicer, any unreimbursed Nonrecoverable Advances and,
to the extent paid by the applicable Mortgagor and deposited in the
Collection Account, any unreimbursed Servicer Advances;
(vii) to the Bank, any amount due and payable on the Letter of Credit
Fee prior to such Payment Date that, as of such Payment Date, was unpaid;
(viii) to the Bank, any amount due on such Payment Date with respect
to the Letter of Credit Fee;
(ix) to the Class A Noteholders, pro rata, in the following order of
priority: (A) the Class A Overdue Interest due on the Notes as of such
Payment Date, if any; and (B) the Class A Monthly Interest due on the Notes
on such Payment Date;
(x) to the Class B Noteholders, pro rata, in the following order of
priority: (A) the Class B Overdue Interest due on the Notes as of such
Payment Date, if any; and (B) the Class B Monthly Interest due on the Notes
on such Payment Date;
(xi) until the outstanding Class A Note Balance has been reduced to
zero, to the Class A Noteholders, pro rata, in the following order of
priority: (A) the Class A Overdue Principal due on the Notes on such
Payment Date, if any; and (B) the Class A Monthly Principal due on the
Notes as of such Payment Date;
(xii) until the outstanding Class B Note Balance has been reduced to
zero, to the Class B Noteholders, pro rata, in the following order of
priority: (A) the Class B Overdue Principal due on the Notes on such
Payment Date, if any; and (B) the Class B Monthly Principal due on the
Notes as of such Payment Date;
(xiii) to the Bank, all amounts necessary to reimburse the Bank for
the outstanding amount of any unreimbursed Letter of Credit Drawings;
(xiv) to the Reserve Account, the Reserve Account Deposit Amount;
(xv) to the Bank, (A) all interest (at the Bank Rate) due on any
unreimbursed Letter of Credit Drawings and (B) all other amounts remaining
due with respect to the Reimbursement Agreement (other than amounts paid
pursuant to clauses (vii), (viii) and (xiii) above); and
-12-
(xvi) if no Restricting Event shall have occurred and be continuing,
any remaining Available Amounts on deposit in the Collection Account shall
be paid to the Issuer or the Issuer's designee (if any), provided that if a
Restricting Event has occurred and is continuing, then such amounts that
would otherwise be paid to the Issuer pursuant to this Section 301(xvi)
will instead be deposited into the Reserve Account.
Section 302. Reserve Account. (a) On or prior to the Closing Date,
---------------
the Trustee shall establish the Reserve Account to be held (together with all
funds, amounts, investment income and other property on deposit therein from
time to time) by and maintained with the Trustee for the benefit of the
Noteholders and the Bank in accordance with the terms hereof. The Reserve
Account shall be held as one or more segregated trust accounts in the Trustee's
corporate trust department and shall be titled as follows: "Norwest Bank
Minnesota, National Association, as Trustee for the benefit of the registered
Holders of Vistana 1998-A Timeshare Mortgage Corp. 5.891% Timeshare Mortgage-
Backed Notes, Series 1998-A, Class A and 6.282% Timeshare Mortgage-Backed Notes,
Series 1998-A, Class B -- Reserve Account". On the Closing Date, no amounts
shall be deposited in the Reserve Account, but instead the Reserve Account shall
receive the Reserve Account Deposit Amount on each Payment Date pursuant to
Section 301 hereof from Available Amounts (and the Trustee hereby agrees to so
deposit, in accordance with each Servicer Report received by it, such amounts
actually received by the Trustee in the Collection Account). The Trustee shall
make or permit withdrawals from the Reserve Account only in accordance with the
Servicer Report with respect to any shortfall in the amounts otherwise available
in the Collection Account to make the payments in Monthly Principal, Overdue
Principal, Monthly Interest and Overdue Interest due on the Notes, in accordance
with Sections 301(ix) through (xii) hereof (each such shortfall, a "Reserve
-------
Account Payment"). All property in the Reserve Account shall constitute
---------------
property of the Issuer which shall be and is hereby pledged to the Trustee
pursuant to Section 402 hereof to secure payments due to the Noteholders and the
Bank.
(b) The Issuer shall cause the Servicer to determine the Reserve
Account Payment, if any, and notify the Trustee of such amount in each Servicer
Report. The Trustee shall promptly, but in no event later than the close of
business on the Determination Date, withdraw from the Reserve Account and
deposit in the Collection Account the Reserve Account Payment. If the Servicer
Report is received after noon on the Determination Date (or, in the event that,
contrary to the terms of the Documents, the Servicer Report arrives after noon
or on a day after the Determination Date), the Trustee may deposit the Reserve
Account Payment on the Business Day immediately succeeding the date upon which
such Servicer Report is received.
(c) On each Payment Date, the Trustee shall, on the basis of the
related Servicer Report, deposit in the Reserve Account, pursuant to Sections
301 and 302(a) hereof, an amount equal to the Reserve Account Deposit Amount and
any other amounts required pursuant to Section 301(xvi). The obligation of the
Trustee to deposit amounts into the Reserve Account in accordance with the terms
of this Indenture shall be limited to the deposit of amounts in the Collection
Account available for such purpose pursuant to Sections 301 and 302(a) hereof.
The Issuer agrees to treat all money, security and other property (including
income and gains or losses thereon) (the "Reserve Account Property") as its
------------------------
assets (and earnings) for federal, state and local tax purposes and not to sell,
transfer or otherwise dispose of any Reserve Account Property or its interest
therein other than as expressly provided hereby.
-13-
(d) On each Payment Date, if the balance in the Reserve Account (after
the payment of amounts required by clause (ix) through (xii) of Section 301) is
greater than the Reserve Account Required Amount, and no Restricting Event shall
have occurred and be continuing, the Trustee shall, in accordance with the
Servicer Report, release and pay the amount (such amount, a "Reserve Account
---------------
Withdrawal") of such excess to the Issuer or its designee. In the event that a
----------
Restricting Event has occurred and is continuing, such excess is required to
remain in the Reserve Account. Also on or prior to each Payment Date, in
accordance with the Servicer Report, the Trustee shall withdraw from the Reserve
Account and deposit in the Collection Account for further distribution in
accordance with Section 301 or Article 8 hereof, as applicable, all amounts
earned (net of investment losses) from Eligible Investments in the Reserve
Account during the related Collection Period. Amounts properly paid to the
Issuer pursuant to this paragraph or pursuant to Section 301 hereof, either
directly from the Collection Account without deposit in the Reserve Account or
from the Reserve Account, shall be deemed released from the Collateral, and the
Issuer shall not in any event thereafter be required to refund any such paid
amounts.
(e) With respect to the Reserve Account Property, the Issuer and the
Trustee agree that any Reserve Account Property that is held in segregated trust
accounts shall be held solely in the name of the Trustee, on behalf of the
Noteholders, the Bank and the Issuer to the extent of their interests therein.
Each such segregated trust account shall be subject to the exclusive custody and
control of the Trustee, and the Trustee shall have sole signature authority with
respect thereto.
(f) Upon termination of this Indenture, any amounts on deposit in the
Reserve Account, after payment of all amounts due to the Noteholders and the
Bank under this Indenture and the other Documents, upon Servicer's written
request to the Trustee, shall be paid to the Issuer or its designee.
Section 303. The Letter of Credit. (a) On each Determination Date,
--------------------
the Issuer shall cause the Servicer to determine with respect to the immediately
following Payment Date the amounts that will be on deposit in the Collection
Account on such Payment Date with respect to the Collection Period related
thereto, after giving effect to any Reserve Account Deposit Amount to be paid
into the Reserve Account and/or any Reserve Account Payment to be made to the
Collection Account on such Determination Date, and the excess of (A) the
Required Payments on the immediately following Payment Date over (B) the
Available Amounts (after giving consideration to any draws made on the Reserve
Account pursuant to Section 302(b) hereof) and shall inform the Trustee in
writing no later than 10:00 a.m., New York City time, on such Determination Date
of the results of such determination.
(b) If on any Payment Date or the Stated Maturity Date, as the case
may be, there would exist a shortfall (as determined pursuant to Section 303(a)
hereof) in the payment of any Monthly Interest, Overdue Interest, Monthly
Principal or Overdue Principal to be made on such Payment Date or, on the Stated
Maturity Date only, Ultimate Principal as set forth in the related Servicer
Report, then the Trustee shall complete a Drawing Certificate in the form of
Exhibit A or Exhibit B to the Letter of Credit, as the case may be, and in
either case submit such Drawing Certificate to the Bank no later than 12:00 noon
New York City time on the second Business Day preceding such Payment Date or
Stated Maturity Date as a claim for a Letter of Credit Drawing in
-14-
an amount equal to the lesser of (A) such shortfall in Monthly Interest, Overdue
Interest, Monthly Principal, Overdue Principal or Ultimate Principal, as the
case may be, and (B) the LOC Amount available on such date (such lesser amount,
the "Letter of Credit Drawing"). For purposes of Letter of Credit Drawings,
------------------------
"Class A Monthly Principal", "Class A Overdue Principal", "Class B Monthly
Principal" and "Class B Overdue Principal" with respect to any Payment Date
other than the Stated Maturity Date, shall be calculated without regard to
clause (C) of the respective definitions of "Class A Monthly Principal" or
"Class B Monthly Principal" set forth in the definitions hereto.
(c) Upon receipt of the amount of a Letter of Credit Drawing from the
Bank, the Trustee shall immediately deposit such amount in the Collection
Account and, on the immediately succeeding Payment Date, shall distribute such
Letter of Credit Drawing to the Noteholders exclusively in payment of the
shortfall in Monthly Interest, Overdue Interest, Monthly Principal or Overdue
Principal or, on the Stated Maturity Date only, in Ultimate Principal as the
case may be, in accordance with Section 301 hereof. The parties hereto
recognize that the making of Letter of Credit Drawings does not relieve any of
the parties hereto of any obligation hereunder or under any other Document.
(d) The Trustee shall (x) receive Letter of Credit Drawings as
attorney-in-fact for each of the Noteholders and (y) disburse such Letter of
Credit Drawings to the Noteholders in the following manner: (a) amounts drawn
under the Letter of Credit for Monthly Interest or Overdue Interest shall be
applied as set forth in clauses (ix) and (x) of Section 301 hereof and (b)
amounts drawn for Monthly Principal or Overdue Principal and, on the Stated
Maturity Date only, Ultimate Principal, payable shall be applied as set forth in
clauses (xi) and (xii) of Section 301 hereof. The Bank shall be entitled to
receive the related Letter of Credit reimbursement amount pursuant to Section
301(xiii) (from funds other than Reserve Account Payments or any Letter of
Credit Drawings) hereof with respect to the Letter of Credit Drawings made by
the Bank and to receive interest thereon pursuant to Section 301 (xv) hereof.
The Trustee hereby agrees for the benefit of each Noteholder and for the benefit
of the Bank that it recognizes, to the extent the Bank pays Letter of Credit
Drawings, either directly or indirectly (as by paying through the Trustee or
from the Letter of Credit Account), (i) the Trustee's first priority perfected
security interest in the Collateral shall support the Bank's right to receive
the related Letter of Credit reimbursement amount pursuant to Section 301(xiii)
without giving effect to any Letter of Credit Drawings and (ii) the Bank shall
be subrogated (but, as to the Collateral, solely in the order of priority set
forth in Section 301) to the rights of the Holders of the Notes to receive
distributions generated by the Mortgage Loans of principal and interest on the
Instruments in accordance with the terms hereof and the flow of funds provisions
of this Indenture.
(e) The Notes will be supported by the Letter of Credit pursuant to
the terms set forth therein, notwithstanding any provisions to the contrary
contained in this Indenture.
(f) If a Responsible Officer of the Trustee has actual knowledge, at
any time, that there will not be a sufficient amount on deposit in the
Collection Account to make all required payments of Monthly Interest, Overdue
Interest, Monthly Principal, Overdue Principal or, if applicable and `on the
Stated Maturity Date only, Ultimate Principal on the Notes to the Noteholders on
the applicable Payment Date, the Trustee shall immediately notify the Bank or
its designee by
-15-
telephone, promptly confirmed in writing by overnight mail or facsimile
transmission, of the amount of such deficiency.
(g) If at any time prior to the Termination Date (as defined in the
Letter of Credit), the short-term unsecured debt rating of the Bank is lowered
below D-1+ by the Rating Agency (if rated by the Rating Agency), A-1+ by S&P or
P-1 by ▇▇▇▇▇'▇, the Bank shall notify the Issuer and the Trustee of the same and
within sixty days of delivering such notice, the Bank at its election shall
either (i) deposit the LOC Amount available in a segregated trust account
maintained by and in the name of the Trustee (the "Letter of Credit Account")
------------------------
and all references herein to the "Letter of Credit" and drawings thereon or
payments with respect thereto shall thereafter be deemed to be references to
such Letter of Credit Account or (ii) replace the Letter of Credit with a
substitute Letter of Credit, on the same terms and conditions as the Letter of
Credit, including an identical Letter of Credit Fee and identical interest rate
on reimbursement of letter of credit drawings, issued by an institution with a
short-term unsecured debt rating of at least D-1+ by the Rating Agency (if rated
by the Rating Agency), A-l+ from S&P, and P-1 from ▇▇▇▇▇'▇, and, upon the
exercise by the Bank of option (ii), the obligations of the Bank under the
Letter of Credit shall terminate and all references herein to the "Letter of
Credit" and the "Bank" shall thereafter be deemed to be references to such
replacement letter of credit and the issuer thereof. In the event the Bank
chooses to exercise option (i) above, any Letter of Credit Drawings that would
otherwise be made on the Bank will instead be made by the Trustee in accordance
with this Indenture from amounts on deposit in the Letter of Credit Account.
There shall be no drawing (as provided in this Section) from the Letter of
Credit Account unless a Letter of Credit Drawing would be required under Section
303(b) on the date of such drawing if the Letter of Credit were still in
effect. Any withdrawal of amounts from the Letter of Credit Account to pay
Monthly Interest, Overdue Interest, Monthly Principal, Overdue Principal or, on
the Stated Maturity Date only, Ultimate Principal on the Notes shall be deemed
to be a Letter of Credit Drawing, reimbursable in accordance with the terms of
this Indenture and the Reimbursement Agreement; provided that, notwithstanding
anything to the contrary set forth herein, any amounts paid as reimbursement of
any such Letter of Credit Drawings shall be deposited into and retained in the
Letter of Credit Account, but, if no Indenture Event of Default has occurred and
is continuing and no Collateral Liquidation has occurred, only to the extent
that the amount on deposit therein is less than the LOC Amount which would be
required if the Letter of Credit were still in effect. If an Indenture Event of
Default has occurred and is continuing on such date or a Collateral Liquidation
has occurred, any amounts in excess of that otherwise required to be deposited
in the Letter of Credit Account shall be deposited into and retained in the
Letter of Credit Account until drawn upon or, if no Collateral Liquidation shall
have occurred and no Indenture Event of Default shall be continuing, such excess
is otherwise permitted to be paid to the Bank. Upon the written direction of
the Bank, the Trustee shall withdraw from the Letter of Credit Account and pay
to the Bank that funded such Letter of Credit Account on each Payment Date so
long as no Indenture Event of Default has occurred and is continuing on such
date and no Collateral Liquidation has occurred, the amount, if any, equal to
12% of the decline in the Aggregate Instrument Principal Balance on such
Payment Date from the immediately preceding Payment Date (or the Cut-off Date,
in the case of the first Payment Date) (whether or not there shall have been any
drawings thereon but without duplication of any reduction on account of
drawings); provided, however, that the amount in the Letter of Credit Account
shall not be reduced (except as a result of drawings thereunder) to an amount
less than 12% of the then Aggregate Instrument Principal Balance; and, provided,
further that if the amount on deposit in the Reserve Account at the close of
business on any Payment Date
-16-
would be less than $711,328.82 then the amount in the Letter of Credit Account
shall not be reduced below $711,328.82 (except as the result of drawings
thereon). Anything above to the contrary notwithstanding, the amount on deposit
in the Letter of Credit Account during the Post Maturity Period, shall equal the
sum of all principal and interest payments made on the Mortgage Loans during the
three Collection Periods preceding the final payment on the Notes. At such time
as the aggregate Note Balance for all Notes has been reduced to zero and any
Post Maturity Period has elapsed, all amounts and other Property remaining in
the Letter of Credit Account during the Post Maturity Period shall be paid
forthwith to the Bank that funded such Letter of Credit Account upon its written
request. If at any time after the exercise of option (i) above, the short-term
unsecured debt rating of the Bank is raised to at least D-1+ by the Rating
Agency (if the Bank is rated by the Rating Agency), A-l+ by S&P and P-1 by
▇▇▇▇▇'▇, the Bank shall issue a new Letter of Credit to the Trustee, on the same
terms and conditions of the original Letter of Credit and the Trustee shall pay
over to the Bank all Property, including interest and any other earnings on
investments, then on deposit in the Letter of Credit Account.
(h) In the event that the Bank exercises option (i) set forth in the
first sentence of subsection (g) above, the Bank shall direct the Trustee in
writing to invest the amounts in such segregated trust account in Eligible
Investments that mature no later than the Business Day preceding the next
Determination Date following the investment of such amounts. All income from
investment of monies held in such account (net of any losses thereon) shall be
paid to the Bank. The Trustee shall not be liable or responsible for the
selection of or losses on any investments made by it pursuant to and in
compliance with such instructions of the Bank pursuant to this Section 303. In
the absence of such written direction, the Trustee shall invest such monies in
investments meeting the criteria set forth in clause (vii) of the definition of
"Eligible Investments" Any funds in the Letter of Credit Account not so invested
must be fully insured by the Federal Deposit Insurance Corporation to the amount
of such insurance.
Section 304. Collection Account. (a) On or prior to the Closing
------------------
Date, the Trustee, on behalf of the Issuer, shall establish the Collection
Account to be held (together with all property therein from time to time) by and
maintained with the Trustee for (i) the benefit of the Noteholders and the Bank
in accordance with the terms hereof and (ii) the Issuer to the extent of its
interest therein as provided in this Indenture. The Collection Account shall be
held in the Trustee's corporate trust department and shall be titled as follows:
"Norwest Bank Minnesota, National Association, as Trustee for the benefit of the
registered Holders of Vistana 1998-A Timeshare Mortgage Corp. 5.891% Timeshare
Mortgage-Backed Notes, Series 1998-A, Class A and 6.282% Timeshare Mortgage-
Backed Notes, Series 1998-A, Class B -- Collection Account". The Trustee shall
make or permit withdrawals from the Collection Account only as provided in this
Indenture.
(b) The following amounts shall be deposited in the Collection Account
at the times indicated below:
(i) The Trustee shall cause the Lockbox Bank to remit from the
Lockbox Account to the Collection Account in immediately available funds
the aggregate amount of all payments actually made by Mortgagors with
respect to the Mortgage Loans (such payments, "Actual Payments") pursuant
to Section 308 hereof;
-17-
(ii) The Issuer shall, or shall cause an Originator or the Servicer
to, remit to the Trustee in immediately available funds the aggregate
Mortgage Purchase Price, due and payable by the Issuer, Originator or
Servicer not later than 12:00 noon New York City time on the Determination
Date immediately following the date on which the Issuer, Servicer or
Originator becomes obligated or elects to pay or to so cause to pay such
Mortgage Purchase Price and the Trustee shall immediately deposit in the
Collection Account any Mortgage Purchase Price received by it from the
Issuer, any Originator or the Servicer;
(iii) The Trustee shall deposit in immediately available funds from
the Reserve Account any amount required to be deposited in the Collection
Account pursuant to Section 302(b) hereof, such deposit to be made not
later than the close of business on the Determination Date or such other
date as required pursuant to Section 302(b) hereof;
(iv) The Trustee shall deposit in immediately available funds an
amount equal to any Letter of Credit Drawing received from the Bank or from
the Letter of Credit Account, such deposit to be made immediately upon
receipt of such amounts by the Trustee;
(v) Reserved.
(vi) The Trustee shall deposit in immediately available funds into
the Collection Account all income earned from Eligible Investments (net of
investment losses), during the related Collection Period from deposits in
the Collection Account and the Reserve Account, pursuant to Section 305
hereof; and
(vii) The Issuer shall cause the Servicer to deposit an amount equal
to the Mortgage Purchase Price of all Mortgage Loans purchased by the
Servicer pursuant to Section 6.01 of the Servicing Agreement.
(c) The Trustee, at the written direction of the Servicer or a
subservicer, shall withdraw (no more than once per calendar week) from the
Lockbox Account or the Collection Account, as the case may be, and return to the
Servicer, such subservicer or the related Originator, as directed by the
Servicer or such subservicer, any amounts which were mistakenly deposited by the
Servicer, a subservicer or such Originator, as the case may be, in the Lockbox
Account or the Collection Account, including, without limitation, amounts
representing Misdirected Payments, Miscellaneous Amounts or Late Fees. Neither
the Trustee nor the Back-up Servicer shall be responsible for verifying any such
amounts.
Section 305. Investment of Monies Held in the Collection Account and
-------------------------------------------------------
the Reserve Account. The Trustee shall invest any cash deposited in the
-------------------
Collection Account or the Reserve Account in such Eligible Investments as the
Servicer shall direct. Each Eligible Investment (including reinvestment of the
proceeds of Eligible Investments) shall be held to its maturity and shall mature
not later than the next succeeding Determination Date, and, in any event, not
later than one Business Day prior to the Payment Date or the Stated Maturity
Date on which the amounts invested are to be disbursed. If the Trustee has not
received written instructions from the Servicer as to the investment of funds
then on deposit in any of the aforementioned accounts, the Trustee shall invest
such funds (except to the extent set forth in Section 702(c) hereof) in Eligible
Investments
-18-
described in clause (vii) of the definition thereof until such Determination
Date provided that upon release of such Eligible Investments in accordance with
Section 701 or 702 hereof, the Trustee shall transfer such Eligible Investments
into the name of the Issuer or its designee. The Trustee shall not be liable or
responsible for losses on any investments made by it pursuant to and in
compliance with such instructions of the Servicer. Any income, or net gain, from
such investments shall be deposited into the Collection Account on the close of
business on the Determination Date for distribution as Available Amounts on the
next Payment Date, and any net loss of principal (determined on a month-by-month
basis) resulting from such investment of the amounts in the above accounts shall
be charged from funds in the Collection Account. Any funds in the Collection
Account or the Reserve Account not so invested must be fully insured by the
Federal Deposit Insurance Corporation to the amount of such insurance.
Section 306. Reports to Noteholders. (a) Within one Business Day
----------------------
after each Determination Date, the Trustee will furnish a copy of the Servicer
Report due on such date to the Issuer, Rating Agency, the Bank and each
Noteholder (or if such report has not been received, a written statement to such
effect) together with a statement setting forth the amount on deposit in the
Reserve Account and the Collection Account, in each case after giving effect to
all withdrawals, applications or transfers required on the related Determination
Date.
(b) In addition, within a reasonable period of time after the end of
each calendar year, the Trustee upon request will furnish to each Noteholder of
record and to the Rating Agency a report as to the aggregate of amounts reported
pursuant to paragraph (a) above for such calendar year or, in the event such
person was a Noteholder of record during a portion of such calendar year, for
the applicable portion of such year.
(c) By January 31 of each calendar year following any year during
which the Notes are outstanding, commencing January 31, 1999, the Trustee upon
request will request from the Servicer and, to the extent such information is
received from the Servicer, furnish to each Noteholder of record and the Rating
Agency at any time during such preceding calendar year, a statement setting
forth the aggregate amount of Monthly Principal, Overdue Principal, Monthly
Interest and Overdue Interest paid to such Holder during the preceding calendar
year.
(d) Promptly, but in no event later than five Business Days after
receipt thereof, the Trustee shall furnish to each Noteholder and the Bank a
copy of all reports (other than Servicer Reports), financial statements and
notices received by the Trustee pursuant to the terms of this Indenture, the
Servicing Agreement or any Transfer Agreement, provided that the Trustee shall
not be required to separately send to any such Person any such report,
statements or notice which is specifically required to be delivered to such
Person by any other Person in accordance with the provisions of any Documents.
Section 307. Records. The Trustee shall cause to be kept and
-------
maintained adequate records pertaining to the Collection Account, the Letter of
Credit Account and the Reserve Account and all disbursements therefrom. The
Trustee shall file at least monthly an accounting thereof in the form of a trust
statement with the Issuer, the Bank, the Noteholders and the Servicer.
-19-
Section 308. Lockbox Bank; Lockbox Account. (a) The Issuer has
-----------------------------
established in the name of the Trustee for the benefit of the Noteholders and
the Bank, a Lockbox Account with the Lockbox Bank for the receipt directly from
the Mortgagors of all Actual Payments on, or in respect of, each Mortgage Loan.
No Person other than the Trustee shall be permitted to have access to such
Lockbox Account. On every other Business Day, all Actual Payments relating to a
Mortgage Loan received in the Lockbox Account shall be deposited into the
Collection Account. The Issuer acknowledges that all Actual Payments relating
to a Mortgage Loan received by the Lockbox Bank and so deposited in the Lockbox
Account constitute part of the Collateral. The Trustee shall, within one
Business Day of receipt, deliver to the Bank all notices received by it in
accordance with the Lockbox Agreement. The Trustee shall also deliver to the
Bank within one Business Day after receipt thereof all copies of all media and
other data provided to the Trustee pursuant to Section 2.4(c) of the Lockbox
Agreement. The Issuer shall promptly deliver written notice to the Rating
Agency, and deliver a true copy to the Bank and each Noteholder, of any
amendment to or modification of the Lockbox Agreement.
(b) The Trustee shall within one Business Day after receipt deposit
all amounts received from the Lockbox Account into the Collection Account.
(c) With respect to the Trustee's rights and obligations under the
Lockbox Agreement, the Trustee shall (i) make and deliver the Remittance
Certificate (as defined in the Lockbox Agreement) only in accordance with the
provisions hereof, and (ii) neither terminate the Lockbox Agreement, remove the
Lockbox Bank, appoint a successor Lockbox Bank nor enter into a new lockbox
agreement with another entity without the prior written consent of the Bank, the
Class A Majority, and the Class B Majority (and the Trustee shall deliver
contemporaneous written notice of such action to the Rating Agency).
(d) In the event that the Lockbox Bank resigns from its duties under
the Lockbox Agreement and no successor Lockbox Bank has been appointed and has
accepted appointment within sixty (60) days after the giving of such notice of
resignation, the Issuer shall petition a court of competent jurisdiction for the
appointment of a successor Lockbox Bank.
Section 309. Securities Account.
------------------
(a) Notwithstanding any other provision of this Indenture, with
respect to each of the Securities Accounts, Norwest Bank Minnesota, National
Association, as the Securities Intermediary, hereby agrees that it will comply
with Entitlement Orders delivered by the Trustee without the need for any
consent by the Issuer.
(b) Each of the Issuer, the Securities Intermediary, and the Trustee
intends that the provisions of this Section will give (to the extent that the
other provisions of this Indenture do not otherwise give) the Trustee "control"
over the Securities Accounts within the meaning of Article 8 of the UCC.
Section 310. Securities Intermediary. With respect to the Account
-----------------------
Property credited to any Securities Account, the Securities Intermediary agrees
that:
-20-
A. with respect to any Account Property that is held in Securities
Accounts, each such Securities Account shall be subject to the exclusive
custody and control of the Securities Intermediary, and the Securities
Intermediary shall have sole signature authority with respect thereto;
B. each Securities Account shall be invested only in cash or
Eligible Investments which the Securities Intermediary (or other eligible
institution maintaining such Securities Account) agrees to treat as
Financial Assets; and
C. any such Account Property that is a Financial Asset shall be
credited to an account in the name of the Securities Intermediary pursuant
to this Indenture in accordance with the Securities Intermediary's
customary procedures such that the Securities Intermediary establishes a
Security Entitlement with respect thereto over which the Trustee has
Control.
(ii) Norwest Bank Minnesota, National Association, as the Securities
Intermediary, hereby confirms with respect to all Securities Accounts
subject hereto that (A) each of the Securities Accounts is or will be a
Securities Account and shall, subject to the terms of this Indenture, treat
the Trustee as entitled to exercise the rights that are attendant to any
Financial Asset credited to such account, (B) all Account Property in
respect of any such Securities Account established pursuant to this
Indenture will be promptly credited by the Securities Intermediary to such
Securities Account, and (C) all securities, Securities Entitlements or
other property underlying any Financial Assets credited to such Securities
Account shall be held in accordance with the customary procedures of such
Securities Intermediary for holding similar property and in no case will
any Financial Asset credited to such Securities Account be registered in
the name of the Issuer, payable to the order of the Issuer or specially
endorsed to the Issuer except to the extent the foregoing have been
specially endorsed to the Securities Intermediary or in blank.
(iii) Norwest Bank Minnesota, National Association, as the Securities
Intermediary, hereby agrees that each item of property (whether investment
property, financial asset, security, instrument or cash) credited to each
Securities Account shall be treated as a Financial Asset.
(iv) If at any time Norwest Bank Minnesota, National Association, as
the Securities Intermediary, shall receive any order from the Trustee
directing transfer or redemption of any Financial Asset relating to any
Securities Account established pursuant to the terms of this Indenture and
any Supplement hereto, the Securities Intermediary shall comply with such
Entitlement Order without further consent by the Issuer or any other
Person. If at any time the Trustee notifies the Securities Intermediary in
writing that this Indenture has been terminated in accordance with the
provisions hereof and the security interest granted hereunder has been
released, then thereafter if the Securities Intermediary shall receive any
order from the Issuer directing transfer or redemption of any Financial
Asset relating to each Securities Account, the Securities Intermediary
shall comply with such Entitlement Order without further consent by the
Trustee or any other Person.
-21-
(v) In the event that Norwest Bank Minnesota, National Association
(in its individual capacity) has or subsequently obtains by agreement,
operation of law or otherwise a security interest in any Securities Account
established pursuant to the terms of this Indenture, or any Financial Asset
credited thereto, Norwest Bank Minnesota, National Association hereby
agrees that such security interest shall be subordinate to the security
interest of the Trustee. The Financial Assets credited to any Securities
Account established pursuant to the terms of this Indenture will not be
subject to deduction, set-off, banker's lien, or any other right in favor
of any Person (except that Norwest Bank Minnesota, National Association,
in its capacity as Securities Intermediary, may set off (i) all amounts due
to it in respect of its customary fees and expenses for the routine
maintenance and operation of such Securities Account, and (ii) the face
amount of any checks which have been credited to such Securities Account
but are subsequently returned unpaid because of uncollected or insufficient
funds).
(vi) There are no other agreements entered into between Norwest Bank
Minnesota, National Association, as a Securities Intermediary, in such
capacity and the Issuer with respect to any Securities Account established
pursuant to the terms of this Indenture and any Supplement hereto. In the
event of any conflict between this Indenture (or any provision of this
Indenture) and any other agreement now existing or hereafter entered into,
the terms of this Indenture shall prevail.
(vii) The rights and powers granted herein to the Securities
Intermediary that have been granted in order to perfect the Trustee's
security interest in each Securities Account created pursuant to this
Indenture and the Security Entitlements to the Financial Assets credited
thereto are powers coupled with an interest and will neither be affected by
the bankruptcy of the Issuer nor by the lapse of time. The obligations of
Norwest Bank Minnesota, National Association, as the Securities
Intermediary hereunder, shall continue in effect until the security
interest of the Trustee in each Securities Account created pursuant to this
Indenture and such Security Entitlements related thereto has been
terminated pursuant to the terms of this Indenture and the Trustee has
notified the Securities Intermediary of such termination in writing, which
the Trustee shall do so promptly.
(viii) Notwithstanding anything else contained herein, the Issuer
agrees that each Securities Account will be established only with the
Securities Intermediary or another institution (to which the Trustee and
the Bank shall have consented in writing in advance) which agrees
substantially as follows: (i) it will comply with Entitlement Orders
related to such account issued by the Trustee without further consent by
the Issuer; (ii) until termination of the Indenture, it will not enter into
any other agreement related to such account pursuant to which it agrees to
comply with Entitlement Orders of any Person other than the Trustee; and
(iii) all assets delivered or credited to it in connection with such
account and all investments thereof will be promptly credited to such
account.
Section 311. Trustee's Covenants as Secured Party in the Security
----------------------------------------------------
Accounts. In the event that a Servicer under the Documents resigns or is
--------
terminated pursuant to the terms of the Servicing Agreement or if either a
Servicer Event of Default an Indenture Event of Default occurs, the Trustee
shall promptly deliver to the Securities Intermediary a Notice of Sole Control,
in accordance with the terms of the Securities Account Control Agreement.
-22-
Section 312. Trustee's Covenants as Bailee under the Custodial
-------------------------------------------------
Agreement. (a) With respect to the Trustee's rights and obligations under the
----------
Custodial Agreement, the Trustee shall (i) comply with the Bank's directions to
the Trustee to request insurance certificates in accordance with the provisions
of Section 2.1(k) of the Custodial Agreement and (ii) neither terminate the
Custodial Agreement, remove the Custodian nor appoint a successor custodian as
set forth in Section 2.4(b) of the Custodial Agreement without the prior written
consent of the Bank, the Class A Majority and the Class B Majority. The Issuer
shall promptly deliver written notice to the Rating Agency, and deliver one true
copy to the Bank and each Noteholder, of any amendment to or modification of the
Custodial Agreement. In the event that the Custodian resigns from its duties
under the Custodial Agreement and no successor ▇▇▇▇▇▇▇▇▇ has been appointed and
has accepted appointment within 60 days after the giving of such notice of
resignation, the Issuer shall petition a court of competent jurisdiction for the
appointment of a successor ▇▇▇▇▇▇▇▇▇.
Section 313. Failure of Servicer to Deliver Servicer Report. In the
-----------------------------------------------
event that the Trustee has not received the Servicer Report by the end of the
Business Day immediately preceding any related Payment Date, the Trustee shall
without further direction apply, to the extent necessary, funds in the
Collection Account and the Reserve Account to the payment of the amounts due on
such Payment Date in accordance with clauses (i) (other than the investment
income payment thereunder), (ii), (iii) (if notice of such amount is transmitted
in writing by the Custodian to the Trustee prior to such Payment Date), (iv),
(v), (vi) (if written notice of such amount is transmitted in writing by the
Servicer to the Trustee prior to such Payment Date), (vii), (viii), (ix) and (x)
of Section 301 hereof. Except as provided for in the preceding sentence, all
amounts in the Collection Account and the Reserve Account shall be applied by
the Trustee in accordance with a Servicer Report. Upon receipt of any late
Servicer Report the Trustee shall promptly, but not later than one Business Day
after receipt of such Servicer Report, take all action, including making
transfers from the Reserve Account and Letter of Credit Drawings as the Trustee
would have made under this Indenture if the Servicer Report had been received on
the Determination Date, and if the related Payment Date shall have passed, the
Trustee, not later than three Business Days after receipt of such Servicer
Report, shall distribute in accordance with Section 301 amounts (not already
disbursed on the related Payment Date) that would have been paid on such date if
such Servicer Report had been timely received.
-23-
ARTICLE IV
COLLATERAL
Section 401. Collateral. The Notes and the Obligations of the
----------
Issuer hereunder shall be limited-recourse obligations of the Issuer as provided
in Section 203 hereof. The Noteholders shall also have the benefit of, and the
Notes shall be secured by and additionally be payable from all of the Issuer's
right, title and interest in, to and under the following (collectively, except
as set forth in the next paragraph, the "Collateral"):
----------
(a) Each original, executed Instrument and the related Mortgage Loan
(including each Substitute Mortgage Loan, if any) evidencing the indebtedness of
a Mortgagor and arising from the sale of a Timeshare Interest by an Originator
to such Mortgagor, which Instrument together with all related mortgage
collateral has been sold or transferred by such Originator to the Issuer, and
all payments due or to become due thereon or thereunder, (b) the Servicing
Agreement and under each Transfer Agreement, (c) the Documents, (d) any interest
rate swap agreement pertaining to the Mortgage Loan Coupon Rates that are
related to Instruments, (e) the Lockbox Account, the Collection Account, Reserve
Account, the Letter of Credit Account and any other account established pursuant
to this Indenture and all amounts from time to time deposited therein, and all
Eligible Investments (including amounts constituting the Trustee's Fee and
earnings thereon, net of investment losses) made with respect to all such
accounts, (f) all products, income and proceeds from any of the foregoing and
(g) any and all other Property and assets which from time to time are Granted by
the Issuer as security for the Performance of the Obligations of the Issuer.
Notwithstanding the foregoing, the Collateral shall not include any of
the following, each of which shall automatically be released from the lien of
this Indenture: (i) any Mortgage Loan, the other related items of Property and
the income thereon and proceeds thereof, all of which have been released from
the security interest of this Indenture in accordance with the provisions of
Section 405 or Article VII hereof; and (ii) any amount properly distributed to a
Person pursuant to Sections 301 or 302 hereof or properly retained by the
Servicer or a subservicer in accordance with the provisions of the Servicing
Agreement.
Section 402. Grant of Security Interest. (a) To secure the (i)
--------------------------
payment of the Monthly Principal, Overdue Principal, Monthly Interest, Overdue
Interest and Ultimate Principal on the Notes and any other cost or pecuniary
liability of the Issuer relating to the Notes and any and all other Documents
and (ii) performance and observance of all covenants, obligations, terms and
conditions of the Issuer under the Notes and any and all other Documents
(clauses (i) and (ii) collectively, the "Obligations"), the Issuer hereby
-----------
presently, irrevocably and unconditionally conveys, assigns and pledges to the
Trustee, and grants the Trustee a security interest in and to, all of the
Issuer's right, title and interest in and to the Collateral.
(b) The Trustee does not assume, and shall have no liability to
perform, any of the Issuer's obligations under the Servicing Agreement or any
other agreement included in the Collateral and shall have no liability arising
from the failure of the Issuer to duly perform any of such obligations.
-24-
Section 403. Mortgage Documents. The Issuer, concurrently with the
------------------
execution and delivery hereof, shall cause the Mortgage Documents for each of
the Mortgage Loans to be delivered to and deposited with the Custodian, as
custodian and bailee for the Trustee on behalf of the Noteholders and the Bank.
Section 404. Pro Rata Interest. The Trustee acknowledges that,
-----------------
subject to the priorities of distribution set forth in Section 301 hereof, the
Collateral shall be for the use and benefit of the Bank and all present and
future bona fide Noteholders.
Section 405. Release of Security Interest. (a) The Trustee, at the
----------------------------
written direction of the Servicer, shall release from the security interest
created pursuant to the terms of this Indenture, any Mortgage Loan and Mortgage
Loan File directly related thereto (1) for which (and to the extent that) the
Mortgage Purchase Price has been deposited in the Collection Account in
accordance with the provisions of Section 304 hereof, or (2) upon payment in
full of all principal and interest due, and other amounts payable, under such
Mortgage Loan pursuant to the terms of such Mortgage Loan or (3) for which a
Substitute Mortgage Loan has been provided. In effectuating such release, the
Trustee shall be entitled to rely in good faith on a certificate of the Servicer
identifying each Mortgage Loan or other items of Collateral to be released from
this Indenture in accordance with the provisions of this Section 405.
(b) The Trustee will, promptly upon receipt of such certificate from
the Servicer and at the Issuer's expense, execute and deliver to the Issuer, the
related Originator, the Servicer or subservicer, as appropriate, a non-recourse
certificate of release substantially in the form of Exhibit D hereto and such
additional documents and instruments as that Person may reasonably request to
evidence the termination and release from the Lien of this Indenture of such
Mortgage Loan, the other related items of Collateral and the income thereon and
proceeds thereof.
-25-
ARTICLE V
SPECIAL PROVISIONS REGARDING
COLLATERAL
Section 501. Administration of Collateral. (a) The Trustee hereby
----------------------------
acknowledges the appointment by the Issuer of the Servicer and the Custodian to
service and administer the Collateral in accordance with the provisions of the
Servicing Agreement and the Custodial Agreement, respectively, and agrees to
provide the Servicer or the Custodian with such documentation in its possession,
and to take all such actions, as the Servicer or a subservicer or the Custodian
may reasonably request, in accordance with the provisions of the Servicing
Agreement and the Custodial Agreement.
(b) (i) The Trustee shall immediately notify the Noteholders, the
Rating Agency and the Bank in writing of any Servicer Event of Default of which
it has Knowledge (each such notice a "Servicer Termination Event Notice").
---------------------------------
After the Trustee delivers such Servicer Termination Event Notice, then so long
as such Servicer Event of Default shall not have been remedied, the Servicer
shall remain as Servicer unless and until (x) in accordance with the Servicing
Agreement, (i) a new Servicer reasonably acceptable to, the Class A Majority,
the Class B Majority, the Rating Agency, the Bank and the Issuer, and such
successor Servicer enters into a servicing agreement in form and substance
satisfactory to the Trustee, the Class A Majority, the Class B Majority, the
Bank and the Issuer, which contains an assumption by such successor Servicer of
the due and punctual performance and observance of each covenant and condition
to be performed or observed by the Servicer under the Servicing Agreement from
and after the date of assumption and (ii) the Trustee, the Class A Majority, the
Class B Majority, the Rating Agency and the Bank consent to the assumption of
the duties, obligations and liabilities of the Servicer under the Servicing
Agreement by such successor Servicer, such consent not to be unreasonably
withheld, unless, (y) at the written direction of the Bank or a Majority of
Holders, the Trustee shall, without further action, succeed in all respects to
the Servicer under the Servicing Agreement (unless and until a successor
Servicer reasonably acceptable to the Bank, the Rating Agency, the Class A
Majority, the Class B Majority and the Issuer has been selected and qualified)
and be subject to all of the responsibilities, duties and liabilities relating
thereto placed on the Servicer by the terms and provisions thereof; provided,
however, that the Trustee shall not be liable for any acts or omissions of the
outgoing Servicer or for any breach by the outgoing Servicer of any of its
representations and warranties contained in the Servicing Agreement and shall
not be required to make any Servicer Advance if such Servicer Advance would be
prohibited by applicable law and provided further, that nothing contained herein
shall prohibit the Trustee, in its capacity as successor Servicer, from
assigning (with the prior written consent of the Bank, the Rating Agency, the
Issuer, the Class A Majority and the Class B Majority) its obligations as
Servicer to a Person whose regular business includes the servicing of
receivables and instruments of a nature similar to the Mortgage Loans. As
compensation for acting as Servicer, the Trustee shall be entitled to such
Servicer Fees and other compensation (whether payable out of the Lockbox
Account, Collection Account or otherwise) as the Servicer would have been
entitled to under the Servicing Agreement and this Indenture if no such Servicer
Termination Event Notice had been given. The Issuer shall promptly reimburse
the Trustee for all Transition Costs incurred in connection with any assumption
by the Trustee of responsibilities of the successor Servicer. Notwithstanding
the above, if the Trustee shall have become the successor Servicer and at any
time
-26-
thereafter shall be incapable or legally prohibited from performing the duties
of Servicer, the Trustee shall, prior to appointing a successor Servicer or
petitioning a court to appoint a successor Servicer pursuant to this Section,
give notice to the Bank, the Rating Agency, the Issuer and each Noteholder of
such incapacity or legal prohibition and the Bank shall have the sole right,
during the sixty days immediately succeeding receipt of such notice, to appoint
a successor Servicer acceptable to the Issuer and Class A Majority and the Class
B Majority. If the Bank is unable to locate and qualify a successor Servicer
within such sixty day period, then the Trustee may appoint, or petition a court
of competent jurisdiction to appoint, any established financial institution
acceptable to the Bank, the Rating Agency, the Issuer, the Class A Majority and
the Class B Majority, having a net worth of not less than $10,000,000 and whose
regular business includes the servicing of receivables of a similar nature to
the Mortgage Loans, as the successor of all of the responsibilities, duties or
liabilities of the Trustee as Servicer under the Servicing Agreement. In the
event that the Trustee becomes the successor Servicer, the Trustee shall
continue to fulfill its duties and responsibilities as successor Servicer until
such time as its successor, if any, acceptable to Issuer, the Bank, the Class A
Majority and the Class B Majority is appointed and has assumed such
responsibilities. In connection with such appointment and assumption, the
Trustee may, with the written consent of the Bank, the Issuer, and the Class A
Majority and the Class B Majority, make such arrangements for the compensation
of such successor out of payments on Mortgage Loans as the Trustee and such
successor shall agree; provided, however, that no such revised compensation
shall be in excess of the Servicer Fee permitted the Servicer under the
Servicing Agreement and the arrangement for reimbursement of expenses shall be
no more favorable than that set forth in the Servicing Agreement unless (i) the
Bank, the Class A Majority, the Class B Majority, and the Issuer shall approve
such higher amounts or (ii) the Issuer, the outgoing Servicer or the Bank shall
agree to pay, out of its own funds, the successor Servicer any such excess
compensation and reimbursement; provided, further, that in no event shall the
Trustee be liable to any successor Servicer for the Servicer Fee or any
additional amounts (including expenses) payable to such successor Servicer,
either pursuant to the Servicing Agreement or otherwise. The Trustee and such
successor shall take such action, consistent with the Servicing Agreement, as
shall be necessary to effectuate any such succession. Upon the resignation or
termination of the Servicer, such outgoing Servicer shall deliver to the
successor Servicer all documents, statements, records, funds and accounts held
by it under the Servicing Agreement and shall execute and deliver such
instruments and do such other things as may be reasonably required to fully
transfer its rights, powers, duties and obligations.
(ii) Notwithstanding the preceding provisions of this Section
501(b), the Issuer shall have no rights hereunder to consent to or accept any
successor Servicer, or the arrangements under which such successor Servicer
shall serve (other than increased Servicer compensation), if either the Servicer
being replaced or any previous Servicer was (x) an Affiliate of Vistana and (y)
was terminated as a result of a Servicer Event of Default.
(c) In the event that the Servicer resigns or is removed, until a
successor Servicer is appointed in accordance with the terms and conditions of
this Indenture and the Servicing Agreement, the Trustee hereby agrees to act as
the temporary successor Servicer as required or requested pursuant to the terms
of the preceding paragraph or the Servicing Agreement and to receive all
documents, statements, records, funds and accounts held by the outgoing Servicer
pursuant to such outgoing Servicer's duties under the Documents as may be
necessary or prudent to act as temporary successor Servicer.
-27-
(d) In anticipation of any possible resignation or termination of
the initial Servicer or any other Servicer under the Servicing Agreement, the
Trustee hereby agrees, in exchange for and in consideration of the Back-up
Servicing Fee, until such time as the Lien of the Indenture is released pursuant
to the Documents, to serve as back-up Servicer (the "Back-up Servicer") and
----------------
perform the following functions:
(i) confirm in writing to the Bank and the initial Holders on or
prior to the Closing Date that the data format of the Servicer was, in the
reasonable business judgment of the Trustee in its capacity as the Back-up
Servicer, of acceptable quality to it and that such format was in
accordance with the Servicing Standards,
(ii) receive each Servicer Report and each monthly Servicer data
tape, and, in the event of a resignation or termination of any Servicer
(other than the Trustee itself) under the Documents, review each such
Servicer Report and data tape as well as the departing Servicer's
collection systems, procedures and servicing transition plan, and
(iii) take all other actions as reasonably necessary to enable it to
assume its duties as successor Servicer in a prompt manner and cooperate
with any other successor Servicer in its assumption of the duties of the
Servicer, including delivering a copy of each Servicer Report it has
received to such successor Servicer.
(e) Upon obtaining actual knowledge, or the receipt of notice, by
the Trustee of a breach of any representations, warranties or covenants by
either Originator under the applicable Transfer Agreement, including
notification of any such breach by the Bank, and upon failure of the Servicer or
the Issuer to enforce any ensuing purchase or repurchase obligation in
accordance with the next succeeding sentence, the Trustee shall enforce such
obligation under the applicable agreement. Upon the request of the Trustee or
the Bank, the Issuer shall enforce, or shall cause the Servicer to enforce, any
such purchase or repurchase obligations, and cause to be deposited in the
Collection Account in accordance with the provisions of Section 304(b) hereof,
the Mortgage Purchase Price received from, or on behalf of, the applicable
Originator with respect to such purchase or repurchase obligation.
Section 502. Payments of Collateral. If the Issuer shall receive
----------------------
from any Mortgagor or any other Person any payments with respect to the
Collateral (to the extent such Collateral has not been released from the Lien of
this Indenture in accordance with Section 405 hereof), the Issuer shall receive
such payment in trust for the Trustee, as secured party hereunder, and subject
to the Trustee's security interest and shall within two Business Days transmit
and deliver such payment to the Lockbox Account to be held in accordance with
the terms hereof.
-28-
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS
For so long as any Obligation of the Issuer under this Indenture and
the Notes is outstanding:
Section 601. Representations and Warranties of the Issuer. The
--------------------------------------------
Issuer hereby represents and warrants to the Trustee, the Noteholders and the
Bank, and upon which the Issuer understands and agrees that the Noteholders and
the Bank are relying in their purchase of Notes or issuance of the Letter of
Credit, on the Closing Date (provided that any representation or warranty
limited by its terms to a specific date shall be so limited):
(a) Special Purpose Entity. The Issuer is a Special Purpose Entity.
----------------------
(b) Collateral. As of the Closing Date, it has good title to, and is
----------
the sole owner of, the Collateral, free and clear from any Lien, except for the
rights of the Mortgagors under the Mortgage Loans and the Lien of the Trustee
under this Indenture and has not assigned to any Person other than the Trustee
any of its right, title or interest in the Collateral. The Issuer covenants and
agrees to warrant and forever defend the title to the Collateral against the
claims and demands of any Person (other than the Trustee or any Person claiming
through the Trustee, including the Bank and the Noteholders), whether now or
hereafter arising, and hereby grants the Trustee full power and authority to
take all actions as the Trustee deems necessary or advisable to effectuate this
sentence. The Issuer will promptly deliver to the Trustee (or its Custodian) any
Instrument evidencing a Mortgage Loan within two Business Days after the receipt
thereof, appropriately and duly endorsed to the order of the Trustee, and in a
manner that satisfies all requirements of endorsement and assignment, in order
to transfer all right, title and interest of the Issuer in each such Instrument,
as further security for payment and performance in full of the Obligations. The
Issuer will cause this Indenture to constitute a valid first-priority perfected
security interest in the Collateral at all times.
(c) Ownership; Names; Address. The Parent is the sole legal and
-------------------------
beneficial owner of the Issuer and owns 100% of the issued stock thereof. The
legal names of the Issuer and the Parent are as set forth in this Indenture.
The Issuer has not operated under any other names. The Issuer does not have any
trade names, fictitious names, assumed names or "doing business as" names. The
principal place of business and chief executive office of the Issuer are as set
forth in Section 1307 hereof and there are no such other locations.
(d) Organization and Good Standing. The Issuer is a corporation that
------------------------------
has been duly organized and is validly existing and in good standing under the
laws of Delaware, and has the power to own its assets and to engage in the
activities in which it is presently engaged and is duly qualified and in good
standing under the laws of each jurisdiction where its ownership of property or
the conduct of its activities requires such qualification, if the failure to so
qualify would have a Material Adverse Effect. The Issuer has no subsidiaries.
-29-
(e) Due Execution. The Issuer Documents, other than the Notes, have
-------------
been duly executed and delivered by the Issuer, and the Notes, when issued in
accordance with the terms of the Note Purchase Agreement and of this Indenture,
will have been duly executed and delivered.
(f) Power and Authority. The Issuer has the legal right, power and
-------------------
authority to execute, deliver and perform its obligations under this Indenture
and the other Issuer Documents and carry out their terms and to Grant the
Security Interest in the Collateral to the Trustee; and the execution, delivery
and performance of this Indenture and the other Issuer Documents have been duly
authorized by the Issuer by all necessary action.
(g) Binding Obligation. Each of the Issuer Documents (other than the
------------------
Notes), assuming due authorization, execution and delivery by the other parties
thereto, constitutes, and the Notes, when issued and authenticated in accordance
with the terms of the Note Purchase Agreement and of this Indenture, will
constitute, a legal, valid and binding obligation of the Issuer, enforceable
against the Issuer in accordance with its terms, except that such enforcement
may be limited by (A) bankruptcy, insolvency, reorganization, moratorium or
other similar laws (whether statutory, regulatory or decisional) now or
hereafter in effect relating to creditors' rights generally and (B) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(h) No Violation. The consummation of the transactions contemplated
------------
by this Indenture and the other Issuer Documents and the fulfillment of the
terms hereof and thereof shall not conflict with, result in any material breach
of any of the terms and provisions of, nor constitute (with or without notice or
lapse of time or both) a default under, the organizational documents of the
Issuer or any Originator, or any Instrument, Mortgage, Timeshare Declaration or
any indenture, agreement, deed of trust, commitment letter, funding arrangement
with any lending institution or investment bank or other instrument to which the
Issuer is a party or by which it is bound; nor result in the creation or
imposition of any Lien upon any of its Properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust, commitment letter, funding
arrangement with any lending institution or investment bank or other instrument
(other than this Indenture); nor violate any law, order, rule or regulation
applicable to the Issuer of any Governmental Authority having jurisdiction over
the Issuer or its Properties.
(i) Consents. No approval, authorization, consent, or other actions
--------
of any other Person under any agreement, contract, lease or license or similar
document or instrument to which Issuer is a party or by which Issuer is bound,
is required to be obtained by Issuer in order to make or consummate the
transactions contemplated under the Documents which has not been obtained on or
prior to the Closing Date. All consents, orders and approvals of, filings and
registrations with, and other actions in respect of, all Governmental
Authorities required to be obtained by Issuer in order to make or consummate the
transactions contemplated under this Indenture and the other Documents have
been, or prior to the time when required will have been, obtained, given, filed
or taken and are or will be in full force and effect on or prior to the Closing
Date.
(j) No Proceedings. There are no Proceedings or investigations to
--------------
which the Issuer, or any Affiliate of the Issuer, is a party pending or, to the
Issuer's Knowledge, threatened before any Governmental Authority or threatened
by others and no injunctions, writs, restraining
-30-
orders of any nature having jurisdiction over the Issuer or its Properties: (A)
asserting the invalidity of this Indenture or the other Documents; (B) seeking
to prevent the consummation of any of the transactions contemplated by this
Indenture or the other Documents; or (C) seeking any determination or ruling
that might have a Material Adverse Effect. There are no Proceedings pending or,
to the best of the Issuer's Knowledge, threatened before any Governmental
Authority involving the Timeshare Projects that will cause a Material Adverse
Effect.
(k) Solvent. The Issuer is Solvent.
-------
(l) Representations. The representations and warranties made by
---------------
the Issuer contained in the Documents to which the Issuer is a party are true
and correct in all material respects as of the date when made. The Servicer, the
Trustee, the Bank and the Noteholders may rely on such representations and
warranties to the same extent as if such representations and warranties were set
forth by the Issuer herein.
(m) Nonconsolidation. The Issuer is operated in such a manner
----------------
that it would not be substantively consolidated with Vistana, the Servicer, any
of the Originators or the Parent, in accordance with applicable bankruptcy or
insolvency laws, and in such a manner that the separate existence of the Issuer
would not be disregarded in the event of a bankruptcy or insolvency of Vistana,
the Servicer, any of the Originators or the Parent, and in such regard, among
other things:
(i) The Issuer maintains, and will continue to maintain, management
over its daily business affairs independent from that of, and free of any
undue or excessive control exercised by, Vistana, the Servicer, any of the
Originators or the Parent in any day-to-day management of the Issuer;
provided, however, that nothing contained in this clause (i) shall prohibit
VCH Portfolio Services, Inc. from acting as Servicer pursuant to the terms
of the Servicing Agreement;
(ii) the Parent maintains a separate business office from the
Issuer;
(iii) all business correspondence of the Issuer and other
communications are conducted in the Issuer's own name and on its own
stationery; and
(iv) the Issuer does not act as an agent of Vistana, the Servicer,
any Originator or the Parent in any capacity and neither Vistana, the
Servicer, any Originator nor the Parent thereof acts as agent for the
Issuer, but instead presents itself to the public as a corporation separate
from the Issuer; provided that VCH Portfolio Services, Inc. may act as the
Servicer under the Servicing Agreement.
(n) Security Interest. At all times, the Trustee will have a
-----------------
valid, first-priority perfected Security Interest in the Collateral prior to all
other Liens subject to Permitted Encumbrances. The Issuer has marked its books
and records to reflect (a) each assignment and transfer of each Mortgage Loan,
the related Instrument and a security interest in the related Collateral subject
thereto from the appropriate Originator and (b) the Security Interest of the
Trustee in such Collateral, including the Mortgage Loans.
-31-
(o) No Other Security Interests. No Security Interest (other than the
---------------------------
Security Interest granted to the Trustee hereunder, or as may be conveyed to the
Issuer pursuant to either Transfer Agreement) has been or will be granted by any
Vistana Transaction Entity or Vistana with respect to any component or part of
the Collateral that has not been released pursuant to a legal, valid and binding
release of the party releasing such Security Interest.
(p) Correct Copies. The Instruments and each other Mortgage Document
--------------
related thereto have been delivered by Issuer to Custodian, as bailee on behalf
of the Trustee, and are true and correct originals of such documents (in all
material respects), each of which is in full force and effect and has not been
amended, modified or terminated in any respect other than such amendments,
modifications or terminations as have been previously and explicitly approved by
Trustee in writing.
(q) No Defaults. No payment under an Instrument is more than sixty
-----------
(60) days past due as of the Cut-off Date pursuant to the terms of such
Instrument.
(r) Notices of Defaults. None of Vistana, any Originator, the Parent
-------------------
or the Servicer has notified Issuer, directly or indirectly, that any Originator
or Servicer is in default under any of its obligations under or with respect to
any Instrument or Mortgage which is part of the Collateral as of the Closing
Date.
(s) No Set-Offs. To the Knowledge of the Issuer, there are no
-----------
setoffs, counterclaims, or defenses on the part of any Mortgagor to pay any
amounts due under any Instrument related to it.
(t) Margin Stock. The Issuer does not own any "margin security", as
------------
that term is defined in Regulations T, U and X of the Federal Reserve Board, and
the proceeds of the Notes under this Indenture will be used only for the
purposes contemplated hereunder. None of the proceeds of the Notes will be
used, directly or indirectly, for the purpose of purchasing or carrying any
margin security, for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry any such "margin security" or for
any other purpose which might cause the Notes to be considered "purpose
credit(s)" within the meaning of Regulations T, U and X of the Federal Reserve
Board. The Issuer will not take or permit any agent acting on its behalf to
take any action which might cause this Indenture or any document or instrument
delivered pursuant hereto to violate any regulation of the Federal Reserve
Board.
(u) Taxes. All federal, state, local and foreign tax returns, reports
-----
and statements required to be filed by Issuer have been filed with the
appropriate Governmental Authority except where failure to file will not have
any Material Adverse Effect, and all material charges and other impositions
shown thereon to be due and payable by Issuer have been paid prior to the date
on which any fine, penalty, interest or late charge may be added thereto for
nonpayment thereof other than those charges that the Issuer is protesting in
good faith and has set aside adequate reserves therefore in accordance with
GAAP. The Issuer has paid when due and payable all material charges upon the
books of the Issuer and no Government Authority has asserted any Lien against
the Issuer with respect to unpaid charges. Proper and accurate amounts have been
withheld by the Issuer from any employees for all periods in full and complete
compliance (other than such non-compliance that shall not have any Material
Adverse Effect) with the tax, social security and unemployment withholding
-32-
provisions of applicable federal, state, local and foreign law and such
withholdings have been timely paid to the respective Governmental Authorities.
Any taxes, fees and other governmental charges payable by the Issuer in
connection with the execution and delivery of the Issuer Documents, the pledge
of the Collateral to the Trustee, and the execution, delivery and sale of the
Notes, have been paid.
(v) ERISA. The Issuer and each of its ERISA Affiliates are in
-----
compliance in all respects with the applicable provisions of ERISA and the
regulations, thereunder other than non-compliance which would not in the
aggregate have a Material Adverse Effect. No Reportable Event has occurred with
respect to any Plan administered by the Issuer or any ERISA Affiliate or any
administrator designated by the Issuer or any ERISA affiliate. With respect to
each such Plan: (i) no such Plan which is subject to section 302 of ERISA or
section 412 of the Code has incurred any "accumulated funding deficiency" (as
defined in either such section), whether or not waived; (ii) the Issuer has
complied with and each such Plan conforms to all applicable laws and
regulations, including but not limited to ERISA and the Code other than non-
compliance which would not in the aggregate have a Material Adverse Effect;
(iii) each such Plan which is a pension plan intended to qualify under section
401(a) or 403(a) of the Code has received a favorable determination letter form
the Internal Revenue Service with respect to such qualification, its related
trust has been determined to be exempt from taxation under section 501(a) of the
Code and nothing has occurred since the date of such letter that would adversely
affect such qualification or exemption in a manner that would have a Material
Adverse Effect; and (iv) there are no actions, suits or claims pending (other
than routine claims for benefits) or, to the Knowledge of the Issuer or any
ERISA Affiliate, threatened with respect to any Plan or against the assets of
any Plan which would have a Material Adverse Effect. Neither the Issuer nor any
ERISA Affiliate nor any Plan administered by the Issuer or any ERISA Affiliate
has engaged in any Prohibited Transaction within the meaning of section 406 of
ERISA and section 4975 of the Code for which the Issuer or any ERISA Affiliate
of may incur liability.
(w) Securities Law. Neither the Issuer, directly or indirectly, nor
--------------
anyone acting on its behalf (including, but not limited to, the Placement Agent)
has offered any Note or any part thereof for issue or sale to, or has solicited
or will solicit any offer to acquire any of the same from, anyone so as to bring
the issuance and sale of the Note within the provisions of Section 5 of the
Securities Act of 1933, as amended. The Issuer is neither an "investment
company" nor a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended. This Indenture need
not be qualified as an "indenture" pursuant to the terms of the Trust Indenture
Act, as amended. To the extent the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), may be deemed to apply to the Notes, none of the
------------
transactions contemplated in the Issuer Documents (including, without limitation
thereof, the use of the proceeds from the sale of the Notes) will violate or
result in a violation of Section 7 of the Exchange Act, or any regulations
issued pursuant thereto.
(x) Compliance with Law. The Issuer has complied with all applicable
-------------------
laws and regulations, including, without limitation, all federal and state laws
and regulations of all of the states in which each of the Timeshare Projects
relating to any component, as of the applicable Transfer Date, of the Collateral
are located and all other governmental jurisdictions in which such Timeshare
-33-
Projects are located or in which Timeshare Interests relating thereto have been
or are being sold or offered for sale, other than any noncompliance that shall
not have a Material Adverse Effect.
(y) Endorsement. Each Instrument pledged to the Trustee hereunder
-----------
has been duly endorsed by the Issuer to such Trustee and in a manner that
satisfies all requirements of endorsement and assignment, in order to transfer
all right, title and interest of the Issuer in each such Instrument.
(z) Omissions and Statements. The Private Placement Memorandum, the
------------------------
certificates to opinions described in Section 7(d) and (e) of the Note Purchase
Agreement and the other documents requested by and delivered to the initial
Noteholders and identified on Schedule III to the Note Purchase Agreement, do
not contain any untrue statement of any material fact or omit to state a fact
---
which has or will have a Material Adverse Effect; provided, however, that this
representation shall not be deemed to be made with respect to any information
regarding Persons not affiliated with Vistana (the "Other Party Information")
but provided further, that no Person affiliated with Issuer has actual knowledge
that any of the Other Party Information contains an untrue statement of material
fact or omits to state a fact which has or will have a Material Adverse Effect.
(aa) No Indebtedness. Issuer is not in default of any payment on
---------------
account of Indebtedness or in violation of or in default under any material term
in any agreement, order, decree or judgment of any court, arbitration or
governmental authority to which it is a party or by which it is bound.
(bb) No Injunctions. There is no injunction, writ, restraining order
--------------
or other order of any nature outstanding that will have a Material Adverse
Effect.
(cc) Inspection. The Issuer agrees and warrants that Trustee's or the
----------
Custodian's examination, inspection, or receipt of information pertaining to the
Collateral or the Timeshare Projects shall not in any way be deemed to reduce
the full scope and protection of the warranties, representations and Obligations
contained in this Indenture.
(dd) Foreign Mortgagors. Not more than five percent (5%) of the
------------------
Initial Aggregate Instrument Principal Balance arose from Mortgage Loans of
which the Mortgagor is a resident of any single nation other than the United
States (including Puerto Rico, U.S. Virgin Islands and Guam). Not more than
twenty-three percent (23%) of the Initial Aggregate Instrument Principal Balance
was obligated to be paid by Foreign Mortgagors, and all Instruments are payable
in U.S. Dollars.
(ee) Purchase Treatment. The Issuer will mark the transfer of
------------------
Instruments to it as a purchase, not a loan, on its books and records for tax
and accounting reporting purposes.
(ff) Year 2000 Representation. The Issuer has reviewed, or will
------------------------
expeditiously review, its operations as well as the operations of each Vistana
Transaction Entity with a view to assessing whether its businesses will be
vulnerable to a Year 2000 Problem or will be vulnerable to the effects of a Year
2000 Problem suffered by any of its major commercial counter-parties. The
-34-
Issuer represents and warrants that each of the Vistana Transaction Entities has
a reasonable basis to believe that no Year 2000 Problem will cause a Material
Adverse Effect.
(gg) Survival of Representations and Warranties. Until payment and
------------------------------------------
Performance in full of the Obligations, the representations and warranties
contained herein shall have a continuing effect as having been true as of the
date when made.
(hh) Supplemental Nature of Article VI; Effect of ▇▇▇▇▇▇. The
---------------------------------------------------
representations, warranties and covenants contained in this Article VI are in
addition to, and not in derogation of, the representations, warranties and
covenants contained elsewhere in the Documents and shall be deemed to be made
and reaffirmed on each Transfer Date with respect to the Mortgage Loans,
Instruments and related property substituted on such date, provided that, when
specifically referencing Instruments, reaffirmation shall be made only with
respect to all of the Instruments being sold, transferred, conveyed or assigned
upon such Transfer Date, and provided, further, that if such representation,
warranty or covenant relates to an Instrument that constitutes a Defaulted
Instrument and Issuer replaces or substitutes the affected Mortgage Loan in
accordance with the terms of this Indenture, no Indenture Event of Default shall
occur hereunder.
Section 602. Affirmative Covenants of the Issuer. The Issuer hereby
-----------------------------------
agrees that, until full, complete and indefeasible payment and performance of
the Obligations, unless the Trustee shall otherwise consent in writing, Issuer
shall do or cause to have done all of the following:
(a) Special Purpose Entity. The Issuer at all times shall remain a
----------------------
Special Purpose Entity.
(b) Reserved.
(c) Principal Place of Business. The Issuer shall give Trustee at
---------------------------
least 30 days' prior written notice of any change in the location of its or any
Originator's principal place of business, chief executive office or the place at
which its books and records are kept from its current principal place of
business.
(d) Originator or Mortgagor Defaults. The Issuer shall use its
--------------------------------
commercially reasonable efforts to cooperate fully with the Trustee and the
Servicer in connection with the collection of any amounts payable by an
Originator or a Mortgagor, as the case may be.
(e) Reserved.
(f) Servicer's Reports. For so long as the Servicer is an Affiliate
------------------
of Vistana, the Issuer shall cause to be delivered to the Trustee and the Bank
when due the Servicer Report and any other reports and information as required
in Section 6.01 of the Servicing Agreement.
(g) Reserved.
(h) Other Information. Issuer shall deliver to the Trustee, the
-----------------
Significant Noteholders and the Bank such other information or data respecting
the condition or operations,
-35-
financial or otherwise, of Issuer as the Trustee, or any Significant Noteholder
may from time to time reasonably request.
(i) Existence; Compliance with Law. Issuer shall preserve and
------------------------------
maintain its existence and all of its licenses, permits, governmental approvals,
rights, privileges and franchises necessary or desirable in the normal conduct
of its business as now conducted or presently proposed to be conducted
(including, without limitation, its qualification to do business in each
jurisdiction in which such qualification is necessary or desirable in view of
its business other than such qualification that shall not have a Material
Adverse Effect); conduct its business and maintain its Property in an orderly
and regular manner; and comply with (a) the provisions of its Articles of
Incorporation, (b) the requirements of all applicable laws, rules, regulations
or orders of any Governmental Authority and requirements for the maintenance of
Issuer's insurance, licenses, permits, governmental approvals, rights,
privileges and franchises and (c) the requirements of all Environmental Laws (as
applicable), except, in any case, to the extent that the failure to comply
therewith would not, in the aggregate, have a Material Adverse Effect.
(j) Taxes and Other Liabilities. Issuer shall pay or cause to be paid
---------------------------
all taxes (which individually or in the aggregate are material), fees,
assessments, governmental charges and levies, including claims for labor,
material and supplies when due and payable or levied against its assets,
properties or income, including any Property that is part of the Collateral,
except to the extent Issuer is contesting the same in good faith and has set
aside adequate reserves in accordance with Partial GAAP for the payment thereof.
(k) Inspection Rights; Assistance. Upon reasonable prior notice, at
-----------------------------
any reasonable time and from time to time during normal business hours, permit
the Trustee, the Bank, each Significant Noteholder or any agent, representative
or employee thereof, to examine and make copies of and abstracts from the
financial records and books of account of the Issuer and other documents in the
possession or under the control of the Issuer relating to any Obligation of the
Issuer arising under or contemplated by this Indenture or any other Document and
to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees and independent accountants (and by this provision the
Issuer hereby authorizes its independent accountants to discuss with such
representative such affairs, finances and accounts) all at such reasonable times
and as often as may be reasonably requested, and to visit the offices of the
Issuer. The Trustee, the Holders and the Bank shall, and each shall cause its
representatives to, hold in confidence all such Confidential Information. Any
reasonable out-of-pocket expense incident to the reasonable exercise by the
Trustee, the Bank, any of their designees and, provided that an Indenture Event
of Default has occurred and is continuing, any Significant Noteholder or any of
its designees, of any right under this Section shall be borne by the Issuer.
(l) Reserved.
--------
(m) Notice of Liens. The Issuer will notify the Trustee and the Bank
---------------
of the existence of any Lien (except Permitted Encumbrances and the Lien of this
Indenture) on any of the Collateral immediately upon discovery thereof.
-36-
(n) Performance of Obligations. Issuer will duly and punctually
--------------------------
fulfill all obligations on its part to be fulfilled under or in connection with
each Document to which it is a party and will do nothing to impair the rights of
the Trustee in the Collateral and the Documents.
(o) Documentation; Further Assurances.
---------------------------------
(i) Issuer shall, and covenants to cause the Servicer to agree, from
time to time, at the expense of Issuer to, promptly execute and deliver all
further instruments of transfer and conveyance, all such other instruments,
and all supplements and amendments hereto, instruments and documents, and
take all further action, that may be necessary or desirable or that either
the Trustee or the Bank may reasonably request or are necessary in order to
maintain, perfect, continue to perfect and protect the Lien and Security
Interest of the Trustee in the Collateral (including, without limitation,
any financing statements under the UCC, this Indenture or any Supplement
related hereto) or to enable either the Trustee or the Bank to exercise and
enforce its rights and remedies hereunder with respect to any Collateral or
the Letter of Credit, respectively. Without limiting the generality of the
foregoing, within ten (10) Business Days after receipt of written request
therefor, Issuer shall execute and file such financing or continuation
statements, or amendments thereto, execute and record transfer instruments
or take possession of such records or documents of title, and such other
instruments or notices, and make such recordings, as may be necessary or
desirable, or as either the Trustee or the Bank may reasonably request, in
order to (a) perfect, maintain, protect and preserve the lien and Security
Interest Granted or purported to be Granted in this Indenture and the other
Documents; (b) publish notice of, or protect the validity of, any Grant or
assignment made or to be made by this Indenture and perfect the security
interest contemplated hereby in favor of the Trustee in the Mortgage Loans
and the related Collateral or any other Collateral; (c) enforce or cause
the Servicer to enforce any of the Mortgage Loans in a manner consistent
with the Servicing Agreement and applicable law; or (d) preserve and defend
title to any Mortgage Loan (including the right to receive all payments due
or to become due thereunder subsequent to the applicable Cut-off Date), the
Security Interest of the Trustee in the Collateral and preserve and defend
the rights of the Trustee and the Noteholders in any Mortgage Loan or other
property constituting Collateral (including the right to receive all
payments due or to become due thereunder subsequent to the applicable Cut-
off Date), against the claims of all persons and parties. The Issuer, upon
the Issuer's failure to do any of the foregoing, hereby designates the
Trustee its agent and attorney-in-fact to execute any UCC financing
statement, continuation statement or other document or instrument required
pursuant to this Section; provided, however, that such designation shall
not be deemed to create a duty in the Trustee to monitor the compliance of
the Issuer with the foregoing covenants.
(ii) Issuer shall furnish to the Trustee, from time to time or upon
reasonable request of the Trustee or the Bank, statements and schedules
further identifying and describing the Collateral.
(iii) The Issuer will deliver to the Trustee, each Noteholder, the
Bank and the Rating Agency, within 120 days after the end of each fiscal
year, an Officer's Certificate, stating that
-37-
(A) a review of the activities of the Issuer during such year and
of performance under this Indenture has been made under such officer's
supervision;
(B) to the best of such officer's Knowledge, based on such
review, (a) the Issuer has fulfilled all of its obligations under this
Indenture throughout such year and (b) the Servicer has fulfilled all of
the Servicer's obligations under the Servicing Agreement; and
(C) whether the officer has any Knowledge of any Indenture Event
of Default or Servicer Event of Default throughout such year or, in the
officer's good faith and reasonable business judgment, an Incipient Default
is occurring which is reasonably likely to result in an Indenture Event of
Default and, if there has been an Indenture Event of Default or Servicer
Event of Default, or, in the officer's good faith and reasonable business
judgment, an Incipient Default is occurring which is reasonably likely to
result in an Indenture Event of Default, specifying each such default known
to him and the nature and status thereof and the nature of the action taken
with respect thereto.
(p) Performance of Obligations under Mortgages and Timeshare Program
----------------------------------------------------------------
Governing Documents. Issuer at all times will fulfill and will cause its agents
-------------------
and independent contractors at all times to fulfill all of Issuer's obligations
to Purchasers, except where failure to do so will not have a Material Adverse
Effect. Issuer will cause its Affiliates to perform, prior to the expiration of
any applicable grace period, all of their respective obligations under the
Timeshare Program Governing Documents, including, without limitation, the
obligation of any Affiliate that is a Manager to perform diligently its
obligation to collect maintenance fees and tax payments from the Association's
members and timely disburse such collected funds for the payment of taxes and
hazard and business interruption insurance maintained by the Association all in
accordance with the applicable Management Agreement, except where failure to so
perform would not give rise to a Material Adverse Effect.
(q) Collection of Payments. Issuer will cause Servicer to undertake
----------------------
the diligent and timely collection consistent with the Servicing Agreement and
applicable law of amounts delinquent under each Instrument which constitutes
part of the Collateral. Unless Trustee is acting as Servicer pursuant to the
terms of Article V hereof, Trustee shall have no obligation to undertake any
action to collect under any Instrument.
(r) Trustee as Additional Insured. Timely after the Closing Date,
-----------------------------
Issuer will use reasonable commercial efforts to (i) cause to be maintained and
(ii) deliver or cause to be delivered to the Custodian on behalf of the Trustee,
evidence of insurance policies required by the Timeshare Program Governing
Documents relating to the Timeshare Projects, naming the Trustee an additional
insured and written by insurers, in amounts and on forms as are customary in the
timeshare resort industry.
(s) No Indebtedness. The Issuer will promptly discharge any and all
---------------
Indebtedness owing by it other than the Notes and the Issuer's obligations under
the Reimbursement Agreement. The Issuer will cause any and all Indebtedness
owing by it or secured by its property (including the Collateral) which does not
relate to the Notes, a Permitted Encumbrance, the Lien of the Indenture or the
Letter of Credit and the Reimbursement Agreement, to be fully extinguished;
provided,
-38-
however, that if no Indenture Event of Default has occurred and is continuing,
the Issuer may make regularly scheduled payments on any such Indebtedness and
other normal and customary payments for services rendered.
(t) Payment of Principal and Interest;. The Issuer will duly and
----------------------------------
punctually pay the principal of and interest on the Notes in accordance with the
terms of the Notes and this Indenture.
(u) Maintenance of Office. The principal place of business and chief
---------------------
executive office of the Issuer is located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇. The Issuer shall not establish a new location for its principal
place of business and chief executive office unless (i) it shall have given to
the Trustee and the Bank not less than thirty (30) days' prior written notice of
its intention so to do, clearly describing such new location and providing such
other information in connection therewith as the Trustee may reasonably request,
and (ii) with respect to such new location, it shall have taken at its own cost
all action necessary so that such change of location does not impair the
Security Interest of the Trustee in the Collateral, and shall have delivered to
the Trustee copies of all filings required in connection therewith.
(v) Performance of Obligations. The Issuer will not take, or fail to
--------------------------
take, any action, and will use its best efforts with respect to Persons that
▇▇▇▇▇▇▇ has Control of, and reasonable commercial efforts with respect to all
other Persons, not to permit any action to be taken by such Person which would
release any Person from any of such Person's covenants or obligations under any
agreement or instrument included in the Collateral, or which would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such agreement or instrument, except as
expressly permitted hereby or in the Servicing Agreement.
(w) Money for Payments to Noteholders to Be Held in Trust.
-----------------------------------------------------
(i) All payments of amounts due and payable with respect to any Notes
that are to be made from amounts withdrawn from the Collection Account, the
Reserve Account or any other account established pursuant to the Documents
shall be made on behalf of the Issuer by the Trustee, and no amounts so
withdrawn from any such account for payments of Notes shall be paid over to
the Issuer under any circumstances.
(ii) In making payments hereunder, the Trustee will:
(A) allocate all sums received for payment to the Noteholders on
each Payment Date in accordance with the terms of this Indenture;
(B) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;
and
-39-
(C) comply with all requirements of the Code, as amended (or any
successor statutes), and all regulations thereunder, with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith, in each case, consistent
with the treatment of the Notes as indebtedness.
(x) Information as to the Issuer. Upon any officer of the Issuer
----------------------------
obtaining Knowledge of any of the following events, the Issuer shall file with
the Trustee, the Bank and the Rating Agency:
(i) upon becoming aware of the existence of any condition or event
which constitutes either an Indenture Event of Default or, in the good
faith and reasonable judgment of the Issuer, an Incipient Default, a
written notice describing its nature and period of existence and what
action the Issuer is taking or proposes to take with respect thereto; and
(ii) promptly upon the Issuer's becoming aware:
(A) that any Person other than a Vistana Transaction Entity has
given any notice to Issuer or taken any other action with respect to an
Indenture Event of Default or a claimed misrepresentation, breach or
default under any Document which, if true, could give rise to a liability
of no less than $100,000,
(B) of the institution of any litigation or of the receipt of
written notice from any Governmental Authority as to the commencement of
any formal investigation involving an alleged or asserted liability of
Issuer of any amount or any adverse judgment in any litigation involving a
potential liability of Issuer of any amount,
(C) of any event or circumstance which reasonably may be
expected to have a Material Adverse Effect, or
(D) of any pending or proposed court or administrative
proceeding which involves or may involve the possibility, individually or
in the aggregate, of a Material Adverse Effect,
a written notice specifying the nature of such Incipient Default, Indenture
Event of Default, notice, litigation, judgment, Material Adverse Effect,
investigation or proceeding and what action the Issuer has taken, is taking or
proposes to take with respect thereto and evaluating its merits.
(y) Year 2000 Covenant. The Issuer shall take, and shall use its best
------------------
efforts with respect to Persons it has control of, and reasonable commercial
efforts with respect to all other Persons, to cause each such Person to take,
all actions necessary and commit adequate resources to assure that each of their
computer-based and other systems are able to effectively process data, including
dates before, on and after January 1, 2000, without experiencing any Year 2000
Problem that could cause a Material Adverse Effect. At the request of either
the Trustee or the Bank, the Issuer will cause each of the Vistana Transaction
Entities to provide the Bank and the Trustee with assurances and substantiations
(including, but not limited to, the results of internal or external audit
-40-
reports prepared in the ordinary course of business) reasonably acceptable to
the Bank and the Trustee as to the capability of such Vistana Transaction
Entities to conduct their businesses and operations before, on and after January
1, 2000 without experiencing a Year 2000 Problem causing a Material Adverse
Effect.
(z) Validity. The Issuer will maintain the validity and effectiveness
--------
of this Indenture.
Section 603. Issuer's Negative Covenants. Issuer covenants and
---------------------------
agrees as follows that, until full, complete and indefeasible payment and
performance of the Obligations, unless the Trustee (acting at the direction of a
Majority of Holders) and the Bank shall otherwise consent in writing, Issuer
shall not do any of the following:
(a) Liens; Negative Pledges; and Encumbrances. Issuer shall not
-----------------------------------------
create, incur, assume or suffer to exist (i) any Lien of any nature upon or with
respect to the Collateral (except as permitted by this Indenture or as permitted
by the Servicing Agreement); (ii) any Indebtedness in excess of $10,000 (other
than the Obligations) with respect to itself or (iii) any direct or indirect
contingent obligation with respect to itself except in the ordinary course of
business; nor shall Issuer do anything to impair the rights of the Trustee in
the Collateral.
(b) Disposition of Assets. Issuer shall not sell, assign, convey,
---------------------
transfer, exchange or otherwise dispose of, any of the Collateral, nor enter
into any sale and sale agreement covering any of the Collateral other than as
expressly contemplated by the Documents. The foregoing shall not prohibit the
sale, assignment, conveyance or other transfer of any Instrument that is not
part of the Collateral.
(c) No Subsidiaries. Issuer shall not create any Subsidiaries.
---------------
(d) Amendments. The Issuer shall neither amend its Articles of
----------
Organization nor agree to amend any Document (other than this Indenture,
pursuant to Article X hereof, and, with respect to the Mortgage Documents, as
permitted by the Servicing Agreement), without the consent of the Bank and the
Trustee (which shall not give such consent without the approval of a Class A
Majority and the Class B Majority). The Issuer shall not take any action in
violation of its Articles of Incorporation.
(e) Defaults. The Issuer shall not take or omit to take any action,
--------
which act or omission would constitute a default under any material agreement,
contract, lease, license, mortgage, deed of trust or instrument to which it is a
party or by which it or any of its Properties or assets is bound, which default
or event of default (after the expiration of any applicable grace period) is
reasonably likely to have a Material Adverse Effect.
(f) Other Activities of Issuer. The Issuer shall not (x) make any
--------------------------
capital expenditures that create, in the aggregate and at any one time, an
Outstanding Indebtedness of the Issuer in excess of $10,000, (y) without the
prior written consent of its Independent Director, (1) commence any case,
proceeding or other action under any existing or future bankruptcy, insolvency
or similar law seeking to have an order for relief entered with respect to it,
or seeking reorganization,
-41-
arrangement, adjustment, wind-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, (2) seek appointment of a receiver,
trustee, custodian or other similar official for it or any part of its assets,
(3) make a general assignment for the benefit of creditors, or (4) take any
action in furtherance of, or consenting or acquiescing in, any of the foregoing
or (z) guarantee (directly or indirectly), endorse the obligations of (except in
the ordinary course of business), or own or purchase any stock, obligations or
securities of or any other interest in, or make any capital contribution to, any
other Person, or engage in any other action that bears on whether the separate
legal identity of the Issuer shall be respected, including, without limitation
(i) holding itself out as being liable for the debts of any other party or (ii)
acting other than in its corporate name and through its duly authorized officers
or agents.
(g) No Advances. The Issuer shall not make any advances, loans,
-----------
extensions of credit, acquisitions or investments other than Eligible
Investments and acquisitions of the Mortgage Loans.
(h) Existence. The Issuer shall not dissolve or terminate its
---------
existence as a Delaware corporation.
(i) Other Transactions. The Issuer shall not engage in any business
------------------
or activity other than in connection with, or relating to, this Indenture, the
Notes, the other Documents, the specific transactions contemplated thereby or
its Articles of Organization.
(j) Validity of Liens and Documents. The Issuer shall not permit the
-------------------------------
validity or effectiveness of this Indenture or any Security Interest set forth
herein to be impaired, or permit the Lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person to be
released by Issuer or its Affiliates from any covenants or obligations under any
of the Documents, except as may be expressly permitted hereby or by the
Servicing Agreement.
(k) Extensions. The Issuer shall not at any time insist upon, plead,
----------
or in any manner whatsoever claim or take the benefit or advantage of, any stay
or extension law or other law that would prohibit or forgive the Issuer from
paying all or any portion of the Monthly Principal, Overdue Principal, Monthly
Interest or Overdue Interest on the Notes as contemplated herein or in the
Notes, wherever enacted, now or at any time hereafter in force, or that may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Issuer hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee or the Bank, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
(l) ERISA. The Issuer shall not permit any Plan to which it or any
-----
ERISA Affiliate is party to engage in a prohibited transaction within the
meaning of section 406 of ERISA or section 4975 of the Code, except in those
cases for which there is a statutory or administrative exemption available under
section 408 of ERISA or section 4975(d) of the Code where such action could not
reasonably be expected to have a Material Adverse Effect, or permit to exist
with respect to any Plan any accumulated funding deficiency within the meaning
of section 412 of the Code, or incur any liability (other than for required
insurance premiums) where such action could reasonably be expected to have a
Material Adverse Effect.
-42-
(m) No Modifications of Instruments. Without the prior written
-------------------------------
consent of the Trustee and the Bank (which consents shall not be unreasonably
withheld) and except with respect to Upgrades and Wraparound Mortgages and as
permitted in the Servicing Agreement, Issuer will not cancel or materially
modify, or consent to or acquiesce in any material modification (including any
change in the Mortgage Loan Coupon Rate or the amount, frequency or number of
payments of principal or interest on any Instrument) to, or solicit the
prepayment of, any Instrument which constitutes part of the Collateral other
than as expressly set forth in the Documents; waive the timely performance of
the obligations of the Mortgagor under any such Instrument or its security; or
release the security for any such Instrument. Issuer will not pay or advance
directly or indirectly for the account of any Originator or the Parent any sum
requested to be deposited, or owing, by any Mortgagor under any Instrument
(whether or not an Eligible Instrument) which constitutes part of the
Collateral.
(n) No Modification of Mortgage Documents. The Issuer will not,
-------------------------------------
without the prior written consent of Trustee and the Bank (which consents shall
not be unreasonably withheld), cancel, amend, or materially modify, waive or
permit or acquiesce in the cancellation or material modification of any
underlying Mortgage Document relating to an Instrument other than as expressly
permitted pursuant to the terms of the Documents.
(o) No Distributions. Except for payments made with respect to the
----------------
Notes, Issuer will not make any distribution (inclusive of dividends, stock
repurchases and redemptions, the repayment of loans from, and the making of
loans to or investments in the distributees) unless at the time of the
distribution and after giving effect thereto, there exists neither an Indenture
Event of Default nor any Incipient Default.
(p) Securities Law. Neither the Issuer, directly or indirectly, nor
--------------
anyone acting on its behalf (including, without limitation, the Placement Agent)
will offer the Notes or any part thereof or any similar securities for issue or
sale to, or will solicit any offer to acquire any of the same from, anyone so as
to bring the issuance and sale of the Notes within the provisions of Section 5
of the Securities Act of 1933, as amended. Issuer will not conduct its
activities in such a manner that would make it subject to the provisions of the
Investment Company Act.
(q) Additional Insurance. Issuer will not obtain or carry insurance
--------------------
relating to the Instruments separate from that required by any Document, unless
the Trustee shall have the same rights with respect thereto as it has with
respect to the insurance required by such Document.
(r) No Petition. Issuer hereby agrees and covenants that it will not
-----------
commence or join in any action or proceeding against the Parent or itself under
any liquidation, conservatorship, bankruptcy, reorganization, rearrangement, or
other insolvency law now or hereafter existing.
(s) Notification of Originators. The Trustee may notify Mortgagors
---------------------------
and Originators of the existence of the Trustee's interest as assignee in the
Collateral and reasonably request from such Mortgagors or Originators any
information relating to the Collateral but, with respect to the Mortgagors,
solely for the purpose of monitoring, administering or verifying the Collateral.
Issuer will not act to prevent reasonable delivery of such notice of the Trustee
under Issuer's letterhead if so requested by Trustee.
-43-
(t) No Collateral Encumbrances. The Issuer will not sell, transfer,
--------------------------
exchange or otherwise dispose of or pledge, lien or encumber any of the
Collateral, except in connection with a sale pursuant to Section 817 hereof or
as otherwise permitted by this Indenture or the Servicing Agreement.
(u) No Claims on Notes and Noteholders. The Issuer will not claim any
----------------------------------
credit or make any deduction from any principal, premium, if any, or interest
payable in respect of the Notes (other than amounts properly withheld from such
payments under the Code or any applicable state law) or assert any claim against
any present or former Noteholder by reason of the payment of any taxes levied or
assessed upon any of the Collateral. The Issuer shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law or other law that would prohibit or forgive the
Issuer from paying all or any portion of any Monthly Principal, Overdue
Principal, Monthly Interest or Overdue Interest on the Notes as contemplated
herein or in the Notes, wherever enacted, now or at any time hereafter in force,
or that may affect the covenants or the performance of this Indenture; and (to
the extent that it may lawfully do so) the Issuer hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
Section 604. Representations and Warranties of Prospective
---------------------------------------------
Noteholders. Each prospective initial Noteholder acquiring Notes, each
-----------
prospective transferee acquiring the Notes, and each prospective owner (or
transferee thereof) of a beneficial interest in Notes shall be deemed, by such
purchase, to have made the representation in Section 205(h) to the Issuer, the
Trustee, the Servicer and any successor Servicer.
Section 605. Consolidation and Merger. The Issuer shall not
------------------------
consolidate with or merge with or into any other Person without obtaining the
prior written consent of the Bank and the Class A Majority and the Class B
Majority.
Section 606. Other Agreements. The Issuer will not after the date of
----------------
the issuance of the Notes enter into or become a party to any agreements or
instruments other than this Indenture, the Servicing Agreement, the Note
Purchase Agreement, the Reimbursement Agreement or any other agreement(s)
contemplated by this Indenture, the Reimbursement Agreement or the Servicing
Agreement, including, without limitation, any agreement(s) for disposition of
the Collateral permitted by Section 804 hereof. In addition, the Issuer will
not (i) amend, modify or waive any provision of the Servicing Agreement or
either Transfer Agreement or (ii) give any approval or consent or permission
provided for therein without the prior written consent of the Bank, the Rating
Agency, the Class A Majority and the Class B Majority.
-44-
ARTICLE VII
DISCHARGE OF INDENTURE
Section 701. Full Discharge. (a) Following payment in full of (i)
--------------
the Notes, (ii) the fees, expenses and charges of the Trustee, the Back-Up
Servicer, the Custodian and any Servicer, (iii) all other Obligations of the
Issuer under this Indenture, including, but not limited to, all amounts owing to
the Bank under the Reimbursement Agreement and the Letter of Credit, including
advance payment of the Letter of Credit Fee to be made with regard to the Post
Maturity Period, and (iv) all obligations of the Issuer under the Documents, and
the release by the Trustee of the Collateral in accordance with Section 701(b),
this Indenture shall be discharged.
(b) Upon payment in full of the amounts referred to in clauses (i)
through (iv) of Section 701(a), the Issuer may submit to the Trustee an
Officer's Certificate requesting the release to the Issuer or its designee of
all or a stated amount of the funds on deposit in the Lockbox Account,
Collection Account, Reserve Account and all or any portion of the other
Collateral (collectively, the "Withdrawn Collateral"). Promptly after receipt
--------------------
of such Officer's Certificate, the Trustee shall release the Withdrawn
Collateral from the lien of this Indenture and the lien of the Bank, and deliver
the Withdrawn Collateral to the Issuer or its designee. The Issuer shall be
entitled to deliver more than one such Officer's Certificate from time to time
until the entire Collateral is released and delivered to the Issuer or its
designee.
(c) In connection with the discharge of this Indenture and the release
of the Collateral, the Trustee shall, within two Business Days after request
therefor by the Issuer, execute and deliver to the Issuer instruments
substantially in the form of Exhibit D hereto, together with assignments of
Mortgage, UCC financing statements and such other documents relating thereto as
may be reasonably requested by Issuer, appropriately and effectively evidencing
such discharge and release.
Section 702. Optional Prepayment of Notes. (a) On any Payment Date
----------------------------
succeeding a Collection Period at the end of which the aggregate Note Balance of
all classes of Notes (after giving effect to the payment of Monthly Principal
and any Overdue Principal on such Payment Date), is less than twenty percent
(20%) of the aggregate Note Balance of all classes of Notes on the Closing Date,
the Issuer shall have the option to direct the Trustee to prepay without
premium, and the Trustee shall so prepay, on such Payment Date, the aggregate
Note Balance of all classes of Notes, plus all accrued Monthly Interest and, if
any, all Overdue Interest, together with all unpaid Letter of Credit Drawings
and interest thereon. To exercise such option, the Issuer shall notify the
Trustee, the Rating Agency and the Bank of such election not later than thirty
(30) days preceding such Payment Date (such date a "Notice Date") and shall
-----------
deposit into the Collection Account on or before the Business Day prior to the
related Payment Date an amount which, when combined with the amounts already on
deposit in the Collection Account, shall be sufficient to pay the amounts
referred to in Section 701(a) hereof as of such Payment Date on which such
prepayment will occur. Upon payment of such amounts to the Trustee and the Bank
and payment in full to the party entitled thereto of any other amounts set forth
in Section 701(a) hereof, the Trustee shall, in accordance with the provisions
of Section 701(b) and (c) hereof, release its Security Interest in the
Collateral and
-45-
disburse amounts then on deposit in the Lockbox Account, Collection Account and
the Reserve Account to the Issuer or as it shall direct in writing.
(b) Notice of any prepayment pursuant to this Section 702 shall be
given by the Trustee to Noteholders not later than the 25th day immediately
preceding such final Payment Date specifying (i) the Payment Date upon which
final payment of the Notes will be made and (ii) the amount of any such final
payment. Failure to give notice of prepayment to any Noteholder shall not
impair or affect the validity of the prepayment.
(c) In the event that any amount due to any Noteholder remains
unclaimed, the Issuer shall cause to be published once, in the eastern edition
of The Wall Street Journal, notice that such money remains unclaimed. Any such
unclaimed amounts shall not be invested by the Trustee (notwithstanding the
provisions of Section 305 hereof) and no additional interest shall accrue on the
related Note subsequent to the date on which such funds were available for
distribution to such Noteholder. If, within two years after the date of such
publication, such amount remains unclaimed, the Issuer or its successor shall be
entitled to all unclaimed funds and other assets which remain subject hereto and
the Trustee upon transfer of such funds shall be discharged of any
responsibility for such funds and the Noteholders shall look to the Issuer or
its successor for payment.
-46-
ARTICLE VIII
DEFAULT PROVISIONS AND REMEDIES
Section 801. Event of Default. "Indenture Event of Default",
---------------- --------------------------
wherever used herein, means any one of the following events (whatever the reason
for such Indenture Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority):
(a) if any payment or prepayment of all or any part of the principal
of or interest on any Note and/or any other amounts payable by the Issuer
hereunder (after the expiration of any applicable grace period expressly set
forth therein or herein), whether at the Stated Maturity Date or at any date
fixed for payment by acceleration, by notice of prepayment or otherwise shall
not be paid on the date as and when due;
(b) any representation or warranty of the Issuer contained herein, in
the Servicing Agreement or in the Reimbursement Agreement, shall prove to be, in
any material respect, false or misleading as of the date deemed made and has a
Material Adverse Effect;
(c) a default in the Performance of any of the Obligations of the
Issuer under Section 603(r) hereof;
(d) breach by the Issuer in the Performance of any of Section 603 (c),
(d), (e), (f), (g), (h), (i), (j), (k), (l), (n), (o), (p), (q), (s), (u),
Section 605 or Section 606 hereof, which breach continues unremedied for a
period of twenty (20) Business Days;
(e) a default in the Performance of any Obligations by the Issuer or a
violation by Issuer of any term, covenant or provision of the Documents (other
than another Indenture Event of Default referred to elsewhere in this section)
which continues unremedied (i) for a period of thirty (30) Business Days after
the earlier of Knowledge by Issuer or notice to Issuer of either, (A) a default
under Section 603(a) hereof or (B) any other default or violation which can be
cured by the payment of money alone or (ii) in the case of any other default or
violation, for a period of thirty (30) Business Days after the earlier of
Knowledge of such default or violation by Issuer or notice to such Issuer of
such default or violation, plus only if such default or violation cannot be
cured by Issuer within thirty (30) Business Days and Issuer has been, in the
good faith and reasonable commercial judgment of the Trustee and the Bank, as
determined by the Trustee (acting at the direction of a Majority of the
Noteholders) and the Bank in their sole discretion, diligent in attempting to
effect cure, such additional period not to exceed an additional ten (10)
Business Days as may be required by Issuer proceeding diligently to effect cure,
provided that if any grace period expressly set forth and relating to such
specific covenant pursuant to the terms of the Documents applies, such grace
period shall be the only applicable grace period for the purposes of this
paragraph;
(f) any final, non-appealable judgment or decree for money damages or
for a fine or penalty against Issuer which is not paid and discharged or stayed
within thirty (30) days thereafter and when aggregated with all other judgments
or decree(s) that have remained unpaid and undischarged or stayed for such
period is in excess of $600,000;
-47-
(g) Issuer shall (i) generally not be paying its debts as they become
due, (ii) file or consent by answer or otherwise to the filing against it of a
petition for relief or reorganization, arrangement or liquidation or any other
petition in bankruptcy or insolvency or the appointment of a custodian under the
laws of any jurisdiction, (iii) or any other commencement by such Person of a
voluntary case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to
the entry of a decree or order for relief in respect of it in an involuntary
case or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, (iv) make an assignment for the
benefit of its creditors, (v) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers for itself or any
substantial part of its property, (vi) be adjudicated insolvent, (vii) dissolve
or commence to wind-up its affairs, (viii) take any action for purposes of any
of the foregoing; or a petition for relief or reorganization, arrangement or
liquidation or any other petition in bankruptcy or insolvency or the appointment
of a custodian under the laws of any jurisdiction is filed against it or a
custodian is appointed for the Issuer, the Collateral or any material part of
its properties and such proceeding is not dismissed and appointment vacated
within sixty (60) days thereafter or (ix) a final judgment, fine or other order
for the payment of money shall be rendered by any Governmental Authority against
Issuer and the Issuer shall not discharge the same or provide for its discharge
in accordance with its terms, or obtain an adequate bond with respect thereto,
or procure a stay of execution thereof within thirty (30) days from the date of
its entry and such final judgment, fine or order is likely to have a Material
Adverse Effect; or
(h) any Servicer Event of Default has occurred and is continuing.
Section 802. Acceleration of Stated Maturity; Rescission and
-----------------------------------------------
Annulment.
---------
(a) If an Indenture Event of Default occurs and is continuing, then
and in every such case the Trustee (acting solely at the direction of 66 2/3% of
the Voting Rights), on behalf of the Noteholders and the Bank, shall declare all
unpaid principal of, and interest accrued to the date of payment on, all the
Notes, and all other sums owing by Issuer under the Notes, this Indenture or the
Documents, to be due and payable immediately, without presentment, demand or
protest and upon any such declaration such principal, all unpaid accrued
interest and other sums shall become immediately due and payable, and thereupon,
the remedies provided for in Section 804(b) shall be carried out without the
need for additional direction from the Noteholders. The Trustee shall give
prompt written notice to Issuer, all Holders and the Bank, that any such remedy
has been effected.
(b) At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter in this Article provided, the Majority of Holders,
by written notice to the Issuer, the Bank and the Trustee, may rescind and annul
such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay:
-48-
(A) all of the installments of Overdue Interest on and
Overdue Principal of the Notes which were overdue prior to the
date of such acceleration;
(B) all of the installments of Monthly Interest on and
Monthly Principal of the Notes which were not paid on any Payment
Dates subsequent to the date of such acceleration (without giving
effect to acceleration);
(C) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, out-of-pocket expenses,
disbursements and advances of the Trustee, its agents and counsel
incurred in connection with the enforcement of this Indenture;
and
(D) all draws made on the Letter of Credit that were due
and payable prior to and on such Payment Date; and
(ii) all Indenture Events of Default, other than the nonpayment
of the Monthly Principal of or Monthly Interest on Notes which have
become due solely by such declaration of acceleration, have been cured
or waived as provided in Section 813 hereof.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 803. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee.
-------
(a) The Issuer covenants that, if pursuant to Section 803 hereof an
acceleration has been declared and has not been rescinded, the Issuer will, upon
demand of the Trustee, pay to the Trustee, for the benefit of the Holders and
the Bank, the whole amount of all draws made on the Letter of Credit, Overdue
Principal, Monthly Principal, Overdue Interest and Monthly Interest then due and
payable on such Notes, with interest upon the Overdue Principal, at the rate
borne by the Notes; and, in addition thereto, such further amount as shall be
sufficient to pay any other outstanding amounts due with respect to the
Obligations and to cover the costs and out-of-pocket expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel incurred in connection with the enforcement
of this Indenture.
(b) If the Issuer fails to pay forthwith such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, may,
but shall not be obligated to, institute a judicial Proceeding for the
collection of the sums so due and unpaid and may prosecute such Proceeding to
judgment or final decree and may enforce the same, subject to the requirements
of this Indenture, against the Collateral pledged by the Issuer and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the Collateral and any other assets of the Issuer.
(c) If an Indenture Event of Default occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its rights and the
rights of the Holders and the Bank by
-49-
such other appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce, subject to the requirements of this Indenture,
any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
Section 804. Remedies.
--------
At any time after an Indenture Event of Default has occurred and while
it is continuing, the Trustee, acting at the direction of 66 2/3% of the Voting
Rights, on behalf of the Noteholders and the Bank may, but without obligation,
in addition to the rights and powers granted elsewhere in the Documents and not
in limitation thereof, do any one or more of the following:
(a) exercise any and all of its rights under Section 802(a) of this
Indenture;
(b) first, withdraw all amounts in the Reserve Account, and then draw
the entire LOC Amount available (to the extent of any Overdue Interest, Monthly
Interest, Overdue Principal and Monthly Principal and at the Stated Maturity
Date only, Ultimate Principal of the Notes);
(c) with respect to the Collateral, (i) foreclose on its Security
Interest in the Collateral or any part thereof and sell or otherwise dispose of
such Collateral, in lots or in its entirety, receive and retain any proceeds
from the other items of Collateral, (ii) institute collection, foreclosure and
other enforcement actions against Mortgagors and other persons obligated on the
Mortgage Loans as permitted by the terms thereof, (iii) enter into modification
agreements and make extension agreements with respect to payments and other
performances, (iv) release Persons liable for performance, (v) settle and
compromise disputes with respect to payments and performances claimed due, all
without notice to Issuer, without being called to account for such actions by
Issuer and without relieving Issuer from Performance of the Obligations, and
(vi) receive, collect, open and read all mail of Issuer for the purpose of
obtaining all items pertaining to the Collateral;
(d) proceed to protect and enforce its rights and remedies under the
Documents and any other documents or instruments related thereto, and/or to
exercise any other rights and remedies available to it at law, in equity or by
statute; and
(e) exercise all other rights and remedies of a secured party under
the Uniform Commercial Code of the relevant jurisdiction and all other rights
and remedies accorded to a secured party in equity or at law. Any notice of sale
or other disposition of the Collateral given not less than ten (10) Business
Days prior to such proposed action in connection with the exercise of the
Trustee's remedies shall constitute reasonable and fair notice of such action.
The Trustee may postpone or adjourn any such sale from time to time by
announcement at the time and place of such sale stated on the notice of sale or
by announcement of any adjourned sale, without being required to give a further
notice of sale. Any such sale may be for cash or, unless prohibited by
applicable law, upon such credit or installment as the Trustee may determine.
Issuer shall be credited with the net proceeds of such sale only when such
proceeds are actually received by the Trustee in good current funds. Despite the
consummation of any such sale, Issuer shall remain liable, for any deficiency on
the Obligations which remains outstanding following such sale. All net proceeds
recovered pursuant to a sale shall be applied in the same priorities as set
forth in Section 301 hereof as if a Restricting
-50-
Event had occurred until all amounts due and owing to all of the Noteholders,
the Trustee, the Servicer and the Bank have been paid in full.
Section 805. Trustee May Enforce Claims Without Possession of Notes.
------------------------------------------------------
(a) In all Proceedings brought by the Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party), the Trustee shall be held to represent all
of the Holders of the Notes and, as the Bank may elect, the Bank. The parties
hereto agree, and each Noteholder, by virtue of its acceptance of each Note,
agrees, that it shall not be necessary to make any Holders of the Notes (and the
Bank, to the extent it elects to be represented by the Trustee) a party to any
such Proceedings.
(b) All rights of action and claims under this Indenture or the Notes
may be prosecuted and enforced by the Trustee without the possession of any of
the Notes or the production thereof in any Proceeding relating thereto, and any
such Proceeding instituted by the Trustee shall be brought in its own name as
trustee, and any recovery whether by judgment, settlement or otherwise shall,
after provision for the payment of the reasonable compensation of, expenses, and
disbursements incurred and advances made, by the Trustee, its agents and
counsel, be for the Bank and the ratable benefit of the Holders of the Notes.
Section 806. Power of Attorney; Allocation of Money Collected.
------------------------------------------------
(a) The Trustee may, acting at the direction of 66 2/3% of the Voting
Rights in the name of the Issuer, or in its own name, make and execute all
conveyances, assignments and transfers of the Collateral sold in connection with
the exercise of the Trustee's remedies; and for this purpose the Trustee shall
be appointed in the Indenture as attorney-in-fact for Issuer.
(b) Upon written request of the Trustee when an Indenture Event of
Default exists, the Issuer shall assemble the Collateral not already in the
Trustee's possession and make it available to the Trustee at a time and place
designated by the Trustee.
(c) While an Indenture Event of Default exists, any cash received and
retained by Trustee in connection with the Collateral shall be applied to
payment of the Obligations under the Notes and this Indenture in the manner
provided for in Section 301 hereof until all amounts due and owing to all of the
Noteholders, the Trustee, the Servicer and the Bank have been paid in full.
Section 807. Limitation on Suits.
-------------------
(a) No Holder of any Note shall have any right to institute any
Proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Trustee of a continuing Indenture Event of Default;
-51-
(ii) the Holders of more than 25% in principal amount of the
Outstanding Notes (with the consent of the Bank) shall have made
written request to the Trustee to institute Proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request (the unsecured indemnity of a
Rated Institutional Noteholder being deemed satisfactory for such
purpose);
(iv) the Trustee has, for thirty (30) days after its receipt of
such notice, request and offer of security or indemnity, failed to
institute any such Proceeding; and
(v) no direction inconsistent with such written request has
been given to the Trustee during such thirty (30) day period by the
Majority of Holders;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes, or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the Holders.
(b) In the event the Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than 66-2/3% in principal amount of the Holders of the
outstanding Notes, the Trustee in its sole discretion may determine what action,
if any, shall be taken, notwithstanding any other provision of this Indenture.
In the event that any single Holder representing more than 66-2/3% in principal
amount of Outstanding Notes submits a request and indemnity (the unsecured
indemnity of a Rated Institutional Noteholder being deemed satisfactory for such
purpose), the Trustee shall follow the direction set forth in such request.
Section 808. Unconditional Right of Holders to Receive Principal and
-------------------------------------------------------
Interest.
--------
Notwithstanding any other provision of this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the Monthly Principal, Overdue Principal of and Monthly Interest and
Overdue Interest on such Note as such principal and interest becomes due and
payable and to institute any Proceeding for the enforcement of such payment, and
such rights shall not be impaired without the consent of such Holder.
Section 809. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any Proceeding to enforce
any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such Proceeding, the Issuer, the Trustee and the Holders shall
-52-
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such Proceeding had been instituted.
Section 810. Rights and Remedies Cumulative.
------------------------------
No right or remedy herein conferred upon or reserved to the Trustee,
the Bank or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 811. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee, the Bank or of any Holder of any
Note to exercise any right or remedy accruing upon any Indenture Event of
Default shall impair any such right or remedy or constitute a waiver of any such
Indenture Event of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Trustee, the Bank or to the Holders may
be exercised from time to time, and as often as may be deemed expedient, by the
Trustee, the Bank or by the Holders, as the case may be.
Section 812. Control by Holders.
------------------
Except as otherwise expressly provided herein, the Majority of Holders
shall have the right to direct the time, method and place of conducting any
Proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee, provided that (i) such direction shall not be in
conflict with any rule of law or with this Indenture, including Section 804
hereof, (ii) such Noteholders have offered to the Trustee reasonable indemnity
against costs, expenses and liabilities which it might incur in connection
therewith as provided in Section 902(iii) hereof, (the unsecured indemnity of a
Rated Institutional Noteholder being deemed satisfactory for such purpose),
(iii) the Trustee may take any other action deemed proper by the Trustee which
is not inconsistent with such direction provided, however, that, subject to
Section 901 hereof, the Trustee need not take any action which it determines
might involve it in personal liability or be unjustly prejudicial to the
Noteholders not consenting, and (iv) if the conditions to retention of the
Collateral set forth in Section 816 hereof have been satisfied and the Trustee
elects to retain the Collateral pursuant to such Section, then any direction to
the Trustee by the Holders of the Notes to undertake a sale of the Collateral
shall be of no force and effect.
Section 813. Waiver of Past Defaults.
-----------------------
(a) The Majority of Holders, may on behalf of the Holders of all the
Notes waive any past Indenture Event of Default hereunder and its consequences,
except an Indenture Event of Default
(i) in the payment of the principal of or interest on any Note,
or
-53-
(ii) in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of all the Noteholders.
(b) Upon any such waiver, such Indenture Event of Default shall cease
to exist and shall be deemed to have been cured and not to have occurred for
every purpose of this Indenture; provided, however, that no such waiver shall
extend to any subsequent or other Event of Default or impair any right
consequent thereon.
Section 814. Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any Note by
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; provided,
however that the provisions of this Section shall not apply to any suit
instituted by the Trustee or the Bank, to any suit instituted by any Holder, or
group of Holders, holding in the aggregate more than 10% in principal amount of
the Outstanding Notes, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of or interest on any Note on or
after the stated maturity date of such Note.
Section 815. Waiver of Stay or Extension Laws.
--------------------------------
The Issuer covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
Section 816. Optional Preservation of Collateral.
-----------------------------------
If the Notes have been declared to be due and payable under Section
802 hereof following an Event of Default and such declaration and its
consequences have not been rescinded and annulled, the Trustee may take
possession of the Collateral and shall, provided that such Collateral continues
to provide sufficient funds for the payment of principal of and interest on the
Notes as they would have become due if there had not been such a declaration,
retain the Collateral intact for the benefit of the Noteholders and apply all
distributions received on the Collateral to the payment of principal and
interest on the Notes as if there had not been such a declaration. In
determining whether to so elect, the Trustee shall, at the sole expense of the
Issuer, obtain and may rely upon an opinion of an independent investment banking
firm and/or accountants as to the feasibility of such proposed action and as to
the sufficiency of the Collateral for such purpose, which opinion shall be
conclusive evidence as to such sufficiency. The Trustee shall promptly notify
each
-54-
of the Rating Agency, the Bank and each Noteholder of an election to retain the
Collateral pursuant to this Section 816.
Section 817. Sale of Collateral.
------------------
(a) The power to effect any sale of any portion of the Collateral (a
"Sale") pursuant to Section 804 hereof shall not be exhausted by any one or more
----
Sales as to any portion of the Collateral remaining unsold, but shall continue
unimpaired until the entire Collateral shall have been sold or all amounts
payable on the Notes, the Reimbursement Agreement, under this Indenture and any
other Document shall have been paid. The Trustee may from time to time postpone
any Sale by public announcement made at the time and place of such Sale.
(b) Upon any Sale, whether made under the power of sale hereby given
or under judgment, order or decree in any Proceeding for the foreclosure or
involving the enforcement of this Indenture: (i) the Bank or the Trustee on
behalf of all Noteholders may bid for and purchase the property being sold, and
upon compliance with the terms of such Sale may hold, retain and possess and
dispose of such property in its own absolute right without further
accountability; and (ii) the receipt of the Trustee or of any officer thereof
making such sale shall be a sufficient discharge to the purchaser or purchasers
at such sale for its or their purchase money, and such purchaser or purchasers,
and its or their assigns or personal representatives, shall not, after paying
such purchase money and receiving such receipt of the Trustee or of such officer
therefor, be obliged to see to the application of such purchase money or be in
any way answerable for any loss, misappropriation or non-application thereof.
(c) The Trustee shall execute and deliver an appropriate instrument
of conveyance transferring its interest in any portion of the Collateral in
connection with (1) a Sale thereof or (2) a prepayment or repurchase of a
Mortgage Loan as contemplated in Section 405 hereof. In addition, the Trustee is
hereby irrevocably appointed the agent and attorney-in-fact of the Issuer to
transfer and convey its interest in any portion of the Collateral in connection
with a Sale thereof, and to take all action necessary to effect such Sale. No
purchaser or transferee at such a Sale shall be bound to ascertain the Trustee's
authority, inquire into the satisfaction of any conditions precedent or see to
the application of any monies.
Section 818. Action on Notes.
---------------
The Trustee's right to seek and recover judgment on the Notes or under
this Indenture shall not be affected by the seeking, obtaining or application of
any other relief under or with respect to this Indenture. Neither the lien of
this Indenture nor any rights or remedies of the Trustee or the Noteholders
shall be impaired by the recovery of any judgment by the Trustee against the
Issuer or by the levy of any execution under such judgment upon any portion of
the Collateral or upon any of the assets of the Issuer.
-55-
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 901. Duties of Trustee. (a) The Trustee, prior to the
-----------------
occurrence of an Indenture Event of Default or after the curing of any Indenture
Event of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture. If an
Indenture Event of Default has occurred and is continuing, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise as a prudent Person would
exercise or use under the circumstances in the conduct of such Person's own
affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provisions of this Indenture, shall determine whether they are in the form
required by this Indenture; provided, however, that the Trustee shall not be
responsible for the accuracy or content of any such resolution, certificate,
statement, opinion, report, document, order or other instrument furnished
pursuant to this Indenture.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) prior to the occurrence of an Indenture Event of Default and
after the curing of such Indenture Event of Default, the duties and
obligations of the Trustee shall be determined solely by the express
provisions of this Indenture, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee and, in the absence of bad
faith or negligence on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates, statements, reports,
documents, orders, opinions or other instruments furnished to the Trustee
and conforming to the requirements of this Indenture;
(ii) the Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Majority of Holders and the Bank
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture.
-56-
(d) No provisions of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it (the unsecured indemnity of a Rated Institutional Noteholder being
deemed satisfactory for such purpose).
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 901, except in its capacity as a successor Servicer.
Section 902. Certain Matters Affecting the Trustee. Except as
-------------------------------------
otherwise provided in Section 901 hereof:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any Opinion of Counsel from counsel chosen with
due care, certificate of a Servicing Officer, certificate of auditors or
any other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(ii) The Trustee may consult with counsel and any advice of such
counsel, to the extent such counsel is chosen with due care, shall be full
and complete authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance with
such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to institute, conduct
or defend any litigation or proceeding hereunder or in relation hereto at
the request, order or direction of any of the Noteholders, pursuant to the
provisions of this Indenture, unless such Noteholders shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby (the unsecured
indemnity of a Rated Institutional Noteholder being deemed satisfactory for
such purpose);
(iv) The Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture;
(v) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so by
the Majority of Holders or the Bank; provided, however, that the Trustee
may require reasonable indemnity against any cost, expense or liability
likely to be incurred in making such investigation as a condition to so
proceeding (the unsecured indemnity of a Rated Institutional Noteholder
being deemed satisfactory for such purpose). The reasonable expense of any
such examination shall be paid, on a pro rata basis, by the Noteholders or,
if the Bank solely requests such an examination, by the Bank or, if paid by
the Trustee, shall be reimbursed by such Noteholders or the Bank upon
demand; and
-57-
(vi) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through its agents or
attorneys, provided that the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed by
it with due care hereunder.
The provisions of this Section 902 shall be applicable to the Trustee
in its capacity as Trustee under this Indenture. If the Trustee, in accordance
with Section 501 hereof, shall have succeeded to the obligations of the
Servicer, the provisions of the Servicing Agreement shall govern the actions of
the Trustee, in accordance with Section 501 hereof, as successor Servicer.
Section 903. Trustee Not Liable. (a) The recitals contained herein
------------------
(other than the representations and warranties contained in Section 911 hereof)
and in the Notes (other than the certificate of authentication on the Notes),
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture, the Notes, the Collateral or
of any related document other than with respect to the representations and
warranties of Section 911 hereof. The Trustee shall not be accountable for the
use or application by the Issuer of any of the Notes or of the proceeds thereof,
or for the use or application of any funds paid to the Issuer or the Servicer
(if the Servicer is a Person other than the Trustee) in respect of the
Collateral.
(b) The Trustee shall have no responsibility or liability, other than
with respect to any liability arising from the Trustee's own negligence or
willful misconduct, for or with respect to the existence or validity of any
Instrument or any other item of the related Mortgage Loan, the perfection of any
Security Interest (whether as of the date hereof or at any future time), the
maintenance of or the taking of any action to maintain such perfection, the
validity of the assignment of any portion of the Collateral to the Trustee or of
any intervening assignment, the performance or enforcement of any Instrument,
the compliance by any Originator, the Issuer or the Servicer or any successor
Servicer thereto (other than the Trustee acting as successor Servicer pursuant
to the terms of this Indenture) with any covenant or the breach by the Issuer,
any Originator or the Servicer or any successor Servicer of any warranty or
representation made hereunder or in any related document or the accuracy of such
warranty or representation, any investment of monies in the Collection Account
or the Reserve Account or any loss resulting therefrom, the acts or omissions of
any Originator, the Issuer, the Servicer (other than the Trustee acting as
Servicer) or any successor Servicer or any Mortgagor or any action of the
Servicer taken in the name of the Trustee.
(c) The Trustee shall not have any obligation or liability under any
Mortgage Loan by reason of or arising out of this Indenture or the granting of a
security interest in such Mortgage Loan hereunder or the receipt by the Trustee
of any payment relating to any Mortgage Loan pursuant hereto, nor shall the
Trustee be required or obligated in any manner to perform or fulfill any of the
obligations of the Issuer, the Servicer (other than as successor Servicer
pursuant to the terms of this Indenture) or any Originator under or pursuant to
any Mortgage Loan, or to make any payment, or to make any inquiry as to the
nature or the sufficiency of any payment received by it, or the sufficiency of
any performance by any party, under any Mortgage Loan.
Section 904. Trustee May Own Notes. The Trustee in its individual
---------------------
or any other capacity may become the owner or pledgee of Notes with the same
rights it would have if it were not
-58-
Trustee provided that such transaction shall not result in the disqualification
of the Trustee for purposes of Rule 3a-7 under the Investment Company Act of
1940.
Section 905. Lien for Trustee's Fees and Expenses. The Issuer shall
------------------------------------
be obligated to pay the reasonable fees and expenses of the Trustee, including,
without limitation, indemnification for loss, liability or expense incurred
without negligence or willful misconduct on its part, arising out of performance
of its duties hereunder, from the Collection Account in accordance with the
priorities and limitations set forth in Section 301 hereof. In addition, the
Issuer shall indemnify the Trustee for, and hold it harmless against, any loss,
liability or expense incurred without negligence or willful misconduct on the
Trustee's part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself both individually and in its representative capacity against any claim or
liability in connection with the exercise or performance of any of its power or
duties hereunder. Upon the occurrence of an Indenture Event of Default resulting
in an acceleration of maturity of the Notes that has not been rescinded and
annulled, the Trustee shall have, as security for the performance of the Issuer
under this Section 905, a lien ranking senior to the lien of the Notes with
respect to which any claim of the Trustee under this Section 905 arose upon all
property and funds held or collected as part of the Collateral by the Trustee in
its capacity as such. The Trustee shall not institute any Proceeding seeking the
enforcement of such lien against the Collateral unless such Proceeding is in
connection with a proceeding in accordance with Article VIII hereof for
enforcement of the lien of this Indenture for the benefit of the Holders of the
Notes secured by the Collateral after the occurrence of an Indenture Event of
Default (other than an Indenture Event of Default arising solely from a breach
of this Section 905) and a resulting declaration of acceleration of maturity of
such Notes that has not been rescinded and annulled.
Section 906. Eligibility Requirements for Trustee. The Trustee
------------------------------------
hereunder shall at all times be a national banking association or a bank or
trust company, organized and doing business under the laws of the United States
of America or any State, authorized under such laws to exercise corporate trust
powers. In addition, the Trustee or its parent corporation shall at all times
(i) have a combined capital and surplus of at least $150,000,000 and (ii) be
subject to supervision or examination by Federal or state authority. If such
entity publishes reports of condition at least annually, pursuant to law or to
the requirements of such supervising or examining authority, then, for the
purposes of this Section, the combined capital and surplus of such entity shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In addition, the Trustee hereunder shall at
all times qualify for purposes of Rule 3a-7 as an "independent trustee" under
the Investment Company Act of 1940. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, the Trustee
shall resign immediately in the manner and with the effect specified in Section
907 hereof.
Section 907. Resignation and Removal of Trustee. (a) The Trustee
----------------------------------
may not at any time resign without first (i) appointing a successor Trustee that
has accepted such appointment and that has been approved, in writing, by the
Class A Majority, the Class B Majority, the Bank, the Rating Agency, and if no
Indenture Event of Default or Incipient Default has occurred and is continuing,
the Issuer and (ii) delivering to the Bank and the Noteholders an Opinion of
Counsel stating that the Trustee cannot legally perform its duties as Trustee
under the Documents. If no successor Trustee shall have been so appointed and
have accepted appointment within 60 days after
-59-
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor ▇▇▇▇▇▇▇.
(b) The Trustee may be removed at any time at the direction of the
Majority of Holders and the Bank upon written notice delivered to the Trustee
and the Issuer. The Issuer, with the consent of the Bank and the Majority of
Holders, may remove the Trustee if: (1) the Trustee fails to comply with Section
906 hereof; (2) the Trustee is adjudged bankrupt or insolvent; (3) a receiver or
other public officer takes charge of the Trustee or its property or affairs; or
(4) the Trustee becomes incapable of acting.
(c) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 906 hereof or this Section 907 and
shall fail to resign after written request therefor by the Bank, the Rating
Agency and the Majority of Holders (or the Issuer with the consent of the Bank
and the Majority of Holders), then the Issuer may, and shall at the direction of
the Bank, remove the Trustee and appoint a successor Trustee reasonably
acceptable to the Majority of Holders and the Bank by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor Trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 908 hereof.
Section 908. Successor Trustee. (a) Any successor Trustee appointed
-----------------
as provided in Section 907 hereof shall execute, acknowledge and deliver to the
Issuer and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee herein. The predecessor Trustee shall, at the direction of the
Class A Majority and the Class B Majority with the consent of the Bank, cause
the Custodian to deliver to the successor Trustee the Mortgage Loans and
Mortgage Loan Files, if any, delivered to it, together with any amounts
remaining in the Collection Account, the Letter of Credit Account and/or the
Reserve Account. In addition, the predecessor Trustee and, upon request of the
successor Trustee, the Issuer shall execute and deliver such instruments and do
such other things as may reasonably be required for more fully and certainly
vesting and confirming in the successor Trustee all such rights, powers, duties
and obligations.
(b) No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 906 hereof and shall be reasonably
acceptable to the Bank.
(c) Upon acceptance of appointment by a successor Trustee as provided
in this Section, the Issuer shall mail notice of the succession of such Trustee
hereunder to the Bank, the Rating Agency and to all Noteholders at their
addresses as shown in the registration books maintained by the Trustee. If the
Issuer fails to mail such notice within 10 days after acceptance of appointment
by the successor Trustee, the successor Trustee shall cause such notice to be
mailed at the expense of the Issuer.
-60-
Section 909. Merger or Consolidation of Trustee. Any entity into
----------------------------------
which the Trustee may be merged or converted or with which it may be
consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided such entity shall be eligible under the provisions of
Section 906 hereof, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 910. Separate Trustees, Co-Trustees and Custodians. (a) The
---------------------------------------------
Trustee or the Majority of Holders, in each case with the consent of the Bank
and, provided neither an Incipient Default nor an Indenture Event of Default has
occurred, the Issuer, which consents shall not be unreasonably withheld or
delayed, shall each have the power from time to time to appoint one or more
persons or corporations to act either as co-trustees jointly with the Trustee,
or as separate trustees, or as custodians, for the purpose of holding title to,
foreclosing or otherwise taking action with respect to any of the Collateral,
where such separate trustee or co-trustee is necessary or advisable (or the
Trustee is advised by counsel that such separate trustee or co-trustee is
necessary or advisable) under any applicable laws or for the purpose of
otherwise conforming to any legal requirement, restriction or condition in any
applicable jurisdiction. The separate trustees, co-trustees, or custodians so
appointed shall be trustees, co-trustees, or custodians for the benefit of all
Noteholders and shall have such powers, rights and remedies as shall be
specified in the instrument of appointment; provided, however, that no such
appointment shall, or shall be deemed to, constitute the appointee an agent of
the Trustee.
(b) Every separate trustee, co-trustee and custodian shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon the
Trustee in respect of the receipt, custody and payment of moneys shall be
exercised solely by the Trustee;
(ii) all other rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised
or performed by the Trustee and such separate trustee, co-trustee, or
custodian jointly, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer hereunder)
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations (including
the holding of title to the Collateral or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee,
co-trustee or custodian;
(iii) no trustee or custodian hereunder shall be personally liable by
reason of any act or omission of any other trustee or custodian hereunder;
and
(iv) the Trustee or the Majority of Holders (in each case, with the
consent of the Bank) may at any time accept the resignation of or remove
any separate trustee, co-trustee or custodian so appointed by it or them if
such resignation or removal does not violate the other terms of this
Indenture.
-61-
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee, co-trustee, or custodian shall refer to this Indenture and the
conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Indenture, specifically including every provision of this Indenture relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be furnished to the Trustee.
(d) Any separate trustee, co-trustees, or custodian may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Indenture on its behalf and in its name. If any separate
trustee, co-trustee, or custodian shall die, become incapable of acting, resign
or be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee or custodian.
(e) No separate trustee, co-trustee or custodian hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
906 hereof and no notice to Noteholders of the appointment thereof shall be
required under Section 908 hereof.
(f) The Trustee agrees to instruct the co-trustees, if any, to the
extent necessary to fulfill the Trustee's obligations hereunder.
Section 911. Representations and Warranties. The Trustee hereby
------------------------------
represents and warrants that:
(a) Organization and Good Standing. The Trustee is a national banking
------------------------------
association duly organized, validly existing and in good standing under the laws
of the United States of America, and has the power to own its assets and to
transact the business in which it is presently engaged;
(b) Authorization. The Trustee has the power, authority and legal
-------------
right to execute, deliver and perform this Indenture and to authenticate the
Notes, and the execution, delivery and performance of this Indenture and the
authentication of the Notes has been duly authorized by the Trustee by all
necessary corporate action;
(c) Binding Obligations. This Indenture, assuming due authorization,
-------------------
execution and delivery by all other parties hereto, constitute the legal, valid
and binding obligations of the Trustee, enforceable against the Trustee in
accordance with their terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
(whether statutory, regulatory or decisional) now or hereafter in effect
relating to creditors' rights generally and the rights of trust companies in
particular and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to certain equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought,
whether a proceeding at law or in equity.
-62-
(d) No Violation. The performance by the Trustee of its obligations
------------
under this Indenture will not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice, lapse of time or
both) a default under, the charter documents or bylaws of the Trustee;
(e) No Proceedings. There are no proceedings or investigations to
--------------
which the Trustee is a party pending, or, to the knowledge of the Trustee,
threatened, before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality (A) asserting the invalidity of this
Indenture or the Notes, (B) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Indenture or (C)
seeking any determination or ruling that would materially and adversely affect
the performance by the Trustee of its obligations under, or the validity or
enforceability of, this Indenture or the Notes; and
(f) Approvals. Neither the execution or delivery by the Trustee of
---------
this Indenture nor the consummation of the transactions by the Trustee
contemplated hereby and thereby requires the consent or approval of, the giving
of notice to, the registration with or the taking of any other action with
respect to any governmental authority or agency under any existing federal or
State of Minnesota or State of Maryland law governing the banking or trust
powers of the Trustee.
Section 912. Trustee Offices. The Trustee shall maintain in
---------------
Minneapolis, Minnesota an office or offices or agency or agencies where Notes
may be surrendered for registration of transfer or exchange, which office shall
initially be located at Sixth Street and Marquette Avenue, Minneapolis,
Minnesota 55479-0070 and shall promptly notify the Issuer, the Servicer, the
Noteholders and the Bank of any change of such location.
Section 913. Notice of Event of Default. If the Trustee shall have
--------------------------
actual Knowledge of an Indenture Event of Default, the Trustee shall give prompt
written notice thereof to the Bank, the Rating Agency and the Noteholders. For
all purposes of this Indenture, in the absence of Knowledge by a corporate trust
officer of the Trustee, the Trustee shall not be deemed to have actual knowledge
of any Indenture Event of Default unless notified in writing thereof by the
Issuer, any Noteholder or the Bank, and such notice references the Notes
generally, the Issuer or this Indenture.
Section 914. Back-Up Servicer and Securities Intermediary. Except
--------------------------------------------
as provided under Section 902 hereof with respect to the Trustee succeeding to
the obligations of Servicer, the Back-Up Servicer and the Securities
Intermediary shall have the same rights and protections as the Trustee in
performing their obligation under the Indenture and the related Documents.
-63-
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 1001. Supplemental Indentures without Consent of Holders.
---------------------------------------------------
Without the consent of any Noteholder, but with the consent of the
Bank, the Issuer and the Trustee may enter into one or more supplements to this
Indenture ("Supplements") for any of the following purposes: (i) to add to the
-----------
covenants of the Issuer for the benefit of the Noteholders and the Bank, or to
surrender any right or power herein conferred upon the Issuer; (ii) to correct
any manifest error, or to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Trustee any property subject or required to be subjected to the
lien of this Indenture, or to subject additional property to the lien of this
Indenture; (iii) to add to the conditions, limitations and restrictions on the
authorized amount, terms and purposes of issue, authentication and delivery of
the Notes, as herein set forth, or additional conditions, limitations and
restrictions thereafter to be observed by the Issuer; (iv) to convey, transfer,
assign, mortgage or pledge any additional property to or with the Trustee; or
(v) to evidence the succession of the Trustee.
Section 1002. Supplemental Indentures with Consent of Holders.
------------------------------------------------
With the consent of the Class A Majority, the Class B Majority and the
Bank, and upon prior notice to the Rating Agency, the Issuer and the Trustee may
enter into a Supplement for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Noteholders under this Indenture;
provided, however, that no such Supplement shall, without the consent of the
Noteholder of each outstanding Note affected thereby and the Bank: (i) reduce
the principal amount of any Note or the rate of interest thereon, or change the
date on which, or the place of payment where, or the coin or currency in which,
any Note or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the stated maturity
date thereof; (ii) reduce the percentage in principal amount of the outstanding
Notes, the consent of whose Noteholders is required for any such Supplement, or
the consent of whose Noteholders is required for any waiver of compliance with
certain provisions of this Indenture or certain Indenture Events of Default and
their consequences provided for in this Indenture or the consent of which is
required to waive any payment default on the Notes; (iii) modify the provisions
of this paragraph except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived without
the consent of the Bank and the Noteholder of each outstanding Note affected
thereby; (iv) modify or alter the definition of the term "Outstanding"; (v)
impair or adversely affect the Collateral except as otherwise permitted herein;
(vi) permit the creation of any Lien ranking prior to or on a parity with the
Lien of this Indenture with respect to any part of the Collateral or terminate
the Lien of this Indenture on any Collateral (except as otherwise expressly
permitted herein) or deprive the Bank or any Noteholder of the security afforded
by the Lien of this Indenture; or (vii) modify any of the provisions of this
Indenture in such a manner as to affect the amount of any payments of interest
or principal due on any Note on any Payment Date or at the Stated Maturity Date.
-64-
Section 1003. Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, a
Supplement permitted by this Article or the modification thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and shall
be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such Supplement is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such Supplement which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Section 1004. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any Supplement under this Article, this
Indenture shall be modified in accordance therewith, and such Supplement shall
form a part of this Indenture for all purposes, and every Holder of Notes
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
Section 1005. Reference in Notes to Supplemental Indentures.
----------------------------------------------
Notes authenticated and delivered after the execution of any
Supplement pursuant to this Article may, and shall if required by the Issuer,
bear a notation in form approved by the Trustee as to any matter provided for in
such Supplement. If the Issuer shall so determine, new Notes so modified as to
conform, in the opinion of the Trustee, may be prepared and executed by the
Issuer and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
Section 1006. Notice of Supplemental Indentures.
----------------------------------
Promptly, but in no event later than ten (10) days after the execution
by the Issuer and the Trustee of any Supplement, the Issuer shall mail to the
Noteholders, the Trustee, the Bank and the Rating Agency, a true copy of such
Supplement. Any failure of the Issuer to mail such copy of the Supplement, or
any defect therein, shall not, however, in any way impair or affect the validity
of any such Supplement.
Section 1007. Bank to Approve Amendments.
--------------------------
The parties hereto, and the Holders from time to time of the Notes,
grant to the Bank the right of prior approval of amendments or supplements to
the Documents (other than Mortgage Documents).
-65-
ARTICLE XI
HOLDERS LISTS
Section 1101. Issuer to Furnish Trustee Names and Addresses of
------------------------------------------------
Holders.
-------
The Issuer will furnish or cause to be furnished to the Trustee and
the Bank (i) not more than ten (10) days after each Record Date with respect to
the Notes, a list, in such form as the Trustee or the Bank may reasonably
require, of the names and addresses and tax identification numbers of the
Holders of Notes as of such Record Date, and (ii) at such other times as the
Trustee or the Bank may request in writing, within thirty (30) days after the
receipt by the Issuer of any such request, a list of similar form and content as
of a date not more than fifteen (15) days prior to the time such list is
furnished; provided, however, that so long as the Trustee maintains the Note
Register, no such lists shall be required.
Section 1102. Preservation of Information; Communications to Holders.
------------------------------------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 1101 and the names and
addresses of Holders received by the Trustee in its capacity as note registrar.
The Trustee may destroy any list furnished to it as provided in Section 1101
upon receipt of a new list so furnished.
-66-
ARTICLE XII
REPURCHASE AND SUBSTITUTION
Section 1201. Optional Purchase or Substitution by Issuer or Servicer
-------------------------------------------------------
(a) In addition to the other circumstances under the Documents
permitting purchase or substitution of Instruments, the Issuer and the Servicer
shall have the right (but not the obligation), at any time either to purchase
for the applicable Mortgage Purchase Price, or to substitute one or more
Substitute Mortgage Loans for other, Mortgage Loans then subject to the Lien of
this Indenture (each a "Predecessor Mortgage Loans") if,
--------------------------
(1) (i) the Predecessor Mortgage Loan is either a Mortgage Loan in
imminent default or a Defaulted Mortgage Loan as of the most recent
Determination Date, or a bankruptcy petition has been filed by or against
the Mortgagor; and
(ii) the Aggregate Instrument Principal Balance of (A) all
Predecessor Mortgage Loans for which substitution or purchase has been or
is being made pursuant to subsection 1201(a)(1)(i) above and (B) all
Mortgage Loans modified pursuant to clause (x) of Section 3.06 of the
Servicing Agreement does not exceed fifteen percent (15%) of the Initial
Aggregate Instrument Principal Balance; or
(2) (i) the Predecessor Mortgage Loan became either an Upgrade or a
Wraparound Mortgage; and
(ii) the Aggregate Instrument Principal Balance of all Predecessor
Mortgage Loans for which a Substitute Mortgage Loan is delivered under this
subsection 1201(a)(2) does not exceed fifteen percent (15%) of the Initial
Aggregate Instrument Principal Balance.
(b) The Issuer shall either give written notice or cause the
Servicer in the Servicer Report to specify to the Trustee, the Bank and the
Rating Agency each substitution of Instruments pursuant to subsection 1201(a)(1)
hereof or subsection 1201(a)(2) hereof or any mandatory substitution or purchase
during the preceding Collection Period. Such Servicer Report or other written
notice shall (i) specify the amount of each Scheduled Payment under the
Predecessor Mortgage Loan and the amount of each Scheduled Payment under each
Substitute Mortgage Loan, (ii) specify the Instrument Principal Balance of the
Predecessor Mortgage Loans, the Instrument Principal Balance of the Substitute
Mortgage Loans and any amounts to be deposited in the Collection Account in
connection with such Substitute Mortgage Loans and (iii) with respect to a
substitution pursuant to subsection 1201(a)(1) hereof or subsection 1201(a)(2)
hereof above, be accompanied by an Officer's Certificate of Issuer or Servicer,
certifying as to compliance with the provisions of the applicable paragraph.
Section 1202. Release of Predecessor Mortgage Loan. Upon any
------------------------------------
substitution of Instruments in accordance with the provisions of Section 1201(a)
above or any mandatory substitution or purchase, the Predecessor Mortgage Loan
and all related Collateral shall be released from the Lien of this Indenture and
the Originator's, the Issuer's and the Servicer's obligations under
-67-
the Documents with respect to such Predecessor Mortgage Loan shall cease (except
for any indemnities with respect to such Predecessor Mortgage Loan), but the
related Originator, the Issuer and the Servicer shall each thereafter have the
same obligations with respect to the Substitute Mortgage Loan as each of them
have with respect to all other Mortgage Loans subject to the terms of the
Documents.
-68-
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 1301. Compliance Certificates and Opinions.
------------------------------------
(a) Upon any application or request by the Issuer to the Trustee to
take any action under any provision of this Indenture, the Issuer shall furnish
to the Trustee a certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and, if deemed reasonably necessary by the Trustee or if required
pursuant to the terms of this Indenture, an Opinion of Counsel stating that in
the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
(b) Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether such covenant
or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1302. Form of Documents Delivered to Trustee.
--------------------------------------
(a) In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion may be based, insofar as it relates to
legal matters, upon a certificate or opinion of, or representations by, counsel,
unless such officer knows that the
-69-
certificate or opinion or representations with respect to the matters upon which
his certificate or opinion is based are erroneous.
(c) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1303. Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be (i) embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing, (ii) evidenced by (A) the record of one or more Holders
voting in favor thereof at any meeting of Holders or (B) the written consent or
direction of the Majority of Holders or the Holders of a specified percentage of
the principal amount of the Notes, as the case may be, or (iii) evidenced by a
combination of such instrument or instruments and any such record of such a
meeting; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments and record are delivered to
the Trustee and, where it is hereby expressly required, to the Issuer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and conclusive in favor of the
Trustee and the Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgements of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Note shall bind every future Holder of
the same Note and the Holder of every Note issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Issuer in
reliance thereon, whether or not notation of such action is made upon such Note.
Section 1304. Reserved.
Section 1305. Limitation of Rights. Except as expressly set forth in
--------------------
this Indenture, this Indenture shall be binding upon the Issuer, the Trustee,
the Noteholders and their respective successors and permitted assigns and shall
not inure to the benefit of any Person other than the parties hereto, the
Noteholders and the Servicer as provided herein. Notwithstanding the previous
-70-
sentence, the parties hereto, the Transferor and the Servicer acknowledge that
the Bank is an express third-party beneficiary hereof entitled to enforce its
rights hereunder as if actually a party hereto.
Section 1306. Severability. (a) If any provision of this Indenture
------------
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever.
(b) The invalidity of any one or more phrases, sentences, clauses or
Sections of this Indenture contained, shall not affect the remaining portions of
this Indenture, or any part thereof.
Section 1307. Notices. All demands, notices and communications
-------
hereunder shall be in writing, personally delivered, sent by an overnight
express mail or delivery service or by fax, and shall be deemed to have been
duly given upon receipt (a) in the case of the Trustee, at the following
address: Norwest Bank Minnesota, National Association, Sixth Street and
Marquette Avenue, Minneapolis, Minnesota, 55479-0070, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇,
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Corporate Trust Services -- Asset-Backed
Administration, with a copy to ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Corporate Trust Department, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇,
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, (b) in the case of the Servicer, at the following
address: VCH Portfolio Services, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇,
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to VCH Portfolio Services, Inc., ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq.,
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇, (c) in the case of the
Issuer, at the following address: Vistana 1998-A Timeshare Mortgage Corp., ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial
Officer, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to
Vistana 1998-A Timeshare Mortgage Corp., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq., Telephone: (▇▇▇) ▇▇▇-▇▇▇▇,
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇, (d) in the case of VDI, at the following address:
Vistana Development, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Chief Financial Officer, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Telecopy: (407)
239-3222, with a copy to Vistana Development, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq., Telephone: (305) 577-
3150, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇, (e) in the case of Points, at the following
address: Points of Colorado, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, and ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇▇▇▇▇, Esq., Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇, (f) in
the case of the Rating Agency, at the following address: Duff & ▇▇▇▇▇▇ Credit
Rating Co., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ABS/Timeshare
Group and (g) in the case of the Bank, at the following address: ▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Asset-Backed Finance, Telephone: (212)
▇▇▇-▇▇▇▇, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ or at other such address as shall be
designated by such party in a written notice to the other parties. Any notice
required or permitted to be given to a Noteholder shall be sent to the address
of such Holder as shown in the Note Register or to the telephone and fax number
furnished by such Noteholder to the Note Registrar.
-71-
Section 1308. Captions. The captions or headings in this Indenture
--------
are for convenience only and in no way define, limit or describe the scope or
intent of any provisions or sections of this Indenture.
Section 1309. Governing Law. This Indenture shall be governed by and
-------------
interpreted in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of law.
Section 1310. No Petition. The Trustee, on its own behalf, hereby
-----------
covenants and agrees, and each Noteholder by its acquisition of a Note shall be
deemed to covenant and agree, that it will not institute against the Issuer any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law, at
any time other than on a date which is at least 135 days after the last date on
which any such Note was outstanding.
Section 1311. General Interpretive Principles. For purposes of this
-------------------------------
Indenture except as otherwise expressly provided or unless the context otherwise
requires:
(a) the defined terms in this Indenture shall include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include any other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date hereof;
(c) references herein to "Articles", "Sections", "Subsections",
"paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, paragraphs and other subdivisions of
this Indenture;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
Section 1312. Third Party Beneficiaries. The Trustee and the Issuer
-------------------------
hereby agree that the Bank shall be a third party beneficiary with respect to
the rights, duties and obligations of the various parties to this Indenture.
Section 1313. Bank Consent and Direction Rights. The Bank's rights
---------------------------------
hereunder shall terminate at such time as no amount owed to the Bank hereunder
or under the Reimbursement Agreement remains unpaid, and the Bank shall have
received an Opinion of Counsel to the effect
-72-
that no monies paid under the Notes are subject to recapture as preferences
under Section 547 of the Bankruptcy Code.
Section 1314. Effective Date of Transaction. Notwithstanding that
-----------------------------
this Indenture is dated as of July 31, 1998, the various transfers, conveyances
and transactions set forth in this Indenture, including, without limitation, the
security interests granted pursuant to Sections 309 and 401 hereof, shall not be
effective until the Closing Date.
Section 1315. Confidentiality. Each Noteholder, by acceptance of its
---------------
Note, agrees and covenants to abide by the provisions of Sections 205(j) and
602(k) hereof.
IN WITNESS WHEREOF, the Issuer, the Securities Intermediary, the Back-
Up Servicer and the Trustee have caused this Indenture to be duly executed and
delivered by their respective officers thereunto duly authorized and their
respective seals, duly attested, to be hereunto affixed, all as of the day and
year first above written.
VISTANA 1998-A TIMESHARE MORTGAGE CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President - Law
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee, as Securities
Intermediary and as Back-up Servicer
By: /s/ ▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇ ▇▇▇▇
Title: Assistant Vice President
Exhibit A
---------
Instrument Schedule
EXHIBIT B
TRANSFER CERTIFICATE
(Transfers pursuant to Rule 144A)
FOR VALUE RECEIVED the undersigned registered Holder hereby sell(s),
assign(s) and transfer(s) unto ______________________________________
______________________________________________________________________________
______________ (please print or typewrite name, Taxpayer Identification No. and
address including postal zip code of assignee) ____________________________
_________________________________________________ the accompanying ___%
Timeshare Mortgage-Backed Notes, Series 1998-A, Class A [and] [___% Timeshare
Mortgage-Backed Notes, Series 1998-A, Class B ] bearing number ___________ (the
"Note") and all rights thereunder, hereby irrevocably constituting and
----
appointing _____________ attorney to transfer said Note on the books of the
Issuer with full power of substitution in the premises. Capitalized terms not
defined herein shall have the meaning set forth in the Indenture, dated as of
July 31, 1998, by and between Vistana 1998-A Timeshare Mortgage Corp., as Issuer
and Norwest Bank National Association, as Trustee.
In connection with any transfer of the Note, the undersigned confirms
that, without utilizing any general solicitation or general advertising, the
Note is being transferred by the undersigned to a "Qualified Institutional
Buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")) pursuant to the exemption from registration under the
--------------
Securities Act provided by Rule 144A thereunder, in a transaction which
satisfies the requirements of such Rule 144A.
The undersigned (the "Seller") has informed the assignee of the Note
------
(the "Purchaser"), and such assignee understands, that the Note will bear a
---------
legend to the following effect:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY
NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED, UNLESS SUCH
TRANSFER IS MADE TO A PERSON REASONABLY BELIEVED TO BE A QUALIFIED
INSTITUTIONAL BUYER ("QIB") UNDER RULE 144A, AS AMENDED ("RULE 144A") OR TO
AN ACCREDITED INVESTOR UNDER SECTION 501(a)(1), (2), (3) AND (7) OF THE
SECURITIES ACT ("ACCREDITED INSTITUTIONAL INVESTOR") IN A TRANSACTION WHICH
DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND PURSUANT TO AN
EFFECTIVE REGISTRATION OR QUALIFICATION UNDER ANY STATE SECURITIES OR "BLUE
SKY" LAWS, OR IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR
QUALIFICATION. IN ADDITION, SUCH TRANSACTION MUST COMPLY WITH THE
PROVISIONS SET FORTH IN SECTION 205 OF THE INDENTURE. BECAUSE OF THE
PROVISIONS FOR THE PAYMENT OF PRINCIPAL CONTAINED HEREIN, THE OUTSTANDING
PRINCIPAL AMOUNT OF THIS NOTE MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE
HEREOF.
-1-
ANYONE PURCHASING THIS NOTE MAY ASCERTAIN THE OUTSTANDING PRINCIPAL AMOUNT
HEREOF BY INQUIRY OF THE TRUSTEE.
Dated: ____________
[SELLER]
By:_________________________________________
Name:____________________
Title:___________________
NOTICE: The signature of the registered Holder to
this assignment must correspond with the name as
written upon the face of the within instrument in
every particular, without alteration or
enlargement or any change whatsoever.
TO BE COMPLETED BY PURCHASER:
By execution hereof ▇▇▇▇▇▇▇▇▇ agrees to be bound, as Noteholder, by
all of the terms, covenants and conditions of the Indenture and the Note and
from and after the date hereof Purchaser assumes all of Seller's obligations as
Noteholder thereunder.
The undersigned represents and warrants to the Seller, the Issuer, the
Trustee, the Bank, the Servicer and any subservicer that (A) it is a "Qualified
Institutional Buyer" as defined in Rule 144A under the Securities Act and
acknowledges that it has received such information regarding the Issuer as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the registered Holder is relying upon
the undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A and (B) the Investor understands and
acknowledges that the acquisition of Notes by an employee benefit plan subject
to the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
-----
the provisions of Section 4975 of the Code (a "Plan"), could result in a
----
prohibited transaction under ERISA or Section 4975 of the Code, unless such
acquisition is subject to a statutory or administrative exemption.
Dated: __________________
By: _____________________________
Name: ___________________________
Title: __________________________
NOTICE: To be executed by an authorized officer.
-2-
EXHIBIT C
TRANSFER CERTIFICATE
(Transfers other than pursuant to Rule 144A to Accredited Institutional
Investors)
VCM Portfolio Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Vistana 1998-A Timeshare Mortgage Corp.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Re: ___% Timeshare Mortgage-Backed Notes, Series 1998-A, Class A
[and] [___% Timeshare Mortgage-Backed Notes, Series 1998-A,
Class B] (the "Note"), issued by Vistana 1998-A Timeshare
Mortgage Corp. (the "Issuer")
Dear Sir or Madam:
FOR VALUE RECEIVED the undersigned registered Holder hereby sell(s),
assign(s) and transfer(s) unto
___________________________________________________
_______________________________________________________________________________
(please print or typewrite name, Taxpayer Identification No. and address
including postal zip code of assignee) ____________________________
_________________________________________________ the accompanying ___%
Timeshare Mortgage-Backed Notes, Series 1998-A, Class A [and] [___% Timeshare
Mortgage-Backed Notes, Series 1998-A, Class B ] bearing number ___________ (the
"Note") and all rights thereunder, hereby irrevocably constituting and
----
appointing _____________ attorney to transfer said Note on the books of the
Issuer with full power of substitution in the premises. Capitalized terms not
defined herein shall have the meaning set forth in the Indenture, defined below.
1. In connection with such transfer and in accordance with Section
205 of the Indenture, dated as of July 31, 1998 (the "Indenture"), between
Norwest Bank Minnesota, National Association (the "Trustee") and the Issuer, the
Seller hereby certifies the following facts: Neither the Seller nor anyone
acting on its behalf has offered, transferred, pledged, sold or otherwise
disposed of the Note, any interest in the Note or any other similar security to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Note, any interest in the Note or any other similar security with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action which would
constitute a distribution of the Note under the Securities Act of 1933, as
amended (the "Securities Act"), or
-1-
which would render the disposition of the Note a violation of Section 5 of the
Securities Act or require registration pursuant thereto.
2. The Purchaser warrants and represents to, and covenants with, the
Seller, the Trustee, the Bank, the Issuer and the Servicer pursuant to Section
205 of the Indenture as follows:
a. The Purchaser understands that the Note has not been and will
not be registered under the Securities Act or the securities laws of any
state and, if the Notes are not then registered under applicable federal
and state securities law (which registration the Issuer is not obligated to
effect), it will not offer to sell, transfer or otherwise dispose of the
Notes except in a transaction which is exempt from such registration.
b. The Purchaser is acquiring the Note for investment for its
own account only and not with a view to the distribution thereof, and the
Purchaser agrees not to dispose of any Note in violation of the
registration requirements of the Securities Act of 1933, as amended, or any
other requirement of law.
c. The Purchaser is either a Qualified Institutional Buyer under
Rule 144A under the Securities Act or an "Accredited Investor" under Rule
501(a)(1), (2), (3) and (7) of the Securities Act.
d. The Purchaser has been furnished with all information
regarding the Note that it has requested from the Issuer, the Trustee or
the Servicer.
e. Neither the Purchaser nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Note, any
interest in the Note or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the Note,
any interest in the Note or any other similar security from, or otherwise
approached or negotiated with respect to the Note, any interest in the Note
or any other similar security with, any person in any manner, or made any
general solicitation by means of general advertising or in any other
manner, or taken any other action, that would constitute a distribution of
the Note under the Securities Act or that would render the disposition of
the Note a violation of Section 5 of the Securities Act or require
registration pursuant thereto, nor will it act, nor has it authorized or
will it authorize any person to act, in such manner with respect to the
Note.
f. The Purchaser understands and acknowledges that the
acquisition of Notes by an employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or the
provisions of Section 4975 of the Code (a "Plan"), could result in a
prohibited transaction under ERISA or Section 4975 of the Code, unless such
acquisition is subject to a statutory or administrative exemption.
3. The Purchaser has conducted an independent investigation of the
risks involved in holding the Notes and understands those risks. The Purchaser
has been provided with all information concerning the Notes, the Issuer, the
Bank, the Servicer, the Originators and the Mortgage Loans that it has
requested.
-2-
4. By execution hereof ▇▇▇▇▇▇▇▇▇ agrees to be bound, as Noteholder,
by all of the terms, covenants and conditions of the Indenture and the Note and
from and after the date hereof Purchaser assumes all of Seller's obligations as
Noteholder thereunder.
5. This document may be executed in one or more counterparts and by
the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same document.
-3-
IN WITNESS WHEREOF, each of the parties have caused this document to
be executed by their duly authorized officers as of the date set forth below.
_______________________________ _____________________________
Seller Purchaser
By:____________________________ By:__________________________
Name: Name:
Title: Title:
Taxpayer Identification Taxpayer Identification
No._________________________ No._______________________
Date:__________________________ Date:________________________
EXHIBIT D
FORM OF NON-RECOURSE RELEASE
Trustee's Certificate
pursuant to Section 405 of the Indenture
----------------------------------------
Norwest Bank Minnesota, National Association, as indenture trustee
(the "Trustee") pursuant to the Indenture, dated as of July 31, 1998, between
Vistana 1998-A Timeshare Mortgage Corp. (the "Issuer") and the Trustee (the
"Indenture"), does hereby release and sell, transfer, assign, deliver and
otherwise convey to ______________ (the "Purchaser"), without recourse,
representation or warranty, all of the Trustee's right, title and interest in
and to all of the assets identified in the attached certificate and all income
thereon and proceeds thereof (collectively, the "Assets") and all security and
documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of
____________.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Indenture Trustee
By: ___________________________
Title: ________________________
-1-
Exhibit E
---------
FORM OF ASSIGNMENT OF MORTGAGE
KNOW ALL MEN BY THESE PRESENTS:
That VISTANA 1998-A TIMESHARE MORTGAGE CORP., a Delaware corporation,
("Assignor"), as owner and holder of the mortgages as more particularly
described on Exhibit "A" of that certain Assignment of Mortgages by Vistana
Timeshare Mortgage Corp. in favor of VTM Corp., dated September ____, 1998 and
recorded September ____, 1998 under Clerk's Number __________, in Official
Records Book _____, Page ____, Public Records of Orange County, Florida, said
mortgages having been further assigned to Vistana Development, Inc. by that
certain Assignment of Mortgages by VTM Corp., in favor of Vistana Development,
Inc., dated September ____, 1998 and recorded September ____, 1998, under
Clerk's Number __________ in Official Records Book _____, Page ____, Public
Records of Orange County, Florida, and said mortgages having been further
assigned to Assignor by that certain Assignment of Mortgages by Vistana
Development, Inc., in favor of Assignor dated September ____, 1998, and recorded
September ____, 1998, under Clerk's Number __________ in Official Records Book
_____, Page ____, Public Records of Orange County, Florida, and by this
reference incorporated herein, said mortgages encumbering timeshare interests in
the timeshare condominium projects more particularly described on Exhibit "A"
attached hereto, for and in consideration of the payment of the "Mortgage
Purchase Price" as set forth in that certain Cross-Receipt and Application of
Proceeds entered into by and between Assignor and Assignee and others dated
September ____, 1998, and other valuable consideration to it in hand paid by
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, AS TRUSTEE, ("Assignee"), the
receipt whereof is hereby acknowledged, does by these presents grant, bargain,
sell, assign, transfer and set over unto Assignee all right, title and interest
of Assignor in and to such mortgage(s);
TOGETHER WITH the promissory note(s) and other obligations therein
described of the mortgagor(s), all moneys due and to become due thereunder, and
all interest thereon, and all rights arising therefrom.
IN WITNESS WHEREOF, the Assignor has caused these presents to be executed
this __ day of September, 1998.
WITNESSES: VISTANA DEVELOPMENT, INC.,
a Florida corporation
__________________________ By:________________________________
Name:_____________________ Name:______________________________
__________________________ Its:_______________________________
Name:_____________________
(CORPORATE SEAL)
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Assignor
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this ____ day of
September, 1998, by _________________ as ___________________ of VISTANA
DEVELOPMENT, INC., a Florida corporation, on behalf of the corporation. He/She
is personally known to me or has produced ___________________________ as
identification.
___________________________________
(SEAL) Notary Public, State of Florida
Name:______________________________
Commission No.:____________________
My Commission Expires:_____________
APPENDIX A
DEFINITIONS
-----------
"Accredited Institutional Investor" has the meaning set forth in the
---------------------------------
preamble of the form of Note set forth in Section 202 of the Indenture.
"Actual Payments" has the meaning set forth in Section 304(b)(v) of
---------------
the Indenture.
"Account Property" means, with respect to any account established and
----------------
maintained pursuant to the Indenture or any Supplement, all amounts, deposits,
investments and any other property held from time to time in such account;
including, but not limited to, deposits, book-entry securities, uncertificated
securities, security entitlements, investment property, accounts and all
proceeds of the foregoing.
"Affiliate" means any entity other than the entity in question that
---------
(i) owns beneficially, directly or indirectly, 10% or more of the outstanding
shares of common stock of such entity in question or (ii) of which 10% or more
of the outstanding shares of its common stock is owned beneficially, directly or
indirectly, by the entity in question, or (iii) which is "controlled," as
defined in Section 230.405 of the Rules and Regulations of the Securities and
Exchange Commission, 17 C.F.R. Section 230.405, by an entity described in clause
(i) above. Notwithstanding the foregoing, no Person owning 20% or less of the
common stock of Vistana shall be deemed an Affiliate.
"Aggregate Instrument Principal Balance" means, as of any date of
--------------------------------------
determination, the sum of the Instrument Principal Balances of all Instruments
(unless otherwise specified).
"Annualized Default Rate" for any Collection Period means (i) the
-----------------------
ratio, expressed as a percentage, of the Aggregate Instrument Principal Balance
of all Instruments that became Defaulted Instruments (provided that, for the
purposes of this definition only, the Instrument Principal Balance of each such
Defaulted Instrument shall not be deemed to be zero as set forth in the
definition of "Instrument Principal Balance" herein) during such Collection
Period over the Aggregate Instrument Principal Balance of all Instruments on the
first day of such period, multiplied by (ii) 12.
"Articles of Organization" means the charter, certificate of
------------------------
incorporation, certificate of trust, trust agreement, articles, operating
agreement, partnership agreement, by-laws and any other written documents
evidencing the formation, organization and continuing existence of the entity
related thereto.
"Assignment of Mortgage" means a written assignment of one or more
----------------------
specific Mortgages relating to one or more Instruments in recordable form,
sufficient under the laws of the jurisdiction wherein the related Unit is
located to give record notice of a transfer of a Mortgage and its proceeds,
delivered by Issuer to Trustee in the form of Exhibit E to the Indenture.
"Association" or "Timeshare Association" means the not-for-profit
----------- ---------------------
corporation related to a particular Timeshare Interest responsible for operating
and maintaining a particular Timeshare Project.
"Available Amounts" means, as of any Payment Date, all those amounts
-----------------
deposited in the Collection Account, with respect to the related Collection
Period, whether as payments under the Mortgage Loans (including Scheduled
Payments, Prepayments, casualty insurance payments and any other unscheduled
payments of principal or interest on the Mortgage Loans), recoveries with
respect to Defaulted Instruments, Servicer Advances, investment income from the
Reserve Account and Collection Account or repurchases of Defaulted Mortgage
Loans, but without giving effect to any amounts drawn by the Trustee from either
the Reserve Account (other than such investment income) or the Letter of Credit.
"Back-up Servicer" has the meaning set forth in Section 501(d) of the
----------------
Indenture.
"Back-up Servicing Fee" means, with respect to any Payment Date, an
---------------------
amount equal to the product of (x) one-twelfth (1/12), (y) .0002 and (z) the
Aggregate Instrument Principal Balance on the opening of business on the first
day of the related Collection Period, provided, however, that the Back-up
Servicing Fee on the Payment Date occurring on October 20, 1998 shall be
calculated based on the Initial Aggregate Instrument Principal Balance.
"Bank" means Dresdner Bank AG, New York Branch.
"Bank Rate" means the sum of LIBOR plus two percent (2%).
---------
"Bankruptcy Code" means the Bankruptcy Code of 1978, as amended, as
---------------
codified under Title 11 of the United States Code, and the Bankruptcy Rules
promulgated thereunder, as the same may be in effect from time to time.
"Borrower" means Vistana Timeshare Mortgage Corp., a Delaware
--------
corporation.
"Business Day" means any day other than a Saturday, Sunday or a day on
------------
which banks in New York, New York, the State of Florida, the State of Maryland
or the state in which the Trustee's Corporate Trust Office is located (and, with
respect to the calculation of LIBOR, London, England) are required or permitted
to close or any date on which the New York Stock Exchange is scheduled to close.
"Class A Majority" means as of the date of determination, Holders
----------------
having more than fifty percent (50%) of the then-outstanding Voting Rights of
all of the Class A Noteholders.
"Class A Monthly Interest" means, with respect to any Payment Date, an
------------------------
amount, in dollars, equal to the product of (i) one-twelfth, (ii) 5.891% and
(iii) the Class A Note Balance on the immediately preceding Payment Date after
giving effect to the
2
payments of Monthly Principal and Overdue Principal made on such immediately
preceding Payment Date, provided, however, that the Class A Monthly Interest on
the initial Payment Date of October 20, 1998 shall be twenty (20) days' interest
calculated based on the Class A Note Balance on the Closing Date.
"Class A Monthly Principal" means, with respect to any Payment Date,
-------------------------
an amount equal to the product of (a) the Class A Percentage and (b) Monthly
Principal; provided, however, that (A) in no event shall the Class A Monthly
Principal exceed the Class A Note Balance as of such Payment Date, (B) on the
Stated Maturity Date the Class A Monthly Principal will be the Class A Note
Balance, and (C) on such earlier date on which the entire principal balance of
the Notes shall be due and payable, if the Trustee forecloses on the Collateral
pursuant to the terms of the Indenture and either (i) disposes of all or
substantially all of the Mortgage Loans or (ii) if the Holders of a majority of
the Outstanding principal amount of each Class of Notes, or the Bank, has
advised the Trustee in writing that the Collateral has deteriorated and that
there is a reasonable likelihood that all Monthly Principal, Overdue Principal
(if any), Monthly Interest and Overdue Interest (if any) on the Notes and Letter
of Credit Drawings will not be paid in full, then (except with respect to Letter
of Credit Drawings) the Class A Monthly Principal will be the Class A Note
Balance.
"Class A Note Balance" means, as of the Closing Date, $31,973,000.00,
--------------------
and thereafter shall equal the Class A Note Balance as of the Closing Date
reduced by all subsequent and unrevoked principal payments on the Class A Notes.
"Class A Noteholder" means, at any time, any Person in whose name a
------------------
Class A Note is registered in the Note Register.
"Class A Notes" means any Class A Notes authorized by, authenticated
-------------
and delivered under the Indenture.
"Class A Overdue Interest" means, with respect to any Payment Date, an
------------------------
amount equal to the excess, if any, of (a) the aggregate amount of Monthly
Interest due on the Class A Notes as of all preceding Payment Dates over (b) the
aggregate amount of Monthly Interest actually paid to the Class A Noteholders
with respect to the Class A Notes on all preceding Payment Dates.
"Class A Overdue Principal" means, as of any Payment Date, an amount
-------------------------
equal to the excess, if any, of (a) the aggregate amount of all Class A Monthly
Principal due on the Class A Notes as of all preceding Payment Dates over (b)
the aggregate amount of principal payments (from whatever source) actually paid
to the Class A Noteholders with respect to the Class A Notes on all preceding
Payment Dates.
"Class A Percentage" means 48.33147%, provided, however, that if a
------------------
draw on the Letter of Credit has occurred and any part of such draw remains
unreimbursed, "Class A Percentage" shall be a fraction, expressed as a
percentage, in which the numerator shall be the Class A Note Balance and the
denominator shall be the
3
sum of the Class A Note Balance, the Class B Note Balance and the outstanding
unreimbursed amount of all draws on the Letter of Credit on such Determination
Date.
"Class A Voting Rights" means the Voting Rights of all Class A
---------------------
Noteholders.
"Class B Majority" means, as of the date of determination, Holders
----------------
having more than fifty percent (50%) of the then-outstanding Voting Rights of
all of the Class B Noteholders.
"Class B Monthly Interest" means, with respect to any Payment Date, an
------------------------
amount, in dollars, equal to the product of (i) one-twelfth, (ii) 6.282% and
(iii) the Class B Note Balance on the immediately preceding Payment Date after
giving effect to the payments of Monthly Principal and Overdue Principal made on
such immediately preceding Payment Date, provided, however, that the Class B
Monthly Interest on the initial Payment Date of October 20, 1998 shall be twenty
(20) days' interest calculated based on the Class B Note Balance on the Closing
Date.
"Class B Monthly Principal" means, with respect to any Payment Date,
-------------------------
an amount equal to the product of (a) the Class B Percentage and (b) Monthly
Principal; provided, however, that (A) in no event shall the Class B Monthly
Principal exceed the Class B Note Balance as of such Payment Date, (B) on the
Stated Maturity Date the Class B Monthly Principal will be the Class B Note
Balance, and (C) on such earlier date on which the entire principal balance of
the Notes shall be due and payable, if the Trustee forecloses on the Collateral
pursuant to the terms of the Indenture and either (i) disposes of all or
substantially all of the Mortgage Loans or (ii) if the Holders of a majority of
the Outstanding principal amount of each Class of Notes, or the Bank, has
advised the Trustee in writing that the Collateral has deteriorated and that
there is a reasonable likelihood that all Monthly Principal, Overdue Principal
(if any), Monthly Interest and Overdue Interest (if any) on the Notes and Letter
of Credit Drawings will not be paid in full, then (except with respect to the
Letter of Credit Drawings) the Class B Monthly Principal will be the Class B
Note Balance.
"Class B Note Balance" means, as of the Closing Date, $34,180,583.90,
--------------------
and thereafter shall equal the Class B Note Balance as of the Closing Date
reduced by all subsequent and unrevoked principal payments on the Class B Notes.
"Class B Notes" means any Class B Notes authorized by, authenticated
-------------
and delivered under the Indenture.
"Class B Overdue Interest" means, with respect to any Payment Date, an
------------------------
amount equal to the excess, if any, of (a) the aggregate amount of Monthly
Interest due on the Class B Notes as of all preceding Payment Dates over (b) the
aggregate amount of Monthly Interest actually paid to the Class B Noteholders
with respect to the Class B Notes on all preceding Payment Dates.
"Class B Overdue Principal" means, as of any Payment Date, the excess,
-------------------------
if any, of (a) the aggregate amount of Class B Monthly Principal due on the
Class B
4
Notes as of all preceding Payment Dates over (b) the aggregate amount of
principal payments (from whatever source) actually paid to the Class B
Noteholders with respect to the Class B Notes on all preceding Payment Dates.
"Class B Percentage" means 51.66853%, provided, however, that if a
------------------
draw on the Letter of Credit has occurred and any part of such draw remains
unreimbursed, "Class B Percentage" shall be a fraction, expressed as a
percentage, in which the numerator shall be the Class B Note Balance and the
denominator shall be the sum of the Class A Note Balance, the Class B Note
Balance and the outstanding unreimbursed amount of the draw on the Letter of
Credit on such Determination Date.
"Closing Date" means September 29, 1998.
"Code" means the Internal Revenue Code of 1986, as the same may be
----
amended, restated or defined.
"Collateral" has the meaning set forth in Section 401 of the
----------
Indenture.
"Collateral Liquidation" shall have the meaning set forth in the
----------------------
Letter of Credit.
"Collection Account" means a segregated trust account established by
------------------
the Trustee pursuant to Section 304 of the Indenture.
"Collection Period" means, with respect to the Payment Date related
-----------------
thereto, the entire calendar month immediately preceding such Payment Date,
provided, however, that with respect to the initial Payment Date, the Collection
Period shall be deemed to commence on the opening of business on August 1, 1998
and terminate at the close of business on September 30, 1998.
"Confidential Information" means information obtained by any Holder
------------------------
including, without limitation, the Documents, that is proprietary in nature and
that was clearly marked or labeled or otherwise adequately identified when
received by the Holder as being confidential information of any Vistana
Transaction Entity or Vistana, provided that such term does not include
information that (a) was publicly known or otherwise known to the Holder prior
to the time of such disclosure, (b) subsequently becomes publicly known through
no act or omission by such Holder or any Person acting on its behalf, (c)
otherwise becomes known to the Holder other than through disclosure by any
Vistana Transaction Entity or Vistana, (d) constitutes financial statements
delivered to the Holder that are otherwise publicly available, or (e) any other
public disclosure authorized by any Vistana Transaction Entity or Vistana.
"Control" means the possession, directly or indirectly, of the power
-------
to direct or cause the direction of management, policies or activities of a
person or entity, whether through ownership of voting securities, by contract or
otherwise.
"Corporate Trust Office" means, as of the Closing Date, the principal
----------------------
corporate trust office of the Trustee located at Sixth Street and Marquette
Avenue,
5
Minneapolis, Minnesota 55479, and thereafter at such other address as the
Trustee may designate from time to time by notice to the Noteholders and the
Issuer.
"Custodial Agreement" means the Custodial Agreement, dated as of the
-------------------
Closing Date, by and between the Custodian, the Issuer and the Trustee, as the
same may be amended, restated and modified from time to time, and any subsequent
custodial agreement entered into with a successor Custodian.
"Custodian" means initially, First Union National Bank, a national
---------
banking association, and thereafter, any custodian of the Instruments acting on
behalf of the Issuer, the Trustee and the Bank pursuant to the Documents.
"Cut-off Date" means, with respect to each Instrument transferred by
------------
an Originator to the Issuer on the Closing Date, July 31, 1998 and, with respect
to any other Transfer Date, the last day of the calendar month immediately
preceding such Transfer Date.
"DCR"or the "Rating Agency" means Duff & ▇▇▇▇▇▇ Credit Rating Co.
--- -------------
"Defaulted Instrument" means an Instrument that, as of any
--------------------
Determination Date occurring after the Transfer Date related to such Instrument,
has (a) either (i) been determined, by the Servicer, in its sole discretion, in
accordance with the Servicing Standards, to not be collectible or (ii) had all
or part of a Scheduled Payment thereunder more than 180 days delinquent as of
the end of the immediately preceding Collection Period or (b) ceased to have the
benefit of the related Mortgage.
"Defaulted Mortgage Loan" means a Mortgage Loan that is evidenced by a
-----------------------
Defaulted Instrument.
"Delinquent Instrument" means, as of any Determination Date, any
---------------------
Instrument (other than an Instrument which became a Defaulted Instrument prior
to such Determination Date) with respect to which the Mortgagor has not paid all
Scheduled Payments due as of the end of the immediately preceding Collection
Period. The delinquency of an Instrument shall be measured based on the
Scheduled Payments required to be made during the term of such Instrument as of
the date such Instrument became part of the Collateral without giving effect to
any modifications, waivers or extensions subsequently granted by the Servicer
unless permitted in the Servicing Agreement.
"Determination Date" means with respect to a Payment Date, the date
------------------
which is the fifteenth (15th) day of the calendar month in which such Payment
Date occurs or, if such fifteenth day is not a Business Day, the next
immediately succeeding Business Day, provided, however, that if such immediately
succeeding Business Day is later than the third Business Day prior to such
Payment Date, then the Determination Date shall be the Business Day immediately
preceding the fifteenth (15th) day of the calendar month.
6
"Documents" means each of the Notes, the Mortgage Documents, the
---------
Indenture, the Lockbox Agreement, each Transfer Agreement, the Custodial
Agreement, the Servicing Agreement, the Letter of Credit, the Reimbursement
Agreement, the Note Purchase Agreement, the Securities Account Control
Agreement, each Assignment of Mortgage (as each is defined in each Transfer
Agreement) and all other documents executed in connection therewith, as they may
be from time to time renewed, amended, modified, supplemented, restated or
replaced.
"Due Date" means as to any Scheduled Payment, the date upon which such
--------
payment is required to be made pursuant to the related Instrument, without
giving effect to any grace period permitted by such Instrument or the related
Mortgage.
"Eligible Instrument" means an Instrument which, on the Transfer Date
-------------------
related thereto, evidences an Eligible Mortgage Loan.
"Eligible Investments" means, at any time, any and all of the
--------------------
following which shall, in any case, unless otherwise provided for pursuant to
the terms and conditions of Article III of the Indenture, mature not later than
the next succeeding Determination Date:
(i) direct obligations of, and obligations fully guaranteed for
timely payment by, the United States of America, the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association, the
Federal Home Loan Banks or any agency or instrumentality of the United
States of America which has a short term unsecured debt rating of at
least "D-1+" by the Rating Agency, "A-1+" by S&P, "P-1" by ▇▇▇▇▇'▇ or
"F-1+" by Fitch for short-term investments, at the time of such
investment the obligations of which are backed by the full faith and
credit of the United States of America;
(ii) (A) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by or federal funds sold by any depository
institution or trust company (including the Trustee or its agent
acting in their respective commercial capacities) incorporated under
the laws of the United States of America or any State thereof and
subject to supervision and examination by federal and/or state
authorities, so long as at the time of such investment or contractual
commitment providing for such investment, such depository institution
or trust company has a short term unsecured debt rating in the highest
available rating category of either the Rating Agency, S&P, ▇▇▇▇▇'▇ or
Fitch and provided that each such investment has an original maturity
of no more than 365 days, and (B) any other demand or time deposit or
deposit which is fully insured by the Federal Deposit Insurance
Corporation;
(iii) repurchase obligations with a term not to exceed 30 days
with respect to any security described in clause (i) above and entered
into with a depository institution or trust company (acting as a
principal) that
7
has a short-term unsecured debt rating in the highest available rating
category of either the Rating Agency, S&P, ▇▇▇▇▇'▇ or Fitch; provided,
however, that collateral transferred pursuant to such repurchase
obligation must (A) be valued weekly at current market price plus
accrued interest, (B) pursuant to such valuation, equal, at all times,
105% of the cash transferred by the Trustee in exchange for such
collateral and (C) be delivered to the Trustee or, if the Trustee is
supplying the collateral, an agent for the Trustee, in such a manner
as to accomplish perfection of a security interest in the collateral
by possession of certificated securities;
(iv) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of
America or any State thereof which has a long term unsecured debt
rating in the highest available rating category of the Rating Agency
at the time of such investment;
(v) commercial paper having an original maturity of less than
365 days and issued by an institution having a short term unsecured
debt rating in the highest available rating category of either the
Rating Agency, S&P, ▇▇▇▇▇'▇ or Fitch at the time of such investment;
(vi) a guaranteed investment contract approved in writing by the
Rating Agency and issued by an insurance company or other corporation
having a short-term unsecured debt rating in the highest available
rating category of either the Rating Agency, S&P, ▇▇▇▇▇'▇ or Fitch at
the time of such investment; and
(vii) money market funds having short-term unsecured debt
ratings in the highest available category of either the Rating Agency,
S&P, ▇▇▇▇▇'▇ or Fitch at the time of such investment; any such money
market funds which provide for demand withdrawals being conclusively
deemed to satisfy any maturity requirements for Eligible Investments
set forth in the Indenture.
"Eligible Mortgage Loan" means a Mortgage Loan conforming to each of
----------------------
the representations and warranties contained in Section 2.03 of the Transfer
Agreement related to it.
"Entitlement Orders" has the meaning set forth in Section Three of the
------------------
Securities Account Control Agreement.
"Environmental Laws" means all foreign, federal, state or local laws,
------------------
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Clean Air Act,
8
the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act,
the Federal Resource Conservation and Recovery Act, the Toxic Substances Control
Act and the Emergency Planning and Community Right-to-Know Act.
"ERISA" means the Employee Retirement Income Security Act of 1974,
-----
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"ERISA Affiliate" means any Person under common control with the
---------------
Issuer or either Originator within the meaning of Section 414(c) of the Code or
Section 4001(b) of ERISA.
"Exchange Act" means the Securities Exchange Act of 1934, and as the
------------
same may be amended from time to time.
"Financial Asset" shall have the meaning set forth in Section 8-
---------------
102(a)(9) of the UCC.
"Fitch" means Fitch IBCA, Inc.
"Foreign Mortgagor" means a Mortgagor that is not a resident of the
-----------------
United States (which United States includes the District of Columbia, Puerto
Rico, the U.S. Virgin Islands and Guam).
"GAAP" means generally accepted accounting principles set forth from
----
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar function of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"Governmental Authority" means (a) any federal, state, county,
----------------------
municipal or foreign government, or political subdivision, (b) any governmental
or quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality or public body, (c) any court or administrative tribunal or (d)
with respect to any Person, any arbitration tribunal or other non-governmental
authority to whose jurisdiction that Person has consented.
"Grant" means grant, bargain, sell, convey, assign, transfer,
-----
mortgage, pledge, create and perfect a Security Interest in and right of set-off
against, deposit, set over and continue.
"Holder" means a Noteholder.
------
9
"Incipient Default" means an event which, with either Knowledge,
-----------------
notice or the passing of time, would be reasonably likely to become an Indenture
Event of Default.
"Indebtedness" means, as to any Person, (a) all indebtedness of such
------------
Person for borrowed money, (b) all leases of equipment of such Person, including
all capital leases of such Person, (c) any obligation of such Person for the
deferred purchase price of property or services (other than trade or other
accounts payable in the ordinary course of business which, in the case of the
Issuer, are not past due, and which, in the case of any other Person, are not
more than ninety (90) days past due), (d) any obligation of such Person that is
secured by a Lien on assets of such Person, whether or not that Person has
assumed such obligation or whether or not such obligation is non-recourse to the
credit of such Person, (e) obligations of such Person arising under acceptance
facilities or under facilities for the discount of accounts receivable of such
Person and (f) any obligation of such Person to reimburse the issuer of any
letter of credit issued for the account of such Person upon which a draw has
been made.
"Indenture" means the Indenture, dated as of July 31, 1998 (as amended
---------
or supplemented from time to time as permitted hereby, the "Indenture"), between
the Issuer and the Trustee.
"Indenture Event of Default" means any one or more of the events of
--------------------------
default described in Section 801 of the Indenture.
"Independent Director" means a director who is not at the time of
--------------------
initial appointment and has not been at any time during the preceding five (5)
years and has not been at any time while serving as Independent Director: (a) a
stockholder, director or beneficial holder of the stock of Vistana or the
Issuer, an officer or employee of the Issuer or any direct or ultimate parent of
the Issuer or Vistana, or any Affiliate thereof; (b) a customer, supplier or
other Person who derives more than 10% of its purchases or revenues from its
activities with the Issuer, Vistana, any Originator or any Affiliate of any
thereof; (c) a Person or other entity controlling or under common control with
any such stockholder, director, officer, employee, customer, supplier or other
Person; or (d) a member of the immediate family of any such stockholder,
director, officer, employee, customer, supplier or other person; provided,
however, that such independent director may serve in similar capacities for
other "special purpose corporations" formed by Vistana or its Affiliates.
"Initial Aggregate Instrument Principal Balance" means the Aggregate
----------------------------------------------
Instrument Principal Balance as of the Cut-off Date.
"Insolvency Law" means any Federal or State bankruptcy, insolvency or
--------------
other similar law now or hereafter in effect.
"Instrument" means a promissory note which has been endorsed by Issuer
----------
to the Trustee and which, as of the Transfer Date related thereto (without any
representation being made at any time thereafter), (a) satisfies each of the
representations
10
made with respect to it under Section 2.03 of the applicable Transfer Agreement,
(b) does not otherwise cause a breach of any other representation or warranty
set forth in such Section 2.03, (c) is not 180 days or more past due, (d) did
not otherwise cause a breach of any other representation or warranty set forth
in Section 601 of the Indenture, (e) was not 60 days or more past due as of the
applicable Cut-off Date, (f) has not been released, reassigned or satisfied from
the Lien of the Indenture and (g) is not related to a Defaulted Mortgage Loan,
provided that, notwithstanding the failure of a promissory note to fulfill any
of the foregoing requirements, a promissory note which has been transferred to
the Issuer shall constitute an Instrument until it has been repurchased or
substituted therefor in accordance with the applicable Documents.
"Instrument Maturity Date" means, with respect to any Mortgage Loan,
------------------------
the Due Date of the last Scheduled Payment in respect of such Mortgage Loan, as
shown on the Instrument Schedule (after giving effect to the receipt of any
partial prepayments in respect of such Mortgage Loan).
"Instrument Payment" means a payment from a Mortgagor made pursuant to
------------------
the terms of an Instrument or related to the foreclosure of the Timeshare
Interest related to it.
"Instrument Principal Balance" means, as of any date of determination,
----------------------------
with respect to any Mortgage Loan, the amount set forth as the instrument
principal balance of such Mortgage Loan on the Instrument Schedule, and
thereafter as reduced by the amount of principal payments made by the related
Mortgagor prior to such date of determination, provided, however, that the
Instrument Principal Balance of any Defaulted Instrument shall be deemed to be
zero as of the date that such Instrument becomes a Defaulted Instrument, other
than with respect to calculations of (i) the Annualized Default Rate, (ii) the
Reserve Account Required Amount, (iii) the Mortgage Purchase Price of any
Mortgage Loan or (iv) the LOC Amount.
"Instrument Schedule" means the schedule appearing as an exhibit to
-------------------
the Indenture identifying each Instrument and as the same may be amended from
time to time.
"Investment Company Act" means the Investment Company Act of 1940, as
----------------------
amended.
"Issuer" means Vistana 1998-A Timeshare Mortgage Corp., a Delaware
------
corporation.
"Issuer Documents" means in the singular, any one of, and, in the
----------------
plural, all of, the Documents to which the Issuer is a party.
"Knowledge" means (a) as to any natural Person, the actual awareness
---------
of the fact, event or circumstance at issue or proper delivery of notification
of such fact, event or circumstance at the place held out by such person as the
place for receipt of such communications and (b) as to any Person that is not a
natural Person other than the Trustee, the Securities Intermediary and the Back-
up Servicer, that (i) the fact, event or
11
circumstance at issue is brought to the attention of a Responsible Officer or
(ii) notice has been delivered to such Person in accordance with the provisions
of the relevant Documents; provided, however, that each such Person that is not
a natural person shall be deemed to have Knowledge of any fact, event or
circumstance if such fact, event or circumstance should have been known or would
have been brought to the attention of a Responsible Officer if the Person had
exercised commercially reasonable due diligence. Notwithstanding the foregoing
sentence, with respect to the Trustee, the Back-up Servicer and the Securities
Intermediary only, "Knowledge" means either written notice delivered to, or
---------
actual knowledge of, a Responsible Officer.
"Late Fee" means, with respect to any Scheduled Payment, the charge
--------
(if any) paid by the related Mortgagor in accordance with the terms of the
related Instrument or other applicable Mortgage Loan Documents if such Scheduled
Payment is received by the Servicer more than the number of days specified in
the Instrument following the related Due Date.
"Letter of Credit" means the Letter of Credit, dated as of the Closing
----------------
Date, issued by the Bank in connection with the transaction described in the
Indenture and in substantially similar form as Exhibit A to the Reimbursement
Agreement, and as the same may be amended, restated and modified from time to
time.
"Letter of Credit Account" has the meaning set forth in Section 303(g)
------------------------
of the Indenture.
"Letter of Credit Drawing" has the meaning set forth in Section 303(b)
------------------------
of the Indenture.
"Letter of Credit Fee" means, as of each Payment Date, an amount equal
--------------------
to the product of (x) one-twelfth, (y) .015, and (z) the LOC Amount on the
opening of business on the first day of the immediately preceding Collection
Period; provided, however, that (i) the Letter of Credit Fee on the Payment
Date occurring on October 20, 1998 shall be calculated based on the LOC Amount
on the Closing Date and an elapsed period equal to the number of days between
the Closing Date and the end of the related Collection Period, and (ii) the
Letter of Credit Fee for the Post Maturity Period shall be calculated with
regard to the LOC Amount at the beginning of the Post Maturity Period and paid
in advance for the number of days in such Post Maturity Period.
"LIBOR" has the meaning set forth in the Reimbursement Agreement.
-----
"LIBOR Determination Date" means the second (2nd) Business Day prior
------------------------
to the Determination Date of each month.
"Lien" means any mortgage, pledge, hypothecation, assignment for
----
security, security interest, encumbrance, ▇▇▇▇, ▇▇▇▇ or charge upon any and,
whether voluntarily incurred or arising by operation of law or otherwise,
affecting any property, including any agreement to grant any of the foregoing,
any conditional sale or other title retention agreement, any lease in the nature
of a security interest, and the filing of or agreement to file or deliver any
financing statement (other than a precautionary financing
12
statement with respect to a lease that is not in the nature of a security
interest) under the UCC or comparable law of any jurisdiction.
"Loan and Security Agreement" means the Loan and Security Agreement,
---------------------------
dated as of November 1, 1997, by and between the Issuer and Dresdner Bank AG,
New York and Grand Cayman Branches, and as the same may be amended, restated and
modified from time to time.
"LOC Amount" means the stated amount of $8,535,946.31 as reduced and
----------
reinstated as provided for in the Letter of Credit.
"Lockbox Account" means the account designated as such, established
---------------
and maintained pursuant to the Lockbox Agreement.
"Lockbox Agreement" means the Lockbox Agreement, dated as of the
-----------------
Closing Date, among the Issuer, the Servicer and the Lockbox Bank, as the same
may be amended, restated or modified, and any subsequent lockbox agreement
entered into with a successor Lockbox Bank.
"Lockbox Bank" means, initially, First Union National Bank, and
------------
thereafter, as of any date, the bank or trust company at which the Lock-Box
Account is established and maintained as of such date.
"Majority of Holders" means, for as long as any Class A Notes are
-------------------
outstanding, Holders of the Class A Notes having more than fifty percent of the
Voting Rights of the Class A Noteholders; and thereafter, Holders of the Class B
Notes having more than fifty percent of the Voting Rights of the Class B
Noteholders.
"Management Agreement" means each of the management agreements,
--------------------
between a Manager and an Association and pertaining to the Timeshare Projects as
the same may be amended or assigned.
"Manager" means a Person with whom an Association enters into a
-------
Management Agreement. As of the Closing Date, such Managers were Points of
Colorado, Inc., with respect to Eagle Pointe and Falcon Pointe, Resort Advisory
Group, Inc., with respect to Christie Lodge and Vistana Management, Inc. with
respect to the other Timeshare Projects.
"Material Adverse Effect" means any set of circumstances or events
-----------------------
which (a) has, or would reasonably be expected to have, any material adverse
effect whatsoever upon the validity or enforceability of any Document (other
than any Mortgage Document related to one or more (but less than a material
number of) individual Mortgage Loans), including the Notes, against either
Originator, the Issuer or the Servicer; (b) materially impairs, or could
reasonably be expected to materially impair, the ability of any Vistana
Transaction Entity or (in any event) the Servicer to perform any of its
obligations under any of the Documents, an undischarged matured liability (other
than the Notes) against a Vistana Transaction Entity of greater than $600,000
being deemed to have such a material and adverse effect; (c) materially and
adversely affects any Timeshare Project in
13
which Timeshare Interests securing more than 10% of the Aggregate Instrument
Principal Balance are located which is not fully covered by insurance (after
giving effect to reasonable deductibles under the circumstances); (d) materially
impairs the ability of the Custodian, Trustee, Bank or any Noteholder to enforce
any of the remedies set forth in, or any interest under, any of the Documents
such that the Documents do not contain adequate provisions for the practical
realization of the rights and benefits afforded thereby; (e) materially and
adversely affects the interests of the Custodian, Trustee, Bank or any
Noteholder in the Collateral including the Grant of the Security Interest to the
Trustee in the Collateral or the overall value thereof, or (f) when used with
respect to any single Mortgage Loan or the related Mortgage Documents,
materially and adversely affects or impairs any of the following: (i) the
enforceability, legality or binding nature of any document in the related
Mortgage Loan File; (ii) the repayment of either principal or interest of the
related Instrument; (iii) the Mortgage Loan Coupon Rate applicable to the
related Instrument; (iv) the Trustee's interests under, security interest in, or
ability to enforce its rights under, any related Mortgage Document; (v) the
enforceability, legality or validity of any related Mortgage Document; and, when
used with reference to the Collateral, or the property sold, transferred,
conveyed and assigned by any Originator, means the effects and impairments
described in the foregoing subclauses (i) through (v) but only when applied to a
material number of Mortgage Loans that constitute Collateral. To the extent that
the definition of Material Adverse Effect makes a direct or indirect reference
to a particular Instrument, Mortgage Loan, Mortgage Loan File, Timeshare
Interest, Unit or Timeshare Project, then no Material Adverse Effect shall be
deemed to have occurred if the Issuer causes the Instruments related to the
foregoing to be replaced or repaid by the end of the calendar month following
the month in which the Issuer obtains Knowledge of such occurrence.
"Miscellaneous Amounts" means, with respect to any Mortgage Loan, any
---------------------
amounts received from or on behalf of the related Mortgagor representing
assessments and payments relating to real property taxes, insurance premiums and
Association fees.
"Misdirected Payments" means payments erroneously made to the Lockbox
--------------------
Account that are not related to the Collateral.
"Monthly Interest" means, as of any Payment Date, the sum of the Class
----------------
A Monthly Interest then due and the Class B Monthly Interest then due.
"Monthly Principal" means, with regard to any Payment Date, the
-----------------
product of (i) ninety-three percent, provided, however, that in the event that a
draw on the Letter of Credit has been made and any part of such draw remains
unreimbursed, the percentage shall be one hundred percent and (ii) the
reduction, if any, in the Aggregate Instrument Principal Balance as set forth on
each Servicer Report related thereto between the commencement of and the
termination of the related Collection Period.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
-------
14
"Mortgage" means the purchase money mortgage or deed of trust given to
--------
secure an Instrument, which shall in each case constitute a first priority,
perfected security interest in a Timeshare Interest granted by the Purchaser
thereof.
"Mortgage Document(s)" means, with respect to any Mortgage Loan, (a)
--------------------
the original Instrument and any amendments or modifications thereto; (b) each of
the executed, original Assignment of Mortgage (as said term is defined in this
Appendix A), which may relate to more than one Mortgage; (c) the original
Mortgage and any amendments or modifications thereto; (d) the Title Policy
(Mortgage) or a commitment that such Title Policy (Mortgage) will be delivered
prior to the 60th day following the Transfer Date related thereto and (e) each
Timeshare Declaration, Timeshare Program Consumer Documents and Timeshare
Program Governing Documents related to the Timeshare Interest provided that, for
the purposes of any delivery requirements to the Custodian pursuant to the
Documents, the documents, in their most current form, referenced in clause (e)
hereof need (A) not be so delivered if previously received by the required
recipient and (B) notwithstanding the provisions of any other Document, shall be
delivered to the Trustee.
"Mortgage Loan" means, as of any date of determination, each loan
-------------
referenced on the Instrument Schedule (and the related Mortgage Loan Documents)
which has been sold, transferred and assigned by the Originator to the Issuer
pursuant to the related Transfer Agreement or has been substituted therefor
pursuant to such Transfer Agreement, the Servicing Agreement or the Indenture
and, in any case, has not theretofore been released from the Security Interest
Granted to the Trustee pursuant to the terms of the Indenture.
"Mortgage Loan Coupon Rate" means, with respect to any Mortgage Loan
-------------------------
and Collection Period, the per annum rate of interest applicable to the interest
payment due on such Mortgage Loan in the applicable Collection Period, which
shall be equal to the rate specified on the Instrument Schedule.
"Mortgage Loan Documents" means, with respect to each Mortgage Loan
-----------------------
and each Mortgagor, (i) the related Mortgage Documents, (ii) the original
related credit application and (iii) the original related truth-in-lending
disclosure statement executed by such ▇▇▇▇▇▇▇▇▇.
"Mortgage Loan Files" means the Mortgage Loan Documents (other than
-------------------
the Mortgage Documents) and all papers and computerized records customarily
maintained by the Servicer in servicing mortgage loans comparable to the
Mortgage Loans in accordance with the Servicing Standards and the provisions of
Section 3.02 of the Servicing Agreement.
"Mortgage Loan Transfer Form" means any Mortgage Loan Transfer Form
---------------------------
substantially in the form of Exhibit A in the Transfer Agreement and executed by
the Originator.
15
"Mortgage Purchase Price" means, for any Mortgage Loan, as of any date
-----------------------
of purchase thereof, one hundred percent (100%) of the Instrument Principal
Balance of the Mortgage Loan as of the end of the Collection Period immediately
preceding the relevant date of purchase (after giving effect to any Prepayments
during such Collection Period), together with all accrued and unpaid interest
thereon at the Mortgage Loan Coupon Rate through the related Due Date in the
Collection Period in which the relevant date of purchase occurs provided that,
for the purposes of this definition, the Instrument Principal Balance of a
Defaulted Mortgage Loan shall not be deemed to be zero.
"Mortgagor" means the Person obligated to make payments due under an
---------
Instrument in accordance with the terms and conditions related to such
Instrument, including any guarantor.
"Nonrecoverable Advances": Servicer Advances that the Servicer, in its
-----------------------
good faith and reasonable commercial judgment, believes are not likely to be
recovered from the Mortgagor.
"Note Balance" means, on the Closing Date, with respect to the Class A
------------
Notes, $31,973,000.00 for the Class A Notes and, with respect to the Class B
Notes, $34,180,583.90 for the Class B Notes, and thereafter, when used with
respect to a single class of Notes, shall equal the Note Balance for such class
reduced by all principal payments on such class of Notes and, when used with
reference to both of the Class A Notes and the Class B Notes, or to the "Notes"
without reference to either class, shall equal the sum of the Note Balances at
the time for both the Class A Notes and the Class B Notes.
"Note Purchase Agreement" means, the Note Purchase Agreement, dated
-----------------------
the Closing Date, by and between the Issuer and the purchasers thereunder, and
relating to the issuance and purchase of the Notes as the same may be amended,
modified or restated, from time to time.
"Note Register" has the meaning set forth in Section 205(a) of the
-------------
Indenture.
"Note Registrar" has the meaning set forth in Section 205(a) of the
--------------
Indenture.
"Noteholders" means the holders of any Notes.
-----------
"Notes" means the Class A Notes and the Class B Notes, as they may
-----
from time to time be renewed, amended, restated or replaced.
"Notice Date" has the meaning set forth in Section 702(a) of the
-----------
Indenture.
"Notice of Sole Control" has the meaning set forth in Section 9 of the
----------------------
Securities Account Control Agreement.
16
"Obligations" has the meaning set forth in Section 402 of the
-----------
Indenture.
"Officer's Certificate" means a certificate of a Responsible Officer
---------------------
signed by the Chairman, the President, a Vice President, the Treasurer, an
Assistant Treasurer, the Secretary, or an Assistant Secretary of the relevant
entity.
"Opinion of Counsel" means a written opinion of counsel reasonably
------------------
acceptable in form and substance to the Trustee and the Bank (who may, unless
otherwise provided herein, be counsel to an Originator, the Issuer or the
Servicer).
"Originator" means in the singular, either one of Points or VDI, and,
----------
in the plural, both of them.
"Outstanding" means, as of the date of determination, either any
-----------
obligation that has yet to be fully performed or amount that has yet to be paid
fully, as the case may be.
"Outstanding Principal Balance" means, as of any date of
-----------------------------
determination, with respect to any Mortgage Loan, the amount set forth as the
Outstanding Principal Balance of such Mortgage Loan on the Instrument Schedule,
and thereafter as reduced by the amount of principal payments made by the
related Mortgagor prior to such date of determination.
"Overdue Interest" means, for any Payment Date, the sum of (i) the
----------------
Class A Overdue Interest and (ii) the Class B Overdue Interest.
"Overdue Principal" means, for any Payment Date, the sum of (i) the
-----------------
Class A Overdue Principal and (ii) the Class B Overdue Principal.
"Parent" means Vistana Acceptance Corp., a Delaware corporation.
------
"Partial GAAP" means GAAP with the exception that such financial
------------
statements shall not contain consolidating and eliminating entries, disclosure
or footnotes.
"Payment Date" means the twentieth (20th) day of each month or, if
------------
such 20th day is not a Business Day, the next succeeding Business Day
thereafter, commencing October 20, 1998, and continuing to and including the
Stated Maturity Date or earlier prepayment in full of all of the Notes.
"Performance" or "Perform" means full, timely and faithful
----------- -------
performance.
"Permitted Mortgage Encumbrances" means with respect to a Mortgage the
-------------------------------
following liens and encumbrances against a Timeshare Interest: (i) the interest
therein of the Mortgagor, (ii) the lien of unbilled and unpaid assessments
payable to the Association, (iii) the lien of unpaid real property taxes and
assessments which are not yet delinquent, (iv) covenants, conditions and
restrictions, rights of way, easements and other matters of public record, such
exceptions appearing of record being matters to which properties of the same
type as such Timeshare Interest are commonly subject and which
17
do not materially interfere with the benefits of the security intended to be
provided by such Mortgage or being matters specifically disclosed in the
applicable land sales registrations filed with the applicable regulatory
agencies, and (v) other matters to which timeshare interests are commonly
subject and which do not materially interfere with the benefits of the security
intended to be provided by such Mortgage.
"Person" means any individual, sole proprietorship, partnership, joint
------
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, firm, estate,
entity, joint stock company, or Governmental Authority.
"Placement Agent" means Dresdner Bank AG, New York Branch, doing
---------------
business as Dresdner Kleinwort ▇▇▇▇▇▇.
"Plan" means plans described in Section 4975(e)(l) of the Code,
----
including individual retirement accounts, or under Section 3(3) of ERISA and
Persons treated under applicable law as using assets of such plans.
"Points" means Points of Colorado, a Colorado corporation having its
------
chief executive office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, #▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Post-Maturity Period" has the meaning set forth in the Letter of
--------------------
Credit.
"Predecessor Instrument" means, with respect to any Substitute
----------------------
Instrument acquired by substitution, the Instrument or Instruments for which
such Substitute Instrument or any intervening Substitute Instrument has been
substituted.
"Predecessor Mortgage Loan" has the meaning set forth in Section 1201
-------------------------
of the Indenture.
"Prepayment(s)" means, with respect to any Mortgage Loan, any of the
-------------
following: (i) payment by the Mortgagor of the Outstanding Principal Balance
plus all accrued interest with respect to such Mortgage Loan in advance of its
Instrument Maturity Date, (ii) payment by or on behalf of the Originator of the
Mortgage Purchase Price of such Mortgage Loan in connection with the mandatory
repurchase of such Mortgage Loan pursuant to Section 2.06 of the applicable
Transfer Agreement, (iii) payment by on or behalf of Issuer or Servicer of the
Mortgage Loan Purchase Price of such Mortgage Loan in connection with the
optional repurchase of such Mortgage Loan pursuant to Section 1201 of the
Indenture, (iv) any partial prepayment of principal received from the relevant
Mortgagor, (v) any payments of cash contemplated by clause (b) of the definition
of Substitute Mortgage Loan and (vi) any Insurance Proceeds received by the
Servicer and deposited in the Lockbox Account pursuant to Section 3.03(a) of the
Servicing Agreement.
"Private Placement Memorandum" means the confidential private
----------------------------
placement memorandum, dated the Closing Date, circulated by the Placement Agent
and describing the transactions contemplated by the Documents.
18
"Proceeding" means any suit in equity, action at law or other judicial
----------
or administrative proceeding.
"Property" means any interest in any kind of property or asset,
--------
whether real, personal or mixed, whether tangible or intangible.
"Prospective Owner" means each prospective owner (or transferee
-----------------
thereof) of a beneficial interest in Notes.
"Purchaser" means a purchaser of a Timeshare Interest from a Timeshare
---------
Developer.
"QIB" has the meaning set forth in the form of Note set forth in the
---
Indenture.
"Rated Institutional Noteholder" means a Noteholder that has been
------------------------------
assigned a credit or claims paying rating of BBB- or better by a nationally-
recognized rating agency.
"Rating Agency" means Duff & ▇▇▇▇▇▇ Credit Rating Co.
-------------
"Record Date" means, with respect to any date upon which the Trustee
-----------
must identify Noteholders of record, the last day of the Collection Period
immediately preceding such date.
"Regulations" means Section 2510.3-101 of regulations issued by the
-----------
United States Department of Labor.
"Reimbursement Agreement" means the Letter of Credit and Reimbursement
-----------------------
Agreement, dated as of July 31, 1998, by and between the Issuer and the Bank,
with regard to the Letter of Credit as the same may be amended, restated or
modified from time to time.
"Reportable Event" means a Reportable Event as defined in section
----------------
4043(b) or 4063(a) of ERISA or the regulations promulgated thereunder, except
for those Reportable Events for which the PBGC has waived notice.
"Required Payments" means each and all of the payments required
-----------------
pursuant to Section 301, clauses (i) through (xii) of the Indenture.
"Reserve Account" means the segregated trust account that was
---------------
established by the Trustee prior to the Closing Date in accordance with the
terms and conditions of the Indenture.
"Reserve Account Deposit Amount" means, on any Payment Date, an amount
------------------------------
equal to the excess of (A) the Reserve Account Required Amount over (B) the
amount on deposit in the Reserve Account (after giving effect to any Reserve
Account draws on such Payment Date).
19
"Reserve Account Payment" has the meaning set forth in Section 302(a)
-----------------------
of the Indenture.
"Reserve Account Property" has the meaning set forth in Section 302(c)
------------------------
of the Indenture.
"Reserve Account Required Amount" means, with respect to each Payment
-------------------------------
Date, the greater of either (1) the product of (a) 5% and (b) the Aggregate
Instrument Principal Balance as of the end of the related Collection Period or
(2) the lesser of (a) $711,328.82 or (b) the Aggregate Instrument Principal
Balance as of the end of the related Collection Period; provided, however, that
if a Restricting Event has occurred and is then continuing, then notwithstanding
the foregoing, no Reserve Account Withdrawals shall be paid to the Issuer or its
designee.
"Reserve Account Withdrawal" has the meaning set forth in Section
--------------------------
302(d) of the Indenture.
"Responsible Officer" means the chairman of the board, the president,
-------------------
any executive vice president, any vice president, the chief financial officer,
the treasurer, any assistant treasurer, the secretary, any assistant secretary,
the controller or any assistant controller if the entity of determination is a
corporation; if the entity is a national association, any corporate trust
officer of such entity; if such entity is a partnership, any one of the
foregoing corporate officers of any general partner thereof, if such entity is a
trust, any one of the foregoing corporate officers of any trustee thereof, if
such entity is a limited liability company, any one of the foregoing corporate
officers thereof or of the managing member thereof and if such entity is the
Trustee, any person responsible for managing the Trustee's obligations and
duties contemplated under the Documents.
"Restricting Event" means the condition that exists on any Payment
-----------------
Date if any one of the following conditions has occurred and is continuing at
any time: (i) a Trigger Event exists on such Payment Date or existed on any of
the two (2) immediately preceding Payment Dates or (ii) an Indenture Event of
Default has occurred and is then continuing.
"Rule 144A" means Rule 144A promulgated under the Securities Act of
---------
1933.
"S&P" means Standard & Poor's Ratings Services.
"Sale" has the meaning set forth in Section 817 of the Indenture.
----
"Scheduled Payments" means, with respect to an Instrument, when used
------------------
in the singular, the periodic payment, including but not limited to principal
and interest scheduled to be paid by a Mortgagor pursuant to the terms and
conditions of an Instrument, due from the Mortgagor during the related
Collection Period; and when used in the plural, all such payments under all such
Instruments (exclusive of any amounts in respect of insurance or taxes and
reflecting any adjustment for any partial prepayment
20
and further reflecting the effect of any modification to such Instrument
permitted pursuant to the Servicing Agreement).
"Securities Account Control Agreement" means that certain Securities
------------------------------------
Account Control Agreement, dated as of July 31, 1998, by and between the
Securities Intermediary, the Trustee as Secured Party thereunder and the Issuer
as the same may be amended, modified or supplemented.
"Securities Accounts" means, when used in the singular, any one of and
-------------------
when used in the plural, all of the Collection Account, the Reserve Account and
the Letter of Credit Account.
"Securities Act", "1933 Act" or the "Securities Act of 1933" means
-------------- -------- ----------------------
the Securities Act of 1933, as amended.
"Securities Intermediary" means initially, Norwest Bank Minnesota,
-----------------------
National Association, a national banking association, as securities intermediary
(as such term is defined under UCC Section 8-102(a)(14)) with respect to the
Securities Accounts and, thereafter, any successors-in-interest.
"Security Entitlements" shall have the meaning set forth in Article 8-
---------------------
102(17) of the UCC.
"Security Interest" means a perfected, direct, first priority and
-----------------
(with respect to any property constituting Collateral, subject only to the
Permitted Encumbrances applicable thereto) exclusive security interest in and
charge upon the property intended to be covered by it.
"Seller" has the meaning set forth in Exhibit B to the Indenture.
------
"Servicer" means initially VCH Portfolio Services, Inc., a Florida
--------
corporation and thereafter, such entity that may be appointed as successor
Servicer pursuant to the Documents.
"Servicer Advances" means the monthly advances on each Payment Date
-----------------
the Servicer is required to make to the Trustee for delinquent Scheduled
Payments that the Servicer reasonably deems to be recoverable.
"Servicer Event of Default" means an "Event of Default" as set forth
-------------------------
in Section 7.01 of the Servicing Agreement, as the same may be amended, restated
or modified from time to time.
"Servicer Report" means the written report required to be delivered by
---------------
the Servicer to the Trustee, the Bank and the Rating Agency, to be delivered on
each Determination Date in substantially similar form as set forth in Exhibit A
to the Servicing Agreement, and setting forth such other information reasonably
requested by the Bank, the Trustee or the Rating Agency.
21
"Servicer Termination Event Notice" has the meaning set forth in
---------------------------------
Section 502 of the Indenture.
"Servicing" means the responsibility of the Servicer for servicing,
---------
managing, and making collections on the Mortgage Loans pursuant to the
requirements set forth in the Documents.
"Servicing Agreement" means that certain Servicing Agreement, dated as
-------------------
of July 31, 1998, by and between the Issuer, as Issuer, and VCH Portfolio
Services, Inc., as Servicer, as the same may be amended, modified or restated
from time to time.
"Servicing Fee" means the monthly fee payable on each Payment Date of
-------------
an amount equal to the product of (x) one-twelfth, (y) 1.2% and (z) the
Aggregate Instrument Principal Balance on the opening of business on the first
day of the related Collection Period, provided, however, that the Servicer Fee
on the Payment Date occurring on October 20, 1998 shall be calculated based on
the Initial Aggregate Instrument Principal Balance.
"Servicing Standards" means the customary standards of prudent
-------------------
servicers of loans secured by fee simple timeshare interests similar to the
Timeshare Interests, and, to the extent not inconsistent with the foregoing,
those standards employed by the Servicer when servicing such loans for its own
account and third parties, but, in any case, without regard for:
(i) any relationship that the Servicer or any Affiliate of the
Servicer may have with the related Mortgagor or any Originator;
(ii) the Servicer's right to receive compensation for its
services under the Servicing Agreement or with respect to any
particular transaction; or
(iii) the fact that the Servicer or any Affiliate of the
Servicer may be a Noteholder;
and, in any case, shall include the following servicing activities:
(a) perform standard accounting services and general
recordkeeping services with respect to the Mortgage Loans;
(b) respond to any telephone and written inquiries of
Mortgagors concerning the Mortgage Loans;
(c) keep Mortgagors informed of the proper place and method
for making payments with respect to the Mortgage Loans;
(d) contact Mortgagors to effect collection and to encourage
prompt payment of Mortgage Loans, doing so by lawful means in
accordance with industry standards;
22
(e) report tax information to Mortgagors as required by law;
and
(f) take such other action as may be necessary or appropriate
in the reasonable judgment of the Servicer for the purpose of
collecting and transferring to the Collection Account or the Lockbox
Account, as required, all payments received in respect of Instruments
(except as otherwise expressly provided in the Documents), and to
carry out the duties and obligations imposed upon the Servicer.
"Significant Noteholder" or "Significant Holder" means both (i) each
---------------------- ---- ------------------
Person who held a Note as of the Closing Date and (ii) any other Noteholder who,
as of the date of determination, holds a Note or Notes with an aggregate unpaid
principal balance of at least seven and one-half percent (7.5%) of the then-
Outstanding aggregate Note Balance;
"66 2/3% of the Voting Rights" means for so long as any Class A Notes
----------------------------
are outstanding, Holders of the Class A Notes having more than 66 2/3% of the
Voting Rights of the Class A Noteholders; and thereafter, Holders of Class B
Notes having more than more than 66 2/3% of the Voting Rights of the Class B
Noteholders;
"Solvent" means, as to any Person at any time, that (a) the fair value
-------
of the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code; (b) the present fair saleable value of the
property in an orderly liquidation of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its debts
as they become absolute and matured; (c) such Person is able to realize upon its
property and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute unreasonably small capital.
"Special Purpose Entity" means, as applicable, a corporation, limited
----------------------
partnership, owner trust arrangement, business trust or limited liability
company which at all times since its formation and at all times thereafter shall
have complied with each of the following:
(i) Affiliate Securities. Such entity has not acquired and will not
acquire obligations or securities of its partners, members or shareholders.
(ii) Allocations. Such entity has allocated and will allocate fairly
and reasonably any overhead for shared office space and uses and will use
separate stationery, invoices and checks.
23
(iii) Arm's length Transactions. Such entity has not entered into
and will not enter into, nor has it been or will it be a party to, any
transaction with its partners, members, shareholders or Affiliates except
(i) for the Documents and (ii) in the ordinary course of its business (as
contemplated by the Documents) and on terms which are intrinsically fair
and are no less favorable to it than would be obtained in a comparable
arm's-length transaction with an unrelated third party.
(iv) Bankruptcy Filing. Such entity, without the unanimous consent
of all of the general partners, directors, trustees or members, as
applicable, has never filed and will never file a bankruptcy or insolvency
petition or otherwise instituted insolvency proceedings with respect to
itself or to any other entity in which it has or had a direct or indirect
legal or beneficial ownership interest, and has not dissolved, liquidated,
consolidated, merged, or sold and will not dissolve, liquidate,
consolidate, merge, or sell all or substantially all of its assets or any
other entity in which it has or had a direct or indirect legal or
beneficial ownership interest, has not engaged and will not engage in any
other business activity, or has not amended and will not amend its
organizational documents, all of the foregoing cases, without the prior
written consent of the Independent Director.
(v) Commingling. Such entity has never commingled and will never
commingle its funds or assets with those of any other entity, and has held
its assets in its own name.
(vi) Divisions. Such entity has never identified and will not
identify its partners, members or shareholders, or any affiliates of either
of them as a division or part of it.
(vii) Formalities. Such entity has always observed and will always
observe all partnership, corporate trust or limited liability company
formalities, as applicable.
(viii) Guarantees. Such entity has not assumed or guaranteed or
become obligated for the debts of, and will not become so obligated, or so
assume or guarantee any other entity and has not held out, and will not
hold out its credit as being available to satisfy the obligations of any
other entity for liabilities permitted to be guaranteed by its Articles of
Organization.
(ix) Identification. Such entity has always held and identified
itself and will always hold and identify itself as a separate and distinct
entity under its own name and not as a division or part of any other person
or entity.
(x) Independent Director. If such entity is a corporation, it has
covenanted always and will continue to so covenant to have at least one
director that is an Independent Director.
(xi) Loans. Such entity has not made, and will not make, loans to
any Person.
24
(xii) No Dissolution. Such entity has not engaged in, sought, or
consented to, and will not so engage, seek or consent to, any dissolution,
winding up, liquidation, consolidation, merger, asset sale, transfer of
partnership or membership interest, or amendment of its limited partnership
agreement, articles of incorporation, articles of organization, certificate
of formation or operating agreement, as applicable, without the prior
written consent of the Independent Director.
(xiii) No Other Assets. Such entity has not had, and will not have,
any assets other than those related to the Collateral.
(xiv) No Other Business. As of the Closing Date, such entity has not
engaged in and will not engage in any business unrelated to the ownership
of its assets.
(xv) No Other Indebtedness. As of the Closing Date, such entity has
no Indebtedness other than, and after the Closing Date will have no other
Indebtedness other than with respect to the Issuer only, the Indebtedness
evidenced by the Notes and existing under the Indenture and the
Reimbursement Agreement, and liabilities in the ordinary course of business
relating to the ownership and operation of its assets.
(xvi) Own Liabilities. Such entity has paid and will continue to pay
its own liabilities out of its own funds and assets.
(xvii) Own Name. Such entity has conducted and will continue to
conduct its business in its own name and not in the name of any other
Person.
(xviii) Pledges. Such entity has not pledged and will not pledge its
assets for the benefit of any other Person other than pursuant to the
Documents.
(xix) Purpose. Such entity was organized solely for the purpose of
owning the Collateral and entering into the Documents, and, with respect to
the Issuer, issuing the Notes.
(xx) Separate Accounts. Such entity has maintained and will
continue to maintain its accounts, books and records separate from any
other Person and in accordance with Partial GAAP.
(xxi) Separate Records. Such entity has maintained its accounting
records and other entity documents separate from any other Person.
(xxii) Unanimous Consent. Such entity has not caused or allowed, and
will not cause or allow, the board of directors of such entity to take any
action requiring the unanimous affirmative vote of 100% of the members of
the board of directors unless an Independent Director shall have
participated in such vote.
"Stated Maturity Date" means February 22, 2010.
--------------------
25
"Subsidiary" means any corporation, association, partnership, limited
----------
liability company, joint venture or other business entity of which more than
fifty percent (50.0%) of the voting stock or other equity interests (in the case
of Persons other than corporations) is owned or controlled directly or
indirectly by another Person, or one or more of the Subsidiaries of such Person,
or a combination thereof.
"Substitute Mortgage Loan" means one or more Mortgage Loans
------------------------
(including, without limitation, Upgrade and Wraparound Mortgages) transferred on
a date other than the Closing Date for which the transferor thereof shall have
delivered an accurate and complete Mortgage Loan Transfer Form and each of
which, on the related Cut-Off Date, (i) is an Eligible Mortgage Loan; provided,
however, that the requirement set forth in Section 2.03(cc) of the applicable
Transfer Agreement that a minimum of one (1) scheduled monthly payment shall
have been made prior to the Transfer Date related to the applicable Mortgage
Loan shall not be necessary with regard to Upgrades and Wraparound Mortgages so
long as the Mortgagor's equity in related Timeshare Interest(s) is 15% or more
of the original principal balance of the related Instrument; (ii) had an
Instrument Principal Balance, including any additional cash delivered by the
Servicer or the Issuer into the Collection Account in connection therewith, not
less than the Instrument Principal Balance of the related Predecessor Mortgage
Loan(s); (iii) would not cause, by virtue of its substitution, the remaining
weighted average life of the Instruments constituting Collateral (as calculated
based upon the Scheduled Payments on all Instruments which comprise the
Aggregate Instrument Principal Balance) to be materially altered, (iv) the final
payment due thereunder will not mature later than eighteen months before the
Stated Maturity Date, (v) the then-remaining weighted average life of the
Instruments constituting Collateral as of such Transfer Date will not, after
inclusion of such Substitute Mortgage Loan(s) into the Collateral, be more than
80 months, (vi) the weighted average coupon of the Instruments then-constituting
Collateral, after inclusion of such Substitute Mortgage Loan into the
Collateral, will not be less than 14%, (vii) the addition of such Substitute
Mortgage Loan shall not cause the Aggregate Instrument Principal Balance arising
from Foreign Mortgagors to be more than twenty-three percent (23%) of the
Aggregate Instrumental Principal Balance of all Instruments, or, if such balance
is greater than twenty-three percent (23%) then the Predecessor Mortgage Loan
related thereto had a Mortgagor that was also a Foreign Mortgagor and the
addition of such Mortgage Loan will not increase the Aggregate Instrument
Principal Balance arising from Foreign Mortgagors above that existing at the
beginning of the Collection Period for which the substitution is being made;
(viii) the weighted average seasoning of all Instruments that constitute
Collateral as of such Transfer Date will not be less than 13 months); (ix) was
originated, serviced and maintained in accordance with standard credit
evaluation policies of the Originator related to such Predecessor Mortgage Loan,
be of equal or better credit quality than the Mortgage Loan being replaced; and
(x) provided that, (1) for purposes of determining compliance with clause (ii)
above, if more than one Substitute Mortgage Loan is being provided on any date,
(a) the Aggregate Instrument Principal Balance of the Substitute Mortgage
Loan(s) and of the Predecessor Mortgage Loan(s) related thereto shall be
determined on an aggregate basis and (b) any amounts deposited into the
Collection Account (which amounts shall be deemed to be Available Amounts) with
respect thereto shall equal the excess of the Aggregate Instrument Principal
Balance of the Predecessor Mortgage Loans over the Aggregate
26
Instrument Principal Balance of the Substitute Mortgage Loans related thereto
and (2) notwithstanding the failure of a Mortgage Loan to fulfill any of the
foregoing requirements, a Mortgage Loan which has been transferred to the Issuer
in substitution for another Mortgage Loan shall constitute a Substitute Mortgage
Loan until it has been repurchased or substituted for in accordance with the
applicable Documents.
"Supplements" has the meaning set forth in Section 1001 of the
-----------
Indenture.
"Tax Counsel" means Weil, Gotshal & ▇▇▇▇▇▇ LLP.
-----------
"Termination Date" means the date upon which the Letter of Credit
----------------
terminates pursuant to the terms thereof.
"Timeshare Declaration" means the declaration or other document
---------------------
recorded or to be recorded in the real estate records where the pertinent
Timeshare Project is located for the purpose of creating and governing the
rights of owners of Timeshare Interests related thereto, as it may be in effect
from time to time.
"Timeshare Developer(s)" means, unless otherwise set forth in the
----------------------
applicable Transfer Agreement, the Originators that offer and solicit offers to
purchase Timeshare Interests related to the Collateral.
"Timeshare Interest" means an undivided 1/52 fee simple interest in a
------------------
Unit on a fixed or floating basis in perpetuity for seven (7) consecutive days
each calendar year or every other calendar year, as the case may be, together
with an appurtenant undivided fractional interest in the common elements of the
Timeshare Project and the non-exclusive right to use such common elements during
such seven (7) day period including rights as members of the Association related
thereto, all in accordance with, and subject to, the related Timeshare Program
Governing Documents.
"Timeshare Program" means the program under which (i) Purchasers have
-----------------
purchased fee simple Timeshare Interests and (ii) owners of Timeshare Interests
share the expenses associated with the operation and management of such program.
"Timeshare Program Consumer Documents" means the purchase contract,
------------------------------------
Instrument, Mortgage, credit application, credit disclosures, rescission right
notices, final subdivision public reports/prospectuses/public offering
statements, Timeshare Project exchange affiliation agreement, and other
documents used or to be used by an Originator in connection with the sale of
Timeshare Interests.
"Timeshare Program Governing Documents" means for each Timeshare
-------------------------------------
Project, the related Articles of Organization of the Association, the rules and
regulations of the Association, the Timeshare Declaration, the Management
Agreement, and any subsidy agreement by which an Originator is obligated to
subsidize shortfalls in the budget of a Timeshare Program in lieu of paying
assessments, as they may be from time to time in effect and all amendments,
modifications and restatements of any of the foregoing.
27
"Timeshare Projects" mean, collectively, Christie Lodge, Eagle County,
------------------
CO; Eagle Pointe, Eagle County, CO; Falcon Pointe (also known as Falcon Point),
Eagle County, CO; Lakeside Terrace (also known as Falcon Point II), Eagle
County, CO; Vistana's Beach Club, St. Lucie County, FL; Vistana Lakes, Orange
County, FL; Vistana Condominium, Orange County, FL; Vistana Falls, Orange
County, FL; Vistana Fountains, Orange County, FL; Vistana Cascades, Orange
County, FL; Vistana Fountains II, Orange County, FL; Vistana Spa, Orange County,
FL; and Vistana Springs, Orange County, FL; and "Timeshare Project" means any
one of them.
"Title Insurer (Mortgage)" means any of First American Title Insurance
------------------------
Company, Chicago Title Insurance Company, Ticor Title Insurance Company, Old
Republic, Lawyer's Title Insurance Company or another title company which the
Bank has approved of in writing to the Issuer and issues a Title Policy
(Mortgage).
"Title Policy (Mortgage)" means the original lender's policy of title
-----------------------
insurance insuring that the Mortgage securing an Instrument is a perfected,
direct, first and exclusive lien on the Timeshare Interest encumbered thereby,
subject only to any Permitted Encumbrances, issued by a Title Insurer (Mortgage)
and in form and substance acceptable to the Trustee, and all amendments,
restatements and modifications thereto.
"Transfer Agreement" means when used in the singular, either of, and,
------------------
when used in the plural, both of, the Transfer Agreements, dated as of July 31,
1998, between an Originator and the Issuer, as the same may be amended, modified
or restated as permitted under the Documents.
"Transfer Date" means the Closing Date and, with respect to each
-------------
Substitute Mortgage Loan, the date upon which such Substitute Mortgage Loan is
sold, transferred, conveyed and assigned by the related Originator to the
Issuer, and pledged by the Issuer to the Trustee.
"Transition Costs" means the necessary or prudent reasonable fees,
----------------
expenses, disbursements and costs incurred by the Trustee in connection with the
transfer of the Servicer's duties under the Servicing Agreement and assuming the
role of successor Servicer pursuant to the terms of Article V of the Indenture
and the Servicing Agreement.
"Trigger Event" means, and shall be deemed to have occurred if, any
-------------
one of the following events occur: (1) the average over each of the three
months immediately preceding the date of determination (provided that such date
of determination occurs at least three months after the Closing Date),
expressed as a percent, of the Aggregate Instrument Principal Balance of
Delinquent Instruments that are more than 60 days past due divided by the
Aggregate Instrument Principal Balance of all Instruments is greater than 10%;
(2) the average Annualized Default Rate for the immediately preceding successive
three month period (provided that such three month period occurs at least three
months after the Closing Date) is greater than 12%; (3) an order or decree has
been entered by any Governmental Authority of competent jurisdiction enjoining
the intended use for timeshare purposes of any Timeshare Project or Timeshare
Projects that relate to
28
Mortgage Loans having an Aggregate Instrument Principal Balance of more than
$1,000,000 at the time of such decree and such order or decree is not vacated,
or such Mortgage Loans are not repurchased or replaced, within one hundred and
twenty (120) days of entry thereof; (4) the policies of hazard insurance or
business interruption insurance in effect on the Closing Date shall have lapsed
for any Timeshare Project or Timeshare Projects that relate to Mortgage Loans
having an Aggregate Instrument Principal Balance of more than $1,000,000 at the
time of such lapse and such policies have not been replaced, or such Mortgage
Loans are not repurchased or replaced, within thirty (30) days after such lapse;
or (5) a Manager that is an Affiliate of Vistana is duly terminated for cause by
the Association for any Timeshare Project or Timeshare Projects that relate to
Mortgage Loans having an Aggregate Instrument Principal Balance of more than
$1,000,000 at the time of such termination, and such Mortgage Loans are not
repurchased or replaced within sixty (60) days after such termination.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as the
-------------------
same may be amended from time to time.
"Trustee" means initially, Norwest Bank Minnesota, National
-------
Association and thereafter, any then-current (as of the date of determination)
successor Trustee appointed pursuant to the terms and conditions of the
Indenture.
"Trustee Fee" means, as of each Payment Date, the product of (i) one-
-----------
twelfth, (ii) .0002 and (iii) the Aggregate Instrument Principal Balance on the
opening of business on the first day of the related Collection Period, provided,
however, that the Trustee Fee on the Payment Date occurring on October 20, 1998
shall be calculated based on the Initial Aggregate Instrument Principal Balance.
The Trustee Fee shall also include certain investment income, which shall be
non-recourse, from amounts held in the Collection Account as provided in Section
301(i) of the Indenture.
"UCC" means the Uniform Commercial Code in effect in any applicable
---
jurisdiction as of the date hereof, and as the same may be amended.
"Ultimate Principal" means the remaining Note Balance, if any, on the
------------------
Stated Maturity Date.
"Unit" means a dwelling unit in a Timeshare Project.
----
"Upgrade" means a Mortgage Loan that has replaced a Predecessor
-------
Mortgage Loan which had the same Mortgagor and, with regard to which, such
Mortgagor freely and voluntarily without inducement from an Originator or any
affiliate or agent thereof except in the ordinary course of business of such
Originator, affiliate or agent chose to reconvey its original Timeshare Interest
and cancel its Predecessor Mortgage Loan in exchange for, and perhaps with
additional consideration for, a new Timeshare Interest evidenced by a new
Mortgage Loan with an Outstanding Instrument Principal Balance including any
cash delivered into the Collection Account in connection therewith, not less
than the Outstanding Instrument Principal Balance of the Predecessor Mortgage
Loan.
29
"VDI" means Vistana Development, Inc., a Florida corporation doing
---
business as Vistana Development, Ltd., and having its chief executive office and
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇.
"Vistana" means Vistana, Inc., a Florida corporation having its chief
-------
executive office and principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇.
"Vistana Transaction Entity" means, when used in the singular, any of,
and when used in the plural, all of the following Persons: the Servicer, each
Originator and the Issuer.
"Voting Rights" means, for so long as any Notes remain outstanding,
-------------
100% of the rights to vote with regard to determinations to be made by
Noteholders under the Documents and which shall be exercisable by the
Noteholders of the class or classes of Notes entitled to vote in accordance with
the provisions of the Documents pro rata in accordance with their respective
Note Balances, provided that, for the purposes of exercising any right to vote
under the Notes, Notes held by the Issuer or any Affiliate of the Issuer shall
not be deemed to be Notes for the purposes of calculating any Voting Rights
unless all of the then-Outstanding Notes are held by the Issuer or any such
Affiliate.
"Withdrawn Collateral" has the meaning set forth in Section 701(b) of
--------------------
the Indenture.
"Wraparound Mortgage" means a Mortgage Loan that has replaced a
-------------------
Predecessor Mortgage Loan and with regards to which, the Mortgagor related
thereto has freely and voluntarily, without inducement from an Originator or any
affiliate or agent thereof except in the ordinary course of business of such
Originator, affiliate or agent, combined the related Predecessor Mortgage Loan
with a mortgage loan on an additional Timeshare Interest to create one new
Substitute Mortgage Loan.
"Year 2000 Problem" shall mean any significant risk that computer
-----------------
hardware, software or equipment containing embedded microchips essential to the
business or operations of the Vistana Transaction Entities will not, in the case
of dates or time periods occurring after December 31, 1999, function at least as
effectively and reliably as in the case of times or time periods occurring
before January 1, 2000, including the making of accurate leap year calculations.
30
