EXHIBIT 10.63
EXECUTION COPY
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MASTER LOAN PURCHASE AGREEMENT
Dated as of August 29, 2002
by and between
FAIRFIELD ACCEPTANCE CORPORATION-NEVADA,
as Seller
and
FAIRFIELD RESORTS, INC.,
as Co-Originator
and
FAIRFIELD MYRTLE BEACH, INC.,
as Co-Originator
and
SEA GARDENS BEACH AND TENNIS RESORT, INC.,
VACATION BREAK RESORTS, INC.,
VACATION BREAK RESORTS AT STAR ISLAND, INC.,
PALM VACATION GROUP
and
OCEAN RANCH VACATION GROUP,
each as a VB Subsidiary
and
PALM VACATION GROUP
and
OCEAN RANCH VACATION GROUP,
each as a VB Partnership
and
SIERRA DEPOSIT COMPANY, LLC
as Purchaser
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TABLE OF CONTENTS
PAGE
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RECITALS.....................................................................................................1
Section 1. Definitions....................................................................................2
Section 2. Purchase and Sale of Loans....................................................................17
Section 3. Pool Purchase Price...........................................................................17
Section 4. Payment of Purchase Price.....................................................................17
(a) Closing Dates..........................................................................17
(b) Manner of Payment of Additional Pool Purchase Price....................................17
(c) Scheduled Payments Under Loans and Cut-Off Date........................................18
Section 5. Conditions Precedent to Sale of Loans.........................................................18
Section 6. Representations and Warranties of the Seller, FRI, FMB and the VB Subsidiaries................18
(a) General Representations and Warranties of the Seller, FRI, FMB and the VB
Subsidiaries.........................................................................18
(b) Representations and Warranties Regarding the Loans...................................23
(c) Representations and Warranties Regarding the Loan Files..............................28
(d) Survival of Representations and Warranties...........................................29
(e) Indemnification of the Company.......................................................29
Section 7. Repurchases or Substitution of Loans for Breach of Representations and Warranties.............29
Section 8. Covenants of the Seller and FRI...............................................................29
(a) Affirmative Covenants of the Seller and FRI............................................29
(b) Negative Covenants of the Seller and FRI...............................................33
Section 9. Representations and Warranties of the Company.................................................35
Section 10. Covenants of the Company......................................................................36
Section 11. Miscellaneous.................................................................................37
(a) Amendment..............................................................................37
(b) Assignment.............................................................................37
(c) Counterparts...........................................................................38
(d) Termination............................................................................38
(e) Governing Law..........................................................................38
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TABLE OF CONTENTS
(continued)
PAGE
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(f) Notices................................................................................38
(g) Severability of Provisions.............................................................38
(h) Successors and Assigns.................................................................38
(i) Costs, Expenses and Taxes..............................................................39
(j) No Bankruptcy Petition.................................................................39
(k) Treatment of Timeshare Upgrades........................................................39
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SCHEDULES
Schedule 1 - Loan Schedule
Schedule 2 - Resorts
Schedule 3 - Environmental Issues
Schedule 4 - Lockbox Accounts
Schedule 5 - Litigation
EXHIBITS
Exhibit A Forms of Custodial Agreements
Exhibit B Form of Assignment of Additional Loans
Exhibit C Credit Standards and Collection Policies of Fairfield Acceptance
Corporation - Nevada and Fairfield Resorts, Inc.
Exhibit D Forms of Loans
Exhibit E Forms of Lockbox Agreements
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MASTER LOAN PURCHASE AGREEMENT
THIS
MASTER LOAN PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
August 29, 2002, is made by and between FAIRFIELD ACCEPTANCE CORPORATION-NEVADA,
a Delaware corporation, as seller (the "SELLER"), FAIRFIELD RESORTS, INC., a
Delaware corporation and the parent corporation of the Seller, as co-originator
("FRI"), FAIRFIELD MYRTLE BEACH, INC., a Delaware corporation and a wholly-owned
subsidiary of FRI, as co-originator ("FMB"), SEA GARDENS BEACH AND TENNIS
RESORT, INC., a Florida corporation ("SEA GARDENS"), VACATION BREAK RESORTS,
INC., a Florida corporation ("VBR"), VACATION BREAK RESORTS AT STAR ISLAND,
INC., a Florida corporation ("VBRS") (each of Sea Gardens, VBR and VBRS being
wholly-owned subsidiaries of Vacation Break, USA, Inc., a wholly-owned
subsidiary of FRI), PALM VACATION GROUP, a Florida general partnership ("PVG"),
OCEAN RANCH VACATION GROUP, a Florida general partnership ("ORVG") (each of Sea
Gardens, VBR, VBRS, PVG and ORVG are hereinafter collectively referred to as the
"VB SUBSIDIARIES" and PVG and ORVG are hereinafter collectively referred to as
the "VB PARTNERSHIPS") and SIERRA DEPOSIT COMPANY, LLC, a Delaware limited
liability company, as purchaser (hereinafter referred to as the "PURCHASER" or
the "COMPANY").
RECITALS
WHEREAS, FRI, FMB and the VB Subsidiaries have originated certain Loans in
connection with the sale to Obligors of Timeshare Properties at various Resorts;
WHEREAS, in the ordinary course of their businesses, FRI purchases or will
purchase directly or indirectly from FMB and the VB Subsidiaries, and the Seller
purchases or will purchase from FRI, certain Loans and related property
(including an interest in the Timeshare Properties underlying such Loans);
WHEREAS, each of FRI, FMB, the VB Subsidiaries, the Seller and the Company
wishes to enter into this Agreement and the related
Master Loan Purchase
Agreement Supplement for each Series of Notes (each, a "PA SUPPLEMENT") in order
to, among other things, effect the sale to the Company on the related Closing
Date of Initial Loans and related Transferred Assets that FAC owns as of the
close of business on the related Cut-Off Date, and the sale to the Company of
Additional Loans (including Additional Upgrade Balances) and related Transferred
Assets that FAC will own from time to time thereafter as of the close of
business on the related Addition Cut-Off Dates; and
WHEREAS, the Company intends to transfer and assign the Loans and related
Transferred Assets to the Issuer, which will then grant security interests in
the Loans and related Transferred Assets to Wachovia Bank, National Association,
as Collateral Agent on behalf of the Trustee and the holders of Notes issued
from time to time pursuant to a Master Indenture and Servicing Agreement of even
date herewith (the "INDENTURE AND SERVICING AGREEMENT"), together with any
Indenture Supplements thereto, each by and between Sierra Receivables Funding
Company, LLC as Issuer, FAC as Master Servicer, the Trustee and the Collateral
Agent.
NOW, THEREFORE, in consideration of the purchase price set forth herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follows:
SECTION 1. DEFINITIONS.
Whenever used in this Agreement, the following words and phrases shall have
the following meanings:
"ADDITION CUT-OFF DATE" shall mean, for Additional Loans of any Series, the
date set forth in the related Assignment.
"ADDITION DATE" shall mean, with respect to any Series, the Addition Date
as defined in the related PA Supplement.
"ADDITIONAL LOAN" shall mean, with respect to any Series, each installment
contract or contract for deed or contract or note secured by a mortgage, deed of
trust, vendor's lien or retention of title, in each case relating to the sale of
one or more Timeshare Properties or Green Timeshare Properties to an Obligor and
each Additional Upgrade Balance, in each case constituting one of the Loans of
such Series purchased from the Seller on an Addition Cut-Off Date and listed on
Schedule 1 to the related Assignment.
"ADDITIONAL POOL PURCHASE PRICE" shall have the meaning set forth in
Section 3.
"ADDITIONAL UPGRADE BALANCE" shall mean, with respect to any Loan, any
future borrowing made by the related Obligor pursuant to a modification of the
Loan relating to a Timeshare Upgrade after the Cut-Off Date or the Addition
Cut-Off Date, as applicable, with respect to such Loan, together with all money
due or to become due in respect of such borrowing.
"AFFILIATE" of any Person shall mean any other Person controlling or
controlled by or under common control with such Person, and "control" shall mean
the power to direct the management and policies of such Person directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and "controlling" and "controlled" shall have meanings correlative to
the foregoing.
"AGREEMENT" shall mean this Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"AMORTIZATION EVENT" shall mean, with respect to any Series, one or more of
the events constituting an Amortization Event as defined in the related
Indenture Supplement.
"ALLIANCE PROGRAM" shall mean any sales and marketing program pursuant to
which an Originator acquires recovered Timeshare Property interests from sold
out third-party unaffiliated resorts for resale.
"ASSESSMENTS" shall mean any assessments made with respect to a Timeshare
Property, including but not limited to real estate taxes, recreation fees,
community club or property owners' association dues, water and sewer improvement
district assessments or other similar
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assessments, the nonpayment of which could result in the imposition of a Lien or
other encumbrance upon such Timeshare Property.
"ASSIGNMENT" shall mean, with respect to any Series, an Assignment as
defined in the related PA Supplement.
"ASSIGNMENT OF MORTGAGE" shall mean any assignment (including any
collateral assignment) of any Mortgage.
"BANKRUPTCY CODE" shall mean the United States Bankruptcy Code, Title 11 of
the United States Code, as amended.
"BENEFIT PLAN" shall mean any employee benefit plan as defined in Section
3(3) of ERISA in respect of which the Company or any ERISA Affiliate of the
Company is, or at any time during the immediately preceding six years was, an
"employer" as defined in Section 3(5) of ERISA.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or Sunday or
(ii) a day on which banking institutions in
New York,
New York, Las Vegas,
Nevada, or the city in which the Corporate Trust Office of the Trustee is
located, or any other city specified in the PA Supplement for a Series, are
authorized or obligated by law or executive order to be closed.
"CENDANT" shall mean
Cendant Corporation or any successor thereof.
"CLOSING DATE" shall mean, with respect to any Series, the Closing Date as
defined in the related PA Supplement.
"COLLATERAL" shall have the meaning set forth in the Indenture and
Servicing Agreement.
"COLLATERAL AGENCY AGREEMENT" shall mean the Collateral Agency Agreement
dated as of January 15, 1998 by and between Fleet National Bank as predecessor
Collateral Agent, Fleet Securities, Inc. as deal agent and the secured parties
named therein, as amended by the First Amendment to Collateral Agency Agreement
dated as of July 31, 1998, as further amended by the Second Amendment to
Collateral Agreement dated as of July 25, 2000, as further amended by the Third
Amendment to Collateral Agency Agreement dated as of July 1, 2001, and as
further amended by the Fourth Amendment to Collateral Agency Agreement dated as
of August 29, 2002 by and among the Collateral Agent, the Trustee and other
secured parties, as such Collateral Agency Agreement may be amended,
supplemented or otherwise modified from time to time in accordance therewith.
"COLLATERAL AGENT" shall mean Wachovia Bank, National Association, as
Collateral Agent, its successors and assigns and any entity which is substituted
as Collateral Agent under the terms of the Collateral Agency Agreement.
"COLLECTION ACCOUNT" shall mean the account or accounts established
pursuant to Section 7.1(a) of the Indenture and Servicing Agreement.
"COLLECTIONS" shall mean, with respect to any Loan, all funds, cash
collections and other cash proceeds of such Loan, including without limitation
(i) all Scheduled Payments or
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recoveries made in the form of money, checks and like items to, or a wire
transfer or an automated clearinghouse transfer received in, any of the Lockbox
Accounts or received by the Issuer or the Master Servicer (or any Subservicer)
in respect of such Loan, (ii) all amounts received by the Issuer, the Master
Servicer (or any Subservicer) or the Trustee in respect of any Insurance
Proceeds relating to such Loan or the related Timeshare Property and (iii) all
amounts received by the Issuer, the Master Servicer (or any Subservicer) or the
Trustee in respect of any proceeds in respect of a condemnation of property in
any Resort, which proceeds relate to such Loan or the related Timeshare
Property.
"COMPANY" shall have the meaning set forth in the preamble.
"CONTAMINANTS" shall have the meaning set forth in Section 6(b)(xii).
"CORPORATE TRUST OFFICE" shall have the meaning set forth in the Indenture
and Servicing Agreement.
"CREDIT CARD ACCOUNT" shall mean an arrangement whereby an Obligor makes
Scheduled Payments under a Loan via pre-authorized debit to a Major Credit Card.
"CREDIT STANDARDS AND COLLECTION POLICIES" shall mean the Credit Standards
and Collection Policies of FAC and FRI, a copy of which is attached to this
Agreement as Exhibit C, as the same may be amended from time to time in
accordance with the provisions of Section 8(b)(iii).
"CUSTODIAL AGREEMENT" shall mean either (i) the custodial agreement dated
as of August 29, 2002 by and between the Issuer, FAC, EFI, Trendwest, Wachovia
Bank, National Association as Custodian, the Trustee and the Collateral Agent or
(ii) the Fourth Amended and Restated Custodial Agreement dated as of August 29,
2002 by and between Xxxxx Fargo Bank Nevada, N.A. (successor by merger to First
Security Trust Company of Nevada), as Custodian, the Collateral Agent, the
Trustee, FRI, FAC, FMB, FFC II, FFC III, the Issuer and other parties named
therein, a copy of each of which is attached to this Agreement as Exhibit A, as
the same may be amended, supplemented or otherwise modified from time to time
thereafter in accordance with the terms hereof.
"CUSTODIAN" shall mean, at any time, the custodian under either Custodial
Agreement at such time.
"CUSTOMARY PRACTICES" shall mean the Master Servicer's practices with
respect to the servicing and administration of Loans as in effect from time to
time, which practices shall be consistent with the practices employed by prudent
lending institutions that originate and service instruments similar to the Loans
or other timeshare loans in the jurisdictions in which the Resorts are located.
"CUT-OFF DATE" shall mean, with respect to any Series, the Cut-Off Date as
defined in the related PA Supplement.
"DE MINIMUS LEVELS" shall have the meaning set forth in Section 6(b)(xii).
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"DEBTOR RELIEF LAWS" shall mean the Bankruptcy Code and all other
applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments or similar
debtor relief laws from time to time in effect affecting the rights of creditors
generally.
"DEFAULTED LOAN" shall mean any Loan (a) with any portion of a Scheduled
Payment delinquent more than 60 days, (b) with respect to which the Master
Servicer shall have determined in good faith that the Obligor will not resume
making Scheduled Payments, (c) for which the related Obligor has been the
subject of a proceeding under a Debtor Relief Law or (d) for which cancellation
or foreclosure actions have been commenced.
"DEFAULTED LOAN REPURCHASE CAP" shall mean, as of any date of
determination, an amount equal to the PRODUCT of (a) 10.5% MULTIPLIED BY (b) the
aggregate Loan principal balance of all Loans (calculated as of the Cut-Off Date
or related Addition Cut-Off Date, as applicable, for each Loan) sold by the
Seller to the Depositor pursuant to this Agreement on or prior to such date of
determination.
"DEFECTIVE LOAN" shall mean, with respect to any Series, any Loan with any
uncured material breach of a representation or warranty of the Seller set forth
in Section 6(b) hereof and in the related PA Supplement.
"DELINQUENT LOAN" shall mean, with respect to any Series, a Loan with any
portion of a Scheduled Payment delinquent more than 30 days, other than any Loan
that is a Defaulted Loan.
"DEPOSITOR ADMINISTRATIVE SERVICES AGREEMENT" shall mean the administrative
services agreement dated as of August 29, 2002 by and between FAC as
administrator and the Company.
"DUE DATE" shall mean, with respect to any Loan, the date on which an
Obligor is required to make a Scheduled Payment thereon.
"DUE PERIOD" shall mean, with respect to any Payment Date, the immediately
preceding calendar month.
"EFI" shall mean EFI Development Funding, Inc., a Delaware corporation and
a wholly-owned indirect Subsidiary of Cendant.
"ELIGIBLE LOAN" shall mean, with respect to any Series, an Eligible Loan as
defined in the related PA Supplement.
"ENVIRONMENTAL LAWS" shall have the meaning set forth in Section 6(b)(xii).
"EQUITY PERCENTAGE" shall mean, with respect to a Loan, a fraction,
expressed as a percentage, the NUMERATOR of which is the EXCESS of (A) the
Timeshare Price of the related Timeshare Property relating to a Loan paid or to
be paid by an Obligor OVER (B) the outstanding principal balance of such Loan at
the time of sale of such Timeshare Property to such Obligor (LESS the amount of
any valid check presented by such Obligor at the time of such sale that has
cleared the payment system), and the DENOMINATOR of which is the Timeshare
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Price of the related Timeshare Property, PROVIDED that any cash downpayments or
principal payments made on any initial Loan that have been fully prepaid as part
of a Timeshare Upgrade and financed downpayments under such initial Loan
financed over a period not exceeding six months from the date of origination of
such Loan that have actually been paid within such six-month period shall be
included for purposes of calculating the numerator of such fraction.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" shall mean, with respect to any Person, (i) any
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Internal Revenue Code) as such
Person; (ii) a trade or business (whether or not incorporated) under common
control (within the meaning of Section 414(c) of the Internal Revenue Code) with
such Person; or (iii) a member of the same affiliated service group (within the
meaning of Section 414(m) of the Internal Revenue Code) as such Person, any
corporation described in clause (i) or any trade or business described in clause
(ii).
"ERISA LIABILITIES" shall have the meaning set forth in Section 8(b)(vi).
"EVENT OF DEFAULT" shall mean, with respect to any Series, one or more of
the events constituting an Event of Default under the related Indenture
Supplement.
"FAC" shall mean Fairfield Acceptance Corporation-Nevada, a Delaware
corporation domiciled in Nevada and a wholly-owned Subsidiary of FRI.
"FACILITY DOCUMENTS" shall mean, collectively, this Agreement, each PA
Supplement, the Indenture and Servicing Agreement, each Indenture Supplement,
the Pool Purchase Agreement, each PPA Supplement, the Custodial Agreement, the
Lockbox Agreements, the Collateral Agency Agreement, the Title Clearing
Agreements, the Loan Conveyance Documents, the Depositor Administrative Services
Agreement, the Issuer Administrative Services Agreement, the Financing
Statements and all other agreements, documents and instruments delivered
pursuant thereto or in connection therewith.
"FAIRSHARE PLUS AGREEMENT" shall mean the Amended and Restated FairShare
Vacation Plan Use Management Trust Agreement effective as of January 1, 1996 by
and between FRI, FMB and such other Subsidiaries and third party developers as
may be named by an amendment or addendum thereto, as the same may be amended,
restated, supplemented or otherwise modified from time to time thereafter in
accordance with the terms of this Agreement.
"FAIRSHARE PLUS PROGRAM" shall mean the program pursuant to which the
occupancy and use of a Timeshare Property is assigned to the trust created by
the FairShare Plus Agreement in exchange for annual symbolic points that are
used to establish the location, timing, length of stay and unit type of a
vacation, including without limitation systems relating to reservations,
accounting and collection, disbursement and enforcement of assessments in
respect of contributed units.
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"FCC" shall mean Fairfield Capital Corporation, a wholly-owned
special-purpose finance Subsidiary of FAC.
"FFC II" shall mean Fairfield Funding Corporation II, a wholly-owned
special purpose finance Subsidiary of FAC.
"FFC III" shall mean Fairfield Funding Corporation III, a wholly-owned
special purpose finance Subsidiary of FAC.
"FIXED WEEK" shall mean a Timeshare Property representing a fee simple
interest in a lodging unit at a Resort that entitles the related Obligor to
occupy such lodging unit for a specified one-week period each year.
"FMB" shall have the meaning set forth in the preamble.
"FRI" shall have the meaning set forth in the preamble.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States.
"GRANT" shall have the meaning set forth in the Indenture and Servicing
Agreement.
"GREEN LOAN" shall mean a Loan the proceeds of which are used to finance
the purchase of a Green Timeshare Property.
"GREEN TIMESHARE PROPERTY" shall mean a Timeshare Property for which
construction on the related Resort has not yet begun or is subject to
completion.
"INDEMNIFIED AMOUNTS" shall have the meaning set forth in Section 6(e).
"INDENTURE AND SERVICING AGREEMENT" shall have the meaning set forth in the
recitals.
"INDENTURE SUPPLEMENT" shall mean, with respect to any Series, an indenture
supplement to the Indenture and Servicing Agreement, executed and delivered in
connection with the issuance of the Notes of such Series pursuant to Section
2.10 of the Indenture and Servicing Agreement, and all amendments thereof and
supplements thereto.
"INDEPENDENT DIRECTOR" shall mean an individual who is an Independent
Director as defined in the Limited Liability Company Agreement of the Company as
in effect on the date of this Agreement.
"INITIAL CLOSING DATE" shall mean August 29, 2002.
"INITIAL LOAN" shall mean, with respect to any Series, each Loan listed on
the related Loan Schedule on the Closing Date for such Series.
"INSOLVENCY EVENT" shall mean, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable
7
Debtor Relief Law now or hereafter in effect, or the filing of a petition
against such Person in an involuntary case under any applicable Debtor Relief
Law now or hereafter in effect, which case remains unstayed and undismissed
within 30 days of such filing, or the appointing of a receiver, conservator,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the ordering of the
winding-up or liquidation of such Person's business; or (b) the commencement by
such Person of a voluntary case under any applicable Debtor Relief Law now or
hereafter in effect, or the consent by such Person to the entry of an order for
relief in an involuntary case under any such Debtor Relief Law, or the consent
by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the making by such
Person of any general assignment for the benefit of creditors, or the failure by
such Person generally to pay its debts as such debts become due or the admission
by such Person of its inability to pay its debts generally as they become due.
"INSOLVENCY PROCEEDING" shall mean any proceeding relating to an Insolvency
Event.
"INSTALLMENT CONTRACT" shall mean, with respect to any Series, an
installment sale contract for deed and retained title in a related Timeshare
Property by and between an Originator and an Obligor.
"INSURANCE PROCEEDS" shall mean proceeds of any insurance policy relating
to any Loan or the related Timeshare Property, including any refund of unearned
premium, but only to the extent such proceeds are not to be applied to the
restoration of any improvements on the related Timeshare Property or released to
the Obligor in accordance with Customary Practices.
"INTERNAL REVENUE CODE" shall mean the United States Internal Revenue Code
of 1986, as amended from time to time.
"ISSUER" shall mean Sierra Receivables Funding Company, LLC, a Delaware
limited liability company.
"ISSUER ADMINISTRATIVE SERVICES AGREEMENT" shall mean the administrative
services agreement dated as of August 29, 2002 by and between FAC as
administrator and the Issuer.
"KONA" shall have the meaning set forth in Section 11(l).
"LIEN" shall mean any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including without limitation any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the UCC (other than any such financing statement
filed for informational purposes only) or comparable law of any jurisdiction to
evidence any of the foregoing.
"LOAN" shall mean, with respect to any Series, each installment contract or
contract for deed or contract or note secured by a mortgage, deed of trust,
vendor's lien or retention of title,
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in each case relating to the sale of one or more Timeshare Properties or Green
Timeshare Properties to an Obligor, that is listed on the Loan Schedule for such
Series on the related Closing Date and any Additional Loans that are listed from
time to time on such Loan Schedule in accordance with the related PA Supplement.
"LOAN CONVEYANCE DOCUMENTS" shall mean, with respect to any Loan, (a) the
Assignment of Additional Loans in the form of Exhibit B, if applicable, and (b)
any such other releases, documents, instruments or agreements as may be required
by the Company, the Issuer or the Trustee in order to more fully effect the sale
(including any prior assignments) of such Loan and any related Transferred
Assets.
"LOAN DOCUMENTS" shall mean, with respect to any Loan, all papers and
documents related to such Loan, including the original of all applicable
promissory notes, stamped as required by the Custodial Agreement, the original
of any related recorded or (to the extent permitted under this Agreement)
unrecorded Mortgage (or a copy of such recorded Mortgage if the original of the
recorded Mortgage is not available, certified to be a true and complete copy of
the original) and a copy of any recorded or (to the extent permitted under this
Agreement) unrecorded warranty deed transferring legal title to the related
Timeshare Property to the Obligor; PROVIDED, HOWEVER, that the Loan Documents
may be provided in microfiche or other electronic form to the extent permitted
under the Custodial Agreement.
"LOAN FILE" shall mean, with respect to any Loan, the Loan Documents
pertaining to such Loan and any additional amendments, supplements, extensions,
modifications or waiver agreements required to be added to the Loan File
pursuant to this Agreement, the Credit Standards and Collection Policies and/or
Customary Practices.
"LOAN POOL" shall mean, with respect to any Series, all Loans identified in
the Loan Schedule for such Series.
"LOAN RATE" shall mean the annual rate at which interest accrues on any
Loan, as modified from time to time in accordance with the terms of any related
Credit Standards and Collection Policies.
"LOAN SCHEDULE" shall mean, with respect to any Series, the list of Loans
attached to the related PA Supplement as Schedule 1, as amended from time to
time on each Addition Date and Repurchase Date as provided in the related PA
Supplement, which list shall set forth the following information with respect to
each Loan therein as of the applicable date:
(a) the Loan number;
(b) the Obligor's name and the home address and telephone number
for such Obligor set forth in the Loan;
(c) the Resort in which the related Timeshare Property is
located;
(d) as to Fixed Weeks, the building, unit and week thereof; as
to UDIs, the phase number thereof; and as to all other
Timeshare Properties, the number of Points issued pursuant
to the FairShare Plus Program (if
9
applicable) for which occupancy rights in such Timeshare
Property may be redeemed and which are represented thereby;
(e) the Loan Rate;
(f) whether the Obligor has elected a PAC with respect to the
Loan;
(g) the original term of the Loan;
(h) the original Loan principal balance and outstanding Loan
principal balance as of the Cut-Off Date or related Addition
Cut-Off Date, as applicable;
(i) the date of execution of the Loan;
(j) the amount of the Scheduled Payment on the Loan;
(k) the original Timeshare Price and Equity Percentage; and
(l) whether the related Timeshare Property has been deeded to
the Obligor.
The Loan Schedule also shall set forth the aggregate amounts described under
clause (h) above for all outstanding Loans. The Loan Schedule may be in the form
of more than one list, collectively setting forth all of the information
required.
"LOCKBOX ACCOUNT" shall mean any of the accounts established pursuant to a
Lockbox Agreement.
"LOCKBOX AGREEMENT" shall mean any agreement substantially in the form of
Exhibit E by and between the Issuer, the Trustee, the Master Servicer and the
applicable Lockbox Bank, which agreement sets forth the rights of the Issuer,
the Trustee and the applicable Lockbox Bank with respect to the disposition and
application of the Collections deposited in the applicable Lockbox Account,
including without limitation the right of the Trustee to direct the Lockbox Bank
to remit all Collections directly to the Trustee.
"LOCKBOX BANK" shall mean any of the commercial banks holding one or more
Lockbox Accounts for the purpose of receiving Collections.
"LOT" shall mean a fully or partially developed parcel of real estate.
"MAJOR CREDIT CARD" shall mean a credit card issued by any Visa USA, Inc.,
MasterCard International Incorporated, American Express Company, Discover Bank
or Diners Club International Ltd. credit card entity.
"MASTER SERVICER" shall mean the master servicer under the Indenture and
Servicing Agreement.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person and any
event or circumstance, a material adverse effect on:
10
(a) the business, properties, operations or condition (financial
or otherwise) of any of such Person;
(b) the ability of such Person to perform its respective
obligations under any Facility Documents to which it is a party;
(c) the validity or enforceability of, or collectibility of
amounts payable under, any Facility Documents to which it is a party;
(d) the status, existence, perfection or priority of any Lien
arising through or under such Person under any Facility Documents to which
it is a party; or
(e) the value, validity, enforceability or collectibility of the
Loans pledged as collateral for any Series of Notes or any of the other
Transferred Assets pledged as collateral for any Series of Notes.
"MORTGAGE" shall mean any mortgage, deed of trust, purchase money deed of
trust or deed to secure debt encumbering the related Timeshare Property, granted
by the related Obligor to the Originator of a Loan to secure payments or other
obligations under such Loan.
"MULTIEMPLOYER PLAN" shall have the meaning set forth in Section 3(37) of
ERISA.
"NOMINEE" shall mean (a) Lawyer's Title Insurance Corporation under the
Eleventh Amended and Restated Title Clearing Agreement dated as of August 29,
2002, as amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof, by and among FRI, FAC, the Issuer, FFC III,
FFC II, FCC, the Trustee, the Collateral Agent, Lawyers Title Insurance
Corporation and certain other parties thereto; (b) Colorado Land Title Company
under the Ninth Amended and Restated Title Clearing Agreement (Colorado) dated
as of August 29, 2002, as amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof, by and among FRI, FAC, the Issuer,
FFC III, FFC II, FCC, the Trustee, the Collateral Agent, Colorado Land Title
Company and certain other parties thereto; (c) Lawyers Title Insurance
Corporation under the Seventh Amended and Restated Title Clearing Agreement
(Westwinds) dated as of August 29, 2002, as amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof, by and among
FRI, FAC, FMB, FFC III, FFC II, FCC, the Issuer, the Collateral Agent, the
Trustee, Lawyers Title Insurance Corporation and certain other parties thereto;
(d) Lawyers Title Insurance Corporation under the Sixth Amended and Restated
Nashville Title Clearing Agreement dated as of August 29, 2002, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, by and among FRI, FAC, the Issuer, FFC III, FFC II, FCC, the
Trustee, the Collateral Agent, Lawyers Title Insurance Corporation and certain
other parties thereto; (e) Lawyers Title Insurance Corporation under the Sixth
Amended and Restated Seawatch Plantation Title Clearing Agreement dated as of
August 29, 2002, as amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof, by and among FRI, FAC, FMB, the
Issuer, FFC III, FFC II, FCC, the Trustee, the Collateral Agent, Lawyers Title
Insurance Corporation and certain other parties thereto; (f) First American
Title Insurance Company under the Eighth Amended and Restated Supplementary
Trust Agreement (Arizona) dated as of August 29, 2002, as amended,
11
supplemented or otherwise modified from time to time in accordance with the
terms thereof, by and among FRI, FAC, the Issuer, FFC III, FFC II, FCC, the
Trustee, the Collateral Agent, First American Title Insurance Company and
certain other parties thereto; (g) Lawyer's Title of Nevada, Inc. under the
Second Amended and Restated Nevada Title Clearing Agreement dated as of August
29, 2002, as amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof, by and among FRI, FAC, FFC III, the Issuer,
the Trustee, the Collateral Agent, Lawyer's Title of Nevada, Inc. and certain
other parties thereto; and (h) such other nominees as shall be approved in
writing by the Collateral Agent pursuant to the terms of other title clearing
agreements (and similar documents, instruments and agreements) that may be
entered into from time to time by each of FRI, FAC, the Issuer and the
Collateral Agent (among other Persons) in accordance with the transactions
contemplated by this Agreement and the other Facility Documents relating to the
Loans and the Timeshare Properties.
"NOTE" shall mean any Loan-backed note issued, executed and authenticated
in accordance with the Indenture and Servicing Agreement and any related
Indenture Supplement.
"NOTEHOLDER" shall have the meaning set forth in the Indenture and
Servicing Agreement.
"OBLIGOR" shall mean, with respect to any Loan, the Person or Persons
obligated to make Scheduled Payments thereon.
"OPERATING AGREEMENT" shall mean the Seventh Amended and Restated Operating
Agreement dated as of July 1, 2001 by and between FRI, FMB, the VB Subsidiaries
and the Seller.
"OPINION OF COUNSEL" shall mean a written opinion of counsel in form and
substance reasonably satisfactory to the recipient thereof.
"ORIGINATOR" shall mean FRI, FMB or a VB Subsidiary, as the case may be, or
any other Subsidiary of
Cendant Corporation that originates Loans in accordance
with the Credit Standards and Collection Policies for sale to FAC.
"PAC" shall mean an arrangement whereby an Obligor makes Scheduled Payments
under a Loan via pre-authorized bank account debit.
"PA SUPPLEMENT" shall have the meaning set forth in the recitals.
"PAYMENT DATE" shall mean, with respect to any Series, the payment date set
forth in the related Indenture Supplement.
"PERMITTED ENCUMBRANCE" shall mean, with respect to a Loan, any of the
following Liens against the related Timeshare Property: (i) the interest therein
of the Obligor and/or the Nominee, as the case may be, (ii) the Lien of due and
unpaid Assessments, (iii) covenants, conditions and restrictions, rights of way,
easements and other matters of public record, such exceptions appearing of
record being consistent with the normal business practices of FAC and
12
FRI or specifically disclosed in the applicable land sales registrations filed
with the applicable regulatory agencies and (iv) other matters to which
properties of the same type as those underlying such Loan are commonly subject
that do not materially interfere with the benefits of the security intended to
be provided by such Timeshare Property.
"PERSON" shall mean any person or entity, including any individual,
corporation, limited liability company, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, governmental entity or
any other organization or entity, whether or not a legal entity.
"PLAN" shall mean an employee benefit plan or other retirement arrangement
subject to ERISA or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time.
"PLAN INSOLVENCY" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"POA" shall mean each property owners' association or similar timeshare
owner body for a Timeshare Property Regime or Resort or portion thereof, in each
case established pursuant to the declarations, articles or similar charter
documents applicable to each such Timeshare Property Regime, Resort or portion
thereof.
"POINTS" shall mean, with respect to any lodging unit at a Timeshare
Property Regime, the number of points of symbolic value assigned to such unit
pursuant to the FairShare Plus Program.
"POOL PURCHASE AGREEMENT" shall mean the master purchase agreement relating
to the Loans, dated the date hereof, by and between the Company and the Issuer,
and all amendments thereof and supplements thereto including, with respect to
any Series, the related PPA Supplement.
"POOL PURCHASE PRICE" shall mean, with respect to any Series, the Pool
Purchase Price as defined in the related PA Supplement.
"POST OFFICE BOX" shall mean each post office box to which Obligors are
directed to mail payments in respect of the Loans of any Series.
"PPA SUPPLEMENT" shall mean any supplement to the Pool Purchase Agreement
relating to a particular Series of Notes.
"PURCHASE" shall mean, with respect to any Series, a Purchase as defined in
the related PA Supplement.
"PURCHASER" shall have the meaning set forth in the preamble.
"QUALIFIED SUBSTITUTE LOAN" shall mean, with respect to any Series, a
substitute Loan that (i) is an Eligible Loan on the applicable date of
substitution for such substitute Loan, (ii) on such date of substitution has a
Loan Rate not less than the Loan Rate of the substituted Loan and (iii) is not
selected in a manner adverse to the Purchaser or its assignees.
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"RECORDS" shall mean all copies of Loans (not including originals) and
other documents, books, records and other information (including without
limitation computer programs, tapes, discs, punch cards, data processing
software and related property and rights) maintained by the Seller or any of its
respective Affiliates (including without limitation each Originator, but not
including the Purchaser or the Issuer) with respect to Loans, the related
Transferred Assets and the related Obligors.
"REORGANIZATION" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of Section 4241
of ERISA.
"REPORTABLE EVENT" shall mean any of the events described in Section 4043
of ERISA.
"REPURCHASE DATE" shall mean, with respect to any Series, the Repurchase
Date as defined in the related PA Supplement.
"REPURCHASE PRICE" shall mean, with respect to any Series, the Repurchase
Price as defined in the related PA Supplement.
"RESERVATION SYSTEM" shall mean the system with respect to Timeshare
Properties pursuant to which a reservation for a particular location, time,
length of stay and unit type is received, accepted, modified or canceled.
"RESERVE ACCOUNT" shall, with respect to any Series, mean any reserve
account established pursuant to the related Indenture Supplement.
"RESORT" shall mean each resort or development listed on Schedule 2 (as
such Schedule 2 may be amended from time to time with the written consent of the
Company and the Seller in connection with proposed sales of Additional Loans
relating to resorts or developments with respect to which Loans have not
previously been sold under this Agreement).
"SCHEDULED PAYMENT" shall mean each scheduled monthly payment of principal
and interest on a Loan.
"SELLER" shall have the meaning set forth in the preamble.
"SERIES" shall mean any Series of Notes issued and established pursuant to
an Indenture Supplement.
"SERIES TERMINATION DATE" shall mean, with respect to any Series, the
Series Termination Date as defined in the related PA Supplement.
"STATE" shall mean any of the 50 United States or the District of Columbia.
"SUBSERVICER" shall have the meaning set forth in the Indenture and
Servicing Agreement.
"SUBSERVICING AGREEMENT" shall have the meaning set forth in the Indenture
and Servicing Agreement.
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"SUBSIDIARY" shall mean, with respect to any Person, any corporation or
other entity of which more than 50% of the outstanding capital stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors of such corporation (notwithstanding that at the time capital
stock of any other class or classes of such corporation shall or might have
voting power upon the occurrence of any contingency) or other persons performing
similar functions is at the time directly or indirectly owned by such Person.
"SUBSTITUTION ADJUSTMENT AMOUNT" shall, with respect to any Series, have
the meaning set forth in the related PA Supplement.
"TIMESHARE PRICE" shall mean the original price of the Timeshare Property
paid by an Obligor, PLUS any accrued and unpaid interest and other amounts owed
by the Obligor.
"TIMESHARE PROPERTY" shall mean the underlying ownership interest that is
the subject of a Loan, which ownership interest may be either a Fixed Week, a
UDI or the Points with respect thereto under the FairShare Plus Program.
"TIMESHARE PROPERTY REGIME" shall mean any of the various interval
ownership regimes located at a Resort, each of which is an arrangement
established under applicable state law whereby all or a designated portion of a
development is made subject to a declaration permitting the transfer of
Timeshare Properties therein, which Timeshare Properties shall, in the case of
Fixed Weeks and UDIs, constitute real property under the applicable local law of
each of the jurisdictions in which such regime is located.
"TIMESHARE UPGRADE" shall mean the upgrade by an Obligor of the Obligor's
existing Timeshare Property to an upgraded Timeshare Property.
"TITLE CLEARING AGREEMENT" shall mean, with respect to certain Loans that
are Installment Contracts, each of (a) the Eleventh Amended and Restated Title
Clearing Agreement dated as of August 29, 2002, as amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof, by
and among the Issuer, FRI, FAC, Lawyers Title Insurance Corporation, the
Collateral Agent and the other parties thereto; (b) the Ninth Amended and
Restated Title Clearing Agreement (Colorado) dated as of August 29, 2002, as
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, by and among the Issuer, FRI, FAC, Colorado Land Title
Company, the Collateral Agent and the other parties thereto; (c) the Seventh
Amended and Restated Title Clearing Agreement (Westwinds) dated as of August 29,
2002, as amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof, by and among the Issuer, FRI, FAC, Lawyers
Title Insurance Corporation, the Collateral Agent and the other parties thereto;
(d) the Sixth Amended and Restated Nashville Title Clearing Agreement dated as
of August 29, 2002, as amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof, by and among the Issuer, FRI, FAC,
Lawyers Title Insurance Corporation, the Collateral Agent and the other parties
thereto; (e) the Sixth Amended and Restated Seawatch Plantation Title Clearing
Agreement dated as of August 29, 2002, as amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof, by and among
the Issuer, FRI, FAC, Lawyers Title Insurance Corporation, the Collateral Agent
and the other parties thereto; (f) the Eighth Amended and Restated
15
Supplementary Trust Agreement (Arizona) dated as of August 29, 2002, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, by and among the Issuer, FRI, FAC, First American Title Insurance
Corporation, the Collateral Agent and the other parties thereto; (g) the Second
Amended and Restated Nevada Title Clearing Agreement dated as of August 29,
2002, as amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof, by and among the Issuer, FRI, FAC, Lawyer's
Title of Nevada, Inc., the Collateral Agent and the other parties thereto; and
(h) such other title clearing agreements and other similar documents,
instruments and agreements which may be entered into from time to time by each
of FRI, FAC, the Issuer and the Collateral Agent (among other Persons) in
accordance with the transactions contemplated by this Agreement and other
Facility Documents relating to the Timeshare Properties.
"TRANSFERRED ASSETS" shall mean, with respect to any Series, any and all
right, title and interest of the Seller in, to and under:
(a) the Loans from time to time, including without limitation
the Initial Loans as of the close of business on the Cut-Off Date and the
Additional Loans as of the close of business on the related Addition
Cut-Off Dates and all Scheduled Payments, other Collections and other funds
received in respect of such Initial Loans and Additional Loans on or after
the Cut-Off Date or Addition Cut-Off Date, as applicable, and any other
monies due or to become due on or after the Cut-Off Date or Addition
Cut-Off Date, as applicable, in respect of any such Loans, and any security
therefor;
(b) (i) the Timeshare Properties relating to the Loans and (ii)
the Title Clearing Agreements and the FairShare Plus Program (including
without limitation the FairShare Plus Agreement) to the extent that they
relate to such Timeshare Properties;
(c) any Mortgages relating to the Loans;
(d) any Insurance Policies relating to the Loans;
(e) the Loan Files and other Records relating to the Loans;
(f) the Loan Conveyance Documents relating to the Loans;
(g) all interest, dividends, cash, instruments, financial assets
and other investment property and other property from time to time
received, receivable or otherwise distributed in respect of, or in exchange
for, or on account of, the sale or other disposition of the Transferred
Assets, and including all payments under Insurance Policies (whether or not
any of the Seller, the Purchaser, any Originator, the Master Servicer, the
Issuer or the Trustee is the loss payee thereof) or any indemnity, warranty
or guaranty payable by reason of loss or damage to or otherwise with
respect to any Transferred Assets, and any security granted or purported to
be granted in respect of any Transferred Assets; and
(h) all proceeds of any of the foregoing property described in
clauses (a) through (g).
16
"TRENDWEST" shall mean Trendwest Resorts, Inc., a wholly-owned indirect
Subsidiary of Cendant.
"TRUSTEE" shall mean Wachovia Bank, National Association, as Trustee under
the Indenture and Servicing Agreement, and its successors and assigns.
"UCC" shall mean the Uniform Commercial Code, as amended from time to time,
as in effect in any specified jurisdiction.
"UDI" shall mean an individual interest in fee simple (as tenants in common
with all other undivided interest owners) in a lodging unit or group of lodging
units at a Resort.
"VB PARTNERSHIPS" shall have the meaning set forth in the preamble.
"VB SUBSIDIARIES" shall have the meaning set forth in the preamble.
SECTION 2. PURCHASE AND SALE OF LOANS.
The Seller may from time to time sell and assign to the Company, and the
Company may from time to time Purchase from the Seller, all the Seller's right,
title and interest in, to and under the Loans listed on the Loan Schedule with
respect to the related PA Supplement. The principal terms of the Purchase and
sale of Loans for each Series shall be set forth in the related PA Supplement.
SECTION 3. POOL PURCHASE PRICE.
Provisions with respect to the Purchase and sale of the Loans for each
Series shall be set forth in the related PA Supplement.
The purchase price for any Additional Loans and other related Transferred
Assets (the "ADDITIONAL POOL PURCHASE PRICE") conveyed to the Company under this
Agreement and the related PA Supplement on each Addition Date shall be a dollar
amount equal to the aggregate outstanding principal balance of such Additional
Loans sold on such date, subject to adjustment to reflect such factors as the
Company and the Seller mutually agree will result in an Additional Pool Purchase
Price equal to the fair market value of such Additional Loans and other related
Transferred Assets.
SECTION 4. PAYMENT OF PURCHASE PRICE.
(a) CLOSING DATES. On the terms and subject to the conditions of
this Agreement and the related PA Supplement, payment of the Pool Purchase Price
for each Series shall be made by the Company on the related Closing Date in
immediately available funds to the Seller to such accounts at such banks as the
Seller shall designate to the Company not less than one Business Day prior to
the such Closing Date.
(b) MANNER OF PAYMENT OF ADDITIONAL POOL PURCHASE PRICE. On the
terms and subject to the conditions in this Agreement and the related PA
Supplement, the Company shall pay to the Seller, on each Business Day on which
any Additional Loans are purchased from the Seller by the Company pursuant to
Section 2 of the related PA Supplement, the Additional Pool
17
Purchase Price for such Additional Loans by paying such Additional Pool Purchase
Price to the Seller in cash.
(c) SCHEDULED PAYMENTS UNDER LOANS AND CUT-OFF DATE. The Company
shall be entitled to all Scheduled Payments, other Collections and all other
funds with respect to any Loan received on or after the related Cut-Off Date or
Addition Cut-Off Date, as applicable. The principal balance of each Loan as of
the related Cut-Off Date or Addition Cut-Off Date, as applicable, shall be
determined after deduction, in accordance with the terms of each such Loan, of
payments of principal received before such Cut-Off Date or Addition Cut-Off
Date.
SECTION 5. CONDITIONS PRECEDENT TO SALE OF LOANS.
No Purchase of Loans and related Transferred Assets shall be made hereunder
or under any PA Supplement on any date on which:
(a) the Company does not have sufficient funds available to pay
the related Pool Purchase Price or Additional Pool Purchase Price in cash; or
(b) an Insolvency Event has occurred and is continuing with
respect to the Seller or the Company.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE SELLER, FRI, FMB AND THE VB
SUBSIDIARIES.
(a) GENERAL REPRESENTATIONS AND WARRANTIES OF THE SELLER, FRI, FMB AND
THE VB SUBSIDIARIES. The Seller, FRI, FMB and the VB Subsidiaries jointly and
severally represent and warrant as of each Closing Date and as of each Addition
Date, or as of such other date specified in such representation and warranty,
that:
(i) ORGANIZATION AND GOOD STANDING.
(A) Each of the Seller, FRI, FMB and the VB Subsidiaries
(other than the VB Partnerships) is a corporation duly organized,
validly existing and in good standing under the laws of the state of
its organization and has full corporate power, authority and legal
right to own its properties and conduct its business as such
properties are presently owned and such business is presently
conducted, and to execute, deliver and perform its obligations under
this Agreement, any related PA Supplement and each of the Facility
Documents to which it is a party. Each of the Seller, FRI, FMB and
the VB Subsidiaries (other than the VB Partnerships) is organized in
the jurisdiction set forth in the preamble. Each of the Seller, FRI,
FMB and the VB Subsidiaries (other than the VB Partnerships) is duly
qualified to do business and is in good standing as a foreign
corporation, and has obtained all necessary licenses and approvals in
each jurisdiction in which failure to qualify or to obtain such
licenses and approvals would render any Loan unenforceable by any of
the Seller, FRI, FMB or the VB Subsidiaries (other than the VB
Partnerships).
18
(B) Each of the VB Partnerships is a general partnership
duly organized and validly existing under the laws of the State of
Florida and has full power, authority and legal right to own its
properties and conduct its business as such properties are presently
owned and such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement, any related
PA Supplement and each of the Facility Documents to which it is a
party. Each of the VB Partnerships is duly qualified to do business
and is in good standing and has obtained all necessary licenses and
approvals in each jurisdiction in which failure to qualify or to
obtain such licenses and approvals would render any Loan
unenforceable by any of the VB Partnerships.
(C) The name of each of the Seller, FRI, FMB, and the VB
Subsidiaries set forth in the preamble of this Agreement is the
correct legal name of such entity, and such name has not been changed
in the past six years (except that a predecessor corporation of the
Seller, Fairfield Acceptance Corporation, was merged with and into
the Seller on July 13, 1998 and FRI changed its name from Fairfield
Communities, Inc. to Fairfield Resorts, Inc. on June 26, 200l). None
of the Seller, FRI, FMB or the VB Subsidiaries utilizes any trade
names, assumed names, fictitious names or "doing business names."
(ii) DUE AUTHORIZATION AND NO CONFLICT. The execution, delivery
and performance by each of the Seller, FRI, FMB and the VB Subsidiaries of
each of the Facility Documents to which it is a party, and the consummation
by each such party of the transactions contemplated hereby and under each
other Facility Document to which it is a party, has been duly authorized by
the Seller, FRI, FMB and the VB Subsidiaries, respectively, by all
necessary corporate or partnership action, does not contravene (i) the
Seller's, FRI's, FMB's or the VB Subsidiaries' charter or by-laws or
partnership agreement, (ii) any law, rule or regulation applicable to the
Seller, FRI or FMB or the VB Subsidiaries, (iii) any contractual
restriction contained in any material indenture, loan or credit agreement,
lease, mortgage, deed of trust, security agreement, bond, note, or other
material agreement or instrument binding on any of the Seller, FRI, FMB or
the VB Subsidiaries or (iv) any order, writ, judgment, award, injunction or
decree binding on or affecting the Seller, FRI, FMB, the VB Subsidiaries or
their properties (except where such contravention would not have a Material
Adverse Effect with respect to such Persons or properties), and do not
result in (except as provided in the Facility Documents) or require the
creation of any Lien upon or with respect to any of their properties; and
no transaction contemplated hereby requires compliance with any bulk sales
act or similar law. Each of the Facility Documents to which the Seller,
FRI, FMB or the VB Subsidiaries is a party have been duly executed and
delivered on behalf of the Seller, FRI, FMB or the VB Subsidiaries, as
applicable. To the extent that this representation is being made with
respect to Title I of ERISA or Section 4975 of the Code, it is made subject
to the assumption that none of the assets being used to purchase the Loans
and Transferred Assets constitute assets of any Benefit Plan or Plan with
respect to which the Seller is a party in interest or disqualified person.
(iii) GOVERNMENTAL AND OTHER CONSENTS. All approvals,
authorizations, consents or orders of any court or governmental agency or
body required in connection
19
with the execution and delivery by the Seller, FRI, FMB or the VB
Subsidiaries of this Agreement, any related PA Supplement or any of the
other Facility Documents to which it is a party, the consummation by such
party of the transactions contemplated hereby or thereby, the performance
by such party of and the compliance by such party with the terms hereof or
thereof, have been obtained, except where the failure so to do would not
have a Material Adverse Effect with respect to such Party.
(iv) ENFORCEABILITY OF FACILITY DOCUMENTS. Each of the Facility
Documents to which any of the Seller, FRI, FMB or the VB Subsidiaries is a
party has been duly and validly executed and delivered by the Seller, FRI,
FMB or the VB Subsidiaries, as applicable, and constitutes the legal, valid
and binding obligation of the Seller, FRI, FMB or the VB Subsidiaries, as
applicable, enforceable against it in accordance with its respective terms,
except as enforceability may be subject to or limited by Debtor Relief Laws
or by general principles of equity (whether considered in a suit at law or
in equity).
(v) NO LITIGATION. Except as disclosed in Schedule 5 to this
Agreement or to any Assignment, there are no proceedings or investigations
pending, or to the knowledge of the Seller, FRI, FMB or the VB Subsidiaries
threatened, against the Seller, FRI, FMB or the VB Subsidiaries before any
court, regulatory body, administrative agency, or other tribunal or
governmental instrumentality (A) asserting the invalidity of this Agreement
or any of the other Facility Documents, (B) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or
any of the other Facility Documents, (C) seeking any determination or
ruling that would adversely affect the performance by any of the Seller,
FRI, FMB or the VB Subsidiaries of its obligations under this Agreement,
any related PA Supplement or any of the other Facility Documents to which
it is a party, (D) seeking any determination or ruling that would adversely
affect the validity or enforceability of this Agreement or any of the other
Facility Documents or (E) seeking any determination or ruling that would,
if adversely determined, be reasonably likely to have a Material Adverse
Effect with respect to such party.
(vi) GOVERNMENTAL REGULATIONS. Neither the Seller, FRI, FMB nor
any of the VB Subsidiaries is (A) an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as
amended, or (B) a "public utility company" or a "holding company," a
"subsidiary company" or an "affiliate" of any public utility company within
the meaning of Section 2(a)(5), 2(a)(7), 2(a)(8) or 2(a)(ii) of the Public
Utility Holding Company Act of 1935, as amended.
(vii) MARGIN REGULATIONS. Neither the Seller, FRI, FMB nor any of
the VB Subsidiaries is engaged, principally or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying any margin stock (as each such term is defined or
used in any of Regulations T, U or X of the Board of Governors of the
Federal Reserve System). No part of the proceeds of any of the notes issued
by the Issuer has been used by the Seller, FRI, FMB or any of the VB
Subsidiaries for so purchasing or carrying margin stock or for any purpose
that violates or would be inconsistent with the provisions of any of
Regulations T, U or X of the Board of Governors of the Federal Reserve
System.
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(viii) LOCATION OF CHIEF EXECUTIVE OFFICE AND RECORDS. The principal
place of business and chief executive office of FRI and FMB, and the office
where FRI and FMB maintain all of their Records, is located at 0000 Xxxxx
Xxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000; the principal place of business and
chief executive office of the Seller, and the office where the Seller
maintains all of its Records, is 10750 Xxxx Xxxxxxxxxx Xxxx., Xxxxx 000,
Xxx Xxxxx, Xxxxxx 00000; and the principal place of business and chief
executive office of each of the VB Subsidiaries is located at 0000 Xxxxx
Xxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000. None of FRI, FMB, the VB Subsidiaries
or the Seller has changed its principal place of business or chief
executive office (or the office where such entity maintains all of its
Records) during the previous six years (except that FRI and FMB changed
their principal place of business and chief executive office from 0000
Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 to 0000 Xxxxx Xxxx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000 on February 18, 2002; FAC changed its
principal place of business and chief executive office from 00000 Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000 to 0000 Xxxx Xxxxxx Xxxxxx, Xxxxx
000, Xxx Xxxxx, Xxxxxx 00000 in 1998, and from such address to the address
set forth above in 2002; each of the VB Subsidiaries changed its principal
place of business and chief executive office from 0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 to the address set forth above in
2001; Fairfield Acceptance Corporation, a predecessor corporation that was
merged into the Seller, maintained its principal place of business and
chief executive office (and all of its Records) in Pulaski County, Arkansas
until July 13, 1998 and FRI changed its name from Fairfield Communities,
Inc. to Fairfield Resorts, Inc. on June 26, 2001). At any time after the
Initial Closing Date, upon 30 days' prior written notice to the Trustee as
assignee of the Company and the Issuer, any of the Seller, FRI, FMB and the
VB Subsidiaries may change its name or may change its type or its
jurisdiction of organization to another jurisdiction within the United
States and any of the VB Partnerships may change the location of its chief
executive office, but only so long as all action necessary or reasonably
requested by the Company to amend the existing financing statements and to
file additional financing statements in all applicable jurisdictions to
perfect the transfer of the Loans and the related Transferred Assets is
taken.
(ix) LOCKBOX ACCOUNTS. Except in the case of any Lockbox Account
pursuant to which only Collections in respect of Loans subject to a PAC or
Credit Card Account are deposited, each of the Seller, FRI, FMB and the VB
Subsidiaries, as applicable, has filed a standing delivery order with the
United States Postal Service authorizing each Lockbox Bank to receive mail
delivered to the related Post Office Box. The account numbers of all
Lockbox Accounts, together with the names, addresses, ABA numbers and names
of contact persons of all the Lockbox Banks maintaining such Lockbox
Accounts and the related Post Office Boxes, are set forth in Schedule 4.
From and after the Initial Closing Date, none of the Seller, FRI, FMB or
the VB Subsidiaries shall have any right, title and/or interest in or to
any of the Lockbox Accounts or the Post Office Boxes and will maintain no
Lockbox accounts in their own names for the collection of payments in
respect of the Loans. None of the Seller, FRI, FMB or the VB Subsidiaries
has any lockbox or other accounts for the collection of payments in respect
of the Loans other than the Lockbox Accounts.
21
(x) FACILITY DOCUMENTS. This Agreement and any PA Supplement are
the only agreements pursuant to which the Seller sells the Loans and other
related Transferred Assets to the Company. Each of the Seller, FRI, FMB and
the VB Subsidiaries has furnished to the Company true, correct and complete
copies of each Facility Document to which any of the Seller, FRI, FMB and
the VB Subsidiaries is a party, each of which is in full force and effect.
None of the Seller, FRI, FMB, any of the VB Subsidiaries or any of its
Affiliates (not including the Purchaser or the Issuer) is in default
thereunder in any material respect.
(xi) TAXES. Each of the Seller, FRI, FMB and the VB Subsidiaries
has timely filed or caused to be filed all federal, state and local tax
returns required to be filed by it, and has paid or caused to be paid all
taxes shown to be due and payable on such returns or on any assessments
received by it, other than any taxes or assessments the validity of which
are being contested in good faith by appropriate proceedings and with
respect to which the Seller, FRI, FMB or any of the VB Subsidiaries, as
applicable, has set aside adequate reserves on its books in accordance with
GAAP, and which proceedings have not given rise to any Lien.
(xii) ACCOUNTING TREATMENT. Each of the Seller, FRI, FMB and the VB
Subsidiaries has accounted for the transactions contemplated in the
Facility Documents to which it is a party in accordance with GAAP.
(xiii) ERISA. There has been no (A) occurrence or expected
occurrence of any Reportable Event with respect to any Benefit Plan subject
to Title IV of ERISA of FRI, FMB, the Seller or any ERISA Affiliate, or any
withdrawal from, or the termination, Reorganization or Plan Insolvency of
any Multiemployer Plan or (B) institution of proceedings or the taking of
any other action by Pension Benefit Guaranty Corporation or by FRI, FMB,
the Seller or any ERISA Affiliate or any such Multiemployer Plan with
respect to the withdrawal from, or the termination, Reorganization or Plan
Insolvency of, any such Plan.
(xiv) NO ADVERSE SELECTION. No selection procedures materially
adverse to the Company, the Issuer, the Noteholders, the Trustee or the
Collateral Agent have been employed by any of the Seller, FRI, FMB or the
VB Subsidiaries in selecting the Loans for inclusion in the Loan Pool on
such Closing Date or Addition Date, as applicable.
(xv) FAIRSHARE PLUS PROGRAM.
(A) As of each Closing Date or any Addition Date, as
applicable, for each Timeshare Property Regime for which the related
Timeshare Properties are comprised primarily of UDIs, the RATIO of
(1) the total number of Points actually allocated to such Timeshare
Property Regime pursuant to the FairShare Plus Program for the
succeeding twelve-month period TO (2) the total number of Points
allocable to available space in such Timeshare Property Regime over
such twelve-month period, does not exceed 1.0 to 1.0.
22
(B) On each Closing Date or any Addition Date, as
applicable, for each owner of a UDI who is a member of the FairShare
Plus Program, the RATIO, expressed as a percentage, of (1) the number
of Points allocated to such owner in Timeshare Property Regime in
return for assigning his Timeshare Property to the FairShare Plus
Program trust TO (2) the total number of Points assigned to all UDI
owners in such Timeshare Property Regime, does not exceed the
percentage of such owner's undivided interest in such Timeshare
Property Regime as described in such owner's Loan.
(xvi) [Reserved].
(xvii) SEPARATE IDENTITY. Each of the Seller, FRI, the VB
Subsidiaries and their respective Affiliates has observed the applicable
legal requirements on its part for the recognition of the Company as a
legal entity separate and apart from each of the Seller, FRI, the VB
Subsidiaries and any of their respective Affiliates (other than the
Company) and has taken all actions necessary on its part to be taken in
order to ensure that the facts and assumptions relating to the Company set
forth in the opinion of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP of even date
herewith relating to substantive consolidation matters with respect to the
Seller and the Company are true and correct; PROVIDED, HOWEVER, that none
of the Seller, FRI, FMB or any of the VB Subsidiaries makes any
representations or warranties in this Section 6(a)(xvii) with respect to
the Company or the Issuer.
(b) REPRESENTATIONS AND WARRANTIES REGARDING THE LOANS. The Seller and
FRI jointly and severally represent and warrant to the Company as of the
applicable Cut-Off Date and Addition Cut-Off Date as to each Loan conveyed on
and as of each Closing Date or the related Addition Date, as applicable (except
as otherwise expressly stated) as follows:
(i) ELIGIBILITY. Such Loan is an Eligible Loan.
(ii) NO WAIVERS. The terms of such Loan have not been waived,
altered, modified or extended in any respect other than (A) modifications
entered into in accordance with Customary Practices and Credit Standards
and Collections Policies that do not reduce the amount or extend the
maturity of required Scheduled Payments and (B) modifications in the
applicability of a PAC (which may result in a change in the related Loan
Rate).
(iii) BINDING OBLIGATION. Such Loan is the legal, valid and binding
obligation of the Obligor thereunder and is enforceable against the Obligor
in accordance with its terms, except as such enforceability may be limited
by Debtor Relief Laws or by general principles of equity (whether
considered in a suit at law or in equity).
(iv) NO DEFENSES. Such Loan is not subject to any statutory right
of rescission, setoff, counterclaim or defense, including without
limitation the defense of usury.
(v) LAWFUL ASSIGNMENT. Such Loan was not originated in, and is
not subject to the laws of, any jurisdiction the laws of which would make
the transfer of the Loan under this Agreement or any PA Supplement
unlawful.
23
(vi) COMPLIANCE WITH LAW. The Originator and the Seller have
complied with requirements of all material federal, state and local laws
(including without limitation usury, truth in lending and equal credit
opportunity laws) applicable to such Loan in all material respects. The
related Timeshare Property Regime is in compliance with any and all
applicable zoning and building laws and regulations and any other laws and
regulations relating to the use and occupancy of such Timeshare Property
Regime, except where such noncompliance would not have a Material Adverse
Effect with respect to the applicable Originator and the Seller. None of
the Seller, FRI, FMB or the VB Subsidiaries has received notice of any
material violation of any legal requirements applicable to such Timeshare
Property Regime, except where such violation would not have a Material
Adverse Effect with respect to the applicable Originator and the Seller.
The Timeshare Property Regime related to such Loan complies with all
applicable state statutes, including without limitation condominium
statutes, timeshare statutes, HUD filings relating to interstate land sales
(if applicable) and the requirements of any governmental authority or local
authority having jurisdiction with respect to such Timeshare Property
Regime, and constitutes a valid and conforming condominium and timeshare
regime under the laws of the State in which the related Resort is located,
except where such noncompliance would not have a Material Adverse Effect
with respect to the applicable Originator and the Seller.
(vii) LOAN IN FORCE; NO SUBORDINATION. Such Loan is in full force
and effect and has not been subordinated, satisfied in whole or in part or
rescinded.
(viii) CAPACITY OF PARTIES. All parties to such Loan had legal
capacity to execute the Loan.
(ix) ORIGINAL LOANS. All original executed copies of such Loans
are in the custody of the Custodian, except to the extent otherwise
permitted pursuant to Section 6(b)(xiv).
(x) LOAN FORM/GOVERNING LAW. Such Loan was executed in
substantially the form of one of the forms of Loan in Exhibit D (as such
Exhibit D may be amended from time to time with the consent of the Seller
and the Company), except for changes required by applicable law and certain
other modifications that do not, individually or in the aggregate, affect
the enforceability or collectibility of such Loan. In addition, such Loan
was originated in and is governed by the laws of the State in which the
related Resort is located.
(xi) INTEREST IN REAL PROPERTY. The Timeshare Property underlying
such Loan is an interest in real property consisting of either a Fixed Week
or a UDI, and (except for a Timeshare Property that is a Green Timeshare
Property) such Timeshare Property has been deeded to the Nominee pursuant
to the terms of one of the Title Clearing Agreements or has been deeded to
the related Obligor in accordance with the requirements of the related Loan
and applicable law.
(xii) ENVIRONMENTAL COMPLIANCE. Each Timeshare Property Regime
related to a Loan is now, and at all times during FRI's ownership thereof
(or the ownership of any
24
Affiliate thereof other than the Company and the Issuer), has been free of
contamination from any substance, material or waste identified as toxic or
hazardous according to any federal, state or local law, rule, regulation or
order governing, imposing standards of conduct with respect to, or
regulating in any way the discharge, generation, removal, transportation,
storage or handling of toxic or hazardous substances, materials or waste or
air or water pollution (hereinafter referred to as "ENVIRONMENTAL LAWS"),
including without limitation any PCB, radioactive substance, methane,
asbestos, volatile hydrocarbons, petroleum products or wastes, industrial
solvents or any other material or substance that now or hereafter may cause
or constitute a health, safety or other environmental hazard to any person
or property (any such substance together with any substance, material or
waste identified as toxic or hazardous under any Environmental Law now in
effect or hereinafter enacted shall be referred to herein as
"CONTAMINANTS"), but excluding from the foregoing any levels of
Contaminants at or below which such Environmental Laws do not apply ("DE
MINIMUS LEVELS"). Neither FRI nor any Affiliate of FRI (other than the
Company and the Issuer) has caused or suffered to occur any discharge,
spill, uncontrolled loss or seepage of any petroleum or chemical product or
any Contaminant (except for De Minimus Levels thereof) onto any property
comprising or adjoining any Timeshare Property Regime, and neither FRI nor
any Affiliate of FRI (other than the Company and the Issuer) nor any
Obligor or occupant of all or part of any Timeshare Property Regime is now
or has been involved in operations at the related Timeshare Property Regime
that could lead to liability for FRI, the Company, any Affiliate of FRI or
any other owner of such Timeshare Property Regime or the imposition of a
Lien on such Timeshare Property Regime under any Environmental Law. No
practice, procedure or policy employed by FRI (or any Affiliate thereof
other than the Company and the Issuer) with respect to POAs for which FRI
acts as the manager or, to the best knowledge of the Seller, by the manager
of the POAs with respect to POAs managed by parties unaffiliated with FRI,
violates any Environmental Law that, if enforced, would reasonably be
expected to (A) have a Material Adverse Effect on such POA or the ability
of such POA to do business, (B) have a Material Adverse Effect on the
financial condition of the POA or (C) constitute grounds for the revocation
of any license, charter, permit or registration that is material to the
conduct of the business of the POA.
Except as set forth in Schedule 3, (1) all property owned, managed,
or controlled by FRI or any Affiliate of FRI (other than the Company and
the Issuer) and located within a Resort is now, and at all times during
FRI's ownership, management or control thereof (or the ownership,
management or control of any Affiliate thereof (other than the Company and
the Issuer)) has been free of contamination from any Contaminants, except
for De Minimus Levels thereof, (2) neither FRI nor any Affiliate of FRI
(other than the Company and the Issuer) has caused or suffered to occur any
discharge, spill, uncontrolled loss or seepage of any Contaminants onto any
property comprising or adjoining any of the Resorts, except for De Minimus
Levels thereof, and (3) neither FRI nor any Affiliate of FRI (other than
the Company and the Issuer) nor any Obligor or occupant of all or part of
any of any Resort is now or previously has been involved in operations at
any Resort that could lead to liability for FRI, the Company, any Affiliate
of FRI or any other owner of any Resort or the imposition of a Lien on such
Resort under any Environmental Law. None of the matters set forth in
Schedule 3 will have a Material Adverse Effect with respect to the Company
or its assignees or the interests of
25
the Company or its assignees in the Loans. Each Resort, and the present use
thereof, does not violate any Environmental Law in any manner that would
materially adversely affect the value or use of such Resort or the
performance by the POAs of their respective obligations under their
applicable declarations, articles or similar charter documents. There is no
condition presently existing, and to the best knowledge of FRI and the
Seller no event has occurred or failed to occur with respect to any Resort,
relating to any Contaminants or compliance with any Environmental Laws that
would reasonably be expected to have a Materially Adverse Effect with
respect to such Resort, including in connection with the present use of
such Resort.
(xiii) TAX LIENS. All taxes applicable to such Loan and the related
Timeshare Property have been paid, except where the failure to pay such tax
would not have a Material Adverse Effect with respect to the Seller or its
assignees or the Purchaser or the collectibility or enforceability of the
Loan. There are no delinquent tax liens in respect of the Timeshare
Property underlying such Loan.
(xiv) LOAN FILES. The related Loan File contains the following Loan
Documents (which may include microfiche or other electronic copies of the
Loan Documents to the extent provided in the Custodial Agreement):
(A) for Loans other than Loans described in clause (B)
below, at least one original of each Loan (or, if the Loan and
promissory note are contained in separate documents, an original of
the promissory note); PROVIDED, HOWEVER, that the original Loan may
have been removed from the Loan File in accordance with the Custodial
Agreement for the performance of collection services and other
routine servicing requirements; and
(B) for Loans relating to Timeshare Properties located in
Resorts in North Carolina or South Carolina with respect to which two
originals of such Loans have been executed, each original Loan is in
the Loan File, and each contains the following legend (whether by
stamp or otherwise) on its face:
"THIS COPY IS ONE OF TWO ORIGINALS, AND WAS EXECUTED SOLELY
FOR RECORDATION. TO THE EXTENT THAT POSSESSION OF THIS CONTRACT IS
REQUIRED TO TRANSFER OR PERFECT A TRANSFER OF ANY INTEREST IN OR TO
THIS CONTRACT, POSSESSION OF THE OTHER ORIGINAL HEREOF IS REQUIRED";
and
(C) for Loans with respect to which the related Timeshare
Property has been deeded out to the related Obligor:
(1) a copy of the deed for such Timeshare Property; and
(2) the original recorded Mortgage (or a copy thereof, if
applicable, for Mortgages that have been submitted for recording as
set forth herein) and Assignments of Mortgages in favor of the
Collateral Agent (or a copy of such
26
recorded Mortgage or Assignment of Mortgage, as the case may be,
certified to be a true and complete copy thereof, if the original of
the recorded Mortgage or Assignment of Mortgage is lost or
destroyed), PROVIDED that in the case of any Loan with respect to
which the related Mortgage and/or deed has been removed from the Loan
File for recording in the local real property recording office: (x)
the original Mortgage shall not have been at such real property
recording office more than (1) 180 days from the related loan closing
date (in the case of Loans (other than Green Loans) relating to
Timeshare Properties located in the State of Florida) or (2) 180 days
from the date on which the related Timeshare Property is required to
be deeded to an Obligor (in the case of Green Loans or Loans relating
to Timeshare Properties located in any other State) and (y) in the
case of any Loan (other than a Green Loan) relating to a Timeshare
Property located in the State of Florida, the Loan File shall contain
one or more certificates from FRI's applicable title agents in
Florida to the effect that the related Mortgage has been delivered
for purposes of recordation to the appropriate local real property
recording office.
(xv) LOCKBOX ACCOUNTS. As of the applicable Cut-Off Date, the
Obligor of such Loan either:
(A) shall have been instructed to remit Payments thereunder
to a Post Office Box for credit to a Lockbox Account or directly to a
Lockbox Account, in each case maintained at a Lockbox Bank pursuant
to the terms of a Lockbox Agreement; or
(B) has entered into a PAC or Credit Card Account pursuant
to which a deposit account of such Obligor is made subject to a
pre-authorized debit in respect of Payments as they become due and
payable, and the Seller has caused a Lockbox Bank to take all
necessary and appropriate action to ensure that each such
pre-authorized debit is credited directly to a Lockbox Account.
(xvi) OWNERSHIP INTEREST. As of the Closing Date or related
Addition Date, as applicable, the Seller has good and marketable title to
the Loan, free and clear of all Liens (other than Permitted Encumbrances).
(xvii) INTEREST IN LOAN. Such Loan constitutes either a "general
intangible," an "instrument," "chattel paper" or an "account" under the
Uniform Commercial Code of the States of Delaware, Florida and
New York.
(xviii) RECORDATION OF ASSIGNMENTS. The collateral Assignment of
Mortgage to the Collateral Agent relating to the Mortgage with respect to
each Loan has been recorded or delivered for recordation simultaneously
with the related Mortgage to the proper office in the jurisdiction in which
the related Timeshare Property is located, except to the extent the related
Timeshare Property is located in the State of Florida and the Seller shall
have delivered an Opinion of Counsel to the effect that recordation of the
Assignment of Mortgage is not necessary to perfect a security interest
therein in favor of the Collateral Agent.
27
(xix) MATERIAL DISPUTES. To the actual knowledge of the Seller, the
Loan is not subject to any material dispute.
(xx) GOOD TITLE; NO LIENS. Upon the Purchase hereunder occurring
on such Closing Date or Addition Date, as applicable, the Company will be
the lawful owner of, and have good title to, each Loan and all of the other
related Transferred Assets that are the subject of such Purchase, free and
clear of any Liens (other than any Permitted Encumbrances on the related
Timeshare Properties). All Loans and related Transferred Assets are
purchased without recourse to any of the Seller, FRI, FMB or the VB
Subsidiaries except as described in this Agreement and any PA Supplement.
Such Purchase by the Company under this Agreement and under any PA
Supplement constitutes a valid and true sale and transfer for consideration
(and not merely the grant of a security interest to secure a loan),
enforceable against creditors of each of the Seller, FRI, FMB and the VB
Subsidiaries, and no Loan or other related Transferred Assets that are the
subject of such Purchase will constitute property of the Seller after such
Purchase.
(xxi) SOLVENCY. Each of the Seller, FRI, FMB and the VB
Subsidiaries, both prior to and immediately after giving effect to the
Purchase of Loans hereunder and under any PA Supplement occurring on such
Closing Date or Addition Date, as applicable, (A) is not insolvent (as such
term is defined in Section 101(32)(A) of the Bankruptcy Code), (B) is able
to pay its debts as they become due and (C) does not have unreasonably
small capital for the business in which it is engaged or for any business
or transaction in which it is about to engage.
(xxii) POA RESERVES. The capital reserves and maintenance fee levels
of the POAs related to each Timeshare Property Regime underlying the Loans
Purchased on such Closing Date or Addition Date, as applicable, are
adequate in light of the operating requirements of such POAs.
(c) REPRESENTATIONS AND WARRANTIES REGARDING THE LOAN FILES. The
Seller and FRI jointly and severally represent and warrant to the Company as of
each Closing Date and related Addition Date as to each Loan and the related Loan
File conveyed by it hereunder on and as of such Closing Date or related Addition
Date, as applicable (except as otherwise expressly stated) as follows:
(i) POSSESSION. On or immediately prior to each Closing Date or
related Addition Date, as applicable, the Custodian will have possession of
each original Loan and the related Loan File, and will have acknowledged
such receipt and its undertaking to hold such original Loan and the related
Loan File for purposes of perfection of the Collateral Agent's interest in
such original Loan and the related Loan File; PROVIDED, HOWEVER, that the
fact that any document not required to be in its respective Loan File
pursuant to Section 6(b)(xiv) of this Agreement is not in the possession of
the Custodian in its respective Loan File does not constitute a breach of
this representation.
(ii) MARKING RECORDS. On or before each Closing Date or Addition
Date, as applicable, the Seller shall have caused the portions of its
computer files relating to the Loans sold on such date to the Company to be
clearly and unambiguously marked to indicate that each such Loan has been
conveyed on such date to the Company.
28
(d) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. It is understood and
agreed that the representations and warranties contained in this Section 6 shall
remain operative and in full force and effect, shall survive the transfer and
conveyance of the Loans with respect to any Series by the Seller to the Company
under this Agreement and any PA Supplement, the conveyance of the Loans by the
Company to the Issuer pursuant to the Pool Purchase Agreement and any PPA
Supplement and the Grant of the Collateral by the Issuer to the Collateral Agent
and shall inure to the benefit of the Company, the Issuer, the Trustee, the
Collateral Agent and the Noteholders and their respective designees, successors
and assigns.
(e) INDEMNIFICATION OF THE COMPANY. FMB, each VB Subsidiary and FRI
shall jointly and severally indemnify, defend and hold harmless the Company
against any and all claims, losses and liabilities, including reasonable
attorneys' fees (the foregoing being collectively referred to as "INDEMNIFIED
AMOUNTS") that may at any time be imposed on, incurred by or asserted against
the Company as a result of a breach by any of FMB, any VB Subsidiary or FRI of
any of its respective representations, warranties or covenants hereunder. Except
as otherwise provided in Section 11(i), FRI shall pay to the Company, on demand,
any and all amounts necessary to indemnify the Company for (i) any and all
recording and filing fees in connection with the transfer of the Loans from the
Seller to the Company, and any and all liabilities with respect to, or resulting
from any delay in paying when due, any taxes (including sales, excise or
property taxes) payable in connection with the transfer of the Loans from the
Seller to the Company and (ii) costs, expenses and reasonable counsel fees in
defending against the same. The agreements in this Section 6(e) shall survive
the termination of this Agreement or any PA Supplement and the payment of all
amounts payable hereunder, under any PA Supplement and under the Loans. For
purposes of this Section 6(e), any reference to the Company shall include any
officer, director, employee or agent thereof, or any successor or assignee
thereof or of the Company.
SECTION 7. REPURCHASES OR SUBSTITUTION OF LOANS FOR BREACH OF REPRESENTATIONS
AND WARRANTIES.
Provisions with respect to the repurchase or substitution of Loans of any
Series for breach of representations and warranties under this Agreement and any
PA Supplement shall be set forth in the related PA Supplement.
SECTION 8. COVENANTS OF THE SELLER AND FRI.
(a) AFFIRMATIVE COVENANTS OF THE SELLER AND FRI. Each of the
Seller and FRI covenants and agrees that it will, at any time prior to the
Termination Date:
(i) COMPLIANCE WITH LAWS, ETC. Comply in all material respects
with all applicable laws, rules, regulations and orders with respect to it,
its business and properties, provisions of ERISA, the Internal Revenue Code
and all applicable regulations and interpretations thereunder, and all
Loans and Facility Documents to which it is a party.
(ii) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain
its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in good
standing as a foreign corporation, and maintain all
29
necessary licenses and approvals in each jurisdiction in which it does
business, except where the failure to preserve and maintain such existence,
rights, franchises, privileges, qualifications, licenses and approvals
would not have a Material Adverse Effect with respect to it.
(iii) AUDITS. Upon at least two Business Days notice during
regular business hours, permit the Company and/or its agents,
representatives or assigns access:
(A) to the offices and properties of the Seller or FRI
in order to examine and make copies of and abstracts from all
books, correspondence and Records of the Seller or FRI as
appropriate to verify the Seller's or FRI's compliance with this
Agreement, any PA Supplement or any other Facility Documents to
which the Seller or FRI is a party and any other agreement
contemplated hereby or thereby, and the Company and/or its agents,
representatives and assigns may examine and audit the same and make
photocopies, computer tapes or other computer replicas thereof, as
appropriate, and each of the Seller and FRI will provide to the
Company and/or its agents, representatives and assigns, at the
expense of the Seller and FRI, such clerical and other assistance
as may be reasonably requested in connection therewith; and
(B) to the officers or employees of the Seller or FRI
designated by the Seller or FRI, as applicable, in order to discuss
matters relating to the Loans and the performance of the Seller or
FRI hereunder, under any PA Supplement or any other Facility
Documents to which the Seller or FRI is a party and any other
agreement contemplated hereby or thereby, and under the other
Facility Documents to which it is a party with the officers or
employees of the Seller and FRI having knowledge of such matters.
Each such audit shall be at the sole expense of the Seller and FRI.
The Company shall be entitled to conduct such audits as frequently as it
deems reasonable in the exercise of the Company's reasonable commercial
judgment; PROVIDED, HOWEVER, that such audits shall not be conducted more
frequently than annually unless an Event of Default or an Amortization
Event shall have occurred. The Company and its agents, representatives and
assigns also shall have the right to discuss the Seller's and FRI's affairs
with the officers, employees and independent accountants of the Seller and
FRI and to verify under appropriate procedures the validity, amount,
quality, quantity, value and condition of, or any other matter relating to,
the Loans and other related Transferred Assets.
(iv) [Reserved].
(v) PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND LOANS. At
its expense, timely and fully perform and comply in all material respects
with the Credit Standards and Collection Policies and Customary Practices
with respect to the Loans and with all provisions, covenants and other
promises required to be observed by the Seller or FRI under the Loans.
30
(vi) [Reserved].
(vii) OWNERSHIP INTEREST. Take such action with respect to each
Loan as is necessary to ensure that the Company maintains a first priority
ownership interest in such Loan and the other related Transferred Assets,
in each case free and clear of any Liens arising through or under the
Seller or FRI and, in the case of any Timeshare Properties, other than any
Permitted Encumbrance thereon, and respond to any inquiries with respect to
ownership of a Loan sold by it hereunder by stating that, from and after
the Initial Closing Date or related Addition Date, as applicable, it is no
longer the owner of such Loan and that ownership of such Loan has been
transferred to the Company.
(viii) INSTRUMENTS. Not remove any portion of the Loans or
related Transferred Assets with respect to any Series that consists of
money or is evidenced by an instrument, certificate or other writing from
the jurisdiction in which it was held under the related Custodial Agreement
unless the Company shall have first received an Opinion of Counsel to the
effect that the Company shall continue to have a first-priority perfected
ownership or security interest with respect to such property after giving
effect to such action or actions.
(ix) NO RELEASE. Not take any action, and use its best efforts
not to permit any action to be taken by others, that would release any
Person from such Person's covenants or obligations under any document,
instrument or agreement relating to the Loans or the other Transferred
Assets, or result in the hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such
document, instrument or agreement, except as expressly provided in this
Agreement or any PA Supplement or such other instrument or document.
(x) INSURANCE AND CONDEMNATION.
(A) FRI (1) shall with respect to each Resort which it
develops or which is developed by its subsidiaries (other than the
Purchaser or the Issuer), cause the governing document of each such
POA at the time of creation to contain covenants requiring
insurance as described in this paragraph and (2) so long as FRI or
an Affiliate (other than the Purchaser or the Issuer) maintains
primary or substantial responsibility for the management,
administration or other services of a similar nature with respect
to such Resort, FRI shall do or cause to be done all things which
it may accomplish with a reasonable amount of cost or effort to
cause each POA to maintain the insurance described in this
paragraph. The insurance referred to clauses in (1) and (2) above
is "all-risk" property and general liability insurance with
financially sound and reputable insurers providing coverage in
scope and amount that (x) satisfy the requirements of the
declarations (or any similar charter document) governing the POA
for the maintenance of such insurance policies and (y) are at least
consistent with the scope and amount of such insurance coverage
obtained by prudent POAs and/or management of other similar
developments in the same jurisdiction. So long as FRI or an
Affiliate other than the Purchaser or the Issuer maintains primary
or substantial responsibility for the management, administration or
other services of a similar
31
nature with respect to such Resort and possesses the right to
direct the application of insurance proceeds, FRI shall use its
best efforts to apply the proceeds of any such insurance policies
in the manner specified in the related declarations (or any similar
charter document) governing the POA and/or any similar charter
documents of such POA (which exercise of best efforts shall include
voting as a member of the POA or as a proxy or attorney-in-fact for
a member). For the avoidance of doubt, the parties acknowledge that
the ultimate discretion and control relating to the maintenance of
any such insurance policies is vested in the POA in accordance with
the respective declaration (or any similar charter document)
relating to each Timeshare Property Regime.
(B) Each of FAC and FRI shall remit to the Collection
Account the portion of any proceeds received pursuant to a
condemnation of property in any Resort relating to any Timeshare
Property to the extent the Obligors are required to make such
remittance under the terms of one or more Loans that have been sold
to the Company hereunder and under the related PA Supplement.
(xi) SEPARATE IDENTITY. Take such action (and cause FMB and the
VB Subsidiaries to take such action) as is necessary to ensure compliance
with Section 6(a)(xvii), including taking all actions necessary on its part
to be taken in order to ensure that the facts and assumptions relating to
the Company set forth in the opinion of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
of even date herewith relating to substantive consolidation matters with
respect to the Seller and the Company are true and correct.
(xii) COMPUTER FILES. Xxxx or cause to be marked each Loan in
its computer files as described in Section 6(c)(ii) and deliver to the
Company, the Issuer, the Trustee and the Collateral Agent a copy of the
Loan Schedule for each Series as amended from time to time.
(xiii) TAXES. File or cause to be filed, and cause each of its
Affiliates with whom it shares consolidated tax liability to file, all
federal, state and local tax returns that are required to be filed by it,
except where the failure to file such returns could not reasonably be
expected to have a Material Adverse Effect with respect to the Purchaser,
the Seller or FRI, or otherwise be reasonably expected to expose the
Purchaser, the Seller or FRI to material liability. Each of the Seller and
FRI will pay or cause to be paid all taxes shown to be due and payable on
such returns or on any assessments received by it, other than any taxes or
assessments the validity of which are being contested in good faith by
appropriate proceedings and with respect to which the Seller, FRI or the
applicable Affiliate has set aside adequate reserves on its books in
accordance with GAAP, and which proceedings could not reasonably be
expected to have a Material Adverse Effect with respect to the Purchaser,
the Seller or FRI, or otherwise be reasonably expected to expose the
Purchaser, the Seller or FRI to material liability.
(xiv) FACILITY DOCUMENTS. Comply in all material respects with
the terms of, and employ the procedures outlined under, this Agreement, any
PA Supplement and all other Facility Documents to which it is a party, and
take all such action as may be from
32
time to time reasonably requested by the Company to maintain this
Agreement, any PA Supplement and all such other Facility Documents in full
force and effect.
(xv) LOAN SCHEDULE. With respect to any Series, promptly amend
the applicable Loan Schedule to reflect terms or discrepancies that become
known after each Closing Date or any Addition Date, and promptly notify the
Company, the Issuer, the Trustee and the Collateral Agent of any such
amendments.
(xvi) SEGREGATION OF COLLECTIONS. Prevent, to the extent within
its control, the deposit into the Collection Account or any Reserve Account
of any funds other than Collections in respect of the Loans with respect to
any Series, and to the extent that, to its knowledge, any such funds are
nevertheless deposited into the Collection Account or any Reserve Account,
promptly identify any such funds to the Master Servicer for segregation and
remittance to the owner thereof.
(xvii) MANAGEMENT OF RESORTS. The Seller hereby covenants and
agrees that it will cause the Originator with respect to each Resort (to
the extent that such Originator is responsible for maintaining or managing
such Resort) to do or cause to be done all things that it may accomplish
with a reasonable amount of cost or effort in order to maintain such Resort
(including without limitation all grounds, waters and improvements thereon
and all other facilities related thereto) in at least as good condition,
repair and working order as would be customary for prudent managers of
similar timeshare properties.
(b) NEGATIVE COVENANTS OF THE SELLER AND FRI. Each of the Seller and
FRI covenants and agrees that it will not, at any time prior to the final Series
Termination Date without the prior written consent of the Company:
(i) SALES, LIENS, ETC. AGAINST LOANS AND TRANSFERRED ASSETS.
Except for the transfers hereunder, sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist, any Lien
arising through or under it (other than, in the case of any Timeshare
Properties, any Permitted Encumbrances thereon) upon or with respect to any
Loan or other Transferred Asset or any interest therein. Each of FRI and
the Seller shall immediately notify the Company of the existence of any
Lien arising through or under it on any Loan or other Transferred Asset.
(ii) EXTENSION OR AMENDMENT OF LOAN TERMS. Extend, amend, waive
or otherwise modify the terms of any Loan (other than as a result of a
Timeshare Upgrade or in accordance with Customary Practices) or permit the
rescission or cancellation of any Loan, whether for any reason relating to
a negative change in the related Obligor's creditworthiness or inability to
make any payment under the Loan or otherwise.
(iii) CHANGE IN BUSINESS OR CREDIT STANDARDS OR COLLECTION
POLICIES. (A) Make any change in the character of its business or (B) make
any change in the Credit Standards and Collection Policies or (C) deviate
from the exercise of Customary Practices, which change or deviation would,
in any such case, materially impair the value or collectibility of any
Loan.
33
(iv) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. Add or
terminate any bank as a bank holding any account for the collection of
payments in respect of the Loans from those listed in Exhibit E or make any
change in its instructions to Obligors regarding payments to be made to any
Lockbox Account at a Lockbox Bank, unless the Company and the Trustee shall
have received (A) 30 days' prior written notice of such addition,
termination or change, (B) written confirmation from the Seller or FRI
that, after the effectiveness of any such termination, there will be at
least one Lockbox in existence and (C) prior to the date of such addition,
termination or change, (1) executed copies of Lockbox Agreements executed
by each new Lockbox Bank, the Seller, the Company, the Master Servicer and
the Trustee and (2) copies of all agreements and documents signed by either
the Company or the respective Lockbox Bank with respect to any new Lockbox
Account.
(v) CHANGE IN CORPORATE NAME, ETC. Make any change to its name
or its type or jurisdiction of organization (or, in the case of the VB
Partnerships, change the location of its chief executive office) that
existed on the Initial Closing Date without providing at least 30 days'
prior written notice to the Company and the Trustee and taking all action
necessary or reasonably requested by the Trustee to amend its existing
financing statements and file additional financing statements in all
applicable jurisdictions as are necessary to maintain the perfection of the
security interest of the Company.
(vi) ERISA MATTERS. (A) Engage or permit any ERISA Affiliate to
engage in any prohibited transaction for which an exemption is not
available or has not previously been obtained from the U.S. Department of
Labor; (B) permit to exist any accumulated funding deficiency (as defined
in Section 302(a) of ERISA and Section 412(a) of the Internal Revenue Code)
or funding deficiency with respect to any Benefit Plan other than a
Multiemployer Plan; (C) fail to make any payments to any Multiemployer Plan
that the Seller, FRI or any ERISA Affiliate may be required to make under
the agreement relating to such Multiemployer Plan or any law pertaining
thereto; (D) terminate any Benefit Plan so as to result in any liability;
(E) permit to exist any occurrence of any Reportable Event that represents
a material risk of a liability of the Seller, FRI or any ERISA Affiliate
under ERISA or the Internal Revenue Code; PROVIDED, HOWEVER, that the ERISA
Affiliates of the Seller and FRI may take or allow such prohibited
transactions, accumulated funding deficiencies, payments, terminations and
Reportable Events described in clauses (A) through (E) above so long as
such events occurring within any fiscal year of the Seller or FRI, in the
aggregate, involve a payment of money by or an incurrence of liability of
any such ERISA Affiliate (collectively, "ERISA LIABILITIES") in an amount
that does not exceed $2,000,000 or otherwise result in liability that would
result in imposition of a lien.
(vii) TERMINATE OR REJECT LOANS. Without limiting the
requirements of Section 8(b)(ii), terminate or reject any Loan prior to the
end of the term of such Loan, whether such rejection or early termination
is made pursuant to an equitable cause, statute, regulation, judicial
proceeding or other applicable law unless, prior to such termination or
rejection, such Loan and any related Transferred Assets have been
repurchased by the Seller pursuant to Section 7 of the related PA
Supplement.
34
(viii) FACILITY DOCUMENTS. Except as otherwise permitted under
Section 8(b)(ii), (A) terminate, amend or otherwise modify any Facility
Document to which it is a party or grant any waiver or consent thereunder
or (B) terminate, amend or otherwise modify the FairShare Plus Agreement;
PROVIDED, HOWEVER, that (1) the Title Clearing Agreements may be amended
for the purposes of (x) making additional properties subject thereto, (y)
making an Affiliate of FRI a party thereto having the same rights and
obligations thereunder as FRI or (z) identifying a separate pool of loans
(which shall not include Loans sold to the Company hereunder) to be sold or
pledged to secure debt under a pooling or financing arrangement similar to
that evidenced by the Indenture and Servicing Agreement, and (2) the
FairShare Plus Agreement may be amended from time to time (x) to substitute
or add additional parties thereto, (y) to comply with state and federal
laws or regulations or (z) for any other purpose, PROVIDED that with
respect to this Section 8(b)(viii), FRI or the Seller furnishes to the
Company, the Issuer and the Trustee an Opinion of Counsel to the effect
that such amendment or modification will not adversely affect in any
material respect the respective interests of the Company, the Issuer, the
Trustee or the Collateral Agent (if applicable) in the Loans and other
Transferred Assets.
(ix) INSOLVENCY PROCEEDINGS. Institute Insolvency Proceedings
with respect to the Company or the Issuer or consent to the institution of
Insolvency Proceedings against the Company or the Issuer, or take any
corporate action in furtherance of any such action.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants as of each Closing Date and Addition
Date, or as of such other date specified in such representation and warranty,
that:
(a) The Company is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Delaware
and has full limited liability company power, authority, and legal right to own
its properties and conduct its business as such properties are presently owned
and as such business is presently conducted, and to execute, deliver and perform
its obligations under this Agreement and any PA Supplement. The Company is duly
qualified to do business and is in good standing as a foreign entity, and has
obtained all necessary licenses and approvals in each jurisdiction necessary to
carry on its business as presently conducted and to perform its obligations
under this Agreement and any PA Supplement. One hundred percent (100%) of the
outstanding membership interests of the Company is directly owned (both
beneficially and of record) by FAC. Such membership interests are validly
issued, fully paid and nonassessable and there are no options, warrants or other
rights to acquire membership interests from the Company.
(b) The execution, delivery and performance of this Agreement and
any PA Supplement by the Company and the consummation by the Company of the
transactions provided for in this Agreement and any PA Supplement have been duly
approved by all necessary limited liability company action on the part of the
Company.
(c) This Agreement and any PA Supplement constitutes the legal,
valid and binding obligation of the Company, enforceable against it in
accordance with its terms, except as
35
such enforceability may be subject to or limited by Debtor Relief Laws and
except as such enforceability may be limited by general principles of equity.
(d) The execution and delivery by the Company of this Agreement
and any PA Supplement, the performance by the Company of the transactions
contemplated hereby and the fulfillment by the Company of the terms hereof
applicable to the Company will not conflict with, violate, result in any breach
of the material terms and provisions of, or constitute (with or without notice
or lapse of time or both) a material default under any provision of any existing
law or regulation or any order or decree of any court applicable to the Company
or its certificate of formation or limited liability company agreement or any
material indenture, contract, agreement, mortgage, deed of trust, or other
material instrument to which the Company is a party or by which it or its
properties is bound.
(e) There are no proceedings or investigations pending, or to the
knowledge of the Company threatened, against the Company before any court,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality (A) asserting the invalidity of this Agreement or any PA
Supplement, (B) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any PA Supplement, (C) seeking any
determination or ruling that, in the reasonable judgment of the Company, would
adversely affect the performance by the Company of its obligations under this
Agreement or any PA Supplement or (D) seeking any determination or ruling that
would adversely affect the validity or enforceability of this Agreement or any
PA Supplement.
(f) All approvals, authorizations, consents, orders or other
actions of any person or entity or any governmental body or official required in
connection with the execution and delivery of this Agreement and any PA
Supplement by the Company, the performance by it of the transactions
contemplated hereby and the fulfillment by it of the terms hereof, have been
obtained and are in full force and effect.
(g) The Company is solvent and will not become insolvent
immediately after giving effect to the transactions contemplated by this
Agreement and any PA Supplement, the Company has not incurred debts beyond its
ability to pay and, immediately after giving effect to the transactions
contemplated by this Agreement and any PA Supplement, the Company shall have an
adequate amount of capital to conduct its business in the foreseeable future.
SECTION 10. COVENANTS OF THE COMPANY.
The Company hereby acknowledges that the parties to the Facility
Documents are entering into the transactions contemplated by the Facility
Documents in reliance upon the Company's identity as a legal entity separate
from the Seller, FRI, the VB Subsidiaries and their respective Affiliates. From
and after the date hereof until the final Series Termination Date under any
Indenture Supplement, the Company will take such actions as shall be required in
order that:
(a) The Company will conduct its business in office space
allocated to it and for which it pays an appropriate rent and overhead
allocation;
36
(b) The Company will maintain corporate records and books of
account separate from those of the Seller, FRI, the VB Subsidiaries and their
respective Affiliates and telephone numbers and stationery that are separate and
distinct from those of the Seller, FRI, the VB Subsidiaries and their respective
Affiliates;
(c) The Company's assets will be maintained in a manner that
facilitates their identification and segregation from those of any of the
Seller, FRI, the VB Subsidiaries and their respective Affiliates;
(d) The Company will observe corporate formalities in its
dealings with the public and with the Seller, FRI, the VB Subsidiaries and their
respective Affiliates and, except as contemplated by the Facility Documents,
funds or other assets of the Company will not be commingled with those of any of
the Seller, FRI, the VB Subsidiaries and their respective Affiliates. The
Company will at all times, in its dealings with the public and with the Seller,
FRI, the VB Subsidiaries and their respective Affiliates, hold itself out and
conduct itself as a legal entity separate and distinct from the Seller, FRI, the
VB Subsidiaries and their respective Affiliates. The Company will not maintain
joint bank accounts or other depository accounts to which any of the Seller,
FRI, the VB Subsidiaries and their respective Affiliates (other than the Master
Servicer) has independent access;
(e) The duly elected board of directors of the Company and duly
appointed officers of the Company will at all times have sole authority to
control decisions and actions with respect to the daily business affairs of the
Company;
(f) Not less than one member of the Company's board of directors
will be an Independent Director. The Company will observe those provisions in
its limited liability company agreement that provide that the Company's board of
directors will not approve, or take any other action to cause the filing of, a
voluntary bankruptcy petition with respect to the Company unless the Independent
Director and all other members of the Company's board of directors unanimously
approve the taking of such action in writing prior to the taking of such action;
(g) The Company will compensate each of its employees,
consultants and agents from the Company's own funds for services provided to the
Company; and
(h) Except as contemplated by the Facility Documents, the Company
will not hold itself out to be responsible for the debts of any of the Seller,
FRI, the VB Subsidiaries and their respective Affiliates.
SECTION 11. MISCELLANEOUS.
(a) AMENDMENT. This Agreement may be amended from time to time or the
provisions hereof may be waived or otherwise modified by the parties hereto by
written agreement signed by the parties hereto; PROVIDED, HOWEVER, that no such
amendment, waiver or modification shall be effective without the prior written
consent of the Trustee.
(b) ASSIGNMENT. The Company has the right to assign its interest
under this Agreement and any PA Supplement as may be required to effect the
purposes of the Pool
37
Purchase Agreement without the consent of the Seller or FRI, and the assignee
shall succeed to the rights hereunder of the Company. The Seller agrees to
perform its obligations hereunder for the benefit of the Issuer, the Trustee,
the Collateral Agent and the Noteholders, agrees that such parties are intended
third party beneficiaries of this Agreement and agrees that the Trustee (or the
Collateral Agent) and (subject to the terms and conditions of the Indenture and
Servicing Agreement and any applicable Indenture Supplement) the Noteholders may
enforce the provisions of this Agreement and any PA Supplement, exercise the
rights of the Company and enforce the obligations of the Seller hereunder
without the consent of the Company.
(c) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
(d) TERMINATION. The obligations of each of the Seller and FRI under
this Agreement and any PA Supplement shall survive the sale of the Loans to the
Company and the Company's transfer of the Loans and other related Transferred
Assets to the Issuer.
(e) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF
NEW YORK, INCLUDING SECTION 5-1401 OF THE
NEW YORK
GENERAL OBLIGATIONS LAW, BUT OTHERWISE WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PRINCIPLES.
(f) NOTICES. All demands and notices hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or mailed
by certified mail, postage prepaid and return receipt requested, or by express
delivery service, to (i) in the case of the Seller, Fairfield Acceptance
Corporation-Nevada, 00000 Xxxx Xxxxxxxxxx Xxxx., Xxxxx 000, Xxx Xxxxx, Xxxxxx
00000, Attention: President, or such other address as may hereafter be furnished
to the Company and FRI in writing by the Seller, (ii) in the case of FRI, FMB
and the VB Subsidiaries, c/o Fairfield Resorts, Inc., 0000 Xxxxx Xxxx Xxxxxx,
Xxxxxxx, Xxxxxxx 00000, Attention: President, or such other address as may
hereafter be furnished to the Seller or the Company in writing by FRI, and (c)
in the case of the Company, Sierra Deposit Company, LLC, 10750 West Charleston
Blvd., Suite 130, Mailstop 2067, Xxx Xxxxx, Xxxxxx 00000, Attention: President,
or such other address as may hereafter be furnished to the Seller or FRI in
writing by the Company.
(g) SEVERABILITY OF PROVISIONS. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
(h) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon each
of the Seller, FRI, the VB Subsidiaries, the VB Partnerships and the Company and
their respective permitted successors and assigns, and shall inure to the
benefit of each of the Seller, FRI, the VB Subsidiaries, the VB Partnerships and
the Company and each of the Issuer, the Trustee and the Collateral Agent to the
extent explicitly contemplated hereby.
38
(i) COSTS, EXPENSES AND TAXES.
(i) Each of the Seller and FRI jointly and severally agrees to
pay on demand to the Company all reasonable costs and expenses, if any,
incurred or reimbursed (or to be reimbursed) by the Company (including
reasonable counsel fees and expenses) in connection with the enforcement or
preservation of the rights and remedies under this Agreement and any PA
Supplement.
(ii) Each of the Seller and FRI jointly and severally agrees to
pay, indemnify and hold the Company harmless from and against any and all
stamp, sales, excise and other taxes and fees payable or determined to be
payable by or reimbursed (or to be reimbursed) by the Company in connection
with the execution, delivery, filing and recording of this Agreement or any
PA Supplement, and against any liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes and fees.
(j) NO BANKRUPTCY PETITION. Each of the Seller, each VB Subsidiary,
each VB Partnership and FRI covenants and agrees not to institute against the
Company or the Issuer, or join any other person in instituting against the
Company or the Issuer, any proceeding under any Debtor Relief Law.
(k) TREATMENT OF TIMESHARE UPGRADES. Notwithstanding anything in this
Agreement to the contrary (but subject to the other provisions of this
paragraph), the Seller (or the Master Servicer on the Seller's behalf) may
upgrade any Timeshare Property by entering into a new Loan with the related
Obligor, but only if the proceeds of such new Loan are used to prepay all
obligations in full of such Obligor under the existing Loan (the proceeds of
which shall be the property of the Company). Upon its creation, the new Loan
created by such Timeshare Upgrade shall not be property of the Company, but may
be sold by the Seller to the Company as an Additional Loan pursuant to the terms
and conditions of this Agreement and any PA Supplement. The parties hereto
intend that the Seller (or the Master Servicer on the Seller's behalf) will not
upgrade a Timeshare Property pursuant to this Section 11(k) in order to provide
direct or indirect assurance to the Seller, the Trustee or any Noteholder
against loss by reason of the bankruptcy or insolvency (or other credit
condition) of, or default by, the Obligor on, or the uncollectibility of, any
Loan.
(l) ADDITION OF KONA HAWAIIAN VACATION OWNERSHIP, LLC.
Notwithstanding anything to the contrary in this Agreement, the parties hereto
may amend this Agreement in writing without the consent of the Trustee to add
Kona Hawaiian Vacation Ownership, LLC ("KONA") as an originator of Loans
hereunder and under any PA Supplement and the other Facility Documents;
PROVIDED, that under any such amendment, Kona shall agree to representations,
warranties and covenants substantially similar to the representations,
warranties and covenants agreed to by FMB hereunder (with such variations as may
be necessary or appropriate given Kona's form and jurisdiction of organization,
the terms of the programs governing its related Timeshare Properties, or the
location of its related Resorts); and PROVIDED, FURTHER, that each of the
conditions precedent to the sale of Loans described in Section 5 hereof, and to
the sale of Additional Loans described in Section 2(d) of each PA Supplement
existing on the date of such amendment and each of the conditions precedent to
closing described in clauses (d), (e), (f), (g), (h) (with respect to the "true
sale" opinion only) and (k) (with respect to any applicable jurisdiction) of
Section 3.3 of the Note Purchase Agreement, dated as of August 29, 2002,
39
among the Issuer, the Purchaser, as depositor, FAC, as master servicer,
Cendant
Corporation, as performance guarantor, Fleet Securities, Inc, as deal agent, and
each of the conduits, alternate investors and class agents named therein, shall
have been satisfied with respect to Kona prior to the effectiveness of any such
amendment.
40
IN WITNESS WHEREOF, the parties have caused their names to be signed hereto
by their respective officers thereunto duly authorized, all as of the day and
year first above written.
FAIRFIELD ACCEPTANCE CORPORATION -
NEVADA
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Treasurer
FAIRFIELD RESORTS, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President and
Assistant Treasurer
FAIRFIELD MYRTLE BEACH, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President and
Assistant Treasurer
SEA GARDENS BEACH AND
TENNIS RESORT, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President and
Assistant Treasurer
[Signature page for FAC MLPA]
VACATION BREAK RESORTS, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Assistant Treasurer
VACATION BREAK RESORTS AT
STAR ISLAND, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President and
Assistant Treasurer
PALM VACATION GROUP,
by its General Partners:
Vacation Break Resorts at Palm Aire,
Inc.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President and
Assistant Treasurer
Palm Resort Group, Inc.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President and
Assistant Treasurer
[Signature page for FAC MLPA]
OCEAN RANCH VACATION GROUP,
by its General Partners:
Vacation Break at Ocean Ranch, Inc.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President and
Assistant Treasurer
Ocean Ranch Development, Inc.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President and
Assistant Treasurer
SIERRA DEPOSIT COMPANY, LLC
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Treasurer
[Signature page for FAC MLPA]
