RECEIVABLES PURCHASE AGREEMENT
THIS RECEIVABLES PURCHASE AGREEMENT (the "Agreement"), dated as of
January 15, 1998 is among FAIRFIELD ACCEPTANCE CORPORATION, a Delaware
corporation, as seller ("Seller"), FAIRFIELD COMMUNITIES, INC., a Delaware
corporation, and the parent corporation of Seller, as co-originator ("FCI"),
FAIRFIELD MYRTLE BEACH, INC., a Delaware corporation and a wholly-owned
subsidiary of FCI, 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 FCI), 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 FAIRFIELD RECEIVABLES CORPORATION, a special purpose
Delaware corporation, as purchaser (the "Company").
RECITALS
WHEREAS, FCI, FMB and the VB Subsidiaries have originated certain
Contracts in connection with the sale to Obligors of VOIs or Lots at various
Developments;
WHEREAS, in the ordinary course of their businesses, FCI purchases or
will purchase from FMB and the VB Subsidiaries, and Seller purchases or will
purchase from FCI, certain Contracts and related property (including an interest
in the VOIs or Lots underlying such Contracts);
WHEREAS, FCI, FMB, the VB Subsidiaries, Seller and the Company wish to
enter into this Agreement in order to among other things (i) effect the sale of
Contracts and related Transferred Assets to the Company on the Effective Date
and (ii) make additional sales of Contracts and related Transferred Assets from
time to time in the future on Contract Grant Dates; and
WHEREAS, the Company desires to finance the purchases of Contracts and
related property on the Effective Date and on each Contract Grant Date, in part
with advances made by EagleFunding Capital Corporation ("EagleFunding") pursuant
a Credit Agreement, dated as of December 15, 1997, (the "Credit Agreement"),
among Seller, as Servicer, Company, as Borrower, FCI, EagleFunding, BankBoston,
N.A., as Collateral Agent and BancBoston Securities, Inc., as Deal Agent, which
advances will be secured by, among other things, a pledge of the Contracts and
related property purchased by Company;
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
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All terms used but not otherwise specifically defined herein shall have
the meanings ascribed to them in the Definitions List, dated as of the date
hereof, that refers to this "Receivables Purchase Agreement" and which is
incorporated herein by this reference. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"Contracts" shall mean each interval ownership or lot contract
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agreement and installment note relating to the sale of one or more VOIs or Lots
to an Obligor, together with any separate Obligor's installment note for the
payment of the balance of the purchase price thereof which constitutes the
Initial Contracts, and Subsequent Contracts, as such terms are defined
hereinafter, which may from time to time be purchased by the Company from the
Seller hereunder and thereafter pledged and assigned by the Company to
Collateral Agent for the benefit of EagleFunding.
"Purchase Price" shall mean either the Initial Purchase Price or
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Subsequent Purchase Price, as applicable, as such terms are defined hereinafter.
"Subordinated Interest" shall mean (x) the Initial Purchase Price of
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the Initial Contracts minus the sum of the amount of cash paid to Seller on the
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Effective Date pursuant to Section 4(c)(i)(A) below and the amount of
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transaction fees and expenses referred to in Section 4(c)(i)(A) below, plus (y)
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the Subsequent Purchase Price of Subsequent Contracts minus the amount of cash
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paid to Seller on any Contract Grant Date pursuant to Section 4(c)(ii)(A) below,
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minus (z) permitted repayments of principal under the Subordinated Note from and
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after the Effective Date.
Section 2. Purchase and Sale of Contracts.
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(a) Initial Contracts. Subject to the terms and conditions and in
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reliance on the representations, warranties, covenants and agreements set forth
in this Agreement, the Seller shall sell and assign, without recourse (except as
expressly provided herein), to the Company and the Company shall purchase from
the Seller, on the Effective Date, all of the Seller's right, title and interest
in, to and under (but none of the obligations arising under) the Contracts
listed on the Contract Schedule delivered on the Effective Date (the "Initial
Contracts"), together with all other Transferred Assets relating thereto.
(b) Subsequent Purchases. The Seller and Company acknowledge that
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pursuant to this Agreement and the Credit Agreement, the Seller, at its option
and in its sole discretion, shall be entitled
from time to time until the Termination Date to designate additional Eligible
Contracts to be offered for sale to the Company on Contract Grant Dates and the
Company shall, until the Termination Date and to the extent EagleFunding is
obligated to fund such Purchase through additional EagleFunding Loans to the
Company under the Credit Agreement, purchase from Seller all of Seller's right,
title and interest in, to and under the Eligible Contracts as listed on a
supplement to the Contract Schedule delivered by Seller on each Contract Grant
Date (the "Subsequent Contracts"), together with all other Transferred Assets
relating thereto.
(c) Treatment as Sale. It is the express and specific intent of the
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parties that the transfer of the Contracts and the other Transferred Assets
relating thereto from the Seller to Company, as provided in this Section 2
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(each, a "Purchase"), is and shall be construed for all purposes as a true,
complete and absolute sale of such Contracts and Transferred Assets.
(d) Recharacterization. To the extent that any transfer of Contracts
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and other Transferred Assets relating thereto from (i) any of FMB or the VB
Subsidiaries to FCI or FCI to Seller, in each case pursuant to the Operating
Agreement or (ii) from Seller to the Company pursuant to this Agreement is not
treated as a sale under applicable law, it is intended that this Agreement shall
constitute a security agreement under applicable law and that each of FMB and
the VB Subsidiaries shall be deemed to have granted to FCI, FCI shall have been
deemed to have granted to Seller, and Seller shall be deemed to have granted to
the Company, a first priority perfected security interest in all of FMB's, the
VB Subsidiaries', FCI's, or Seller's, as the case may be, right, title and
interest in, to and under such Contracts and other Transferred Assets relating
thereto, in order to secure the advance of the aggregate purchase price paid to
the Seller hereunder from time to time; and each of FMB, the VB Subsidiaries,
FCI and Seller, as the case may be, shall be deemed to have (i) collaterally
assigned all of its right, title and interest in, to and under the Contracts and
other Transferred Assets relating thereto pursuant to the assignments executed
in accordance with the Operating Agreement or Section 5(c) hereof, as
applicable, and (ii) waived any and all defenses to the enforceability of such
advance pursuant to this Section 2(d) including, without limitation, any defense
arising under usury laws.
(e) Security Interest in Transferred Assets. FCI, FMB, the VB
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Subsidiaries and Seller acknowledge that the Contracts and other Transferred
Assets relating thereto are subject to the security interest of Collateral Agent
for the benefit of itself and EagleFunding pursuant to the Credit Agreement, and
that EagleFunding has assigned its rights under the EagleFunding Note (together
with its related rights under the Credit Agreement) to the Liquidity Collateral
Agent pursuant to the Liquidity Agreement and Liquidity Security Agreement.
(f) Other Property. In connection with each Purchase hereunder, the
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Seller also sells, transfers and assigns to Company, all of its right, title and
interest in, to and under the following related property:
(i) all proceeds of the Contracts and other Transferred Assets
including without limitation, interest dividends, cash, instruments and other
property from time to time received, receivable, or otherwise distributed in
respect of or in exchange for or on account of the sale or other disposition of
any or all of the then existing Contracts or other Transferred Assets relating
thereto and including all payments on Insurance Policies (whether or not any of
the Seller, FCI, FMB, the VB Subsidiaries, EagleFunding, or the Collateral Agent
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 of the foregoing
property, and any security granted or purported to be granted in respect of any
said property; and
(ii) all other monies or property of the Seller specifically relating
to the Contracts and Transferred Assets, or the property described in clause (i)
above, coming into the actual possession or control of the Company, the
Collateral Agent, the Deal Agent or EagleFunding, (whether for safekeeping,
deposit, custody pledge transaction, collection or otherwise).
(g) Quitclaim of Residual Interest by FMB, the VB Subsidiaries and FCI.
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(i) The parties hereto recognize that each of (A) FMB and the VB Subsidiaries
has previously sold, transferred and assigned, or in the future will sell,
transfer and assign, all of its right, title and interest in and to the
Contracts originated by it, and the other Transferred Assets relating thereto to
FCI and (B) FCI has previously sold, transferred and assigned, or in the future
will sell, transfer and assign, all of its right, title and interest in and to
the Contracts originated by it, and the other Transferred Assets relating
thereto to Seller, in each case pursuant to the terms of the Operating
Agreement, such sales and transfers being evidenced and memorialized by one or
more blanket assignments executed by such parties in favor of FCI or Seller, as
applicable. For the avoidance of any doubt and to further evidence the intent of
the parties hereto that all residual right, title and interest in the Contracts
and other Transferred Assets relating thereto are being sold and transferred to
the Company pursuant to this Agreement, each of FCI, FMB and the VB Subsidiaries
hereby irrevocably quitclaim any residual right, title and interest that any of
them may be deemed to have in and to any of the Contracts or other Transferred
Assets relating thereto directly to the Company.
(ii) To the extent that any quitclaim of Contracts and other
Transferred Assets relating thereto from FCI, FMB or the VB Subsidiaries to the
Company contemplated by Section 2(g) above is not treated as a sale under
applicable law, it is intended that this Agreement shall constitute a security
agreement under applicable law and that each of FCI, FMB or the VB Subsidiaries,
as
applicable, shall have been deemed to grant to the Company a first priority
perfected security interest in all of FCI's, FMB's or the VB's Subsidiaries, as
the case may be, right, title and interest in, to and under such Contracts and
other Transferred Assets relating thereto in order to secure the advance of the
aggregate purchase price paid to the Seller hereunder from time to time and each
of FCI, FMB and the VB Subsidiaries, as the case may be, shall be deemed to have
waived any and all defenses to the enforceability of such advance pursuant to
this Section 2(g)(ii) including, without limitation, any defense arising under
usury laws.
Section 3. Purchase Price.
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(a) The amount payable to the Seller for the Initial Contracts and
other related Transferred Assets on the Effective Date shall be an amount equal
to ninety-seven percent (97%) of the aggregate Principal Balance of the Initial
Contracts as of the applicable Cut-Off Date therefor (the "Initial Purchase
Price").
(b) The amount payable to the Seller by Company on each Contract Grant
Date subsequent to the Effective Date in connection with any Purchase of
Subsequent Contracts hereunder (the "Subsequent Purchase Price") shall be an
amount equal to ninety-seven percent (97%) of the aggregate Principal Balance of
the Subsequent Contracts as of the applicable Cut-Off Date therefor.
(c) The parties intend, and each of the Seller and Company shall
reflect in their financial accounting and tax records that the difference
between (x) the aggregate unpaid principal balance of the Contracts as of the
Cut-Off Date therefor and (y) the Purchase Price paid by the Company therefor,
shall be a capital contribution by Seller in accordance with Section 351 of the
IRC.
Section 4. Payment of Purchase Price.
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(a) Effective Date. Payment for and delivery of the Initial Contracts
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being purchased by the Company shall take place on the Effective Date, at such
time and place as shall be mutually agreed upon among the parties hereto.
Payment of the portion of the Initial Purchase Price to be paid in cash pursuant
hereto, shall be made by the Company on the Effective 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 Effective
Date.
(b) Contract Grant Dates. Payment for and delivery of the Subsequent
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Contracts to be purchased by the Company on a Contract Grant Date subsequent to
the Effective Date shall be made at such time and place and to such accounts and
such banks as the parties may mutually agree.
(c) Manner of Payment of Purchase Price.
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(i) Initial Purchase Price. On the Initial Closing Date, the
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Initial Purchase Price shall be paid to Seller in the manner provided below:
(A) in cash, in an amount equal to the difference of
(x) the aggregate Principal Balance of EagleFunding Loans being made on
the Effective Date, minus (y) transaction fees and expenses, if any,
payable by the Seller to the Company;
(B) to the extent that the Initial Purchase Price
exceeds the sum of the amount of the cash payment in Section 4(c)(i)(A)
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above plus the amount of transaction fees and expenses referred to in
Section 4(c)(i)(A), such excess shall be paid, on the Effective Date,
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by means of the Subordinated Note so that such Subordinated Note is
equal to the Subordinated Interest on the Effective Date.
(ii) Subsequent Purchase Price. On each Contract Grant Date
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subsequent to the Effective Date, the Subsequent Purchase Price shall be paid to
Seller in the manner provided below:
(A) in cash, an amount equal to the difference of (x)
the aggregate Principal Balance of EagleFunding Loans being made on the
Contract Grant Date, minus (y) transaction fees and expenses, if any,
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payable by the Seller to the Company; and
(B) to the extent that the Subsequent Purchase Price
paid on any Subsequent Grant Date exceeds the sum of the amount of the
cash payment in Section 4(c)(ii)(A) above plus the amount of
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transaction fees and expenses referred to in Section 4(c)(ii)(A), such
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excess shall be paid, on the Contract Grant Date, by means of an
increase in the principal balance of the Subordinated Note so that such
Subordinated Note is equal to the Subordinated Interest on the Contract
Grant Date.
(e) Scheduled Payments Under Contracts and Cut-Off Dates. The Company
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shall be entitled to all Payments, other Collections and all other funds with
respect to any Contract received after the Cut-Off Date therefor; provided that
on the Effective Date or Contract Grant Date, as applicable, the Company shall
reimburse Seller for an amount equal to all accrued and paid interest on each
Contract at the Contract Rate through, and including, the Effective Date or
Contract Grant Date, as applicable. The principal balance of each Contract as of
the Cut-Off Date therefor is determined after deduction of payments of principal
received before and on such Cut-Off Date. On each Contract Grant Date hereunder,
the Company hereby authorizes and instructs the Servicer, to either (i) deposit,
on the Company's behalf, in the Collection Account established pursuant to the
Credit Agreement or (ii) credit against the portion of the Purchase Price to be
paid in cash, the aggregate
amount of funds received with respect to the Initial Contracts or Subsequent
Contracts, as applicable, between the Cut-Off Date therefor and the applicable
Contract Grant Date.
Section 5. Conditions to Sale of Contracts.
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(a) Effective Date. The Company's obligations hereunder to purchase and
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pay for the Initial Contracts and other Transferred Assets relating thereto on
the Effective Date are subject to the fulfillment of the following conditions on
or before such Effective Date:
(i) The Company shall have received (a) the Credit Agreement executed
by all the parties thereto and (b) all conditions to lending set forth in
Section 3.01 and 3.02 of the Credit Agreement shall have been fulfilled, to the
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extent they are capable of being fulfilled prior to the performance by the
Company of its obligations under this Agreement, and a certificate to such
effect delivered by the Company pursuant to the Credit Agreement shall be
conclusive for purposes of this Agreement;
(ii) The representations and warranties of the Seller, FCI, FMB and the
VB Subsidiaries made herein and the Seller as Servicer under the Credit
Agreement shall be true and correct in all material respects on the Effective
Date.
(b) Subsequent Purchases. The Company's purchase of any Subsequent
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Contracts on any Contract Grant Date subsequent to the Effective Date is subject
to the fulfillment of the following conditions on or before such Contract Grant
Date:
(i) The Credit Agreement shall be in full force and effect;
(ii) All conditions to borrowing set forth in Sections 3.02 of the
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Credit Agreement shall have been fulfilled, to the extent the same are capable
of being fulfilled prior to performance by the Company of its obligations
hereunder; and
(iii) The representations and warranties of Seller made herein and as
Servicer in the Credit Agreement shall be true and correct in all material
respects on the Contract Grant Date.
(c) Form of Assignment. In connection with each sale and purchase of
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Contracts and related Transferred Assets hereunder, Seller shall execute an
assignment substantially in the form of Exhibit "A" hereto and deliver the same
to the Company, and the Company shall thereupon execute and deliver to the
Seller, a form of certificate substantially in the form of Exhibit "B" hereto.
Section 6. Transfer of Contracts.
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Pursuant to the Credit Agreement, the Company will transfer, pledge and
Grant all of its right, title and interest in, to and under the Contracts,
Transferred Assets and related property, which
constitute the property conveyed or to be conveyed to it by the Seller to the
Collateral Agent for the benefit of EagleFunding pursuant to the Collateral
Agency Agreement. All Contracts conveyed or to be conveyed to the Company
hereunder shall be held by Custodian pursuant to the terms of the Custodial
Agreement for the benefit of the Company and Collateral Agent. Upon each
Purchase hereunder, Custodian shall execute and deliver to the Company, a form
of certificate acknowledging receipt of the Contracts substantially in the form
of Exhibit "C" hereto.
Each of FCI and the Seller acknowledges that, pursuant to the Credit
Agreement, the Company may transfer, pledge and grant all of its right, title
and interest in, to and under the Contracts and related Transferred Assets, all
of its right, title and interest hereunder, and its right to exercise the
remedies created hereunder including, without limitation, Section 7(g) hereof,
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to Collateral Agent. Each of FCI and the Seller agrees that, upon such
assignment, Collateral Agent may enforce directly, without joinder of the
Company, all of Seller's and FCI's obligations hereunder, including without
limitation, the repurchase obligations of the Seller set forth in Section 8
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hereof, with respect to breaches of the representations and warranties set forth
in Section 7 hereof.
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Section 7. Representations and Warranties of Seller, FCI, FMB and the VB
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Subsidiaries.
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(a) General Representations and Warranties of Seller, FCI, FMB and the
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VB Subsidiaries. Seller, FCI, FMB and the VB Subsidiaries jointly and severally
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represent and warrant to the Company as follows:
(i) Organization and Good Standing. (A) Seller, FCI, FMB and the VB
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Subsidiaries (other than the VB Partnerships) are corporations duly organized,
validly existing and in good standing under the laws of the state of their
organization and have full corporate power, authority and legal right to own
their properties and conduct their businesses as such properties are presently
owned and such businesses are presently conducted, and to execute, deliver and
perform their obligations under each of the Facility Documents to which they are
a party. Seller, FCI, FMB and the VB Subsidiaries (other than the VB
Partnerships) are duly qualified to do business and are in good standing as a
foreign corporations, and have obtained all necessary licenses and approvals in
each jurisdiction in which failure to qualify or to obtain such licenses and
approvals would render any Contract unenforceable by Seller, FCI, FMB or the VB
Subsidiaries (other than the VB Partnerships), or would have a Material Adverse
Effect.
(B) The VB Partnerships are general partnerships duly
organized and validly existing under the laws of the State of Florida and have
full power, authority and legal right to own their properties and conduct their
businesses as such properties are presently owned and such businesses are
presently conducted, and to execute, deliver and perform their obligations under
each of the
Facility Documents to which they are a party. The VB Partnerships are duly
qualified to do business and are in good standing and have obtained all
necessary licenses and approvals in each jurisdiction in which failure to
qualify or to obtain such licenses and approvals would render any Contract
unenforceable by VB Partnerships or would have a Material Adverse Effect.
(ii) Due Authorization and No Conflict. The execution, delivery and
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performance by Seller, FCI, FMB and the VB Subsidiaries of each of the Facility
Documents to which they are a party, and the consummation of the transactions
contemplated hereby and under the Facility Documents have in all cases been duly
authorized by Seller, FCI, FMB and the VB Subsidiaries by all necessary
corporate (or in the case of the VB Partnerships, partnership) action, do not
contravene (i) Seller's, FCI's, FMB's or the VB Subsidiaries' charter or by-laws
(or in the case of the VB Partnerships, partnership agreements), (ii) any law,
rule or regulation applicable to Seller, FCI or FMB or the VB Subsidiaries,
(iii) any contractual restriction contained in any indenture, loan or credit
agreement, lease, mortgage, deed of trust, security agreement, bond, note, or
other agreement or instrument binding on or affecting Seller, FCI, FMB, the VB
Subsidiaries or their properties or (iv) any order, writ, judgment, award,
injunction or decree binding on or affecting Seller, FCI, FMB or their
properties (except where such contravention would not have a Material Adverse
Effect, and do not result in 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 other
Facility Documents to which Seller, FCI, FMB or the VB Subsidiaries is a party
have been duly executed and delivered on behalf of Seller, FCI, FMB and the VB
Subsidiaries.
(iii) Governmental and Other Consents. All approvals, authorizations,
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consents, orders or other actions of, and all registration, qualification,
designation, declaration, notice to or filing with, any Person or of any
governmental body or official required in connection with the execution and
delivery of any of the Facility Documents to which Seller, FCI, FMB or the VB
Subsidiaries is a party, the consummation of the transactions contemplated
hereby or thereby, the performance of and the compliance with the terms hereof
or thereof, have been obtained, except where the failure so to do would not have
a Material Adverse Effect.
(iv) Enforceability of Facility Documents. Each of the Facility
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Documents to which the Seller, FCI, FMB or the VB Subsidiaries is a party have
been duly and validly executed and delivered by the Seller, FCI, FMB or the VB
Subsidiaries and constitute the legal, valid and binding obligation of Seller,
FCI, FMB or the VB Subsidiaries, as applicable, enforceable in accordance with
their 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 otherwise disclosed on FCI's annual report
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on Form 10-K for the year ended December 31, 1996 and Forms 10-Q for the
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997
(collectively the "Base Reports"), which Base Reports shall have been delivered
to the Company, Collateral Agent, Deal Agent and EagleFunding prior to the
Effective Date, or except as otherwise set forth on Schedule 4.01(e) to the
Credit Agreement, there are no proceedings or investigations pending or, to the
best knowledge of Seller, FCI or FMB, threatened against the Seller, FCI, 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 Seller, FCI, FMB or the VB
Subsidiaries of their obligations under this Agreement or any of the other
Facility Documents, (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;
provided, however, that in the event the Company, Collateral Agent, Deal Agent
or EagleFunding shall receive a report dated subsequent to the date of the Base
Reports, which report shall disclose the existence of, and accurately describe,
one or more proceedings or investigations which are not disclosed in the Base
Reports, and neither the Company, Collateral Agent, Deal Agent, nor EagleFunding
shall not identify in writing to the Seller, FCI, FMB or the VB Subsidiaries
within 90 days of the receipt of such report, one or more of the proceedings or
investigations described in such report as constituting a proceeding or
investigation of a type described in one or more of clauses (A) through (E)
above, the existence of each such proceeding or investigation not so identified
to Seller, FCI, FMB or the VB Subsidiaries shall be deemed not to constitute a
breach of the representation and warranty of this subsection (v).
(vi) Accuracy of Information. All certificates, reports, financial
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statements and any other written information furnished by or on behalf of the
Seller, FCI, FMB or the VB Subsidiaries to the Company, Collateral Agent, Deal
Agent or EagleFunding, at any time pursuant to any requirement of, or in
response to any request of any such party under, this Agreement or any other
Facility Document or any transaction contemplated hereby or thereby, have been,
and all such certificates, reports, financial statements and any other written
information hereafter furnished by Seller, FCI, FMB or the VB Subsidiaries to
such parties will be, true and accurate in every respect material to the
transactions contemplated hereby on the date as of which any such certificate,
report, financial statement or similar writing was or will be delivered, and
shall not omit to
state any material facts or any facts necessary to make the statements contained
therein not materially misleading.
(vii) Governmental Regulations. Neither Seller, FCI, FMB nor any of the
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VB Subsidiaries, is (i) an "investment company" registered or required to be
registered or required to be registered under the Investment Company Act of
1940, as amended, (ii) 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)(11) of the Public Utility
Holding Company Act of 1935, as amended, or (iii) otherwise subject to any other
federal or state statute or regulation limiting its ability to incur or pay
indebtedness.
(viii) Margin Regulations. Neither Seller, FCI, FMB, nor any of the VB
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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 of the quoted terms is defined or used in any of
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System, as in effect from time to time). No part of the proceeds of any of the
EagleFunding Loans has been used for so purchasing or carrying margin stock or
for any purpose which violates, or which would be inconsistent with, the
provisions of any of Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
(ix) Location of Chief Executive Office and Records. The principal
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place of business and chief executive office of Seller FCI and FMB, and the
office where Seller, FCI and FMB maintain all of their Records, is located at
00000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000 and the principal
place of business and chief executive office of each of the VB Subsidiaries is
located at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 (provided
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that, at any time after the Closing Date, upon 30 days' prior written notice to
Collateral Agent, any of the Seller, FCI, FMB, and the VB Subsidiaries may
relocate its principal place of business and chief executive office, and/or the
office where Seller, FCI, FMB or such VB Subsidiary maintains all of its
Records, to such other locations within the United States where all action
required by Section 7.04 of the Credit Agreement shall have been taken and
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completed (giving effect to the provisions of such Section 7.04 as if each
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reference to the "Borrower" therein is, instead, a reference to each of the
Seller, FCI, FMB and the VB Subsidiaries).
(x) Lock-Box Accounts. Except in the case of any Lock-Box Account
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pursuant to which only Collections in respect of Contracts subject to a PAC are
deposited, each of the Seller and FCI has filed a standing delivery order with
the United States Postal Service authorizing each Lock-Box Bank to receive mail
delivered to the related Post Office Box. The account numbers of all Lock-Box
Accounts, together with the names, addresses, ABA numbers and names
of contact persons of all the Lock-Box Banks maintaining such Lock-Box Accounts
and the related Post Office Boxes, are specified in Exhibit F to the Credit
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Agreement. From and after the Closing Date, neither FCI, FMB, nor the VB
Subsidiaries shall have any right, title and/or interest in or to any of the
Lock-Box Accounts or the Post-Office Boxes and will maintain no lock-box
accounts in their own names for the collection of Payments in respect of
Contracts. Neither the Seller, FCI, FMB, nor any of the VB Subsidiaries has any
other lock-box accounts for the collection of Payments in respect of Contracts,
except for the Lock-Box Accounts.
(xi) Facility Documents. This Agreement is the only agreement pursuant to
-------------------
which Seller sells the Company Contracts, other Transferred Assets or any other
assets of a similar nature. The Seller, FCI, FMB and the VB Subsidiaries have
furnished to each of the Company, Collateral Agent, Deal Agent, and
EagleFunding, true, correct and complete copies of each Facility Document to
which any of the Seller, FCI, FMB and the VB Subsidiaries are parties, each of
which is in full force and effect. Neither Seller, FCI, FMB, any of the VB
Subsidiaries, nor any Affiliate thereof is in default of any of its obligations
thereunder in any material respect. All Contracts and related assets are
purchased without recourse to any of the Seller, FCI, FMB or the VB Subsidiaries
except as described in this Agreement. The Purchases by Company under this
Agreement constitute valid and true sales and transfers for consideration (and
not merely a pledge of assets for security purposes), enforceable against
creditors of each of Seller, FCI, FMB and the VB Subsidiaries, and no Contract
or related Collateral shall constitute property of the Seller.
(xii) Ownership of the Company. One hundred percent (100%) of the
--------------------------
outstanding capital stock of the Company is directly owned (both beneficially
and of record) by Seller. Such stock is validly issued, fully paid and
nonassessable and there are no options, warrants or other rights to acquire
capital stock from the Company.
(xiii) Taxes. Each of Seller, FCI, FMB and the VB Subsidiaries have
-----
filed or caused to be filed all Federal, state and local tax returns which are
required to be filed by them, and have paid or caused to be paid all taxes shown
to be due and payable on such returns or on any assessments received by them,
other than any taxes or assessments, the validity of which are being contested
in good faith by appropriate proceedings and with respect to which Seller, FCI,
FMB and the VB Subsidiaries have set aside adequate reserves on their books in
accordance with GAAP and which proceedings have not given rise to any Lien.
(xiv) Solvency. Each of Seller, FCI, FMB and the VB Subsidiaries both
--------
prior to and after giving effect to each Purchase of Contracts hereunder (i) is
not "insolvent" (as such term is defined in '101(32)(A) of the Bankruptcy Code);
(ii) is able to pay its debts as they become due; and (iii) 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.
(xv) Reporting and Accounting Treatment. For reporting and accounting
-----------------------------------
purposes, and in their books of account and records, the Seller and FCI will
treat the Purchase of each Contract pursuant to this Agreement as a purchase of,
or absolute assignment of, the Seller's full right, title and ownership interest
in each Contract, and the Seller and FCI have not in any other manner accounted
for or treated the transactions.
(xvi) ERISA. There has been no (i) occurrence or expected occurrence of
-----
any Reportable Event with respect to any Plan of FCI, FMB, Seller or any ERISA
Affiliate, or any withdrawal from, or the termination, Reorganization or Plan
Insolvency of any Multiemployer Plan or (ii) institution of proceedings or the
taking of any other action by PBGC or FCI, FMB, Seller or any ERISA Affiliates
or any such Multiemployer Plan with respect to the withdrawal from or the
termination, Reorganization or Plan Insolvency of, any such Plan.
(xvii) No Adverse Selection. No selection procedures adverse to the
---------------------
Company, EagleFunding, the Collateral Agent or the Deal Agent have been employed
by any of Seller, FCI, FMB or the VB Subsidiaries in selecting the Contracts (i)
for inclusion in the Contract Pool on any Contract Grant Date, (ii) intended to
be released from the Primary Lien under Section 7.11(c), or (iii) to be granted
to the Collateral Agent pursuant to Section 7.12 as "Remarketed Contracts."
(xviii) FairShare Program. (a) On any date of determination, for each
-----------------
VOI Regime for which the constituent VOIs are comprised primarily of UDIs, the
ratio of (a) the total number of Points actually allocated to a VOI Regime
pursuant to the FairShare Plus Program at such time for the next succeeding
twelve month period, divided by (b) the total number of Points which are
-----------
allocable to occupiable space in such VOI regime over such twelve month period
does not exceed a ratio of 1.0 to 1.0.
(b) On any date of determination, for each owner of a UDI who is a
member of the FairShare Plus Program, the ratio of (a) the number of Points
allocated to such owner in a VOI Regime in return for assigning his VOI to the
FairShare Plus Program trust divided by (b) the total number of Points assigned
----------
to all UDI owners in such VOI Regime does not exceed the percentage of such
owner's undivided interest in such VOI Regime as described in such owner's
Contract.
The representations and warranties of Seller, FCI, FMB and the VB
Subsidiaries set forth in this Section 7(a) shall be deemed to be remade,
-------------
without further act by any Person, on and as of the Effective Date, and each
Contract Grant Date. The representations and warranties set forth in this
Section 7(a) shall survive the transfer and assignment of the Contracts to the
-----------
Company.
(b) Representations and Warranties Regarding the Contracts. Seller and
------------------------------------------------------
FCI jointly and severally represent and warrant to the
Company as to each Contract conveyed on and as of the related Cut-Off Date
(except as otherwise expressly stated) as follows:
(i) Eligibility. Such Contract is an Eligible Contract.
-----------
(ii) Contract Schedule. The information set forth in the Contract
------------------
Schedule is true and correct with respect to such Contract.
(iii) No Waivers. The terms of such Contract have not been waived,
-----------
altered, modified, or extended in any respect, without the prior written consent
of the Deal Agent, other than (i) extensions which are Permitted Deferrals, (ii)
modifications, entered into in accordance with Customary Practice and Credit
Standards and Collections Policies, which do not reduce the amount or extend the
maturity of required Payments, and (iii) modifications in the applicability of a
PAC (which will, among other things, result in a change in the relevant Contract
Rate).
(iv) Binding Obligation. Such Contract 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).
(v) No Defenses. Such Contract is not subject to any right of
------------
rescission, setoff, counterclaim or defense, including the defense of usury, the
operations of any of the terms of such Contract or the exercise of any right
thereunder will not render such Contract unenforceable in whole or in a manner
materially affecting the value or collectibility of the Contract or subject to
any right of rescission, setoff, counterclaim or defense, including the defense
of usury, and no such right of rescission, setoff, counterclaim or defense has
been asserted with respect thereto.
(vi) Origination. Such Contract was originated by FCI, FMB or one of
-----------
the VB Subsidiaries, as applicable, in the ordinary course of their businesses
and was purchased by (i) FCI from FMB or a VB Subsidiary (if such Contract was
not originated by FCI) or (ii) Seller from FCI in each case in the regular
course of their businesses pursuant to the Operating Agreement in transactions
constituting "true sales".
(vii) Lawful Assignment. Such Contract was not originated in and is not
-----------------
subject to the laws of any jurisdiction the laws of which would make the
transfer of the Contract under this Agreement or the Grant of such Contract
under the Credit Agreement unlawful.
(viii) Compliance with Law. The requirements of any federal, state or
-------------------
local law (including, without limitation, usury, truth in lending and equal
credit opportunity laws) applicable to such Contract have been complied with.
The VOI Regime related to such Contract 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 VOI Regime; except where such noncompliance would not
have a Material Adverse Effect. Except as disclosed in the Base Reports, none of
the Seller, FCI, FMB or the VB Subsidiaries has received notice of any material
violation of any legal requirements applicable to such VOI Regime; except where
such noncompliance would not have a Material Adverse Effect. The VOI Regime
related to such Contract 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 and constitutes a
valid and conforming condominium and timeshare regime under the laws of the
State where the related Development is located; except where such noncompliance
would not have a Material Adverse Effect.
(ix) Contract in Force. Such Contract is in full force and effect and
-----------------
has not been satisfied in whole or in part, or rescinded.
(x) No Subordination. Such Contract has not been subordinated in whole
----------------
or in part.
(xi) Capacity of Parties. All parties to such Contract had capacity to
-------------------
execute the Contract.
(xii) Good Title. The Seller has good and marketable title to such
-----------
Contract free and clear of any Lien (other than the Primary Lien). The Seller
has not sold, assigned or pledged such Contract to any Person other than the
Collateral Agent and the Company. As to the related VOI or Lot, either, (i) a
generally accepted form of title insurance policy, insuring the fee estate
ownership of the Lot or the real property subject to the VOI Regime by the
Persons owning the respective interests therein, and their successors and
assigns was effective at the time the Originator (or a Subsidiary thereof)
acquired the Lot or at the time of registration of the VOI Regime, is valid and
remains in full force and effect, and was issued by a title insurer qualified to
do business in the applicable jurisdiction; or (ii) at the time the Originator
(or a Subsidiary thereof) acquired the Lot or at the time of registration of the
VOI Regime, such fee estate ownership had been verified by an attorney's opinion
of title, the form and substance of which is of a type acceptable for purposes
of registration of sales of VOI or Lots, and which may be relied upon by Persons
subsequently owning the respective interests therein, and their successors and
assigns. The Seller has not sold, assigned, or pledged its interest in the
related VOI or Lot to any Person other than the Collateral Agent and the
Company, and the Seller's right, title and interest therein is free of any Liens
(other than the Primary Lien).
(xiii) No Defaults. As of the relevant Cut-Off Date, there is no
------------
default, breach, violation or event permitting acceleration
existing under the Contract and no event which, with the giving of notice or the
expiration of any grace or cure period or both, would constitute such a default,
breach, violation or event permitting acceleration under such Contract (after
giving effect to Permitted Deferrals). None of Seller, FCI, FMB or the VB
Subsidiaries has waived any such default, breach, violation or event permitting
acceleration without obtaining the prior written consent of the Collateral
Agent.
(xiv) Equal Installments. Such Contract has a fixed rate of interest
-------------------
and provides for payments which fully amortize the loan over its term. Interest
accrues on such Contract on an actuarial (i.e., pre-computed) basis.
(xv) Original Contracts. All original executed copies of such Contracts
------------------
are in the custody of the Custodian, except to the extent otherwise permitted
pursuant to Section 4.02(x) of the Credit Agreement.
(xvi) Minimum Downpayment. Such Contract had a minimum Equity
---------------------
Percentage of 10% (or in the case of Contracts the down payment for which was
financed, 15%) at origination (including in such total any cash down payments
and Payments made on any other Contract which has been "traded in" in connection
with the origination of such Contract and downpayments under such Contract
financed over a period not exceeding six months from the date of origination of
such Contract which have actually been paid within such six month period).
(xvii) Contract Form/Governing Law. Such Contract was executed in
-----------------------------
substantially the form of one of the forms of Contract attached hereto as
Exhibit D, (as such Exhibit D may be amended from time to time with the consent
of the Collateral Agent in the exercise of its reasonable discretion in
connection with the Purchase of Contracts on Contract Grant Dates originated at
a Development with respect to which the Contract forms relating thereto have not
been previously been approved by Collateral Agent and previously included on
said Exhibit D), except for changes required by applicable law and certain other
modifications which do not, individually or in the aggregate, affect the
enforceability or collectibility of such Contract. In addition, such Contract
was originated in and is governed by the laws of the State in which the related
Development is located, and each such State is a jurisdiction as to the law of
which the Company shall have, on or before the relevant Contract Grant Date,
delivered to the Collateral Agent an Opinion of Counsel regarding the
enforceability of the form or forms of Contract used in such jurisdiction and
such other matters as either such recipient shall reasonably request, and such
Contract is substantially in the form of one of the forms of Contracts attached
as an exhibit to such opinion.
(xviii) No Event of Default. No Event of Default (or Unmatured Event of
-------------------
Default) will occur as a result of the Purchase of the Contract by the Company
pursuant to this Agreement.
(xvix) Reserved.
--------
(xx) Interest in Real Property. The VOI or Lot underlying such Contract
-------------------------
is an interest in real property consisting of either (a) a fixed week or
undivided interest in fee simple in a lodging unit or group of lodging units at
a Development, (b) an undivided leasehold interest in any lodging unit located
at the Harbortown Marina Resort Hotel in Ventura County, California or the
Pagosa Mountain Xxxxxxx VOI Regime at the Pagosa Development in Xxxxxxxxx
County, Colorado or (c) if a lot, a fee simple interest in real property; and in
each case such VOI or Lot has been deeded to the Nominee pursuant to the terms
of one of the Title Clearing Agreements, or has been deeded to the relevant
Obligor in accordance with the requirements of the applicable Contract or
applicable law.
(xxi) Environmental Compliance. Each VOI Regime related to a Contract
-------------------------
is now, and at all times during FCI's (or any Affiliate of FCI's) ownership
thereof 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
(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 which 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"). Neither FCI nor any Affiliate of FCI
------------
has caused or suffered to occur any discharge, spill, uncontrolled loss or
seepage of any petroleum or chemical product or any Contaminant onto any
property comprising or adjoining any of the VOI Regimes, and neither FCI nor any
Affiliate of FCI nor any Obligor or Occupant of all or part of any of the VOI
Regimes is now or has been involved in operations at; any VOI Regime which could
lead to liability for FCI, the Company, any other Affiliate of FCI or any other
owner of any VOI Regime or the imposition of a lien on such VOI Regime under any
Environmental Law.
Except as set forth on Schedule 4.02(t) to the Credit Agreement, all
----------------
property owned, managed, or controlled by FCI or any Affiliate of FCI and
located within a Development is now, and has at all times during FCI's (or any
Affiliate of FCI's) ownership, management or control thereof been free of
contamination from any Contaminants. Except as set forth on Schedule 4.02(t) to
----------------
the Credit Agreement, neither FCI nor any Affiliate of FCI 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 Developments, and neither FCI nor any Affiliate of FCI nor
any Obligor or occupant of all or part of any of any Development is now or has
been involved in operations at any Development which could lead to liability for
FCI, the Company, any other Affiliate of FCI or any other owner of any
Development or the imposition of a lien on such Development under any
Environmental Law. None of the matters set forth on Schedule 4.02(t) to the
----------------
Credit Agreement will have a Material Adverse Effect, a material adverse effect
on the interests of EagleFunding or the Collateral Agent in the Collateral or an
adverse effect on EagleFunding, the Collateral Agent or the Deal Agent.
(xxii) Tax Liens. All taxes applicable to such Contract and the related
---------
VOI or Lot have been paid; except where the failure to pay would not have a
Material Adverse Effect. There are no delinquent tax liens in respect of the VOI
or Lot underlying such Contract.
(xxiii) Reserved.
(xxiv) Contract Files. The related Contract File contains the documents
--------------
required by Section 4.02(v) of the Credit Agreement.
(xxv) Lock-Box Accounts. The Obligor of such Contract either:
-----------------
(1) shall have been instructed, pursuant to the Seller's
routine distribution of a periodic statement to such Obligor next
succeeding
(A) the Effective Date or any Contract Grant Date, as
applicable, or
(B) the day on which a PAC ceased to apply to such
Contract, in the case of a Contract formerly subject to a PAC,
but in no event later than the then next succeeding due date for
Payment under the related Contract, to remit Payments thereunder to a
Post Office Box for credit to a Lock-Box Account, or directly to a
Lock-Box Account, in each case maintained at a Lock-Box Bank pursuant
to the terms of a Lock-Box Agreement substantially in the form of
Exhibit H of the Credit Agreement, or
(2) has entered into a PAC, 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,
and has caused, a Lock-Box Bank and/or the Collection Account Bank, to
take all necessary and appropriate action to ensure that each such
pre-authorized debit is credited directly to a Lock-Box Account.
(xxvi) Ground Leases. In the case of any Contract relating to a VOI or
-------------
Lot located in Pagosa Mountain Xxxxxxx VOI Regime at the Pagosa Development in
Xxxxxxxxx County, Colorado, (i) the ground lease to which the relevant
Development is subject has a fixed term which terminates after the maturity of
such Contract, and (ii) all rent due and payable for the term of the relevant
ground lease has been fully paid through the date on which this representation
is made (or remade, as the case may be).
(xxvii) Ownership Interest. On or after the relevant Contract Grant
-------------------
Date, the Company shall have a legal, valid and perfected ownership interest in,
and good and marketable title to, the Contract, which interest in and title to
the Contract is free and clear of all liens (other than the Primary Lien).
All of the representations and warranties of Seller and FCI set forth
in this Section 7(b) shall be deemed to be remade, without further act by any
-----------
Person, on and as of each Cut-Off Date with respect to each Contract Purchased
by the Company on and as of the Effective Date and each Contract Grant Date. In
addition, each of the representations and warranties of Seller and FCI set forth
in the following subsections of this Section 7(b) shall be deemed to be remade,
-----------
without further act by any Person, on and as of each Business Day hereunder
occurring prior to the Collection Date: subsections (i) (but only with respect
to the eligibility criteria set forth in the definition of "Eligible Contract"
in the Definitions List at clauses (a), (b), (c), (d), (h), (k), (l), (m), (o),
(q), (r), (t), (u), (v) and (w) thereof), (iii), (iv), (v), (viii), (ix), (x),
(xii), (xiv), (xv), (xxi), (xxii), (xxiv), (xxv), (xxvi) and (xxvii). All of the
representations and warranties set forth in this Section 7(b) shall survive the
-----------
Purchase of the respective Contracts by the Company.
(c) Representations and Warranties Regarding the Contract Files. Seller
-----------------------------------------------------------
and FCI jointly and severally represent and warrant to the Company as to each
Contract and the related Contract File conveyed by it hereunder as follows:
(i) Possession. On or immediately prior to the Effective Date and each
----------
Contract Grant Date, the Custodian will have possession of each original
Contract and the related Contract File being sold to Company on said date, and
shall have acknowledged such receipt, and its undertaking to act as bailee for
purposes of perfection of the Collateral Agent's interests in such original
Contract and the related Contract File (provided, however, that the fact that
-------- -------
any of the Contracts not required to be in its respective Contract File pursuant
to Section 4.02(v) of the Credit Agreement is not in the possession of the
Custodian in its respective Contract File does not constitute a breach of this
representation).
(ii) Marking Records. On or before each Contract Grant Date, the Seller
---------------
shall have caused the portions of the computer files relating to the Contracts
Granted on such date to the Collateral Agent to be clearly and unambiguously
marked to indicate that such
Contract constitutes part of the Collateral Granted by the Company in accordance
with the terms of the Credit Agreement. In addition, prior to each such Grant,
each such Contract shall have been clearly and unambiguously stamped or marked
as follows:
"This Contract is part of the Collateral under a Collateral
Agency Agreement, dated as of January 15, 1998, by and among
BankBoston, N.A. and the secured parties thereto. A first priority
security interest herein is held by BankBoston, N.A. as Collateral
Agent for each of the secured parties under the Collateral Agency
Agreement.
The representations and warranties of Seller and FCI set forth in this
Section 7(c) shall be deemed to be remade, without further act by any Person, on
------------
on and as of the Effective Date, and each Contract Grant Date with respect to
the Contracts conveyed to the Company on and as of each such date. The
representations and warranties set forth in this Section 7(c) shall survive the
-----------
transfer and assignment of the respective Contracts to the Company.
(d) Survival of Representations and Warranties. It is understood and
--------------------------------------------
agreed that the representations and warranties contained in this Section 7 shall
---------
remain operative and in full force and effect, shall survive the transfer and
conveyance of the Contracts by the Seller to the Company and the Grant by the
Company to Collateral Agent and shall inure to the benefit of the Company, the
Collateral Agent and EagleFunding and their respective designees, successors
and assigns.
(e) Indemnification of the Company. The Seller and FCI shall jointly
------------------------------
and severally indemnify, defend and hold harmless the Company against any and
all claims, losses and liabilities (including reasonable attorneys' fees) (all
of the foregoing being collectively referred to as "Indemnified Amounts"), which
-------------------
(i) may at any time be imposed on, incurred by or asserted against the Company
in any way relating to or arising out of this Agreement or the transactions
contemplated hereby or any action taken or omitted by the Company under or in
connection with any of the foregoing, (ii) would not have been imposed on,
incurred by or asserted against the Company but for its having purchased the
Contracts and related Transferred Assets hereunder or (iii) relate to the
services underlying the Contracts or any of the other Transferred Assets or any
act or omission to act by the Seller in respect of any of the Transferred
Assets, excluding, however, (a) recourse for uncollectible Payments under the
--------- -------
Contracts or to insure against default by the Obligors thereunder, (b) any
income, franchise or other taxes (or interest or penalties with respect thereto)
incurred by the Company arising out of or as a result of this Agreement or the
Transferred Assets conveyed hereunder in respect of any Contract and (c) any
claim, expense, cost or liability of the Company under the Credit Agreement or
Liquidity Agreement. Without in any way limiting the foregoing, except as
otherwise provided in this Section 7(e), or Section 12(j) hereof, the Seller
----------- -------------
shall pay to the Company, on demand, any and all amounts necessary to indemnify
the Company from and against any and all Indemnified Amounts relating to or
resulting from: (w) any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, any sales,
gross receipts, intangible personal property, privilege or license taxes, but
not including taxes imposed upon the Company under the laws of the United States
or any jurisdiction within the United States in which the Company is organized
or maintains its principal office or in which the Company books this
transaction; (x) any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, any taxes
which may arise at any time and from time to time in the future in respect of
this Agreement, the transactions contemplated hereby and the subject matter
hereof and thereof;(y) costs, expenses and reasonable counsel fees in defending
against the same, whether arising by reason of the acts to be performed by the
Seller hereunder or imposed against the Company or the Seller, the property
involved or otherwise, or (z) any and all loss, penalties, fines, forfeitures,
legal fees and related costs, judgments and other costs and expenses resulting
from any claim, demand, defense or assertion based on or grounded upon, or
resulting from, a breach of the representations and warranties contained in this
Agreement. The agreements in this clause (e) shall survive the collection of all
Contracts, the termination of this Agreement and the payment of all amounts
payable hereunder and under the Contracts. For purposes of this clause (e), any
reference to the Company shall include any officer, director, employee, agent or
affiliate thereof, or any successor or assignee thereof.
Section 8. Repurchases of Contracts for Breach of Representations
------------------------------------------------------
and Warranties.
--------------
(a) Repurchase Obligation. Subject to Section 8(b) hereof, Seller shall
--------------------- -----------
repurchase from the Company, at the Repurchase Price defined immediately below,
any Contract sold by Seller to the Company on the first Settlement Date
occurring following the last day of the immediately preceding Calculation Period
in which Seller becomes aware or receives written notice from the Company or the
Collateral Agent that such Contract is a "Defective Contract"; provided,
--------
however, that with respect to any Contract incorrectly described on the Contract
-------
Schedule only with respect to its Principal Balance on the relevant Cut-Off
Date, which Seller would otherwise be required to repurchase pursuant to this
Section 8(a), Seller may, in lieu of repurchasing such Contract, pay to the
-----------
Company on the Business Day next preceding the relevant Notice Settlement Date,
cash in an amount sufficient to cure such deficiency or discrepancy. For
purposes of this Section 8(a) the term "Repurchase Price" shall mean an amount
equal to the product of (x) a factor of .97 multiplied by (y) the remaining
--------------
Principal Balance outstanding on such Contract as of the opening of business on
the latest Determination Date to occur prior to the Settlement Date on which the
repurchase is to be effected hereunder, together with accrued and unpaid
interest thereon at the Contract Rate from
the earlier of (i) the last due date as to which the Obligor paid interest under
such Contract or (ii) such Determination Date, to the Settlement Date on which
such repurchase is made. The Company hereby directs the Seller, for so long as
the Credit Agreement is in effect, to make such payment on its behalf to the
Collection Account pursuant to Section 7(b) hereof. The following defects with
-----------
respect to documents in any Contract File, to the extent they do not impair the
validity or enforceability of the subject document under applicable law, shall
not be deemed to constitute a breach of the representations and warranties
contained in Section 7(b): misspellings of or omissions of initials in names;
------------
name changes from divorce or marriage; discrepancies as to payment dates in a
Contract of no more than 30 days; discrepancies as to Payments of no more than
$5.00; discrepancies as to origination dates of not more than 30 days; inclusion
of additional parties other than the primary Obligor not listed in the
Servicer's records or in the Contract Schedule and non-substantive typographical
errors and other non-substantive minor errors of a clerical or administrative
nature.
(b) Repurchases. Seller shall notify the Company of any repurchase not
-----------
less than two Business Days prior to the date on which such repurchase shall be
effected, specifying the Defective Contract and the Repurchase Price therefor.
Upon the repurchase of a Defective Contract pursuant to Section 8(a), Seller
-----------
shall, prior to 11:00 A.M. New York City time on the relevant Settlement Date
deposit, on behalf of the Company, deposit or otherwise caused to be retained in
the Collection Account the Repurchase Price.
Upon each repurchase, the Company shall, automatically and without
further action be deemed to sell, transfer, assign, set over and otherwise
convey to the Seller, without recourse, representation or warranty, all the
right, title and interest of the Company in and to such Defective Contract, the
VOI or Lot, the Contract File relating thereto, all monies due or to become due
with respect thereto, all Payments and proceeds thereof (including Payments
received from and including the Determination Date next preceding the date of
transfer) and all other assets related thereto as described in Sections 2 and 3
----------------
hereof . The Company shall execute such documents, releases and instruments of
transfer or assignment and take such other actions as shall reasonably be
requested by the Seller to effect the conveyance of such Defective Contract, and
the VOI or Lot and Contract File related thereto pursuant to this subsection.
(c) Except for the remedies set forth in Section 7(e), the obligation
-----------
of Seller to repurchase any Defective Contract shall constitute the sole remedy
against Seller, FCI or their affiliates, respecting any breach of the
representations and warranties set forth in Section 7(b) and (c) available
---------------------
hereunder to the Company; provided, however, that this provision shall not limit
-----------------
in any way rights of the Company against any other Person.
(d) FCI hereby irrevocably and unconditionally guarantees to the
Company, the Collateral Agent, the Deal Agent and EagleFunding the due and
punctual performance by Seller of all of its repurchase obligations set forth in
this Section 8. Such guaranty by FCI shall be on identical terms as FCI's
guaranty of Seller's servicing obligations as set forth in Section 9.14(b) of
the Credit Agreement.
Section 9. Covenants of Seller and FCI.
---------------------------
(a) Affirmative Covenants of Seller and FCI. At any time prior to the
----------------------------------------
Collection Date, Seller and FCI each covenants and agrees that it shall:
(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, and all Contracts 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 necessary licenses and approvals, in each
jurisdiction except where the failure to preserve and maintain such existence,
rights, franchises, privileges, qualifications, licenses and approvals would not
have a Material Adverse Effect.
(iii) Audits. At any time and from time to time during regular business
------
hours, permit the Company, and/or its agents, representatives or assigns,
access:
(i) to the offices and properties of Seller or FCI (including,
without limitation, any repository used by Seller or FCI to store the
computer tapes or other computer records constituting the Daily Report)
in order to examine and make copies of and abstracts from all books,
correspondence and Records of Seller or FCI as appropriate to verify
the Seller's or FCI's compliance with this Agreement, or any other
Facility Documents to which Seller or FCI 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 thereof (and computer tapes or other computer replicas
thereof, as appropriate), and Seller and FCI agrees to render to the
Company and/or its agents, representatives and assigns, at Seller's and
FCI's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto; and
(ii) to the officers or employees of Seller and FCI in order
to discuss matters relating to the Contracts or Seller's or FCI's
performance hereunder with any of such officers or employees of Seller
and FCI having knowledge of such matters.
Each such audit shall be at the sole expense of Seller and FCI. The number and
frequency of any such audits shall be limited to such number and frequency as
shall be reasonable in the exercise of the Company's, or its assigns',
reasonable commercial judgment. The Company and its agents, representatives and
assigns shall also have the right to discuss Seller's and FCI's affairs with the
officers and employees of Seller and FCI and Seller's and FCI's independent
accountants and to verify under appropriate procedures the validity, amount,
quality, quantity, value and condition of, or any other matter relating to, the
Contracts and related Collateral.
(iv) Keeping of Records and Books of Account. Maintain and implement
---------------------------------------
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Contracts in the event of the
destruction or loss of the originals thereof) and keep and maintain, all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Contracts (including, without limitation,
records adequate to permit the daily identification of all Collections with
respect to, and adjustments of amounts payable under, each Contract).
(v) Performance and Compliance with Receivables and Contracts. At its
----------------------------------------------------------
expense, timely and fully perform and comply in all material respects with all
provisions, covenants and other promises required to be observed by Seller or
FCI under the Contracts.
(vi) Location of Records. Maintain its principal place of business and
-------------------
chief executive office, and the offices where it maintains its Records, at the
addresses referred to in Section 4.01(k) of the Credit Agreement or, in any such
--------------
case, upon 30 days' prior written notice to the Company, at such other locations
within the United States where all action required by Section 7.04 of the Credit
------------
Agreement shall have been taken and completed (giving effect to the provisions
of such Section 7.04 as if each reference to the "Borrower" therein is instead a
------------
reference to each of the Seller and FCI). Each of Seller and FCI will at all
times maintain its chief executive office and the offices where it keeps the
Records within the United States of America.
(vii) Compliance with ERISA. Comply in all material respects with the
-----------------------
provisions of ERISA, the IRC, and all other applicable laws, and the regulations
and interpretations thereunder.
(viii) Ownership Interest. Take such action with respect to each Contract as
------------------
is necessary to ensure that the Company maintains either a first priority
perfected security interest in or a legal and valid ownership interest in such
Contract and the related Collateral, in each case free and clear of any Liens
(other than the Primary Lien and in the case of any VOIs of Lots, any Permitted
Encumbrance thereon) and respond to any inquiries with respect to ownership of a
Contract sold by it hereunder by stating that, from and after the applicable
Closing Date relating thereto, it is no
longer the owner of such Contract and that ownership of such Contract is held by
the Company subject to the lien of the Credit Agreement and the Liquidity
Security Agreement;
(ix) Instruments. Not remove any portion of the Contracts or related
-----------
Collateral that consists of money or is evidenced by an instrument, certificate
or other writing from the jurisdiction in which it was held at the date the most
recent Opinion of Counsel delivered pursuant to Section 5.01(j) of the Credit
---------------
Agreement (or from the jurisdiction in which it was held as described in the
Opinion of Counsel delivered on the Effective Date if no Opinion of Counsel has
yet been delivered pursuant to Section 5.01(j) of the Credit Agreement) unless
--------------
the Collateral Agent shall have first received an Opinion of Counsel to the
effect that the lien and security interest created by the Credit Agreement with
respect to such property will continue to be maintained after giving effect to
such action or actions; provided, however, that each of the Collateral Agent and
--------- -------
the Servicer may remove Pledged Contracts from such jurisdiction to the extent
necessary to satisfy any requirement of law or court order, in all cases in
accordance with the provisions of the Custodial Agreement and Section 5.01(n)of
--------------
the Credit Agreement.
(x) No Release. Not take any action and shall use its best efforts not
----------
to permit any action to be taken by others that would release any Person from
any of such Person's covenants or obligations under any document, instrument or
agreement, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness or, any such document, instrument or agreement,
except as expressly provided in this Agreement or the Credit Agreement or such
other instrument or document.
(xi) Insurance and Condemnation.
--------------------------
(A) FCI (1) shall use its best efforts, in the case of
Developments where FCI or any subsidiary of FCI maintains primary or
substantial responsibility for management, administration or other
services of a similar nature, and (2) shall do or cause to be done all
things which it may accomplish with a reasonable amount of cost or
effort, in the case of Developments where FCI or any Subsidiary of FCI
does not maintain primary or substantial responsibility for management,
administration or other services of a similar nature, to cause each of
the POA's for each Development, to (A) maintain one or more policies of
"all-risk" property and general liability insurance with financially
sound and reputable insurers providing coverage in scope and amount
which (x) satisfies the requirements of the Declarations (or any
similar charter document) governing the POA for the maintenance of such
insurance policies, and (y) is 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; and
(B) apply
the proceeds of any such insurance policies in the manner specified in
the relevant 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 VOI Regime.
(B) Each of FAC and FCI shall remit to the Collection Account,
the portion of any proceeds received pursuant to a condemnation of
property in any Development relating to any of the VOIs or Lots.
(xii) Separate Identity. Take such action (and cause FMB and the VB
------------------
Subsidiaries to take such action) as is necessary to ensure compliance with
Section 5.01(o) of the Credit Agreement.
--------------
(xiii) Computer Files. Xxxx or cause to be marked each Contract in its
---------------
computer files that the Contracts conveyed to Company hereunder have been
pledged to Collateral Agent.
(xiv) 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 which 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, or which could otherwise be reasonably expected to expose Seller or FCI
to a material liability. Each of Seller and FCI shall 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, FCI or the applicable Affiliate shall have 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, or which could
otherwise be reasonably expected to expose Seller or FCI to a material
liability.
(xv) Facility Documents. Comply in all material respects with the terms
------------------
of, and employ the procedures outlined under this Agreement and all of the other
Facility Documents to which it is a party, and take all such action to such end
as may be from time to time reasonably requested by the Company to maintain all
such Facility Documents in full force and effect.
(xvi) Contract Schedule. Promptly amend the Contract Schedule to reflect
------------------
terms or discrepancies that become known after any Contract Grant Date, and
promptly notify the Company and Deal Agent of any such amendments.
(xvii) Segregation of Collections. Prevent the deposit into any of the
----------------------------
Lock-Box Accounts, the Collection Account or the Spread Account of any funds
other than Collections in respect of the Pledged Contracts (except, in the case
of the Spread Account as required by the Credit Agreement) (provided that this
--------
Covenant shall not have been breached to the extent that items other than
Collections, which are not material in the aggregate, have been mistakenly
forwarded by an Obligor directly to any of FCI, FAC or any of their respective
Affiliates, or deposited into any of the Lock-Box Accounts), and to the extent
that any such funds are nevertheless deposited into any of such Lock-Box
Accounts, the Collection Account or the Spread Account, promptly identify any
such funds to the Servicer for segregation and remittance to the owner thereof.
(b) Negative Covenants of Seller and FCI. At any time prior to the
---------------------------------------
Collection Date, Seller and FCI each covenants and agrees that it shall not,
without the prior written consent of the Company and the Collateral Agent and
Deal Agent:
(i) Sales, Liens, Etc. Against Receivables and Related Security. Except
-----------------------------------------------------------
for the releases contemplated under Section 7.11 and 7.12 of the Credit
------------------------
Agreement, sell, assign (by operation of law or otherwise) or otherwise dispose
of, or create or suffer to exist, any Lien (other than the Primary Lien and with
respect to VOIs and Lots relating to Contracts, any Permitted Encumbrances
thereon) upon or with respect to, any Contract or any Transferred Assets, or any
interests in either thereof, or upon or with respect to any Lock-Box Account to
which any Collections are sent, or assign any right to receive income in respect
thereof. Each of FCI and Seller shall immediately notify the Company of the
existence of any Lien on any Contract or Transferred Assets, and shall defend
the right, title and interest of the Company in, to and under the Contracts and
Transferred Assets, against all claims of third parties.
(ii) Extension or Amendment of Contract Terms. Extend, amend, waive or
----------------------------------------
otherwise modify the terms of any Contract (other than by way of a Permitted
Deferral or in accordance with Customary Practices), or permit the rescission or
cancellation of any Contract, whether for any reason relating to a negative
change in the related Obligor's creditworthiness or inability to make any
payment under the Contract or otherwise; provided, however, that the following
-------- -------
modifications may be made to a Pledged Contract from time to time: (i)
extensions which are Permitted Deferrals, (ii) amendments, entered into in
accordance with Customary Practices and Credit Standards and Collections
Policies, which do not reduce the amount or extent the maturity of required
Payments, and (iii) modifications in the applicability of a PAC (which will,
among other things, result in a change in the relevant Contract Rate).
(iii) Change in Business or Credit and Collection Policy. (A) Make any
------------------------------------------------------
change in the character of its business, or (B) make any change in the Credit
Standards and Collection Policies or deviate
from the exercise of Customary Practices, which change or deviation would, in
either case, materially impair the value or collectibility of any Contract.
(iv) Change in Payment Instructions to Obligors. Add or terminate any
-------------------------------------------
bank as a Lock-Box Bank from those listed in Exhibit E to the Credit Agreement
---------
or make any change in its instructions to Obligors regarding payments to be made
to any Lock-Box Account at a Lock-Box Bank, unless the Company and Deal Agent
shall have received (i) 30 days' prior written notice of such addition,
termination or change, (ii) written confirmation from the Seller or FCI that
after the effectiveness of any such termination, there shall be at least one (1)
Lock-Box Account in existence and (iii) prior to the effective date of such
addition, termination or change, (x) executed copies of Lock-Box Agreements
executed by each new Lock-Box Bank, the Seller, the Company, the Servicer, the
Collateral Agent and the Deal Agent and (y) copies of all agreements and
documents signed by either the Company or the respective Lock-Box Bank with
respect to any new Lock-Box Account.
(v) Change in Corporate Name, Etc. Make any change to its corporate
-------------------------------
name, fictitious names, assumed names or doing business names which existed on
the Effective Date without providing at least 30-days prior written notice to
the Company and the Deal Agent to the extent all action required by Section 7.04
-----------
of the Credit Agreement shall have been taken and completed (giving effect to
the provisions of such Section 7.04 as if each reference to the "Borrower"
------------
therein is instead a reference to each of Seller and FCI).
(vi) ERISA Matters. (i) 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 DOL; (ii) permit to exist any accumulated
funding deficiency, as defined in Section 302(a) of ERISA and Section 412(a) of
the IRC, or funding deficiency with respect to any Benefit Plan other than a
Multiemployer Plan; (iii) fail to make any payments to any Multiemployer Plan
that Seller, FCI or any ERISA Affiliate may be required to make under the
agreement relating to such Multiemployer Plan or any law pertaining thereto;
(iv) terminate any Benefit Plan so as to result in any liability; (v) permit to
exist any occurrence of any reportable event described in Title IV of ERISA
which represents a material risk of a liability of Seller, FCI or any ERISA
Affiliate under ERISA or the IRC; provided, however, Seller's or FCI's ERISA
-------- -------
Affiliates may take or allow such prohibited transactions, accumulated funding
deficiencies, payments, terminations and reportable events described in clauses
(i) through (iv) above so long as such events occurring within any fiscal year
of Seller or FCI, 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 which does not exceed $500,000.
-----------
(vii) Terminate or Reject Contracts. Without limiting anything in
-------------------------------
Section 9(b)(ii) above, terminate or reject any Contract prior to the end of the
---------------
term of such Contract, whether such rejection or early termination is made
pursuant to an equitable cause, statute, regulation, judicial proceeding or
other applicable law (including, without limitation, Section 365 of the
Bankruptcy Code), unless prior to such termination or rejection, such Contract
and any related Collateral have been released from the Primary Lien pursuant to
Section 7.11 of the Credit Agreement in consideration of the payment of an
-------------
appropriate Release Price therefor.
(viii) Facility Documents. Except as otherwise permitted under the Credit
-------------------
Agreement, (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, (A) the Title Clearing Agreements may be amended for the purposes of
-------
(1) making additional properties subject thereof, (2) making an Affiliate of FCI
a party thereto having the same rights and obligations thereunder as FCI or (3)
identifying a separate pool of Contracts (which shall not include the Pledged
Contracts) to be sold or pledged to secure debt under a pooling or pledge
arrangement similar to that evidenced by this Credit Agreement, and (B) the
FairShare Plus Agreement may be amended from time to time (1) to substitute or
add additional parties thereto, (2) to comply with state and federal laws or
regulations, or (3) for any other purpose, provided that with respect to this
clause (3), FCI or Seller furnishes to the Company and Deal Agent an Opinion of
Counsel in form and substance acceptable to the Deal Agent to the effect that
such amendment or modification will not adversely affect in any material respect
the respective interests of EagleFunding, the Collateral Agent or the Deal
Agent.
(ix) Accounting Treatment. Prepare any financial statements or other
---------------------
statements which shall account for the transactions contemplated by this
Agreement in any manner other than as the sale of, or a capital contribution of,
the Contracts by the Seller to the Company.
(x) Insolvency Proceedings. Institute Insolvency Proceedings with
-----------------------
respect to the Company or consent to the institution of Insolvency Proceedings
against the Company, or take any corporate action in furtherance of any such
action, or allow the Company to seek dissolution or liquidation in whole or in
part.
Section 10. Seller Subordinated Note.
------------------------
(a) On the Effective Date, Company shall execute the Subordinated Note
substantially in the form of Exhibit "E" (the "Subordinated Note"). The
principal amount of the Subordinated Note shall be calculated pursuant to the
Settlement Report and, on any day, shall be equal to the Subordinated Interest
on such day.
(b) Interest on the principal amount of the Subordinated Note shall
accrue at a rate set forth in the Subordinated Note. Principal and interest
payments on the Subordinated Note may be made only at the times and to the
extent permitted by the Credit Agreement. Principal amounts outstanding on the
Subordinated Note shall increase concurrently with the payment of the Purchase
Price pursuant to the terms hereof. Except to the extent permitted by the Credit
Agreement, Seller agrees not to ask, demand, xxx for or take or receive from
Company in cash or other property, by set-off or in any other manner, payment of
all or any part of the Subordinated Note.
(c) The Seller agrees upon any distribution of all or any of the assets
of Company to creditors of Company upon the dissolution, winding up, total or
partial liquidation, arrangement, reorganization, adjustment protection, relief,
or composition of Company or its debts, any payment or distribution of any kind
in respect of the Subordinated Note (including, without limitation, cash,
property, securities and any payment or distribution which may be payable or
deliverable by reason of the payment of any other Debt of Company being
subordinated to the payment of the Subordinated Note) that otherwise would be
payable or deliverable upon or with respect to the Subordinated Note, directly
or indirectly, by set-off or in any other manner, including, without limitation,
from or by way of the Collateral, shall be paid or delivered directly to the
Deal Agent for application (in the case of cash) to or as Collateral (in the
case of non-cash property) for the payment or prepayment in full of, the
Obligations until the Obligations shall have been indefeasibly paid in full in
cash. The Deal Agent and Collateral Agent are irrevocably authorized and
empowered (in their own name or in the name of the Seller or otherwise), but
shall have no obligation, to demand, xxx for, collect and receive every payment
or distribution referred to in the preceding sentence and give acquittance
therefor and to file claims and proofs of claim and take such other action
(including, without limitation, voting the Subordinated Note and enforcing any
security interest or other lien securing payment of the Subordinated Note) as
may be required to (i) collect the Subordinated Note for the account of
EagleFunding and to file appropriate claims or proofs of claim in respect of the
Subordinated Note, (ii) collect and receive any and all payments or distribution
which may be payable or deliverable upon or with respect to the Subordinated
Note. Seller shall execute and deliver to the Deal Agent and Collateral Agent
such powers of attorney, assignments or other instruments as the Deal Agent and
Collateral Agent may request in order to enable the Deal Agent or Collateral
Agent to enforce any and all claims with respect to, and any security interests
and other liens securing payment of, the Subordinated Note.
(d) All payments or distributions upon or with respect to the
Subordinated Note that are received by the Seller contrary to the provisions of
the Credit Agreement shall be received in trust for the benefit of the Deal
Agent and EagleFunding and shall be
segregated from other funds and property held by Seller and shall be forthwith
paid over to the Deal Agent in the same form as so received (with any necessary
endorsement) to be applied (in the case of cash) to, or held as Collateral (in
the case of non-cash property) for the payment or prepayment in full of the
Obligations until the Obligations shall have been indefeasibly paid in full in
cash. The Seller agrees that no payment or distribution to EagleFunding pursuant
to the provisions of the Subordinated Note shall entitle the Seller to exercise
any rights of subrogation in respect thereof against Company until the
Obligations shall have been indefeasibly paid in full in cash. The Seller and
Company hereby waive promptness, diligence, notice of acceptance and any other
notice with respect to any of the Obligations and any requirement that the Deal
Agent or Collateral Agent protect, secure, perfect or insure any security
interest or lien on any property subject thereto or exhaust any right or take
any action against Company or any other Person or any Collateral.
(e) The Seller agrees and confirms that neither the Deal Agent nor
Collateral Agent shall have any duty whatsoever to the Seller as holder of the
Subordinated Note and that such Deal Agent and Collateral Agent shall not be
liable to the Seller for any action taken or omitted, to the extent authorized
under terms of the Credit Agreement or this Agreement, with respect to the
Subordinated Note.
(f) Prior to the indefeasible payment in full in cash of the
Obligations the Seller will not seek to collect any amounts owing under the
Subordinated Note in any manner or exercise or enforce any of its rights under
the Subordinated Note, except as permitted by the Credit Agreement.
(g) The Seller and Company further agree that at no time hereafter will
any part of the indebtedness represented by the Subordinated Note be represented
by any negotiable instruments or other writings except the Subordinated Note.
(h) The Seller and Company waive notice of and consent to the creation
of the EagleFunding Loans pursuant to the Credit Agreement, and any other
Obligation, any extensions granted by EagleFunding, the Deal Agent, or
Collateral Agent, with respect thereto, the taking or releasing of Collateral or
any obligors or guarantors for the payment thereof, and the releasing of the
Seller or any other subordinating creditors. No failure or delay by
EagleFunding, the Deal Agent, Collateral Agent or the Liquidity Collateral Agent
to exercise any right granted herein, or in any other agreement or bylaw shall
constitute a waiver of such right or of any other right.
(i) The Seller and Company agree to execute and deliver to
EagleFunding, the Collateral Agent, the Deal Agent and the Liquidity Collateral
Agent such additional documents and to take such further actions as
EagleFunding, the Collateral Agent, the Deal Agent and the Liquidity Collateral
Agent may hereafter
reasonably require to evidence the subordination of the Subordinated Note.
(j) The terms of the Subordinated Note and the subordination effected
hereby, and the rights of EagleFunding, the Collateral Agent, the Deal Agent and
the Liquidity Collateral Agent and the obligation of the Seller and Company
arising hereunder, shall not be affected, modified or impaired in any manner or
to any extent by (i) any amendment or modification of or supplement to any
provision of the Facility Documents, or any instrument or document executed or
delivered pursuant thereto or in connection with the transactions contemplated
thereby; (ii) the validity or enforceability of any of such documents; (iii) any
exercise or non-exercise of any right, power or remedy under or in respect of
the Obligations, or any instruments or documents related thereto or arising at
law; or (iv) any waiver, consent release, indulgence, extension, renewal,
modification, delay or other action, inaction, or omission in respect of any
Obligation, or any of the instruments or documents related thereto.
(k) Neither the Subordinated Note nor any right of the Seller to
receive any payment thereunder, shall be assigned, transferred, exchanged,
pledged, hypothecated, participated or otherwise conveyed; provided, however,
-------- -------
that the Seller may pledge or otherwise transfer the Subordinated Note to the
Collateral Agent for the benefit of the FAC Lenders and the FAC Agent and the
FCI Lenders and the FCI Agent or otherwise pledge or transfer the Subordinated
Note to a third party with the prior written consent of Deal Agent; provided,
--------
further, that any assignee of the Subordinated Note shall be bound by all of the
-------
terms applicable to the Subordinated Note set forth in the Facility Documents.
Section 11. Representations and Warranties of the Company.
---------------------------------------------
The Company represents and warrants as of the Effective Date and each
Contract Grant Date, that:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has full corporate
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. The Company 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 necessary to carry on its business as presently conducted
and to perform its obligations under this Agreement;
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions provided for in this Agreement have been duly
approved by all necessary corporate action on the part of the Company;
(c) This Agreement constitutes a legal, valid and binding obligation of
the Company, enforceable against it in accordance with its terms, except as 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 of this Agreement, the performance of
the transactions contemplated hereby and the fulfillment 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 incorporation or bylaws or any indenture, contract,
agreement, mortgage, deed of trust, or other 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 best
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, (B) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement, (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 (D) seeking any determination or
ruling that would adversely affect the validity or enforceability of this
Agreement;
(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 by the Company, the
performance by it of the transactions contemplated hereby and the fulfillment of
the terms hereof, have been obtained and are in full force and effect; and
(g) The Company is solvent and will not become insolvent after giving
effect to the transactions contemplated by this Agreement; the Company has not
incurred Debts beyond its ability to pay; and the Company, after giving effect
to the transactions contemplated by this Agreement, will have an adequate amount
of capital to conduct its business in the foreseeable future.
Section 12. 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 Deal Agent.
(b) Software. (i) Subject to paragraph (b)(ii) below, FCI and each
Originator hereby grants a royalty free perpetual, irrevocable non-exclusive
license to Seller and the Company (which for all purposes of this License shall
include, without limitation, any secured party which enforces its rights against
Seller or the Company or any transferee of any such secured party which acquires
rights in connection with or subsequent to such enforcement), in, to and under
all rights of FCI and each Originator in or to all intellectual property
(including, without limitation, all computer software, tapes, disks and other
electronic media, books, records and documents) relating to the Contracts;
including, without limitation, any such software, electronic media, books,
records and documents used:
(A) to account for and service the Transferred Assets;
(B) in the management of any VOI resorts, and
the VOIs and Lots located within such VOI
resorts,
(C) in the monitoring of accounts receivables
and third party contracts relating to the
management of properties located within any
VOI resort, and
(D) in managing and operating the FairShare Plus
Program and the Reservation System;
and al rights of FCI in, to or under all relevant licenses, sublicenses, leases,
contracts (including, without limitation, service and maintenance contracts),
warranties and guaranties relating to any such software, electronic media,
books, records and documents, as the case may be, including without limitation,
all such rights arising under such software, electronic media, books, records
and documents (all of the rights described in this clause (i) being referred to
collectively referred to as the "Licensed Rights"). Each of Seller and the
Company shall have the right to use all of the Licensed Rights in connection
with the conduct of their respective business as each deems necessary or
appropriate, including without limitation the right to use such Licensed Rights
for the purposes specified in clauses b(i)(A)-(D) immediately above and the
right to assign, sublicense or otherwise transfer all or any part of such rights
to one or more third parties in connection with the transfer of all or any part
of the Transferred Assets (including, without limitation, any such transfer
pursuant to or in connection with the grant by Seller and/or the Company of a
security interest in any or all of its assets and/or the enforcement by any such
secured party of its interests in such assets).
(ii) The license granted to Seller and Company pursuant to clauses
(b)(i)(B)-(D) immediately above, shall only be deemed to confer upon Seller and
Company, and their respective successors and assigns, the sole right to
sub-license the use of such software,
electronic media, books, records and documents (at no charge, except for
reimbursement of administrative, legal and other expenses associated with such
sub-license) to (A) FCI (as long as FCI or any of its subsidiaries is manager of
the subject POA) or the subject POA (in the event FCI or any of its subsidiaries
is not the manager of such POA) in the case of clauses (b)(i)(B)-(C) above or
(B) FCI (or if applicable any successor to FCI) under the FairShare Plus Program
in the case of clause (b)(i)(D) above; provided that, no such sub-license shall
be effective unless and until each of the following events have occurred: (x) an
Event of Default has occurred and is continuing under the Credit Agreement and
(y) FCI is unable to continue, or has been removed, as manager of the subject
POA or the FairShare Plus Program, such removal occurring other than as a result
of action instigated (whether by institution of a proxy contest or otherwise) by
the Company or its successors and assigns, including Collateral Agent.
(iii) All rights and licenses granted under or pursuant to this clause
(b) (the "License") are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of the United States Bankruptcy Code (the "Code"), licenses to
rights in and to "intellectual property" as defined under the Code. The parties
hereto agree that each of the Seller and the Company, as licensee of such rights
under the License, shall have and retain and may fully exercise and exploit all
of their respective rights under the Code. The parties hereto further agree
that, in the event of the commencement of bankruptcy proceedings by or against
FCI under the Code, each of Seller and Company, as licensees, shall be entitled
to have and retain all of its rights under the License.
(iv) In an Event of Default has occurred and is continuing under the
Credit Agreement, FCI hereby agrees to provide to any of the persons or entities
described in clauses b(ii)(A) and (B) immediately above, and each of their
successors and assigns, immediately upon the written request of Seller or
Company, copies of all software (including without limitation both object code
and source code), tapes disks, other electronic media, books, records, documents
and other tangible embodiments of the Licensed Rights.
(c) Assignment. The Company has the right to assign its interest under
----------
this Agreement as may be required to effect the purposes of the Credit
Agreement, without the consent of the Seller or FCI, and the assignee shall
succeed to the rights hereunder of the Company. In addition, but only to the
extent allowed by the Credit Agreement, Collateral Agent, Deal Agent or
EagleFunding has the right to assign its interest hereunder without the written
consent of either Seller or FCI, and the assignee shall succeed to the rights
hereunder of Collateral Agent, Deal Agent or EagleFunding.
(d) 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.
(e) Termination. Seller's and FCI's obligations under this Agreement
-----------
shall survive the sale of the Contracts to the Company, the Company's pledge of
the Contracts to the Collateral Agent under the Credit Agreement, and
EagleFunding's pledge and assignment under the Liquidity Security Agreement to
the Liquidity Collateral Agent and such obligations shall not terminate until
the satisfaction and payment of all Obligations under the Credit Agreement.
(f) Governing Law. This Agreement shall be construed in accordance with
-------------
the laws of the State of Nevada and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
(g) 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
registered mail, postage prepaid, or by express delivery service, to (i) in the
case of Seller, Fairfield Acceptance Corporation, 00000 Xxxxxxxxx Xxxxxx Xxxxx,
Xxxxxx Xxxx, Xxxxxxxx 00000, Attention: President, or such other address as may
hereafter be furnished to the Company and FCI in writing by Seller, (ii) in the
case of FCI, FMB and VB Subsidiaries, c/o Fairfield Communities, Inc., 00000
Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000, Attention: President, or
such other address as may hereafter be furnished to Seller or the Company in
writing by FCI, and (c) in the case of the Company, Fairfield Receivables
Corporation, Suite 1000, 0000 X. Xxxxxxxxxx Xxxx., Xxx Xxxxx, Xxxxxx 00000,
Attention: President, or such other address an may be furnished to Seller or FCI
in writing by the Company; with a copy of any such notice to Collateral Agent at
000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxx Xxxxxxx, or such other
address as may hereafter be furnished to Seller or FCI in writing by the
Collateral Agent.
(h) 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.
(i) Successors and Assigns. This Agreement shall be binding upon each
----------------------
of Seller, FCI and the Company and their respective successors and assigns, as
may be permitted hereunder, and shall inure to the benefit of each of the
Seller, FCI and the Company and each of the Collateral Agent, the Deal Agent,
EagleFunding and the Liquidity Collateral Agent to the extent explicitly
contemplated hereby (including, without limitation, with respect to the
Subordination provisions of Section 10 hereof).
----------
(j) Costs, Expenses and Taxes. (A) Each of Seller and FCI jointly and
--------------------------
severally agrees to pay on demand to Company (x) all reasonable costs and
expenses incurred or reimbursed (or to be
reimbursed) by Company in connection with the preparation, execution and
delivery (including any requested amendments, waivers or consents) of this
Agreement, the other Facility Documents and the other documents to be delivered
hereunder and thereunder, including, without limitation, reasonable fees and
out-of-pocket expenses of counsel (subject, in the case of fees and expenses of
counsel, to the terms of the Fee Letter and (y) all reasonable costs and
expenses, if any, incurred or reimbursed (or to be reimbursed) by Company
(including reasonable counsel fees and expenses), in connection with the
enforcement or preservation of the rights and remedies under this Agreement and
each of the other documents to be delivered hereunder.
(B) Each of Seller and FCI jointly and severally agrees to pay,
indemnify and hold 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 Company in connection with the execution,
delivery, filing and recording of this Agreement, the other Facility Documents
and the other agreements and documents to be delivered hereunder and thereunder,
and against any liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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
By:/s/Xxxxxx X. Xxxxxx
Its: President
FAIRFIELD COMMUNITIES, INC.
By:/s/Xxxxxx X. Xxxxxx
Its: Senior Vice President
FAIRFIELD MYRTLE BEACH, INC.
By:/s/Xxxxxx X. Xxxxxx
Its: Vice President
SEA GARDENS BEACH AND
TENNIS RESORT, INC.
By:/s/Xxxxxx X. Xxxxxx
Its: Vice President
VACATION BREAK RESORTS, INC.
By:/s/Xxxxxx X. Xxxxxx
Its: Vice President
VACATION BREAK RESORTS AT
STAR ISLAND, INC.
BY:/s/Xxxxxx X. Xxxxxx
Its: Vice President
PALM VACATION GROUP, by its
its General Partners:
Vacation Break Resorts at Palm
Aire, Inc.
By:/s/Xxxxxx X. Xxxxxx
Its: Vice President
Palm Resort Group, Inc.
By:/s/Xxxxxx X. Xxxxxx
Its: Vice President
OCEAN RANCH VACATION GROUP,
by its General Partners:
Vacation Break at Ocean Ranch, Inc.
By:/s/Xxxxxx X. Xxxxxx
Its: Vice President
Ocean Ranch Development, Inc.
By:/s/Xxxxxx X. Xxxxxx
Its: Vice President
FAIRFIELD RECEIVABLES CORPORATION
By:/s/Xxxxxx X. Xxxxxxx
Its: President
