AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
THIS AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (the
"Agreement") originally dated as of March 28, 1995 and amended and
restated as of July 31, 1996 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") and FAIRFIELD CAPITAL CORPORATION, a special
purpose Delaware corporation, as purchaser (the "Company").
RECITALS
WHEREAS, FCI (together with certain of its predecessor
subsidiaries) and FMB 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 has
purchased from FMB and Seller has purchased from FCI certain
Contracts and related property (including beneficial ownership to the
VOIs or Lots underlying such Contracts);
WHEREAS, FCI, Seller and the Company have previously entered
into that certain Receivables Purchase Agreement, dated as of March
28, 1995 (the "Original Receivables Purchase Agreement") pursuant to
which Seller sold the 1995 Contract Pool to Company on the Closing
Date;
WHEREAS, FCI, FMB, Seller and the Company wish to enter into
this Agreement in order to amend and restate the Original Receivables
Purchase Agreement to among other things (i) effect the sale of
additional Contracts and related Transferred Assets to the Company on
the Effective Restatement 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 financed the purchase of the 1995 Contract
Pool on the Closing Date, and desires to finance the purchases of
additional Contracts and related property on the Effective
Restatement Date and on each Contract Grant Date, in part with
advances made by Triple-A One Funding Corporation ("Triple-A")
pursuant to an Amended and Restated Credit Agreement, dated as of
March 28, 1995, amended and restated as of July 31, 1996 (the
"Credit Agreement"), among Seller, as Servicer, Company, as Borrower,
FCI, Triple-A, Capital Markets Assurance Corporation, individually
and as Collateral Agent and Administrative Agent and The First
National Bank of Boston as letter of credit provider ("L/C Bank"),
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
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 "Amended and
Restated 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 an interval ownership or lot contract
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 1995 Contracts, Effective Restatement
Date 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 (i) Collateral Agent for the benefit of itself and Triple-
A and (ii) Collateral Agent for the benefit of the L/C Bank, each
pursuant to the Credit Agreement.
"Purchase Price" shall mean either the (i) initial purchase
price paid for the 1995 Contract Pool on the Closing Date or (ii)
Effective Restatement Date Purchase Price or Subsequent Purchase
Price, as applicable, as such terms are defined hereinafter.
"Subordinated Interest" shall mean (x) $11,019,426.95, which
constitutes the principal balance of the Subordinated Note as of the
Effective Restatement Date plus the Effective Restatement Date
Purchase Price of the Effective Restatement Date Contracts minus the
sum of the amount of cash paid to Seller on the Effective Restatement
Date pursuant to Section 4(d)(ii)(A) below and the amount of
transaction fees and expenses referred to in Section 4(d)(ii)(A)
below, plus (y) the Subsequent Purchase Price of Subsequent Contracts
minus the amount of cash paid to Seller on any Contract Grant Date
pursuant to Section 4(d)(iii)(A) below, minus (z) permitted
repayments of principal under the Subordinated Note from and after
the Effective Restatement Date.
Section 2. Purchase and Sale of Contracts.
(a) 1995 Contracts. Subject to the terms and conditions and
in reliance on the representations, warranties, covenants and
agreements set forth in this Agreement, the Seller sold and assigned,
without recourse (except as expressly provided herein), to the
Company and the Company purchased from the Seller, on the Closing
Date, all of the Seller's right, title and interest in, to and under
(but none of the obligations arising under) the Contracts included in
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the 1995 Contract Pool, together with all other Transferred Assets
relating thereto.
(b) Effective Restatement Date Contracts. Subject to the
terms and conditions and in 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 Restatement Date referred to herein, 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 Restatement Date (the
"Effective Restatement Date Contracts"), together with all other
Transferred Assets relating thereto.
(c) Subsequent Purchases. The Seller and Company acknowledge
that 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 Triple-A is obligated to fund such Purchase through additional
Triple-A 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.
(d) Treatment as Sale. It is the express and specific intent
of the 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 (each, a "Purchase"), is and shall be
construed for all purposes as a true, complete and absolute sale of
such Contracts and Transferred Assets.
(e) Recharacterization. To the extent that any transfer of
Contracts and other Transferred Assets relating thereto from FMB to
FCI, FCI to Seller, Seller to Company or any other transfer
contemplated by 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 FMB shall have been
deemed to grant to FCI, FCI shall have been deemed to grant to
Seller, and Seller shall be deemed to have granted to the Company, a
first priority perfected security interest in all of FMB's, 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, 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 Section 5(c) hereof and
(ii) waived any and all defenses to the enforceability of such
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advance pursuant to this Section 2(e) including, without limitation,
any defense arising under usury laws.
(f) Security Interest in Transferred Assets. FMB, FCI and
Seller acknowledge that the Contracts and other Transferred Assets
relating thereto are subject to the security interest of (i)
Collateral Agent for the benefit of itself and Triple-A and (ii)
Collateral Agent for the benefit of the L/C Bank, each pursuant to
the Credit Agreement, and that Triple-A has assigned its rights under
the Triple-A Note (together with its related rights under the Credit
Agreement) to the Liquidity Agent pursuant to the Liquidity Agreement
and Liquidity Security Agreement.
(g) Other Property. In connection with each Purchase
hereunder the 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 right, title and interest of the Seller in, to and
under the 1994 Interest Rate Hedge, any replacement agreement
therefor, and any other contract, instrument, or agreement in which
the Seller has any interest or rights, pursuant to which the Seller
(or its assignor or predecessor in interest) has hedged against
movements in interest rates in connection with its ownership and
financing of the Contracts and other Transferred Assets, including,
without limitation, all monies to become due to the Seller (or its
assignor or predecessor in interest) thereunder or in connection
therewith;
(ii) all proceeds of the foregoing property described in
clause (i) above, 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, Triple-A, the Surety, the Collateral Agent
or the L/C Bank 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
(iii) all other monies or property of the Seller specifically
relating to the Transferred Assets, or the property described in
clauses (i) and (ii) above, coming into the actual possession or
control of the Company, the Collateral Agent, the Administrative
Agent, the Surety , Triple-A or the L/C Bank (whether for
safekeeping, deposit, custody pledge transaction, collection or
otherwise).
(h) Quitclaim of Residual Interest by FMB and FCI. (i) The
parties hereto recognize that (i) FMB has previously sold,
transferred and assigned all of its right, title and interest in and
to the Contracts originated by it, and the other Transferred Assets
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relating thereto, to FCI and (ii) FCI has previously sold,
transferred and assigned all of its right, title and interest in and
to the Contracts originated by it or FMB, and the other Transferred
Assets relating thereto, to Seller; such sales and transfers being
evidenced and memorialized by one or more blanket assignments
executed by FMB in favor of FCI, or FCI in favor of Seller, as the
case may be. 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, FMB and FCI each hereby irrevocably quitclaim any
residual right, title and interest that either 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 FMB or FCI to the Company
contemplated by Section 2(h) 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 FMB or FCI shall
have been deemed to grant to the Company a first priority perfected
security interest in all of FMB's or FCI'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 FCI and FMB, 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(h)(ii) including, without
limitation, any defense arising under usury laws.
Section 3. Purchase Price.
(a) The amount payable to the Seller by Company for the 1995
Contract Pool on the Closing Date was $24,390,300.81. The amount
payable to the Seller for the Effective Restatement Date Contracts
and other related Transferred Assets on the Effective Restatement
Date shall be $34,934,255.07 (the "Effective Restatement Date
Purchase Price").
(b) The amount payable to the Seller by Company on each
Contract Grant Date subsequent to the Effective Restatement 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) Closing Date. Payment for and delivery of the 1995
Contract Pool occurred on the Closing Date.
(b) Effective Restatement Date. Payment for and delivery of
the Effective Restatement Date Contracts being purchased by the
Company shall take place at a closing at the offices of Sidley &
Austin, 0000 Xxx Xxxxxx, Xxxxxxxxxx, X.X. 00000, at 10:00 a.m. on the
Effective Restatement Date, or such other time and place as shall be
mutually agreed upon among the parties hereto. Payment of the
portion of the Effective Restatement Date Purchase Price to be paid
in cash pursuant hereto, shall be made by the Company on the
Effective Restatement 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
Restatement Date.
(c) Contract Grant Dates. Payment for and delivery of the
Subsequent Contracts to be purchased by the Company on a Contract
Grant Date subsequent to the Effective Restatement Date shall be made
at such time and place and to such accounts and such banks as the
parties may mutually agree.
(d) Manner of Payment of Purchase Price.
(i) Closing Date. The payment of the Purchase Price on
the Closing Date was comprised of the following:
(A) a cash payment to the Seller equal to $20,285,814.04
(which amount was net of (x) transaction fees and expenses
payable by Seller on the Closing Date in an amount equal to
$143,394.63 and (y) net collections on the 1995 Contracts
through the Closing Date in the amount of $215,082.31).
(B) the execution and delivery of the Subordinated Note
in the original principal balance of $3,746,009.83, which
amount represented the excess of the Purchase Price paid on
said Closing Date over the sum of the amount of the cash
payment in Section 4(d)(i)(A) above plus the amount of
transaction fees and expenses referred to in Section
4(d)(i)(A).
(ii) Effective Restatement Date Purchase Price. On the
Effective Restatement Date, the Effective Restatement Date Purchase
Price shall be paid to Seller in the manner provided below:
(A) in cash, in an amount equal to $23,000,967.71
(which amount is net of (x) transaction fees and expenses
payable by Seller in an amount equal to $1,066,396.76 and (y)
net collections on the Effective Restatement Date Contracts in
the amount of $932,635.53.
(B) to the extent that the Effective Restatement
Date Purchase Price exceeds the sum of the amount of the cash
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payment in Section 4(d)(ii)(A) above plus the amount of
transaction fees and expenses referred to in Section
4(d)(ii)(A), such excess shall be paid, on the Effective
Restatement 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 Effective
Restatement Date.
(iii) Subsequent Purchase Price. On each Contract Grant
Date subsequent to the Effective Restatement 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
the aggregate Principal Balance of Triple-A Loans being made on
the Contract Grant Date, minus (y) transaction fees and
expenses payable by the Seller to the Company.
(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(d)(iii)(A) above plus
the amount of transaction fees and expenses referred to in
Section 4(d)(iii)(A)(y), such 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 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 Restatement 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
Restatement 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 Effective Restatement
Date 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.
(a) Effective Restatement Date. The Company's obligations
hereunder to purchase and pay for the Effective Restatement Date
Contracts and other Transferred Assets relating thereto on the
Effective Restatement Date are subject to the fulfillment of the
following conditions on or before such Effective Restatement Date:
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(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 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 and
FMB made herein and the Seller as Servicer under the Credit Agreement
shall be true and correct in all material respects on the Effective
Restatement Date.
(b) Subsequent Purchases. The Company's purchase of any
Subsequent Contracts on any Contract Grant Date subsequent to the
Effective Restatement 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 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 a certificate of the
Company to such effect delivered pursuant to the Credit Agreement
shall be conclusive for purposes of this Agreement; 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 Contracts and related Transferred Assets hereunder, FMB,
FCI and Seller, as the case may be, shall execute assignments (which
may be blanket assignments) substantially in the form of Exhibit "A"
hereto and deliver the same, and if there are any Mortgages relating
to a Contract, Assignments of Mortgages, 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.
Pursuant to the Credit Agreement, the Company will, on the
Effective Restatement Date or Contract Grant Date, 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 to it by the Seller on such Effective
Restatement Date or Contract Grant Date, to (i) the Collateral Agent
for the benefit of itself and Triple-A and (ii) the Collateral Agent
for the benefit of the L/C Bank. Immediately following the sale of
Contracts pursuant to this Agreement, and the pledge of such
Contracts pursuant to the Credit Agreement, such Contracts shall be
held by Custodian pursuant to the terms of the Custodial Agreement
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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, 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 hereof, with respect to breaches of the
representations and warranties set forth in Section 7 hereof.
Section 7. Representations and Warranties of Seller and FCI.
(a) General Representations and Warranties of Seller, FCI and
FMB. Seller, FCI and FMB jointly and severally represent and
warrant to the Company as follows:
(i) Due Incorporation and Good Standing. Seller, FCI and FMB
are corporations duly organized, validly existing and in good
standing under the laws of the state of Delaware, 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 and FMB 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 or FMB, or
would have a Material Adverse Effect.
(ii) Due Authorization and No Conflict. The execution,
delivery and performance by Seller, FCI and FMB 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 and FMB by all
necessary corporate action, do not contravene (i) Seller's, FCI's or
FMB's charter or by-laws, (ii) any law, rule or regulation applicable
to Seller, FCI or FMB, (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 or their property
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
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hereby requires compliance with any bulk sales act or similar law.
Each of the other Facility Documents to which Seller, FCI or FMB is a
party have been duly executed and delivered on behalf of Seller, FCI
or FMB.
(iii) Governmental and Other Consents. All approvals,
authorizations, 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 or FMB 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, and each such required approval,
authorization, consent, order, registration, qualification,
designation, declaration, notice or filing is listed on Exhibit E to
the Credit Agreement (or in the case of any Purchase on a Contract
Grant Date, as set forth in any addendum to such Exhibit E to the
Credit Agreement prepared by Seller and accepted by the Company and
Collateral Agent in its sole discretion).
(iv) Enforceability of Facility Documents. Each of the
Facility Documents to which the Seller, FCI or FMB is a party have
been duly and validly executed and delivered by the Seller, FCI or
FMB and constitute the legal, valid and binding obligation of Seller,
FCI or FMB, 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
report on Form 10-K for the year ended December 31, 1996 and Form 10-
Q's for the quarters ended March 31, 1996 and June 30, 1996,
respectively (the "Base Reports"), which Base Reports shall have been
delivered to the Company prior to the Effective Restatement Date,
there are no proceedings or investigations pending or, to the best
knowledge of Seller, FCI or FMB, threatened against the Seller, FCI,
or FMB 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 or FMB 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 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
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which are not disclosed in the Base Reports, and the Company shall
not identify in writing to the Seller, FCI or FMB, 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 or FMB 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 statements and any other written information furnished by
or on behalf of the Seller, FCI or FMB to Company, Collateral Agent,
Triple-A, Administrative Agent or the L/C Bank 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 or FMB 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 FCI, FMB, nor Seller,
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 FCI, FMB, nor Seller, 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 Triple-A Loans has been used, and
no portion of the Letter of Credit has been obtained, 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 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 0000 Xxxxxxxx Xxxx, Xxxxxx Xxxx,
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Xxxxxxxx 00000 (provided that, at any time after the Closing Date,
upon 30 days' prior written notice to FCC and Collateral Agent,
either the Seller or FCI may relocate its principal place of business
and chief executive office, and/or the office where Seller and FCI
maintain all of their 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 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,
FCI and FMB).
(x) Lock-Box Accounts. Except in the case of any Lock-Box
Account pursuant to which only Collections in respect of Contracts
subject to a PAC are deposited, each of the Seller an 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 Agreement. From and after the Closing Date,
neither FCI, FMB, nor Seller 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, nor FMB 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 and FMB have furnished to each of the Company, Collateral
Agent, Triple-A and the L/C Bank, true, correct and complete copies
of each Facility Document to which the Seller, FCI and FMB are
parties, each of which is in full force and effect. Neither Seller,
FCI, FMB, 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 the Seller, FCI or
FMB 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 and
FMB, 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. The Seller, FCI and FMB have filed or caused to
be filed all Federal, state and local tax returns which are required
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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 and FMB 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 FCI, FMB and Seller, both prior to
and after giving effect to each Purchase of Contracts hereunder (i)
is not "insolvent" (as such term is defined in Sec. 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) Restatement Balance. The aggregate Principal Balance of
all (a) Effective Restatement Date Contracts (determined as of July
31, 1996) to be sold and transferred to the Company on the Effective
Restatement Date is not less than $36,014,695.95 and the (b) 1995
Contracts (determined as September 15, 1996) is not less than
$10,385,832.74.
(xvii) 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.
(xviii) No Adverse Selection. No selection procedures adverse
to the Company, Triple-A, the Collateral Agent, the Surety, the
Administrative Agent or the L/C Bank have been employed by FCI, FMB
or Seller in selecting the Contracts for inclusion in the Contract
Pool on any Contract Grant Date, (ii) the Contracts intended to be
released from the Primary Lien and the L/C Bank Lien under Section
7.11(c), or (iii) the Contracts to be granted to the Collateral Agent
pursuant to Section 7.12 as "Remarketed Contracts."
(xix) 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,
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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 detemination, 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 and FMB set
forth in this Section 7(a) shall be deemed to be remade, without
further act by any Person, on and as of the Closing Date, Effective
Restatement 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, FCI and FMB 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 Collateral 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, (iii) reductions in the amount of
required principal Payments under such Contract which do not alter
the aggregate amount of Collections anticipated to be received in the
Collection Account in respect of such Contract (as a result of any
release of prepaid premiums for Credit Life Insurance), and (iv)
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
-14-
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 (or
FMB) in the ordinary course of its business, and was purchased (i) by
FCI from FMB (if applicable) and (ii) by FAC from FCI in each case in
the regular course of their businesses 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. None of the
Seller or FCI has received notice of any material violation of any
legal requirements applicable to such VOI Regime. 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 Liens that are
being released in connection with the transactions contemplated
hereby and the Primary Lien or the L/C Bank Lien). The Seller has
not sold, assigned or pledged such Contract to any Person other than
FCC. 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
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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 FCC, and the Seller's right,
title and interest therein is free of any Liens, other than Liens
that are being released in connection with the transactions
contemplated hereby, the Primary Lien, the L/C Bank Lien or any
Permitted Encumbrances.
(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 or FCI 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 (or in the case of a 1995 Contract, a fixed or a floating
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% 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).
(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
-16-
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 and the L/C Bank, 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 Contract 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
-17-
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(u) 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(u) 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(u) to the Credit Agreement will have a
Material Adverse Effect, a material adverse effect on the interests
of Triple-A, the L/C Bank, the Surety or the Collateral Agent in the
Collateral or an adverse effect on Triple-A, the L/C Bank, the Surety
or the Collateral 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 on the Contract or the
interests of Triple A or Surety therein. There are no delinquent tax
liens in respect of the VOI or Lot underlying such Contract.
(xxiii) Credit Life Insurance. If such Contract also financed
a policy of Credit Life Insurance: (i) the Company has been assigned
a valid beneficial interest in such policy; (ii) the Company has the
power and authority to pledge its interest as the beneficiary of such
policy, and it has so pledged its interest to the Collateral Agent
pursuant to various effective Documents of Pledge and Assignment;
(iii) the Company has the sole power and authority to direct the
cancellation of such policy in the event of nonpayment of such
Contract and the sole right to receive any unearned premium in the
event of cancellation of such policy; and (iv) the Company has the
power and authority to assign its right to receive any unearned
premium with respect to such policy, and it has so pledged its right
to the Collateral Agent pursuant to various effective Documents of
Pledge and Assignment.
(xxiv) Contract Files. The related Contract File contains the
documents required by Section 4.02(x) 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
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(A) the Closing Date, the Effective Restatement
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 either of Harbortown Marina Resort Hotel in
Ventura County, California or the 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 or the L/C Bank
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 Restatement 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), (xxiii),
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(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.
For the avoidance of doubt, the parties hereto acknowledge that
FCI and Seller makes the representation and warranty in subsection
(i) of this Section 7(b) relating to the eligibility criterion set
forth in the definition of "Eligible Contract" in the Definitions
List at clause (u)(1) thereof, without actual knowledge of the
satisfaction of such requirement in the case of any particular
Obligor, and without a requirement of related inquiry or
investigation as to the satisfaction of such requirement on the part
of FCI or Seller.
Notwithstanding anything in the foregoing to the contrary, a
representation of the Seller and FCI set forth in this Section 7(b)
shall be deemed not to have been breached with respect to a Contract
on any Contract Grant Date to extent that all of the following
statements are true:
(i) such Contract is a 1995 Contract;
(ii) the existence of the condition giving rise to such
breach of a representation set forth in this Section 7(b) shall
have been identified in any of Exhibits B (Summary by Age of
Contract) - E (Summary of Geographical Distribution of
Obligors), G (Summary by Equity Percentage), K (Summary by Year
of Origination), L (Summary of Original Terms), and N (Summary
of Months to Maturity) to the E&Y Audit Report; and
(iii) the extent to which all 1995 Contracts in the 1995
Contract Pool, taken as a whole, were subject to such condition
was accurately calculated and described in the E&Y Audit Report
as of the E&Y Audit Date.
(c) Representations and Warranties Regarding the 1995 Contract
Pool. Seller, FCI and FMB jointly and severally represent and
warrant to Company that:
(i) E&Y Audit Report. The information set forth in the E&Y
Audit Report was true and correct in all material respects as of the
E&Y Audit Date; and
(ii) Seasoning of Contract Pool. As of the E&Y Audit Date,
the aggregate Principal Balances of all 1995 Contracts in the 1995
Contract Pool with respect to which at least 60 months have elapsed
from the date on which such 1995 Contract was entered into,
constituted greater than 95% of the 1995 Contract Pool Principal
Balance at such time;
(iii) Equity Percentage. As of the E&Y Audit Date, the
aggregate Principal Balance of all 1995 Contracts in the 1995
Contract Pool with respect to which the Equity Percentage of such
1995 Contract was greater than or equal to 40%, constituted greater
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than 95% of the 1995 Contract Pool Principal Balance at such time;
and
(iv) Fixed Week Percentage. As of the March 31, 1995, the
aggregate Principal Balance of all 1995 Contracts in the Contract
Pool with respect to which the underlying ownership interest
consisted of a Fixed Week (whether or not such VOI was then subject
to the FairShare Plus Program) or Lot constituted greater than 90% of
the 1995 Contract Pool Principal Balance at such time.
A breach of a representation and warranty set forth in this
Section 7(c) shall be deemed to be a breach of such representation
and warranty with respect to each 1995 Contract. The representations
and warranties made in this Section 7(c) shall survive the transfer
and assignment of the respective 1995 Contracts by the Seller to the
Company.
(d) Representations and Warranties Regarding the Contract
Files. Seller, FCI and FMB 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
Restatement 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(x) 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 (other than the 1995
Contracts which were previously stamped in accordance with the
Original Receivables Purchase Agreement) shall have been clearly and
unambiguously stamped or marked as follows:
"This Contract is part of the Collateral under a an
Amended and Restated Credit Agreement dated as of July 31
1996, and a first priority security interest herein is
held by Capital Markets Assurance Corporation ("CapMAC")
as collateral agent for itself and for Triple-A One
Funding Corporation and their respective assignees, and a
second priority security interest herein is held by
CapMAC as collateral agent for The First National Bank of
Boston and its assignees."
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The representations and warranties of Seller and FCI set forth
in this Section 7(d) shall be deemed to be remade, without further
act by any Person, on and as of the Effective Restatement 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(d) shall survive the transfer
and assignment of the respective Contracts to the Company.
(e) 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, the Administrative Agent, the Surety, Triple-A
and the L/C Bank and their respective designees, successors and
assigns.
(f) Seller's and FCI's 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 7.3, 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
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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 Seller's or FCI's
representations and warranties contained in this Agreement. The
agreements in this clause (g) 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 (g), 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
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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, 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(f), 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), (c) and (d) 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 Administrative Agent, Triple-
A, the Surety and the L/C Bank, 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
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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
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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 address 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,
the L/C Bank Lien and in the case of any VOIs of Lots, any Permitted
Encumbrance) 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 at the Effective Restatement 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
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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.
(C) FCI shall maintain each of (A) the Master Group
Credit Life Policy originally issued by American United Life
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Insurance Company of Indiana to FCI, as beneficiary, and (B)
the Master Group Credit Life Policy originally issued by
American Bankers Life Assurance Company of Florida to FCI, as
beneficiary, in each case in full force and effect, having a
scope and amounts of coverage (on a per Obligor basis) at least
equal to the scope and amounts of coverage in effect on the
date hereof.
(xii) Separate Identity. Take such action (and cause FMB 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 Collateral
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, for the initial
deposit therein) (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 to an
Obligor directly to any of FCI, FAC or any of their respective
Affiliates, or deposited into a lock-box account maintained for the
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benefit of FNBB under its credit arrangements with FCI or FAC) 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, the
Collateral Agent and the L/C Bank:
(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, the L/C Bank Lien or, 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, (iii) reductions in the
amount of required principal Payments under such Contract which do
not alter the aggregate amount of Collections anticipated to be
received in the Collection Account in respect of such Contract (as a
result of any release of prepaid premiums for Credit Life Insurance),
and (iv) 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.
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(iv) Change in Payment Instructions to Obligors. Add or
terminate any bank as a Lock-Box Bank from those listed in Exhibit F
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 Collateral 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 and the Collateral 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 Restatement Date without
providing at least 30-days prior written notice to the Company and
the Collateral 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 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
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to such termination or rejection, such Contract and any related
Collateral have been released from both of the Primary Lien and the
L/C Bank 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 Collateral Agent an
Opinion of Counsel in form and substance acceptable to the Collateral
Agent to the effect that such amendment or modification will not
adversely affect in any material respect the respective interests of
Triple-A, the L/C Bank, the Collateral Agent, the Administrative
Agent or the Surety.
(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 Restatement Date, Company shall execute
the Amended and Restated 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
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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
Collateral 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 and the L/C Bank Obligations
until the Obligations and the L/C Bank Obligations shall have been
indefeasibly paid in full in cash. The Collateral Agent is
irrevocably authorized and empowered (in its 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 the Collateral Agent may request to (i) collect
the Subordinated Note for the account of Triple-A, the Surety and the
L/C Bank, and to file appropriate claims or proofs of claim in
respect of the Subordinated Note, (ii) execute and deliver to the
Collateral Agent such powers of attorney, assignments or other
instruments as the Collateral Agent may request in order to enable
the Collateral Agent to enforce any and all claims with respect to,
and any security interests and other liens securing payment of, the
Subordinated Note, (iii) collect and receive any and all payments or
distribution which may be payable or deliverable upon or with respect
to 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 Collateral Agent, Triple-A, the Surety and the L/C
Bank and shall be segregated from other funds and property held by
Seller and shall be forthwith paid over to the Collateral 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 and the L/C Bank Obligations until the Obligations and
the L/C Bank Obligations shall have been indefeasibly paid in full in
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cash. The Seller agrees that no payment or distribution to Triple-A,
the Surety or the L/C Bank 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
and L/C Bank 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 L/C Bank Obligations and any requirement that the
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 the Collateral Agent
shall not have any duty whatsoever to the Seller as holder of the
Subordinated Note and that the 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 and L/C Bank 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.
(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 Triple-A Loans pursuant to the Credit Agreement, and
any other Obligation or L/C Bank Obligation, any extensions granted
by Triple-A, the Surety, the Collateral Agent, the L/C Bank or the
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 Triple-A, the Surety, the Collateral Agent, the
L/C Bank or the Liquidity 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
Triple-A, the Surety, the Collateral Agent, the L/C Bank and the
Liquidity Agent such additional documents and to take such further
actions as Triple-A, the Surety, the Collateral Agent, the L/C Bank
and the Liquidity 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 Triple-A, the Surety, the
Collateral Agent, the L/C Bank and the Liquidity Agent and the
obligation of the Seller and Company arising hereunder, shall not be
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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, L/C Bank
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, L/C 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 with the prior written consent of Collateral
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 Closing Date, the
Effective Restatement 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
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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
and the Collateral Agent; provided, however, that no such amendment,
waiver or modification shall be effective without the prior written
consent of the Collateral Agent.
(b) Software. (i) Subject to paragraph (b)(2) below, FCI
hereby grants a royalty free perpetual, non-exclusive license to
Seller and the Company, and each of their successors and assigns, in,
to and under 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;
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(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 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.
(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 to (i) the POAs in the
case of clauses (b)(i)(B)-(C) above or (ii) 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 FCC or its successors and
assigns, including Collateral Agent or L/C Bank.
(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, Triple-A, the Surety and/or L/C Bank 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, Triple-A and/or L/C Bank.
(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 and assignment of the Contracts to the Collateral
Agent under the Credit Agreement, and Triple-A's pledge and
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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 and L/C Bank Obligations
under the Credit Agreement.
(f) Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Arkansas 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, 0000 Xxxxxxxx Xxxx, 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, Fairfield Communities, Inc., 0000 Xxxxxxxx Xxxx, 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 Capital
Corporation, 0000 Xxxxxxxx Xxxx, Xxxxxx Xxxx, Xxxxxxxx 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 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Head of Exposure Management, 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 Administrative Agent, Triple-A, the
Surety, the L/C Bank and the Liquidity 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
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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]
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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
FAIRFIELD CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
_____________________________
Its: President
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