RECEIVABLES PURCHASE AGREEMENT
THIS RECEIVABLES PURCHASE AGREEMENT (the "Agreement"), dated as of July
31, 1998 is among FAIRFIELD ACCEPTANCE CORPORATION - NEVADA, a Delaware
corporation, as seller ("Seller"), FAIRFIELD COMMUNITIES, INC., a Delaware
corporation and the parent corporation of Seller, as co-originator ("FCI"),
FAIRFIELD MYRTLE BEACH, INC., a Delaware corporation and a wholly-owned
subsidiary of FCI, as co-originator ("FMB"), SEA GARDENS BEACH AND TENNIS
RESORT, INC., a Florida corporation ("Sea Gardens"), VACATION BREAK RESORTS,
INC., a Florida corporation ("VBR"), VACATION BREAK RESORTS AT STAR ISLAND,
INC., a Florida corporation ("VBRS") (each of Sea Gardens, VBR and VBRS being
wholly-owned subsidiaries of Vacation Break, USA, Inc., a wholly-owned
subsidiary of FCI), PALM VACATION GROUP, a Florida general partnership ("PVG"),
OCEAN RANCH VACATION GROUP, a Florida general partnership ("ORVG")(each of Sea
Gardens, VBR, VBRS, PVG and ORVG are hereinafter collectively referred to as the
"VB Subsidiaries" and PVG and ORVG are hereinafter collectively referred to as
the "VB Partnerships") and FAIRFIELD FUNDING CORPORATION, II, a special purpose
Delaware corporation, as purchaser (the "Company").
RECITALS
--------
WHEREAS, FCI, FMB and the VB Subsidiaries have originated certain Contracts
in connection with the sale to Obligors of VOIs at various Developments;
WHEREAS, in the ordinary course of their businesses, FCI purchases or will
purchase from FMB and the VB Subsidiaries, and Seller purchases or will purchase
from FCI, certain Contracts and related property (including an interest in the
VOIs underlying such Contracts);
WHEREAS, Seller is the owner of 100% of the capital stock of the Company;
WHEREAS, FCI, FMB, the VB Subsidiaries, Seller and the Company wish to
enter into this Agreement in order to, among other things, (i) effect the sale
of Contracts and related Transferred Assets to the Company on the Initial
Closing Date and (ii) make additional sales of Contracts and related Transferred
Assets from time to time in the future on Subsequent Closing Dates; and
WHEREAS, the Company simultaneously herewith, is pledging and assigning the
Contracts and related Transferred Assets being purchased from Seller to
BankBoston, N.A., as Collateral Agent (the "Collateral Agent") for the benefit
of First Security Bank, National Association, as Trustee (the "Trustee") and the
holders of $49,848,474.90 Vacation Ownership Interest Contract Pay-Through
Notes, Series 1998-A, pursuant to a Pledge and Servicing Agreement of even date
herewith (the "Pledge and Servicing Agreement"), among the Company, as Issuer,
the Seller, as Servicer, FCI, the Trustee, the Collateral Agent, and BankBoston,
N.A., as the Standby Servicer.
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 Pledge and Servicing Agreement. Whenever used
in this Agreement, the following words and phrases shall have the following
meanings:
"Base Reports" shall have the meaning set forth in Section 7(a)(v) hereof.
------------
"Closing Date" shall mean the Initial Closing Date or a Subsequent Closing
------------
Date, as applicable, as such terms are defined hereinafter.
"Collateral Agent" shall have the meaning set forth in the recitals hereto.
----------------
"Company" shall have the meaning set forth in the preamble hereto.
-------
"Contaminants" shall have the meaning set forth in Section 7(b)(xxi)
------------
hereof.
"Contracts" shall mean each installment contract or contract for deed or
---------
contracts or notes secured by a mortgage, deed of trust, vendor's lien or
retention of title relating to the sale of one or more VOIs to an Obligor, which
constitutes the Initial Contracts, and Substitute 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
the Collateral Agent for the benefit of the Trustee and the Noteholders.
"Cut-Off Date" shall mean (a) with respect to the Initial Closing Date,
-------------
July 31, 1998, and (b) with respect to each Subsequent Closing Date, the last
day of the month preceding the month in which the related Closing Date occurs.
"Cut-off Date Pool Principal Balance" shall have the meaning set forth in
-------------------------------------
Section 3(a) hereof.
"Environmental Laws" shall have the meaning set forth in Section 7(b)(xxi)
-------------------
hereof.
"FCI" shall have the meaning set forth in the preamble hereto.
---
"FMB" shall have the meaning set forth in the preamble hereto.
---
"Indemnified Amounts" shall have the meaning set forth in Section 7(e)
--------------------
hereof.
"Initial Closing Date" shall have the meaning set forth in Section 4(a)
----------------------
hereof.
"Initial Contracts" shall have the meaning set forth in Section 2(a)
------------------
hereof.
"Initial Purchase Price" shall have the meaning set forth in Section 3(a)
------------------------
hereof.
"Operating Agreement" shall mean the Fifth Amended and Restated Operating
--------------------
Agreement, dated as of July 14, 1998, among FCI, FMB, the VB Subsidiaries and
the Seller.
"Pledge and Servicing Agreement" shall have the meaning set forth in the
--------------------------------
recitals hereto.
"Purchase" shall have the meaning set forth in Section 2(c) hereof.
--------
"Purchase Price" shall mean either the Initial Purchase Price or Subsequent
--------------
Purchase Price, as applicable, as such terms are defined hereinafter.
"Repurchase Price" shall have the meaning set forth in Section 8(a)
-----------------
hereof.
"Seller" shall have the meaning set forth in the preamble hereto.
------
"Subsequent Closing Date" shall have the meaning set forth in Section 2(b)
------------------------
hereof.
"Subsequent Purchase Price" shall have the meaning set forth in Section
---------------------------
3(b) hereof.
"Substitute Contracts" shall have the meaning set forth in Section 2(b)
---------------------
hereof.
"Trustee" shall have the meaning set forth in the recitals hereto.
-------
"VB Partnerships" shall have the meaning set forth in the preamble hereto.
---------------
"VB Subsidiaries" shall have the meaning set forth in the preamble hereto.
---------------
Section 2. Purchase and Sale of Contracts.
------------------------------
(a) Initial Contracts. Subject to the terms and conditions and in reliance
-----------------
on the representations, warranties, covenants and agreements set forth in this
Agreement, the Seller hereby sells and assigns, without recourse (except as
expressly provided herein), to the Company and the Company hereby purchases from
the Seller, on the Initial Closing Date, all of the Seller's right, title and
interest in, to and under (but none of the obligations arising under) the
Contracts listed on the Contract Schedule delivered on the Initial Closing Date
(the "Initial Contracts"), together with all other Transferred Assets relating
thereto.
(b) Subsequent Purchases. The Seller and Company acknowledge that pursuant
to this Agreement and Sections 2.4 and 7.4 of the Pledge and Servicing
Agreement, the Seller shall during each month of the Reinvestment Period
designate additional Eligible Contracts that the Company shall Grant to the
Collateral Agent for the benefit of the Trustee and the Noteholders as
Collateral
in substitution for amounts on deposit in the Reinvestment Account. 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 each Collateral Substitution
Date referred to in Section 2.4 of the Pledge and Servicing Agreement (each, a
"Subsequent Closing Date"), all of the Seller's right, title and interest in, to
and under (but none of the obligations arising under) the Contracts listed on
the Contract Schedule delivered on each Subsequent Closing Date (the "Substitute
Contracts"), together with all other Transferred Assets relating thereto.
(c) 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 and will be treated as
such for all federal income tax reporting and all other purposes.
(d) Recharacterization. To the extent that any transfer of Contracts and
------------------
other Transferred Assets relating thereto from (i) any of FMB or the VB
Subsidiaries to FCI or FCI to Seller, in each case pursuant to the Operating
Agreement or (ii) from Seller to the Company pursuant to this Agreement is not
treated as a sale under applicable law, it is intended that this Agreement shall
constitute a security agreement under applicable law and that each of FMB and
the VB Subsidiaries shall be deemed to have granted to FCI, FCI shall have been
deemed to have granted to Seller, and Seller shall be deemed to have granted to
the Company, a first priority perfected security interest in all of FMB's, the
VB Subsidiaries', FCI's, or Seller's, as the case may be, right, title and
interest in, to and under such Contracts and other Transferred Assets relating
thereto, in order to secure the advance of the aggregate purchase price paid to
the Seller hereunder from time to time; and each of FMB, the VB Subsidiaries,
FCI and Seller, as the case may be, shall be deemed to have (i) collaterally
assigned all of its right, title and interest in, to and under the Contracts and
other Transferred Assets relating thereto pursuant to the assignments executed
in accordance with the Operating Agreement or Section 5(c) hereof, as
applicable, and (ii) waived any and all defenses to the enforceability of such
advance pursuant to this Section 2(d) including, without limitation, any defense
arising under usury laws.
(e) Security Interest in Transferred Assets. FCI, FMB, the VB Subsidiaries
----------------------------------------
and Seller acknowledge that the Contracts and other Transferred Assets relating
thereto are subject to the security interest of the Collateral Agent for the
benefit of the Trustee and the Noteholders pursuant to the Pledge and Servicing
Agreement.
(f) 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 all other monies or property of the Seller
specifically relating to the Contracts and Transferred Assets coming into the
actual possession or control of the Company, the Collateral Agent, the Trustee,
a Noteholder or the Custodian (whether for safekeeping, deposit, custody pledge
transaction, collection or otherwise).
(g) Quitclaim of Residual Interest by FMB, the VB Subsidiaries and FCI. (i)
------------------------------------------------------------------
The parties hereto recognize that each of (A) FMB and the VB Subsidiaries has
previously sold, transferred and assigned to FCI all of its right, title and
interest in and to the Contracts heretofore originated by it, and will in the
future sell, transfer and assign to FCI all of its right, title and interest in
and to the Contracts to be originated by it after the date hereof, together
with, in each case, the other Transferred Assets relating thereto, and (B) FCI
has previously sold, transferred and assigned to the Seller all of its right,
title and interest in and to the Contracts heretofore originated by it (or
heretofore sold to it by FMB or the VB Subsidiaries), and will in the future
sell, transfer and assign to Seller all of its right, title and interest in and
to the Contracts to be originated by it (or sold to it by FMB or the VB
Subsidiaries) after the date hereof, together with, in each case, the other
Transferred Assets relating thereto. Each sale, transfer and assignment
referenced in the immediately preceding sentence has been, or will in the future
be, made pursuant to the terms of the Operating Agreement, and memorialized by
one or more blanket assignments executed by such parties in favor of FCI or
Seller, as applicable. For the avoidance of any doubt and to further evidence
the intent of the parties hereto that all residual right, title and interest in
the Contracts and other Transferred Assets relating thereto are being sold and
transferred to the Company pursuant to this Agreement, each of FCI, FMB and the
VB Subsidiaries hereby irrevocably quitclaim any residual right, title and
interest that any of them may be deemed to have in and to any of the Contracts
or other Transferred Assets relating thereto directly to the Company.
(ii) To the extent that any quitclaim of Contracts and other Transferred
Assets relating thereto from FCI, FMB or the VB Subsidiaries to the Company
contemplated by Section 2(g) above is not treated as a sale under applicable
law, it is intended that this Agreement shall constitute a security agreement
under applicable law and that each of FCI, FMB or the VB Subsidiaries, as
applicable, shall have been deemed to grant to the Company a first priority
perfected security interest in all of FCI's, FMB's or the VB Subsidiaries, as
the case may be, right, title and interest in, to and under such Contracts and
other Transferred Assets relating thereto in order to secure the advance of the
aggregate purchase price paid to the Seller hereunder from time to time and each
of FCI, FMB and the VB Subsidiaries, as the case may be, shall be deemed to have
waived any and all defenses to the enforceability of such advance pursuant to
this Section 2(g)(ii) including, without limitation, any defense arising under
usury laws.
Section 3. Purchase Price.
--------------
(a) The Initial Contracts shall have an unpaid principal balance
aggregating $60,058,403.50 at the Cut-Off Date (such aggregate unpaid principal
balance at the Cut-Off Date being referred to herein as the "Cut-Off Date Pool
Principal Balance"). The purchase price (the "Initial Purchase Price") for the
Initial Contracts shall be 100% of the Cut-Off Date Pool Principal Balance.
(b) The purchase price of the Substitute Contracts to be purchased and sold
hereunder on a Subsequent Closing Date (each, a "Subsequent Purchase Price")
shall be an amount equal to 100% of the aggregate unpaid principal balance of
the Substitute Contracts on the Cut-Off Date therefor (as each such Cut-Off Date
is determined in accordance with the Pledge and Servicing
Agreement) plus accrued interest thereon, computed at the Contract Rate of the
Substitute Contract from and including such Cut-Off Date to but excluding such
Subsequent Closing Date.
Section 4. Payment of Purchase Price.
-------------------------
(a) Initial Closing Date. Payment for and delivery of the Initial Contracts
--------------------
being purchased by the Company shall take place at a closing at the offices of
the Seller, at 10:00 a.m. local time on August 25, 1998, or such other time and
place as shall be mutually agreed upon among the parties hereto (the "Initial
Closing Date"). Payment of the portion of the Initial Purchase Price to be paid
in cash pursuant hereto, shall be made by the Company on the Initial Closing
Date in immediately available funds to the Seller to such accounts at such banks
as the Seller shall designate to the Company not less than one Business Day
prior to the Initial Closing Date.
(b) Subsequent Closing Dates. Payment for and delivery of the Substitute
--------------------------
Contracts to be purchased by the Company on a Subsequent Closing Date shall be
made at such time and place and to such accounts and such banks as the parties
may mutually agree.
(c) Manner of Payment of Purchase Price.
-----------------------------------
(i) Initial Purchase Price. On the Initial Closing Date, the Initial
------------------------
Purchase Price shall be paid to Seller in the manner provided below:
(A) in cash, in an amount equal to $46,845,554.72 (which amount
is before (x) certain transaction fees and expenses payable by Seller
in an amount equal to $195,039.66 and (y) net collections on the
Initial Contracts in the amount of $1,352,875.37; and
(B) to the extent that the Initial Purchase Price exceeds the sum
of the amount of the cash payment in Section 4(c)(i)(A) above plus the
-----------------
amount of transaction fees and expenses referred to in Section
-------
4(c)(i)(A), such excess shall be paid, on the Initial Closing Date, in
---------
the form of a capital contribution to the Company by Seller in
accordance with Section 351 of the IRC.
(ii) Subsequent Purchase Price. On each Subsequent Closing Date,
--------------------------
the Subsequent Purchase Price shall be paid to Seller in cash to be
disbursed from the Reinvestment Account in an amount equal to the
difference of (x) the Subsequent Purchase Price, minus (y) transaction
fees and expenses, if any, payable by the Seller to the Company.
(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
applicable Closing Date 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 Initial Closing Date or Subsequent Closing 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
Closing 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 Pledge and Servicing Agreement or (ii)
credit against the portion of the Purchase Price to be paid in cash, the
aggregate amount of funds received with respect to the Initial Contracts or
Substitute Contracts, as applicable, between the Cut-Off Date therefor and the
applicable Closing Date.
Section 5. Conditions to Sale of Contracts.
-------------------------------
(a) Initial Closing Date. The Company's obligations hereunder to purchase
--------------------
and pay for the Initial Contracts and other Transferred Assets relating thereto
on the Initial Closing Date are subject to the fulfillment of the following
conditions on or before such Initial Closing Date:
(i) The Company shall have received (A) the Pledge and Servicing Agreement
executed by all the parties thereto and (B) all conditions to closing set forth
in Section 2.2 of the Pledge and Servicing 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 Pledge and Servicing Agreement
shall be conclusive for purposes of this Agreement;
(ii) The representations and warranties of the Seller, FCI, FMB and the VB
Subsidiaries made herein and the Seller as Servicer under the Pledge and
Servicing Agreement shall be true and correct in all material respects on the
Initial Closing Date, and a certificate to such effect delivered by each such
company pursuant to this Agreement and/or the Pledge and Servicing Agreement
shall be conclusive for purposes of this Agreement.
(b) Subsequent Purchases. The Company's obligations hereunder to purchase
---------------------
and pay for the Substitute Contracts and other Transferred Assets relating
thereto on any Subsequent Closing Date is subject to the fulfillment of the
following conditions on or before such Subsequent Closing Date:
(i) The Pledge and Servicing Agreement shall be in full force and effect;
(ii) All conditions to substitution set forth in Section 2.4 of the Pledge
-----------
and Servicing 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 to such effect delivered by the Company
pursuant to the Pledge and Servicing Agreement shall be conclusive for purposes
of this Agreement; and
(iii) The representations and warranties of Seller made herein and as
Servicer in the Pledge and Servicing Agreement shall be true and correct in all
material respects on the Subsequent Closing Date, and a certificate to such
effect delivered by the Seller pursuant to the Pledge and Servicing Agreement
shall be conclusive for purposes of this Agreement;
(c) Form of Assignment. In connection with each sale and purchase of
-------------------
Contracts and related Transferred Assets hereunder, Seller shall execute an
assignment substantially in the form of
Exhibit "A" hereto and deliver the same to the Company, and the Company shall
thereupon execute and deliver to the Seller, a form of certificate substantially
in the form of Exhibit "B" hereto.
Section 6. Transfer of Contracts.
---------------------
Pursuant to the Pledge and Servicing Agreement, the Company will, on each
Closing Date, Grant all of its right, title and interest in, to and under the
Contracts, Transferred Assets and related property on such Closing Date which
constitute Collateral, to the Collateral Agent for the benefit of the Trustee
and the Noteholders. The Company has the right to assign its interest under this
Agreement as may be required to effect the purposes of the Pledge and Servicing
Agreement, without the consent of the Seller, FCI or any VB Subsidiary, and the
assignee shall succeed to the rights hereunder of the Company. All Contracts
conveyed or to be conveyed to the Company hereunder shall be held by Custodian
pursuant to the terms of the Custodial Agreement for the benefit of (i) the
Company and (ii) Collateral Agent for the benefit of the Trustee and the
Noteholders. 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 Pledge and
Servicing Agreement, the Company may 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(e) hereof, to Collateral
Agent for the benefit of the Trustee and the Noteholders. 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, FCI, FMB and the VB
-------------------------------------------------------------------
Subsidiaries.
------------
(a) General Representations and Warranties of Seller, FCI, FMB and the VB
-----------------------------------------------------------------------
Subsidiaries. Seller, FCI, FMB and the VB Subsidiaries jointly and severally
------------
represent and warrant to the Company as follows:
(i) Organization and Good Standing. (A) Seller, FCI, FMB and the VB
---------------------------------
Subsidiaries (other than the VB Partnerships) are corporations duly organized,
validly existing and in good standing under the laws of the state of their
organization and have full corporate power, authority and legal right to own
their properties and conduct their businesses as such properties are presently
owned and such businesses are presently conducted, and to execute, deliver and
perform their obligations under each of the Facility Documents to which they are
a party. Seller, FCI, FMB and the VB Subsidiaries (other than the VB
Partnerships) are duly qualified to do business and are in good standing as a
foreign corporations, and have obtained all necessary licenses and approvals in
each jurisdiction in which failure to qualify or to obtain such licenses and
approvals would render any Contract unenforceable by Seller, FCI, FMB or the VB
Subsidiaries (other than the VB Partnerships), or would have a Material Adverse
Effect.
(B) The VB Partnerships are general partnerships duly organized and validly
existing under the laws of the State of Florida and have full power, authority
and legal right to own their properties and conduct their businesses as such
properties are presently owned and such businesses are presently conducted, and
to execute, deliver and perform their obligations under each of the Facility
Documents to which they are a party. The VB Partnerships are duly qualified to
do business and are in good standing and have obtained all necessary licenses
and approvals in each jurisdiction in which failure to qualify or to obtain such
licenses and approvals would render any Contract unenforceable by VB
Partnerships or would have a Material Adverse Effect.
(C) The names of the Seller, FCI, FMB, and the VB Subsidiaries set forth in
the preamble of this Agreement are the correct legal names of such entities, and
such names have not been changed in the past six years (except that a
predecessor corporation to the Seller, Fairfield Acceptance Corporation, was
merged with and into the Seller on July 13, 1998). None of the Seller, FCI, FMB
or the VB Subsidiaries utilizes any trade names, assumed names, fictitious names
or "doing business names."
(ii) Due Authorization and No Conflict. The execution, delivery and
------------------------------------
performance by Seller, FCI, FMB and the VB Subsidiaries of each of the Facility
Documents to which they are a party, and the consummation of the transactions
contemplated hereby and under the Facility Documents have in all cases been duly
authorized by Seller, FCI, FMB and the VB Subsidiaries by all necessary
corporate (or in the case of the VB Partnerships, partnership) action, do not
contravene (i) Seller's, FCI's, FMB's or the VB Subsidiaries' charter or by-laws
(or in the case of the VB Partnerships, partnership agreements), (ii) any law,
rule or regulation applicable to Seller, FCI or FMB or the VB Subsidiaries,
(iii) any contractual restriction contained in any indenture, loan or credit
agreement, lease, mortgage, deed of trust, security agreement, bond, note, or
other agreement or instrument binding on or affecting Seller, FCI, FMB, the VB
Subsidiaries or their properties or (iv) any order, writ, judgment, award,
injunction or decree binding on or affecting Seller, FCI, FMB or their
properties (except where such contravention would not have a Material Adverse
Effect), and do not result in or require the creation of any Lien upon or with
respect to any of their properties; and no transaction contemplated hereby
requires compliance with any bulk sales act or similar law. Each of the other
Facility Documents to which Seller, FCI, FMB or the VB Subsidiaries is a party
have been duly executed and delivered on behalf of Seller, FCI, FMB and the VB
Subsidiaries.
(iii) Governmental and Other Consents. All approvals, authorizations,
---------------------------------
consents, orders or other actions of, and all registration, qualification,
designation, declaration, notice to or filing with, any Person or of any
governmental body or official required in connection with the execution and
delivery of any of the Facility Documents to which Seller, FCI, FMB or the VB
Subsidiaries is a party, the consummation of the transactions contemplated
hereby or thereby, the performance of and the compliance with the terms hereof
or thereof, have been obtained, except where the failure so to do would not have
a Material Adverse Effect.
(iv) Enforceability of Facility Documents. Each of the Facility Documents
-------------------------------------
to which the Seller, FCI, FMB or the VB Subsidiaries is a party have been duly
and validly executed and delivered by the Seller, FCI, FMB or the VB
Subsidiaries and constitute the legal, valid and
binding obligation of Seller, FCI, FMB or the VB Subsidiaries, as applicable,
enforceable in accordance with their respective terms, except as enforceability
may be subject to or limited by Debtor Relief Laws or by general principles of
equity (whether considered in a suit at law or in equity).
(v) No Litigation. There are no proceedings or investigations pending or,
-------------
to the best knowledge of Seller, FCI or FMB, threatened against the Seller, FCI,
FMB or the VB Subsidiaries before any court, regulatory body, administrative
agency, or other tribunal or governmental instrumentality (A) asserting the
invalidity of this Agreement or any of the other Facility Documents, (B) seeking
to prevent the consummation of any of the transactions contemplated by this
Agreement or any of the other Facility Documents, (C) seeking any determination
or ruling that would adversely affect the performance by Seller, FCI, FMB or the
VB Subsidiaries of their obligations under this Agreement or any of the other
Facility Documents, (D) seeking any determination or ruling that would adversely
affect the validity or enforceability of this Agreement or any of the other
Facility Documents, or (E) seeking any determination or ruling that would, if
adversely determined, be reasonably likely to have a Material Adverse Effect
(except for the purposes of this representation and warranty, the term "Material
Adverse Effect" shall not include clause (a) of the definition of such term).
(vi) Accuracy of Information. All certificates, reports, financial
-------------------------
statements and any other written information furnished by or on behalf of the
Seller, FCI, FMB or the VB Subsidiaries to the Company, Collateral Agent,
Trustee or the Noteholders, at any time pursuant to any requirement of, or in
response to any request of any such party under, this Agreement or any other
Facility Document or any transaction contemplated hereby or thereby, have been,
and all such certificates, reports, financial statements and any other written
information hereafter furnished by Seller, FCI, FMB or the VB Subsidiaries to
such parties will be, true and accurate in every respect material to the
transactions contemplated hereby on the date as of which any such certificate,
report, financial statement or similar writing was or will be delivered, and
shall not omit to state any material facts or any facts necessary to make the
statements contained therein not materially misleading.
(vii) Governmental Regulations. Neither Seller, FCI, FMB nor any of the VB
------------------------
Subsidiaries, is (A) an "investment company" registered or required to be
registered or required to be registered under the Investment Company Act of
1940, as amended, (B) a "public utility company" or a "holding company," a
"subsidiary company" or an "affiliate" of any public utility company within the
meaning of Section 2(a)(5), 2(a)(7), 2(a)(8) or 2(a)(11) of the Public Utility
Holding Company Act of 1935, as amended, or (C) otherwise subject to any other
federal or state statute or regulation limiting its ability to incur or pay
indebtedness.
(viii) Margin Regulations. Neither Seller, FCI, FMB, nor any of the VB
-------------------
Subsidiaries is engaged, principally or as one of its important activities, in
the business of extending credit for the purpose of "purchasing" or "carrying"
any margin stock (as each of the quoted terms is defined or used in any of
Regulations 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 Notes has
been used for so purchasing or carrying margin stock or for any purpose which
violates, or which would be
inconsistent with, the provisions of any of Regulations 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 FCI and FMB, and the office where FCI and
FMB maintain all of their Records, is located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the principal place of business and chief executive
office of the Seller, and the office where the Seller maintains all of its
Records, is ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, and the
principal place of business and chief executive office of each of the VB
Subsidiaries is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇. Neither FCI, FMB, the VB Subsidiaries nor the Seller have changed its
principal place of business or chief executive office (or the office where such
entity maintains all of its Records) during the previous six months (except that
a predecessor corporation which was merged into the Seller maintained its
principal place of business and chief executive office (and all of its Records)
in Pulaski County, Arkansas until July 13, 1998). At any time after the Initial
Closing Date, upon 30 days' prior written notice to the Trustee and Noteholders,
any of the Seller, FCI, FMB, and the VB Subsidiaries may relocate its principal
place of business and chief executive office, and/or the office where Seller,
FCI, FMB or such VB Subsidiary maintains all of its Records, to such other
locations within the United States where all action required by Section 4.2(t)
of the Pledge and Servicing Agreement shall have been taken and completed
(giving effect to the provisions of such Section 4.2(t) as if each reference to
the "Issuer" therein is, instead, a reference to each of the Seller, FCI, FMB
and the VB Subsidiaries.
(x) Lock-Box Accounts. Except in the case of any Lock-Box Account pursuant
-----------------
to which only Collections in respect of Contracts subject to a PAC or Credit
Card Account are deposited, each of the Seller, FMB, the VB Subsidiaries, and
FCI, as applicable, 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 Pledge and Servicing Agreement. From
and after the Closing Date, neither FCI, FMB, nor the VB Subsidiaries shall have
any right, title and/or interest in or to any of the Lock-Box Accounts or the
Post-Office Boxes and will maintain no lock-box accounts in their own names for
the collection of Payments in respect of Contracts. Neither the Seller, FCI,
FMB, nor any of the VB Subsidiaries has any other lock-box accounts for the
collection of Payments in respect of Contracts, except for the Lock-Box
Accounts.
(xi) Facility Documents. This Agreement is the only agreement pursuant to
-------------------
which Seller sells the Company Contracts, other Transferred Assets or any other
assets of a similar nature. The Seller, FCI, FMB and the VB Subsidiaries have
furnished to each of the Company, the Noteholders, the Trustee and Collateral
Agent, true, correct and complete copies of each Facility Document to which any
of the Seller, FCI, FMB and the VB Subsidiaries are parties, each of which is in
full force and effect. Neither Seller, FCI, FMB, any of the VB Subsidiaries, nor
any Affiliate thereof is in default of any of its obligations thereunder in any
material respect. Upon each Purchase hereunder, the Company shall be the lawful
owner of, and have good title to, each Contract and all of the Transferred
Assets relating thereto, free and clear of any Liens (other than
the Lien of the Pledge and Servicing Agreement and any Permitted Encumbrances on
the related VOIs). All Contracts and related assets are purchased without
recourse to any of the Seller, FCI, FMB or the VB Subsidiaries except as
described in this Agreement. The Purchases by Company under this Agreement
constitute valid and true sales and transfers for consideration (and not merely
a pledge of assets for security purposes), enforceable against creditors of each
of Seller, FCI, FMB and the VB Subsidiaries, and no Contract or related
Transferred Assets shall constitute property of the Seller.
(xii) Ownership of the Company. One hundred percent (100%) of the
---------------------------
outstanding capital stock of the Company is directly owned (both beneficially
and of record) by Seller. Such stock is validly issued, fully paid and
nonassessable and there are no options, warrants or other rights to acquire
capital stock from the Company.
(xiii) Taxes. Each of Seller, FCI, FMB and the VB Subsidiaries have timely
-----
filed or caused to be filed all federal, state and local tax returns which are
required to be filed by them, and have paid or caused to be paid all taxes shown
to be due and payable on such returns or on any assessments received by them,
other than any taxes or assessments, the validity of which are being contested
in good faith by appropriate proceedings and with respect to which Seller, FCI,
FMB and the VB Subsidiaries have set aside adequate reserves on their books in
accordance with GAAP and which proceedings have not given rise to any Lien.
(xiv) Solvency. Each of Seller, FCI, FMB and the VB Subsidiaries both prior
--------
to and after giving effect to each Purchase of Contracts hereunder (A) is not
"insolvent" (as such term is defined in ss.101(32)(A) of the Bankruptcy Code);
(B) is able to pay its debts as they become due; and (C) does not have
unreasonably small capital for the business in which it is engaged or for any
business or transaction in which it is about to engage.
(xv) Reporting and Accounting Treatment. For tax and other reporting and
-----------------------------------
accounting purposes, and in their books of account and records, the Seller and
FCI will treat the Purchase of each Contract pursuant to this Agreement as a
purchase of, or absolute assignment of, the Seller's full right, title and
ownership interest in each Contract, and the Seller and FCI have not in any
other manner accounted for or treated the transactions.
(xvi) ERISA. There has been no (A) 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 (B) institution of proceedings or the
taking of any other action by PBGC or FCI, FMB, Seller or any ERISA Affiliates
or any such Multiemployer Plan with respect to the withdrawal from or the
termination, Reorganization or Plan Insolvency of, any such Plan.
(xvii) No Adverse Selection. No selection procedures adverse to the
----------------------
Company, the Noteholders, the Trustee or the Collateral Agent have been employed
by any of Seller, FCI, FMB or the VB Subsidiaries in selecting the Contracts (A)
for inclusion in the Contract Pool on any Closing Date or (B) Granted to the
Collateral Agent pursuant to Section 3.5 of the Pledge and Servicing Agreement
as "Remarketed Contracts."
(xviii) FairShare Program. (A) On any date of determination, for each VOI
-----------------
Regime for which the constituent VOIs are comprised primarily of UDIs, the ratio
of (1) the total number of Points actually allocated to a VOI Regime pursuant to
the FairShare Plus Program at such time for the next succeeding twelve month
period, divided by (2) the total number of Points which are allocable to
-----------
occupiable space in such VOI Regime over such twelve month period does not
exceed a ratio of 1.0 to 1.0.
(B) On any date of determination, for each owner of a UDI who is a member
of the FairShare Plus Program, the ratio of (1) 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 (2) 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.
(xix) POA Reserves. The capital reserves and maintenance fee levels of the
------------
POAs related to each VOI Regime underlying the Contracts are adequate in light
of the operating requirements of such POAs.
(xx) Separate Identity. The Company is operated as an entity separate from
-----------------
each of the Seller, FCI, the VB Subsidiaries and their respective other
Affiliates such that the representation and warranties set forth in Section
3.1(n) of the Pledge and Servicing Agreement are true and correct.
The representations and warranties of Seller, FCI, FMB and the VB
Subsidiaries set forth in this Section 7(a) shall be deemed to be remade,
without further act by any Person, on and as of the Initial Closing Date, and
each Subsequent Closing Date. The representations and warranties set forth in
this Section 7(a) shall survive the transfer and assignment of the Contracts to
the Company.
(b) Representations and Warranties Regarding the Contracts. Seller and FCI
------------------------------------------------------
jointly and severally represent and warrant to the Company as to each Contract
conveyed on and as of the related Cut-Off Date (except as otherwise expressly
stated) as follows:
(i) Eligibility. Such Contract is an Eligible Contract.
-----------
(ii) Contract Schedule. The information set forth in the Contract Schedule
-----------------
is true and correct with respect to such Contract.
(iii) No Waivers. The terms of such Contract have not been waived, altered,
----------
modified, or extended in any respect, without the prior written consent of the
Majority Holders, other than (A) extensions which are Permitted Deferrals, (B)
modifications, entered into in accordance with Customary Practice and Credit
Standards and Collections Policies, which do not reduce the amount or extend the
maturity of required Payments, and (C) 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, without limitation, the defense of
usury, the operations of any of the terms of such Contract or the exercise of
any right thereunder will not render such Contract unenforceable in whole or in
a manner materially affecting the value or collectibility of the Contract or
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto.
(vi) No Excess Concentration Reserve. The inclusion of the Contract in the
--------------------------------
Contract Pool will not result in an Excess Concentration Reserve
(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 Pledge and Servicing Agreement unlawful.
(viii) Compliance with Law. The requirements of any federal, state or local
-------------------
law (including, without limitation, usury, truth in lending and equal credit
opportunity laws) applicable to such Contract have been complied with. The VOI
Regime related to such Contract is in compliance with any and all applicable
zoning and building laws and regulations and any other laws and regulations
relating to the use and occupancy of such VOI Regime; except where such
noncompliance would not have a Material Adverse Effect. Except as disclosed in
the Base Reports, none of the Seller, FCI, FMB or the VB Subsidiaries has
received notice of any material violation of any legal requirements applicable
to such VOI Regime; except where such noncompliance would not have a Material
Adverse Effect. The VOI Regime related to such Contract complies with all
applicable state statutes including, without limitation, condominium statutes,
timeshare statutes, HUD filings relating to interstate land sales (if
applicable), and the requirements of any governmental authority or local
authority having jurisdiction and constitutes a valid and conforming condominium
and timeshare regime under the laws of the State where the related Development
is located; except where such noncompliance would not have a Material Adverse
Effect.
(ix) Contract in Force. Such Contract is in full force and effect and has
-----------------
not been satisfied in whole or in part, or rescinded.
(x) No Subordination. Such Contract has not been subordinated, satisfied or
----------------
rescinded in whole or in part.
(xi) Capacity of Parties. All parties to such Contract had capacity to
-------------------
execute the Contract.
(xii) Good Title. The Seller has good and marketable title to such Contract
----------
free and clear of any Lien (other than the Lien of the Collateral Agent under
the Collateral Agency Agreement). The Seller has not sold, assigned or pledged
such Contract to any Person other than the Collateral Agent and the Company. As
to the related VOI, either, (A) a generally accepted form of title insurance
policy, insuring the fee estate ownership of the real property subject to the
VOI Regime by the Persons owning the respective interests therein, and their
successors and assigns was effective at the time the Originator (or a Subsidiary
thereof) acquired the VOI 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 (B) at the time the
Originator (or a Subsidiary thereof) acquired the VOI 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 VOIs 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 to any Person other than the Collateral Agent and
the Company, and the Seller's right, title and interest therein is free of any
Liens (other than the Lien of the Collateral Agent under the Collateral Agency
Agreement).
(xiii) No Defaults. As of the relevant Cut-Off Date, there is no default,
-----------
breach, violation or event permitting acceleration existing under the Contract
and no event which, with the giving of notice or the expiration of any grace or
cure period or both, would constitute such a default, breach, violation or event
permitting acceleration under such Contract (after giving effect to Permitted
Deferrals). None of Seller, FCI, FMB or the VB Subsidiaries has waived any such
default, breach, violation or event permitting acceleration.
(xiv) Equal Installments. Such Contract has a fixed rate of interest and
-------------------
provides for payments which fully amortize the loan over its term. Interest
accrues on such Contract on an actuarial (i.e., pre-computed) basis utilizing a
simple interest calculation.
(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 3.2(v) of the Pledge and Servicing Agreement.
(xvi) Reserved.
--------
(xvii) Contract Form/Governing Law. Such Contract was executed in
-------------------------------
substantially the form of one of the forms of Contract attached hereto as
Exhibit "Q", (as such Exhibit "Q" may be amended from time to time with the
consent of the Majority Holders in the exercise of their reasonable discretion
in connection with the Purchase of Contracts on Closing Dates originated at a
Development with respect to which Contracts have not been previously been
Granted to Collateral Agent), except for changes required by applicable law and
certain other modifications which do not, individually or in the aggregate,
affect the enforceability or collectibility of such Contract. In addition, such
Contract was originated in and is governed by the laws of the State in which the
related Development is located, and each such State is a jurisdiction as to the
law of which the Company shall have, on or before the relevant Closing Date,
delivered to the Trustee and
Noteholders an Opinion of Counsel regarding the enforceability of the form or
forms of Contract used in such jurisdiction and such other matters as the
Majority Holders shall reasonably request, and such Contract is substantially in
the form of one of the forms of Contracts attached as an exhibit to such
opinion.
(xviii) No Event of Default. No Event of Default, or any event which, with
-------------------
the passage of time or the giving of notice, or both, will give rise to an Event
of Default, will occur as a result of the Purchase of the Contract by the
Company pursuant to this Agreement.
(xix) Reserved.
--------
(xx) Interest in Real Property. The VOI underlying such Contract is an
--------------------------
interest in real property consisting of either a Fixed Week or UDI; and in each
case such VOI 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 or air
or water pollution (hereinafter referred to as "Environmental Laws"), including,
------------------
without limitation, any PCB, radioactive substance, methane, asbestos, volatile
hydrocarbons, petroleum products or wastes, industrial solvents or any other
material or substance which now or hereafter may cause or constitute a health,
safety or other environmental hazard to any person or property (any such
substance together with any substance, material or waste identified as toxic or
hazardous under any Environmental Law now in effect or hereinafter enacted shall
be referred to herein as "Contaminants"). Neither FCI nor any Affiliate of FCI
------------
has caused or suffered to occur any discharge, spill, uncontrolled loss or
seepage of any petroleum or chemical product or any Contaminant onto any
property comprising or adjoining any of the VOI Regimes, and neither FCI nor any
Affiliate of FCI nor any Obligor or Occupant of all or part of any of the VOI
Regimes is now or has been involved in operations at; any VOI Regime which could
lead to liability for FCI, the Company, any other Affiliate of FCI or any other
owner of any VOI Regime or the imposition of a lien on such VOI Regime under any
Environmental Law. No practice, procedure or policy employed by FCI (or any
Affiliate of FCI) in the case of POAs in which FCI acts as the manager, and to
the best knowledge of FCI and Seller, by the manager of the POAs, in the case
POAs managed by parties unaffiliated with FCI, violates any Environmental Law
which, if enforced, would reasonably be expected to (i) have a material adverse
effect on such POA or the ability of such POA to do business, (b) have a
material adverse effect on the financial condition of the POA or (c) constitute
grounds for the revocation of any license, charter, permit or registration which
is material to the conduct of the business of the POA.
Except as set forth on Schedule 5 to the Pledge and Servicing 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 5 to the
Pledge and Servicing 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 5 to the Pledge and Servicing Agreement will have a Material
Adverse Effect, a material adverse effect on the interests of the Collateral
Agent, the Trustee or the Noteholders in the Collateral or an adverse effect on
the Collateral Agent, the Trustee or the Noteholders. Each Development, and the
present use thereof, does not violate any Environmental Law, so as to materially
adversely affect the value or use of such Development or the performance by the
POAs of their respective obligations under their applicable declarations,
articles or similar charter documents. There is no condition presently existing,
and to the best knowledge of FCI and the Seller, no event has occurred or failed
to occur concerning the Development relating to any Contaminants or compliance
with any Environmental Laws which would reasonably be expected to materially
adversely affect the present use of such Development or the financial condition
or business operations of the Development or which would have a Material Adverse
Effect.
(xxii) Tax Liens. All taxes applicable to such Contract and the related VOI
---------
have been paid; except where the failure to pay would not have a Material
Adverse Effect. There are no delinquent tax liens in respect of the VOI
underlying such Contract.
(xxiii) Reserved.
(xxiv) Contract Files. The related Contract File contains the documents
---------------
required by Section 3.2(v)of the Pledge and Servicing Agreement.
(xxv) Lock-Box Accounts. The Obligor of such Contract either:
-----------------
(A) shall have been instructed, pursuant to the Seller's routine
distribution of a periodic statement to such Obligor next succeeding
(1) the Initial Closing Date or any Subsequent Closing Date,
as applicable, or
(2) the day on which a PAC or Credit Card Account ceased to
apply to such Contract, in the case of a Contract formerly
subject to a PAC or Credit Card Account,
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 "F" of the Pledge and Servicing Agreement, or
(B) has entered into a PAC or Credit Card Account, pursuant to
which a deposit account of such Obligor is made subject to a
pre-authorized debit in respect of Payments as they become due and
payable, and the Seller has caused, a Lock-Box Bank and/or the Trustee,
to take all necessary and appropriate action to ensure that each such
pre-authorized debit is credited directly to a Lock-Box Account.
(xxvi) [reserved]
(xxvii) Ownership Interest. On the relevant Closing 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 Lien of the Pledge and Servicing
Agreement).
(xxviii) Recordation of Assignments. The Servicer has caused all
----------------------------
Assignments of Mortgages relating to mortgages granted to the Collateral Agent
on each Closing Date to be recorded or delivered for recordation in accordance
with Section 3.2(v) of the Pledge and Servicing Agreement, simultaneously with
the related Mortgage to the proper office in the State where related VOI is
located; provided that such recordation of the Assignment of Mortgage shall only
have occurred to the extent that such VOI is located in Developments in a State
other than Florida.
(xxix) Interest in Contract. An interest in the Contract constitutes
--------------------
either a "general intangible" or an "instrument" under the Uniform Commercial
Code of the state of Nevada.
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 each Closing 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 Termination Date:
subsections (i) (but only with respect to the eligibility criteria set forth in
the definition of "Eligible Contract" in the Pledge and Servicing Agreement at
clauses (a), (b), (c), (d), (g), (h), (k), (l), (m), (o), (q), (r), (t), (u),
(v) and (w) thereof), (iii), (iv), (v), (viii), (ix), (x), (xii), (xiv), (xv),
(xxi), (xxii), (xxiv), (xxv), (xxvi), (xxvii), (xxviii) and (xxix). All of the
representations and warranties set forth in this Section 7(b) shall survive the
Purchase of the respective Contracts by the Company.
(c) Representations and Warranties Regarding the Contract Files. Seller
-----------------------------------------------------------
and FCI jointly and severally represent and warrant to the Company as to each
Contract and the related Contract File conveyed by it hereunder as follows:
(i) Possession. On or immediately prior to the Initial Closing Date and
----------
each Subsequent Closing 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 3.2(v) of the Pledge and Servicing 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 Closing 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 has been conveyed on such date to the Company and
constitutes part of the Collateral Granted or to be Granted on such date in
accordance with the terms of the Pledge and Servicing Agreement by the Company
to the Collateral Agent for the benefit of the Noteholders. In addition, prior
to each such Grant, each such Contract shall have been clearly and unambiguously
stamped or marked as follows:
"This Contract is part of the Collateral under a Collateral
Agency Agreement, dated as of January 15, 1998, by and among
BankBoston, N.A. and the secured parties thereto. A first priority
security interest herein is held by BankBoston, N.A. as Collateral
Agent for each of the secured parties under the Collateral Agency
Agreement.
The representations and warranties of Seller and FCI set forth in this
Section 7(c) shall be deemed to be remade, without further act by any Person, on
and as of the Initial Closing Date, and each Subsequent Closing Date with
respect to the Contracts conveyed to the Company on and as of each such date.
The representations and warranties set forth in this Section 7(c) shall survive
the transfer and assignment of the respective Contracts to the Company.
(d) Survival of Representations and Warranties. It is understood and
--------------------------------------------
agreed that the representations and warranties contained in this Section 7 shall
remain operative and in full force and effect, shall survive the transfer and
conveyance of the Contracts by the Seller to the Company and the Grant by the
Company to Collateral Agent and shall inure to the benefit of the Company, the
Collateral Agent, the Trustee and the Noteholders and their respective
designees, successors and assigns.
(e) Indemnification of the Company. The Seller, FMB, each VB
---------------------------------
Subsidiary, 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 Pledge and
Servicing Agreement. Without in any way limiting the foregoing, except as
otherwise provided in this Section 7(e), or Section 12(j) hereof, the Seller
shall pay to the Company, on demand, any and all amounts necessary to indemnify
the Company from and against any and all Indemnified Amounts relating to or
resulting from: (w) any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, any sales,
gross receipts, intangible personal property, privilege or license taxes, but
not including taxes imposed upon the Company under the laws of the United States
or any jurisdiction within the United States in which the Company is organized
or maintains its principal office or in which the Company books this
transaction; (x) any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, any taxes
which may arise at any time and from time to time in the future in respect of
this Agreement, the transactions contemplated hereby and the subject matter
hereof and thereof; (y) costs, expenses and reasonable counsel fees in defending
against the same, whether arising by reason of the acts to be performed by the
Seller hereunder or imposed against the Company or the Seller, the property
involved or otherwise, or (z) any and all loss, penalties, fines, forfeitures,
legal fees and related costs, judgments and other costs and expenses resulting
from any claim, demand, defense or assertion based on or grounded upon, or
resulting from, a breach of the representations and warranties contained in this
Agreement. The agreements in this clause (e) shall survive the collection of all
Contracts, the termination of this Agreement and the payment of all amounts
payable hereunder and under the Contracts. For purposes of this clause (e), any
reference to the Company shall include any officer, director, employee, agent or
affiliate thereof, or any successor or assignee thereof.
Section 8. Repurchases of Contracts for Breach of Representations and
------------------------------------------------------------
Warranties.
----------
(a) Repurchase Obligation. Subject to Section 8(b) hereof, Seller shall
--------------------- -----------
repurchase from the Company, at the Repurchase Price defined immediately below,
any Contract sold by Seller to the Company on the first Payment Date occurring
following the last day of the immediately preceding Calculation Period in which
Seller becomes aware or receives written notice from the Company, the Trustee or
any Noteholder that such Contract is a Defective Contract. For purposes of this
Section 8(a) the term "Repurchase Price" shall mean an amount equal to the
remaining Principal Balance outstanding on such Contract as of the opening of
business on the latest Determination Date to occur prior to the Payment 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 Payment Date on which such repurchase is made. The
Company hereby directs the Seller, for so long as the Pledge and Servicing
Agreement is in effect, to make such payment on its behalf to the Collection
Account pursuant to Section 7(b) hereof. The following defects with respect to
documents in any Contract File, to the extent they do not impair the validity or
enforceability of the subject document under applicable law, shall not be deemed
to constitute a breach of the representations and warranties contained in
Section 7(b): misspellings of or
omissions of initials in names; name changes from divorce or marriage;
discrepancies as to payment dates in a Contract of no more than 30 days;
discrepancies as to Payments of no more than $5.00; discrepancies as to
origination dates of not more than 30 days; inclusion of additional parties
other than the primary Obligor not listed in the Servicer's records or in the
Contract Schedule and non-substantive typographical errors and other
non-substantive minor errors of a clerical or administrative nature.
(b) Repurchases. Seller shall notify the Company of any repurchase not
-----------
less than two Business Days prior to the date on which such repurchase shall be
effected, specifying the Defective Contract and the Repurchase Price therefor.
Upon the repurchase of a Defective Contract pursuant to Section 8(a), Seller
shall, prior to 12:00 P.M. New York City time on the relevant Payment Date
deposit, on behalf of the Company, deposit or otherwise caused to be retained in
the Collection Account the Repurchase Price.
Upon each repurchase, the Company shall, simultaneously with or
immediately after similar action by Trustee that is deemed to have occurred
pursuant to Section 3.5 of the Pledge and Servicing Agreement, 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, 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 and Contract File related thereto pursuant to this
subsection.
(c) Except for the remedies set forth in Section 7(e), the obligation
of Seller to repurchase any Defective Contract shall constitute the sole remedy
against Seller, FCI or their affiliates, respecting any breach of the
representations and warranties set forth in Section 7(b) and (c) available
hereunder to the Company; provided, however, that this provision shall not limit
-------- -------
in any way rights of the Company against any other Person.
(d) FCI hereby irrevocably and unconditionally guarantees to the
Company, the Collateral Agent, the Trustee and the Noteholders 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 5.16 of the
Pledge and Servicing Agreement.
Section 9. Covenants of Seller and FCI.
---------------------------
(a) Affirmative Covenants of Seller and FCI. At any time prior to the
----------------------------------------
Termination Date, Seller and FCI each covenants and agrees that it shall:
(i) Compliance with Laws, Etc. Comply in all material respects with all
-------------------------
applicable laws, rules, regulations and orders with respect to it, its business
and properties, and all Contracts and Facility Documents to which it is a party.
(ii) Preservation of Corporate Existence. Preserve and maintain its
-------------------------------------
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified in good standing as a
foreign corporation, and maintain all necessary licenses and approvals, in each
jurisdiction except where the failure to preserve and maintain such existence,
rights, franchises, privileges, qualifications, licenses and approvals would not
have a Material Adverse Effect.
(iii) Audits. At any time and from time to time during regular business
------
hours, permit the Company, and/or its agents, representatives or assigns
(including the Noteholders and their agents, representatives and assigns),
access:
(A) 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
(B) to the officers or employees of Seller and FCI in order to
discuss matters relating to the Contracts or Seller's or FCI's
performance hereunder with any of such officers or employees of Seller
and FCI having knowledge of such matters.
Each such audit shall be at the sole expense of Seller and FCI. The number and
frequency of any such audits shall be limited to such number and frequency as
shall be reasonable in the exercise of the Company's, or its assigns',
reasonable commercial judgment. The Company and its agents, representatives and
assigns shall also have the right to discuss Seller's and FCI's affairs with the
officers and employees of Seller and FCI and Seller's and FCI's independent
accountants and to verify under appropriate procedures the validity, amount,
quality, quantity, value and condition of, or any other matter relating to, the
Contracts and related Collateral.
(iv) Keeping of Records and Books of Account. Maintain and implement
---------------------------------------
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Contracts in the event of the
destruction or loss of the originals thereof) and keep and maintain, all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Contracts (including, without limitation,
records adequate to permit the daily
identification of all Collections with respect to, and adjustments of amounts
payable under, each Contract).
(v) Performance and Compliance with Receivables and Contracts. At its
-------------------------------------------------------------
expense, timely and fully perform and comply in all material respects with the
Credit Standards and Collection Policies and Customary Practices in regard to
the Contracts and with all provisions, covenants and other promises required to
be observed by Seller or FCI under the Contracts.
(vi) Location of Records. Maintain its principal place of business and
-------------------
chief executive office, and the offices where it maintains its Records, at the
addresses referred to in Section 4.2(t) of the Pledge and Servicing 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
4.2(t) of the Pledge and Servicing Agreement shall have been taken and completed
(giving effect to the provisions of such Section 4.2(t) as if each reference to
the "Issuer" 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 Lien under the Pledge and Servicing Agreement) and in the case
of any VOIs, any Permitted Encumbrance thereon) and respond to any inquiries
with respect to ownership of a Contract sold by it hereunder by stating that,
from and after the applicable Closing Date relating thereto, it is no longer the
owner of such Contract and that ownership of such Contract is held by the
Company subject to the lien of the Pledge and Servicing 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 4.1(j) of the Pledge and
Servicing Agreement (or from the jurisdiction in which it was held as described
in the Opinion of Counsel delivered on the Initial Closing Date if no Opinion of
Counsel has yet been delivered pursuant to Section 4.1(j) of the Pledge and
Servicing 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 Pledge and Servicing Agreement with respect to such property will continue
to be maintained after giving effect to such action or actions; provided,
however, that each of the Collateral Agent and the Servicer may remove Pledged
Contracts from such jurisdiction to the extent necessary to satisfy any
requirement of law or court order, in all cases in accordance with the
provisions of the Custodial Agreement and Section 4.1(n) of the Pledge and
Servicing 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 Pledge and Servicing 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.
(xii) Separate Identity. Take such action (and cause FMB and the VB
------------------
Subsidiaries to take such action) as is necessary to ensure compliance with
Section 4.1(o) of the Pledge and Servicing Agreement.
(xiii) Computer Files. ▇▇▇▇ or cause to be marked each Contract in its
---------------
computer files as described in Section 3.3(b) of the Pledge and Servicing
Agreement and shall deliver to the Trustee on behalf of the Company the Contract
Schedule specified in Section 2.6 of the Pledge and Servicing Agreement.
(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 Closing Date, and promptly
notify the Company and Trustee of any such amendments.
(xvii) Segregation of Collections. Prevent the deposit into any of the
----------------------------
Lock-Box Accounts, the Collection Account or the Reserve Account of any funds
other than Collections in respect of the Pledged Contracts (except, in the case
of the Reserve Account as required by the Pledge and Servicing Agreement)
(provided that this covenant shall not have been breached to the extent that
--------
items other than Collections, which are not material in the aggregate, have been
mistakenly forwarded by an Obligor directly to any of FCI, FAC or any of their
respective Affiliates, or deposited into any of the Lock-Box Accounts), and to
the extent that any such funds are nevertheless deposited into any of such
Lock-Box Accounts, the Collection Account or the Reserve 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
-----------------------------------------
Termination Date, Seller and FCI each covenants and agrees that it shall not,
without the prior written consent of the Company and the Collateral Agent and
Trustee:
(i) Sales, Liens, Etc. Against Receivables and Related Security. Except for
-----------------------------------------------------------
the transfers hereunder and the releases contemplated under Section 3.5 and 3.6
of the Pledge and Servicing Agreement, sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist, any Lien
(other than the Lien under the Pledge and Servicing Agreement) and with respect
to VOIs 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: (A)
extensions which are Permitted Deferrals, (B) amendments, entered into in
accordance with Customary Practices and Credit Standards and Collections
Policies, which do not reduce the amount or extent the maturity of required
Payments, and (C) modifications in the applicability of a PAC (which will, among
other things, result in a change in the relevant Contract Rate).
(iii) Change in Business or Credit and Collection Policy. (A) Make any
-----------------------------------------------------
change in the character of its business, or (B) make any change in the Credit
Standards and Collection Policies or deviate from the exercise of Customary
Practices, which change or deviation would, in either case, materially impair
the value or collectibility of any Contract.
(iv) Change in Payment Instructions to Obligors. Add or terminate any bank
------------------------------------------
as a Lock-Box Bank from those listed in Exhibit "E" to the Pledge and Servicing
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
Trustee shall have received (A) 30 days' prior written notice of such addition,
termination or change, (B) 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 (C) prior to the Initial Closing Date of such
addition, termination or change, (1) executed copies of Lock-Box Agreements
executed by each new Lock-Box Bank, the Seller, the Company, the Servicer, the
Collateral Agent and the Trustee and (2) 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
Initial Closing Date without providing at least 30-days prior written notice to
the Company and the Trustee to the extent all action required by Section 4.2(t)
of the Pledge and Servicing Agreement shall have been taken and completed
(giving effect to the provisions of such Section 4.2(t) as if each reference to
the "Issuer" therein is instead a reference to each of Seller and FCI).
(vi) ERISA Matters. (A) Engage or permit any ERISA Affiliate to engage in
-------------
any prohibited transaction for which an exemption is not available or has not
previously been obtained from the DOL; (B) permit to exist any accumulated
funding deficiency, as defined in Section 302(a) of ERISA and Section 412(a) of
the IRC, or funding deficiency with respect to any Benefit Plan other than a
Multiemployer Plan; (C) 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; (D) terminate
any Benefit Plan so as to result in any liability; (E) 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 (A) through
(D) above so long as such events occurring within any fiscal year of Seller or
FCI, in the aggregate, involve a payment of money by or an incurrence of
liability of any such ERISA Affiliate (collectively, "ERISA Liabilities") in an
-----------------
amount which does not exceed $500,000.
(vii) Terminate or Reject Contracts. Without limiting anything in Section
------------------------------
9(b)(ii) above, terminate or reject any Contract prior to the end of the term of
such Contract, whether such rejection or early termination is made pursuant to
an equitable cause, statute, regulation, judicial proceeding or other applicable
law (including, without limitation, Section 365 of the Bankruptcy Code), unless
prior to such termination or rejection, such Contract and any related Collateral
have been released from the Lien pursuant to Section 3.5 of the Pledge and
Servicing Agreement in consideration of the payment of an appropriate Release
Price or Repurchase Price therefor.
(viii) Facility Documents. Except as otherwise permitted under the Pledge
-------------------
and Servicing 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, (1) the Title Clearing Agreements may be amended for the purposes of
-------
(x) making additional properties subject thereof, (y) making an Affiliate of FCI
a party thereto having the same rights and obligations thereunder as FCI or (z)
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 Pledge and Servicing Agreement,
and (2) the FairShare Plus Agreement may be amended from time to time (x) to
substitute or add additional parties thereto, (y) to comply with state and
federal laws or regulations, or (z) for any other purpose, provided that with
respect to this clause (x), FCI or Seller furnishes to the Company, the Trustee
and the Noteholders an Opinion of Counsel in form and substance acceptable to
the Majority Holders to the effect that such amendment or modification will not
adversely affect in any material respect the respective interests of the
Company, the Collateral Agent, the Trustee or the Noteholders.
(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. Reserved.
--------
Section 11. Representations and Warranties of the Company.
---------------------------------------------
The Company represents and warrants as of the Initial Closing Date and each
Subsequent Closing Date, that:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has full corporate
power, authority, and legal right to own its properties and conduct its business
as such properties are presently owned and as such business is presently
conducted, and to execute, deliver and perform its obligations under this
Agreement. The Company is duly qualified to do business and is in good standing
as a foreign corporation, and has obtained all necessary licenses and approvals
in each jurisdiction necessary to carry on its business as presently conducted
and to perform its obligations under this Agreement;
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions provided for in this Agreement have been duly
approved by all necessary corporate action on the part of the Company;
(c) This Agreement constitutes a legal, valid and binding obligation of the
Company, enforceable against it in accordance with its terms, except as such
enforceability may be subject to or limited by Debtor Relief Laws and except as
such enforceability may be limited by general principles of equity;
(d) The execution and delivery of this Agreement, the performance of the
transactions contemplated hereby and the fulfillment of the terms hereof
applicable to the Company will not conflict with, violate, result in any breach
of the material terms and provisions of, or constitute (with or without notice
or lapse of time or both) a material default under any provision of any existing
law or regulation or any order or decree of any court applicable to the Company
or its certificate of incorporation or bylaws or any indenture, contract,
agreement, mortgage, deed of trust, or other instrument to which the Company is
a party or by which it or its properties is bound;
(e) There are no proceedings or investigations pending or, to the best
knowledge of the Company, threatened against the Company before any court,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality (A) asserting the invalidity of this Agreement, (B) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement, (C) seeking any determination or ruling that, in the reasonable
judgment of the Company, would adversely affect the performance by the Company
of its obligations under this Agreement, or (D) seeking any determination or
ruling that would adversely affect the validity or enforceability of this
Agreement;
(f) All approvals, authorizations, consents, orders or other actions of any
person or entity or any governmental body or official required in connection
with the execution and delivery
of this Agreement by the Company, the performance by it of the transactions
contemplated hereby and the fulfillment of the terms hereof, have been obtained
and are in full force and effect; and
(g) The Company is solvent and will not become insolvent after giving
effect to the transactions contemplated by this Agreement; the Company has not
incurred Debts beyond its ability to pay; and the Company, after giving effect
to the transactions contemplated by this Agreement, will have an adequate amount
of capital to conduct its business in the foreseeable future.
Section 12. Miscellaneous.
-------------
(a) Amendment. This Agreement may be amended from time to time or the
---------
provisions hereof may be waived or otherwise modified by the parties hereto by
written agreement signed by the parties hereto; provided, however, that no such
------------------
amendment, waiver or modification shall be effective without the prior written
consent of the Trustee.
(b) Software. (i) Subject to paragraph (b)(ii) below, FCI and each
--------
Originator hereby grants a royalty-free perpetual, irrevocable non-exclusive
license to Seller and the Company (which for all purposes of this License shall
include, without limitation, any secured party which enforces its rights against
Seller or the Company or any transferee of any such secured party which acquires
rights in connection with or subsequent to such enforcement), in, to and under
all rights of FCI and each Originator in or to all intellectual property
(including, without limitation, all computer software, tapes, disks and other
electronic media, books, records and documents) relating to the Contracts;
including, without limitation, any such software, electronic media, books,
records and documents used:
(A) to account for and service the Transferred Assets;
(B) in the management of any VOI resorts, and the VOIs located
within such VOI resorts,
(C) in the monitoring of accounts receivables and third party
contracts relating to the management of properties located
within any VOI resort, and
(D) in managing and operating the FairShare Plus Program and the
Reservation System;
and all rights of FCI in, to or under all relevant licenses, sublicenses,
leases, contracts (including, without limitation, service and maintenance
contracts), warranties and guaranties relating to any such software, electronic
media, books, records and documents, as the case may be, including without
limitation, all such rights arising under such software, electronic media,
books, records and documents (all of the rights described in this clause (i)
being referred to collectively referred to as the "Licensed Rights"). Each of
Seller and the Company shall have the right to use all of the Licensed Rights in
connection with the conduct of their respective business as each deems
necessary or appropriate, including without limitation the right to use such
Licensed Rights for the purposes specified in clauses b(i)(A)-(D) immediately
above and the right to assign, sublicense or otherwise transfer all or any part
of such rights to one or more third parties in connection with the transfer of
all or any part of the Transferred Assets (including, without limitation, any
such transfer pursuant to or in connection with the grant by Seller and/or the
Company of a security interest in any or all of its assets and/or the
enforcement by any such secured party of its interests in such assets).
(ii) The license granted to Seller and Company pursuant to clauses
(b)(i)(B)-(D) immediately above, shall only be deemed to confer upon Seller and
Company, and their respective successors and assigns, the sole right to
sub-license the use of such software, electronic media, books, records and
documents (at no charge, except for reimbursement of administrative, legal and
other expenses associated with such sublicense) to (A) FCI (as long as FCI or
any of its subsidiaries is manager of the subject POA) or the subject POA (in
the event FCI or any of its subsidiaries is not the manager of such POA) in the
case of clauses (b)(i)(B)-(C) above or (B) FCI under the FairShare Plus Program
(or if applicable any successor to FCI thereunder) 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 Pledge and Servicing Agreement and (y)
FCI is unable to continue, or has been removed, as manager of the subject POA or
the FairShare Plus Program, such removal occurring other than as a result of
action instigated (whether by institution of a proxy contest or otherwise) by
the Company or its successors and assigns, including Collateral Agent.
(iii) All rights and licenses granted under or pursuant to this clause (b)
(the "License") are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of the United States Bankruptcy Code (the "Code"), licenses to
rights in and to "intellectual property" as defined under the Code. The parties
hereto agree that each of the Seller and the Company, as licensee of such rights
under the License, shall have and retain and may fully exercise and exploit all
of their respective rights under the Code. The parties hereto further agree
that, in the event of the commencement of bankruptcy proceedings by or against
FCI under the Code, each of Seller and Company, as licensees, shall be entitled
to have and retain all of its rights under the License.
(iv) If an Event of Default has occurred and is continuing under the Pledge
and Servicing Agreement, FCI hereby agrees to provide to any of the persons or
entities described in clauses b(ii)(A) and (B) immediately above, and each of
their successors and assigns, immediately upon the written request of Seller or
Company, copies of all software (including without limitation both object code
and source code), tapes disks, other electronic media, books, records, documents
and other tangible embodiments of the Licensed Rights.
(c) Assignment. The Company has the right to assign its interest under this
----------
Agreement as may be required to effect the purposes of the Pledge and Servicing
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 Pledge and Servicing Agreement, the Collateral Agent,
Trustee and each Noteholder 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, Trustee or Noteholder.
(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 and the Company's pledge of the
Contracts to the Collateral Agent for the benefit of the Trustee and the
Noteholders.
(f) Governing Law. This Agreement shall be construed in accordance with the
-------------
laws of the State of Nevada and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
(g) Notices. All demands and notices hereunder shall be in writing and
-------
shall be deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, or by express delivery service, to (i) in the
case of Seller, Fairfield Acceptance Corporation-Nevada, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President, or such other
address as may hereafter be furnished to the Company and FCI in writing by
Seller, (ii) in the case of FCI, FMB and VB Subsidiaries, c/o Fairfield
Communities, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
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 Funding Corporation, II, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President, or such other address an may be
furnished to Seller or FCI in writing by the Company.
(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 Trustee and the
Noteholders to the extent explicitly contemplated hereby (including, without
limitation, with respect to the Subordination provisions of Section 10 hereof).
(j) Costs, Expenses and Taxes. (i) Each of Seller and FCI jointly and
---------------------------
severally agrees to pay on demand to Company (A) all reasonable costs and
expenses incurred or reimbursed (or to be reimbursed) by Company in connection
with the preparation, execution and delivery (including any requested
amendments, waivers or consents) of this Agreement, the other Facility Documents
and the other documents to be delivered hereunder and thereunder, including,
without limitation, reasonable fees and out-of-pocket expenses of counsel and
(B) 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.
(ii) Each of Seller and FCI jointly and severally agrees to pay,
indemnify and hold Company harmless from and against any and all stamp, sales,
excise and other taxes and fees payable or determined to be payable by or
reimbursed (or to be reimbursed) by Company in connection with the execution,
delivery, filing and recording of this Agreement, the other Facility Documents
and the other agreements and documents to be delivered hereunder and thereunder,
and against any liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have caused their names to be signed
hereto by their respective officers thereunto duly authorized, all as of the day
and year first above written.
FAIRFIELD ACCEPTANCE CORPORATION-
NEVADA
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Its: President
FAIRFIELD COMMUNITIES, INC.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Its: Senior Vice President
FAIRFIELD MYRTLE BEACH, INC.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Its: Vice President
SEA GARDENS BEACH AND
TENNIS RESORT, INC.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Its: Vice President
VACATION BREAK RESORTS, INC.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Its: Vice President
VACATION BREAK RESORTS AT
STAR ISLAND, INC.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Its: Vice President
PALM VACATION GROUP, by its
its General Partners:
Vacation Break Resorts at Palm
Aire, Inc.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Vice President
Palm Resort Group, Inc.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Its:Vice President
OCEAN RANCH VACATION GROUP, by
its General Partners:
Vacation Break at Ocean Ranch, Inc.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Its: Vice President
Ocean Ranch Development, Inc.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Its:Vice President
FAIRFIELD FUNDING CORPORATION, II
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Its: President