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EXHIBIT 10.68
EXECUTION COPY
SERIES 2002-1 SUPPLEMENT
Dated as of August 29, 2002
to
MASTER LOAN PURCHASE AGREEMENT
Dated as of August 29, 2002
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SIERRA RECEIVABLES FUNDING COMPANY, LLC
LOAN-BACKED
VARIABLE FUNDING NOTES,
SERIES 2002-1
- --------------------------------------------------------------------------------
by and between
EFI DEVELOPMENT FUNDING, INC.
as Seller
and
SIERRA DEPOSIT COMPANY, LLC
as Purchaser
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TABLE OF CONTENTS
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PAGE
Section 1. Definitions..............................................................................1
Section 2. Sale.....................................................................................5
(a) Series 2002-1 Loans......................................................................5
(b) Filing of Financing Statements...........................................................6
(c) Delivery of Series 2002-1 Loan Schedule..................................................6
(d) Purchase of Additional Series 2002-1 Loans...............................................6
(e) Treatment as Sale........................................................................7
(f) Recharacterization.......................................................................7
(g) Security Interest in Transferred Assets..................................................7
(h) Transfer of Loans........................................................................7
Section 3. Purchase Price...........................................................................8
Section 4. Payment of Purchase Price................................................................8
Section 5. Conditions Precedent to Sale of Series 2002-1 Loans and Additional Loans.................8
(a) Conditions Precedent to Sale of Series 2002-1 Loans......................................8
(b) Conditions Precedent to Sale of Additional Loans.........................................8
Section 6. Representations and Warranties of the Seller.............................................9
(a) Representations and Warranties of the Seller.............................................9
(b) Representations and Warranties Regarding the Series 2002-1 Loans........................10
Section 7. Repurchases or Substitution of Series 2002-1 Loans......................................11
(a) Repurchase or Substitution Obligation...................................................11
(b) Repurchases and Substitutions...........................................................11
(c) Repurchases of Series 2002-1 Loans that Become Defaulted Loans..........................12
(d) Maximum Repurchases.....................................................................12
Section 8. Covenants of the Seller.................................................................13
Section 9. Representations and Warranties of the Company...........................................13
Section 10. Covenants of the Company................................................................13
Section 11. Miscellaneous Provisions................................................................13
(l) Ratification of Agreement...............................................................13
(m) Amendment...............................................................................13
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TABLE OF CONTENTS
(continued)
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<Caption>
PAGE
(n) Counterparts............................................................................13
(o) GOVERNING LAW...........................................................................13
(p) Successors and Assigns..................................................................13
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THIS PURCHASE AGREEMENT SUPPLEMENT (this "PA SUPPLEMENT"), dated as of
August 29, 2002, is by and between EFI DEVELOPMENT FUNDING, INC., a Delaware
corporation, as seller (the "SELLER"), and SIERRA DEPOSIT COMPANY, LLC, a
Delaware limited liability company, as purchaser (hereinafter referred to as the
"PURCHASER" or the "COMPANY").
Section 2 of the Agreement provides that the Seller may from time to time
sell and assign to the Company, and the Company may from time to time Purchase
from the Seller, all the Seller's right, title and interest in, to and under
Loans listed on the Loan Schedule of the related PA Supplement on the Closing
Date for the related Series. The principal terms of the Purchase and sale of
Loans for each Series shall be set forth in a PA Supplement to the Agreement.
Pursuant to this PA Supplement and in accordance with Section 2 of the
Agreement, the Seller hereby sells to the Company, and the Company hereby
Purchases from the Seller, the Series 2002-1 Loans, and the Seller and the
Company hereby specify the principal terms of such sales and Purchases.
SECTION 1. DEFINITIONS.
All capitalized terms used herein and not otherwise defined herein have the
meanings ascribed to them in the Agreement. Each capitalized term defined herein
shall relate only to the Series 2002-1 Loans and to no other Loans purchased by
the Company from the Seller.
In the event that any term or provision contained herein shall conflict
with or be inconsistent with any term or provision contained in the Agreement,
the terms and provisions of this PA Supplement shall be controlling.
The words "hereof," "herein" and "hereunder" and words of similar import
when used in this PA Supplement shall refer to this PA Supplement as a whole and
not to any particular provision of this PA Supplement; and Article, Section,
subsection, Schedule and Exhibit references contained in this PA Supplement are
references to Articles, Sections, subsections, Schedules and Exhibits in or to
this PA Supplement unless otherwise specified.
"ADDITION DATE" shall mean the date from and after which Additional Loans
are sold pursuant to Section 2(d).
"AGREEMENT" shall mean the Master Loan Purchase Agreement dated as of
August 29, 2002 by and between the Seller and the Purchaser, as the same may be
amended, supplemented or otherwise modified from time to time thereafter in
accordance with its terms.
"ASSIGNMENT" shall have the meaning set forth in Section 2(d)(iii)(E).
"CLOSING DATE" shall mean August 29, 2002.
"COMPANY" shall have the meaning set forth in the preamble.
"CUT-OFF DATE" shall mean August 27, 2002.
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"EFI HYPOTHECATION LOAN" shall mean a loan from Equivest Capital, Inc. to a
Developer.
"ELIGIBLE LOAN" shall mean a Series 2002-1 Loan:
(a) with respect to which (i) the related Timeshare Property is not a
Lot, (ii) the related Timeshare Property has been purchased by an
Obligor, (iii) except in the case of a Green Loan, a certificate of
occupancy for the related Timeshare Property has been issued, (iv)
except in the case of a Green Loan, the unit for the related
Timeshare Property is complete and ready for occupancy, is not in
need of material maintenance or repair, except for ordinary,
routine maintenance and repairs that are not substantial in nature
or cost and contains no structural defects materially affecting its
value, (v) the related Timeshare Property Regime is not in need of
maintenance or repair, except for ordinary, routine maintenance and
repairs that are not substantial in nature or cost and contains no
structural defects materially affecting its value, (vi) there is no
legal, judicial or administrative proceeding pending, or to the
Seller's knowledge threatened, for the total condemnation of the
related Timeshare Property or partial condemnation of any portion
of the related Timeshare Property Regime that would have a material
adverse effect on the value of the related Timeshare Property and
(vii) the related Timeshare Property is not related to a Resort
located outside of the United States, Canada, Mexico or the United
States Virgin Islands;
(b) with respect to which the rights of the Obligor thereunder are
subject to declarations, covenants and restrictions of record
affecting the Resort;
(c) in the case of a Series 2002-1 Loan that is an Installment
Contract, with respect to which the Seller has a valid ownership or
security interest in an underlying Timeshare Property, subject only
to Permitted Encumbrances, unless the criteria in paragraph (d) are
satisfied;
(d) with respect to which (i) if the related Timeshare Property has
been deeded to the Obligor of the related Series 2002-1 Loan, (A)
the Seller has a valid and enforceable first lien Mortgage on such
Timeshare Property, except as such enforceability may be limited by
Debtor Relief Laws and as such enforceability may be limited by
general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law,
(B) such Mortgage and related mortgage note have been assigned to
the Collateral Agent, (C) such Mortgage and the related note for
such Mortgage have been transferred to the custody of the Custodian
in accordance with the provisions of Section 6(c)(i) of the
Agreement and (D) if any Mortgage relating to such Series 2002-1
Loan is a deed of trust, a trustee duly qualified under applicable
law to serve as such has been properly designated in accordance
with applicable law and currently so serves or (ii) if the related
Timeshare Property has not been deeded to the Obligor of the
related Series 2002-1 Loan, the Seller has legal title to and an
equitable interest in such Timeshare Property;
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(e) that was issued in a transaction that complied, and is in
compliance, in all material respects with all material requirements
of applicable federal, state and local law;
(f) that requires the Obligor to pay the unpaid principal balance over
an original term of not greater than 120 months and (ii) the
original term of which does not exceed 84 months unless (A) the
Series 2002-1 Loan relates to a Timeshare Upgrade or (B) the
weighted average FICO score of all such Series 2002-1 Loans with
original terms longer than 84 months is at least 640 and the Series
2002-1 Loan has a FICO score not less than 600;
(g) the Scheduled Payments on which are denominated and payable in
United States dollars;
(h) that is not a Defective Loan or a Defaulted Loan;
(i) that (i) is not a Delinquent Loan as of the Cut-Off Date or related
Addition Cut-Off Date, as applicable, and (ii) with respect to
which no Scheduled Payment was (A) delinquent for more than 30 days
past its Due Date more than once during the 18-month period
preceding the Cut-Off Date or related Addition Cut-Off Date, as
applicable, with respect to such Series 2002-1 Loan, or (B)
delinquent for more than 60 days at any time during such 18-month
period (each such determination under this clause (ii) being made
without giving effect to the grant of any extension of the Due Date
of any such Scheduled Payment).
(j) that does not finance the purchase of credit life insurance;
(k) with respect to which no Due Date thereunder occurring after the
Cut-Off Date or the related Addition Cut-Off Date, as applicable,
has been deferred;
(l) with respect to which the related Timeshare Property (A) consists
of a Fixed Week, Vacation Credits or a UDI and (B) if it consists
of a Fixed Week, it has been converted into a UDI, which conversion
does not give rise to the extension of the maturity of any payments
under such Series 2002-1 Loan;
(m) that was originated by a Developer and has been consistently
serviced by an Affiliate of the Seller, in each case in the
ordinary course of its respective business and in accordance with
Customary Practices and Credit Standards and Collection Policies;
(n) that has not been specifically reserved against by the Seller or
classified by the Seller as uncollectible or charged off;
(o) that arises from transactions in a jurisdiction in which the Seller
is duly qualified to do business, except where the failure to so
qualify will not adversely affect or impair the legality, validity,
binding effect and enforceability of such Series 2002-1 Loan;
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(p) that has not been cancelled or terminated by the related Obligor
(regardless of whether such Obligor is legally entitled to do so)
and constitutes a legal, valid, binding and enforceable obligation
of the related Obligor, except as such enforceability may be
limited by Debtor Relief Laws and as such enforceability may be
limited by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law;
(q) that is fully amortizing pursuant to a required schedule of
substantially equal monthly payments of principal and interest;
(r) with respect to which (i) the downpayment has been made and (ii) no
statutory rescission rights with respect to the related Obligor are
continuing as of the Cut-Off Date or related Addition Cut-Off Date,
as applicable;
(s) that had an Equity Percentage of 10% or more at the time of the
sale of the related Timeshare Property to the related Obligor (or,
in the case of a Loan relating to a Timeshare Upgrade, an Equity
Percentage of 10% or more of the value of all vacation credits
owned by the related Obligor);
(t) with respect to which the related Obligor has not at any time made
a written request for rescission of such Series 2002-1 Loan or
otherwise stated in writing that it does not intend to consummate
such Loan or to fully perform under such Series 2002-1 Loan;
(u) that is not an EFI Hypothecation Loan;
(v) with respect to which at least one Scheduled Payment has been made
by the Obligor;
(w) as of the Cut-Off Date or related Addition Cut-Off Date, as
applicable, has an outstanding loan balance not greater than
$100,000; and
(x) that, in the case of a Green Loan, (i) satisfies each of the
eligibility criteria set forth in paragraphs (a) through (w) above
other than any such criteria that cannot be satisfied due solely to
(A) the related Green Timeshare Property being located in a Resort
that is not yet complete and ready for occupancy; (B) the Seller
not having a valid ownership interest in the related Green
Timeshare Property; or (C) the related Green Timeshare Property not
having been deeded to the Obligor or legal title not being held by
the Nominee; and (ii) the related Green Timeshare Property has a
scheduled completion date no more than six months following the
Cut-Off Date or related Addition Cut-Off Date, as applicable.
"EXCESS CONCENTRATION AMOUNT" shall have the meaning set forth in the
Series 2002-1 Supplement.
"PA SUPPLEMENT" shall have the meaning set forth in the preamble.
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"POOL PURCHASE PRICE" shall have the meaning set forth in Section 3.
"PURCHASE" shall have the meaning set forth in Section 2(e).
"PURCHASER" shall have the meaning set forth in the preamble.
"REPURCHASE DATE" shall have the meaning set forth in Section 7.
"REPURCHASE PRICE" shall have the meaning set forth in Section 7.
"SERIES TERMINATION DATE" shall mean the date on which all obligations with
respect to the Series 2002-1 Notes issued under the Series 2002-1 Supplement
have been paid in full and the Series 2002-1 Supplement is discharged.
"SERIES 2002-1 ADDITIONAL LOAN" shall mean each Additional Loan
constituting one of the Series 2002-1 Loans Purchased from the Seller on an
Addition Cut-Off Date and listed on Schedule 1 to the related Assignment.
"SERIES 2002-1 LOAN" means each Loan listed from time to time on the Series
2002-1 Loan Schedule.
"SERIES 2002-1 LOAN SCHEDULE" shall mean the Loan Schedule for the Series
2002-1 Loans.
"SERIES 2002-1 NOTEHOLDER" shall mean any Noteholder under the Series
2002-1 Supplement.
"SERIES 2002-1 PLEDGED LOAN" shall have the meaning set forth in the Series
2002-1 Supplement.
"SERIES 2002-1 SUPPLEMENT" shall mean the supplement to the Master
Indenture and Servicing Agreement executed and delivered in connection with the
original issuance of the Series 2002-1 Notes and all amendments thereof and
supplements thereto.
"SUBSTITUTION ADJUSTMENT AMOUNT" shall have the meaning set forth in
Section 7.
SECTION 2. SALE.
(a) SERIES 2002-1 LOANS. Subject to the terms and conditions
and in reliance on the representations, warranties, and covenants and agreements
set forth in the Agreement and this PA Supplement, the Seller hereby sells and
assigns to the Company, and the Company hereby Purchases from the Seller,
without recourse except as specifically set forth herein, all of the Seller's
right, title and interest in, to and under the Initial Loans, if any, listed on
the Series 2002-1 Loan Schedule delivered on the Closing Date, together with all
Transferred Assets relating thereto. The Series 2002-1 Additional Loans existing
at the close of business on the related Addition Cut-Off Date and all other
Transferred Assets relating thereto shall be sold by the Seller and purchased by
the Company on the related Addition Date. Notwithstanding the foregoing, and for
avoidance of doubt, the Seller does not assign, and the Purchaser does not
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agree to assume, any obligations specific to any Developer as developer of any
Timeshare Property underlying an Installment Contract.
(b) FILING OF FINANCING STATEMENTS. In connection with the
foregoing sale, the Seller agrees to record and file a financing statement or
statements (and continuation statements or other amendments with respect to such
financing statements) with respect to the Series 2002-1 Loans and related
Transferred Assets described in Section 2(a) sold by the Seller hereunder
meeting the requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect the interests of the Purchaser created
hereby under the applicable UCC and to deliver a file-stamped copy of such
financing statements and continuation statements (or other amendments) or other
evidence of such filings to the Purchaser.
(c) DELIVERY OF SERIES 2002-1 LOAN SCHEDULE. In connection with
the sale and conveyance hereunder, the Seller agrees on or prior to the Closing
Date and on or prior to the applicable Addition Date (in the case of Additional
Series 2002-1 Loans) to indicate or cause to be indicated clearly and
unambiguously in its accounting, computer and other records that the Series
2002-1 Loans and related Transferred Assets have been sold to the Purchaser
pursuant to this PA Supplement. In addition, in connection with the sale and
conveyance hereunder, the Seller agrees on or prior to the Closing Date and on
or prior to the applicable Addition Date (in the case of Additional Series
2002-1 Loans) to deliver to the Company a Series 2002-1 Loan Schedule for such
Series 2002-1 Loans or Additional Series 2002-1 Loans.
(d) PURCHASE OF ADDITIONAL SERIES 2002-1 LOANS.
(i) [Reserved].
(ii) The Seller may, with the consent of the Purchaser,
designate Eligible Loans to be sold as Additional Series 2002-1 Loans.
(iii) On the Addition Date with respect to any Additional
Series 2002-1 Loans, such Additional Series 2002-1 Loans shall become
Series 2002-1 Loans, and the Purchaser shall Purchase the Seller's right,
title and interest in, to and under the Additional Series 2002-1 Loans and
the other related Transferred Assets as provided in the Assignment, subject
to the satisfaction of the following conditions on such Addition Date:
(A) The Seller shall have delivered to the Purchaser
copies of UCC financing statements covering such Additional Series
2002-1 Loans, if necessary to perfect the Purchaser's first
priority interest in such Series 2002-1 Additional Loans and the
other related Transferred Assets;
(B) On each of the Addition Cut-Off Date and the
Addition Date, the sale of such Additional Series 2002-1 Loans and
the other related Transferred Assets to the Purchaser shall not
have caused the Seller's insolvency or have been made in
contemplation of the Seller's insolvency;
(C) No selection procedure shall have been utilized by
the Seller that would result in a selection of such Additional
Series 2002-1 Loans (from the
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Eligible Loans available to the Seller) that would be materially
adverse to the interests of the Purchaser as of the Addition Date;
(D) The Seller shall have indicated in its accounting,
computer and other records that the Additional Series 2002-1 Loans
and the other related Transferred Assets have been sold to the
Purchaser and shall have delivered to the Purchaser the required
Series 2002-1 Loan Schedule;
(E) The Seller and the Purchaser shall have entered
into a duly executed, written assignment substantially in the form
of Exhibit B to the Agreement (an "ASSIGNMENT");
(F) The Seller shall have delivered to the Purchaser an
Officer's Certificate of the Seller dated the Addition Date,
confirming, to the extent applicable, the items set forth in
Section 2(d)(iii) (A) through (E);
(G) The Seller shall have executed the letter agreement
relating to the amendment of documents and the letter agreement
relating to inspections and audits which agreements were entered
into by Fairfield Acceptance Corporation, the Purchaser and Sierra
Receivables Funding Company, LLC on the date of this PA Supplement;
and
(H) The Purchaser shall have paid the Additional Pool
Purchase Price as provided in Section 3 of the Agreement.
(iv) The Seller shall have no obligation to sell the
Additional Series 2002-1 Loans if it has not been paid the Additional Pool
Purchase Price therefor.
(e) TREATMENT AS SALE. It is the express and specific intent of
the parties that the sale of the Series 2002-1 Loans and related Transferred
Assets from the Seller to the Company as provided in this Section 2 (the
"PURCHASE") is and shall be construed for all purposes as a true and absolute
sale of such Series 2002-1 Loans and related Transferred Assets, shall be
absolute and irrevocable and provide the Company with the full benefits of
ownership of the Series 2002-1 Loans and related Transferred Assets and will be
treated as such for all federal income tax reporting and all other purposes.
(f) RECHARACTERIZATION. Without prejudice to the provisions of
Section 2(e) providing for the absolute transfer of the Seller's interest in the
Series 2002-1 Loans and related Transferred Assets to the Company in order to
secure the prompt payment and performance of all of the obligations of the
Seller to the Company and the Company's assignees arising in connection with the
Agreement, this PA Supplement and the other Facility Documents, whether now or
hereafter existing, due or to become due, direct or indirect, or absolute or
contingent, the Seller hereby assigns and grants to the Company a first priority
security interest in all of the Seller's right, title and interest, whether now
owned or hereafter acquired, if any, in, to and under all of the Series 2002-1
Loans and related Transferred Assets and the proceeds thereof.
(g) SECURITY INTEREST IN TRANSFERRED ASSETS. The Seller
acknowledges that the Series 2002-1 Loans and related Transferred Assets are
subject to the Lien of the Indenture and
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Servicing Agreement for the benefit of the Trustee and the Series 2002-1
Noteholders (or to the Collateral Agent on behalf of the Trustee and the Series
2002-1 Noteholders).
(h) TRANSFER OF LOANS. All Series 2002-1 Loans conveyed to the
Company hereunder shall be held by the Custodian pursuant to the terms of the
Custodial Agreement for the benefit of the Company, the Issuer, the Trustee and
the Collateral Agent. Upon each Purchase hereunder, the Custodian shall execute
and deliver to the Company a certificate acknowledging receipt of the applicable
Series 2002-1 Loans pursuant to the Custodial Agreement.
The Seller acknowledges that the Company will convey the Series 2002-1
Loans and the other related Transferred Assets to the Issuer and that the Issuer
will grant a security interest in the Series 2002-1 Loans and other related
Transferred Assets to the Collateral Agent pursuant to the Indenture and
Servicing Agreement and the related Series 2002-1 Supplement. The Seller agrees
that, upon such grant, the Issuer, the Trustee and the Collateral Agent may
enforce all of the Seller's obligations hereunder and under the Agreement
directly, including without limitation the repurchase obligations of the Seller
set forth in Section 7.
SECTION 3. PURCHASE PRICE.
No Series 2002-1 Loans shall be sold on the Closing Date. The purchase
price for Additional Loans sold on an Addition Date shall be the Additional Pool
Purchase Price.
SECTION 4. PAYMENT OF PURCHASE PRICE.
Sections 4(a) through (c) are set forth in the Agreement.
(d) The closing shall take place at the offices of Orrick, Herrington &
Sutcliffe LLP, Washington Harbour, 3050 K Street, NW, Washington, D.C. 20007, at
10:00 a.m. local time on the Closing Date, or such other time and place as shall
be mutually agreed upon among the parties hereto.
SECTION 5. CONDITIONS PRECEDENT TO SALE OF SERIES 2002-1 LOANS AND ADDITIONAL
LOANS.
(a) CONDITIONS PRECEDENT TO SALE OF SERIES 2002-1 LOANS. The
Purchaser's obligations hereunder to Purchase and pay for the Series 2002-1
Loans and related Transferred Assets are subject to the fulfillment of the
following conditions on or before the Closing Date:
(i) (A) The Purchaser shall have received the Series 2002-1
Pool Purchase Agreement relating to each Series 2002-1 Loan
executed by all the parties thereto and (B) all conditions
precedent to the sale of the Series 2002-1 Pool Loans
thereunder shall have been fulfilled to the extent they are
capable of being fulfilled prior to the performance by the
Purchaser of its obligations under this PA Supplement.
(ii) The representations and warranties of the Seller made in
the Agreement and herein shall be true and correct in all
material respects on the Closing Date.
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(b) CONDITIONS PRECEDENT TO SALE OF ADDITIONAL LOANS. No Purchase of
Additional Loans and related Transferred Assets may be made hereunder until the
Purchaser shall have received each of the following in form and substance
acceptable to the Purchaser:
(i) Copies of search reports certified by parties acceptable to
the Purchaser dated a date reasonably prior to the initial Addition Date
listing all effective financing statements which name the Seller (under its
present name and any previous names) as debtor or seller and which are
filed with respect to the Seller in each relevant jurisdiction, together
with copies of such financing statements (none of which shall cover any
portion of the Series 2002-1 Loans being purchased from the Seller and
related Transferred Assets except as contemplated by the Facility
Documents);
(ii) Copies of proper UCC Financing Statement Amendments (Form
UCC3), if any, necessary to terminate all security interests and other
rights of any Person in the Series 2002-1 Loans being purchased from the
Seller and related Transferred Assets previously granted by the Seller
(except as contemplated by the Facility Documents);
(iii) Copies of proper UCC Financing Statements (Form UCC1)
naming the Seller as debtor or seller of the Series 2002-1 Loans being
purchased from the Seller and related Transferred Assets, the Issuer as
total assignee and the Purchaser as assignor secured party, and such other
similar instruments or documents with respect to the Seller as may be
necessary or in the opinion of the Purchaser desirable under the UCC of all
appropriate jurisdictions or any comparable law to evidence the perfection
of the Purchaser's interest in the Series 2002-1 Loans and related
Transferred Assets;
(iv) An opinion or opinions of counsel to the Seller, in the
form required by the Purchaser, with respect to the following: (A) certain
security interest matters, and (B) "true sale" and substantive
consolidation matters; and
(v) Evidence that one or more Lockbox Accounts have been
established.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
(a) REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants as of the Closing Date and as of each Addition Date, or
as of such other date specified in such representation and warranty, that:
(xvii) ACCURACY OF INFORMATION. All information with
respect to the Seller contained in the Confidential Information Memorandum
dated June 2002 with respect to the Series 2002-1 Notes and Series 2002-1
Loans (including, without limitation, the Credit Standards and Collection
Policies) was true and accurate in every respect material to the
transactions contemplated hereby on the date as of which it was delivered,
and did not omit to state any fact necessary to make the statements
contained therein not materially misleading or, if any such information
contained therein has been discovered to have been inaccurate on such date,
such information has been corrected by subsequent information provided in
writing to the Issuer.
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(xviii) NO MATERIAL ADVERSE CHANGE. As of the Closing Date,
there has been no material adverse change with respect to the business
operations or financial condition of the Seller since December 31, 2001.
Sections 6(a)(i) through (xvi) are set forth in the Agreement.
(b) REPRESENTATIONS AND WARRANTIES REGARDING THE SERIES 2002-1
LOANS. The Seller represents and warrants to the Company as of the Cut-Off Date
and Addition Cut-Off Date as to each Series 2002-1 Loan conveyed on and as of
the Closing Date or the related Addition Date, as applicable (except as
otherwise expressly stated) as follows:
(xxiii) LOAN SCHEDULE. The information set forth in the
Series 2002-1 Loan Schedule is true and correct with respect to such Series
2002-1 Loan.
(xxiv) GOOD TITLE TO SERIES 2002-1 LOANS. The Seller has
good and marketable title to such Series 2002-1 Loan free and clear of any
Lien other than Permitted Encumbrances. The Seller has not sold, assigned
or pledged such Series 2002-1 Loan or any interest therein to any Person
other than the Company. With respect to the related Timeshare Property,
either (A) a generally accepted form of title insurance policy insuring the
fee estate ownership of the real property subject to the Timeshare Property
Regime by the Persons owning the respective interests therein and their
successors and assigns (1) was effective either at the time the Developer
(or a Subsidiary thereof) acquired the Timeshare Property or at the time of
registration of the Timeshare Property Regime, (2) is valid and remains in
full force and effect and (3) was issued by a title insurer qualified to do
business in the applicable jurisdiction; or (B) either at the time the
Developer (or a Subsidiary thereof) acquired the Timeshare Property or at
the time of registration of the Timeshare Property 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 Timeshare Properties and which may be relied upon by Persons
subsequently owning the respective interests therein and their successors
and assigns.
(xxv) NO DEFAULTS. As of the Cut-Off Date or related
Addition Cut-Off Date, as applicable, such Series 2002-1 Loan is not a
Defaulted Loan and no event has occurred which, with the taking of any
action or the expiration of any grace or cure period or both, would cause
such Series 2002-1 Loan to be a Defaulted Loan. The Seller has not waived
any such default, breach, violation or event permitting acceleration with
respect to such Series 2002-1 Loan.
(xxvi) EQUAL INSTALLMENTS. Such Series 2002-1 Loan has a
fixed Loan Rate and provides for substantially equal monthly payments that
fully amortize the Series 2002-1 Loan over its term.
(xxvii) EXCESS CONCENTRATION AMOUNT. The Purchase of such
Series 2002-1 Loan occurring on such Closing Date or Addition Date, as
applicable, and the inclusion of such Series 2002-1 Loan as a Series 2002-1
Pledged Loan pursuant to the
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Series 2002-1 Supplement to the Indenture and Servicing Agreement, does not
cause an increase in the Excess Concentration Amount.
Sections 6(b)(i) through (xxii) are set forth in the Agreement.
SECTION 7. REPURCHASES OR SUBSTITUTION OF SERIES 2002-1 LOANS.
(a) REPURCHASE OR SUBSTITUTION OBLIGATION. Subject to
Section 7(b), upon discovery by the Seller or upon written notice from the
Company, the Issuer or the Trustee that any Series 2002-1 Loan is a Defective
Loan, the Seller shall, within 90 days after the earlier of its discovery or
receipt of notice thereof, cure such Defective Loan in all material respects or
either (i) repurchase such Defective Loan from the Company or its assignee at
the Repurchase Price or (ii) substitute one or more Qualified Substitute Loans
for such Defective Loan. For purposes of this Agreement, the term "REPURCHASE
PRICE" shall mean an amount equal to the outstanding Principal Balance of such
Defective Loan as of the close of business on the Due Date immediately preceding
the Payment Date on which the repurchase is to be made, plus accrued but unpaid
interest thereon to the date of the repurchase. The Company hereby directs the
Seller, for so long as the Indenture and Servicing Agreement is in effect, to
make such payment on its behalf to the Collection Account pursuant to Section
7(b). The following defects with respect to documents in any Loan File, solely
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 6(b): misspellings of or
omissions of initials in names; name changes from divorce or marriage;
discrepancies as to payment dates in a Series 2002-1 Loan of no more than 30
days; discrepancies as to Scheduled 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 Master
Servicer's records or in the Series 2002-1 Loan Schedule and non-substantive
typographical errors and other non-substantive minor errors of a clerical or
administrative nature.
(b) REPURCHASES AND SUBSTITUTIONS. The Seller shall provide
written notice to the Company of any repurchase pursuant to Section 7(a) not
less than two Business Days prior to the date on which such repurchase is to be
effected, specifying the Defective Loan and the Repurchase Price therefor. Upon
the repurchase of a Defective Loan pursuant to Section 7(a), the Seller shall
deposit the Repurchase Price in the Collection Account on behalf of the Company
no later than 12:00 noon, New York time, on the Payment Date on which such
repurchase is made (the "REPURCHASE DATE").
If the Seller elects to substitute a Qualified Substitute Loan or Loans for
a Defective Loan pursuant to this Section 7(b), the Seller shall deliver such
Qualified Substitute Loan in the same manner as the other Series 2002-1 Loans
sold hereunder, including delivery of the applicable Loan Documents as required
pursuant to the Custodial Agreement and satisfaction of the same conditions with
respect to such Qualified Substitute Loan as to the Purchase of Additional Loans
set forth in Section 2(d)(iii). Payments due with respect to Qualified
Substitute Loans prior to the last day of the Due Period next preceding the date
of substitution shall not be property of the Company, but will be retained by
the Master Servicer and remitted by the Master Servicer to the
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Seller on the next succeeding Payment Date. Scheduled Payments due on a
Defective Loan prior to the last day of the Due Period next preceding the date
of substitution shall be property of the Company, and after such last day of the
Due Period next preceding the date of substitution the Seller shall be entitled
to retain all Scheduled Payments due thereafter and other amounts received in
respect of such Defective Loan. The Seller shall cause the Master Servicer to
deliver a schedule of any Defective Loans so removed and Qualified Substitute
Loans so substituted to the Company and such schedule shall be an amendment to
the Series 2002-1 Loan Schedule. Upon such substitution, the Qualified
Substitute Loan or Loans shall be subject to the terms of this PA Supplement in
all respects, the Seller shall be deemed to have made the representations and
warranties with respect to each Qualified Substitute Loan set forth in Section
6(b) of the Agreement and this PA Supplement and Section 6(c) of the Agreement,
in each case as of the date of substitution, and the Seller shall be deemed to
have made a representation and warranty that each Loan so substituted is an
Qualified Substitute Loan as of the date of substitution. The Seller shall be
obligated to repurchase or substitute for any Eligible Substitute Loan as to
which the Seller has breached the Seller's representations and warranties in
Section 6(b) to the same extent as for any other Series 2002-1 Loan, as provided
herein. In connection with the substitution of one or more Qualified Substitute
Loans for one or more Defective Loans, the Master Servicer shall determine the
amount (such amount, a "SUBSTITUTION ADJUSTMENT AMOUNT"), if any, by which the
aggregate principal balance of all such Qualified Substitute Loans as of the
date of substitution is less than the aggregate principal balance of all such
Defective Loans (after application of the principal portion of the Scheduled
Payments due in the month of substitution that are to be distributed to the
Company in the month of substitution). The Seller shall deposit the amount of
such shortfall into the Collection Account in immediately available funds on the
date of substitution, without any reimbursement therefor.
Upon each repurchase or substitution, the Company shall automatically and
without further action sell, transfer, assign, set over and otherwise convey to
the Seller, without recourse, representation or warranty, all of the Company's
right, title and interest in and to the related Defective Loan, the related
Timeshare Property, the Loan File relating thereto and any other related
Transferred Assets, all monies due or to become due with respect thereto and all
Collections with respect thereto (including payments received from Obligors from
and including the last day of the Due Period next preceding the date of
transfer, subject to the payment of any Substitution Adjustment Amount). 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 Loan, the related Timeshare
Property and related Loan File pursuant to this Section 7(b).
Promptly after the occurrence of a Repurchase Date and after the repurchase
of Defective Loans in respect of which the Repurchase Price has been paid on
such date, the Seller shall direct the Master Servicer to delete such Defective
Loans from the Series 2002-1 Loan Schedule.
The obligation of the Seller to repurchase or substitute for any Defective
Loan shall constitute the sole remedy against the Seller with respect to any
breach of the representations and warranties set forth in Section 6(b) available
hereunder to the Company or its successors or assigns.
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(c) REPURCHASES OF SERIES 2002-1 LOANS THAT BECOME DEFAULTED
LOANS. If any Series 2002-1 Loan becomes a Defaulted Loan during any Due Period,
the Seller may repurchase such Defaulted Loan from the Company or its assignees
at the Repurchase Price therefor and in accordance with the additional
provisions applicable to repurchases of Defective Loans under Section 7(b).
(d) MAXIMUM REPURCHASES. Notwithstanding anything to the
contrary in the Agreement or this PA Supplement, no Defaulted Loans shall be
repurchased by the Seller to the extent that the aggregate principal balance of
all Defaulted Loans so repurchased is greater than the Defaulted Loan Repurchase
Cap.
SECTION 8. COVENANTS OF THE SELLER.
Section 8 is set forth in the Agreement.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Section 9 is set forth in the Agreement.
SECTION 10. COVENANTS OF THE COMPANY.
Section 10 is set forth in the Agreement.
SECTION 11. MISCELLANEOUS PROVISIONS.
(l) RATIFICATION OF AGREEMENT. As supplemented by this PA
Supplement, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this PA Supplement shall be read, taken and
construed as one and the same instrument.
(m) AMENDMENT. This PA Supplement 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.
(n) COUNTERPARTS. This PA Supplement may be executed in two or
more counterparts, and by different parties on separate counterparts, each of
which shall be an original, but all of which shall constitute one and the same
instrument.
(o) GOVERNING LAW. THIS PA SUPPLEMENT IS GOVERNED BY AND SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING
Section 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT OTHERWISE WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES.
(p) SUCCESSORS AND ASSIGNS. This PA Supplement shall be binding
upon each of the Seller and the Company and their respective permitted
successors and assigns, and shall inure to the benefit of, and be enforceable
by, each of the Seller and the Company and each of the Issuer, the Trustee, the
Collateral Agent and the Noteholders.
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IN WITNESS WHEREOF, the parties have caused their names to be signed hereto
by their respective officers thereunto duly authorized, all as of the day and
year first above written.
EFI DEVELOPMENT FUNDING,
INC.,
as Seller
By: /s/ Lisa Henson
----------------------------------
Name: Lisa Henson
Title: Vice President
SIERRA DEPOSIT COMPANY,
LLC,
as Purchaser
By: /s/ Ralph E. Turner
----------------------------------
Name: Ralph E. Turner
Title: President and Treasurer
[Signature page for EFI PA Supplement]