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EXHIBIT 10.64
EXECUTION COPY
SERIES 2002-1 SUPPLEMENT
Dated as of August 29, 2002
to
MASTER LOAN PURCHASE AGREEMENT
Dated as of August 29, 2002
SIERRA RECEIVABLES FUNDING COMPANY, LLC
LOAN-BACKED
VARIABLE FUNDING NOTES,
SERIES 2002-1
by and between
FAIRFIELD ACCEPTANCE CORPORATION-NEVADA,
as Seller
FAIRFIELD RESORTS, INC.,
as Co-Originator
FAIRFIELD MYRTLE BEACH, INC.,
as Co-Originator
SEA GARDENS BEACH AND TENNIS RESORT, INC.,
VACATION BREAK RESORTS, INC.,
VACATION BREAK RESORTS AT STAR ISLAND, INC.,
PALM VACATION GROUP
and
OCEAN RANCH VACATION GROUP,
each as a VB Subsidiary
PALM VACATION GROUP
and
OCEAN RANCH VACATION GROUP,
each as a VB Partnership
and
SIERRA DEPOSIT COMPANY, LLC
as Purchaser
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TABLE OF CONTENTS
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PAGE
Section 1. Definitions...............................................................................1
Section 2. Sale......................................................................................6
(a) Series 2002-1 Loans.......................................................................6
(b) Filing of Financing Statements...............................................................6
(c) Delivery of Series 2002-1 Loan Schedule......................................................6
(d) Purchase of Additional Series 2002-1 Loans...................................................7
(e) Treatment as Sale............................................................................8
(f) Recharacterization...........................................................................8
(g) Security Interest in Transferred Assets......................................................8
(h) Quitclaim of All Right, Title and Interest by FMB, the VB Subsidiaries and FRI...............8
(i) Transfer of Loans............................................................................9
Section 3. Purchase Price............................................................................9
Section 4. Payment of Purchase Price.................................................................9
Section 5. Conditions Precedent to Sale of Series 2002-1 Loans......................................10
Section 6. Representations and Warranties of the Seller, FRI, FMB and the VB Subsidiaries...........10
(a) Representations and Warranties of the Seller, FRI, FMB and the VB Subsidiaries...........10
(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............................................................12
(c) Repurchases of Series 2002-1 Loans that Become Defaulted Loans...........................13
(d) Maximum Repurchases......................................................................13
Section 8. Covenants of the Seller and FRI..........................................................13
Section 9. Representations and Warranties of the Company............................................14
Section 10. Covenants of the Company.................................................................14
Section 11. Miscellaneous Provisions.................................................................14
(l) Ratification of Agreement...................................................................14
(m) Amendment...................................................................................14
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TABLE OF CONTENTS
(continued)
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PAGE
(n) Counterparts................................................................................14
(o) GOVERNING LAW...............................................................................14
(p) Successors and Assigns......................................................................14
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THIS PURCHASE AGREEMENT SUPPLEMENT (this "PA SUPPLEMENT"), dated as of
August 29, 2002, is by and between FAIRFIELD ACCEPTANCE CORPORATION-NEVADA, a
Delaware corporation, as seller (the "SELLER"), FAIRFIELD RESORTS, INC., a
Delaware corporation and the parent corporation of the Seller, as co-originator
("FRI"), FAIRFIELD MYRTLE BEACH, INC., a Delaware corporation and a wholly-owned
subsidiary of FRI, as co-originator ("FMB"), SEA GARDENS BEACH AND TENNIS
RESORT, INC., a Florida corporation ("SEA GARDENS"), VACATION BREAK RESORTS,
INC., a Florida corporation ("VBR"), VACATION BREAK RESORTS AT STAR ISLAND,
INC., a Florida corporation ("VBRS") (each of Sea Gardens, VBR and VBRS being
wholly-owned subsidiaries of Vacation Break, USA, Inc., a wholly-owned
subsidiary of FRI), PALM VACATION GROUP, a Florida general partnership ("PVG"),
OCEAN RANCH VACATION GROUP, a Florida general partnership ("ORVG") (each of Sea
Gardens, VBR, VBRS, PVG and ORVG are hereinafter collectively referred to as the
"VB SUBSIDIARIES" and PVG and ORVG are hereinafter collectively referred to as
the "VB PARTNERSHIPS") and SIERRA DEPOSIT COMPANY, LLC, a Delaware limited
liability company, as purchaser (hereinafter referred to as the "PURCHASER" or
the "COMPANY").
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).
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"AGREEMENT" shall mean the Master Loan Purchase Agreement dated as of
August 29, 2002 by and between the Seller, FRI, FMB, the VB Subsidiaries, the VB
Partnerships 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.
"CUT-OFF DATE POOL PRINCIPAL BALANCE" shall have the meaning set forth in
Section 3.
"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; PROVIDED, HOWEVER, that a Series 2002-1 Loan shall not fail to
be an Eligible Loan solely because the rights of the Obligor
thereunder have been subjected to the FairShare Plus Program;
(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;
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(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
Originator 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, a
Nominee has legal title to such Timeshare Property and the Seller has
an equitable interest in such Timeshare Property underlying the
related Series 2002-1 Loan;
(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;
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(l) with respect to which the related Timeshare Property (A) consists of a
Fixed Week or a UDI and (B) if it consists of a Fixed Week, it has
been converted into a UDI or has become subject to the FairShare Plus
Program, which conversion or other modification does not give rise to
the extension of the maturity of any payments under such Series 2002-1
Loan;
(m) that (i) either (A) has been transferred by FRI to FAC pursuant to the
Operating Agreement, (B) in the case of any Series 2002-1 Loan
originated by an Originator other than FRI or any Loan related to the
Dolphin's Cove Resort, has been transferred by such Originator to FRI
pursuant to the Operating Agreement and (C) in the case of any Loan
related to the Dolphin's Cove Resort, was originated by Dolphin's Cove
Resort, Ltd., a California limited partnership, and was transferred to
FRI pursuant to a receivables purchase agreement dated December 29,
2000 by and between Dolphin's Cove Resort, Ltd. and FRI and (ii) in
the case of any Loans sold to the Purchaser on the Closing Date, such
Loans were sold by Fairfield Receivables Corporation to FAC pursuant
to an Assignment of Contracts and Mortgages, dated as of August 29,
2002;
(n) that was originated by an Originator and has been consistently
serviced by FAC, in each case in the ordinary course of its respective
business and in accordance with Customary Practices and Credit
Standards and Collection Policies;
(o) that has not been specifically reserved against by the Seller or
classified by FAC or FRI as uncollectible or charged off;
(p) that arises from transactions in a jurisdiction in which FRI and each
Subsidiary of FRI (other than the Purchaser and the Issuer) that
conducts business in such jurisdiction 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;
(q) 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;
(r) that is fully amortizing pursuant to a required schedule of
substantially equal monthly payments of principal and interest;
(s) 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;
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(t) 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);
(u) 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;
(v) that is not a Series 2002-1 Loan originated under an Alliance Program;
(w) with respect to which at least one Scheduled Payment has been made by
the Obligor;
(x) 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
(y) that, in the case of a Green Loan, (i) satisfies each of the
eligibility criteria set forth in paragraphs (a) through (x) 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.
"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.
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"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" shall mean 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 listed on the
Series 2002-1 Loan Schedule delivered on the Closing Date, together with all
other 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 agree to assume, any obligations specific to FRI or any
Originator 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
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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 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");
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(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); and
(G) 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. FRI, FMB, the VB
Subsidiaries and the Seller acknowledge that the Series 2002-1 Loans and related
Transferred Assets are subject to the Lien of the Indenture and 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) QUITCLAIM OF ALL RIGHT, TITLE AND INTEREST BY FMB, THE VB
SUBSIDIARIES AND FRI.
(i) The parties hereto recognize that each of (A) FMB and
the VB Subsidiaries has previously sold, transferred
and assigned to FRI all of its right, title and
interest in and to the Series 2002-1 Loans originated
by it and (B) FRI has previously sold, transferred and
assigned to the Seller all of its respective right,
title and interest in and to the Series 2002-1 Loans
originated by it or sold to it by FMB or the VB
Subsidiaries, together with, in each case, the other
related Transferred Assets. Each such sale, transfer
and assignment has been made pursuant to the terms of
the Operating Agreement and one or more blanket
assignments executed by such
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parties in favor of FRI or the Seller, as applicable.
For the avoidance of doubt and to further evidence the
intent of the parties hereto that all right, title and
interest in the Series 2002-1 Loans and related
Transferred Assets are being sold and transferred to
the Company pursuant to the Agreement and this PA
Supplement, each of FRI, FMB and the VB Subsidiaries
hereby irrevocably quitclaim all right, title and
interest that any of them may have or be deemed to
have in and to any of the Series 2002-1 Loans and
related Transferred Assets directly to the Company.
(ii) To the extent that any quitclaim of the Series 2002-1
Loans and related Transferred Assets from FRI, FMB or
the VB Subsidiaries to the Company contemplated by
this Section 2(h) is not treated as a sale under
applicable law, this PA Supplement shall constitute a
security agreement under applicable law and, 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, each of FRI, FMB and the VB Subsidiaries,
as applicable, hereby assigns and grants to the
Company a first priority security interest in all of
the right, title and interest of FRI, FMB or such VB
Subsidiary, as applicable, 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.
(i) TRANSFER OF LOANS. All Series 2002-1 Loans conveyed to the
Company hereunder shall be held by the Custodian pursuant to the terms of either
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 either Custodial Agreement.
Each of FRI, the other Originators and 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. Each of FRI, the other Originators and the Seller agrees that, upon
such grant, the Issuer and the Collateral Agent may enforce all of the Seller's
and FRI'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.
The Initial Series 2002-1 Loans had an aggregate unpaid principal balance
of $280,127,904.13 at the Cut-Off Date (such aggregate unpaid principal balance
at the Cut-Off
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Date being referred to herein as the "CUT-OFF DATE POOL PRINCIPAL BALANCE"). The
purchase price (the "POOL PURCHASE PRICE") for the Loans sold on the Closing
Date shall be $280,127,904.13. 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) Payment for and delivery of the Series 2002-1 Loans being purchased by
the Company on the Closing Date shall take place at a closing 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.
The Purchaser's obligations hereunder to Purchase and pay for the Series
2002-1 Loans and related Transferred Assets on the Closing Date are subject to
the fulfillment of the following conditions on or before the Closing Date:
(a) (i) 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 (ii) 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.
(b) The representations and warranties of each of the Seller, FRI,
FMB and the VB Subsidiaries made in the Agreement and herein
shall be true and correct in all material respects on the
Closing Date.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE SELLER, FRI, FMB AND THE
VB SUBSIDIARIES.
(a) REPRESENTATIONS AND WARRANTIES OF THE SELLER, FRI, FMB AND THE
VB SUBSIDIARIES. The Seller, FRI, FMB and the VB Subsidiaries jointly and
severally represent and warrant as of the Closing Date and as of each Addition
Date, or as of such other date specified in such representation and warranty,
that:
(xviii) ACCURACY OF INFORMATION. All information with respect
to the Seller, FRI, FMB or the VB Subsidiaries 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
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information has been corrected by subsequent information provided in
writing to the Issuer.
(xix) 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 any of the Seller, FRI, FMB or the VB
Subsidiaries since December 31, 2001.
Sections 6(a)(i) through (xvii) are set forth in the Agreement.
(b) REPRESENTATIONS AND WARRANTIES REGARDING THE SERIES 2002-1
LOANS. The Seller and FRI jointly and severally represent and warrant 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 Originator
(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
Originator (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. None of the Seller, FRI,
FMB or the VB Subsidiaries has 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.
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(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 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 either 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
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substitution shall not be property of the Company, but will be retained by the
Master Servicer and remitted by the Master Servicer to the 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, FRI or their
Affiliates 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 AND FRI.
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.
Sections 11(a) through (k) are set forth in the Agreement.
(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, FRI, the VB Subsidiaries, the VB Partnerships and the
Company and their respective permitted successors and assigns, and shall inure
to the benefit of, and be enforceable
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by, each of the Seller, FRI, the VB Subsidiaries, the VB Partnerships 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.
FAIRFIELD ACCEPTANCE CORPORATION-
NEVADA
By: /s/ Ralph E. Turner
--------------------------------
Name: Ralph E. Turner
Title: President and Treasurer
FAIRFIELD RESORTS, INC.
By: /s/ Ralph E. Turner
--------------------------------
Name: Ralph E. Turner
Title: Senior Vice President and
Assistant Treasurer
FAIRFIELD MYRTLE BEACH, INC.
By: /s/ Ralph E. Turner
--------------------------------
Name: Ralph E. Turner
Title: Senior Vice President and
Assistant Treasurer
SEA GARDENS BEACH AND
TENNIS RESORT, INC.
By: /s/ Ralph E. Turner
--------------------------------
Name: Ralph E. Turner
Title: Senior Vice President and
Assistant Treasurer
VACATION BREAK RESORTS, INC.
By: /s/ Ralph E. Turner
--------------------------------
Name: Ralph E. Turner
Title: Assistant Treasurer
VACATION BREAK RESORTS AT
STAR ISLAND, INC.
By: /s/ Ralph E. Turner
--------------------------------
Name: Ralph E. Turner
Title: Senior Vice President and
Assistant Treasurer
[Signature page for FAC PA Supplement]
<Page>
PALM VACATION GROUP,
by its General Partners:
Vacation Break Resorts at Palm Aire,
Inc.
By: /s/ Ralph E. Turner
--------------------------------
Name: Ralph E. Turner
Title: Senior Vice President and
Assistant Treasurer
Palm Resort Group, Inc.
By: /s/ Ralph E. Turner
--------------------------------
Name: Ralph E. Turner
Title: Senior Vice President and
Assistant Treasurer
OCEAN RANCH VACATION GROUP,
by its General Partners:
Vacation Break at Ocean Ranch,
Inc.
By: /s/ Ralph E. Turner
--------------------------------
Name: Ralph E. Turner
Title: Senior Vice President and
Assistant Treasurer
Ocean Ranch Development, Inc.
By: /s/ Ralph E. Turner
--------------------------------
Name: Ralph E. Turner
Title: Senior Vice President and
Assistant Treasurer
SIERRA DEPOSIT COMPANY, LLC
By: /s/ Ralph E. Turner
--------------------------------
Name: Ralph E. Turner
Title: President and Treasurer
[Signature page for FAC PA Supplement]