[First Amendment to RFI/Borrower Purchase Agreement]
FIRST AMENDMENT AGREEMENT
FIRST AMENDMENT AGREEMENT, dated as of January 31, 2000 (the "First
Amendment"), to the Purchase Agreement, dated as of January 31, 2000, between
Resort Funding, Inc., as seller (the "Seller") and EFI Funding Company, Inc., as
purchaser (the "Purchaser")(as the same may be amended, supplemented, modified
or restated in accordance with its terms, the "Purchase Agreement"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
attributed thereto in the Purchase Agreement.
WHEREAS, the parties hereto have agreed to amend the Purchase
Agreement on the terms and subject to the conditions herein set forth.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the fulfillment of
the conditions set forth below, the parties hereto agree as follows:
SECTION 1. AMENDMENT TO THE PURCHASE AGREEMENT
The Purchase Agreement is hereby amended by deleting in their
entirety all of the terms and provisions thereof and substituting in their place
all of the terms and provisions of the Purchase Agreement attached hereto as
Exhibit A.
SECTION 2. CONDITIONS TO EFFECTIVENESS
This First Amendment shall be effective upon the delivery to the
Agent of counterparts hereof executed by each of the parties hereto.
SECTION 3. MISCELLANEOUS
[First Amendment to RFI/Borrower Purchase Agreement]
3.1 The Purchaser and the Seller each hereby certifies that the
representations and warranties set forth in the Purchase Agreement are true and
correct on the date hereof with the same force and effect as if made on the date
hereof, except to the extent that such representations and warranties speak
specifically to an earlier date in which case they shall have been true and
correct on such date. In addition, the Purchaser and the Seller each represents
and warrants (which representations and warranties shall survive the execution
and delivery hereof) that (a) no default under the Purchase Agreement (nor any
event that but for notice or lapse of time or both would constitute such a
default) shall have occurred and be continuing as of the date hereof nor shall
any default under the Purchase Agreement (nor any event that but for notice or
lapse of time or both would constitute such a default) occur due to this First
Amendment becoming effective, (b) the Purchaser and the Seller each has the
corporate power and authority to execute and deliver this First Amendment and
has taken or caused to be taken all necessary corporate actions to authorize the
execution and delivery of this First Amendment, and (c) no consent of any other
person (including, without limitation, shareholders or creditors of the
Purchaser or the Seller), and no action of, or filing with any governmental or
public body or authority is required to authorize, or is otherwise required in
connection with the execution and performance of this First Amendment other than
such that have been obtained.
3.2 The Purchase Agreement, as amended hereby, is hereby ratified
and confirmed in all respects and remains in full force and effect in accordance
with its terms.
3.3 All references in the Purchase Agreement to "this Agreement" and
"herein" and all references to the Purchase Agreement in the documents executed
in connection with the Purchase Agreement shall mean the Purchase Agreement as
amended hereby and as it may in the future be amended, restated, supplemented or
modified from time to time.
3.4 This First Amendment may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which shall
be an original and all of which shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this First Amendment
by facsimile shall be effective as delivery of a manually executed counterpart
of this First Amendment.
3.5 The Purchaser hereby agrees to pay all costs and expenses
incurred by the Lender and the Agent in connection with this First Amendment
including, without limitation, the fees and expenses of Kaye, Scholer, Fierman,
Hays & Handler, LLP, counsel to the Lender and the Agent.
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[First Amendment to RFI/Borrower Purchase Agreement]
3.6 THIS FIRST AMENDMENT SHALL, IN ACCORDANCE WITH SECTION 5-1401 OF
THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES THEREOF
THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the date first above written.
EFI FUNDING COMPANY, INC.
By:
------------------------------------
Title:
RESORT FUNDING, INC.
By:
------------------------------------
Title:
CONSENTED TO AND AGREED:
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK AG, as Agent
By:
-------------------------------------
Title:
By:
-------------------------------------
Title:
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[First Amendment to RFI/Borrower Purchase Agreement]
Exhibit A
Purchase Agreement
(See attached.)
PURCHASE AGREEMENT
between
RESORT FUNDING, INC.
as Seller
and
EFI FUNDING COMPANY, INC.,
as Purchaser
Dated as of January 31, 2000
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS...................................................1
SECTION 1.1 General................................................1
SECTION 1.2 Specific Terms.........................................1
SECTION 1.3 Certain References....................................43
ARTICLE II CONVEYANCE OF THE RECEIVABLES AND THE OTHER
CONVEYED PROPERTY .........................................44
SECTION 2.1 Conveyance of the Receivables and the Other
Conveyed Property ..................................44
SECTION 2.2 Collections...........................................46
SECTION 2.3 Payments and Computations, Etc........................47
SECTION 2.4 Transfer of Records to Purchaser......................47
SECTION 2.5 Characterization......................................47
ARTICLE III CONDITIONS OF SALE...........................................48
SECTION 3.1 Conditions Precedent to the Initial Purchase..........48
SECTION 3.2 Conditions Precedent to All Purchases.................50
ARTICLE IV REPRESENTATIONS AND WARRANTIES...............................60
SECTION 4.1 Representations and Warranties of the Seller..........60
SECTION 4.2 Indemnification.......................................66
ARTICLE V COVENANTS OF THE SELLER......................................70
SECTION 5.1 Protection of Title of the Purchaser..................70
SECTION 5.2 Other Liens or Interests..............................72
SECTION 5.3 Costs and Expenses....................................73
SECTION 5.4 Compliance with Laws, Etc.............................73
SECTION 5.5 Collections...........................................73
SECTION 5.6 Separate Conduct of Business..........................73
SECTION 5.7 Financial Covenant....................................74
SECTION 5.8 Agreement Provisions and Certain Other Matters........74
SECTION 5.9 Amendment of Certain Documents........................75
SECTION 5.10 Audits................................................76
SECTION 5.11 Releases..............................................76
ARTICLE VI REPURCHASES..................................................76
SECTION 6.1 Repurchase of Receivables Upon Breach of Warranty.....76
SECTION 6.2 Reassignment of Purchased Receivables.................77
SECTION 6.3 Waivers...............................................77
ARTICLE VII MISCELLANEOUS................................................77
SECTION 7.1 Liability of the Seller...............................77
SECTION 7.2 Costs, Expenses and Taxes.............................77
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SECTION 7.3 Limitation on Liability of the Seller and Others......78
SECTION 7.4 Amendment, Etc........................................78
SECTION 7.5 Notices...............................................78
SECTION 7.6 Merger and Integration................................79
SECTION 7.7 Severability of Provisions............................79
SECTION 7.8 Intention of the Parties..............................79
SECTION 7.9 Governing Law.........................................79
SECTION 7.10 Counterparts..........................................80
SECTION 7.11 Nonpetition Covenant..................................80
SECTION 7.12 Binding Effect; Assignability.........................80
SECTION 7.13 Third Party Beneficiary...............................80
EXHIBIT A FORM OF ASSIGNMENT.......................................Exh. A-1
EXHIBIT B FORM OF DEFERRED PURCHASE PRICE NOTE.....................Exh. B-1
EXHIBIT C-1 FORMS OF CONSUMER ALLONGE..............................Exh. C-1-1
EXHIBIT C-2 FORMS OF DEVELOPER ALLONGE.............................Exh. C-2-1
SCHEDULE A SCHEDULE OF RECEIVABLES..................................Sch. A-1
SCHEDULE B ADDRESSES ...............................................Sch. B-1
SCHEDULE C PRIOR NAMES AND TRADE NAMES OF SELLER....................Sch. C-1
SCHEDULE D ELIGIBLE DEVELOPERS......................................Sch. D-1
SCHEDULE E RECEIVABLES AND OTHER CONVEYED
PROPERTY NEEDING EVIDENCE OF RELEASE.....................Sch. E-1
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated as of January 31, 2000, between
RESORT FUNDING, INC., a Delaware corporation, as seller (the "Seller"), and EFI
FUNDING COMPANY, INC., a Delaware corporation, as purchaser (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Purchaser has agreed to purchase from the Seller from
time to time, and the Seller has agreed to sell to the Purchaser from time to
time, certain Receivables and Other Conveyed Property (in each case, as
hereinafter defined) related thereto on the terms set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the Purchaser and the Seller,
intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 General. The specific terms defined in this Article
include the plural as well as the singular. Words herein importing a gender
include the other gender. References herein to "writing" include printing,
typing, lithography, and other means of reproducing words in visible form.
References to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement or the RLSA (as
hereinafter defined). References herein to Persons include their successors and
assigns permitted hereunder or under the RLSA. The terms "include" or
"including" mean "include without limitation" or "including without limitation".
The words "herein", "hereof" and "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular Article, Section or
other subdivision, and Article, Section, Schedule and Exhibit references, unless
otherwise specified, refer to Articles and Sections of and Schedules and
Exhibits to this Agreement. Capitalized terms used herein but not defined herein
shall have the respective meanings assigned to such terms in the RLSA.
SECTION 1.2 Specific Terms. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Acceptable Environmental Report" means an environmental report
or reports (i) certified to the Seller and assigned by the Seller to the
Purchaser (in the case of an environmental report related to an Existing Pledged
Consumer Note Receivable or an Existing Purchased Consumer Note Receivable) or
(ii) certified to the Seller and the Purchaser (in the case
of an environmental report related to a Pledged Consumer Note Receivable or a
Pledged Purchased Consumer Note Receivable other than an Existing Pledged
Consumer Note Receivable or an Existing Purchased Consumer Note Receivable), in
each case, covering an Applicable Development and confirming (to the extent
relevant, in the Purchaser's or its assigns' reasonable discretion): (x) the
absence of Hazardous Materials on, under, or affecting the Land or any other
real property or personal property comprising such Applicable Development,
except for commercially reasonable amounts thereof commonly found at residential
and resort properties in the Applicable Jurisdiction; (y) that an engineering or
environmental consulting firm has obtained, reviewed, and included within its
report a CERCLIS printout from the EPA, statements from the EPA and other
applicable state and local authorities, and such other information as the
Purchaser or its assigns may reasonably require, including, without limitation,
a Phase I Environmental Inspection (if available, in the case of an Applicable
Development located outside of the United States), all of which information
shall confirm that there are no known or suspected Hazardous Materials located
at, used or stored on, or transported to or from the Applicable Development or
in such proximity thereto as to create a material risk of contamination of any
of the related Applicable Underlying Loan Collateral or Applicable Underlying
Purchased Note Collateral, except for commercially reasonable amounts thereof
commonly found at residential and resort properties in the related Applicable
Jurisdiction; and (z) if such Applicable Development, or any part thereof, was
constructed prior to 1986, the absence of friable asbestos within the Units,
Common Elements, if any, or elsewhere at such Applicable Development. If any
such environmental report reflects the presence of friable asbestos, regardless
of when construction of the Applicable Development was completed, such report
shall be deemed not to be an Acceptable Environmental Report. To the extent that
an environmental report complying with the requirements of this definition has
been obtained with respect to an Applicable Development, there shall be no
requirement to obtain another environmental report or an update of the prior
environmental report, in each case, with respect to such Applicable Development
unless there shall have occurred an event that could make such environmental
report materially incorrect or misleading.
"AD&C Mortgage" means, with respect to any Development, a mortgage
encumbering such Development or a portion thereof which (i) secures the debt of
the related Developer under an acquisition, development and/or construction loan
facility and (ii) provides for the release of any Interval related to a Unit
located at such Development from the lien created by such mortgage upon the sale
of such Interval to a Consumer.
"Agreement" means this Purchase Agreement and all amendments hereof
and supplements hereto made in accordance with the terms hereof.
"Applicable Development" means an Eligible Development in connection
with which (x) the Seller has made a Qualified Loan to the related Eligible
Developer or (y) the Seller has purchased a Consumer Note Receivable from the
related Eligible Developer including, without limitation, in the case of a
Pledged Consumer Note Receivable or a Purchased Consumer Note Receivable related
to a Consumer's purchase of a Club Membership Right to Use Interval or a Club
Membership Fee Simple Interval, the Eligible Development serving as the related
Home Resort but not the other Developments with respect to which such Consumer
has rights.
"Applicable Underlying Borrower" means a Developer that is the
maker of a
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Developer Note Receivable.
"Applicable Underlying Consumer" means a Consumer that is a maker of
a Purchased Consumer Note Receivable or a Pledged Consumer Note Receivable.
"Applicable Underlying Guarantor" means any Person that has executed
and delivered an Underlying Guaranty in favor of a Developer or the Seller, as
the case may be, in connection with one or more Developer Note Receivables or
Consumer Note Receivables or the sale by a Developer to the Seller of one or
more Consumer Note Receivables.
"Applicable Underlying Loan" means a loan made by the Seller to a
Developer pursuant to a Hypothecation Loan Agreement or other loan agreement in
connection with a Development which is evidenced by a Developer Note Receivable.
"Applicable Underlying Loan Collateral" means any and all collateral
granted to the Seller to secure the payment by an Applicable Underlying Borrower
of any or all principal, interest and other amounts owing to the Seller by such
Applicable Underlying Borrower in connection with an Applicable Underlying Loan.
"Applicable Underlying Purchased Note Collateral" means any and all
collateral granted to an Applicable Underlying Seller by an Applicable
Underlying Consumer to secure the payment of any or all principal, interest and
other amounts owing to such Applicable Underlying Seller by such Applicable
Underlying Consumer in connection with a Purchased Consumer Note Receivable (all
of which Applicable Underlying Purchased Note Collateral shall have been
assigned by such Applicable Underlying Seller to the Seller pursuant to an
Eligible Developer Sale Agreement).
"Applicable Underlying Seller" means a Developer that sold a
Consumer Note Receivable to the Seller.
"Assignment" means an Assignment executed by the Seller and the
Purchaser, substantially in the form of Exhibit A attached hereto.
"Consumer Allonge" means an allonge, in substantially one of the
forms attached hereto as Exhibit C-1, (i) in the case of a Pledged Consumer Note
Receivable (other than an Existing Pledged Consumer Note Receivable), endorsing
such Consumer Note Receivable from the Applicable Underlying Borrower to the
Seller and endorsing such Consumer Note Receivable from the Seller to the
Purchaser, (ii) in the case of an Existing Pledged Consumer Note Receivable,
endorsing such Consumer Note Receivable from Credit Suisse First Boston Mortgage
Capital LLC to the Seller and endorsing such Consumer Note Receivable from the
Seller to the Purchaser or (iii) in the case of a Purchased Consumer Note
Receivable (other than an Existing Purchased Consumer Note Receivable),
endorsing such Consumer Note Receivable from the Applicable Underlying Seller to
the Seller unless such Consumer Note Receivable was already so endorsed on the
back of the Consumer Note Receivable itself and endorsing such Consumer Note
Receivable from the Seller to the Purchaser.
"Consumer Note Receivable" means a promissory note, installment
sales
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contract, or other evidence of indebtedness made and executed by a Consumer in
favor of an Applicable Underlying Borrower or Applicable Underlying Seller in
connection with such Consumer's acquisition of an Interval.
"Deferred Purchase Price" means the portion of the Purchase Price of
Receivables purchased by the Purchaser hereunder on any Purchase Date exceeding
the amount of the Purchase Price under Section 2.1(c) to be paid in cash, which
portion, when added to the cumulative amount of all previous Deferred Purchase
Prices (after giving effect to any payments made on account thereof) shall not
exceed 20% of the Outstanding Principal Balance of all Receivables purchased by
the Purchaser hereunder. The obligations of the Purchaser in respect of the
Deferred Purchase Price shall be evidenced by the Purchaser's Subordinated Note.
"Developer Allonge" means an allonge, in substantially one of the
forms attached hereto as Exhibit C-2, (i) in the case of a Developer Note
Receivable (other than an Existing Developer Note Receivable), endorsing such
Developer Note Receivable from the Seller to the Purchaser or (ii) in the case
of an Existing Developer Note Receivable, endorsing such Developer Note
Receivable from Credit Suisse First Boston Mortgage Capital LLC to the Seller
and endorsing such Developer Note Receivable from the Seller to the Purchaser.
"Developer Note Receivable" means a promissory note that was
executed by an Applicable Underlying Borrower to the order of the Seller
evidencing an Applicable Underlying Loan.
"Discount" means, with respect to any Receivable (i) which is a
Developer Note Receivable, 11.1% of the Outstanding Principal Balance of such
Receivable and (ii) which is a Purchased Consumer Note Receivable, 11.1% of the
Outstanding Principal Balance of such Receivable; provided, however, that the
foregoing Discounts may be revised prospectively by request of either of the
parties hereto to reflect changes in recent experience with respect to
write-offs, timing and cost of Collections, cost of funds and other relevant
factors in order that the Purchase Price for such Receivable shall equal the
fair market value of such Receivable, provided that such revision is consented
to by both of the parties (it being understood that each party agrees to duly
consider such request but shall have no obligation to give such consent).
"Eligible Developer" means a Developer, (i) the creditworthiness for
a receivables/ hypothecation loan or receivables purchase/sale arrangement and
other qualifications of which are satisfactory to the Servicer, in its
reasonable discretion, based upon the Credit and Collection Policy, (ii) which
was underwritten by the Seller based upon the Credit and Collection Policy and
(iii) which is not bankrupt or insolvent; it being understood by the parties
hereto that, subject to their continued compliance with each of the criteria
included in this definition, each of the Developers listed on Schedule D
attached hereto shall be Eligible Developers hereunder.
"Eligible Developer Note Receivable" means a Developer Note
Receivable that satisfies each of the following criteria:
(1) The Hypothecation Loan Agreement related to such Developer
Note Receivable provides for an advance rate of not greater than 90.00%
against the
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aggregate Outstanding Principal Balance of Eligible Pledged Consumer Note
Receivables and/or Eligible Pledged Presale Consumer Note Receivables
securing the debt of the Applicable Underlying Borrower thereunder and
such advance rates have not been exceeded.
(2) Each Assignment Document exists with respect to such
Developer Note Receivable and is duly executed and enforceable in
accordance with its terms and has been delivered to the Custodian.
(3) [Intentionally Omitted].
(4) The Applicable Underlying Loan Documents related to such
Developer Note Receivable are in full force and effect.
(5) The Seller was the original and sole payee thereof and a
fully executed Developer Allonge has been permanently affixed thereto.
(6) Neither the related Applicable Underlying Borrower nor the
related Applicable Underlying Guarantor, if any, is an Affiliate of the
Seller, Equivest or the Purchaser and the Development related to such
Developer Note Receivable is not directly or indirectly owned in whole or
in part by an Affiliate of the Seller, Equivest or the Purchaser.
(7) Neither the Applicable Underlying Borrower nor the
Applicable Underlying Guarantor, if any, has any claim against the Seller
or the Purchaser, or any Affiliate thereof, and no defense, set-off, or
counterclaim exists with respect to such Developer Note Receivable.
(8) The original of such Developer Note Receivable and all
related documents and instruments, the terms of each of which shall comply
in all material respects with all Applicable Laws, have been endorsed by
the Seller to the Purchaser in the manner prescribed by the Purchaser (or
its assigns) and have been delivered to the Custodian.
(9) Each such Developer Note Receivable is enforceable in
accordance with its terms and represents the genuine, legal, valid and
binding payment obligation of the Applicable Underlying Borrower related
thereto, and such Applicable Underlying Borrower had full legal capacity
to execute and deliver such Developer Note Receivable and any other
documents related thereto and to grant the security interest purported to
be granted under the related Hypothecation Loan Agreement, and such
Developer Note Receivable has not been prepaid or repaid in full.
(10) Each such Developer Note Receivable is denominated in
United States Dollars and, at the time of origination and at all times
thereafter, materially conformed to all requirements of the Credit and
Collection Policy applicable to such Receivable and, in any case, no such
Receivable has been reserved against or would be required to be
written-off pursuant to the Credit and Collection Policy.
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(11) All requirements of applicable federal, state and local
laws, and regulations thereunder (including, without limitation, but only
if and to the extent applicable, usury laws, the Federal Truth-in-Lending
Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the
Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal
Reserve Board's Regulations "B" and "Z," the Soldiers' and Sailors' Civil
Relief Act of 1940 and state adaptations of the National Consumer Act and
of the Uniform Consumer Credit Code, the Interstate Land Sales Full
Disclosure Act, the Real Estate Settlement Procedures Act and all other
consumer credit laws and equal credit opportunity and disclosure laws and
any regulations promulgated thereunder) in respect of such Developer Note
Receivable, the sale of the Intervals related to the Consumer Note
Receivables securing such Developer Note Receivable and the sale of credit
life and credit accident and health insurance and any extended service
contracts in connection with the sale of the Intervals related to the
Consumer Note Receivables securing such Developer Note Receivable, have
been complied with in all material respects.
(12) [Intentionally Omitted].
(13) The Coupon Rate set forth in the Hypothecation Loan
Agreement related to such Developer Note Receivable shall be not less than
the Minimum APR with respect to such Developer Note Receivable on the date
on which such Developer Note Receivable was purchased hereunder.
(14) [Intentionally Omitted].
(15) Such Developer Note Receivable, as of the applicable
Purchase Date therefor, (i) had not at any time during the past 90 days
been more than 30 days past due and was not, at the time of its Purchase
hereunder, more than 30 days past due and (ii) had no material provision
thereof waived, amended, altered or modified in any respect since its
origination in a manner which could be considered adverse to the
Purchaser's or its assigns' interest therein.
(16) Such Developer Note Receivable (i) was originated by the
Seller in the ordinary course of the Seller's business and in accordance
with the Credit and Collection Policy and the Seller had all necessary
licenses and permits to originate Developer Note Receivables in the
jurisdiction where the related Applicable Underlying Borrower and Eligible
Development were located and (ii) and/or documentation evidencing or
governing same contains customary and enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for
realization against the collateral security related thereto. The Purchaser
has all necessary licences and permits to own such Developer Note
Receivable under all applicable law.
(17) Such Developer Note Receivable was originated by the
Seller without any fraud or material misrepresentation on the part of the
related Applicable Underlying Borrower or the Seller. Such Developer Note
Receivable was sold by the Seller to the Purchaser without any fraud or
material misrepresentation on the part of the
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Seller.
(18) Such Developer Note Receivable is payable by an
Applicable Underlying Borrower which (i) is not, nor was at any time
during the three (3) year period immediately preceding the applicable
Purchase Date therefor, subject to any bankruptcy, insolvency,
reorganization or similar proceeding and (ii) has not had any real
property owned by such Applicable Underlying Borrower foreclosed or
currently subject to foreclosure.
(19) Such Developer Note Receivable is not due from the United
States or any State or from any agency, department, subdivision or
instrumentality thereof.
(20) The information pertaining to such Developer Note
Receivable set forth in the Schedule of Receivables and the related
Assignment and Assignment Documents is true and correct.
(21) The Seller's master computer records relating to such
Developer Note Receivable have been clearly and unambiguously marked to
show that such Developer Note Receivable has been sold to the Purchaser.
(22) The Computer Tape or Listing to be made available by the
Seller to the Purchaser (or its assignees or designees) on the Purchase
Date on which such Developer Note Receivable is to be purchased hereunder
is complete and accurate in all material respects as of such Purchase
Date.
(23) Such Developer Note Receivable constitutes an instrument
within the meaning of the UCC of all jurisdictions which govern the
perfection of the Purchaser's ownership interest therein.
(24) The Seller shall have taken all steps necessary under all
applicable law in order to cause a valid, subsisting and enforceable first
priority perfected security interest to exist in its favor in the
Applicable Underlying Loan Collateral and all other Collateral related to
such Developer Note Receivable (and the proceeds thereof) on or before the
applicable Purchase Date therefor and immediately prior to the Purchase of
such Developer Note Receivable by the Purchaser, there shall have existed
in favor of the Seller as secured party, a valid, subsisting and
enforceable first priority perfected lien in the Applicable Underlying
Loan Collateral and all other Collateral related to such Receivable (and
the proceeds thereof), and such security interest is and shall be prior to
all other liens upon and security interests in such Applicable Underlying
Loan Collateral and other Collateral (and the proceeds thereof) that now
exist or may hereafter arise or be created; provided, that, any such
security interest in the Land, Units and/or Common Elements of an
Applicable Development, to the extent evidenced by a Developer Mortgage,
may be subordinate to an AD&C Mortgage.
(25) The Seller shall have taken all steps necessary under all
applicable law in order to cause to exist in favor of the Purchaser, (A) a
valid, subsisting and enforceable first priority perfected ownership
interest in such Developer Note Receivable
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and (B) a valid, subsisting and enforceable first priority (subject to the
proviso contained in subparagraph (x) above) perfected security interest
in the Applicable Underlying Loan Collateral and all other Collateral
related to such Developer Note Receivable (and the proceeds thereof) on or
before the applicable Purchase Date therefor and upon the Purchase of such
Developer Note Receivable by the Purchaser, there shall exist in favor of
the Purchaser, a valid, subsisting and enforceable first priority
perfected ownership interest in such Developer Note Receivable and a
valid, subsisting and enforceable first priority (subject to the proviso
contained in subparagraph (x) above) perfected security interest in the
Applicable Underlying Loan Collateral and all other Collateral related to
such Developer Note Receivable (and the proceeds thereof) and such
security interest is and shall be prior to all other liens upon and
security interests therein that now exist or may hereafter arise or be
created.
(26) Subject to the following sentence, if such Developer Note
Receivable is secured by Pledged Consumer Note Receivables which are in
turn secured by liens on Fee Simple Intervals, Interval Mortgages covering
all such Fee Simple Intervals are in full force and effect and such
Interval Mortgages and collateral assignments thereof from the Applicable
Underlying Borrower to the Seller and from the Seller to the Purchaser
shall each have been duly recorded or registered in the Applicable
Jurisdiction in accordance with all Applicable Laws (and such Interval
Mortgage has evidence thereon of payment of all required documentary
stamps and intangible taxes, if any are required). If such Developer Note
Receivable is secured by Pledged Consumer Note Receivables which are in
turn secured by liens on Club Membership Fee Simple Intervals, Interval
Mortgages covering all such Club Membership Fee Simple Intervals at the
respective applicable Home Resorts are in full force and effect and such
Interval Mortgages and collateral assignments thereof from the Applicable
Underlying Borrower to the Seller and from the Seller to the Purchaser
shall each have been duly recorded or registered in the Applicable
Jurisdiction in accordance with all Applicable Laws (and such Interval
Mortgage has evidence thereon of payment of all required documentary
stamps and intangible taxes, if any are required).
(27) (x) If such Developer Note Receivable is secured by
Pledged Consumer Note Receivables which are in turn secured by liens on
Right to Use Intervals other than Club Membership Right to Use Intervals
(except in the case of Existing Developer Note Receivables), (i) a
Developer Mortgage exists which covers the Applicable Development related
to such Developer Note Receivable and such Developer Mortgage and an
assignment thereof from the Seller to the Purchaser shall each have been
duly recorded or registered in the Applicable Jurisdiction in accordance
with all Applicable Laws (and such Developer Mortgage has evidence thereon
of payment of all required documentary stamps and intangible taxes, if any
are required), (ii) Non-Disturbance Arrangements are in effect with
respect to such Right to Use Intervals and an Opinion of Counsel has been
delivered to the Purchaser which shall contain an opinion that such
Non-Disturbance Arrangements shall remain in full force and effect
notwithstanding the occurrence of a Bankruptcy Event with respect to the
related Applicable Underlying Borrower or (iii) the related Applicable
Underlying Borrower has transferred all of its Developer's Interests to a
bankruptcy remote special purpose entity (any such entity, an "SPE") under
terms and conditions satisfactory to the Purchaser and
8
its assigns and an Opinion of Counsel has been delivered to the Purchaser
and its assigns which shall contain an opinion that such transfer
constitutes a true sale or absolute transfer of such Developer's Interests
from such Applicable Underlying Borrower to such SPE rather than a loan
secured by such interest such that (A) such Developer's Interests would
not constitute property of the estate of such Applicable Underlying
Borrower under Section 541(a)(1) of the Bankruptcy Code and (B) Section
362(a) of the Bankruptcy Code would not apply to stay payments of amounts
collected with respect to such Developer's Interests.
(y) If such Developer Note Receivable is secured by
Pledged Consumer Note Receivables which are in turn secured by liens
on Specific Club Membership Right to Use Intervals (except in the
case of Existing Developer Note Receivables), a Developer Mortgage
exists which covers the Home Resort related to such Developer Note
Receivable and such Developer Mortgage and an assignment thereof
from the Seller to the Purchaser shall each have been duly recorded
or registered in the Applicable Jurisdiction in accordance with all
Applicable Laws (and such Developer Mortgage has evidence thereon of
payment of all required documentary stamps and intangible taxes, if
any are required).
(z) If such Developer Note Receivable is secured by
Pledged Consumer Note Receivables which are in turn secured by liens
on Non-Specific Club Membership Right to Use Intervals, security
interest arrangements satisfactory to the Purchaser and its assigns
in their reasonable discretion, are in full force and effect with
respect to such Developer Note Receivable, Pledged Consumer Note
Receivables and Non-Specific Club Membership Right to Use Intervals.
(28) All filings (including, without limitation, UCC and real
property filings) required to be made by any Person and all other actions
required to be taken or performed by any Person in any jurisdiction to
give the Purchaser a first priority perfected ownership interest in such
Developer Note Receivables and in all right, title and interest of the
Seller in, to and under all Applicable Underlying Loan Collateral related
thereto and the proceeds thereof have been made, taken or performed.
(29) With respect to such Developer Note Receivable, there
exists a Pledged Developer Note Receivable File and a copy of such Pledged
Developer Note Receivable File is in the possession of the Custodian.
(30) Such Developer Note Receivable has not been satisfied,
subordinated or rescinded, and the Applicable Underlying Loan Collateral
securing such Developer Note Receivable has not been released from the
lien of the Purchaser, in whole or in part.
(31) Such Developer Note Receivable was originated in, or is
subject to the laws of, any jurisdiction the laws of which would make
unlawful, void or voidable the sale, transfer and assignment of such
Developer Note Receivable under this Agreement and neither the Applicable
Underlying Borrower nor the Seller has entered into any
9
agreement with any Person that prohibits, restricts or conditions the
assignment of such Developer Note Receivable.
(32) The Seller has not taken any action to convey any right
to any Person that would result in such Person having a right to payments
due under such Developer Note Receivable or payments received under the
related Title Policy, if any, or otherwise to impair the rights of the
Purchaser or any of its assignees or designees in such Developer Note
Receivable, the Applicable Underlying Loan Collateral securing such
Developer Note Receivable or the proceeds thereof.
(33) Such Developer Note Receivable is not assumable by
another Person in a manner which would release the related Applicable
Underlying Borrower thereof from such Applicable Underlying Borrower's
obligations to the Seller or the Purchaser (or any of its assignees or
designees).
(34) Such Developer Note Receivable is in full force and
effect and constitutes the legal, valid and binding obligation of the
Applicable Underlying Borrower thereunder and is not subject to any right
of rescission, setoff, counterclaim or defense (except the potential
discharge in bankruptcy of such Applicable Underlying Borrower).
(35) There has been no default, breach, violation or event
permitting acceleration under the terms of such Developer Note Receivable,
and no condition exists or event has occurred and is continuing that with
notice, the lapse of time or both would constitute a default, breach,
violation or event permitting acceleration under the terms of such
Developer Note Receivable, and there has been no waiver of any of the
foregoing.
(36) If such Developer Note Receivable is secured in whole or
in part by Pledged Consumer Note Receivables which are in turn secured by
liens on Right to Use Intervals, either (i) a Developer Title Policy is in
effect which (a) covers the related Applicable Development and all
necessary steps have been taken in order to assign the Seller's rights as
the insured under the aforementioned Developer Title Policy to the
Purchaser (or to have an endorsement issued granting to the Purchaser the
rights of an insured under such policy), (b) is at all times in an amount
not less than the acquisition and construction costs incurred by the
Developer with respect to the related Applicable Development and (c) was
issued by a Title Insurance Company or (ii) on the date the Purchaser
acquires an interest in such Developer Note Receivable, (a) good and
marketable title to the related Applicable Development (except with
respect to Fee Simple Intervals previously sold to Consumers) was vested
in the related Developer and (b) such Applicable Development is not
subject to any monetary liens (except with respect to taxes and
assessments which are not delinquent or, if applicable, with respect to an
AD&C Mortgage) or other encumbrances which would interfere with the
development or the intended use of such Applicable Development.
(37) If such Developer Note Receivable is secured in whole or
in part by Pledged Consumer Note Receivables which are in turn secured by
liens on Fee Simple Intervals, either (i) one or more Interval Title
Policies are in effect which (a) cover each such Fee Simple Interval with
respect to the related Applicable Development and all
10
necessary steps have been taken in order to assign the Seller's rights as
the insured under the aforementioned Interval Title Policies to the
Purchaser (or to have an endorsement issued granting to the Purchaser the
rights of an insured under such policies), (b) are at all times in an
aggregate amount of not less than the outstanding principal amount of all
such Pledged Consumer Note Receivables and (c) were issued by a Title
Insurance Company or (ii) on the date the Purchaser acquires an interest
in such Developer Note Receivable, (a) good and marketable title to such
Applicable Development (except with respect to Fee Simple Intervals
previously sold to Consumers) was vested in the applicable Developer
immediately prior to the sale of each related Fee Simple Interval to the
related Consumer, (b) upon the consummation of such sale, good and
marketable title to such Fee Simple Interval is vested in such Consumer
and (c) such Development is not subject to any monetary liens (except with
respect to taxes and assessments which are not delinquent or, if
applicable, with respect to an AD&C Mortgage) or other encumbrances which
would interfere with the development or the intended use of such
Development.
(38) No selection procedures adverse to the Purchaser (or its
assignees or designees) have been utilized in selecting any such Developer
Note Receivable from all other similar receivables acquired by the Seller.
(39) An enforceable Developer Repurchase Obligation is in full
force and effect with respect to each Pledged Consumer Note Receivable
securing such Developer Note Receivable.
(40) Such Developer Note Receivable shall not relate to a
Developer which is Equivest or an Affiliate of Equivest.
(41) [Intentionally Omitted].
(42) [Intentionally Omitted].
(43) Upon the Purchase of such Developer Note Receivable, the
Weighted Average APR of all Primary Level Eligible Receivables shall be at
least 12%.
(44) [Intentionally Omitted].
(45) [Intentionally Omitted].
(46) [Intentionally Omitted].
(47) The related Applicable Underlying Borrower is an Eligible
Developer.
(48) The related Applicable Underlying Loan is a Qualified
Loan.
"Eligible Pledged Consumer Note Receivable" means a Pledged Consumer
Note Receivable that satisfies each of the following criteria:
11
(49) The related Applicable Underlying Borrower is the sole
payee thereof.
(50) Such Pledged Consumer Note Receivable arises from a bona
fide sale by an Applicable Underlying Borrower of one or more Intervals to
a Consumer.
(51) The Interval sale from which it arises has not been
canceled by the related Consumer, any statutory or other applicable
cancellation or rescission period has expired (or in the case of Interval
sales with respect to Presale Consumer Note Receivables and Developments
located in Florida or any other jurisdiction which by law entitles a
Consumer to an ongoing cancellation or rescission period, no such
cancellation or rescission has occurred; it being agreed that if on or
after the date the Purchaser acquires an interest in such Pledged Consumer
Note Receivable such sale is canceled or rescinded, such cancellation or
rescission shall constitute a failure to satisfy this paragraph (c) with
respect to such Pledged Consumer Note Receivable and such Pledged Consumer
Note Receivable shall be deemed not to have constituted an Eligible
Pledged Consumer Note Receivable on the date the Purchaser acquired an
interest therein), and the Interval sale otherwise complies fully with the
terms, provisions, and conditions of this Agreement, the Applicable
Underlying Loan Documents, the sale documentation between the Consumer and
the Applicable Underlying Borrower and all Applicable Laws.
(52) [Intentionally Omitted].
(53) A down payment and/or other payments have been received
by the related Applicable Underlying Borrower from the Consumer who is the
maker of the Pledged Consumer Note Receivable in an amount equal to at
least ten percent (10%) of the original purchase price of the relevant
Interval and such Consumer has received no cash or other rebates of any
kind with respect to the purchase price of such Interval.
(54) No monthly installment or any other payment due with
respect to such Pledged Consumer Note Receivable is more than thirty (30)
days contractually past due at the time the Purchaser acquires an interest
in such Pledged Consumer Note Receivable (except as permitted under
subclause (ii) of paragraph (t) below).
(55) [Intentionally Omitted].
(56) The interest rate on such Pledged Consumer Note
Receivable on the date the Purchaser acquires an interest in such Pledged
Consumer Note Receivable is not less than the Facility Funding Rate as of
the end of the most recently ended Remittance Period plus 3%.
(57) The Consumer who owns the relevant Interval (or has
obtained similar rights with respect to the relevant Interval by means of
a contract for deed, installment sale contract or other arrangement) has
access to a Unit within the related Applicable Development during any use
period reserved by or assigned to such Consumer, all in accordance with
the Applicable Timeshare Documents.
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(58) The Consumer who owns the relevant Interval (or has
obtained similar rights with respect to the relevant Interval by means of
a contract for deed, installment sale contract or other arrangement) (i)
is the maker of such Pledged Consumer Note Receivable and (ii) is not an
Affiliate of, or related to, or employed by the Applicable Underlying
Borrower, the Seller, Equivest or the Purchaser.
(59) The Consumer has no claim against the Applicable
Underlying Borrower, the Seller, the Purchaser or any Affiliate thereof,
or any defense, set-off, or counterclaim with respect to such Pledged
Consumer Note Receivable.
(60) (i) The maximum Outstanding Principal Balance of such
Pledged Consumer Note Receivable does not exceed $25,000 per one week/year
Interval (except that if such Pledged Consumer Note Receivable relates to
a Fractional Interval, the maximum Outstanding Principal Balance shall not
exceed $50,000) (or such greater amount as may be approved in writing in
advance by the Purchaser (or its assignee or designee) and (ii) if such
Pledged Consumer Note Receivable relates to a Fractional Interval, the
Outstanding Principal Balance thereof, together with the aggregate
Outstanding Principal Balance of all other Consumer Note Receivables (as
defined in the RLSA) owing by Consumers relating to Fractional Intervals
and which constitute a Receivable (as defined in the RLSA) or collateral
security for a Receivable (as defined in the RLSA) purchased by the
Purchaser under either of the Borrower Receivables Purchase Agreements,
shall not exceed an amount equal to 5.00% of the Eligible Receivables
Balance.
(61) Such Pledged Consumer Note Receivable is executed by a
resident of the United States or if not, the Outstanding Principal Balance
thereof, together with the aggregate Outstanding Principal Balance of all
other Consumer Note Receivables (as defined in the RLSA) owing by
Consumers that are not residents of the United States and which constitute
a Receivable (as defined in the RLSA) or collateral security for a
Receivable (as defined in the RLSA) purchased by the Purchaser under
either of the Borrower Receivables Purchase Agreements, shall not exceed
an amount equal to 2.5% of the Eligible Receivables Balance.
(62) The original of such Pledged Consumer Note Receivable and
all related documents have been endorsed by the Applicable Underlying
Borrower to the Seller and then endorsed by the Seller to the Purchaser,
in the manner prescribed in writing by the Purchaser (or its assigns)
prior to the date the Purchaser acquires an interest therein and delivered
to the Custodian as provided in this Agreement (provided that with respect
to Pledged Consumer Note Receivables in which an interest is acquired by
the Purchaser on the initial Purchase Date hereunder, such endorsements
shall be completed within 30 days of the date of this Agreement, it being
agreed by the parties hereto that any failure to do so with respect to any
such Pledged Consumer Note Receivables within such time period shall
constitute a failure to satisfy this paragraph (n) with respect to such
Pledged Consumer Note Receivables and such Pledged Consumer Note
Receivables shall be deemed not to have constituted Eligible Pledged
Consumer Note Receivables on the date the Purchaser acquired an interest
therein), and the terms
13
thereof and all instruments related thereto shall comply in all respects
with all Applicable Laws.
(63) (i) Each Unit in the Applicable Development, which the
relevant Consumer has the right to occupy, pursuant to the Applicable
Timeshare Documents, has been completed and furnished in accordance with
the terms and provisions of such Consumer's purchase contract, the
Applicable Development's public offering statement, and the other
Applicable Timeshare Documents, (ii) a certificate of occupancy for each
such Unit (or the building in which the Unit is located) has been issued,
and (iii) such Unit is not subject to any Lien (other than the lien
created by such Interval Mortgage and the Permitted Liens and
Encumbrances) that has not previously been consented to in writing by the
Purchaser (or its assignees or designees).
(64) The forms of promissory note, mortgage, federal
truth-in-lending disclosure statement, if applicable, purchase contract,
and other documents and instruments, if applicable, relating to the
Interval purchase transaction giving rise to such Pledged Consumer Note
Receivable have been approved in advance by the Purchaser (or its
assignees or designees) in writing, which such approval shall not be
unreasonably withheld.
(65) Such Pledged Consumer Note Receivable is denominated in
United States Dollars and, at the time of origination and at all times
thereafter, materially conformed to all requirements of the Credit and
Collection Policy applicable thereto.
(66) All requirements of applicable federal, state and local
laws, and regulations thereunder (including, without limitation, but only
if and to the extent applicable, usury laws, the Federal Truth-in-Lending
Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the
Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal
Reserve Board's Regulations "B" and "Z", the Soldiers' and Sailors' Civil
Relief Act of 1940 and state adaptations of the National Consumer Act and
of the Uniform Consumer Credit Code, the Interstate Land Sales Full
Disclosure Act, the Real Estate Settlement Procedures Act and all other
consumer credit laws and equal credit opportunity and disclosure laws and
any regulations promulgated thereunder) in respect of such Pledged
Consumer Note Receivable, the sale of the Intervals related thereto and
the sale of credit life and credit accident and health insurance and any
extended service contracts in connection with the sale of such Intervals,
have been complied with in all material respects.
(67) Such Pledged Consumer Note Receivable has an original
term of not more than 120 months.
(68) Such Pledged Consumer Note Receivable, as of the date the
Purchaser acquires an interest therein, (i) had a remaining term of not
more than 120 months, (ii) was not, as of the date the Purchaser acquires
an interest therein, more than 30 days past due (or 90 days past due with
respect to a Pledged Consumer Note Receivable (x) the interest of the
Purchaser in which was acquired on the initial Purchase
14
Date hereunder and (y) that was being lent against under the Prior Loan
Facility immediately prior to the initial Purchase Date hereunder) and
(iii) had no material provision thereof waived, amended, altered or
modified in any respect (including, without limitation, as a result of the
application of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended) since its origination.
(69) Such Pledged Consumer Note Receivable (i) was originated
by the Applicable Underlying Borrower in its ordinary course of business
and in accordance with its underwriting guidelines and such Applicable
Underlying Borrower had all necessary licenses and permits to originate
Consumer Note Receivables in the jurisdiction where the related Eligible
Development was located, (ii) was pledged to the Seller by the Applicable
Underlying Borrower under the related Hypothecation Loan Agreement and the
Applicable Underlying Loan Documents and the Seller has all necessary
licenses and permits to own such Consumer Note Receivable under all
applicable law, (iii) and/or the documentation evidencing or governing
same contains customary and enforceable provisions such as to render the
rights and remedies of the holder thereof adequate for realization against
the collateral security related thereto, and (iv) and/or the documentation
evidencing or governing same provides for level monthly payments
(provided, that the payment in the first month and the final month of the
life of the Pledged Consumer Note Receivable may be different from the
level payment) which, if made when due, shall fully amortize the debt
evidenced by such Pledged Consumer Note Receivable over the original term
of such Pledged Consumer Note Receivable. The Purchaser has all necessary
licences and permits to own its interest in such Pledged Consumer Note
Receivable under all applicable law.
(70) Such Pledged Consumer Note Receivable was originated by
the Applicable Underlying Borrower without any fraud or material
misrepresentation on the part of the related Applicable Underlying
Borrower or the related Consumer. Such Pledged Consumer Note Receivable
was pledged to the Seller by the Applicable Underlying Borrower under the
related Hypothecation Loan Agreement and the Applicable Underlying Loan
Documents without any fraud or material misrepresentation on the part of
Applicable Underlying Borrower.
(71) Such Pledged Consumer Note Receivable is payable by one
or two Consumers, at least one of whom is a natural (and not a corporate)
Person, and if such Pledged Consumer Note Receivable is payable by more
than one Consumer, each such Consumer is jointly and severally obligated
to pay the full amount payable under such Pledged Consumer Note
Receivable.
(72) Such Pledged Consumer Note Receivable is payable by a
Consumer which (i) is not, nor was at any time during the three (3) year
period immediately preceding the date the Purchaser acquires an interest
therein, subject to any bankruptcy, insolvency, reorganization or similar
proceeding (or if such Consumer was at any time during the three (3) year
period immediately preceding the date the Purchaser acquires an interest
therein subject to any bankruptcy, insolvency, reorganization or similar
proceeding, such Consumer has made at least the immediately preceding
twelve monthly payments under such Pledged Consumer Note Receivable
without delinquency)
15
and (ii) has not had any real property owned by such Consumer foreclosed
or subject to foreclosure.
(73) Such Pledged Consumer Note Receivable is not due from the
United States or any State or from any agency, department, subdivision or
instrumentality thereof.
(74) The information pertaining to such Pledged Consumer Note
Receivable set forth in the Schedule of Receivables and the related
Assignment and Assignment Documents is true and correct.
(75) [Intentionally Omitted].
(76) Subject to the following sentence, if such Pledged
Consumer Note Receivable is secured by a lien on a Fee Simple Interval, an
Interval Mortgage related to such Fee Simple Interval is in full force and
effect and such Interval Mortgage and collateral assignments thereof from
the Applicable Underlying Borrower to the Seller and from the Seller to
the Purchaser shall each have been duly recorded or registered in the
Applicable Jurisdiction in accordance with all Applicable Laws (and such
Interval Mortgage has evidence thereon of payment of all required
documentary stamps and intangible taxes, if any are required). If such
Pledged Consumer Note Receivable is secured by a lien on a Club Membership
Fee Simple Interval, an Interval Mortgage covering such Club Membership
Fee Simple Interval at the respective applicable Home Resort is in full
force and effect and such Interval Mortgage and collateral assignments
thereof from the Applicable Underlying Borrower to the Seller and from the
Seller to the Purchaser shall each have been duly recorded or registered
in the Applicable Jurisdiction in accordance with all Applicable Laws (and
such Interval Mortgage has evidence thereon of payment of all required
documentary stamps and intangible taxes, if any are required).
(77) (x) If such Pledged Consumer Note Receivable was executed
in connection with the related Consumer's purchase of a Right to Use
Interval other than a Club Membership Right to Use Interval (except in the
case of an Existing Pledged Consumer Note Receivable), (i) a Developer
Mortgage exists which covers the Applicable Development related to such
Pledged Consumer Note Receivable and such Developer Mortgage and an
assignment thereof from the Seller to the Purchaser shall each have been
duly recorded or registered in the Applicable Jurisdiction in accordance
with all Applicable Laws (and such Developer Mortgage has evidence thereon
of payment of all required documentary stamps and intangible taxes, if any
are required), (ii) Non-Disturbance Arrangements are in effect with
respect to such Right to Use Interval and an Opinion of Counsel has been
delivered to the Purchaser which shall contain an opinion that such
Non-Disturbance Arrangements shall remain in full force and effect
notwithstanding the occurrence of a Bankruptcy Event with respect to the
related Applicable Underlying Borrower or (iii) the related Applicable
Underlying Borrower has transferred all of its Developer's Interests to an
SPE under terms and conditions satisfactory to the Purchaser and its
assigns and an Opinion of Counsel has been delivered to the Purchaser and
its assigns which shall contain an opinion that such
16
transfer constitutes a true sale or absolute transfer of such Developer's
Interests from such Applicable Underlying Borrower to such SPE rather than
a loan secured by such interest such that (A) such Developer's Interests
would not constitute property of the estate of such Applicable Underlying
Borrower under Section 541(a)(1) of the Bankruptcy Code and (B) Section
362(a) of the Bankruptcy Code would not apply to stay payments of amounts
collected with respect to such Developer's Interests.
(y) If such Pledged Consumer Note Receivable is secured
by a lien on a Specific Club Membership Right to Use Interval
(except in the case of an Existing Pledged Consumer Note Receivable)
(i) a Developer Mortgage exists which covers the Home Resort related
to such Pledged Consumer Note Receivable and such Developer Mortgage
and an assignment thereof from the Seller to the Purchaser shall
each have been duly recorded or registered in the Applicable
Jurisdiction in accordance with all Applicable Laws (and such
Developer Mortgage has evidence thereon of payment of all required
documentary stamps and intangible taxes, if any are required), (ii)
Non-Disturbance Arrangements are in effect with respect to the Home
Resort related to such Specific Club Membership Right to Use
Interval and an Opinion of Counsel has been delivered to the
Purchaser and its assigns which shall contain an opinion that such
Non-Disturbance Arrangements shall remain in full force and effect
notwithstanding the occurrence of a Bankruptcy Event with respect to
the related Applicable Underlying Borrower or (iii) the related
Applicable Underlying Borrower has transferred all of its
Developer's Interests with respect to such Home Resort and all other
Applicable Developments in the same club to an SPE under terms and
conditions satisfactory to the Purchaser and its assigns and an
Opinion of Counsel has been delivered to the Purchaser and its
assigns which shall contain an opinion that such transfer
constitutes a true sale or absolute transfer of such Developer's
Interests from such Applicable Underlying Borrower to such SPE
rather than a loan secured by such interest such that (A) such
Developer's Interests would not constitute property of the estate of
such Applicable Underlying Borrower under Section 541(a)(1) of the
Bankruptcy Code and (B) Section 362(a) of the Bankruptcy Code would
not apply to stay payments of amounts collected with respect to such
Developer's Interests.
(z) If such Pledged Consumer Note Receivable is secured
by a lien on a Non-Specific Club Membership Right to Use Interval,
security interest arrangements satisfactory to the Purchaser and its
assigns in their reasonable discretion are in full force and effect
with respect to such Pledged Consumer Note Receivable and
Non-Specific Club Membership Right to Use Interval; provided,
however, that no UCC financing statements will be required to be
filed against any individual Consumer.
(78) The Applicable Underlying Borrower owned the Pledged
Consumer Note Receivable free and clear of any Adverse Claim immediately
prior to its pledge of such Pledged Consumer Note Receivable to the
Seller.
(79) All filings (including, without limitation, UCC and real
property filings) required to be made by any Person and all other actions
required to be taken or
17
performed by any Person in any jurisdiction to give the Purchaser a first
priority perfected lien on such Pledged Consumer Note Receivable and the
proceeds thereof have been made, taken or performed.
(80) With respect to such Pledged Consumer Note Receivable,
there exists a Pledged Consumer Note Receivable File and a copy of such
Pledged Consumer Note Receivable File is in the possession of the
Custodian.
(81) Such Pledged Consumer Note Receivable has not been
satisfied, subordinated or rescinded, and the Applicable Underlying Loan
Collateral securing such Pledged Consumer Note Receivable has not been
released from the lien of the Purchaser, in whole or in part.
(82) Such Pledged Consumer Note Receivable was not originated
in, or is subject to the laws of, any jurisdiction the laws of which would
make unlawful, void or voidable the sale, transfer and assignment of such
Pledged Consumer Note Receivable and none of the Applicable Underlying
Borrower, the related Consumer, the Seller or the Purchaser has entered
into any agreement with any Person that prohibits, restricts or conditions
the assignment of such Pledged Consumer Note Receivable.
(83) None of the Applicable Underlying Borrower, the related
Consumer, the Seller or the Purchaser have taken any action to convey any
right to any Person that would result in such Person having a right to
payments due under such Pledged Consumer Note Receivable or payments
received under the related Title Policy, if any, or otherwise to impair
the rights of the Purchaser (or its assignees or designees) in such
Pledged Consumer Note Receivable or the proceeds thereof.
(84) Such Pledged Consumer Note Receivable is not assumable by
another Person in a manner which would release the related Consumer from
such Consumer's obligations to the Applicable Underlying Borrower, the
Seller or the Purchaser (or its assignees or designees).
(85) Such Pledged Consumer Note Receivable is in full force
and effect and constitutes the legal, valid and binding obligation of the
related Consumer and is not subject to any right of rescission (or in the
case of Interval sales with respect to Presale Consumer Note Receivables
and Developments located in Florida or any other jurisdiction which by law
entitles a Consumer to an ongoing rescission period, no such rescission
has occurred), setoff, counterclaim or defense (except the potential
discharge in bankruptcy of such Consumer).
(86) There has been no default, breach, violation or event
permitting acceleration under the terms of such Pledged Consumer Note
Receivable, and no condition exists or event has occurred and is
continuing that with notice, the lapse of time or both would constitute a
default, breach, violation or event permitting acceleration under the
terms of such Pledged Consumer Note Receivable, and there has been no
waiver of any of the foregoing.
18
(87) No selection procedures adverse to the Seller or the
Purchaser (or its assignees or designees) have been utilized in selecting
any such Pledged Consumer Note Receivable from all other similar
receivables acquired by the Applicable Underlying Borrower.
(88) Each such Pledged Consumer Note Receivable has in place
with respect thereto an enforceable Developer Repurchase Obligation.
(89) Such Pledged Consumer Note Receivable is not a Presale
Consumer Note Receivable.
(90) If such Pledged Consumer Note Receivable was executed in
connection with the related Consumer's purchase of a Right to Use
Interval, either (i) a Developer Title Policy is in effect which (a)
covers the related Applicable Development and all necessary steps have
been taken in order to assign the Seller's rights as the insured under the
aforementioned Developer Title Policy to the Purchaser (or to have an
endorsement issued granting to the Purchaser the rights of an insured
under such policy), (b) is at all times in an amount not less than the
acquisition and construction costs incurred by the Developer with respect
to the related Applicable Development and (c) was issued by a Title
Insurance Company or (ii) on the date the Purchaser acquires an interest
in such Pledged Consumer Note Receivable, (a) good and marketable title to
the related Applicable Development (except with respect to Fee Simple
Intervals previously sold to Consumers) was vested in the related
Developer and (b) such Applicable Development is not subject to any
monetary liens (except with respect to taxes or assessments which are not
delinquent or, if applicable, with respect to an AD&C Mortgage) or other
encumbrances which would interfere with the development or the intended
use of such Applicable Development.
(91) If such Pledged Consumer Note Receivable was executed in
connection with the related Consumer's purchase of a Fee Simple Interval,
either (i) an Interval Title Policy is in effect which (a) covers such Fee
Simple Interval and all necessary steps have been taken in order to assign
the Seller's rights as the insured under the aforementioned Interval Title
Policy to the Purchaser (or to have an endorsement issued granting to the
Purchaser the rights of an insured under such policy), (b) is at all times
in an aggregate amount of not less than the outstanding principal amount
of such Pledged Consumer Note Receivable and all other Consumer Note
Receivables covered by such Interval Title Policy, if any, and (c) was
issued by a Title Insurance Company or (ii) on the date the Purchaser
acquires an interest in such Pledged Consumer Note Receivable, (a) good
and marketable title to the related Applicable Development (except with
respect to other Fee Simple Intervals previously sold to Consumers) was
vested in the related Developer immediately prior to the sale of the Fee
Simple Interval related to such Pledged Consumer Note Receivable to the
related Consumer, (b) upon the consummation of such sale, good and
marketable title to such Fee Simple Interval was vested in such Consumer
and (c) such Fee Simple Interval is not subject to any monetary liens
(except with respect to taxes and assessments which are not delinquent) or
other encumbrances which would interfere with the development or the
intended use of such Fee Simple Interval.
19
(92) Such Pledged Consumer Note Receivable secures an Eligible
Developer Note Receivable.
(93) If such Pledged Consumer Note Receivable was executed in
connection with the related Consumer's purchase of a Fee Simple Interval,
such Consumer was delivered a deed with respect to such Fee Simple
Interval and such deed was duly recorded or registered in the Applicable
Jurisdiction in accordance with all Applicable Laws.
(94) If such Pledged Consumer Note Receivable was an Existing
Pledged Consumer Note Receivable or a new Pledged Consumer Note Receivable
securing a new advance under an Existing Developer Note Receivable (unless
such new Pledged Consumer Note Receivable relates to a new phase of
construction at the Development which is the subject of such Existing
Developer Note Receivable) either:
(x) an Acceptable Environmental Report covering the
Applicable Development related to such Pledged Consumer Note
Receivable has been obtained by the Seller; or
(y) on the date the Purchaser acquires an interest in
such Pledged Consumer Note Receivable, (a) there is the absence of
Hazardous Materials on, under, or affecting the Land or any other
real property or personal property comprising the Applicable
Development related to such Pledged Consumer Note Receivable, except
for commercially reasonable amounts thereof commonly found at
residential and resort properties in the Applicable Jurisdiction,
(b) there are no known or suspected Hazardous Materials located at,
used or stored on, or transported to or from such Applicable
Development or in such proximity thereto as to create a material
risk of contamination of any of the Applicable Underlying Loan
Collateral except for commercially reasonable amounts thereof
commonly found at residential and resort properties in the
Applicable Jurisdiction, and (c) there is the absence of friable
asbestos within the Units, Common Elements, if any, or elsewhere at
such Applicable Development.
(95) If such Pledged Consumer Note Receivable is (i) not an
Existing Pledged Consumer Note Receivable and (ii) not a new Pledged
Consumer Note Receivable securing a new advance under an Existing
Developer Note Receivable (unless such new Pledged Consumer Note
Receivable relates to a New Phase at the Development which is the subject
of such Existing Developer Note Receivable), an Acceptable Environmental
Report shall have been obtained by the Seller covering the Applicable
Development related to such Pledged Consumer Note Receivable (and, if such
Pledged Consumer Note Receivable relates to a Club Membership Right to Use
Interval or a Club Membership Fee Simple Interval, with respect to each
other Development with respect to which the holder of such an Interval has
rights, on the date the Purchaser acquires an interest in such Pledged
Consumer Note Receivable, (i) there are no Hazardous Materials on, under,
or affecting the Land or any other real property or personal property
comprising such Development, except for commercially reasonable amounts
thereof
20
commonly found at residential and resort properties in the Applicable
Jurisdiction, (ii) there are no known or suspected Hazardous Materials
located at, used or stored on, or transported to or from such Development
or in such proximity thereto as to create a material risk of contamination
of any Applicable Underlying Loan Collateral, except for commercially
reasonable amounts thereof commonly found at residential and resort
properties in the Applicable Jurisdiction, and (iii) there is no friable
asbestos within the Units, Common Elements, if any, or elsewhere at such
Development).
(96) The Purchaser has received certified copies of all
insurance policies and endorsements thereto or other evidence of insurance
satisfactory to the Purchaser and its assigns, in the reasonable
discretion of each, with respect to the Applicable Development relating to
such Pledged Consumer Note Receivable and such insurance policies and
endorsements thereto shall conform in all material respects with the
Credit and Collection Policy and customary practice in the timeshare
industry. In addition, the Applicable Underlying Borrower has obtained and
is maintaining or has caused the Applicable Timeshare Owners' Association
to obtain and maintain all policies of insurance required by and in
accordance with the terms of the Credit and Collection Policy and which
are customary in the timeshare industry in the Applicable Jurisdiction.
(97) Each Assignment Document exists with respect to such
Pledged Consumer Note Receivable and is duly executed and enforceable in
accordance with its terms and has been delivered to the Custodian.
(98) Upon the Purchaser acquiring an interest in such Pledged
Consumer Note Receivable, not more than 10% of the Eligible Receivables
Balance shall relate to any one Eligible Development (as defined in the
RLSA).
(99) Upon the Purchaser acquiring an interest in such Pledged
Consumer Note Receivable, not more than 20% (or 40%, in the case of
Florida) of the Eligible Receivables Balance shall relate to Developments
(as defined in the RLSA) in any one state.
(100) Upon the Purchaser acquiring an interest in such Pledged
Consumer Note Receivable, not more than 25% of the Eligible Receivables
Balance shall relate to Pledged Consumer Note Receivables.
(101) Upon the Purchaser acquiring an interest in such Pledged
Consumer Note Receivable, not more than 20% of the Eligible Receivables
Balance shall relate to any one Eligible Developer (as defined in the
RLSA) which is not a wholly-owned subsidiary of Equivest.
(102) Upon the Purchaser acquiring an interest in such Pledged
Consumer Note Receivable, the aggregate Outstanding Principal Balance of
all Consumer Note Receivables (as defined in the RLSA) owing by Consumers
that are not residents of the United States and which constitute a
Receivable (as defined in the RLSA) or collateral security for a
Receivable (as defined in the RLSA) purchased by the Purchaser under
either Borrower Receivables Purchase Agreement shall not exceed an amount
equal
21
to 2.5% of the Eligible Receivables Balance.
(103) [Intentionally Omitted].
(104) The Seller shall have taken all steps necessary under
all applicable law in order to cause to exist in favor of the Purchaser a
valid, subsisting and enforceable first priority perfected security
interest in such Pledged Consumer Note Receivable and all Collateral
related to such Pledged Consumer Note Receivable (and the proceeds
thereof) on or before the date on which the Purchaser acquires an interest
in such Pledged Consumer Note Receivable, and upon such acquisition by the
Purchaser of an interest in such Pledged Consumer Note Receivable, there
shall exist in favor of the Purchaser a valid, subsisting and enforceable
first priority perfected security interest in such Pledged Consumer Note
Receivable and all Collateral related to such Pledged Consumer Note
Receivable (and the proceeds thereof) and such security interest is and
shall be prior to all other liens upon and security interests therein that
now exist or may hereafter arise or be created; provided, that, any such
security interest in the Land, Units and/or Common Elements of an
Applicable Development, to the extent evidenced by a Developer Mortgage,
may be subordinate to an AD&C Mortgage.
(105) On the date on which the Purchaser acquires an interest
in such Pledged Consumer Note Receivable, such Pledged Consumer Note
Receivable is not a Defaulted Receivable or a Delinquent Receivable.
"Eligible Pledged Presale Consumer Note Receivable" means a Pledged
Consumer Note Receivable which constitutes a Presale Consumer Note Receivable
that satisfies each of the criteria for an Eligible Pledged Consumer Note
Receivable (other than the criteria of such definition set forth in paragraph
(i), subclauses (i) and (ii) of paragraph (o), paragraph (bb), paragraph (oo),
paragraph (qq), paragraph (ss) and, solely to the extent that the requirements
thereof would require the recordation of an Interval Mortgage, paragraph (ddd)
thereof) and that additionally satisfies each of the following criteria:
(106) (i) All sales and financing documents relating to such
Presale Consumer Note Receivable have been executed and delivered to the
Seller, (ii) there are no conditions or requirements for the escrow of
Consumer deposits or payments required under applicable law or contract
relating to the sale which is the subject of such Presale Consumer Note
Receivable and (iii) all conditions and requirements with respect to such
sale have been completed other than the issuance of the certificate of
occupancy for the building in which the Unit related to the applicable
Interval is located.
(107) Such Presale Consumer Note Receivable will meet the
criteria set forth in paragraph (i), subclauses (i) and (ii) of paragraph
(o), paragraph (bb), paragraph (oo), paragraph (qq), paragraph (ss) and
paragraph (ddd) in the defined term Eligible Pledged Consumer Note
Receivable at the closing of the Interval to which such Presale Consumer
Note Receivable relates, which closing shall take place in accordance with
the purchase contract for that Interval, but in any event no later than
two years from the date of the purchase contract.
22
(108) The related Applicable Underlying Borrower shall have
posted and shall maintain completion and performance bonds in amounts
satisfactory to complete the related Development and in form and substance
satisfactory to the Purchaser and its assigns.
(109) The documentation related to such Presale Consumer Note
Receivable shall require the Consumer to make periodic payments of
principal and interest on such Presale Consumer Note Receivable prior to
the closing of the Interval to which such Presale Consumer Note Receivable
relates.
(110) If such Presale Consumer Note Receivable relates to the
Surrey Development, the Outstanding Principal Balance of such Presale
Consumer Note Receivable, together with the aggregate Outstanding
Principal Balance of all other Presale Consumer Note Receivables relating
to the Surrey Development which constitute a Receivable (as defined in the
RLSA) or collateral security for a Receivable (as defined in the RLSA)
purchased by the Purchaser under either Borrower Receivables Purchase
Agreement, does not exceed an amount equal to 8% of the Eligible
Receivables Balance (or such lesser percentage as is consistent with a
"BBB" rated timeshare securitization financing, as determined by either or
both the Rating Agencies).
(111) If such Presale Consumer Note Receivable relates to one
or more Developments other than the Surrey Development, the Outstanding
Principal Balance of such Presale Consumer Note Receivable, together with
the aggregate Outstanding Principal Balance of all other Presale Consumer
Note Receivables not relating to the Surrey Development which constitute a
Receivable (as defined in the RLSA) or collateral security for a
Receivable (as defined in the RLSA) purchased by the Purchaser under
either Borrower Receivables Purchase Agreement, does not exceed an amount
equal to 2.5% of the Eligible Receivables Balance.
(112) If such Presale Consumer Note Receivable relates to a
Development other than the Surrey Development, the Outstanding Principal
Balance of such Presale Consumer Note Receivable, together with the
aggregate Outstanding Principal Balance of all other Presale Consumer Note
Receivables relating to the same Development which constitute a Receivable
(as defined in the RLSA) or collateral security for a Receivable (as
defined in the RLSA) purchased by the Purchaser under either Borrower
Receivables Purchase Agreement, does not exceed an amount equal to
$500,000.
(113) Upon the Purchaser acquiring an interest in such Presale
Consumer Note Receivable, not more than 10% of the Eligible Receivables
Balance shall relate to any one Eligible Development (as defined in the
RLSA).
(114) Upon the Purchaser acquiring an interest in such Presale
Consumer Note Receivable, not more than 20% (or 40%, in the case of
Florida) of the Eligible Receivables Balance shall relate to Developments
(as defined in the RLSA) in any one state.
23
(115) Upon the Purchaser acquiring an interest in such Presale
Consumer Note Receivable, not more than 25% of the Eligible Receivables
Balance shall relate to Pledged Consumer Note Receivables.
(116) Upon the Purchaser acquiring an interest in such Presale
Consumer Note Receivable, not more than 20% of the Eligible Receivables
Balance shall relate to any one Eligible Developer (as defined in the
RLSA) which is not a wholly-owned subsidiary of Equivest.
(117) Such Presale Consumer Note Receivable is executed by a
resident of the United States or if not, the Outstanding Principal Balance
thereof, together with the aggregate Outstanding Principal Balance of all
other Consumer Note Receivables (as defined in the RLSA) owing by
Consumers that are not residents of the United States and which constitute
a Receivable (as defined in the RLSA) or collateral security for a
Receivable (as defined in the RLSA) purchased by the Purchaser under
either of the Borrower Receivables Purchase Agreements, shall not exceed
an amount equal to 2.5% of the Eligible Receivables Balance.
(118) Upon the Purchaser acquiring an interest in such Presale
Consumer Note Receivable (but only if such Presale Consumer Note
Receivable relates to a Fractional Interval), the Outstanding Principal
Balance thereof, together with the aggregate Outstanding Principal Balance
of all other Consumer Note Receivables (as defined in the RLSA) owing by
Consumers relating to Fractional Intervals and which constitute a
Receivable (as defined in the RLSA) or collateral security for a
Receivable (as defined in the RLSA) purchased by the Purchaser under
either of the Borrower Receivables Purchase Agreements, shall not exceed
an amount equal to 5.00% of the Eligible Receivables Balance.
"Eligible Purchased Consumer Note Receivable" means a Purchased
Consumer Note Receivable that satisfies each of the following criteria:
(119) Each Assignment Document exists with respect thereto and
is duly executed and enforceable in accordance with its terms and has been
delivered to the Custodian.
(120) The Applicable Underlying Purchase Documents related to
such Purchased Consumer Note Receivable have been approved in writing by
the Purchaser (or its assignee or designee) in its reasonable discretion.
(121) [Intentionally Omitted].
(122) To the best of the Seller's and its Affiliates'
knowledge, (i) neither the related Applicable Underlying Seller nor the
related Applicable Underlying Guarantor, if any, has any claim against the
Seller, EFI, the Purchaser, or any Affiliate thereof, and no defense,
set-off, or counterclaim exists with respect to the Developer Repurchase
Obligation or any other terms or provisions of the related Eligible
Developer Sale Agreement and (ii) the Consumer obligated under such
Purchased Consumer Note
24
Receivable has no claim against the Applicable Underlying Seller, the
Applicable Underlying Guarantor, if any, the Seller, EFI, the Purchaser,
or any Affiliate thereof, and no defense, set-off or counterclaim exists
with respect to such Purchased Consumer Note Receivable.
(123) The original of such Purchased Consumer Note Receivable
and all related documents and instruments, the terms of each of which
shall comply in all material respects with all Applicable Laws, have been
endorsed by the Applicable Underlying Seller to the Seller and by the
Seller to the Purchaser in any commercially reasonable manner prescribed
by the Purchaser (or its assigns) and have been delivered to the
Custodian; provided, that with respect to Purchased Consumer Note
Receivables which are Purchased on the initial Purchase Date hereunder,
only those Purchased Consumer Note Receivables related to the Plantation
Cove Resort and Plantation Island Resort shall be so endorsed within 30
days of the date of this Agreement, it being agreed by the parties that
any failure to complete such endorsement with respect to any such
Purchased Consumer Note Receivables within such time period shall
constitute a failure to satisfy this paragraph (e) with respect to such
Purchased Consumer Note Receivables and such Purchased Consumer Note
Receivables shall be deemed not to constitute Eligible Purchased Consumer
Note Receivables on the date Purchased.
(124) Such Purchased Consumer Note Receivable represents the
genuine, legal, valid and binding payment obligation of the related
Consumer, enforceable in accordance with its terms and such Consumer had
full legal capacity to execute and deliver such Purchased Consumer Note
Receivable, the related Interval Mortgage, if applicable, and any other
documents related thereto; and such Purchased Consumer Note Receivable has
not been prepaid or repaid in full.
(125) Such Purchased Consumer Note Receivable is denominated
in United States Dollars and, at the time of origination and at all times
thereafter, materially conformed to all requirements of the Credit and
Collection Policy applicable to such Purchased Consumer Note Receivable
and, in any case, such Purchased Consumer Note Receivable has not been
reserved against or would be required to be written-off pursuant to the
Credit and Collection Policy.
(126) All requirements of applicable federal, state and local
laws, and regulations thereunder (including, without limitation, but only
if and to the extent applicable, usury laws, the Federal Truth-in-Lending
Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the
Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal
Reserve Board's Regulations "B" and "Z", the Soldiers' and Sailors' Civil
Relief Act of 1940 and state adaptations of the National Consumer Act and
of the Uniform Consumer Credit Code, the Interstate Land Sales Full
Disclosure Act, the Real Estate Settlement Procedures Act and all other
consumer credit laws and equal credit opportunity and disclosure laws and
any regulations promulgated thereunder) in respect of such Purchased
Consumer Note Receivable, the sale of the Intervals related to such
Purchased Consumer Note Receivable and the sale of credit life and credit
accident and health insurance and any extended service contracts in
connection with the sale of the
25
Intervals related to such Purchased Consumer Note Receivable, have been
complied with in all material respects.
(127) On the date on which such Purchased Consumer Note
Receivable is purchased hereunder, such Purchased Consumer Note Receivable
is not a Defaulted Receivable or a Delinquent Receivable.
(128) The Coupon Rate set forth in such Purchased Consumer
Note Receivable shall be not less than the Minimum APR with respect to
such Purchased Consumer Note Receivable on the applicable Purchase Date
therefor.
(129) Such Purchased Consumer Note Receivable arises from a
bona fide sale by an Applicable Underlying Seller of one or more Intervals
to a Consumer.
(130) The Interval sale from which it arises has not been
canceled by the related Consumer, any statutory or other applicable
cancellation or rescission period has expired (or in the case of Interval
sales with respect to Presale Consumer Note Receivables and Developments
located in Florida or any other jurisdiction which by law entitles a
Consumer to an ongoing cancellation or rescission period, no such
cancellation or rescission has occurred; it being agreed that if on or
after the date such Purchased Consumer Note Receivable is Purchased
hereunder such sale is canceled or rescinded, such cancellation or
rescission shall constitute a failure to satisfy this paragraph (l) with
respect to such Purchased Consumer Note Receivable and such Purchased
Consumer Note Receivable shall be deemed not to have constituted an
Eligible Consumer Note Receivable on the Purchase Date therefor), and the
Interval sale otherwise complies fully with the terms, provisions, and
conditions of this Agreement, the Applicable Underlying Purchase
Documents, the sale documentation between the Consumer and the Applicable
Underlying Seller and all Applicable Laws.
(131) Subject to the following sentence, if such Purchased
Consumer Note Receivable is secured by a lien on a Fee Simple Interval, an
Interval Mortgage covering such Fee Simple Interval is in full force and
effect and such Interval Mortgage and assignments thereof from the
Applicable Underlying Seller to the Seller and from the Seller to the
Purchaser shall each have been duly recorded or registered in the
Applicable jurisdiction in accordance with all Applicable Laws (and such
Interval Mortgage has evidence thereon of payment of all required
documentary stamps and intangible taxes, if any are required). If such
Purchased Consumer Note Receivable is secured by a lien on a Club
Membership Fee Simple Interval, an Interval Mortgage covering such Club
Membership Fee Simple Interval at the respective applicable Home Resort is
in full force and effect and such Interval Mortgage and assignments
thereof from the Applicable Underlying Seller to the Seller and from the
Seller to the Purchaser shall each have been duly recorded or registered
in the Applicable Jurisdiction in accordance with all Applicable Laws (and
such Interval Mortgage has evidence thereon of payment of all required
documentary stamps and intangible taxes, if any are required).
(132) (x) If such Purchased Consumer Note Receivable was
executed in connection with the related Consumer's purchase of a Right to
Use Interval
26
other than a Club Membership Right to Use Interval (except in the case of
an Existing Purchased Consumer Note Receivable), (i) a Developer Mortgage
exists which covers the Applicable Development related to such Purchased
Consumer Note Receivable and such Developer Mortgage and an assignment
thereof from the Seller to the Purchaser shall each have been duly
recorded or registered in the Applicable Jurisdiction in accordance with
all Applicable Laws (and such Developer Mortgage has evidence thereon of
payment of all required documentary stamps and intangible taxes, if any
are required), (ii) Non-Disturbance Arrangements are in effect with
respect to such Right to Use Interval and an Opinion of Counsel has been
delivered to the Purchaser which shall contain an opinion that such
Non-Disturbance Arrangements shall remain in full force and effect
notwithstanding the occurrence of a Bankruptcy Event with respect to the
related Applicable Underlying Seller or (iii) the related Applicable
Underlying Seller has transferred all of its Developer's Interests to an
SPE under terms and conditions satisfactory to the Purchaser and its
assigns and an Opinion of Counsel has been delivered to the Purchaser and
its assigns which shall contain an opinion that such transfer constitutes
a true sale or absolute transfer of such Developer's Interests from such
Applicable Underlying Seller to such SPE rather than a loan secured by
such interest such that (A) such Developer's Interests would not
constitute property of the estate of such Applicable Underlying Seller
under Section 541(a)(1) of the Bankruptcy Code and (B) Section 362(a) of
the Bankruptcy Code would not apply to stay payments of amounts collected
with respect to such Developer's Interests.
(y) If such Purchased Consumer Note Receivable was
executed in connection with the related Consumer's purchase of a
Specific Club Membership Right to Use Interval (except in the case
of an Existing Purchased Consumer Note Receivable), (i) a Developer
Mortgage exists which covers the Home Resort related to such
Purchased Consumer Note Receivable and such Developer Mortgage and
an assignment thereof from the Seller to the Purchaser shall each
have been duly recorded or registered in the Applicable Jurisdiction
in accordance with all Applicable Laws (and such Developer Mortgage
has evidence thereon of payment of all required documentary stamps
and intangible taxes, if any are required), (ii) Non-Disturbance
Arrangements are in effect with respect to the Home Resort related
to such Specific Club Membership Right to Use Interval and an
Opinion of Counsel has been delivered to the Purchaser and its
assigns which shall contain an opinion that such Non-Disturbance
Arrangements shall remain in full force and effect notwithstanding
the occurrence of a Bankruptcy Event with respect to the related
Applicable Underlying Seller or (iii) the related Applicable
Underlying Seller has transferred all of its Developer's Interests
with respect to such Home Resort and all other Applicable
Developments in the same club to an SPE under terms and conditions
satisfactory to the Purchaser and its assigns and an Opinion of
Counsel has been delivered to the Purchaser and its assigns which
shall contain an opinion that such transfer constitutes a true sale
or absolute transfer of such Developer's Interests from such
Applicable Underlying Seller to such SPE rather than a loan secured
by such interest such that (A) such Developer's Interests would not
constitute property of the estate of such Applicable Underlying
Seller under Section 541(a)(1) of the Bankruptcy Code and (B)
Section 362(a) of the Bankruptcy Code would not apply to stay
payments
27
of amounts collected with respect to such Developer's Interests.
(z) If such Purchased Consumer Note Receivable was
executed in connection with the related Consumer's purchase of a
Non-Specific Club Membership Right to Use Interval, security
interest arrangements satisfactory to the Purchaser and its assigns
in their reasonable discretion are in full force and effect with
respect to such Purchased Consumer Note Receivable and Non-Specific
Club Membership Right to Use Interval; provided, however, that no
UCC financing statements will be required to be filed against any
individual Consumer.
(133) A down payment and/or other payments have been received
by the related Applicable Underlying Seller from the Consumer who is the
maker of the Purchased Consumer Note Receivable in an amount equal to at
least ten percent (10%) of the original purchase price of the relevant
Interval and such Consumer has received no cash or other rebates of any
kind with respect to the purchase price of such Interval.
(134) No monthly installment or any other payment due with
respect to such Purchased Consumer Note Receivable is more than thirty
(30) days contractually past due as at the applicable Purchase Date
therefor (except as permitted under subclause (ii) of paragraph (cc)
below).
(135) [Intentionally Omitted].
(136) The interest rate on such Purchased Consumer Note
Receivable as at the applicable Purchase Date therefor is not less than
the Facility Funding Rate as of the end of the most recently ended
Remittance Period plus 3%.
(137) The Consumer who owns the relevant Interval (or has
obtained similar rights with respect to the relevant Interval by means of
a contract for deed, installment sale contract or other arrangement) has
access to a Unit within the Applicable Development during any use period
reserved by or assigned to such Consumer, all in accordance with the
Applicable Timeshare Documents.
(138) The Consumer who owns the relevant Interval (or has
obtained similar rights with respect to the relevant Interval by means of
a contract for deed, installment sale contract or other arrangement) (i)
is the maker of the related Purchased Consumer Note Receivable and (ii) is
not an Affiliate of, or related to, or employed by the Applicable
Underlying Seller, the Seller, EFI, the Purchaser or Equivest.
(139) The relevant Consumer has no claim against the
Applicable Underlying Seller, the Seller, EFI, the Purchaser or any
Affiliate thereof, or any defense, set-off, or counterclaim with respect
to the Purchased Consumer Note Receivable.
(140) (i) The maximum Outstanding Principal Balance of such
Purchased Consumer Note Receivable does not exceed $25,000 per one
week/year Interval (except that if such Purchased Consumer Note Receivable
relates to a Fractional
28
Interval, the maximum Outstanding Principal Balance shall not exceed
$50,000) (or such greater amount as may be approved in writing in advance
by the Purchaser (or its assignees or designees) and (ii) if such
Purchased Consumer Note Receivable relates to a Fractional Interval, the
Outstanding Principal Balance thereof, together with the aggregate
Outstanding Principal Balance of all other Consumer Note Receivables (as
defined in the RLSA) owing by Consumers relating to Fractional Intervals
and which constitute a Receivable (as defined in the RLSA) or collateral
security for a Receivable (as defined in the RLSA) purchased by the
Purchaser under either of the Borrower Receivables Purchase Agreements,
shall not exceed an amount equal to 5.00% of the Eligible Receivables
Balance.
(141) Such Purchased Consumer Note Receivable is executed by a
resident of the United States or if not, the Outstanding Principal Balance
thereof, together with the aggregate Outstanding Principal Balance of all
other Consumer Note Receivables (as defined in the RLSA) owing by
Consumers that are not residents of the United States and which constitute
a Receivable (as defined in the RLSA) or collateral security for a
Receivable (as defined in the RLSA) purchased by the Purchaser under
either of the Borrower Receivables Purchase Agreements, shall not exceed
an amount equal to 2.5% of the Eligible Receivables Balance.
(142) [Intentionally Omitted].
(143) (i) Each Unit in the Applicable Development, which the
relevant Consumer has the right to occupy, pursuant to the Applicable
Timeshare Documents, has been completed and furnished in accordance with
the terms and provisions of such Consumer's purchase contract, the
Applicable Development's public offering statement, and the other
Applicable Timeshare Documents, (ii) a certificate of occupancy for each
such Unit (or the building in which the Unit is located) has been issued,
and (iii) such Unit is not subject to any Lien (other than the lien
created by such Interval Mortgage and the Permitted Liens and
Encumbrances) that has not previously been consented to in writing by the
Purchaser (or its assignees or designees).
(144) The forms of promissory note, mortgage, if applicable,
federal truth-in-lending disclosure statement, if applicable, purchase
contract, and other documents and instruments relating to the Interval
purchase transaction giving rise to such Purchased Consumer Note
Receivable have been approved in advance by the Purchaser (or its
assignees or designees) in writing.
(145) [Intentionally Omitted].
(146) Such Purchased Consumer Note Receivable has an original
term of not more than 120 months.
(147) Such Purchased Consumer Note Receivable, as of the
applicable Purchase Date therefor, (i) had a remaining term of not more
than 120 months, (ii) had not at any time during the past 90 days been
more than 120 days past due and was not, at the applicable Purchase Date
therefor, more than 30 days past due (or 90 days past due
29
with respect to a Purchased Consumer Note Receivable (x) the interest of
the Purchaser in which was purchased on the initial Purchase Date and (y)
that was being lent against under the Prior Loan Facility immediately
prior to the initial Purchase Date hereunder) and (iii) had no material
provision thereof waived, amended, altered or modified in any respect
(including, without limitation, as a result of the application of the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended) since its
origination.
(148) Such Purchased Consumer Note Receivable (i) was
originated by the Applicable Underlying Seller in its ordinary course of
business and in accordance with its underwriting guidelines (and such
Applicable Underlying Seller had all necessary licenses and permits to
originate Purchased Consumer Note Receivables in the jurisdiction where
the related Eligible Development was located), (ii) was sold to the Seller
by the Applicable Underlying Seller under an Eligible Developer Sale
Agreement, which provides for a Developer Repurchase Obligation and which
remains in full force and effect, and the other Applicable Underlying
Purchase Documents, each of which remains in full force and effect, and
the Seller has all necessary licenses and permits to own such Purchased
Consumer Note Receivable under all applicable law, (iii) and/or the
documentation evidencing or governing same contains customary and
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for realization against the collateral security
related thereto, and (iv) and/or the documentation evidencing or governing
same provides for level monthly payments (provided, that the payment in
the first month and the final month of the life of the Purchased Consumer
Note Receivable may be different from the level payment) which, if made
when due, shall fully amortize the debt evidenced by such Purchased
Consumer Note Receivable over the original term of such Purchased Consumer
Note Receivable. The Purchaser has all necessary licences and permits to
own such Purchased Consumer Note Receivable under all applicable law.
(149) Such Purchased Consumer Note Receivable was originated
by the Applicable Underlying Seller without any fraud or material
misrepresentation on the part of the related Applicable Underlying Seller
or the related Consumer. Such Purchased Consumer Note Receivable was sold
to the Seller by the Applicable Underlying Seller under the related
Applicable Underlying Purchase Documents without any fraud or material
misrepresentation on the part of Applicable Underlying Seller.
(150) Such Purchased Consumer Note Receivable is payable by
one or two Consumers, at least one of whom is a natural (and not a
corporate) Person, and if a Purchased Consumer Note Receivable is payable
by more than one Consumer, each such Consumer is jointly and severally
obligated to pay the full amount payable under such Purchased Consumer
Note Receivable.
(151) Such Purchased Consumer Note Receivable is payable by a
Consumer which (i) is not, nor was at any time during the three (3) year
period immediately preceding the applicable Purchase Date therefor,
subject to any bankruptcy, insolvency, reorganization or similar
proceeding (or if such Consumer was at any time during the three (3) year
period immediately preceding the applicable Purchase Date therefor subject
to any bankruptcy, insolvency, reorganization or similar proceeding, such
30
Consumer has made at least the immediately preceding twelve monthly
payments under such Purchased Consumer Note Receivable without
delinquency) and (ii) has not had any real property owned by such Consumer
foreclosed or currently subject to foreclosure.
(152) Such Purchased Consumer Note Receivable is not due from
the United States or any State or from any agency, department, subdivision
or instrumentality thereof.
(153) The information pertaining to such Purchased Consumer
Note Receivable set forth in the Schedule of Receivables and the related
Assignment and Assignment Documents is true and correct.
(154) [Intentionally Omitted].
(155) The Seller shall have taken all steps necessary under
all applicable law in order to cause a valid, subsisting and enforceable
first priority perfected ownership interest to exist in its favor in such
Purchased Consumer Note Receivable, the Applicable Underlying Purchased
Note Collateral and all other Collateral related to such Purchased
Consumer Note Receivable (and the proceeds thereof) on or before the
applicable Purchase Date therefor and immediately prior to the Purchase of
such Purchased Consumer Note Receivable by the Purchaser, there shall have
existed in favor of the Seller, as secured party, a valid, subsisting and
enforceable first priority perfected security interest in the Applicable
Underlying Purchased Note Collateral and all other such Collateral related
to such Purchased Consumer Note Receivable (and the proceeds thereof), and
such security interest is and shall be prior to all other liens upon and
security interests in such Applicable Underlying Purchased Note Collateral
and other such Collateral (and the proceeds thereof) that now exist or may
hereafter arise or be created; provided, that, any such security interest
in the Land, Units and/or Common Elements of an Applicable Development, to
the extent evidenced by a Developer Mortgage, may be subordinate to an
AD&C Mortgage.
(156) The Seller shall have taken all steps necessary under
all applicable law in order to cause to exist in favor of the Purchaser,
(A) a valid, subsisting and enforceable first priority perfected ownership
interest in such Purchased Consumer Note Receivable and (B) a valid,
subsisting and enforceable first priority perfected security interest in
the Applicable Underlying Purchased Note Collateral and all other
Collateral related to such Purchased Consumer Note Receivable (and the
proceeds thereof) on or before the applicable Purchase Date therefor and
upon the Purchase of such Purchased Consumer Note Receivable by the
Purchaser, there shall exist in favor of the Purchaser, a valid,
subsisting and enforceable first priority perfected ownership interest in
such Purchased Consumer Note Receivable and a valid, subsisting and
enforceable first priority (or, to the extent such security interest is in
the Land, Units and/or Common Elements of an Applicable Development,
evidenced by a Developer Mortgage and subordinate to an AD&C Mortgage,
second priority) perfected security interest in the Applicable Underlying
Purchased Note Collateral and all other Collateral related to such
Purchased Consumer Note Receivable (and the proceeds thereof) and such
security interest is and shall be prior to all other liens upon and
security interests therein that now
31
exist or may hereafter arise or be created.
(157) [Intentionally Omitted].
(158) The Applicable Underlying Seller owned the Purchased
Consumer Note Receivable free and clear of any Adverse Claim immediately
prior to its sale of such Purchased Consumer Note Receivable to the
Seller.
(159) All filings (including, without limitation, UCC and real
property filings) required to be made by any Person and all other actions
required to be taken or performed by any Person in any jurisdiction to
give the Purchaser a first priority perfected ownership interest in such
Purchased Consumer Note Receivable and the proceeds thereof have been
made, taken or performed.
(160) With respect to such Purchased Consumer Note Receivable,
there exists a Pledged Purchased Consumer Note Receivable File and a copy
of such Pledged Purchased Consumer Note Receivable File is in the
possession of the Custodian.
(161) Such Purchased Consumer Note Receivable has not been
satisfied, subordinated or rescinded, and the Applicable Underlying
Purchase Collateral securing such Purchased Consumer Note Receivable has
not been released from the lien of the Purchaser, in whole or in part.
(162) Such Purchased Consumer Note Receivable was not
originated in, or is subject to the laws of, any jurisdiction the laws of
which would make unlawful, void or voidable the sale, transfer and
assignment of such Purchased Consumer Note Receivable and none of the
Applicable Underlying Seller, the related Consumer, the Seller, EFI or the
Purchaser has entered into any agreement with any Person that prohibits,
restricts or conditions the assignment of such Purchased Consumer Note
Receivable.
(163) None of the Applicable Underlying Seller, the related
Consumer, the Seller, EFI or the Purchaser have taken any action to convey
any right to any Person that would result in such Person having a right to
payments due under such Purchased Consumer Note Receivable or payments
received under the related Title Policy, if applicable, or otherwise to
impair the rights of the Purchaser (or its assignees or designees)in such
Purchased Consumer Note Receivable, the Applicable Underlying Purchased
Note Collateral securing such Purchased Consumer Note Receivable or the
proceeds thereof.
(164) Such Purchased Consumer Note Receivable is not assumable
by another Person in a manner which would release the related Consumer
from such Consumer's obligations to the Applicable Underlying Seller, the
Seller or the Purchaser (or any of its assignees or designees).
(165) Such Purchased Consumer Note Receivable is in full force
and effect and constitutes the legal, valid and binding obligation of the
related Consumer and
32
is not subject to any right of rescission (or in the case of a Purchased
Consumer Note Receivable executed in connection with an Interval sale with
respect to a Development located in Florida or any other jurisdiction
which by law entitles a Consumer to an ongoing rescission period, no such
rescission has occurred), setoff, counterclaim or defense (except the
potential discharge in bankruptcy of such Consumer).
(166) There has been no default, breach, violation or event
permitting acceleration under the terms of such Purchased Consumer Note
Receivable, and no condition exists or event has occurred and is
continuing that with notice, the lapse of time or both would constitute a
default, breach, violation or event permitting acceleration under the
terms of such Purchased Consumer Note Receivable, and there has been no
waiver of any of the foregoing.
(167) No selection procedures adverse to the Seller or the
Purchaser (or its assignees or designees) have been utilized in selecting
any such Purchased Consumer Note Receivable from all other similar
receivables acquired by the Applicable Underlying Seller.
(168) Such Purchased Consumer Note Receivable has in place
with respect thereto an enforceable Developer Repurchase Obligation.
(169) Such Pledged Purchased Consumer Note Receivable is not a
Presale Consumer Note Receivable.
(170) Upon the Purchase of such Purchased Consumer Note
Receivable, not more than 20% of the Eligible Receivables Balance shall
relate to any one Eligible Developer (as defined in the RLSA) which is not
a wholly-owned subsidiary of Equivest.
(171) Upon the Purchase of such Purchased Consumer Note
Receivable, not more than 10% of the Eligible Receivables Balance shall
relate to any one Eligible Development (as defined in the RLSA).
(172) Upon the Purchase of such Purchased Consumer Note
Receivable, not more than 20% (or 40%, in the case of Florida) of the
Eligible Receivables Balance shall relate to Developments (as defined in
the RLSA) in any one state.
(173) Upon the Purchase of such Purchased Consumer Note
Receivable, the Weighted Average APR of all Primary Level Eligible
Receivables shall be at least 12%.
(174) [Intentionally Omitted].
(175) [Intentionally Omitted].
(176) If such Purchased Consumer Note Receivable was executed
in connection with the related Consumer's purchase of a Right to Use
Interval, either (i) a Developer Title Policy is in effect which (a)
covers the related Applicable Development
33
and all necessary steps have been taken in order to assign the Seller's
rights as the insured under the aforementioned Developer Title Policy to
the Purchaser (or to have an endorsement issued granting to the Purchaser
the rights of an insured under such policy), (b) is at all times in an
amount not less than the acquisition and construction costs incurred by
the Developer with respect to the related Applicable Development and (c)
was issued by a Title Insurance Company or (ii) on the date the Purchaser
acquires an interest in such Purchased Consumer Note Receivable, (a) good
and marketable title to the related Applicable Development was vested in
the related Developer and (b) such Applicable Development is not subject
to any monetary liens (except with respect to taxes and assessments that
are not delinquent or, if applicable, with respect to an AD&C Mortgage) or
other encumbrances which would interfere with the development or the
intended use of such Applicable Development.
(177) If such Purchased Consumer Note Receivable was executed
in connection with the related Consumer's purchase of a Fee Simple
Interval, either (i) an Interval Title Policy is in effect which (a)
covers such Fee Simple Interval and all necessary steps have been taken in
order to assign the Seller's rights as the insured under the
aforementioned Interval Title Policy to the Purchaser (or to have an
endorsement issued granting to the Purchaser the rights of an insured
under such policy), (b) is at all times in an aggregate amount of not less
than the outstanding principal amount of such Purchased Consumer Note
Receivable and all other Consumer Note Receivables covered by such
Interval Title Policy, if any, and (c) was issued by a Title Insurance
Company or (ii) on the date the Purchaser acquires an interest in such
Purchased Consumer Note Receivable, (a) good and marketable title to the
related Development (except with respect to other Fee Simple Intervals
sold to Consumers) was vested in the related Developer immediately prior
to the sale of the Fee Simple Interval related to such Purchased Consumer
Note Receivable to the related Consumer, (b) upon the consummation of such
sale, good and marketable title to such Fee Simple Interval was vested in
such Consumer and (c) such Fee Simple Interval is not subject to any
monetary liens (except with respect to taxes and assessments that are not
delinquent) or other encumbrances which would interfere with the
development or the intended use of such Fee Simple Interval.
(178) If such Purchased Consumer Note Receivable was executed
in connection with the related Consumer's purchase of a Fee Simple
Interval, such Consumer was delivered a deed with respect to such Fee
Simple Interval and such deed was duly recorded or registered in the
Applicable Jurisdiction in accordance with all Applicable Laws.
(179) If such Purchased Consumer Note Receivable was an
Existing Purchased Consumer Note Receivable or a new Purchased Consumer
Note Receivable sold under the terms of an Existing Eligible Developer
Sale Agreement (unless such new Purchased Consumer Note Receivable relates
to a New Phase at the Development which is the subject of such Existing
Eligible Developer Sale Agreement) either:
(x) an Acceptable Environmental Report has been obtained
by the Seller covering the Applicable Development related to such
Purchased Consumer Note Receivable; or
34
(y) on the date the Purchaser acquires an interest in
such Purchased Consumer Note Receivable, (a) there is the absence of
Hazardous Materials on, under, or affecting the Land or any other
real property or personal property comprising the Applicable
Development related to such Purchased Consumer Note Receivable,
except for commercially reasonable amounts thereof commonly found at
residential and resort properties in the Applicable Jurisdiction,
(b) there are no known or suspected Hazardous Materials located at,
used or stored on, or transported to or from such Applicable
Development or in such proximity thereto as to create a material
risk of contamination of any Applicable Underlying Purchased Note
Collateral except for commercially reasonable amounts thereof
commonly found at residential and resort properties in the
Applicable Jurisdiction and (c) there is the absence of friable
asbestos within the Units, Common Elements, if any, or elsewhere at
such Applicable Development or, if asbestos is found to be present
in any part of the Applicable Development, such presence is of a
nature or magnitude that is able to be removed by a licensed removal
contractor for a guaranteed maximum sum reasonably satisfactory to
the Purchaser and its assigns.
(180) If such Purchased Consumer Note Receivable is (i) not an
Existing Purchased Consumer Note Receivable or (ii) a new Purchased
Consumer Note Receivable sold under the terms of an Existing Eligible
Developer Sale Agreement (which new Purchased Consumer Note Receivable
relates to a New Phase at the Development which is the subject of such
Existing Eligible Developer Sale Agreement), an Acceptable Environmental
Report has been obtained by the Seller covering the Applicable Development
related to such Purchased Consumer Note Receivable (and, if such Purchased
Consumer Note Receivable relates to a Club Membership Right to Use
Interval or a Club Membership Fee Simple Interval, with respect to each
other Development with respect to which the holder of such an Interval has
rights, on the date the Purchaser acquires an interest in such Purchased
Consumer Note Receivable, (i) there shall be no Hazardous Materials on,
under, or affecting the Land or any other real property or personal
property comprising such Development, except for commercially reasonable
amounts thereof commonly found at residential and resort properties in the
Applicable Jurisdiction, (ii) there are no known or suspected Hazardous
Materials located at, used or stored on, or transported to or from such
Development or in such proximity thereto as to create a material risk of
contamination of any of the Applicable Underlying Purchased Note
Collateral, except for commercially reasonable amounts thereof commonly
found at residential and resort properties in the Applicable Jurisdiction,
and (iii) there is no friable asbestos within the Units, Common Elements,
if any, or elsewhere at such Development or, if asbestos is found to be
present in any part of such Development, such presence is of a nature or
magnitude that is able to be removed by a licensed removal contractor for
a guaranteed maximum sum reasonably satisfactory to the Purchaser and its
assigns).
(181) The Purchaser has received certified copies of all
insurance policies and endorsements thereto or other evidence of insurance
approved by the Purchaser and its assigns prior to the Purchaser
Purchasing such Purchased Consumer
35
Note Receivable, in the reasonable discretion of each, with respect to the
Applicable Development relating to such Purchased Consumer Note Receivable
and such insurance policies and endorsements thereto shall conform in all
material respects with the Credit and Collection Policy and customary
practice in the timeshare industry in the Applicable Jurisdiction. In
addition, the Applicable Underlying Borrower or the Applicable Underlying
Seller has obtained and is maintaining or has caused the Applicable
Timeshare Owners' Association to obtain and maintain all policies of
insurance required by and in accordance with the terms of the Credit and
Collection Policy and which are customary in the timeshare industry in the
Applicable Jurisdiction.
(182) The related Applicable Underlying Seller is an Eligible
Developer.
(183) Such Purchased Consumer Note Receivable was purchased by
the Seller pursuant to an Eligible Developer Sale Agreement.
(184) Neither the related Applicable Underlying Seller nor the
related Applicable Underlying Guarantor, if any, is an Affiliate of the
Seller, Equivest or the Purchaser and the Development related to such
Purchased Consumer Note Receivable is not directly or indirectly owned in
whole or in part by an Affiliate of the Seller, Equivest or the Purchaser.
"Eligible Purchased Presale Consumer Note Receivable" means a
Purchased Consumer Note Receivable which constitutes a Presale Consumer Note
Receivable that satisfies each of the criteria for an Eligible Purchased
Consumer Note Receivable (other than the criteria of such definition set forth
in paragraph (m), paragraph (s), subclauses (i) and (ii) of paragraph (y),
paragraph (yy), paragraph (hhh) and, solely to the extent that the requirements
thereof would require the recordation of an Interval Mortgage, paragraphs (kk),
(ll) and (ggg) thereof) and that additionally satisfies each of the following
criteria:
(a) (i) All sales and financing documents relating to such Presale
Consumer Note Receivable have been executed and delivered to the Seller,
(ii) there are no conditions or requirements for the escrow of Consumer
deposits or payments required under applicable law or contract relating to
the sale which is the subject of such Presale Consumer Note Receivable and
(iii) all conditions and requirements with respect to such sale have been
completed other than the issuance of the certificate of occupancy for the
building in which the Unit related to the applicable Interval is located.
(b) Such Presale Consumer Note Receivable will meet the criteria set
forth in paragraph (m), paragraph (s), subclauses (i) and (ii) of
paragraph (y), paragraph (yy), paragraph (hhh), paragraph (kk), paragraph
(ll) and paragraph (ggg) in the defined term Eligible Purchased Consumer
Note Receivable at the closing of the Interval to which such Presale
Consumer Note Receivable relates, which closing shall take place in
accordance with the purchase contract for that Interval, but in any event
no later than two years from the date of the purchase contract.
(c) The related Applicable Underlying Seller shall have posted and
shall maintain completion and performance bonds in amounts satisfactory to
complete the
36
related Development and in form and substance satisfactory to the Seller
and the Purchaser.
(d) The documentation related to such Presale Consumer Note
Receivable shall require the Consumer to make periodic payments of
principal and interest on such Presale Consumer Note Receivable prior to
the closing of the Interval to which such Presale Consumer Note Receivable
relates.
(e) If such Presale Consumer Note Receivable relates to the Surrey
Development, the Outstanding Principal Balance of such Presale Consumer
Note Receivable, together with the aggregate Outstanding Principal Balance
of all other Presale Consumer Note Receivables relating to the Surrey
Development which constitute a Receivable (as defined in the RLSA) or
collateral security for a Receivable (as defined in the RLSA) purchased by
the Purchaser under either Borrower Receivables Purchase Agreement, does
not exceed an amount equal to 8% of the Eligible Receivables Balance (or
such lesser percentage as is consistent with a "BBB" rated timeshare
securitization financing, as determined by either or both Rating
Agencies).
(f) If such Presale Consumer Note Receivable relates to one or more
Developments other than Surrey Development, the Outstanding Principal
Balance of such Presale Consumer Note Receivable, together with the
aggregate Outstanding Principal Balance of all other Presale Consumer Note
Receivables not relating to the Surrey Development which constitute a
Receivable (as defined in the RLSA) or collateral security for a
Receivable (as defined in the RLSA) purchased by the Purchaser under
either Borrower Receivables Purchase Agreement, does not exceed an amount
equal to 2.5% of the Eligible Receivables Balance.
(g) If such Presale Consumer Note Receivable relates to a
Development other than the Surrey Development, the Outstanding Principal
Balance of such Presale Consumer Note Receivable, together with the
aggregate Outstanding Principal Balance of all other Presale Consumer Note
Receivables relating to the same Development which constitute a Receivable
(as defined in the RLSA) or collateral security for a Receivable (as
defined in the RLSA) purchased by the Purchaser under either Borrower
Receivables Purchase Agreement, does not exceed an amount equal to
$500,000.
(h) Such Presale Consumer Note Receivable is executed by a resident
of the United States or if not, the Outstanding Principal Balance thereof,
together with the aggregate Outstanding Principal Balance of all other
Consumer Note Receivables (as defined in the RLSA) owing by Consumers that
are not residents of the United States and which constitute a Receivable
(as defined in the RLSA) or collateral security for a Receivable (as
defined in the RLSA) purchased by the Purchaser under either of the
Borrower Receivables Purchase Agreements, shall not exceed an amount equal
to 2.5% of the Eligible Receivables Balance.
(i) Upon the Purchase of such Presale Consumer Note Receivable, not
more than 20% of the Eligible Receivables Balance shall relate to any one
Eligible Developer (as defined in the RLSA) which is not a wholly-owned
subsidiary of Equivest.
37
(j) Upon the Purchase of such Presale Consumer Note Receivable (but
only if such Presale Consumer Note Receivable relates to a Fractional
Interval), the Outstanding Principal Balance thereof, together with the
aggregate Outstanding Principal Balance of all other Consumer Note
Receivables (as defined in the RLSA) owing by Consumers relating to
Fractional Intervals and which constitute a Receivable (as defined in the
RLSA) or collateral security for a Receivable (as defined in the RLSA)
purchased by the Purchaser under either of the Borrower Receivables
Purchase Agreements, shall not exceed an amount equal to 5.00% of the
Eligible Receivables Balance.
(k) Upon the Purchase of such Presale Consumer Note Receivable, not
more than 10% of the Eligible Receivables Balance shall relate to any one
Eligible Development (as defined in the RLSA).
(l) Upon the Purchase of such Presale Consumer Note Receivable, not
more than 20% (or 40%, in the case of Florida) of the Eligible Receivables
Balance shall relate to Developments (as defined in the RLSA) in any one
state.
"Eligible Receivable" means, at any time, an Eligible Developer Note
Receivable, an Eligible Purchased Consumer Note Receivable or an Eligible
Purchased Presale Consumer Note Receivable.
"Other Conveyed Property" means, with respect to any Receivable, all
of the Seller's right, title and interest in, to and under:
(1) all Underlying Guaranties, Applicable Underlying Loan
Collateral (in the case of a Developer Note Receivable) (including
Pledged Consumer Note Receivables), Applicable Underlying Purchased
Note Collateral (in the case of a Purchased Consumer Note
Receivable), all other Collateral related thereto and all other
collateral security and guaranties securing or guaranteeing any or
all of such Receivable;
(2) all Related Security related thereto;
(3) all Collections and other monies due and to become due in
respect thereof and any security therefor;
(4) the Assigned Documents to the extent related thereto,
including, in each case, without limitation, all monies due and to
become due under or in connection therewith, and all legal opinions
delivered or rendered in connection with such Receivable or any item
included in clauses (a) through (d) of this definition or any
transaction related to any of the foregoing;
(5) the Pledged Developer Note Receivable File and Pledged
Consumer Note Receivable Files for all Pledged Consumer Note
Receivables securing same (in the case of a Developer Note
Receivable) or the Pledged Purchased Consumer Note Receivable File
and Eligible Pledged Developer Sale
38
Agreement File (in the case of a Purchased Consumer Note Receivable)
related thereto;
(6) the related Hypothecation Agreement or other loan
agreement (in the case of a Developer Note Receivable) or Eligible
Developer Sale Agreement or other sale agreement (in the case of a
Purchased Consumer Note Receivable), in each instance to the extent
relating to such Receivable, including the rights and remedies of
the Seller with respect to any representations, warranties,
covenants, repurchase obligations, indemnities and other agreements
of the Applicable Underlying Borrower or Applicable Underlying
Seller, as appropriate, with respect to such Receivable;
(7) the documents, books, records and other information
(including, without limitation, computer programs, tapes, disks,
punch cards, data processing software and related property and
rights) and other Records related thereto or related to the obligors
thereon;
(8) all Liquidation Proceeds related thereto;
(9) all UCC financing statements filed with respect to any of
the foregoing;
(10) all environmental reports with respect to any portion of
a Development related to such Receivable;
(11) any and all other property in which any interest was
assigned or transferred to the Seller by the Applicable Underlying
Borrower or the Applicable Underlying Seller securing, guaranteeing
or otherwise relating to or in connection with such Receivable; and
(12) all proceeds of the foregoing property described in
clauses (a) through (k) above, including interest, dividends, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of, or in exchange
for, or on account of, the sale or other disposition of such
Receivable.
"Pledged Consumer Note Receivable" means, with respect to an
Applicable Underlying Loan, a Consumer Note Receivable in which an Applicable
Underlying Borrower has granted to the Seller a first priority perfected
security interest pursuant to the Applicable Underlying Loan Documents relating
to such Applicable Underlying Loan.
"Purchase" means a purchase by the Purchaser of Receivables from the
Seller pursuant to Section 2.1.
"Purchased Consumer Note Receivable" means a Consumer Note
Receivable that was sold to the Seller by an Applicable Underlying Seller.
39
"Purchase Date" has the meaning specified in Section 2.1(b).
"Purchase Price" means, with respect to any Receivable that is the
subject of a Purchase hereunder, an amount equal to the Outstanding Principal
Balance of such Receivable on the Purchase Date therefor minus the Discount with
respect to such Receivable.
"Purchaser" has the meaning specified in the Preamble.
"Purchase Request Notice" has the meaning specified in Section
2.1(b).
"Qualified Loan" means an Applicable Underlying Loan made to an
Eligible Developer in connection with an Eligible Development which satisfies
the Credit and Collection Policy in all material respects.
"Receivable" means a Developer Note Receivable or a Purchased
Consumer Note Receivable.
"RLSA" means the Receivables Loan and Security Agreement, dated as
of the date hereof, by and among the Purchaser, the Seller, as Servicer, DG Bank
Deutsche Genossenschaftsbank AG, as Agent, the Lenders named therein, U.S. Bank
Trust National Association, as the Custodian, and Sage Systems, Inc., as the
Backup Servicer, as amended or restated from time to time pursuant to the terms
thereof.
"Schedule of Receivables" means the schedule of all Receivables sold
pursuant to this Agreement which is attached hereto as Schedule A, as amended
from time to time pursuant to the terms hereof.
"Seller" has the meaning specified in the Preamble.
"Seller Repurchase Event" means, with respect to any Receivable, the
occurrence of a breach of any of the Seller's representations or warranties
under Section 4.1(a) or (o) with respect to such Receivable or any related Other
Conveyed Property.
"Subordinated Note" means the Purchaser's Deferred Purchase Price
Note in the form of Exhibit B attached hereto, as the same may be amended,
restated, supplemented or otherwise modified from time to time, evidencing the
Deferred Purchase Price outstanding from time to time.
SECTION 1.3 Certain References. For the purposes of this Agreement,
all references in those definitions in the RLSA set forth below to (i) the terms
"The Agent", "the Agent", "the Agent (for the benefit of the Lender)", "the
Agent, on behalf of the Lender", "the Agent and the Lender", "the Lender", or
other words or phrases of like import shall mean and be a reference to "the
Purchaser (or its assignees or designees)", (ii) any approvals or consents with
respect to any documentation as a condition precedent to any "Loans
hereunder..." shall mean and be a reference to any approvals or consents with
respect to any documentation as a condition precedent to any "Purchases
hereunder", (iii) the term "Pledged Receivable" shall mean and be a reference to
the term "Receivable" as defined herein and (iv) the terms "Pledged Consumer
Note
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Receivable", "Pledged Developer Note Receivable" and "Pledged Purchased Consumer
Note Receivable" shall mean and be a reference to the terms "Pledged Consumer
Note Receivable", "Developer Note Receivable" and "Purchased Consumer Note
Receivable", respectively, as defined herein:
"Applicable Timeshare Documents"
"Applicable Underlying Loan Documents"
"Applicable Underlying Purchase Documents"
"Collections"
"Defaulted Receivable"
"Delinquent Receivable"
"Eligible Developer Sale Agreement"
"Eligible Developer Sale Agreement File"
"Eligible Development"
"Permitted Liens and Encumbrances"
"Pledged Consumer Note Receivable File"
"Pledged Developer Note Receivable File"
"Pledged Purchased Consumer Note Receivable File"
Without limiting the foregoing, if any definition in the RLSA used
herein refers to (i) assets, property or documentation being pledged or assigned
by the Purchaser to the Agent, for the benefit of the Lender, or other words or
phrases of like import, for purposes of this Agreement, such definition shall,
to the extent the context requires, refer to such assets, property or
documentation prior to such pledge or assignment or to such assets, property or
documentation being purchased or assigned by the Seller to the Purchaser
hereunder and (ii) persons, documents or other items being acceptable or
satisfactory to, or being subject to the consent or approval of, the Agent or
the Lender or both or other words or phrases of similar import, for purposes of
this Agreement, such definition shall, to the extent the context requires, refer
to such persons, documents or other items being acceptable or satisfactory to,
or being subject to the consent or approval of, the Purchaser (or its assignees
or designees). Further, any reference herein to any of the terms "Pledged
Consumer Note Receivable File", "Pledged Developer Note Receivable File",
"Pledged Purchased Consumer Note Receivable File" or "Receivable File" shall
mean a reference to such respective terms as defined in the RLSA but excluding
any Assignment Documents which provide for the pledge by the Purchaser to the
Agent, for the benefit of the Lender, of the Purchaser's interest in any
collateral securing any Pledged Consumer Note Receivable, Purchased Consumer
Note Receivable or Developer Note Receivable (other than any Pledged Consumer
Note Receivables securing such Developer Note Receivable).
ARTICLE II
CONVEYANCE OF THE RECEIVABLES
AND THE OTHER CONVEYED PROPERTY
SECTION 1.4 Conveyance of the Receivables and the Other Conveyed
Property.
(1) Subject to the terms and conditions of this Agreement, from time
to time
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on and after the date of this Agreement, the Seller may, at its option, sell,
transfer, assign and otherwise convey to the Purchaser, without recourse (except
to the extent specifically provided in Sections 4.2 or 6.1 hereof; it being
understood and agreed, however, that the Seller has other obligations and
liabilities hereunder in addition to those under such Sections), and the
Purchaser may, at its option, purchase from the Seller, all right, title and
interest of the Seller in, to and under (i) Receivables designated by the Seller
from time to time and (ii) all Other Conveyed Property with respect thereto. It
is the express intention of the Seller and the Purchaser that the sales,
transfers, assignments and conveyances contemplated by this Agreement shall
constitute sales of such Receivables and Other Conveyed Property with respect
thereto from the Seller to the Purchaser (and not loans by the Purchaser to the
Seller secured by such Receivables and related Other Conveyed Property),
conveying good title thereto free and clear of any Liens (other than, in the
case of the Purchaser's security interest in any Applicable Underlying Loan
Collateral or Applicable Underlying Purchased Note Collateral for such
Receivables which constitutes real property, Permitted Liens and Encumbrances on
such real property), which sales, transfers, assignments and conveyances are,
subject to the terms hereof, absolute and irrevocable and provide the Purchaser
with the full benefits of ownership of such Receivables and Other Conveyed
Property, and such Receivables and Other Conveyed Property shall not be part of
the Seller's estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy or similar law. Except for (i) the
Seller's repurchase obligations set forth in Section 6.1 and (ii) the Seller's
obligations and liabilities with respect to the representations, warranties,
covenants, indemnities and other agreements made by the Seller under or pursuant
to the terms of this Agreement, each transfer of Receivables and the related
Other Conveyed Property hereunder is made without liability to the Seller;
provided, that such transfer does not constitute, and is not intended to result
in, an assumption by the Purchaser or any assignee thereof of any obligation of
the Seller or any other Person arising in connection with the Receivables or
related Other Conveyed Property.
(2) Each Purchase (including the initial Purchase) from the Seller
shall be made on at least two Business Days' prior written notice from the
Seller to the Purchaser, provided that such request is received by the Purchaser
no later than 1:00 P.M. (New York City time) on the Business Day of receipt.
Each such request for a Purchase (each a "Purchase Request Notice") shall
specify the date of such Purchase (which shall be a Business Day) and the
proposed Purchase Price for such Purchase. The Purchaser shall promptly notify
the Seller whether it has determined to make such Purchase. Each Purchase
Request Notice made by the Seller shall be irrevocable and binding on the
Seller, and the Seller shall indemnify the Purchaser against any loss or expense
incurred by it as a result of any failure by the Seller to complete such
Purchase, including, without limitation, any loss or expense incurred by reason
of the Purchaser having agreed to borrow monies under the RLSA to purchase the
Receivables which are the subject of such Purchase Request Notice. On the date
of each Purchase (each a "Purchase Date"), the Purchaser shall, upon
satisfaction of the applicable conditions set forth in Article III, pay the
Purchase Price for such Purchase in the manner provided in Section 2.1(c). Each
delivery of a Purchase Request Notice shall be accompanied by an updated
Schedule of Receivables, which schedule shall be attached hereto as Schedule A
and made a part hereof. Each schedule so delivered shall supersede any prior
schedules so delivered.
(3) The Purchase Price paid for any Receivables that are the subject
of any Purchase hereunder shall be determined on or prior to the date of such
Purchase and shall be paid
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on the Purchase Date therefor by means of either of the following, or a
combination thereof, as mutually agreed upon by the parties hereto: (i) a
deposit in same day funds to the Seller's account designated by the Seller or
(ii) an increase in the Deferred Purchase Price (subject at all times to the
limitations contained in the definition thereof), which Deferred Purchase Price
is evidenced by the Subordinated Note.
(4) On each Purchase Date hereunder, after giving effect to the
Purchase on such date, the Purchaser shall own all Receivables identified as
being sold to the Purchaser under this Section 2.1 as of such date (including
Receivables previously sold by the Seller to the Purchaser hereunder). The
Purchase of any Receivable hereunder shall include all Other Conveyed Property
with respect to such Receivable. The Seller shall not take any action
inconsistent with such ownership and shall not claim any ownership interest in
such sold Receivables or Other Conveyed Property. Except as expressly provided
otherwise herein or in the related Assignment or Assignment Documents, the
Purchaser shall not, in connection with any Purchase hereunder, assume any
obligations or liabilities of the Seller under or with respect to any
Receivables or any Other Conveyed Property; provided that in no event shall the
Purchaser assume any obligations or liabilities of the Seller to fund or make
any loans under any loan agreement between the Seller and a Developer or to
purchase any receivables, instruments or other debt obligations under any
purchase agreement between the Seller and a Developer, and the Seller shall
retain such obligations and liabilities.
(5) Until the occurrence of a Servicer Default and the replacement
of the Seller as Servicer pursuant to the terms of the RLSA, the Seller, as
Servicer, shall conduct the servicing, administration and collection of the
Receivables transferred hereunder and shall take, or cause to be taken, all such
actions as may be necessary or advisable to service, administer and collect such
Receivables, from time to time, all in accordance with the terms of the RLSA. In
accordance with the Custodial Agreement, certain documents relating to
Receivables sold hereunder shall be delivered to and held in trust by the
Custodian for the benefit of the Purchaser and its assignees, and the Purchaser
hereby instructs the Seller to so deliver such documents to the Custodian. Such
delivery to the Custodian of such documents and the possession thereof by the
Custodian is at the will of the Purchaser and its assignees and in a custodial
capacity for their benefit only.
(6) On each Purchase Date, the Seller shall deliver to the Custodian
on behalf of the Purchaser and any assignee thereof each item contained in the
Receivable Files of, and any other chattel paper and instruments (as each term
is defined in the UCC) representing or evidencing, any of the Receivables being
sold on such Purchase Date or the Other Conveyed Property related thereto.
SECTION 1.5 Collections. (a) Unless otherwise agreed (pursuant to
the RLSA or otherwise), the Seller (as Servicer or otherwise) shall, within two
Business Days after receipt thereof, deposit into the Collection Account, all
Collections of Receivables purchased by the Purchaser hereunder then held by the
Seller (and until so deposited, such Collections shall be held in trust by the
Seller for the benefit of the Purchaser and its assigns).
(1) On each Remittance Date, the Purchaser shall pay to the Seller
accrued interest on the Deferred Purchase Price and the Purchaser may, at its
option, prepay in whole or
43
in part the principal amount of the Deferred Purchase Price; provided that each
such payment shall be made solely from (i) Collections of Receivables purchased
by the Purchaser hereunder after all other amounts then due from the Purchaser
under the RLSA have been paid in full and all amounts then required to be set
aside by the Purchaser or the Servicer under the RLSA have been so set aside or
(ii) excess cash flow from operations of the Purchaser which is not required to
be applied to or set aside for the payment of other obligations of the
Purchaser; and provided further, that no such payment shall be made at any time
when an Event of Default, Early Amortization Event or an event, act or condition
that but for notice or lapse of time or both would constitute an Event of
Default or Early Amortization Event shall have occurred and be continuing or
would result therefrom. At such time following the Collection Date when all
Loans, Yield and other amounts owed by the Purchaser under the RLSA shall have
been paid in full and all commitments of the Lender to provide any financial
accommodations to the Purchaser under the RLSA shall have terminated, the
Purchaser shall apply, on each Remittance Date, all Collections of Receivables
purchased by the Purchaser hereunder received by the Purchaser pursuant to
Section 2.2(a) (and not previously distributed) first to the payment of accrued
interest on the Deferred Purchase Price, and then to the reduction of the
principal amount of the Deferred Purchase Price.
SECTION 1.6 Payments and Computations, Etc. (a) All amounts to be
paid by the Seller (whether as Servicer or otherwise) under this Agreement to
the Purchaser or its assignee shall be paid or deposited as promptly as possible
on the day when due in same day funds to the Collection Account.
(1) The Seller shall, to the extent permitted by applicable law, pay
to the Purchaser or its assignee interest on any amount not paid or deposited by
the Seller (whether as Servicer or otherwise) when due hereunder at an interest
rate per annum equal to 2% above the Base Rate, payable on demand.
(2) All computations of interest hereunder shall be made on the
basis of a year of 360 days for the actual number of days elapsed. Whenever any
payment or deposit to be made hereunder shall be due on a day other than a
Business Day, such payment or deposit shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
such payment or deposit.
SECTION 1.7 Transfer of Records to Purchaser. Each Purchase of
Receivables hereunder shall include the transfer to the Purchaser of all of the
Seller's right, title and interest in and to the records relating to such
Receivables and the related Other Conveyed Property and shall include an
irrevocable non-exclusive license to the use of the Seller's computer software
system to access and create such records. Such license shall be without royalty
or payment of any kind, is coupled with an interest, and shall be irrevocable
until all of the Receivables purchased hereunder are either collected in full or
become Defaulted Receivables.
The Seller shall take such action reasonably requested by the
Purchaser, from time to time hereafter, that may be necessary or appropriate to
ensure that the Purchaser has an enforceable ownership interest in the records
relating to the Receivables purchased by it hereunder and the related Other
Conveyed Property and rights (whether by ownership, license or
44
sublicense) to the use of the Seller's computer software system to access and
create such records.
In recognition of the Seller's need to have access to the records
transferred to the Purchaser hereunder, the Purchaser hereby grants to the
Seller an irrevocable license to access such records in connection with any
activity arising in the ordinary course of the Seller's business or in
performance of its duties as Servicer, provided that (i) the Seller shall not
disrupt or otherwise materially interfere with the Purchaser's use of and access
to such records during such license period and (ii) the Seller consents to the
assignment and delivery of the records (including any information contained
therein relating to the Seller or its operations) to any assignees or
transferees of the Purchaser provided they agree to hold such records
confidential.
SECTION 1.8 Characterization. If, notwithstanding the intention of
the parties expressed in Section 2.1(a), any sale by the Seller to the Purchaser
of Receivables and related Other Conveyed Property hereunder shall be
characterized as a secured loan and not a sale or, such sale shall for any
reason be ineffective or unenforceable, then this Agreement shall be deemed to
constitute a security agreement under the UCC and other applicable law. For this
purpose and without being in derogation of the parties' intention that each sale
of Receivables and related Other Conveyed Property hereunder shall constitute a
true sale thereof, the Seller hereby grants to the Purchaser a duly perfected
security interest in all of the Seller's right, title and interest in, to and
under all Receivables intended by the parties to be conveyed to the Purchaser
pursuant to Section 2.1 and the Other Conveyed Property related thereto, now
existing or hereafter arising.
ARTICLE III
CONDITIONS OF SALE
SECTION 1.9 Conditions Precedent to the Initial Purchase. The
initial Purchase hereunder is subject to the condition precedent that the
Purchaser shall have received on or before the date of the initial Purchase
under this Agreement, in form and substance reasonably satisfactory to the
Purchaser:
(1) a Purchase Request Notice executed by the Seller with
respect thereto and an Assignment executed by the Seller and setting
forth the Receivables and the Other Conveyed Property with respect
thereto to be sold on the date of the initial Purchase under this
Agreement;
(2) a certified copy of the resolutions duly adopted by the
Board of Directors of the Seller approving this Agreement, the
Assignments and the other documents to be delivered by it hereunder
and the transactions and matters contemplated hereby and thereby;
(3) the certificate of incorporation, as amended, of the
Seller, certified by the Secretary of State of Delaware, dated as of
a recent date prior to the date hereof;
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(4) a good standing certificate for the Seller issued by the
Secretary of State of Delaware, dated not earlier than 20 days prior
to the date hereof;
(5) a copy of the Seller's bylaws, as amended, certified by
its Secretary or Assistant Secretary or by such other person as is
authorized to do so by such bylaws;
(6) a certificate of the Secretary or Assistant Secretary or
by such other person as is authorized to do so by the bylaws of the
Seller certifying (x) the names and true signatures of the officers
authorized on its behalf to sign this Agreement, the Assignments,
and the other documents to be delivered by it hereunder (on which
certificate the Purchaser and its assigns may conclusively rely
until such time as the Purchaser shall receive from the Seller a
revised certificate meeting the requirements of this subsection
(vi)), (y) that all representations and warranties made by the
Seller in this Agreement are true and correct in all material
respects and that the Seller is in compliance with each of its
covenants and other agreements set forth herein and (z) that the
certificate of incorporation of the Seller delivered to the
Purchaser under clause (iii) above has not been amended, modified or
supplemented and is in full force and effect;
(7) copies of proper financing statements (on Form UCC-1)
naming the Seller as the assignor of the Receivables and the Other
Conveyed Property related thereto purchased pursuant to this
Agreement and the Purchaser as assignee, or other similar
instruments or documents, in form and substance sufficient for
filing under the UCC or any comparable law of any and all
jurisdictions as may be necessary or, in the opinion of the
Purchaser or any assignee thereof, desirable to perfect the
Purchaser's ownership interest in all Receivables and the Other
Conveyed Property related thereto purchased pursuant to this
Agreement;
(8) copies of properly executed termination statements or
statements of release (on Form UCC-3) or other similar instruments
or documents, if any, in form and substance satisfactory for filing
under the UCC or any comparable law of any and all jurisdictions as
may be necessary or, in the opinion of the Purchaser and its
assigns, desirable to release all security interests and similar
rights of any Person in the Receivables and Other Conveyed Property
related thereto purchased pursuant to this Agreement previously
granted by the Seller;
(9) certified copies of requests for information or copies (on
Form UCC-11) (or a similar search report certified by a party
acceptable to the Purchaser and any assignee thereof), dated a date
reasonably near and prior to the date of such initial conveyance,
listing all effective financing statements and other similar
instruments and documents including those referred to above in
subsections (vii) and (viii) which name the Seller (under its
present name and any previous name) as debtor and which are filed in
the jurisdictions in which filings are to be made pursuant to such
subsections (vii) and (viii) above, together with copies of such
financing statements, none of which, except those filed pursuant to
46
subsections (vii) and (viii), above, shall cover any Receivables or
Other Conveyed Property related thereto purchased pursuant to this
Agreement;
(10) any necessary third party consents to the closing of the
transactions contemplated hereby, in the form and substance
satisfactory to the Purchaser; and
(11) favorable opinions of Baker & Hostetler LLP, counsel to
the Seller, and Dorsey & Whitney LLP, Minnesota counsel to the
Seller, with respect to such matters as the Purchaser or any
assignee thereof may reasonably request. (1)
SECTION 1.10 Conditions Precedent to All Purchases. The obligation
of the Purchaser to pay for each Receivable and the Other Conveyed Property
related thereto on each Purchase Date (including the initial Purchase Date)
shall be subject to the further conditions precedent that on such Purchase Date:
(1) The following statements shall be true:
(1) the representations and warranties of the Seller contained
in Section 4.1 shall be correct on and as of such Purchase Date in
all material respects, before and after giving effect to the
Purchase to take place on such Purchase Date, as though made on and
as of such date; and
(2) the Seller is in compliance in all material respects with
each of its covenants and other agreements set forth herein.
(2) The Purchaser shall have received an Assignment, dated the date
of such Purchase Date, executed by the Seller, listing each Receivable and Other
Conveyed Property with respect thereto being sold on such Purchase Date and
designating each such Receivable as an Eligible Receivable.
(3) The Seller shall have delivered to the Custodian on behalf of
the Purchaser and any assignee thereof a copy of the Assignment described in
clause (b) above for such Purchase Date, together with each item contained in
the Receivable Files of, and any other chattel paper and instruments (as each
term is defined in the UCC) representing or evidencing, any of the Receivables
being sold on such Purchase Date or the Other Conveyed Property related thereto.
(4) The Seller shall have taken such other action, including
delivery of approvals, consents, opinions, documents and instruments to the
Purchaser, as the Purchaser or any assignee thereof may reasonably request.
(5) There shall have been no Material Adverse Effect.
(6) (A) The Seller shall have timely delivered to the Purchaser a
Purchase Request Notice appropriately completed and executed by the Seller, (B)
the Seller shall have delivered to the Purchaser an Officer's Certificate from
the Seller certifying that (1) the Seller has delivered or caused to have been
delivered to the Custodian a copy of the Assignment related
47
to the Receivables being Purchased hereunder on such Purchase Date, together
with (i) the Pledged Developer Note Receivable File with respect to the
Developer Note Receivables being Purchased hereunder on such Purchase Date, (ii)
the Pledged Consumer Note Receivable File with respect to each Pledged Consumer
Note Receivable in which the Purchaser is acquiring an interest hereunder on
such Purchase Date, (iii) the Pledged Purchased Consumer Note Receivable File
with respect to each Purchased Consumer Note Receivable being Purchased
hereunder on such Purchase Date, and (iv) the Eligible Developer Sale Agreement
File with respect to each Eligible Developer Sale Agreement or other sale
agreement pursuant to which any Purchased Consumer Note Receivable being
Purchased hereunder on such Purchase Date was sold to the Seller, (2) the
Developer Note Receivables and all related Pledged Consumer Note Receivables
and/or the Purchased Consumer Note Receivables related to or constituting the
Receivables being Purchased hereunder on such Purchase Date are duly endorsed or
otherwise duly assigned by the Seller to the Purchaser and (3) the Developer
Mortgages, if applicable, and Interval Mortgages, if applicable, related to each
Receivable being Purchased hereunder on such Purchase Date, assignments thereof
by the Applicable Underlying Borrower or Applicable Underlying Seller to the
Seller and assignments thereof by the Seller to the Purchaser have all been duly
recorded in the appropriate recording offices, and (C) the Custodian has
delivered to the Purchaser by 11:30 A.M. (New York City time) on such Purchase
Date, a Receipt from the Custodian confirming that, inter alia, the Receivable
Files received on such Purchase Date conform with the Assignment delivered to
the Custodian on such Purchase Date.
(7) The Seller shall have taken all steps necessary under all
applicable law in order to cause a valid, subsisting and enforceable first
priority perfected security interest to exist in its favor in the Applicable
Underlying Loan Collateral, the Applicable Underlying Purchased Note Collateral
and all other Collateral related to each Receivable (and the proceeds thereof)
being Purchased hereunder on such Purchase Date and immediately prior to the
Purchase of such Receivables by the Purchaser hereunder, there shall have
existed in favor of the Seller as secured party, a valid, subsisting and
enforceable first priority perfected lien in the Applicable Underlying Loan
Collateral, the Applicable Underlying Purchased Note Collateral and all other
such Collateral related to such Receivable (and the proceeds thereof), and such
security interest is and shall be prior to all other liens (other than Permitted
Liens and Encumbrances) upon and security interests in such Applicable
Underlying Loan Collateral, Applicable Underlying Purchased Note Collateral and
other such Collateral (and the proceeds thereof) that now exist or may hereafter
arise or be created; provided, that, any such security interest in the Land,
Units and/or Common Elements of an Applicable Development, to the extent
evidenced by a Developer Mortgage, may be subordinate to an AD&C Mortgage.
(8) The Seller shall have taken all steps necessary under all
applicable law in order to cause a valid, subsisting and enforceable first
priority perfected ownership interest to exist in favor of the Purchaser in the
Receivables being Purchased hereunder on such Purchase Date and in all right,
title and interest of the Seller in, to and under the Other Conveyed Property
related thereto (and the proceeds thereof) and immediately prior to the Purchase
of such Receivables by the Purchaser, there shall have existed in favor of the
Seller as secured party, a valid, subsisting and enforceable first priority
ownership interest in such Receivables and Other Conveyed Property related
thereto (and the proceeds thereof) which ownership interest is free of all liens
and security interests.
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(9) The Seller shall have taken all steps necessary under all
applicable law in order to cause to exist in favor of the Purchaser a first
priority perfected security interest in the Applicable Underlying Loan
Collateral, the Applicable Underlying Purchased Note Collateral and all other
Collateral related to each Receivable (and the proceeds thereof) being Purchased
hereunder on such Purchase Date (subject, in the case of the security interest
in any Applicable Underlying Loan Collateral, Applicable Underlying Purchased
Note Collateral or other Collateral for such Receivable which constitutes real
property, to Permitted Liens and Encumbrances on such real property) and upon
the Purchase of such Receivables by the Purchaser, there shall exist in favor of
the Purchaser, as secured party, a valid, subsisting and enforceable first
priority perfected security interest in the Applicable Underlying Loan
Collateral, the Applicable Underlying Purchased Note Collateral and all other
Collateral related to each Receivable (and the proceeds thereof) being Purchased
hereunder on such Purchase Date (subject, in the case of the security interest
in any Applicable Underlying Loan Collateral, Applicable Underlying Purchased
Note Collateral or other Collateral for such Receivable which constitutes real
property, to Permitted Liens and Encumbrances on such real property) and such
security interest is and shall be prior to all other liens upon and security
interests therein that now exist or may hereafter arise or be created (other
than Permitted Liens and Encumbrances as aforesaid).
(10) The Pledged Consumer Note Receivables and all related Pledged
Developer Note Receivables and the Purchased Consumer Note Receivables, in each
instance, constituting or related to each Receivable being Purchased hereunder
on such Purchase Date shall have been duly endorsed or otherwise duly assigned
by the Seller to the Purchaser and delivered to the Custodian.
(11) All Interval Mortgages related to each Receivable being
Purchased hereunder on such Purchase Date and assignments thereof from the
Applicable Underlying Borrower or the Applicable Underlying Seller to the Seller
and from the Seller to the Purchaser shall each have been duly recorded or
registered in the Applicable Jurisdiction in accordance with all Applicable
Laws. All Developer Mortgages related to each Receivable being Purchased
hereunder on such Purchase Date and assignments thereof from the Seller to the
Purchaser shall each have been duly recorded or registered in the Applicable
Jurisdiction in accordance with all Applicable Laws. All Interval Mortgages, if
applicable, and Developer Mortgages, if applicable, assigned to the Purchaser
hereunder must have evidence thereon of payment of all required documentary
stamps and intangible taxes, if any are required.
(12) The Seller shall have delivered or caused to have been
delivered to the Custodian a copy of the Assignment related to the Receivables
being Purchased hereunder on the related Purchase Date, together with (i) the
Pledged Developer Note Receivable File with respect to each Developer Note
Receivable being Purchased hereunder on such Purchase Date, (ii) the Pledged
Consumer Note Receivable File with respect to each Pledged Consumer Note
Receivable in which the Purchaser is acquiring an interest hereunder on such
Purchase Date, (iii) the Pledged Purchased Consumer Note Receivable File with
respect to each Purchased Consumer Note Receivable being Purchased hereunder on
such Purchase Date and (iv) the Eligible Developer Sale Agreement File with
respect to each Eligible Developer Sale Agreement or other sale agreement
pursuant to which any Purchased Consumer Note Receivable being Purchased
hereunder on such Purchase Date was sold to the Seller.
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(13) [Intentionally Omitted].
(14) No law or regulation shall prohibit, and no order, judgment or
decree of any federal, state or local court or governmental body, agency or
instrumentality shall prohibit or enjoin, the Purchase of any Receivables or
related Other Conveyed Property on such Purchase Date in accordance with the
provisions hereof.
(15) To the extent not provided above, all Assignment Documents with
respect to the Receivables and related Other Conveyed Property being Purchased
hereunder on such Purchase Date shall have been duly executed and delivered by
the Seller and such Assignment Documents, to the extent applicable, shall each
have been duly recorded or registered in the Applicable Jurisdiction in
accordance with all Applicable Laws.
(16) As to each Receivable to be Purchased hereunder on such
Purchase Date, the Purchaser shall have received an Officer's Certificate from
the Seller certifying that:
(1) It has received no notice of any asserted or threatened
defense, offset, counterclaim, discount, or allowance in respect of
any Receivables or related Other Conveyed Property being Purchased
hereunder on such Purchase Date; and
(2) It has received such additional items as the Purchaser
shall reasonably require, including, without limitation, an aging
report and delinquency reports of any Receivables or related Other
Conveyed Property being Purchased hereunder on such Purchase Date.
(17) The following conditions shall have been satisfied:
(1) Applicable Underlying Documents. With respect to any
Receivables to be Purchased on such Purchase Date consisting of
Developer Note Receivables, the Applicable Underlying Borrower and
the Applicable Underlying Guarantor (if any) have executed and
delivered to the Seller the Applicable Underlying Loan Documents.
With respect to any Receivables to be Purchased on such Purchase
Date consisting of Purchased Consumer Note Receivables, the
Applicable Underlying Seller and the Applicable Underlying Guarantor
(if any) have executed and delivered to the Seller the Applicable
Underlying Purchase Documents.
(2) Developer Title Policies, Etc. If applicable, with respect
to any Receivables to be Purchased on such Purchase Date consisting
of Developer Note Receivables secured in whole or in part by
Consumer Note Receivables related to Right to Use Intervals and with
respect to any Receivables to be Purchased on such Purchase Date
consisting of Purchased Consumer Note Receivables related in whole
or in part to Right to Use Intervals, the Applicable Underlying
Borrower or Applicable Underlying Seller has delivered to the
Servicer an ALTA extended coverage lender's policy of title
insurance insuring in favor of the Applicable
50
Underlying Borrower or Applicable Underlying Seller and the Seller,
together with their successors and assigns, including but not
limited to the Purchaser, that good and marketable title in and to
the related Applicable Development is vested in the Applicable
Underlying Borrower or Applicable Underlying Seller, without
exception for filed or unfiled mechanics' liens or claims or (if a
Survey with respect to the related Applicable Development was
required pursuant to the terms of this Agreement or if such Survey
was conducted for any other reason) for matters that an accurate
Survey would disclose, subject only to Permitted Liens and
Encumbrances (the "Developer Title Policy") and such Developer Title
Policy shall be issued by a title insurance company reasonably
satisfactory to the Purchaser and assigns in all respects (the
"Title Insurance Company"). It is understood by the parties hereto
that if a Developer Title Policy can not be obtained with respect to
a Development located in a jurisdiction outside of the United
States, a similar title policy, if available, may be obtained in
lieu thereof.
Each Developer Title Policy shall contain such affirmative coverage as the
Seller deems reasonably necessary, including but not limited to an affirmative
statement that the Developer Title Policy insures the Applicable Underlying
Borrower or Applicable Underlying Seller and the Seller, together with their
successors and assigns, including but not limited to the Purchaser, against all
mechanics' and materialmen's liens arising from or out of construction of the
Applicable Development, and shall contain endorsements in form and content
acceptable to the Seller: (A) insuring against matters that would be disclosed
on an accurate Survey of the Land if a Survey with respect to the related
Applicable Development was required pursuant to the terms of this Agreement or
if such Survey was conducted for any other reason; (B) insuring that no building
restriction or similar exception to title disclosed on the Developer Title
Policy has been violated and that any violation thereof would not create or
result in any reversion, reverter or forfeiture of title; (C) if available, with
respect to zoning in the form typically issued in the Applicable Jurisdiction;
and (D) if available, insuring over any environmental superlien or similar lien
upon all or any portion of the Applicable Development. Such Developer Title
Policy shall provide that the Seller shall receive an endorsement to the
Developer Title Policy on the date of each advance of the Applicable Underlying
Loan or on the date of each Applicable Underlying Purchase: (A) indicating that
since the date of the immediately preceding advance or purchase there has been
no change in the state of title and no mechanics' or materialmen's lien, claim,
or lien or similar notice has been filed against the Development covered by such
Developer Title Policy; (B) updating the Developer Title Policy to the date of
such advance or purchase; and (C) increasing the coverage of the Developer Title
Policy by an amount equal to the amount of such advance or the purchase price
with respect to such purchase if the Developer Title Policy does not by its own
terms provide for such an increase. The condition of title to all Applicable
Underlying Loan Collateral or Applicable Underlying Purchased Note Collateral,
as applicable, must be satisfactory to the Purchaser or assigns in all respects,
in its reasonable discretion, as a condition precedent to the Purchase of the
relevant Receivables.
(3) Interval Title Policies. If applicable, with respect to
any Receivables to be Purchased on such Purchase Date consisting of
Developer Note Receivables secured in whole or in part by Fee Simple
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Intervals and with respect to any Receivables to be Purchased on
such Purchase Date consisting of Purchased Consumer Note Receivables
related in whole or in part to Fee Simple Intervals, the Applicable
Underlying Borrower or Applicable Underlying Seller has delivered to
the Servicer one or more ALTA extended coverage lender's policies of
title insurance insuring in favor of the Applicable Underlying
Borrower or Applicable Underlying Seller and the Seller, together
with their successors and assigns, including but not limited to the
Purchaser, that good and marketable title in and to each such Fee
Simple Interval is vested in the applicable Consumer, without
exception for filed or unfiled mechanics' liens or (if a Survey with
respect to the related Applicable Development was required pursuant
to the terms of this Agreement or if such Survey was conducted for
any other reason) claims or for matters that an accurate Survey
would disclose, subject only to Permitted Liens and Encumbrances
(each such policy, an "Interval Title Policy"). Such Interval Title
Policy shall be issued by a Title Insurance Company. It is
understood by the parties hereto that if an Interval Title Policy
can not be obtained with respect to Intervals related to a
Development located in a jurisdiction outside of the United States,
a similar title policy, if available, may be obtained in lieu
thereof.
Each such Interval Title Policy shall contain such affirmative
coverage as the Seller deems reasonably necessary, including but not
limited to an affirmative statement that the Interval Title Policy
insures the Applicable Underlying Borrower or Applicable Underlying
Seller and the Seller, together with their successors and assigns,
including but not limited to the Purchaser, to the extent of their
respective interests in the Intervals covered by such Interval Title
Policy, against all mechanics' and materialmen's liens arising from
or out of construction of the Applicable Development, and shall
contain endorsements in form and content acceptable to the Seller:
(A) insuring against matters that would be disclosed on an accurate
Survey of the Land if a Survey with respect to the related
Applicable Development was required pursuant to the terms of this
Agreement or if such Survey was conducted for any other reason; (B)
insuring that no building restriction or similar exception to title
disclosed on the Interval Title Policy has been violated and that
any violation thereof would not create or result in any reversion,
reverter or forfeiture of title; (C) if available, with respect to
zoning in the form typically issued in the Applicable Jurisdiction;
and (D) if available, insuring over any environmental superlien or
similar lien upon all or any portion of the Applicable Development.
Such Interval Title Policy shall provide that the Seller shall
receive an endorsement to the Interval Title Policy on the date of
each new advance of the Applicable Underlying Loan or on the date of
each new purchase of a Consumer Note Receivable under the applicable
Eligible Developer Sale Agreement: (A) indicating that since the
date of the immediately preceding advance or purchase, there has
been no change in the state of title and no mechanics' or
materialmen's lien, claim, or lien or similar notice has been filed
against any Interval that is covered by such Interval Title Policy;
(B) updating the Interval Title Policy to the date of such new
advance or new purchase; and (C) increasing the coverage of the
Interval Title Policy (x) to include the Interval or Intervals which
secure such new advance or are the subject of such new purchase and
(y) by an amount equal to the amount of such new advance or the
purchase price with respect to such new purchase if the Interval
Title Policy does
52
not by its own terms provide for such an increase. The condition of
title to all Applicable Underlying Loan Collateral or Applicable
Underlying Purchased Note Collateral, as applicable, must be
satisfactory to the Purchaser or assigns in all respects, in its
reasonable discretion, as a condition precedent to the Purchase of
the relevant Receivables.
(4) Opinions of Applicable Underlying Borrower's and Other's
Counsel. The Seller has received (and delivered to the Purchaser)
from counsel for the Applicable Underlying Borrower, the Applicable
Underlying Guarantor, if any, or the Applicable Underlying Seller,
as applicable, licensed in the Applicable Jurisdiction and
reasonably acceptable to the Purchaser or assigns, legal opinions in
substantially the applicable form attached as Exhibit D (it being
understood that legal opinions substantially in such form are
acceptable to the Purchaser and assigns) to the RLSA or otherwise in
form and substance reasonably satisfactory to the Purchaser or
assigns, dated as of the date of closing of the Applicable
Underlying Loan or the Applicable Underlying Purchase, as
applicable, covering such items as may be reasonably required by the
Purchaser or assigns, including, without limitation, that the
Applicable Underlying Loan Documents or the Applicable Underlying
Purchase Documents, as applicable, are valid, binding, and
enforceable in accordance with their terms and that they do not
violate any applicable usury or other Applicable Laws. The Seller
shall use its best efforts to ensure that each such legal opinion
shall also be addressed to the Purchaser and assigns and expressly
state that it may be relied upon by the Purchaser and assigns for
any and all purposes.
(5) Applicable Underlying Borrower's and Other's Background
Documents. Each of the Applicable Underlying Borrower, the
Applicable Underlying Guarantor, if any, and the Applicable
Underlying Seller, as appropriate, has delivered to the Servicer and
the Servicer has approved each of the following:
(A) Applicable Underlying Borrower's, Applicable
Underlying Guarantor's or Applicable Underlying Seller's
Organizational Documents. Copies of the Applicable Underlying
Borrower's, Applicable Underlying Guarantor's and Applicable
Underlying Seller's, as appropriate, organizational documents,
including but not limited to its articles of incorporation,
bylaws, partnership agreement, limited liability company
agreement and other relevant documents, as applicable,
together with any amendments thereto, certified to be true and
complete by the Applicable Underlying Borrower's, Applicable
Underlying Guarantor's and Applicable Underlying Seller's, as
appropriate, Secretary or other authorized representative.
(B) Good Standing Certificates. After the date hereof,
current good standing certificates issued by the relevant
secretaries of state (or similar officials with respect to
foreign jurisdictions) for the Applicable Underlying Borrower,
the Applicable Underlying Guarantor and the
53
Applicable Underlying Seller, as appropriate and to the extent
available in the case of foreign jurisdictions.
(C) Resolutions. Certified resolutions of the Applicable
Underlying Borrower's, Applicable Underlying Guarantor's and
Applicable Underlying Seller's, as appropriate, boards of
directors or general partners, as applicable, or such other
evidence of authority as is appropriate for the Applicable
Underlying Borrower's, Applicable Underlying Guarantor's and
Applicable Underlying Seller's, as appropriate, form of
business organization, authorizing the execution of all
Applicable Underlying Loan Documents, Underlying Guaranties or
Applicable Underlying Purchase Documents, as applicable, and
the performance of all obligations of the Applicable
Underlying Borrower, the Applicable Underlying Guarantor and
Applicable Underlying Seller, as appropriate, thereunder.
(D) Survey. In the case of any Consumer Note Receivable
which is the subject of a Developer Mortgage, an as-built
Survey (except, in the case of a Presale Consumer Note
Receivable, in which case the Survey shall only have been
conducted as to the applicable Land) satisfactory to the
Purchaser and (except in the case of Surveys delivered prior
to the date hereof) assigns and prepared by a licensed
surveyor satisfactory to the Seller, the Purchaser and assigns
and the Title Insurance Company in accordance with the
Seller's and the Purchaser's and assigns' requirements, of the
Applicable Development's Land, showing the location and
dimensions of all Units, Common Elements, if any, and other
improvements thereto and indicating the routes of ingress and
egress for public access to the Applicable Development, all
utility lines, walks, drives, recorded or visible easements
and rights-of-way on such Land, and showing that there are no
encroachments, improvements, projections, or easements
(recorded or unrecorded) on the property lines which would
prevent the development or intended use of the Applicable
Development. The Survey shall certify the acreage of the Land
and shall indicate whether the Land is located within any
flood hazard area. The Survey must be prepared in accordance
with the standards set forth by ALTA/ACSM and those of any and
all surveyors' bureaus or associations of the Applicable
Jurisdiction as well as any and all Applicable Laws and must
be certified to the Seller, the Purchaser and assigns and the
Title Insurance Company. The surveyor's certificate placed on
the Survey shall include a statement that said Survey notes or
locates any and all such items set forth as exceptions in the
applicable Title Policy as the Purchasers and assigns may
require, and otherwise satisfy all of Purchaser's and assigns'
Survey requirements, and shall include any other information
required by the Purchaser and assigns and the Title Insurance
Company. A Survey shall not be required if such Survey (or its
reasonable equivalent) is not available in the case of foreign
jurisdictions.
54
(E) Environmental Report. If applicable, an Acceptable
Environmental Report covering the related Applicable
Development, including all mortgaged real property which
constitutes part of such Applicable Development.
(6) Evidence of Insurance. The Purchaser and assigns have
received certified copies of all insurance policies and endorsements
thereto or other evidence satisfactory to the Purchaser and assigns,
in the reasonable discretion of each, relating to the Applicable
Development, including but not limited to the Encumbered Intervals
and such insurance policies and endorsements thereto shall conform
with the Credit and Collection Policy in all material respects and
customary practice in the timeshare industry in the Applicable
Jurisdiction. In addition, the Purchaser and assigns have received
written evidence that the Applicable Underlying Borrower or
Applicable Underlying Seller, as applicable, has obtained and is
maintaining or has caused the Applicable Timeshare Owners'
Association to obtain and maintain all policies of insurance
required by and in accordance with the terms hereof and of the
Credit and Collection Policy and which are customary in the
timeshare industry in the Applicable Jurisdiction, including but not
limited to copies of the most current paid insurance premium
invoices for such policies.
(7) Applicable Laws. The Purchaser and assigns have received
evidence satisfactory to the Purchaser that all Encumbered Intervals
at the Applicable Development are and will be in compliance with all
applicable zoning, building, and other Applicable Laws in connection
with the construction, development, establishment, and operation of
the Applicable Development and the sale, use, marketing, and
occupancy of Units and Intervals thereat.
(8) Litigation. The Purchaser and assigns have received
evidence satisfactory to the Purchaser and assigns that there exists
no pending bankruptcy, foreclosure, or other material litigation or
judgments outstanding against or with respect to the Applicable
Development, the Applicable Underlying Borrower, the Applicable
Underlying Guarantor, if any, or the Applicable Underlying Seller
(each a "Material Party"). The term "other material litigation" as
used herein shall not include matters in which (i) a Material Party
is a plaintiff and no counterclaim is pending; or (ii) the Purchaser
and assigns determine, in their reasonable discretion, that such
litigation is immaterial due to settlement, insurance coverage,
frivolity, or amount or nature of claim. The Purchaser and assigns
shall have obtained an independent search, at the Seller's or the
Applicable Underlying Borrower's or Applicable Underlying Seller's
expense, confirming that no such bankruptcy, foreclosure action, or
other material litigation or judgment exists.
(9) Code/Other Searches. The Purchaser and assigns have
obtained such searches of the applicable public records as it deems
necessary under all Applicable Laws to verify that it has a first
and prior perfected Lien and security interest covering all of the
Applicable Underlying Loan Collateral or the
55
Applicable Underlying Purchased Note Collateral, as appropriate;
provided, that no UCC searches will be conducted with respect to
Consumers; and provided, further, that, any such security interest
in the Land, Units and/or Common Elements of an Applicable
Development, to the extent evidenced by a Developer Mortgage, may be
subordinate to an AD&C Mortgage.
(10) Taxes and Assessments. The Purchaser and assigns have
received copies of the most current tax bills related to the
Applicable Development (other than an Applicable Development related
to a Non-Specific Club Membership Right to Use Interval or a
Non-Specific Club Membership Fee Simple Interval), together with
evidence satisfactory to it that all real estate and personal
property taxes and assessments owed by or for which the Applicable
Underlying Borrower, the Applicable Underlying Seller or the
Applicable Timeshare Owners' Association is responsible for
collection have been paid, except for such taxes as are being
disputed in good faith and with respect to which adequate reserves
have been established.
(11) Financial Statements. The Purchaser and assigns have
received the financial statements required by the Applicable
Underlying Loan Documents or the Applicable Underlying Purchase
Documents to be delivered to the Seller, or otherwise required by
the Purchaser and assigns, for the Applicable Underlying Borrower,
the Applicable Underlying Guarantor and the Applicable Underlying
Seller, all in form and substance satisfactory to the Purchaser and
assigns in their reasonable discretion.
(12) Interval Sales. To the extent applicable, the Purchaser
and assigns have received a written statement from the Applicable
Underlying Borrower or the Applicable Underlying Seller, as
applicable, to the effect that the Applicable Underlying Borrower or
the Applicable Underlying Seller, as applicable, has complied in all
material respects with all Applicable Laws relating to the marketing
and sale of Intervals, including but not limited to any Encumbered
Intervals, at the Applicable Development, including but not limited
to timeshare registration statutes, rules, and regulations.
(13) Management and Property Contract. The Purchaser and
assigns have received a copy of the management contract, if any, for
the Applicable Development (the "Management Contract") and the
Purchaser and assigns have determined to their mutual satisfaction
that the Applicable Development is being managed by a professional
management company reasonably acceptable to the Purchaser and
assigns.
(14) Miscellaneous. Such other matters as the Purchaser or
assigns shall reasonably require.
True copies or, to the extent required hereby, originals of
all of the above-referenced documents, instruments, forms, opinions,
and other materials shall be delivered to the Servicer, either prior
to or contemporaneously with the
56
Seller's execution and delivery to the Purchaser of the sworn
written certificate required by this Section. The Servicer's written
acknowledgment of receipt and recommendation of approval of each
such item is an absolute condition precedent to the Purchaser's
obligation to Purchase the relevant Receivables hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 1.11 Representations and Warranties of the Seller. The
Seller makes the following representations and warranties, on which the
Purchaser relies in purchasing the Receivables and the Other Conveyed Property
related thereto and in granting a security interest in the Receivables and the
Other Conveyed Property related thereto to the Agent for the benefit of the
Lender under the RLSA. Such representations and warranties are made as of the
execution and delivery of this Agreement and on each Purchase Date and shall
survive the sale, transfer and assignment of the Receivables and the Other
Conveyed Property related thereto hereunder and the grant of a security interest
in such Receivables and the Other Conveyed Property related thereto by the
Purchaser to the Agent for the benefit of the Lender under the RLSA.
(1) Eligibility of Receivables. Each Receivable purported to be sold
by the Seller hereunder is an Eligible Receivable as of the date of its
purported sale to the Purchaser hereunder. Each Pledged Consumer Note Receivable
securing a Developer Note Receivable purported to be sold by the Seller
hereunder is an Eligible Pledged Consumer Note Receivable or an Eligible Pledged
Presale Consumer Note Receivable, as appropriate, as of the date in which the
Purchaser acquires an interest in such Pledged Consumer Note Receivable.
(2) Organization and Good Standing. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with power and authority to own its properties (including the
Receivables and Other Conveyed Property) and to conduct its business as such
properties are currently owned and such business is currently conducted.
(3) Due Qualification. The Seller is duly qualified to do business,
and is in good standing, and has obtained all necessary licenses and approvals,
in all jurisdictions in which the ownership or lease of its property or the
conduct of its business requires such qualification, licenses and/or approvals
except where failure to obtain such licenses and approvals or to be so qualified
would not cause a Material Adverse Effect.
(4) Power and Authority. The Seller has the power, authority and
legal right to execute, deliver and perform this Agreement, the RLSA, each
Applicable Underlying Loan Document, Applicable Underlying Purchase Document and
Assignment Document to which it is a party and each other Transaction Document
to which it is a party and to carry out its terms and their terms, respectively.
The Seller has the power, authority and legal right to sell and assign the
Receivables and Other Conveyed Property related thereto to be sold and assigned
to the Purchaser hereunder and has duly authorized such sale and assignment to
the Purchaser by all necessary action and the execution, delivery and
performance of this Agreement, the RLSA, each
57
Applicable Underlying Loan Document, Applicable Underlying Purchase Document and
Assignment Document to which it is a party and each Transaction Document to
which it is a party have been duly authorized by the Seller by all necessary
action.
(5) Valid Sale; Binding Obligations. This Agreement, the RLSA, each
Assignment, each Applicable Underlying Loan Document, Applicable Underlying
Purchase Document and Assignment Document to which the Seller is a party and
each other Transaction Document to which the Seller is a party have been and
will be duly executed and delivered by the Seller. Sales made pursuant to this
Agreement will constitute a valid sale, transfer and assignment of the
Receivables and the Other Conveyed Property related thereto to be purchased
hereunder by the Purchaser, enforceable against creditors of, and purchasers
from, the Seller. The Seller shall have no remaining property interest in any
Receivable and the Other Conveyed Property related thereto purchased by the
Purchaser hereunder. This Agreement, the RLSA, each Assignment, each Applicable
Underlying Loan Document, Applicable Underlying Purchase Document and Assignment
Document to which the Seller is a party and each other Transaction Document to
which the Seller is a party constitutes the legal, valid and binding obligation
of the Seller enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
conservatorship, receivership, liquidation or other similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(6) No Violation. The consummation of the transactions contemplated
by this Agreement, the RLSA, each Assignment, each Applicable Underlying Loan
Document, Applicable Underlying Purchase Document and Assignment Document to
which the Seller is a party and the other Transaction Documents to which the
Seller is a party, and the fulfillment of the terms of this Agreement, the RLSA,
each Assignment, each Applicable Underlying Loan Document, Applicable Underlying
Purchase Document and Assignment Document to which the Seller is a party and the
other Transaction Documents to which the Seller is a party, shall not conflict
with, result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a default under, the certificate of
incorporation or by-laws of the Seller, or any indenture, agreement, mortgage,
deed of trust or other instrument to which the Seller is a party or by which it
is bound or any of its properties are subject (other than any indenture,
agreement, mortgage, deed of trust or other instrument the violation of which
would not reasonably be expected to have a Material Adverse Effect), or result
in the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement, mortgage, deed of trust or other
instrument (other than this Agreement or the RLSA), or violate any law, order,
rule or regulation applicable to the Seller of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or any of its properties, or
in any way materially affect the Seller's ability to perform its obligations
under this Agreement, the RLSA, the Assignments, the Applicable Underlying Loan
Documents, Applicable Underlying Purchase Documents or Assignment Documents to
which it is a party or any other Transaction Documents to which it is a party.
(7) No Proceedings. There are no proceedings or investigations
pending or threatened against the Seller before any court, regulatory body,
administrative agency or other
58
tribunal or governmental instrumentality having jurisdiction over the Seller or
its properties (i) asserting the invalidity of this Agreement, the RLSA, any
Assignment, any Applicable Underlying Loan Document, Applicable Underlying
Purchase Document or Assignment Document or any of the other Transaction
Documents, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, the RLSA, any Assignment, any Applicable
Underlying Loan Document, Applicable Underlying Purchase Document or Assignment
Document or any of the other Transaction Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have more than an
inconsequential adverse effect on the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement, the
RLSA, any Assignment, any Applicable Underlying Loan Document, Applicable
Underlying Purchase Document or Assignment Document to which it is a party or
any other Transaction Documents to which it is a party or (iv) that could
reasonably be expected to have more than an inconsequential adverse effect on
the Receivables.
(8) No Consents. Other than that which has been obtained, no consent
of any other party and no consent, license, approval or authorization, or
registration, filing or declaration with, any governmental authority, bureau or
agency is required for the due execution, delivery and performance by the Seller
of this Agreement or any other document to be delivered by it hereunder.
(9) Chief Executive Office; Tradenames. The principal place of
business and chief executive office of the Seller and the office where the
Seller keeps its records concerning the Receivables are located at the address
or addresses listed on Schedule B hereto. The Seller's legal name is as set
forth in this Agreement; the Seller has not changed its name since the date of
its incorporation and the Seller is not known by any trade names or
doing-business-as name, in each instance, other than those listed on Schedule C
hereto.
(10) Solvency. The Seller is solvent and will not become insolvent
after giving effect to the transactions contemplated by this Agreement and the
other Transaction Documents. The Seller, after giving effect to the transactions
contemplated by this Agreement and the other Transaction Documents, will have an
adequate amount of capital to conduct its business in the foreseeable future.
(11) Compliance With Laws. The Seller has complied and will comply
in all material respects with all applicable laws, rules, regulations,
judgments, agreements, decrees and orders with respect to its business and
properties.
(12) Taxes. The Seller has filed (on a consolidated basis or
otherwise) on a timely basis all federal, state and other material tax returns
required to be filed, is not liable for taxes payable by any other Person and
has paid or made adequate provisions for the payment of all taxes, assessments
and other governmental charges due from the Seller. No tax lien or similar
adverse claim has been filed, and, to the best of the Seller's knowledge, no
claim is being asserted, with respect to any such tax, assessment or other
governmental charge. Any taxes, fees and other governmental charges payable by
the Seller in connection with the execution and delivery of this Agreement and
the other Transaction Documents and the transactions contemplated hereby or
thereby have been paid, if due, or shall have been paid prior to delinquency.
59
(13) Purchase Request Notices. Each Purchase Request Notice is
accurate in all material respects.
(14) Assignments. Each Assignment is accurate in all material
respects.
(15) No Liens, Etc. The Receivables and Other Conveyed Property
related thereto to be sold and assigned to the Purchaser hereunder are owned
(immediately prior to their sale hereunder) by the Seller free and clear of any
Adverse Claim (other than, in the case of the Seller's security interest in any
Applicable Underlying Loan Collateral or Applicable Underlying Purchased Note
Collateral for such Receivables which constitutes real property, Permitted Liens
and Encumbrances on such real property and, to the extent such security interest
is evidenced by a Developer Mortgage, an AD&C Mortgage) or restrictions on
transferability, and upon transfer hereunder the Purchaser will have acquired
good and marketable title to and a valid and perfected ownership interest in
such Receivables and Other Conveyed Property related thereto, free and clear of
any Adverse Claim (other than, in the case of the Purchaser's security interest
in any Applicable Underlying Loan Collateral or Applicable Underlying Purchased
Note Collateral for such Receivables which constitutes real property, Permitted
Liens and Encumbrances on such real property and, to the extent such security
interest is evidenced by a Developer Mortgage, an AD&C Mortgage) or restrictions
on transferability. No effective financing statement or other instrument similar
in effect covering all or any part of the Receivables and Other Conveyed
Property related thereto to be purchased hereunder is on file in any recording
office, except such as may have been filed in favor of the Purchaser in
accordance with this Agreement or in favor of the Agent in accordance with the
RLSA or except as shall be released upon purchase of such Receivables and Other
Conveyed Property by the Purchaser or except, with respect any Applicable
Underlying Loan Collateral or Applicable Underlying Purchased Note Collateral
for such Receivables which constitutes real property, those representing
Permitted Liens and Encumbrances on such real property and, to the extent the
security interest therein is evidenced by a Developer Mortgage, an AD&C
Mortgage.
(16) [Intentionally Omitted].
(17) Information True and Correct. All information heretofore or
hereafter furnished by or on behalf of the Seller to the Purchaser in connection
with this Agreement or any transaction contemplated hereby is and will be true
and complete in all material respects and does not and will not omit to state a
material fact necessary to make the statements contained therein not misleading.
(18) ERISA Compliance. The Seller is in compliance in all material
respects with ERISA and has not incurred and does not expect to incur any
material liabilities (except for premium payments arising in the ordinary course
of business) to the Pension Benefit Guaranty Corporation (or any successor
thereto) under ERISA.
(19) No Material Adverse Effect; No Default. (i) The Seller is not a
party to any indenture, loan or credit agreement or any lease or other agreement
or instrument or subject to any charter or corporate restriction that could
have, and no provision of applicable law or governmental regulation is
reasonably likely to have, a Material Adverse Effect and (ii) the Seller
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is not in default under or with respect to any contract, agreement, lease or
other instrument to which the Seller is a party which is reasonably likely to
have a Material Adverse Effect.
(20) Financial or Other Condition. There has been no Material
Adverse Effect.
(21) Investment Company Status. The Seller is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents to which the
Seller is a party will not violate any provision of such Act or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder.
(22) No Shared Obligations. There is not now, nor will there be at
any time in the future, any agreement or understanding between the Seller and
the Purchaser (other than as expressly set forth herein or in the other
Transaction Documents) providing for the allocation or sharing of obligations to
make payments or otherwise in respect of any taxes, fees, assessments or other
governmental charges.
(23) Representation and Warranties True and Correct. Each of the
representations and warranties of the Seller contained in the Transaction
Documents to which it is a party is true and correct in all material respects
and the Seller hereby makes each such representation and warranty to, and for
the benefit of, the Purchaser as if the same were set forth in full herein.
(24) Intent of Seller. The Seller has not transferred any interest
in any Receivable (or the Other Conveyed Property related thereto) to the
Purchaser with any intent to hinder, delay or defraud any of the Seller's
creditors.
(25) Consideration. The Seller has received fair consideration and
reasonably equivalent value in exchange for the sale of the Receivables
hereunder.
(26) Year 2000. The Seller is Year 2000 Compliant.
(27) Multiple Purchasers. The Seller has not assigned or transferred
to any Person (other than the Purchaser) any loans by the Seller to a Developer
secured in whole or in part by Consumer Note Receivables made pursuant to the
terms of a loan agreement between the Seller and such Developer if any other
loans made pursuant to the same loan agreement have been assigned or transferred
to the Purchaser.
(28) Filings. (i) All filings (including, without limitation, UCC
and real property filings) required to be made by any Person and all other
actions required to be taken or performed by any Person in any jurisdiction to
give the Purchaser a first priority perfected lien on all Applicable Underlying
Purchased Note Collateral and all other collateral security for all Purchased
Consumer Note Receivables purchased by the Purchaser hereunder and the proceeds
thereof have been made, taken or performed; provided, that, (X) any such lien on
the Land, Units and/or Common Elements of an Applicable Development, to the
extent evidenced by a Developer Mortgage, may be subordinate to an AD&C Mortgage
and (Y) such lien on
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Applicable Underlying Purchased Note Collateral and other collateral security
which constitutes real property may be subject to Permitted Liens and
Encumbrances; (ii) all filings (including, without limitation, UCC and real
property filings) required to be made by any Person and all other actions
required to be taken or performed by any Person in any jurisdiction to give the
applicable Developer a first priority perfected lien on all collateral security
for all Consumer Note Receivables securing any Developer Note Receivables
purchased by the Purchaser hereunder and the proceeds thereof have been made,
taken or performed; provided, that such lien on any such collateral security
which constitutes real property may be subject to Permitted Liens and
Encumbrances; (iii) all filings (including, without limitation, UCC and real
property filings) required to be made by any Person and all other actions
required to be taken or performed by any Person in any jurisdiction to give the
Seller a first priority perfected lien on all Applicable Underlying Loan
Collateral and all other collateral security for all Developer Note Receivables
purchased by the Purchaser hereunder and the proceeds thereof have been made,
taken or performed; provided, that, (X) any such lien on the Land, Units and/or
Common Elements of an Applicable Development, to the extent evidenced by a
Developer Mortgage, may be subordinate to an AD&C Mortgage and (Y) such lien on
Applicable Underlying Loan Collateral and other collateral security which
constitutes real property may be subject to Permitted Liens and Encumbrances;
(iv) all filings (including, without limitation, UCC and real property filings)
required to be made by any Person and all other actions required to be taken or
performed by any Person in any jurisdiction to give the Purchaser a first
priority perfected ownership interest in all Purchased Consumer Note Receivables
Purchased hereunder and the proceeds thereof have been made, taken or performed;
and (v) all filings (including, without limitation, UCC and real property
filings) required to be made by any Person and all other actions required to be
taken or performed by any Person in any jurisdiction to transfer from the Seller
to the Purchaser a first priority perfected lien on all Applicable Underlying
Loan Collateral and all other collateral security for all Developer Note
Receivables Purchased hereunder and the proceeds thereof have been made, taken
or performed.
(29) Underwriting and Servicing. Each of the Receivables to be
Purchased hereunder was underwritten and is being serviced in conformance with
the Seller's standard underwriting, credit, collection, operating and reporting
procedures and systems (including, without limitation, the Credit and Collection
Policy).
(30) Selection. In selecting the Receivables to be Purchased under
this Agreement, no selection procedures were employed which are intended to be
adverse to the interests of the Purchaser or which would reasonably be expected
to result in the Receivables Purchased hereunder containing a higher percentage
of Defaulted Receivables than the percentage of Defaulted Receivables in the
Receivables retained by the Seller.
(31) Proceeds. No proceeds of any Purchase will be used to acquire
any equity security of a class which is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
(32) Bulk Sales. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
SECTION 1.12 Indemnification.
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(1) The Seller shall defend, indemnify and hold harmless the
Purchaser and its assigns and transferees from and against any and all
costs, expenses, losses, damages, claims, and liabilities, arising out of
or resulting from any breach of any of the Seller's representations and
warranties and covenants contained herein.
(2) The Seller shall defend, indemnify and hold harmless the
Purchaser and its assigns and transferees against any and all costs,
expenses, losses, damages, claims and liabilities arising out of or
resulting from any acts, events or conditions relating to any Receivable
or Other Conveyed Property Purchased hereunder that occurred, existed or
otherwise related to a time prior to the respective Purchase Date
therefor.
(3) The Seller shall defend, indemnify and hold harmless the
Purchaser and its assigns and transferees against any and all costs,
expenses, losses, damages, claims and liabilities arising out of or
resulting from any action taken by it in respect of any portion of the
Receivables Purchased hereunder or the Other Conveyed Property related to
a Receivable Purchased hereunder other than in accordance with this
Agreement or the RLSA.
(4) The Seller agrees to pay, and shall defend, indemnify and
hold harmless the Purchaser and its assigns and transferees from and
against, any taxes that may at any time be asserted against the Purchaser
or any of its assigns or transferees with respect to the transactions
contemplated in this Agreement, including, without limitation, any sales,
gross receipts, general corporation, tangible or intangible personal
property, privilege, or license taxes and costs and expenses in defending
against the same, arising by reason of the acts to be performed by the
Seller under this Agreement and imposed against such Persons.
(5) The Seller shall defend, indemnify, and hold harmless the
Purchaser and its assigns and transferees from and against any and all
costs, expenses, losses, claims, damages, and liabilities to the extent
that such cost, expense, loss, claim, damage, or liability arose out of,
or was imposed upon the Purchaser or any of its assigns or transferees
through the negligence, willful misfeasance, or bad faith of the Seller in
the performance of its duties under this Agreement or by reason of
reckless disregard of the Seller's obligations and duties under this
Agreement.
(6) The Seller shall indemnify, defend and hold harmless the
Purchaser and its assigns and transferees from and against any loss,
liability or expense imposed upon, or incurred by, the Purchaser or any of
its assigns or transferees as result of the failure of any Receivable
Purchased hereunder, or the sale or financing of the related Interval, to
comply with all requirements of applicable law.
(7) The Seller shall defend, indemnify and hold harmless the
Purchaser and its assigns and transferees from and against any loss,
liability or expense imposed upon, or incurred by, the Purchaser or any of
its assigns or transferees as a result of (i) any claim, action or demand
by a Developer arising from any obligation of the
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Seller (including any failure of the Seller to fulfill such obligation) to
fund or make any loans under any loan agreement between the Seller and a
Developer or any other obligation under such loan agreement not expressly
assumed by the Purchaser or any of its assigns or transferees, as the case
maybe, (ii) any claim, action or demand by a Developer arising from any
obligation of the Seller (including any failure of the Seller to fulfill
such obligation) to purchase any Consumer Note Receivable under any
purchase agreement between the Seller and a Developer or any other
obligation (including any failure of the Seller to fulfill such
obligation) under such purchase agreement, (iii) any claim, action or
demand by a Developer or other Person arising from any obligation of the
Seller (including the failure of the Seller to fulfill such obligation)
under or related to any loan or purchase agreement between the Seller and
a Developer or any Receivable or Other Conveyed Property related thereto
which is not expressly assumed by the Purchaser or any of its assigns and
transferees, as the case maybe, and (iv) any setoff or similar remedy made
by any Person against any Receivables or Other Conveyed Property related
thereto assigned or transferred to the Purchaser under this Agreement as a
consequence of the Seller's acts or omissions with respect to any
obligations of the Seller not expressly assumed by the Purchaser or any of
its assigns or transferees, as the case may be, including the failure of
the Seller to fulfill any of its obligations described in clauses (i)
through (iii) above.
(8) The Seller shall defend, indemnify and hold harmless the
Purchaser and its assigns and transferees from and against, and shall pay
liquidated damages to the Purchaser and its assigns and transferees as a
result of, any loss, liability or expense imposed upon, or incurred by,
the Purchaser or any of its assigns or transferees as a result of any
Consumer Note Receivable which secures or purportedly secures any
Developer Note Receivable Purchased hereunder not constituting an Eligible
Pledged Consumer Note Receivable or an Eligible Pledged Presale Consumer
Note Receivable, as the case may be, on the date the Purchaser acquires an
interest therein or any other collateral security for any Developer Note
Receivable Purchased hereunder not complying with any applicable
requirements hereof; provided that (i) the indemnity under this Section
4.2(h) shall not be applicable with respect to any Developer Note
Receivable which is repurchased by the Seller in accordance with Article
VI hereof and (ii) the maximum amount which may be claimed at any time
under this Section 4.2(h) with respect to any collateral security for a
Developer Note Receivable Purchased hereunder shall not exceed an amount
equal to any Borrowing Base Deficiency in existence at such time (after
taking into account the status of such collateral security).
(9) The Seller shall defend, indemnify and hold harmless the
Purchaser and its assigns and transferees from and against any and all
damages, claims, losses, liabilities and related costs and expenses,
including reasonable attorneys' fees and disbursements, awarded against or
incurred by the Purchaser or any assign or transferee arising out of or as
a result of this Agreement or the purchase hereunder of any Receivables or
Other Conveyed Property or in respect of any Receivable Purchased
hereunder or any related Other Conveyed Property, including, without
limitation, arising out of or as a result of:
(1) the inclusion, or purported inclusion, in any
Purchase of any
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Receivable that is not an Eligible Receivable (or, with respect to
the inclusion, or purported inclusion, in any Purchase of a
Developer Note Receivable, of any Pledged Consumer Note Receivable
purportedly securing same that is not an Eligible Pledged Consumer
Note Receivable or an Eligible Pledged Presale Consumer Note
Receivable) on the date of such Purchase, or the characterization in
any statement made by the Seller of any Receivable Purchased
hereunder as an Eligible Receivable which is not an Eligible
Receivable (or, with respect to a Developer Note Receivable
Purchased hereunder, of any Pledged Consumer Note Receivable
purportedly securing same as an Eligible Pledged Consumer Note
Receivable or an Eligible Pledged Presale Consumer Note Receivable
which is not so) as of the date of such statement;
(2) any representation or warranty or statement made or
deemed made by the Seller (or any of its officers) under or in
connection with this Agreement, which shall have been incorrect in
any material respect when made;
(3) the failure by the Seller to comply with any
applicable law, rule or regulation with respect to any Receivable
Purchased hereunder or the related Other Conveyed Property; or the
failure of any Receivable Purchased hereunder or the related Other
Conveyed Property to conform to any such applicable law, rule or
regulation;
(4) the failure to vest in the Purchaser absolute
ownership of the Receivables that are, or that purport to be, the
subject of a Purchase under this Agreement and the Other Conveyed
Property in respect thereof, free and clear of any Adverse Claim
(other than, in the case of the Purchaser's security interest in any
Applicable Underlying Loan Collateral or Applicable Underlying
Purchased Note Collateral for such Receivables which constitutes
real property, Permitted Liens and Encumbrances on such real
property and, to the extent such security interest is evidenced by a
Developer Mortgage, an AD&C Mortgage);
(5) the failure of the Seller to have filed, or any
delay in filing, financing statements or other similar instruments
or documents under the UCC of any applicable jurisdiction or other
applicable laws with respect to any Receivables that are, or that
purport to be, the subject of a Purchase under this Agreement and
the Other Conveyed Property in respect thereof, whether at the time
of any Purchase or at any subsequent time;
(6) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the
payment of any Receivable that is, or that purports to be, the
subject of a Purchase under this Agreement (including, without
limitation, a defense based on such Receivable or the related Other
Conveyed Property not being a legal, valid and binding obligation of
such Obligor enforceable against it in accordance with its terms),
or any other claim resulting from the sale of the Interval or other
property related to such Receivable or the furnishing or failure to
furnish such Other Conveyed Property or relating to collection
activities with respect to such Receivable (if such collection
activities
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were performed by the Seller acting as Servicer);
(7) any failure of the Seller, as Servicer or otherwise,
to perform its duties or obligations in accordance with the
provisions hereof or to perform its duties or obligations under any
agreement related to a Receivable purchased hereunder or the related
Other Conveyed Property;
(8) any products liability or other claim arising out of
or in connection with merchandise, insurance, other property or
services which are the subject of any Receivable purchased hereunder
or the related Other Conveyed Property;
(9) the commingling of Collections of Receivables
purchased hereunder or the related Other Conveyed Property by the
Seller or a designee of the Seller, as Servicer or otherwise, at any
time with other funds of the Seller or an Affiliate of the Seller;
(10) any investigation, litigation or proceeding related
to this Agreement or the use of proceeds of Purchases or the
ownership of Receivables, the related Other Conveyed Property, or
Collections with respect thereto or in respect of any Receivable or
the related Other Conveyed Property;
(11) any failure of the Seller to comply with its
covenants contained in Article V;
(12) any fees or other costs and expenses payable to any
replacement Servicer, to the extent in excess of the servicing fees
payable to the Seller under the RLSA;
(13) any claim brought by any Person other than the
Purchaser or any of its assigns or transferees arising from any
activity by the Seller or any Affiliate of the Seller in servicing,
administering or collecting any Receivable purchased hereunder or
any related Other Conveyed Property; or
(14) the failure of the Seller's computer applications
to resolve any Year 2000 Problem.
It is expressly agreed and understood by the parties hereto (i) that
the foregoing indemnification under this Section 4.2 is not intended to, and
shall not, constitute a guarantee of the collectibility or payment of the
Receivables purchased hereunder or any related Other Conveyed Property and (ii)
that nothing in this Section 4.2 shall require the Seller to indemnify any
Person (A) for Receivables which are not collected, not paid or uncollectible on
account of the insolvency, bankruptcy, or financial inability to pay of the
applicable Obligor, (B) for damages, losses, claims or liabilities or related
costs or expenses resulting from such Person's gross negligence or willful
misconduct, or (C) for any income taxes or franchise taxes incurred by such
Person arising out of or as a result of this Agreement or in respect of any
Receivable purchased hereunder or any related Other Conveyed Property.
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Indemnification under this Section 4.2 shall include reasonable fees
and expenses of counsel and expenses of litigation. The indemnity obligations
hereunder shall be in addition to any obligation that the Seller may otherwise
have under applicable law or any other Transaction Document and shall survive
the termination of this Agreement.
ARTICLE V
COVENANTS OF THE SELLER
SECTION 1.13 Protection of Title of the Purchaser.
(1) On or prior to the date hereof, the Seller shall have filed or
caused to be filed UCC-1 financing statements, executed by the Seller as seller
or debtor, naming the Purchaser as purchaser or secured party, naming the Agent,
for the benefit of the Lender, as assignee and describing the Receivables
Purchased hereunder and the Other Conveyed Property being sold by it to the
Purchaser as collateral, in such locations as the Purchaser or the Agent shall
have reasonably required. From time to time thereafter, the Seller shall execute
and file such financing statements and cause to be executed and filed such
continuation statements, all in such manner and in such places as may be
required by law to fully perfect, preserve, maintain and protect the interest of
the Purchaser under this Agreement, and the security interest of the Agent for
the benefit of the Lender under the RLSA, in the Receivables Purchased hereunder
and the Other Conveyed Property related thereto, as the case may be, and in the
proceeds thereof. The Seller shall deliver (or cause to be delivered) to the
Purchaser, the Lender and the Agent file-stamped copies of, or filing receipts
for, any document filed as provided above, as soon as available following such
filing. In the event that the Seller fails to perform its obligations under this
subsection, the Purchaser or the Agent may perform such obligations, at the
expense of the Seller, and the Seller hereby grants to the Purchaser and the
Agent an irrevocable power of attorney and license to take any and all steps in
order to perform such obligations in the Seller's or in its own name, as
applicable, and on behalf of the Seller, as are necessary or desirable, in the
determination of the Purchaser or Agent or any assignee thereof.
(2) On or prior to each Purchase Date hereunder, the Seller shall
have taken all steps required under applicable law in order to obtain and assign
outright to the Purchaser a first priority perfected security interest in each
item of Other Conveyed Property securing the Receivables being transferred to
the Purchaser on such Purchase Date (subject, in the case of the Purchaser's
security interest in any Applicable Underlying Loan Collateral or Applicable
Underlying Purchased Note Collateral for such Receivables which constitutes real
property, to Permitted Liens and Encumbrances on such real property and, to the
extent such security interest is evidenced by a Developer Mortgage, an AD&C
Mortgage). On or prior to each Purchase Date hereunder, the Seller shall have
taken all steps required under applicable law in order for the Purchaser to
grant to the Agent, for the benefit of the Lender, a first priority perfected
security interest in the Purchaser's security interest in each item of Other
Conveyed Property securing the Receivables being transferred to the Purchaser on
such Purchase Date and from time to time thereafter, the Seller shall take all
such actions as may be required by law (or deemed desirable by the Agent) to
fully preserve, maintain and protect the Purchaser's first priority perfected
security interest in each such item of Other Conveyed Property (subject, in the
case of the
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Purchaser's security interest in any Applicable Underlying Loan Collateral or
Applicable Underlying Purchased Note Collateral which constitutes real property,
to Permitted Liens and Encumbrances on such real property and, to the extent
such security interest is evidenced by a Developer Mortgage, an AD&C Mortgage)
and the Agent's first priority perfected security interest in the Purchaser's
security interest in such Other Conveyed Property. Upon the occurrence of an
Event of Default under the RLSA, the Agent may instruct the Seller to take all
additional steps, if any, as are necessary, in the reasonable determination of
the Agent to create and/or maintain perfection of the security interest in the
Other Conveyed Property related to each Receivable sold to the Purchaser
hereunder on behalf of the Purchaser and to create and/or maintain perfection of
the security interest in the security interest of the Purchaser in the Other
Conveyed Property related to each Receivable purchased by the Purchaser
hereunder on behalf of the Agent, for the benefit of the Lender, and if the
Seller fails to take all such steps, the Agent may take such steps at the sole
expense of the Seller, and the Seller hereby grants to the Agent an irrevocable
power of attorney and license to take any and all such steps in the Seller's or
its own name, as applicable, and on behalf of the Seller, as are necessary or
desirable, in the determination of the Agent to create and/or maintain
perfection of such security interests of the Purchaser and the Agent, for the
benefit of the Lender.
(3) The Seller shall not change its name, identity, or corporate
structure in any manner that would or could make any financing statement or
continuation statement filed by the Seller (or by the Purchaser on behalf of the
Seller) in accordance with paragraph (a) above seriously misleading within the
meaning of ss. 9-402(7) of the UCC, unless the Seller shall have given the
Purchaser and the Agent at least 30 days' prior written notice thereof, and
shall promptly file appropriate amendments to all previously filed financing
statements and continuation statements.
(4) The Seller shall give the Purchaser and the Agent at least 30
days' prior written notice of any relocation of its principal place of business
or chief executive office if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement. The Seller shall at all times maintain each office from which it
services Receivables and its principal executive office within the United States
of America.
(5) The Seller shall maintain its computer systems so that, from and
after the time of sale under this Agreement of Receivables to the Purchaser and
the grant of a security interest in such Receivables by the Purchaser to the
Agent for the benefit of the Lender, the Seller's master computer records
(including archives) that shall refer to such Receivable indicate clearly that
such Receivable has been Purchased hereunder and Pledged under the RLSA.
Indication of the Purchaser's ownership interest in, and of the Agent's security
interest for the benefit of the Lender in, a Receivable purchased by the
Purchaser hereunder shall be deleted from or modified on the Seller's computer
systems when, and only when, such Receivable Purchased hereunder shall be (i)
transferred from the ownership of the Purchaser in connection with any Take-Out
Securitization or otherwise, (ii) paid off by the related Obligor, (iii)
liquidated by the Servicer, or (iv) purchased by the Seller in accordance with
Section 6.1 or 6.2 hereof.
SECTION 1.14 Other Liens or Interests. Except for the conveyances
hereunder, the Seller will not sell, pledge, assign or transfer to any other
Person, or grant, create,
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incur, assume or suffer to exist any lien on the Receivables purchased by the
Purchaser hereunder, the Other Conveyed Property with respect thereto or any
interest therein (other than, with respect to any Applicable Underlying Loan
Collateral or Applicable Underlying Purchased Note Collateral which constitutes
real property, Permitted Liens and Encumbrances on such real property and, to
the extent the security interest therein is evidenced by a Developer Mortgage,
an AD&C Mortgage), and the Seller shall defend the right, title, and interest of
the Purchaser and the Agent, for the benefit of the Lender, in and to the such
Receivables and the Other Conveyed Property related thereto against all claims
of third parties (other than with respect to such Permitted Liens and
Encumbrances and AD&C Mortgage) claiming through or under the Seller.
SECTION 1.15 Costs and Expenses. The Seller shall pay all reasonable
costs and disbursements in connection with the performance of its obligations
hereunder and the Transaction Documents to which it is a party.
SECTION 1.16 Compliance with Laws, Etc. (a) The Seller shall at all
times comply with all requirements of applicable foreign, federal, state and
local laws, and regulations thereunder (including, without limitation to the
extent applicable, usury laws, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting
Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act,
the Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations "B" and
"Z", the Soldiers' and Sailors' Civil Relief Act of 1940 and state adaptations
of the National Consumer Act and of the Uniform Consumer Credit Code, the
Interstate Land Sales Full Disclosure Act, the Real Estate Settlement Procedures
Act and all other consumer credit laws and equal credit opportunity and
disclosure laws and any regulations promulgated thereunder) in the conduct of
its business.
(1) The Seller will preserve and maintain its corporate existence,
rights, franchises, qualifications and privileges except to the extent that the
failure so to preserve and maintain such existence, rights, franchises,
qualifications, and privileges would not materially adversely affect the
collectibility of the Receivables purchased by the Purchaser hereunder or the
ability of the Seller to perform its obligations under this Agreement or the
RLSA.
SECTION 1.17 Collections. (a) The Seller shall remit all payments by
or on behalf of the Obligors received directly by the Seller to the Collection
Account, without deposit into any intervening account as soon as practicable,
but in no event later than two Business Days after receipt thereof.
(1) The Seller will maintain and implement administrative and
operating procedures (including, without limitation, an ability to recreate
records evidencing Receivables purchased by the Purchaser hereunder and related
Other Conveyed Property in the event of the destruction of the originals
thereof), and keep and maintain all documents, books, records and other
information reasonably necessary for the collection of all Receivables purchased
by the Purchaser hereunder and the related Other Conveyed Property (including,
without limitation, records adequate to permit the daily identification of each
new Receivable to be purchased hereunder and all Collections of and adjustments
to each Receivable purchased hereunder).
(2) The Seller will not change its instructions to Obligors
regarding payments
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to be made by such Obligors with respect to Receivables purchased hereunder
without the prior written consent of the Purchaser and its assigns (which
consent shall not be unreasonably withheld).
SECTION 1.18 Separate Conduct of Business. The Seller will:(i)
maintain separate corporate records and books of account from those of the
Purchaser; (ii) conduct its business from an office separate from that of the
Purchaser; (iii) ensure that all oral and written communications, including
without limitation, letters, invoices, purchase orders, contracts, statements
and applications, will be made solely in its own name; (iv) have stationery and
other business forms and a mailing address and a telephone number separate from
those of the Purchaser; (v) not hold itself out as having agreed to pay, or as
being liable for, the obligations of the Purchaser; (vi) not engage in any
transaction with the Purchaser except as contemplated by this Agreement or as
permitted by the RLSA; (vii) continuously maintain as official records the
resolutions, agreements and other instruments underlying the transactions
contemplated by this Agreement; and (viii) disclose on its annual financial
statements (A) the effects of the transactions contemplated by this Agreement in
accordance with generally accepted accounting principles and (B) that the assets
of the Purchaser are not available to pay its creditors.
SECTION 1.19 Financial Covenant. The Seller shall at all times have
and maintain a Tangible Net Worth in an amount which, when added to the Tangible
Net Worth of EFI at such time, shall not be less than an amount equal to (i)
$25,000,000 plus (ii) seventy-five percent (75%) of the aggregate amount of
proceeds received by the Seller or EFI after the date of this Agreement in
connection with (A) each issuance of any class or classes of capital stock after
the date of this Agreement and (B) each incurrence of Debt after the date of
this Agreement, other than Debt which shall be the most senior debt of the
Seller or EFI.
SECTION 1.20 Agreement Provisions and Certain Other Matters. (a) The
Seller shall not, on or after the date hereof, enter into either (x) a loan
agreement with a Developer providing for loans by the Seller to such Developer
secured in whole or in part by Consumer Note Receivables and which loans are
sold or to be sold to the Purchaser hereunder or (y) a purchase agreement with a
Developer providing for the sale by such Developer to the Seller of Consumer
Note Receivables which are sold or to be sold to the Purchaser hereunder unless
such loan agreement or purchase agreement, as the case maybe, provides the
following in a manner satisfactory to the Purchaser and its assigns:
(I) in the case of a loan agreement, that (i) no consent of the
Developer party thereto or any other Person shall be required as a condition to
the effectiveness of an assignment or transfer by the Seller of all or any part
of the Seller's right, title and interest in and to a loan made thereunder or
any Other Conveyed Property related thereto and there shall be no restriction on
the ability of the Seller to assign or transfer all or any part of the Seller's
right, title and interest in and to any such loan or Other Conveyed Property,
including any restriction as to who the assignee or transferee may be, (ii) the
assignee or transferee of all or any part of the Seller's right, title and
interest in and to one or more loans made under such loan agreement shall not,
by virtue of acquiring an interest in any such loans, have any obligation or
liability to fund or make any loans under such loan agreement (the Seller
retaining such obligation and liability), (iii) the Developer shall have no
rights of setoff or other remedies against any such assignee or transferee as a
consequence of the Seller's acts or omissions under such loan agreement,
including any
70
failure of the Seller to fund a loan thereunder, and (iv) the Developer shall be
directly obligated to such assignee or transferee with respect to the interests
assigned or transferred to such assignee or transferee, including the repayment
of the loans so assigned or transferred and the payment and performance of any
indemnity or reimbursement obligations related thereto or related to any Other
Conveyed Property relating thereto; and
(II) in the case of a purchase agreement, that (i) no consent of
the Developer party thereto or any other Person shall be required as a condition
to the effectiveness of an assignment or transfer by the Seller of all or any
part of the Seller's right, title and interest in and to any Consumer Note
Receivable purchased by the Seller thereunder or any Other Conveyed Property
related thereto and there shall be no restriction on the ability of the Seller
to assign or transfer all or any part of the Seller's right, title and interest
in and to any such Consumer Note Receivable or Other Conveyed Property,
including any restriction as to who the assignee or transferee may be, (ii) the
assignee or transferee of all or any part of the Seller's right, title and
interest in and to one or more Consumer Note Receivables purchased under such
purchase agreement shall not, by virtue of acquiring an interest in any such
Consumer Note Receivable or any related Other Conveyed Property, have any
obligation or liability to purchase any Consumer Note Receivables under such
purchase agreement or any other obligation under or with respect to such
purchase agreement or any document or agreement executed in connection therewith
(the Seller retaining such obligations and liabilities), (iii) the Developer
shall have no rights of setoff or other remedies against any such assignee or
transferee as a consequence of the Seller's acts or omissions under or with
respect to such purchase agreement, including any failure of the Seller to make
a purchase thereunder and (iv) the Developer shall be directly obligated to such
assignee or transferee with respect to the interests assigned or transferred to
such assignee or transferee including the payment and performance of any
indemnity, repurchase or reimbursement obligations of the Developer related
thereto or related to any Other Conveyed Property relating thereto.
Without limiting the other rights and remedies of the Purchaser and its assigns
if this covenant is violated, any Receivable created or purchased under any loan
agreement or purchase agreement entered into on or after the date hereof which
does not comply with this clause (a) shall in no event constitute an Eligible
Receivable.
(1) The Seller shall not assign or transfer to any Person (other
than the Purchaser) any loans by the Seller to a Developer secured in whole or
in part by Consumer Note Receivables made pursuant to the terms of a loan
agreement between the Seller and such Developer if any other loans made pursuant
to the same loan agreement have been assigned or transferred to the Purchaser.
Without limiting the rights and remedies of the Purchaser and its assigns, if
the Seller violates this covenant no Receivable created under such loan
agreement shall constitute an Eligible Receivable.
SECTION 1.21 Amendment of Certain Documents. (a) The Seller shall
not amend, restate or otherwise modify any Applicable Underlying Loan Documents
or any Applicable Underlying Purchase Documents in a manner which materially
affects the Purchaser's or its assigns' interests in any related Applicable
Underlying Loan Collateral or Applicable Underlying Purchased Note Collateral
without the prior written consent of the Purchaser or its assigns, which consent
may be granted or withheld in the Purchaser's or its
71
assigns' reasonable discretion. Copies of any such amended, restated or
otherwise modified Applicable Underlying Loan Document or Applicable Underlying
Purchase Document, as so approved by the Purchaser or its assigns, shall be
provided to the Purchaser and its assigns promptly following the effective date
thereof. SECTION 1.1
(1) The Seller shall not make or allow to be made any amendment to
the Credit and Collection Policy without the prior written consent of the
Purchaser or its assigns (which consent shall not be unreasonably withheld);
provided that, without the prior written consent of the Purchaser or its
assigns, the Seller may make or allow to be made any inconsequential amendment
to such policy.
SECTION 1.22 Audits. The Seller will, from time to time during
regular business hours as requested by the Purchaser or its assigns, permit the
Purchaser, or its agents, representatives or assigns, (i) to examine and make
copies of and abstracts from all books, records and documents (including,
without limitation, computer tapes and disks) in the possession or under the
control of the Seller relating to the Receivables purchased hereunder and the
Other Conveyed Property related thereto and (ii) to visit the offices and
properties of the Seller for the purpose of examining such materials described
in clause (i) above, and to discuss matters relating to Receivables purchased
hereunder and the Other Conveyed Property related thereto or the performance of
the Seller hereunder or under the Other Conveyed Property with any of the
officers or employees of the Seller having knowledge of such matters.
SECTION 1.23 Releases. The Seller shall deliver to the Purchaser and
its assigns within thirty days after the date hereof UCC-3 releases and other
evidence satisfactory to the Purchaser and its assigns showing that the Seller's
right, title and interest in, to and under the Receivables and Other Conveyed
Property described on Schedule E annexed hereto are not subject to any Adverse
Claim (other than as contemplated hereunder or under the RLSA). In the event
that, with respect to any such Receivable or the related Other Conveyed
Property, the Seller fails to timely deliver same to the Purchaser and its
assigns, then such Receivable shall not have constituted an Eligible Receivable
hereunder on the date the Purchaser acquired an interest therein and the Seller
shall repurchase same in accordance with Section 6.1 hereof. The Seller hereby
releases any security interest or other interest it may have in any Receivables
(as defined in the RLSA) purchased by the Purchaser hereunder or under the
EFI/Borrower Receivables Purchase Agreement and any related Other Conveyed
Property (as defined in either Borrower Receivables Purchase Agreement),
including any interest in any of the foregoing to secure any loans made by it to
a Developer, and agrees to execute such UCC-3 releases and other documents as
the Purchaser or its assigns may reasonably request to evidence same.
ARTICLE VI
REPURCHASES
SECTION 1.24 Repurchase of Receivables Upon Breach of Warranty. Upon
the occurrence of a Seller Repurchase Event, the Seller shall, unless such
Seller Repurchase Event shall have been cured in all material respects,
repurchase the applicable Receivable from the Purchaser within three (3)
Business Days of the discovery by, or notice from any Person to,
72
the Seller of such Seller Repurchase Event, and the Seller shall pay the sum of
the outstanding principal amount of such Receivable plus all accrued but unpaid
interest and fees thereon in each case as of the date of the repurchase from the
Purchaser. Notwithstanding any other provision of this Agreement or the RLSA to
the contrary, the obligation of the Seller under this Section shall not
terminate upon a termination of the Seller as Servicer under the RLSA and shall
be performed in accordance with the terms hereof notwithstanding the failure of
the Servicer or the Purchaser to perform any of their respective obligations
with respect to such Receivable under the RLSA.
SECTION 1.25 Reassignment of Purchased Receivables. Upon deposit in
the Collection Account of the price paid to the Purchaser for any Receivable
repurchased by the Seller under Section 6.1, the Purchaser shall (and shall
request the Agent to) take such steps as may be reasonably requested by the
Seller in order to assign to the Seller all of the Purchaser's and the Agent's
right, title and interest in and to such Receivable and all security and
documents and all Other Conveyed Property conveyed to the Purchaser and the
Agent directly relating thereto, without recourse, representation or warranty,
except as to the absence of liens, charges or encumbrances created by or arising
as a result of actions of the Purchaser or the Agent. Such assignment shall be a
sale and assignment outright, and not for security. If, following the
reassignment of a Receivable, in any enforcement suit or legal proceeding, it is
held that the Seller may not enforce any such Receivable on the ground that it
shall not be a party in interest or a holder entitled to enforce the Receivable,
the Purchaser shall, at the expense of the Seller, take such steps as the
Seller, deems reasonably necessary to enforce the Receivable, including bringing
suit in the Purchaser's name.
SECTION 1.26 Waivers. No failure or delay on the part of the
Purchaser or any assignee thereof, in exercising any power, right or remedy
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other or future
exercise thereof or the exercise of any other power, right or remedy.
ARTICLE VII
MISCELLANEOUS
SECTION 1.27 Liability of the Seller. The Seller shall be liable in
accordance herewith only to the extent of the obligations in this Agreement
specifically undertaken by the Seller and its representations, warranties,
covenants and other agreements hereunder.
SECTION 1.28 Costs, Expenses and Taxes. (a) In addition to the
rights of indemnification granted to the Purchaser pursuant to Section 4.2, the
Seller agrees to pay on demand all costs and expenses in connection with the
preparation, execution and delivery of this Agreement and the other documents
and agreements to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Purchaser with
respect thereto and with respect to advising the Purchaser as to its rights and
remedies under this Agreement, and the Seller agrees to pay all costs and
expenses, if any (including reasonable counsel fees and expenses), in connection
with the enforcement of this Agreement and the other
73
documents to be delivered hereunder excluding, however, any costs of enforcement
or collection of Receivables purchased by the Purchaser hereunder.
(1) In addition, the Seller agrees to pay any and all stamp and
other taxes and fees payable in connection with the execution, delivery, filing
and recording of this Agreement or the other documents or agreements to be
delivered hereunder, and the Seller agrees to save the Purchaser and its assigns
and transferees harmless from and against any liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees.
SECTION 1.29 Limitation on Liability of the Seller and Others. The
Seller and any manager, employee or agent of the Seller may rely in good faith
on the advice of counsel respecting any matters arising under this Agreement.
The Seller shall not be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its obligations under this Agreement,
the RLSA or the other Transaction Documents to which it is a party.
SECTION 1.30 Amendment, Etc. No amendment or waiver of any provision
of this Agreement or consent to any departure by the Seller therefrom shall be
effective unless in a writing signed by the Purchaser and the Agent and, in the
case of any amendment, also by the Seller, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No failure on the part of the Purchaser to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. In the event that the Seller requests in writing the consent or approval
of the Purchaser or its assigns in connection with (a) any matter with respect
to which such consent or approval is required pursuant to this Agreement or (b)
the waiver of any term or condition of this Agreement with respect to any
requirement or condition of Purchase hereunder, and the Seller does not receive
a written consent or approval or a written denial thereof within ten (10)
Business Days after the later of (i) the Purchaser's or its assign's, as
applicable, receipt of such request and (ii) the receipt by the Purchaser or its
assigns, as applicable, of all information, documents and other materials
reasonably requested by the Purchaser or its assigns, as applicable, with
respect to such request, then the Purchaser or its assigns, as applicable, will
be deemed to have consented to or approved the subject matter of such request;
provided that, so long as the Agent for the benefit of the Lender is an assignee
of the Purchaser's rights hereunder, all requests under this sentence shall be
given concurrently to the Purchaser and the Agent and any consent, approval or
denial by the Purchaser of any such request shall additionally require the
written approval of the Agent. (which approval shall be given or denied or
deemed given in accordance with the procedures set forth in this sentence).
SECTION 1.31 Notices. All demands, notices and communications to the
Seller or the Purchaser hereunder shall be in writing, personally delivered, or
sent by telecopier (subsequently confirmed in writing), reputable overnight
courier or mailed by certified mail, return receipt requested, and shall be
delivered (a) in the case of the Seller at the following address: Two Clinton
Square, Syracuse, New York 13202, Attention: Thomas J. Hamel, Facsimile No.:
(315) 422-9477 or such other address as shall be designated by the Seller in a
written notice delivered to the Purchaser and (b) in the case of the Purchaser
at the following address: Two Clinton Square, Syracuse, New York 13202,
Attention: Lisa Henson, Facsimile
74
No.: (315) 422-9477 or such other address as shall be designated by the
Purchaser in a written notice delivered to the Seller. All such demands, notices
and communications shall be effective, upon receipt, or in the case of (i)
notice by mail, five days after being deposited in the United States mails,
first class postage prepaid, (ii) notice by telex, when telexed against receipt
of answerback, or (iii) notice by facsimile copy, when verbal communication of
receipt is obtained, except that notices and communications pursuant to Article
II shall not be effective until received.
SECTION 1.32 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement, the RLSA and the other Transaction Documents
set forth the entire understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, are superseded by this
Agreement, the RLSA and the other Transaction Documents. This Agreement may not
be modified, amended, waived or supplemented except as provided herein.
SECTION 1.33 Severability of Provisions. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
SECTION 1.34 Intention of the Parties. The execution and delivery of
this Agreement shall constitute an acknowledgment by the Seller and the
Purchaser that they intend that each assignment and transfer herein contemplated
constitutes a sale and assignment outright, and not for security, of the
Receivables and the Other Conveyed Property related thereto conveying good title
thereto free and clear of any liens, from the Seller to the Purchaser, and that
the Receivables and the Other Conveyed Property related thereto shall not be a
part of the Seller's estate in the event of the bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding under any
federal or state bankruptcy or similar law, or the occurrence of another similar
event, of, or with respect to, the Seller. In the event that any or all such
assignments and transfers are determined to be made as security for a loan made
by the Purchaser to the Seller (or are otherwise determined not to be sales and
assignments outright), the parties intend that the Seller shall have granted to
the Purchaser a security interest in all right, title and interest in and to the
Receivables and the Other Conveyed Property conveyed pursuant to Section 2.1,
and that this Agreement shall constitute a security agreement under applicable
law.
SECTION 1.35 Governing Law. THIS AGREEMENT SHALL, IN ACCORDANCE WITH
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS
OF LAW PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY
OTHER JURISDICTION.
SECTION 1.36 Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of
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which counterparts shall constitute but one and the same instrument. Delivery
of an executed counterpart of a signature page to this Agreement by facsimile
shall be effective as delivery of a manually executed counterpart of this
Agreement.
SECTION 1.37 Nonpetition Covenant. Until one year and one day after
the latest maturing commercial paper issued by a Lender that is an Issuer under
the RLSA shall be paid in full, neither the Seller nor the Purchaser shall
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against such Lender (or, in
the case of the Seller, against the Purchaser) under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of such
Lender (or the Purchaser) or any substantial part of its property, or ordering
the winding up or liquidation of the affairs of such Lender (or the Purchaser).
SECTION 1.38 Binding Effect; Assignability.
(1) This Agreement shall be binding upon and inure to the benefit of
the Seller, the Purchaser and their respective successors and assigns; provided,
however, that the Seller may not assign its rights or obligations hereunder or
any interest herein without the prior written consent of the Purchaser and any
assignee thereof. The Purchaser may assign all of its rights hereunder to an
assignee, and such assignee shall have all rights of the Purchaser under this
Agreement (as if such assignee were the Purchaser hereunder).
(2) This Agreement shall create and constitute the continuing
obligation of the parties hereto in accordance with its terms, and shall remain
in full force and effect until such time, after the Collection Date, when all of
the Receivables are collected in full; provided, however, that rights and
remedies with respect to any breach of any representation and warranty made by
the Seller pursuant to Article IV hereof and the provisions of Section 4.2,
Article V and Section 7.11 shall be continuing and shall survive any termination
of this Agreement.
SECTION 1.39 Third Party Beneficiary. Each of the parties hereto
hereby acknowledges that the Purchaser intends to assign all of its rights under
this Agreement to the Agent for the benefit of the Lender and the Seller hereby
consents to such assignment. The Agent and the Lender shall be third party
beneficiaries of, and shall be entitled to enforce the Purchaser's rights and
remedies under, this Agreement to the same extent as if they were parties
hereto.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
RESORT FUNDING, INC., as Seller
By:
------------------------------------
Name:
Title:
EFI FUNDING COMPANY, INC., as Purchaser
By:
------------------------------------
Name:
Title:
[Signature Page to Purchase Agreement]
EXHIBIT A
FORM OF ASSIGNMENT
ASSIGNMENT, dated as of ___________ __, 200_, between Resort Funding, Inc.
(the "Seller") and EFI Funding Company, Inc. ("Purchaser").
1. We refer to the Purchase Agreement (the "Purchase Agreement")
dated as of January 31, 2000 between the Seller and the
Purchaser. All provisions of the Purchase Agreement are
incorporated herein by reference. All capitalized terms used
herein and not defined herein shall have the meanings set
forth in the Purchase Agreement.
2. The Seller does hereby sell, transfer, assign, and otherwise
convey, to the Purchaser, without recourse (except to the
extent specifically provided in the Purchase Agreement), and
the Purchaser hereby purchases, all right, title and interest
of Seller in and to the sold Receivables identified as such on
Annex A hereto and the Other Conveyed Property related thereto
(including, without limitation, with respect to a sold
Developer Note Receivable, the Seller's security interest in
each Consumer Note Receivable related to such sold Developer
Note Receivable) pursuant to the Purchase Agreement.
3. The Seller does hereby represent and warrant that the sold
Receivables identified in Annex A hereto are Eligible
Receivables [and, if any such sold Receivables include
Developer Note Receivables, all Pledged Consumer Note
Receivables securing same identified in Annex A hereto are
Eligible Pledged Consumer Note Receivables or Eligible Pledged
Presale Consumer Note Receivables].
4. The Seller does hereby remake the representations and
warranties set forth in Section 4.1 of the Purchase Agreement
with full force and effect as if the same were fully set forth
herein.
IN WITNESS WHEREOF, the parties have caused this Assignment to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
RESORT FUNDING, INC., as Seller
By:
------------------------------------
Name:
Title:
Exh. A-1
EFI FUNDING COMPANY, INC., as Purchaser
By:
------------------------------------
Name:
Title:
Exh. A-2
ANNEX A
(TO ASSIGNMENT)
Exh. A-3
EXHIBIT B
FORM OF
DEFERRED PURCHASE PRICE NOTE
New York, New York
As of January 31, 2000
FOR VALUE RECEIVED, EFI FUNDING COMPANY, INC., a Delaware
corporation (the "Purchaser"), hereby promises to pay to Resort Funding, Inc.
(the "Seller") the principal amount of this Note, determined as described below,
together with interest thereon at a rate per annum equal at all times to the
Base Rate (as defined in the RLSA) in effect on the last Business Day of the
then most recently ended calendar month, in each case in lawful money of the
United States of America. Capitalized terms used herein but not defined herein
shall have the meanings assigned to such terms in the Purchase Agreement, dated
as of January 31, 2000, between the Seller and the Purchaser (such agreement, as
it may from time to time be amended, restated or otherwise modified in
accordance with its terms, the "Purchase Agreement"). This Note is the note
referred to in the definition of "Deferred Purchase Price" in the Purchase
Agreement.
The aggregate principal amount of this Note at any time shall be
equal to the difference between (a) the sum of the aggregate principal amount of
this Note on the date of the issuance hereof and each addition to the principal
amount of this Note pursuant to the terms of Section 2.1 of the Purchase
Agreement minus (b) the aggregate amount of all payments made in respect of the
principal amount of this Note, in each case, as recorded on the schedule annexed
to and constituting a part of this Note, but failure to so record shall not
affect the obligations of the Purchaser to the Seller.
The entire principal amount of this Note shall be due and payable on
the date one year after the Facility Maturity Date or such later date as may be
agreed in writing by the Seller and the Purchaser. Subject to the subordination
terms hereof, the principal amount of this Note may, at the option of the
Purchaser, be prepaid in whole at any time or in part from time to time.
Interest on this Note shall be paid in arrears on each Remittance Date, at
maturity and thereafter on demand. All payments hereunder shall be made by wire
transfer of immediately available funds to such account of the Seller as the
Seller may designate in writing.
Notwithstanding any other provisions contained in this Note, in no
event shall the rate of interest payable by the Purchaser under this Note exceed
the highest rate of interest permissible under applicable law.
The obligations of the Purchaser under this Note are subordinated in
right of payment, to the extent set forth in Section 2.2(b) of the Purchase
Agreement, to the prior payment in full of all Loans, Yield, Fees and other
obligations of the Purchaser under the RLSA.
Notwithstanding any provision to the contrary in this Note or
elsewhere, other than with respect to payments specifically permitted by Section
2.2(b) of the Purchase
Exh. B-1
Agreement, no demand for any payment may be made hereunder, no payment shall be
due with respect hereto and the Seller shall have no claim for any payment
hereunder prior to the occurrence of the date one year after the Facility
Maturity Date and then only on the date, if ever, when all Loans, Yield, Fees
and other obligations owing under the RLSA shall have been paid in full and all
commitments of the Lender to provide any financial accommodations under the RLSA
shall have been terminated.
In the event that, notwithstanding the foregoing provision limiting
such payment, the Seller shall receive any payment or distribution on this Note
which is not specifically permitted by Section 2.2(b) of the Purchase Agreement,
such payment shall be received and held in trust by the Seller for the benefit
of the entities to whom the obligations are owed under the RLSA and shall be
promptly paid over to such entities.
The Purchaser hereby waives diligence, presentment, demand, protest
and notice of any kind whatsoever.
Neither this Note, nor any right of the Seller to receive payments
hereunder, shall, without the prior written consent of the Purchaser and (so
long as the RLSA remains in effect or any amounts remain outstanding thereunder)
the Agent under the RLSA, be assigned, transferred, exchanged, pledged,
hypothecated, participated or otherwise conveyed.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
EFI FUNDING COMPANY, INC.
By:
-------------------------------------
Title:
Exh. B-2
SCHEDULE TO DEFERRED PURCHASE PRICE NOTE
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Amount of Unpaid
Addition to Principal Paid or Principal
Date Principal Amount Prepaid Balance Notation Made By
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Sch. B-1
EXHIBIT C-1
FORMS OF CONSUMER ALLONGE
Exh. C-1-1
EXHIBIT C-2
FORMS OF DEVELOPER ALLONGE
Exh. C-2-1
SCHEDULE A
SCHEDULE OF RECEIVABLES
[To include description of Receivables and collateral security therefor]
Sch. A-1
SCHEDULE B
ADDRESSES
Two Clinton Square
Syracuse, New York 13202
Sch. B-1
SCHEDULE C
PRIOR NAMES AND TRADE NAMES OF SELLER
Resort Funding
RFI
The Processing Center
Bennett Funding International, Ltd.
Sch. C-1
SCHEDULE D
ELIGIBLE DEVELOPERS
Sch. D-1
SCHEDULE E
RECEIVABLES AND OTHER CONVEYED
PROPERTY NEEDING EVIDENCE OF RELEASES
Sch. E-1