EXHIBIT 10.26
===============================================================================
INDENTURE
among
TRI FUNDING V, INC.
("Issuer")
and
TRENDWEST RESORTS, INC.
("Servicer")
and
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
("Trustee")
Dated as of August 1, 2001
Providing for
$30,100,000 4.32% Receivables-Backed Notes, Series 2001-1, Class A-1
$72,500,000 5.86% Receivables-Backed Notes, Series 2001-1, Class A-2
$37,800,000 5.94% Receivables-Backed Notes, Series 2001-1, Class B
$23,400,000 6.53% Receivables-Backed Notes, Series 2001-1, Class C
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TABLE OF CONTENTS
PAGE
Parties...........................................................................................................1
Preliminary Statement.............................................................................................1
Granting Clause...................................................................................................1
ARTICLE ONE DEFINITIONS............................................................................2
Section 1.01. Definitions............................................................................2
ARTICLE TWO NOTE FORM.............................................................................20
Section 2.01. Form..................................................................................20
ARTICLE THREE THE NOTES.............................................................................20
Section 3.01. Denomination..........................................................................20
Section 3.02. Execution, Authentication, Delivery and Dating........................................20
Section 3.03. Notes as Debt.........................................................................21
Section 3.04. Registration, Registration of Transfer and Exchange...................................21
Section 3.05. Limitation on Transfer and Exchange...................................................22
Section 3.06. Mutilated, Destroyed, Lost or Stolen Notes............................................22
Section 3.07. Payment of Principal and Interest; Principal and Interest Rights Preserved............23
Section 3.08. Persons Deemed Owner..................................................................24
Section 3.09. Cancellation..........................................................................24
Section 3.10. Book-Entry Registration of Class A Notes, Class B Notes and Class C Notes.............25
Section 3.11. Notice to Clearing Agency.............................................................26
Section 3.12. Definitive Notes......................................................................26
ARTICLE FOUR ORIGINAL ISSUANCE OF NOTES; SUBSTITUTIONS OF COLLATERAL...............................26
Section 4.01. Conditions to Original Issuance of Notes..............................................26
Section 4.02. Security for Notes....................................................................29
Section 4.03. Substitution and Purchase of Receivables; Upgrade Contracts...........................29
Section 4.04. Releases..............................................................................31
Section 4.05. Trust Estate..........................................................................31
Section 4.06. Notice of Release.....................................................................32
Section 4.07. Opinions as to Trust Estate...........................................................32
ARTICLE FIVE SATISFACTION AND DISCHARGE............................................................32
Section 5.01. Satisfaction and Discharge of Indenture...............................................32
ARTICLE SIX DEFAULTS AND REMEDIES.................................................................32
Section 6.01. Events of Default.....................................................................32
Section 6.02. Acceleration of Maturity; Rescission and Annulment....................................34
Section 6.03. Collection of Indebtedness and Suits for Enforcement by Trustee.......................35
Section 6.04. Remedies..............................................................................35
Section 6.05. Optional Preservation of Trust Estate.................................................36
Section 6.06. Trustee May File Proofs of Claim......................................................36
Section 6.07. Trustee May Enforce Claims Without Possession of Notes................................37
Section 6.08. Application of Money Collected........................................................37
Section 6.09. Limitation on Suits...................................................................39
Section 6.10. Unconditional Right of Noteholders to Receive Principal and Interest..................39
Section 6.11. Restoration of Rights and Remedies....................................................39
Section 6.12. Rights and Remedies Cumulative........................................................39
Section 6.13. Delay or Omission; Not Waiver.........................................................40
Section 6.14. Control by Noteholders................................................................40
Section 6.15. Waiver of Past Defaults...............................................................40
Section 6.16. Undertaking for Costs.................................................................41
Section 6.17. Waiver of Stay or Extension Laws......................................................41
Section 6.18. Sale of Trust Estate..................................................................41
Section 6.19. Action on Notes.......................................................................42
ARTICLE SEVEN THE TRUSTEE...........................................................................43
Section 7.01. Certain Duties and Responsibilities...................................................43
Section 7.02. Notice of Default.....................................................................45
Section 7.03. Certain Rights of Trustee.............................................................45
Section 7.04. Not Responsible for Recitals or Issuance of Notes.....................................46
Section 7.05. May Hold Notes........................................................................46
Section 7.06. Money Held in Trust...................................................................46
Section 7.07. Compensation and Reimbursement........................................................47
Section 7.08. Corporate Trustee Required; Eligibility...............................................48
Section 7.09. Resignation and Removal; Appointment of Successor.....................................48
Section 7.10. Acceptance of Appointment by Successor................................................49
Section 7.11. Merger, Conversion, Consolidation or Succession to Business of Trustee................49
Section 7.12. Co-Trustees and Separate Trustees.....................................................49
Section 7.13. Rights with Respect to the Servicer...................................................51
Section 7.14. Appointment of Authenticating Agent...................................................51
Section 7.15. Custodian to Hold Contracts...........................................................52
ARTICLE EIGHT RESERVED..............................................................................53
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ARTICLE NINE SUPPLEMENTAL INDENTURES...............................................................53
Section 9.01. Supplemental Indentures Without Consent of Noteholders................................53
Section 9.02. Supplemental Indentures with Consent of Noteholders...................................54
Section 9.03. Execution of Supplemental Indentures..................................................55
Section 9.04. Effect of Supplemental Indentures.....................................................55
Section 9.05. Reference in Notes to Supplemental Indentures.........................................55
ARTICLE TEN REDEMPTION OF NOTES...................................................................55
Section 10.01. Optional Purchase of the Collateral; Mandatory Redemption.............................55
Section 10.02. Notice to Trustee.....................................................................56
Section 10.03. Notice of Redemption..................................................................56
Section 10.04. Deposit of the Redemption Price.......................................................56
Section 10.05. Notes Payable on Redemption Date......................................................56
ARTICLE ELEVEN REPRESENTATIONS, WARRANTIES AND COVENANTS.............................................57
Section 11.01. Representations and Warranties........................................................57
Section 11.02. Covenants.............................................................................61
Section 11.03. Other Matters as to the Issuer........................................................67
ARTICLE TWELVE ACCOUNTS AND ACCOUNTINGS..............................................................68
Section 12.01. Collection of Money...................................................................68
Section 12.02. Collection Account....................................................................68
Section 12.03. Reserve Account.......................................................................72
Section 12.04. Prefunding Account....................................................................74
Section 12.05. Capitalized Interest Account..........................................................75
Section 12.06. Reports by Trustee to Noteholders.....................................................76
ARTICLE THIRTEEN PROVISIONS OF GENERAL APPLICATION.....................................................77
Section 13.01. Acts of Noteholders...................................................................77
Section 13.02. Notices, etc., to Trustee, Issuer, Servicer and the Rating Agencies...................78
Section 13.03. Notices and Other Documents to Noteholders; Waiver....................................79
Section 13.04. Effect of Headings and Table of Contents..............................................79
Section 13.05. Successors and Assigns................................................................79
Section 13.06. Separability..........................................................................79
Section 13.07. Benefits of Indenture.................................................................79
Section 13.08. Legal Holidays........................................................................79
Section 13.09. Governing Law.........................................................................80
Section 13.10. Counterparts..........................................................................80
Section 13.11. Obligation............................................................................80
Section 13.12. Compliance Certificates and Opinions..................................................80
Section 13.13. Effective Date of Transactions........................................................81
Section 13.14. Parties will Not Institute Insolvency Proceedings.....................................81
Signatures.......................................................................................................82
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EXHIBIT A Form of Investment Letter
EXHIBIT B Form of Supplement for Grant of Substitute Contracts and
Upgrade Contracts
EXHIBIT C-1 Form of Class A-1 Note
EXHIBIT C-2 Form of Class A-2 Note
EXHIBIT C-3 Form of Class B Note
EXHIBIT C-4 Form of Class C Note
Exhibit D Note Owner Certificate
SCHEDULE A Contract Schedule
SCHEDULE B Targeted Principal Balance Schedule
SCHEDULE C Custodian Fees and Expenses
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INDENTURE, dated as of August 1, 2001 (herein, as amended and
supplemented from time to time as permitted hereby, called this "Indenture"),
among TRI FUNDING V, INC., a Delaware corporation (herein, together with its
permitted successors and assigns, called the "Issuer"), TRENDWEST RESORTS, INC.,
an Oregon corporation, as servicer (herein, together with its permitted
successors and assigns, called the "Servicer"), and ▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, a national banking association, as trustee (the
"Trustee").
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for the issuance of the Issuer's 4.32% Receivables-Backed
Notes, Series 2001-1, Class A-1 (the "Class A-1 Notes"), its 5.86%
Receivables-Backed Notes, Series 2001-1, Class A-2 (the "Class A-2 Notes" and,
together with the Class A-1 Notes, the "Class A Notes"), its 5.94%
Receivables-Backed Notes, Series 2001-1, Class B (the "Class B Notes"), and its
6.53% Receivables-Backed Notes, Series 2001-1, Class C (the "Class C Notes" and
together with the Class A Notes and the Class B Notes, the "Notes"). All
covenants and agreements made by the Issuer, the Servicer and the Trustee herein
are for the benefit and security of the Holders of the Notes. The Issuer, the
Servicer and the Trustee are entering into this Indenture, and the Trustee is
accepting the trusts created hereby, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement of the
Issuer, the Servicer and the Trustee in accordance with its terms have been
done.
GRANTING CLAUSE
To secure the payment of the principal of and interest on the Notes in
accordance with their terms, the payment of all of the sums payable under this
Indenture and the performance of the covenants contained in this Indenture, the
Issuer hereby Grants to the Trustee, solely in trust and as collateral security
as provided in this Indenture, for the ratable benefit of the Holders of each
Class of Notes, respectively, all of the Issuer's rights, title and interest in
and to the following whether now owned or hereafter acquired and any and all
benefits accruing to the Issuer from: (a) the Receivables, the Contracts,
including all proceeds of the Contracts, the Receivables and all payments
received on or with respect to the Contracts and the Receivables and due after
the applicable Cut-Off Date whether now existing or hereafter acquired and
including, without limitation, Subsequent Contracts and Subsequent Receivables
acquired by the Issuer pursuant to the Receivables Purchase Agreement and all
payments received on or with respect to the Subsequent Contracts and the
Subsequent Receivables; (b) the Contract Files and the Custodian Files; (c) the
Related Security; (d) the Receivables Purchase Agreement, the Asset Assignment
and any Subsequent Asset Assignment; (e) the Servicing Agreement; (f) the
Custodian Agreement; (g) all amounts from time to time on deposit in the
Capitalized Interest Account, the Collection Account, the Local Bank Account,
the Prefunding Account and the Reserve Account (including any Eligible
Investments and other property in such accounts); and (h) proceeds of the
foregoing (including, but not by way of limitation, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind, and other forms of obligations and receivables which at any time
constitute all or part or are included in the proceeds of any of the foregoing)
(all of the foregoing being hereinafter referred to as the "Collateral" or
"Trust Estate"). The Trust Estate will include the Issuer's interest in
Subsequent Contracts and the related Receivables and a security interest in the
Related Security but will not include the Contracts and the related Receivables
and Related Security that are released from the lien of the Trustee on each
Payment Date pursuant to the terms of this Indenture.
The Trustee acknowledges such Grant, accepts the trusts hereunder in
accordance with the provisions hereof and agrees to perform the duties herein
required to the best of its ability to the end that the interests of the
Noteholders may be adequately and effectively protected.
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Except as otherwise expressly provided
herein or unless the context otherwise requires, the following terms have the
respective meanings set forth below for all purposes of this Indenture, and the
definitions of such terms are equally applicable both to the singular and plural
forms of such terms.
"Acquisition Consideration": The meaning specified in the Receivables
Purchase Agreement.
"Act": With respect to any Noteholder, the meaning specified in Section
13.01.
"Affiliate": At any time, and with respect to any Person, (a) any other
Person that at such time directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of such
first mentioned Person or any Person of which such first mentioned Person
beneficially owns or holds, in the aggregate, directly or indirectly, 10% or
more of any class of voting or equity interests; provided, however, neither
WorldMark nor JELD-WEN, inc. shall be deemed to be Affiliates of the Issuer. As
used in this definition, "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise.
"Aggregate Collateral Value": As of any date, the sum of the aggregate
of the Collateral Values outstanding at such date; provided, however, that the
Collateral Value of any Defaulted Contract shall not be included in the
calculation of Aggregate Collateral Value in any Due Period after the Due Period
in which such Contract or Mortgage Loan became a Defaulted Contract.
"Asset Assignment": The meaning specified in the Receivables Purchase
Agreement.
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"Assets": The meaning specified in the Receivables Purchase Agreement.
"Authenticating Agent": Any entity appointed by the Trustee pursuant to
Section 7.14 hereof, which initially shall be the Trustee.
"Board of Directors": Either the board of directors of the Issuer or of
the Servicer, as the context requires, or any duly authorized committee of such
Board.
"Board Resolution": A copy of a resolution delivered to the Trustee and
certified by the Secretary or an Assistant Secretary of the Servicer or the
Issuer, as the case may be, to have been duly adopted by its respective Board of
Directors and to be in full force and effect on the date of such certification.
"Book-Entry Class A Notes": Book-Entry Class A-1 Notes and/or
Book-Entry Class A-2 Notes, as applicable.
"Book-Entry Class A-1 Notes": Beneficial interests in the Class A-1
Notes, the ownership and transfers of which shall be made through book entries
by a Clearing Agency as described in Section 3.10.
"Book-Entry Class A-2 Notes": Beneficial interests in the Class A-2
Notes, the ownership and transfers of which shall be made through book entries
by a Clearing Agency as described in Section 3.10.
"Book-Entry Class B Notes": Beneficial interests in the Class B Notes,
the ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 3.10.
"Book-Entry Class C Notes": Beneficial interests in the Class C Notes,
the ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 3.10.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking institutions in
New York City or in the city in which the
Corporate Trust Office of the Trustee is located are authorized or obligated by
law or executive order to close.
"Calculation Date": The last day of a Due Period.
"Calculation Receivables": All Receivables that are not more than 90
days delinquent as of the close of business on the related Calculation Date.
"Capitalized Interest Account": The account or accounts with that name
created and maintained pursuant to Section 12.05 hereof.
"Cede & Co.": The initial registered holder of the Class A Notes, the
Class B Notes and the Class C Notes, acting as nominee of The Depository Trust
Company.
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"Class": Any of the Class A Notes, the Class B Notes or the Class C
Notes.
"Class A Note Owner": With respect to a Book-Entry Class A Note, the
Person who is the beneficial owner of such Book-Entry Class A Note as reflected
on the books of the Clearing Agency or on the books of a Person maintaining an
account with such Clearing Agency (directly or as an indirect participant, in
accordance with the rules of such Clearing Agency).
"Class A Notes": The definition set forth in the Preliminary Statement.
"Class A Principal Distribution Amount": With respect to each Payment
Date (a) prior to Stated Maturity and (i) during any time other than during a
Trigger Event Period, an amount equal to the lesser of (A) the amount necessary
to reduce the principal balance of the Class A Notes to the Targeted Credit
Enhancement Level with respect to such Class and such Payment Date and (B) the
amount available in the Collection Account from the related Due Period after the
payment of the amounts set forth in clauses (i)-(vi) of Section 12.02(d);
provided, however, the amount in clause (a)(vii) shall be paid first to the
holders of the Class A-1 Notes until the Class A-1 Notes are paid in full, then
to the holders of the Class A-2 Notes until the Class A-2 Notes are paid in
full; and (ii) during a Trigger Event Period, the amount in the Collection
Account from the related Due Period after the payment of the amounts set forth
in clauses (i)-(vi) of Section 12.02(e) until the Class A Notes have been paid
in full; and (b) at Stated Maturity, an amount equal to the aggregate principal
amount of Class A Notes Outstanding as of such date.
"Class A Supplemental Principal Distribution Amount": With respect to
each Payment Date on and after the Payment Date occurring in September, 2004 and
not during a Trigger Event Period, an amount equal to the lesser of (i) the
amount necessary to reduce the principal balance of the Class A Notes to the
Targeted Principal Balance with respect to the Class A Notes and such Payment
Date, and (ii) the amount available in the Collection Account from the related
Due Period after the payment of the amounts set forth in clauses (i)-(x) of
Section 12.02(d). Prior to the Payment Date occurring in September, 2004, the
Class A Supplemental Principal Distribution Amount shall equal zero.
"Class A-1 Note Rate": 4.32% per annum.
"Class A-1 Noteholder": Cede & Co. or a holder of a Definitive Class
A-1 Note.
"Class A-1 Notes": The definition set forth in the Preliminary
Statement.
"Class A-2 Note Rate": 5.86% per annum.
"Class A-2 Noteholder": Cede & Co. or a holder of a Definitive Class
A-2 Note.
"Class A-2 Notes": The definition set forth in the Preliminary
Statement.
"Class B Noteholder": Cede & Co. or a holder of a Definitive Class B
Note.
4
"Class B Note Owner": With respect to a Book-Entry Class B Note, the
Person who is the beneficial owner of such Book-Entry Class B Note as reflected
on the books of the Clearing Agency or on the books of a Person maintaining an
account with such Clearing Agency (directly or as an indirect participant, in
accordance with the rules of such Clearing Agency).
"Class B Note Rate": 5.94% per annum.
"Class B Notes": The definition set forth in the Preliminary Statement.
"Class B Principal Distribution Amount": With respect to each Payment
Date (a) prior to Stated Maturity and (i) not during a Trigger Event Period, an
amount equal to the lesser of (A) the amount necessary to reduce the principal
balance of the Class B Notes to the Targeted Credit Enhancement Level with
respect to such Class and such Payment Date and (B) the amount available in the
Collection Account from the related Due Period after the payment of the amounts
set forth in clauses (i)-(vii) of Section 12.02(d); and (ii) during a Trigger
Event Period, the amount in the Collection Account from the related Due Period
after the payment of the amounts set forth in clauses (i)-(vii) of Section
12.02(e) until the Class B Notes have been paid in full; and (b) at Stated
Maturity, an amount equal to the aggregate principal amount of Class B Notes
Outstanding as of such date.
"Class B Supplemental Principal Distribution Amount": With respect to
each Payment Date on and after the Payment Date occurring in September, 2004 and
not during a Trigger Event Period, an amount equal to the lesser of (i) the
amount necessary to reduce the principal balance of the Class B Notes to the
Targeted Principal Balance with respect to the Class B Notes and such Payment
Date and (ii) the amount available in the Collection Account from the related
Due Period after the payment of the amounts set forth in clauses (i)-(xi) of
Section 12.02(d). Prior to the Payment Date occurring in September, 2004, the
Class B Supplemental Principal Distribution Amount shall equal zero.
"Class C Noteholder": Cede & Co. or a holder of a Definitive Class C
Note.
"Class C Note Owner": With respect to a Book-Entry Class C Note, the
Person who is the beneficial owner of such Book-Entry Class C Note as reflected
on the books of the Clearing Agency or on the books of a Person maintaining an
account with such Clearing Agency (directly or as an indirect participant, in
accordance with the rules of such Clearing Agency).
"Class C Note Rate": 6.53% per annum.
"Class C Notes": The definition set forth in the Preliminary Statement.
"Class C Principal Distribution Amount": With respect to each Payment
Date (a) prior to Stated Maturity and (i) not during a Trigger Event Period, an
amount equal to the lesser of (A) the amount necessary to reduce the principal
balance of the Class C Notes to the Targeted Credit Enhancement Level with
respect to such Class and such Payment Date and (B) the amount available in the
Collection Account from the related Due Period after the payment of the amounts
set forth in clauses (i)-(viii) of Section 12.02(d); and (ii) during a Trigger
Event Period, the amount in the Collection Account from the related Due Period
5
after the payment of the amounts set forth in clauses (i)-(viii) of Section
12.02(e) until the Class C Notes have been paid in full; and (b) at Stated
Maturity, an amount equal to the aggregate principal amount of Class C Notes
Outstanding as of such date.
"Class C Supplemental Principal Distribution Amount": With respect to
each Payment Date on and after the Payment Date occurring in September, 2004 and
not during a Trigger Event Period, an amount equal to the lesser of (i) the
amount necessary to reduce the principal balance of the Class C Notes to the
Targeted Principal Balance with respect to the Class C Notes and such Payment
Date and (ii) the amount available in the Collection Account from the related
Due Period after the payment of the amounts set forth in clauses (i)-(xii) of
Section 12.02(d). Prior to the Payment Date occurring in September, 2004, the
Class C Supplemental Principal Distribution Amount shall equal zero.
"Clearing Agency": An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.
"Clearing Agency Participant": A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date": August 23, 2001, the date that the Transaction
Documents are originally executed and delivered by the parties thereto.
"Club": WorldMark.
"Code": The Internal Revenue Code of 1986, as amended.
"Collateral": The meaning specified in the Granting Clause of this
Indenture.
"Collateral Value": With respect to each Receivable as of any date of
determination, the amount of principal outstanding with respect to such
Receivable at the end of such date (without giving effect to any write-off or
writedown of such Receivable).
"Collection Account": The account or accounts with that name created
and maintained pursuant to Section 12.02 hereof.
"Contract Files": The meaning specified in the Receivables Purchase
Agreement.
"Contract Schedule": The listing of Contracts, including Mortgage
Loans, and Receivables on Schedule A hereto as amended from time to time,
including, without limitation, by any transfer of Subsequent Contracts,
Substitute Contracts or Upgrade Contracts, which shall include with respect to
each Contract listed on such schedule: (a) its identifying number, (b) the name
and mailing address of the related Obligor, (c) the original number of months to
maturity, (d) the number of months to maturity as of the related Cut-Off Date,
(e) the interest rate of the Receivable, (f) its date of origination, (g) the
6
original principal balance, (h) the Collateral Value as of the related Cut-Off
Date, (i) the maturity date, (j) the monthly payment amount, (k) the
paid-through date, (l) the first payment date, (m) the date of sale, and (n) the
related number of Vacation Credits, if applicable.
"Contracts": The retail installment contracts or Mortgage Loans, as
applicable (and all rights with respect thereto, including all guaranties and
other agreements or arrangements of whatever character from time to time
supporting or securing payment of any such contract and all rights with respect
to the Related Security to the extent specifically related to any such
contract), which are acquired by the Issuer from time to time pursuant to the
Receivables Purchase Agreement and identified on the Contract Schedule attached
hereto as Schedule A, plus Substitute Contracts, Subsequent Contracts and
Upgrade Contracts, and any amendments, riders and annexes thereto; provided
that, from and after the date on which a Receivable relating to a Contract or
Mortgage Loan is purchased or substituted by the Issuer or Trendwest in
accordance with Section 4.03 hereof or released pursuant to Section 4.04 hereof,
such Contract shall no longer constitute a "Contract" for purposes of the
Transaction Documents.
"Controlling Class": The Class A Notes until the Class A Notes are paid
in full, then the Class B Notes until the Class B Notes are paid in full, then
the Class C Notes.
"Corporate Trust Office": The principal corporate trust office of the
Trustee located at Sixth Street and Marquette Avenue, MAC N9311-161,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other address as the Trustee may
designate from time to time by notice to the Noteholders, the Servicer and the
Issuer, or the principal corporate trust office of any successor Trustee.
"Custodian": ▇▇▇▇▇ Fargo Bank Minnesota, National Association, a
national banking association, and its permitted successors and assigns.
"Custodian Agreement": The Custodian Agreement, dated as of August 1,
2001, by and among the Custodian, the Servicer, the Issuer and the Trustee, as
amended and supplemented from time to time.
"Custodian Fee": The fees and expenses of the Custodian, which are set
forth on Schedule C hereto.
"Custodian Files": The meaning set forth in the Receivables Purchase
Agreement.
"Cut-Off Date": With respect to Contracts pledged to the Trustee on the
Closing Date, the Initial Cut-Off Date, with respect to each Subsequent
Contract, the related Subsequent Cut-Off Date, and with respect to any
Substitute Contract or Upgrade Contract, the date on which such Contract is
pledged to the Trustee by the Issuer.
"Default": Any occurrence or circumstance which with notice or the
lapse of time or both would become an Event of Default.
"Default Rate": For any Due Period, the sum of the Collateral Values as
of the Calculation Date occurring in such Due Period of all Contracts that
became Defaulted Contracts in such Due Period and remained Defaulted Contracts
as of the end of business on such Calculation Date divided by the Aggregate
Collateral Value on the Calculation Date immediately preceding such Due Period.
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"Defaulted Contract": The Contract related to a Defaulted Receivable.
"Defaulted Receivable": A Receivable shall become a Defaulted
Receivable at the earliest of (i) the date on which the Servicer receives notice
that the related Obligor has (or, if a Receivable has two Obligors, both
Obligors have) become the subject of bankruptcy proceedings, (ii) the
Calculation Date on which any portion of the related Receivable would (if such
Receivable were owned by Trendwest) be written off Trendwest's financial
statements or books of account or would otherwise be deemed uncollectible in the
normal course of business (for reasons other than disputes of amounts owed with
respect to such Receivable), (iii) the Calculation Date on which all or part of
any Scheduled Payment with respect to such Receivable has not been received and
remains unpaid for a period of 180 or more days as of such Calculation Date or
(iv) the date on which the related Obligor has (or, if a Contract has two
Obligors, both Obligors have) given notice to the Servicer, or the Servicer
otherwise has reason to believe, that such Receivable will not be paid (for
reasons other than disputes of amounts owed with respect to such Receivable).
"Definitive Note": A definitive, fully registered Note of Class A-1,
Class A-2, Class B, or Class C issued pursuant to Section 3.12.
"Delinquent Contract": As of any Calculation Date, a Contract (a) as to
which a Scheduled Payment was not received by or on behalf of the Issuer within
60 days of when such Scheduled Payment was due and remains unpaid as of such
Calculation Date and (b) that is not a Defaulted Contract.
"Delivery Date": The date on which a Note is issued in accordance with
this Indenture.
"Depository Agreement": The letter of representations, between the
Issuer and the Depository Trust Company, as Clearing Agency.
"Determination Date": The fifth day preceding each Payment Date or, if
such day is not a Business Day, the preceding Business Day.
"Due Date": With respect to each Receivable, the date of the month on
which payment is due thereunder.
"Due Period": As to any Determination Date or Payment Date, as the case
may be, the period beginning on and including the first day and ending at the
end of the last day of the calendar month preceding the month in which such
Determination Date or Payment Date, as the case may be, occurs; provided,
however, that the initial Due Period shall be the period from and including
August 1, 2001 through August 31, 2001.
8
"Eligible Account": A segregated account, which may be an account
maintained with the Trustee, which is maintained with a depository institution
or trust company whose long term unsecured debt obligations are rated at least
A-1 by Moody's and at least F1 by Fitch (if rated by Fitch).
"Eligible Investments": Any and all of the following:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America or any agency or instrumentality of the United States
of America the obligations of which are backed by the full faith and credit of
the United States of America;
(ii) (A) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by or federal funds sold by any depository
institution or trust company (including the Trustee or its agent acting in their
respective commercial capacities) incorporated under the laws of the United
States of America or any State thereof and subject to supervision and
examination by federal and/or state authorities, so long as at the time of such
investment or contractual commitment providing for such investment, such
depository institution or trust company has the highest short term unsecured
debt rating of Moody's and Fitch (if rated by Fitch) and provided that each such
investment has an original maturity of no more than 180 days, and (B) any other
demand or time deposit or deposit which is fully insured by the Federal Deposit
Insurance Corporation;
(iii) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or any
State thereof which has a long term unsecured debt rating in the highest
available rating category of Moody's and Fitch (if rated by Fitch) at the time
of such investment;
(iv) commercial paper having, or demand notes constituting an
investment vehicle in commercial paper having, an original maturity of less than
180 days and issued by an institution having a short term unsecured debt rating
in the highest available rating category of Moody's and Fitch (if rated by
Fitch) at the time of such investment (the issuer of any demand notes under this
paragraph (iv) must also be an institution that satisfies the unsecured debt
rating test specified in this paragraph (iv));
(v) a guaranteed investment contract issued by an insurance company or
other corporation having a long term unsecured debt rating or a claims paying
ability rated in the highest available rating category of Moody's and Fitch (if
rated by Fitch) at the time of such investment; and
(vi) money market funds having ratings in the highest available rating
category of Moody's and Fitch (if rated by Fitch) at the time of such investment
(any such money market funds which provide for demand withdrawals being
conclusively deemed to satisfy any maturity requirements for Eligible
Investments set forth herein), including money market funds of the Trustee and
any such funds that are managed by the Trustee or any of its Affiliates or for
which the Trustee or any Affiliate of the Trustee acts as advisor.
9
Any Eligible Investments may be purchased by or through the Trustee or
any of its Affiliates.
"Event of Default": The meaning specified in Section 6.01 hereof.
"Final Due Date": With respect to each Receivable, the last Due Date
specified in the related Contract.
"Final Payment Date": With respect to any Class, the date on which the
final principal payment on the Notes of such Class becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by acceleration or
redemption.
"Fitch": Fitch, Inc. and its successors in interest.
"Fractional Interest": A fee simple 1/13 interest in a condominium unit
at a Resort.
"Grant": To grant, bargain, sell, warrant, alienate, remise, release,
convey, assign, transfer, mortgage, pledge, create and grant a security interest
in and right of set-off against, deposit, set over and confirm. A Grant of the
Contracts, the Receivables or of any other instrument shall include all rights,
powers and options (but none of the obligations) of the Granting party
thereunder, including, without limitation, the immediate and continuing right to
claim, collect, receive and receipt for payments in respect of the Contracts,
the Mortgage Loans, and the Receivables, or any other payment due thereunder, to
give and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring proceedings in the name
of the Granting party or otherwise, and generally to do and receive anything
which the Granting party is or may be entitled to do or receive thereunder or
with respect thereto.
"Holder" or "Noteholder": The person in whose name a Note is registered
in the Note Register.
"Indenture" or "this Indenture": This instrument as originally executed
as from time to time supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
as so supplemented or amended. All references in this Indenture to designated
"Articles," "Sections," "Subsections" and other subdivisions are to the
designated Articles, Sections, Subsections and other subdivisions of this
Indenture as originally executed, or if amended or supplemented, as so amended
and supplemented. The words "herein," "hereof," "hereunder" and other words of
similar import, when not related to a specific subdivision of this Indenture,
refer to this Indenture as a whole and not to any particular Article, Section,
Subsection or other subdivision.
"Independent": When used with respect to any specified Person means
such a Person, who (1) is in fact independent of the Issuer, (2) does not have
any direct financial interest or any material indirect financial interest in the
Issuer or in any Affiliate of the Issuer, (3) is not connected with the Issuer
10
as an officer, employee, promoter, underwriter, Trustee, partner, director, a
person performing similar functions and (4) is not a brother, sister, spouse,
parent or child of any Person listed in clauses (2) and (3) above; provided,
that WorldMark shall not be deemed to be Independent of the Issuer or its
Affiliates. Whenever it is herein provided that any Independent Person's opinion
or certificate shall be furnished to the Trustee, such Person shall be appointed
by a Issuer Order and approved by the Trustee in the exercise of reasonable
care, and such opinion or certificate shall state that the signer has read this
definition and that the signer is Independent within the meaning hereof.
"Initial Aggregate Collateral Value": $148,960,863.
"Initial Cut-Off Date": The close of business on July 31, 2001.
"Initial Payment Date": September 17, 2001, the first Payment Date
following the Closing Date.
"Initial Purchaser": Banc One Capital Markets, Inc.
"Interest Shortfall Payment": The definition set forth in Section
3.07(a).
"Issuer": TRI Funding V, Inc., a Delaware corporation, until a
successor Person shall have become the Issuer pursuant to the applicable
provisions of this Indenture, and thereafter "Issuer" shall mean such successor
Person.
"Issuer Order" and "Issuer Request": A written order or request signed
in the name of the Issuer by the Chairman of the Board, President, a Vice
President, the Treasurer or Secretary of the Issuer and delivered to the
Trustee.
"Lien": Any mortgage, deed of trust, pledge, hypothecation, assignment,
participation or equity interest, deposit arrangement, encumbrance, charge, lien
(statutory or other), preferences priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing.
"Loan Documents": The meaning specified in the Receivables Purchase
Agreement.
"Local Bank": The meaning specified in the Servicing Agreement.
"Local Bank Account": The meaning specified in the Servicing Agreement.
"Monthly Servicer's Report": The report prepared by the Servicer
pursuant to Section 4.01 of the Servicing Agreement.
11
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc. and its successors in
interest.
"Mortgage": The mortgage or deed of trust security for the Obligor's
obligations under such Obligor's Mortgage Note.
"Mortgage Loan": A loan made by Trendwest to an Obligor for the
purchase of a Fractional Interest, as evidenced by the Mortgage Note, the
Mortgage and the purchase agreement related to such loan.
"Mortgage Note": The promissory note made by an Obligor in connection
with such Obligor's purchase of a Fractional Interest.
"Note" or "Notes": The notes authenticated and delivered under this
Indenture.
"Note Owner": A Class A Note Owner, Class B Note Owner or Class C Note
Owner, as the case may be.
"Note Owner Certificate": The certificate of a Note Owner or transferee
thereof, a form of which is attached as Exhibit D hereto.
"Note Purchase Agreement": The Note Purchase Agreement, dated as of
August 24, 2001, among the Issuer, Trendwest and the Initial Purchaser.
"Note Rate": The Class A-1 Note Rate, the Class A-2 Note Rate, the
Class B Note Rate or the Class C Note Rate, as applicable.
"Note Register" and "Note Registrar": The respective meanings specified
in Section 3.04 hereof.
"Noteholder" or "Holder": The Person in whose name a Note is registered
in the Note Register.
"Obligor": Each borrower under a Contract, including any guarantor of
such borrower, and their respective successors and assigns.
"Officer's Certificate": A certificate signed by the Chairman of the
Board, the President, a Vice President, the Treasurer, the Controller, an
Assistant Treasurer or the Secretary of the company on whose behalf the
certificate is delivered, and delivered to the Trustee, which certificate shall
comply with the applicable requirements of Section 13.12 hereof or, with respect
to Officer's Certificates delivered pursuant to the Servicing Agreement, shall
set forth the information required by the applicable provision of the Servicing
Agreement. Unless otherwise specified, any reference in this Indenture to an
Officer's Certificate shall be to an Officer's Certificate of the Issuer on
behalf of the Issuer.
"Opinion of Counsel": A written opinion of counsel who may, except as
otherwise expressly provided in this Indenture, be counsel for the Issuer and
who shall be reasonably satisfactory to the Trustee and which opinion shall
comply with the applicable requirements of Section 13.12 hereof.
12
"Outstanding": With respect to the Notes, as of any date of
determination, all Notes theretofore authenticated and delivered under this
Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation; and
(ii) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture, unless proof
satisfactory to the Trustee is presented that any such Notes are held by a bona
fide purchaser;
provided, however, that for purposes of determining whether the Holders of the
requisite principal amount of the Outstanding Notes have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Notes
owned by the Issuer or any other obligor upon such Notes, any Affiliate of the
Issuer or Trendwest shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent, or
waiver, only such Notes which the Trustee knows to be so owned shall be so
disregarded.
"Overdue Interest": The meaning set forth in Section 3.07(a).
"Overdue Contract Payment": With respect to a Due Period and a
Delinquent Contract, all payments due in a prior Due Period that the Servicer
receives from or on behalf of an Obligor during the related Due Period on such
Delinquent Contract, including any Servicing Charges.
"Paying Agent": The Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 7.08 hereof and is
authorized by the Issuer pursuant to Section 11.02(o) hereof to pay the
principal of, or interest on, any Notes on behalf of the Issuer.
"Payment Date": The fifteenth day of each calendar month (or if such
day is not a Business Day, the next succeeding Business Day) commencing on the
Initial Payment Date.
"Person": Any individual, corporation, limited liability company,
partnership, association, joint-stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Prefunding Account": The segregated trust account or accounts by that
name established and maintained by the Trustee pursuant to Section 12.04.
"Prefunding Period": The period beginning on the Closing Date and
ending on the Prefunding Period Termination Date.
"Prefunding Period Termination Date": The first to occur of the
following: (a) the close of business on December 17, 2001, (b) the Payment Date
on which the amount on deposit in the Prefunding Account (after giving effect to
any transfers therefrom in connection with the pledge of Subsequent Receivables
to the Trustee on such Payment Date) is less than $10,000 and (c) the date on
which a Trigger Event occurs.
13
"Principal Distribution Amount": The Class A Principal Distribution
Amount, the Class B Principal Distribution Amount or the Class C Principal
Distribution Amount, as applicable.
"Private Placement Memorandum": The Private Placement Memorandum, dated
August [24], 2001, relating to the offering of the Notes.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Purchase and Substitution Limit": 13% of the aggregate Collateral
Value of all Receivables pledged by the Issuer to the Trustee as of the
Prefunding Period Termination Date measured as of their related Cut-Off Dates.
"Purchase Price": With respect to any Contract or interest therein
repurchased by the Issuer or Trendwest, as the case may be, pursuant to Section
3.03 of the Receivables Purchase Agreement, Section 4.03 hereof or Section
3.10(b) of the Servicing Agreement, the sum of (i) the Collateral Value of the
related Receivable on the Calculation Date on or immediately succeeding the date
when the Receivable is repurchased and (ii) any interest portion of Scheduled
Payments with respect to such Receivable due on or prior to such Calculation
Date but not received through such Calculation Date.
"Rating Agencies": Each of Fitch and Moody's.
"Receivables": With respect to any Contract, all of, and the right to
receive all of (i) the Scheduled Payments, (ii) any Residual Proceeds, (iii) any
Recoveries and (iv) any Servicing Charges.
"Receivables Purchase Agreement": The Receivables Purchase Agreement,
dated as of August 1, 2001, by and among Trendwest, TW Holdings III and the
Issuer, as amended and supplemented from time to time, together with the Asset
Assignment and each Subsequent Asset Assignment executed in connection
therewith.
"Record Date": With respect to any Payment Date, the close of business
on the last day of the related Due Period, whether or not a Business Day, except
that with respect to the Initial Payment Date, the Record Date shall be the
Closing Date.
"Recoveries": For any Due Period occurring during or after the date on
which any Contract becomes a Defaulted Contract and with respect to such
Defaulted Contract, all payments that the Servicer received from or on behalf of
an Obligor during such Due Period in respect of such Defaulted Contract or from
liquidation or reselling the Related Security (including purchases by Trendwest
14
pursuant to Section 3.10(e) of the Servicing Agreement), including but not
limited to Scheduled Payments, Overdue Contract Payments and Guaranty Amounts,
as reduced by any reasonably incurred out-of-pocket expenses incurred by the
Servicer in enforcing such Defaulted Contract.
"Redemption Date": The meaning specified in Section 10.01 hereof.
"Redemption Price": With respect to any Note, and as of any Redemption
Date, the Outstanding principal amount of such Note, together with interest
accrued thereon through the Redemption Date at the Note Rate (exclusive of
installments of interest and principal maturing on or prior to the Redemption
Date, payment of which shall have been made or duly provided for to the Holder
of such Note on the applicable Record Date or as otherwise provided in this
Indenture).
"Redemption Record Date": With respect to any redemption of any Note, a
date fixed pursuant to Section 10.01 hereof.
"Registered Holder": The Person whose name appears on the Note Register
on the applicable Record Date or Redemption Record Date.
"Reinvestment Income": Any interest or other earnings earned on any
amounts in the Prefunding Account, the Capitalized Interest Account, the Reserve
Account or the Collection Account from investments of the amounts in such
accounts as provided herein.
"Related Security": With respect to each Contract, the related
Fractional Interest or Vacation Credits, as applicable.
"Releasable Receivable": With respect to any Payment Date not occurring
during a Trigger Event Period and for which the principal balance of each Class
of Notes has been reduced to the Targeted Credit Enhancement Level for such
Class and Payment Date and the amount in the Reserve Account is equal to or
greater than the Reserve Account Required Balance, any Defaulted Receivable and
any Receivable that is more than 90 days delinquent.
"Remittance Date": The Business Day immediately preceding each Payment
Date.
"Reserve Account": The trust account created and maintained pursuant to
Section 12.03 hereof.
"Reserve Account Required Balance": As of any Payment Date, an amount
equal to the greater of (i) $250,000 and (ii) the product of (a) 3.0% and (b)
the principal balance of the Notes Outstanding as of such Payment Date (after
any distributions made pursuant to Section 12.02, on such date).
"Residual Proceeds": With respect to a Contract that is not a Defaulted
Contract and the Related Security, the net proceeds of any resale or other
disposition of such Related Security.
15
"Resort": A resort or other location at which WorldMark owns
condominium or timeshare units or which was developed by Trendwest for sale of
fee simple 1/13 interests.
"Responsible Officer": When used with respect to the Trustee, any
officer assigned to the Corporate Trust Department (or any successor thereto),
including any Vice President, Assistant Vice President, Trust Officer, Assistant
Secretary or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and having
direct responsibility for the administration of this Indenture, and also, with
respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Rule 144A": Rule 144A promulgated under the Securities Act.
"S&P": Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors in interest.
"Sale": The meaning specified in Section 6.18 hereof.
"Scheduled Payment": With respect to a Payment Date and a Contract, the
periodic payment set forth in such Contract due from the Obligor in the related
Due Period. Scheduled Payments shall not include any membership dues or other
housekeeping payments relating to the use of the Club.
"Securities Act": The Securities Act of 1933, as amended.
"Servicer": Initially, Trendwest Resorts, Inc., an Oregon corporation,
and any successor Servicer appointed pursuant to Section 6.02 of the Servicing
Agreement.
"Servicer Event of Default": The meaning set forth in the Servicing
Agreement.
"Servicer Fee": On each Payment Date, an amount equal to the product of
(i) one-twelfth of 1.00% and (ii) the Aggregate Collateral Value at the close of
business on the related Calculation Date; provided, however, that if Trendwest
is no longer acting as Servicer, the Servicing Fee shall be the greater of the
Servicing Fee paid to Trendwest and the then current market rate for servicing
the Receivables based on the average of three bids from servicers that service
receivables similar to the Receivables. Such market rate fee shall be no greater
than a monthly fee equal to the product of (i) one-twelfth of 2.00% and (ii) the
Aggregate Collateral Value at the close of business on related Calculation Date,
unless the holders of a majority in principal amount of the Notes Outstanding of
the Controlling Class consent in writing to a fee in excess of such amount.
"Servicing Agreement": The Servicing Agreement, dated as of August 1,
2001, by and among the Issuer, the Servicer and the Trustee, as amended or
supplemented from time to time.
"Servicing Charges": The sum of (i) all late payment charges paid by
Obligors on Delinquent Contracts after payment in full of any Scheduled Payments
due in a prior Due Period and Scheduled Payments for the related Due Period and
(ii) any other incidental charges or fees received from an Obligor, including,
but not limited to, late fees, collection fees and bounced check charges.
16
"Servicing Officers": The meaning set forth in the Servicing Agreement.
"State": Any state of the United States of America and, in addition,
the District of Columbia and the Commonwealth of Puerto Rico.
"Stated Maturity": September 15, 2012.
"Subordinated Note": The subordinated note dated as of the Closing
Date, made by the Issuer to Trendwest as a part of Acquisition Consideration and
the payments of which are subordinated by its terms to distributions made
pursuant to clauses (i)-(xiv) of Section 12.02(d) and clauses (i)-(ix) of
Section 12.02(e). The form of the Subordinated Note is attached to the
Receivables Purchase Agreement as Exhibit C thereto.
"Subsequent Contract": The meaning set forth in the Receivables
Purchase Agreement.
"Subsequent Cut-Off Date": With respect to any Subsequent Contract, the
last day of the Due Period immediately preceding the related Subsequent Transfer
Date.
"Subsequent Receivable": The Receivable relating to a Subsequent
Contract.
"Subsequent Transfer Date": Each date, which must be a Business Day,
during the Prefunding Period on which one or both of Trendwest and TW Holdings
III sell to the Issuer and the Issuer pledges to the Trustee Subsequent
Contracts hereunder.
"Substitute Contract": The meaning specified in the Receivables
Purchase Agreement.
"Substitute Receivable": The meaning specified in the Receivables
Purchase Agreement.
"Supplemental Principal Distribution Amount": With respect to the Class
A Notes, the Class A Supplemental Principal Distribution Amount, with respect to
the Class B Notes, the Class B Supplemental Principal Distribution Amount and
with respect to the Class C Notes, the Class C Supplemental Principal
Distribution Amount.
"Targeted Credit Enhancement Level": With respect to the Class A Notes,
45.0% with respect to the Class B Notes, 23.0% and with respect to the Class C
Notes, 9.0% of the sum of (a) amounts remaining in the Prefunding Account after
giving effect to any transfers therefrom in connection with the transfer of
Subsequent Receivables to the Issuer and the simultaneous pledge to the Trustee
on such Payment Date and (b) the Aggregate Collateral Value of all Eligible
Receivables as of the close of business on the related Calculation Date or, with
respect to any Contracts added after the related Calculation Date and prior to
such Payment Date, as of the related Cut-Off Date. The percentage of Calculation
17
Receivables providing credit enhancement for a class is calculated as the
percentage equivalent of a fraction, the numerator of which is the excess of the
aggregate Collateral Value of all Calculation Receivables over the aggregate
outstanding principal amount of the Notes of such Class and of any pari passu or
senior Class, and the denominator of which is the aggregate Collateral Value of
all Calculation Receivables.
"Targeted Principal Balance": With respect to the Class A Notes, the
Class B Notes, and the Class C Notes and each Payment Date, the amount set forth
on Schedule B attached hereto.
"Transaction Documents": This Indenture, the Note Purchase Agreement,
the Servicing Agreement, the Receivables Purchase Agreement, the Custodian
Agreement and the Notes.
"Transfer Date": The meaning specified in the Receivables Purchase
Agreement.
"Trendwest": Trendwest Resorts, Inc., an Oregon corporation, and its
permitted successors and assigns.
"Trigger Event": Any of the following events or conditions: (1) if, as
of any Calculation Date, the aggregate Collateral Value of the Receivables that
are more than 60 days delinquent, as of each related Calculation Date for the
preceding three Due Periods is greater than or equal to 6.0% of the Aggregate
Collateral Value as of the related Calculation Date; (2) if, as of any
Calculation Date, the aggregate Collateral Value of Defaulted Receivables that
became Defaulted Receivables in the related Due Period is greater than or equal
to 0.80% of the Aggregate Collateral Value as of the related Calculation Date;
(3) the aggregate Collateral Value of the Receivables that became Defaulted
Receivables is greater than or equal to 17% of the aggregate Collateral Value of
Receivables pledged to the Trustee as of the Prefunding Period Termination Date,
measured as of their respective Cut-Off Dates; (4) an Event of Default or
Servicer Event of Default has occurred and is continuing; (5) (a) WorldMark
voluntarily incurs or is any time voluntarily liable for any debt (other than
customary trade payables), or any of its property voluntarily is or voluntarily
becomes subject to any Liens (other than (i) utility or similar easements or
licenses which do not relate to borrowings by WorldMark or (ii) Liens that in
the aggregate for all properties do not exceed $100,000), or (b) WorldMark
involuntarily incurs or is any time involuntarily liable for any debt, or any of
its property involuntarily is or involuntarily becomes subject to any Liens
(other than utility or similar easements or licenses which do not relate to
borrowings by WorldMark) that individually or in the aggregate (with respect to
all such debt and the obligations secured by all such Liens) exceed $1,000,000;
(6) WorldMark sells, leases or otherwise transfers voluntarily or otherwise, any
of its real estate properties or any interest therein so that, in the aggregate,
there is a net decrease in Vacation Credits available for member use below
900,000,000; (7) WorldMark exchanges one of its present properties for another
property that is worth fewer Vacation Credits than the property so exchanged; or
(8) WorldMark has interests in units at fewer than 38 developed resort
properties.
"Trigger Event Period": Each period beginning on the Determination Date
following the day on which a Trigger Event occurs and ending on the last day of
the month in which no Trigger Event occurs or is continuing.
"Trust Estate": The meaning specified in the Granting Clause of this
Indenture.
18
"Trustee": ▇▇▇▇▇ Fargo Bank Minnesota, National Association, a national
banking association, until a successor Person shall have become the Trustee
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Person.
"Trustee Fee": The fee payable on each Payment Date to the Trustee in
consideration for the Trustee's performance of its duties pursuant to this
Indenture as Trustee, in an amount equal to the product of (x) one twelfth and
(y) the sum of (i) $2,500 and (ii) the greater of (A) $1,200 and (B) the product
of the Trustee Fee Rate and the aggregate principal amount of Outstanding Notes
on the preceding Payment Date after giving effect to distributions on such date
(or, in the case of the Initial Payment Date, the initial aggregate principal
amount of the Notes).
"Trustee Fee Rate": 0.0275%.
"TW Holdings III": TW Holdings III, Inc., a Delaware corporation, and
its permitted successors and assigns.
"UCC": The Uniform Commercial Code as it may from time to time be in
effect in the applicable State.
"Unreimbursed Servicing Transfer Payments": With respect to any
transfer of servicing by the Servicer, any costs or expenses of the Trustee, to
the extent not reimbursed by the Servicer or a third-party, including, without
limitation, any costs or expenses (including reasonable attorney fees)
associated with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee to service the Receivables properly and
effectively and of amending this Indenture or any other Transaction Document to
reflect such transfer.
"Upgrade": The prepayment of a Contract and entry into a new contract
by an Obligor, WorldMark and Trendwest, pursuant to which the Obligor purchases
additional Vacation Credits in exchange for an increase in the principal balance
owed by the Obligor.
"Upgrade Contract": The new contract entered into by an Obligor,
Trendwest and WorldMark related to an Upgrade by such Obligor. Each Upgrade
Contract shall be pledged to the Trustee pursuant to Section 4.03(g) hereof.
"Vacation Credits": The vacation credits financed by an Obligor
pursuant to a Contract.
"Vice President": With respect to a member of the Issuer or the
Trustee, any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
"WorldMark": WorldMark, The Club, a California mutual benefit
corporation, and its successors in interest.
19
ARTICLE TWO
NOTE FORM
Section 2.01. Form. The Class A-1 Notes, the Class A-2 Notes, the Class
B Notes and the Class C Notes, together with the certificates of authentication,
shall be in substantially the form set forth in Exhibits C-1, C-2, C-3 and C-4,
respectively, hereto, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture, and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon, as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of such Notes.
The definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any manner acceptable to the Trustee and the initial purchasers of the Notes,
all as determined by the officers executing such Notes, as evidenced by their
execution of such Notes.
ARTICLE THREE
THE NOTES
Section 3.01. Denomination. The aggregate principal amount of the Class
A-1 Notes, the Class A-2 Notes, the Class B Notes and the Class C Notes which
may be authenticated and delivered under this Indenture is limited to an
aggregate principal amount of $30,100,000 $72,500,000 $37,800,000 and
$23,400,000 respectively (except for Notes authenticated and delivered upon
registration of transfer or in exchange for or in lieu of, other Notes pursuant
to Sections 3.03, 3.04, 3.06 or 9.05 hereof). The Notes shall be issuable only
as registered Notes without coupons in the denominations of at least $250,000;
provided, however, that, the foregoing shall not restrict or prevent the
transfer in accordance with Sections 3.04 and 3.05 hereof of any Note with a
remaining outstanding principal amount of less than $250,000.
Section 3.02. Execution, Authentication, Delivery and Dating. The Notes
shall be executed on behalf of the Issuer by the President, one of the Vice
Presidents or the Treasurer of the Issuer. The signature of these officers on
the Notes must be manual.
Notes bearing the manual signatures of individuals who were at any time
the proper officers of the Issuer shall bind the Issuer, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
authentication or delivery of such Notes or did not hold offices at the date of
authentication or delivery of such Notes.
Each Note shall bear on its face the appropriate Delivery Date and be
dated as of the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
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certificate of authentication substantially in the form provided for herein
executed by the Trustee or by any Authenticating Agent by the manual signature
of one of its authorized officers, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 3.03. Notes as Debt. For all federal, state, local and foreign
tax purposes, the Issuer, the Servicer, the Trustee and all Noteholders shall
treat the Notes as debt of the Issuer.
Section 3.04. Registration, Registration of Transfer and Exchange. (a)
The Issuer shall cause to be kept initially at the Corporate Trust Office a
register (the "Note Register"), in which, subject to such reasonable regulations
as it may prescribe, the Issuer shall provide for the registration of Notes and
the registration of transfers of Notes. ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, Sixth Street and Marquette Avenue, MAC N9303-121, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, is hereby appointed "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. The Trustee shall
have the right to rely conclusively upon a certificate of the Note Registrar as
to the names and addresses of the Holders of the Notes and the principal amounts
and numbers of such Notes as held. Upon request of any Holder, the Trustee
shall, to the extent it may lawfully do so, furnish such Holder with a list of
the names and addresses of all Holders entered on the Note Register indicating
the principal amount and serial number, if any, of each Note held by each
Holder.
(b) Only upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 11.02(n)
hereof and subject to the conditions set forth in Section 3.05 and Section 3.06
hereof, the Issuer shall execute, and the Trustee or its agent shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any authorized denominations, and of a
like aggregate principal amount and Stated Maturity.
(c) At the option of the Holder, Notes may be exchanged for other Notes
of any authorized denominations and of a like aggregate principal amount and
Stated Maturity, only upon surrender of the Notes to be exchanged at such office
or agency, subject to Section 3.06 hereof. Whenever any Notes are so surrendered
for exchange, the Issuer shall execute, and the Trustee or its agent shall
authenticate and deliver, the Notes which the Noteholder making the exchange is
entitled to receive.
(d) All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of such transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall (if so required by the Issuer or the Note Registrar) be duly
endorsed or be accompanied by a written instrument of transfer in form
reasonably satisfactory to the Issuer and the Note Registrar duly executed, by
the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
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sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 9.05 hereof not involving any registration of
transfer.
Notwithstanding anything else to the contrary contained in this
Indenture, the obligation of the Issuer to pay the principal of and interest on
the Notes is not a general obligation of the Issuer, but is limited solely to
the amounts available out of the Collateral pledged to the Trustee under this
Indenture.
Section 3.05. Limitation on Transfer and Exchange. The Notes will not be
registered or qualified under the Securities Act or the securities laws of any
State. If the Notes of any Class are no longer held by The Depository Trust
Company pursuant to Section 3.10, then the restrictions set forth in this
Section 3.05 shall apply to transfers of such Notes. In such event, no transfer
of any Note shall be made unless that transfer is made in a transaction which
does not require registration or qualification under the Securities Act or under
applicable State securities laws. In the event that a transfer is to be made
without registration or qualification, such Noteholder's prospective transferee
shall either (i) deliver to the Trustee an investment letter substantially in
the form set forth on Exhibit A hereto (the "Investment Letter") or (ii) deliver
to the Trustee an opinion of counsel that the transfer is exempt from the
Securities Act. Such opinion may be given by an attorney that is an employee or
officer of such transferee. Neither the Issuer nor the Trustee is obligated to
register or qualify the Notes under the Securities Act or any other securities
law.
The Trustee shall have no liability to the Trust Estate or any
Noteholder arising from a transfer of any such Note in reliance upon a
certification or opinion described in this Section 3.05.
Section 3.06. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Note Registrar, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any Note, and
(ii) there is delivered to the Trustee such security or indemnity as may be
required by the Trustee to save the Issuer and the Trustee or any agent of any
of them harmless, then, in the absence of written notice to the Issuer or the
Note Registrar that such Note has been acquired by a bona fide purchaser, the
Issuer shall execute and, upon its request, the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a new Note of the same tenor, initial principal amount and Stated
Maturity, bearing a number not contemporaneously outstanding. If after the
delivery of such new Note, a bona fide purchaser of the original Note in lieu of
which such new Note was issued presents for payment such original Note, the
Issuer and the Trustee shall be entitled to recover such new Note from the
person to whom it was delivered or any person taking therefrom, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expenses incurred
by the Issuer or the Trustee or any agent of any of them in connection
therewith. If any such mutilated, destroyed, lost or stolen Note shall have
become or shall be about to become due and payable, or shall have become subject
to redemption in full, instead of issuing a new Note, the Issuer may pay such
Note without surrender thereof, except that any mutilated Note shall be
surrendered.
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Upon the issuance of any new Note under this Section 3.06, the Issuer
may require from the applicable Holder the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Note issued pursuant to this Section 3.06, in lieu of any
destroyed, lost or stolen Note, shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section 3.06 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 3.07. Payment of Principal and Interest; Principal and Interest
Rights Preserved. (a) The Notes shall bear interest on the unpaid principal
amount thereof at the applicable Note Rate (calculated on the basis of a 360-day
year consisting of 12 months of 30 days each), monthly from and including the
first day of each Due Period through the last day of such Due Period (except
with respect to the Initial Payment Date, from the Closing Date through August
31, 2001) and (to the extent that the payment of such interest shall be legally
enforceable) on any overdue installment of principal or interest (such overdue
interest and interest at the applicable Note Rate on such overdue interest, the
"Overdue Interest") from the date such principal or interest became due and
payable until fully paid. Interest shall be due and payable in arrears on each
Payment Date, with each payment of interest calculated as described above on the
unpaid principal amount of the Outstanding Notes at the close of business on the
Payment Date immediately preceding such Payment Date or, with respect to
interest payable on the Initial Payment Date, on the principal amount of the
Outstanding Notes on the Closing Date; provided, however, that in making any
interest payment, if the interest calculation with respect to any Note shall
result in a portion of such payment being less than $.01, then such payment
shall be decreased to the nearest whole cent, and no subsequent adjustment shall
be made in respect thereof. To the extent that there is a shortfall in the
amount available to pay the interest owed on the Class A Notes, the amount of
interest paid to the holders of each such Class of Class A Notes shall be
determined by multiplying the amount available for such distribution by the
ratio of the amount of interest (including Overdue Interest) owed on such Class
to the amount of interest (including Overdue Interest) owed on all Classes of
the Class A Notes (each such amount with respect to each Class, the "Interest
Shortfall Payment"). With respect to the Notes of any Class, due but unpaid
interest will accrue interest at the related Note Rate.
(b) The principal of each Note shall be payable in installments
beginning on the Initial Payment Date and ending no later than the Stated
Maturity of such Note unless such Note becomes due and payable at an earlier
date by declaration of acceleration or automatic acceleration, call for
redemption or otherwise. All reductions in the principal amount of any Note
effected by payments of installments of principal made on any Payment Date shall
be binding upon all future Holders of such Note, and of any Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof,
23
whether or not such payment is noted on such Note. Payments of principal of the
Notes of each Class will be made on each Payment Date in an amount equal to the
sum of (a) the Principal Distribution Amount for such Class and (b) the
Supplemental Principal Distribution Amount for such Class (and in the case of
the Class A Notes, will be applied to the Notes on a pro rata basis among the
Notes of such Class) commencing on the Initial Payment Date, provided, however,
that with respect to the Class A Notes during any time other than a Trigger
Event Period, the Class A-2 Notes will not be entitled to any payments of
principal until the aggregate principal amount of the Class A-1 Notes has been
reduced to zero. The principal payable on the Notes of each Class shall be paid
(to the extent payable in accordance with the terms hereof) on each Payment Date
beginning on the Initial Payment Date and ending on the Final Payment Date with
respect to such Class (and in the case of the Class A Notes, on a pro rata basis
within each Class based upon the face amount of each Note of such Class);
provided, however, that if as a result of such proration a portion of such
principal would be less than $.01, then such payment shall be decreased to the
nearest whole cent, and such portion shall be applied to the next succeeding
principal payment.
(c) The principal of and interest on the Notes are payable by check
mailed by first-class mail to the Person whose name appears as the Registered
Holder of such Note on the Note Register at the address of such Person as it
appears on the Note Register or, if requested by such Registered Holder, by wire
transfer in immediately available funds to the account specified in writing to
the Trustee by such Registered Holder at least five Business Days prior to the
Record Date for the Payment Date on which wire transfers will commence, in such
coin or currency of the United States of America as at the time of payment is
legal tender for the payment of public and private debts. All payments on the
Notes shall be paid without any requirement of presentment. The Issuer shall
notify the Trustee at the close of business on the Record Date next preceding
the Payment Date on which the Issuer expects that the final installment of
principal of such Note will be paid that the Issuer expects that such final
installment will be paid on such Payment Date. Notice of final payment on any
Note shall be mailed by the Trustee to the Holder of such Note in accordance
with Section 12.06(a) hereof. Funds representing any such checks returned
undeliverable shall be held in accordance with Section 11.02(o). Upon payment in
full of all amounts owed to the Noteholder of any Note, such Note shall be void,
and such Noteholder shall use reasonable efforts to return such Note to the
Trustee at the Corporate Trust Office for cancellation upon written request of
the Trustee or the Issuer. In the event a Noteholder cannot return its Note to
the Trustee within 60 days following payment in full of the Note, it shall send
the Trustee an affidavit certifying the reason it cannot return such Note upon
request.
Section 3.08. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee and any agent of
the Issuer or the Trustee shall treat the Person in whose name any Note is
registered as the owner of such Note for the purpose of receiving payments of
principal of and interest on such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and neither the Issuer, the Trustee nor any
agent of the Issuer or the Trustee shall be affected by notice to the contrary.
Section 3.09. Cancellation. All Notes surrendered to the Trustee for
payment, registration of transfer or exchange (including Notes surrendered to
any Person other than the Trustee which shall be delivered to the Trustee) shall
be promptly canceled by the Trustee. No Notes shall be authenticated in lieu of
or in exchange for any Notes canceled as provided in this Section 3.09, except
24
as expressly permitted by this Indenture. All canceled Notes held by the Trustee
shall be disposed of by the Trustee as is customary with its standard practice.
Section 3.10. Book-Entry Registration of Class A Notes, Class B Notes
and Class C Notes. Each of the Notes, upon original issuance, shall be issued in
the form of one or more typewritten Class A-1 Notes, Class A-2 Notes, Class B
Notes and Class C Notes, respectively (the "Book-Entry Class A-1 Notes," the
"Book-Entry Class A-2 Notes," the "Book-Entry Class B Notes," and the
"Book-Entry Class C Notes" respectively), to be delivered to The Depository
Trust Company, the initial Clearing Agency, or its agent by, or on behalf of,
the Issuer. Each of the Class A Notes, Class B Notes and Class C Notes shall
initially be registered on the Note Register in the name of Cede & Co., the
nominee of The Depository Trust Company, as the initial Clearing Agency, and no
Note Owner will receive a definitive note representing such Note Owner's
interest in such Note Owner's applicable Class of Notes, except as provided in
Section 3.12. Unless and until Definitive Class A-1 Notes and/or Definitive
Class A-2 Notes and/or Definitive Class B Notes and/or Definitive Class C Notes
have been issued to the applicable Note Owners pursuant to Section 3.12:
(a) the provisions of this Section 3.10 shall be in full force and
effect with respect to the Notes of each Class, as the case may be;
(b) the Issuer, the Servicer and the Trustee may deal with the Clearing
Agency and the Clearing Agency Participants for all purposes with respect to the
Notes (including the making of distributions on the Notes) as the authorized
representatives of the respective Note Owners;
(c) to the extent that the provisions of this Section 3.10 conflict
with any other provisions of this Indenture, the provisions of this Section 3.10
shall control; and
(d) the rights of the respective Note Owners shall be exercised only
through the Clearing Agency and the Clearing Agency Participants and shall be
limited to those established by law and agreements between such respective Note
Owners and the Clearing Agency and/or the Clearing Agency Participants. Pursuant
to the Depository Agreement, unless and until Definitive Class A-1 Notes,
Definitive Class A-2 Notes, Definitive Class B Notes or Definitive Class C
Notes, as the case may be, are issued pursuant to Section 3.12, the initial
Clearing Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of principal of and interest
on the related Class A-1 Notes, Class A-2 Notes, Class B Notes and Class C
Notes, as the case may be, to such Clearing Agency Participants.
For purposes of any provision of this Indenture requiring or permitting
actions with the consent of, or at the direction of, holders of a Class of Notes
evidencing a specified percentage of the Outstanding principal amount of such
Class, such direction or consent may be given by Note Owners (acting through the
Clearing Agency and the Clearing Agency Participants) owning such Notes
evidencing the requisite percentage of the Outstanding principal amount of such
Notes, respectively.
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Section 3.11. Notice to Clearing Agency. Whenever notice or other
communication to the Noteholders of any Class is required under this Agreement,
unless and until Definitive Notes shall have been issued to the related Note
Owners pursuant to Section 3.12, the Trustee shall give all such notices and
communications specified herein to be given to such Noteholders to the
applicable Clearing Agency which shall give such notices and communications to
the related Note Owners in accordance with its applicable rules, regulations and
procedures.
Section 3.12. Definitive Notes. If (a)(i) the Issuer advises the Trustee
in writing that the Clearing Agency is no longer willing or able to properly
discharge its responsibilities under the Depository Agreement with respect to
any or all Classes and (ii) the Trustee or the Issuer is unable to locate a
qualified successor, (b) the Issuer, at its option, advises the Trustee in
writing that it elects to terminate the book-entry system with respect to any or
all Classes through the Clearing Agency or (c) after the occurrence of an Event
of Default, Note Owners, with respect to a Class of Notes, evidencing not less
than 50% of the aggregate unpaid Outstanding principal amount of such Class of
Notes, advise the Trustee and the Clearing Agency through the Clearing Agency
Participants in writing that the continuation of a book-entry system with
respect to such Class of Notes through the Clearing Agency is no longer in the
best interests of the Note Owners of such Class of Notes, the Trustee shall
notify all Owners of such Class of Notes, through the Clearing Agency, of the
occurrence of any such event and of the availability of Definitive Notes, to the
Note Owners of such Class of Notes requesting the same. Upon surrender to the
Trustee of a Class of Notes by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, the Issuer shall execute
and the Trustee shall authenticate and deliver the applicable Definitive Notes.
Neither the Issuer nor the Trustee shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Notes to the Note
Owners of a Class of Notes, all references herein to obligations imposed upon or
to be performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Notes and the Trustee shall recognize the holders of such Definitive
Notes as Noteholders of such Class hereunder.
ARTICLE FOUR
ORIGINAL ISSUANCE OF NOTES; SUBSTITUTIONS OF COLLATERAL
Section 4.01. Conditions to Original Issuance of Notes. (a) The Trustee
shall, upon receipt of an Issuer Order and upon the satisfaction of the
conditions set forth below, authenticate and deliver the Notes on the Closing
Date. The Outstanding Notes shall be equally and ratably entitled, with all
other Notes as provided herein, to the benefits of this Indenture without
preference, priority or distinction, except as set forth herein, all in
accordance with the terms and provisions of this Indenture.
(b) The obligation of the Trustee to authenticate, execute and deliver
the Notes is subject to the satisfaction of the following conditions:
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(i) the Issuer shall have executed the Notes to be authenticated and
delivered on the Closing Date and shall have delivered such Notes to the Trustee
on or prior to the Closing Date;
(ii) the Issuer shall have delivered to the Custodian on or prior to
the Closing Date the original executed counterpart of each Contract (and the
rest of the contents of the related Custodian File) identified in the Contract
Schedule on the Closing Date, and the Trustee shall have received a receipt from
the Custodian evidencing such delivery;
(iii) the Issuer and the Servicer shall have delivered to the Trustee
on or prior to the Closing Date an Officer's Certificate dated as of the Closing
Date of each of the Issuer and the Servicer, stating, as applicable, that (A)
such Person is not in Default under this Indenture or the Servicing Agreement
and that the issuance of the Notes will not result in any breach of any of the
terms, conditions or provisions of, or constitute a default under, such Person's
certificate of incorporation, by-laws or other organizational documents, as
applicable, or any material indenture, mortgage, deed of trust or other
agreement or instrument to which such Person is a party or by which it is bound,
or any order of any court or administrative agency entered in any proceeding to
which such Person is a party or by which it may be bound or to which it may be
subject; and (B) that all conditions precedent provided in this Indenture
relating to the authentication and delivery of the Notes have been complied
with;
(iv) each of the Issuer, TW Holdings III, the Custodian and the
Servicer shall have delivered to the Trustee on or prior to the Closing Date a
Board Resolution of its board of directors authorizing, as applicable, the
execution, delivery and performance of this Indenture and the other Transaction
Documents and the transactions contemplated hereby and thereby, certified by an
officer of such Person, as applicable;
(v) each of the Issuer, TW Holdings III and the Servicer shall have
delivered to the Trustee on or prior to the Closing Date a copy of an officially
certified document, dated not more than 30 days prior to the Closing Date,
evidencing its due organization and good standing;
(vi) each of the Issuer, TW Holdings III and the Servicer shall have
delivered to the Trustee on or prior to the Closing Date copies of its charter
and by-laws certified by its Secretary or an Assistant Secretary;
(vii) the Issuer shall have delivered, or cause to be delivered, to the
Trustee, on or prior to the Closing Date, evidence of filing (a) with the
Secretary of State of the State of the Issuer's State of Incorporation, UCC-1
financing statements executed by the Issuer, as debtor, and naming the Trustee
as secured party for the benefit of the Noteholders, and the Trust Estate as
collateral; and (b) with the Secretary of State of the States in which each of
Trendwest and TW Holdings III is incorporated, UCC-1 financing statements
executed by the applicable transferor as debtor and naming the Issuer as secured
party and naming as collateral the Assets transferred by each transferor
pursuant to the Receivables Purchase Agreement;
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(viii) the Servicer shall have delivered to the Trustee on or prior to
the Closing Date a certificate listing the Servicing Officers of the Servicer as
of the Closing Date;
(ix) the Issuer shall have delivered to the Trustee on or prior to the
Closing Date an executed copy of the Servicing Agreement and the Receivables
Purchase Agreement and all amendments and supplements thereto;
(x) Trendwest and TW Holdings III shall have delivered to the Trustee
on or prior to the Closing Date an executed copy of the Receivables Purchase
Agreement and all amendments and supplements thereto;
(xi) Moody's shall have delivered a letter rating the Class A Notes,
the Class B Notes and the Class C Notes at least "▇▇▇," "▇▇" and "Baa3,"
respectively, and Fitch shall have delivered a letter rating the Class A Notes,
the Class B Notes and the Class C Notes at least "AAA," "AA-" and "BBB+,"
respectively; and
(xiii) The Issuer shall furnish to the Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording and filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents, and with respect to the
execution and filing of any UCC financing statements and continuation
statements, as are necessary to (x) perfect the grants of security interests by
Trendwest and TW Holdings III to the Issuer, and (y) perfect and make effective
the first priority lien and security interest in the Trust Estate in favor of
the Trustee, for the benefit of the Noteholders, created by this Indenture and
reciting the details of such action, or stating that, in the opinion of such
counsel, no such action is necessary to make such lien and security interest
effective.
(c) The obligation of the Trustee to accept the pledge of the
Subsequent Contracts on any Subsequent Transfer Date shall be subject to the
satisfaction of the following conditions:
(i) the Issuer shall have delivered to the Custodian on or prior to the
applicable Subsequent Transfer Date the original executed counterpart of each
applicable Contract (and the rest of the contents of the related Custodian File)
identified in the schedule to the applicable Subsequent Asset Assignment on such
Subsequent Transfer Date, and the Trustee shall have received a receipt from the
Custodian evidencing such delivery;
(ii) the Issuer and the Servicer shall have delivered to the Trustee on
or prior to the Subsequent Transfer Date an Officer's Certificate dated as of
such date of each of the Issuer and the Servicer, stating, as applicable, that
(A) such Person is not in Default under this Indenture or the Servicing
Agreement and (B) that all conditions precedent provided in this Indenture
relating to the pledge and delivery of the applicable Subsequent Contracts have
been complied with; and
(iii) none of the ratings from either Moody's or Fitch, as applicable,
shall have been reduced or withdrawn.
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Section 4.02. Security for Notes.
(a) Filing. The Issuer shall file UCC-1 financing statements described
in Section 4.01(b)(vii) hereof in accordance with such Section 4.01(b)(vii).
From time to time, the Servicer shall take or cause to be taken such actions and
execute such documents as are necessary or deemed by the Trustee to be
appropriate to perfect the Trustee's interests in the Contracts, the Receivables
and the Mortgage Loans and protect the Trustee's interest in the Vacation
Credits against all other Persons, including, without limitation, the filing of
financing statements, amendments thereto and continuation statements, the
execution of transfer instruments and the making of notations on or taking
possession of all records or documents of title.
(b) Name Change or Relocation. If any change in the Issuer's name,
identity, structure or the location of its State of incorporation occurs, then
the Issuer shall deliver 30 days' prior written notice of such change or
relocation to the Servicer, the Trustee, the Rating Agencies and the Noteholders
and no later than the effective date of such change or relocation, the Servicer
shall file such amendments or statements as may be required to preserve and
protect the Trustee's interests in the Trust Estate.
(c) Chief Executive Office. During the term of this Indenture, the
Issuer will maintain its chief executive office and principal place of business
in one of the States of the United States.
(d) Costs and Expense. The Servicer agrees to pay all reasonable costs
and disbursements in connection with the perfection and the maintenance of
perfection, as against all third parties, of the Trustee's right, title and
interest in and to the Trust Estate.
Section 4.03. Substitution and Purchase of Receivables; Upgrade
Contracts. (a) If at any time the Issuer or the Trustee obtains knowledge
(within the meaning of 7.01(e) hereof), discovers or is notified by the Servicer
that any of the representations and warranties of Trendwest in the Receivables
Purchase Agreement were incorrect at the time as of which such representations
and warranties were made, then the Person discovering such defect, omission, or
circumstance shall promptly notify the other parties to this Indenture, the
Noteholders and Trendwest.
(b) In the event any representation or warranty of Trendwest in the
Receivables Purchase Agreement is incorrect and materially and adversely affects
the value of a Contract, the related Receivable or the Related Security, or the
interests of the Holders of the Notes, or in the event of any breach of any of
the representations and warranties set forth in Sections 3.01(a)(v),
3.01(a)(vi), 3.01(a)(vii), 3.01(a)(xiii), 3.01(a)(xiv), 3.01(a)(xvi),
3.01(a)(xxii) or 3.01(a)(xxiii) of the Receivables Purchase Agreement, then the
Issuer shall require Trendwest, pursuant to the Receivables Purchase Agreement,
to eliminate or otherwise cure the circumstance or condition which has caused
such representation or warranty to be incorrect within 30 days of discovery or
notice thereof. If Trendwest fails or is unable to cure such circumstance or
condition in accordance with the Receivables Purchase Agreement, then the Issuer
shall require Trendwest to substitute or purchase pursuant to the Receivables
Purchase Agreement, any Receivable related to any Contract as to which such
representation or warranty is incorrect within the time specified in Section
3.03 of the Receivables Purchase Agreement. The Servicer shall deposit, or shall
cause to be deposited, into the Local Bank Account upon receipt of such amounts
by the Servicer pursuant to Section 3.03 of the Receivables Purchase Agreement.
29
(c) If the Issuer fails to enforce the purchase or substitution
obligation of Trendwest under the Receivables Purchase Agreement, the Trustee is
hereby appointed attorney-in-fact to act on behalf of and in the name of the
Issuer to require such purchase or substitution.
(d) With respect to any Defaulted Receivable or Delinquent Receivable,
the Issuer shall be entitled to purchase the Contract related to such Contract
or to deliver a Substitute Contract meeting the same requirements as those
specified in Section 3.04 of the Receivables Purchase Agreement for
substitutions and purchases by Trendwest upon breaches of a representation or
warranty by Trendwest thereunder; provided, however, that the aggregate
Collateral Value of Defaulted Receivables and Substitute Contracts which are
purchased or substituted by the Issuer (measured as of the date of substitution)
shall at no time exceed the Purchase and Substitution Limit.
(e) The Issuer shall provide to the Trustee, or with respect to item
(ii) below the Custodian, on the date of delivery of any Substitute Contract the
items listed in (i) and (ii) below:
(i) a supplement to the Receivables Purchase Agreement substantially in
the form of Annex A to the Receivables Purchase Agreement and Exhibit B hereto,
subjecting such Substitute Contract to the provisions thereof and hereof and
providing with respect to such Substitute Contract the information set forth in
the Contract Schedule; and
(ii) the original executed counterpart of the Contract and the
Custodian File relating to such Substitute Contract.
(f) Subject to Section 4.04 hereof, if a Contract becomes a Defaulted
Contract, the Issuer may obtain the release from the Lien of this Indenture such
Contract by paying to the Trustee out of the amount paid to the Issuer pursuant
to clause (xxi) of Section 12.02(d) or clause (xvi) of Section 12.02(e) the
Purchase Price for such Defaulted Contract; provided, however, the Issuer cannot
obtain such a release if the Collateral Value of all such Defaulted Contracts so
released would exceed the amount paid to the Issuer pursuant to such clauses;
further provided, that the releases pursuant to this Section 4.03(f) shall be
deemed to be releases subject to the Purchase and Substitution Limit as if
released pursuant to Section 4.03(b).
(g) If an Obligor desires to enter into an Upgrade Contract, the Issuer
shall purchase such Contract from Trendwest in exchange for the existing
Contract pursuant to Section 3.04(d) of the Receivables Purchase Agreement, and
the Servicer shall cause Trendwest to deliver such Upgrade Contract to the
Custodian on behalf of the Issuer immediately upon execution by Trendwest,
WorldMark and the Obligor, and the Issuer shall pledge such Upgrade Contract to
the Trustee immediately upon such execution by delivering (i) to the Trustee a
supplemental grant in the form of Annex A to the Receivables Purchase Agreement
and Exhibit B hereto, subjecting such Upgrade Contract to the provisions thereof
and hereof and providing with respect to such Upgrade Contract the information
set forth in the Contract Schedule and (ii) to the Custodian the original
executed counterpart of the Upgrade Contract and the rest of the contents of the
related Custodian File.
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Section 4.04. Releases. (a) On each Payment Date not occurring during a
Trigger Event Period, the Issuer shall be entitled to obtain a release from the
lien of this Indenture for any Contract, the related Receivable and the Related
Security at any time (i) after a payment by Trendwest of the Purchase Price of
the Receivable, (ii) after a Substitute Contract is substituted for such
Contract in accordance with the terms hereof, (iii) upon the purchase of a
Contract in accordance with Section 3.10(b) of the Servicing Agreement, or (iv)
if the related Receivable is a Releasable Receivable, if the Issuer delivers to
the Trustee an Officer's Certificate (A) identifying the Receivable and the
related Contract and Related Security to be released, (B) requesting the release
thereof, (C) setting forth the amount deposited in the Collection Account with
respect thereto, in the event such Contract, the related Receivable and Related
Security are being released from the lien of this Indenture pursuant to (i) or
(iii) above, (D) certifying that the amount deposited in the Collection Account
equals (x) the Purchase Price of the Receivable related to such Contract, in the
event a Contract, the related Receivable and Related Security are being released
from the lien of this Indenture pursuant to (i) above or (y) the entire amount
set forth in Section 3.10(b) of the Servicing Agreement with respect to such
Contract, the related Receivable and Related Security in the event of a release
from the lien of this Indenture pursuant to (iii) above and (E) if Releasable
Receivables are to be released, that the Notes of each Class are being paid down
to their respective Targeted Credit Enhancement Levels (measured on a pro forma
basis after giving effect to such release) and the amount in the Reserve Account
is greater than or equal to the Reserve Account Required Balance; provided,
however, that upon the termination of a Contract, any residual proceeds from the
Related Security shall be placed in the Collection Account prior to the Trustee
or the Issuer releasing the Related Security from the security interest granted
to the Trustee by the Issuer pursuant to this Indenture or to the Issuer by
Trendwest pursuant to the Receivables Purchase Agreement.
(b) Upon satisfaction of the conditions specified in subsection (a)
above or upon the satisfaction of the conditions in Section 4.03(e) or the
remittance of the Purchase Price by the Issuer pursuant to Section 4.03(d) or
Section 4.03(f) hereof and Section 3.04 of the Receivables Purchase Agreement
with respect to a Contract, the Trustee shall release from the lien of this
Indenture the Contract, the related Receivable and Related Security described in
the Issuer's request for release and shall deliver, or instruct the Custodian to
deliver, to or upon the order of the Issuer such Contract and the related
Custodian File.
Section 4.05. Trust Estate. When required by the provisions of Articles
Four, Six and Twelve hereof, the Trustee shall execute instruments to release
property from the lien of this Indenture, or convey the Trustee's interest in
the same, in a manner and under circumstances which are not inconsistent with
the provisions of this Indenture. No party relying upon an instrument executed
by the Trustee as provided in this Article Four shall be bound to ascertain the
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any monies.
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Section 4.06. Notice of Release. The Trustee shall be entitled to
receive at least 5 days' prior written notice of any action to be taken pursuant
to Section 4.04(a) hereof, accompanied by copies of any instruments involved.
Section 4.07. Opinions as to Trust Estate. On or before each
anniversary of the Closing Date, the Issuer shall furnish to the Trustee an
Opinion of Counsel with respect to each jurisdiction in which a UCC financing
statement has been filed against each of Trendwest, TW Holdings III, and the
Issuer either stating that, in the opinion of such counsel, such action has been
taken with respect to the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and with respect to the execution and filing of any UCC financing statements and
continuation statements as is necessary to maintain the first priority lien and
security interest created by this Indenture, and the security interest, if
applicable, created by the Receivables Purchase Agreement and reciting the
details of such action or stating that in the opinion of such counsel no such
action is necessary to maintain such lien and security interest. Such Opinion of
Counsel shall also describe the recording, filing, re-recording and refiling of
this Indenture, any indentures supplemental hereto and any other requisite
documents and the execution and filing of any UCC financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest of this Indenture and the security
interest, if applicable, created by the Receivables Purchase Agreement until the
next date a continuation statement must be filed to maintain the Trustee's
interest in the Collateral.
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01. Satisfaction and Discharge of Indenture. (a) Following
payment in full of (i) the Notes, (ii) the fees and charges of the Trustee and
(iii) all other obligations of the Issuer under this Indenture, and the release
by the Trustee of the Trust Estate in accordance with Section 5.01(b) hereof,
this Indenture shall be discharged.
(b) In connection with the discharge of this Indenture and the release
of the Trust Estate, the Trustee shall release from the lien of this Indenture
and shall deliver, or instruct the Custodian to deliver, to or upon the order of
the Issuer all property remaining in the Trust Estate and shall execute and
file, at the expense of the Issuer, UCC financing statements evidencing such
discharge and release.
ARTICLE SIX
DEFAULTS AND REMEDIES
Section 6.01. Events of Default. "Event of Default" wherever used
herein means any one of the following events:
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(1) failure to make any payment of interest as required under this
Indenture which failure remains uncured for one Business Day after the same
becomes due and payable; or
(2) failure to make any payment of principal as required under this
Indenture which failure remains uncured for one Business Day after the same
becomes due and payable; or
(3) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture, the Note Purchase Agreement, the
Receivables Purchase Agreement, the Custodian Agreement or the Servicing
Agreement (other than a covenant or warranty default, the observance or
performance of which is elsewhere in this Section 6.01 specifically dealt with),
or any representation or warranty of the Issuer made in this Indenture, the Note
Purchase Agreement, the Receivables Purchase Agreement, the Custodian Agreement,
the Servicing Agreement or in any certificate or other writing delivered
pursuant hereto or thereto or in connection herewith or therewith proving to
have been incorrect in any material respect as of the time when the same shall
have been made and such default shall continue or not be cured, or the
circumstance or condition in respect of which such representation or warranty
was incorrect shall not have been eliminated or otherwise cured, for a period of
30 days (except for defaults relating to Sections 4.03 and 11.02(a), (b), (i),
(j), (l), (q) and (s) hereof, which shall have no grace period) from the earlier
of the Issuer obtaining actual knowledge of, or receiving from the Trustee or
any Holder notice of, such default or incorrect representation or warranty; or
(4) the Issuer becomes subject to registration as an "investment
company" under the Investment Company Act of 1940, as amended; or
(5) the filing of a petition or the entry of a decree or order for
relief by a court having jurisdiction in the premises in respect of the Issuer
under the Federal Bankruptcy Code or any other applicable federal or State
bankruptcy, insolvency, reorganization, liquidation or other similar law now or
hereafter in effect or any arrangement with creditors or appointing a receiver,
liquidator, assignee, trustee, or sequestrator (or other similar official) for
the Issuer or for any substantial part of its property in an involuntary case,
or ordering the winding up or liquidation of the Issuer's affairs, and the
continuance of any such petition undismissed or of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
(6) the institution by the Issuer of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by the Issuer to the institution of
bankruptcy or insolvency proceedings against the Issuer, or the filing by the
Issuer of a petition or answer or consent seeking reorganization or relief under
the Federal Bankruptcy Code or any other applicable federal or State bankruptcy,
insolvency, reorganization, liquidation or other similar law now or hereafter in
effect, or the consent by the Issuer to the filing of any such petition or to
the appointment of or possession by a receiver, liquidator, assignee, custodian,
trustee or sequestrator (or other similar official) of the Issuer or of any
substantial part of the Issuer's property, or the making by the Issuer of any
assignment for the benefit of creditors, or the admission by either in writing
of its inability, or the failure by it generally, to pay its debts as they
become due, or the taking of corporate action by the Issuer in furtherance of
any such action; or
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(7) (i) the impairment of the validity of any security interest of the
Trustee in the Trust Estate, except as expressly permitted, or (ii) creation of
any encumbrance not otherwise permitted which is not stayed or released within
10 days of the Issuer having knowledge of its creation; or
(8) a default in the observance or performance by Trendwest of its
repurchase obligations under Section 3.03 of the Receivables Purchase Agreement.
Section 6.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default with respect to the Notes Outstanding occurs and is continuing,
then Holders of not less than 66-2/3 % in aggregate principal amount of the
Outstanding Notes of the Controlling Class may declare, by notice in writing to
the Trustee and the Issuer, or may direct the Trustee to declare, by notice in
writing to the Issuer, the principal of all the Notes to be immediately due and
payable, and upon any such declaration, such principal shall become immediately
due and payable without any presentment, demand, protest or other notice of any
kind (except such notices as shall be expressly required by the provisions of
this Indenture), all of which are hereby expressly waived; provided, however,
that if an Event of Default under paragraph (5) or (6) of Section 6.01 hereof
occurs with respect to the Issuer, the Notes shall automatically become due and
payable without any declaration notice to the Issuer or the Trustee. The Trustee
shall send a copy of any such notice to the Rating Agencies.
At any time after such a declaration of acceleration has been made, or
after such acceleration has automatically become effective, but before any Sale
of the Trust Estate has been made or a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of not less than 66-2/3% in aggregate principal amount of
the Outstanding Notes of the Controlling Class, by written notice to the Issuer
and the Trustee, may rescind and annul such declaration or automatic
acceleration and its consequences (except that in the case of a payment default
on the Notes, the consent of all the Noteholders shall be required to rescind
and annul such declaration or automatic acceleration and its consequences) if:
(1) the Issuer has paid or deposited with the Trustee a sum sufficient
to pay
(A) all overdue installments of interest on all Notes,
(B) the principal of any Notes which has become due otherwise than by
such declaration of acceleration or automatic acceleration and interest thereon
at the applicable Note Rate borne by such Notes from the time such principal
first became due until the date when paid, and
(C) all sums paid or advanced, together with interest thereon, by the
Trustee or any Noteholder hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee and the Noteholders, their agents and
counsel incurred in connection with the enforcement of this Indenture to the
date of such payment or deposit; and
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(2) all Events of Default, other than the nonpayment of the principal
of the Notes which have become due solely by such declaration of acceleration or
by automatic acceleration, have been cured or waived as provided in Section 6.15
hereof.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Section 6.03. Collection of Indebtedness and Suits for Enforcement by
Trustee. The Issuer covenants that if an Event of Default shall occur and be
continuing and the Notes have been declared, or automatically become, due and
payable and such declaration or automatic acceleration has not been rescinded
and annulled, the Issuer will, upon demand of the Trustee, pay to the Trustee,
for the benefit of the Holders of the Notes, the whole amount then due and
payable on the Notes for principal and interest, with interest upon the overdue
principal and overdue interest at the applicable Note Rate and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Issuer fails to pay such amount forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute
Proceedings for the collection of the sums so due and unpaid, and prosecute such
Proceeding to judgment or final decree, and enforce the same against the Issuer
and collect the monies adjudged or decreed to be payable in the manner provided
by law out of the property of the Issuer, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
sole discretion proceed to protect and enforce its rights and the rights of the
Noteholders by such appropriate Proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 6.04. Remedies. If an Event of Default shall have occurred and
be continuing, the Trustee may do one or more of the following:
(a) institute Proceedings for the collection of all amounts then due
and payable on the Notes or under this Indenture, whether by declaration,
automatic acceleration or otherwise, enforce any judgment obtained, and collect
from the Issuer the monies adjudged due;
(b) take possession of and sell the Trust Estate securing the Notes or
any portion thereof or rights or interest therein, at one or more Sales called
and conducted in any manner permitted by law;
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(c) institute any Proceedings from time to time for the complete or
partial foreclosure of the lien created by this Indenture with respect to the
Trust Estate securing the Notes;
(d) during the continuance of a default under a Contract, exercise any
of the rights of the lender under such Contract; and
(e) exercise any remedies of a secured party under the UCC or any
applicable law and take any other appropriate action to protect and enforce the
rights and remedies of the Trustee or the Holders of the Notes hereunder;
provided, however, that without the consent of the Holders of not less than all
of the Outstanding Notes, the Trustee may not sell or otherwise liquidate any
portion of the Trust Estate unless the proceeds of such Sale or liquidation
distributable to the Noteholders are sufficient to discharge in full the amounts
then due and unpaid upon the Notes for principal and interest, including
interest upon the overdue principal at the applicable Note Rate and Overdue
Interest.
Section 6.05. Optional Preservation of Trust Estate. If (i) an Event of
Default shall have occurred and be continuing with respect to the Notes and (ii)
no Notes have been declared, or have automatically become, due and payable, or
such declaration or automatic acceleration and its consequences have been
annulled and rescinded, the Trustee, upon request from the Holders of a majority
in principal amount of the Outstanding Notes, may elect, by giving written
notice of such election to the Issuer, to take possession of and retain the
Trust Estate securing the Notes intact, collect or cause the collection of the
proceeds thereof and make and apply all payments and deposits and maintain all
accounts in respect of such Notes in accordance with the provisions of Article
Twelve of this Indenture. If the Trustee is unable to or is stayed from giving
such notice to the Issuer for any reason whatsoever, such election shall be
effective as of the time of such determination or request, as the case may be,
notwithstanding any failure to give such notice, and the Trustee shall give such
notice upon the removal or cure of such inability or stay (but shall have no
obligation to effect such removal or cure). Any such election may be rescinded
with respect to any portion of the Trust Estate securing the Notes remaining at
the time of such rescission by written notice to the Trustee and the Issuer from
the Holders of a majority in principal amount of the Notes Outstanding of the
Controlling Class.
Section 6.06. Trustee May File Proofs of Claim. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other Proceeding relating to the Issuer
or any other obligor upon any of the Notes or the property of the Issuer or of
such other obligor or their creditors, the Trustee (irrespective of whether the
principal of the Notes shall then be due and payable as therein expressed or by
declaration, automatic acceleration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Issuer for the payment of overdue
principal or interest) shall be entitled and empowered to intervene in such
Proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the Notes issued
hereunder and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and any other amounts due the Trustee under
Section 7.07 hereof) and of the Noteholders allowed in such Proceeding, and
36
(ii) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such Proceeding is hereby authorized by each Noteholder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Noteholders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Noteholder in any such Proceeding.
Section 6.07. Trustee May Enforce Claims Without Possession of Notes.
(a) In all Proceedings brought by the Trustee (and also any Proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all of the
Noteholders, and it shall not be necessary to make any Noteholder a party to any
such Proceedings.
(b) All rights of actions and claims under this Indenture or the Notes
may be prosecuted and enforced by the Trustee without the possession of any of
the Notes or the production thereof in any Proceeding relating thereto, and any
such Proceedings instituted by the Trustee shall be brought in its own name as
Trustee of an express trust, and any recovery whether by judgment, settlement or
otherwise shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the benefit of the Holders of the Notes and shall be distributed as set
forth in Section 6.08 hereof.
Section 6.08. Application of Money Collected. If the Notes have been
declared, have automatically become, or otherwise become due and payable
following an Event of Default and such declaration or automatic acceleration has
not been rescinded or annulled, any money collected by the Trustee with respect
to the Notes pursuant to this Article Six or otherwise and any other money that
may be held thereafter by the Trustee as security for the Notes, including
without limitation the amounts in the Reserve Account, shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal or interest, without
presentation of any Notes:
FIRST: To the payment to the Trustee of the Trustee Fee, its expenses
then due, any Unreimbursed Servicing Transfer Payments, its costs incurred in
connection with enforcing the remedies provided for in this Article Six and any
other amounts owing to the Trustee (in any capacity) under any Transaction
Document;
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SECOND: To the payment of the Custodian Fee, if not paid by the
Servicer;
THIRD: To the payment of all amounts due the Servicer pursuant to
Section 3.09 of the Servicing Agreement and, but for the acceleration of the
Notes, Section 12.02 hereof;
FOURTH: To the payment of the amounts then due and unpaid upon the
Class A Notes for Overdue Interest (to the extent such interest has been
collected by the Trustee or a sum sufficient therefor has been so collected and
payment thereof is legally enforceable at the respective rate or rates
prescribed therefor in the Class A Notes) to the Holders of the Class A Notes,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Class A Notes for interest, treating the two Classes of
Class A Notes as one Class; provided, however, if the amount available is
insufficient to pay in full the interest owed on the Class A Notes, the Holders
of such Class of Class A Notes shall receive the Interest Shortfall Payment for
such Class, on a pro rata basis within such Class;
FIFTH: To the payment of the amounts then due and unpaid upon the Class
B Notes for Overdue Interest (to the extent such interest has been collected by
the Trustee or a sum sufficient therefor has been so collected and payment
thereof is legally enforceable at the respective rate or rates prescribed
therefor in the Class B Notes) to the Holders of the Class B Notes, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Class B Notes for interest;
SIXTH: To the payment of the amounts then due and unpaid upon the Class
C Notes for Overdue Interest (to the extent such interest has been collected by
the Trustee or a sum sufficient therefor has been so collected and payment
thereof is legally enforceable at the respective rate or rates prescribed
therefor in the Class C Notes) to the Holders of the Class C Notes, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Class C Notes for interest;
SEVENTH: To the payment of the remaining outstanding principal balance
of the Class A Notes ratably without preference or priority of any kind,
treating the two Classes of Class A Notes as one Class;
EIGHTH: To the payment of the remaining outstanding principal balance
of the Class B Notes ratably without preference or priority of any kind;
NINTH: To the payment of the remaining outstanding principal balance of
the Class C Notes ratably without preference or priority of any kind; and
TENTH: To the payment of any surplus to or at the written direction of
the Issuer or any other person legally entitled thereto.
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Section 6.09. Limitation on Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
(2) the Holders of not less than 66-2/3% in principal amount of the
Outstanding Notes of the Controlling Class shall have made written request to
the Trustee to institute Proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 30 days after its receipt of such notice, request
and offer of security or indemnity has failed to institute any such Proceedings;
and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 30-day period by the Holders of not less than 66-2/3%
or more in principal amount of the Outstanding Notes of the Controlling Class;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes, or to obtain or to seek to obtain priority or preference over
any other Holders of Notes or to enforce any right under this Indenture, except
in the manner herein provided and for the equal and ratable benefit of all the
Holders of Notes.
Section 6.10. Unconditional Right of Noteholders to Receive Principal
and Interest. Notwithstanding any other provision in this Indenture, the
Noteholders shall have the right, which is absolute and unconditional, to
receive payment of the principal, interest, and premium, if any, on such Note as
such principal, interest, and premium, if any, becomes due and payable and to
institute any Proceeding for the enforcement of any such payment, and such right
shall not be impaired without the consent of such Noteholder.
Section 6.11. Restoration of Rights and Remedies. If the Trustee or any
Noteholder has instituted any Proceeding to enforce any right or remedy under
this Indenture and such Proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Noteholder,
then, and in every case, the Issuer, the Trustee and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Noteholders shall continue as though no such
Proceeding had been instituted.
Section 6.12. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Notes in the last paragraph of Section 3.06 hereof, no right or
remedy herein conferred upon or reserved to the Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
39
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 6.13. Delay or Omission; Not Waiver. No delay or omission of the
Trustee or of any Holder of any Note to exercise any right or remedy accruing
upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or any acquiescence therein. Every right and
remedy given by this Article Six or by law to the Trustee or to the Noteholders
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Noteholders, as the case may be.
Section 6.14. Control by Noteholders. The Holders of not less than
66-2/3% in principal amount of the Outstanding Notes of the Controlling Class,
shall have the right to direct the time, method and place of conducting any
Proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee; provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture including, without limitation, any provision hereof which
expressly provides for greater percentage of principal of Outstanding Notes;
(2) any direction to the Trustee by the Noteholders to undertake a
private Sale of the Trust Estate shall be by the Holders of not less than
66-2/3% in principal amount of Outstanding Notes of the Controlling Class,
unless the condition set forth in Section 6.18(b)(ii) hereof is met;
(3) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction; provided, however, that, subject
to Section 7.01 hereof, the Trustee need not take any action which a Responsible
Officer or Officers of the Trustee in good faith determines might involve it in
personal liability or be unjustly prejudicial to the Noteholders not consenting;
and
(4) the Trustee has been furnished reasonable indemnity against costs,
expenses and liabilities which it might incur in connection therewith as
provided in Section 7.01(f) hereof.
Section 6.15. Waiver of Past Defaults. The Holders of not less than
66-2/3% in principal amount of the Outstanding Notes of the Controlling Class
may on behalf of the Holders of all the Notes waive any past Default hereunder
and its consequences, except a Default:
(1) in the payment of the principal of, or premium, if any, or interest
on any Note, or a Default described in Sections 6.01(5) and (6) hereof, or
40
(2) in respect of a covenant or provision hereof which under Article
Nine hereof cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 6.16. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but notwithstanding such assessment, the provisions of this
Section 6.16 shall not apply to any suit instituted by the Trustee, or to any
suit instituted by any Noteholder or group of Noteholders, holding in the
aggregate more than 50% in principal amount of the Outstanding Notes of the
Controlling Class, or to any suit instituted by any Noteholder for the
enforcement of the payment of the principal of or interest on any Note on or
after the Stated Maturity provided that such suit is not deemed to be frivolous
under the applicable rules of civil procedure by such court.
Section 6.17. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not, at any time, insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
Section 6.18. Sale of Trust Estate. (a) The power to effect any sale (a
"Sale") of any portion of the Trust Estate pursuant to Section 6.04 hereof shall
not be exhausted by any one or more Sales as to any portion of the Trust Estate
remaining unsold, but shall continue unimpaired until the entire Trust Estate
securing the Notes shall have been sold or all amounts payable on the Notes and
under this Indenture with respect thereto shall have been paid. The Trustee may
from time to time postpone any Sale by public announcement made at the time and
place of such Sale.
(b) To the extent permitted by applicable law, the Trustee shall not,
in any private Sale, sell to a third party the Trust Estate, or any portion
thereof unless:
(i) the Holders of not less than all of the Outstanding Notes consent
to or direct the Trustee to make such Sale; or
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(ii) the proceeds of such Sale would not be less than the sum of all
amounts due to the Trustee hereunder and the entire unpaid principal amount of
the Notes and interest due or to become due thereon on the Payment Date next
succeeding such Sale.
(c) If the Trustee sells the Trust Estate in a public sale and the
proceeds of such sale will not be sufficient to pay the entire amount of
principal of and interest on the Notes, such sale must be consented to by the
Holders of not less than 66-2/3% of the principal amount of the Notes
Outstanding of each Class of Notes; provided, however, that if the principal
amount of the Notes Outstanding exceeds the Aggregate Collateral Value, then no
consent shall be required from the Holders of any Class of Notes whose Notes are
not supported by an amount of Collateral Value that equals or exceeds the
principal amount of the Notes of such Class (assuming that the Aggregate
Collateral Value first supports the Class A-1 Notes, then the Class A-2 Notes,
then the Class B Notes, and then the Class C Notes).
(d) The Trustee or the Noteholders may bid for and acquire any portion
of the Trust Estate in connection with a public Sale thereof, and in lieu of
paying cash therefor, any Noteholder may make settlement for the purchase price
by crediting against amounts owing on the Notes of such Holder or other amounts
owing to such Holder secured by this Indenture, that portion of the net proceeds
of such Sale to which such Holder would be entitled, after deducting the
reasonable costs, charges and expenses incurred by the Trustee or the
Noteholders in connection with such Sale. The Notes need not be produced in
order to complete any such Sale, or in order for the net proceeds of such Sale
to be credited against the Notes. The Trustee or the Noteholders may hold,
lease, operate, manage or otherwise deal with any property so acquired in any
manner permitted by law.
(e) The Trustee shall execute and deliver an appropriate instrument of
conveyance transferring its interest in any portion of the Trust Estate in
connection with a Sale thereof. In addition, the Trustee is hereby irrevocably
appointed the agent and attorney-in-fact of the Issuer to transfer and convey
its interest in any portion of the Trust Estate in connection with a Sale
thereof, and to take all action necessary to effect such Sale. No purchaser or
transferee at such a sale shall be bound to ascertain the Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any monies.
(f) The method, manner, time, place and terms of any Sale of all or any
portion of the Trust Estate shall be commercially reasonable.
Section 6.19. Action on Notes. The Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Trustee or the Noteholders shall be impaired by the recovery of any judgment
by the Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate or upon any of the assets of the
Issuer.
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ARTICLE SEVEN
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default known to the Trustee as provided in
subsection (e) below:
(i) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith or negligence on its part, the Trustee
may conclusively rely as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions, which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same and to determine whether or not they substantially
conform to the requirements of this Indenture.
(b) In case an Event of Default known to the Trustee as provided in
subsection (e) below has occurred and is continuing, the Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and shall use the
same degree of care and skill in its exercise, as a reasonable person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct or bad faith, except that:
(i) this subsection (c) shall not be construed to limit the effect of
subsection (a) of this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer of the Trustee, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts to such
judgment;
(iii) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Holders of a majority (or such other percentage as may be required by the
terms hereof) in principal amount of the Outstanding Notes in accordance with
Section 6.14 hereof relating to the time, method and place of conducting any
Proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture, the Receivables Purchase
Agreement or the Servicing Agreement; and
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(iv) no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 7.01.
(e) For all purposes under this Indenture, the Trustee shall not be
deemed to have notice or knowledge of any Default or Event of Default described
in Section 6.01(3), 6.01(4), 6.01(5), 6.01(6), 6.01(7) or 6.01(8) hereof or the
events specified in Section 4.03(a) hereof unless a Responsible Officer has
actual knowledge thereof or unless written notice of any event which is in fact
such an Event of Default or Default is received by the Trustee at the Corporate
Trust Office, and such notice references the Notes generally, the Issuer, the
Trust Estate or this Indenture.
(f) The Trustee shall be under no obligation to institute any suit, or
to take any remedial action under this Indenture, or to enter any appearance or
in any way defend in any suit in which it may be made defendant, or to take any
steps in the execution of the trusts hereby created or in the enforcement of any
rights and powers hereunder until it shall be indemnified to its reasonable
satisfaction against any and all costs and expenses, outlays and counsel fees
and other reasonable disbursements and against all liability, except liability
resulting from the Trustee's negligence or willful misconduct as adjudicated, in
connection with any action so taken.
(g) Notwithstanding any extinguishment of all right, title and interest
of the Issuer in and to the Trust Estate following an Event of Default and a
consequent declaration of acceleration or automatic acceleration of the maturity
of the Notes, whether such extinguishment occurs through a Sale of the Trust
Estate to another person, the acquisition of the Trust Estate by the Trustee
with respect to the Trust Estate (or the proceeds thereof) and the Noteholders
and the rights of the Noteholders shall continue to be governed by the terms of
this Indenture.
(h) The Trustee shall provide the reports and accountings as required
pursuant to Section 12.06 hereof.
(i) The duties and obligations of the Trustee under this Indenture and
the other Transaction Documents to which it is a party shall be determined
solely by the express provisions of this Indenture and such other Transaction
Documents. The Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in the Transaction
Documents, no implied covenant shall be read into the Transaction Documents (and
the Trustee shall not be required to take any discretionary action except as
expressly set forth herein) and, in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely on the truth of the statements and
corrections of the opinions furnished to the Trustee.
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Section 7.02. Notice of Default. Promptly after the occurrence of any
Default known to the Trustee (within the meaning of Section 7.01(e) hereof)
which is continuing, the Trustee shall transmit by mail to all Holders of Notes,
as their names and addresses appear on the Note Register, notice of such Default
hereunder known to the Trustee.
Section 7.03. Certain Rights of Trustee. Except as otherwise provided
in Section 7.01,
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, note or other
obligation, paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request or Issuer Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel and the written advice of such
counsel selected by the Trustee with due care or any Opinion of Counsel shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Noteholders pursuant to this Indenture, unless such Noteholders shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Issuer, upon
reasonable notice and at reasonable times personally or by agent or attorney;
and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney or the supervision of those
agents or attorneys, appointed with due care by it hereunder.
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Section 7.04. Not Responsible for Recitals or Issuance of Notes. (a)
The recitals contained herein and in the Notes, except the certificates of
authentication on the Notes, shall be taken as the statements of the Issuer, and
the Trustee assumes no responsibility for their correctness. The Trustee makes
no representations as to the validity or condition of the Trust Estate or any
part thereof, or as to the title of the Issuer thereto or as to the security
afforded thereby or hereby, or as to the validity or genuineness of any
securities at any time pledged and deposited with the Trustee hereunder or as to
the validity or sufficiency of this Indenture or of the Notes. The Trustee shall
not be accountable for the use or application by the Issuer of Notes or the
proceeds thereof or of any money paid to the Issuer or upon Issuer Order under
any provisions hereof.
(b) Except as otherwise expressly provided herein and without limiting
the generality of the foregoing, the Trustee shall have no responsibility or
liability for or with respect to the existence or validity of any of the Related
Security or Contracts, the perfection of any security interest (whether as of
the date hereof or at any future time), the maintenance of or the taking of any
action to maintain such perfection, the validity of the assignment of any
portion of the Trust Estate to the Trustee or of any intervening assignment, the
review of any Contract (it being understood that the Trustee has not reviewed
and does not intend to review the substance or form of any such Contract), the
performance or enforcement of any Contract, the compliance by the Issuer,
Trendwest, TW Holdings III or the Servicer with any covenant or the breach by
the Issuer, Trendwest, TW Holdings III or the Servicer of any warranty or
representation made hereunder or in any related document or the accuracy of any
such warranty or representation, any investment of monies in the Collection
Account, the Prefunding Account, the Capitalized Interest Account or the Reserve
Account or any loss resulting therefrom, the acts or omissions of the Issuer,
Trendwest, TW Holdings III, the Servicer or any Obligor, any action of the
Servicer taken in the name of the Trustee, or the validity of the Servicing
Agreement or the Receivables Purchase Agreement.
(c) The Trustee shall not have any obligation or liability under any
Contract by reason of or arising out of this Indenture or the granting of a
security interest in such Contract hereunder or the receipt by the Trustee of
any payment relating to the Trust Estate pursuant hereto, nor shall the Trustee
be required or obligated in any manner to perform or fulfill any of the
obligations of the Seller under or pursuant to any Contract, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it, or the sufficiency of any performance by any party,
under any Contract.
Section 7.05. May Hold Notes. The Trustee, the Servicer, any Paying
Agent, the Note Registrar, any Authenticating Agent or any other agent of the
Issuer, in its individual or any other capacity, may become the owner or pledgee
of any Note, and if operative, may otherwise deal with the Issuer with the same
rights it would have if it were not Trustee, Servicer, Paying Agent, Note
Registrar, Authenticating Agent or such other agent.
Section 7.06. Money Held in Trust. Money and investments held in trust
by the Trustee or any Paying Agent hereunder shall be held in one or more trust
accounts hereunder but need not be segregated from other funds except to the
extent required herein or required by law. The Trustee or any Paying Agent shall
be under no liability for interest on any money received by it hereunder except
as otherwise agreed with the Issuer or otherwise specifically provided herein.
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Section 7.07. Compensation and Reimbursement. The Issuer agrees:
(i) to pay the Trustee the Trustee Fee and any investment income earned
by the Trustee pursuant to Section 12.02 (net of losses for which the Trustee is
liable pursuant to Section 12.02)(which compensation shall not otherwise be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);
(ii) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all Unreimbursed Servicing Transfer Expenses,
reasonable out-of-pocket expenses, disbursements and advances incurred or made
by the Trustee in accordance with any provision of this Indenture or the
Servicing Agreement (including the reasonable compensation and the expenses and
disbursements of the Trustee's agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, bad faith or
willful misconduct;
(iii) to indemnify and hold harmless the Trust Estate and the Trustee
from and against any loss, liability, expense, damage or injury sustained or
suffered pursuant to this Indenture by reason of any acts, omissions or alleged
acts or omissions arising out of activities of the Trust Estate or the Trustee
(including without limitation any violation of any applicable laws by the Issuer
as a result of the transactions contemplated by this Indenture), including, but
not limited to, any judgment, award, settlement, reasonable attorneys' fees and
other expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim; provided that the Issuer shall not
indemnify the Trustee if such loss, liability, expense, damage or injury is due
to the Trustee's negligence or willful misconduct, willful misfeasance or bad
faith in the performance of duties. The indemnification of the Trustee provided
by this Section 7.07 shall be payable to the Trustee out of funds on deposit in
the Collection Account pursuant to subsection 12.02(d)(viii) or 12.02(e)(xvi),
as applicable; the Trustee shall have no ability to sell or otherwise liquidate
the Contracts in the Trust Estate solely in order to obtain funds to finance
this indemnification obligation. The provisions of this indemnity shall run
directly to and be enforceable by an injured person subject to the limitations
hereof and this indemnification agreement shall survive the termination of this
Indenture; and
(iv) that if insufficient funds are available to pay any fees or
expenses owing to the Trustee, then such fees or expenses shall be deferred and
payable on the next Payment Date such funds are available.
Upon the occurrence of an Event of Default resulting in an acceleration
of maturity of the Notes that has not been rescinded and annulled, the Trustee
shall have, as security for the performance of the Issuer under this Section
7.07, a lien ranking senior to the lien of the Notes with respect to which any
claim of the Trustee under this Section 7.07 arose upon all property and funds
held or collected as part of the Trust Estate by the Trustee in its capacity as
such. The Trustee shall not institute any Proceeding seeking the enforcement of
such lien against any Trust Estate unless (i) such Proceeding is in connection
with a proceeding in accordance with Article Six hereof for enforcement of the
lien of this Indenture for the benefit of the Holders of the Notes secured by
47
such Trust Estate after the occurrence of an Event of Default (other than an
Event of Default due solely to a breach of this Section 7.07) and a resulting
declaration of acceleration or automatic acceleration of maturity of such Notes
that has not been rescinded and annulled, or (ii) such Proceeding does not
result in or cause a Sale or other disposition of such Trust Estate. All monies
so collected by the Trustee shall be applied in accordance with Section 6.08
hereof, and the Trustee shall receive amounts pursuant to Section 6.08 hereof
only to the extent that payment thereof will not result in a subsequent Event of
Default caused by such payments to the Trustee.
Section 7.08. Corporate Trustee Required; Eligibility. There shall at
all times be a trustee hereunder which shall be a corporation or association
organized and doing business under the laws of the United States of America or
of any State, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $100,000,000, or be a member
of a consolidated bank holding company with a combined capital and surplus of at
least $100,000,000, subject to supervision or examination by Federal or state
authority and having an office within the United States of America, and, except
with respect to the initial Trustee hereunder, which shall have a commercial
paper or other short-term rating of the highest short term rating categories by
Moody's and Fitch (if rated by Fitch) or otherwise acceptable to the Holders of
not less than 66-2/3% in principal amount of the Outstanding Notes of the
Controlling Class. If such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 7.08, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 7.08, it shall resign immediately in the
manner and with the effect hereinafter specified in this Article Seven.
Section 7.09. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article Seven shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10 hereof.
(b) The Trustee may resign at any time by giving 60 days' written
notice thereof to the Issuer and to each Noteholder. If an instrument of
acceptance by a successor Trustee shall not have been delivered to the Trustee
within 60 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, appoint a successor Trustee.
(c) The Trustee may be removed with or without cause by the Act of the
Holders of not less than 66-2/3% in principal amount of the Outstanding Notes of
the Controlling Class by notice to the Trustee at any time.
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(d) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause
with respect to the Notes, the Holders of not less than 66-2/3% in principal
amount of the Outstanding Notes of the Controlling Class or the Issuer, with the
written consent of Holders of not less than 66-2/3% in principal amount of
Outstanding Notes of the Controlling Class, may appoint a successor Trustee.
(e) The Issuer shall give notice to the Servicer, the Custodian and the
Noteholders in the manner provided in Section 13.03 hereof of each resignation
and each removal of the Trustee and each appointment of a successor Trustee with
respect to the Notes. Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the
Issuer, each Noteholder and the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee but, on request of the Issuer or the successor
Trustee, such retiring Trustee shall, upon payment of its reasonable
out-of-pocket costs and expenses, execute and deliver an instrument transferring
to such successor Trustee all the rights, powers and trusts of the retiring
Trustee, and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder, subject
nevertheless to its lien, if any, provided for in Section 7.07 hereof. Upon
request of any such successor Trustee, the Issuer shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be eligible under this Article
Seven.
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any Person into which the Trustee may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such Person shall be otherwise qualified and eligible under this
Article Seven, without the execution or filing of any paper or any further act
on the part of any of the parties hereto. In case any Notes have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes.
Section 7.12. Co-Trustees and Separate Trustees. At any time or times,
for the purpose of meeting the legal requirements of any jurisdiction in which
any of the Trust Estate may at the time be located, the Issuer and the Trustee
shall have power to appoint, and, upon the written request of the Trustee, or of
the Holders of Notes representing at least 25% of the aggregate principal amount
of the Outstanding Notes, the Issuer shall for such purpose join with the
Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to appoint, one or more Persons approved by the
49
Trustee, either to act as co-Trustee, jointly with the Trustee of all or any
part of such Trust Estate, or to act as separate Trustee of any such property,
in either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or persons in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section 7.12. If the Issuer does not join in such
appointment within 15 days after the receipt by it of a request so to do, or in
case an Event of Default has occurred and is continuing, the Trustee alone shall
have power to make such appointment.
Should any written instrument from the Issuer be reasonably required by
any co-Trustee or separate Trustee so appointed for more fully confirming to
such co-Trustee or separate Trustee such property, title, right or power, any
and all such instruments shall, on request, be executed, acknowledged and
delivered by the Issuer.
Every co-Trustee or separate Trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms:
(i) the Notes shall be authenticated and delivered by, and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised solely by
the Trustee;
(ii) the rights, powers, duties and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by such appointment
shall be conferred or imposed upon and exercised or performed by the Trustee or
by the Trustee and such co-Trustee or separate Trustee jointly, as shall be
provided in the instrument appointing such co-Trustee or separate Trustee,
except to the extent that under any law of any jurisdiction in which any
particular act is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-Trustee or separate
Trustee;
(iii) the Trustee at any time, by an instrument in writing executed by
it, with the concurrence of the Issuer evidenced by a Board Resolution, may
accept the resignation of or remove any co-Trustee or separate Trustee,
appointed under this Section 7.12, and, in case an Event of Default has occurred
and is continuing, the Trustee shall have power to accept the resignation of, or
remove, any such co-Trustee or separate Trustee without the concurrence of the
Issuer. Upon the written request of the Trustee, the Issuer shall join with the
Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to effectuate such resignation or removal. A
successor to any co-Trustee or separate Trustee that has so resigned or been
removed may be appointed in the manner provided in this Section 7.12;
(iv) no co-Trustee or separate Trustee hereunder shall be personally
liable by reason of any act or omission of the Trustee or any other such Trustee
hereunder nor shall the Trustee be liable by reason of any act or omission of
any co-Trustee or separate Trustee selected by the Trustee with due care or
appointed in accordance with directions to the Trustee pursuant to Section 6.14
hereof; and
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(v) any Act of Noteholders delivered to the Trustee shall be deemed to
have been delivered to each such co-Trustee and separate Trustee.
Section 7.13. Rights with Respect to the Servicer. The Trustee's rights
and obligations with respect to the Servicer shall be governed by the Servicing
Agreement.
Section 7.14. Appointment of Authenticating Agent. The Trustee may
appoint an Authenticating Agent or Agents with respect to the Notes which shall
be authorized to act on behalf of the Trustee to authenticate Notes issued upon
original issue or upon exchange, registration of transfer or pursuant to Section
3.06 hereof, and Notes so authenticated shall be entitled to the benefits of
this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Notes by the Trustee or the
Trustee's certificate of authentication or the delivery of Notes to the Trustee
for authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent
and delivery of the Notes to the Authenticating Agent on behalf of the Trustee.
Each Authenticating Agent shall be acceptable to the Issuer and the Holders of a
majority in principal amount Outstanding of the Notes and shall at all times be
a corporation having a combined capital and surplus of not less than the
equivalent of $50,000,000 and subject to supervision or examination by Federal
or state authority or the equivalent foreign authority, in the case of an
Authenticating Agent who is not organized and doing business under the laws of
the United States of America, any state thereof or the District of Columbia. If
such Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section 7.14, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. If
at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section 7.14, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section 7.14.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of such Authenticating Agent, shall continue to be an
Authenticating Agent without the execution or filing of any paper or any further
act on the part of the Trustee or such Authenticating Agent; provided, such
corporation shall be otherwise eligible under this Section 7.14.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Issuer. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Issuer. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 7.14, the Trustee may appoint a successor
51
Authenticating Agent which shall be acceptable to the Issuer and shall mail
written notice of such appointment by first-class mail, postage prepaid, to all
Holders of Notes, if any, with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Note Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section 7.14.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 7.14, but the
Trustee shall not be entitled to be reimbursed for such payments.
If an appointment is made pursuant to this Section 7.14, the Notes may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
This is one of the Notes described in the within-mentioned Indenture.
[TRUSTEE]
By
As Authenticating Agent
By
Authorized Signatory
Section 7.15. Custodian to Hold Contracts. The Custodian, as agent
(solely for the purpose of perfecting the security interest of the Trustee in
the Contracts and the related Custodian Files) and bailee of the Trustee, shall
hold each Contract, together with any documents relating thereto that may from
time to time be delivered to the Custodian, until such time as such Contract is
released from the lien of this Indenture pursuant to the terms hereof. Within 45
days of the applicable Transfer Date, the Custodian will review each Custodian
File to determine whether or not such file is complete, and, if necessary, it
shall file an exception report with the Issuer, the Trustee and the Servicer
within such time period. If an exception is not cured within 75 days of the
applicable Transfer Date, the related Contract must be repurchased by Trendwest
within 30 days of the end of such 75-day period. The Trustee shall have no
responsibility or liability for the actions or inactions of the Custodian with
respect to such review.
The Trustee shall be under no duty or obligation to inspect, review or
examine the Contracts or the related Custodian Files for any purpose, including,
without limitation, to determine that the same are genuine, enforceable or
appropriate for the represented purpose or that they have actually been recorded
or that they are other than what they purport to be on their face.
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ARTICLE EIGHT
RESERVED
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
The Issuer, the Servicer and the Trustee, without the consent of the Holders of
any Notes, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes, provided that any such amendment, as evidenced by an
Opinion of Counsel, will not have a material adverse effect on Noteholders:
(1) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and confirm
unto the Trustee any property subject or required to be subjected to the lien of
this Indenture, or to subject to the lien of this Indenture additional property;
or
(2) to evidence the succession of another Person to the Issuer, and the
assumption by such successor of the covenants of the Issuer herein and in the
Notes contained, in accordance with Section 11.02(q) hereof; or
(3) to add to the covenants of the Issuer, for the benefit of the
Holders of all Notes, or to surrender any right or power herein conferred upon
the Issuer; or
(4) to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee for the benefit of the Noteholders; or
(5) to evidence the succession of the Trustee pursuant to Article Seven
hereof.
No supplemental indenture that permits the issuance of the Notes in
coupon form will be of any force and effect unless the Trustee and the Issuer
shall have received an Opinion of Counsel to the effect that such amendment will
not adversely affect the Issuer's ability to deduct the interest paid on the
Notes. The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into any such supplemental indenture that affects the
Trustee's own rights, duties, liabilities or immunities under this Indenture or
otherwise.
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Promptly after the execution by the Issuer, the Servicer and the
Trustee of any supplemental indenture pursuant to this Section 9.01, the Issuer
shall mail to each Noteholder and to the Rating Agencies a copy of such
supplemental indenture.
Section 9.02. Supplemental Indentures with Consent of Noteholders. With
the consent of the Holders of not less than 66-2/3% in aggregate principal
amount of the Outstanding Notes of the Controlling Class, by Act of said Holders
delivered to the Issuer and the Trustee, the Issuer, the Servicer and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of modifying in any manner the rights of
the Holders of the Notes under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holders of each
Outstanding Note affected thereby:
(1) change the Stated Maturity of any Note or the due date of any
installment of principal of, or any installment of interest on, any Note, or
reduce the principal amount thereof or the Note Rate or change any place of
payment where, or the coin or currency in which, any Note or the interest
thereon is payable, or impair the right to institute suit for the enforcement of
any such payment; or
(2) reduce the percentage in principal amount of the Outstanding Notes,
the consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any waiver of
compliance with certain provisions of this Indenture or Events of Default or
their consequences; or
(3) impair or adversely affect the Trust Estate except as otherwise
permitted herein; or
(4) modify or alter the provisions of the proviso to the definition of
the term "Outstanding"; or
(5) modify any of the provisions of this Section 9.02, except to
increase the percentage of Holders of the Outstanding Notes required for any
modification or waiver or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each
Outstanding Note affected thereby; or
(6) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Trust Estate or
terminate the lien of this Indenture on any property at any time subject hereto
or deprive the Holder of any Note of the security afforded by the lien of this
Indenture; or
(7) modify any of Sections 6.01(l) or (2), 6.02, 6.03, 6.08, 6.18,
12.02(d), 12.02(e) or 12.02(f) hereof.
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It shall be necessary for any Act of Noteholders under this Section
9.02 to approve the particular form of any proposed supplemental indenture.
Promptly after the execution by the Issuer, the Servicer and the
Trustee of any supplemental indenture pursuant to this Section 9.02, the Issuer
shall mail to the Holders of the Notes a copy of such supplemental indenture.
Notwithstanding anything to the contrary herein, no supplemental
Indenture relating to changing the Notes into notes in bearer form shall be
effective until an Opinion of Counsel from a nationally recognized law firm has
been delivered to the Trustee to the effect that such supplemental Indenture
will not subject the Issuer or the Holders of the Notes to any additional taxes
under U.S. federal law.
Section 9.03. Execution of Supplemental Indentures. In executing any
supplemental indenture permitted by this Article Nine or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive upon request, and (subject to Section 7.01 hereof) shall be fully
protected in relying in good faith upon, an Opinion of Counsel reasonably
acceptable to the Trustee stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own duties or immunities under this Indenture or
otherwise.
Section 9.04. Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture under this Article Nine, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Notes theretofore
or thereafter authenticated and delivered hereunder shall be bound thereby.
Section 9.05. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article Nine may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Issuer shall so determine, new Notes so modified
as to conform, in the opinion of the Trustee and the Issuer, to any such
supplemental indenture may be prepared and executed by the Issuer and
authenticated and delivered by the Trustee in exchange for Outstanding Notes.
ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01. Optional Purchase of the Collateral; Mandatory
Redemption. The Servicer shall have the option to purchase all of the Collateral
on any Payment Date (the "Redemption Date") after the Aggregate Collateral Value
is less than 10% of the Initial Aggregate Collateral Value for an amount equal
to the Aggregate Collateral Value of the Receivables at the Calculation Date,
plus any fees due hereunder if the amount of such purchase price is not enough
to pay such fees.
The Servicer shall set the Redemption Date, the Issuer shall set the
Redemption Record Date, and the Issuer shall give notice thereof to the Trustee
pursuant to Section 10.02 hereof.
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Installments of interest and principal due on or prior to a Redemption
Date shall continue to be payable to the Holders of Notes called for redemption
as of the relevant Record Dates according to their terms and the provisions of
Section 3.07 hereof.
Section 10.02. Notice to Trustee. In the case of any purchase pursuant
to Section 10.01 hereof, the Servicer shall, at least 15 days prior to the
Redemption Date, notify the Trustee of such Redemption Date.
Section 10.03. Notice of Redemption. Upon receipt of such notice set
forth in Section 10.02 above, the Trustee shall provide notice of redemption
pursuant to Section 10.01 hereof by first-class mail, postage prepaid, mailed no
later than five Business Days following the date on which such notice was
received, to each Holder of Notes whose Notes are to be redeemed, at his address
in the Note Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price; and
(3) that on the Redemption Date, the Redemption Price will become due
and payable upon each such Note, and that interest thereon shall cease to accrue
on the Redemption Date if the Redemption Price is paid on such date.
Notice of redemption of Notes shall be given by the Trustee in the name
and at the expense of the Issuer. Failure to give notice of redemption, or any
defect therein, to any Holder of any Note selected for redemption shall not
impair or affect the validity of the redemption of any other Note.
Section 10.04. Deposit of the Redemption Price. On or before the
Business Day next preceding any Redemption Date, the Servicer shall deposit with
the Trustee or, if there is a Paying Agent, with the Paying Agent an amount of
monies sufficient to pay the Redemption Price of all Notes which are to be
redeemed on such Redemption Date plus any fees due hereunder if the amount of
such deposit net of the Redemption Price is not enough to pay such fees.
Section 10.05. Notes Payable on Redemption Date. Notice of redemption
having been given as provided in Section 10.03 hereof, the Notes shall, on the
Redemption Date, become due and payable at the Redemption Price and on such
Redemption Date (unless the Issuer shall default in the payment of the
Redemption Price) such Notes shall cease to bear interest. The Holders of such
Notes shall be paid the Redemption Price by the Paying Agent on behalf of the
Issuer; provided, however, that installments of principal and interest which are
due on or prior to the Redemption Date shall be payable to the Holders of such
Notes registered as such on the relevant Record Dates according to their terms
and the provisions of Section 3.07 hereof.
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If the Holders of any Note called for redemption shall not be so paid,
the principal and premium, if any, shall, until paid, bear interest from the
Redemption Date at the Note Rate.
ARTICLE ELEVEN
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 11.01. Representations and Warranties. The Issuer hereby makes
the following representations and warranties for the benefit of the Trustee and
the Noteholders on which the Trustee relies in accepting the Trust Estate in
trust and in authenticating the Notes. Such representations and warranties are
made as of each Transfer Date, but shall survive the transfer, grant and
assignment of the Trust Estate to the Trustee.
(a) Organization and Good Standing. The Issuer is a corporation duly
organized, validly existing and in good standing under the law of the State of
Delaware and each other State where the nature of its business requires it to
qualify, except to the extent that the failure to so qualify would not in the
aggregate materially adversely affect the ability of the Issuer to perform its
obligations under this Indenture, the Notes, the Servicing Agreement, the Note
Purchase Agreement, the Custodian Agreement or the Receivables Purchase
Agreement.
(b) Authorization. The Issuer has the power, authority and legal right
to execute, deliver and perform this Indenture, the Notes, the Receivables
Purchase Agreement, the Servicing Agreement, the Note Purchase Agreement and the
Custodian Agreement and the execution, delivery and performance of this
Indenture, the Notes, the Servicing Agreement, the Note Purchase Agreement, the
Custodian Agreement and the Receivables Purchase Agreement have been duly
authorized by the Issuer by all necessary action.
(c) Binding Obligation. This Indenture, the Notes, the Servicing
Agreement, the Note Purchase Agreement, the Custodian Agreement and the
Receivables Purchase Agreement have been duly executed and delivered by the
Issuer, and this Indenture, assuming due authorization, execution and delivery
by the Trustee and the Servicer, the Receivables Purchase Agreement, assuming
due authorization, execution and delivery by TW Holdings III and Trendwest, the
Servicing Agreement, assuming due authorization, execution and delivery by the
Servicer and the Trustee, the Note Purchase Agreement, assuming due
authorization, execution and delivery by the Initial Purchaser and Trendwest,
and the Custodian Agreement, assuming due authorization, execution and delivery
by the Trustee, the Custodian and the Servicer, each constitutes a legal, valid
and binding obligation of the Issuer, enforceable against the Issuer in
accordance with its terms except that (A) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
(whether statutory, regulatory or decisional) now or hereafter in effect
relating to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, whether a proceeding at law or in equity.
57
(d) No Violation. The consummation of the transactions contemplated by
the fulfillment of the terms of this Indenture, the Notes, the Servicing
Agreement, the Note Purchase Agreement, the Custodian Agreement and the
Receivables Purchase Agreement will not conflict with, result in any breach of
any of the terms and provisions of or constitute (with or without notice, lapse
of time or both) a default under the organizational documents or bylaws of the
Issuer, or any material indenture, agreement, mortgage, deed of trust or other
instrument to which the Issuer is a party or by which it is bound, or in the
creation or imposition of any Lien upon any of its properties pursuant to the
terms of such indenture, agreement, mortgage, deed of trust or other such
instrument, other than any Lien created or imposed pursuant to the terms of this
Indenture or the Receivables Purchase Agreement, or violate any law or, to the
best of the Issuer's knowledge, after due inquiry, any material order, rule or
regulation applicable to the Issuer of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Issuer or any of its properties.
(e) No Proceedings. There are no Proceedings or investigations to which
the Issuer, or any of the Issuer's Affiliates, is a party pending, or, to the
knowledge of Issuer, threatened, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality (A)
asserting the invalidity of this Indenture, the Servicing Agreement, the
Receivables Purchase Agreement, the Note Purchase Agreement, the Custodian
Agreement or the Notes, (B) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by the Receivables Purchase
Agreement, this Indenture, the Servicing Agreement, the Note Purchase Agreement,
the Custodian Agreement or the Notes or (C) seeking any determination or ruling
that would materially and adversely affect the performance by the Issuer of its
obligations under, or the validity or enforceability of, this Indenture, the
Servicing Agreement, the Receivables Purchase Agreement, the Note Purchase
Agreement, the Custodian Agreement or the Notes. There are no actions, suits or
Proceedings pending, or to the best of Issuer's knowledge, threatened, against
or affecting Issuer, or any of its properties, in or before any court,
arbitrator or other body. There are no Proceedings pending, or to the best of
Issuer's knowledge, threatened, against it or any of its or WorldMark's
properties, in or before any court, arbitrator or other body, that could be
reasonably expected to have a material adverse effect on WorldMark or the
Issuer's ability to perform its obligations under the Transaction Documents.
Issuer is not in default with respect to any order of any court, arbitrator or
governmental body.
(f) Approvals. All approvals, authorizations, consents, orders or other
actions of any Person, or of any court, governmental agency or body or official,
required in connection with the execution and delivery of this Indenture, the
Servicing Agreement, the Note Purchase Agreement, the Custodian Agreement or the
Receivables Purchase Agreement and with the valid and proper authorization,
issuance and sale of the Notes pursuant to this Indenture and the Note Purchase
Agreement (except approvals of State securities officials under Blue Sky laws),
have been or will be taken or obtained on or prior to the Closing Date.
(g) Name and Place of Business. The Issuer's legal name is as set forth
in this Indenture. The Issuer has not used or done business under any other name
in the previous five-year period. The Issuer's principal place of business and
chief executive office is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇ or at such other location where all action required by Section 11.02(f)
hereof shall have been taken place with respect to the Trust Estate. The Issuer
has not used any other address in the previous five-year period.
58
(h) Transfer and Asset Assignment. Upon the delivery to the Custodian
of the Contracts and the filing of the UCC financing statements described in
Sections 4.01(b)(vii) and 4.02(a) hereof, the Trustee for the benefit of the
Noteholders shall have a first priority perfected security interest in the
Receivables, the Contracts, and in the proceeds thereof, except for Liens
permitted under Section 11.02(a) and limited to the extent set forth in Section
9-315 of the UCC as in effect in the applicable jurisdiction. All filings
(including, without limitation, UCC filings) as are necessary in any
jurisdiction to perfect the interest of the Trustee in the Trust Estate (other
than the Vacation Credits), including the transfer of the Contracts and the
payments to become due thereunder, have been made.
(i) Stockholders of the Issuer. Trendwest is the sole stockholder of
the Issuer; all of the stock of the Issuer has been fully paid and is owned of
record, free and clear of all mortgages, assignments, pledges, security
interests, warrants, options and rights to purchase. The Issuer will not permit
any stockholder to transfer its stock, other than for estate planning purposes,
without the consent of the Holders of a majority in principal amount of
Outstanding Notes of the Controlling Class. The Issuer shall ensure that at all
times at least one of its directors is an independent director.
(j) Receivables Purchase Agreement. As of the Closing Date, the Issuer
has entered into the Receivables Purchase Agreement and the Asset Assignment
(and on each Subsequent Transfer Date will enter into a Subsequent Asset
Assignment) with TW Holdings III and Trendwest relating to its acquisition of
the Receivables related to the Contracts identified therein and a security
interest in the Related Security, and the representations and warranties made by
TW Holdings III and Trendwest relating to such Contracts, such Receivables as of
the related Transfer Date and such interests in the Related Security have been
(or will be) validly assigned to and are (or will be) for the benefit of the
Issuer, the Trustee and the Noteholders and such representations and warranties
are (or will be) true and correct in all material respects.
(k) Bulk Transfer Laws. The transfer, assignment and conveyance of the
Contracts and the related Receivables and the grant of a security interest in
the Related Security by TW Holdings III and Trendwest to the Issuer to the
Trustee pursuant to the Receivables Purchase Agreement or by the Issuer pursuant
to this Indenture is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
(l) Solvency. Neither on the date of the transactions contemplated by
the Transaction Documents or immediately before or after such transactions, nor
as a result of the transactions, will the Issuer:
(A) be insolvent such that the sum of its debts is greater than all of
its respective property, at a fair valuation;
(B) be engaged in, or about to engage in, business or a transaction for
which any property remaining with the Issuer will be an unreasonably small
capital or the remaining assets of the Issuer will be unreasonably small in
relation to its respective business or the transaction; and
59
(C) have intended to incur, or believed it would incur, debts that
would be beyond its respective ability to pay as such debts mature or become
due. The Issuer's assets and cash flow enable it to meet its present obligations
in the ordinary course of business as they become due.
(m) Tax Returns. All tax returns or extensions required to be filed by
the Issuer in any jurisdiction have in fact been filed, and all taxes,
assessments, fees and other governmental charges upon the Issuer, or upon any of
the respective properties, income or franchises shown to be due and payable on
such returns have been, or will be, paid. To the best of the Issuer's knowledge,
all such tax returns are true and correct and the Issuer has no knowledge of any
proposed additional tax assessment against it in any material amount nor of any
basis therefor. The provisions for taxes on the books of the Issuer are in
accordance with generally accepted accounting principles.
(n) Tax Reporting. The Issuer will treat the acquisition of the
Contracts, Mortgage Loans and the related Receivables and the security interest
in the Related Security as a sale to the Issuer for federal, State and local
income tax reporting and accounting purposes.
(o) Subsidiaries. The Issuer has no subsidiaries.
(p) Pension Plans. Each pension plan or profit sharing plan to which
the Issuer is a party has been fully funded in accordance with the obligations
of the Issuer set forth in such plan.
(q) Constituent Documents. The Issuer will not amend its Certificate of
Incorporation or its By-laws without the consent of the Trustee and the Holders
of a majority in principal amount of the Outstanding Notes of the Controlling
Class.
(r) Private Offering by Issuer. Assuming that the Notes are offered and
sold in the manner contemplated in the Note Purchase Agreement and in the
Private Placement Memorandum and assuming that the representations made in the
representation letters of the purchasers of the Notes are true and correct, the
Notes are not required to be registered under Section 5 of the Securities Act in
connection with the offer, issuance, sale and delivery thereof as contemplated
by the Private Placement Memorandum and the Note Purchase Agreement, and neither
the Issuer nor any agent acting on its behalf, has taken or will take any action
which would subject the offer, issuance, sale or delivery of the Notes to the
provisions of Section 5 of the Securities Act or to the registration provisions
of any state securities laws of any applicable jurisdiction.
(s) No Untrue Statements of Material Fact. The information furnished or
caused to be furnished by the Issuer contained in the Private Placement
Memorandum will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. Any materials concerning the Issuer provided by or on
behalf of the Issuer from time to time to holders of the Notes or to prospective
purchasers with respect to resales of the Notes pursuant to subsection (d)(4) of
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Rule 144A, when so provided, will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(t) Number of Vacation Credits. As of June 30, 2001, there were
1,022,193,000 existing Vacation Credits.
(u) Information Regarding Receivables. As of the Initial Cut-Off Date,
the information relating to the Receivables provided to the Initial Purchaser by
or on behalf of the Issuer was true and correct in all material respects.
(v) Liabilities of WorldMark. WorldMark: (i) has not voluntarily
incurred or at any time become voluntarily liable for any Indebtedness; (ii) has
not voluntarily allowed its property to become subject to any Liens, nor is any
of its property subject to any Liens, other than (A) utility or other easements
or licenses unrelated to any debt of WorldMark or (B) Liens that in do not
exceed, in aggregate, $100,000; and (iii) has not involuntarily incurred and is
not involuntarily liable for any debt, nor is any of its property involuntarily
subject to any Liens (other than utility or similar easements or licenses
unrelated to any debt of WorldMark) that individually or in the aggregate (with
respect to all such debt and the obligations secured by all such Liens) exceed
$1,000,000.
Section 11.02. Covenants. The Issuer hereby makes the following
covenants on which the Trustee relies in accepting the Trust Estate in trust and
in authenticating the Notes. Such covenants are made as of the Closing Date, but
shall survive the transfer, grant and assignment of the Trust Estate to the
Trustee.
(a) No Liens. Except for the conveyances and grant of security
interests hereunder, the Issuer will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien on any
portion of the Trust Estate now existing or hereafter created, or any interest
therein prior to the termination of this Indenture pursuant to Section 5.01
hereof; the Issuer will notify the Trustee of the existence of any Lien on any
portion of the Trust Estate immediately upon discovery thereof; and the Issuer
shall defend the right, title and interest of the Trustee in, to and under the
Trust Estate now existing or hereafter created, against all claims of third
parties claiming through or under the Issuer; provided, however, that nothing in
this Section 11.02(a) shall prevent or be deemed to prohibit the Issuer from
suffering to exist upon any of the Trust Estate any Liens for municipal or other
local taxes and other governmental charges if such taxes or governmental charges
shall not at the time be due and payable or if the Issuer shall currently be
contesting the validity thereof in good faith by appropriate proceedings and
shall have set aside on its books adequate reserves with respect thereto.
(b) Delivery of Collections. The Issuer agrees to hold in trust and
promptly pay to the Servicer all amounts received by the Issuer in respect of
the Trust Estate (other than amounts distributed to or for the benefit of the
Issuer pursuant to Article Twelve hereof).
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(c) Obligations with Respect to Contracts. The Issuer will duly fulfill
all obligations on its part to be fulfilled under or in connection with each
Contract and will do nothing to impair the rights of the Trustee (for the
benefit of the Noteholders) in the Receivables, the Contracts, and any other
part of the Trust Estate. As long as there is no event of default under the
applicable Contract, the Issuer will not disturb the Obligor's use of the Club
in accordance with the rules of the Club.
(d) Compliance with Law. The Issuer will comply, in all material
respects, with all acts, rules, regulations, orders, decrees and directions of
any governmental authority applicable to the Loan Documents or any part thereof,
provided, however, that the Issuer may contest any act, regulation, order,
decree or direction in any reasonable manner which shall not materially and
adversely affect the rights of the Trustee (for the benefit of the Noteholders)
in the Receivables, the Contracts, and the Related Security. The Issuer will
comply, in all material respects, with all requirements of law applicable to the
Issuer.
(e) Preservation of Security Interest. The Issuer shall execute and
file such continuation statements and any other documents which may be required
by law or which the Trustee deems appropriate to fully preserve and protect the
interest of the Trustee (for the benefit of the Noteholders) in the Trust
Estate.
(f) Maintenance of Office, etc. The Issuer will not, without providing
30 days' prior written notice to the Trustee and each Noteholder and without
filing such amendments to any previously filed financing statements as the
Trustee may require or as may be required in order to maintain the Trustee's
perfected security interest in the Trust Estate (other than the Vacation
Credits), (a) change the location of its chief executive office or its state of
incorporation, or (b) change its name, identity or corporate structure in any
manner which would make any financing statement or continuation statement filed
by the Issuer in accordance with the Servicing Agreement or this Indenture
seriously misleading within the meaning of Sections 9-506 and 9-507 of any
applicable enactment of the UCC.
(g) Further Assurances. Except as set forth in Section 11.02(e), the
Issuer will make, execute or endorse, acknowledge, and file or deliver to the
Trustee from time to time such schedules, confirmatory assignments, conveyances,
transfer endorsements, powers of attorney, certificates, reports and other
assurances or instruments and take such other steps relating to the Trust
Estate, as the Trustee may request and reasonably require.
(h) Notice of Liens. The Issuer shall notify the Trustee and each
Noteholder promptly after becoming aware of any Lien on any Trust Estate, except
for any Liens for municipal or other local taxes if such taxes shall not at the
time be due or payable without penalty.
(i) Activities of the Issuer. The Issuer (a) shall engage in only (1)
the acquisition, ownership, selling and pledging of the Assets acquired by the
Issuer pursuant to the Receivables Purchase Agreement, and causing the issuance
of, receiving and selling the Notes issued pursuant to this Indenture and (2)
the exercise of any powers permitted to corporations under the General
Corporation Law of the State of Delaware which are incidental to the foregoing
or necessary to accomplish the foregoing; (b) will (1) maintain its books and
records separate from the books and records of any other entity, (2) maintain
separate bank accounts and no funds of the Issuer shall be commingled with funds
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of any other entity, (3) keep in full effect its existence, rights and
franchises as a corporation under the laws of the State of Delaware, and will
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Indenture, (4) conduct its
business from an office or office space separate from the office of TW Holdings
III and Trendwest and will maintain a telephone number separate from that of TW
Holdings III and Trendwest, and (5) operate its business generally so as not to
be substantively consolidated with any of its Affiliates; and (c) will not (1)
dissolve or liquidate in whole or in part, (2) own any subsidiary or lend or
advance any moneys to, or make an investment in, any Person, (3) make any
capital expenditures, (4)(A) commence any case, proceeding or other action under
any existing or future bankruptcy, insolvency or similar law seeking to have an
order for relief entered with respect to it, or seeking reorganization,
arrangement, adjustment, wind-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, (B) seek appointment of a receiver,
trustee, custodian or other similar official for it or any part of its assets,
(C) make a general assignment for the benefit of creditors (other than as
contemplated herein), or (D) take any action in furtherance of, or consenting or
acquiescing in, any of the foregoing, (5) guarantee (directly or indirectly),
endorse or otherwise become contingently liable (directly or indirectly) for the
obligations of, or own or purchase any stock, obligations or securities of or
any other interest in, or make any capital contribution to, any other Person,
(6) merge or consolidate with any other Person, except as permitted pursuant to
Section 11.02(q) hereof, (7) engage in any other action that adversely affects
whether the separate legal identity of the Issuer will be respected, including
without limitation (A) holding itself out as being liable for the debts of any
other party or (B) acting other than in its corporate name and through its duly
authorized officers or agents, or (8) create, incur, assume, or in any manner
become liable in respect of any indebtedness other than that contemplated herein
or trade payables and expense accruals incurred in the ordinary course of
business and which are incidental to its business purpose. The Issuer shall not
amend any article in its Certificate of Incorporation or its By-laws that deals
with any matter discussed above without the prior written consent of the Holders
of not less than 66-2/3% in aggregate principal amount of the Outstanding Notes
of the Controlling Class.
(j) Directors. The Issuer agrees that at all times, at least one
director and one executive officer of the Issuer will not be a director, officer
or employee of any direct or ultimate parent, or Affiliate of such parent or of
the Issuer or a brother, sister, parent, child or spouse of any of the foregoing
and shall also comply with the requirements set forth in Article SEVENTH of the
Certificate of Incorporation of the Issuer; provided, however, that (a) such
independent director may also be the independent officer and (b) such
independent director and such independent officer may serve in similar
capacities for other "special purpose entities" formed by the Issuer and its
Affiliates. The Issuer's Certificate of Incorporation shall at all times provide
that such independent director shall have a fiduciary duty to the Holders of the
Notes.
(k) Consolidated Return. The Issuer is a member of an affiliated group
with Trendwest within the meaning of Section 1504 of the Code and will file a
consolidated return with Trendwest for federal income tax purposes at all times
until after the termination of this Indenture.
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(l) Security Interest in the Related Security. The Issuer warrants that
it has, or will have as of the related Transfer Date, a valid security interest
in the Related Security and that it will defend its security interest in such
Related Security against all Persons, claims and demands whatsoever. The Issuer
shall not assign, sell, pledge, or exchange, suffer any lien on or in any way
encumber or otherwise dispose of its interest in the Related Security, except as
permitted under this Indenture.
(m) Taxable Income from the Receivables. The Issuer shall treat the
Receivables as owned by it for federal, State and local income tax purposes, and
any affiliated group of which the Issuer is a member within the meaning of
Section 1504 of the Code shall treat the Receivables as owned by the Issuer for
federal, State and local income tax purposes, shall report and include in the
computation of the Issuer's gross income for such tax purposes in its
consolidated or combined return the income from the Receivables and the
Contracts, and shall deduct the interest paid or accrued with respect to the
Notes in accordance with its applicable method of accounting for such purposes.
(n) Maintenance of Office or Agency. The Issuer will maintain an office
or agency within the United States of America where Notes may be presented or
surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demand to or upon the Issuer in
respect of the Notes and this Indenture may be served. The Issuer hereby
initially appoints the Trustee at the Corporate Trust Office for each of said
purposes. The Issuer will give 30 days' prior written notice to the Trustee and
the Noteholders of any change in the location, of any such office or agency. If
at any time the Issuer shall fail to maintain any such office or agency or shall
fail to furnish the Trustee and the Noteholders with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Trustee, and the Issuer hereby appoints the Trustee its agent to receive all
such presentations, surrenders, notices and demands.
(o) Money for Note Payments to Be Held in Trust. The Trustee shall
execute and deliver, and if there is any Paying Agent other than the Trustee,
the Issuer will cause each Paying Agent other than the Trustee to execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee that, subject to the provisions of this Section 11.02, such Paying
Agent will:
(i) hold all sums held by it for the payment of principal of or
interest on Notes in trust for the benefit of the Noteholders entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided;
(ii) give the Trustee notice of any Default by the Issuer (or any other
obligor upon the Notes) in the making of any payment of principal or interest;
and
(iii) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
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The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Issuer Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by such Paying Agent; and, upon
such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
(p) Enforcement of Servicing Agreement and the Receivables Purchase
Agreement. The Issuer will take all actions necessary, and diligently pursue all
remedies available to it, to the extent commercially reasonable, to enforce the
obligations of the Servicer under the Servicing Agreement, and Trendwest and TW
Holdings III under the Receivables Purchase Agreement and to secure its rights
thereunder.
(q) Issuer May Consolidate, Etc., Only on Certain Terms. The Issuer
shall not consolidate or merge with or into any other Person or convey or
transfer its properties and assets substantially as an entirety to any Person,
unless:
(i) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger or which acquires by conveyance or transfer the
properties and assets of the Issuer substantially as an entirety shall be a
Person organized and existing as a limited purpose entity under the laws of the
United States of America or any State thereof and shall have expressly assumed,
by an indenture supplemental hereto, executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, the obligation to make due and
punctual payments of the principal of and interest on all of the Notes and to
perform every covenant of this Indenture on the part of the Issuer to be
performed or observed; and
(ii) immediately after giving effect to such transaction, no Event of
Default or Default shall have occurred and be continuing; and
(iii) the Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation,
merger, conveyance or transfer and such supplemental indenture comply with this
Article Eleven and that all conditions precedent herein relating to such
transaction have been complied with; and
(iv) such consolidation, merger, conveyance or transfer shall be on
such terms as shall fully preserve the lien and security hereof, the perfection
and priority thereof and the rights and powers of the Trustee and the Holders of
the Notes hereunder; and
(v) the surviving entity shall be a "special purpose entity"; i.e.,
shall have an organizational charter substantially similar to the Certificate of
Incorporation and the By-laws of the Issuer including specific limitations on
the business purposes, and provisions for independent directors; and
(vi) the Issuer shall have obtained the prior written consent of the
Holders of the Notes, which shall not be unreasonably withheld.
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(r) Successor Substituted. Upon any consolidation or merger, or any
conveyance or transfer of the properties and assets of the Issuer substantially
as an entirety in accordance with Section 11.02(q) hereof, the Person formed by
or surviving such consolidation or merger (if other than the Issuer) or the
Person to which such conveyance or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Issuer under
this Indenture with the same effect as if such Person had been named as the
Issuer herein. In the event of any such conveyance or transfer, the Person named
as the "Issuer" in the first paragraph of this instrument or any successor which
shall theretofore have become such in the manner prescribed in this Article
Eleven shall be released from its liabilities as obligor and maker on all the
Notes and from its obligations under this Indenture and may be dissolved,
wound-up and liquidated at any time thereafter.
(s) Use of Proceeds. The proceeds from the sale of the Notes will be
used by the Issuer (i) to pay the Acquisition Consideration, (ii) to deposit the
amounts required hereby into the Reserve Account, the Prefunding Account and the
Capitalized Interest Account, (iii) to pay the expenses associated with the
issuance of Notes pursuant to this Indenture and the transactions contemplated
hereby and by the Receivables Purchase Agreement and the Servicing Agreement and
(iv) for the Issuer's general business purposes. None of the transactions
contemplated in this Indenture, the Receivables Purchase Agreement or the
Servicing Agreement (including the use of the proceeds from the sale of the
Notes) will result in a violation of Section 7 of the Securities Exchange Act of
1934, as amended, or any regulations issued pursuant thereto, including
Regulations T, U and X of the Board of Governors of the Federal Reserve System,
12 C.F.R., Chapter II. The Issuer does not own or intend to carry or purchase
any "margin security" within the meaning of said Regulation U, including margin
securities originally issued by it or any "margin stock" within the meaning of
said Regulation U.
(t) Investment Company Act of 1940. The Issuer will at all times
conduct its operations in a manner which will not subject it to registration as
an "investment company" under the Investment Company Act of 1940, as amended.
(u) Transactions with Affiliates. The Issuer will not enter into or
cause, suffer or permit to exist any arrangement or contract with any of its
Affiliates unless such arrangement or contract is fair and equitable to the
Issuer, is commercially reasonable and is an arrangement or contract no less
favorable to the Issuer than generally available on an arms-length basis in
equitable transactions with third parties.
(v) Delivery of Custodian Files. The Issuer shall deliver, or cause to
be delivered, to the Custodian the Custodian Files related to the Contracts
identified on the Contract Schedule at least five days prior to the Closing Date
in accordance with Section 4.01(b)(ii) hereof.
(w) Rule 144A Transfers. The Issuer will deliver with reasonable
promptness any financial or other information that a Holder may reasonably
request from time to time to permit such Holder to comply with the requirements
of Rule 144A in connection with the resale of Notes by such Holder.
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(x) Redemption. The Issuer will not, and will not permit any of its
Affiliate to, purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the Notes except in accordance with Article 10 hereof.
(y) Information Regarding the Trust Estate. The Issuer shall provide to
the Trustee or any Noteholder or Note Owner and their duly authorized
representatives, attorneys or accountants access to any and all documentation
and to any existing data processing systems (including, but not limited to, any
data that can reasonably be generated therefrom) regarding the Trust Estate
(including the Contract Schedule) that the Issuer may possess, such access being
afforded at no cost to the Issuer (except during the continuance of an Event of
Default hereunder), but only upon reasonable request and during normal business
hours so as not to interfere unreasonably with the Issuer's normal operations or
customer or employee relations, at offices designated by the Issuer.
(z) Closing Date Deposit of Collections. The Issuer shall deposit or
cause to be deposited into the Collection Account from the proceeds of the Notes
an amount at least equal to the collections on the Trust Estate from the Initial
Cut-Off Date to the Closing Date.
(aa) Subsequent Transfers of Contracts. On each Subsequent Transfer
Date, the Issuer will enter in the related Subsequent Asset Assignment upon the
satisfaction of the conditions therefor set forth in the Receivables Purchase
Agreement.
(bb) Delivery of Contracts and Custodian Files. The Issuer will deliver
to the Custodian on or prior to the applicable Subsequent Transfer Date the
original executed counterpart of each applicable Contract (and the rest of the
contents of the related Custodian File) identified in the schedule to the
applicable subsequent Asset Assignment on such Transfer Date.
Section 11.03. Other Matters as to the Issuer.
(a) Limitation on Liability of Directors, Officers, or Employees of the
Issuer. The directors, officers, or employees of the Issuer shall not be under
any liability to the Trustee, the Noteholders, the Issuer, the Servicer or any
other Person hereunder or pursuant to any document delivered hereunder, it being
expressly understood that all such liability is expressly waived and released as
a condition of, and as consideration for, the execution of this Indenture and
the issuance of the Notes.
(b) Parties Will Not Institute Insolvency Proceedings. So long as this
Indenture is in effect, and for one year and one day following its termination,
none of the parties hereto or any Affiliate thereof will file any involuntary
petition or otherwise institute any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding or other proceeding under any federal or
State bankruptcy or similar law against or by the Issuer; provided, however,
that the Trustee shall not be prohibited from taking any such actions after an
Event of Default if it is acting at the direction of Holders of not less than
66-2/3% in principal amount of Outstanding Notes of the Controlling Class.
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ARTICLE TWELVE
ACCOUNTS AND ACCOUNTINGS
Section 12.01. Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture. The Trustee shall hold all
such money and property so received by it as part of the Trust Estate and shall
apply it as provided in this Indenture. If any Contract becomes a Defaulted
Contract, the Trustee, upon the written request of the Issuer or the Servicer
may, and upon the request of the Holders of a majority in principal amount of
the Outstanding Notes of the Controlling Class shall, take such action as may be
reasonably necessary to assist the Servicer to enforce such payment or
performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and to proceed thereafter as
provided in Article Six hereof.
Section 12.02. Collection Account. (a) On the Closing Date, the Issuer
shall cause the Trustee to open and maintain an account (the "Collection
Account"), which at all times shall be an Eligible Account and which shall be
established at the Trustee, for the benefit of the Noteholders, for the receipt
of (i) amounts deposited into the Local Bank Account, (ii) any Reinvestment
Income earned during the related Due Period and not otherwise allocated under
the Indenture, (iii) amounts transferred from the Reserve Account in accordance
with Sections 12.03(d)(i), (iv) amounts transferred from the Prefunding Account
in accordance with Section 12.04(d) and (v) amounts transferred from the
Capitalized Interest Account in accordance with Section 12.05(d) hereof. All
payments to be made from time to time by the Issuer to the Noteholders out of
funds in the Collection Account pursuant to this Indenture shall be made by the
Trustee or the Paying Agent of the Issuer. Funds in the Collection Account shall
not be commingled with any other monies. All monies deposited from time to time
in the Collection Account pursuant to this Indenture shall be held in the name
of the Trustee as part of the Trust Estate as herein provided.
(b) Upon Issuer Order, the Trustee shall invest the funds in the
Collection Account in Eligible Investments. The Issuer Order shall specify the
Eligible Investments in which such amounts shall be invested, shall state that
the same are Eligible Investments and shall further specify the percentage of
funds to be invested in each Eligible Investment. No such Eligible Investment
shall mature later than the Business Day preceding the next following Payment
Date and shall not be sold or disposed of prior to its maturity. In the absence
of an Issuer Order, the Trustee shall invest funds in the Collection Account in
Eligible Investments described in clause (vi) of the definition thereof.
Eligible Investments shall be made in the name of the Trustee for the benefit of
the Noteholders. The Trustee shall have no responsibility for verifying that any
investments directed by the Issuer are Eligible Investments. Anything to the
contrary notwithstanding, the Trustee shall be entitled to invest funds in the
Collection Account in Eligible Investments on the Business Day preceding each
Payment Date and shall be entitled to the income and gain from such Eligible
Investments for its one-day investment; such Eligible Investments shall mature
not later than the related Payment Date; the Trustee shall be liable for any
loss incurred on account of such one-day investment.
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(c) Any income or other gain from investments in Eligible Investments
as outlined in (b) above shall be credited to the Collection Account and any
loss resulting from such investments shall be charged to such account; provided,
however, that the Issuer shall make or cause to be made no later than the
applicable Payment Date a deposit to the Collection Account to the extent of any
losses therein caused as a result of the Issuer's investment instructions
provided for herein. Except as set forth in Section 12.02(b), the Trustee shall
not be liable for any loss incurred on any funds invested in Eligible
Investments pursuant to the provisions of this Section 12.02.
(d) On each Payment Date not occurring during a Trigger Event Period,
then on such Payment Date, after making all transfers and deposits into the
Collection Account from the Reserve Account pursuant to clauses (i) and (iii) of
Section 12.03(d) hereof, from the Capitalized Interest Account pursuant to
Section 12.05 hereof and from the Prefunding Account pursuant to Section 12.04
hereof, the Trustee shall withdraw from the Collection Account (other than
amounts representing payments of Receivables due after the related Calculation
Date immediately preceding such Payment Date), and shall make the following
disbursements in the following order in accordance with the provisions of and
instructions on the Monthly Servicer's Report (the determination by the Servicer
of such amounts shall, in the absence of manifest error, be deemed to be
presumptively correct and the Trustee shall be protected in relying upon the
same with out any independent check or investigation); provided that the Trustee
shall, to the extent funds are available in the Collection Account, make
interest payments based on the outstanding principal balance of the Notes even
if it shall not have received the Monthly Servicer's Report:
(i) to the Trustee, any Unreimbursed Servicing Transfer Payments (up to
a cumulative limit of $100,000) and the Trustee Fee;
(ii) to the Custodian, the Custodian Fee, to the extent the Custodian
Fee has not been paid by the Servicer;
(iii) to the Servicer (if Trendwest or an Affiliate of Trendwest is not
the Servicer): (A) the Servicer Fee; and (B) the amounts necessary to reimburse
the Servicer and any successor Servicer as provided in Section 3.09 of the
Servicing Agreement for reasonable costs and expenses incurred by the Servicer
(including reasonable attorney's fees and out-of-pocket expenses) in connection
with the realization, attempted realization or enforcement of rights and
remedies upon Defaulted Contracts, from amounts received as Recoveries from any
Defaulted Contracts;
(iv) to the Class A-1 Noteholders and the Class A-2 Noteholders, the
aggregate interest due on the Outstanding Class A-1 Notes and Class A-2 Notes on
that Payment Date and any Overdue Interest; provided, however, if the amount
available is insufficient to pay in full the interest owed on the Class A Notes,
the Holders of each Class of Class A Notes shall receive the Interest Shortfall
Payment for such Class;
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(v) to the Class B Noteholders, the aggregate interest due on the
Outstanding Class B Notes on that Payment Date and any Overdue Interest;
(vi) to the Class C Noteholders, the aggregate interest due on the
Outstanding Class C Notes on that Payment Date and any Overdue Interest;
(vii) to the Class A Noteholders, the Class A Principal Distribution
Amount, (a) first, to Class A-1 Noteholders until the principal balance of the
Class A-1 Notes has been reduced to zero; and then (b) second, to the Class A-2
Noteholders, an amount up to the excess of the Class A Principal Distribution
Amount over any such amounts distributed to the Class A-1 Noteholders on such
Payment Date, until the principal balance of the Class A-2 Notes has been
reduced to zero;
(viii) to the Class B Noteholders, the Class B Principal Distribution
Amount;
(ix) to the Class C Noteholders, the Class C Principal Distribution
Amount;
(x) to deposit to the Reserve Account an amount necessary, if any, to
bring the amount on deposit in the Reserve Account to the Reserve Account
Required Balance;
(xi) (a) to the Class A-1 Noteholders, the Class A Supplemental
Principal Distribution Amount until the principal balance of the Class A-1 Notes
has been reduced to zero, and then (b) to the Class A-2 Noteholders, an amount
up to the excess of the Class A Supplemental Principal Distribution Amount over
any such amounts distributed to the Class A-1 Noteholders on such Payment Date,
until the principal balance of the Class A-2 Notes has been reduced to zero;
(xii) to the Class B Noteholders, the Class B Supplemental Principal
Distribution Amount;
(xiii) to the Class C Noteholders, the Class C Supplemental Principal
Distribution Amount;
(xiv) if Trendwest is the Servicer, to Trendwest: (A) the Servicer Fee;
and (B) the amounts necessary to reimburse the Servicer as provided in Section
3.09 of the Servicing Agreement for reasonable costs and expenses incurred by
the Servicer (including reasonable attorney's fees and out-of-pocket expenses)
in connection with the realization, attempted realization or enforcement of
rights and remedies upon Defaulted Contracts, from amounts received as
Recoveries from any Defaulted Contracts;
(xv) to Trendwest, interest due on the Subordinated Note;
(xvi) to Trendwest, principal due on the Subordinated Note;
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(xvii) to the Trustee, in payment of any other amounts due to the
Trustee as expressly provided herein and in the Servicing Agreement, including
Unreimbursed Servicing Transfer Payments not paid pursuant to clause (i) above;
and
(xviii) to remit any excess funds to or at the direction of the Issuer.
The foregoing provisions of Section 12.02(d) notwithstanding, any
monies deposited in the Collection Account for purposes of redeeming Notes
pursuant to Article Ten hereof shall, subject to Section 11.02(o) hereof, remain
in the Collection Account until used to redeem such Notes.
(e) On each Payment Date occurring during a Trigger Event Period if
either no Default or Event of Default shall have occurred and be continuing or
the entire unpaid principal amount of the Notes shall not have been declared,
have automatically become or otherwise have become due and payable pursuant to
Section 6.02 hereof, then on such Payment Date, after making all transfers and
deposits into the Collection Account from the Reserve Account pursuant to
clauses (i) and (iii) of Section 12.03(d) hereof, from the Capitalized Interest
Account pursuant to Section 12.05 hereof and from the Prefunding Account
pursuant to Section 12.04 hereof, the Trustee shall withdraw from the Collection
Account (other than amounts representing payments of Receivables due after the
related Calculation Date immediately preceding such Payment Date), and shall
make the following disbursements in the following order in accordance with the
provisions of and instructions on the Monthly Servicer's Report; provided that
the Trustee shall, to the extent funds are available in the Collection Account,
make interest payments based on the outstanding principal balance of the Notes
even if it shall not have received the Monthly Servicer's Report:
(i) to the Trustee, any Unreimbursed Servicing Transfer Payments (up to
a cumulative limit of $100,000) and the Trustee Fee;
(ii) to the Custodian, the Custodian Fee if not paid by the Servicer;
(iii) to the Servicer: (A) the Servicer Fee; and (B) the amounts
necessary to reimburse the Servicer and any successor Servicer as provided in
Section 3.09 of the Servicing Agreement for reasonable costs and expenses
incurred by the Servicer (including reasonable attorney's fees and out-of-pocket
expenses) in connection with the realization, attempted realization or
enforcement of rights and remedies upon Defaulted Contracts; from amounts
received as Recoveries from any Defaulted Contracts;
(iv) to the Class A-1 Noteholders and the Class A-2 Noteholders, pro
rata, the aggregate interest due on the Outstanding Class A-1 Notes and Class
A-2 Notes on that Payment Date and any Overdue Interest; provided, however; if
the amount available is insufficient to pay in full the interest owed on the
Class A Notes, the Holders of each Class of Class A Notes shall receive the
Interest Shortfall Payment for such Class;
(v) to the Class B Noteholders, the aggregate interest due on the
Outstanding Class B Notes on that Payment Date and any Overdue Interest;
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(vi) to the Class C Noteholders, the aggregate interest due on the
Outstanding Class C Notes on that Payment Date and any Overdue Interest;
(vii) to the Class A Noteholders, the Class A Principal Distribution
Amount, pro rata, until the principal balance of the Class A Notes is reduced to
zero;
(viii) to the Class B Noteholders, the Class B Principal Distribution
Amount, pro rata, until the principal balance of the Class B Notes is reduced to
zero;
(ix) to the Class C Noteholders, the Class C Principal Distribution
Amount, pro rata, until the principal balance of the Class C Notes is reduced to
zero;
(x) to Trendwest, the interest due Trendwest under the Subordinated
Note;
(xi) to Trendwest, the principal due to Trendwest under the
Subordinated Note until the principal balance of the Subordinated Note is
reduced to zero;
(xii) to the Trustee, any other amounts due to the Trustee as expressly
provided herein and in the Servicing Agreement, including Unreimbursed Servicing
Transfer Payments not paid pursuant to clause (i) above;
(xiii) to the Servicer, any other amounts due the Servicer as expressly
provided herein and in the Servicing Agreement; and
(xiv) to remit any excess funds to or at the direction of the Issuer.
The foregoing provisions of Section 12.02(e) notwithstanding, any
monies deposited in the Collection Account for purposes of redeeming Notes
pursuant to Article Ten hereof shall, subject to Section 11.02(o) hereof, remain
in the Collection Account until used to redeem such Notes.
(f) Upon the Issuer's or the Trustee's obtaining actual knowledge of
the occurrence of any Trigger Event, the Issuer or the Trustee, as the case may
be, shall within two Business Days of obtaining such actual knowledge notify the
other and Noteholders of such occurrence.
Section 12.03. Reserve Account. (a) Prior to the Closing Date, the
Trustee shall open and maintain a trust account (the "Reserve Account"), which
at all times will be an Eligible Account, for the benefit of the Noteholders,
for the receipt of the initial deposit of $4,914,000 and of deposits pursuant to
Section 12.02(d)(x) hereof. The Issuer agrees to deposit $4,914,000 in the
Reserve Account on or prior to the Closing Date. Monies deposited in the Reserve
Account will be invested at the written direction of the Issuer in Eligible
Investments during the term of this Indenture, and any income or other gain
realized from such investment shall be held by the Trustee in the Reserve
Account as part of the Trust Estate as security for the Notes subject to
disbursement and withdrawal as herein provided. Monies shall be subject to
withdrawal in accordance with Section 12.03(d) hereof.
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(b) Upon Issuer Order all or a portion of the Reserve Account shall be
invested and reinvested at the Issuer's written direction in one or more
Eligible Investments. In the absence of an Issuer Order, the Trustee shall
invest funds in the Reserve Account in Eligible Investments described in clause
(vi) of the definition thereof. All income or other gain from such investments
shall be credited to such Reserve Account, and any loss resulting from such
investments shall be charged to such Reserve Account; provided, however, that
the Issuer shall make or cause to be made on any Remittance Date a deposit to
the Reserve Account to the extent of any losses therein caused as a result of
the Issuer's investment instructions. No Eligible Investment shall mature later
than the Business Day preceding the next following Payment Date and shall not be
sold or disposed of prior to its maturity. Eligible Investments shall be made in
the name of the Trustee for the benefit of the Noteholders. The Trustee shall
provide to the Servicer a monthly account statement showing deposits and
withdrawals in such month and listing such investments, describing the Eligible
Investments in which such amounts have been invested.
(c) If any amounts invested as provided in Section 12.03(b) hereof
shall be needed for disbursement from the Reserve Account as set forth in
Section 12.03(d) hereof, the Trustee shall cause such investments of such
Reserve Account to be sold or otherwise converted to cash to the credit of such
Reserve Account. The Trustee shall not be liable for any investment loss
resulting from investment of money in the Reserve Account in any Eligible
Investment in accordance with the terms hereof (other than in its capacity as
obligor under any Eligible Investment).
(d) Disbursements from the Reserve Account shall be made as detailed in
the Monthly Servicer Report, to the extent funds therefor are available, only as
follows:
(i) in the event that the amount in the Collection Account at 2:00
p.m.,
New York time, on the Determination Date immediately preceding any Payment
Date (other than amounts representing payments of Receivables due after the
related Calculation Date immediately preceding such Payment Date) is less than
the sum of the amounts required to be distributed on the related Payment Date
pursuant to clauses (i)-(ix) of Section 12.02(d) hereof, the Trustee shall, in
accordance with the related Monthly Servicer's Report, withdraw funds from the
Reserve Account on or prior to 5:00 p.m.,
New York time, on the Remittance Date
to the extent necessary to make such payments on such Payment Date and deposit
such funds into the Collection Account;
(ii) subject to subparagraphs (iii) and (iv) of this Section 12.03(d),
in the event that on any Payment Date the balance in the Reserve Account equals
an amount greater than the Reserve Account Required Balance (after giving effect
to the distributions listed in Section 12.02(d)(i)-(ix) hereof on such Payment
Date in accordance with the Monthly Servicer's Report), the Trustee shall
withdraw funds in the Reserve Account in such amount so that the remaining
amount in the Reserve Account after such withdrawal will equal the Reserve
Account Required Balance, and disburse such amounts to or at the direction of
the Issuer; no funds shall be released to the Issuer pursuant to this
subparagraph (ii) if any of a Trigger Event Period or an Event of Default has
occurred and is continuing;
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(iii) if a Trigger Event has occurred and is continuing, the Trustee
shall on the next Determination Date, withdraw all funds from the Reserve
Account (or any such lesser amount of such funds as such Holders may direct) and
deposit such funds into the Collection Account for disbursement in accordance
with the provisions of Section 12.02(e) hereof; and
(iv) on the Final Payment Date with respect to the Class C Notes, to
the extent any funds remain in the Reserve Account after distributions pursuant
to clauses (i) through (ix) of Section 12.02(d), such remaining amounts shall be
used to pay the amounts set forth in clauses (xi) through (xviii) of Section
12.02(d).
Section 12.04. Prefunding Account. (a) Prior to the Closing Date, the
Trustee shall open and maintain a trust account (the "Prefunding Account"),
which at all times will be an Eligible Account, for the benefit of the
Noteholders, for the receipt of the initial deposit of $31,039,137 from the
proceeds of the Notes. The Issuer agrees to deposit $31,039,137 in the
Prefunding Account on or prior to the Closing Date. Monies received in the
Prefunding Account will be invested at the written direction of the Issuer in
Eligible Investments during the term of this Indenture, and any income or other
gain realized from such investment shall be held by the Trustee in the
Prefunding Account as part of the Trust Estate as security for the Notes subject
to disbursement and withdrawal as herein provided. Monies shall be subject to
withdrawal in accordance with Section 12.04(d) hereof.
(b) Upon Issuer Order, all or a portion of the Prefunding Account shall
be invested and reinvested at the Issuer's written direction in one or more
Eligible Investments. In the absence of an Issuer Order, the Trustee shall
invest funds in the Prefunding Account in Eligible Investments described in
clause (vi) of the definition thereof. All income or other gain from such
investments shall be credited to the Prefunding Account, and any loss resulting
from such investments shall be charged to the Prefunding Account; provided,
however, that the Issuer shall make or cause to be made on any Remittance Date a
deposit to the Prefunding Account to the extent of any losses therein caused as
a result of the Issuer's investment instructions. No Eligible Investment shall
mature later than the Business Day preceding the next following Payment Date and
shall not be sold or disposed of prior to its maturity. Eligible Investments
shall be made in the name of the Trustee for the benefit of the Noteholders. The
Trustee shall provide to the Servicer a monthly account statement showing
deposits and withdrawals in such month and listing such investments, describing
the Eligible Investments in which such amounts have been invested.
(c) If any amounts invested as provided in Section 12.04(b) hereof
shall be needed for disbursement from the Prefunding Account as set forth in
Section 12.04(d) hereof, the Trustee shall cause such investments of such
Prefunding Account to be sold or otherwise converted to cash to the credit of
such Prefunding Account. The Trustee shall not be liable for any investment loss
resulting from investment of money in the Prefunding Account in any Eligible
Investment in accordance with the terms hereof (other than in its capacity as
obligor under any Eligible Investment).
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(d) Disbursements from the Prefunding Account shall be made as detailed
in writing by the Issuer or the Servicer on behalf of the Issuer, to the extent
funds therefor are available, only as follows:
(i) on each Subsequent Transfer Date, the Servicer shall instruct the
Trustee in writing (x) to withdraw from the Prefunding Account an amount equal
to the Collateral Value as of the related Subsequent Cut-Off Date of the
Subsequent Contracts transferred to the Issuer and pledged to the Trustee on
such Subsequent Transfer Date as of the related Subsequent Cut-Off Date and (y)
subject to the receipt of the items described in Section 4.01(c), to distribute
such amount to or at the direction of the Issuer in accordance with the
instructions provided to the Trustee;
(ii) on each Remittance Date, the Trustee shall deposit the
Reinvestment Income related to the investment of amounts in the Prefunding
Account during the related Due Period into the Collection Account for
distribution on the related Payment Date; and
(iii) if the amount in the Prefunding Account has not been reduced to
zero on the Prefunding Period Termination Date after giving effect to any
reductions in the amount in the Prefunding Account on such Payment Date pursuant
to clause (i) above, the Servicer shall instruct the Trustee in writing to
withdraw from the Prefunding Account on such Payment Date all amounts remaining
on deposit in the Prefunding Account (excluding any Reinvestment Income in such
account) and distribute such amount to the Class A-1 Noteholders as a prepayment
of principal; provided, however, that if such amount is greater than $100,000,
such amount will be paid pro rata to all of the Class A Noteholders.
Section 12.05. Capitalized Interest Account. (a) On or prior to the
Closing Date, the Trustee shall open and maintain a trust account (the
"Capitalized Interest Account"), which at all times will be an Eligible Account,
for the benefit of the Noteholders, for the receipt of an initial deposit of
$225,342.41 from the proceeds of the Notes. The Issuer agrees to deposit
$225,342.41 in the Capitalized Interest Account on or prior to the Closing Date.
Monies received in the Capitalized Interest Account will be invested at the
written direction of the Issuer in Eligible Investments during the term of this
Indenture, and any income or other gain realized from such investment shall be
held by the Trustee in the Capitalized Interest Account as part of the Trust
Estate as security for the Notes subject to disbursement and withdrawal as
herein provided. Monies shall be subject to withdrawal in accordance with
Section 12.05(d) hereof.
(b) Upon Issuer Order all or a portion of the Capitalized Interest
Account shall be invested and reinvested at the Issuer's written direction in
one or more Eligible Investments. In the absence of an Issuer Order, the Trustee
shall invest funds in the Capitalized Interest Account in Eligible Investments
described in clause (vi) of the definition thereof. All income or other gain
from such investments shall be credited to the Capitalized Interest Account, and
any loss resulting from such investments shall be charged to the Capitalized
Interest Account; provided, however, that the Issuer shall make or cause to be
made on any Remittance Date a deposit to the Capitalized Interest Account to the
extent of any losses therein caused as a result of the Issuer's investment
instructions. No Eligible Investment shall mature later than the Business Day
preceding the next following Payment Date and shall not be sold or disposed of
75
prior to its maturity. Eligible Investments shall be made in the name of the
Trustee for the benefit of the Noteholders. The Trustee shall provide to the
Servicer a monthly account statement showing deposits and withdrawals in such
month and listing such investments, describing the Eligible Investments in which
such amounts have been invested.
(c) If any amounts invested as provided in Section 12.05(b) hereof
shall be needed for disbursement from the Capitalized Interest Account as set
forth in Section 12.05(d) hereof, the Trustee shall cause such investments of
such Capitalized Interest Account to be sold or otherwise converted to cash to
the credit of the Capitalized Interest Account. The Trustee shall not be liable
for any investment loss resulting from investment of money in the Capitalized
Interest Account in any Eligible Investment in accordance with the terms hereof
(other than in its capacity as obligor under any Eligible Investment).
(d) Disbursements from the Capitalized Interest Account shall be made
as detailed in the Monthly Servicer Report, to the extent funds therefor are
available, only as follows:
(i) On or before each Payment Date occurring during the Prefunding
Period and on or before the Payment Date on or immediately succeeding the
Prefunding Period Termination Date, the Trustee shall withdraw from the
Capitalized Interest Account for deposit into the Collection Account the amount
equal to the aggregate amount of interest accruing at the weighted average of
one-twelfth of the Class A-1 Note Rate, the Class A-2 Note Rate, and the Class B
Note Rate, the Class C Note Rate and the Class D Note Rate on the amount on
deposit in the Prefunding Account, less projected investment earnings on the
Prefunding Account, as of the related Payment Date. Amounts in the Capitalized
Interest Account shall be withdrawn solely to pay such amounts and shall not be
available to the Noteholders or the Trustee for any other purpose.
(ii) Any amounts remaining on deposit in the Capitalized Interest
Account on the Payment Date on or immediately succeeding the Prefunding Period
Termination Date (after taking account any transfer from the Capitalized
Interest Account to the Collection Account on such Payment Date) shall be
withdrawn from the Capitalized Interest Account, paid to the Issuer and released
from the Lien of this Indenture; after such payment, the Trustee shall close the
Capitalized Interest Account.
Section 12.06. Reports by Trustee to Noteholders. (a) On each Payment
Date, the Trustee shall account to the Initial Purchaser, each Holder of Notes
and to the Rating Agencies the amount paid on such date that represents
principal and the amount paid on such date that represents interest, and shall
contemporaneously advise the Issuer of all such payments. The Trustee may
satisfy its obligations under this Section 12.06 by delivering the Monthly
Servicer's Report to each such Holder of the Notes, the Rating Agencies and the
Issuer. On or before the 5th day prior to the Final Payment Date with respect to
any Class, the Trustee shall send notice to the Rating Agencies and to the
Initial Purchaser the Holders of the Notes of such Class of such Final Payment
Date. Such notice shall include a statement that if such Notes are paid in full
on the Final Payment Date, interest shall cease to accrue as of the day
immediately preceding such Final Payment Date.
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The Trustee shall provide or make available electronically (or upon
written request, by first class mail or facsimile) each month to Holders of
Notes and any other Person entitled thereto, the Monthly Servicer Report;
provided, however, the Trustee shall have no obligation to provide such Monthly
Servicer Report until it has received the requisite information from the Issuer
or the Servicer. The Monthly Servicer Report and, with the consent or at the
direction of the Issuer, such other information regarding the Notes and/or the
Receivables as the Trustee may have in its possession, shall be made available
via the Trustee's Internet Website, but only with the use of a password provided
by the Trustee or its agent to a Holder of Notes or such other Person entitled
thereto upon receipt by the Trustee from such Holder of Notes or other Person of
a certification in the form of Exhibit D; provided, however, that the Trustee or
its agent shall provide such password to the parties to this Indenture and the
Rating Agencies without requiring such certification. The Trustee will make no
representation or warranty as to the accuracy or completeness of such documents
and will assume no responsibility therefor. The Trustee's Internet Website
initially shall be located at "▇▇▇.▇▇▇▇▇▇.▇▇▇" or at such other address as shall
be specified by the Trustee from time to time in writing to a Holder of Notes or
other Person. In connection with providing access to the Trustee's Internet
Website, the Trustee may require registration and the acceptance of a
disclaimer. The Trustee shall not be liable for the dissemination of information
in accordance with this Indenture. The Trustee shall be entitled to rely on but
shall not be responsible for the content or accuracy of any information provided
by third parties for purposes of preparing any reports and to affix thereto any
disclaimer it deems appropriate in its reasonable discretion (without suggesting
liability on the part of any other party hereto.)
(b) The Servicer shall provide to each owner of an interest any Note
who executes and delivers an executed Note Owner Certificate to the Servicer any
information required to be delivered to the Noteholders pursuant to Article IV
of the Servicing Agreement to the extent such information is not provided by the
Trustee as set forth in Section 12.06(a). The Servicer may provide such
information via mail, facsimile, overnight courier, hand delivery, or electronic
transmission in a format reasonably acceptable to the Servicer and such Note
Owner.
(c) Annually (and more often if required by applicable law), the
Trustee shall distribute to Noteholders any Form 1099 or similar information
returns required by applicable tax law to be distributed to the Noteholders and
received in accordance with the next sentence. The Trustee shall prepare or
cause to be prepared all such information for distribution by the Trustee to the
Noteholders.
ARTICLE THIRTEEN
PROVISIONS OF GENERAL APPLICATION
Section 13.01. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by an agent duly appointed in writing; and, except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where it is
77
hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
7.01 hereof) conclusive in favor of the Trustee and the Issuer, if made in the
manner provided in this Section 13.01.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Trustee deems
sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind the Holder of every
Note issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be done by
the Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
Section 13.02. Notices, etc., to Trustee, Issuer, Servicer and the
Rating Agencies. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with any party hereto
shall be sufficient for every purpose hereunder if in writing and telecopied or
mailed, first-class postage prepaid and addressed to the appropriate address
below:
(a) to the Trustee at Sixth Street and Marquette Avenue, MAC N9311-161,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (facsimile number (▇▇▇) ▇▇▇-▇▇▇▇), Attention:
Corporate Trust Services--Asset-Backed Securities or at any other address
previously furnished in writing to the Issuer and the Servicer; or
(b) to the Issuer at TRI Funding V, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ 97601(facsimile number (▇▇▇) ▇▇▇-▇▇▇▇), Attention: Chief Financial
Officer, or at any other address previously furnished in writing to the Trustee
and the Servicer by the Issuer; or
(c) to the Servicer at Trendwest Resorts, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (facsimile number (▇▇▇) ▇▇▇-▇▇▇▇), Attention: Chief
Financial Officer, or at any other address previously furnished in writing to
the Trustee and the Issuer; or
(d) to the Initial Purchaser at Banc One Capital Markets, Inc., 1 Bank
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇; or
(e) to Fitch at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(facsimile number (▇▇▇) ▇▇▇-▇▇▇▇), or at any other address previously furnished
in writing to the Trustee and the Issuer; and
78
(f) to Moody's at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Residential Mortgage Pass-Through Monitoring Group, or at any other
address previously furnished in writing to the Trustee and the Issuer.
Section 13.03. Notices and Other Documents to Noteholders; Waiver. (a)
Where this Indenture provides for notice to Noteholders of any event, such
notice shall be in writing and sent (i) by telefacsimile if the sender on the
same day sends a confirming copy of such notice by a recognized overnight
delivery service (charges prepaid), or (ii) by registered or certified mail with
return receipt requested (postage prepaid), or (iii) by a recognized overnight
delivery service (with charges prepaid). Any such notice to a Noteholder or its
nominee must be sent (i) to such Person at the address specified for such
communications in the Note Register, or at such other address as the Noteholder
shall have specified to the Trustee in writing and (ii) if specified, to such
other Person as shall be identified in writing to the Trustee by each Noteholder
or its nominee. Notice under this Section 13.03 will be deemed to be given only
when actually received.
(b) Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
(c) Any reports, documents or other communications other than notices
to be sent to Noteholders may be telecopied or mailed, first-class postage
prepaid and shall be addressed to the Noteholders and their nominees and
designees, if applicable, as set forth in paragraph (a) above.
Section 13.04. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 13.05. Successors and Assigns. All covenants and agreements in
this Indenture by the Issuer shall bind its successors and assigns, whether so
expressed or not.
Section 13.06. Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or unpaired thereby.
Section 13.07. Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto, the Noteholders, and any Paying Agent which may be appointed pursuant to
the provisions hereof, and any of their successors hereunder, any benefit or any
legal or equitable right, remedy or claim under this Indenture or under the
Notes.
Section 13.08. Legal Holidays. In any case in which the date of any
Payment Date or the Stated Maturity of any Note shall not be a Business Day,
then (notwithstanding any other provision of the Notes or this Indenture)
79
payment of principal, interest, or premium, if any, need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the nominal date of any such Stated Maturity or Payment
Date and, assuming such payment is actually made on such subsequent Business
Day, no additional interest shall accrue on the amount so paid for the period
from and after any such nominal date.
Section 13.09. Governing Law. This Indenture and each Note shall be
construed in accordance with and governed by the internal laws of the State of
New York applicable to agreements made and to be performed therein, without
regard to the conflict of laws provisions of any State.
Section 13.10. Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 13.11. Obligation. No recourse may be taken, directly or
indirectly, against any incorporator, subscriber to the capital stock,
stockholder, member, partner, employee, officer or director of the Issuer or of
any predecessor or successor of the Issuer with respect to the Issuer's
obligations on the Notes or under this Indenture or any certificate or other
writing delivered in connection herewith; provided, however, that this Section
13.11 shall not protect any Person from his, her or its own fraud or willful
misconduct or from any liability that such Person may incur in another capacity
under the Transaction Documents.
Section 13.12. Compliance Certificates and Opinions. Upon any
application, order or request by the Issuer or the Servicer to the Trustee to
take any action under any provision of this Indenture for which a specific
request is required under this Indenture, the Issuer or the Servicer, as
applicable, shall furnish to the Trustee an Officer's Certificate of the Issuer
or the Servicer, as applicable, stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with, except that in the case of any such application or request as to
which the furnishing of a different certificate is specifically required by any
provision of this Indenture or the Servicing Agreement relating to such
particular application or request, no additional certificate need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, such
individual has made such examination or investigation as is necessary to enable
such individual to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
80
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 13.13. Effective Date of Transactions. This Indenture and the
other Transaction Documents shall be deemed to be effective and shall be valid
and enforceable as of the Closing Date.
Section 13.14. Parties will Not Institute Insolvency Proceedings.
During the term of this Agreement and for one year and one day after the
termination hereof, none of the parties hereto or any Affiliate thereof or any
Holder of Outstanding Notes (and each Holder of Outstanding Notes so agrees by
acceptance of a Note) will file any involuntary petition or otherwise institute
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceeding under any federal or state bankruptcy or similar
law against the Issuer.
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IN WITNESS WHEREOF, the Issuer, the Servicer and the Trustee have
caused this Indenture to be duly executed by the persons thereunto duly
authorized as of the day and year first above written.
TRI FUNDING V, INC., Issuer
By
Name:
Title:
TRENDWEST RESORTS, INC., Servicer
By
Name:
Title:
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, Trustee
By
Name:
Title:
82
Exhibit A
INVESTMENT LETTER
TRI FUNDING V, INC.
______% RECEIVABLES-BACKED NOTES CLASS _____, SERIES 2001-1
TRI Funding V, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as Trustee
MAC ▇▇▇▇▇-▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
______________________ (the "Purchaser") hereby represents and warrants
to you in connection with its purchase of $_________ in principal amount of the
above-captioned notes (the "Notes") as follows:
1. The Purchaser is purchasing the Notes for its own account or an
account with respect to which it exercises sole investment discretion and it or
such account is a qualified institutional buyer ("Qualified Institutional
Buyer") under Rule 144A and is aware that the sale to it is being made in
reliance on Rule 144A and is acquiring such Notes for investment and not with a
view to, or for offer or sale in connection with, any distribution (within the
meaning of the Securities Act of 1933, as amended (the "Securities Act")) or
fractionalization thereof or with any intention of reselling the Notes or any
part thereof, subject to any requirement of law that the disposition of its
property or the property of such account or accounts be at all times within its
or their control and subject to its or their ability to resell such Notes
pursuant to Rule 144A.
2. The Purchaser acknowledges that the Notes have not been and will
not be registered under the Securities Act and may not be sold within the United
States or to, or for the account or benefit of, U.S. persons except as permitted
below.
3. If the Purchaser is a person other than a foreign purchaser outside
the United States, it agrees that (i) if it should reoffer, resell, pledge or
otherwise transfer its Note prior to the second anniversary of the later of (a)
the original issuance of such Note (or any predecessor Note), and (b) the sale
of such Note (or any predecessor Note) by the Issuer or any affiliate of the
Issuer (computed in accordance with paragraph (d) of Rule 144 under the
Securities Act), or (ii) if it was at the date of such transfer or during the
three months preceding such date of transfer an affiliate of the Issuer (a) it
will do so in compliance with any applicable state securities or "Blue Sky" laws
and only (A) to the Issuer or (B) in compliance with Rule 144A, and only if a
certificate in the form of Exhibit B to the Indenture is delivered by the
transferee to the Trustee, and (b) it will give the transferee notice of any
restrictions on resale of such Note.
4. The Purchaser understands that the Notes, unless otherwise agreed
by the Issuer and the Holder thereof, will bear a legend to the following
effect:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF THE ISSUER
THAT THIS NOTE MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR ANY
PREDECESSOR NOTE HERETO) OTHER THAN IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS (1) TO TRENDWEST RESORTS, INC.
("TRENDWEST") OR ANY OF ITS AFFILIATES CONTROLLED BY TRENDWEST OR (2)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT TO AN INSTITUTIONAL
INVESTOR THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 144A, OR PURCHASING FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER WHOM THE HOLDER HAS
INFORMED, IN EACH CASE, THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, AND UPON THE RECEIPT BY THE ISSUER
OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE ISSUER THAT SUCH RESALE,
PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS.
5. The Purchaser has received the information, if any, requested by it
pursuant to Rule 144A, has had full opportunity to review such information and
has received all additional information necessary to verify such information.
6. The Purchaser (i) has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of its
investment in the Notes, and (ii) has the ability to bear the economic risks of
its prospective investment and can afford the complete loss of such investment.
7. The Purchaser understands that the Issuer, the Initial Purchaser
and others will rely upon the truth and accuracy of the foregoing
acknowledgments, representations and agreements and agrees that if any of the
foregoing acknowledgments, representations or agreements deemed to have been
made by it are no longer accurate, it will promptly notify the Issuer and the
Initial Purchaser. If it is acquiring any Notes as a fiduciary or agent for one
or more investor accounts, it represents that it has sole investment discretion
with respect to each such account and it has full power to make the foregoing
acknowledgments, representations and agreements on behalf of such account.
8. Either (a) The Purchaser will not acquire the Notes with the assets
of any "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") which is subject to
Title I of ERISA or any "plan" as defined in Section 4975 of the Code or (b) no
non-exempt "prohibited transaction" under Section 406 of ERISA or Section 4975
of the Code will occur in connection with our acquisition or holding of the
Notes.
A-2
The representations and warranties contained herein shall be binding
upon the heirs, executors, administrators and other successors of the
undersigned. If there is more than one signatory hereto, the obligations,
representations, warranties and agreements of the undersigned are made jointly
and severally.
Executed at _______________________, ________________________, this
______ day of _____________________, 20___.
----------------------------------- -------------------------------------
Purchaser's Name and Title (Print) Signature of Purchaser
-----------------------------------
Address of Purchaser
--------------------------------------
Purchaser's Taxpayer Identification or
Social Note Number
A-3
Exhibit B
FORM OF SUPPLEMENT TO CONTACT SCHEDULE FOR GRANT OF INTERESTS IN
SUBSTITUTE CONTRACTS AND UPGRADE CONTRACTS
Pursuant to Section 4.03(e) and Section 4.03(g) of the Indenture, dated
as of August 1, 2001, among TRI Funding V, Inc. (the "Issuer"), Trendwest
Resorts, Inc. and ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as Trustee
(the "Trustee") (such Indenture as amended and supplemented from time to time,
the "Indenture"), attached hereto as Annex I is a supplement to Schedule A of
the Indenture, which includes information regarding certain interests in
Contracts, the related Receivables and the Related Security that are hereby
Granted by the Issuer to the Trustee in accordance with the Indenture. For
purposes of this Supplement, all defined terms used herein and not otherwise
defined herein shall have the meanings assigned to them in the Indenture.
Dated:
TRI FUNDING V, INC.
By
Name:_______________________________________
Title:______________________________________
ANNEX I
SUPPLEMENT FOR SUBSTITUTE CONTRACTS
AND UPGRADE CONTRACTS
EXHIBIT C-1
FORM OF CLASS A-1 NOTES
EXHIBIT C-2
FORM OF CLASS A-2 NOTES
EXHIBIT C-3
FORM OF CLASS B NOTES
EXHIBIT C-4
FORM OF CLASS C NOTES
EXHIBIT D
NOTE OWNER CERTIFICATE
(Confirmation of Party Requesting Information)
[Date]
▇▇▇▇▇ Fargo Bank Minnesota, Trendwest Resorts, Inc.
National Association, as Trustee ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇-▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: TRI Funding V, Inc. Receivables-Backed Notes, Series 2001-1
-------------------------------------------------------------------------------
Ladies and Gentlemen:
This letter is delivered to you in connection with a request for
information by the undersigned beneficial holder (the "Holder") or the
undersigned prospective transferee (the "Transferee") of Class ___ Notes (the
"Notes"). The Notes were issued pursuant to the Indenture, dated as of August 1,
2001 (the "Indenture"), by and among TRI Funding V, Inc., as issuer, Trendwest
Resorts, Inc., as servicer, and ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as trustee (the "Trustee"). All terms used herein and not otherwise
defined shall have the meanings set forth in the Indenture. The undersigned
hereby certifies, represents, and warrants to you, that:
INITIAL BOX AS APPLICABLE:
1. _____ In the case of a request for
information by a direct or beneficial holder
of Notes: the undersigned is a direct or
beneficial holder of Notes and is requesting
the information solely for use in evaluating
such party's investment in the Notes and
will otherwise keep such information
confidential in accordance with its standard
procedures for such information.
2. _____ In the case of a request for
information by a prospective transferee: (i)
the undersigned holder is a direct or
beneficial holder of Notes and undersigned
the requesting party is a prospective
transferee of the undersigned holder's Notes
and (ii) the undersigned requesting party is
a prospective transferee of Notes, is
requesting the information solely for use in
evaluating a possible investment in Notes
and will otherwise keep such information
confidential in accordance with its standard
procedures for such information.
IN WITNESS WHEREOF, ________________________ has caused this
Certificate Agreement has been executed this _____ day of _________________,
20___.
[-------------------------------------]
[HOLDER]
By
Name:__________________________________________
Title:_________________________________________
[-------------------------------------]
[TRANSFEREE]
By
Name:__________________________________________
Title:_________________________________________
D-2
SCHEDULE A
CONTRACT SCHEDULE
SCHEDULE B
TARGETED PRINCIPAL BALANCE