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▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇ DRAFT
OF APRIL 17, 1996
SERVICING AGREEMENT
among
TRI FUNDING COMPANY I, L.L.C.
("Issuer")
and
TRENDWEST RESORTS, INC.
("Servicer")
and
SAGE SYSTEMS, INC.
("Subservicer")
and
LASALLE NATIONAL BANK, as Trustee
("Trustee")
Dated as of March 1, 1996
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TABLE OF CONTENTS
SECTION HEADING PAGE
ARTICLE 1 DEFINITIONS.................................... 1
Section 1.01. Defined Terms............................... 1
ARTICLE 2 SERVICER REPRESENTATIONS, WARRANTIES AND
COVENANTS...................................... 4
Section 2.01. Representations and Warranties.............. 4
Section 2.02. Covenants................................... 6
ARTICLE 3 ADMINISTRATION AND SERVICING OF CONTRACTS...... 6
Section 3.01. Responsibilities of Servicer................ 6
Section 3.02. Standard of Care............................ 9
Section 3.03. Clearing Account, ACH Payments and Servicer
Remittances................................. 9
Section 3.04. Property Management......................... 10
Section 3.05. Financing Statements........................ 10
Section 3.06. [Reserved.]................................. 10
Section 3.07. [Reserved.]................................. 10
Section 3.08. No Offset................................... 10
Section 3.09. Servicing Compensation...................... 11
Section 3.10. Substitution or Purchase of Contracts and
Receivables................................. 11
ARTICLE 4 ACCOUNTINGS, STATEMENTS AND REPORTS............ 12
Section 4.01. Monthly Servicer's Reports.................. 12
Section 4.02. Financial Statements; Certification as to
Compliance; Notice of Default............... 13
Section 4.03. Independent Accountants' Reports............ 14
Section 4.04. Access to Certain Documentation and
Information................................. 15
Section 4.05. Trustee to Cooperate........................ 17
Section 4.06. Oversight of Servicing...................... 17
ARTICLE 5 THE SERVICER, THE SUBSERVICER AND THE ISSUER... 18
Section 5.01. Servicer and Subservicer Indemnification.... 18
Section 5.02. Corporate Existence; Reorganizations........ 19
Section 5.03. Limitation on Liability of the Servicer, the
Subservicer and Others...................... 19
Section 5.04. The Servicer and Subservicer Not to Resign.. 20
Section 5.05. Issuer Indemnification...................... 20
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ARTICLE 6 SERVICING TERMINATION.......................... 21
Section 6.01. Servicer Events of Default.................. 21
Section 6.02. Appointment of Successor Servicer........... 23
Section 6.03. Notification to Noteholders................. 24
Section 6.04. Waiver of Past Defaults..................... 24
Section 6.05. Effects of Termination of Servicer.......... 24
Section 6.06. No Effect on Other Parties.................. 25
ARTICLE 7 THE SUBSERVICER................................ 25
Section 7.01. Representations and Warranties.............. 25
Section 7.02. Subservicer Events of Default............... 26
Section 7.03. Appointment of Successor Subservicer........ 28
Section 7.04. Notification to Noteholders................. 28
Section 7.05. Waiver of Past Defaults..................... 28
Section 7.06. Effects of Termination of Subservicer....... 28
ARTICLE 8 MISCELLANEOUS PROVISIONS....................... 29
Section 8.01. Termination of the Servicing Agreement...... 29
Section 8.02. Amendments.................................. 29
Section 8.03. Governing Law............................... 30
Section 8.04. Notices, etc., to Trustee, Issuer, Servicer
and Subservicer............................. 30
Section 8.05. Notices and Other Documents to Noteholders;
Waiver...................................... 31
Section 8.06. Severability of Provisions.................. 31
Section 8.07. Binding Effect.............................. 31
Section 8.08. Article Headings and Captions............... 32
Section 8.09. Legal Holidays.............................. 32
Section 8.10. Assignment for Security for the Notes....... 32
Section 8.11. No Servicing Assignment..................... 32
Section 8.12. Counterparts................................ 32
Signatures....................................................... 33
Exhibit A -- Form of Monthly Servicer's Report
Exhibit B -- Form of Report of Independent Accountants
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SERVICING AGREEMENT
THIS SERVICING AGREEMENT, dated as of March 1, 1996 (the "Agreement"), by
and among TRI FUNDING COMPANY I, L.L.C., a Delaware limited liability company
(herein, together with its permitted successors and assigns, the "Issuer"),
TRENDWEST RESORTS, INC., an Oregon corporation, as servicer hereunder (herein,
together with its permitted successors and assigns, the "Servicer"), SAGE
SYSTEMS, INC., a Washington corporation, as subservicer hereunder (herein,
together with its permitted successors and assigns, the "Subservicer") and
LASALLE NATIONAL BANK, as trustee (herein, together with its permitted
successors and assigns, the "Trustee") under the Indenture (defined below).
PRELIMINARY STATEMENT
The Issuer has entered into an Indenture, dated as of March 1, 1996 (as
amended and supplemented from time to time, the "Indenture"), with the Trustee
and the Servicer, pursuant to which the Issuer intends to issue its 7.42%
Receivables-Backed Notes, Series 1996-1 (collectively, the "Notes").
The Issuer, Trendwest Resorts, Inc. (not as Servicer, but acting on its
own behalf, "Trendwest"), Trendwest Funding I, Inc., a Delaware corporation
("TFI"), and TWH Funding I, Inc., a Delaware corporation ("SPC"), have entered
into a Purchase and Sale Agreement, dated as of March 1, 1996 (as amended and
supplemented from time to time, the "Sale Agreement"), providing for, among
other things, the sale by SPC and TFI to the Issuer of the Purchased Assets, as
defined in the Sale Agreement. Under the terms and conditions set forth in the
Indenture, the Issuer is and will be pledging such Purchased Assets to the
Trustee as security for the Notes. As a precondition to the effectiveness of the
Sale Agreement, the Sale Agreement requires that the Servicer, the Subservicer,
the Issuer and the Trustee enter into this Agreement to provide for the
servicing of the Purchased Assets.
In order to further secure the Notes, the Issuer is granting to the
Trustee a security interest in, among other things, the Issuer's rights derived
under this Agreement and the Sale Agreement, and the Servicer and the
Subservicer agree that all covenants and agreements made by the Servicer and the
Subservicer herein with respect to the Purchased Assets shall also be for the
benefit and security of the Trustee and all Holders from time to time of the
Notes. For its services under this Agreement, the Servicer will receive a
Servicer Fee as provided herein and in the Indenture.
ARTICLE 1
DEFINITIONS
Section 1.01. Defined Terms. Except as otherwise specified or as the context
may otherwise require, the following terms have the respective meanings set
forth below for all purposes of this Agreement, and the definitions of such
terms are equally applicable both to the singular and plural forms of such terms
and to the masculine, feminine and neuter
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genders of such terms. Capitalized terms used but not otherwise defined herein
shall have the respective meanings assigned to such terms in the Indenture.
"Clearing Account" shall mean the account established by the Subservicer
at the Clearing Account Bank, into which account collections with respect to the
Contracts will be deposited by the Subservicer.
"Clearing Account Bank" shall mean First Interstate Bank of Washington (or
an affiliate thereof), and its successors and assigns.
"Contract Files" shall have the meaning specified in the Sale Agreement.
"Custodian Agreement" shall mean the Custodian Agreement, dated as of
March 1, 1996, among Sage Systems, Inc., as Custodian, the Trustee, the Issuer
and Trendwest, as amended and supplemented from time to time.
"Custodian Files" shall have the meaning specified in the Sale
Agreement.
"Independent Accountants" shall mean ▇▇▇▇▇▇▇▇, Peugh, McDaniel, ▇▇▇▇▇▇▇▇ &
Co. or another firm of public accountants of recognized standing; provided, that
such firm is independent with respect to the Servicer within the meaning of the
Securities Act of 1933, as amended.
"Institutional Investor" shall have the meaning specified in the
Indenture.
"Issuer" shall mean TRI Funding Company I, L.L.C., a Delaware limited
liability company and its permitted successors and assigns.
"Liquidated Receivable" shall mean a Receivable that has been liquidated
pursuant to Section 3.01(b) hereof.
"Monthly Servicer's Report" shall mean the report prepared by the Servicer
pursuant to Section 4.01 hereof.
"Officer's Certificate" shall mean, for any Person, a certificate signed
by the President, any Vice President, Treasurer or Secretary of such Person and,
in the case of the Issuer, any authorized representative of the Issuer.
"Opinion of Counsel" shall mean a written opinion of counsel in a form
that is, and from counsel who is, reasonably acceptable to the person requesting
such opinion.
"Projected Income" shall mean, with respect to each Due Period, the amount
set forth under the line item "Amount Billed" on the Monthly Servicer's Report.
"Purchased Assets" shall have the meaning specified in the Sale
Agreement.
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"Receivables Purchase Agreement" shall mean the Receivables Purchase
Agreement, dated as of the date hereof, among Trendwest, TW Holdings, Inc. and
TFI as the same may be amended or modified from time to time, together with any
annexes, appendices, exhibits or schedules thereto and including the Assignment
executed and delivered in connection therewith.
"Remittance Date" shall mean the Business Day immediately preceding each
Payment Date.
"Reported Company" shall mean each of the Issuer, the Subservicer,
WorldMark, Trendwest and its subsidiaries, provided, however, if Trendwest is no
longer acting as Servicer or Sage is no longer acting as Subservicer, then
"Reported Company" shall also mean any successor Servicer or successor
Subservicer, as the case may be, appointed pursuant to this Agreement.
"Reported Company's Financial Statements" shall include each Reported
Company's audited consolidated balance sheet, income statement, statement of
cash flows, auditors opinion letter regarding audited financial statements and
all notes to the audited financial statements; Trendwest's and WorldMark's
financial statements shall be audited, but, with respect to any other Reported
Company, if such information is not currently being audited, then such
information may be unaudited.
"Sage" shall mean Sage Systems, Inc., a Washington corporation and its
successors in interest.
"Sale Agreement" shall mean the Purchase and Sale Agreement, together with
any annexes, appendices, exhibits or schedules attached thereto, by and among
TFI, SPC, Trendwest and the Issuer dated as of the date hereof, and including
the Assignment executed and delivered in connection therewith.
"Servicer" shall initially mean Trendwest Resorts, Inc. until a successor
Person shall have become the Servicer pursuant to the applicable provisions of
this Agreement, and thereafter "Servicer" shall mean such successor Person.
"Servicer Default" shall mean any occurrence or circumstance which with
notice or the lapse of time or both would be a Servicer Event of Default under
this Agreement.
"Servicer Event of Default" shall mean each of the occurrences or
circumstances enumerated in Section 6.01 hereof.
"Servicer Termination Notice" means the notice described in Section
6.01 hereof.
"Servicing Officer" shall mean those officers of the Servicer involved in,
or responsible for, the administration and servicing of the Purchased Assets, as
identified on the list of Servicing Officers furnished by the Servicer to the
Trustee and the Noteholders from time to time.
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"SPC" shall mean TWH Funding I, Inc., a Delaware corporation, and its
permitted successors and assigns.
"Subservicer" shall initially mean Sage until a successor Person shall
have become the Subservicer pursuant to the applicable provisions of this
Agreement, and thereafter "Subservicer" shall mean such successor Person.
"Subservicer Default" shall mean each of the occurrences or circumstances
which with notice or the lapse of time or both would be a Subservicer Event of
Default under this Agreement.
"Subservicer Event of Default" shall mean each of the occurrences or
circumstances enumerated in Section 7.02 hereof.
"Substitution Criterion" shall have the meaning specified in the Sale
Agreement.
"Substitute Receivable" shall have the meaning specified in the Sale
Agreement.
"TFI" shall mean Trendwest Funding I, Inc., a Delaware corporation, and
its permitted successors and assigns.
"Trustee" shall initially mean LaSalle National Bank, until a successor
Person shall have become the Trustee pursuant to the applicable provisions of
the Indenture, and thereafter "Trustee" shall mean such successor Person.
"Upgrade" shall have the meaning specified in the Indenture.
"Upgrade Contract" shall have the meaning specified in the Indenture.
ARTICLE 2
SERVICER REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties. The Servicer makes the
following representations and warranties to the Trustee and for the benefit
of the Noteholders which shall survive the Closing Date:
(a) Organization and Good Standing. The Servicer has been duly
incorporated and is validly existing in good standing as a corporation
under the laws of the State of Oregon, with requisite corporate power and
authority to own its properties, perform its obligations under this
Agreement and the Indenture and to transact the business in which it is
now engaged or in which it proposes to engage; the Servicer is duly
qualified to do business and is in good standing in each State in which
the nature of its business requires it to be so qualified, except where
failure to so qualify would not have a material adverse effect on the
ability of the Servicer to perform its obligations under this Agreement
and the Indenture.
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(b) Authorization and Binding Obligation. Each of this Agreement and
the Indenture has been duly authorized, executed and delivered by the
Servicer and constitutes the valid and legally binding obligation of the
Servicer enforceable against the Servicer in accordance with its terms,
subject as to enforcement to any bankruptcy, insolvency, reorganization
and other similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity regardless
of whether enforcement is sought in a court of equity or law.
(c) No Violation. The entering into of this Agreement and the
Indenture and the performance by the Servicer of its obligations under
this Agreement and the Indenture and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of the Servicer pursuant to
the terms of any material indenture, mortgage, deed of trust or other
agreement or instrument to which it is a party or by which it is bound or
to which any of its property or assets is subject, nor will such action
result in any violation of the provisions of its Articles of Incorporation
or By-laws, or any statute or any order, rule or regulation of any court
or any regulatory authority or other governmental agency or body having
jurisdiction over it or any of its properties; and no consent, approval,
authorization, order, registration or qualification of or with any court,
or any such regulatory authority or other governmental agency or body is
required for the Servicer to enter into this Agreement and the Indenture.
(d) No Proceedings. There are no proceedings or investigations
pending, or to the knowledge of the Servicer, threatened against or
affecting the Servicer or any subsidiary in or before any court,
governmental authority or agency or arbitration board or tribunal,
including but not limited to any such proceeding or investigation with
respect to any environmental or other liability resulting from the
ownership or use of any of the Credits, which, individually or in the
aggregate, involve the possibility of materially and adversely affecting
the properties, business, prospects, profits or condition (financial or
otherwise) of the Servicer and its subsidiaries, or the ability of the
Servicer to perform its obligations under this Agreement or the Indenture.
The Servicer is not in default with respect to any order of any court,
governmental authority or agency or arbitration board or tribunal.
(e) Approvals. The Servicer (i) is not in violation of any laws,
ordinances, governmental rules or regulations to which it is subject, (ii)
has not failed to obtain any licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its property or
to the conduct of its business, and (iii) is not in violation in any
material respect of any term of any agreement, charter instrument, bylaw
or instrument to which it is a party or by which it may be bound, which
violation or failure to obtain materially adversely affect the business or
condition (financial or otherwise) of the Servicer and its subsidiaries.
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(f) Investment Company. The Servicer is not an investment
company which is required to register under the Investment Company Act
of 1940, as amended.
(g) Fidelity Bond. The Servicer has insurance coverage for employee
dishonesty with respect to pension funds in an amount equal to $2,000,000
per occurrence and for employee dishonesty with respect to other funds in
an amount equal to $500,000 per occurrence.
Section 2.02. Covenants. (a) The Servicer covenants as to the
Purchased Assets:
(i) The Servicer shall not release or assign any Lien in favor of
the Trustee on any Credits related to any Contract in whole or in part,
except as permitted herein or in the Indenture.
(ii) The Servicer will in all material respects duly fulfill all
obligations on the Servicer's part to be fulfilled under or in connection
with the Purchased Assets. The Servicer will not amend, rescind, cancel or
modify any Contract or term or provision thereof, except as permitted
herein or in the Indenture, and the Servicer will not do anything that
would impair the rights of the Noteholders in the Purchased Assets, except
as contemplated herein or in the Indenture; provided that, without
limiting the foregoing, the Servicer may once per Contract over the
lifetime of such Contract allow the Obligor of such Contract to skip one
Scheduled Payment and add one month to the term of the related Contract;
provided, further, that such extension will not extend the date of the
last payment of any Contract one month beyond the Stated Maturity of the
Notes.
(iii) As more specifically set forth below, in performing its
servicing duties hereunder, the Servicer shall collect all payments
required to be made by the Obligors under the Contracts and enforce all
material rights of the Issuer under the Contracts. The Servicer shall not
assign, sell, pledge or exchange or in any way encumber or otherwise
dispose of the Credits, except as permitted hereunder or in the Indenture.
(b) The Servicer will deliver each of the accountings, statements
and reports described in Article 4 hereof to each party as set forth
therein.
(c) The Servicer shall maintain insurance coverage for employee
dishonesty with respect to pension funds in an amount greater than or
equal to $2,000,000 per occurrence and for employee dishonesty with
respect to other funds in an amount greater than or equal to $500,000 per
occurrence.
ARTICLE 3
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 3.01. Responsibilities of Servicer. (a) The Servicer, for the
benefit of the Noteholders, shall be responsible for, and shall, in accordance
with its customary practices,
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pursue the managing, servicing, administering, enforcing and making of
collections on the Contracts, the Credits, the enforcement of the Trustee's
security interest in the Receivables and the Credits granted pursuant to the
Indenture, and, if applicable, the resale of the Credits, each in accordance
with applicable law and the standards and procedures set forth in this Agreement
and any related provisions of the Indenture, the Sale Agreement and the
Receivables Purchase Agreement. The Servicer's responsibilities shall include
collecting and posting of all payments, responding to inquiries of Obligors,
investigating delinquencies, accounting for collections and furnishing monthly
and annual statements to the Trustee and the Noteholders with respect to
payments and using its best efforts to maintain the perfected security interest
of the Trustee in the Trust Estate (except with respect to the Credits). Subject
to the terms and conditions of this Agreement, the Servicer (at its expense),
acting alone or through a subservicer, including the Subservicer, shall have
full power and authority, acting at its sole discretion, to do any and all
things in connection with such managing, servicing, administration, enforcement,
collection and such resale of the Credits that it may deem necessary or
desirable and in the best interests of the Noteholders, including the prudent
delegation of such responsibilities. Without limiting the generality of the
foregoing, the Servicer, in its own name or in the name of the Subservicer,
shall, and is hereby authorized and empowered by the Trustee, subject to Section
3.02 hereof, to execute and deliver (on behalf of itself, the Noteholders, the
Trustee or any of them) any and all instruments of satisfaction or cancellation,
or of partial or full release or discharge, and all other comparable
instruments, with respect to the Contracts, the Custodian Files and the Contract
Files. Subject to the terms and conditions of this Agreement, the Servicer,
acting alone or through the Subservicer, also may, in its sole discretion, waive
any late payment charge or penalty, or any other fees that may be collected in
the ordinary course of servicing any Contract. Notwithstanding the foregoing,
neither the Servicer, nor the Subservicer, shall, except pursuant to an Upgrade
or a judicial order from a court of competent jurisdiction, or as otherwise
expressly provided in this Agreement, release or waive the right to collect the
Scheduled Payments or any unpaid balance on any Contract. The Trustee shall, at
the expense of the Servicer, furnish the Servicer, or at the request of the
Servicer, the Subservicer, with any powers of attorney and other documents
necessary or appropriate to enable the Servicer or the Subservicer to carry out
their servicing and administrative duties hereunder, and the Trustee shall not
be responsible for the Servicer's or the Subservicer's application thereof.
Notwithstanding the appointment by the Servicer of the Subservicer or any
delegation of its responsibilities hereunder, the Servicer shall remain
primarily liable for the full performance of its obligations hereunder;
provided, however, that if the Servicer requests from the Holders the removal of
the Subservicer after the occurrence of a Subservicer Event of Default, or any
act or omission that with the passage of time would be a Subservicer Event of
Default, and the Holders of 66-2/3% in principal amount of the Notes Outstanding
do not consent to such request, the Servicer shall no longer be liable for any
subsequent acts of the Subservicer except any acts taken by Sage at the
direction of the Servicer.
(b) The Servicer shall conduct any Contract management, servicing,
administration, collection or enforcement actions in the following manner:
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(i) The Servicer, as agent for and on behalf of the Issuer, with
respect to any Defaulted Contract shall follow such practices and
procedures as are normal and consistent with the Servicer's standards and
procedures relating to its own contracts, receivables and vacation credits
that are similar to the Contracts, Receivables and the Credits, including
without limitation, the taking of appropriate actions to foreclose or
otherwise liquidate any such Defaulted Contract, together with the related
Credits, to collect any Guaranty Amounts, and to enforce the Issuer's
rights in or under the Sale Agreement and the Receivables Purchase
Agreement. The Servicer shall continue its customary practice of applying
payments on Defaulted Contracts and Delinquent Contracts first to
delinquent interest, then to interest and then to principal. All
Recoveries or Residual Proceeds in respect of any such Receivable and the
related Credits received by the Servicer or the Subservicer shall be
deposited in the Clearing Account pursuant to Section 3.03(a);
(ii) The Servicer may ▇▇▇ to enforce or collect upon Contracts as
agent for the Trustee. If the Servicer elects to commence a legal
proceeding to enforce a Contract, the act of commencement shall be deemed
to be an automatic assignment of the Contract to the Servicer for purposes
of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the
ground that it is not a real party in interest or a holder entitled to
enforce the Contract, then the Trustee shall, at the Servicer's request
and expense, take such steps as the Servicer deems necessary and instructs
the Trustee in writing to take to enforce the Contract, including bringing
suit in its name or the name of the Issuer or the names of the
Noteholders, and the Trustee shall be indemnified by the Servicer for any
such action taken;
(iii) The Servicer shall exercise any rights of recourse against third
parties that exist with respect to any Contract in accordance with the
Servicer's usual practice and applicable law. In exercising recourse
rights, the Servicer is authorized on the Trustee's behalf to reassign the
Contract to the person against whom recourse exists to the extent
necessary, and at the price set forth in the document creating the
recourse. The Servicer will not reduce or diminish such recourse rights,
except to the extent that it exercises such right;
(iv) The Servicer may not accept Substitute Contracts that do not
comply with Section 3.10 hereof, Sections 3.03 and 3.04 of the Receivables
Purchase Agreement, Sections 3.03 and 3.04 of the Sale
Agreement and Section 4.03 of the Indenture;
(v) The Servicer may waive, modify or vary any terms of any Contract
or consent to the postponement of strict compliance with any such term if
in the Servicer's reasonable and prudent determination such waiver,
modification or postponement is not materially adverse to the Noteholders;
provided, however, that except as otherwise expressly permitted with
respect to an Upgrade, (A) the Servicer shall not forgive any payment, and
(B) the Servicer shall not permit any modification, waivers, variation or
postponements with respect to any Contract that would decrease the
Scheduled Payment, defer the payment of any principal or interest or any
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Scheduled Payment, reduce the Aggregate Collateral Value relating to the
Notes (except in connection with actual payments attributable to such
Aggregate Collateral Value), or prevent the complete amortization of the
Aggregate Collateral Value relating to the Notes from occurring by the
Calculation Date preceding the Stated Maturity. The Monthly Servicer's
Report shall indicate any modification of any Scheduled Payment pursuant
to Section 2.02(a)(ii) hereof; and
(vi) Notwithstanding any provision to the contrary contained in this
Agreement, the Servicer or the Subservicer shall exercise any right under
a Contract to accelerate the unpaid Scheduled Payments, due or to become
due thereunder in such a manner as to maximize the net proceeds available
to the Issuer; provided, however, that the Servicer will not accelerate
any Scheduled Payment unless permitted to do so by the terms of the
Contract and under applicable law.
Section 3.02. Standard of Care. In managing, administering, servicing,
enforcing and making collections on the Contracts and the Credits pursuant to
this Agreement, each of the Servicer and the Subservicer will provide such
services in a manner consistent with past practice and applicable law and will
not change such practice in any way that would cause an adverse material change
in such practice. In any event, each of the Servicer and the Subservicer
warrants that in providing such services it will exercise that degree of skill
and care consistent with that which other servicers in the industry customarily
exercise with respect to similar contracts and vacation credits owned or
serviced by them. Each of the Servicer and the Subservicer shall punctually
perform all of its obligations and agreements under this Agreement and shall
comply with all applicable federal and state laws and regulations, shall
maintain all state and federal licenses and franchises necessary for it to
perform its servicing responsibilities hereunder, and shall not materially
impair the rights of the Noteholders in any Contracts or payments thereunder.
Section 3.03. Clearing Account, ACH Payments and Servicer Remittances. (a)
The Servicer has previously instructed (or, with respect to Substitute
Contracts, will have instructed) each Obligor to remit his or her payments to
the Subservicer. The Subservicer shall deposit all payments for principal and
interest on the Receivables that it receives into an account (the "Clearing
Account") maintained at the Clearing Account Bank in the name of, and in the
sole control of, the Servicer. On each Business Day, the Subservicer shall, or
shall cause the Clearing Account Bank to, transfer all amounts in the Clearing
Account collected relating to the Contracts and the Receivables to the
Collection Account, which shall be an Eligible Account at the Clearing Account
Bank in the name of the Trustee on behalf of the Noteholders. The Trustee, based
solely on information set forth in the Monthly Servicer's Report, shall cause
the amounts in the Collection Account to be deposited in the Distribution
Account on the Remittance Date in an amount necessary to make the distributions
set forth in Section 12.02(d) of the Indenture on the related Payment Date.
(b) Except as otherwise provided in this Agreement, the Servicer, as agent
of the Issuer, shall remit or cause to be remitted to the Subservicer for
deposit in the Clearing Account by 4:00 p.m., Seattle time, on each Business Day
the amounts described below that
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have been received by the Servicer through 4:00 p.m., Seattle time, on the
preceding Business Day:
(i) all payments made under the Contracts relating to the
Receivables due after the Cut-Off Date, including prepayments but
excluding taxes, received directly by the Servicer;
(ii) all Residual Proceeds and Recoveries;
(iii) the Purchase Price of any Contract purchased by the
Servicer or the Issuer, to the extent received by the Servicer; and
(iv) all Guaranty Amounts.
The Servicer shall hold in trust for the benefit of the Noteholders any
payment it receives relating to items (i) through (iv) above until such time as
the Servicer transfers such payment to the Subservicer. The Subservicer shall
hold in trust for the benefit of the Holders of the Notes any payment it
receives relating to items (i) through (iv) above until such time as the
Subservicer transfers any such payment to the Clearing Account Bank for deposit
in the Clearing Account. Any such amounts held in the Clearing Account shall be
held in trust for the benefit of the Noteholders.
Section 3.04. Property Management. Trendwest will continue to manage the
Club in accordance with the management agreement between Trendwest and WorldMark
in existence as of the date hereof, as the same may be amended from time to time
on account of (i) a change in such agreement approved by a majority of the
members of WorldMark or (ii) a change in the agreement made in order to keep
Trendwest or WorldMark in compliance with federal, state or local laws, rules
and regulations, or (iii) as such agreement may be amended from time to time
with the written consent of the Holders of Notes representing 66-2/3% in
principal amount of the Notes Outstanding.
Section 3.05. Financing Statements. (a) The Servicer will make all UCC
filings and recordings as may be required pursuant to the terms of the
Indenture. The Servicer shall, in accordance with its customary servicing
procedures and at its own expense, be responsible for such steps as are
necessary to maintain perfection of such security interests. The Trustee hereby
authorizes the Servicer to re-perfect or to cause the re-perfection of such
security interest on its behalf as Trustee, as necessary.
(b) Within thirty (30) days from the date upon which the financing
statements described on Schedule I hereto appear in the records of the relevant
offices, the Servicer shall cause searches to be conducted in such offices and
promptly deliver the results of such searches to the counsel of the initial
Noteholders.
Section 3.06. [Reserved.]
Section 3.07. [Reserved.]
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Section 3.08. No Offset. Prior to the termination of this Agreement, the
obligations of the Servicer or the Subservicer under this Agreement shall not be
subject to any defense, counterclaim or right of offset which the Servicer or
the Subservicer have or may have against the Issuer, the Trustee or any
Noteholder whether in respect of this Agreement, the Indenture, the Notes, the
Sale Agreement, any Contract, Receivable, Credit or otherwise.
Section 3.09. Servicing Compensation. As compensation for the performance of
its obligations under this Agreement, the Servicer shall be entitled to receive
the Servicer Fee. The Servicer Fee shall be paid monthly, commencing on the
Initial Payment Date and terminating on the first to occur of (i) the receipt of
the last Scheduled Payment and related Residual Proceeds with respect to the
last remaining Contract, (ii) the receipt of Recoveries with respect to the last
remaining Contract, or (iii) the date on which the Issuer, Trendwest or TFI
purchases the last remaining Contract or Receivable, as the case may be. The
Servicer Fee shall be paid by the Issuer to the Servicer at the times and in the
priority as set forth in the Indenture. The Servicer shall pay all expenses
incurred by it in connection with its servicing activities hereunder, including,
without limitation, payment of the fees and disbursements of the Independent
Accountants, payment of expenses incurred in connection with distributions and
reports to the Trustee and the Noteholders and shall not be entitled to
reimbursement for such expenses; provided, however, that the Servicer will be
entitled to prompt reimbursement from the Issuer 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. The Servicer shall
pay the fees and expenses of the Subservicer and shall not be entitled to
reimbursement therefor.
Section 3.10. Substitution or Purchase of Contracts and Receivables. (a)
Except with respect to an Upgrade, the Servicer shall not allow termination of a
Contract prior to the scheduled expiration date unless the Obligor prepays the
entire Contract in full or unless the Issuer has (i) pledged to the Trustee a
Substitute Receivable and the Issuer's interest in the related Credits under the
related Substitute Contract, and delivered to the Trustee the original executed
counterpart of such Substitute Contract or (ii) purchased such Receivable and
the Issuer's interest in the related Credits from the Trustee by remittance of
the Purchase Price to the Subservicer for deposit in the Clearing Account in
accordance with Section 3.03(a) hereof; provided, further, that purchases and
substitutions of Receivables pursuant to this subparagraph (a) shall comply with
the requirements of Section 4.03 of the Indenture and the criteria set forth in
Section 3.04 of the Sale Agreement and Section 3.04 of the Receivables Purchase
Agreement.
(b) The Servicer shall permit the Issuer to (i) purchase the Receivable
related to any Defaulted Contract or Delinquent Contract by remittance by the
Issuer to the Subservicer for deposit in the Clearing Account in accordance with
Section 3.03(a) hereof or (ii) substitute for the Receivable related to any
Defaulted Contract or Delinquent Contract a Substitute Receivable and the
Issuer's interest in the Credits under the related Substitute Contract, upon the
delivery to the Trustee of the original executed counterpart of the Substitute
Contract; provided that, purchases and substitutions of Receivables pursuant to
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this subparagraph (b) shall comply with the requirements of Section 4.03 of the
Indenture and the criteria set forth in Section 3.04 of the Sale Agreement and
Section 3.04 of the Receivables Purchase Agreement.
(c) Notwithstanding any other provision contained in this Agreement, the
Servicer shall not, with respect to a Defaulted Contract, negotiate or enter
into a new contract with the Obligor relating to the Credits or the Obligor's
obligations under such Defaulted Contract unless the Issuer has repurchased or
made a substitution for the Receivable related to such Defaulted Contract in the
manner set forth in subsection (b) hereof.
(d) In the event that Trendwest is required, as a result of the breach by
it of certain representations or warranties, to repurchase or substitute a
Contract pursuant to Section 3.03 of the Sale Agreement and Section 3.03 the
Receivables Purchase Agreement, the Servicer shall permit such repurchase or
substitution in accordance with the terms of Sections 3.03 and 3.04 thereof.
(e) On any Determination Date, if after giving effect to all distributions
to be made on the related Payment Date, the Reserve Account balance will be
equal to or greater than the Reserve Account Required Balance, Trendwest may, at
its option, purchase, in its own right and not as Servicer hereunder, the
Credits relating to a Defaulted Contract at a price equal to 25% of (i) the
initial principal balance of the related Contract with respect to Contracts
which have not been "upgraded," or (ii) the sum of the initial principal balance
of the original Contract and the increase in principal balance due to Upgrades
with respect to Contracts that have been "upgraded." On such Determination Date,
the proceeds of such sale shall be remitted by Trendwest to the Subservicer for
immediate deposit into the Clearing Account.
(f) Prior to the substitution of any Contract hereunder, the Subservicer
shall review its records and determine that there are no liens or other
interests in such Substitute Contract, the related Substitute Receivable and
related Credits other than that of Trendwest or TFI, as applicable. If there are
any such other interests in such Substitute Contract, such Contract shall not
become a substitute Contract until all such interests have been terminated.
ARTICLE 4
ACCOUNTINGS, STATEMENTS AND REPORTS
Section 4.01. Monthly Servicer's Reports. No later than 1:00 p.m., Chicago
time, on each Determination Date, the Servicer shall deliver to the Issuer, the
Placement Agents, the Trustee and each Noteholder the Monthly Servicer's Report
in the form attached as Exhibit A with respect to the activity in the
immediately preceding Due Period. In the course of preparing the Monthly
Servicer's Report, the Servicer shall seek direction from the Issuer as to
remittance of the funds to be paid pursuant to Section 12.02(d)(xiv) of the
Indenture. Contracts and Receivables which have been substituted for or
purchased by Trendwest or the Issuer shall be identified by the related Obligor
number. On each Determination Date, the Subservicer shall deliver to the
Trustee, in the form of a computer
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disk or tape or via electronic transmission in a format acceptable to the
Trustee, containing all the information in the Subservicer's electronic files
regarding each of the Receivables as well as any additional information
reasonably requested by the Trustee prior to the related Payment Date. The
Monthly Servicer's Report prepared for each Due Period for June, September,
December and March shall also include a summary of the following information as
of the end of such Due Period: the total number of Credits, whether sold or
unsold; and the number of developed properties of the Club; the name of each
such developed property and the total number of Credits allocated to each
developed property.
Section 4.02. Financial Statements; Certification as to Compliance; Notice
of Default. (a) The Servicer (or the successor Servicer if the initial Servicer
is no longer the Servicer) will deliver, or cause to be delivered, to the
Trustee, the Placement Agents and each Holder (and, upon the request of any
Noteholder, to any prospective transferee of any Note):
(i) within 120 days after the end of each fiscal year of each
Reported Company, a copy of such Reported Company's Financial Statements,
all in reasonable detail and accompanied by an opinion of a firm of
independent certified public accountants (which shall be (i) ▇▇▇▇▇▇▇▇,
Peugh, McDaniel, ▇▇▇▇▇▇▇▇ & Co. LLP, (ii) a legal successor thereto, or
(iii) a nationally recognized accounting firm) stating that such financial
statements present fairly the financial condition of such Reported Company
(or, in the case of a successor Servicer, such successor Servicer's
financial condition) and have been prepared in accordance with generally
accepted accounting principles consistently applied (except for changes in
application in which such accountants concur), and that the examination of
such accountants in connection with such financial statements has been
made in accordance with generally accepted auditing standards, and
accordingly included such tests of the accounting records and such other
auditing procedures as were considered necessary in the circumstances;
(ii) within 60 days of the end of each fiscal quarter, unaudited
versions of each Reported Company's consolidated balance sheet and income
statement; and
(iii) with the Issuer's, the Servicer's and Trendwest's (if Trendwest
is not the Servicer) Financial Statements delivered pursuant to
subsections (a)(i) and (a)(ii) above, each of the Issuer, the Servicer and
Trendwest (if Trendwest is not the Servicer) deliver an Officer's
Certificate stating that such officer has reviewed the relevant terms of
the Indenture, the Sale Agreement, the Receivables Purchase Agreement and
this Agreement and has made, or caused to be made, under such officer's
supervision, a review of the transactions and conditions of such Reported
Company during the period covered by such Reported Company's Financial
Statements then being furnished, that the review has not disclosed the
existence of any Default or Event of Default under the Indenture or any
Servicer Default or Servicer Event of Default or, if a Default or Event of
Default under the Indenture or a Servicer Default or a Servicer Event of
Default exists, describing its nature, and the Issuer, with respect to a
Default or Event of Default, or the Servicer, with respect to a Servicer
Default or a Servicer Event of Default, describing what action such Person
has taken and is taking with respect thereto, and that on the basis of
such review the
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officer signing such certificate is of the opinion that during such period
the Servicer has serviced the Contracts in compliance with the procedures
hereof except as disclosed in such certificate;
(iv) with each Reported Company's Financial Statements delivered
pursuant to subsections (a)(i) and (a)(ii) above, each Reported Company
shall deliver an Officer's Certificate stating that such financial
statements present fairly the financial condition of such Reported
Company;
(v) immediately upon becoming aware of the existence of any
condition or event which constitutes a Servicer Default, a Servicer Event
of Default, a Subservicer Default or a Subservicer Event of Default
hereunder, a Default or an Event of Default under the Indenture, Sale
Agreement or Receivables Purchase Agreement, or a Trigger Event or Cash
Accumulation Event under the Indenture, a written notice describing its
nature and period of existence and what action the Servicer is or proposes
to take with respect thereto;
(vi) promptly upon the Servicer's becoming aware of:
(A) any proposed or pending investigation of it, the
Subservicer, the Club or the Issuer by any governmental authority
or agency, or
(B) any pending or proposed court or administrative proceeding
which involves or may involve the possibility of materially and
adversely affecting the properties, business, prospects, profits or
condition (financial or otherwise) of the Servicer, the Subservicer,
TFI, SPC, the Club or the Issuer,
a written notice specifying the nature of such investigation or proceeding
and what action the Servicer is taking or proposes to take with respect
thereto and evaluating its merits; and
(vi) with reasonable promptness any other data and information which
may be reasonably requested from time to time, including without
limitation any information required to be made available at any time to
any prospective transferee of any Notes in order to satisfy the
requirements of Rule 144A under the Securities Act of 1933, as amended.
(b) On or before each April 30, so long as any of the Notes are
outstanding, the Servicer shall furnish to the Trustee an Officer's Certificate
either stating that such action has been taken with respect to the recording,
filing, and rerecording and refiling of any financing statements and
continuation statements as necessary to maintain the interest of the Trustee
created by the Indenture, TFI or SPC created by the Sale Agreement and TFI
created Receivables Purchase Agreement with respect to the Trust Estate and
reciting the details of such action or stating that no such action is necessary
to maintain such interest. Such Officer's Certificate shall also describe the
recording, filing, rerecording and refiling
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of any financing statements and continuation statements that will be required to
maintain the interest of the Trustee in the Trust Estate until the date such
next Officer's Certificate is due.
Section 4.03. Independent Accountants' Reports. (a) Within thirty (30) days
of the Closing Date, the Servicer shall, at its expense, cause the Independent
Accountants to prepare a report, a form of which is attached as Exhibit B
hereto, to the effect that such Independent Accountants have reviewed a
statistically significant random sample (at the 95% confidence level) of the
Custodian Files and that such reviewed Custodian Files are in the possession of
the Subservicer and properly accounted for in the Subservicer's records.
(b) For each fiscal year (commencing with the fiscal year ending December
31, 1996), the Servicer at its expense shall cause the Independent Accountants
(who may also render and deliver other services to the Servicer and its
Affiliates) to prepare a report that shall include the information set forth in
the report set forth in paragraph (a) of this Section 4.03 and which shall also
include a report addressed to the Servicer, the Trustee and the Noteholders as
of the close of such year, to the effect that the Independent Accountants have
compared the information contained in the Monthly Servicer's Reports delivered
for a random three-month period during the relevant period with information
contained in the accounts and records for such period, and, where applicable, on
the basis of such procedures and comparison, report matters which come to the
Independent Accountants' attention to indicate that the information contained in
the Monthly Servicer's Reports does not reconcile with the information contained
in the Servicer's accounts and records. If any letter delivered pursuant to this
Section 4.03 (commencing with the letter relating to the fiscal year ending
December 31, 1996) discloses such exceptions, the Servicer at its expense shall
cause the Independent Accountants to deliver an agreed-upon procedures letter
addressed to the Servicer, the Trustee and the Noteholders for each subsequent
three-month period. Such obligation shall continue until the Independent
Accountants deliver a letter relating to a three-month period that does not
disclose any such exceptions. Thereafter, the Servicer shall cause a letter to
be delivered relating to each fiscal year in accordance with the first sentence
of this Section 4.03. The Servicer shall deliver to the Trustee a copy of any
such reports within 90 days of the close of the relevant period.
Section 4.04. Access to Certain Documentation and Information. (a) Each of
the Servicer and the Subservicer shall provide to the Trustee or any Noteholder
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
Servicer and the Subservicer may possess, such access being afforded without
charge but only upon reasonable request and during normal business hours so as
not to interfere unreasonably with the Servicer's or Subservicer's normal
operations or customer or employee relations, at offices of the Servicer and the
Subservicer designated by the Servicer and the Subservicer. If a Servicer Event
of Default, a Subservicer Event of Default, a Cash Accumulation Event or a
Trigger Event has occurred, the reasonable costs of providing the foregoing
shall be borne by the Servicer; otherwise, the Person seeking the foregoing
shall pay its, his or her own expenses relating to the foregoing.
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(b) At all times during the term hereof, the Servicer shall keep available
at its principal executive office for inspection by Noteholders and the Trustee
a list of all Contracts the interests in which are then held as a part of the
Trust Estate, together with a reconciliation of such list to that set forth in
the Contract Schedule and each of the Monthly Servicer's Reports, indicating the
cumulative addition and removal of the Issuer's interest in the Contracts from
the Trust Estate.
(c) Each of the Servicer and the Subservicer will maintain accounts and
records as to each respective Contract serviced by the Servicer and the
Subservicer that are accurate and sufficiently detailed as to permit (i) the
reader thereof to know as of the most recent Calculation Date the status of such
Contract, including any payments, Residual Proceeds and Recoveries received or
owing (and the nature of each) thereon and (ii) the reconciliation between
payments, Residual Proceeds or Recoveries on (or with respect to) each Contract
and the amounts from time to time deposited in the Collection Account in respect
of such Contract.
(d) Each of the Servicer and the Subservicer will maintain all of its
computerized accounts and records so that, from and after the time of the
acquisition of an interest in the Purchased Assets by the Issuer, the Servicer's
and the Subservicer's accounts and records (including any back-up computer
archives) that refer to any Contract, Receivable or Credits indicate clearly
that the Receivables are owned by the Issuer and are pledged, together with the
Issuer's security interest in the related Credits, to the Trustee for the
benefit of the Noteholders. Indication of the Trustee's interest in a Receivable
will be deleted from or modified on the Servicer's accounts and records when,
and only when, the Receivable or related Contract has been paid in full,
replaced with a Substitute Contract or purchased by Trendwest or the Issuer or
assigned to the Servicer pursuant to this Agreement, as the case may be.
(e) Nothing in this Section 4.04 shall affect the obligation of the
Servicer or the Subservicer to observe any applicable law prohibiting disclosure
of information regarding the Obligors, and the failure to provide information
otherwise required by this Section 4.04 as a result of such observance by the
Servicer, shall not constitute a breach of this Section 4.04.
(f) All information obtained by the Trustee or any Noteholder regarding
any Reported Company (pursuant to Section 4.02 or otherwise), the Obligors and
the Contracts, whether upon exercise of its rights under this Section 4.04 or
otherwise, shall be maintained by the Trustee and the Noteholder, as applicable,
in confidence in accordance with procedures adopted by the Trustee or such
Noteholder, as applicable, in good faith to protect such confidential
information; provided that the Trustee and any Noteholder may deliver or
disclose such confidential information to (i) their directors, officers,
employees, agents, attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment represented by the
Notes), (ii) their financial advisors and other professional advisors who agree
to hold confidential such information substantially in accordance with the terms
of this Section 4.04(f), (iii) any other holder of any Note, (iv) any
Institutional Investor to which any Noteholder sells or offers to sell such Note
or
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any part thereof or any participation therein (if such Person has agreed in
writing prior to its receipt of such confidential information to be bound by the
provisions of this Section 4.04(f)), (v) any federal or state regulatory
authority having jurisdiction over the Trustee or any Noteholder, (vi) the
National Association of Insurance Commissioners or any similar organization, or
any nationally recognized rating agency that requires access to information
about the Noteholders' investment portfolio or (vii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to the Trustee or
any Noteholder, (x) in response to any subpoena or other legal process, (y) in
connection with any litigation to which the Trustee or any Noteholder is a party
or (z) if an Event of Default has occurred and is continuing, to the extent the
Trustee or any Noteholder may reasonably determine such delivery and disclosure
to be necessary or appropriate in the enforcement or for the protection of the
rights and remedies under the Notes and this Agreement.
Section 4.05. Trustee to Cooperate. Upon payment (including through
application of any prepayment) in full of any Contract, the Servicer will notify
the Trustee by written certification (which certification shall include a
statement to the effect that all amounts received in connection with such
payments in full which are required to be deposited in the Clearing Account
pursuant to Section 3.03 hereof have been so deposited) of a Servicing Officer
and shall request delivery of the Contract to the Servicer in accordance with
Section 1.3 of the Custodian Agreement. Upon receipt of such delivery request,
the Custodian shall, within 7 days of such request by the Servicer, release such
Contract to the Servicer in accordance with the Custodian Agreement. Upon
release of such Contract, the Servicer is authorized to execute an instrument in
satisfaction of such Contract and to do such other acts and execute such other
documents as it deems necessary to discharge the Obligor thereunder and, if
applicable, release any security interest in the Credits related thereto. The
Servicer shall determine when a Contract has been paid in full. Upon the written
request of a Servicing Officer and subject to the Trustee's rights to indemnity
contained herein and in the Indenture, the Trustee shall perform such other acts
as reasonably requested in writing by the Servicer and otherwise cooperate with
the Servicer in enforcement of the Noteholders' rights and remedies with respect
to Contracts.
Section 4.06. Oversight of Servicing. (a) Prior to each Payment Date,
the Trustee shall review the Monthly Servicer's Report related thereto and
shall determine the following:
(i) that such Monthly Servicer's Report is complete on its face;
(ii) that the amounts credited to and withdrawn from the Collection
Account and the Reserve Account, and to be transferred to and withdrawn
from the Distribution Account and the balance of each such account, as set
forth in the records of the Trustee, are the same as the amount set forth
in the Monthly Servicer's Report;
(iii) that the Servicer has properly calculated the aggregate amounts
that are to be distributed pursuant to clauses (i), (ii)(A), (iii), (iv),
(v) and (vi) of Section 12.02(d) of the Indenture on such Payment Date;
and
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(iv) based solely on information set forth in the Monthly Servicer's
Report, determine that the Projected Income for the related Due Period
equals the sum of payments received as principal and interest from
Obligors due in such Due Period plus the amount of principal and interest
not paid on Delinquent Contracts and Defaulted Contracts (including
amounts due by virtue of canceled or bounced checks or other reversed
payments) minus any payments due in other Due Periods that were paid in
such Due Period (both late payments and prepayments).
(b) In the event of any discrepancy between the information set forth in
subparagraph (a) as calculated by the Servicer from that determined or
calculated by the Trustee, the Trustee shall promptly notify the Servicer of
such discrepancy. If within 30 days of such notice being provided to the
Servicer, the Trustee and the Servicer are unable to resolve such discrepancy,
the Trustee shall promptly notify the Holders of the Notes of such discrepancy.
(c) Based solely on the information included in the Contract Schedule
delivered on the Closing Date and the electronic reports provided on each
Payment Date thereafter, the Trustee shall determine that any Substitute
Contracts delivered under Section 3.10 satisfy the Substitution Criterion
described in clause (i) of the second sentence of Section 3.04(b) of the Sale
Agreement and clause (i) of the second sentence of Section 3.04(b) of the
Receivables Purchase Agreement.
(d) Other than as specifically set forth elsewhere in this Agreement, the
Trustee shall have no obligation to supervise, verify, monitor or administer the
performance of the Servicer or the Subservicer and shall have no liability for
any action taken or omitted by the Servicer or the Subservicer.
(e) The Trustee shall consult fully with the Servicer and the Subservicer
as may be necessary from time to time to perform or carry out the Trustee's
obligations hereunder, including the obligation to choose at any time a
successor to the duties and obligations of the Servicer as servicer or
Subservicer under Section 6.02 hereof.
(f) The Subservicer shall provide the Trustee with a copy of the software
that the Subservicer uses to service the Contracts, and the Trustee shall
maintain possession of such software in a manner that will protect the
proprietary information therein. The Trustee shall be under no obligation to
load the software onto its computer systems and may not release such software to
a third party unless the Subservicer is removed or otherwise is no longer acting
as the Subservicer. The Trustee shall return such software upon final payment of
all amounts due on the Notes.
ARTICLE 5
THE SERVICER, THE SUBSERVICER AND THE ISSUER
Section 5.01. Servicer and Subservicer Indemnification. (a) The Servicer
shall indemnify and hold harmless the Trustee, TFI, SPC, the Issuer, and the
Trust Estate, for the
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benefit of the Noteholders, from and against any loss, liability, claim,
expense, damage or injury suffered or sustained to the extent that such loss,
liability, claim, expense, damage or injury arose out of or was imposed by
reason of the failure by the Servicer to perform its duties under this Agreement
or are attributable to errors or omissions of the Servicer related to such
duties; provided, however, that the Servicer shall not indemnify any party to
the extent that acts of fraud, gross negligence or breach of fiduciary duty by
such party contributed to such loss, liability, claim, expense, damage or
injury.
(b) The Subservicer shall indemnify and hold harmless the Trustee, TFI,
SPC, the Issuer, the Servicer and the Trust Estate, for the benefit of the
Noteholders, from and against any loss, liability, claim, expense, damage or
injury suffered or sustained to the extent that such loss, liability, claim,
expense, damage or injury arose out of or was imposed by reason of the failure
by the Subservicer to perform its duties under this Agreement or are
attributable to errors or omissions of the Subservicer related to such duties;
provided, however, that the Subservicer shall not indemnify any party to the
extent that acts of fraud, gross negligence or breach of fiduciary duty by such
party contributed to such loss, liability, claim, expense, damage or injury.
(c) Indemnification under this Section 5.01 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation
reasonably incurred. If the Servicer or Subservicer has made any indemnity
payments to the Trustee or the Noteholders pursuant to this Section and such
party thereafter collects any of such amounts from others, such party will
promptly repay such amounts collected to the Servicer or Subservicer, as
applicable, without interest. The provisions of this Section 5.01 shall survive
any expiration or termination of this Agreement.
Section 5.02. Corporate Existence; Reorganizations. (a) The Servicer and the
Subservicer shall keep in full effect their existence and good standing as
corporations in the State of their incorporation and will obtain and preserve
their qualification to do business as foreign corporations in each jurisdiction
in which such qualification is or shall be necessary to enable the Servicer or
the Subservicer to perform their duties under this Agreement, except where the
failure to so qualify would not have a material adverse effect on the Trust
Estate or the ability of the Servicer or the Subservicer to perform their duties
hereunder; provided, however, that the Servicer and the Subservicer may
reincorporate in another State, if to do so would be in the best interests of
the Servicer or the Subservicer and would not have a material adverse effect
upon the Noteholders.
(b) Neither the Servicer nor the Subservicer shall (i) convey, transfer or
lease substantially all of its assets as an entirety to any Person, or (ii)
merge or consolidate with another Person, unless such Person or the merged or
consolidated entity acquires substantially all the assets of the Servicer or the
Subservicer, as the case may be, as an entirety and executes and delivers to the
Issuer and the Trustee an agreement, in form and substance reasonably
satisfactory to the Issuer and the Trustee, which contains an assumption by such
Person or entity of the due and punctual performance and observance of each
covenant and condition to be performed or observed by the Servicer or the
Subservicer, as the case may be, under this Agreement; provided that nothing
herein shall prevent the
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Servicer from selling contracts and receivables which are not Purchased Assets
pursuant to a receivables financing.
Section 5.03. Limitation on Liability of the Servicer, the Subservicer and
Others. Except as provided in Section 5.01, the Servicer, the Subservicer and
any of the officers, directors, employees or agents of the Servicer or the
Subservicer shall not be under any liability for any action taken or for
refraining from the taking of any action in their capacity as Servicer or
Subservicer pursuant to this Agreement; provided, however, that this provision
shall not protect the Servicer or Subservicer or any such Person against any
liability which would otherwise be imposed by reason of willful misconduct, bad
faith or negligence (which includes negligence with respect to the duties of the
Servicer or Subservicer explicitly set forth in this Agreement) in the
performance of its duties hereunder. The Servicer, the Subservicer and any
officer, director, employee or agent of the Servicer or the Subservicer may rely
in good faith on any document of any kind prima facie properly executed and
submitted by any Person with respect to any matters arising hereunder. No
implied covenants or obligations shall be read into the Servicing Agreement
against the Servicer or the Subservicer. In the event the Servicer or the
Subservicer perform any activities beyond the requirements of this Agreement,
they shall have the option but will not be required to perform such activities
in the future.
Section 5.04. The Servicer and Subservicer Not to Resign. (a) Neither the
Servicer nor the Subservicer shall resign from the duties and obligations hereby
imposed on it by this Agreement except upon a determination by the Board of
Directors of the Servicer or Subservicer, as the case may be, that by reason of
change in applicable legal requirements, with which the Servicer or Subservicer,
as the case may be, cannot reasonably comply, the continued performance by the
Servicer or the Subservicer, as the case may be, of its duties under this
Agreement would cause it to be in violation of such legal requirements, said
determination to be evidenced by a resolution from the appropriate Board of
Directors to such effect, accompanied by an Opinion of Counsel to such effect
and reasonably satisfactory to the Trustee.
(b) No such resignation shall become effective until a successor Servicer
or Subservicer, as the case may be, shall have assumed the responsibilities and
obligations of the Servicer or Subservicer hereunder.
(c) Except as provided in Sections 5.02 and 6.01 hereof, the duties and
obligations of the Servicer and Subservicer under this Agreement shall continue
until this Agreement shall have been terminated as provided in Section 8.01
hereof, and shall survive the exercise by the Issuer or the Trustee of any right
or remedy under this Agreement, or the enforcement by the Issuer, the Trustee or
any Noteholder of any provision of the Notes or this Agreement.
Section 5.05. Issuer Indemnification. The Issuer shall indemnify and hold
harmless the Servicer and the Subservicer (but solely from the amounts to be
distributed as set forth in Sections 12.02(d)(xiv) and 12.03(d)(ii) of the
Indenture) from and against any loss, liability, expense, damage or injury
suffered or sustained by the Servicer or the Subservicer, including but not
limited to any judgment, award, settlement, reasonable attorneys' fees and other
costs and expenses incurred in connection with the defense of any actual or
threatened
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action, proceeding or claim, which arises out of the Servicer's or the
Subservicer's activities hereunder; provided, however, that the Issuer shall not
indemnify the Servicer or the Subservicer if the Servicer's or the Subservicer's
activities constituted fraud, willful misconduct, negligence (which includes
negligence with respect to the duties of the Servicer which are explicitly set
forth in this Agreement) or breach of fiduciary duty by the Servicer or the
Subservicer for any amounts for which the Servicer or Subservicer is obligated
to indemnify the Issuer or other Persons pursuant to Section 5.01 hereof.
ARTICLE 6
SERVICING TERMINATION
Section 6.01. Servicer Events of Default. (a) Any of the following
acts or occurrences shall constitute a Servicer Event of Default:
(i) any failure by the Servicer to deliver to the Subservicer for
payment to Noteholders any proceeds or payments received from an Obligor
or in respect of the Trust Estate and required to be so delivered under
the terms of the Indenture and this Agreement that continues unremedied
until 1:00 p.m., Chicago time, on the second successive Business Day
following such failure; provided, however, that the Subservicer, upon
receiving actual knowledge of such failure, shall give the Servicer and
the Trustee prompt written, telecopied or telephonic notice of such
failure. Notwithstanding the foregoing, any failure by the Subservicer to
deliver such notice to the Servicer shall not prevent the occurrence of a
Servicer Event of Default; or
(ii) any failure by the Servicer to deliver a Monthly Servicer's
Report pursuant to Section 4.01 hereof that continues unremedied until
1:00 p.m., Chicago time, the following Business Day; provided, however,
that if the Trustee has actual knowledge that the Servicer has not
delivered the Monthly Servicer's Report by 1:00 p.m., Chicago time, on a
Determination Date, the Trustee shall give the Servicer written,
telecopied or telephonic notice of such failure. Notwithstanding the
foregoing, any failure by the Trustee to deliver such notice to the
Servicer shall not prevent the occurrence of a Servicer Event of Default;
or
(iii) any failure by the Servicer to remit any Purchase Price received
by it to the Subservicer that continues unremedied until 4:00 p.m.,
Chicago time, the following Business Day; provided, however, that if the
Servicer has not remitted any Purchase Price received by it to the
Subservicer by 2:00 p.m., Chicago time, on the Determination Date and the
Trustee has received written notification from the Subservicer by way of
the Monthly Servicer's Report or otherwise that such Purchase Price has
not been paid, the Trustee shall give the Servicer prompt written,
telecopied or telephonic notice of such failure. Notwithstanding the
foregoing, any failure by the Trustee to deliver such notice to the
Servicer shall not prevent the occurrence of a Servicer Event of Default;
or
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(iv) any failure by the Servicer to make remittances (other than a
remittance of Purchase Price referred to in clause (iii) above) or deliver
notices pursuant to Section 3.03 hereof, that continues unremedied until
1:00 p.m., Chicago time, of the second successive Business Day; or
(v) any failure on the part of the Servicer duly to observe or
perform any other covenants or agreements of the Servicer set forth in
this Agreement or the Indenture, as the case may be, or any representation
or warranty of the Servicer set forth in Section 2.01 of this Agreement
shall prove to be incorrect in any material respect, which failure or
breach continues unremedied for a period of 30 days after the date on
which the Servicer becomes aware of such failure or breach, or receives
written notice of such failure or breach; or
(vi) any assignment by the Servicer to a delegate of its duties or
rights under this Agreement, except as specifically permitted hereunder,
or any attempt to make such an assignment; or
(vii) the entry of a decree or order for relief by a court having
jurisdiction in respect of the Servicer or a petition against the Servicer
in an involuntary case under any federal bankruptcy laws, as now or
hereafter in effect, or any other present or future federal or state
bankruptcy, insolvency or similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official for the Servicer or for any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Servicer and
the continuance of any such decree or order unstayed and in effect, or
failure for such petition to be dismissed, for a period of 60 consecutive
days; or
(viii) the commencement by the Servicer of a voluntary case under any
federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency, reorganization
or similar law, or the consent by the Servicer to the appointment of or
taking possession by a conservator, receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official in any
insolvency, readjustment of debt, marshaling of assets and liabilities,
bankruptcy or similar proceedings of or relating to the Servicer relating
to a substantial part of its property, or the making by the Servicer of an
assignment for the benefit of creditors, or the failure by the Servicer
generally to pay its debts as such debts become due or if the Servicer
shall admit in writing its inability to pay their debts as they become
due, or the taking of corporate action by the Servicer in furtherance of
any of the foregoing; or
(ix) the stockholders' equity of the Servicer and its consolidated
subsidiaries, determined in accordance with generally accepted accounting
principles, as would be shown on a consolidated balance sheet for such
Persons, is below $5,000,000; or
(x) the occurrence of a Trigger Event if the initial Servicer
is the Servicer; or
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(xi) the occurrence of a Subservicer Event of Default.
(b) If a Servicer Event of Default shall have occurred and be continuing,
the Trustee shall, upon written direction of the Holders of Notes representing
not less than 66-2/3% in principal amount of the Notes Outstanding, by notice
(the "Servicer Termination Notice") given in writing to the Servicer terminate
all, but not less than all, of the rights and obligations (except as expressly
provided herein) of the Servicer under this Agreement. Notwithstanding the
foregoing, a delay in or failure of performance under Sections 6.01(a)(ii) or
6.01(a)(v) hereof for a period of 30 or more days shall not constitute a
Servicer Event of Default if such delay or failure could not have been prevented
by the exercise of reasonable diligence by the Servicer and such delay or
failure was caused by acts of declared or undeclared war, public disorder,
rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes,
earthquakes, floods or similar causes; provided, however, that in any event,
such delay or failure shall constitute a Servicer Event of Default if it
continues unremedied for a period of 35 days. The preceding sentence shall not
relieve the Servicer from using its best efforts to perform its obligations in a
timely manner in accordance with the terms of this Agreement, and the Servicer
shall provide the Trustee, the Issuer and the Noteholders with prompt notice of
such failure or delay by it or the Subservicer, together with a description of
its efforts to so perform its obligations.
(c) [Reserved]
(d) On or after the receipt by the Servicer of a Servicer Termination
Notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Notes or the Contracts or otherwise, shall pass to and be
vested in the successor Servicer appointed pursuant to Section 6.02 hereof, and,
without limitation, such successor Servicer is hereby authorized and empowered
to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer of the Contracts and
related documents, or otherwise. The Servicer agrees to cooperate with the
Trustee and the successor Servicer in effecting the termination of the
responsibilities and rights of the Servicer hereunder, including, without
limitation, the transfer to the successor Servicer for administration by it of
all cash amounts that shall at the time be held by the Servicer for deposit, or
have been deposited by the Servicer or thereafter received with respect to
Contracts. To assist the successor Servicer in enforcing all rights under the
Contracts, the outgoing Servicer, at its own expense, shall transfer its records
(electronic and otherwise) relating to such Contracts to the successor Servicer
in such form as the successor Servicer may reasonably request and shall transfer
the related Contracts (to the extent not held by the Trustee) and all other
records, correspondence and documents relating to the Contracts that it may
possess to the successor Servicer in the manner and at such times as the
successor Servicer shall reasonably request.
Section 6.02. Appointment of Successor Servicer. (a)(i) On and after the
time at which the Servicer resigns as Servicer pursuant to Section 5.04 hereof
or is terminated as Servicer pursuant to Section 6.01 hereof, the Trustee shall,
at the direction of Holders of
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Notes representing not less than 66-2/3% in principal amount of the Notes
Outstanding appoint a successor Servicer.
(ii) The successor Servicer shall be the successor in all respects to the
Servicer in its capacity as Servicer under this Agreement, and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof; provided, however, that any such successor
shall not be liable for any acts or omissions of the outgoing Servicer or for
any breach by the outgoing Servicer of any of its representations and warranties
contained herein or in any related document or agreement. Subject to the consent
of the Holders representing not less than 66-2/3% in principal amount of the
Notes Outstanding, the successor Servicer may subcontract with another firm to
act as subservicer so long as the successor Servicer remains fully responsible
and accountable for performance of all obligations of the Servicer on and after
the time the Servicer receives the Servicer Termination Notice. The successor
Servicer shall be entitled to the Servicer Fee in connection with acting as
Servicer hereunder.
(b) The Servicer, the Subservicer, the Issuer, the Trustee and any
successor Servicer or successor Subservicer shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
Upon any succession, such successor Servicer as well as any successor
Subservicer shall notify the Obligors that it has been appointed Servicer under
this Agreement with respect to the Contracts.
Section 6.03. Notification to Noteholders. The Servicer shall promptly
notify the Subservicer, the Issuer and the Trustee of any Servicer Event of
Default upon actual knowledge thereof by an officer of the Servicer. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article 6, the Trustee shall give prompt written notice thereof to the
Noteholders at their respective addresses appearing in the Note Register.
Section 6.04. Waiver of Past Defaults. The Trustee shall, at the direction
of the Holders of Notes representing not less than 66-2/3% in principal amount
of the Notes Outstanding, on behalf of all Noteholders, waive any default by the
Servicer in the performance of its obligations hereunder and its consequences,
other than a default with respect to required deposits and payments in
accordance with Article 3 or a default of the type set forth in clause (vii) or
(viii) of Section 6.01(a) hereof, which waiver shall require the consent of each
Noteholder. Upon any such waiver of a past default, such default shall cease to
exist, and any Servicer Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereon
except to the extent expressly waived.
Section 6.05. Effects of Termination of Servicer. (a) Upon the appointment
of a successor Servicer, the predecessor Servicer shall remit any Scheduled
Payments and any other payments or proceeds that such predecessor may receive
pursuant to any Contract or otherwise to such successor after such date of
appointment.
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(b) After the delivery of a Servicer Termination Notice, the outgoing
Servicer shall have no further obligations with respect to the management,
administration, servicing, enforcement, custody or collection of the Contracts,
and the successor Servicer shall have all of such obligations, except that the
outgoing Servicer will transmit or cause to be transmitted directly to such
successor Servicer promptly on receipt and in the same form in which received,
any amounts held by the outgoing Servicer (properly endorsed where required for
such successor to collect them) received as payments upon or otherwise in
connection with the Contracts. The outgoing Servicer's indemnification
obligations pursuant to Section 5.01 hereof will survive the termination of the
Servicer but will not extend to any acts or omissions of a successor Servicer.
Section 6.06. No Effect on Other Parties. (a) Upon any termination of the
rights and powers of the Servicer pursuant to Section 6.01, or upon any
appointment of a successor Servicer, all the rights, powers, duties and
obligations of Trendwest under this Agreement, the Indenture, the Receivables
Purchase Agreement and the Sale Agreement, other than Trendwest's rights,
powers, duties and obligations as Servicer therein, shall remain unaffected by
such termination or appointment and shall remain in full force and effect
thereafter.
ARTICLE 7
THE SUBSERVICER
Section 7.01. Representations and Warranties. The Subservicer makes
the following representations and warranties to the Trustee and for the
benefit of the Noteholders which shall survive the Closing Date:
(a) Organization and Good Standing. The Subservicer has been duly
incorporated and is validly existing in good standing as a corporation
under the laws of the State of Washington, with requisite corporate power
and authority to own its properties, perform its obligations under this
Agreement and to transact the business in which it is now engaged or in
which it proposes to engage; the Subservicer is duly qualified to do
business and is in good standing in each State in which the nature of its
business requires it to be so qualified, except where failure to so
qualify would not have a material adverse effect on the ability of the
Subservicer to perform its obligations under this Agreement.
(b) Authorization and Binding Obligation. This Agreement has been
duly authorized, executed and delivered by the Subservicer and constitutes
the valid and legally binding obligation of the Subservicer enforceable
against the Subservicer in accordance with its terms, subject as to
enforcement to any bankruptcy, insolvency, reorganization and other
similar laws of general applicability relating to or affecting creditors'
rights generally and to general principles of equity regardless of whether
enforcement is sought in a court of equity or law.
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(c) No Violation. The entering into of this Agreement and the
performance by the Subservicer of its obligations under this Agreement and
the consummation of the transactions contemplated herein will not conflict
with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any of the property or assets of the
contemplated pursuant to the terms of any material indenture, mortgage,
deed of trust or other agreement or instrument to which it is a party or
by which it is bound or to which any of its property or assets is subject,
nor will such action result in any violation of the provisions of its
Articles of Incorporation or By-laws, or any statute or any order, rule or
regulation of any court or any regulatory authority or other governmental
agency or body having jurisdiction over it or any of its properties; and
no consent, approval, authorization, order, registration or qualification
of or with any court, or any such regulatory authority or other
governmental agency or body is required for the Subservicer to enter into
this Agreement.
(d) No Proceedings. There are no proceedings or investigations
pending, or to the knowledge of the Subservicer, threatened against or
affecting the Subservicer or any subsidiary in or before any court,
governmental authority or agency or arbitration board or tribunal,
including but not limited to any such proceeding or investigation with
respect to any environmental or other liability resulting from its
business which, individually or in the aggregate, involve the possibility
of materially and adversely affecting the properties, business, prospects,
profits or condition (financial or otherwise) of the Subservicer, or the
ability of the Subservicer to perform its obligations under this
Agreement. The Subservicer is not in default with respect to any order of
any court, governmental authority or agency or arbitration board or
tribunal.
(e) Approvals. The Subservicer (i) is not in violation of any laws,
ordinances, governmental rules or regulations to which it is subject, (ii)
has not failed to obtain any licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its property or
to the conduct of its business, and (iii) is not in violation in any
material respect of any term of any agreement, charter instrument, bylaw
or instrument to which it is a party or by which it may be bound, which
violation or failure to obtain materially adversely affect the business or
condition (financial or otherwise) of the Subservicer and its
subsidiaries.
Section 7.02. Subservicer Events of Default. (a) Any of the following
acts or occurrences shall constitute a Subservicer Event of Default:
(i) any failure by the Subservicer to deliver to the Clearing
Account Bank for deposit in the Clearing Account any proceeds or payments
received from an Obligor or the Servicer or in respect of the Trust Estate
and required to be so delivered under the terms of the Indenture and this
Agreement that continues unremedied until 1:00 p.m., Chicago time, on the
second successive Business Day following such failure; provided, however,
that the Trustee, upon receiving actual knowledge of such failure, shall
give the Subservicer prompt written, telecopied or
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telephonic notice of such failure. Notwithstanding the foregoing, any
failure by the Trustee to deliver such notice to the Subservicer shall not
prevent the occurrence of a Subservicer Event of Default; or
(ii) any failure on the part of the Subservicer duly to observe or
perform any other covenants or agreements of the Subservicer set forth in
this Agreement, or any representation or warranty of the Subservicer set
forth in Section 7.01 of this Agreement shall prove to be incorrect in any
material respect, which failure or breach continues unremedied for a
period of 30 days after the date on which the Subservicer becomes aware of
such failure or breach, or receives written notice of such failure or
breach; or
(iii) any assignment by the Subservicer to a delegate of its duties or
rights under this Agreement, except as specifically permitted hereunder,
or any attempt to make such an assignment; or
(iv) the entry of a decree or order for relief by a court having
jurisdiction in respect of the Subservicer or a petition against the
Subservicer in an involuntary case under any federal bankruptcy laws, as
now or hereafter in effect, or any other present or future federal or
state bankruptcy, insolvency or similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official for the Subservicer or for any substantial part of its property,
or ordering the winding up or liquidation of the affairs of the
Subservicer and the continuance of any such decree or order unstayed and
in effect, or failure for such petition to be dismissed, for a period of
60 consecutive days; or
(v) the commencement by either the Subservicer of a voluntary case
under any federal bankruptcy laws, as now or hereafter in effect, or any
other present or future federal or state bankruptcy, insolvency,
reorganization or similar law, or the consent by either the Subservicer to
the appointment of or taking possession by a conservator, receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official in any insolvency, readjustment of debt, marshaling of assets and
liabilities, bankruptcy or similar proceedings of or relating to the
Subservicer relating to a substantial part of its property, or the making
by the Subservicer of an assignment for the benefit of creditors, or the
failure by the Subservicer generally to pay its debts as such debts become
due or if the Subservicer shall admit in writing its inability to pay
their debts as they become due, or the taking of corporate action by the
Subservicer in furtherance of any of the foregoing; or
(b) If a Subservicer Event of Default shall have occurred and be
continuing, then the Trustee shall, upon written direction of the Holders of
Notes representing 66-2/3% in principal amount of the Notes Outstanding, by
notice (the "Subservicer Termination Notice") given in writing to the
Subservicer terminate all, but not less than all, of the rights and obligations
of the Subservicer under this Agreement. Notwithstanding the foregoing, a delay
in or failure of performance under Sections 7.02(a)(ii) hereof for a period of
30 or more days shall not constitute a Subservicer Event of Default if such
delay or failure could
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not have been prevented by the exercise of reasonable diligence by the
Subservicer and such delay or failure was caused by acts of declared or
undeclared war, public disorder, rebellion or sabotage, epidemics, landslides,
lightning, fire, hurricanes, earthquakes, floods or similar causes; provided,
however, that in any event, such delay or failure shall constitute a Subservicer
Event of Default if it continues unremedied for a period of 35 days. The
preceding sentence shall not relieve the Subservicer from using its best efforts
to perform its obligations in a timely manner in accordance with the terms of
this Agreement, and the Subservicer shall provide the Trustee, the Issuer and
the Noteholders with prompt notice of such failure or delay by it, together with
a description of its efforts to so perform its obligations.
Section 7.03. Appointment of Successor Subservicer. (a)(i) On and after the
time at which Subservicer resigns pursuant to Section 5.04 hereof or is
terminated as Subservicer pursuant to Section 7.02(b) hereof, the Trustee shall,
at the direction of Holders of Notes representing at least 66-2/3% in principal
amount of the Notes Outstanding appoint a successor Subservicer.
(ii) The successor Subservicer shall be the successor in all respects to
the Subservicer in its capacity as Subservicer under this Agreement, and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
Subservicer by the terms and provisions hereof; provided, however, that any such
successors shall not be liable for any acts or omissions of the outgoing
Subservicer, as the case may be, or for any breach by either the outgoing
Subservicer of any of its representations and warranties contained herein or in
any related document or agreement.
(b) The Servicer, the Subservicer, the Issuer, the Trustee and any
successor Servicer or successor Subservicer shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
Upon any succession, such successor Servicer as well as any successor
Subservicer shall notify the Obligors that it has been appointed Servicer or
Subservicer, as the case may be, under this Agreement with respect to the
Contracts.
Section 7.04. Notification to Noteholders. The Subservicer shall promptly
notify the Servicer, the Issuer and the Trustee of any Subservicer Event of
Default upon actual knowledge thereof by the Subservicer. Upon any termination
of, or appointment of a successor to, the Subservicer pursuant to this Article
7, the Trustee shall give prompt written notice thereof to the Noteholders at
their respective addresses appearing in the Note Register.
Section 7.05. Waiver of Past Defaults. The Trustee shall, at the direction
of the Holders of Notes representing more than 66-2/3% in principal amount of
the Notes Outstanding, on behalf of all Noteholders, waive any default by the
Subservicer in the performance of its obligations hereunder and its
consequences, other than a default with respect to required deposits and
payments in accordance with Article 3 or a default of the type set forth in
clause (iv) or (v) of Section 7.02(a) hereof, which waiver shall require the
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consent of each Noteholder. Upon any such waiver of a past default, such default
shall cease to exist, and any Subservicer Event of Default arising therefrom
shall be deemed to have been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly waived.
Section 7.06. Effects of Termination of Subservicer. (a) Upon the
appointment of a successor Subservicer, the predecessor Subservicer shall remit
any Scheduled Payments and any other payments or proceeds that such predecessor
may receive pursuant to any Contract or otherwise to such successor after such
date of appointment.
(b) After the delivery of a Subservicer Termination Notice, the outgoing
Subservicer shall have no further obligations with respect to the management,
administration, servicing, enforcement, custody or collection of the Contracts,
and the successor Subservicer shall have all of such obligations, except that
the outgoing Subservicer will transmit or cause to be transmitted directly to
such successor Subservicer promptly on receipt and in the same form in which
received, any amounts held by the outgoing Subservicer (properly endorsed where
required for such successor to collect them) received as payments upon or
otherwise in connection with the Contracts.
ARTICLE 8
MISCELLANEOUS PROVISIONS
Section 8.01. Termination of the Servicing Agreement. (a) Absent a
termination pursuant to Section 6.01 or 7.02 hereof, the respective duties and
obligations of the Servicer, the Subservicer, the Issuer and the Trustee created
by this Agreement shall terminate upon the discharge of the Indenture in
accordance with its terms; and the respective duties and obligations of the
Trustee shall terminate with respect to the Trustee in the event the Trustee
resigns or is replaced under Section 7.09 of the Indenture; provided, however,
that no resignation or removal of the Trustee and no appointment of a successor
Trustee shall become effective until the acceptance of appointment by the
successor Trustee under Section 7.10 of the Indenture. Upon the termination of
this Agreement pursuant to this Section 8.01(a), each of the Servicer and the
Subservicer shall pay all monies with respect to the Receivables and Credits
held by the Servicer or the Subservicer, as the case may be, and to which the
Servicer and the Subservicer or the Subservicer, as the case may be, is not
entitled, to the Issuer or upon the Issuer's order. Each of the Servicer's and
Subservicer's indemnification obligations pursuant to Section 5.01 hereof will
survive the termination of this Agreement.
(b) This Agreement shall not be automatically terminated as a result of an
Event of Default under the Indenture or any action taken by the Trustee
thereafter with respect thereto, and any liquidation or preservation of the
Trust Estate by the Trustee thereafter shall be subject to the rights of the
Servicer to service the Receivables and to collect servicing compensation as
provided hereunder.
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Section 8.02. Amendments. (a) This Agreement may be amended from time to
time by the Issuer, the Subservicer and the Servicer, with the consent of the
Trustee, and the Holders of not less than 66-2/3% in principal amount of Notes
outstanding, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement; provided,
however, that no such amendment shall, without the consent of each Noteholder
(i) alter the priorities with which any allocation of funds shall be made under
this Agreement; (ii) permit the creation of any lien on the Trust Estate (other
than the lien of the Indenture) or any portion thereof or deprive any such
Noteholder of the benefit of this Agreement with respect to the Trust Estate or
any portion thereof; (iii) modify any provision herein relating to the voting
percentage of Noteholders necessary to grant consent or give direction, or (iv)
modify this Section 8.02 or Sections 6.02 or 6.04 hereof.
(b) Promptly after the execution of any amendment, the Servicer shall send
to the Subservicer, the Trustee, the Rating Agency and each Holder of the Notes
a conformed copy of each such amendment.
(c) It shall be necessary, in any consent of Noteholders under this
Section 8.02, to approve the particular form of any proposed amendment. The
manner of obtaining such consent and of evidencing the authorization of the
execution thereof by Noteholders shall be subject to such reasonable regulations
as the Trustee may prescribe.
(d) Any amendment or modification effected contrary to the provisions of
this Section 8.02 shall be void.
Section 8.03. Governing Law. This Agreement shall be construed in accordance
with the internal laws of the State of New York without regard to conflict of
laws principles and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 8.04. Notices, etc., to Trustee, Issuer, Servicer and Subservicer.
Any request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other document provided or permitted by this Agreement 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 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (facsimile number (▇▇▇) ▇▇▇-▇▇▇▇), Attention: Asset Backed
Securities Trust Services, TRI Funding 1996-1, or at any other address
previously furnished in writing to the Issuer, the Noteholders, the
Servicer and the Subservicer; or
(b) to the Issuer at TRI Funding Company I, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ (facsimile number (▇▇▇) ▇▇▇-▇▇▇▇), Attention:
Treasurer, or at any other address previously furnished in writing to the
Trustee, the Noteholders, the Servicer and the Subservicer by the Issuer;
or
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(c) to the Servicer at Trendwest Resorts, Inc., ▇▇▇▇▇ ▇.▇. ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (facsimile number (▇▇▇) ▇▇▇-▇▇▇▇),
Attention: Executive Vice President, or at any other address
previously furnished in writing to the Trustee, the Noteholders, the
Subservicer and the Issuer; or
(d) to the Subservicer at Sage Systems, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (facsimile number (206)
462-0264), Attention: President, or at any other address previously
furnished in writing to the Trustee, the Noteholders and the Servicer; or
(e) to the Rating Agency at Fitch Investors Service, L.P., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (facsimile (▇▇▇) ▇▇▇-▇▇▇▇),
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or at any other address previously furnished
in writing to the Trustee, the Noteholders, the Subservicer, the Servicer
and the Issuer.
Section 8.05. Notices and Other Documents to Noteholders; Waiver. (a) Where
this Agreement 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 to (i) 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. The Trustee acknowledges receipt of Annex 1 to the Note Purchase
Agreement, which sets forth such information with respect to the initial
Holders. Notice under this Section 8.05 will be deemed to be given only when
actually received.
(b) Where this Agreement 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 8.06. Severability of Provisions. If one or more of the provisions
of this Agreement shall be for any reason whatever held invalid, such provisions
shall be deemed severable from the remaining covenants and provisions of this
Agreement, and shall in no way affect the validity or enforceability of such
remaining provisions, the rights of any parties hereto, or the rights of the
Trustee or any Noteholder. To the extent permitted by
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law, the parties hereto waive any provision of law which renders any provision
of this Agreement prohibited or unenforceable in any respect.
Section 8.07. Binding Effect. All provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns
of the parties hereto, and all such provisions shall inure to the benefit of the
Noteholders. This Agreement may not be modified except by a writing signed by
all parties hereto.
Section 8.08. Article Headings and Captions. The article headings and
captions in this Agreement are for convenience of reference only, and shall not
limit or otherwise affect the meaning hereof.
Section 8.09. Legal Holidays. In the case where the date on which any action
required to be taken, document required to be delivered or payment required to
be made is not a Business Day, such action, delivery or payment need not be made
on such date, but may be made on the next succeeding Business Day.
Section 8.10. Assignment for Security for the Notes. The Servicer
understands that the Issuer will assign to and grant to the Trustee a security
interest in all of its right, title and interest to this Agreement. The Servicer
consents to such assignment and grant and further agree that all
representations, warranties, covenants and agreements of the Servicer made
herein shall also be for the benefit of and inure to the Trustee and all Holders
from time to time of the Notes.
Section 8.11. No Servicing Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 5.02 and 5.04 hereof,
this Agreement may not be assigned by the Issuer, the Seller, the Subservicer or
the Servicer (except with respect to the appointment of a subservicer) without
the prior written consent of the Holders of Notes representing not less than
66-2/3% in principal amount of the Notes Outstanding.
Section 8.12. Counterparts. This Agreement may be executed in one or
more counterparts all of which together shall constitute one original
document.
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IN WITNESS WHEREOF, the Issuer, the Servicer, the Subservicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers or authorized signatories thereunto duly authorized as of the date and
year first above written.
TRI FUNDING COMPANY I, L.L.C., as Issuer
By: TRENDWEST FUNDING I, INC., Member
By______________________________________
Name:
Title:
TRENDWEST RESORTS, INC., as Servicer
By______________________________________
Name:
Title:
SAGE SYSTEMS, INC., as Subservicer
By______________________________________
Name:
Title:
LASALLE NATIONAL BANK, as Trustee
By______________________________________
Name:
Title:
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EXHIBIT A
FORM OF
MONTHLY SERVICER'S REPORT