EXHIBIT 10.28
RECEIVABLES SALE AGREEMENT
DATED AS OF SEPTEMBER 28, 2001
BETWEEN
TRENDWEST RESORTS, INC.
as Seller
AND
TW HOLDINGS III, INC.
as Buyer
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENTS..............................................................................1
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES..................................................................2
Section 1.1 Purchases of Receivables................................2
Section 1.2 Payment for the Purchases...............................4
Section 1.3 Adjustments for Dilutions...............................5
Section 1.4 Repurchase of Receivables...............................6
Section 1.5 Upgrade Contracts.......................................8
Section 1.6 Payments and Computations, Etc..........................8
Section 1.7 Transfer of Records.....................................9
Section 1.8 Characterization.......................................10
ARTICLE II
REPRESENTATIONS AND WARRANTIES.....................................................................10
Section 2.1 Representations and Warranties of Seller...............10
ARTICLE III
CONDITIONS OF PURCHASES............................................................................17
Section 3.1 Conditions Precedent to Initial Purchase...............17
Section 3.2 Conditions Precedent to All Purchases..................17
ARTICLE IV
COVENANTS..........................................................................................18
Section 4.1 Affirmative Covenants of Seller........................18
Section 4.2 Negative Covenants of Seller...........................24
ARTICLE V
AMORTIZATION EVENTS................................................................................26
Section 5.1 Amortization Events....................................26
Section 5.2 Remedies...............................................27
ARTICLE VI
INDEMNIFICATION....................................................................................28
Section 6.1 Indemnities by Seller..................................28
Section 6.2 Other Costs and Expenses...............................31
ARTICLE VII
MISCELLANEOUS......................................................................................32
Section 7.1 Waivers and Amendments.................................32
Section 7.2 Notices................................................32
Section 7.3 Protection of Ownership Interests of Buyer.............32
Section 7.4 Confidentiality........................................33
Section 7.5 Bankruptcy Petition....................................34
Section 7.6 CHOICE OF LAW..........................................34
Section 7.7 CONSENT TO JURISDICTION................................34
Section 7.8 WAIVER OF JURY TRIAL...................................35
Section 7.9 Integration; Binding Effect; Survival of Terms.........35
Section 7.10 Counterparts; Severability; Section References.........36
Exhibits and Schedules
Exhibit I - Definitions
Exhibit II - Principal Place of Business; Location(s) of Records; Federal
Employer Identification Number
Exhibit III - Account Numbers
Exhibit IV - Form of Compliance Certificate
Exhibit V - Credit and Collection Policy
Exhibit VI - Form of Subordinated Note
Exhibit VII - Form of Vacation Owner Agreement
Exhibit VIII - Form of Sale Assignment
Exhibit IX - Form(s) of Mortgage Note(s)
Exhibit X - Form of FI Assignment Document (First Step)
Exhibit XI - Form of FI Assignment Document (Second Step)
Exhibit XII - Concord's Credit and Collection Policy
Schedule A List of Documents to Be Delivered to Buyer Prior to the
Effective Date
RECEIVABLES SALE AGREEMENT
THIS
RECEIVABLES SALE AGREEMENT, dated as of September 28,
2001 is by and between Trendwest Resorts, Inc. ("TWRI"), an Oregon corporation
("Seller"), TW Holdings III, Inc., a Delaware corporation ("Buyer"). Unless
defined elsewhere herein, capitalized terms used in this Agreement shall have
the meanings assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS
Seller now owns, and from time to time hereafter will own,
Receivables. Seller has previously sold, transferred and assigned to Buyer
Receivables pursuant to a
Receivables Sale Agreement dated as of January 7, 2000
(the "Previous Sale Agreement") among the Seller and Buyer.
As of the date hereof, TWRI is entering into a Receivables
Transfer Agreement (the "Transfer Agreement") with Eagle Crest, Inc. and Running
Y Resort, Inc. (each an "RTA Seller" and together the "RTA Sellers") pursuant to
which the RTA Sellers (i) on the effective date thereunder will sell the Legacy
Eagle Crest Receivables to TWRI and (ii) from to time thereafter will sell RTA
Receivables to TWRI.
Seller and Buyer desire to amend and restate the Previous Sale
Agreement. Seller wishes to continue to sell and assign to Buyer, and Buyer
wishes to continue to purchase from Seller, all of Seller's right, title and
interest in and to Receivables, together with the Related Security and
Collections with respect thereto.
Seller and Buyer intend the transactions contemplated hereby
to be true sales of the Receivables from Seller to Buyer, providing Buyer with
the full benefits of ownership of the Receivables, and Seller and Buyer do not
intend these transactions to be, or for any purpose to be characterized as,
loans from Buyer to Seller.
Buyer has previously sold, transferred and assigned from time
to time to the Purchasers upon each purchase of Receivables from Seller,
undivided interests therein and in the associated Related Security and
Collections pursuant to the Previous Purchase Agreement (as defined in the
Purchase Agreement).
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Buyer desires to continue, upon each purchase of Receivables
from Seller hereunder, to sell undivided interests in such Receivables and in
the associated Related Security and Collections pursuant to the Receivables
Purchase Agreement dated as of the date hereof (as the same may from time to
time hereafter be amended, supplemented, restated or otherwise modified, the
"Purchase Agreement") by and between Buyer (in such capacity the "RPA Seller"),
Seller, as Servicer, ▇▇▇▇▇ Fargo Minnesota, National Association, as Custodian,
the financial institutions from time to time party thereto as "Financial
Institutions", Jupiter Securitization Corporation and Blue Keel Funding LLC, as
Conduits, Fleet Securities, Inc., as an Investor Agent and as a Financial
Institution, Bank One, NA, as Paying Agent and Bank One, NA (Main Office
Chicago), as Agent, Investor Agent and as a Financial Institution.
NOW THEREFORE, in consideration of the foregoing premises and
actual agreements contained herein and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1 Purchases of Receivables.
(a) On each Purchase Date hereunder, in consideration for the
Purchase Price and upon the terms and subject to the conditions set forth
herein, Seller shall sell, assign, transfer, set-over and otherwise convey to
Buyer, without recourse (except to the extent expressly provided herein), and
Buyer shall purchase from Seller, all of Seller's right, title and interest in
and to all Receivables identified in the related Schedule of Receivables,
together with all Related Security relating thereto and all Collections thereof;
provided, however, that in no event shall Buyer be obligated to purchase, or
Seller be obligated to sell, any Receivable arising after the Amortization Date.
In accordance with the preceding sentence, on the RSA Effective Date, Buyer
shall acquire all of Seller's right, title and interest in and to the Legacy
Eagle Crest Receivables and all other Receivables identified in the related
Schedule of Receivables, together with all Related Security relating thereto and
all Collections thereof. The acquisition by Buyer of the right, title and
interest of Seller in the applicable Receivables in connection with each
Purchase hereunder is conditioned upon and
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subject to Seller's receipt of the Purchase Price therefor in accordance with
Section 1.2.
(b) Not less than five Business Days prior to each date which
Seller proposes to be a Purchase Date, Seller shall deliver to Buyer (i) a
notice that Seller proposes to sell Receivables to Buyer on the specified
Purchase Date, and (ii) a schedule of the Originated Receivables that Seller
proposes to sell to Buyer on such Purchase Date (a "Draft Schedule of
Receivables"). The Seller shall also deliver to the Custodian, for each
Originated Receivable on the Draft Schedule of Receivables, each Receivable
Document listed in the definition of "Receivable Documents."
(c) If Buyer is unwilling to effect a Purchase of Receivables
on such proposed Purchase Date, or if Buyer is willing to purchase some, but not
all, of such Originated Receivables on such proposed Purchase Date, then Buyer
shall deliver to Purchaser, within two Business Days following Buyer's receipt
of Seller's notice, a notice to such effect, including (if Buyer is willing to
purchase some but not all such Originated Receivables), a schedule of the
Originated Receivables which Buyer is willing to purchase. If Buyer is unwilling
to effect a Purchase of Receivables on such Purchase Date, then such proposed
Purchase Date shall be abandoned. Otherwise, on such Purchase Date, a purchase
and sale of the Originated Receivables specified on the schedule delivered by
Seller (or, if Buyer delivered a schedule as provided in the preceding sentence,
then a purchase and sale of the Originated Receivables specified on such
schedule (the applicable schedule being the "Schedule of Receivables" for such
Purchase Date), shall occur pursuant to Section 1.1(a) on such Purchase Date
(subject to compliance with the conditions specified in Article III).
(d) In connection with consummation of any Purchase hereunder,
Seller will deliver to the Custodian (i) an executed Sale Assignment
(substantially in the form of Exhibit VIII hereto) and (ii) the Schedule of
Receivables. Buyer may request that Seller deliver, and Seller shall deliver,
such approvals, opinions, information, reports or documents as Buyer may
reasonably request.
(e) It is the intention of the parties hereto that each
Purchase of Receivables made hereunder shall constitute a "true sale", which
sales are absolute and irrevocable and provide Buyer with the full benefits of
ownership of the Receivables. Except for adjustments for dilution pursuant to
Section 1.3, each sale of Receivables hereunder is made without recourse to
Seller; provided, however, that (i) Seller shall be liable to Buyer for all
representations, warranties and covenants made by Seller pursuant to the terms
of the Transaction Documents to which Seller is a party, and (ii) such sale
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does not constitute and is not intended to result in an assumption by Buyer or
any assignee thereof of any obligation of any Originator or any other Person
arising in connection with the Receivables, the related Contracts and/or other
Related Security or any other obligations of any Originator. In view of the
intention of the parties hereto that the Purchases of Receivables made hereunder
shall constitute sales of such Receivables rather than loans secured thereby,
Seller agrees that it will, on or prior to the date hereof and in accordance
with Sections 4.1(e)(ii) and 4.2(f), ▇▇▇▇ its master data processing records
relating to the Receivables with a legend acceptable to Buyer and to the Agent
(as Buyer's assignee), evidencing that Buyer has purchased such Receivables as
provided in this Agreement and to note in its financial statements that such
Receivables have been sold to Buyer. Upon the request of Buyer or the Agent (as
Buyer's assignee), Seller or its Affiliate will execute and file such Financing
Statements, and such other instruments or notices, as may be necessary or
appropriate to perfect and maintain the perfection of Buyer's ownership interest
in the Receivables and the Related Security and Collections with respect
thereto, or as Buyer or the Agent (as Buyer's assignee) may reasonably request.
Section 1.2 Payment for the Purchases.
(a) Upon acceptance and approval by the Custodian of the
documents specified in Section 1.1(d), the Buyer will transfer or cause to be
transferred to the Seller an amount equal to the Purchase Price with respect to
such Purchase of Receivables. The Purchase Price for each Purchase shall be
payable in full by Buyer to Seller on the date of such Purchase, and shall be
paid to Seller in the following manner:
(i) by delivery of immediately available funds, to the extent
of (x) funds made available to Buyer in connection with its subsequent sale of
an interest in such Receivables to the Purchasers under the Purchase Agreement
and (y) any Collections on Receivables or other funds available to Buyer on such
Purchase Date; and
(ii) the balance, by accepting a contribution to its capital
and/or with the proceeds of a borrowing from Seller of a subordinated revolving
loan (each, a "Subordinated Loan") in such amounts as determined by Buyer,
provided that the Subordinated Loan made on the date of any Purchase by the
Seller shall not cause the Net Worth of Buyer to be less than the Required
Capital Amount.
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Subject to the limitations set forth in the preceding clause (ii), Seller
irrevocably agrees to advance each Subordinated Loan requested of it by Buyer on
or prior to the Facility Termination Date. The Subordinated Loans owing to
Seller shall be evidenced by, and shall be payable in accordance with the terms
and provisions of, the Subordinated Note and shall be payable solely from funds
which the Buyer is not required under the Purchase Agreement to set aside for
the benefit of, or otherwise pay over to, the Agent for the benefit of the
Purchasers.
(b) On each Settlement Date related to a Calculation Period,
all Collections paid to Buyer pursuant to the terms of the Purchase Agreement
shall be paid to the Seller to reduce the amounts owed by Buyer to Seller under
the Subordinated Note. If the balance on the Subordinated Note has been reduced
to zero and all other amounts owed thereunder have been paid, then Buyer shall
be entitled to retain any remaining Collections.
(c) In addition to such other information as may be included
therein, each Monthly Report shall set forth the following with respect to the
related Calculation Period: (i) the aggregate Outstanding Balance of Receivables
created by the Seller and conveyed in Purchases during such Calculation Period,
as well as the Net Receivables Balance (as defined in the Purchase Agreement)
included therein, (ii) the aggregate Purchase Price payable to the Seller in
respect of such Purchases, (iii) the aggregate amount of funds received by such
Seller during such Calculation Period which are to be applied toward the
aggregate Purchase Price owing for such Calculation Period pursuant to the first
sentence of this paragraph, (iv) the increase or decrease in the amount
outstanding under the Subordinated Note as of the end of such Calculation Period
after giving effect to the application of funds in paragraph (b) above and the
restrictions on Subordinated Loans set forth in paragraph (a) above, and (v) the
amount of any capital contribution made by to Buyer as of the end of such
Calculation Period pursuant to paragraph (a) above.
Section 1.3 Adjustments for Dilutions. If on any day:
(a) the Outstanding Balance of a Receivable is:
(i) reduced as a result of any defective or rejected goods or
services, rescission of a Contract, any discount or any adjustment or otherwise
by any Originator or by Seller (other than cash Collections on account of the
Receivables),
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(ii) reduced or canceled as a result of a setoff in respect of
any claim by any Person (whether such claim arises out of the same or a related
transaction or an unrelated transaction), or
(b) any of the representations and warranties set forth in
Article II are no longer true with respect to any Receivable,
then, in such event, Seller shall deposit into the Collection Account on the
second Business Day following the date (the "Dilution Date") of occurrence of an
event described in paragraphs (a) or (b) of this Section 1.3, an amount in
immediately available funds equal to the Accrued Balance of such Receivable as
of the Dilution Date.
Section 1.4 Repurchase of Receivables.
(a) From time to time the Buyer may convey back to Seller, at
Seller's option, (x) to the extent permitted pursuant to Section 1.4(c), any
Receivable which constituted a Charged-Off Receivable, an Undocumented
Receivable or a Defaulted Receivable as of the last day of the related
Calculation Period and (y) to the extent permitted by Section 1.4(e), any
Timeshare Interest which constituted a Repossessed Timeshare Interest as of the
last day of the related Calculation Period. Seller shall provide the Agent with
irrevocable written notice prior to the date upon which such reconveyance shall
occur of its intention to cause such reconveyance to occur, which notice shall
(i) state the amount of each form of consideration described in Sections 1.4(b)
and 1.4(e) which shall be paid to Buyer on such Settlement Date, (ii) identify
the Charged-Off Receivables, Undocumented Receivables or Defaulted Receivables
to be reconveyed to Seller and (iii) otherwise be satisfactory in form and
substance to Buyer.
(b) As consideration for the reconveyance of a Receivable
pursuant to Section 1.4(a)(x), Seller shall provide to Buyer, in immediately
available funds, an amount equal to the Outstanding Balance of such Receivable
(prior to any write-off thereof).
(c) The aggregate Outstanding Balance (prior to any write-off
thereof of Receivables other than Undocumented Receivables) reconveyed pursuant
to Section 1.4(a)(x) shall (i) at no time exceed 10% of the result of (A) the
aggregate initial
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Outstanding Balance of all Receivables conveyed from the Seller to the Buyer on
any Purchase Date reduced by (B) the aggregate Outstanding Balance (prior to any
write-off thereof) of all Receivables subsequently reconveyed from the Buyer to
the Seller, and (ii) (A) for the RSA Year beginning January 7, 2001 not exceed
$15,000,000 and (B) for the RSA Year beginning January 2, 2002, and each
subsequent RSA Year, not exceed $17,500,000.
(d) As consideration for any reconveyance pursuant to Section
1.4(a)(y) of a Repossessed Timeshare Interests, on the applicable Settlement
Date, Seller shall pay to Buyer in immediately available funds an amount equal
to 25% of the original purchase price paid by the defaulting Obligor for such
Timeshare Interests.
(e) Seller may not repurchase Repossessed Timeshare Interests
at any time pursuant to Section 1.4(a)(y) unless each of the following
conditions is satisfied:
(i) either the Amortization Date or the Revolving Period
Termination Date has occurred under the Purchase Agreement;
(ii) Seller has theretofore repurchased the maximum amount of
Charged-off Receivables, Undocumented Receivables and Defaulted Receivables
permitted to be repurchased at such time pursuant to Sections 1.4(a)(x) and
1.4(c); and
(iii) the aggregate Outstanding Balance of all Charged-off
Receivables and Defaulted Receivables related to Repossessed Timeshare Interests
which have been repurchased pursuant to Section 1.4(a)(y), including the
Repossessed Timeshare Interests to be repurchased on such Settlement Date, does
not exceed an amount equal to 5.0% of the Outstanding Balance of Eligible
Receivables as of the earlier to occur of the Amortization Date and the
Revolving Period Termination Date.
Seller may not repurchase any Repossessed Timeshare Interests relating to a
Charged- off Receivable, an Undocumented Receivable or a Defaulted Receivable
unless Seller repurchases all of the Repossessed Timeshare Interests relating to
such Charged-off Receivable, Undocumented Receivable or Defaulted Receivable at
such time.
(f) The rights of Seller pursuant to this Section 1.4 to
repurchase Charged-off Receivables, Undocumented Receivables, Defaulted
Receivables and
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Repossessed Timeshare Interests shall be subject and subordinate to the rights
of the Agent pursuant to Section 10.2 of the Purchase Agreement to sell, dispose
or otherwise liquidate the Receivables and the Related Security following the
occurrence of an Amortization Event. Such rights of the Seller shall not apply
to any Charged-off Receivables, Undocumented Receivables, Defaulted Receivables
or Repossessed Timeshare Interests which the Agent or any Servicer has sold, nor
shall they apply to any Charged-off Receivables, Undocumented Receivables,
Defaulted Receivables or Repossessed Timeshare Interests as to which the Agent
or any Servicer has provided at least five Business Days prior notice to the
Seller of its intention so to sell (unless, prior to the expiration of such five
Business Days, Seller has irrevocably committed to purchase such Charged-off
Receivables, Undocumented Receivables, Defaulted Receivables or Repossessed
Timeshare Interests on the next succeeding Settlement Date).
Section 1.5 Upgrade Contracts.
(a) If at any time the Obligor of a Receivable (other than a
Fractional Interest Receivable) enters into an Upgrade Contract, Seller shall
deliver (i) to the Buyer, a notice indicating such Upgrade and identifying the
Receivable (the "Upgrade Receivable") represented by such Upgrade Contract and
(ii) to the Custodian, the Receivable Documents related to such Upgrade
Receivable.
(b) Buyer shall pay to Seller, in immediately available funds,
an amount equal to the excess, if any, of (x) the Outstanding Balance of such
Upgrade Receivable over (y) the Outstanding Balance of the existing receivable
(the "Pre-Upgrade Receivable") to which it is related.
(c) The Buyer will subsequently deliver to the Agent and the
Investor Agents a Seller Direction and a Request for Release in accordance with
Section 2.10 of the Purchase Agreement indicating such Upgrade and identifying
the Upgrade Receivable and the Pre-Upgrade Receivable.
(d) There shall be no limit on the number of Receivables
related to Upgrade Contracts substituted for under this Agreement.
Section 1.6 Payments and Computations, Etc. All amounts to be
paid or deposited by Buyer hereunder shall be paid or deposited in accordance
with the terms of the Agreement on the day when due in immediately available
funds to the account of
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Seller designated from time to time by Seller or as otherwise directed by
Seller. In the event that any payment owed by any Person hereunder becomes due
on a day that is not a Business Day, then such payment shall be made on the next
succeeding Business Day. If any Person fails to pay any amount hereunder when
due, such Person agrees to pay, on demand, the Default Fee in respect thereof
until paid in full; provided, however, that such Default Fee shall not at any
time exceed the maximum rate permitted by applicable law. All computations of
interest payable hereunder shall be made on the basis of a year of 360 days for
the actual number of days (including the first but excluding the last day)
elapsed.
Section 1.7 Transfer of Records.
(a) In connection with the Purchases of Receivables hereunder,
Seller hereby sells, transfers, assigns and otherwise conveys to Buyer all of
Seller's right and title to and interest in the Records relating to all
Receivables sold hereunder. There will be no need for any further documentation
in connection with any Purchase, other than documents specifically required by
this Agreement. In connection with such transfer, Seller hereby grants to each
of Buyer, the Agent and the Servicer an irrevocable, non-exclusive license to
use, without royalty or payment of any kind, all software used by the applicable
Originator to account for the Receivables, to the extent necessary to administer
the Receivables, whether such software is owned by such Originator or is owned
by others and used by such Originator under license agreements with respect
thereto, provided that should the consent of any licensor of such Originator to
such grant of the license described herein be required, such Originator hereby
agrees that upon the request of Buyer (or the Agent as Buyer's assignee), such
Originator will use its reasonable efforts to obtain the consent of such
third-party licensor. The license granted hereby shall be irrevocable, and shall
terminate on the date this Agreement terminates in accordance with its terms.
(b) Seller (i) shall take such action requested by Buyer
and/or the Agent (as Buyer's assignee), from time to time hereafter, that may be
necessary or appropriate to ensure that Buyer and Buyer's Assigns under the
Purchase Agreement have an enforceable ownership interest in the Records
relating to the Receivables purchased from Seller hereunder, and (ii) shall use
its reasonable efforts to ensure that Buyer, the Agent and the Servicer each has
an enforceable right (whether by license or sublicense or otherwise) to use all
of the computer software used to account for the Receivables and/or to recreate
such Records.
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Section 1.8 Characterization. If, notwithstanding the
intention of the parties expressed in Section 1.1(e), any sale or contribution
by Seller to Buyer of Receivables hereunder shall be characterized as a secured
loan and not a sale, then this Agreement shall be deemed to constitute a
security agreement under the UCC and other applicable law. For this purpose and
without being in derogation of the parties' intention that each sale of
Receivables hereunder shall constitute a true sale thereof, Seller hereby grants
to Buyer a duly perfected security interest in all of Seller's right, title and
interest in, to and under all Receivables now existing and hereafter arising,
all Collections and Related Security with respect thereto, each Collection
Account, the Transfer Agreement and all proceeds of the foregoing, which
security interest shall be prior to all other Adverse Claims thereto. After the
occurrence of an Amortization Event, Buyer and Buyer's Assigns shall have, in
addition to the rights and remedies which they may have under this Agreement,
all other rights and remedies provided to a secured creditor after default under
the UCC and other applicable law, which rights and remedies shall be cumulative.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of Seller. Seller
hereby represents and warrants to Buyer, as to itself and as to WorldMark (to
the extent specific reference to WorldMark is made) that:
(a) Corporate Existence and Power. Seller is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation, and is duly qualified to do business and is in good
standing as a foreign corporation, and has and holds all corporate power and all
governmental licenses, authorizations, consents and approvals required to carry
on its business in each jurisdiction in which its business is conducted, except
where failure to so qualify or so hold could not be reasonably expected to have
a Material Adverse Effect.
(b) Power and Authority; Due Authorization Execution and
Delivery. The execution and delivery by Seller of this Agreement and each other
Transaction Document to which it is a party, and the performance of its
obligations hereunder and thereunder and, Seller's use of the proceeds of
Purchases made hereunder, are within its corporate powers and authority and have
been duly authorized by all necessary corporate
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action on its part. This Agreement and each other Transaction Document to which
Seller is a party has been duly executed and delivered by Seller.
(c) No Conflict. The execution and delivery by Seller of this
Agreement and each other Transaction Document to which it is a party, and the
performance of its obligations hereunder and thereunder do not contravene or
violate (i) its certificate or articles of incorporation or by-laws (or
equivalent organizational documents), (ii) any law, rule or regulation
applicable to it, (iii) any restrictions under any agreement, contract or
instrument to which it is a party or by which it or any of its property is
bound, or (iv) any order, writ, judgment, award, injunction or decree binding on
or affecting it or its property, and do not result in the creation or imposition
of any Adverse Claim on assets of Seller or its Subsidiaries (except as created
hereunder) and no transaction contemplated hereby requires compliance with any
bulk sales act or similar law.
(d) Governmental Authorization. Other than the filing of the
Financing Statements required hereunder, no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution and delivery by Seller of this
Agreement and each other Transaction Document to which it is a party and the
performance of its obligations hereunder and thereunder.
(e) Actions, Suits.
(i) There are no actions, suits or proceedings pending, or to
the best of Seller's knowledge, threatened, against or affecting Seller, or any
of its or WorldMark's properties, in or before any court that could be
reasonably expected to have a Material Adverse Effect.
(ii) Seller is not in default with respect to any order of any
court, arbitrator or governmental body.
(f) Binding Effect. This Agreement and each other Transaction
Document to which Seller is a party constitute the legal, valid and binding
obligations of Seller enforceable against Seller in accordance with their
respective terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws relating to or
limiting creditors' rights generally and by general
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principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(g) Accuracy of Information. All information heretofore
furnished by Seller or any of its Affiliates to Buyer (or Buyer's Assigns) for
purposes of or in connection with this Agreement, any of the other Transaction
Documents or any transaction contemplated hereby or thereby is, and all such
information hereafter furnished by Seller or any of its Affiliates to Buyer (or
Buyer's Assigns) will be, true and accurate in every material respect on the
date such information is stated or certified and does not and will not contain
any material misstatement of fact or omit to state a material fact or any fact
necessary to make the statements contained therein not misleading.
(h) Use of Proceeds. No proceeds of any Purchase hereunder
will be used (i) for a purpose that violates, or would be inconsistent with,
Regulation T, U or X promulgated by the Board of Governors of the Federal
Reserve System from time to time or (ii) to acquire any security in any
transaction which is subject to Section 13 or 14 of the Securities Exchange Act
of 1934, as amended.
(i) Good Title. Immediately prior to each Purchase hereunder,
Seller shall be the legal and beneficial owner of the Receivables and Related
Security with respect thereto, free and clear of any Adverse Claim. There have
been duly filed all financing statements or other similar instruments or
documents necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect Seller's ownership interest in each Receivable, its
Collections and the Related Security.
(j) Good Title to the RTA Receivables. Immediately prior to
each Purchase hereunder, Seller shall have acquired from the relevant RTA Seller
pursuant to the Transfer Agreement, free and clear of any Adverse Claim, full
legal and beneficial ownership of the RTA Receivables which are listed on the
Schedule of Receivables for the related Purchase Date. There have been duly
filed all Financing Statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect Seller's ownership interest in each RTA Receivable, its Collections
and the Related Security.
(k) Perfection. This Agreement, together with the filing of
the Financing Statements contemplated hereby, is effective to, and shall, upon
each Purchase hereunder, transfer to Buyer (and Buyer shall acquire from Seller)
legal and
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equitable title to, with the right to sell and encumber each Receivable existing
and hereafter arising, together with the Related Security and Collections with
respect thereto, free and clear of any Adverse Claim. There have been duly filed
all Financing Statements or other similar instruments or documents necessary
under the UCC (or any comparable law) of all appropriate jurisdictions to
perfect Buyer's ownership interest in the Receivables, the Related Security and
the Collections.
(l) Perfection of Interest in the RTA Receivables. The
Transfer Agreement, together with the filing of the Financing Statements
contemplated therein, is effective to, and shall, upon each Purchase (as defined
in the Transfer Agreement) thereunder, transfer to Seller (and Seller shall
acquire from each RTA Seller) legal and equitable title to, with the right to
sell and encumber each RTA Receivable existing and hereafter arising, together
with the Related Security and Collections with respect thereto, free and clear
of any Adverse Claim. There have been duly filed all Financing Statements or
other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect Seller's ownership
interest in each RTA Receivable, the Related Security and the Collections.
(m) Places of Business. The principal places of business and
chief executive office of Seller and the offices where it keeps all of its
Records are located at the address(es) listed on Exhibit II or such other
locations of which Buyer has been notified in accordance with Section 4.2(a) in
jurisdictions where all action required by Section 4.2(a) has been taken and
completed. Seller's Federal Employer Identification Number is correctly set
forth on Exhibit II.
(n) Collections. The conditions and requirements set forth in
Section 4.1(l) have at all times been satisfied and duly performed. The name and
address of the bank or banks with which the Clearing Account and the Concord
Account are established, together with the account numbers of the Clearing
Account, the Concord Account and the Collection Account, are listed on Exhibit
III.
(o) Material Adverse Effect. Since December 31, 2000 no event
has occurred that would have a Material Adverse Effect, including a Material
Adverse Effect regarding the collectibility of the Receivables.
(p) Names. In the past five (5) years, Seller has not used any
corporate names, trade names or assumed names other than the name in which it
has executed this Agreement.
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(q) Ownership of Buyer. Seller owns, directly or indirectly,
100% of the issued and outstanding capital stock of Buyer, free and clear of any
Adverse Claim. Such capital stock is validly issued, fully paid and
nonassessable, and there are no options, warrants or other rights to acquire
securities of Buyer.
(r) Not a Holding Company or an Investment Company. Seller is
not a "holding company" or a "subsidiary holding company" of a "holding company"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended, or any successor statute. Seller is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or any successor
statute.
(s) Compliance with Law. Seller has complied in all respects
with all applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject. Each Receivable,
together with the Contract related thereto, does not contravene any laws, rules
or regulations applicable thereto (including laws, rules and regulations
relating to truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy), and no part of
such Contract is in violation of any such law, rule or regulation.
(t) Compliance with Credit and Collection Policy. Seller has
complied in all material respects with the Credit and Collection Policy with
regard to each Receivable and the related Contract, and has not made any
material change to such Credit and Collection Policy, except for such material
changes as to which Buyer (or Buyer's Assigns) has been notified in accordance
with Section 4.1(a)(vii).
(u) Payments to Seller. With respect to each Receivable
transferred to Buyer hereunder, the Purchase Price received by Seller
constitutes reasonably equivalent value in consideration therefor, and such
transfer was not made for or on account of an antecedent debt. No transfer by
Seller of any Receivable hereunder is or may be voidable under any section of
the Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss.101 et seq.), as amended.
(v) Enforceability of Contracts. Each Contract with respect to
each Receivable is effective to create, and has created, a legal, valid and
binding obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and all accrued interest thereon, enforceable
against the Obligor in accordance with its terms, except as such enforcement may
be limited by applicable
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bankruptcy, insolvency, reorganization or other similar laws relating to or
limiting creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
(w) Eligible Receivables. Each Receivable included in the Net
Receivables Balance was an Eligible Receivable on the date of its Purchase
hereunder.
(x) Accounting. The manner in which Seller accounts for the
transactions contemplated by this Agreement and the Transfer Agreement does not
jeopardize the true sale analysis hereunder or thereunder.
(y) No Adverse Selection. Seller has not selected the
Receivables to be transferred hereunder from all eligible Originated Receivables
based on criteria which it believes would result in such transferred Receivables
being of lesser quality than the Originated Receivables not transferred
hereunder.
(z) Title to Properties. WorldMark, directly or beneficially,
owns good record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct of its
business, except for such defects in title as could not, individually or in the
aggregate, have a Material Adverse Effect.
(aa) Mortgages and Mortgage Notes. Each Fractional Interest
Receivable is evidenced by a Mortgage Note and is secured by a Mortgage on the
related Fractional Interest and by no other collateral (unless a first priority
perfected mortgage on or security interest in such other collateral has been
created in favor of Seller and assigned by Seller to the Buyer). The Obligor
under each Fractional Interest Receivable has been delivered the related deed,
which was effective to convey fee simple title to such Obligor in the related
Fractional Interest, and such deed has been duly recorded or registered in the
Applicable Jurisdiction in accordance with applicable laws. All applicable
intangibles taxes and documentary sales taxes in respect of each Mortgage Note
have been paid in full. The Mortgage in respect of each Fractional Interest
Receivable (i) names Seller as the first mortgagee, (ii) creates a valid and
enforceable mortgage lien or deed of trust upon the related Fractional Interest
in favor of Seller, subject to no liens, encumbrances or claims other than
Permitted Liens and (iii) has not been assigned to any Person prior to the
assignments thereof pursuant to the FI Assignment Documents. The related
Mortgage contains customary and enforceable provisions so as to render the
rights and remedies of the holder thereof adequate for the
15
practical realization against the related FI Unit of the benefits of the
security interests intended to be provided thereby, including by judicial
foreclosure; and there is no exemption available to the related Obligor which
would interfere with the mortgagee's right to foreclose such Mortgage, other
than that which may be available under applicable bankruptcy, debt relief or
homestead statutes.
(bb) Liabilities of WorldMark. WorldMark:
(i) has not voluntarily incurred or at any time become
voluntarily liable for any Indebtedness;
(ii) has not voluntarily allowed its property to become
subject to any Liens, nor is any of its property subject to any Liens, other
than (A) utility or other easements or licenses unrelated to any debt of
WorldMark or (B) Liens that in do not exceed, in aggregate, $100,000; and
(iii) has not involuntarily incurred and is not involuntarily
liable for any debt, nor is any of its property involuntarily subject to any
Liens (other than utility or similar easements or licenses unrelated to any debt
of WorldMark) that individually or in the aggregate (with respect to all such
debt and the obligations secured by all such Liens) exceed $1,000,000.
(cc) Environmental Matters. The Seller has conducted its
operations and kept and maintained its property in compliance with all
Environmental Laws. The Seller has performed its duties under its management
agreement with WorldMark in material compliance with all Environmental Laws.
(dd) Conformity of Receivable Documents. The information set
forth on each Schedule of Receivables is accurate and is consistent with the
terms of the related Receivable Documents delivered to the Custodian.
(ee) No Subsidiaries of WorldMark. WorldMark has no
Subsidiaries.
(ff) Insurance. Seller in its individual capacity and as
property manager for WorldMark maintains in effect, or causes to be maintained
in effect, such property, casualty and liability insurance covering its and its
related WorldMark's real property and personal property as Seller deems
appropriate in its good faith business judgement.
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(gg) Compliance with Representations. On and as of the date of
each Purchase Date hereunder, Seller hereby represents and warrants that all of
the other representations and warranties set forth in this Article II are true
and correct on and as of the date of such Purchase (and after giving effect to
such Purchase) as though made on and as of each such Purchase Date.
ARTICLE III
CONDITIONS OF PURCHASES
Section 3.1 Conditions Precedent to Initial Purchase. The
initial Purchase under this Agreement (including the Purchase of the Legacy
Eagle Crest Receivables) is subject to the conditions precedent that (a) Buyer
shall have received on or before the applicable Purchase Date those documents
listed on Schedule A and (b) all of the conditions to the "Effective Date" under
and as defined in the Purchase Agreement shall have been satisfied or waived in
accordance with the terms thereof. The date of such initial Purchase Date shall
be the "RSA Effective Date".
Section 3.2 Conditions Precedent to All Purchases. Each
Purchase shall be subject to the further conditions precedent that:
(a) the Facility Termination Date shall not have occurred;
(b) Buyer (and Buyer's Assigns) shall have received such other
approvals, opinions or documents as it may reasonably request;
(c) no Amortization Event or Potential Amortization Event
shall have occurred.
As a further condition to each Purchase, on the applicable Purchase Date, Seller
represents and warrants that the representations and warranties set forth in
Article II are true and correct on and as of such Purchase Date (and after
giving effect thereto) as though made on and as of such date.
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ARTICLE IV
COVENANTS
Section 4.1 Affirmative Covenants of Seller. Until the date on
which this Agreement terminates in accordance with its terms, Seller hereby
covenants as set forth below:
(a) Financial Reporting. Seller will maintain for itself and
its Subsidiaries a system of accounting established and administered in
accordance with GAAP, and furnish to Buyer (or Buyer's Assigns):
(i) Annual Reporting. Such annual financial reports as
required by Section 7.1(a)(i) of the Purchase Agreement.
(ii) Quarterly Reporting. Such quarterly financial reports as
required by Section 7.1(a)(ii) of the Purchase Agreement.
(iii) Compliance Certificate. Together with the financial
statements required hereunder, a compliance certificate in substantially the
form of Exhibit IV signed by an Authorized Officer of Seller and dated the date
of such annual financial statement or such quarterly financial statement, as the
case may be.
(iv) Shareholders Statements and Reports. Promptly upon the
furnishing thereof to the shareholders of Seller or its Affiliates, copies of
all financial statements, reports and proxy statements so furnished.
(v) S.E.C. Filings. Promptly upon the filing thereof, copies
of all registration statements and annual, quarterly, monthly or other regular
reports which Seller or its Affiliates or any of their Subsidiaries may from
time to time file with the Securities and Exchange Commission.
(vi) Copies of Notices. Promptly upon its receipt of any
notice, request for consent, financial statements, certification, report or
other communication under or in connection with any Transaction Document from
any Person other than Buyer, the Agent or Conduit, copies of the same.
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(vii) Change in Credit and Collection Policy. At least thirty
(30) days prior to the effectiveness of any material change in or amendment to
the Credit and Collection Policy, a copy of the Credit and Collection Policy
then in effect and a notice indicating such change or amendment.
(viii) Other Information. Promptly, from time to time, such
other information, documents, records or reports relating to the Receivables or
the condition or operations, financial or otherwise, of Seller and WorldMark as
Buyer (or Buyer's Assigns) may from time to time reasonably request in order to
protect the interests of Buyer (and Buyer's Assigns) under or as contemplated by
this Agreement.
(b) Notices. Seller will notify the Buyer (and Buyer's
Assigns) in writing of any of the following promptly upon learning of the
occurrence thereof, describing the same and, if applicable, the steps being
taken with respect thereto:
(i)Amortization Events or Potential Amortization Events. The
occurrence of each Amortization Event and each Potential Amortization Event, as
set forth in Article V of this Agreement, by a statement of an Authorized
Officer of Seller.
(ii) Judgment and Proceedings.
(A) The entry of any judgment or decree against WorldMark, the
Seller or any of the Seller's Subsidiaries if the aggregate amount of all
judgments and decrees then outstanding against WorldMark, the Seller or the
Seller's Subsidiaries exceeds $1,000,000.
(B) The institution of any material litigation, arbitration
proceeding or governmental proceeding against WorldMark, the Seller or the
Seller's Subsidiaries.
(iii) Material Adverse Effect. The occurrence of any event or
condition that has, or could reasonably be expected to have, a Material Adverse
Effect, including a Material Adverse Effect on the collectibility of the
Receivables.
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(iv) Defaults Under Other Agreements. The occurrence of a
default or an event of default under any other material financing arrangement
pursuant to which Seller is a debtor or an obligor.
(v) Downgrade of the Seller. Any downgrade in the rating of
any Indebtedness or asset backed security of the Seller, or any of its
Subsidiaries or Affiliates, as applicable or as may become applicable, by any
nationally recognized rating agency, setting forth the Indebtedness or asset
backed security affected and the nature of such change.
(vi) Default by Custodian. The occurrence of a default or
event of default under Article XV of the Purchase Agreement or any other
provision of the Purchase Agreement by the Custodian.
(vii) Termination of Concord. The termination of Concord as
subservicer for the Legacy Eagle Crest Receivables.
(c) Compliance with Laws and Preservation of Corporate
Existence. Seller will comply in all material respects with all applicable laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which they may be subject. Seller will preserve and maintain its corporate
existence, rights, franchises and privileges in the jurisdiction of their
incorporation, and qualify and remain qualified in good standing as foreign
corporations in each jurisdiction where their businesses are conducted.
(d) Audits. Seller will furnish and will cause WorldMark to
furnish to Buyer (or Buyer's Assigns) from time to time such information with
respect to it and the Receivables as Buyer (or Buyer's Assigns) may reasonably
request. Seller and WorldMark will, from time to time during regular business
hours as requested by Buyer (or Buyer's Assigns), upon reasonable notice, permit
Buyer (or Buyer's Assigns) or their respective agents or representatives, (i) to
examine and make copies of and abstracts from all Records in the possession or
under the control of Seller relating to the Receivables and the Related
Security, including the related Contracts, and (ii) to visit the offices and
properties of Seller for the purpose of examining such materials described in
clause (i) above, and to discuss matters relating to Seller's and any
WorldMark's financial condition or the Receivables and the Related Security or
Seller's performance under any of the Transaction Documents or Seller's
performance under the Contracts and, in each case, with any of the officers or
employees of Seller having
20
knowledge of such matters. The cost of audits conducted pursuant to this Section
4.1 (d) will be borne solely by the Seller.
(e) Keeping and Marking of Records and Books.
(i) Seller will maintain and implement administrative and
operating procedures (including an ability to recreate records evidencing
Receivables in the event of the destruction of the originals thereof), and keep
and maintain (or will cause the Custodian to keep and maintain) all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Receivables (including records adequate to permit the
immediate identification of each new Receivable and all Collections of and
adjustments to each existing Receivable). Seller will give Buyer (and Buyer's
Assigns) notice of any material change in the administrative and operating
procedures referred to in the previous sentence.
(ii) Seller will (A) on or prior to the date hereof, ▇▇▇▇ its
master data processing records and other books and records relating to the
Receivables with a legend, acceptable to Buyer (and Buyer's Assigns), describing
Buyer's ownership interests in the Receivables and further describing the
Purchaser Interests of the Agent (on behalf of the Purchasers) under the
Purchase Agreement and (B) upon the request of Buyer (or Buyer's Assigns), (x)
▇▇▇▇ each Contract with a legend describing Buyer's ownership interests in the
Receivables and further describing the Purchaser Interests of the Agent (on
behalf of the Purchasers) and (y) deliver to the Custodian all Receivable
Documents (including all multiple originals of any such Contract) relating to
the Receivables.
(iii) Seller will be responsible for causing the Custodian to
perform any function required by this Section 4.1(e) to the extent applicable.
(f) Compliance with Contracts and Credit and Collection
Policy. Seller will timely and fully (i) perform and comply with all provisions,
covenants and other promises required to be observed by it under the Contracts
related to the Receivables, and (ii) comply in all respects with the Credit and
Collection Policy in regard to each Receivable and the related Contract. Seller
will pay when due any taxes payable in connection with the Receivables,
exclusive of taxes on or measured by income or gross receipts of Buyer and
Buyer's Assigns.
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(g) Performance and Enforcement of Transfer Agreement. Seller
will and will require each RTA Seller to, perform each of their respective
obligations and undertakings under and pursuant to the Transfer Agreement, will
purchase RTA Receivables thereunder in strict compliance with the terms thereof
and will vigorously enforce the rights and remedies accorded to Seller under the
Transfer Agreement. Seller will take all actions to perfect and enforce its
rights and interests (and the rights and interests of Buyer as assignee of
Seller) under the Transfer Agreement as Buyer (or Buyer's Assigns) may from time
to time reasonably request, including, without limitation, making claims to
which it may be entitled under any indemnity, reimbursement or similar provision
contained in the Transfer Agreement
(h) Ownership. Seller will take all necessary action to
establish and maintain, irrevocably in Buyer, legal and equitable title to the
Receivables, the Related Security and the Collections, free and clear of any
Adverse Claims, including the filing of all Financing Statements or other
similar instruments or documents necessary under the UCC (or any comparable law)
of all appropriate jurisdictions to perfect Buyer's interest in such
Receivables, Related Security and Collections and such other action to perfect,
protect or more fully evidence the interest of Buyer as Buyer (or Buyer's
Assigns) may reasonably request.
(i) Purchasers' Reliance. Seller acknowledges that the Agent,
the Investor Agents and the Purchasers are entering into the transactions
contemplated by the Purchase Agreement in reliance upon Buyer's identity as a
legal entity that is separate from Seller and any Affiliates thereof. Therefore,
from and after the date of execution and delivery of this Agreement, Seller will
take all reasonable steps including all steps that Buyer or any assignee of
Buyer may from time to time reasonably request to maintain Buyer's identity as a
separate legal entity and to make it manifest to third parties that Buyer is an
entity with assets and liabilities distinct from those of Seller and any
Affiliates thereof and not just a division of Seller. Without limiting the
generality of the foregoing and in addition to the other covenants set forth
herein, Seller (i) will not hold itself out to third parties as liable for the
debts of Buyer nor purport to own the Receivables and other assets acquired by
Buyer, (ii) will take all other actions necessary on its part to ensure that
Buyer is at all times in compliance with the covenants set forth in Section
7.1(i) of the Purchase Agreement and (iii) will cause all tax liabilities
arising in connection with the transactions contemplated herein or otherwise to
be allocated between Seller and Buyer on an arm's-length basis and in a manner
consistent with the procedures set forth in U.S. Treasury Regulations
ss.ss.1.1502-33(d) and 1.1552-1.
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(j) Taxes. Seller will file all tax returns and reports
required by law to be filed by it and promptly pay all taxes and governmental
charges at any time owing.
(k) Insurance. Seller will maintain in effect, or cause to be
maintained in effect, at Seller's own expense, such property, casualty and
liability insurance covering its real property and personal property as Seller
deems appropriate in its good faith business judgement. The foregoing
requirements shall not be construed to negate, reduce or modify, and are in
addition to, Seller's obligations hereunder.
(l) Environmental Laws. Seller shall, and shall cause each of
its Subsidiaries to, conduct its operations and keep and maintain its property
in compliance with all Environmental Laws. Seller shall perform its duties under
its management agreement with WorldMark in compliance with all Environmental
Laws.
(m) Collections.
(i) Seller shall cause each Obligor of Receivables (other than
Obligors on Legacy Eagle Crest Receivables during the Concord Servicing Period)
to remit his or her payments to a clearing account (the "Clearing Account")
established at Key Bank, National Association, or another bank acceptable to the
Agent in its sole discretion. The Seller shall cause any payments made by
Automatic Debit Collection (other than with respect to Legacy Eagle Crest
Receivables during the Concord Servicing Period) to be deposited directly into
the Clearing Account from each Obligor's relevant account. In the event any
payments relating to Receivables (other than Legacy Eagle Crest Receivables
during the Concord Servicing Period) are remitted directly to Seller or any
Affiliate of Seller, Seller will remit (or will cause all such payments to be
remitted) directly to the bank where the Clearing Account is then established
for deposit into the Clearing Account within two (2) Business Days following
receipt thereof and, at all times prior to such remittance, Seller will itself
hold or, if applicable, will cause such payments to be held in trust for the
exclusive benefit of Buyer and Buyer's Assigns.
(ii) Seller shall cause the Subservicer to instruct each
Obligor with respect to the Legacy Eagle Crest Receivables to remit his or her
payments to the Concord Account, until the termination of the Concord Servicing
Period. Seller shall instruct any payments with respect to the Legacy Eagle
Crest
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Receivables made by Automatic Debit Collection to be deposited directly into the
Concord Account from the relevant account of each Obligor. In the event any
payments relating to Legacy Eagle Crest Receivables are remitted directly to
Seller or the Subservicer or any Affiliate of Seller or the Subservicer, Seller
will remit (or will cause all such payments to be remitted) directly to the bank
where the Concord Account is then established for deposit into the Concord
Account within two (2) Business Days following receipt thereof and, at all times
prior to such remittance, the Seller will itself hold or, if applicable, will
cause such payments to be held in trust for the exclusive benefit of Buyer and
its assigns.
(n) Fractional Interest Receivables. On or before the
Undocumented Receivable Date with respect to each Fractional Interest
Receivable, the Seller shall perform the following:
(i) Each of the related deed, the Mortgage and each FI
Assignment Document related to such Fractional Interest Receivable shall have
been duly recorded or registered in the Applicable Jurisdiction in accordance
with all applicable laws and duly executed file stamped originals thereof (which
shall include evidence thereon of payment of all required documentary stamps and
intangible taxes, if any are required) shall have been delivered to the
Custodian pursuant to Article XV; and
(ii) An Acceptable Title Policy shall have been delivered to
the Custodian pursuant to Article XV of the Purchase Agreement.
Section 4.2 Negative Covenants of Seller. Until the date on
which this Agreement terminates in accordance with its terms, Seller hereby
covenants that:
(a) Name Change, Offices and Records. Seller will not change
its name, identity or corporate structure, change its jurisdiction of
organization or relocate its chief executive office or any office where Records
are kept unless it shall have: (i) given Buyer (and Buyer's Assigns) at least
forty-five (45) days' prior written notice thereof and (ii) delivered to Buyer
(and Buyer's Assigns) all Financing Statements, instruments and other documents
requested by Buyer (or any of Buyer's Assigns) in connection with such change or
relocation.
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(b) Change in Payment Instructions to Obligors. Seller will
not add or terminate any Clearing Account agreement or make or allow the
Subservicer to make any change in the instructions to Obligors (other than as
set forth in Section 4.1(m) hereof upon the termination of the Concord Servicing
Period) regarding payments to be made to any Clearing Account or to the Concord
Account (as applicable), or amend or supplement any agreement with the Custodian
or grant any waiver of performance thereunder, unless Buyer (or Buyer's Assigns)
shall have received, at least ten (10) days before the proposed effective date
therefor, (i) written notice of such addition, termination or change and (ii)
with respect to the addition of a Clearing Account, an executed Clearing Account
agreement with respect to the new Clearing Account.
(c) Modifications to Contracts and Credit and Collection
Policy. Seller will not make any change to the Credit and Collection Policy that
could adversely affect the collectibility of the Receivables or decrease the
credit quality of any newly created Receivables. Except as otherwise permitted
in its capacity as Servicer pursuant to Section 8.2(d) of the Purchase
Agreement, Seller will not extend, amend or otherwise modify the terms of any
Receivable or any Contract related thereto other than in accordance with the
Credit and Collection Policy.
(d) Sales, Liens. Seller will not sell, assign (by operation
of law or otherwise) or otherwise dispose of, or grant any option with respect
to, or create or suffer to exist any Adverse Claim upon (including the filing of
any financing statement) or with respect to, any Receivable, Related Security or
Collections, or upon or with respect to any Contract under which any Receivable
arises, or any Collection Account, or assign any right to receive income with
respect thereto, and Seller will defend the right, title and interest of Buyer
in, to and under any of the foregoing property, against all claims of third
parties claiming through or under Seller. However, no part of this Section
4.2(d) shall be construed as prohibiting an assignment pursuant to Section 13.1
or Section 2.1 of the Purchase Agreement.
(e) No Adverse Selection. Seller shall not select the
Receivables to be transferred hereunder from all eligible Originated Receivables
based on criteria which it believes would result in such transferred Receivables
being of lesser quality than the Originated Receivables not transferred
hereunder.
(f) Accounting for Purchases. Seller will not, and will not
permit any Affiliate to, account for or treat (whether in financial statements
or otherwise) the transactions contemplated hereby in any manner other than the
sale of the Receivables
25
and the Related Security by Seller to Buyer or in any other respect account for
or treat the transactions contemplated hereby in any manner other than as a sale
of the Receivables and the Related Security by Seller to Buyer except to the
extent that such transactions are not recognized on account of consolidated
financial reporting in accordance with GAAP.
ARTICLE V
AMORTIZATION EVENTS
Section 5.1 Amortization Events. The occurrence of any one or
more of the following events shall constitute an Amortization Event:
(a) Seller shall fail (i) to make any payment or deposit
required hereunder when due, or (ii) to perform or observe any term, covenant or
agreement hereunder (other than as referred to in clause (i) of this paragraph
(a)) or any other Transaction Document to which it is a party and such failure
in the case of this clause (ii) shall continue for three (3) consecutive
Business Days.
(b) Any representation, warranty, certification or statement
made by Seller in this Agreement, any other Transaction Document or in any other
document delivered pursuant hereto or thereto shall prove to have been incorrect
when made or deemed made, and the effects of such have not been cured within
three business days after the date the representation, warranty, certification
or statement was discovered, or should have been discovered, not to have been
correct.
(c) Failure of WorldMark to pay any Indebtedness when due or
of Seller to pay any Indebtedness greater than $1,000,000 when due; or the
default by Seller in the performance of any term, provision or condition
contained in any agreement under which any such Indebtedness greater than
$1,000,000 was created or is governed, the effect of which is to cause, or to
permit the holder or holders of such Indebtedness to cause, such Indebtedness to
become due prior to its stated maturity; or any such Indebtedness of Seller
shall be declared to be due and payable or required to be prepaid (other than by
a regularly scheduled payment) prior to the date of maturity thereof.
(d) (i) Seller or any of its Subsidiaries shall generally not
pay its debts as such debts become due or shall admit in writing its inability
to pay its debts
26
generally or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against Seller or any of its
Subsidiaries seeking to adjudicate it bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee or other similar
official for it or any substantial part of its property or (ii) Seller or any of
its Subsidiaries shall take any corporate action to authorize any of the actions
set forth in clause (i) above in this subsection (d).
(e) A date shall occur which is the 90th day following the
earlier to occur of (i) a public announcement of a Change of Control and (ii) a
Change of Control.
(f) One or more final judgments for the payment of money shall
be entered against Seller on claims not covered by insurance or as to which the
insurance carrier has denied its responsibility, and such judgment shall
continue unsatisfied and in effect for fifteen (15) consecutive days without a
stay of execution.
(g) WorldMark:
(i) voluntarily incurs or at any time become voluntarily
liable for any Indebtedness;
(ii) voluntarily allows its property to become subject to any
Liens, or subjects any of its property to any Liens, other than (A) utility or
other easements or licenses unrelated to any debt of WorldMark or (B) Liens that
in do not exceed, in aggregate, $100,000; or
(iii) involuntarily incurs or becomes involuntarily liable for
any debt, or subjects any of its property involuntarily to any Liens (other than
utility or similar easements or licenses unrelated to any debt of WorldMark)
that individually or in the aggregate (with respect to all such debt and the
obligations secured by all such Liens) exceed $1,000,000.
Section 5.2 Remedies. Upon the occurrence and during the
continuation of an Amortization Event, Buyer may take any of the following
actions: (i) declare the Amortization Date to have occurred, whereupon the
Amortization Date shall forthwith occur, without demand, protest or further
notice of any kind, all of which
27
are hereby expressly waived by Seller; provided, however, that upon the
occurrence of an Amortization Event described in Section 5.1(d), or of an actual
or deemed entry of an order for relief with respect to Seller under the Federal
Bankruptcy Code, the Amortization Date shall automatically occur, without
demand, protest or any notice of any kind, all of which are hereby expressly
waived by Seller and (ii) to the fullest extent permitted by applicable law,
declare that the Default Fee shall accrue with respect to any amounts then due
and owing by Buyer to Seller. The aforementioned rights and remedies shall be in
addition to all other rights and remedies of Buyer and Buyer's Assigns available
under this Agreement, by operation of law, at equity or otherwise, all of which
are hereby expressly preserved, including all rights and remedies provided under
the UCC, all of which rights shall be cumulative.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnities by Seller.
(a) Without limiting any other rights that Buyer may have
hereunder or under applicable law, Seller hereby agrees to indemnify Buyer and
Buyer's Assigns, officers, directors, agents and employees (each an "Indemnified
Party") from and against any and all damages, losses, claims, taxes,
liabilities, costs, expenses and for all other amounts payable, including
reasonable attorneys' fees (which attorneys may be employees of Buyer) and
disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by any of them arising out of
or as a result of this Agreement, the Transfer Agreement, or the acquisition,
either directly or indirectly, by Buyer of an interest in the Receivables,
excluding, however:
(i) Indemnified Amounts to the extent a final judgment of a
court of competent jurisdiction holds that such Indemnified Amounts resulted
from gross negligence or willful misconduct on the part of the Indemnified Party
seeking indemnification;
(ii) Indemnified Amounts to the extent the same includes
losses in respect of Receivables that are uncollectible on account of the
insolvency, bankruptcy or lack of creditworthiness of the related Obligor; or
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(iii) taxes imposed by the jurisdiction in which such
Indemnified Party's principal executive office is located, on or measured by the
overall net income of such Indemnified Party to the extent that the computation
of such taxes is consistent with the Intended Characterization;
provided, however, that nothing contained in this sentence shall limit the
liability of Seller or limit the recourse of Buyer to Seller for amounts
otherwise specifically provided to be paid by Seller under the terms of this
Agreement.
(b) Without limiting the generality of the indemnification
contained in Section 6.1(a), Seller shall indemnify Buyer for Indemnified
Amounts (including losses in respect of uncollectible receivables, regardless of
whether reimbursement therefor would constitute recourse to Seller) relating to
or resulting from:
(i) any representation or warranty made by any Originator,
Seller or Custodian (or any officers of any Originator, Seller, any Vacation
Club or Custodian) under or in connection with this Agreement, any other
Transaction Document or any other information or report delivered by Seller
pursuant hereto or thereto, which shall have been false or incorrect when made
or deemed made;
(ii) the failure by any Originator, Seller, any Vacation Club
or Custodian (with respect to its duties under Article XV of the Purchase
Agreement or any other provision of the Purchase Agreement) to comply with any
applicable law, rule or regulation with respect to any Receivable or Contract
related thereto, or the nonconformity of any Receivable or Contract included
therein with any such applicable law, rule or regulation or any failure of any
Originator, Seller, any Vacation Club or Custodian (with respect to its duties
under Article XV of the Purchase Agreement or any other provision of the
Purchase Agreement) to keep or perform any of their respective obligations,
express or implied, with respect to any Contract;
(iii) any failure of any Originator, Seller or Custodian to
perform its duties, covenants or other obligations in accordance with the
provisions of this Agreement or any other Transaction Document;
(iv) any lawsuit or legal claim arising out of or in
connection with the Resorts and Units, any defect in a Vacation Club's ownership
of title to, or leasehold rights in, the real property used in its business, any
Obligor's right
29
to use the Resorts and Units, or any rights or services that are the subject of
any Contract;
(v) any products liability or similar claim arising out of or
in connection with rights or services that are the subject of any Contract;
(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable (including a defense based on such Receivable or the related Contract
not being a legal, valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other claim resulting from the
sale of the service or rights related to such Receivable or the furnishing or
failure to provide for such rights or furnish such services;
(vii)the commingling of Collections of Receivables at any time
with other funds;
(viii) any investigation, litigation or proceeding related to
or arising from this Agreement or any other Transaction Document, the
transactions contemplated hereby, the use of the proceeds of a Purchase, the
ownership of the Receivables or any other investigation, litigation or
proceeding relating to any Originator, Seller, any Vacation Club or Custodian in
which any Indemnified Party becomes involved as a result of any of the
transactions contemplated hereby;
(ix) any inability to litigate any claim against any Obligor
in respect of any Receivable as a result of such Obligor being immune from civil
and commercial law and suit on the grounds of sovereignty or otherwise from any
legal action, suit or proceeding;
(x) any Amortization Event described in Section 5.1(d);
(xi) any failure of Seller to acquire and maintain legal and
equitable title to, and ownership of any RTA Receivable and the Related Security
and Collections with respect thereto from each RTA Seller, free and clear of any
Adverse Claim; or any failure of Seller to give reasonably equivalent value to
each RTA Seller under the Transfer Agreement in consideration of the transfer by
each RTA Seller of any RTA Receivable, or any
30
attempt by any Person to void such transfer under statutory provisions or common
law or equitable action;
(xii) any failure to vest and maintain vested in Buyer, or to
transfer to Buyer, legal and equitable title to, and ownership of, the
Receivables, the Related Security (and the Collections, free and clear of any
Adverse Claim);
(xiii) the failure to have filed, or any delay in filing,
Financing Statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to any
Receivable, the Related Security and Collections with respect thereto, and the
proceeds of any thereof, whether at the time of any Purchase or at any
subsequent time;
(xiv) any action or omission by Seller, WorldMark or Custodian
which reduces or impairs the rights of Buyer with respect to any Receivable or
the value of any such Receivable; and
(xv) any attempt by any Person to void any Purchase hereunder
under statutory provisions or common law or equitable action.
Any Indemnified Amounts incurred by actions of the Custodian which are not paid
by the Custodian to the applicable Indemnified Party on or before the 30th day
after a demand for payment of the Buyer is delivered to the Custodian shall be
immediately payable by the Seller to the Buyer.
Section 6.2 Other Costs and Expenses. Seller shall pay to
Buyer on demand all costs and out-of-pocket expenses in connection with the
preparation, execution, delivery and administration of this Agreement, the
transactions contemplated hereby and the other documents to be delivered
hereunder. Seller shall pay to Buyer on demand any and all costs and expenses of
Buyer, if any, including reasonable counsel fees and expenses in connection with
the enforcement of this Agreement and the other documents delivered hereunder
and in connection with any restructuring or workout of this Agreement or such
documents, or the administration of this Agreement following an Amortization
Event.
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ARTICLE VII
MISCELLANEOUS
Section 7.1 Waivers and Amendments.
(a) No failure or delay on the part of Buyer (or Buyer's
Assigns) in exercising any power, right or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude any other further exercise thereof or the
exercise of any other power, right or remedy. The rights and remedies herein
provided shall be cumulative and nonexclusive of any rights or remedies provided
by law. Any waiver of this Agreement shall be effective only in the specific
instance and for the specific purpose for which given.
(b) No provision of this Agreement may be amended,
supplemented, modified or waived except in writing signed by Seller and Buyer
and, to the extent required under the Purchase Agreement, the Agent, the
Investor Agents, the Conduits, and the Financial Institutions or the Required
Financial Institutions.
Section 7.2 Notices. Except as provided below, all
communications and notices provided for hereunder shall be in writing (including
bank wire, telecopy or electronic facsimile transmission or similar writing) and
shall be given to the other parties hereto at their respective addresses or
telecopy numbers set forth on the signature pages hereof or at such other
address or telecopy number as such Person may hereafter specify for the purpose
of notice to each of the other parties hereto. Each such notice or other
communication shall be effective (i) if given by telecopy, upon the receipt
thereof, (ii) if given by mail, at the time such communication is received via
first class mail or (iii) if given by any other means, when received at the
address specified in this Section 7.2.
Section 7.3 Protection of Ownership Interests of Buyer.
(a) Seller agrees that from time to time, at its expense, it
will promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that Buyer (or Buyer's Assigns)
may reasonably request, to perfect, protect or more fully evidence the
Receivables, or to enable Buyer (or Buyer's Assigns) to exercise and enforce
their rights and remedies hereunder. At any time after the occurrence or during
the continuation of an Amortization Event, Buyer (or Buyer's Assigns) may, at
Seller's sole cost and expense, direct Seller to notify the
32
Obligors of Receivables of the ownership interests of Buyer under this Agreement
and may also direct that payments of all amounts due or that become due under
any or all Receivables be made directly to Buyer or its designee.
(b) If Seller or Custodian fails to perform any of its
obligations hereunder or under any other Transaction Document, Buyer (or Buyer's
Assigns) may (but shall not be required to) perform, or cause performance of,
such obligation, and Buyer's (or such assigns') costs and expenses incurred in
connection therewith shall be payable by Seller as provided in Section 6.2.
Seller irrevocably authorizes Buyer (and Buyer's Assigns) at any time and from
time to time in the sole discretion of Buyer (or Buyer's Assigns), and appoints
Buyer (and Buyer's Assigns) as its attorney(es)-in-fact, to act on behalf of
Seller (i) to execute on behalf of Seller as debtor and to file Financing
Statements necessary or desirable in Buyer's (or Buyer's Assigns') sole
discretion to perfect and to maintain the perfection and priority of the
interest of Buyer in the Receivables and (ii) to file a carbon, photographic or
other reproduction of this Agreement or any financing statement with respect to
the Receivables as a financing statement in such offices as Buyer (or Buyer's
Assigns) in their sole discretion deem necessary or desirable to perfect and to
maintain the perfection and priority of Buyer's interests in the Receivables.
This appointment is coupled with an interest and is irrevocable.
(c) If, at any time following an Amortization Event, in
connection with the sale, liquidation or disposition by the Agent, any Purchaser
or any Servicer of any Receivables, Timeshare Interests or other Related
Security, it is necessary to obtain any license or to register or qualify any
such Person or any such collateral under any applicable law or regulation,
Seller shall, at its expense, take all actions that may be necessary or
desirable, or that the Agent or any Investor Agent may reasonably request, to
assist in any such licensing, registration or qualification, and the Seller
shall reimburse the Agent, each Purchaser and any such Servicer (other than TWRI
or any Affiliate thereof) for any fees, costs or expenses incurred thereby.
Section 7.4 Confidentiality.
(a) Seller shall maintain and shall cause each of its
employees and officers to maintain the confidentiality of this Agreement and the
other confidential proprietary information with respect to the Agent, the
Investor Agents and Conduits and their respective businesses obtained by it or
them in connection with the structuring, negotiating and execution of the
transactions contemplated herein, except that Seller and
33
its officers and employees may disclose such information to Seller's external
accountants and attorneys and as required by any applicable law or order of any
judicial or administrative proceeding.
(b) Anything herein to the contrary notwithstanding, Seller
hereby consents to the disclosure of any nonpublic information with respect to
it (i) to Buyer, the Agent, the Investor Agents, any other Financial
Institutions or Conduits by each other, (ii) by Buyer, the Agent, the Investor
Agents or the Purchasers to any prospective or actual assignee or participant of
any of them or to a prospective or actual successor servicer or (iii) by the
Agent or any Investor Agent to any rating agency, Commercial Paper dealer or
provider of a surety, guaranty or credit or liquidity enhancement to a Conduit
or any entity organized for the purpose of purchasing, or making loans secured
by, financial assets for which Bank One or FSI acts as the administrative agent
and to any officers, directors, employees, outside accountants and attorneys of
any of the foregoing. In addition, the Purchasers and the Agent may disclose any
such nonpublic information pursuant to any law, rule, regulation, direction,
request or order of any judicial, administrative or regulatory authority or
proceedings (whether or not having the force or effect of law).
Section 7.5 Bankruptcy Petition. Seller hereby covenants and
agrees that, prior to the date that is one year and one day after the payment in
full of all outstanding senior Indebtedness of any Conduit, it will not
institute against, or join any other Person in instituting against, such Conduit
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.
Section 7.6 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE STATE OF
ILLINOIS.
Section 7.7 CONSENT TO JURISDICTION. SELLER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO,
ILLINOIS IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SELLER
PURSUANT TO THIS AGREEMENT AND SELLER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT
34
AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF
BUYER (OR BUYER'S ASSIGNS) TO BRING PROCEEDINGS AGAINST SELLER IN THE COURTS OF
ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY SELLER AGAINST BUYER (OR
BUYER'S ASSIGNS) OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT
OR ANY DOCUMENT EXECUTED BY SELLER PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT
ONLY IN A COURT IN CHICAGO,
ILLINOIS.
Section 7.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT
EXECUTED BY SELLER PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER OR THEREUNDER.
Section 7.9 Integration; Binding Effect; Survival of Terms.
(a) This Agreement, the Subordinated Note, and the
Subscription Agreement contain the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement among the parties hereto with respect to
the subject matter hereof superseding all prior oral or written understandings.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns (including any trustee in bankruptcy). This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms and shall remain in full force and effect until terminated in
accordance with its terms; provided, however, that the rights and remedies with
respect to (i) any breach of any representation and warranty made by Seller
pursuant to Article II, (ii) the indemnification and payment provisions of
Article VI, and Section 7.5 shall be continuing and shall survive any
termination of this Agreement.
35
Section 7.10 Counterparts; Severability; Section References.
This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same Agreement. Any provisions of this Agreement which are
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Unless otherwise
expressly indicated, all references herein to "Article," "Section," "Schedule"
or "Exhibit" shall mean articles and sections of, and schedules and exhibits to,
this Agreement.
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date hereof.
TRENDWEST RESORTS, INC.
By:
------------------------------------------------------
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TW HOLDINGS III, INC.
By:
------------------------------------------------------
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
37
EXHIBIT I
Definitions
This is Exhibit I to the Agreement (as hereinafter defined).
As used in the Agreement and the Exhibits, Schedules and Annexes thereto,
capitalized terms have the meanings set forth in this Exhibit I (such meanings
to be equally applicable to the singular and plural forms thereof). If a
capitalized term is used in the Agreement, or any Exhibit, Schedule or Annex
thereto, and not otherwise defined therein or in this Exhibit I, such term shall
have the meaning assigned thereto in Exhibit I to the Purchase Agreement.
"Accrued Balance" means, as to any Receivable, the Outstanding
Balance of such Receivable plus any accrued and unpaid interest thereon.
"Acquisition Agreement" means the Acquisition Agreement, dated
as of May 4, 2001, by and among Eagle Crest, Eagle Crest Vacation Club, Running
Y Resort, TWRI and WorldMark.
"Adverse Claim" means a lien, security interest, charge or
encumbrance, or other right or claim in, of or on any Person's assets or real or
personal properties in favor of any other Person, other than the rights created
under the Transaction Documents.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person or any Subsidiary of such Person. A
Person shall be deemed to control another Person if the controlling Person owns
10.0% or more of any class of voting securities of the controlled Person or
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of the controlled Person, whether through ownership
of stock, by contract or otherwise.
"Agent" has the meaning set forth in the Preliminary
Statements to the Agreement.
"Agreement" means the
Receivables Sale Agreement, dated as of
September 28, 2001, between Seller and Buyer, as the same may be amended,
restated or otherwise modified.
Exh. I-1
"Amortization Date" means the earliest to occur of (i) the
Facility Termination Date, (ii) any Business Day so designated by Seller or
Buyer, and (ii) the Business Day immediately prior to the occurrence of an
Amortization Event set forth in Section 5.1(d), (iii) the Business Day specified
in a written notice from Buyer to Seller following the occurrence of any other
Amortization Event, and (iv) the date which is 30 Business Days after Buyer's
receipt of written notice from Seller that it wishes to terminate the Agreement.
"Amortization Event" has the meaning set forth in Section 5.1
of the Agreement.
"Applicable Declaration" means, with respect to a Resort, the
declaration of condominium, declaration of covenants, conditions, and
restrictions, master deed, or similar document, together with any amendments or
restatements thereof, that establishes the underlying form of ownership of such
Resort and, if required by applicable law, that is recorded in the appropriate
public records of the Applicable Jurisdiction.
"Applicable Jurisdiction" means, with respect to a Resort or a
Unit, the state, county, municipality, and/or other governmental jurisdiction
(including a foreign jurisdiction if applicable) in which such Resort or Unit is
located.
"Applicable Timeshare Documents" means all Applicable
Declarations and other documents and instruments relating to a Resort and Unit,
Common Elements, if any, Common Furnishings, if any, including, but not limited
to, the project documents, registrations and other approvals, business licenses,
Contracts, homeowners association agreements, and corporate documents and other
documents to the extent used in the marketing, sale, and financing of such
Timeshare Interests. Each Applicable Timeshare Document shall be in form and
content acceptable to the Agent. Promptly upon the request of the Agent or any
Investor Agent, the Servicer shall deliver to the Agent or such Investor Agent
true, correct, and complete copies of all Applicable Timeshare Documents and any
material amendments thereto.
"Authorized Officer" means, with respect to Seller, its
corporate controller or chief financial officer or any other designated officer
acceptable to the Buyer.
Exh. I-2
"Bank One" means Bank One, NA (with its main office in
Chicago,
Illinois), in its individual capacity, and its successors.
"Business Day" means any day on which banks are not authorized
or required to close in New York, New York or Chicago,
Illinois and The
Depository Trust Company of New York is open for business.
"Buyer" has the meaning set forth in the preamble to the
Agreement.
"Buyer's Assigns" means any Person to whom the Buyer transfers
rights under the Agreement or interests in the Receivables by the Buyer pursuant
to this Agreement or the Purchase Agreement, including, without limitation, the
Agent, the Investor Agents and the Purchasers.
"Calculation Period" means each calendar month or portion
thereof which elapses during the term of the Agreement. The first Calculation
Period shall commence on the date of the initial Purchase of Receivables
hereunder and the final Calculation Period shall terminate on the Amortization
Date.
"Change of Control" means the acquisition by any Person, or
two or more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 20% or more of the outstanding shares of
voting stock of any Originator.
"Charged-Off Receivable" means a Receivable: (i) as to which
the Obligor thereof has taken any action, or suffered any event to occur, of the
type described in Section 10.1(d) of the Purchase Agreement (as if references to
Originating Party therein refer to such Obligor; (ii) as to which the Obligor
thereof, if a natural person, is deceased; (iii) which, consistent with the
Credit and Collection Policy, would be written off TWRI's books as
uncollectible; (iv) which has been identified by Seller as uncollectible; or (v)
as to which any payment, or part thereof, remains unpaid for 179 days or more
from the original due date for such payment.
"Clearing Account" has the meaning set forth in Section 4.1(l)
of this Agreement.
"Collection Account" has the meaning set forth in Section
2.8(c) of the Purchase Agreement.
Exh. I-3
"Concord" means Concord Servicing Corporation, an Arizona
corporation.
"Concord Account" means the "Concord Account" set forth in
"Exhibit III hereof.
"Concord's Collection Policy" means Concord's collection
policies and practices relating to Contracts and Receivables (including Legacy
Eagle Crest Receivables) existing on the date hereof and summarized in Exhibit
XII, as modified from time to time in accordance with the Agreement.
"Concord Servicing Period" means the time period during which
Concord is acting as subservicer for the Legacy Eagle Crest Receivables.
"Conduit" has the meaning set forth in the preamble to the
Agreement.
"Contract" means (in the case of a Fractional Interest
Receivable) a Mortgage Note or (in the case of a Receivable other than a
Fractional Interest Receivable) an Installment Sale Contract and (in either
case) any and all other instruments, agreements, invoices, or other writings
pursuant to which indebtedness of an Obligor to any Originator arises or which
evidences such indebtedness.
"Credit and Collection Policy" means, collectively, (i) with
respect to all Receivables (other than Legacy Eagle Crest Receivables during the
Concord Servicing Period) Seller's credit and collection policies and practices
relating to Contracts and Receivables (including RTA Receivables) existing on
the date hereof and summarized in Exhibit V, as modified from time to time in
accordance with the Agreement and (ii) with respect to Legacy Eagle Crest
Receivables during the Concord Servicing Period, the Concord Collection Policy.
"Default Fee" means a per annum rate of interest equal to the
sum of (i) the Prime Rate, plus (ii) 2% per annum.
"Defaulted Receivable" means a Receivable on which payment of
all or part of the amount due remains unpaid for more than 90 and less than 179
days but which is not a Charged-Off Receivable.
Exh. I-4
"Delinquent Receivable" means a Receivable as to which any
payment, or part thereof, remains unpaid for 31 or more days or more from the
original due date for such payment but which is not a Charged-Off Receivable.
"Dilutions" means, at any time, the aggregate amount of
reductions or cancellations described in Section 1.3(a) of the Agreement.
"Draft Schedule of Receivables" has the meaning set forth in
Section 1.1.
"Eagle Crest" means Eagle Crest, Inc., an Oregon corporation.
"Eagle Crest Acquisition" means the transaction contemplated
by and consummated pursuant to the Acquisition Agreement.
"Eagle Crest Vacation Club" means Eagle Crest Vacation Club,
Inc., an Oregon not-for-profit corporation.
"Eligible Receivable" means, at any time, an Originated
Receivable:
(i) the Obligor of which (a) if a natural person, is a
resident of the United States or any Canadian province other than Quebec, (b) if
a corporation or other business organization, is organized under the laws of the
United States or any Canadian province other than Quebec or any political
subdivision thereof and has its chief executive office in the United States or
any Canadian province other than Quebec; (c) is not an Affiliate of any of the
parties hereto; and (d) is not a government or a governmental subdivision or
agency,
(ii) the Obligor of which is not the Obligor of any Delinquent
Receivable, Defaulted Receivable or Charged-Off Receivable,
(iii) which is not more than 30 days past due and which has
never been more than 30 days past due,
(iv) each payment (notwithstanding any payments made by the
Obligor at the time of entering into a Contract) under which by its terms is due
and payable within no more than 45 days of the original billing date therefor,
Exh. I-5
(v) which has not had its payment terms extended (other than
in the case of an Upgrade Contract),
(vi) the remaining term of which is not greater than 120
months,
(vii) on which one due payment has been made by the Obligor
and received (other than in the case of an Upgrade Contract),
(viii) which is an "account," "chattel paper" or "general
intangible" within the meaning of Section 9-105 or Section 9-106, respectively,
of the UCC of all applicable jurisdictions,
(ix) which is denominated and payable only in United States
dollars in the United States,
(x) which arises under a Contract which is in substantially
the form of one of the form contracts set forth on Exhibit VII hereto or which
has been otherwise approved by the Agent in writing, which, together with such
Receivable, is in full force and effect and constitutes the legal, valid and
binding obligation of the related Obligor enforceable against such Obligor in
accordance with its terms subject to no offset, counterclaim or other defense,
(xi) which arises under a Contract which (A) does not require
the Obligor under such Contract to consent to the transfer, sale or assignment
of the rights and duties of the seller under such Contract and (B) does not
contain a confidentiality provision that purports to restrict the ability of the
Buyer or of any of Buyer's Assigns to exercise its rights under this Agreement
or any other Transaction Document, including its right to review the Contract,
(xii) which arises under a Contract that contains an
obligation to pay a specified sum of money,
(xiii) which, together with the Contract related thereto, does
not contravene any law, rule or regulation applicable thereto (including any
law, rule and regulation relating to truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection practices and
privacy) and with
Exh. I-6
respect to which no part of the Contract related thereto is in violation of any
such law, rule or regulation,
(xiv) which satisfies all applicable requirements of the
Credit and Collection Policy,
(xv) which was generated in the ordinary course of Seller's
business,
(xvi) which arises solely from the purchase of Timeshare
Interests by an Obligor or from an Upgrade by an Obligor,
(xvii) as to which the Agent has not notified Buyer that the
Agent has determined that such Receivable or class of Receivables is not
acceptable as an Eligible Receivable, including because such Receivable arises
under a Contract that is not acceptable to the Agent,
(xviii) as to which, if such Receivable has been listed on a
Schedule of Exceptions delivered by the Custodian pursuant to Section 15.1(d) of
this Agreement, the Agent has consented in writing to the treatment of such
Receivable as an Eligible Receivable, and
(xix) the Receivables File for which includes all related
Receivable Documents.
Notwithstanding the foregoing, the Legacy Eagle Crest
Receivables shall not constitute Eligible Receivables until such time as the
Agent has delivered written notice to the Seller that (x) it has received and
reviewed UCC lien searches conducted in the States of Washington and Oregon
against the RTA Sellers and (y) such results are satisfactory in all respects to
the Agent.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any governmental
authorities, in each case relating to environmental, health, safety and land use
matters.
Exh. I-7
"Facility Termination Date" means the earliest of (i) the
occurrence of a Amortization Event, (ii) 30 Business Days after the receipt of
written notification from Buyer to the Agent of Buyer's intention to terminate
the Liquidity Facility, and (iii) the Liquidity Termination Date.
"Federal Bankruptcy Code" means Title 11 of the United States
Code entitled "Bankruptcy", as amended and any successor statute thereto.
"FI Assignment Document (First Step)" means, with respect to a
Fractional Interest Receivable, an absolute and unconditional assignment in the
form attached to the Sale Agreement in the form attached hereto as Exhibit X
relating to the sale, assignment, transfer and conveyance of such Fractional
Interest Receivable from the RSA Originator to the RPA Seller.
"FI Assignment Document (Second Step)" means, with respect to
a Fractional Interest Receivable, an absolute and unconditional assignment in
the form of the attached Exhibit XI relating to the sale, assignment, transfer
and conveyance of such Fractional Interest Receivable from the RPA Seller to
Agent.
"FI Assignment Documents" means, with respect to a Fractional
Interest Receivable, the related FI Assignment Document (First Step) and the
related FI Assignment Document (Second Step).
"FI Resort" means the Depoe Bay resort located in Depoe Bay,
Oregon and each other property from time to time designated hereafter by TWRI to
the Agent as an FI Resort.
"FI Unit" means a Unit at an FI Resort that has been
designated in the Applicable Declaration as reserved for Fractional Interest
usage.
"Finance Charges" means, with respect to a Contract, any
finance, interest, late payment charges or similar charges owing by an Obligor
to the Originator pursuant to such Contract or any service fees owed to the
Originator related to such Contract. Finance Charges do not include any Vacation
Club's membership dues owed by Obligors.
"Financial Institutions" has the meaning set forth in the
preamble to the Agreement.
Exh. I-8
"Financing Statement" means a UCC financing statement,
amendment, continuation statement, release, termination or other filing under
the UCC.
"Fractional Interest" means an undivided fee simple timeshare
interest in a particular FI Resort or FI Unit, as a tenant in common with other
owners of undivided interests in such FI Resort or FI Unit, together with all
rights, benefits, privileges, and interests appurtenant thereto, including but
not limited to the right to use and occupy an FI Unit within a development and
the Common Elements and Common Furnishings, if any, appurtenant to such FI Unit
or the development during a reserved or assigned use period, all as more
specifically described in the Applicable Declaration or other Applicable
Timeshare Documents.
"Fractional Interest Receivable" means a Receivable arising
out of the purchase by an Obligor of a Fractional Interest.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"Indemnified Amounts" has the meaning set forth in Section
6.1.
"Indemnified Party" has the meaning set forth in Section 6.1.
"Installment Sale Contract" shall mean a vacation owner
agreement executed by an Originator, its related Vacation Club and an Obligor.
"Intended Characterization" means, for income tax purposes,
the characterization of the acquisition by the Purchasers of Purchaser Interests
under the Purchase Agreement as a loan or loans by the Purchasers to Buyer
secured by the Receivables, the Related Security and the Collections.
"Investor Agent" has the meaning set forth in the Purchase
Agreement.
"Legacy Eagle Crest Receivables" means, as of any time, those
Receivables, other than receivables that have been charged-off or paid in full,
and that have been transferred to Seller under, and included on the Schedule of
Legacy Eagle Crest Receivables delivered pursuant to, the Transfer Agreement.
Exh. I-9
"Liquidity Agreement" has the meaning set forth in the
Purchase Agreement.
"Liquidity Termination Date" means September 26, 2002.
"Material Adverse Effect" means a material adverse effect on
(i) the financial condition or operations of Seller and its Subsidiaries, (ii)
the ability of Seller to perform its obligations under the Agreement or any
other Transaction Document, (iii) the legality, validity or enforceability of
the Agreement or any other Transaction Document, (iv) any Originator's,
Seller's, Buyer's, the Agent's, the Investor Agents' or any Purchaser's interest
in the Receivables generally or in any significant portion of the Receivables,
the Related Security or Collections with respect thereto, or (v) the
collectibility of the Receivables generally or of any material portion of the
Receivables.
"Mortgage" means a properly recorded or registered mortgage,
deed of trust, or other security instrument customary in the timeshare industry
in the Applicable Jurisdiction that creates a valid and enforceable first
priority lien against the Fractional Interest identified therein in accordance
with all applicable laws and secures the payment of all principal, interest, and
other amounts owed by an Obligor.
"Mortgage Note" means the promissory note or other instrument
or agreement executed by an Obligor that evidences the indebtedness of such
Obligor incurred in connection with the purchase of a Fractional Interest.
"Net Value" means, as of any date of determination, an amount
equal to the sum of (i) the aggregate Outstanding Balance of the Receivables at
such time, minus (ii) the sum of (A) the aggregate Capital outstanding at such
time, plus (B) the Aggregate Reserves.
"Net Worth" means as of the last Business Day of each
Calculation Period preceding any date of determination, the excess, if any, of
(a) the aggregate Outstanding Balance of the Receivables at such time, over (b)
the sum of (i) the aggregate Capital outstanding at such time, plus (ii) the
aggregate outstanding principal balance of the Subordinated Loans (including any
Subordinated Loan proposed to be made on the date of determination).
"Obligor" means a Person obliged to make payments pursuant to
a Contract.
Exh. I-10
"Original Balance" means, with respect to any Receivable, the
Outstanding Balance of such Receivable on the date it was purchased by Buyer.
"Originated Receivable" means the indebtedness and other
obligations owed by an Obligor to an Originator (without giving effect to any
transfer or conveyance under the Agreement or the Transfer Agreement) or Buyer
(after giving effect to the transfers under the Agreement or the Transfer
Agreement) whether constituting an account, chattel paper, instrument or general
intangible, arising under a Contract and includes the obligation to pay any
Finance Charges with respect thereto. Indebtedness and other rights and
obligations arising from any one transaction, including indebtedness and other
rights and obligations represented by an individual invoice, shall constitute a
Receivable separate from a Receivable consisting of the indebtedness and other
rights and obligations arising from any other transaction.
"Originator" means each of (i) TWRI in its capacity as Seller
under the Agreement and (ii) each of Eagle Crest and Running Y in its capacity
as an RTA Seller under the Transfer Agreement.
"Outstanding Balance" of any Receivable at any time means the
then outstanding principal balance thereof.
"Potential Amortization Event" means an event which, with the
passage of time or the giving of notice, or both, would constitute an
Amortization Event.
"Pre-Upgrade Receivable" has the meaning set forth in Section
1.5 of this Agreement.
"Previous Sale Agreement" has the meaning specified in the
preamble to the Agreement.
"Prime Rate" means a rate per annum equal to the prime rate of
interest announced from time to time by Bank One or its parent (which is not
necessarily the lowest rate charged to any customer), changing when and as said
prime rate changes.
"Previous Sale Agreement" has the meaning set forth in the
preamble to the Agreement.
Exh. I-11
"Purchase" means a purchase under the Agreement by Buyer from
Seller of Receivables, the Related Security and the Collections related thereto,
together with all related rights in connection therewith.
"Purchase Agreement" has the meaning set forth in the preamble
to the Agreement.
"Purchase Date" means, as provided in Section 1.1(b) of the
Agreement, any Business Day selected by Seller on which a Purchase shall occur.
"Purchase Price" means, with respect to any Purchase on any
date, the aggregate price to be paid by Buyer to Seller for such Purchase in
accordance with Section 1.2 of the Agreement for the Receivables, Collections
and Related Security being sold to Buyer on such date, which price shall equal
the product of (x) the Original Balance of such Receivables, multiplied by (y)
the Purchase Price Factor then in effect.
"Purchase Price Credit" has the meaning set forth in Section
1.3 of the Agreement.
"Purchase Price Factor" means a percentage calculated to
provide Buyer with a reasonable return on its investment in the Receivables
after taking account of (i) the time value of money based upon the anticipated
dates of collection of the Receivables and the cost to Buyer of financing its
investment in the Receivables during such period and (ii) the risk of nonpayment
by the Obligors. Seller and Buyer may agree from time to time to change the
Purchase Price Factor based on changes in one or more of the items affecting the
calculation thereof, provided that any change to the Purchase Price Factor shall
take effect as of the commencement of a Calculation Period, shall apply only
prospectively and shall not affect the Purchase Price payment in respect of
Purchases which occurred during any Calculation Period ending prior to the
Calculation Period during which Seller and Buyer agree to make such change. The
initial Purchase Price Factor shall be 100.0%.
"Purchaser" means Conduit or a Financial Institution, as
applicable.
"Receivable" means an Originated Receivable that has been
identified for sale to the Buyer or sold to the Buyer, as the context may
require, but shall not include any Removed Receivable from and after the date on
which such Removed Receivable is repurchased by the Seller hereunder.
Exh. I-12
"Receivable Documents" shall mean with respect to each
Receivable and each Obligor:
(i) each original Installment Sale Contract or Mortgage Note,
as applicable;
(ii) a notice of sale and assignment affixed to the
Installment Sale Contract or Mortgage Note, as applicable, (x) if such
Installment Sale Contract or Mortgage Note was delivered to the Custodian prior
to the RSA Effective Date, stating the legend set forth in clause (ii) of the
definition of "Receivables Documents" in the Previous Sale Agreement, and (ii)
otherwise stating the following:
The Receivable described herein has been sold to TW Holdings III, Inc. and
undivided interests in the Receivable described have further been sold by TW
Holdings III, Inc. pursuant to Receivables Purchase Agreement dated as of
September 28, 2001.
(iii) to the extent such has been executed by the applicable
Originator, an original of each guarantee, assumption, modification or
substitution agreement, if any, which relates to the related Receivable (or copy
thereof certified by an officer of the applicable Originator to be a true and
correct copy);
(iv) if such Receivable is a Fractional Interest Receivable,
each original of the related Mortgage and FI Assignment Documents and a copy of
the related deed; and
(v) to the extent such are in the possession of the applicable
Originator prior to the transfer of the related to the Receivable to the
Custodian, copies of all other Receivable Files related to such Receivable.
"Receivable Files" shall mean the documents and other papers
and computerized records customarily maintained by the Servicer in servicing
receivables comparable to the Receivables.
"Records" means, with respect to any Receivable, all
Contracts, other Receivable Documents and other documents, books, records and
other information
Exh. I-13
(including computer programs, tapes, disks, punch cards, data processing
software and related property and rights) relating to such Receivable, any
Related Security therefor and the related Obligor.
"Related Security" means, with respect to any Receivable:
(i) all security interests, liens and Mortgages, and the
property subject thereto from time to time, if any, purporting to secure payment
of such Receivable, whether pursuant to the Contract related to such Receivable
or otherwise, together with all Financing Statements and security agreements
describing any collateral securing such Receivable,
(ii) all guaranties, insurance and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Receivable whether pursuant to the Contract related to such
Receivable or otherwise,
(iii) all service contracts and other contracts and agreements
associated with such Receivable,
(iv) all Records related to such Receivable,
(v) all of Seller's right, title and interest in, to and under
the Transfer Agreement, and
(vi) all income and proceeds of any of the foregoing.
"Repossessed Timeshare Interests" means, with respect to a
Charged-off Receivable or a Defaulted Receivable, the related Timeshare
Interests which have been repossessed from or returned by the Obligor on such
Receivable (whether through foreclosure, repossession, deed in lieu of
foreclosure, or other means).
"Required Capital Amount" means, as of any date of
determination, an amount equal to 3% of the Outstanding Balance of all Eligible
Receivables.
"Resorts and Units" means, collectively, FI Resorts, FI Units,
VC Resorts and VC Units.
Exh. I-14
"Revolving Period Termination Date" means September 27, 2002,
or as extended upon written notice from the Agent, on behalf of the Purchasers,
to the Buyer.
"RSA Effective Date" has the meaning set forth in Section 3.1
of this Agreement.
"RSA Year" means a one-year period, measured from and
including January 7, 2000, or the anniversary of such date, as applicable.
"RTA Receivables " means, as of any time, all right to use
Timeshare Interests receivables, originated by Eagle Crest or Running Y and
transferred to Seller pursuant to the Transfer Agreement, other than receivables
that have been charged-off or paid in full.
"RTA Seller" has the meaning set forth in the preamble to this
Agreement.
"Running Y" means Running Y, Inc., an Oregon corporation.
"Sale Assignment" means the executed assignment of Originated
Receivables, substantially in the form of Exhibit VIII, in conjunction with a
Purchase.
"Schedule of Legacy Eagle Crest Receivables" means the
schedule of RTA Receivables delivered in connection with the Purchase under the
Transfer Agreement.
"Schedule of Receivables" has the meaning set forth in Section
1.1 of the Agreement.
"Serviced Receivables" shall mean, as of any time, all right
to use timeshare or Vacation Credit receivables originated or serviced by TWRI
other than receivables that have been paid in full or charged off and including
the Receivables.
"Settlement Date" means the 20th day of each calendar month
(or if such day is not a Business Day, then the next Business Day).
"Subordinated Loan" has the meaning set forth in Section
1.2(a) of the Agreement.
Exh. I-15
"Subordinated Note" means a promissory note in substantially
the form of Exhibit VI hereto as more fully described in Section 1.2 of the
Agreement, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"Subscription Agreement" means that certain Stockholder and
Subscription Agreement, dated as of January 7, 2000, between Seller and Buyer.
"Subservicer" means Concord or any other Person appointed by
TWRI to administer, service and collect the RTA Receivables .
"Subsidiary" of a Person means (i) any corporation more than
50% of the outstanding securities having ordinary voting power of which shall at
the time be owned or controlled, directly or indirectly, by such Person or by
one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, association, limited liability company,
joint venture or similar business organization more than 50% of the ownership
interests having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of an Originator.
"Timeshare Interests" means each or all of the Vacation
Credits or Fractional Interests or other Vacation Club ownership interests, as
applicable.
"Transaction Documents" means, collectively, this Agreement,
the Transfer Agreement, the Purchase Agreement, each Liquidity Agreement, each
Collection Account Agreement, the Subordinated Note, the Subscription Agreement
and all other instruments, documents and agreements executed and delivered in
connection herewith.
"Transfer Agreement" has the meaning set forth in the preamble
to this Agreement.
"TWRI" shall have the meaning it is given in the preamble to
the Agreement.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the specified jurisdiction.
Exh. I-16
"Undocumented Receivable" means any Fractional Interest
Receivable as to which all actions and deliveries specified in Section 4.1(n)
have not occurred by the related Undocumented Receivable Date.
"Undocumented Receivable Date" shall mean, with respect to a
Fractional Interest Receivable, the date which is 90 days after the date on
which such Receivable was originated.
"Unrecorded Document" means, with respect to a Fractional
Interest Receivable on any date, each document described in Section 4.1(n) which
has not at such date been recorded or registered in the Applicable Jurisdiction.
"Upgrade" means the cancellation of an existing Contract
(other than a Fractional Interest Receivable) and entry into a new, 84-month
Contract by an Obligor, Vacation Club and TWRI, pursuant to which the Obligor
purchases additional Vacation Credits.
"Upgrade Contract" means the new Contract entered into by an
Obligor, TWRI and a Vacation Club related to an Upgrade by such Obligor.
"Upgrade Receivable" has the meaning set forth in Section 1.5
of this Agreement.
"Vacation Club" means each of WorldMark and Eagle Crest
Vacation Club. References herein to a Vacation Club being "related" to an
Originator shall be construed as follows: (i) WorldMark is "related" (a) to TWRI
with respect to all Receivables originated by TWRI and (b) to Running Y and
Eagle Crest with respect to Receivables originated by Running Y and Eagle Crest
on and after the effectiveness of the Eagle Crest Acquisition; and (ii) Eagle
Crest Club is "related" to Eagle Crest and Running Y with respect to all
Receivables originated by Eagle Crest or Running Y before the effectiveness of
the Eagle Crest Acquisition.
"Vacation Credits" means ownership interests in WorldMark that
entitle the owner to use Resorts and Units.
"Vacation Owner Agreement" means such Contract between Seller,
a Vacation Club and any Obligor in substantially the same form as attached as
Exhibit VII.
Exh. I-17
"VC Resorts" means those properties owned in fee simple by a
Vacation Club or in which a Vacation Club has a valid leasehold interest, which
an Obligors who is a Vacation Credit owner has limited rights to use under the
terms of an Installment Sale Contract between an Originator, the corresponding
Vacation Club and such Obligors as more fully described in the Applicable
Declaration and other Applicable Timeshare Documents. This definition includes
all VC Resorts in existence as of the date of this Agreement or which come into
existence during the term of this Agreement. To the extent that a particular
property has both VC Units and FI Units, it shall constitute a VC Resort to the
extent of the VC Units and an FI Resort to the extent of the FI Units.
"VC Units" means Units that are designated for use by owners
of Vacation Credits.
"WorldMark" means WorldMark, The Club, a California
not-for-profit mutual benefit corporation.
All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles. All terms
used in Article 9 of the UCC in the State of
Illinois, and not specifically
defined herein, are used herein as defined in such Article 9.
Exh. I-18
EXHIBIT II
Places of Business; Locations of Records;
Federal Employer Identification Number(s)
Places of Business:
Trendwest Resorts, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ fax
Location of Records:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ fax
Federal Employer Identification Number: ▇▇-▇▇▇▇▇▇▇
Exh.II-1
EXHIBIT III
Account Numbers
Account Bank Name and Address Account Number
-------------------------------------------------------------------------------
Clearing Account Key Bank, National Association 479681015661
Mail Code WA1180512
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Concord Account [ ] [ ]
Exh. III-1
EXHIBIT IV
Form of Compliance Certificate
This Compliance Certificate is furnished pursuant to that
certain
Receivables Sale Agreement dated as of September 28, 2001, between
Trendwest Resorts Inc. and TW Holdings III, Inc. (the "Agreement"). Capitalized
terms used and not otherwise defined herein are used with the meanings
attributed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected Vice President of Seller.
2. I have reviewed the terms of the Agreement and I have made,
or have caused to be made under my supervision, a detailed review of the
transactions and conditions of Seller and its Subsidiaries during the accounting
period covered by the attached financial statements.
3. The examinations described in paragraph 2 did not disclose,
and I have no knowledge of, the existence of any condition or event which
constitutes an Amortization Event or a Potential Amortization Event, as each
such term is defined under the Agreement, during or at the end of the accounting
period covered by the attached financial statements or as of the date of this
Certificate, except as set forth below.
4. Described below are the exceptions, if any, to paragraph 3
by listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which Seller has taken, is taking, or
proposes to take with respect to each such condition or event:
The foregoing certifications, together with the computations
set forth in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this day of , ____.
Exh. IV-1
------------------------------
[Name]
Exh. IV-2
EXHIBIT V
Credit and Collection Policy
Exh. VI-1
EXHIBIT VI
Form of Subordinated Note
SUBORDINATED NOTE
January 7, 2000
1. Note. FOR VALUE RECEIVED, the undersigned, TW Holdings III,
Inc., a Delaware corporation ("SPV"), hereby unconditionally promises to pay to
the order of Trendwest Resorts, Inc., an Oregon corporation ("Originator"), in
lawful money of the United States of America and in immediately available funds,
on the date following the Amortization Date which is one year and one day after
the date on which (i) the Outstanding Balance of all Receivables sold under the
"Sale Agreement" referred to below has been reduced to zero and (ii) Originator
has paid to the Buyer all indemnities, adjustments and other amounts which may
be owed thereunder in connection with the Purchases (the "Collection Date"), the
aggregate unpaid principal sum outstanding of all "Subordinated Loans" made from
time to time by Originator to SPV pursuant to and in accordance with the terms
of that certain
Receivables Sale Agreement dated as of January 7, 2000, between
Originator and SPV (as amended, restated, supplemented or otherwise modified
from time to time, the "Sale Agreement"). Reference to Section 1.2 of the Sale
Agreement is hereby made for a statement of the terms and conditions under which
the loans evidenced hereby have been and will be made. All terms which are
capitalized and used herein and which are not otherwise specifically defined
herein shall have the meanings ascribed to such terms in the Sale Agreement.
2. Interest. SPV further promises to pay interest on the
outstanding unpaid principal amount hereof from the date hereof until payment in
full hereof at a rate equal to 8.75%; provided, however, that if SPV shall
default in the payment of any principal hereof, SPV promises to pay, on demand,
interest at the rate of the 8.75% per annum on any such unpaid amounts, from the
date such payment is due to the date of actual payment. Interest shall be
payable on the 20th day of each month, or the next Business Day if such day is
not a Business Day in arrears; provided, however, that SPV may elect on the date
any interest payment is due hereunder to defer such payment and upon such
election the amount of interest due but unpaid on such date shall constitute
Exh. VII-1
principal under this Subordinated Note. The outstanding principal of any loan
made under this Subordinated Note shall be due and payable on the Collection
Date and may be repaid or prepaid at any time without premium or penalty.
3. Principal Payments. Originator is authorized and directed
by SPV to enter on the grid attached hereto, or, at its option, in its books and
records, the date and amount of each loan made by it which is evidenced by this
Subordinated Note and the amount of each payment of principal made by SPV, and
absent manifest error, such entries shall constitute prima facie evidence of the
accuracy of the information so entered; provided that neither the failure of
Originator to make any such entry or any error therein shall expand, limit or
affect the obligations of SPV hereunder.
4. Subordination. The indebtedness evidenced by this
Subordinated Note is subordinated to the prior payment in full of all of SPV's
recourse obligations under that certain Receivables Purchase Agreement dated as
of January 7, 2000, by and among SPV, Originator, as Servicer, Sage Systems,
Inc., as "Custodian", various "Purchasers" from time to time party thereto, and
Bank One, NA (Main Office Chicago), as the "Agent" and "Paying Agent" (as
amended, restated, supplemented or otherwise modified from time to time, the
"Purchase Agreement"). The subordination provisions contained herein are for the
direct benefit of, and may be enforced by, the Agent and the Purchasers and/or
any of their respective assignees (collectively, the "Senior Claimants") under
the Purchase Agreement. Until the date on which all "Capital" outstanding under
the Purchase Agreement has been repaid in full and all other obligations of SPV
and/or the Servicer thereunder and under the "Fee Letter" referenced therein
(all such obligations, collectively, the "Senior Claim") have been indefeasibly
paid and satisfied in full, Originator shall not demand, accelerate, ▇▇▇ for,
take, receive or accept from SPV, directly or indirectly, in cash or other
property or by set-off or any other manner (including from or by way of
collateral) any payment or security of all or any of the indebtedness under this
Subordinated Note or exercise any remedies or take any action or proceeding to
enforce the same; provided, however, that (i) Originator hereby agrees that it
will not institute against SPV any proceeding of the type described in Section
5.1(d) of the Sale Agreement unless and until the Collection Date has occurred
and (ii) nothing in this paragraph shall restrict SPV from paying, or Originator
from requesting, any payments under this Subordinated Note so long as SPV is not
required under the Purchase Agreement to set aside for the benefit of, or
otherwise pay over to, the funds used for such payments to any of the Senior
Claimants and further provided that the making of such payment would not
otherwise violate the terms and provisions of the Purchase Agreement. Should any
payment, distribution or security or proceeds thereof be received by Originator
in violation of the immediately preceding sentence, Originator
Exh. VII-2
agrees that such payment shall be segregated, received and held in trust for the
benefit of, and deemed to be the property of, and shall be immediately paid over
and delivered to the Agent for the benefit of the Senior Claimants.
5. Bankruptcy; Insolvency. Upon the occurrence of any
proceeding of the type described in Section 5.1(d) of the Sale Agreement
involving SPV as debtor, then and in any such event the Senior Claimants shall
receive payment in full of all amounts due or to become due on or in respect of
Capital and the Senior Claim (including "CP Costs" and "Yield" accruing under
the Purchase Agreement after the commencement of any such proceeding, whether or
not any or all of such CP Costs or Yield is an allowable claim in any such
proceeding) before Originator is entitled to receive payment on account of this
Subordinated Note, and to that end, any payment or distribution of assets of SPV
of any kind or character, whether in cash, securities or other property, in any
applicable insolvency proceeding, which would otherwise be payable to or
deliverable upon or with respect to any or all indebtedness under this
Subordinated Note, is hereby assigned to and shall be paid or delivered by the
Person making such payment or delivery (whether a trustee in bankruptcy, a
receiver, custodian or liquidating trustee or otherwise) directly to the Agent
for application to, or as collateral for the payment of, the Senior Claim until
such Senior Claim shall have been paid in full and satisfied.
6. Amendments. This Subordinated Note shall not be amended or
modified except in accordance with Section 7.1 of the Sale Agreement. The terms
of this Subordinated Note may not be amended or otherwise modified without the
prior written consent of the Agent for the benefit of the Purchasers.
7. GOVERNING LAW. THIS SUBORDINATED NOTE HAS BEEN MADE AND
DELIVERED AT CHICAGO,
ILLINOIS, AND SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS AND
DECISIONS OF THE STATE OF
ILLINOIS. WHEREVER POSSIBLE EACH PROVISION OF THIS
SUBORDINATED NOTE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND
VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS SUBORDINATED NOTE SHALL
BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
SUBORDINATED NOTE.
Exh. VII-3
8. Waivers. All parties hereto, whether as makers, endorsers,
or otherwise, severally waive presentment for payment, demand, protest and
notice of dishonor. Originator additionally expressly waives all notice of the
acceptance by any Senior Claimant of the subordination and other provisions of
this Subordinated Note and expressly waives reliance by any Senior Claimant upon
the subordination and other provisions herein provided.
9. Assignment. This Subordinated Note may not be assigned,
pledged or otherwise transferred to any party other than Originator without the
prior written consent of the Agent, and any such attempted transfer shall be
void.
TW HOLDINGS III, INC.
By:_____________________________
Title:
Exh. VII-4
Schedule
to
SUBORDINATED NOTE
SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
Amount of Amount of Unpaid
Subordinated Principal Principal Notation made
Date Loan Paid Balance by
Exh. VII-5
EXHIBIT VII
Form of Vacation Owner Agreement
Exh. VIII-1
EXHIBIT VIII
Form of Sale Assignment
TRENDWEST RESORTS, INC.
AND
TW HOLDINGS III, INC.
SALE ASSIGNMENT, dated as of [__], 200[_], between Trendwest
Resorts, Inc. (the "Seller") and TW Holdings III, Inc. (the "Buyer").
1. We refer to the Receivable Sale Agreement (the "Sale
Agreement") dated as of September 28, 2001, between the Seller and the Buyer.
All provisions of such Sale Agreement are incorporated herein by reference. All
capitalized terms shall have the meanings set forth in the Sale Agreement.
2. The Seller does hereby sell, transfer, assign, set over and
convey to the Buyer all right, title and interest of the Seller in and to the
Receivables listed on Schedule 1 hereto (each, a "Receivable"), and the Buyer
does hereby purchase each such Receivable.
3. The Outstanding Balance for the Receivables sold and
purchased, pursuant to paragraph 2 hereof is $[ ]. The Purchase Price for the
Receivables sold and purchased hereby is $ [__] ,representing the product of (x)
the Original Balance of such Receivables, multiplied by (y) the Purchase Price
Factor (as defined in the Sale Agreement) then in effect. The Purchase Price
shall be payable in full contemporaneously with the execution of this Sale
Assignment, as provided in Section 1.1 of the Sale Agreement.
Exh. IX-2
IN WITNESS WHEREOF, the parties have caused this Sale
Assignment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
TRENDWEST RESORTS, INC.,
as Seller
By: _________________________
Name:
Title:
TW HOLDINGS III, INC.,
as Buyer
By: ________________________
Name:
Title:
▇▇▇. ▇▇-▇
EXHIBIT IX
Form(s) of Mortgage Note(s)
Exh. X-1
EXHIBIT X
Form of FI Assignment Document (First Step)
Exh. XI-1
EXHIBIT XI
Form of FI Assignment Document (Second Step)
This FI Assignment Agreement ("Second Step") (this "Assignment") is
made and executed as of September 28, 2001 by TW Holdings III, Inc., a Delaware
corporation ("RPA Seller"), whose address is ________________________, in favor
of Bank One, NA (Main Office Chicago), as Agent pursuant to the Purchase
Agreement as hereinafter defined ("Purchaser"). Unless defined elsewhere herein,
capitalized terms in this Assignment shall have the meanings assigned to such
terms in the Agreement.
1. The RPA Seller and Purchaser and certain other parties entered into that
certain Amended and Restated Receivables Purchase Agreement, dated as of
February __, 2001 (as the same may be amended, amended and restated, or
supplemental from time to time, being herein called the "Purchase Agreement"),
pursuant to which the RPA Seller has agreed to sell, on the terms and conditions
set forth in the Agreement, to Purchaser certain Receivables (as defined and
further described in the Purchase Agreement). This Assignment is being delivered
pursuant to the Agreement.
2. For value received in accordance with the Purchase Agreement, the RPA Seller
hereby sells, conveys, assigns, transfers and sets over to Purchaser, to the
extent of the Purchaser Interests therein, all of the RPA Seller's right, title
and interest in and to (i) the Receivables owned by the RPA Seller on the date
hereof, (ii) the Related Security with respect to such Receivables and (iii) all
Collections with respect to, and other proceeds of, such Receivables. Such
Related Security includes each of the mortgages and deeds of trust identified on
Exhibit A attached to this Assignment and incorporated into this Assignment by
reference.
3. The execution and delivery of this Assignment shall not subject Purchaser to,
or transfer or pass to Purchaser, or in any way affect or modify, the liability
of the RPA Seller under all or part of such Receivables assigned under this
Assignment, it being understood and agreed that notwithstanding this Assignment
or any subsequent assignment, all of the obligations of the RPA Seller to each
and every other party under each and every item of the Receivables shall be and
remain enforceable by such other party, its successors, and assigns, only
against the RPA Seller and its successors and assigns, and that Purchaser has
not assumed any of the obligations or duties of the RPA Seller under or with
respect to any of the Receivables.
Exh. XII-1
4. This Assignment is for conveyance, not for security.
5. This Assignment shall be binding on the RPA Seller and its successors and
assigns, and shall inure to the benefit of Purchaser and its successors and
assigns.
In witness whereof, the RPA Seller has executed this Assignment on the
date first written above.
TW Holdings III, Inc.
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
STATE OF )
---------------------------)
) ss
COUNTY OF )
--------------------------)
The foregoing instrument was acknowledged before me this ___ day of
_________, by ______________________ as _______________ of __________________,
a(n) ______________ corporation, on behalf of the corporation. _____ is
personally known to me or has produced ______________________ as identification.
-----------------------------------------
(Notary Signature)
(NOTARY SEAL)
-----------------------------------------
(Notary Name printed)
NOTARY PUBLIC Commission No. ______________
Exh. XII-2
EXHIBIT XII
Concord's Credit and Collection Policy
Exh. ▇▇▇-▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇. XII-4
Schedule A
DOCUMENTS TO BE DELIVERED TO BUYER
ON OR PRIOR TO THE EFFECTIVE DATE
1. Copy of the Resolutions of the Board of Directors of Seller
certified by its Secretary, authorizing Seller's execution, delivery and
performance of the Agreement and the other documents to be delivered by it
thereunder.
2. Articles or Certificate of Incorporation (or equivalent
organizational documents) of Seller certified by the Secretary of State of the
jurisdiction of incorporation of Seller on or within thirty (30) days prior to
the Effective Date.
3. Good Standing Certificate for Seller issued by the
Secretaries of State of California, Oregon and Washington.
4. A certificate of the Secretary of Seller certifying: (i)
the names and signatures of the officers authorized on its behalf to execute the
Agreement and any other documents to be delivered by it thereunder and (ii) a
copy of Seller's By-Laws.
5. Time stamped receipt copies of proper Financing Statements,
duly filed under the UCC on or before the date of such initial Purchase in all
jurisdictions as may be necessary or, in the opinion of Buyer (or Buyer's
Assigns), desirable, under the UCC of all appropriate jurisdictions or any
comparable law in order to perfect the ownership interests contemplated by the
Agreement.
6. Delivered simultaneous to the Initial Purchase, executed
copies of proper releases and UCC termination statements, ready for filing, if
any, necessary to release all security interests and other rights of any Person
in the Receivables, Contracts or Related Security previously granted by Seller.
7. Executed Collection Account Agreements for each Lock-Box
and Collection Account.
8. A favorable opinion of legal counsel for Seller reasonably
acceptable to Buyer (or Buyer's Assigns) which addresses the following matters
and such other matters as Buyer (or Buyer's Assigns) Agent may reasonably
request:
Sch.A-1
-- Seller is a corporation duly incorporated, validly existing, and in good
standing under the laws of its state of incorporation.
-- Seller has all requisite authority to conduct its business in each
jurisdiction where failure to be so qualified would have a material adverse
effect on Seller's business.
-- The execution and delivery by Seller of the Agreement and each other
Transaction Document to which it is party and its performance of its
obligations thereunder have been duly authorized by all necessary corporate
action and proceedings, corporate or otherwise, on the part of Seller and
will not:
(a) require any action by or in respect of, or filing with,
any governmental body, agency or official (other than the filing of UCC
Financing Statements);
(b) contravene, or constitute a default under, any provision
of applicable law or regulation or of its Articles of Incorporation or Bylaws
(or equivalent organizational documents) or of any agreement, judgment,
injunction, order, decree or other instrument binding upon Seller; or
(c) result in the creation or imposition of any Adverse Claim
on assets of Seller or any of its Subsidiaries (except as contemplated by the
Agreement).
-- The Agreement and each other Transaction Document to which it is a party
has been duly executed and delivered by Seller (the Originating Parties)
and constitutes the legal, valid, and binding obligation of Seller
enforceable in accordance with its terms, except to the extent the
enforcement thereof may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally and subject
also to the availability of equitable remedies if equitable remedies are
sought.
Sch.A-2
-- Counsel is without knowledge of any matters or facts contrary to the
Representations and Warranties contained in Section 2.1 of the Sales
Agreement.
-- Seller is not an "investment company" registered or required to be
registered under the Investment Company Act of 1940.
9. A "true sale" opinion and "substantive consolidation"
opinion of counsel for Seller with respect to the transactions contemplated by
the Agreement and the Purchase Agreement.
10. A Compliance Certificate.
11. A direction letter executed by Seller authorizing Buyer
and Buyer's Assigns, and directing warehousemen to allow Buyer and Buyer's
Assigns, to inspect and make copies from Seller's books and records maintained
at off-site data processing or storage facilities.
12. A form of Monthly Report.
13. Executed copies of (i) all consents from and
authorizations by any Persons and (ii) all waivers and amendments to existing
credit facilities, that are necessary in connection with the Agreement.
14. State of Washington Public Offering Documents including
(i) Declaration of Vacation Owner Program for WorldMark certified by State of
Washington Department of Real Estate, (ii) statement of compliance with
registration requirements of [Arizona,] California, Hawaii and Oregon and (iii)
statement of clear title, to WorldMark properties.
15. Good Standing Certificate for WorldMark issued by the
Secretaries of State of each jurisdiction where it has material operations.
16. A favorable opinion of in-house counsel to the Seller
stating that, to the best of the opinion givers knowledge, there is no action,
suit or other proceeding against Seller, WorldMark or any Affiliate of Seller
[or a Vacation Club], which would materially adversely affect the business or
financial condition of Seller, WorldMark and their respective Affiliates taken
as a whole or which would
Sch.A-3
materially adversely affect the ability of Seller to perform its obligations
under the Agreement.
17. A Statement of Auditing Standards 70 report on Concord
proposed by [ ].
Sch.A-4