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Exhibit 10.6
SECURITY AGREEMENT
Vacation Credits Purchased: 6000
Owner Number: 01-0000
WorldMark, The Club, and Trendwest Resorts, Inc.
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Phone: (▇▇▇) ▇▇▇-▇▇▇▇
WORLDMARK, THE CLUB
RETAIL INSTALLMENT CONTRACT
VACATION OWNER AGREEMENT
(Washington)
WorldMark, The Club, a California mutual benefit corporation (Club), and
Trendwest Resorts, Inc., an Oregon corporation (TRI), agree to sell to the
undersigned Owner 6000 Vacation Credits and Membership in the Club as a (choose
one) Premier X or Standard __ Ownership, and Owner agrees to purchase and hold
the Vacation Credits and Membership on these terms and conditions:
A. BENEFITS AND NATURE OF OWNERSHIP
1. VACATION CREDIT OWNERSHIP.
As an Owner of Vacation Credits, Owner is a Member of Club and is entitled to:
(a) reserve the use of Club Resort Units; (b) vote for Club directors; (c) vote
on major Club decisions; and (d) through the Club, participate in the corporate
ownership of the real estate and other assets of the Club.
2. DURATION OF OWNERSHIP.
Ownership shall be effective from the date of issuance by Club. Premier
ownership is perpetual. Standard ownership expires 40 years after issuance.
HOWEVER THE OWNER HAS SEVEN CALENDAR DAYS AFTER SIGNING THIS AGREEMENT OR
RECEIVING THE WORLDMARK PUBLIC OFFERING STATEMENT, WHICHEVER EVENT LAST OCCURS,
TO RESCIND THIS AGREEMENT AND HAVE RETURNED ALL FUNDS PAID. THE REQUEST MUST BE
IN WRITING AND EITHER DELIVERED IN PERSON OR MAILED TO WORLDMARK.
3. TRANSFERABILITY OF VACATION CREDITS.
Vacation Credits may be transferred entirely or partially at any time during
their term and without limitation to the number of transfers, through sale,
gift, inheritance, dissolution of marriage or by any operation of law, subject
to the following terms: (a) a transfer fee of $150.00 has been paid to Club; (b)
all payments or charges due Club are current; (c) the Vacation Credits
transferred and the Vacation Credits retained, if any, must each be enough
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Vacation Credits to hold a Basic Membership in the Club at the then current
requirement, and (d) the transferee must satisfy all qualifications of an Owner
and Club's credit requirements. TRI and Club will not repurchase the Vacation
Credits or assist in locating a buyer.
B. ASSURANCE OF CONTINUED CLUB QUALITY
4. NO REDUCTION IN NUMBER AND QUALITY OF UNITS AND RESORTS.
Owner shall have access to all existing and future Resorts and Units owned or
operated by or associated with Club, wherever located, which have been
registered with the applicable,agencies where the properties are located. The
location and specific nature of Resorts and Units shall be subject to change by
the Club, but Club is obligated to continue to provide Resorts and Units
comparable to those available at the date of this Agreement, and sufficient
Units in reasonable locations to provide annual reservations for all issued
Vacation Credits.
5. PARTICIPATION OF OWNER IN GOVERNING CLUB.
The ARTICLES and BYLAWS of Club provide for: (a) meetings and votes by Owners;
(b) election and meetings of, and limitation on powers of, directors; (c)
assessment of annual dues and special assessments; (d) enforcement and
discipline procedures; (e) appointment of officers and their duties; and (f)
insurance.
6. ULTIMATE CONTROL OF PROPERTIES BY CLUB.
The Club shall hold the deed or the lease to each Unit free of the effects of
debt encumbrances, and subject to a DECLARATION OF VACATION OWNER PROGRAM which
(a) shall be recorded or filed against each Unit; (b) provides for dedication of
the Unit to the Vacation Owner Program; and (c) establishes the Vacation
Credits.
7. GUIDELINES (RULES) SUPPORTING OWNER SATISFACTION.
Guidelines (Rules) may be adopted and amended from time to time by Club for
benefit of Owners and the management of the Resorts, whether general rules or
rules applicable to a specific location only, which may govern Owner usage of
Resort Units in the following subjects, among others: (a) reservations; (b)
number of occupants; (c) guest policies; (d) fees; (e) rental of Units by Club
to nonowners when not in use by Owners; (f) charges for use of specific
facilities; (g) personal conduct and behavior; (h) check-out times; (i) care and
maintenance of Units and facilities, and (j) conditions for the use and purchase
of Bonus Time. A copy of the current Guidelines (Rules) is provided herewith.
8. PROFESSIONAL DEVELOPMENT AND MANAGEMENT OF CLUB.
TRI has developed Club and acquired certain Resort properties which it has
transferred to Club in exchange for the proceeds of sale as well as exclusive
marketing rights, and the right to add additional
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properties under the same conditions. TRI will also manage Club and Club
properties under a Management Agreement with Club.
C. VACATION CREDIT USE
9. VACATION CREDITS PROGRAM.
The benefits and obligations of Ownership are determined by the number of
Vacation Credits purchased.
(a) Use. Vacation Credits, up to the amount purchased, may be used for
all nights and all seasons and at all Resorts on a space available
basis, but the number of Credits required for occupancy will be based
on factors such as the season, location, Unit size and type, and day of
the week.
(b) Issuance. Vacation Credits are renewed annually throughout the term
of the Ownership, at the beginning of Owner's Anniversary Year, in the
total amount purchased by Owner.
(c) Banking (carry-over) Credits. Vacation Credits which remain unused
at the end of each Anniversary Year will automatically carry over for
use during the following year, and will expire at the end of that year.
Use will be charged first against any carry-over Vacation Credits and
then against the current year's Credits. Credits might also be carried
over for future use with an exchange organization.
(d) Borrowing Future Credits. Owner may use Vacation Credits one
Anniversary Year in advance by borrowing against the following year's
assignment of Credits if Owner has paid his or her Club dues for the
following year. (e)Additional Credits. Owner may purchase additional
Vacation Credits in increments of 1000 at any time after the date of
this Agreement, subject to the following: (i) the Credits are
available; (ii) Owner is not in default under this Agreement; and (iii)
the then current price is paid.
10. VACATION CREDITS PURCHASED.
Owner is currently purchasing the number of Vacation Credits shown on page one.
11. BONUS TIME.
Premier Owners may purchase additional reserved time, referred to as Bonus Time.
Conditions for purchase and use of Bonus Time are determined by space
availability and Club Guidelines (Rules), which are subject to change.
D. QUALIFICATIONS AND CONDITIONS TO PURCHASE VACATION CREDITS
12. LEGAL CAPACITY.
Owner represents that Owner is a person or entity with the legal capacity to
enter into this Agreement.
13. NON-INVESTMENT PURCHASE.
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Owner represents that Owner is purchasing Vacation Credits for the purpose of
recreational and social use, and not for financial profit.
14. CREDIT REQUIREMENT.
Owner shall satisfy Club's reasonable credit requirements for purchase to be
accepted.
E. CONTRACTUAL STANDARDS
15. LIABILITY LIMITATIONS.
Owner agrees that Owner and Owner's family or guests assume all risks of loss or
damage to persons or property in using the Resorts, except that this limitation
of liability shall not apply in cases of negligence of the Resort, the Club or
TRI. Owner also agrees to maintain liability and property damage insurance in
connection with any motor vehicle(s) brought to the Resorts, in amounts
customarily carried on such vehicle(s). Liability for breach of any warranty
under this Agreement shall not exceed the amounts Owner has paid Club under this
Agreement.
16. EVENTS OF DEFAULT
Each of the following constitutes an Event of Default by Owner if not cured (a)
within 30 days from the due date, (b) within 30 days from giving of written
notice by Club or TRI as to a breach by omission or inaction, or (c) upon
continued active breach or violation after receipt of a written notice or
warning thereof, which notice or warning shall include the details of the
default and how the default may be remedied, if at all, within a specified
reasonable period (whichever of the foregoing is most applicable): (i) not
paying a purchase price installment, the annual dues or installment thereof, or
any other charge of Club when due; (ii) transfer of Vacation Credits, whether
voluntarily or involuntarily, except as specifically allowed herein; (iii)
misrepresentation or omission of a material fact in connection with this
Agreement or the extension of credit hereunder; or (iv) material breach of a
provision of this Agreement, the Guidelines (Rules) of Club, or the rules of a
company with which Club has exchange arrangements.
17. REMEDIES/SECURITY INTEREST.
No waiver by Club, TRI or any Holder or Co-Holder of this Agreement, of any
default or breach by Owner shall operate as a waiver of the same or any other
default or breach by Owner or any other Owner in the future. Each Owner signing
below hereby appoints each other Owner signing below as his or her agent for
dealing with the Holder of this Agreement for any purpose. Upon the occurrence
of an Event of Default, Club or the Holder of this Agreement may choose one or
more of the following remedies: (a) declare the entire unpaid balance of the
Cash Price immediately due, unless prohibited by law; (b) foreclose the lien
created by the grant of the security interest and sell or retain the Vacation
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Credits in satisfaction of owners obligations hereunder, or exercise any other
right under the Uniform Commercial Code, Division 9 (To secure compliance with
his or her obligations hereunder, Owner hereby grants to Club and TRI security
interests in the Vacation Credits and any proceeds therefrom, which Vacation
Credits were purchased under this Agreement. These security interests constitute
liens on the Vacation Credits and any proceeds therefrom. These security
interests and liens shall remain in effect as long as there are obligations of
Owner to be fulfilled under this Agreement.); (c) terminate the Vacation Credits
and retain all amounts previously paid by owner as compensation for damages
incurred in proceeding pursuant to this Agreement (Club, TRI and Owner agree
that in such case it would be impractical or extremely difficult to fix the
actual damage.); (d) suspend use rights; (e) ▇▇▇ for the unpaid balance due
hereunder; and/or (f) pursue any other remedy allowed by law, except Club cannot
terminate this Agreement or foreclose against the Vacation Credits without the
consent of the Holder of any right to the unpaid purchase price hereunder.
18. ADDITIONAL CREDITOR.
The right to receive payment of the purchase price under this Agreement belongs
to TRENDWEST RESORTS, INC., but could be assigned to another creditor.
NOTICE:
ANY HOLDER OF This CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND
DEFENSES WHICH THE DEBTOR (OWNER) COULD ASSERT AGAINST THE SELLER OF GOODS OR
SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY
HEREUNDER BY THE DEBTOR (OWNER) SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR
(OWNER) HEREUNDER.
19. GENERAL PROVISIONS.
Any written notice required or desired to be given hereunder shall be deemed
given when personally delivered or upon deposit in the U.S. Mail, first class
postage prepaid, addressed to the address given herein or such subsequent
address as is given by proper notice. This Agreement, and any and all other
documents executed at the same time as this Agreement, constitute the entire
agreement between the parties hereto. No representation or warranties, oral or
written, other than the representations set forth in said documents, have been
relied upon by the parties. This Agreement shall be binding upon and benefit the
heirs, executors, administrators and successors of each of the parties. If any
provision of this Agreement shall be found to be invalid, the remaining
provisions shall nevertheless remain in full force and effect. This Agreement
shall survive the issuance of Vacation Credits and shall survive the final
payment toward the purchase hereunder.
20. PURCHASER RESPONSIBILITY.
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Transfer or abandonment of Vacation Credits does not relieve Owner of Owner's
obligations hereunder unless such transfer or termination of this Agreement is
agreed to by the Club and the holder of any right to the unpaid purchase price
under this Agreement.
F. CLUB CHARGES
21. ANNUAL DUES.
The beginning annual dues for these Vacation Credits is $309.00 (U.S. Funds),
based on the formula and rate of annual dues currently established by Club. The
annual dues shall be paid in advance on a quarterly basis beginning 9/01/96.
Such dues shall be used first for maintenance and operation of Resort Units,
then for other expenses authorized in the Club Bylaws. Annual dues may be
increased annually subject to Club Bylaws.
22. SPECIAL ASSESSMENTS AND TAXES.
Club may levy special assessments subject to Club Bylaws. The Owner is also
responsible for any tax that might be assessed by a civil taxing authority on
the purchase or use of the facilities.
23. EXTRA USE CHARGES.
Owner must pay separately for extra benefits including, but not limited to, if
available, food, storage, extra maid service, purchase of goods, use of
equipment, furnishings or facilities not normally provided as part of the Unit
or Resort facilities, and exchange program services if available.
24. DAMAGE CHARGES.
Owner must pay any cost of repair or replacement for any damage caused by Owner,
Owner's family or guests.
G. PURCHASE PRICE, FINANCE CHARGE, AND PAYMENTS
25. PURCHASE PRICE.
Owner agrees to pay TRI the purchase price of $7,800.00 (U.S. Funds), together
with the credit service charge (Finance Charge) stated below. Payments shall be
credited first on the interest then due, then on principal. Payments shall not
begin prior to thirty (30) days after signing of this Agreement by Club. The
interest (Finance Charge) shall begin to accrue on the date thirty (30) days
prior to the due date of the first monthly payment.
Disclosures Required By: Federal Truth in Lending Act, and State Law.
Creditors: WORLDMARK, THE CLUB and TRENDWEST RESORTS, INC.; ▇▇▇▇▇ ▇.▇. ▇▇▇▇
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ANNUAL PERCENTAGE FINANCE CHARGE AMOUNT TOTAL OF TOTAL SALE
RATE The dollar amount the FINANCED PAYMENTS PRICE
The cost of your credit as a credit will cost you:
yearly rate: The amount of credit The amount you The total cost of your
provided to you or on will have paid purchase on credit
your behalf: after you have including your
made all payments downpayment of:
as scheduled:
$750.00
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14.9% $4,344.34 $7,050.00 $11,394.34 $12,144.34
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No. of Payments: Amount of Each Payment: Payments are due monthly, on
the same date each month
84 $135.65
Beginning: 8/15/96
Security: You are giving the Club and TRI a security interest in the
Vacation Credits being purchased.
Prepayment: If you prepay the balance due, there will be no penalty.
Late Charge: Owner will be charged a late charge of $5.00 for each
payment or charge that is more than 10 days late, to
compensate Club or TRI for additional carrying and
collection costs.
Variable Rate: The Annual Percentage Rate disclosed above will
automatically increase by 1 Percentage Point (which is the
maximum increase) in the event any one of the following
occurs: (a) you discontinue participation in our
preauthorized check (PAC) plan, (b) your financial
institution is unable to participate, or (c) we discontinue
your participation for a reasonable cause. The Annual
Percentage Rate will not increase above 14.9%. An increase
in the Annual Percentage Rate would increase your monthly
payment by not more than $10.00
Contract
Reference: You should refer to this Agreement for information about
nonpayment, default and the right to accelerate maturity of
your payment obligation.
ITEMIZATION OF AMOUNT FINANCED
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1. Cash Price: $7,800.00 4. Total Cash Price: $7,800.00
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2. Other Credits $0.00 5. Downpayment: $750.00
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2. State and Local Taxes: $0.00 6. Amount Financed: $7,050.00
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OWNER ACKNOWLEDGES THAT THE OWNER HAS RECEIVED A COMPLETED COPY OF THIS
AGREEMENT, REQUIRED PUBLIC OFFERING STATEMENT, CLUB ARTICLES, CLUB BYLAWS,
DECLARATION PROTOTYPE AND GUIDELINES, AND THAT THE OWNER HAS BEEN GIVEN A
SATISFACTORY OPPORTUNITY TO READ THIS AGREEMENT.
NOTICE TO BUYER (OWNER):
(A) DO NOT SIGN THIS CONTRACT BEFORE YOU READ IT OR IF ANY SPACES INTENDED FOR
THE AGREED TERMS, EXCEPT AS TO UNAVAILABLE INFORMATION, ARE BLANK. (B) YOU ARE
ENTITLED TO A COPY OF THIS CONTRACT AT THE TIME YOU SIGN IT. (C) YOU MAY AT ANY
TIME PAY OFF THE FULL UNPAID BALANCE DUE UNDER THIS CONTRACT, AND IN SO DOING
YOU MAY RECEIVE A PARTIAL REBATE OF THE SERVICE CHARGE. (D) THE SERVICE CHARGE
DOES NOT EXCEED 14.9%. (MUST BE FILLED IN) PER ANNUM COMPUTED MONTHLY.
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Owner Date Signed Owner Name
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Owner Date Signed Street Address
TRENDWEST RESORTS, INC. and WORLDMARK, THE CLUB
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Authorized Agent Date Signed Phone (area code)
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