TW HOLDINGS II, INC.,
as Borrower
TRENDWEST RESORTS, INC.,
as Master Servicer
SAGE SYSTEMS, INC.,
as Custodian
and
LASALLE NATIONAL BANK,
as Trustee
--------------
TRUST INDENTURE
--------------
Dated as of April 15, 1999
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION...............................................2
SECTION 1.1. General Definitions...........................................................................2
SECTION 1.2. Compliance Certificates and Opinions..........................................................2
SECTION 1.3. Form of Documents Delivered to Trustee........................................................3
SECTION 1.4. Acts of Noteholders, etc......................................................................4
SECTION 1.5. Notice to Noteholders; Waiver.................................................................5
SECTION 1.6. Effect of Headings and Table of Contents......................................................6
SECTION 1.7. Successors and Assigns........................................................................6
SECTION 1.8. GOVERNING LAW.................................................................................6
SECTION 1.9. Legal Holidays................................................................................6
SECTION 1.10. Execution in Counterparts.....................................................................6
SECTION 1.11. Inspection ...................................................................................7
SECTION 1.12. Survival of Representations and Warranties....................................................7
ARTICLE 2. THE NOTES ............................................................................................7
SECTION 2.1. General Provisions............................................................................7
SECTION 2.2. Execution, Authentication, Delivery,
and Dating.........................................................................8
SECTION 2.3. Transfer and Exchange.........................................................................9
SECTION 2.4. Mutilated, Destroyed, Lost and Stolen Notes..................................................10
SECTION 2.5. Payment of Interest and Principal; Rights Preserved..........................................11
SECTION 2.6. Persons Deemed Owners........................................................................12
SECTION 2.7. Cancellation.................................................................................12
SECTION 2.8. Noteholder Lists.............................................................................12
SECTION 2.9. Treasury Notes...............................................................................12
ARTICLE 3. ACCOUNTS; COLLECTION AND APPLICATION OF MONEYS; REPORTS..............................................13
SECTION 3.1. Trust Accounts; Investments by Trustee.......................................................13
SECTION 3.2. Establishment and Administration of the Collection Account...................................15
SECTION 3.3. Reserved. ..................................................................................15
SECTION 3.4. Distributions................................................................................16
SECTION 3.5. Certifications to Noteholders................................................................17
SECTION 3.6. Returned Payments............................................................................17
ARTICLE 4. THE TRUST ESTATE.....................................................................................17
SECTION 4.1. Acceptance by Trustee........................................................................17
SECTION 4.2. Subsequent Transfers.........................................................................18
SECTION 4.3. Conditions Precedent to All Transfers........................................................19
SECTION 4.4. Grant of Security Interest; Tax Treatment....................................................20
SECTION 4.5. Further Action Evidencing Assignments........................................................21
SECTION 4.6. Substitution of Receivables and Release of Liens.............................................21
SECTION 4.7. Appointment of Custodian; Delivery of
Receivable Documents; Verification................................................22
SECTION 4.8. Receipts. ..................................................................................23
SECTION 4.9 Duties of Custodian..........................................................................23
SECTION 4.10. Representations and Warranties of Custodian..................................................24
SECTION 4.11. Indemnification of Custodian.................................................................25
SECTION 4.12. Adverse Interests............................................................................25
SECTION 4.13. Termination of Custodian.....................................................................25
ARTICLE 5. SERVICING OF ASSETS..................................................................................26
SECTION 5.1. Appointment of Master Servicer...............................................................26
SECTION 5.2. Duties of Master Servicer; Subservicers......................................................27
SECTION 5.3. Collection Responsibilities; Receivable Modifications........................................31
SECTION 5.4. Maintenance of Insurance.....................................................................31
Section 5.5. Assumption and Substitution Agreements.......................................................32
SECTION 5.6. Realization Upon Defaulted Receivables.......................................................32
Section 5.7. Representations and Warranties as to the
Master Servicer...................................................................33
SECTION 5.8. Existence; Status as Master Servicer; Merger.................................................34
SECTION 5.9. Performance of Obligations...................................................................35
SECTION 5.10. Event of Master Servicer Termination.........................................................35
SECTION 5.11. Optional Purchase of Vacation Credits........................................................35
ARTICLE 6. EVENTS OF DEFAULT; REMEDIES..........................................................................36
SECTION 6.1. Events of Default............................................................................36
SECTION 6.2. Acceleration of Maturity; Rescission and Annulment...........................................38
SECTION 6.3. Remedies ..................................................................................39
SECTION 6.4. Trustee May File Proofs of Claim.............................................................40
SECTION 6.5. Trustee May Enforce Claims Without Possession of Notes.......................................41
SECTION 6.6. Application of Money Collected...............................................................42
SECTION 6.7. Limitation on Suits..........................................................................42
SECTION 6.8. Unconditional Right of Noteholders to Receive Principal and Interest.........................43
SECTION 6.9. Restoration of Rights and Remedies...........................................................43
SECTION 6.10. Rights and Remedies Cumulative...............................................................43
SECTION 6.11. Delay or Omission Not Waiver.................................................................43
SECTION 6.12. Control by Noteholders.......................................................................43
SECTION 6.13. Waiver of Events of Default..................................................................44
SECTION 6.14. Undertaking for Costs........................................................................44
SECTION 6.15. Waiver of Stay or Extension Laws.............................................................45
SECTION 6.16. Sale of Trust Estate.........................................................................45
ARTICLE 7. THE TRUSTEE..........................................................................................46
SECTION 7.1. Certain Duties...............................................................................46
SECTION 7.2. Notice of Events of Default..................................................................48
SECTION 7.3. Certain Matters Affecting the Trustee........................................................48
SECTION 7.4. Trustee Not Liable for Notes or Receivables..................................................49
SECTION 7.5. Trustee May Own Notes........................................................................49
SECTION 7.6. The Master Servicer to Pay Trustee's Fees and Expenses.......................................49
SECTION 7.7. Eligibility Requirements for Trustee.........................................................50
SECTION 7.8. Resignation or Removal of Trustee............................................................50
SECTION 7.9. Successor Trustee............................................................................51
SECTION 7.10. Merger or Consolidation of Trustee...........................................................52
SECTION 7.11. Appointment of Co-Trustee or Separate
Trustee...........................................................................53
SECTION 7.12.. Paying Agent and Note Registrar Rights.......................................................54
SECTION 7.13. No Obligation to make Advances...............................................................55
ARTICLE 8. COVENANTS ...........................................................................................55
SECTION 8.1. Payment of Principal and Interest............................................................55
SECTION 8.2. Maintenance of Office or Agency; Chief Executive Office......................................55
SECTION 8.3. Money for Payments to Noteholders to be Held in Trust........................................55
SECTION 8.4. Corporate Existence; Merger;
Consolidation, etc................................................................56
SECTION 8.5. Protection of Trust Estate; Further
Assurances........................................................................56
SECTION 8.6. Reserved. ..................................................................................57
SECTION 8.7. Additional Covenants.........................................................................57
SECTION 8.8. Taxes ..................................................................................58
ARTICLE 9. SUPPLEMENTAL INDENTURES..............................................................................58
SECTION 9.1. Supplemental Indentures......................................................................58
SECTION 9.2. Supplemental Indentures with Consent of Noteholders..........................................59
SECTION 9.3. Execution of Supplemental Indentures.........................................................60
SECTION 9.4. Effect of Supplemental Indentures............................................................60
SECTION 9.5. Reference in Notes to Supplemental
Indentures........................................................................61
ARTICLE 10. SATISFACTION AND DISCHARGE..........................................................................61
SECTION 10.1. Satisfaction and Discharge of Indenture......................................................61
SECTION 10.2. Application of Trust Money...................................................................61
SECTION 10.3. Trust Termination Date.......................................................................62
ARTICLE 11. REPRESENTATIONS AND WARRANTIES......................................................................62
SECTION 11.1. Representations and Warranties of the Borrower...............................................62
SECTION 11.2. Representations and Warranties as to Each Trust Estate Receivable............................65
ARTICLE 12. MISCELLANEOUS.......................................................................................65
SECTION 12.1. Indemnities of the Master Servicer...........................................................65
SECTION 12.2. Officer's Certificate and Opinion of Counsel
as to Conditions Precedent........................................................66
SECTION 12.3. Statements Required in Certificate or
Opinion...........................................................................66
SECTION 12.4. Notices ..................................................................................67
SECTION 12.5. No Proceedings...............................................................................68
[SIGNATURE PAGE FOLLOWS].........................................................................................68
EXHIBITS
EXHIBIT A Form of Collateral Assignment
EXHIBIT B Form of Variable Note
EXHIBIT C Form of Rule 144A Transferee Letter
EXHIBIT D Form of Investor Letter
EXHIBIT E Form of Servicer Report
EXHIBIT F Form of Request for Release
EXHIBIT G Form of Receipt
Schedule 1 List of Assets
Annex A Trendwest Warehouse Facility Definitions
trust indenture
TRUST INDENTURE
This TRUST INDENTURE dated as of April 15, 1999 (the
"Indenture"), is by and among TW HOLDINGS II, INC., a Delaware corporation (the
"Borrower"), TRENDWEST RESORTS, INC., an Oregon corporation, as Master Servicer
(the "Master Servicer") and individually ("TWRI"), SAGE SYSTEMS, INC., as
Custodian (the "Custodian") and LASALLE NATIONAL BANK, as trustee (the
"Trustee").
RECITALS OF THE BORROWER
WHEREAS, the Borrower is a bankruptcy-remote corporation
formed for the sole purpose of acquiring from TWRI certain timeshare receivables
originated by TWRI and certain other rights and properties pertaining thereto;
WHEREAS, the Borrower has duly authorized the execution and
delivery of this Indenture to provide for the issuance of a class of variable
funding notes (the "Notes") which shall evidence Advances made from time to time
by Prudential Securities Credit Corporation (the "Lender") pursuant to the
Credit Agreement, dated April 15, 1999, by and among the Borrower, TWRI and the
Lender;
WHEREAS, the Notes shall be secured by the Assets;
WHEREAS, the Borrower intends that the Trustee, on behalf of
the Noteholders, will, from time to time, take assignment of Receivables and
related rights and benefits, including those under any collateral security
agreement, and guarantees from the Borrower simultaneously with the acquisition
of such Receivables by the Borrower from TWRI; and
NOW, THEREFORE, THIS TRUST INDENTURE WITNESSETH:
For and in consideration of the mutual covenants set forth
herein, and for other valuable consideration, the receipt of which are hereby
acknowledged, it is mutually covenanted and agreed, for the benefit of all
parties hereto, as follows:
GRANTING CLAUSE
The Borrower hereby Grants to the Trustee for inclusion in the
Trust Estate on each Assignment Date, for the benefit and security of the
Noteholders and the Trustee, all of the Borrower's right, title and interest in
and to the following:
(i) all Assets specified in the related Collateral Assignment. The Trustee
acknowledges receipt of the related Trust Estate and declares that it
will hold or shall cause the related Custodian to hold such documents
and the other documents constituting a part of the related Receivable
Documents, for the benefit of the Noteholders;
(ii) the Trust Accounts and all monies, checks, securities, investments and
interests held in, credited to or evidencing such accounts;
(iii) all of the Borrower's right, title and interest in and to investments
made with proceeds of the property described in clauses (i) and (ii)
above; and
(iv) all distributions, revenues, products, substitutions, benefits, profits
and proceeds, in whatever form, of any of the foregoing.
Such Grant is made in trust to secure (i) the payment of all amounts due on the
Notes, (ii) the payment of all other sums payable under this Indenture with
respect to the Notes and (iii) compliance with the provisions of this Indenture
with respect to the Notes.
The Trustee acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions hereof, and agrees to perform the
duties herein required to the best of its ability and to the end that the Trust
Estate and the interests of the Noteholders, the Trustee and the Borrower may be
adequately and effectively protected as hereinafter provided.
ARTICLE 1.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. General Definitions.
In addition to the terms defined elsewhere in this Indenture,
certain capitalized terms shall have the meanings given them in "Trendwest
Warehouse Facility Definitions" attached hereto as Annex A.
SECTION 1.2. Compliance Certificates and Opinions.
Upon any written application or request by the Borrower to the
Trustee to take any action under any provision of this Indenture, other than any
request that (a) the Trustee authenticate the Notes specified in such request,
(b) the Trustee invest moneys in any of the Trust Accounts pursuant to the
written directions specified in such request, or (c) the Trustee pay moneys due
and payable to the Borrower hereunder to the Borrower's assignee specified in
such request, the Trustee shall require the Borrower to furnish to the Trustee
an Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and that the request otherwise is in accordance with the terms of the Indenture,
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such requested action as to which other evidence of satisfaction of the
conditions precedent thereto is specifically required by any provision of this
Indenture, no additional certificate or opinion need be furnished.
SECTION 1.3. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Borrower
delivered to the Trustee may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by, counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which
his certificate or opinion is based are erroneous. Any such officer's
certificate or opinion and any Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or representations
by, an officer or officers of the Borrower as to such factual matters unless
such officer or counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous. Any Opinion of Counsel may be based on the written
opinion of other counsel, in which event such Opinion of Counsel shall be
accompanied by a copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such counsel and the
Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Wherever in this Indenture, in connection with any application
or certificate or report to the Trustee, it is provided that the Borrower shall
deliver any document as a condition of the granting of such application, or as
evidence of compliance with any term hereof, it is intended that the truth and
accuracy, at the time of the granting of such application or at the effective
date of such certificate or report (as the case may be), of the facts and
opinions stated in such document shall in such case be conditions precedent to
the right of the Borrower to have such application granted or to the sufficiency
of such certificate or report. The foregoing shall not, however, be construed to
affect the Trustee's right to rely upon the truth and accuracy of any statement
or opinion contained in any such document as provided in Section 7.1(b).
Whenever in this Indenture it is provided that the absence of
the occurrence and continuation of a Default or Event of Default, or Event of
Master Servicer Termination is a condition precedent to the taking of any action
by the Trustee at the request or direction of the Borrower, then,
notwithstanding that the satisfaction of such condition is a condition precedent
to the Borrower's right to make such request or direction, the Trustee shall be
protected in acting in accordance with such request or direction if it does not
have knowledge of the occurrence and continuation of such Default or Event of
Default, or Event of Master Servicer Termination. For all purposes of this
Indenture, the Trustee shall not be deemed to have knowledge of any Default or
Event of Default, or Event of Master Servicer Termination nor shall the Trustee
have any duty to monitor or investigate to determine whether a default has
occurred (other than an Event of Default of the kind described in Section
6.1(a)), or Event of Master Servicer Termination unless a Responsible Officer of
the Trustee shall have actual knowledge thereof or shall have been notified in
writing thereof by the Borrower, the Master Servicer, or any Noteholder.
SECTION 1.4. Acts of Noteholders, etc.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Noteholders shall be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by Noteholders representing 66-2/3% of the
then Outstanding Principal Amount of Outstanding Notes; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Borrower. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 7.1)
conclusive in favor of the Trustee and the Borrower, if made in the manner
provided in this Section 1.4.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the holder of any Note shall bind every future
holder of the same Note and the holder of every Note issued upon the
registration of transfer thereof or in exchange therefore or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Borrower in reliance thereon, whether or not notation of such action is made
upon such Note.
(d) By accepting the Notes issued pursuant to this Indenture,
each Noteholder irrevocably appoints the Trustee hereunder as the special
attorney-in-fact for such Noteholder vested with full power on behalf of such
Noteholder to effect and enforce the rights of such Noteholder for the benefit
of such Noteholder; provided that nothing contained in this Section 1.4(d) shall
be deemed to confer upon the Trustee any duty or power to vote on behalf of the
Noteholders with respect to any matter on which the Noteholders have a right to
vote pursuant to the terms of this Indenture.
SECTION 1.5. Notice to Noteholders; Waiver.
(a) Where this Indenture provides for notice to Noteholders of
any event, or the mailing of any report to Noteholders, such notice or report
shall be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid or certified mail return receipt
requested, or sent by private courier or confirmed telecopy to each Noteholder
affected by such event or to whom such report is required to be mailed, at its
address as it appears in the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice or
the mailing of such report. In any case where a notice or report to Noteholders
is mailed, neither the failure to mail such notice or report, nor any defect in
any notice or report so mailed, to any particular Noteholder shall affect the
sufficiency of such notice or report with respect to other Noteholders. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Noteholders shall be filed with the Trustee, but such filing shall not
be a condition precedent to the validity of any action taken in reliance upon
such waiver.
(b) In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable to mail or
send notice to Noteholders, in accordance with Section 1.5(a), of any event or
any report to Noteholders when such notice or report is required to be delivered
pursuant to any provision of this Indenture, then such notification or delivery
as shall be made with the approval of the Trustee shall constitute a sufficient
notification for every purpose hereunder.
SECTION 1.6. Effect of Headings and Table of Contents.
The Article and Section headings herein and in the Table of
Contents are for convenience only and shall not affect the construction hereof.
SECTION 1.7. Successors and Assigns.
All covenants and agreements in this Indenture by each of the
Borrower, the Master Servicer or the Trustee shall bind its respective
successors and permitted assigns, whether so expressed or not.
SECTION 1.8. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. UNLESS MADE
APPLICABLE IN A SUPPLEMENT HERETO, THIS INDENTURE IS NOT SUBJECT TO THE TRUST
INDENTURE ACT OF 1939, AS AMENDED, AND SHALL NOT BE GOVERNED THEREBY AND
CONSTRUED IN ACCORDANCE THEREWITH.
SECTION 1.9. Legal Holidays.
In any case where any Payment Date or any other date on which
principal of or interest on any Note is proposed to be paid shall not be a
Business Day, then (notwithstanding any other provision of this Indenture or of
the Notes) such payment need not be made on such date, but shall be made on the
next succeeding Business Day with the same force and effect as if made on such
Payment Date, or other date on which principal of or interest on any Note is
proposed to be paid, provided that no interest shall accrue for the period from
and after such Payment Date, or any other date on which principal of or interest
on any Note is proposed to be paid, as the case may be, until such next
succeeding Business Day.
SECTION 1.10. Execution in Counterparts.
This Indenture may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
SECTION 1.11. Inspection.
The Borrower agrees that, on reasonable prior notice, it will
permit the representatives of the Trustee or any Noteholder holding Notes
evidencing at least 25% of the Outstanding Principal Amount of the Notes, during
the Borrower's normal business hours, to examine all of the books of account,
records, reports and other papers of the Borrower, to make copies thereof and
extracts therefrom, and to discuss its affairs, finances and accounts with its
officers, employees and independent accountants (and by this provision the
Borrower hereby authorizes its accountants to discuss with such representatives
such affairs, finances and accounts), all at such reasonable times and as often
as may be reasonably requested for the purpose of reviewing or evaluating the
financial condition or affairs of the Borrower or the performance of and
compliance with the covenants and undertakings of the Borrower and the Master
Servicer in this Indenture, the Receivables Sale Agreement or any of the other
documents referred to herein or therein. Any expense incident to the exercise by
the Trustee at any time or any Noteholder during the continuance of any Default
or Event of Default, of any right under this Section 1.11 shall be borne by the
Borrower. Nothing contained herein shall be construed as a duty of the Trustee
to perform such inspection.
SECTION 1.12. Survival of Representations and Warranties.
The representations, warranties and certifications of the
Borrower made in this Indenture or in any certificate or other writing delivered
by the Borrower pursuant hereto shall survive the authentication and delivery of
the Notes hereunder.
ARTICLE 2.
THE NOTES
SECTION 2.1. General Provisions.
(a) Maximum Outstanding Principal Balance of Notes. The
aggregate Outstanding Principal Amount of the Notes that may be authenticated
and delivered under this Indenture shall not exceed $75,000,000.
(b) Denominations. The Notes may be issued in minimum
denominations of $500,000 and any integral multiple of $1,000 in excess thereof;
provided that the foregoing shall not restrict or prevent the transfer in
accordance with Section 2.3 of this Indenture of any Notes having a remaining
Outstanding Principal Amount of other than an integral multiple of $1,000, or
the issuance of a single Note with a denomination less than $500,000.
(c) Principal Payments. For each Payment Date, the Noteholders
shall be entitled to the Note Principal Payment Amount (the "Principal
Payments"). Principal Payments on the Notes will be made in accordance with
Sections 3.4 or 6.6, as applicable.
(d) Interest Payments. For each Payment Date, the Noteholders
shall be entitled to the Note Interest Payment Amount (the "Interest Payments")
that has accrued on the Notes during the previous Due Period, plus unpaid
interest from prior Due Periods, at the Note Interest Rate. Interest Payments
will be made in accordance with Sections 3.4 and 6.6, as applicable.
(e) Outstanding Principal Amount. The Outstanding Principal
Amount of the Notes will, at all times, be equal to the Outstanding amount of
Advances made pursuant to the Credit Agreement.
(f) Form of Notes. The Notes shall be in substantially the
form attached hereto as Exhibit B.
SECTION 2.2. Execution, Authentication, Delivery, and Dating.
(a) The Notes shall be manually executed on behalf of the
Borrower by its Chairman, Vice Chairman, President, or any Vice President.
(b) Any Note bearing the signature of an individual who was at
the time of execution thereof a proper officer of the Borrower shall bind the
Borrower, notwithstanding that such individual ceases to hold such office prior
to the authentication and delivery of such Note or did not hold such office at
the date of such Note.
(c) No Note shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Note a certificate of authentication substantially in the form provided for
herein, executed by the Trustee by manual signature, and such certificate upon
any Note shall be conclusive evidence, and the only evidence, that such Note has
been duly authenticated and delivered hereunder. Each Note shall be dated the
date of its authentication.
(d) The Notes may from time to time be executed by the
Borrower and delivered to the Trustee for authentication together with a
Borrower Order to the Trustee directing the authentication and delivery of such
Notes and thereupon the same shall be authenticated and delivered by the Trustee
in accordance with such Borrower Order.
SECTION 2.3. Transfer and Exchange.
(a) The Borrower shall cause to be kept at the Corporate Trust
Office a register (the "Note Register") in which, subject to such reasonable
regulations as the Trustee may prescribe, the Borrower shall provide for the
registration of Notes and of transfers of Notes. The Trustee is hereby appointed
"Note Registrar" for the purpose of registering Notes and transfers of Notes as
herein provided.
No transfer of any Note may be made unless that transfer is
made pursuant to an effective registration statement under the Securities Act
and an effective registration or a qualification under applicable state
securities laws, or is made in a transaction that does not require such
registration or qualification because the transfer satisfies one of the
following: (i) such transfer is in compliance with Rule 144A under the
Securities Act, to a person who the transferor reasonably believes is a
Qualified Institutional Buyer (as defined in Rule 144A) that is purchasing for
its own account or for the account of a Qualified Institutional Buyer and to
whom notice is given that such transfer is being made in reliance upon Rule 144A
under the Securities Act as certified by such transferee in a letter delivered
to the Note Registrar in the form of Exhibit C hereto; (ii) after the
appropriate holding period, such transfer is pursuant to an exemption from
registration under the Securities Act provided by Rule 144 under the Securities
Act; (iii) such transfer is to a transferee who is an accredited investor in a
transaction exempt from the registration requirements of the Securities Act, in
each case in accordance with any applicable securities laws of any State of the
United States or (iv) such transfer is otherwise exempt from the registration
requirements of the Securities Act. In order to assure compliance with such
laws, the Noteholder's prospective transferee referred to in the preceding
clauses (iii) or (iv) must deliver an investment letter certifying to the
Borrower and the Trustee as to the facts surrounding such transfer in the form
of Exhibit D hereto. Except in the case of a transfer of Notes to a transferee
referred to in the preceding clause (i) or, in general, a transfer that is to be
made after two years from the Issuance Date, the Trustee shall require an
opinion of counsel satisfactory to it to the effect that such transfer may be
made pursuant to an exemption from the Securities Act without such registration
(which opinion of counsel shall not be an expense of the Trustee, the Master
Servicer or the Borrower). None of the Borrower, the Master Servicer, the Note
Registrar or the Trustee is obligated to register or qualify the Notes under the
Securities Act or any other securities law or to take any action not otherwise
required under this Indenture to permit the transfer of any Note without
registration.
Neither the Trustee nor the Note Registrar shall effect the
registration of transfer of any Note, if after giving effect to such transfer,
the Notes would be held by more than ninety-eight Noteholders.
(b) Subject to Section 2.3(a), upon surrender for registration
of transfer of any Note at the office of the Trustee designated pursuant to
Section 8.2 for such purpose, the Borrower shall execute and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any authorized denominations and of a like
aggregate original principal amount.
(c) Every Note presented or surrendered for registration of
transfer or for exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Borrower and the Trustee duly
executed, by the holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made for any registration of
transfer or exchange of Notes, but the Borrower or the Trustee may require
payment by the transferor of a sum sufficient to cover any Tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Notes, other than exchanges pursuant to Section 9.5 not
involving any transfer.
(e) The Master Servicer agrees to cause the Borrower, and the
Borrower agrees, to provide such information as required under Rule 144A under
the Securities Act so as to allow resales of Notes to Qualified Institutional
Buyers in accordance herewith.
SECTION 2.4. Mutilated, Destroyed, Lost and Stolen Notes.
(a) If any mutilated Note is surrendered to the Trustee, the
Borrower shall execute and the Trustee shall authenticate and deliver in
exchange therefore a replacement Note of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
(b) If there shall be delivered to the Borrower and the
Trustee (i) evidence to their satisfaction of the destruction, loss or theft of
any Note and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless then, in the absence of
actual notice to the Borrower or the Trustee that such Note has been acquired by
a bona fide purchaser, the Borrower shall execute and upon its request the
Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or
stolen Note, a replacement Note of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
(c) In case the final installment of principal on any such
mutilated, destroyed, lost or stolen Note has become or will at the next Payment
Date become due and payable, the Borrower in its discretion may, instead of
issuing a replacement Note, pay or cause the Trustee to pay such Note.
(d) Upon the issuance of any replacement Note under this
Section 2.4, the Borrower or the Trustee may require the payment by the
Noteholder of a sum sufficient to cover any Tax or other governmental charge
that may be imposed as a result of the issuance of such replacement Note.
(e) Every replacement Note issued pursuant to this Section 2.4
in lieu of any destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Borrower, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes duly issued hereunder.
(f) The provisions of this Section 2.4 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.5. Payment of Interest and Principal; Rights
Preserved.
(a) Any installment of interest or principal, payable on any
Note that is punctually paid or duly provided for by or on behalf of the
Borrower on the applicable Payment Date shall be paid to the Person in whose
name such Note was registered at the close of business on the Record Date for
such Payment Date by check mailed to the address specified in the Note Register,
or upon the request of a Holder by wire transfer of federal funds to the account
and number specified in the Note Register, in each case on such Record Date for
such Person (which shall be, as to each original purchaser of the Notes, the
account and number specified by such purchaser to the Trustee in writing, or, if
no such account or number is so specified, then by check mailed to such Person's
address as it appears in the Note Register on such Record Date).
(b) All reductions in the principal amount of a Note effected
by payments of installments of principal made on any Payment Date shall be
binding upon all Holders of such Note and of any Note issued upon the
registration of transfer thereof or in exchange therefore or in lieu thereof,
whether or not such payment is noted on such Note. All payments on the Notes
shall be paid without any requirement of presentment but each Holder of any Note
shall be deemed to agree, by its acceptance of the same, to surrender such Note
at the Corporate Trust Office against payment of the final installment of
principal of such Note.
SECTION 2.6. Persons Deemed Owners.
Prior to due presentment of a Note for registration of
transfer, the Borrower, the Trustee, and any agent of the Borrower or the
Trustee may treat the registered Noteholder as the owner of such Note for the
purpose of receiving payment of principal of and interest on such Note and for
all other purposes whatsoever, whether or not such Note be overdue, and neither
the Borrower, the Trustee, nor any agent of the Borrower or the Trustee shall be
affected by notice to the contrary.
SECTION 2.7. Cancellation.
All Notes surrendered for registration of transfer or exchange
or following final payment shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly canceled by it. The
Borrower may at any time deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Borrower may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
canceled by the Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Notes held by the Trustee may be
disposed of in the normal course of its business or as directed by a Borrower
Order.
SECTION 2.8. Noteholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Noteholders. In the event the Trustee no longer serves as the Note
Registrar, the Borrower (or any other obligor upon the Notes) shall furnish to
the Trustee at least 5 Business Days before each Payment Date (and in all events
in intervals of not more than 6 months) and at such other times as the Trustee
may request in writing a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Noteholders.
SECTION 2.9. Treasury Notes.
In determining whether the Noteholders of the required
Outstanding Principal Amount of the Notes have concurred in any direction,
waiver or consent, Notes held or redeemed by the Borrower or any other obligor
upon the Notes or held by an Affiliate of the Borrower or such other obligor
shall be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes which a Responsible Officer of the
Trustee knows are so owned shall be so disregarded.
ARTICLE 3.
ACCOUNTS; COLLECTION AND
APPLICATION OF MONEYS; REPORTS
SECTION 3.1. Trust Accounts; Investments by Trustee.
(a) On or before the Issuance Date, the Trustee shall
establish in the name of the Trustee for the benefit of the Noteholders and the
Borrower to the extent of their interests therein as provided in this Indenture,
the Trust Accounts, which accounts shall be Eligible Bank Accounts.
Subject to the further provisions of this Section 3.1(a), the
Trustee shall, upon receipt or upon transfer from another account, as the case
may be, deposit into such accounts all amounts received by it which are required
to be deposited therein in accordance with the provisions of this Indenture. All
such amounts and all investments made with such amounts, including all income
and other gain from such investments, shall be held by the Trustee in such
accounts as part of the Trust Estate as herein provided, subject to withdrawal
by the Trustee in accordance with, and for the purposes specified in the
provisions of, this Indenture.
(b) The Trustee shall hold in trust but shall not be required
to deposit in any account specified pursuant to Section 3.1(a) any payment
received by it until such time as the Trustee shall have identified to its
reasonable satisfaction the nature of such payment and, on the basis thereof,
the proper account or accounts into which such payment is to be deposited. In
determining into which of the accounts, if any, referred to above any amount
received by the Trustee is to be deposited, the Trustee may conclusively rely
(in the absence of bad faith on the part of the Trustee) on the advice of the
Master Servicer. Unless the Trustee is advised differently in writing by the
Master Servicer, the Trustee shall assume that any amount remitted to it is to
be deposited into the Collection Account. The Trustee may establish from time to
time such deadline or deadlines as it shall determine are reasonable or
necessary in the administration of the Trust Estate after which all amounts
received or collected by the Trustee on any day shall not be deemed to have been
received or collected until the next succeeding Business Day.
(c) None of the Master Servicer, the Trustee nor the
institution then acting as Trustee shall have any right of set-off with respect
to any Trust Account, or any investment therein.
(d) So long as no Event of Default shall have occurred and be
continuing, all or a portion of the amounts in any Trust Account shall be
invested and reinvested by the Trustee pursuant to the written directions of the
Master Servicer in one or more Eligible Investments. Subject to the restrictions
on the maturity of investments set forth in Section 3.1(f), the Master Servicer
may authorize the Trustee to make the specific Eligible Investments set forth
therein, to make Eligible Investments from time to time consistent with the
general instructions set forth therein, or to make specific Eligible Investments
pursuant to instructions received in writing or by telegraph or facsimile
transmission from the employees of the Master Servicer, as the case may be,
identified therein, in each case in such amounts as the Master Servicer shall
specify.
(e) In the event that either (i) the Master Servicer shall
have failed to give investment directions to the Trustee by 12:30 P.M., Chicago
time on any Business Day on which there may be uninvested cash or (ii) an Event
of Default shall be continuing, the Trustee shall promptly invest and reinvest
the funds then in the designated Trust Account to the fullest extent practicable
in one or more Eligible Investments meeting the criteria in paragraph (e) of the
definition of "Eligible Investments", in accordance with Section 3.2(d). All
investments made by the Trustee shall mature no later than the maturity date
therefore permitted by Section 3.1(f).
(f) No investment of any amount held in any Trust Account
shall mature later than the Deposit Date preceding the Payment Date which is
scheduled to occur immediately following the date of investment. All income or
other gains (net of losses) from the investment of moneys deposited in any Trust
Account shall be deposited by the Trustee in such account immediately upon
receipt.
(g) Any investment of any funds in any Trust Account and any
sale of any investment held in such accounts, shall be made under the following
terms and conditions:
(i) each such investment shall be made in the name of
the Trustee or in the name of a nominee of the Trustee, in each case in
such manner as shall be necessary to maintain the identity of such
investments as assets of the Trust Estate;
(ii) any certificate or other instrument evidencing
such investment shall be delivered directly to the Trustee or its agent
and the Trustee shall have sole possession of such instrument, and all
income on such investment; and
(iii) the proceeds of any sale of an investment shall
be remitted by the purchaser thereof directly to the Trustee for
deposit in the account in which such investment was held.
(h) If any amounts are needed for disbursement from any Trust
Account and sufficient uninvested funds are not collected and available therein
to make such disbursement, in the absence of a written order from the Master
Servicer for the liquidation of investments held therein in an amount sufficient
to provide the required funds, the Trustee shall select and cause to be sold or
otherwise converted to cash a sufficient amount of the investments in such
accounts.
(i) The Trustee shall not in any way be held liable by reason
of any insufficiency in any Trust Account resulting from losses on investments
made in accordance with the provisions of this Section 3.1 including, but not
limited to, losses resulting from the sale or depreciation in the market value
of such investments (but the institution serving as Trustee shall at all times
remain liable for its own debt obligations, if any, constituting part of such
investments). The Trustee shall not be liable for any investment made by it in
accordance with this Section 3.1 on the grounds that it could have made a more
favorable investment or a more favorable selection for sale of an investment.
The Trustee may trade with itself or an Affiliate in the purchase or sale of
Eligible Investments.
SECTION 3.2. Establishment and Administration of the
Collection Account. (a) The Trustee shall cause to be established and maintained
a Collection Account for the Notes issued hereunder. The Collection Account
shall be an Eligible Bank Account initially established at the office of the
Trustee, bearing the following designation "TW Holdings II, Inc. -- Collection
Account, LaSalle National Bank, as Trustee". The Trustee shall possess all
right, title and interest in all funds on deposit from time to time in the
Collection Account and in all proceeds thereof. The Collection Account shall be
under the sole dominion and control of the Trustee for the benefit of the
Noteholders as their interests appear in the Trust Estate. If, at any time, the
Collection Account ceases to be an Eligible Bank Account, the Master Servicer
and the Trustee shall within 5 Business Days establish a new Collection Account
which shall be an Eligible Bank Account, transfer any cash and/or any
investments to such new Collection Account and from the date such new Collection
Account is established, it shall be the "Collection Account".
(a)(b) The Master Servicer agrees to cause amounts on deposit
in the Clearing Account to be deposited to the Collection Account on a daily
basis as provided in Section 5.3 hereof.
(c) The Master Servicer shall direct the Trustee, in writing,
to invest the amounts in each Collection Account in accordance with Sections
3.1(d), (e), (f) and (g).
(d) The Master Servicer shall instruct the Trustee in writing
to make withdrawals and payments from each Collection Account for the purposes
of carrying out the Master Servicer's and the Trustee's duties hereunder.
SECTION 3.3. Reserved.
SECTION 3.4. Distributions.
(a) On each Payment Date prior to an Acceleration Event (as
defined below), the Trustee shall disburse the Available Funds in the Collection
Account, based on the Servicer Report, in the following priority:
(i) to the Trustee, the Trustee Fee, plus any accrued
and unpaid Trustee Fees from any prior Due Periods and, reimbursement
to the Trustee of reasonable expenses incurred during the related Due
Period;
(ii) if TWRI is no longer the Master Servicer, to the
Master Servicer, the Master Servicer Fee, plus any accrued and unpaid
Master Servicer Fees from any prior Due Periods;
(iii) to the Noteholders, interest in an amount equal
to Note Interest Payment Amount, plus any accrued and unpaid Note
Interest Payment Amount from prior Due Periods;
(iv) to the Noteholders, in reduction of the
Outstanding Principal Amount of the Notes, an amount equal to the Note
Principal Payment Amount;
(v) so long as TWRI is the Master Servicer, to the
Master Servicer, the Master Servicer Fee, plus any accrued and unpaid
Master Servicer Fees from any prior Due Periods;
(vi) the remaining funds in the Collection Account, if
any, to or at the direction of the Borrower.
(b) On each Payment Date occurring upon or after the
occurrence of an Event of Default specified in this Indenture or the Credit
Agreement upon which the Outstanding Principal Amount of the Notes has been
accelerated in accordance with Section 6.2 of this Indenture (each, an
"Acceleration Event"), the Trustee shall, based on the Servicer Report, disburse
the balance of Available Funds in the following priority:
(i) to the Trustee, the Trustee Fee, plus any accrued
and unpaid Trustee Fees from any prior Due Periods and reimbursement of
reasonable expenses incurred by the Trustee during the related Due
Period and any unreimbursed reasonable expenses from prior Due Periods;
(ii) if TWRI is no longer the Master Servicer, to the
Master Servicer, the Master Servicer Fee, plus any accrued and unpaid
Master Servicer Fees from any prior Due Periods;
(iii) to the Noteholders, interest in an amount equal
to Note Interest Payment Amount, plus any accrued and unpaid Note
Interest Payment Amount from any prior Due Periods;
(iv) to the Noteholders, all remaining Available Funds
until the Outstanding Principal Amount of the Notes has been reduced to
zero; and
(v) if TWRI is the Master Servicer, to the Master
Servicer, the Master Servicer Fee, plus any accrued and unpaid Master
Servicer Fees from any prior Due Periods;
(vi) the remainder of funds held in the Collection
Account to or at the direction of the Borrower.
SECTION 3.5. Certifications to Noteholders. On each Payment
Date, concurrently with the distribution or allocation to the Noteholders, the
Trustee shall furnish to the Noteholders a certification (i) that the related
Servicer Report is complete on its face, and (ii) that no Event of Master
Servicer Termination has occurred, or if an Event of Master Servicer Termination
has occurred and is continuing, specifying the Event of Master Servicer
Termination or such event and its status.
Notwithstanding any provision of this Indenture to the
contrary, the Trustee shall have no duty or obligation with respect to the
information provided to it, including, without limitation, to verify, monitor or
otherwise supervise or administer the performance of the Master Servicer.
SECTION 3.6. Returned Payments. If the principal amount of any
Note or any other amount payable under any Note (including interest) shall have
been reduced by any distribution or allocation of any portion of collections or
other Payments on Trust Estate Receivables, and thereafter such distribution or
allocation is rescinded or must otherwise be returned by or on behalf of the
recipient thereof to the Borrower, the Trust Estate or any other creditor of the
Borrower for any reason, such principal or other amount distributed or allocated
in respect of such Note shall be increased by the amount of such distribution or
allocation to the extent so returned, all as though such distribution or
allocation had not been made.
ARTICLE 4.
THE TRUST ESTATE
SECTION 4.1. Acceptance by Trustee. (a) Pursuant to each
Collateral Assignment, the Trustee will acknowledge the related conveyance of
the Assets and other assets constituting the Trust Estate conveyed by the
Borrower pursuant to such Collateral Assignment, and the Trustee will hold such
Receivables and all other assets comprising the Trust Estate, in trust for the
benefit of the Noteholders subject to the terms and provisions hereof. Pursuant
to Section 4.7 hereof, the Trustee hereby appoints the Custodian to hold the
related Receivable Documents on behalf of the Trustee.
(a)(b) The Trustee shall perform its duties under this Section
4.1 and hereunder on behalf of the Trust Estate and for the benefit of the
Noteholders in accordance with the terms of this Indenture and applicable law
and, in each case, taking into account its other obligations hereunder, but
without regard to:
(i) any relationship that the Trustee or any Affiliate
of the Trustee may have with the related Obligor;
(ii) the ownership of any Note by the Trustee or any
Affiliate of the Trustee;
(iii) the Trustee's right to receive compensation for
its services hereunder or with respect to any particular transaction;
or
(iv) the ownership, or holding in trust for others, by
the Trustee of any other loans or property.
SECTION 4.2. Subsequent Transfers. (a) Subject to the
satisfaction of the conditions specified in Section 4.3 hereof and the terms of
this Indenture, on each Assignment Date, the Borrower shall pledge to the
Trustee, on behalf of the Trust Estate, and the Trust Estate shall accept the
pledge of Receivables (each, a "Transfer") from the Borrower.
(a)(b) On any Business Day which is an Assignment Date after
the Issuance Date, the Borrower shall give the Master Servicer and the Trustee
written notice of each Transfer (in each case, a "Transfer Notice") specifying
the Outstanding Principal Balance of each Trust Estate Receivable pledged
thereby to the Trust Estate on such Assignment Date. The Master Servicer shall
independently confirm and hereby represents and warrants as to, and the Trustee
may, without any duty to make any independent investigation with respect
thereto, rely on, the facts set forth in such Transfer Notice.
(c) On each Assignment Date following its delivery of a
Transfer Notice, the Borrower will complete, execute and deliver a Collateral
Assignment to the Trustee on behalf of the Trust Estate. The Trustee shall
deliver executed copies thereof to the Master Servicer, the Borrower and each
Noteholder. On each Assignment Date, the Borrower shall also deliver an original
executed UCC-1 financing statement with exhibits which describe the collateral
as the Receivables subject to the related Transfer.
(d) Following delivery of a duly executed Collateral
Assignment and a UCC-1 financing statement and subject to the satisfaction of
the conditions set forth in Sections 4.2(a) and 4.3, all Receivables specified
in such Collateral Assignment (including all Payments allocable to principal and
interest received after the related Cut-off Date) will be pledged to the Trustee
on behalf of the Trust Estate and such Receivables shall become Assets and part
of the Trust Estate. The Borrower shall deliver a revised Schedule of
Receivables to the Trustee and the Noteholders.
SECTION 4.3. Conditions Precedent to All Transfers.
Each Transfer shall be subject to the conditions precedent
that:
(a) On the related Assignment Date (including the initial
Transfer on the date hereof), the Borrower (with respect to itself and the
related Receivables) and the Master Servicer shall have certified and are deemed
to have represented and warranted hereunder and shall so represent and warrant
in the related Collateral Assignment that:
(i) the representations and warranties (A) of the
Borrower and TWRI set forth in Sections 11.1 and 11.2 hereof and (B) of
the Master Servicer set forth herein, are true and correct on and as of
such date, before and after giving effect to such Transfer, as though
made on and as of such date;
(ii) no event has occurred, or would result from such
Transfer or from the application of the proceeds therefrom, which
constitutes an Event of Default or would constitute an Event of Default
but for the requirement that notice be given or time elapse or both;
(iii) each of the Borrower and TWRI is in material
compliance with each of its covenants set forth herein and in all
Warehouse Facility Documents; and
(iv) no event has occurred which constitutes an Event
of Master Servicer Termination or would constitute an Event of Master
Servicer Termination but for the requirement that notice be given or
time elapse or both.
(b) The Borrower shall have delivered to the Trustee and the
Noteholders an executed copy of the related Collateral Assignment, an executed
UCC-1 financing statement and an Officer's Certificate stating and representing
and warranting (and hereby represents and warrants) that all conditions
precedent to the effectiveness thereof as specified herein shall have been
satisfied;
(c) The Custodian shall have confirmed receipt of the related
Receivable Documents and shall have delivered a Receipt as provided in Section
4.8 hereof; and
(d) No Responsible Officer of the Trustee has actual knowledge
that any conditions to such Transfer have not been fulfilled, and no Noteholder
shall have notified the Trustee of the same, and the Trustee shall have received
such other documents, opinions, certificates and instruments as any Noteholder
or the Trustee may request.
SECTION 4.4. Grant of Security Interest; Tax Treatment. (a)
For purposes of legal form and the Intended Tax Characterization, it is the
intention of the parties hereto that this Indenture and each related Collateral
Assignment shall constitute a security agreement under applicable law, and that
the Borrower has granted to the Trustee on behalf of the Trust Estate for the
benefit of the Noteholders and other creditors of the Trust Estate, a first
priority perfected security interest in all of the Borrower's right, title and
interest in, to and under the Assets and the other assets constituting the Trust
Estate. The Trustee shall treat this Indenture and the Trust Estate as a
security device for tax purposes and shall not file tax returns or obtain an
employer identification number on behalf of the Trust Estate; provided, however,
that if the Notes are recharacterized as equity interests in the Trust Estate
for tax purposes, the parties hereto agree to treat such class as partnership
interests in a partnership under the New York Uniform Partnership Act in which
the Borrower was a general partner and each such recharacterized Noteholder was
a limited partner. In the event of such treatment, the Master Servicer shall
file all necessary tax returns or reports. The provisions of this Indenture
shall be construed in furtherance of the foregoing intended tax treatment. The
conveyance by the Borrower of the Assets to the Trustee on behalf of the Trust
Estate on each Assignment Date shall not constitute and are not intended to
result in an assumption by the Trustee or any Noteholder of any obligation of
the Borrower or the Master Servicer to the obligors, or any other Person in
connection with the Assets.
(a)(b) It is the intention of the parties hereto that, with
respect to all Taxes, the Notes will be treated as indebtedness of the Borrower
to the Noteholders secured by the Assets (the "Intended Tax Characterization").
The Borrower, the Master Servicer and the Trustee, by entering into this
Indenture, and each Noteholder by the purchase of a Note, agree to report such
transactions for purposes of all Taxes in a manner consistent with the Intended
Tax Characterization.
(c) The Borrower and the Master Servicer shall take no action
inconsistent with the Trustee's interest in the Assets and shall indicate or
shall cause to be indicated in its books and records held on its behalf that
each Trust Estate Receivable and the other assets constituting the Trust Estate
has been pledged to the Trustee on behalf of the Trust Estate and the
Noteholders.
SECTION 4.5. Further Action Evidencing Assignments. (a) The
Borrower and the Master Servicer each agrees that, from time to time, at its
respective expense, it will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or
appropriate, or that the Master Servicer or the Trustee or the Noteholders may
reasonably request, in order to perfect, protect or more fully evidence the
security interest in the Assets or to enable the Trustee to exercise or enforce
any of its rights hereunder, and under any Collateral Assignment. Without
limiting the generality of the foregoing, the Borrower will, without the
necessity of a request and upon the request of the Master Servicer or the
Trustee, execute and file (or cause to be executed and filed) such financing or
continuation statements, or amendments thereto or assignments thereof, and such
other instruments or notices, as may be necessary or appropriate including,
without limitation, recording and filing UCC-1 financing statements, amendments
or continuation statements with such state and county offices as is necessary to
perfect a security interest: (i) each Assignment Date, and (ii) prior to the
effective date of any change of the name, identity or structure or relocation of
its chief executive office or any change that would or could affect the
perfection pursuant to any financing statement or continuation statement or
assignment previously filed or make any UCC-1 or continuation statement
previously filed pursuant to this Indenture seriously misleading within the
meaning of applicable provisions of the UCC (and the Borrower shall give the
Trustee at least 30 Business Days prior notice of any circumstance in (ii)
before the same occurs). The Borrower shall deliver promptly to the Trustee
file-stamped copies of any such filing.
(a)(b) (i) The Borrower hereby grants to each of the Master
Servicer and the Trustee a power of attorney to execute all documents on behalf
of the Borrower as may be necessary or desirable to effectuate the foregoing and
(ii) the Master Servicer hereby grants to the Trustee a power of attorney to
execute all documents on behalf of the Master Servicer as may be necessary or
desirable to effectuate the foregoing; provided, however, that such grant shall
not create a duty on the Trustee to file, prepare, record or monitor or any
responsibility for the contents or adequacy of any such documents.
SECTION 4.6. Substitution of Receivables and Release of Liens.
(a) From time to time, the Borrower may Grant Substitute Receivables to the
Trustee for inclusion in the Trust Estate and may contemporaneously request the
release of a Trust Estate Receivable (i) for which the Borrower intends to
effect a Liquidation, (ii) for which there is a breach of any of the
representations and warranties set forth in Sections 11.1 or 11.2, (iii) for
which original Receivable Documents required hereunder have not been delivered
to the Custodian which would adversely affect the Trustee's or the Master
Servicer's ability to enforce the obligations of the Obligor, (iv) for which
filings or other actions required in Section 4.5 have not been taken, (v) which
has ceased to be an Eligible Receivable, (vi) for which all amounts due in
respect of such Trust Estate Receivable have been paid in full, or (vii) for
which the related Obligor wishes to effect an Upgrade.
(b) Upon delivery of (i) a Collateral Assignment for such
Substitute Receivable, and (ii) delivery of a Receipt by the Custodian of the
Receivable Documents for such Substitute Receivable, the Trustee on behalf of
the Trust Estate shall release such Trust Estate Receivable and shall execute a
request for release substantially in the form attached as Exhibit F (a "Request
for Release") prepared by the Master Servicer which the Trustee will deliver to
the Custodian to release the related Receivable Documents to the Borrower, and
the Trustee shall assign without representation or warranty and without recourse
to the Borrower all of the Trust Estate's right, title and interest in such
Trust Estate Receivable. Upon such substitution, such Receivable will be
released from the lien of the Indenture. All documents of assignment shall be
prepared in accordance with Section 4.2 hereof.
SECTION 4.7. Appointment of Custodian; Delivery of Receivable
Documents; Verification (a) The Trustee hereby appoints Sage Systems, Inc. (the
"Custodian"), in its independent corporate capacity, as the custodian and bailee
with respect to the Receivable Documents that are related to the Trust Estate
Receivables. The Custodian hereby accepts such appointment and agrees to
maintain and hold all such Receivable Documents received by it for the exclusive
benefit of the Trustee, as trustee for the Noteholders. With respect to such
Receivable Documents, the Custodian agrees to act in accordance with this
Indenture and in accordance with any directions of the Trustee. Under no
circumstances shall the Custodian (i) deliver possession of any Receivable
Documents to the Borrower or any other Person, or (ii) take any directions with
respect to any Receivable Documents from the Borrower or any other Person,
without the express written consent of the Trustee or the Noteholders.
(b) On a date at least five Business Days prior to a proposed
Assignment Date, the Borrower shall deliver or cause to be delivered (A) to the
Custodian, Trustee and each Noteholder (i) a draft Collateral Assignment, and
(ii) a revised draft of a Schedule of Receivables, which shall include the
Receivables the Borrower wishes to pledge to the Trust Estate, and (B) to the
Custodian, each Receivable Document listed in the definition of "Receivable
Documents".
(c) Upon receipt of the documents described in (b) above, the Custodian
shall verify that (i) all documents required to be delivered to it pursuant to
this Indenture are in the Custodian's possession, (ii) such documents appear
regular on their face and relate to the appropriate Receivable and none of the
Receivable Documents contains evidence of any claims, liens, security interests
or encumbrances (other than the Lien of this Indenture), and that (iii) the
information contained in the Schedule of Receivables matches the related
information in the Receivable Documents.
If the Custodian determines from such verification that any discrepancy
or deficiency exists with respect to any Receivable Document, the Custodian
shall note such discrepancy or deficiency on a schedule (a "Schedule of
Exceptions") which the Custodian shall deliver (in both hard copy and electronic
format acceptable to the Noteholders) to the Borrower, the Trustee and each
Noteholder within two Business Days prior to the proposed Assignment Date. The
delivery of such Schedule of Exceptions shall be the Custodian's representation
that, other than the discrepancies and deficiencies described in such Schedule
of Exceptions, all Receivable Documents required to be delivered hereunder are
in the possession of the Custodian. The Trustee shall not accept the pledge of
Receivables that are listed in such Schedule of Exceptions without the express
written consent of the Noteholders.
SECTION 4.8. Receipts. On the Business Day immediately
preceding an Assignment Date, the Custodian shall deliver (in both hard copy and
electronic format acceptable to the Noteholders) (i) an original certification
and receipt in the form attached hereto as Exhibit G (a "Receipt") to the
Trustee, and (ii) copies to the Borrower and each Noteholder. Each Receipt shall
include a list of all Trust Estate Receivables, including such newly pledged
Trust Estate Receivables, for which the Custodian is holding Receivable
Documents.
SECTION 4.9. Duties of Custodian.
(a) Standard of Care. The Custodian shall use reasonable care,
in accordance with the standard customs adhered to by institutions that act as
custodians in the performance of its obligations hereunder.
(b) Facilities. The Custodian shall maintain continuous
custody of all items delivered to it in secure fireproof facilities located at
2553 B 152nd Avenue, Space #15K2, Redmond, Washington 98052. All Receivable
Documents will be marked and physically separated from the files relating to
other receivables for which the Custodian holds on behalf of itself or others.
The Custodian shall provide access to the facilities to the Trustee and each
Noteholder or their related representatives at such time as the each may
reasonably request.
(b) Reviews. The Custodian shall conduct, or cause to be
conducted, periodic reviews of all items held by it under this Indenture in such
a manner as shall enable the Trustee and each Noteholder to verify the accuracy
of the Custodian's record keeping. The Custodian shall immediately report to the
Trustee and each Noteholder of any defect with respect to a Receivable Document
or any failure on its part to hold the Receivable Documents as herein provided.
(c) Release of Documents. Upon receipt of a Request for
Release as provided in Section 4.6 hereof, the Custodian shall, within five
Business Days, deliver the requested Receivable Documents as directed in such
Request for Release. Receivable Documents properly released as provided in
Section 4.6 shall be free of the lien of this Indenture. Upon notice of an Event
of Default whereby the Assets are to be liquidated under Section 6.3 or a
Securitization Take-out from the Trustee, the Custodian shall cooperate to
effect the transfer of the Receivable Documents to such third parties as is
necessary.
(f) Insurance. The Custodian shall, at its own expense,
maintain at all times during the existence of this Indenture, and keep in full
force and effect (a) fidelity insurance, (b) theft of document insurance, (c)
forgery insurance, and (d) insurance covering the risk of errors and omissions.
All such insurance shall be in amounts, with standard coverage and subject to
deductibles, as are customary for insurance typically maintained by banks that
act as custodians in similar transactions. A certificate of the respective
insurer as to each such policy shall be furnished to the Trustee, upon request,
stating that such policy is in full force and effect.
(g) Updated Receipt and Receivable Data. On each Determination
Date or, within two Business Days of a request from the Trustee or a Noteholder,
the Custodian shall provide (i) an updated Receipt (in both hard copy and
electronic format acceptable to the Noteholders) to the Trustee or a Noteholder,
as the case may be, as to the Receivable Documents in its possession and (ii)
such electronic data regarding the Trust Estate Receivables reasonably requested
by the Noteholders in a format acceptable to the Noteholders.
(h) Copies of Receivable Documents. Upon request from the
Trustee or a Noteholder, the Custodian shall, at the cost and expense of the
requesting party (other than the Trustee), provide copies of Receivable
Documents.
SECTION 4.10. Representations and Warranties of Custodian. The
Custodian represents and warrants to the Trustee and the Noteholders that:
(a) The Custodian (i) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and
(ii) has full corporate power and authority to conduct its business and affairs
as a Custodian;
(b) The Custodian does not control, is not controlled by nor
is under common control with, the Borrower;
(c) In respect of other lenders of TWRI where the Custodian is
acting as custodian, the Custodian is (i) in possession of all loan files
required by the related loan documents, and (ii) is in compliance with such loan
documents; and
(d) This Agreement, when executed and delivered by the
Custodian, shall constitute the valid, legal and binding obligation of the
Custodian, enforceable against the Custodian in accordance with its terms,
except as the enforcement thereof may be limited by applicable receivership or
similar debtor relief laws and that certain equitable remedies may not be
available regardless of whether enforcement is sought in equity or at law.
SECTION 4.11. Indemnification of Custodian. The Custodian
hereby agrees to indemnify and hold the Trustee, the Borrower, the Noteholder,
their shareholders, affiliates, directors, officers, employees, agents,
successors and assigns, harmless from and against any and all losses, claims,
demands, causes of action, or other legal proceedings, judgments, costs,
liabilities and/or expenses, including all reasonable attorney's fees, incurred
resulting from the Custodian's negligence, willful misconduct or failure to
perform its obligations hereunder, or a breach of any representation or warranty
by the Custodian contained in this Indenture. The foregoing indemnification
provisions set forth shall survive any termination of this Indenture.
SECTION 4.12. Adverse Interests. By execution of this
Indenture, the Custodian represents, warrants and covenants that it does not
currently hold, and during the existence of this Indenture shall not hold, any
adverse interest, by way of security or otherwise, in any Trust Estate
Receivable, and hereby waives and releases any such interest that it may have in
any Trust Estate Receivable as of the date hereof. Notwithstanding any other
provisions of this Indenture and without limiting the generality of the
foregoing, the Custodian shall not at any time exercise or seek to enforce any
claim, right or remedy, including any statutory or common law rights of set-off,
if any, that the Custodian may otherwise have against all or any part of a
Receivable Document, Trust Estate Receivable or proceeds of either.
SECTION 4.13. Termination of Custodian. (a) The Noteholders
may, without cause, request that the Custodian be replaced with a successor
custodian. Upon receipt of written directions from the Noteholders that the
Noteholders desire to replace the Custodian with a successor custodian, the
Trustee shall promptly notify the Custodian that all its rights and obligations
under this Indenture are terminated and immediately appoint the successor
custodian as Custodian.
(b) Upon receipt of such notice, the Custodian will take such
actions as are necessary to best facilitate the transition of the performance of
the Custodian's activities to the successor Custodian, and the Borrower and the
Custodian shall assist the successor custodian to assume and perform the duties
of the Custodian hereunder (including, without limitation, the immediate
delivery of all Receivable Documents and Receivable Files to the successor
custodian).
ARTICLE 5.
SERVICING OF ASSETS
SECTION 5.1. Appointment of Master Servicer. (a) The
servicing, administering and collection of the Trust Estate Receivables shall be
conducted by the Master Servicer designated from time to time in accordance with
this Section. Until the Trustee (acting upon the direction of the Noteholders)
gives notice (the "Successor Notice") to the Borrower and the Master Servicer of
the designation of a new Master Servicer, TWRI is hereby designated as, and
hereby agrees to perform the duties and obligations of, Master Servicer in
accordance with the terms of this Indenture. The Trustee and the Noteholders
agree not to provide the Borrower and the Master Servicer with a Successor
Notice unless an Event of Master Servicer Termination shall have occurred and be
continuing and shall remain unremedied for five Business Days after written
notice thereof shall have been given to the Borrower and the Master Servicer by
the Trustee.
(b) Upon receipt of a Successor Notice or upon resignation of
the Master Servicer pursuant to Section 5.1(c), the Master Servicer will take
such actions as are necessary to best facilitate the transition of the
performance of the Master Servicer's activities to the new Master Servicer and
the Borrower and Master Servicer shall assist the new Master Servicer to assume
and perform the duties of the Master Servicer hereunder.
Without limiting the foregoing, the Master Servicer agrees that:
(i) the Trustee, at the direction of the Noteholder,
may direct some or all of the Obligors to make payment of all amounts payable
under any Trust Estate Receivables directly to the Trustee, to the new Master
Servicer or through a lockbox account designated by the Trustee;
(ii) the Master Servicer shall at the Master Servicer's
expense, give notice of the Trustee's security interest in the Trust Estate
Receivables to each Obligor and direct that payments be made directly to the
Trustee, to the new Master Servicer or through a lockbox account designated by
the Trustee;
(iii) the Master Servicer shall (A) assemble all of the
documents, instruments and other records (including, without limitation,
computer programs, tapes and disks) in its possession which evidence the Trust
Estate Receivables, the related Receivable Documents, or which are otherwise
necessary or desirable to collect such Trust Estate Receivables, and shall make
the same available to the Trustee or the new Master Servicer at a place selected
by the Trustee, (B) segregate all cash, checks and other instruments received by
it from time to time constituting Collections in a manner acceptable to the
Trustee and shall, promptly upon receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of transfer, to the
Trustee, the new Master Servicer or the Collection Account, as the case may be,
and (C) permit the successor Master Servicer and its agents, employees and
assignees access to its facilities and its books, records, documents and
instruments including, without limitation, computer programs, tapes and disks
related to the Trust Estate Receivables; and
(iv) the Trustee or any new Master Servicer is
authorized to take any and all steps in the Seller's name and on behalf of the
Seller necessary or desirable, in the Trustee's determination, to collect all
amounts due under the Trust Estate Receivables, including, without limitation,
endorsing the Borrower's name on checks and other instruments representing
payments on the Trust Estate Receivables and enforcing such Trust Estate
Receivables and the related Receivable Documents.
(c) The Master Servicer's authorization to act as servicer of
the Trust Estate Receivables under this Indenture shall terminate on the first
day following the Commitment Termination Date on which (i) the Outstanding
Principal Amount of the Notes shall be reduced to zero and (ii) all obligations
hereunder shall have been fully paid and performed.
(d) TWRI acknowledges that the Trustee and the Noteholders
have relied on TWRI's agreement to act as the initial Master Servicer hereunder
in their respective decisions to execute and deliver the Warehouse Facility
Documents. TWRI agrees not to resign as Master Servicer and, until any Successor
Notice shall have been delivered to TWRI, to continue to perform all of the
duties of the Master Servicer hereunder unless it shall have determined that the
performance of such duties shall no longer be permitted by applicable law
SECTION 5.2. Duties of Master Servicer; Subservicers.
(a) The Master Servicer, for the benefit of the Noteholders,
shall be responsible for, and shall, in accordance with its customary practices,
pursue the managing, servicing, administering, enforcing and making of
collections on the Trust Estate Receivables, the Vacation Credits, the
enforcement of the Trustee's security interest in the Trust Estate Receivables,
and if applicable, the resale of the Vacation Credits, each in accordance with
applicable law and the standards and procedures set forth in this Indenture. The
Master Servicer agrees that in providing such services, it will exercise that
degree of skill and care consistent with that which other servicers in the
industry customarily exercise with respect to similar receivables and Vacation
Credits owned or serviced by them, and to the extent more exacting, the
procedures used by the Master Servicer in respect of timeshare receivables
serviced by it for its own account. The duties of the Master Servicer shall
include collection and posting of all payments, responding to inquiries of
Obligors on the Trust Estate Receivables, investigating delinquencies, sending
payment coupons to Obligors, reporting tax information to Obligors, accounting
for collections, using its best efforts to maintain the perfected security
interest of the Trustee in the Trust Estate, and furnishing the monthly
statements to the Trustee and each Noteholder substantially in the form of
Exhibit E hereto (the "Servicer Report"), which statements shall be delivered no
later than the Determination Date for the related Payment Date. Each monthly
statement shall be accompanied by a current certificate from the Master Servicer
and each Subservicer, if any, stating that to the best of the knowledge and
information of the Master Servicer or such Subservicer after examination of
relevant books and records, TWRI has not sold except to the Trustee, or granted
a security interest in, any Trust Estate Receivable. The Master Servicer shall
have, subject to the terms of this Indenture, full power and authority, acting
alone and subject only to the specific requirements and prohibitions of this
Indenture, to do any and all things in connection with such managing, servicing,
administration and collection that it may deem necessary or desirable. Without
limiting the generality of the foregoing, but subject to the other provisions of
this Indenture, the Master Servicer is authorized and empowered by the Trustee,
acting on behalf of the Noteholders, to execute and deliver, on behalf of
itself, the Trustee, the Noteholders or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all comparable instruments, with respect to the Trust Estate Receivables. The
Trustee shall furnish the Master Servicer with all powers of attorney or other
documents necessary or appropriate to enable the Master Servicer to carry out
its servicing and administrative duties hereunder. Notwithstanding anything
herein to the contrary, the Trustee shall have no liability for any action taken
by the Master Servicer under the preceding authorization.
(b) The Master Servicer may enter into Subservicing Agreements
with one or more Subservicers approved by the Trustee at the direction of the
Noteholder for the servicing and administration of certain of the Trust Estate
Receivables. The Trustee and the Noteholders hereby agree that Sage Systems,
Inc. is an approved Subservicer. The Master Servicer shall notify the Trustee
promptly if a Subservicer is hired. References in this Indenture to actions
taken or to be taken by the Master Servicer in servicing the Trust Estate
Receivables include actions taken or to be taken by a Subservicer on behalf of
the Master Servicer and the Trustee. Each Subservicing Agreement will be upon
such terms and conditions as are not inconsistent with this Indenture and as the
Master Servicer and the Subservicer have agreed. The Master Servicer and a
Subservicer may enter into amendments thereto or different forms of Subservicing
Agreements; provided, however, that any such amendments or different forms shall
be consistent with and not violate the provisions of this Indenture or
materially adversely affect the rights of the Trustee or the Noteholders.
The Master Servicer shall be entitled to terminate any
Subservicing Agreement that may exist in accordance with the terms and
conditions of such Subservicing Agreement and without any limitation by virtue
of this Indenture; provided, however, that in the event of termination of any
Subservicing Agreement by the Master Servicer or the related Subservicer, the
Master Servicer shall either act directly as servicer of the related Trust
Estate Receivables or enter into a Subservicing Agreement with a successor
Subservicer approved by the Trustee which will be bound by the terms of the
related Subservicing Agreement.
Notwithstanding any Subservicing Agreement, any of the
provisions of the Agreement relating to agreements or arrangements between the
Master Servicer or a Subservicer or reference to actions taken through such
Persons or otherwise, the Master Servicer shall remain obligated and liable to
the Trustee and the Noteholders for the servicing and administering of the Trust
Estate Receivables in accordance with the provisions of this Indenture without
diminution of such obligation or liability by virtue of such Subservicing
Agreement or arrangements or by virtue of indemnification from a Subservicer and
to the same extent and under the same terms and conditions as if the Master
Servicer alone were servicing and administering the Trust Estate Receivables.
The Master Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the Master Servicer, and nothing contained in
this Indenture shall be deemed to limit or modify such indemnification.
Any Subservicing Agreement that may be entered into and any
other transactions or servicing arrangements relating to the Trust Estate
Receivables involving a Subservicer or an affiliate of the Master Servicer in
its capacity as such shall be deemed to be between the Subservicer or other
affiliate of the Master Servicer, as the case may be, and the Master Servicer
alone, and the Trustee and the Noteholders shall not be deemed parties thereto
and shall have no claims, rights, obligations, duties or liabilities with
respect to the Subservicer except as set forth in the immediately succeeding
paragraph; provided that the Trustee and the Noteholders may rely upon all
representations and warranties of the Subservicer contained therein.
In the event the Master Servicer shall for any reason no
longer be servicing any of the Trust Estate Receivables, the Trustee shall act
as successor servicer, and thereupon assume all of the rights and obligations of
such Master Servicer. In such event, the Trustee shall be deemed to have assumed
all of the Master Servicer's interest therein arising after the date of such
assumption and to have replaced the Master Servicer as a party to each such
Subservicing Agreement to the same extent as if such Subservicing Agreement had
been assigned to the assuming party except that the Master Servicer shall not
thereby be relieved of any liability or obligations under the Subservicing
Agreement and the Trustee shall not assume any such liability. The Trustee may,
if a successor Master Servicer has not been appointed by the Noteholders in
writing within 60 days of the delivery of the Successor Notice, seek the
assistance of a third party to locate a successor Master Servicer acceptable to
the Noteholders. The Master Servicer shall, upon request of the Trustee but at
the expense of the Master Servicer, deliver to the assuming party all documents
and records relating to each such Subservicing Agreement and the Trust Estate
Receivables then being serviced and an accounting of amounts collected and held
by it and otherwise use its best efforts to effect the orderly and efficient
transfer of the Subservicing Agreement to the assuming party.
The Master Servicer shall retain all data (including, without
limitation, computerized records) relating directly to or maintained in
connection with the servicing of the Trust Estate Receivables at 9805 Willows
Road, Redmond, Washington 98052 or at the office of any Subservicer or, upon 15
days' notice to the Trustee, at such other place where the servicing offices of
the Master Servicer are located, and shall give the Trustee and the Noteholders
access to all data at all reasonable times, and, during the continuation of an
Event of Master Servicer Termination or an Event of Default, the Master Servicer
shall, on demand of the Trustee, deliver or cause to be delivered to the Trustee
all data (including, without limitation, computerized records and, to the extent
transferable, related operating software) necessary for the servicing of the
Trust Estate Receivables and all monies collected by it and required to be
deposited in or credited to the Collection Account.
(c) The Master Servicer may, from time to time and with the
consent of the Trustee and the Noteholders, make changes to the Credit and
Collection Policies, provided that no such change can materially impair the
collectibility of any Trust Estate Receivable. Copies of each such revised
Credit and Collection Policies shall replace the version existing as Exhibit B
of the Credit Agreement.
(d) Except as set forth in Section 5.6(b) hereof, all expenses
incurred by the Master Servicer, including expenses incurred by any Subservicer
in performing their obligations hereunder shall be for the account of the Master
Servicer, and the Trustee and the Noteholders shall have no obligations to make
any payments in respect thereof.
(e) The Master Servicer will make all UCC filings and
recordings as may be required pursuant to the terms of this Indenture. The
Master Servicer shall, in accordance with its customary servicing procedures and
at its own expense, be responsible for such steps as are necessary to maintain
perfection of such security interests. The Trustee hereby authorizes the Master
Servicer to re-perfect or to cause the re-perfection of such security interests
on its behalf as Trustee, as necessary.
SECTION 5.3. Collection Responsibilities; Receivable
Modifications.
(a) The Master Servicer shall, on behalf of the Trustee,
collect all payments made under each Trust Estate Receivable and shall use its
best efforts (in accordance with the servicing standard set forth in Section
5.2) to collect from each Obligor all payments on or in respect of such Trust
Estate Receivable after the related Cut-off Date. The Master Servicer may in its
discretion waive any assumption fees, late payment charges, charges for checks
returned for insufficient funds, prepayment fees, if any, or other fees which
may be collected in the ordinary course of servicing the Trust Estate
Receivables.
(b) The Master Servicer shall cause each Obligor to remit his
or her payments to a clearing account (the "Clearing Account") which shall be an
Eligible Bank Account. The Master Servicer shall cause any payments made by
automated clearing house debit to be deposited directly into the Clearing
Account from each Obligor's relevant account. On each Business Day, the Master
Servicer shall cause all amounts on deposit in the Clearing Account related to
the Trust Estate Receivables to be remitted to the Collection Account for
distribution in accordance with Section 3.4 of this Indenture.
(c) The Master Servicer shall hold in trust for the benefit of
the Trustee and the Noteholders any payments it receives until such time as it
shall transfer such payments to the Clearing Account. Any amounts held in the
Clearing Account shall be held in trust for the benefit of the Trustee and the
Noteholders.
SECTION 5.4. Maintenance of Insurance.
The Master Servicer shall and shall cause any Subservicer to
keep in force during the term of this Indenture a policy or policies of
insurance covering errors and omissions in the operation of the Master
Servicer's or such Subservicer's procedures, and a fidelity bond. Such policy or
policies and fidelity bond shall be in such form and amount that is customarily
kept by institutions which service receivables similar to the Trust Estate
Receivables. The Master Servicer shall be deemed to have complied with this
provision if an affiliate of the Master Servicer has such errors and omissions
and fidelity bond coverage and, by the terms of such insurance policy or
fidelity bond, the coverage afforded thereunder extends to the Master Servicer.
Each such errors and omissions policy and fidelity bond shall not be canceled
without 30 days, prior written notice to the Trustee and the Noteholders.
SECTION 5.5. Assumption and Substitution Agreements. (a) The
Master Servicer shall not modify, waive or amend the terms of any Trust Estate
Receivable unless a default on such Trust Estate Receivable has occurred or is
imminent or unless such modification, amendment or waiver shall not (i) alter
the interest rate on or the principal balance of such Trust Estate Receivable,
(ii) alter the final maturity of, or any other terms of, such Trust Estate
Receivable which would have a material adverse affect on Noteholders, (iii)
materially impair the Vacation Credits underlying such Trust Estate Receivable
or (iv) reduce materially the likelihood that payments of interest and principal
on such Trust Estate Receivable shall be made when due; provided, further, the
Master Servicer may grant an extension of the final maturity of a Trust Estate
Receivable if the Master Servicer, in its sole discretion, determines that (a)
such Trust Estate Receivable is in default or default on such Trust Estate
Receivable is likely to occur in the foreseeable future, and (b) that the value
of the Trust Estate Receivable will be enhanced by such extension; provided,
further, that the Master Servicer shall not (1) grant more than one extension
per calendar year with respect to a Trust Estate Receivable or (2) grant an
extension for more than one calendar month with respect to a Trust Estate
Receivable;
(b) the Master Servicer may consent to the assumption by a
Person of the Installment Sale Contract related to a Trust Estate Receivable;
provided, however, in connection with any such assumption, the rate of interest
borne by, the maturity date of, the principal amount of, the timing of payments
of principal and interest in respect of, and all other material terms of, the
related Trust Estate Receivable shall not be changed.
SECTION 5.6. Realization Upon Defaulted Receivables.
(a) In connection with the foreclosure or liquidation of any
Defaulted Receivable, the Master Servicer shall follow such practices and
procedures as it shall deem necessary or advisable and as shall be normal and
usual in its general servicing activities. The Master Servicer shall be required
to expend its own funds in connection with the liquidation of any Defaulted
Receivable if it shall determine that such expenditures will increase the
Liquidation Proceeds available to the Borrower after reimbursement to the Master
Servicer for its Liquidation expenses.
(b) Liquidation expenses incurred by the Master Servicer can
be repaid to the Master Servicer only from Liquidation Proceeds from sale or
other disposition of the related Defaulted Receivables.
SECTION 5.7. Representations and Warranties as to the Master
Servicer. The Master Servicer represents and warrants to the Trustee for the
benefit of the Noteholders that:
(a) Organization and Good Standing. The Master Servicer shall
have been duly organized and shall be validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, with power and
authority to own its properties and to conduct its business as such properties
shall be currently owned and such business is presently conducted.
(b) Due Qualification. The Master Servicer shall be duly
qualified to do business as a foreign corporation in good standing, and shall
have obtained all necessary licenses and approvals in all jurisdictions in which
the ownership or lease of property or the conduct of its business shall require
such qualifications, except where the failure to so qualify or to have obtained
such licenses and approvals would not have a material adverse effect on the
ability of the Master Service to perform its obligations under this Indenture or
the other Warehouse Facility Documents to which its in and is a party.
(c) Power and Authority. The Master Servicer shall have the
power and authority to executive, deliver and perform its obligations under the
Agreement and each other Warehouse Facility Document to which it is a party and
to carry out their respective terms, and the execution, delivery and performance
of this Indenture and each other Warehouse Facility Document to which it is a
party shall have been duly authorized by the Master Servicer by all necessary
corporate action.
(d) Binding Obligation. This Agreement shall constitute a
legal, valid and binding obligation of the Master Servicer enforceable in
accordance with its terms, except as enforceability may be subject to or limited
by bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors, rights in general and by general principals of equity.
(e) No Violation. The consummation of the transactions
contemplated by this Indenture and the other Warehouse Facility Documents to
which the Master Servicer is a party and the fulfillment of the terms of this
Indenture and the other Warehouse Facility Documents shall not conflict with,
result in any breach of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time) a default under, the articles of
incorporation or bylaws of the Master Servicer, or conflict with or violate any
of the terms or provisions of, or constitute (with or without notice or lapse of
time) a default under, any material indenture, agreement or other instrument to
which the Master Servicer is a party or by which it shall be bound; nor violate
any law or, to the best of the Master Servicer's knowledge, nay order, rule or
regulation applicable to the Master Servicer of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Master Servicer or its properties;
which breach, default, conflict or violation would have a material adverse
effect on the ability of the Master Servicer to perform its obligations under
this Indenture or any other Warehouse Facility Documents to which it is a party.
(f) On the basis of a comprehensive review and assessment of
the Master Servicer's systems and equipment and inquiry made of the Master
Servicer's material suppliers, vendors, customers and Subservicers, the Master
Servicer reasonably believes that the Year 2000 Problem, including costs of
remediation, will not result in a material adverse change in the operations,
business, properties, condition (financial or otherwise) or prospects of the
Master Servicer. The Master Servicer has developed and has required that all
Subservicers develop feasible contingency plans adequate to ensure uninterrupted
and unimpaired business operation in the event of the failure of its own or a
third party's system or equipment due to the Year 2000 problem, including those
of vendors, customers, and suppliers, as well as a general failure of or
interruption in its communication and delivery infrastructure.
SECTION 5.8. Existence; Status as Master Servicer; Merger.
(a) The Master Servicer shall keep in full effect its
existence, rights and franchises as a corporation under the laws of the state of
its organization and shall obtain and preserve its qualification to do business
as a foreign corporation, in each case to the extent necessary to protect the
validity and enforceability of the Trust Estate Receivables and this Indenture.
(b) The Master Servicer shall not consolidate with or merge
into any other Person or convey, transfer or lease substantially all of its
assets as an entirety to any Person unless the Person formed by such
consolidation or into which the Master Servicer has been merged or the Person
which acquires substantially all the assets of the Master Servicer as an
entirety is a corporation organized under the laws of a state in the United
States, can lawfully perform the obligations of the Master Servicer hereunder
and executes and delivers to the other parties hereto an agreement, in form and
substance reasonably satisfactory to the Trustee (acting upon the direction of
the Noteholders), which contains an assumption by such successor entity of the
due and punctual performance and observance of each covenant and condition to be
performed or observed by the Master Servicer under this Indenture.
(c) From the date hereof until the first day following the
Commitment Termination Date on which (i) the Notes shall have been paid in full,
and (ii) all obligations shall have been fully paid and performed, the Master
Servicer shall, promptly after learning thereof notify the Trustee of (i) the
details of any action, proceeding, investigation or claim against or affecting
the Master Servicer instituted before any court, arbitrator or Governmental
Authority or, to its knowledge threatened to be instituted, which, if determined
adversely to the Master Servicer would be likely to have a material adverse
effect on the performance by it of its obligations under any Warehouse Facility
Document to which is a part or by which it is bound.
SECTION 5.9. Performance of Obligations. The Master Servicer
shall not take any action or, to the extent within its control, permit any
action to be taken by others, which would excuse any Obligor from any of its
covenants or obligations under any Receivable Document which could have an
adverse affect on the Noteholders without the written consent of the Trustee at
the direction of the Noteholders.
SECTION 5.10. Event of Master Servicer Termination. The
following shall constitute an Event of Master Servicer Termination:
(a) the occurrence of an Event of Default with respect to
the Master Servicer under Sections 6.1(a), (b) and (c); or
(b) if, as of any Payment Date, (i) the Charge-off Rate or the
Consolidated Charge-off Rate exceeds 5% per annum, (ii) the average of the
Delinquency Rate Amounts or the Consolidated Delinquency Rate Amounts, in either
case for the three Due Periods immediately preceding the Due Period in which
such Payment Date occurs exceeds 5%, or (iii) the average of the Defaulted
Receivable Amounts or the Consolidated Defaulted Receivable Amounts, in either
case for the three Due Periods immediately preceding the Due Period in which
such Payment Date occurs exceeds 3%.
SECTION 5.11. Optional Purchase of Vacation Credits. On any
Determination Date, if no Event of Default has occurred and is continuing, the
Master Servicer may, at its option, purchase the Vacation Credits relating to a
Defaulted Receivable at the Vacation Credit Purchase Price. The Master Servicer
shall remit the Vacation Credit Purchase Price to the Trustee for immediate
deposit into the Collection Account and such remittance shall be deemed to be a
collection of principal with respect to such Defaulted Receivable. Upon the
deposit of the Vacation Credit Purchase Price, the Vacation Credits purchased
pursuant to this Section 5.11 shall be released from the lien of this Indenture.
ARTICLE 6.
EVENTS OF DEFAULT; REMEDIES
SECTION 6.1. Events of Default.
"Event of Default," wherever used herein with respect to the
Notes, means any one of the following:
(a) (i) default in the making of Principal Payments or
Interest Payments in respect of the Notes when such become due and payable, and
continuance of such default for two Business Days; or (ii) failure to make any
deposit when due hereunder by the Master Servicer or the Trustee and continuance
of such default for one Business Day; or
(b) a default in the performance, or breach, of any covenant
of the Borrower or the Master Servicer in this Indenture (other than a covenant
dealing with a default in the performance of which or the breach of which is
specifically dealt with elsewhere in this Section 6.1) and continuance of such
default or breach for a period of 30 days after the earliest of (i) any officer
of the Borrower or the Master Servicer first acquiring knowledge thereof, (ii)
the Trustee's giving written notice thereof to the Borrower or (iii) the holders
of a majority of the then Outstanding Principal Amount of the Notes giving
written notice thereof to the Borrower and the Trustee; or
(c) if any representation or warranty of the Borrower or the
Master Servicer made in this Indenture shall prove to be incorrect in any
material respect as of the time when the same shall have been made, and such
breach is not remedied within 30 days after notice of breach from the Trustee or
the holders of a majority of Outstanding Principal Amount of the Notes; or
(d) the entry by a court having jurisdiction in the premises
of (i) a decree or order for relief in respect of the Borrower in an involuntary
case or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or (ii) a decree or order adjudging the
Borrower a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of or in respect
of the Borrower under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or other
similar official of the Borrower or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(e) the commencement by the Borrower of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Borrower in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable federal
or state law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator, or similar official of the Borrower or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the Borrower's failure to pay its debts generally as
they become due, or the taking of corporate action by the Borrower in
furtherance of any such action; or
(f) The failure of the Borrower to cure a Borrowing Base
Deficiency as provided in Sections 8 and 9.19 of the Credit Agreement within two
(2) Business Days of actual knowledge of the Borrower or notice from a
Noteholder or the Trustee; or
(g) The breach by TWRI or the Borrower of any representation,
warranty, covenant or agreement in the Credit Agreement which is not remedied
within 30 days after notice of such breach from any party to a Warehouse
Facility Document; or
(h) Any material default under the Engagement Letter; or
(i) An Event of Master Servicer Termination occurs; or
(j) Any Change of Control in the ownership of TWRI; or
(k) Any materially adverse change in the business, operations,
financial condition, properties or prospects of TWRI and any material Affiliates
of TWRI, on a consolidated basis, in each case as determined by the Noteholders
in their sole discretion in good faith, or the existence of any other condition
which, in the Noteholders' sole determination, constitutes an impairment of TWRI
to perform its obligations under this Indenture or under the Credit Agreement;
or
(l) Any materially adverse change in the business, operations,
financial condition, properties or prospects of Worldmark in each case as
determined by the Noteholders in their sole discretion in good faith, or the
existence of any other condition which, in the Noteholders' sole determination,
constitutes an impairment of Worldmark to perform its obligations under any
agreements to which it is a party; or
(m) TWRI or any of its subsidiaries shall default in any
payment of principal or interest on any indebtedness of any lender which causes
or which is reasonably likely to result in the acceleration of any such
indebtedness to such lender or cause or permit the termination of any commitment
to lend to the TWRI or any of its subsidiaries.
(n) (i) Worldmark voluntarily incurs or is any time
voluntarily liable for any debt, or any of its property voluntarily is or
voluntarily becomes subject to any Liens (other than (x) utility or similar
easements or licenses which do not relate to borrowings by Worldmark or (y)
Liens that in the aggregate for all Resorts do not exceed $100,000), or (ii)
Worldmark involuntarily is or involuntarily becomes subject to any Liens (other
than utility or similar easements or licenses which do not relate to borrowings
by Worldmark) that individually or in the aggregate (with respect to all such
debt and the obligations secured by all such Liens) exceed $1,000,000, or (iii)
Worldmark sells, leases or otherwise transfers voluntarily or otherwise, any of
its real estate properties or any interest therein so that, in the aggregate,
there is a net decrease in Vacation Credits available for member use greater
than or equal to 10% from the number of Vacation Credits available for member
use on the Issuance Date, or (iv) Worldmark exchanges one of its present Resort
properties for another property that is worth fewer Vacation Credits than the
property so exchanged, or (v) Worldmark has interests in units at fewer than 20
developed Resorts.
SECTION 6.2. Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default of the kind specified in Section
6.1(d) or Section 6.1(e) occurs, the unpaid principal amount of the Notes shall
automatically become due and payable at par together with all accrued and unpaid
interest thereon, without presentment, demand, protest or notice of any kind,
all of which are hereby waived by the Borrower. If an Event of Default (other
than an Event of Default of the kind described in Section 6.1(d) or Section
6.1(e)) with respect to the Notes occurs and is continuing, then and in every
such case the Trustee shall, if so directed by the Noteholders, or the
Noteholders may, declare the unpaid principal amount of all the Notes to be due
and payable immediately, by a notice in writing to the Borrower (and to the
Trustee if given by Noteholders), and upon any such declaration such principal
amount shall become immediately due and payable together with all accrued and
unpaid interest thereon, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower. Interest on all
amounts due and payable under this Section 6.2 shall accrue interest at the rate
LIBOR plus 4.00%.
(b) At any time after such a declaration of acceleration has
been made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Holders of
a like percentage of the Notes by written notice to the Borrower and the
Trustee, may rescind and annul such declaration and its consequences if:
(i) the Borrower has paid or deposited with the
Trustee a sum sufficient to pay:
(A) all Principal Payments on the Notes which have become
due otherwise than by such declaration of
acceleration and interest thereon from the date when
the same first became due until the date of payment
or deposit at the appropriate Note Interest Rate,
(B) all Interest Payments due with respect to the Notes
and, to the extent that payment of such interest is
lawful, interest upon overdue interest from the date
when the same first became due until the date of
payment or deposit at a rate per annum equal to the
appropriate Note Interest Rate, and
(C) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses,
disbursements, and advances of each of the Trustee
and the Master Servicer, its agents and counsel;
and
(ii) all Events of Default with respect to the Notes,
other than the non-payment of the Outstanding Principal Amount of the
Notes which become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 6.13.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 6.3. Remedies.
(a) If an Event of Default with respect to the Notes occurs
and is continuing of which a Responsible Officer of the Trustee has actual
knowledge, the Trustee shall immediately give notice to each Noteholder as set
forth in Section 7.2 and shall solicit such Noteholders for advice. The Trustee
shall then take such action as so directed by the Noteholders, subject to the
provisions of this Indenture.
(b) Following any acceleration of the Notes, the Trustee shall
have all of the rights, powers and remedies with respect to the Trust Estate as
are available to secured parties under the UCC or other applicable law, subject
to subsection (d) below. Such rights, powers and remedies may be exercised by
the Trustee in its own name as trustee of an express trust.
(c) (i) If an Event of Default specified in Section 6.1(a)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Borrower for the whole
amount of principal and interest remaining unpaid with respect to the Notes.
(i) (ii) If an Event of Default occurs and is continuing the Trustee,
at the instruction of the Noteholders, shall proceed to protect and
enforce its rights and the rights of the Noteholders by such
appropriate judicial or other proceedings as the Trustee shall deem
most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or
in aid of the exercise of any power granted herein, or to enforce any
other proper remedy. The Trustee shall notify the Borrower, the Master
Servicer and the Noteholders of any such action.
(d) If (i) the Trustee shall have received written
instructions from the Noteholders, to the effect that such Persons approve of or
request the liquidation of the Assets or (ii) upon an Event of Default set forth
in Section 6.1(d) or (e), the Trustee shall, direct the Master Servicer or its
successor, to the extent lawful, promptly sell, dispose of or otherwise
liquidate the Assets in a commercially reasonable manner and on commercially
reasonable terms, which shall include the solicitation of competitive bids;
provided, however, that, upon an Event of Default set forth in Section 6.1(d) or
(e), the Noteholders may notify the Trustee that such liquidation shall not
occur. The Trustee may obtain a prior determination from any such conservator,
receiver or liquidator of the Borrower that the terms and manner of any proposed
sale, disposition or liquidation are commercially reasonable.
(e) Notwithstanding the foregoing provisions of Section 6.3,
if an Event of Default occurs and is continuing, the parties hereto agree that,
in addition to or in lieu of the other remedies described in this Section 6.3,
the Trustee, at the direction of the Noteholders may (i) amend the distribution
of Available Funds described in Section 3.4 hereof, provided that the Trustee
Fee and the Master Servicer Fee shall not be subordinate to Interest Payments
and Principal Payments, (ii) amend this Indenture as provided in Section 9.2(b)
to provide for reserve accounts or other mechanisms designed to provide
over-collateralization for the Noteholders, (iii) appoint a new Master Servicer
as provided in Section 5.1 hereof, or (iv) agree to waive such Event of Default
for a period of time as shall be determined by the Noteholders.
SECTION 6.4. Trustee May File Proofs of Claim. (a) In case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Borrower, or any other obligor upon the Notes, or the
property of the Borrower, or such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Borrower for the payment
of overdue principal or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the Notes or any
amounts owing on the Trust Estate Receivables or the other assets
constituting the Trust Estate and to file such other papers or
documents as may be necessary or advisable in order to have the claims
of the Trustee and any predecessor Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee and any predecessor Trustee, their agents and counsel) and of
the Noteholders allowed in such judicial proceeding;
(ii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute
the same; and
(iii) to participate as a member, voting or otherwise,
of any official committee of creditors appointed in such matter;
and any custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder to make such payments to the Trustee and to pay to the Trustee
any amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee and any predecessor Trustee, their agents and counsel,
and any other amounts due the Trustee and any predecessor Trustee under Section
7.6.
(a)(b) Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, agreement, adjustment or composition
affecting the Notes or the rights of any Noteholder thereof or affecting the
Trust Estate Receivables or the other assets constituting the Trust Estate or to
authorize the Trustee to vote in respect of the claim of any Noteholder in any
such proceeding.
SECTION 6.5. Trustee May Enforce Claims Without Possession of
Notes. All rights of action and claims under this Indenture, the Notes, the
Trust Estate Receivables or the other assets constituting the Trust Estate may
be prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provisions for
the payment of the reasonable compensation, expenses, disbursements and advances
of the Trustee and any predecessor Trustee, their agents and counsel, be for the
benefit of the Noteholders in respect of which such judgment has been recovered,
and pursuant to the priorities contemplated by Section 3.4.
SECTION 6.6. Application of Money Collected. Any money
collected by the Trustee pursuant to this Article 6 shall be deposited in the
applicable Collection Account or Accounts for disbursement in accordance with
the provisions of Article 3.
SECTION 6.7. Limitation on Suits. No Noteholder shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture or for any other remedy hereunder, unless:
(a) there is a continuing Event of Default and such Noteholder
has previously given written notice to the Trustee of a continuing Event of
Default;
(b) such Noteholder or Noteholders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(c) the Trustee, for 30 days after its receipt of such notice,
request and offer of indemnity, has failed to institute any such proceeding; and
(d) no direction inconsistent with such written request has
been given to the Trustee during such 30-day period by the Noteholders;
it being understood and intended that no one or more of such Noteholders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Noteholders, or to obtain or to seek to obtain priority or preference over
any other Noteholders or to enforce any right under this Indenture, except in
the manner herein provided and for the ratable benefit of all such Noteholders.
It is further understood and intended that so long as any portion of the Notes
remains Outstanding, TWRI shall not have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture (other than for the
enforcement of Section 3.4) or for the appointment of a receiver or trustee
(including without limitation a proceeding under the Bankruptcy Code), or for
any other remedy hereunder. Nothing in this Section 6.7 shall be construed as
limiting the rights of otherwise qualified Noteholders to petition a court for
the removal of a Trustee pursuant to Section 7.8 hereof.
SECTION 6.8. Unconditional Right of Noteholders to Receive
Principal and Interest.
Notwithstanding any other provision in this Indenture, other
than the provisions hereof limiting the right to recover amounts due on the
Notes to recoveries from the property of the allocated Trust Estate, the Holder
of any Note shall have the absolute and unconditional right to receive payment
of the principal of and interest on such Note on the maturities for such
payments, and such right shall not be impaired without the consent of such
Noteholder.
SECTION 6.9. Restoration of Rights and Remedies.
If the Trustee or any Noteholder has instituted any proceeding
to enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Noteholder, then and in every such case, subject to any
determination in such proceeding, the Borrower, the Trustee and the Noteholders
shall be restored severally and respectively to their former positions hereunder
and thereafter all rights and remedies of the Trustee and the Noteholders
continue as though no such proceeding had been instituted.
SECTION 6.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost, or stolen Notes in the last paragraph
of Section 2.4, no right or remedy herein conferred upon or reserved to the
Trustee or to the Noteholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 6.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Note to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this Article
or by law to the Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the
Noteholders, as the case may be.
SECTION 6.12. Control by Noteholders.
Except as may otherwise be provided in this Indenture, until
such time as the conditions specified in Sections 10.1(a)(i) and (ii) have been
satisfied in full, the Noteholders shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with respect
to the Notes. Notwithstanding the foregoing,
(i) no such direction shall be in conflict
with any rule of law or with this Indenture;
(ii) the Trustee shall not be required to follow any
such direction which the Trustee reasonably believes might result in
any personal liability on the part of the Trustee for which the Trustee
is not adequately indemnified; and
(iii) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with any such
direction; provided that the Trustee shall give notice of any such
action to each Noteholder.
SECTION 6.13. Waiver of Events of Default.
(a) The Noteholders may, by one or more instruments in
writing, waive any Event of Default on behalf of all Noteholders hereunder and
its consequences, except a continuing Event of Default:
(i) in respect of the payment of the principal of or
interest on any Note (which may only be waived by the Holder of such
Note), or
(ii) in respect of a covenant or provision hereof
which under Article 9 cannot be modified or amended without the consent
of the Holder of each Outstanding Note affected (which only may be
waived by the Holders of all Outstanding Notes affected).
(b) A copy of each waiver pursuant to Section 6.13(a) shall be
furnished by the Borrower to the Trustee and each Noteholder. Upon any such
waiver, such Event of Default shall cease to exist and shall be deemed to have
been cured, for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Event of Default or impair any right consequent
thereon.
SECTION 6.14. Undertaking for Costs.
All parties to this Indenture agree (and each Holder of any
Note by its acceptance thereof shall be deemed to have agreed) that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but
notwithstanding such assessment, the provisions of this Section shall not apply
to any suit instituted by the Trustee, to any suit instituted by any Noteholder,
or group of Noteholders, holding in the aggregate more than 10% of the then
Outstanding Principal Amount of the Notes, or to any suit instituted by any
Noteholder for the enforcement of the payment of the principal of or interest on
any Note on or after the maturities for such payments.
SECTION 6.15. Waiver of Stay or Extension Laws.
The Borrower covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Borrower (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted
allocated to the Notes.
SECTION 6.16. Sale of Trust Estate.
(a) The power to effect any sale of any portion of the Trust
Estate pursuant to Section 6.3 shall not be exhausted by any one or more sales
as to any portion of the Trust Estate remaining unsold, but shall continue
unimpaired until the entire Trust Estate so allocated shall have been sold or
all amounts payable on the Notes shall have been paid. The Trustee may from time
to time, upon directions in accordance with Section 6.12, postpone any public
sale by public announcement made at the time and place of such sale.
(b) To the extent permitted by applicable law, the Trustee
shall not sell to a third party the Trust Estate, or any portion thereof except
as permitted under Section 6.3(d).
(c) In connection with a sale of all or any portion of the
Trust Estate:
(i) any one or more Noteholders may bid for and
purchase the property offered for sale, and upon compliance with the
terms of sale may hold, retain, and possess and dispose of such
property, without further accountability, and any Noteholder may, in
paying the purchase money therefore, deliver in lieu of cash any
Outstanding Notes or claims for interest thereon for credit in the
amount that shall, upon distribution of the net proceeds of such sale,
be payable thereon, and the Notes, in case the amounts so payable
thereon shall be less than the amount due thereon, shall be returned to
the Noteholders after being appropriately stamped to show such partial
payment;
(ii) the Trustee shall execute and deliver an
appropriate instrument of conveyance prepared by the Master Servicer
transferring its interest without representation or warranty and
without recourse in any portion of the Trust Estate in connection with
a sale thereof;
(iii) the Trustee is hereby irrevocably appointed
attorney-in-fact of the Borrower to transfer and convey its interest in
any portion of the Trust Estate in connection with a sale thereof, and
to take all action necessary to effect such sale;
(iv) no purchaser or transferee at such a sale shall
be bound to ascertain the Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of
any moneys; and
(v) The method, manner, time, place and terms of any
sale of all or any portion of the Trust Estate shall be commercially
reasonable.
ARTICLE 7.
THE TRUSTEE
SECTION 7.1. Certain Duties. (a) The Trustee undertakes to
perform such duties and only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read into this
Indenture against the Trustee.
(a)(b) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Indenture, provided however, the Trustee shall not be required to verify or
recalculate the contents thereof.
(c) If an Event of Default or an Event of Master Servicer
Termination has occurred and is continuing, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent Person would exercise or use
under the circumstances in the conduct of such Person's own affairs; provided,
however, that no provision in this Indenture shall be construed to limit the
obligations of the Trustee to provide notices under Section 7.2.
(d) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction.
(e) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) this Section shall not be construed to
limit the effect of Section 7.1(a) and (b);
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it shall be
proved that the Trustee shall have been negligent in ascertaining the
pertinent facts; and
(iii) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the written direction of the Holders of the requisite
principal amount of the Outstanding Notes, or in accordance with any
written direction delivered to it under Section 6.2(a), relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture.
(f) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section 7.1.
(g) The Trustee makes no representations or warranties with
respect to the Assets or the validity or sufficiency of any assignment of the
Trust Estate Receivables to the Borrower or to the Trust Estate.
(h) Notwithstanding anything to the contrary herein, the
Trustee is not required to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall have reasonable grounds to
believe that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
SECTION 7.2. Notice of Events of Default. The Trustee shall
promptly (but in any event within 5 Business Days) notify the Master Servicer,
and the Noteholders upon a Responsible Officer obtaining actual knowledge of any
event which constitutes an Event of Default or an Event of Master Servicer
Termination or would constitute an Event of Default or an Event of Master
Servicer Termination but for the requirement that notice be given or time elapse
or both; provided, further, that this Section 7.2 shall not limit the
obligations of the Trustee to provide notices expressly required by this
Indenture.
SECTION 7.3. Certain Matters Affecting the Trustee. Subject
to the provisions of Section 7.1:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) Any request or direction of any Noteholders, the Master
Servicer, or the Borrower mentioned herein shall be in writing;
(c) Whenever in the performance of its duties hereunder the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officer's Certificate or Opinion of Counsel;
(d) The Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be deemed authorization in respect
of any action taken, suffered, or omitted by it hereunder in good faith and in
reliance thereon;
(e) Prior to the occurrence of an Event of Default or an Event
of Master Servicer Termination, or after the curing of all Events of Default or
Events of Master Servicer Termination which may have occurred, the Trustee shall
not be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper document, unless
requested in writing so to do by the Noteholders; provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the reasonable opinion of the Trustee, not reasonably assured to the Trustee
by the security afforded to it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such cost, expense or liability as a
condition to so proceeding. The reasonable expense of every such examination
shall be paid by the Master Servicer or, if paid by the Trustee, shall be
reimbursed by the Master Servicer upon demand; and
(f) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian (which may be Affiliates of the Trustee) and
the Trustee shall not be liable for any acts or omissions of such agents,
attorneys or custodians appointed with due care by it hereunder.
SECTION 7.4. Trustee Not Liable for Notes or Receivables. (a)
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or any Warehouse Facility Document, the Notes (other than the
authentication thereof) or of any Receivable. The Trustee shall not be
accountable for the use or application by the Borrower of funds paid to the
Borrower in consideration of conveyance of the Receivables to the Trust Estate.
(a)(b) If the Trustee acts as Successor Servicer, the Trustee
shall have no responsibility or liability for or with respect to: the
validity of any security interest in any Vacation Credits; the
existence or validity of any Trust Estate Receivable, the validity of
the assignment of any Trust Estate Receivable to the Trust Estate or of
any intervening assignment; the review of any Trust Estate Receivable
or any Receivable File, the completeness of any Receivable File, the
receipt by the Custodian of any Trust Estate Receivable or Receivable
File (it being understood that the Trustee has not reviewed and does
not intend to review such matters); the performance or enforcement of
any Trust Estate Receivable; the compliance by the Master Servicer or
the Borrower with any covenant or the breach by the Master Servicer or
the Borrower of any warranty or representation made hereunder or in any
related document or the accuracy of any such warranty or
representation; the acts or omissions of the Master Servicer or any
Obligor; or any action of the Master Servicer taken in the name of the
Trustee.
SECTION 7.5. Trustee May Own Notes. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes with
the same rights as it would have if it were not Trustee.
SECTION 7.6. The Master Servicer to Pay Trustee's Fees and
Expenses. The Master Servicer agrees to reimburse the Trustee upon its request
for all agreed-upon third-party expenses, disbursements and advances incurred or
made by the Trustee in its capacity as such in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursement of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith. The
obligations of the Master Servicer under this Section 7.6 shall survive the
termination of this Indenture and the resignation or removal of the Trustee. The
compensation of the Trustee shall not be limited by any law on compensation of a
trustee of an express trust.
SECTION 7.7. Eligibility Requirements for Trustee. Other than
the initial Trustee, the Trustee hereunder shall at all times (a) be a
corporation, depository institution, or trust company organized and doing
business under the laws of the United States of America or any state thereof
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $250,000,000, (b) be subject to supervision or
examination by federal or state authority, (c) be capable of maintaining an
Eligible Bank Account and (d) have a long-term unsecured debt rating of not less
than Baa2 from the Rating Agencies, and shall be acceptable to the Noteholders.
If such institution publishes reports of condition at least annually, pursuant
to or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section 7.7, the combined capital and surplus of
such institution shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section 7.7, the Trustee shall resign immediately in the manner and with the
effect specified in Section 7.8.
SECTION 7.8. Resignation or Removal of Trustee. (a) The
Trustee may at any time resign and be discharged with respect to the Notes by
giving 90 days' written notice thereof to the Master Servicer, the Borrower, and
the Noteholders. Upon receiving such notice of resignation, the Master Servicer
shall promptly appoint a successor Trustee not objected to by the Noteholders
within 30 days after prior written notice, by written instrument, in
quintuplicate, one counterpart of which instrument shall be delivered to each of
the Borrower, the Master Servicer, the successor Trustee and the predecessor
Trustee. If no successor Trustee shall have been so appointed and have accepted
appointment within 90 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(a)(b) If at any time the Trustee shall cease to be eligible
in accordance with the provisions of Section 7.7 and shall fail to resign after
written request therefor by the Master Servicer, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Master Servicer or the Noteholders may direct, and the Master Servicer shall
follow such direction and remove the Trustee. If it removes the Trustee under
the authority of the immediately preceding sentence, the Master Servicer shall
promptly appoint a successor Trustee not objected to by the Noteholders within
30 days after prior written notice, by written instrument, in quintuplicate, one
counterpart of which instrument shall be delivered to each of the Borrower, the
Master Servicer, the Noteholders, the successor Trustee and the predecessor
Trustee.
(c) The Trustee may be removed by the Master Servicer at any
time by giving written notice thereof to the Trustee and each of the Holders of
the Notes then outstanding. Such removal by the Master Servicer will become
effective unless the Holders of at least 51% of the principal amount of the
Notes then outstanding deliver a written statement to the Master Servicer
opposing such removal within 30 days following receipt of such notice of removal
from the Master Servicer.
(d) Any resignation or removal of the Trustee and appointment
of a successor Trustee pursuant to any of the provisions of this Section 7.8
shall not become effective until acceptance of appointment by the successor
Trustee as provided in Section 7.9.
SECTION 7.9. Successor Trustee. (a) Any successor Trustee
appointed as provided in Section 7.8 shall execute, acknowledge and deliver to
each of the Master Servicer, the Borrower, the Noteholders and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder with like effect as if originally named
a Trustee. The predecessor Trustee shall deliver or cause to be delivered to the
successor Trustee or its custodian any related documents and statements held by
it or its custodian hereunder; and the Master Servicer and the Borrower and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for the full and certain vesting and
confirmation in the successor Trustee of all such rights, powers, duties and
obligations.
(a)(b) In case of the appointment hereunder of a successor
Trustee with respect to the Notes, the Borrower, the retiring Trustee and each
successor Trustee with respect to the Notes shall execute and deliver an
indenture supplemental hereto wherein each successor Trustee shall accept such
appointment and which (i) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each successor Trustee all
the rights, powers, trusts and duties of the retiring Trustee with respect to
the Notes to which the appointment of such successor Trustee relates, (ii) if
the retiring Trustee is not retiring with respect to all Notes, shall contain
such provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring Trustee with respect to
the Notes as to which the retiring Trustee is not retiring shall continue to be
vested in the retiring Trustee, and (iii) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the Trust Estate hereunder by more than one Trustee, it
being understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same allocated trust and that each
such Trustee shall be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such Trustee; and
upon the execution and delivery of such supplemental indenture the resignation
or removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Notes to which the appointment of
such successor Trustee relates; but, on request of the Borrower or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Notes to which the appointment of such successor Trustee
relates.
Upon request of any such successor Trustee, the Borrower shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights, powers and trusts referred
to in the preceding paragraph.
(c) No successor Trustee shall accept appointment as provided
in this Section 7.9 unless at the time of such acceptance such successor Trustee
shall be eligible under the provisions of Section 7.7.
(d) Upon acceptance of appointment by a successor Trustee as
provided in this Section 7.9, the Master Servicer shall mail notice of the
succession of such Trustee hereunder to each Noteholder at its address as shown
in the Note Register. If the Master Servicer fails to mail such notice within 10
days after acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be mailed at the expense of the Borrower and
the Master Servicer.
SECTION 7.10. Merger or Consolidation of Trustee. Any
corporation into which the Trustee may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be eligible
under the provisions of Section 7.7, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
SECTION 7.11. Appointment of Co-Trustee or Separate Trustee.
(a) At any time or times for the purpose of meeting any legal requirement of any
jurisdiction in which any part of the Trust Estate may at the time be located or
in which any action of the Trustee may be required to be performed or taken, the
Trustee, the Master Servicer or the Holders of at least 51% of the Outstanding
Principal Amount of the Notes, by an instrument in writing signed by it or them,
may appoint, at the reasonable expense of the Trust Estate, one or more
individuals or corporations to act as separate trustee or separate trustees or
co-trustee, acting jointly with the Trustee, of all or any part of the Trust
Estate, to the full extent that local law makes it necessary for such separate
trustee or separate trustees or co-trustee acting jointly with the Trustee to
act. Notwithstanding the appointment of any separate or co-trustee, the Trustee
shall remain obligated and liable for the obligations of the Trustee under this
Indenture.
(b) The Trustee and, at the request of the Trustee, the Master
Servicer shall execute, acknowledge and deliver all such instruments as may be
required by the legal requirements of any jurisdiction or by any such separate
trustee or separate trustees or co-trustee for the purpose of more fully
confirming such title, rights, or duties to such separate trustee or separate
trustees or co-trustee. Upon the acceptance in writing of such appointment by
any such separate trustee or separate trustees or co-trustee, it, he, she or
they shall be vested with such title to the Trust Estate or any part thereof,
and with such rights, powers, duties and obligations as shall be specified in
the instrument of appointment, and such rights, powers, duties and obligations
shall be conferred or imposed upon and exercised or performed by the Trustee, or
the Trustee and such separate trustee or separate trustees or co-trustees
jointly with the Trustee subject to all the terms of this Indenture, except to
the extent that under any law of any jurisdiction in which any particular act or
acts are to be performed the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations shall be exercised and performed by such separate trustee or
separate trustees or co-trustee, as the case may be. Any separate trustee or
separate trustees or co-trustee may, at any time by an instrument in writing,
constitute the Trustee its attorney-in-fact and agent with full power and
authority to do all acts and things and to exercise all discretion on its behalf
and in its name. In any case any such separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, the title to the Trust Estate
and all assets, property, rights, power duties and obligations and duties of
such separate trustee or co-trustee shall, so far as permitted by law, vest in
and be exercised by the Trustee, without the appointment of a successor to such
separate trustee or co-trustee unless and until a successor is appointed.
(c) All provisions of this Indenture which are for the benefit
of the Trustee shall extend to and apply to each separate trustee or co-trustee
appointed pursuant to the foregoing provisions of this Section 7.11.
(d) Every additional trustee and separate trustee hereunder
shall, to the extent permitted by law, be appointed and act and the Trustee
shall act, subject to the following provisions and conditions: (i) all powers,
duties and obligations and rights conferred upon the Trustee in respect of the
receipt, custody, investment and payment of monies shall be exercised solely by
the Trustee; (ii) all other rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed and exercised or
performed by the Trustee and such additional trustee or trustees and separate
trustee or trustees jointly except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed, the
Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the holding
of title to the Properties in any such jurisdiction) shall be exercised and
performed by such additional trustee or trustees or separate trustee or
trustees; (iii) no power hereby given to, or exercisable by, any such additional
trustee or separate trustee shall be exercised hereunder by such trustee except
jointly with, or with the consent of, the Trustee; and (iv) no trustee hereunder
shall be personally liable by reason of any act or omission of any other trustee
hereunder.
If at any time, the Trustee shall deem it no longer necessary or
prudent in order to conform to such law, the Trustee shall execute and deliver
all instruments and agreements necessary or proper to remove any additional
trustee or separate trustee.
(e) Any request, approval or consent in writing by the Trustee
to any additional trustee or separate trustee shall be sufficient warrant to
such additional trustee or separate trustee, as the case may be, to take such
action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 7.11,
the powers of any additional trustee or separate trustee shall not exceed those
of the Trustee hereunder.
SECTION 7.12.. Paying Agent and Note Registrar Rights So long
as the Trustee is the Paying Agent and Note Registrar, the Paying Agent and Note
Registrar shall be entitled to the rights, benefits and immunities of the
Trustee as set forth in Article 7 to the same extent and as fully as though
named in place of the Trustee.
SECTION 7.13. No Obligation to make Advances. The
Trustee shall have no obligation to make Advances under the Credit Agreement.
ARTICLE 8.
COVENANTS
SECTION 8.1. Payment of Principal and Interest.
The Borrower will cause the due and punctual payment of the
principal of and interest on the Notes in accordance with the terms of the Notes
and this Indenture.
SECTION 8.2. Maintenance of Office or Agency; Chief
Executive Office.
(a) The Borrower will maintain at the Corporate Trust Office
an office or agency where Notes may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Borrower in respect of
the Notes and this Indenture may be served. The Borrower hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
(b) The Borrower will not change the location of its principal
place of business without giving the Trustee at least 60 Business Days' prior
written notice thereof.
SECTION 8.3. Money for Payments to Noteholders to be Held
in Trust.
(a) All payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Trust Accounts
pursuant to Section 3.4 or Section 6.6 shall be made on behalf of the Borrower
by the Trustee, and no amounts so withdrawn from the applicable Collection
Account for payments of Notes shall be paid over to the Borrower under any
circumstances except as provided in this Section 8.3, in Section 3.4 or Section
6.6.
(b) In making payments hereunder, the Trustee will hold all
sums held by it for the payment of amounts due with respect to the Notes in
trust for the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided and pay such
sums to such Persons as herein provided.
(c) Except as required by applicable law, any money held by
the Trustee in trust for the payment of any amount due with respect to any Note
and remaining unclaimed for three years after such amount has become due and
payable to the Noteholder shall be discharged from such trust and, subject to
applicable escheat laws, and so long as no Event of Default has occurred and is
continuing, paid to the Borrower upon request; otherwise, such amounts shall be
redeposited in the Collection Account as Available Funds, and such Noteholder
shall thereafter, as an unsecured general creditor, look only to the Borrower
for payment thereof (but only to the extent of the amounts so paid to the
Borrower), and all liability of the Trustee with respect to such trust money
shall thereupon cease.
SECTION 8.4. Corporate Existence; Merger; Consolidation, etc.
(a) The Borrower will keep in full effect its existence,
rights and franchises as a corporation under the laws of the State of Delaware,
and will obtain and preserve its qualification to do business as a foreign
entity in each jurisdiction in which such qualification is or shall be necessary
to protect the validity and enforceability of this Indenture, the Notes or any
of the Trust Estate Receivables.
(b) The Borrower shall at all times observe and comply in all
material respects with (i) all laws applicable to it, (ii) all requirements of
law in the declaration and payment of dividends on its capital stock, and (iii)
all requisite and appropriate corporate and other formalities (including without
limitation meetings of the Borrower's Board of Directors and, if required by
law, its charter or otherwise, meetings and votes of the shareholders of the
Borrower to authorize corporate action) in the management of its business and
affairs and the conduct of the transactions contemplated hereby.
(c) The Borrower shall not issue or register the transfer of
any of its common stock to any Person other than TWRI or an Affiliate of TWRI.
(d) The Borrower shall not (i) consolidate or merge with or
into any other Person or convey or transfer its properties and assets
substantially as an entirety to any other Person or (ii) commingle its assets
with those of any other Person.
SECTION 8.5. Protection of Trust Estate; Further Assurances.
The Borrower will from time to time execute and deliver all
such supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance, and other
instruments, and will take such other action as may be necessary or advisable
to:
(i) Grant more effectively the Assets
comprising all or any portion of the Trust Estate;
(ii) maintain or preserve the lien of this Indenture
or carry out more effectively the purposes hereof;
(iii) publish notice of, or protect the validity of,
any Grant made or to be made by this Indenture and perfect the security
interest contemplated hereby in favor of the Trustee in each of the
Trust Estate Receivables and all other property included in the Trust
Estate;
(iv) enforce or cause the Master Servicer to enforce
any of the Trust Estate Receivables in accordance with the terms
hereof; and
(v) preserve and defend title to the Trust Estate
Receivables (including the right to receive all payments due or to
become due thereunder), the interests in the Properties, or other
property included in the Trust Estate and preserve and defend the
rights of the Trustee in the Trust Estate (including the right to
receive all payments due or to become due thereunder) against the
claims of all Persons and parties other than as permitted hereunder.
The Borrower, upon the Borrower's failure to do so, hereby designates the
Trustee and the Master Servicer its agent and attorney-in-fact to execute any
financing statement or continuation statement required pursuant to this Section
8.5; provided, however, that such designation shall not be deemed to create a
duty in the Trustee to monitor the compliance of the Borrower with the foregoing
covenants, and provided, further, that the duty of the Trustee to execute any
instrument required pursuant to this Section 8.5 shall arise only if a
Responsible Officer of the Trustee has actual knowledge of any failure of the
Borrower to comply with the provisions of this Section 8.5.
SECTION 8.6. Reserved.
SECTION 8.7. Additional Covenants.
(a) The Borrower will not:
(i) sell, transfer, exchange or otherwise dispose of
any portion of the Trust Estate except as expressly permitted by this
Indenture;
(ii) claim any credit on, or make any deduction from,
the principal of, or interest on, any of the Notes by reason of the
payment of any taxes levied or assessed upon any portion of the Trust
Estate; or
(iii) (A) permit the validity or effectiveness of this
Indenture or any Grant hereby to be impaired, or permit the lien of
this Indenture to be amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any covenants or
obligations under this Indenture, except as may be expressly permitted
hereby, (B) permit any lien, charge, security interest, mortgage or
other encumbrance to be created on or to extend to or otherwise arise
upon or burden the Trust Estate or any part thereof or any interest
therein or the proceeds thereof other than the lien of this Indenture,
or (C) except as otherwise contemplated in this Indenture, permit the
lien of this Indenture not to constitute a valid first priority
security interest in the Trust Estate.
(b) Notice of Event of Default. Immediately upon becoming
aware of the existence of any condition or event which constitutes a Default or
an Event of Default, the Borrower shall deliver to the Trustee a written notice
describing its nature and period of existence and what action the Borrower is
taking or proposes to take with respect thereto.
(c) Report on Proceedings. Promptly upon the Borrower's
becoming aware of (i) any proposed or pending investigation of it by any
Governmental Authority or agency; or (ii) any pending or proposed court or
administrative proceeding which involves or may involve the possibility of
materially and adversely affecting the properties, business, prospects, profits
or condition (financial or otherwise) of the Borrower, the Borrower shall
deliver to the Trustee a written notice specifying the nature of such
investigation or proceeding and what action the Borrower is taking or proposes
to take with respect thereto and evaluating its merits.
SECTION 8.8. Taxes.
The Borrower shall pay all Taxes of the Borrower when due and
payable or levied against the Borrower's assets, properties or income, including
any property that is part of the Trust Estate.
ARTICLE 9.
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures.
(a) The Borrower, by a Borrower Order, and the Trustee, at any
time and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(i) without the consent of any Noteholder; (x) to
correct or amplify the description of any property at any time subject
to the lien of this Indenture, or to better assure, convey and confirm
unto the Trustee any property subject or required to be subjected to
the lien of this Indenture; provided such action pursuant to this
clause (i) shall not adversely affect the interests of the Noteholders
in any respect; or
(y) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to
the Notes and to add to or change any of the provisions of
this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 7.9;
or
(z) to cure any ambiguity, to correct or supplement
any provision herein which may be defective or inconsistent
with any other provision herein, or to make any other
provisions with respect to matters or questions arising under
this Indenture; provided that such action pursuant to this
clause (z) shall not adversely affect the interests of the
Holders of Notes; or
(b) The Trustee shall promptly deliver, at least 5 Business
Days prior to the effectiveness thereof, to each Noteholder a copy of any
supplemental indenture entered into pursuant to this Section 9.1(a).
SECTION 9.2. Supplemental Indentures with Consent of
Noteholders.
(a) With the written consent of the Noteholders delivered to
the Borrower and the Trustee, the Borrower, by a Borrower Order, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Noteholders under this Indenture; provided, that no supplemental indenture
shall, without the consent of the Holder of each Outstanding Note affected
thereby,
(i) change the maturity of any Note or the Principal
Payments or Interest Payments due or to become due on any Payment Date
with respect to any Note, or change the priority of payment thereof as
set forth herein, or reduce the principal amount thereof or the Note
Interest Rate thereon, or change the place of payment where, or the
coin or currency in which, any Note or the interest thereon is payable,
or impair the right to institute suit for the enforcement of any such
payment on or after the Maturity thereof;
(ii) reduce the percentage of the Outstanding
Principal Amount of the Notes, the consent of whose Noteholders is
required for any such supplemental indenture, for any waiver of
compliance with provisions of this Indenture or Events of Default and
their consequences, provided for in this Indenture;
(iii) modify any of the provisions of this Section or
Section 6.13 except to increase any percentage or fraction set forth
therein or to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the Noteholder;
(iv) modify or alter the provisions of the proviso to
the definition of the term "Outstanding"; or
(v) permit the creation of any lien ranking prior to
or on a parity with the lien of this Indenture with respect to any part
of the Trust Estate or, terminate the lien of this Indenture on any
property at any time subject hereto or deprive any Noteholder of the
security afforded by the lien of this Indenture;
provided, no such supplemental indenture may modify or change any terms
whatsoever of the Indenture that could be construed as increasing the Borrower's
or TWRI's discretion hereunder.
(b) If an Event of Default has occurred and is continuing, as
provided in Section 6.3, the parties to this Indenture hereby agree to amend the
provisions of this Indenture at the direction of the Noteholders.
(c) The Trustee shall promptly deliver to each Noteholder a
copy of any supplemental indenture entered into pursuant to Section 9.2(a).
SECTION 9.3. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by,
any supplemental indenture (a) pursuant to Section 9.1 of this Indenture or (b)
pursuant to Section 9.2 of this Indenture without the consent of each holder of
the Notes to the execution of the same, or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 7.1) shall be, fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any supplemental indenture which affects the Trustee's
own rights, duties, obligations, or immunities under this Indenture or
otherwise.
SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 9.5. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. New Notes so modified as to
conform, in the opinion of the Trustee and the Borrower, to any such
supplemental indenture may be prepared and executed by the Borrower and
authenticated and delivered by the Trustee in exchange for Outstanding Notes.
ARTICLE 10.
SATISFACTION AND DISCHARGE
SECTION 10.1. Satisfaction and Discharge of Indenture.
(a) This Indenture shall cease to be of further effect (except
as to any surviving rights of registration of transfer or exchange of Notes
herein expressly provided for), and the Trustee, on demand of and at the expense
of the Borrower, shall execute proper instruments (prepared by the Borrower)
acknowledging satisfaction and discharge of this Indenture, when the Borrower
and the Master Servicer have paid or caused to be paid all other sums payable
hereunder by the Borrower and the Master Servicer for the benefit of the
Noteholders and the Trustee; and the Borrower has delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with. At such time, the Trustee
shall deliver to the Borrower all cash, securities and other property held by it
as part of the Trust Estate other than funds deposited with the Trustee pursuant
to Section 10.1(a)(i)(B), for the payment and discharge of the Notes.
(b) Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Borrower to the Trustee under Section 7.6 and,
if money shall have been deposited with the Trustee pursuant to Section
10.1(a)(i)(B), the obligations of the Trustee under Section 10.2 and Section
8.3(c) shall survive.
SECTION 10.2. Application of Trust Money.
Subject to the provisions of Section 8.3(c), all money
deposited with the Trustee pursuant to Sections 10.1 and 8.3 shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment to the Persons entitled thereto, of the principal and
interest for whose payment such money has been deposited with the Trustee.
SECTION 10.3. Trust Termination Date. Upon the full
application of (a) moneys deposited pursuant to this Article 10 or (b) proceeds
of the Assets pursuant to Sections 3.4 or 6.6, the Trust Estate created by this
Indenture shall be deemed to have terminated (the "Trust Termination Date").
ARTICLE 11.
REPRESENTATIONS AND WARRANTIES
SECTION 11.1. Representations and Warranties of the Borrower.
The Borrower represents and warrants to the Trustee and the Noteholders, as of
each Issuance Date and on each day until the discharge of this Indenture, all
the representations and warranties contained in Section as follows:
(a) The Borrower is a wholly-owned bankruptcy remote
subsidiary of TWRI Resorts, Inc. and is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified to do business, and is in good standing in each jurisdiction in
which the nature of its business requires it to be so qualified and which
permits such qualification;
(b) The Borrower has the power and authority to own and convey
all of its properties and to execute and deliver this Indenture and the
Warehouse Facility Documents and to perform the transactions contemplated hereby
and thereby;
(c) The Borrower is operated in such a manner and is
constituted so that it would not be substantively consolidated in the bankruptcy
trust estate of any Affiliate, such that the separate existence of the Borrower
and any Affiliate would be disregarded, and to such end:
(i) the Borrower maintains separate records, books of
account and financial statements from those of TWRI and each other
Affiliate of TWRI;
(ii) the Borrower does not commingle any of its assets
or funds with those of TWRI or any of the other Affiliates of TWRI;
(iii) the Borrower maintains a separate board of
directors with at least one independent director and observes all
separate corporate formalities, and all decisions with respect to the
Borrower's business and daily operations have been and shall be
independently made by the officers of the Borrower pursuant to
resolutions of its board of directors;
(iv) other than contributions of capital, payment of
dividends and return of capital, no transactions have been entered into
between the Borrower and TWRI or between the Borrower and any of the
other Affiliates of TWRI except such transactions as are contemplated
by this Indenture and the Warehouse Facility Documents;
(v) except for such administration and collection and
functions as TWRI may perform on behalf of the Borrower and the Trust
Estate pursuant to this Indenture and the Warehouse Facility Documents,
the Borrower acts solely in its own name and through its own authorized
officers and agents and the Borrower does not act as agent of TWRI or
any other Person in any capacity;
(vi) except for any funds received from TWRI (or from
TWRI indirectly by way of any of the other Affiliates of TWRI) as a
capital contribution, the Borrower shall not accept for its own account
funds from TWRI or any of the other Affiliates of TWRI; and the
Borrower shall not allow TWRI or any of the other Affiliates of TWRI
otherwise to supply funds to, or guarantee any obligation of, the
Borrower;
(vii) the Borrower shall not guarantee, or otherwise
become liable with respect to, any obligation of TWRI or any of the
other Affiliates of TWRI; and
(viii) the Borrower shall at all times hold itself out
to the public under the Borrower's own name as a legal entity separate
and distinct from TWRI and the other Affiliates of TWRI.
(d) The Borrower is a special purpose corporation and has not
engaged, and does not presently engage and shall not engage, in any activity
other than the activities undertaken pursuant to this Indenture and the
Warehouse Facility Documents and contemplated hereby and thereby and activities
ancillary or incident thereto, and has no Debt other than the Notes;
(e) The execution, delivery and performance by the Borrower of
this Indenture, the Warehouse Facility Documents and the transactions
contemplated hereby and thereby, (i) have been duly authorized by all necessary
corporate or other action on the part of the Borrower, (ii) do not contravene or
cause the Borrower to be in default under (A) the Borrower's organizational
documents, (B) any contractual restriction contained in any indenture, loan or
credit agreement, lease, mortgage, security agreement, bond, note, or other
agreement or instrument binding on or affecting the Borrower or its property, or
(C) any law, rule, regulation, order, writ, judgment, award, injunction, or
decree applicable to, binding on or affecting the Borrower or its property, and
(iii) do not result in or require the creation of any Adverse Claim upon or with
respect to any of the property of the Borrower;
(f) This Indenture and the Warehouse Facility Documents have
each been duly executed and delivered on behalf of the Borrower;
(g) No consent of, or other action by, and no notice to or
filing with, any Governmental Authority or any other party, is required for the
due execution, delivery and performance by the Borrower of this Indenture or any
of the Warehouse Facility Documents or for the perfection of or the exercise by
the Trustee or the Noteholders of any of their rights or remedies thereunder
which have not been duly obtained;
(h) This Indenture and each other Warehouse Facility Document
is the legal, valid and binding obligation of the Borrower enforceable against
the Borrower in accordance with its respective terms; except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, receivership,
moratorium or other laws relating to or affecting the rights of creditors
generally, and by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in law or in equity);
(i) There is no pending or, to the Borrower's best knowledge,
threatened action, suit or proceeding, nor any injunction, writ, restraining
order or other order of any nature against or affecting the Borrower, its
officers or directors, or the property of the Borrower, in any court or
tribunal, or before any arbitrator of any kind or before or by any Governmental
Authority (i) asserting the invalidity of this Indenture or any of the Warehouse
Facility Documents, (ii) seeking to prevent the sale and assignment of any Trust
Estate Receivable or the consummation of any of the transactions contemplated
thereby, (iii) seeking any determination or ruling that might materially and
adversely affect (A) the performance by the Borrower of this Indenture or any of
the Warehouse Facility Documents or the interests of the Noteholders, (B) the
validity or enforceability of this Indenture or any of the Warehouse Facility
Documents, (C) any Trust Estate Receivable, or (D) the Intended Tax
Characterization, or (iv) asserting a claim for payment of money adverse to the
Borrower or the conduct of its business or which is inconsistent with the due
consummation of the transactions contemplated by this Indenture or any of the
Warehouse Facility Documents;
(j) The principal place of business and chief executive office
of the Borrower are located at the address in the State of Washington indicated
in Section 12.4 and there are now no, and there have not been any, other
locations where the Borrower is located (as that term is used in the UCC) or
keeps Records except, after the date of this Indenture, as disclosed in writing
to the Trustee and the Noteholders and the Master Servicer at least 30 Business
Days prior to any such change;
(k) The legal name of the Borrower is as set forth in the
beginning of this Indenture and the Borrower has not changed its name since its
formation, and during such period, the Borrower did not use, nor does the
Borrower now use any tradenames, fictitious names, assumed names or "doing
business as" names;
(l) The Borrower does not have any Subsidiaries;
(m) The Borrower is solvent and will not become insolvent
after giving effect to the transactions contemplated by this Indenture and each
of the Warehouse Facility Documents; the Borrower's transfers of Assets to the
Trust Estate have been and will be made for reasonably equivalent value and fair
consideration; and the Borrower, after giving effect to the transactions
contemplated by this Indenture and each of the Warehouse Facility Documents,
will have an adequate amount of capital to conduct its business in the future;
and
(n) The Borrower has complied in all material respects with
all applicable laws, rules, regulations, and orders with respect to it, its
business and properties and all of the Assets.
SECTION 11.2. Representations and Warranties as to Each
Trust Estate Receivable. (a) With respect to the Variable Notes, each of the
Borrower and TWRI hereby make and repeat the representations and warranties in
Section 2.3 of the Credit Agreement.
(b) The Borrower and the Master Servicer each hereby
certifies that the representations and warranties contemplated in this Section
11.2 shall survive the transfer of the Trust Estate Receivables to the Trust
Estate.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.1. Indemnities of the Master Servicer.
(a) The Master Servicer agrees to indemnify (i) the Trust
Estate from, and hold it harmless against, any and all losses, liabilities,
damages, claims or expenses (including reasonable attorneys' fees of counsel)
arising as a result of the Master Servicer's acts or omissions (subject to the
administration standard set forth in Section 5.2(b)) in violation of this
Indenture and (ii) the Trustee, any separate trustee or co-trustee, if any,
their directors, officers, employees and agents, from, and hold it harmless
against, any and all losses, liabilities, damages, claims, expenses (including
attorney's fees and disbursements), fines or penalties, or judgments arising out
of or in connection with the performance by the Trustee, separate trustee, if
any, or co-trustee, if any, of its duties hereunder or in connection with the
Trust Estate, or the issuance of the Notes except to the extent the Trustee's,
separate trustee's or co-trustee's own bad faith, willful misconduct or
negligence has been judicially determined to have contributed to the loss,
liability, damage, claim or expense.
(b) This Section 12.1 shall survive the termination of this
Indenture or the resignation or removal of the Trustee in respect of rights
accrued prior to such resignation or removal.
SECTION 12.2. Officer's Certificate and Opinion of Counsel as
to Conditions Precedent.
Upon any request or application by the Borrower (or any other
obligor upon the Notes) to the Trustee to take any action under this Indenture,
the Borrower (or such other obligor) shall furnish to the Trustee:
(a) an Officer's Certificate (which shall include the
statements set forth in Section 12.3) stating that, in the opinion of the
signer, all conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel (which shall include the statements
set forth in Section 12.3) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been complied with.
SECTION 12.3. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
SECTION 12.4. Notices. (a) All communications, instructions,
directions and notices to the parties thereto shall be (i) in writing (which may
be by telecopy, followed by delivery of original documentation within one
Business Day), (ii) effective when received and (iii) delivered or mailed first
class mail, postage prepaid to it at the following address:
If to the Borrower:
TW HOLDINGS II, INC.
9805 Willows Road
Redmond, Washington 98052
Attention: Timothy P. O'Neil
Facsimile Number: (425) 498-3067
Telephone Number: (425) 498-2561
If to the Master Servicer:
Trendwest Resorts, Inc.
9805 Willows Road
Redmond, Washington 98052
Attention: Timothy P. O'Neil
Facsimile Number: (425) 498-3062
Telephone Number: (425) 498-2561
If to the Trustee:
LaSalle National Bank
Corporate Trust Department
135 S. LaSalle Street
Suite 1625
Chicago, Illinois 60674
Attention: Asset-Backed Securities Group-
TW Holdings II
Facsimile Number: (312) 904-2084
Telephone Number: (312) 904-7807
If to the Custodian:
Sage Systems, Inc.
2135 112th Avenue, N.E., Suite 101
Bellevue, Washington 98004
Attention: Mack Hendrick
Facsimile Number: (425) 462-0264
Telephone Number: (425) 451-2484
with copies to:
Interval International
6262 Sunset Drive
Miami, Florida 33143
Attention: Paul Rishell
Facsimile Number: (800) 622-1861
or at such other address as the party may designate by notice to the other
parties hereto, which shall be effective when received.
(a)(b) All communications and notices pursuant hereto to a
Noteholder shall be in writing and delivered or mailed first class mail, postage
prepaid or overnight courier at the address shown in the Note Register. The
Trustee agrees to deliver or mail to each Noteholder upon receipt, all notices
and reports that the Trustee may receive hereunder and under any Warehouse
Facility Documents. Unless otherwise provided herein, the Trustee may consent to
any requests received under such documents or, at its option, follow the
directions of Noteholders within 30 days after prior written notice to the
Noteholders. All notices to Noteholders shall be sent simultaneously. Expenses
for such communications and notices shall be borne by the Master Servicer.
SECTION 12.5. No Proceedings. The Noteholders, the Master
Servicer and the Trustee each hereby agrees that it will not, directly or
indirectly institute, or cause to be instituted, against the Borrower or the
Trust Estate any proceeding of the type referred to in Section 6.1(e) so long as
there shall not have elapsed one year plus one day since the last maturity of
the Notes.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed as of the day and year first above written.
TW HOLDINGS II, INC.,
as Borrower
By: _____________________________
Name:
Title:
TRENDWEST RESORTS, INC.,
as Master Servicer
By: _____________________________
Name:
Title:
SAGE SYSTEMS, INC.,
as Custodian
By: _______________________
Name:
Title:
LASALLE NATIONAL BANK,
as Trustee
By: _____________________________
Name:
Title:
trust indenture
EXHIBIT A
FORM OF COLLATERAL ASSIGNMENT
COLLATERAL ASSIGNMENT
COLLATERAL ASSIGNMENT, dated as of [DATE] between TW HOLDINGS II, INC.
(the "Pledgor") and LASALLE NATIONAL BANK, as Trustee (the "Trustee").
i. We refer to the Indenture (the "Indenture"), dated as of April 15,
1999, by and among the Pledgor, Trendwest Resorts, Inc., Sage Systems, Inc., as
Custodian, and the Trustee. All provisions of such Indenture are incorporated by
reference. All capitalized terms shall have the meanings set forth in the
Indenture.
ii. Pledgor does hereby pledge, transfer, assign, set over and convey
to the Trustee on behalf of the Noteholders and the Trustee does hereby accept,
a security interest in all right, title and interest of the Pledgor in, to and
under the Assets listed on Schedule 1 hereto and all other property constituting
Assets under the Indenture.
iii. Each of TWRI and the Pledgor does hereby certify: (a) the
representations and warranties of the Pledgor and TWRI set forth in Sections
11.1 and 11.2 of the Indenture are true and correct on and as of the date
hereof, before and after giving effect to the Transfer evidenced hereby and to
the application of the proceeds therefrom, as though made on and as of such
date; (b) no event has occurred, or would result from such Transfer or from the
application of the proceeds therefrom, which constitutes an Event of Default or
would constitute an Event of Default but for the requirement that notice be
given or time elapse or both; (c) each of TWRI and the Pledgor is in compliance
with each of its covenants set forth in the Indenture; and (d) the aggregate
Unpaid Principal Balance of the Receivables listed on Schedule 1 hereto to be
pledged to the Trustee pursuant to this Collateral Assignment is $[___].
IN WITNESS WHEREOF, the parties have caused this Collateral
Assignment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
TW HOLDINGS II, INC., as Pledgor
By:__________________________
Name:
Title:
LASALLE NATIONAL BANK, as Trustee
By:__________________________
Name:
Title:
trust indenture
EXHIBIT B
FORM OF NOTE
trust indenture
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. BY ITS ACCEPTANCE
HEREOF, EACH PURCHASER REPRESENTS AND AGREES THAT THIS NOTE MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT IN COMPLIANCE WITH THE
REGISTRATION PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE PROVISIONS
UNDER STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN THE INDENTURE REFERRED TO HEREIN.
NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE REPRESENTS THAT EITHER (A) IT IS NOT AN EMPLOYEE BENEFIT PLAN, TRUST
OR ACCOUNT, WHETHER OR NOT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR DESCRIBED IN SECTION 4975(e)(1)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, INCLUDING AN INDIVIDUAL
RETIREMENT ACCOUNT, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY
REASON OF AN INVESTMENT IN SUCH ENTITY BY A PLAN, TRUST OR ACCOUNT DESCRIBED
ABOVE, OR (B) THE ACQUISITION AND HOLDING OF SUCH NOTES WILL BE COVERED BY A
DEPARTMENT OF LABOR CLASS EXEMPTION.
TW HOLDINGS II, INC.
NOTE
April [__], 1999
New York, New York
FOR VALUE RECEIVED, TW Holdings II, Inc., a Delaware
corporation (the "Borrower") hereby promises to pay to PRUDENTIAL SECURITIES
CREDIT CORPORATION (the "Holder") or its assigns, the principal sum of
seventy-five million ($75,000,000), in lawful money of the United States of
America and in immediately available funds, on the dates and in the principal
amounts provided in the Indenture referred to below, and to pay interest on the
unpaid principal amount of this Note until paid in full, at the rates per annum
and on the dates provided in the Indenture (hereinafter defined) and the Credit
Agreement, dated as of April 15, 1999 (the "Credit Agreement") among the
Borrower, Trendwest Resorts, Inc. and Prudential Securities Credit Corporation.
The Maturity Date of this Note is as set forth in the Credit
Agreement.
By its holding of this Note, the Holder shall be deemed to
accept the terms of the Credit Agreement and the Indenture and agree to be bound
thereby.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to herein by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
This Note is one of a duly authorized issue of Notes of the
Borrower, limited in aggregate principal amount of $75,000,000, issued under the
Trust Indenture, dated as of April 15, 1999 (herein called the "Indenture"),
among the Borrower, Trendwest Resorts, Inc. ("TWRI"), Sage Systems, Inc., as
custodian (the "Custodian") and LaSalle National Bank, as trustee (the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Borrower, TWRI, the Custodian, the
Trustee and the Holders and of the terms upon which the Notes are authenticated
and delivered. Unless otherwise defined herein, all capitalized terms used
herein shall have the meanings set forth in Annex A of the Indenture.
This Note is secured by the pledge to the Trustee under the
Indenture of the Trust Estate and recourse is limited to the extent set forth in
the Indenture and the Credit Agreement. The amounts owed under this Note shall
not include any recourse to the Trustee or any affiliates thereof.
The Outstanding Principal Amount of this Note shall, at any
time, be equal to the outstanding amount of Advances made pursuant to the Credit
Agreement; therefore, the Outstanding Principal Amount of this Note shall
increase or decrease depending on Advances made to and Advances repaid by the
Borrower.
If certain Events of Default under the indenture have been
declared, the unpaid principal of the Notes may be declared immediately due and
payable in the manner and with the effect provided in the Indenture. Notice of
such declaration will be given by mail to Noteholders, as their names and
addresses appear in the Note Register, as provided in the Indenture. Upon
payment of such principal amount together with all accrued interest, the
obligations of the Borrower with respect to the payment of principal and
interest on this Note shall terminate.
The Indenture permits with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Noteholders under the Indenture
at any time by the Company and the Trustee with the consent of the Noteholders
of the percentages specified in the Indenture at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes, at the time Outstanding,
on behalf of all the Holders, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note shall
be conclusive and binding upon such Holder and upon all future Holders of this
Note issued upon the registration of transfer hereof or in exchange herefor or
in lieu hereof, whether or not notation of such consent or waiver is made upon
this Note.
Each Note may be issued only in registered form and only in
minimum denominations of at least $500,000 and integral multiples of $1,000 in
excess thereof; provided that the foregoing shall not restrict or prevent the
transfer in accordance with Section 2.3 of the Indenture of any Note having a
remaining Outstanding Principal Amount of other than an integral multiple of
$1,000, or the issuance of a single Note with a denomination less than $500,000.
The Borrower, the Trustee and any agent of the Borrower or the
Trustee may treat the Person in whose name this Note is registered as the owner
hereof for all purposes, whether or not this Note may be overdue, and neither
the Borrower, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture and this Note shall be deemed to be contracts
made under the laws of the State of New York and shall for all purposes be
governed by, and construed in accordance with, the laws of the State of New
York.
IN WITNESS WHEREOF, the Borrower has caused this instrument to
be duly executed by the manual signature of its duly Authorized Officer.
Dated: April 15, 1999
TW HOLDINGS II, INC.
By: ____________________________
Name:
Title:
Trustee's Certificate of Authentication
This is one of the Notes referred to in
the within mentioned Indenture.
LASALLE NATIONAL BANK,
as Trustee
By: ____________________________
Name:
Title:
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to:__________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Print or type name, address and zip code and social security or tax ID number
of assignee) and irrevocably appoint _________________, agent to transfer this
Note on the books of the Borrower. The agent may substitute another to act for
him.
Dated: ____________________
Signed:________________________________
(sign exactly as the name appears on the other side of this Note)
Signature Guarantee
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Note, it is recommended that you fill in the name of the new owner in the
"Assignee" blank. Alternatively, instead, of using this Assignment Form, you may
sign a separate "power of attorney" form and then mail the unsigned Note and the
signed "power of attorney" in separate envelopes. For added protection, use
certified or registered mail for a Note.
trust indenture
EXHIBIT C
FORM OF RULE 144A TRANSFEREE LETTER
RULE 144A TRANSFEREE LETTER
LaSalle National Bank
135 S. LaSalle Street
Suite 1625
Chicago, Illinois 60674
Ladies and Gentlemen:
We propose to purchase $[___] in original aggregate principal
amount of TW Holdings II, Inc. Notes (the "Notes"). The Notes were issued
pursuant to a Trust Indenture (as supplemented, the "Indenture") dated as of
April 15, 1999, among TW Holdings II, Inc. (the "Borrower"), Trendwest Resorts,
Inc., as Master Servicer ("TWRI"), Sage Systems, Inc., as Custodian (the
"Custodian") and LaSalle National Bank, as trustee (the "Trustee"). Capitalized
terms used herein but not otherwise defined shall have the same meaning as in
Annex A to the Indenture.
In connection with our proposed purchase of the Notes, we
agree to the following terms and conditions and make the representations and
warranties stated herein with the express understanding that they will be relied
upon by TWRI, the Borrower and the Trustee.
1. We understand that the Notes have not been registered under
the Securities Act of 1933, as amended (the "Securities Act") or registered or
qualified under any state securities or "Blue Sky" laws and are being sold to us
in a transaction that is exempt from the registration requirements of the
Securities Act and the registration or qualification requirements of such state
laws.
2. We are (Check one):
___ (a) a "Qualified Institutional Buyer" (as
defined in Rule 144A under the Securities
Act), in the case of a transfer of Notes to
be made in reliance on Rule 144A.
___ (b) an institutional investor that has such
knowledge and experience in financial and
business matters as to be capable of
evaluating the merits and risks of an
investment in the Notes and is able to bear
the economic risk of investment in the
Notes.
___ (c) an "accredited investor" as defined in Rule
501 promulgated under the Securities Act
that has such knowledge and experience in
financial and business matters as to be
capable of evaluating the merits and risks
of investment in the Notes and is able to
bear the economic risk of investment in the
Notes.
4. We agree that, to the extent that Section 2(a) of this
letter is applicable, that the Notes will not be transferred unless such
transfer is made in reliance on Rule 144A or unless some other exemption from
the registration requirements of the Securities Act, or any applicable state
securities law, is available.
5. To the extent that Section 2(b) or (c) of this letter is
applicable, that we are acquiring the Notes (i) solely for investment purposes
for our own account or for accounts as to which we exercise sole investment
discretion and not with a view to any resale or distribution of the Notes in
whole or in part, or (ii) otherwise for purposes which will not constitute a
distribution of securities under the Securities Act, or under any state
securities of "Blue Sky" laws subject, nevertheless, to the understanding that
disposition of our property shall at all times be and remain within our control,
and under no circumstances will we attempt to sell, pledge, hypothecate or
otherwise transfer all or any portion of our interest in the Notes except in
accordance with the terms of the Notes and the Indenture.
6. We agree not to sell the Notes in whole or in part, unless
the subsequent purchaser agrees to be subject to the same representations and
warranties as were applicable to us in acquiring the Notes.
7. We understand that each of the Notes shall bear a legend to
substantially the following effect:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. BY ITS
ACCEPTANCE HEREOF, EACH PURCHASER REPRESENTS AND AGREES THAT THIS NOTE MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT IN COMPLIANCE WITH
THE REGISTRATION PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE PROVISIONS
UNDER STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN THE INDENTURE REFERRED TO HEREIN.
NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED
UNLESS THE TRANSFEREE REPRESENTS THAT EITHER (A) IT IS NOT AN EMPLOYEE BENEFIT
PLAN, TRUST OR ACCOUNT, WHETHER OR NOT SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR DESCRIBED IN
SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, INCLUDING
AN INDIVIDUAL RETIREMENT ACCOUNT, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE
PLAN ASSETS BY REASON OF AN INVESTMENT IN SUCH ENTITY BY A PLAN, TRUST OR
ACCOUNT DESCRIBED ABOVE, OR (B) THE ACQUISITION AND HOLDING OF SUCH NOTES WILL
BE COVERED BY A DEPARTMENT OF LABOR CLASS EXEMPTION.
8. We understand that there is no public market for the Notes
and it is unlikely that such market will develop.
9. We are authorized to invest in the Notes.
10. We certify that, in acquiring the Notes, we have complied
with any applicable guidelines or regulations for or limitations on investments
established by each regulatory agency or body, if any, which has jurisdiction
over investments made by us and that our acquisition and retention of the Notes
will not violate the limitations on possession contained in any such guidelines,
regulations or limitations.
11. We further agree to be bound by all of the terms and
conditions of ownership of the Notes contained in the Indenture, as the same may
be amended from time to time.
Very truly yours,
[TRANSFEREE]
By: ____________________________
Name:
Title:
EXHIBIT D
FORM OF INVESTOR LETTER
INVESTOR LETTER
LaSalle National Bank
135 S. LaSalle Street
Suite 1625
Chicago, Illinois 60674
Ladies and Gentlemen:
We propose to purchase $[___] in original aggregate principal
amount of TW Holdings II, Inc. Notes (the "Notes"). The Notes were issued
pursuant to a Trust Indenture (as supplemented, the "Indenture") dated as of
April 15, 1999, among TW Holdings II, Inc. (the "Borrower"), Trendwest Resorts,
Inc., as Master Servicer ("TWRI"), Sage Systems, Inc., as Custodian (the
"Custodian") and LaSalle National Bank, as trustee (the "Trustee"). Capitalized
terms used herein but not otherwise defined shall have the same meaning as in
Annex A to the Indenture.
In connection with our proposed purchase of the Notes, we
agree to the following terms and conditions and make the representations and
warranties stated herein with the express understanding that they will be relied
upon by TWRI, the Borrower and the Trustee.
1. We understand that the Notes have not been registered under
the Securities Act of 1933, as amended (the "Securities Act") or registered or
qualified under any state securities or "Blue Sky" laws and are being sold to us
in a transaction that is exempt from the registration requirements of the
Securities Act and the registration or qualification requirements of such state
laws.
2. We are (Check one):
(a) a "Qualified Institutional Buyer" (as
defined in Rule 144A under the Securities
Act), in the case of a transfer of Notes to
be made in reliance on Rule 144A.
(b) an institutional investor that has such
knowledge and experience in financial and
business matters as to be capable of
evaluating the merits and risks of an
investment in the Notes and is able to bear
the economic risk of investment in the
Notes.
(c) an "accredited investor" as defined in Rule
501 promulgated under the Securities Act
that has such knowledge and experience in
financial and business matters as to be
capable of evaluating the merits and risks
of investment in the Notes and is able to
bear the economic risk of investment in the
Notes.
4. We agree that, to the extent that Section 2(a) of this
letter is applicable, that the Notes will not be transferred unless such
transfer is made in reliance on Rule 144A or unless some other exemption from
the registration requirements of the Securities Act, or any applicable state
securities law, is available.
5. To the extent that Section 2(b) or (c) of this letter is
applicable, that we are acquiring the Notes (i) solely for investment purposes
for our own account or for accounts as to which we exercise sole investment
discretion and not with a view to any resale or distribution of the Notes in
whole or in part, or (ii) otherwise for purposes which will not constitute a
distribution of securities under the Securities Act, or under any state
securities of "Blue Sky" laws subject, nevertheless, to the understanding that
disposition of our property shall at all times be and remain within our control,
and under no circumstances will we attempt to sell, pledge, hypothecate or
otherwise transfer all or any portion of our interest in the Notes except in
accordance with the terms of the Notes and the Indenture.
6. We agree not to sell the Notes in whole or in part, unless
the subsequent purchaser agrees to be subject to the same representations and
warranties as were applicable to us in acquiring the Notes.
7. We understand that each of the Notes shall bear a legend to
substantially the following effect:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. BY ITS
ACCEPTANCE HEREOF, EACH PURCHASER REPRESENTS AND AGREES THAT THIS NOTE MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT IN COMPLIANCE WITH
THE REGISTRATION PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE PROVISIONS
UNDER STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN THE INDENTURE REFERRED TO HEREIN.
NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED
UNLESS THE TRANSFEREE REPRESENTS THAT EITHER (A) IT IS NOT AN EMPLOYEE BENEFIT
PLAN, TRUST OR ACCOUNT, WHETHER OR NOT SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR DESCRIBED IN
SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, INCLUDING
AN INDIVIDUAL RETIREMENT ACCOUNT, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE
PLAN ASSETS BY REASON OF AN INVESTMENT IN SUCH ENTITY BY A PLAN, TRUST OR
ACCOUNT DESCRIBED ABOVE, OR (B) THE ACQUISITION AND HOLDING OF SUCH NOTES WILL
BE COVERED BY A DEPARTMENT OF LABOR CLASS EXEMPTION.
8. We understand that there is no public market for the Notes
and it is unlikely that such market will develop.
9. We are authorized to invest in the Notes.
10. We certify that, in acquiring the Notes, we have complied
with any applicable guidelines or regulations for or limitations on investments
established by each regulatory agency or body, if any, which has jurisdiction
over investments made by us and that our acquisition and retention of the Notes
will not violate the limitations on possession contained in any such guidelines,
regulations or limitations.
11. We further agree to be bound by all of the terms and
conditions of ownership of the Notes contained in the Indenture, as the same may
be amended from time to time.
Very truly yours,
[INVESTOR]
By: ____________________________
Name:
Title:
EXHIBIT E
FORM OF SERVICER REPORT
EXHIBIT F
FORM OF REQUEST FOR RELEASE
REQUEST FOR RELEASE OF DOCUMENTS
SAGE SYSTEMS, INC.
2135 112th Avenue, N.E., Suite 101
Bellevue, Washington 98004
Re: Indenture dated as of April 15, 1999, among TW Holdings II, Inc.,
as Borrower, Trendwest Resorts, Inc., as Master Servicer, Sage Systems, Inc., as
Custodian and LaSalle National Bank, as Trustee (the "Indenture")
Pursuant to Section 4.6 and 4.9(c) of the above-referenced
Indenture, in connection with the Receivables indicated on Schedule A hereto, we
request the release of the related Receivable Documents [specify documents] for
the reason indicated below.
Capitalized terms used but not defined herein shall have the
meanings given them in "Trendwest Warehouse Facility Definitions" attached as
Annex A to the Indenture.
Loan Number:
Reason for Requesting Release (check all that apply)
___ 1. Liquidation (Section 4.6(a)(i))
___ 2. Breach of representation and warranty (Section 4.6(a)(ii))
___ 3. Missing Receivable Documents (Section 4.6(a)(iii))
___ 4. Failure to file financing statements (Section 4.6(a)(iv))
___ 5. Cease to be an Eligible Receivable
___ 6. Paid in Full
___ 7. Upgrade
LASALLE NATIONAL BANK,
By:___________________________
Name:
Title:
Release consented to:
[NOTEHOLDERS]
By: __________________________
Name:
Title:
SCHEDULE A
RECEIVABLES TO BE RELEASED
trust indenture
EXHIBIT G
FORM OF RECEIPT
RECEIPT
RECEIPT NO. [Date]
Re: Indenture dated as of April 15, 1999, among TW Holdings II, Inc.,
as Borrower, Trendwest Resorts, Inc., as Master Servicer, Sage Systems, Inc., as
Custodian and LaSalle National Bank, as Trustee (the "Indenture")
Ladies and Gentlemen:
In accordance with the provisions of Section 4.8 of the
above-referenced Indenture, the undersigned, as Custodian, hereby certifies that
as to each Receivable described in the Schedule of Receivables, a copy of which
is attached hereto, it has reviewed each Receivable Document and has determined
that (i) all documents required to be delivered to it pursuant to the Indenture
are in its possession, and (ii) based on its examination of the foregoing
documents, such documents appear regular on their face and relate to the
appropriate Receivable and none of the Receivable Documents contains evidence of
any claims, liens, security interests or encumbrances (other than the Lien of
the Indenture), and (iii) the information contained in the Schedule of
Receivables matches the related information in the Receivable Documents.
The Custodian hereby confirms that it is holding each such
Receivable Document as agent and bailee of the Trustee, as trustee for the
Noteholders, pursuant to the terms of the Indenture. The Custodian hereby
confirms it will act in accordance with the standard of care standard provided
in the Indenture and under no circumstances shall the Custodian (i) deliver
possession of any Receivable Document to the Borrower or any other Person, or
(ii) take any directions with respect to any Receivable Documents from the
Borrower or any other Person, without the express written consent of the Trustee
or the Noteholders.
SAGE SYSTEMS, INC.,
as Custodian
By: ____________________________
Name:
Title:
SCHEDULE A TO RECEIPT
SCHEDULE OF RECEIVABLES
TRENDWEST WAREHOUSE FACILITY DEFINITIONS
"Act" shall mean, with respect to any Noteholder, as defined
in Section 1.4 of the Indenture.
"Advances" means the advances provided for by Section 1.1 of
the Credit Agreement.
"Adverse Claim" shall mean any claim of ownership or any lien,
security interest, title retention, trust or other charge or encumbrance, or
other type of preferential arrangement having the effect or purpose of creating
a lien or security interest, other than the interests created under this
Indenture in favor of the Trustee and the Noteholders.
"Affiliate" shall mean any Person: (a) which directly or
indirectly controls, or is controlled by, or is under common control with such
Person; (b) which directly or indirectly beneficially owns or holds five percent
(5%) or more of the voting stock of such Person; or (c) five percent (5%) or
more of the voting stock of which is directly or indirectly beneficially owned
or held by such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Assets" shall mean each Trust Estate Receivable, including
any Substitute Receivables (but excluding any such loan which has been released
from the lien of the Indenture pursuant to the terms hereof), and includes,
without limitation, (a) the related Assignment, (b) all security interests or
liens and property subject thereto from time to time purporting to secure
payment by the Obligor thereunder, including without limitation, the Vacation
Credits, (c) all guarantees, indemnities and warranties, certificates of title
or other title documentation and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such Trust Estate
Receivable, (d) all collections and all related Receivable Documents, Receivable
Files and records with respect to the foregoing, and (e) all proceeds of any of
the foregoing.
"Assignee" shall have the meaning set forth in Section
7.1(b) of the Credit Agreement.
"Assignment" shall mean collectively, with respect to any
Trust Estate Receivable, the related Sale Assignment and any Collateral
Assignment.
"Assignment Date" shall mean each date when Trust Estate
Receivables are transferred to the Trust Estate.
"Authorized Officer" means, with respect to TWRI or the
Borrower, any officer of TWRI or the Borrower, as the case may be, who is
authorized to act for TWRI or the Borrower, as the case may be, in matters
relating to transactions contemplated by the Credit Agreement or the Indenture.
"Available Facility Amount" on any date of determination,
shall mean (a) the Commitment, minus (b) the principal amount outstanding of all
Advances on such date.
"Available Funds" means all funds held in the Collection
Account as of the end of any Due Period.
"Board" shall mean, with respect to any Person, its board of
directors or, if it does not have a board of directors, its governing body which
performs the same duties as a board of directors.
"Borrower" shall mean TW Holdings II, Inc., a Delaware
corporation.
"Borrower Order" or "Borrower Request" shall mean a written
order or request delivered to the Trustee and signed by an Authorized Officer of
the Borrower.
"Borrowing Base" shall mean, an amount equal to the lesser of
90% of (i) the aggregate Unpaid Principal Balance of Trust Estate Receivables
which are Eligible Receivables, and (ii) the market value of such Eligible
Receivables as determined solely by PSI.
"Borrowing Base Deficiency" shall have occurred on any date in
which the Outstanding Principal Amount of the Notes exceeds the Borrowing Base.
"Borrowing Notice" shall have the meaning set forth in Section
1.3 of the Credit Agreement.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in New York, New York, Seattle,
Washington, or in the city and State where the Trustee's principal offices are
located, are authorized or obligated by law, executive order or governmental
decree to be closed.
"Change of Control" shall have occurred with respect to TWRI
if JELD WEN inc. no longer holds a majority of the common stock of TWRI.
"Charge-off Factor" means, with respect to any Due Period, a
fraction of which the numerator is 365 and the denominator is the number of days
in such Due Period.
"Charge-off Rate" means, as of any Payment date, the average
of the Monthly Charge-off Rates for the three Due Periods immediately preceding
the Due Period in which such Payment Date occurs.
"Clearing Account" shall be as defined in Section 5.3 of the
Indenture.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and any successor statute, together with the rules and
regulations thereunder.
"Collateral Assignment" shall mean a certificate of assignment
by the Borrower to the Trustee substantially in the form of Exhibit A to the
Indenture giving notice of, and evidencing, the pledge of Receivables and the
other Assets by the Borrower to the Trustee on behalf of the Trust Estate.
"Collection Account" shall have the meaning assigned to such
term in Section 3.2 of the Indenture.
"Commission" shall mean the Securities and Exchange
Commission.
"Commitment" shall mean the obligation of the Lender to make
Advances in an aggregate amount equal to $75,000,000, to the extent set forth in
the Warehouse Facility Documents.
"Commitment Termination Date" shall mean the earlier of (i)
the Maturity Date, or (ii) the occurrence of an Event of Default.
"Consolidated Charge-off Rate" means, as of any Payment Date,
the average of the Consolidated Monthly Charge-off Rates for the three Due
Periods immediately preceding the Due Period in which such Payment Date occurs.
"Consolidated Defaulted Receivable Amount" means, as of any
Payment Date, a fraction, expressed as a percentage, the numerator of which is
the Unpaid Principal Balance of all TWRI Receivables that were Defaulted
Receivables as of the last day of the related Due Period, and the denominator of
which is the Unpaid Principal Balance of all TWRI Receivables as of the last day
of such Due Period.
"Consolidated Delinquency Rate Amount" means, as of any
Payment Date, a fraction, expressed as a percentage, the numerator of which is
the Unpaid Principal Balance of all TWRI Receivables in respect of which a
payment of principal or interest was more than 30 days past due as of the last
day of the related Due Period, and the denominator of which is the Unpaid
Principal Balance of all TWRI Receivables as of the last day of such Due Period.
"Consolidated Monthly Charge-off Rate" means, with respect of
any Due Period, a fraction, expressed as a percentage on a per annum basis, the
numerator of which is the product of (x) the Charge-off Factor for such Due
Period and (y) the Unpaid Principal Balance of all TWRI Receivables that were
charged-off during such Due Period, and the denominator of which is the average
outstanding principal balance of all TWRI Receivables for each day in such Due
Period.
"Corporate Trust Office" shall mean the office of the Trustee
at which at any particular time its corporate trust business shall be
principally administered, which office at the date of the execution of the
Indenture is located at the address set forth in Section 12.4 of the Indenture.
"Credit Agreement" shall mean the credit agreement, dated as
of April 15, 1999, by and among the Borrower, TWRI, and the Lender.
"Credit and Collection Policies" shall mean TWRI's credit
extension procedures and policies and collection practices described in Exhibit
B of the Credit Agreement.
"Custodian" shall be Sage Systems, Inc, a Washington
corporation.
"Cut-off Date" shall mean with respect to Trust Estate
Receivables financed on the Initial Funding Date, April 7, 1999 and, with
respect to subsequent Trust Estate Receivables, as shall be mutually agreed upon
by the Borrower, the Trustee and the Lender.
"Debt" shall mean for any Person, (a) indebtedness of such
Person for borrowed money or credit extended, (b) obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (c)
obligations of such Person to pay the deferred purchase price of property or
services, (d) obligations of such Person as lessee under leases which have been
or should be, in accordance with GAAP, recorded as capital leases, (e)
obligations secured by any lien or other charge upon property or assets owned by
such Person, even though such Person has not assumed or become liable for the
payment of such obligations, (f) obligations of such Person under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to in
clauses (a) through (e) above, and (g) liabilities in respect of unfunded vested
benefits under plans covered by ERISA. For the purposes hereof, the term
"guarantee" shall include any agreement, whether such agreement is on a
contingency or otherwise, to purchase, repurchase or otherwise acquire Debt of
any other Person, or to purchase, sell or lease, as lessee or lessor, property
or services, in any such case primarily for the purpose of enabling another
Person to make payment of Debt, or to make any payment (whether as an advance,
capital contribution, purchase of an equity interest or otherwise) to assure a
minimum equity, asset base, working capital or other balance sheet or financial
condition, in connection with the Debt of another Person, or to supply funds to
or in any manner invest in another Person in connection with Debt of such
Person.
"Default" shall mean any event or condition that would become
an Event of Default after notice or passage of time or both.
"Defaulted Receivable" means any Trust Estate Receivable in
respect of which (i) the related Obligor has failed to pay when due any amounts
due in respect thereof which failure continues for 90 days or more; (ii) the
Obligor has failed to perform any term or covenant on its part to be performed
under any related Receivable Document which failure continues for 90 days or
more, if the effect of such failure is to accelerate or to permit (with or
without the giving of notice) the acceleration of the maturity of such
Receivable; (iii) the related Obligor is the subject of a petition in
bankruptcy, either voluntary or involuntary, or in any other proceeding under
the federal bankruptcy laws or makes an assignment for the benefit of creditors;
(iv) any liquidation, foreclosure or similar proceedings have begun; or (v) the
Master Servicer has determined, in accordance with the procedures and standards
set forth in the Indenture and in the Credit and Collection Policies, that
eventual payment in full is unlikely.
"Defaulted Receivable Amount" means, as of any Payment Date, a
fraction, expressed as a percentage, the numerator of which is the Unpaid
Principal Balance of all Trust Estate Receivables that were Defaulted
Receivables as of the last day of the related Due Period and the denominator of
which is the Unpaid Principal Balance of all Trust Estate Receivables as of the
last day of such Due Period.
"Delinquency Rate Amount" means, as of any Payment Date, a
fraction, expressed as a percentage, the numerator of which is the Unpaid
Principal Balance of all Trust Estate Receivables in respect of which a
principal or interest payment was more than 30 days past due as of the last day
of the related Due Period and the denominator of which is the Unpaid Principal
Balance of all Trust Estate Receivables (other than Defaulted Receivables) as of
the last day of such Due Period.
"Deposit Date" shall mean the Business Day immediately
preceding each related Payment Date.
"Determination Date" shall mean, with respect to a Payment
Date, the tenth day of the related calendar month (unless such day is not a
Business Day, then the next day that is a Business Day).
"Dollars" or "$" shall mean the lawful currency of the United
States of America, and in relation to any payment, same day or immediately
available funds.
"Due Period" shall mean, (a) with respect to the initial Due
Period, the month of April 1999, and (b) thereafter, with respect to any Payment
Date, the period commencing on the first day of the calendar month preceding the
calendar month in which such Payment Date occurs and ending on the last day of
the calendar month preceding the calendar month in which such Payment Date
occurs.
"Eligible Bank Account" shall mean a segregated account, which
may be an account maintained with the Trustee, which is either (a) maintained
with a depository institution or trust company whose long-term unsecured debt
obligations are rated at least BBB+ by Standard & Poor's and Baa-1 by Moody's
and whose short-term unsecured obligations are rated at least A-1 by Standard &
Poor's and P-1 by Moody's; or (b) a trust account or similar account maintained
with a federally or state chartered depository institution subject to
regulations regarding fiduciary funds on deposit substantially similar to 12
C.F.R. 9.10(b).
"Eligible Investment" shall mean one or more of the following:
(a) obligations of, or guaranteed as to timely payment of principal and interest
by, the United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United States;
(b) repurchase agreements (including those with the Trustee as a counterparty)
on obligations specified in clause (a) maturing not more than one month from the
date of acquisition thereof, provided that the long-term unsecured obligations
of the party agreeing to repurchase such obligations are at the time rated by a
Rating Agency in one of the three highest rating categories (without regard to
numerical modifiers) available from a Rating Agency; and provided, further, that
the short-term debt obligations of the party agreeing to repurchase shall be
rated in the highest rating category (without regard to numerical modifiers) by
a Rating Agency;
(c) federal funds, certificates of deposit, time deposits and bankers'
acceptances, each of which shall not have an original maturity of more than 90
days, of any depository institution or trust company incorporated under the laws
of the United States or any state; provided that the long-term unsecured debt
obligations of such depository institution or trust company at the date of
acquisition thereof have been rated by a Rating Agency in one of the three
highest rating categories (without regard to numerical modifiers) available from
a Rating Agency; and provided, further, that the short-term obligations of such
depository institution or trust company shall be rated in the highest rating
category (without regard to numerical modifiers) by a Rating Agency;
(d) commercial paper or commercial paper funds (having original maturities of
not more than 90 days) of any corporation incorporated under the laws of the
United States or any state thereof; provided that any such commercial paper or
commercial paper funds shall be rated in the highest short-term rating category
(without regard to numerical modifiers) by a Rating Agency; and
(e) any no-load money market fund rated in the highest short-term rating
category or equivalent highest long-term rating category (without regard to
numerical modifiers) by a Rating Agency;
provided that, Eligible Investments purchased from funds in the Eligible Bank
Accounts shall include only such obligations or securities that either may be
redeemed daily or mature no later than the Business Day next preceding the next
Payment Date; and provided, further, that no instrument shall be an Eligible
Investment if such instrument evidences a right to receive only interest
payments with respect to the obligations underlying such instrument. Eligible
Investments may include those Eligible Investments with respect to which the
Trustee or an Affiliate thereof provides services.
"Eligible Receivable" shall mean, for any date of
determination, any Receivable as to which the representations and warranties set
forth in Section 2.3(a) of the Credit Agreement are true and correct as of the
related Funding Date and for which the Custodian has delivered a Receipt
pursuant to the Indenture; provided, however, any Receivable (i) for which
payments are delinquent for 60 or more days on such date of determination, or
(ii) which is a Defaulted Receivable shall not be an Eligible Receivable.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Event of Default" shall have the meaning assigned thereto in
Sections 6.1 of the Indenture.
"Event of Master Servicer Termination" shall mean each of
the events described in Section 5.10 of the Indenture.
"Event of Purchase Termination" shall have the meaning
specified in Section 7 of the Receivable Sale Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"Executive Officer" with respect to a Person shall mean the
Chief Executive Officer, President, Chief Operating Officer or Chief Financial
Officer.
"Foreign Obligor" means an obligor of a Receivable who is not
a resident of, and is not making payments from, the "United States" (as defined
in Section 7701(a)(9) of the Code).
"Funding Date" shall have the meaning set forth in Section 1.2
of the Credit Agreement.
"GAAP" shall mean, as of the date of any determination with
respect thereto, generally accepted accounting principles as understood and
applied in the United States at the time in question.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Grant" shall mean grant, bargain, convey, assign, transfer,
mortgage, pledge, create and grant a security interest in and right of set-off
against, deposit, set over and confirm. The Grant of the Trust Estate effected
by the Indenture shall include all rights, powers, and options (but none of the
obligations) of the Borrower with respect thereto, including, without
limitation, the immediate and continuing right to claim for, collect, receive,
and give receipts for Payments in respect of the Receivables and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring judicial proceedings in the name of the Borrower or otherwise, and
generally to do and receive anything that the Borrower is or may be entitled to
do or receive thereunder or with respect thereto.
"Indenture" shall be the trust indenture, dated as of April
15, 1999, by and among the Borrower, the Master Servicer, the Custodian, and the
Trustee.
"Initial Funding Date" shall have the meaning set forth in
Section 1.2 of the Credit Agreement.
"Installment Sale Contract" shall mean the vacation owner
agreement executed by TWRI, Worldmark and an Obligor.
"Intended Tax Characterization" shall have the meaning
specified in Section 4.4(b) of the Indenture.
"Interest Payments" shall be as defined in 2.1(d) of the
Indenture.
"Interest Period" shall mean the calendar month preceding the
related Payment Date.
"Investment" shall mean any loan, advance, extension of credit
(except for accounts and notes receivable for merchandise sold or services
furnished in the ordinary course of business, and amounts paid in advance on
account of the purchase price of merchandise to be delivered to the payor within
one year of the date of the advance), or purchase of stock, notes, bonds or
other securities or capital contribution to any Person, whether in cash or other
property. The amount of any Investment shall be its cost (the amount of cash or
the fair market value of other property given in exchange therefor).
"Issuance Date" shall mean the Initial Funding Date.
"Lender" shall mean Prudential Securities Credit Corporation,
its successors and permitted assigns.
"LIBOR" shall mean, with respect to any date of calculation,
an interest rate per annum equal to the rate for one month maturity appearing on
the Telerate Page 3750 at 11:00 a.m. on such date, as determined by the Lender.
"Lien" shall mean any interest in property securing an
obligation owed to, or a claim by, any Person other than the owner of the
property, whether such interest shall be based on the common law, civil law,
statute, civil code or contract, whether or not such interest shall be recorded
or perfected and whether or not such interest shall be contingent upon the
occurrence of some future event or events or the existence of some future
circumstance or circumstances, and including the lien, privilege, security
interest or other encumbrance arising from a mortgage, deed of trust,
hypothecation, cession, transfer, assignment, pledge, adverse claim or charge,
conditional sale or trust receipt, or from a lease, consignment or bailment for
security purposes. The term "Lien" shall also include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting property. For the
purposes of the Credit Agreement, a Person shall be deemed to be the owner of
any property that such Person shall have acquired or shall hold subject to a
conditional sale agreement or other arrangement (including a leasing
arrangement) pursuant to which title to the property shall have been retained by
or vested in some other Person for security purposes.
"Liquidated Receivable" shall mean a Receivable for which a
Liquidation has occurred.
"Liquidation" shall mean, with respect to any Defaulted
Receivable, the sale of the related Vacation Credits, following an enforcement
action to a Person other than the Master Servicer, the Borrower or TWRI.
"Liquidation Proceeds" shall mean the proceeds received in
respect of a Defaulted Receivable after Liquidation.
"Master Servicer" shall mean Trendwest Resorts, Inc.
"Master Servicer Fee" shall mean, for each day, an amount
equal to the product of (a) the Master Servicer Fee Rate, and (b) the Unpaid
Principal Balance of all Trust Estate Receivables as of such date, and (c) a
fraction, the numerator of which is one and the denominator of which is 360.
"Master Servicer Fee Rate" shall mean 1.75%.
"Maturity Date" shall mean April 14, 2000.
"Maximum Leverage Ratio" shall mean the ratio of (1) the
aggregate of all recourse liabilities of TWRI (including with limitation, all
securitization transactions (to the extent of actual recourse available) to (2)
Tangible Net Worth.
"Minimum Assignment Denomination" shall mean $500,000.
"Monthly Charge-off Rate" means, with respect to any Due
Period, a fraction, expressed as a percentage on a per annum basis, the
numerator of which is the product of (x) the Charge-off Factor for such Due
Period, and (y) the Unpaid Principal Balance of all Trust Estate Receivables
that were charged off during such Due Period and the denominator of which is the
average Unpaid Principal Balance of all Trust Estate Receivables for each day in
such Due Period.
"Moody's" shall mean Moody's Investor Services, Inc.
"Net Income" shall mean, on a consolidated basis, as of any
date of determination, for any period, net income (or loss) of TWRI as
determined and computed in accordance with GAAP;
"New Equity" shall mean the sum of (i) the net cash proceeds
of any sale of stock of TWRI by TWRI less (ii) the net cash proceeds received by
TWRI in connection with the sale of stock under TWRI's employee stock option
plans, or TWRI's employee stock purchase plan, approved by TWRI's shareholders.
"Note Daily Interest" shall mean for any day, the product of
the Outstanding Principal Amount for the Notes at the close of business on such
day (including any Advances made on such day), and the applicable Note Interest
Rate for such day.
"Note Interest Payment Amount" shall mean for any Payment
Date, the sum of Note Daily Interest for each day of the related Interest
Period.
"Note Interest Rate" shall mean a per annum rate equal to (i)
if no Event of Default has occurred and is continuing, one month LIBOR plus
1.00%, reset daily, and (ii) if an Event of Default has occurred and is
continuing, one month LIBOR plus 4.00%, reset daily.
"Note Principal Payment Amount" shall mean, for any Payment
Date, an amount sufficient to cause the Outstanding Principal Amount of the
Notes to equal the Borrowing Base (after application of all Payments allocable
to principal in respect of the Trust Estate Receivables for the related Due
Period).
"Note Register" shall be as defined in Section 2.3 of the
Indenture.
"Note Registrar" shall be as defined in Section 2.3 of the
Indenture.
"Noteholder" or "Holder" shall mean a holder of a Note.
"Notes" shall mean the variable funding notes issued under
Article 2 of the Indenture.
"Obligor" means the obligor on an Installment Sale Contract.
"Officer's Certificate" (i) with respect to the Trustee, any
duly authorized officer, including any vice president, assistant vice president,
or any officer or assistant officer of the Trustee customarily performing
functions similar to those performed by any of the above-designated officers and
(ii) with respect to TWRI or the Borrower shall mean a certificate executed on
behalf of such party by the Chairman of the Board, the President or any Vice
President of the relevant entity.
"Outstanding" shall mean, as of any date of determination,
all Notes theretofore authenticated and delivered under this Indenture except:
(a) Notes theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
(b) Notes or portions thereof for whose payment money in the
necessary amount has been theretofore irrevocably deposited with the Trustee in
trust for the holders of such Notes; and
(c) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Trustee is presented that any such Notes are held by a
Person in whose hands the Note is a valid obligation; provided, however, that in
determining whether the holders of the requisite percentage of the Outstanding
Principal Amount of the Notes have given any request, demand, authorization,
direction, notice, consent, or waiver hereunder, Notes owned by the Borrower or
any Affiliate of the Borrower shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent, or waiver, only Notes that a Responsible Officer of the Trustee
actually knows to be so owned shall be so disregarded.
"Outstanding Principal Amount" shall mean the aggregate unpaid
principal amount of the Notes at any time.
"Paying Agent" shall mean the Trustee.
"Payment Date" shall mean (i) the 15th day of each month
(unless such day is not a Business Day, then the next day that is a Business
Day), commencing on May 17, 1999 and (ii) the Maturity Date.
"Payments" shall mean for any Receivable for any Due Period,
all amounts received with respect to such Receivable during such Due Period,
including, without limitation, payments (including prepayments) from the
relevant Obligor (including principal, interest, late fees and other charges.
"Permitted Liens" shall mean Liens created under the
Indenture.
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, estate, unincorporated organization or government (or any agency or
political subsection thereof).
"Principal Payments" shall be as defined in Section 2.1(c)
of the Indenture.
"PSI" shall mean Prudential Securities Incorporated.
"Rating Agency" shall mean any of Fitch IBCA, Inc., Duff &
Phelps Credit Rating Co., Standard & Poor's, or Moody's.
"Receipt" shall be defined in Section 4.8 of the Indenture.
"Receivable" shall mean each of the right to use receivables
originated by TWRI with respect to Resorts owned by Worldmark.
"Receivable Acquisition Price" shall mean the lesser of (i)
90% of the Unpaid Principal Balance for Eligible Receivables as of the date of
purchase under the Receivable Sale Agreement, and (ii) 90% of the aggregate
market value of such Eligible Receivables, as determined solely by PSI.
"Receivable Coupon Rate" shall mean, with respect to any
Receivable, the per annum rate of interest set forth in the related Installment
Sale Contract, used to calculate the interest payment due on such Receivable.
"Receivable Documents" shall mean with respect to each Trust
Estate Receivable and each Obligor:
(i) an original Installment Sale Contract with evidence that
the appropriate financing statements have been filed in the appropriate filing
offices;
(ii) a notice of sale and assignment affixed to the
Installment Sale Contract stating the following: "Undivided interests in the
Receivables described herein have been sold to TW Holdings II, Inc. pursuant to
a Receivable Sale Agreement dated as of April 15, 1999, between Trendwest
Resorts, Inc. and TW Holdings II, Inc. TW Holdings II, Inc. has pledged such
interest to LaSalle National Bank, as Trustee, pursuant to an Indenture dated as
of April 15, 1999, by and among TW Holdings II, Inc., Trendwest Resorts, Inc.
and LaSalle National Bank."
(iii) 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 Borrower to be a true
and correct copy); and
(iv) 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 Master Servicer in
servicing receivables comparable to the Receivables.
"Receivable Sale Agreement" shall mean the Receivable Sale
Agreement dated as of April 15, 1999 between the Borrower and TWRI, pursuant to
which the Borrower agrees to acquire Eligible Receivables from TWRI, as from
time to time further amended, supplemented or modified.
"Record Date" shall mean, with respect to a Payment Date, the
last day of the calendar month immediately preceding such Payment Date.
"Records" shall refer to all documents, books, records and
other information (including, without limitation, computer programs, tapes,
disks, punch cards, data processing software and related property and rights)
prepared and maintained by the Master Servicer or by or on behalf of the
Borrower with respect to Receivables and the related Obligors.
"Repurchase Requirement" shall be as defined in Section 5(d)
of the Receivables Sale Agreement.
"Request for Release" shall be as defined in the Section 4.6
of the Indenture.
"Required Information" shall mean, as of the related Cut-Off
Date, with respect to a Trust Estate Receivable, the following information: (a)
its identifying number, (b) the name and mailing address of the related Obligor,
(c) the original number of months to maturity, (d) the number of months to
maturity as of the related Cut-Off Date, (e) the Receivable Coupon Rate, (f) its
date of origination, (g) the Original Principal Balance, (h) the Unpaid
Principal Balance as of the Cut-Off Date, (i) the maturity date, (j) the monthly
payment amount, (k) sale price, (l) the paid-through date, (m) the first payment
date, (n) the date of sale, and (o) the related number of Vacation Credits.
"Requirement of Law" shall mean, as to any Person, any law,
treaty, rule or regulation, or determination of an arbitrator or Governmental
Authority, in each case applicable to or binding upon such Person or to which
such Person is subject, whether federal, state or local (including, without
limitation, usury laws, the federal Truth in Lending Act and Regulation Z and
Regulation B of the Board of Governors of the Federal Reserve System).
"Responsible Officer" shall mean, with respect to the
Trustee, any officer or such officer's superiors assigned to the Asset Backed
Securities Trust Group of the Trustee and the transactions contemplated by the
Warehouse Facility Documents, including any Managing Director, Vice President,
Assistant Vice President, Secretary, Assistant Secretary, Treasurer, Assistant
Treasurer, any trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers.
"Resorts" shall mean all the resorts owned (or leased) and
operated by Worldmark, whether existing on the Issuance Date or in the future.
"Sale Assignment" each assignment executed by TWRI in favor
of the Borrower from time to time pursuant to the Receivable Sale Agreement
conveying Receivables to the Borrower.
"Sale Date" shall mean, with respect to any Receivable, the
date on which such Receivable is sold or contributed pursuant to Section 2 of
the Receivable Sale Agreement.
"Schedule of Exceptions" shall be as defined in Section 4.6
of the Indenture.
"Schedule of Receivables" shall mean a list containing the
Required Information with respect to each Trust Estate Receivable delivered to
the Trustee and the Custodian under the Indenture.
"Securities" shall mean, with respect to any Person, any
shares of any class of such Person's capital stock, or any options or warrants
to purchase its capital stock or other security exchangeable for or convertible
into its capital stock.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
"Securitization Take-out" shall mean a transaction pursuant
to which the Trust Estate Receivables and other related Assets constituting the
Trust Estate are reconveyed in connection with the public issuance or private
placement of securities rated by at least one of the Rating Agencies and backed
by the Trust Estate Receivables and other related Assets.
"Security Interest" shall mean the security interest and
rights created under the Indenture in the Assets in favor of the Trustee.
"Servicer Report" shall be as defined in Section 5.2 of the
Indenture.
"Solvent" shall mean, with respect to any Person, that:
(a) the properties of such Person, at a fair valuation,
exceed the total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of such Person;
(b) based on current projections, which are based on
underlying assumptions which provide a reasonable basis for the projections and
which reflect such Person's judgment based on present circumstances of the most
likely set of conditions and such Person's most likely course of action for the
period projected, such Person believes it has sufficient cash flow to enable it
to pay its debts as they mature; and
(c) such Person does not have an unreasonably small capital
with which to engage in its anticipated business.
"Standard & Poor's" shall mean Standard & Poor's Ratings
Group, a division of The McGraw Hill Companies, Inc.
"Subsequent Funding Date" shall have the meaning set forth
in Section 1.2 of the Credit Agreement.
"Substitute Receivable" means an Eligible Receivable
submitted for a Trust Estate Receivable under Section 4.6 of the Indenture: (i)
having as of the time of substitution a principal balance, after deduction of
the principal portion of the monthly payment due in the month of substitution
equal to or greater than the Unpaid Principal Balance of the Trust Estate
Receivable for which it is being substituted, provided that if more than one
Receivable is being submitted, the aggregate principal balance of all submitted
Receivables shall be equal or greater than the Unpaid Principal Balance of the
Trust Estate Receivables for which they are being substituted, (ii) having a
Receivable Coupon Rate equal to or greater than the Receivable Coupon Rate of
the Trust Estate Receivable for which it is being substituted, and (iii)
otherwise satisfying the representations and warranties contained therein.
"Tangible Net Worth" shall equal a Person's (i) net worth as
calculated under GAAP, less (ii) receivables from stockholders or Affiliates,
less (iii) intangible assets as calculated under GAAP.
"Tax or Taxes" shall mean all taxes, charges, fees, levies
or other assessments, including, without limitation, income, gross receipts,
profits, withholding, excise, property, sales, use, occupation and franchise
taxes (including, in each such case, any interest, penalties or additions
attributable to or imposed on or with respect to any such taxes, charges, fees
or other assessments) imposed by the United States, any state or political
subdivision thereof, any foreign government or any other jurisdiction or taxing
authority.
"Transfer" shall be as specified in Section 4.2(a) of the
Indenture.
"Transfer Notice" shall be as specified in Section 4.2(b) of
the Indenture.
"Trust Accounts" shall mean such accounts as the Trustee may
create from time to time under the Indenture.
"Trust Estate" shall mean all money, instruments and other
property and rights subject to the lien of this Indenture, including all
proceeds thereof.
"Trust Estate Receivables" shall mean all Receivables that
are pledged to the Trustee and are part of the Trust Estate.
"Trustee" shall be LaSalle National Bank.
"Trustee Fee" shall mean an amount equal to $2,500 a month.
"TWRI" shall mean Trendwest Resorts, Inc., an Oregon
corporation.
"TWRI Receivables" shall mean, as of any time, all right to
use timeshare receivables originated by TWRI other than Receivables that have
been paid in full or charged off and including the Trust Estate Receivables.
"UCC" shall mean the Uniform Commercial Code as in effect in
the relevant state.
"Unpaid Principal Balance" means the unpaid principal amount
for a Receivable as of the end of the most recent Due Period, or in the case of
the initial funding, on a date agreed upon by the Lender and the Borrower on the
Initial Funding Date.
"Upgrade" shall mean the prepayment of a Receivable and
entry into a new Installment Sale Contract by an Obligor, Worldmark and TWRI,
pursuant to which the Obligor purchases additional Vacation Credits in exchange
for an increase in the principal balance owed by such Obligor.
"Vacation Credit Purchase Price" shall mean, with respect to
a Defaulted Receivable, the lesser of (a) an amount equal to 25% of the price at
which the related Obligor purchased the related Vacation Credits, and (b) the
Unpaid Principal Balance of such Defaulted Receivable.
"Vacation Credits" shall mean the related Obligor's Vacation
Credits in Worldmark.
"Warehouse Facility Documents" shall mean the Credit
Agreement, the Receivable Sale Agreement, the Indenture, the Collateral
Assignments, any Subservicing Agreement, the Engagement Letter and the Notes.
"Worldmark" shall mean Worldmark, the Club, a California
mutual benefit corporation which holds unencumbered fee title to (or a long term
lease on) the Resorts subject to the rights of the Obligors to use the Resorts.
"Year 2000 Problem" shall mean the inability of computers,
as well as embedded microchips in non-computing devices, to perform properly
date-sensitive functions with respect to certain dates prior to and after
December 31, 1999.