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RECEIVABLES PURCHASE AGREEMENT
among
TRI FUNDING COMPANY I, L.L.C.
("Prior Issuer")
and
TRENDWEST RESORTS, INC.
("Trendwest")
and
TW HOLDINGS, INC.
("TWH")
and
TRENDWEST FUNDING II, INC.
("TFI")
Dated as of March 1, 1998
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TABLE OF CONTENTS
SECTION HEADING PAGE
ARTICLE 1 DEFINITIONS...................................................2
Section 1.01. Defined Terms..........................................2
ARTICLE 2 ACQUISITION OF ASSETS.........................................3
Section 2.01. [Reserved.]....................................................3
Section 2.02. Initial Acquisition............................................3
Section 2.03 Subsequent Acquisitions........................................4
Section 2.04 Delivery of Contracts..........................................4
Section 2.05. Servicing of Contracts and Related Credits.....................4
Section 2.06. Review of Contracts............................................4
ARTICLE 3 REPRESENTATIONS AND WARRANTEES................................5
Section 3.01. Representations and Warranties of the Sellers..................5
Section 3.02. Representations and Warranties of TFI.........................12
Section 3.03. Purchase or Substitution Required upon Breach of Certain
Representations and Warranties................................14
Section 3.04. Requirements for Purchase or Substitution of Contracts........14
ARTICLE 4 SELLER COVENANTS..............................................16
Section 4.01. Seller Covenants..............................................16
Section 4.02. TFI Covenants.................................................20
Section 4.03. Assignment of Assets..........................................20
ARTICLE 5 CONDITIONS PRECEDENT..........................................21
Section 5.01. Conditions to TFI's Initial Obligations.......................21
Section 5.02. Conditions to the Sellers' Obligations........................22
ARTICLE 6 TERM AND TERMINATION..........................................22
.
Section 6.01. Term..........................................................22
Section 6.02. Default by Sellers............................................22
ARTICLE 7 MISCELLANEOUS.................................................23
Section 7.01. Amendments....................................................23
Section 7.02. Governing Law.................................................23
Section 7.03. Notices.......................................................23
Section 7.04. Separability Clause...........................................23
Section 7.05. Assignment....................................................23
Section 7.06. Further Assurances............................................24
Section 7.07. No Waivers; Cumulative Remedies...............................24
Section 7.08. Binding Effect; Third Party Beneficiaries.....................24
Section 7.09. Set-Off.......................................................24
Section 7.10. Counterparts..................................................24
Signature Page..............................................................25
ANNEX A -- FORM OF SUPPLEMENT FOR SUBSTITUTE CONTRACTS AND UPGRADE CONTRACTS
EXHIBIT A -- FORM OF CONTRACT
EXHIBIT B -- FORM OF ASSET ASSIGNMENT
EXHIBIT C -- FORM OF SUBSEQUENT ASSET ASSIGNMENT
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THIS RECEIVABLES PURCHASE AGREEMENT, dated as of March 1, 1998 (this
"Agreement"), by and among TRI Funding Company I, L.L.C., a Delaware limited
liability company (herein, together with its permitted successors and assigns,
the "Prior Issuer"), Trendwest Resorts, Inc., an Oregon corporation (herein,
together with its permitted successors and assigns, "Trendwest"), TW Holdings,
Inc., a Nevada corporation (herein, together with its permitted successors and
assigns, "TWH"), and Trendwest Funding II, Inc., a Delaware corporation (herein,
together with its permitted successors and assigns, "TFI").
PRELIMINARY STATEMENT
TRI Funding II, Inc., a Delaware special purpose corporation (the
"Issuer") has entered into an Indenture, dated as of March 1, 1998 (as amended
and supplemented from time to time, the "Indenture"), with LaSalle National
Bank, as trustee (herein, together with its permitted successors and assigns,
the "Trustee"), and Trendwest, as servicer (herein, together with its permitted
successors and assigns, the "Servicer"), pursuant to which the Issuer intends to
issue its notes, issuable in one or more Series as provided in the Indenture
(the "Notes"), limited as to principal amount as set forth in the related Series
Supplement.
In furtherance thereof, the Prior Issuer, Trendwest, TWH (collectively,
the "Sellers") and TFI have entered into this Agreement to provide for, among
other things, the acquisition by TFI of all of the right, title and interest in
and to certain Assets which will be sold (or, with respect to the Contracts,
pledged) by TFI to the Issuer pursuant to that certain Purchase and Sale
Agreement, dated as of even date herewith, by and among TFI, Trendwest and the
Issuer (the "Sale Agreement"). The Issuer will be pledging and granting to the
Trustee a security interest in the Issuer's interest in the Assets, as security
for the Notes. As a precondition to the effectiveness of this Agreement, the
Issuer, the Trustee, the Subservicer and the Servicer will enter into the
Servicing Agreement, dated as of March 1, 1998 (as amended and supplemented from
time to time, the "Servicing Agreement"), to provide for the administration and
servicing of the Assets. In connection with the issuance of each Series of Notes
and pursuant to this Agreement, the Sellers from time to time will sell the
Assets to TFI. Such sales shall be effected on the Closing Date by this
Agreement and an Asset Assignment among the Sellers and TFI, and on each
subsequent Series Closing Date by this Agreement and the applicable Subsequent
Asset Assignment among Trendwest, TWH (collectively, the "Subsequent Sellers")
and TFI, and the list of Contracts so conveyed shall be listed on Schedule I to
such Asset Assignment or the applicable Subsequent Asset Assignment.
In order to further secure the Notes, TFI is granting to the Issuer,
pursuant to the Sale Agreement, and the Issuer subsequently will grant to the
Trustee pursuant to the Indenture, a security interest in, among other things,
TFI's rights derived under this Agreement, and the Sellers agree that all
representations, warranties, covenants and agreements made by them in this
Agreement with respect to the Assets shall also be for the benefit and security
of the Issuer and the Trustee and all holders from time to time of the
applicable Series of Notes. In consideration for the Assets and their
representations, warranties, covenants and other agreements under this
Agreement, on the Closing Date TWH and the Prior Issuer will receive cash, and
Trendwest will receive cash, inter-company debt, and all of the common stock of
TFI, and on each subsequent Series on each subsequent Series Closing Date, TWH
will receive cash and Trendwest will receive cash and inter-company debt.
ARTICLE 1DEFINITIONS
Section 1.01. Defined Terms. For purposes of this Agreement the
following terms shall have the meanings specified herein. Capitalized terms used
herein but not otherwise defined shall have the respective meanings assigned to
such terms in the Indenture or the Sale Agreement.
"Acquisition Consideration" shall mean, with respect to any Contracts
and the related Receivables, the cash which shall be paid by TFI to the Sellers
on the applicable Series Closing Date and an interest in payments to TFI from
the Issuer in an aggregate amount equal to 100% of the aggregate principal
amount outstanding on the Contracts as of the related Series Cut-Off Date.
"Asset Assignment" shall mean the Asset Assignment, substantially in
the form attached hereto as Exhibit B, which shall be entered into in connection
with the conveyance of Assets from the Sellers to TFI on the Closing Date.
"Assets" shall mean all of the Sellers' right, title and interest in
and to (a) the Contracts and the related Receivables, including the proceeds of
the Contracts and the related Receivables and all payments received on or with
respect to the Contracts and the related Receivables and due after the related
Series Cut-Off Date, (b) the Contract Files and the Custodian Files, (c) the
Sellers' rights and interests in the related Credits, (d) the Servicing Charges
with respect to the Contracts and (e) all income and proceeds of the foregoing
or relating thereto.
"Contract File" shall mean, with respect to each Contract, the
following documents:
(i) a copy of the Contract;
(ii) notice of assignment; and
(iii) any other documents or papers relating to servicing the Receivables.
"Custodian" shall mean Sage Systems, Inc. and its permitted successors and
assigns.
"Custodian File" shall mean, with respect to each Contract, the
following documents:
(i) the original Contract; and
(ii) notice of assignment.
"Electronic Ledgers" shall mean the electronic master records of all
contracts of the Sellers or the Issuer similar to and including the Contracts.
"Eligible Contract" shall mean a Contract that satisfies the selection
criteria set forth in Section 3.01(a) hereof and which is aged at least four
months, provided that with respect to any Substitute Contract, any reference in
such Section to Series Cut-Off Date shall be deemed to refer to the date as of
which such Substitute Contract is conveyed to the Seller in accordance with
Section 3.04 hereof.
"Indenture" shall mean the Indenture, dated as of March 1, 1998, by and
among the Issuer, the Trustee and the Servicer, as amended and supplemented from
time to time.
"Seller Address" with respect to Trendwest shall mean 12301 N.E. 10th
Place, Bellevue, Washington 98005, with respect to TWH shall mean 245 E. Liberty
Street, 3rd Floor, Reno, Nevada 89520 and with respect to the Prior Issuer shall
mean 3250 Lakeport Boulevard, Klamath Falls, Oregon 97601.
"Series Cut-Off Date" shall have the meaning set forth in the Indenture.
"Subsequent Asset Assignment" shall mean the Subsequent Asset
Assignment, substantially in the form attached hereto as Exhibit C, which shall
be entered to in connection with the conveyance of Assets from the Subsequent
Sellers to TFI on each subsequent Series Closing Date.
"Substitute Contract" shall have the meaning set forth in Section 3.04(b)
hereof.
"Substitute Receivable" shall mean the Receivable related to a Substitute
Contract.
"Substitution Criterion" shall have the meaning set forth in Section
3.04(b) hereof.
"TFI Address" shall mean 3250 Lakeport Boulevard, Klamath Falls, Oregon
97601.
"Upgrade" shall have the meaning set forth in the Indenture.
"Upgrade Contract" shall have the meaning set forth in the Indenture.
ARTICLE 2ACQUISITION OF ASSETS
Section 2.01. [Reserved.]
Section 2.02. Initial Acquisition. In return for the Asset
Consideration and other rights created by this Agreement, each of the Sellers
hereby transfers, assigns, sells and grants to TFI, without recourse except as
provided in Section 3.03 of this Agreement, on the Closing Date, any and all of
such Seller's respective right, title and interest in and to all of the Assets
relating to the Contracts set forth on Schedule I to the Asset Assignment. Each
of the Sellers hereby acknowledges that its transfer of the Assets to TFI is
absolute and irrevocable, without reservation or retention of any interest
whatsoever by such Seller.
Section 2.03. Subsequent Acquisitions. TWH and Trendwest, in return
for cash and for cash and inter-company debt, respectively, shall transfer,
assign, sell and grant to TFI, without recourse except as provided in Section
3.03 of this Agreement, on each Series Closing Date, any and all of their
respective right, title and interest in and to all of the Assets relating to the
Contracts set forth on Schedule I to the respective Subsequent Asset
Assignments. Each of TWH and Trendwest acknowledges that its transfer of the
Assets to TFI will be absolute and irrevocable, without reservation or retention
of any interest whatsoever by it.
Section 2.04. Delivery of Contracts; Filing of Financing Statements.
(a) In connection with TFI's acquisition of the Assets, Trendwest, on behalf of
the Sellers, TFI and the Issuer, shall deliver, or cause the delivery of, the
original Contracts to the Custodian so that the Custodian may retain possession
thereof as provided in the Transaction Documents. In addition, the Sellers agree
to execute, and Trendwest agrees to record and file prior to each Series Closing
Date at its own expense, financing statements (and thereafter timely
continuation statements with respect to such financing statements) with respect
to the Assets transferred on such date, in accordance with Section 3.01(a)(viii)
and Section 4.01(c) hereof.
(b) In connection with such acquisition, each of the Sellers shall
promptly, at its own expense, cause any Electronic Ledger maintained by it to be
marked to show which Assets have been acquired by TFI in accordance with this
Agreement and transferred or pledged, as the case may be, by TFI to the Issuer
and pledged by the Issuer to the Trustee in accordance with the Transaction
Documents.
(c) It is the intention of the Sellers and TFI that TFI is acquiring
full and absolute title to the Assets. If it is determined, however, that the
Sellers have transferred to TFI a security interest in the Assets, then this
Agreement shall constitute a security agreement under applicable law, and each
of the Sellers does hereby pledge, grant and assign to TFI a security interest
in the Assets.
Section 2.05. Servicing of Contracts and Related Credits. The
Servicer shall service the Contracts and the other Assets for the benefit of the
Issuer (and its successors and assigns) in accordance with the terms and
conditions of the Transaction Documents. Notwithstanding the foregoing,
Trendwest acknowledges and agrees that its obligations under this Agreement are
independent of any obligations it may have as Servicer and that its obligations
under this Agreement will continue in full force and effect, whether or not it
is acting as Servicer, until termination of this Agreement in accordance with
Section 6.01 hereof, unless otherwise provided herein.
Section 2.06. Review of Contracts. If any of the Sellers or the
Custodian (who shall thereupon notify TFI, Trendwest and the Trustee) discovers
that any Contracts are missing or defective (that is, mutilated, damaged,
defaced, incomplete, improperly dated, forged or otherwise physically altered)
in any material respect, Trendwest shall correct or cure such omission, defect
or other irregularity within 30 days from the date Trendwest discovered such
omission or defect, or from the date Trendwest is notified by the Custodian of
such omission or defect. In the event Trendwest is unable to correct or cure
such omission, defect or irregularity within the 30-day period described in the
preceding sentence, Trendwest shall purchase or replace such Contract from TFI
in accordance with Section 3.03 hereof.
ARTICLE 3 REPRESENTATIONS AND WARRANTEES
Section 3.01. Representations and Warranties of the Sellers. Each of
Trendwest, with respect to all of the Contracts and related Receivables, the
Prior Issuer, with respect to the Contracts and related Receivables transferred
by the Prior Issuer, and TWH, with respect to the Contracts and related
Receivables transferred by TWH, hereby and by the Asset Assignment, hereby makes
the following representations and warranties to TFI and for the benefit of the
Issuer, the Trustee and Holders of each Series of Notes, on which TFI relies in
acquiring the Assets and on which the Holders rely in purchasing such Notes;
provided, however, that with respect to the representations and warranties
relating to the Assets, the Holders of Notes of any Series only rely on such
representations and warranties to the extent such Assets are part of the related
Series Trust Estate. Such representations and warranties shall survive any
subsequent transfer, assignment, contribution or conveyance of the Contracts and
related Receivables and interest in the related Credits and any issuance of
Notes.
(a) As to each Contract, as of the related Series Closing Date:
(i) The information set forth in the related Series Contract Schedule is
true and correct as of the related Series Cut-Off Date.
(ii) The rights with respect to the Contract are assignable by the lender
thereunder and its successors and assigns without the consent of any Person.
(iii) The applicable Seller has heretofore provided to the Custodian the
sole original counterpart of the Contract, together with any and all amendments,
waivers and modifications thereto, except for any original executed counterparts
which have been marked to show that they have been pledged by the Issuer to the
Trustee under the Indenture, and the terms of such Contract have not been
further amended, waived or modified subsequent to the above being provided to
the Custodian.
(iv) The Electronic Ledgers have been marked as provided in Section 2.04(b)
hereof.
(v) The Contract was not originated in, nor is it subject to the laws of,
any jurisdiction, the laws of which would make unlawful the sale, transfer or
assignment of such document under any of the Transaction Documents, including
any repurchase in accordance with the Transaction Documents.
(vi) The Contract is, and on the related Series Closing Date will be, in
full force and effect in accordance with its respective terms, and none of the
Sellers or any Obligor has or will have suspended or reduced any payments or
obligations due or to become due thereunder by reason of a default by the other
party to such Contract; as of the related Series Cut-Off Date, no Scheduled
Payment with respect to such Contract has not been received and remains unpaid
for a period of 30 or more days (without regard to advances, if any, made by the
Servicer), and there are no proceedings pending, or to the best of the knowledge
of any Seller, threatened asserting insolvency of such Obligor; there has been
no other default, breach or violation and no event other than relating to an
Upgrade, permitting acceleration under such Contract; there are no proceedings
pending, or to the best of the knowledge of any Seller, threatened, wherein such
Obligor or any governmental agency has alleged that such Contract is illegal or
unenforceable; and none of the related Scheduled Payments are subject to any
set-off or credit of any kind.
(vii) The Contract is the valid, binding and legally enforceable obligation
of the parties thereto, enforceable in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, reorganization and other
similar laws of general applicability relating to or affecting creditors' rights
generally and to general principles of equity regardless of whether enforcement
is sought in a court of law or equity.
(viii) All actions, filings (including UCC filings) and recordings as are
required by the Indenture and that may be necessary to perfect, with respect to
the applicable Series Trust Estate, a first priority security interest of the
Issuer and the Trustee in, and the sale by the applicable Seller to TFI of, the
Contract and the related Receivables and the sale from TFI to the Issuer of the
related Receivables, being acquired and the transfer of the security interest in
the related Credits hereunder have been accomplished and are in full force and
effect.
(ix) The Contract is identical to one of the form contracts attached as
Exhibit A hereto, except for either (i) such immaterial modifications or
deviations from the form contract which appear in such Contract, which
immaterial modifications or deviations will not have a material adverse effect
on the Holders of the Notes or (ii) such modifications or deviations as set
forth on Schedule I to the Asset Assignment or Subsequent Asset Assignment, as
the case may be, related to such Contract.
(x) The Contract was originated by Trendwest in Trendwest's ordinary course
of business and meets Trendwest's qualifications for originating vacation credit
installment contracts. The origination and collection practices used by
Trendwest and the applicable Seller with respect to such Contract have been in
all respects legal, proper, prudent and customary in the vacation credit
financing and servicing business.
(xi) The Receivable is under a Contract that has a term to the last
Scheduled Payment Date of not more than 84 months (except for Contracts relating
to the Eagle Crest resort, which have a term to the last Scheduled Payment Date
of not more than 120 months) and not less than one month.
(xii) The Contract obligates the related Obligor to make all Scheduled
Payments thereunder in full notwithstanding the collection by Trendwest of a
security deposit with respect thereto. The calculation of the Collateral Value
of the related Receivable does not include any security deposits or similar
payments collected by or on behalf of Trendwest which are applied to Scheduled
Payments.
(xiii) All requirements of applicable federal, State and local laws, and
regulations thereunder, including, without limitation, usury laws, if any, in
respect of the Contract have been complied with in all material respects, and
such Contract complied in all material respects at the time it was originated or
made and now complies in all material respects with all legal requirements of
the jurisdiction in which it was originated.
(xiv) The Contract is not and will not be subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
whether arising out of transactions concerning such Contract or otherwise, and
the operation of any of the terms of such Contract or the exercise by the
applicable Seller or the Obligor of any right under such Contract will not
render such Contract unenforceable in whole or in part, and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect
thereto, except that certain rights or defenses may exist under applicable law
which, individually or in the aggregate, do not make the remedies available to
the Seller with respect to such Contract inadequate for the practical
realization of the benefits provided thereby.
(xv) Each of the Sellers has duly fulfilled all obligations on the lender's
part to be fulfilled under or in connection with the Contract, including,
without limitation, giving any notices or consents necessary to effect the
acquisition of the Assets by TFI and has done nothing to impair the rights of
TFI in such Contract or payments with respect thereto.
(xvi) The Contract and the related Seller's interest in the related Credits
have not been sold, transferred, assigned or pledged by the Seller to any Person
other than the Issuer (except for such interests in the Purchased Assets which
shall be terminated on or prior to the related Series Closing Date), and upon
execution and delivery hereof and of the Asset Assignment by the related Seller
and the payment by the Issuer of the related Acquisition Consideration, TFI will
have all of the right, title and interest in and to such Seller's interest in
the Contract and the related Receivable and a security interest in the related
Credits, free and clear of all liens and encumbrances, except for the interests
of the Obligor pursuant to such Contract. Such Contract has not been satisfied,
subordinated or rescinded.
(xvii) The relevant Seller has no specific knowledge that the Contract will
not be fully performed in accordance with its terms.
(xviii) The Obligor has made the first payment (which payment may be an
advance payment under such Contract) due under the Contract within the time set
forth in such Contract.
(xix) The related Obligor is located in the United States of America or
Canada, and the related Scheduled Payments are payable in U.S. dollars.
(xx) Except for changes due to Upgrades, the related Scheduled Payments
were established at the time such Contract was originated.
(xxi) There are no unpaid brokerage or other fees owed to third parties
relating to the origination of the Contract.
(xxii) The Contract cannot be rescinded pursuant to applicable consumer
finance laws.
(xxiii) The contract was originated in compliance with the requirements of
all federal, state and local laws, rules and regulations applicable to the
origination of the Contract (including, without limitation, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing
Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal
Reserve Board's Regulations "B" and "Z", the Soldiers' and Sailors' Civil Relief
Act of 1940, and any other federal, state and local laws relating to interest,
usury, consumer credit, equal credit opportunity, fair credit reporting,
privacy, consumer protection, false or deceptive trade practices and disclosure,
the Mail Fraud statute and any timeshare disclosure), non-compliance with which
could have a material adverse effect on the enforceability or value of the
Contract.
(xxiv) All Scheduled Payments are due and payable on a monthly basis and
such Scheduled Payments are level payments throughout the terms of the
Contracts.
(b) As to the aggregate pool of Contracts supporting a Series of Notes as
of the related Series Closing Date, no Seller used any selection procedures that
identified the Contracts as being less desirable or valuable than other
comparable vacation credit installment contracts owned by such Seller.
(c) As to each Seller as of the Closing Date and as to each Subsequent
Seller as of each subsequent Series Closing Date:
(i) Such Seller has been duly organized and is validly existing and in good
standing as a corporation or limited liability company, as applicable, under the
laws of the State in which such Seller was organized with corporate power and
authority to own its properties and to transact the business in which it is now
engaged, and such Seller is duly qualified to do business in and is in good
standing under the laws of each State in which its business is located or is not
required under applicable law to effect such qualification, except where failure
to so qualify would not have a material adverse effect on the ability of such
Seller to perform its obligations under the Transaction Documents or on any of
the Contracts, the Receivables or the related Credits or on the ability of such
Seller, TFI, the Issuer or the Trustee to realize upon or enforce the same.
(ii) The performance of the obligations of such Seller under this Agreement
and the other Transaction Documents and the consummation of the transactions
herein and therein contemplated will not conflict with or result in any breach
of any of the terms or provisions of, or constitute with or without notice,
lapse of time or both, a default under the Articles of Incorporation, Bylaws,
Certificate of Formation or Limited Liability Company Agreement, as applicable,
of such Seller, or any material indenture, agreement, mortgage, deed of trust or
other instrument to which such Seller is a party or by which it is bound, or
result in the creation or imposition of any lien, charge or encumbrance (except
the lien created by the Transaction Documents) upon any of the property or
assets of such Seller pursuant to the terms of such indenture, mortgage, deed of
trust, or other agreement or instrument to which such Seller is a party or by
which such Seller is bound or to which any of such Seller's property or assets
is subject, nor will such action result in any violation of the provisions of
such Seller's Articles of Incorporation, By-laws, Certificate of Formation or
Limited Liability Company Agreement, as applicable, or any statute or any order,
rule or regulation of any court or any regulatory authority or other
governmental agency or body having jurisdiction over such Seller or any of its
properties; and no consent, approval, authorization, order, registration or
qualification of or with or other action of any court, or any such regulatory
authority or other governmental agency or body is required for consummation of
the transactions contemplated by this Agreement and the other Transaction
Documents except such consents, approvals and authorizations which have been
obtained or such registrations or qualifications which have been made.
(iii) This Agreement and any other Transaction Document to which such
Seller is a party have been duly authorized, executed and delivered by such
Seller by all necessary corporate action and such agreements are the valid and
legally binding obligations of such Seller, enforceable against such Seller in
accordance with their respective terms, subject as to enforcement to applicable
bankruptcy, insolvency, reorganization and other similar laws of general
applicability relating to or affecting creditors' rights generally and to
general principles of equity regardless of whether enforcement is sought in a
court of law or equity.
(iv) The relevant Seller Address is the chief executive office, principal
place of business and the office where such Seller keeps its records concerning
the Contracts, Receivables and the related Credits. Such Seller has not used any
address other than its Seller Address and 4010 Lake Washington Boulevard, Suite
300, Kirkland, Washington 98033, in the previous five-year period. Such Seller's
legal name is as set forth in this Agreement. Such Seller has not used or done
business under any other name in the previous six-year period.
(v) Such Seller does not believe, nor does it have any reasonable cause to
believe, that it cannot perform each and every covenant contained in this
Agreement.
(vi) The transactions contemplated by the Transaction Documents are being
consummated by such Seller in furtherance of its ordinary business purposes,
with no contemplation of insolvency and with no intent to hinder, delay or
defraud any of its present or future creditors.
(vii) The consideration received by such Seller pursuant to this Agreement
is fair consideration having value reasonably equivalent to or in excess of the
value of the performance of such Seller's obligations hereunder.
(viii) Neither on the date of the transactions contemplated by the
Transaction Documents or immediately before or after such transactions, nor as a
result of the transactions, will such Seller:
(A) be insolvent such that the sum of its debts is greater than all of its
respective property, at a fair valuation;
(B) be engaged in, or about to engage in, business or a transaction for
which any property remaining with such Seller will be an unreasonably small
capital or the remaining assets of such Seller will be unreasonably small in
relation to its respective business or the transaction; and
(C) have intended to incur, or believed it would incur, debts that would be
beyond its respective ability to pay as such debts mature or become due. Such
Seller's assets and cash flow enable it to meet its present obligations in the
ordinary course of business as they become due.
(ix) Both immediately before and after the transactions contemplated by the
Transaction Documents (a) the present fair salable value of such Seller's assets
was or will be in excess of the amount that will be required to pay its probable
liabilities as they then exist and as they become absolute and matured; and (b)
the sum of such Seller's assets was or will be greater than the sum of its
debts, valuing its assets at a fair salable value.
(x) The acquisition of the Assets by TFI pursuant to this Agreement is not
subject to the bulk transfer or any similar statutory provisions in effect in
any applicable jurisdiction.
(xi) There are no proceedings or investigations pending or, to the
knowledge of such Seller, threatened against or affecting such Seller in or
before any court, governmental authority or agency or arbitration board or
tribunal which, individually or in the aggregate, involve the possibility of
materially and adversely affecting the properties, business, prospects, profits
or condition (financial or otherwise) of such Seller, or the ability of such
Seller to perform its obligations under this Agreement or the other Transaction
Documents. Such Seller is not in default with respect to any order of any court,
governmental authority or agency or arbitration board or tribunal.
(xii) All tax returns or extensions required to be filed by such Seller in
any jurisdiction have in fact been filed, and all taxes, assessments, fees and
other governmental charges upon such Seller, or upon any of the respective
properties, income or franchises shown to be due and payable on such returns
have been, or will be, paid. All such tax returns are true and correct, and such
Seller has no knowledge of any proposed additional tax assessment against it in
any material amount nor of any basis therefor. The provisions for taxes on the
books of such Seller are in accordance with generally accepted accounting
principles.
(xiii) Such Seller (i) is not in violation of any laws, ordinances,
governmental rules or regulations to which it is subject, (ii) has not failed to
obtain any licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its property or to the conduct of its business,
and (iii) is not in violation in any material respect of any term of any
agreement, charter instrument, bylaw or instrument to which it is a party or by
which it may be bound which violation or failure to obtain might materially
adversely affect the business or condition (financial or otherwise) of such
Seller.
(xiv) It is the intention of such Seller that the Assets are being or have
been acquired by TFI and that the beneficial interest in and title to the Assets
are not part of such Seller's estate in the event of the filing of a bankruptcy
petition by or against such Seller under any bankruptcy law.
(xv) Immediately prior to the acquisition of the Assets by TFI pursuant to
this Agreement, such Seller was the sole owner of its portion of the Assets at
such time and had good and marketable title to the Assets, free and clear of all
liens, claims and encumbrances (except for the Acquisition Consideration and
security interests in the Assets which shall be terminated on or prior to the
applicable Series Closing Date).
(xvi) The Sellers will treat the transfer of the Assets as a sale to TFI
for federal, State and local income tax reporting and accounting purposes.
(xvii) The sale of the Assets pursuant to this Agreement constitutes the
valid sale by the Sellers to TFI of all of such Seller's right, title and
interest in the Assets.
(xviii) The Sellers have valid business reasons for selling the Assets to
TFI pursuant to this Agreement rather than obtaining a loan secured by the
Assets.
(xix) The Sellers will be operated generally so as to not be substantively
consolidated with TFI for bankruptcy purposes.
(xx) No event has occurred that adversely affects the Sellers' ability to
perform the transactions contemplated by the Transaction Documents.
(xxi) Each pension plan or profit sharing plan to which each of the Sellers
is a party has been fully funded in accordance with the obligations of such
Seller as set forth in such plan.
(xxii) Neither the acquisition nor the holding of the Contracts and the
related Receivables violates any federal or State law, rule or regulation the
non-compliance with which could have a material adverse effect on the value of
the Contracts or the related Receivables.
Section 3.02. Representations and Warranties of TFI. TFI hereby
makes the following representations and warranties for the benefit of the
Issuer, the Trustee and Holders of the Notes, on which the Sellers rely in
entering into this Agreement with TFI and on which the Holders of the Notes rely
in purchasing the Notes; such representations and warranties speak as of each
Series Closing Date unless otherwise indicated, but shall survive any subsequent
transfer, assignment, contribution or conveyance of the Assets or any part
thereof:
(a) TFI has been duly organized and is validly existing in good standing as
a corporation under the laws of the State of Delaware, with corporate power and
authority to own its properties, perform its obligations under the Transaction
Documents and to transact the business in which it is now engaged or in which it
proposes to engage; TFI is duly qualified to do business and is in good standing
in each State in which the nature of its business requires it to be so
qualified, except where failure to so qualify would not have a material adverse
effect on the ability of TFI to perform its obligations under the Transaction
Documents.
(b) The transfer to and receipt by TFI of the Sellers' interest in the
Contracts, the Receivables and the related Credits pursuant to this Agreement
and the consummation of the transactions contemplated herein and in the
Transaction Documents will not conflict with or result in breach of any of the
terms or provisions of, or constitute (with or without notice, lapse of time or
both) a default under the Certificate of Incorporation or By-laws of TFI or any
material indenture, agreement, mortgage, deed of trust or other instrument to
which TFI is a party or by which it is bound, or result in the creation or
imposition of any lien, charge or encumbrance (except for the lien created by
the Sale Agreement and the Indenture) upon any of the property or assets of TFI
pursuant to the terms of, such indenture, mortgage, deed of trust, or other
agreement or instrument to which TFI is a party or by which it is bound or to
which any of the property or assets of TFI is subject, nor will such action
result in any violation of the provisions of the Certificate of Incorporation or
By-laws of TFI or any statute or any order, rule or regulation of any court or
regulatory authority or other governmental agency or body having jurisdiction
over TFI or any of its properties; and no consent, approval, authorization,
order, registration or qualification of or with or other action of any court or
any such regulatory authority or other governmental agency or body is required
for the acquisition of the Assets hereunder.
(c) The Transaction Documents to which TFI is a party have been duly
authorized, executed and delivered by TFI by all necessary corporate action and
constitute valid and legally binding obligations of TFI enforceable against TFI
in accordance with their terms, subject as to enforcement to bankruptcy,
insolvency, reorganization and other similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity regardless of whether enforcement is sought in a court of equity or
law.
(d) There are no proceedings or investigations to which TFI is a party
pending or, to the knowledge of TFI, threatened, before any court, regulatory
body, administrative agency or other tribunal or governmental instrumentality
(a) asserting the invalidity of this Agreement, (b) seeking to prevent the
issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement, or (c) seeking any determination or ruling that
would materially and adversely affect the performance by TFI of its obligations
under, or the validity or enforceability of, this Agreement.
(e) All approvals, authorizations, consents, orders or other actions of any
Person or of any court, governmental agency or body or official, required in
connection with the execution and delivery of this Agreement, have been or will
be taken or obtained on or prior to the related Series Closing Date.
(f) The TFI Address is the principal place of business and chief executive
office of TFI.
Section 3.03. Purchase or Substitution Required upon Breach of Certain
Representations and Warranties. Upon discovery by TFI or any of the Sellers of
the breach of any representations or warranties set forth in Section 3.01 or
3.02 hereof which materially and adversely affects the value of a Contract,
Receivable, the related Credits, or the interests of the Holders of the Notes of
any Series, or a breach of any of the representations and warranties set forth
in Sections 3.01(a)(v), 3.01(a)(vi), 3.01(a)(vii), 3.01(a)(xiii), 3.01(a)(xiv),
3.01(a)(xvi), 3.01(a)(xxii) or 3.01(a)(xxiii) hereof, the party discovering such
breach shall give prompt written notice to the other parties. Trendwest shall,
within 30 days from the date it was notified of, or otherwise discovers, such
breach, cure such breach, or, (1) if the breach relates to a particular Contract
and is not cured, either (a) purchase TFI's interest in such Contract and the
related Receivable from TFI at the Purchase Price or (b) provide a Substitute
Contract or (2) if the breach relates to a representation or warranty regarding
the selection criteria of the Contracts as a whole and is not cured by
Trendwest, either (a) purchase TFI's interest in such non-conforming Contracts
and the related Receivables from TFI or (b) provide Substitute Contracts as set
forth above, so that the representations and warranties with respect to the
selection criteria are correct, as evidenced by a certificate of an officer of
Trendwest to the Trustee. The Purchase Price for a purchased Contract shall be
paid, and any Substitute Contract shall be delivered, by Trendwest to TFI in
accordance with Section 3.04(c) hereof. It is understood and agreed that the
obligation of Trendwest to cure or purchase or replace any Contract as to which
such a breach has occurred shall constitute the sole remedy respecting such
breach available to TFI, the Issuer, the Holders of Notes or the Trustee on
behalf of such Holders (except for any indemnities provided under Section
4.01(j) hereof or any obligations under the Sale Agreement or the Indenture) for
any losses, claims, damages and liabilities arising from TFI's interest in such
Contract or the inclusion of TFI's interest in such Contract in the applicable
Series Trust Estate.
Section 3.04. Requirements for Purchase or Substitution of
Contracts; Upgrades. (a) If Trendwest is required to purchase TFI's interest in
any Contract and the related Receivables under Section 3.03 hereof, if TFI or
Trendwest is required to purchase the Issuer's interest in any Contract and the
related Receivables under Section 3.03 of the Sale Agreement, or if the Issuer
is required or elects to purchase the Trustee's interest in any Contract and the
related Receivables under Section 3.10 of the Servicing Agreement, such Contract
and related Receivables shall be purchased by Trendwest at the Purchase Price.
All purchases shall be accomplished at the times specified in subsection (c)
below.
(b) If Trendwest is required to substitute any Contract under Section
3.03 hereof or if TFI or Trendwest is required to substitute any Contract under
Section 3.03 of the Sale Agreement (a "Substitute Contract"), each such
Substitute Contract shall (i) be an Eligible Contract; (ii) be written on one of
the standard forms attached as Exhibit A to this Agreement; (iii) be accompanied
by a supplement to this Agreement substantially in the form of Annex A hereto
subjecting such Contract to the provisions hereof and providing with respect to
such Substitute Contract the information required in the related Series Contract
Schedule; (iv) not have been selected using procedures that identified the
Contracts as being less desirable or valuable than other comparable vacation
credit installment contracts owned by Trendwest; and (v) not have any Scheduled
Payments that are due after the Stated Maturity Date of the Notes of the Series
supported by such Contract. In addition, (i) such Substitute Contracts shall
have an aggregate Collateral Value at least equal to and not substantially
greater than the aggregate Collateral Value of the Contracts being withdrawn as
of the date of withdrawal (the "Substitution Criterion") and (ii) the
representations and warranties set forth in Sections 3.01 and 3.02 shall be true
and correct with respect to such Substitute Contract and the aggregate pool of
Contracts as of the date such Substitute Contract is conveyed to TFI.
Upon the substitution of any Substitute Contract pursuant to the
provisions of this Section 3.04(b), Trendwest hereby agrees that such Substitute
Contract will be subject to all the terms and provisions of this Agreement, the
Sale Agreement, the Servicing Agreement, the Custodian Agreement and the
Indenture just as if such Substitute Contract had been one of the original
Contracts acquired on the applicable Series Closing Date. Upon the substitution
of a Substitute Contract pursuant to this Section 3.04(b), TFI and Trendwest
shall also comply with the provisions and limitations set forth in the
Indenture. All substitutions shall be accomplished at the time specified in
subsection (c) below.
(c) Any purchase or substitution of a Contract by Trendwest in
accordance with Section 3.03 hereof or this Section 3.04 or by TFI or Trendwest
under Section 3.03 or Section 3.04 of the Sale Agreement shall be made either by
remittance of the Purchase Price to the Subservicer for deposit into the
Clearing Account in accordance with Section 3.03(a) of the Servicing Agreement
or by substitution of a Substitute Contract, as applicable, within one Business
Day following the expiration of the cure period set forth in Section 3.03
hereof.
(d) If an Obligor desires to enter into an Upgrade Contract,
Trendwest, as Servicer, shall inform the Issuer and TFI of such fact. In such
event, if the Issuer desires to purchase the receivable related to such Upgrade
and so advises Trendwest, Trendwest for the benefit of the Issuer and TFI may
(but shall not be obligated to) enter into an Upgrade Contract with such Obligor
and transfer such Upgrade Contract to TFI in exchange for the existing Contract
with such Obligor and an amount equal to the difference in the principal balance
between the existing Contract and the Upgrade Contract (which amount shall be
paid to Trendwest by increasing the amount owed by TFI under the intercompany
debt between TFI and Trendwest); provided, however, that (i) such Upgrade
Contract has an interest rate that is not more than 1.0% per annum lower than
the interest rate on the Contract that is being replaced, (ii) each Scheduled
Payment under the Upgrade Contract shall be the equal to or greater than the
Scheduled Payments on the existing Contract, (iii) such Obligor has made all
Scheduled Payments due on or before the date of such Upgrade, (iv) such Upgrade
Contract is written on one of the standard forms attached as Exhibit A to this
Agreement, (v) simultaneous with the execution of the Upgrade Contract,
Trendwest shall execute a form of assignment to TFI attached to such Upgrade
Contract, and indicate on the face of the Upgrade Contract that such contract is
being sold to TFI, so that TFI can immediately execute an assignment of the
related Receivable to the Issuer, which will pledge such Receivable to the
Trustee pursuant to the Indenture, (vi) such Upgrade Contract shall be delivered
by Trendwest to the Custodian immediately after execution of such contract by
the Obligor, WorldMark and Trendwest (and, in any event, prior to the release of
the original Contract), (vii) the transfer of the Upgrade Contract shall not be
effective (and the lien of the Trustee on the existing Contract and the related
Receivable shall not be released) until after any applicable rescission period
has expired and (viii) clauses (i)-(vii) above shall be representations and
warranties of Trendwest, and Trendwest shall be obligated to purchase from the
Issuer any Upgrade Contract that does not comply with such representations and
warranties. Simultaneous with the delivery of such Upgrade Contract to the
Custodian, Trendwest shall deliver to the Trustee a supplement to this Agreement
substantially in the form of Annex A hereto subjecting such Contract to the
provisions hereof and providing with respect to such Upgrade Contract the
information required on the applicable Series Contract Schedule.
Upon the acquisition by TFI of any Upgrade Contract pursuant to the
provisions of this Section 3.04(d) (and the subsequent transfer of the related
Receivable to the Issuer), Trendwest hereby agrees that such Upgrade Contract
and the related Receivable, as applicable, will be subject to all the terms and
provisions of this Agreement, the Sale Agreement, the Servicing Agreement and
the Indenture just as if such Upgrade Contract had been one of the original
Contracts acquired on the applicable Series Closing Date.
ARTICLE 4 SELLER COVENANTS
Section 4.01. Seller Covenants. Each Seller hereby covenants and agrees
with TFI as follows:
(a) Except as hereinafter provided, such Seller will keep in full effect
its existence, rights and franchises as a corporation or limited liability
company, as applicable, and will obtain and preserve its qualification to do
business as a foreign corporation or limited liability company, as applicable,
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement or any of the
Contracts and to perform its duties hereunder. Any person into which such Seller
may be merged or consolidated, or to whom such Seller has sold substantially all
of its assets, or any corporation resulting from any merger, conversion or
consolidation to which such Seller shall be a party, or any Person succeeding to
the business of such Seller shall be the successor of such Seller hereunder,
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;
provided, however, that (w) immediately after giving effect to such transaction,
no representation or warranty made pursuant to Section 3.01(c) hereof shall have
been breached, (x) such successor executes an agreement of assumption, in form
reasonably satisfactory to the Trustee, to perform every obligation under this
Agreement, (y) such Seller shall have delivered to TFI a certificate of an
officer of such Seller and an Opinion of Counsel each stating that such
consolidation, merger, or succession and such agreement of assumption complies
with this Section 4.01 and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with, and (z)
such Seller shall have delivered to TFI an Opinion of Counsel either (1) stating
that, in the opinion of such counsel, all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of TFI in the Contracts and
reciting the details of such filings, or (2) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interest.
(b) Neither such Seller nor any of the members, directors, officers,
employees or agents of such Seller (and, with respect to the Prior Issuer, of
the members of such Seller) shall be under any liability to TFI, the Trustee or
the Holders of Notes for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment
not involving recklessness or negligence; provided, however, that this provision
shall not protect such Seller against any breach of warranties or
representations made herein, or failure to perform its obligations in strict
compliance with this Agreement, or any liability which would otherwise be
imposed by reason of any breach of the terms and conditions of this Agreement.
Such Seller, and any member, director, officer, employee or agent of such Seller
(and, with respect to the Prior Issuer, of the members of such Seller), may rely
in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. Such Seller
shall not be under any obligation to appear in, prosecute, or defend any legal
action that is not incidental to its obligations as the seller of the Assets
under this Agreement and that in its opinion may involve it in any expense or
liability.
(c) Such Seller will from time to time, at its own expense, execute and
file such additional financing statements (including continuation statements) as
may be necessary or which the Trustee may deem appropriate to preserve the
security interests and liens described in Section 3.01(a)(viii) hereof and are
reasonably satisfactory in form and substance to TFI and the Issuer.
(d) Such Seller will not change its name, identity or corporate structure
in any manner that would, could, or might make any financing statement or
continuation statement misleading within the meaning of section 9-402(7) of the
UCC, unless it shall have given TFI, the Issuer and the Trustee at least 30
days' prior written notice thereof.
(e) Such Seller will give TFI, the Issuer and the Trustee at least 30 days'
prior written notice of any relocation of its principal executive office if, as
a result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement.
(f) Such Seller will duly fulfill all obligations on its part to be
fulfilled under or in connection with each Contract, will not change or modify
the terms of the Contracts (and shall prevent any third-party originator that
still owns any Contract from changing or modifying the terms of any such
Contract) except as expressly permitted by the terms of the Transaction
Documents and will do nothing to impair the rights of TFI, the Issuer or the
Trustee in the Assets. In the event that the rights of such Seller under any
Contract or any guaranty of the related Obligor's obligations under any Contract
are not assignable to TFI or the Issuer, such Seller will enforce such rights on
behalf of TFI or the Issuer; the Seller is not aware of any such inability to
assign any Contracts.
(g) Such Seller will comply, in all material respects, with all material
acts, rules, regulations, orders, decrees and directions of any governmental
authority applicable to the Assets or any part thereof; provided, however, that
such Seller may contest any act, regulation, order, decree or direction in any
reasonable manner which shall not materially and adversely affect the rights of
TFI, the Issuer or the Trustee in the Assets.
(h) Such Seller will advise TFI, the Issuer and the Trustee promptly, in
reasonable detail, of the occurrence of any breach by such Seller following
discovery by such Seller of such breach of any of its representations,
warranties and covenants contained herein.
(i) Such Seller will execute or endorse, acknowledge, and deliver to TFI,
the Issuer and the Trustee from time to time such schedules, confirmatory
assignments, conveyances, and other reassurances or instruments and take such
further similar actions relating to the Assets, and the rights covered by the
Transaction Documents, as TFI, the Issuer or the Trustee may reasonably request
to preserve and maintain title to the Assets and the rights of the Trustee and
the Holders of Notes therein against the claims of all persons and parties.
(j) Trendwest agrees to indemnify, defend and hold TFI harmless from and
against any and all loss, liability, damage, judgment, claim, deficiency or
expense (including interest, penalties, reasonable attorney's fees and amounts
paid in settlement) that is caused by (i) a material breach at any time by any
Seller of the representations, warranties and covenants contained in Section
3.01 hereof or this Section 4.01 or (ii) any material information furnished by
any Seller which is set forth in any schedule delivered hereunder, being untrue
in any material respect when any such representation was made or schedule
delivered, provided that Trendwest shall not have any liability with respect to
a representation or warranty as to any specific Contract, Receivable or the
related Credits other than to purchase such Contract or substitute for such
Contract in accordance with Section 3.03 hereof unless such breach of
representation or warranty is the result of a Seller's fraud, negligence, bad
faith or willful misconduct. Trendwest shall also indemnify the Issuer, the
Trustee and the Servicer for any cost or expenses incurred by them in the
enforcement of this Agreement. The obligations of Trendwest under this Section
4.01(j) shall be considered to have been relied upon by TFI and shall survive
the execution, delivery and performance of this Agreement, regardless of any
investigation made by or on behalf of TFI, until termination of the Indenture.
If Trendwest has made any indemnity payments pursuant to this Section 4.01(j)
and thereafter the recipient collects any of such amounts from others, such
party will promptly repay the amount collected to Trendwest, without interest.
(k) Such Seller will do nothing to disturb or impair the acquisition
hereunder by TFI of all of such Seller's right, title and interest in the Assets
or the Issuer's rights, title or interest in the Purchased Assets.
(l) Such Seller (i) will (A) maintain its books and records separate from
the books and records of TFI and (B) maintain bank accounts separate from those
of TFI and (ii) will not (x) take, prior to the complete payment of the Notes,
any action that would cause the dissolution or liquidation of TFI, (y) guarantee
(directly or indirectly), endorse or otherwise become contingently liable
(directly or indirectly) for the obligations of TFI or (z) institute against
TFI, or join any other person in instituting against TFI, any case, proceeding
or other action under any existing or future bankruptcy, insolvency or similar
laws.
(m) Such Seller shall notify TFI, the Issuer and the Trustee promptly after
becoming aware of any Lien on any Asset.
(n) On each date as of which Trendwest substitutes a Substitute Contract in
accordance with Section 3.03 hereof, Trendwest shall provide to TFI a supplement
to this Agreement substantially in the form of Annex A hereto subjecting such
Contract to the provisions hereof and providing with respect to such Substitute
Contract the information required in the Contract Schedule.
(o) The annual financial statements of such Seller will disclose the
effects of the transactions contemplated by the Transaction Documents in
accordance with generally accepted accounting principles. The financial
statements of such Seller and TFI will also disclose that the assets of TFI are
not available to pay creditors of such Seller. The resolutions, agreements and
other instruments underlying the Transaction Documents will be continuously
maintained by such Seller as official records.
(p) Such Seller will, at its own cost and expense, (i) retain the
Electronic Ledger as a master record of the Contracts and the related Credits
and copies of all documents relating to each Contract (other than the original
executed Contracts) as custodian for the Issuer and other Persons, if any, with
interests in the Contracts and the related Credits and (ii) mark the Contracts
and the Electronic Ledger to the effect that the Contracts and such Seller's
interest in the related Credits have been acquired by TFI, that the related
Receivables subsequently have been transferred by TFI to the Issuer and a
security interest in the related Contracts and the related Credits have been
granted by TFI to the Issuer and that such Receivables, security interests and
rights have been pledged, transferred and assigned to the Trustee by the Issuer
pursuant to the Indenture.
(q) Such Seller will perform the transactions contemplated by this
Agreement in a manner that is consistent with TFI's ownership interest in the
Assets (prior to the conveyance of any part of such interest to the Issuer
pursuant to the Sale Agreement). Such Seller will respond to all third party
inquiries confirming the transfer of the Assets to TFI and of the Purchased
Assets to the Issuer.
(r) Such Seller shall immediately transfer to the Servicer for deposit in
the Clearing Account any payment it receives relating to the Assets.
Section 4.02. TFI Covenants. TFI hereby covenants and agrees with the
Sellers as follows:
(a) TFI hereby acknowledges and agrees that its rights in the related
Credits are expressly subject to the rights of the related Obligors in such
Credits pursuant to the applicable Contract.
(b) On each date as of which any interest in any Contract is to be
purchased or replaced by Trendwest pursuant to Section 3.03 hereof, TFI shall
submit to Trendwest an instrument of assignment assigning TFI's interest in such
Contract and the related Credits to Trendwest, signed by the president, senior
vice president or any vice president of TFI. Each such assignment shall operate
as an assignment, without recourse, representation, or warranty, to Trendwest of
all of TFI's right, title, and interest in and to such Contract, the related
Receivable and the related Credits and any security documents relating thereto,
such assignment being an assignment outright and not for security, and upon
payment of the Purchase Price or delivery of a Substitute Contract, Trendwest
will thereupon own such interest in the Contract and all such security and
documents, free of any further obligation to TFI with respect thereto. If in any
enforcement suit or legal proceeding it is held that Trendwest may not enforce a
Contract on the ground that it is not a real party in interest or holder
entitled to enforce the Contract, TFI shall, at TFI's expense, take such steps
as TFI deems necessary to enforce the Contract, including bringing suit in TFI's
name.
(c) TFI warrants that, except as contemplated by the Transaction Documents,
it will have ownership of or a valid security interest in the related Credits.
TFI shall not assign, sell, pledge, or exchange, or in any way encumber or
otherwise dispose of the related Credits, except as contemplated by or permitted
under the Transaction Documents.
Section 4.03. Assignment of Assets. The Sellers understand that TFI
will assign to the Issuer the Receivables and grant to the Issuer a security
interest in all its right, title and interest to this Agreement, the Contracts
and the related Credits and that the Issuer will assign to and grant to the
Trustee a security interest in such Receivables, Contracts and the related
Credits. The Sellers consent to such assignments and grants and further agree
that all representations, warranties, covenants and agreements the Sellers made
herein shall also be for the benefit of and inure to the Issuer, the Trustee and
all Holders from time to time of the Notes.
ARTICLE 5 CONDITIONS PRECEDENT
Section 5.01. Conditions to TFI's Initial Obligations. The
obligations of TFI to execute and deliver the Asset Assignment to the Sellers on
the Closing Date and the applicable Subsequent Asset Assignment to the
Subsequent Sellers on each subsequent Series Closing Date, pursuant to, and
perform it obligations pursuant to, this Agreement shall be subject to the
satisfaction of the following conditions:
(a) All representations and warranties of the Sellers contained in Sections
3.01(b) and 3.01(c) hereof and all information provided in the related Series
Contract Schedule shall be true and correct on such Series Closing Date, with
the same effect as though such representations and warranties had been made on
such date, and the applicable Sellers shall have delivered to TFI, the Issuer,
the Trustee and each original purchaser of the related Series of Notes an
Officer's Certificate to such effect;
(b) All representations and warranties of the Sellers contained in Section
3.01(a) hereof shall be true and correct on the related Series Closing Date with
respect to the Contracts listed on the related Series Contract Schedule, with
the same effect as though such representations and warranties had been made on
such date, and the applicable Sellers shall have delivered to TFI, the Issuer,
the Trustee and each original purchaser of the related Series of Notes an
Officer's Certificate to such effect;
(c) The Sellers shall have delivered all other information theretofore
required or reasonably requested by TFI to be delivered by the Sellers
hereunder, duly certified by an officer of each of the Sellers, and the Sellers
shall have substantially performed all other obligations required to be
performed as of such Series Closing Date by the provisions of this Agreement;
(d) On or prior to such Series Closing Date, Trendwest, on behalf of the
Sellers shall have delivered, or caused the delivery of, the Custodian File
related to the Contracts identified in the Contract Schedule to the Custodian or
its agent and, subject to Section 2.04 hereof, there shall have been made all
filings, recordings and/or registrations, and there shall have been given, or
taken, any notice or any other similar action, as may be necessary in the
opinion of TFI, in order to establish and preserve the right, title and interest
of TFI in such Contract and the other Assets;
(e) On or before the Closing Date, the Issuer, the Servicer, the
Subservicer and the Trustee shall have entered into the Servicing Agreement;
(f) The related Series of Notes shall be issued and sold on the related
Series Closing Date, the Issuer shall receive the full consideration due it upon
the issuance of such Notes, the Issuer shall have applied such consideration, to
the extent necessary, to pay the related consideration to TFI for the sale of
the Receivables and the grant of the security interest in the Contracts and the
Credits, and TFI shall have applied such consideration, to the extent necessary,
to pay the related Acquisition Consideration; and
(g) Each of the Sellers shall have executed and delivered the Asset
Assignment or a Subsequent Asset Assignment, as applicable.
Section 5.02. Conditions to the Sellers' Obligations. The
obligations of each of the Sellers to execute and deliver to TFI the Asset
Assignment or a Subsequent Asset Assignment, as applicable, and perform its
obligations pursuant to this Agreement on the Closing Date and each subsequent
Series Closing Date shall be subject to the satisfaction of the following
conditions:
(a) All representations and warranties of TFI contained in this Agreement
shall be true and correct with the same effect as though such representations
and warranties had been made on such date;
(b) TFI shall have executed and delivered the applicable Asset Assignment;
and
(c) All corporate and legal proceedings and all instruments in connection
with the transactions contemplated by this Agreement shall be satisfactory in
form and substance to such Seller, and such Seller shall have received from the
TFI copies of all documents (including, without limitation, records of corporate
proceedings) relevant to the transactions herein contemplated as such Seller may
reasonably have requested.
Trendwest's and TFI's obligations to repurchase the Contracts pursuant
to this Agreement shall not be affected by any failure of the Issuer to comply
with clause (a) of this Section 5.02 subsequent to the Closing Date.
ARTICLE 6 TERM AND TERMINATION
Section 6.01. Term. This Agreement shall commence as of the date of
execution and delivery hereof and shall continue in full force and effect until
the later of (i) payment with respect to the last Asset or (ii) termination of
the Indenture.
Section 6.02. Default by Sellers. If any Seller shall be in default
under this Agreement and such default shall not have been cured for a period of
60 days, or if such Seller shall become insolvent or make an assignment for the
benefit of its creditors or have a receiver appointed for all or substantially
all of its properties, or if any proceedings commenced, or consented to, by such
Seller are not stayed or dismissed within 90 days after being commenced against
such Seller under any bankruptcy, insolvency or other law for the relief of
debtors, TFI shall have the right, in addition to any other rights it may have
under any applicable law, to terminate this Agreement with respect to such
Seller upon 30 days' prior written notice to such Seller; provided that any
termination of this Agreement shall not release such Seller from any obligation
under this Agreement.
ARTICLE 7 MISCELLANEOUS
Section 7.01. Amendments. This Agreement and the rights and
obligations of the parties hereunder may not be changed orally but only by an
instrument in writing signed by the party against which enforcement is sought.
This Agreement may be amended by TFI and the Sellers only with the prior written
consent of the Holders of 66-2/3% in principal amount of the Controlling Class
of the Notes Outstanding of each Series; provided, however, that the number of
Holders of any Series required for any such amendment may be modified as set
forth in the related Series Supplement.
Section 7.02. Governing Law. This Agreement shall be construed in
accordance with the internal laws of the State of New York, without regard to
choice of law principles.
Section 7.03. Notices. All demands, notices and communications
hereunder shall be in writing and shall be delivered personally, mailed by
registered or certified United States mail, postage prepaid, or sent via
overnight air courier or facsimile communication and addressed, in the case of
the Sellers, to the Seller Address, and in the case of TFI, to the TFI Address.
All notices and demands shall be deemed to have been given either at the time of
the delivery thereof to any officer of the Person entitled to receive such
notices and demands at the address of such Person for notices hereunder, or on
the third day after the mailing thereof to such address, as the case may be. Any
Person may change the address for notices hereunder by giving notice of such
change to the other Person.
Section 7.04. Separability Clause. Any provisions of this Agreement
which are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 7.05. Assignment. Except as provided in Section 4.01(a),
this Agreement may not be assigned or delegated by any Seller without the prior
written consent of TFI, the Trustee and the Holders of 66-2/3% in principal
amount of the Notes of the Controlling Class of each Series Outstanding and may
not be assigned or delegated by TFI without the prior written consent of each of
the Sellers, the Trustee and the Holders of 66-2/3% in principal amount of the
Notes of the Controlling Class of each Series Outstanding.
Section 7.06. Further Assurances. Each of the Sellers and TFI agrees
to do such further acts and things and to execute and deliver to the Trustee
such additional assignments, agreements, powers and instruments as are required
by the Trustee to carry into effect the purposes of this Agreement or to better
assure and confirm unto the Trustee or the Holders of the Notes their rights,
powers or remedies hereunder. If any Obligor shall be in default under any
Contract, upon reasonable request from the Servicer, the applicable Seller will
take all reasonable steps to assist in enforcing such Contract and preserving
and maintaining title to the Assets and the rights of the Trustee and the
Holders of the Notes therein against the claims of all persons and parties to
the extent the applicable Seller is capable of performing such requested steps
and the Servicer reasonably determines that the assistance of the applicable
Seller is necessary to effect the intent and purposes hereof.
Section 7.07. No Waivers; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of TFI or the Sellers, any
right, remedy, power or privilege hereunder shall operate as a waiver thereof
nor shall any single or partial exercise of any right, remedy, or privilege
hereunder preclude any other or further exercise hereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.
Section 7.08. Binding Effect; Third Party Beneficiaries. This
Agreement will inure to the benefit of and be binding upon the parties hereto,
the Holders of Outstanding Notes, and their respective successors and permitted
assigns.
Section 7.09. Set-Off. (a) Each of the Sellers hereby irrevocably
and unconditionally waives all right of set-off that it may have under contract
(including this Agreement), applicable law or otherwise with respect to any
funds or monies of TFI and the Issuer at any time held by or in the possession
of such Seller.
(b) TFI and the Issuer shall have the right to set-off against each
Seller any amounts to which such Seller may be entitled and to apply such
amounts to any claims TFI and the Issuer may have against such Seller from time
to time under this Agreement. Upon any such set-off TFI shall give notice of the
amount thereof and the reasons therefor.
Section 7.10. Counterparts. This Agreement may be executed in one or more
counterparts all of which together shall constitute one original document.
IN WITNESS WHEREOF, the Sellers and TF I have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
date and year first above written.
TRENDWEST RESORTS, INC., in its individual
capacity and as Seller
By
Name:
Title:
TRI FUNDING COMPANY I, L.L.C., Seller
By: TRENDWEST FUNDING I, INC., as
member
By
Name:
Title:
TW HOLDINGS, INC., Seller
By
Name:
Title:
TRENDWEST FUNDING II, INC.
By
Name:
Title:
===============================================================================
===============================================================================
ANNEX A
FORM OF SUPPLEMENT FOR SUBSTITUTE CONTRACTS
AND UPGRADE CONTRACTS
Pursuant to Section 3.04(b) and Section 3.04(d) of the Receivables
Purchase Agreement dated as of March 1, 1998 (the "Agreement"), among Trendwest
Resorts, Inc. ("Trendwest"), TRI Funding Company I, L.L.C., TW Holdings, Inc.
and Trendwest Funding II, Inc. ("TFI"), attached as Schedule I hereto is a
Supplemental Contract Schedule, which includes information regarding Assets that
are hereby sold, assigned, transferred and delivered by Trendwest to TFI in
accordance with the Agreement and the Asset Assignment and setting forth the
Collateral Value of any Contract being sold to TFI by the Issuer pursuant to an
Upgrade or exchanged pursuant to a substitution.
TRENDWEST RESORTS, INC.
By
Name:
Title:
==============================================================================
==============================================================================
SCHEDULE I
SUPPLEMENTAL CONTRACT SCHEDULE FOR SUBSTITUTE CONTRACTS
AND UPGRADE CONTRACTS
===============================================================================
===============================================================================
EXHIBIT A
FORM OF CONTRACT
===============================================================================
===============================================================================
EXHIBIT B
FORM OF ASSET ASSIGNMENT
This Asset Assignment ("Assignment") is made as of March ____, 1998
(the "Closing Date"), by and among Trendwest Resorts, Inc., an Oregon
corporation ("Trendwest"), TRI Funding Company I, L.L.C., a Delaware limited
liability company (the "Prior Issuer"), TW Holdings, Inc., a Nevada corporation,
(together with Trendwest and the Prior Issuer, the "Assignors" and each an
"Assignor") and Trendwest Funding II, Inc., a Delaware corporation ("Assignee"),
with reference to the following facts:
RECITALS:
A. In connection with the sale of certain assets of the Assignors in
conjunction with the issuance of notes on the date hereof by TRI Funding II,
Inc., Assignee and the Assignors have executed the Receivables Purchase
Agreement dated as of March 1, 1998 (the "Agreement").
B. In connection with the Agreement, each of the Assignors desires to
assign and transfer to Assignee all of such Assignor's right, title and interest
in and to each of the assets described in Schedule I hereto, and the
corresponding paragraphs below (the "Assigned Interests").
C. Assignee desires to accept this Assignment and transfer of the Assigned
Interests and assume all duties and obligations attendant thereto, accruing
after the Transfer Date.
D. Terms used but not defined herein have the meanings ascribed to them in
the Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and in consideration of the mutual
covenants set forth herein, the Assignors and Assignee hereby agree as follows:
1. Assignment. Each Assignor hereby assigns, conveys, grants and transfers,
without recourse except as provided in the Agreement, to Assignee (and the
successors and assigns of Assignee) the following property:
1.1. Such Assignor's right, title and interest in and to the Contracts and
related Receivables described and listed on Schedule I hereto.
1.2. A security interest in the vacation credits subject to each such
Contract (the "Credits").
1.3. All other Assets relating to such Contract.
2. Assumption. Assignee hereby accepts the foregoing assignment and hereby
assumes all of the indebtedness, if any, duties and obligations incident hereto
and thereto, subject to the terms and conditions of the Agreement.
3. Further Assurance. The Assignors and Assignee each hereby agree to
provide such further assurances and to execute and deliver such documents and to
perform all such other acts as are necessary or appropriate to consummate and
effectuate this Assignment.
4. Distinct Entities. The Assignors and Assignee hereby acknowledge that
for all purposes each of the Assignors and the Assignee are separate and
distinct legal entities. Accordingly, no Assignor shall be liable to any third
party for the debts, obligations and liabilities of the Assignee; and Assignee
shall not be liable to any third party for the debts, obligations and
liabilities of any Assignor to the extent that such debts, obligations and
liabilities have not been expressly assumed by Assignee hereunder.
5. Governing Law. This Assignment shall be governed by and interpreted in
accordance with the laws of the State of New York, and the parties hereto hereby
acknowledge and agree that this Assignment and the transactions contemplated
hereunder were negotiated and entered into in the State of New York.
6. Authority. Each of the Assignors and the Assignee hereby represent
respectively that they have full power and authority to enter into this
Assignment.
7. Counterparts. This Assignment may be executed in multiple counterparts,
each of which shall be deemed an original but all of which, taken together,
shall constitute one and the same instrument.
8. Successors and Assigns. Each of the Assignors and the Assignee agree
that this Assignment will be binding and will inure to the benefit of each
Assignor and its successors and assigns and the Assignee and its successors and
assigns.
IN WITNESS WHEREOF, this Assignment has been executed as of the date first
above written.
TRENDWEST RESORTS, INC., Assignor
By
Name:
Title:
TRI FUNDING COMPANY I, L.L.C., Assignor
By: TRENDWEST FUNDING I, INC., as member
By
Name:
Title:
TW HOLDINGS, INC., Assignor
By
Name:
Title:
TRENDWEST FUNDING II, INC., Assignee
By
Name:
Title:
==============================================================================
==============================================================================
SCHEDULE I
CONTRACT SCHEDULE
===============================================================================
===============================================================================
EXHIBIT C
FORM OF SUBSEQUENT ASSET ASSIGNMENT
This Asset Assignment ("Assignment") is made as of ___________, ____
(the "Series Closing Date"), by and among Trendwest Resorts, Inc., an Oregon
corporation ("Trendwest"), TW Holdings, Inc., a Nevada corporation, (together
with Trendwest, the "Assignors" and each an "Assignor") and Trendwest Funding
II, Inc., a Delaware corporation ("Assignee"), with reference to the following
facts:
RECITALS:
A. In connection with the sale of certain assets of the Assignors in
conjunction with the issuance of notes on the date hereof by TRI Funding II,
Inc., Assignee and the Assignors have executed the Receivables Purchase
Agreement dated as of March 1, 1998 (the "Agreement").
B. In connection with the Agreement, each of the Assignors desires to
assign and transfer to Assignee all of such Assignor's right, title and interest
in and to each of the assets described in Schedule I hereto, and the
corresponding paragraphs below (the "Assigned Interests").
C. Assignee desires to accept this Assignment and transfer of the Assigned
Interests and assume all duties and obligations attendant thereto, accruing
after the Transfer Date.
D. Terms used but not defined herein have the meanings ascribed to them in
the Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and in consideration of the mutual
covenants set forth herein, the Assignors and Assignee hereby agree as follows:
1. Assignment. Each Assignor hereby assigns, conveys, grants and transfers,
without recourse except as provided in the Agreement, to Assignee (and the
successors and assigns of Assignee) the following property:
1.1. Such Assignor's right, title and interest in and to the Contracts and
related Receivables described and listed on Schedule I hereto.
1.2. A security interest in the vacation credits subject to each such
Contract (the "Credits").
1.3. All other Assets relating to such Contract.
2. Assumption. Assignee hereby accepts the foregoing assignment and hereby
assumes all of the indebtedness, if any, duties and obligations incident hereto
and thereto, subject to the terms and conditions of the Agreement.
3. Further Assurance. The Assignors and Assignee each hereby agree to
provide such further assurances and to execute and deliver such documents and to
perform all such other acts as are necessary or appropriate to consummate and
effectuate this Assignment.
4. Distinct Entities. The Assignors and Assignee hereby acknowledge that
for all purposes each of the Assignors and the Assignee are separate and
distinct legal entities. Accordingly, no Assignor shall be liable to any third
party for the debts, obligations and liabilities of the Assignee; and Assignee
shall not be liable to any third party for the debts, obligations and
liabilities of any Assignor to the extent that such debts, obligations and
liabilities have not been expressly assumed by Assignee hereunder.
5. Governing Law. This Assignment shall be governed by and
interpreted in accordance with the laws of the State of New York, and the
parties hereto hereby acknowledge and agree that this Assignment and the
transactions contemplated hereunder were negotiated and entered into in the
State of New York.
6. Authority. Each of the Assignors and the Assignee hereby represent
respectively that they have full power and authority to enter into this
Assignment.
7. Counterparts. This Assignment may be executed in multiple counterparts,
each of which shall be deemed an original but all of which, taken together,
shall constitute one and the same instrument.
8. Successors and Assigns. Each of the Assignors and the Assignee agree
that this Assignment will be binding and will inure to the benefit of each
Assignor and its successors and assigns and the Assignee and its successors and
assigns.
IN WITNESS WHEREOF, this Assignment has been executed as of the date first
above written.
TRENDWEST RESORTS, INC., Assignor
By
Name:
Title:
TW HOLDINGS, INC., Assignor
By
Name:
Title:
TRENDWEST FUNDING II, INC., Assignee
By
Name:
Title:
==============================================================================
==============================================================================
SCHEDULE I
CONTRACT SCHEDULE