Exhibit 10.46
SERVICING AGREEMENT
among
TRI FUNDING III, INC.
("Issuer")
and
TRENDWEST RESORTS, INC.
("Servicer" or "Trendwest")
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee
("Trustee")
Dated as of August 1, 1999
TABLE OF CONTENTS
SECTION HEADING PAGE
ARTICLE 1 DEFINITIONS............................................................................2
Section 1.01. Defined Terms..........................................................................2
ARTICLE 2 SERVICER REPRESENTATIONS, WARRANTIES AND COVENANTS.....................................4
Section 2.01. Representations and Warranties.........................................................4
Section 2.02. Covenants..............................................................................6
ARTICLE 3 ADMINISTRATION AND SERVICING OF CONTRACTS..............................................7
Section 3.01. Responsibilities of Servicer...........................................................7
Section 3.02. Standard of Care.......................................................................9
Section 3.03. Local Bank Account, ACH Payments and Servicer Remittances.............................10
Section 3.04. Property Management...................................................................11
Section 3.05. Financing Statements..................................................................11
Section 3.06. [Reserved.]...........................................................................11
Section 3.07. [Reserved.]...........................................................................11
Section 3.08. No Offset.............................................................................11
Section 3.09. Servicing Compensation................................................................11
Section 3.10. Substitution or Purchase of Contracts and Receivables.................................12
ARTICLE 4 ACCOUNTINGS, STATEMENTS AND REPORTS...................................................13
Section 4.01. Monthly Servicer's Reports............................................................13
Section 4.02. Financial Statements; Certification as to Compliance; Notice of Default...............13
Section 4.03. Independent Accountants'Reports.......................................................15
Section 4.04. Access to Certain Documentation and Information.......................................16
Section 4.05. Trustee to Cooperate..................................................................18
Section 4.06. Oversight of Servicing................................................................18
ARTICLE 5 THE SERVICER AND THE ISSUER...........................................................19
Section 5.01. Servicer Indemnification..............................................................19
Section 5.02. Corporate Existence; Reorganizations..................................................19
Section 5.03. Limitation on Liability of the Servicer and Others....................................20
Section 5.04. The Servicer Not to Resign............................................................20
Section 5.05. Issuer Indemnification................................................................21
ARTICLE 6 SERVICING TERMINATION.................................................................21
Section 6.01. Servicer Events of Default............................................................21
Section 6.02. Appointment of Successor Servicer.....................................................24
Section 6.03. Notification to Noteholders...........................................................24
Section 6.04. Waiver of Past Defaults...............................................................24
Section 6.05. Effects of Termination of Servicer....................................................25
Section 6.06. No Effect on Other Parties............................................................25
ARTICLE 7 [RESERVED]............................................................................26
ARTICLE 8 MISCELLANEOUS PROVISIONS..............................................................26
Section 8.01. Termination of the Servicing Agreement................................................26
Section 8.02. Amendments............................................................................26
Section 8.03. Governing Law.........................................................................27
Section 8.04. Notices, etc., to Trustee, Issuer and Servicer........................................27
Section 8.05. Notices and Other Documents to Noteholders; Waiver....................................28
Section 8.06. Severability of Provisions............................................................28
Section 8.07. Binding Effect........................................................................29
Section 8.08. Article Headings and Captions.........................................................29
Section 8.09. Legal Holidays........................................................................29
Section 8.10. Assignment for Security for the Notes.................................................29
Section 8.11. No Servicing Assignment...............................................................29
Section 8.12. Counterparts..........................................................................29
Section 8.13. Parties Will Not Institute Insolvency Proceedings.....................................29
Signatures.......................................................................................................30
EXHIBIT A -- Form of Monthly Servicer's Report
EXHIBIT B -- Permitted Changes to Property Management Agreement
EXHIBIT C -- Form of Report of Independent Accountants
SERVICING AGREEMENT
THIS SERVICING AGREEMENT, dated as of August 1, 1999 (the "Agreement"),
by and among TRI FUNDING III, INC., a Delaware corporation (herein, together
with its permitted successors and assigns, the "Issuer"), TRENDWEST RESORTS,
INC., an Oregon corporation, for itself (together with its successors and
assigns, "Trendwest") as servicer hereunder (herein, together with its permitted
successors and assigns, the "Servicer"), and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association as trustee (herein, together with
its permitted successors and assigns, the "Trustee") under the Indenture
(defined below).
PRELIMINARY STATEMENT
The Issuer has entered into an Indenture, dated as of August 1, 1999
(as amended and supplemented from time to time, the "Indenture"), with the
Trustee and the Servicer, pursuant to which the Issuer intends to issue from
time to time in series its Receivables-Backed Notes (collectively, the "Notes").
The Issuer, Trendwest Resorts, Inc. (not as Servicer, but acting on its
own behalf, "Trendwest"), TRI Funding II, Inc., a Delaware corporation ("TRI
II"), TRI Funding Company I, L.L.C., a Delaware limited liability company ("TRI
I"), TW Holdings II, Inc., a Delaware corporation ("XX XX"), and TW Holdings,
Inc., a Nevada corporation ("TW Holdings"), have entered into a Receivables
Purchase Agreement, dated as of August 1, 1999 (as amended and supplemented from
time to time, the "Receivables Purchase Agreement"), providing for, among other
things, the sale by Trendwest, TRI I, TRI II, XX XX and TW Holdings to the
Issuer of the Assets, as defined in the Receivables Purchase Agreement. Under
the terms and conditions set forth in the Indenture, the Issuer is and will be
pledging such Assets to the Trustee as security for the Notes. As a precondition
to the effectiveness of the Receivables Purchase Agreement, the Receivables
Purchase Agreement requires that the Servicer, the Issuer and the Trustee enter
into this Agreement to provide for the servicing of the Assets.
In order to further secure the Notes, the Issuer is granting to the
Trustee a security interest in, among other things, the Issuer's rights derived
under this Agreement and the Receivables Purchase Agreement, and the Servicer
agrees that all covenants and agreements made by the Servicer herein with
respect to the Assets shall also be for the benefit and security of the Trustee
and all Holders from time to time of the Notes. For its services under this
Agreement, the Servicer will receive a Servicer Fee as provided herein and in
the Indenture.
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ARTICLE 1
DEFINITIONS
Section 1.01. Defined Terms. Except as otherwise specified or as the
context may otherwise require, the following terms have the respective meanings
set forth below for all purposes of this Agreement, and the definitions of such
terms are equally applicable both to the singular and plural forms of such terms
and to the masculine, feminine and neuter genders of such terms. Capitalized
terms used but not otherwise defined herein shall have the respective meanings
assigned to such terms in the Indenture.
"Assets" shall have the meaning specified in the Receivables Purchase
Agreement.
"Collateral Agent Agreement" shall mean the Collateral Agent Agreement,
dated as of August 1, 1999, among Sage Systems, Inc., as Collateral Agent, the
Trustee, the Issuer and Trendwest, as amended and supplemented from time to
time.
"Collateral Agent Files" shall have the meaning specified in the
Receivables Purchase Agreement.
"Contract Files" shall have the meaning specified in the Receivables
Purchase Agreement.
"Independent Accountants" shall mean KPMG Peat Marwick or another firm
of public accountants of nationally recognized standing; provided, that such
firm is independent with respect to the Servicer within the meaning of the
Securities Act of 1933, as amended.
"Institutional Investor" shall have the meaning specified in the
Indenture.
"Issuer" shall mean TRI Funding III, Inc., a Delaware corporation, and
its permitted successors and assigns.
"Liquidated Receivable" shall mean a Receivable that has been
liquidated pursuant to Section 3.01(b) hereof.
"Local Bank Account" shall mean the account established by the Servicer
at the Local Bank, into which account collections with respect to the Contracts
will be deposited by the Servicer.
"Local Bank" shall mean Commerce Bank of Washington (or an affiliate
thereof), and its successors and assigns.
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"Monthly Servicer's Report" shall mean the report prepared by the
Servicer pursuant to Section 4.01 hereof, a form of which is attached hereto as
Exhibit A.
"Officer's Certificate" shall mean, for any Person, a certificate
signed by the President, any Vice President, Treasurer or Secretary of such
Person and, in the case of the Issuer, any authorized representative of the
Issuer.
"Opinion of Counsel" shall mean a written opinion of counsel in a form
that is, and from counsel who is, reasonably acceptable to the person requesting
such opinion.
"Receivables Purchase Agreement" shall mean the Receivables Purchase
Agreement, dated as of the date hereof, among Trendwest, TW Holdings, TRI I, TRI
II, XX XX and the Issuer as the same may be amended or modified from time to
time, together with any annexes, appendices, exhibits or schedules thereto and
including the Asset Assignment and any Subsequent Asset Assignment executed and
delivered in connection therewith.
"Remittance Date" shall mean the Business Day immediately preceding
each Payment Date.
"Reported Company" shall mean each of the Issuer, WorldMark, Trendwest
and its subsidiaries, provided, however, if Trendwest is no longer acting as
Servicer, then "Reported Company" shall also mean any successor Servicer
appointed pursuant to this Agreement.
"Reported Company's Financial Statements" shall include each Reported
Company's audited consolidated balance sheet, income statement, statement of
cash flows, auditors opinion letter regarding audited financial statements, all
notes to the audited financial statements and, with respect to Trendwest, a
letter stating that either (i) the auditors have found no material weakness or
(ii) specifying any material weaknesses found by such auditors; Trendwest's and
WorldMark's financial statements shall be audited, but, with respect to any
other Reported Company, if such information is not currently being audited, then
such information may be unaudited.
"Servicer" shall initially mean Trendwest Resorts, Inc. until a
successor Person shall have become the Servicer pursuant to the applicable
provisions of this Agreement, and thereafter "Servicer" shall mean such
successor Person.
"Servicer Default" shall mean any occurrence or circumstance which with
notice or the lapse of time or both would be a Servicer Event of Default under
this Agreement.
"Servicer Event of Default" shall mean each of the occurrences or
circumstances enumerated in Section 6.01 hereof.
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"Servicer Termination Notice" means the notice described in Section
6.01 hereof.
"Servicing Officer" shall mean those officers of the Servicer involved
in, or responsible for, the administration and servicing of the Assets, as
identified on the list of Servicing Officers furnished by the Servicer to the
Trustee and the Noteholders from time to time.
"Substitution Criterion" shall have the meaning specified in the
Receivables Purchase Agreement.
"Substitute Receivable" shall have the meaning specified in the
Receivables Purchase Agreement.
"TRI I" shall mean TRI Funding Company, L.L.C., a Delaware limited
liability company, and its permitted successors and assigns.
"TRI II" shall mean TRI Funding II, Inc., a Delaware corporation, and
its permitted successors and assigns.
"Trustee" shall initially mean Norwest Bank Minnesota, National
Association, until a successor Person shall have become the Trustee pursuant to
the applicable provisions of the Indenture, and thereafter "Trustee" shall mean
such successor Person.
"TW Holdings" shall mean TW Holdings, Inc., a Nevada corporation, and
its permitted successors and assigns.
"XX XX" shall mean TW Holdings II, Inc., a Delaware corporation, and
its permitted successors and assigns.
"Upgrade" shall have the meaning specified in the Indenture.
"Upgrade Contract" shall have the meaning specified in the Indenture.
ARTICLE 2
SERVICER REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties. The Servicer makes the
following representations and warranties to the Trustee and for the benefit of
the Noteholders as of the Closing Date, which shall survive the Closing Date:
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(a) Organization and Good Standing. The Servicer has been
duly incorporated and is validly existing in good standing as a
corporation under the laws of the State of Oregon, with requisite
corporate power and authority to own its properties, perform its
obligations under this Agreement and the Indenture and to transact the
business in which it is now engaged or in which it proposes to engage;
the Servicer is duly qualified to do business and is in good standing
in each State in which the nature of its business requires it to be so
qualified, except where failure to so qualify would not have a material
adverse effect on the ability of the Servicer to perform its
obligations under this Agreement and the Indenture.
(b) Authorization and Binding Obligation. Each of this
Agreement and the Indenture has been duly authorized, executed and
delivered by the Servicer and constitutes the valid and legally binding
obligation of the Servicer enforceable against the Servicer in
accordance with its terms, subject as to enforcement to any bankruptcy,
insolvency, reorganization and other similar laws of general
applicability relating to or affecting creditors' rights generally and
to general principles of equity regardless of whether enforcement is
sought in a court of equity or law.
(c) No Violation. The entering into of this Agreement and the
Indenture and the performance by the Servicer of its obligations under
this Agreement and the Indenture and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach of any of the terms or provisions of, or constitute
a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the property or assets of the
Servicer pursuant to the terms of any material indenture, mortgage,
deed of trust or other agreement or instrument to which it is a party
or by which it is bound or to which any of its property or assets is
subject, nor will such action result in any violation of the provisions
of its Articles of Incorporation or By-laws, or any statute or any
order, rule or regulation of any court or any regulatory authority or
other governmental agency or body having jurisdiction over it or any of
its properties; and no consent, approval, authorization, order,
registration or qualification of or with any court, or any such
regulatory authority or other governmental agency or body is required
for the Servicer to enter into this Agreement and the Indenture.
(d) No Proceedings. There are no proceedings or
investigations pending, or to the knowledge of the Servicer, threatened
against or affecting the Servicer or any subsidiary in or before any
court, governmental authority or agency or arbitration board or
tribunal, including but not limited to any such proceeding or
investigation with respect to any environmental or other liability
resulting from the ownership or use of any of the Vacation Credits,
which, individually or in the aggregate, involve the possibility of
materially and adversely affecting the properties, business, prospects,
profits or condition (financial or otherwise) of the Servicer and its
subsidiaries, or the ability of the Servicer to perform its obligations
under this Agreement or the Indenture. The Servicer is not in
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default with respect to any order of any court, governmental authority
or agency or arbitration board or tribunal.
(e) Approvals. The Servicer (i) is not in violation of any
laws, ordinances, governmental rules or regulations to which it is
subject, (ii) has not failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the
ownership of its property or to the conduct of its business, and (iii)
is not in violation in any material respect of any term of any
agreement, charter instrument, bylaw or instrument to which it is a
party or by which it may be bound, which violation or failure to obtain
materially adversely affect the business or condition (financial or
otherwise) of the Servicer and its subsidiaries.
(f) Investment Company. The Servicer is not an investment
company which is required to register under the Investment Company Act
of 1940, as amended.
(g) Fidelity Bond. The Servicer has insurance coverage for
employee dishonesty with respect to funds it holds in an amount equal
to $500,000 per occurrence and coverage under an errors and omissions
policy.
(h) ERISA. Except for one 401(K) plan, the Servicer does
not have or maintain any pension plans.
(i) Year 2000. The Servicer has reviewed its computer systems
relating to the collections of the Receivables, and such systems are
Year 2000 compliant.
Section 2.02. Covenants. (a) The Servicer covenants as to the Assets:
(i) The Servicer shall not release or assign any Lien in
favor of the Trustee on any Receivables or the Vacation Credits related
to any Contract in whole or in part, except as permitted herein or in
the Indenture.
(ii) The Servicer will in all material respects duly fulfill
all obligations on the Servicer's part to be fulfilled under or in
connection with the Assets. The Servicer will not amend, rescind,
cancel or modify any Contract or term or provision thereof, except as
permitted herein or in the Indenture or in connection with an Upgrade,
and the Servicer will not do anything that would impair the rights of
the Noteholders in the Assets, except as contemplated herein or in the
Indenture; provided that, without limiting the foregoing, the Servicer
may once per Contract over the lifetime of such Contract allow the
Obligor of such Contract to skip one Scheduled Payment and add one
month to the term of the related Contract; provided, further, that such
extension will not extend the date of the last payment of any Contract
that terminates prior to the Stated Maturity one month beyond the
Stated Maturity of the Notes.
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(iii) As more specifically set forth below, in performing its
servicing duties hereunder, the Servicer shall collect all payments
required to be made by the Obligors under the Contracts and enforce all
material rights of the Issuer under the Contracts. The Servicer shall
not assign, sell, pledge or exchange or in any way encumber or
otherwise dispose of the Receivables or the Vacation Credits, except as
permitted hereunder or in the Indenture.
(b) The Servicer will deliver each of the accountings, statements and
reports described in Article 4 hereof to each party as set forth therein.
(c) The Servicer shall maintain insurance coverage for employee
dishonesty with respect to funds it holds in an amount greater than or equal to
$500,000 per occurrence and coverage under an errors and omissions policy.
(d) Trendwest and the Servicer, if not Trendwest, will not consent
(except as may be required by the reasonableness standard in Section 2.3 of the
Third Amended Vacation Program Agreement, dated as of June 3, 1994, between
Trendwest and WorldMark, as amended) to any request from WorldMark to allow
WorldMark to encumber, pledge or hypothecate any vacation property under such
Section 2.3.
ARTICLE 3
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 3.01. Responsibilities of Servicer. (a) The Servicer, for the
benefit of the Noteholders, shall be responsible for, and shall, in accordance
with its customary practices, pursue the managing, servicing, administering,
enforcing and making of collections on the Contracts, the Vacation Credits, the
enforcement of the Trustee's security interest in the Receivables and the
Vacation Credits granted pursuant to the Indenture, and, if applicable, the
resale of the Vacation Credits, each in accordance with applicable law and the
standards and procedures set forth in this Agreement and any related provisions
of the Indenture and the Receivables Purchase Agreement. The Servicer's
responsibilities shall include collecting and posting of all payments,
responding to inquiries of Obligors, investigating delinquencies, accounting for
collections and furnishing monthly and annual statements to the Trustee, the
Noteholders and the Rating Agencies with respect to payments and using its best
efforts to maintain the perfected security interest of the Trustee in the Trust
Estate (except with respect to the Vacation Credits). Subject to the terms and
conditions of this Agreement, the Servicer (at its expense), acting alone or
through a subservicer, shall have full power and authority, acting at its sole
discretion, to do any and all things in connection with such managing,
servicing, administration, enforcement, collection and such resale of the
7
Vacation Credits that it may deem necessary or desirable and in the best
interests of the Noteholders, including the prudent delegation of such
responsibilities. Without limiting the generality of the foregoing, the
Servicer, in its own name, shall, and is hereby authorized and empowered by the
Trustee, subject to Section 3.02 hereof, to execute and deliver (on behalf of
itself, the Noteholders, the Trustee or any of them) any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Contracts, the Collateral
Agent Files and the Contract Files. Subject to the terms and conditions of this
Agreement, the Servicer, also may, in its sole discretion, waive any late
payment charge or penalty, or any other fees that may be collected in the
ordinary course of servicing any Contract. Notwithstanding the foregoing, the
Servicer, shall not, except pursuant to a judicial order from a court of
competent jurisdiction, or as otherwise expressly provided in this Agreement,
release or waive the right to collect the Scheduled Payments or any unpaid
balance on any Contract. The Trustee shall, at the expense of the Servicer,
furnish the Servicer, or at the request of the Servicer, with any powers of
attorney and other documents necessary or appropriate to enable the Servicer to
carry out their servicing and administrative duties hereunder, and the Trustee
shall not be responsible for the Servicer's application thereof. Notwithstanding
any delegation of its responsibilities hereunder, the Servicer shall remain
primarily liable for the full performance of its obligations hereunder.
(b) The Servicer shall conduct any Contract management, servicing,
administration, collection or enforcement actions in the following manner:
(i) The Servicer, as agent for and on behalf of the Issuer,
with respect to any Defaulted Contract shall follow such practices and
procedures as are normal and consistent with the Servicer's standards
and procedures relating to its own contracts, receivables and vacation
credits that are similar to the Contracts, Receivables and the Vacation
Credits, including without limitation, the taking of appropriate
actions to foreclose or otherwise liquidate any such Defaulted
Contract, together with the related Vacation Credits and to enforce the
Issuer's rights in or under the Receivables Purchase Agreement. The
Servicer shall continue its customary practice of applying payments on
Defaulted Contracts and Delinquent Contracts first to delinquent
interest, then to interest and then to principal. All Recoveries or
Residual Proceeds in respect of any such Receivable and the related
Vacation Credits received by the Servicer shall be deposited in the
Local Bank Account pursuant to Section 3.03(a);
(ii) The Servicer may xxx to enforce or collect upon Contracts
as agent for the Trustee. If the Servicer elects to commence a legal
proceeding to enforce a Contract, the act of commencement shall be
deemed to be an automatic assignment of the Contract to the Servicer
for purposes of collection only. If, however, in any enforcement suit
or legal proceeding it is held that the Servicer may not enforce a
Contract on the ground that it is not a real party in interest or a
holder entitled to enforce the Contract, then the Trustee shall, at the
Servicer's request and expense, take such steps as the Servicer deems
necessary and instructs the Trustee in writing to take to enforce the
Contract, including
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bringing suit in its name or the name of the Issuer or the names of the
Noteholders, and the Trustee shall be indemnified by the Servicer for
any such action taken;
(iii) The Servicer shall exercise any rights of recourse
against third parties that exist with respect to any Contract in
accordance with the Servicer's usual practice and applicable law. In
exercising recourse rights, the Servicer is authorized on the Trustee's
behalf to reassign the Contract to the person against whom recourse
exists to the extent necessary, and at the price set forth in the
document creating the recourse. The Servicer will not reduce or
diminish such recourse rights, except to the extent that it exercises
such right;
(iv) The Servicer may not accept Substitute Contracts that do
not comply with Section 3.10 hereof, Sections 3.03 and 3.04 of the
Receivables Purchase Agreement, Section 4.03 of the Indenture and the
definition of Eligible Contract;
(v) The Servicer may waive, modify or vary any terms of any
Contract or consent to the postponement of strict compliance with any
such term if in the Servicer's reasonable and prudent determination
such waiver, modification or postponement is not materially adverse to
the Noteholders; provided, however, that (A) the Servicer shall not
forgive any payment, and (B) the Servicer shall not permit any
modification, waivers, variation or postponements with respect to any
Contract that would decrease the Scheduled Payment, decrease the
interest rate, defer the payment of any principal or interest or any
Scheduled Payment, reduce the Collateral Value of such Contract (except
in connection with actual payments attributable to such Collateral
Value), or prevent the complete amortization of the Collateral Value of
such Contract from occurring by the Calculation Date preceding the
Stated Maturity with respect to such Notes. The Monthly Servicer's
Report shall indicate any modification of any Scheduled Payment
pursuant to Section 2.02(a)(ii) hereof; and
(vi) Notwithstanding any provision to the contrary contained
in this Agreement, the Servicer shall exercise any right under a
Contract to accelerate the unpaid Scheduled Payments, due or to become
due thereunder in such a manner as to maximize the net proceeds
available to the Issuer; provided, however, that the Servicer will not
accelerate any Scheduled Payment unless permitted to do so by the terms
of the Contract and under applicable law.
Section 3.02. Standard of Care. In managing, administering, servicing,
enforcing and making collections on the Contracts and the Vacation Credits
pursuant to this Agreement, the Servicer will provide such services in a manner
consistent with past practice and applicable law and will not change such
practice in any way that would cause an adverse material change in such
practice. In any event, the Servicer warrants that in providing such services it
will exercise that degree of skill and care consistent with that which other
servicers in the industry customarily exercise with respect to similar contracts
and vacation credits owned or serviced by them. The Servicer shall punctually
perform all of its obligations
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and agreements under this Agreement and shall comply with all applicable federal
and state laws and regulations, shall maintain all state and federal licenses
and franchises necessary for it to perform its servicing responsibilities
hereunder, and shall not materially impair the rights of the Noteholders in any
Contracts or payments thereunder.
Section 3.03. Local Bank Account, ACH Payments and Servicer Remittances.
(a) The Servicer has previously instructed (or, with respect to Substitute
Contracts and Subsequent Contracts, will have instructed) each Obligor to remit
his or her payments to a third party agent of the Servicer. The Servicer shall
cause such agent to deposit, within one Business Day, all payments for principal
and interest on the Receivables that it receives into an account (the "Local
Bank Account") maintained at the Local Bank in the name of, and in the sole
control of, such agent. In the event that a third party (which may not include
any Affiliate of Trendwest) is no longer acting as an agent for the purposes of
collecting payments relating to the Trust Estate, the Servicer will establish a
lockbox account in the name of the Trustee with a lockbox bank and direct the
Obligors to make all payments to such lockbox account. The Servicer shall cause
payments made by automated clearing house debit to be deposited directly into
the Local Bank Account from the Obligor's relevant account. On each Business
Day, the Servicer shall, or shall cause the Local Bank Account Bank to, transfer
all amounts in the Local Bank Account collected relating to the Contracts and
the Receivables (including the purchase price thereof) to the Collection
Account, which shall be an Eligible Account at the Trustee in the name of the
Trustee on behalf of the Noteholders. The Trustee, based solely on information
set forth in each Monthly Servicer's Report, shall cause the amounts in the
Collection Account to be withdrawn from the Collection Account on related
Payment Date in an amount necessary to make the distributions set forth in
Section 12.02(d) or 12.02(e) of the Indenture on such Payment Date.
(b) Except as otherwise provided in this Agreement, the Servicer, as
agent of the Issuer, shall remit for deposit in the Local Bank Account by 4:00
p.m., Seattle time, on each Business Day the amounts described below that have
been received by the Servicer through 4:00 p.m., Seattle time, on the preceding
Business Day:
(i) all payments made under the Contracts relating to the
Receivables due after the Cut-Off Date, including prepayments but
excluding taxes, received directly by the Servicer;
(ii) all Residual Proceeds and Recoveries; and
(iii) the Purchase Price of any Contract purchased by the
Servicer or the Issuer, to the extent received by the Servicer.
The Servicer shall hold in trust for the benefit of the Holders of the
Notes any payment it receives relating to items (i) through (iii) above until
such time as the Servicer transfers any such payment to the Local Bank Account
Bank for deposit in the Local Bank Account. Any such amounts held in the Local
Bank Account shall be held in trust for the benefit of the Noteholders.
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Section 3.04. Property Management. Trendwest will continue to manage the
Club in accordance with the management agreement between Trendwest and WorldMark
in existence as of the date hereof, as the same may be amended from time to time
on account of (i) a change in such agreement approved by a majority of the
members of WorldMark, (ii) a change in the agreement made in order to keep
Trendwest or WorldMark in compliance with federal, state or local laws, rules
and regulations, (iii) as such agreement may be amended from time to time with
the written consent of the Holders of Notes representing 66-2/3% in principal
amount of the Outstanding Notes of the Controlling Class or (iv) a change in
such agreement in the manner described in Exhibit B to this Agreement.
Section 3.05. Financing Statements. (a) The Servicer will make all UCC
filings and recordings as may be required to perfect the security interests of
the Trustee in the Trust Estate pursuant to the terms of the Indenture. The
Servicer shall, in accordance with its customary servicing procedures and at its
own expense, be responsible for such steps as are necessary to maintain
perfection of such security interests. The Trustee hereby authorizes the
Servicer to re-perfect or to cause the re-perfection of such security interest
on its behalf as Trustee, as necessary.
(b) Within thirty (30) days from the date upon which the financing
statements are filed in connection with the issuance of the Notes, the Servicer
shall cause searches to be conducted in such offices and promptly deliver the
results of such searches to the Trustee.
Section 3.06. [Reserved.]
Section 3.07. [Reserved.]
Section 3.08. No Offset. Prior to the termination of this Agreement, the
obligations of the Servicer under this Agreement shall not be subject to any
defense, counterclaim or right of offset which the Servicer has or may have
against the Issuer, the Trustee or any Noteholder whether in respect of this
Agreement, the Indenture, the Notes, the Receivables Purchase Agreement, any
Contract, Receivable, Vacation Credit or otherwise.
Section 3.09. Servicing Compensation. As compensation for the
performance of its obligations under this Agreement, the Servicer shall be
entitled to receive the Servicer Fee. The Servicer Fee shall be paid monthly,
commencing on the Initial Payment Date and terminating on the first to occur of
(i) the receipt of the last Scheduled Payment and related Residual Proceeds with
respect to the last remaining Contract, (ii) the receipt of Recoveries with
respect to the last remaining Contract, or (iii) the date on which the Notes are
paid in full. The Servicer Fee shall be paid by the Issuer to the Servicer at
the times and in the priority as set forth in the Indenture. The Servicer shall
pay all expenses incurred by it in connection with its servicing activities
hereunder, including, without limitation, payment of the fees and disbursements
of the Independent Accountants, payment of
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expenses incurred in connection with distributions and reports to the Trustee
and the Noteholders and shall not be entitled to reimbursement for such
expenses; provided, however, in accordance with Section 12.02 of the Indenture,
that the Servicer will be entitled to prompt reimbursement from the Issuer for
reasonable costs and expenses incurred by the Servicer (including reasonable
attorney's fees and out-of-pocket expenses) in connection with the realization,
attempted realization or enforcement of rights and remedies upon Defaulted
Contracts, from amounts received as Recoveries from any Defaulted Contracts.
Section 3.10. Substitution or Purchase of Contracts and Receivables. (a)
Except with respect to an Upgrade, the Servicer shall not allow termination of a
Contract prior to the scheduled expiration date unless the Obligor prepays the
entire Contract in full or unless the Issuer has (i) pledged to the Trustee a
Substitute Receivable and the Issuer's interest in the related Vacation Credits
under the related Substitute Contract, and delivered to the Trustee the original
executed counterpart of such Substitute Contract or (ii) purchased such
Receivable and the Issuer's interest in the related Vacation Credits from the
Trustee by remittance of the Purchase Price to the Servicer for deposit in the
Local Bank Account in accordance with Section 3.03(a) hereof; provided, further,
that purchases and substitutions of Receivables pursuant to this subparagraph
(a) shall comply with the requirements of Section 4.03 of the Indenture and the
criteria set forth in Section 3.04 of the Receivables Purchase Agreement.
(b) The Servicer shall permit the Issuer to (i) purchase the Receivable
related to any Defaulted Contract or Delinquent Contract by remittance by the
Issuer to the Servicer for deposit in the Local Bank Account in accordance with
Section 3.03(a) hereof or (ii) substitute for the Receivable related to any
Defaulted Contract or Delinquent Contract a Substitute Receivable and the
Issuer's interest in the Vacation Credits under the related Substitute Contract,
upon the delivery to the Trustee of the original executed counterpart of the
Substitute Contract; provided that, purchases and substitutions of Receivables
pursuant to this subparagraph (b) shall comply with the requirements of Section
4.03 of the Indenture and the criteria set forth in Section 3.04 of the
Receivables Purchase Agreement.
(c) Notwithstanding any other provision contained in this Agreement,
the Servicer shall not, with respect to a Defaulted Contract, negotiate or enter
into a new contract with the Obligor relating to the Vacation Credits or the
Obligor's obligations under such Defaulted Contract unless the Issuer has
repurchased or made a substitution for the Receivable related to such Defaulted
Contract in the manner set forth in subsection (b) hereof.
(d) In the event that Trendwest is required, as a result of the breach
by it of certain representations or warranties, to repurchase or substitute a
Contract pursuant to Section 3.03 of the Receivables Purchase Agreement, the
Servicer shall permit such repurchase or substitution in accordance with the
terms of Sections 3.03 and 3.04 thereof.
(e) Once the Purchase and Substitution Limit is reached, Trendwest may,
at its option, purchase, in its own right and not as Servicer hereunder, the
Vacation Credits relating to a
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Defaulted Contract at a price equal to 25% of the initial principal balance of
the related Contract. On such Determination Date, Trendwest shall, or, if
Trendwest is not the Servicer, shall cause the Servicer to, immediately deposit
the proceeds of such sale into the Local Bank Account, and such proceeds shall
be deemed to be a collection of principal with respect to such Contract.
(f) Prior to the substitution of any Contract hereunder, the Servicer
shall review its records and determine that there are no liens or other
interests in such Substitute Contract, the related Substitute Receivable and
related Vacation Credits other than that of Trendwest. If there are any such
other interests in such Substitute Contract, such Contract shall not become a
Substitute Contract until all such interests have been terminated.
ARTICLE 4
ACCOUNTINGS, STATEMENTS AND REPORTS
Section 4.01. Monthly Servicer's Reports. No later than 2:00 p.m., New
York time, on each Determination Date, the Servicer shall deliver to the Issuer,
the Initial Purchaser, the Trustee, each Noteholder and the Rating Agencies the
Monthly Servicer's Report in the form attached as Exhibit A hereto with respect
to the activity in the immediately preceding Due Period. The determination by
the Servicer of such amounts shall, in the absence of manifest error, be deemed
to be presumptively correct and the Trustee shall be protected in relying upon
the same without any independent check or investigation. In the course of
preparing the Monthly Servicer's Report, the Servicer shall seek direction from
the Issuer as to remittance of the funds to be paid to the Issuer after all
other distributions in accordance with the Indenture. Contracts and Receivables
which have been substituted for or purchased by Trendwest or the Issuer shall be
identified by the related Obligor number. On each Determination Date, the
Servicer shall deliver to the Trustee, in the form of a computer disk or tape or
via electronic transmission in a format acceptable to the Trustee, containing
all the information in the Servicer's electronic files regarding each of the
Receivables as well as any additional information reasonably requested by the
Trustee prior to the related Payment Date. The Monthly Servicer's Report
prepared for each Due Period for June, September, December and March shall also
include a summary of the following information as of the end of such Due Period:
the total number of Vacation Credits, whether sold or unsold; the total number
of Vacation Credits sold; and the number of developed properties of the Club;
the name of each such developed property and the total number of Vacation
Credits allocated to each developed property.
Section 4.02. Financial Statements; Certification as to Compliance;
Notice of Default. (a) The Servicer (or the successor Servicer if the initial
Servicer is no longer the Servicer) will deliver, or cause to be delivered, to
the Trustee, the Initial Purchaser, each Holder and the Rating Agencies (and,
upon the request of any Noteholder, to any prospective transferee of any Note):
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(i) within 120 days after the end of each fiscal year of each
Reported Company, a copy of such Reported Company's Financial
Statements, all in reasonable detail and accompanied by an opinion of a
firm of independent certified public accountants (which shall be (i)
KPMG Peat Marwick, (ii) a legal successor thereto, or (iii) a
nationally recognized accounting firm) stating that such financial
statements present fairly the financial condition of such Reported
Company (or, in the case of a successor Servicer, such successor
Servicer's financial condition) and have been prepared in accordance
with generally accepted accounting principles consistently applied
(except for changes in application in which such accountants concur),
and that the examination of such accountants in connection with such
financial statements has been made in accordance with generally
accepted auditing standards, and accordingly included such tests of the
accounting records and such other auditing procedures as were
considered necessary in the circumstances;
(ii) within 60 days of the end of each fiscal quarter,
unaudited versions of each Reported Company's consolidated balance
sheet, income statement and cash flow statement;
(iii) with the Issuer's, the Servicer's and Trendwest's (if
Trendwest is not the Servicer) Financial Statements delivered pursuant
to subsections (a)(i) and (a)(ii) above, each of the Issuer, the
Servicer and Trendwest (if Trendwest is not the Servicer) will deliver
an Officer's Certificate stating that such officer has reviewed the
relevant terms of the Indenture, the Receivables Purchase Agreement and
this Agreement and has made, or caused to be made, under such officer's
supervision, a review of the transactions and conditions of such
Reported Company during the period covered by such Reported Company's
Financial Statements then being furnished, that the review has not
disclosed the existence of any Default or Event of Default under the
Indenture or any Servicer Default or Servicer Event of Default or, if a
Default or Event of Default under the Indenture or a Servicer Default
or a Servicer Event of Default exists, describing its nature, and the
Issuer, with respect to a Default or Event of Default, or the Servicer,
with respect to a Servicer Default or a Servicer Event of Default,
describing what action such Person has taken and is taking with respect
thereto, and that on the basis of such review the officer signing such
certificate is of the opinion that during such period the Servicer has
serviced the Contracts in compliance with the procedures hereof except
as disclosed in such certificate;
(iv) with each Reported Company's Financial Statements
delivered pursuant to subsections (a)(i) and (a)(ii) above, each
Reported Company shall deliver an Officer's Certificate stating that
such financial statements present fairly the financial condition of
such Reported Company;
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(v) immediately upon becoming aware of the existence of any
condition or event which constitutes a Servicer Default or a Servicer
Event of Default hereunder, a Default or an Event of Default under the
Indenture or Receivables Purchase Agreement, or a Trigger Event under
the Indenture, a written notice describing its nature and period of
existence and what action the Servicer is or proposes to take with
respect thereto;
(vi) promptly upon the Servicer's becoming aware of:
(A) any proposed or pending investigation of
it, the Club or the Issuer by any governmental authority or
agency, or
(B) any pending or proposed court or administrative
proceeding which involves or may involve the possibility of
materially and adversely affecting the properties, business,
prospects, profits or condition (financial or otherwise) of
the Servicer, the Club or the Issuer,
a written notice specifying the nature of such investigation or
proceeding and what action the Servicer is taking or proposes to take
with respect thereto and evaluating its merits; and
(vi) with reasonable promptness any other data and information
which may be reasonably requested from time to time, including without
limitation any information required to be made available at any time to
any prospective transferee of any Notes in order to satisfy the
requirements of Rule 144A under the Securities Act of 1933, as amended.
(b) On or before each April 30, so long as any of the Notes are
outstanding, the Servicer shall furnish to the Trustee an Officer's Certificate
either stating that such action has been taken with respect to the recording,
filing, and rerecording and refiling of any financing statements and
continuation statements as necessary to maintain the interest of the Trustee
created by the Indenture and the Issuer created Receivables Purchase Agreement
with respect to the Trust Estate and reciting the details of such action or
stating that no such action is necessary to maintain such interest. Such
Officer's Certificate shall also describe the recording, filing, rerecording and
refiling of any financing statements and continuation statements that will be
required to maintain the interest of the Trustee in the Trust Estate until the
date such next Officer's Certificate is due.
Section 4.03. Independent Accountants' Reports. (a) Within thirty (30)
days of the Closing Date, the Servicer shall, at its expense, cause the
Independent Accountants to prepare a report, a form of which is attached as
Exhibit C hereto (which report shall also include as well the additional
procedure of comparing the actual aging of the random sample portfolio to the
aging number provided by the Collateral Agent's system), to the effect that such
Independent Accountants have reviewed a statistically significant random sample
(at the 95% confidence level) of the Collateral Agent
15
Files and that such reviewed Collateral Agent Files are in the possession of the
Collateral Agent and properly accounted for in the Collateral Agent's records.
(b) For each fiscal year (commencing with the fiscal year ending
December 31, 1999), the Servicer at its expense shall cause the Independent
Accountants (who may also render and deliver other services to the Servicer and
its Affiliates) to prepare a report that shall include the information set forth
in the report set forth in paragraph (a) of this Section 4.03 and which shall
also include a report addressed to the Servicer, the Trustee, Initial Purchaser
and the Noteholders as of the close of such year, to the effect that the
Independent Accountants have compared the information contained in the Monthly
Servicer's Reports delivered for a random three-month period during the relevant
period with information contained in the accounts and records for such period,
and, where applicable, on the basis of such procedures and comparison, report
matters which come to the Independent Accountants' attention to indicate that
the information contained in the Monthly Servicer's Reports does not reconcile
with the information contained in the Servicer's accounts and records. If any
letter delivered pursuant to this Section 4.03 (commencing with the letter
relating to the fiscal year ending December 31, 1999) discloses such exceptions,
the Servicer at its expense shall cause the Independent Accountants to deliver
an agreed-upon procedures letter addressed to the Servicer, the Trustee and the
Noteholders for each subsequent three-month period. Such obligation shall
continue until the Independent Accountants deliver a letter relating to a
three-month period that does not disclose any such exceptions. Thereafter, the
Servicer shall cause a letter to be delivered relating to each fiscal year in
accordance with the first sentence of this Section 4.03. The Servicer shall
deliver to the Trustee a copy of any such reports within 90 days of the close of
the relevant period.
Section 4.04. Access to Certain Documentation and Information. (a) The
Servicer shall provide to the Trustee or any Noteholder and their duly
authorized representatives, attorneys or accountants access to any and all
documentation and to any existing data processing systems (including, but not
limited to, any data that can reasonably be generated therefrom) regarding the
Trust Estate (including the Contract Schedule) that the Servicer may possess,
such access being afforded without charge but only upon reasonable request and
during normal business hours so as not to interfere unreasonably with the
Servicer's normal operations or customer or employee relations, at offices of
the Servicer designated by the Servicer. If a Servicer Event of Default or a
Trigger Event has occurred, the reasonable costs of providing the foregoing
shall be borne by the Servicer; otherwise, the Person seeking the foregoing
shall pay its, his or her own expenses relating to the foregoing.
(b) At all times during the term hereof, the Servicer shall keep
available at its principal executive office for inspection by Noteholders and
the Trustee a list of all Contracts the interests in which are then held as a
part of the Trust Estate, together with a reconciliation of such list to that
set forth in the Contract Schedule and each of the Monthly Servicer's Reports,
indicating the cumulative addition and removal of the Issuer's interest in the
Contracts from the Trust Estate.
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(c) The Servicer will maintain accounts and records as to each
respective Contract serviced by the Servicer that are accurate and sufficiently
detailed as to permit (i) the reader thereof to know as of the most recent
Calculation Date the status of such Contract, including any payments, Residual
Proceeds and Recoveries received or owing (and the nature of each) thereon and
(ii) the reconciliation between payments, Residual Proceeds or Recoveries on (or
with respect to) each Contract and the amounts from time to time deposited in
the Collection Account in respect of such Contract.
(d) The Servicer will maintain all of its computerized accounts and
records so that, from and after the time of the acquisition of an interest in
the Assets by the Issuer, the Servicer's accounts and records (including any
back-up computer archives) that refer to any Contract, Receivable or Vacation
Credits indicate clearly that the Receivables are owned by the Issuer and are
pledged, together with the Issuer's security interest in the related Vacation
Credits, to the Trustee for the benefit of the Noteholders. Indication of the
Trustee's interest in a Receivable will be deleted from or modified on the
Servicer's accounts and records when, and only when, the Receivable or related
Contract has been paid in full, replaced with a Substitute Contract or purchased
by Trendwest or the Issuer or assigned to the Servicer pursuant to this
Agreement, as the case may be.
(e) Nothing in this Section 4.04 shall affect the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure to provide information otherwise
required by this Section 4.04 as a result of such observance by the Servicer,
shall not constitute a breach of this Section 4.04.
(f) All information (that is not public information) obtained by the
Trustee or any Noteholder regarding any Reported Company (pursuant to Section
4.02 or otherwise), the Obligors and the Contracts, whether upon exercise of its
rights under this Section 4.04 or otherwise, shall be maintained by the Trustee
and the Noteholder, as applicable, in confidence in accordance with procedures
adopted by the Trustee or such Noteholder, as applicable, in good faith to
protect such confidential information; provided that the Trustee and any
Noteholder may deliver or disclose such confidential information to (i) their
directors, officers, trustees, managers, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by the Notes), (ii) their financial
advisors and other professional advisors who agree to hold confidential such
information substantially in accordance with the terms of this Section 4.04(f),
(iii) any other holder of any Note, (iv) any Institutional Investor to which any
Noteholder sells or offers to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such confidential information to be bound by the provisions of this Section
4.04(f)), (v) any federal or state regulatory authority having jurisdiction over
the Trustee or any Noteholder, (vi) the National Association of Insurance
Commissioners or any similar organization, or any nationally recognized rating
agency that requires access to information about the Noteholders' investment
portfolio, (vii) the Rating Agencies or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to the Trustee or any
Noteholder, (x) in response to
17
any subpoena or other legal process, (y) in connection with any litigation to
which the Trustee or any Noteholder is a party or (z) if an Event of Default has
occurred and is continuing, to the extent the Trustee or any Noteholder may
reasonably determine such delivery and disclosure to be necessary or appropriate
in the enforcement or for the protection of the rights and remedies under the
Notes and the Transaction Documents.
Section 4.05. Trustee to Cooperate. Upon payment (including through
application of any prepayment) in full of any Contract, the Servicer will notify
the Trustee by written certification (which certification shall include a
statement to the effect that all amounts received in connection with such
payments in full which are required to be deposited in the Local Bank Account
pursuant to Section 3.03 hereof have been so deposited) of a Servicing Officer
and shall request delivery of the Contract to the Servicer in accordance with
Section 1.3 of the Collateral Agent Agreement. Upon receipt of such delivery
request, the Collateral Agent shall, within 7 days of such request by the
Servicer, release such Contract to the Servicer in accordance with the
Collateral Agent Agreement. Upon release of such Contract, the Servicer is
authorized to execute an instrument in satisfaction of such Contract and to do
such other acts and execute such other documents as it deems necessary to
discharge the Obligor thereunder and, if applicable, release any security
interest in the Vacation Credits related thereto. The Servicer shall determine
when a Contract has been paid in full. Upon the written request of a Servicing
Officer and subject to the Trustee's rights to indemnity contained herein and in
the Indenture, the Trustee shall perform such other acts as reasonably requested
in writing by the Servicer and otherwise cooperate with the Servicer in
enforcement of the Noteholders' rights and remedies with respect to Contracts.
Section 4.06. Oversight of Servicing. (a) Prior to each Payment Date,
the Trustee shall review the Monthly Servicer's Report related thereto and shall
determine the following:
(i) that such Monthly Servicer's Report is complete on its
face; and
(ii) that the amounts credited to and withdrawn from the
Collection Account, the Capitalized Interest Account, Prefunding
Account and the Reserve Account, as set forth in the records of the
Trustee, are the same as the amount set forth in such Monthly
Servicer's Report.
(b) In the event of any discrepancy between the information set forth
in subparagraph (a) as calculated by the Servicer from that determined or
calculated by the Trustee, the Trustee shall promptly notify the Servicer of
such discrepancy. If within 30 days of such notice being provided to the
Servicer, the Trustee and the Servicer are unable to resolve such discrepancy,
the Trustee shall promptly notify the Holders of the Notes of such discrepancy.
(c) Based solely on the information included in the Contract Schedule
delivered on the Closing Date and the electronic reports provided on each
Payment Date thereafter, the Trustee
18
shall determine that any Substitute Contracts delivered under Section 3.10
satisfy the Substitution Criterion as defined in the Receivables Purchase
Agreement.
(d) Other than as specifically set forth elsewhere in this Agreement,
the Trustee shall have no obligation to supervise, verify, monitor or administer
the performance of the Servicer and shall have no liability for any action taken
or omitted by the Servicer.
(e) The Trustee shall consult fully with the Servicer as may be
necessary from time to time to perform or carry out the Trustee's obligations
hereunder, including the obligation to choose at any time a successor to the
duties and obligations of the Servicer as servicer under Section 6.02 hereof.
ARTICLE 5
THE SERVICER AND THE ISSUER
Section 5.01. Servicer Indemnification. (a) The Servicer shall indemnify
and hold harmless the Trustee, the Issuer, and the Trust Estate, for the benefit
of the Noteholders, from and against any loss, liability, claim, expense, damage
or injury suffered or sustained to the extent that such loss, liability, claim,
expense, damage or injury arose out of or was imposed by reason of the failure
by the Servicer to perform its duties under this Agreement or are attributable
to errors or omissions of the Servicer related to such duties; provided,
however, that the Servicer shall not indemnify any party to the extent that acts
of fraud, gross negligence or breach of fiduciary duty by such party contributed
to such loss, liability, claim, expense, damage or injury.
(b) Indemnification under this Section 5.01 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation
reasonably incurred. If the Servicer has made any indemnity payments to the
Trustee or the Noteholders pursuant to this Section and such party thereafter
collects any of such amounts from others, such party will promptly repay such
amounts collected to the Servicer without interest. The provisions of this
Section 5.01 shall survive any expiration or termination of this Agreement.
Section 5.02. Corporate Existence; Reorganizations. (a) The Servicer
shall keep in full effect its existence and good standing as a corporation in
the State of its incorporation and will obtain and preserve its qualification to
do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to enable the Servicer to perform its
duties under this Agreement, except where the failure to so qualify would not
have a material adverse effect on the Trust Estate or the ability of the
Servicer to perform its duties hereunder; provided, however, that the Servicer
may reincorporate in another State, if to do so would be in the best interests
of the Servicer and would not have a material adverse effect upon the
Noteholders.
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(b) The Servicer shall not (i) convey, transfer or lease substantially
all of its assets as an entirety to any Person, or (ii) merge or consolidate
with another Person, unless such Person or the merged or consolidated entity
acquires substantially all the assets of the Servicer, as an entirety and
executes and delivers to the Issuer and the Trustee an agreement, in form and
substance reasonably satisfactory to the Issuer and the Trustee, which contains
an assumption by such Person or entity of the due and punctual performance and
observance of each covenant and condition to be performed or observed by the
Servicer, under this Agreement; provided that nothing herein shall prevent the
Servicer from selling contracts and receivables which are not Assets pursuant to
a receivables financing.
Section 5.03. Limitation on Liability of the Servicer and Others. Except
as provided in Section 5.01, the Servicer, and any of the officers, directors,
employees or agents of the Servicer shall not be under any liability for any
action taken or for refraining from the taking of any action by the Servicer in
its capacity as Servicer pursuant to this Agreement; provided, however, that
this provision shall not protect the Servicer or any such Person against any
liability which would otherwise be imposed by reason of willful misconduct, bad
faith or negligence (which includes negligence with respect to the duties of the
Servicer explicitly set forth in this Agreement) in the performance of its
duties hereunder. The Servicer and any officer, director, employee or agent of
the Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person with respect to any matters
arising hereunder. No implied covenants or obligations shall be read into the
Servicing Agreement against the Servicer. In the event the Servicer performs any
activities beyond the requirements of this Agreement, it shall have the option
but will not be required to perform such activities in the future.
Section 5.04. The Servicer Not to Resign. (a) The Servicer (except as
set forth in the last sentence of this subsection (a)) shall not resign from the
duties and obligations hereby imposed on it by this Agreement except upon a
determination by the Board of Directors of the Servicer that by reason of change
in applicable legal requirements, with which the Servicer cannot reasonably
comply, the continued performance by the Servicer of its duties under this
Agreement would cause it to be in violation of such legal requirements, said
determination to be evidenced by a resolution from the appropriate Board of
Directors to such effect, accompanied by an Opinion of Counsel to such effect
and reasonably satisfactory to the Trustee.
(b) No such resignation shall become effective until a successor
Servicer, acceptable to the Rating Agencies and to Holders of not less than 51%
in aggregate principal amount of the Outstanding Notes of the Controlling Class,
shall have assumed the responsibilities and obligations of the Servicer
hereunder.
(c) Except as provided in Sections 5.02 and 6.01 hereof, the duties and
obligations of the Servicer under this Agreement shall continue until this
Agreement shall have been terminated as provided in Section 8.01 hereof, and
shall survive the exercise by the Issuer or the Trustee of
20
any right or remedy under this Agreement, or the enforcement by the Issuer, the
Trustee or any Noteholder of any provision of the Notes or this Agreement.
Section 5.05. Issuer Indemnification. The Issuer shall indemnify and
hold harmless the Servicer (but solely from the amounts to be distributed as set
forth in Sections 12.02(d)(xxi), 12.02(e)(xvi) and 12.03(d)(ii) of the
Indenture) from and against any loss, liability, expense, damage or injury
suffered or sustained by the Servicer, including but not limited to any
judgment, award, settlement, reasonable attorneys' fees and other costs and
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim, which arises out of the Servicer's activities
hereunder; provided, however, that the Issuer shall not indemnify the Servicer
if the Servicer's activities constituted fraud, willful misconduct, negligence
(which includes negligence with respect to the duties of the Servicer which are
explicitly set forth in this Agreement) or breach of fiduciary duty by the
Servicer for any amounts for which the Servicer is obligated to indemnify the
Issuer or other Persons pursuant to Section 5.01 hereof.
ARTICLE 6
SERVICING TERMINATION
Section 6.01. Servicer Events of Default. (a) Any of the following acts
or occurrences shall constitute a Servicer Event of Default:
(i) any failure by the Servicer (A) to deliver to the Local
Bank for deposit in the Local Bank Account or (B) to deliver or cause
to be delivered to the Trustee for deposit in the Collection Account
any proceeds or payments received from an Obligor or in respect of the
Trust Estate and required to be so delivered under the terms of the
Indenture and this Agreement that continues unremedied until 2:00 p.m.,
New York time, on the second successive Business Day following such
failure; or provided, however, that the Trustee, upon receiving actual
knowledge of such failure, shall give the Servicer prompt written,
telecopied or telephonic notice of such failure. Notwithstanding the
foregoing, any failure by the Trustee to deliver such notice to the
Servicer shall not prevent the occurrence of a Servicer Event of
Default; or
(ii) any failure by the Servicer to deliver a Monthly
Servicer's Report pursuant to Section 4.01 hereof that continues
unremedied until 2:00 p.m., New York time, the following Business Day;
provided, however, that if the Trustee has actual knowledge that the
Servicer has not delivered such Monthly Servicer's Report by 2:00 p.m.,
New York time, on a Determination Date, the Trustee shall give the
Servicer written, telecopied or telephonic notice of such failure.
Notwithstanding the foregoing, any failure by the Trustee to deliver
such notice to the Servicer shall not prevent the occurrence of a
Servicer Event of Default; or
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(iii) any failure by the Servicer to remit any Purchase Price
received by it to the Trustee that continues unremedied until 5:00
p.m., New York time, the following Business Day; provided, however,
that if the Servicer has not remitted any Purchase Price received by it
to the Trustee by 3:00 p.m., New York time, on the Determination Date
and the Trustee has actual knowledge that such Purchase Price has not
been paid, the Trustee shall give the Servicer prompt written,
telecopied or telephonic notice of such failure. Notwithstanding the
foregoing, any failure by the Trustee to deliver such notice to the
Servicer shall not prevent the occurrence of a Servicer Event of
Default; or
(iv) any failure by the Servicer to make remittances (other
than a remittance of Purchase Price referred to in clause (iii) above)
or deliver notices pursuant to Section 3.03 hereof, that continues
unremedied until 2:00 p.m., New York time, of the second successive
Business Day; or
(v) any failure on the part of the Servicer duly to observe
or perform any other covenants or agreements of the Servicer set forth
in this Agreement or the Indenture or any representation or warranty of
the Servicer set forth in Section 2.01 of this Agreement shall prove to
be incorrect in any material respect, which failure or breach continues
unremedied for a period of 30 days after the date on which the Servicer
becomes aware of such failure or breach, or receives written notice of
such failure or breach; or
(vi) any assignment by the Servicer to a delegate of its
duties or rights under this Agreement, except as specifically permitted
hereunder, or any attempt to make such an assignment; or
(vii) the entry of a decree or order for relief by a court
having jurisdiction in respect of the Servicer or a petition against
the Servicer in an involuntary case under any federal bankruptcy laws,
as now or hereafter in effect, or any other present or future federal
or state bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official for the Servicer or for any substantial part of
its property, or ordering the winding up or liquidation of the affairs
of the Servicer and the continuance of any such decree or order
unstayed and in effect, or failure for such petition to be dismissed,
for a period of 60 consecutive days; or
(viii) the commencement by the Servicer of a voluntary case
under any federal bankruptcy laws, as now or hereafter in effect, or
any other present or future federal or state bankruptcy, insolvency,
reorganization or similar law, or the consent by the Servicer to the
appointment of or taking possession by a conservator, receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official in any insolvency, readjustment of debt, marshaling of assets
and liabilities, bankruptcy or similar proceedings of or relating to
the Servicer relating to a substantial part of its property, or the
making by the Servicer of an assignment for the benefit of creditors,
or the failure by the Servicer generally to pay its debts as such debts
become due or if the Servicer shall admit in writing its
22
inability to pay their debts as they become due, or the taking of
corporate action by the Servicer in furtherance of any of the
foregoing; or
(ix) the stockholders' equity of the Servicer and its
consolidated subsidiaries, determined in accordance with generally
accepted accounting principles, as would be shown on a consolidated
balance sheet for such Persons, is below $50,000,000; or
(x) the occurrence of a Trigger Event.
(b) If a Servicer Event of Default shall have occurred and be
continuing, the Trustee shall, upon written direction of the Holders of Notes
representing not less than 66-2/3% in principal amount of the Outstanding Notes
of the Controlling Class, by notice (the "Servicer Termination Notice") given in
writing to the Servicer terminate all, but not less than all, of the rights and
obligations (except as expressly provided herein) of the Servicer under this
Agreement. Notwithstanding the foregoing, a delay in or failure of performance
under Sections 6.01(a)(ii) or 6.01(a)(v) hereof for a period of more than 30 or
more days shall not constitute a Servicer Event of Default if such delay or
failure could not have been prevented by the exercise of reasonable diligence by
the Servicer and such delay or failure was caused by acts of declared or
undeclared war, public disorder, rebellion or sabotage, epidemics, landslides,
lightning, fire, hurricanes, earthquakes, floods or similar causes; provided,
however, that in any event, such delay or failure shall constitute a Servicer
Event of Default if it continues unremedied for a period of 30 days. The
preceding sentence shall not relieve the Servicer from using its best efforts to
perform its obligations in a timely manner in accordance with the terms of this
Agreement, and the Servicer shall provide the Trustee, the Issuer and the
Noteholders with prompt notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations.
(c) On or after the receipt by the Servicer of a Servicer Termination
Notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Notes or the Contracts or otherwise, shall pass to and be
vested in the successor Servicer appointed pursuant to Section 6.02 hereof, and,
without limitation, such successor Servicer is hereby authorized and empowered
to execute and deliver, on behalf of such Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer of the Contracts and
related documents, or otherwise. The Servicer agrees to cooperate with the
Trustee and the successor Servicer in effecting the termination of the
responsibilities and rights of the Servicer hereunder, including, without
limitation, the transfer to the successor Servicer for administration by it of
all cash amounts that shall at the time be held by the Servicer for deposit, or
have been deposited by the Servicer or thereafter received with respect to
Contracts. To assist the successor Servicer in enforcing all rights under the
Contracts, the outgoing Servicer, at its own expense (including, without
limitation, any costs or expenses associated with the complete transfer of all
servicing data and the completion, correction or manipulation of such servicing
data as may be required by the successor Servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the successor
Servicer to
23
service the Contracts properly and effectively to the successor Servicer in such
form as the successor Servicer may reasonably request), shall transfer its
records (electronic and otherwise) relating to such Contracts and shall transfer
the related Contracts (to the extent not held by the Trustee) and all other
records, correspondence and documents relating to the Contracts that it may
possess to the successor Servicer in the manner and at such times as the
successor Servicer shall reasonably request.
Section 6.02. Appointment of Successor Servicer. (a)(i) On and after the
time at which the Servicer resigns as Servicer pursuant to Section 5.04 hereof
or is terminated as Servicer pursuant to Section 6.01 hereof, the Trustee shall,
within 90 days of the delivery of a Servicer Termination Notice, at the
direction of Holders of Notes representing not less than 66-2/3% in principal
amount of the Outstanding Notes of the Controlling Class, and with the consent
of the Rating Agencies, appoint a successor Servicer; provided, however, pending
the appointment of the successor Servicer, the Trustee shall act as the
successor Servicer hereunder.
(ii) The successor Servicer shall be the successor in all respects to
the Servicer in its capacity as Servicer under this Agreement, and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof; provided, however, that any such successor
shall not be liable for any acts or omissions of such outgoing Servicer or for
any breach by the outgoing Servicer of any of its representations and warranties
contained herein or in any related document or agreement. Subject to the consent
of the Rating Agencies and the Holders representing not less than 66-2/3% in
principal amount of the Outstanding Notes of the Controlling Class, such
successor Servicer may subcontract with another firm to act as subservicer so
long as such successor Servicer remains fully responsible and accountable for
performance of all obligations of the Servicer on and after the time such
Servicer receives the Servicer Termination Notice. Such successor Servicer shall
be entitled to the Servicer Fee in connection with acting as Servicer hereunder.
(b) Each of the Servicer, the Issuer, the Trustee and any successor
Servicer, shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. Upon any succession, such successor
Servicer shall notify the Obligors that it has been appointed Servicer under
this Agreement with respect to the Contracts.
Section 6.03. Notification to Noteholders. The Servicer shall promptly
notify the Issuer, the Trustee and the Rating Agencies of any Servicer Event of
Default upon actual knowledge thereof by an officer of the Servicer. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article 6, the Trustee shall give prompt written notice thereof to the
Noteholders at their respective addresses appearing in the Note Register.
Section 6.04. Waiver of Past Defaults. The Trustee shall, at the
direction of the Holders of Notes representing not less than 66-2/3%
24
in principal amount of the Outstanding Notes of the Controlling Class, on behalf
of all Noteholders, waive any default by the Servicer in the performance of its
obligations hereunder and its consequences, other than a default with respect to
required deposits and payments in accordance with Article 3 or a default of the
type set forth in clause (vii) or (viii) of Section 6.01(a) hereof, which waiver
shall require the consent of each Noteholder. Upon any such waiver of a past
default, such default shall cease to exist, and any Servicer Event of Default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon except to the extent expressly waived.
Section 6.05. Effects of Termination of Servicer. (a) Upon the
appointment of a successor Servicer, the predecessor Servicer shall remit any
Scheduled Payments and any other payments or proceeds that such predecessor may
receive pursuant to any Contract or otherwise to such successor after such date
of appointment.
(b) After the delivery of a Servicer Termination Notice, the outgoing
Servicer shall have no further obligations with respect to the management,
administration, servicing, enforcement, custody or collection of the Contracts,
and the successor Servicer shall have all of such obligations, except that such
outgoing Servicer will transmit or cause to be transmitted directly to such
successor Servicer promptly on receipt and in the same form in which received,
any amounts held by such outgoing Servicer (properly endorsed where required for
such successor to collect them) received as payments upon or otherwise in
connection with the Contracts. Such outgoing Servicer's indemnification
obligations pursuant to Section 5.01 hereof will survive the termination of such
Servicer but will not extend to any acts or omissions of a successor Servicer.
Section 6.06. No Effect on Other Parties. (a) Upon any termination of
the rights and powers of the Servicer pursuant to Section 6.01, or upon any
appointment of a successor to such Servicer, all the rights, powers, duties and
obligations of Trendwest under this Agreement, the Indenture and the Receivables
Purchase Agreement, other than Trendwest's rights, powers, duties and
obligations as Servicer therein, shall remain unaffected by such termination or
appointment and shall remain in full force and effect thereafter.
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ARTICLE 7
[RESERVED]
ARTICLE 8
MISCELLANEOUS PROVISIONS
Section 8.01. Termination of the Servicing Agreement. (a) Absent a
termination pursuant to Section 6.01, the respective duties and obligations of
the Servicer, the Issuer and the Trustee created by this Agreement shall
terminate upon the discharge of the Indenture in accordance with its terms; and
the respective duties and obligations of the Trustee shall terminate with
respect to the Trustee in the event the Trustee resigns or is replaced under
Section 7.09 of the Indenture; provided, however, that no resignation or removal
of the Trustee and no appointment of a successor Trustee shall become effective
until the acceptance of appointment by the successor Trustee under Section 7.10
of the Indenture. Upon the termination of this Agreement pursuant to this
Section 8.01(a), the Servicer shall pay all monies with respect to the
Receivables and Vacation Credits held by the Servicer, as the case may be, and
to which the Servicer is not entitled, to the Issuer or upon the Issuer's order.
The Servicer's indemnification obligations pursuant to Section 5.01 hereof will
survive the termination of this Agreement.
(b) This Agreement shall not be automatically terminated as a result of
an Event of Default under the Indenture or any action taken by the Trustee
thereafter with respect thereto, and any liquidation or preservation of the
Trust Estate by the Trustee thereafter shall be subject to the rights of the
Servicer to service the Receivables and to collect servicing compensation as
provided hereunder.
Section 8.02. Amendments. (a) This Agreement may be amended from time to
time by the Issuer and the Servicer, with the consent of the Trustee, and the
Holders of not less than 66-2/3% in principal amount of the Outstanding Notes of
the Controlling Class for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement; provided,
however, that no such amendment shall, without the consent of each affected
Noteholder (i) alter the priorities with which any allocation of funds shall be
made under this Agreement; (ii) permit the creation of any lien on the Trust
Estate (other than the lien of the Indenture) or any portion thereof or deprive
any such Noteholder of the benefit of this Agreement with respect to the Trust
Estate or any portion thereof; (iii) modify any provision herein relating to the
voting percentage of Noteholders necessary to grant consent or give direction,
(iv) modify this Section 8.02 or Sections 6.02 or 6.04 hereof, (v) cause the
downgrade of the then current ratings assigned by the Rating Agencies with
respect to the Notes.
26
(b) Promptly after the execution of any amendment, the Servicer shall
send to the Trustee, the Rating Agencies and each Holder of the Notes a
conformed copy of each such amendment.
(c) It shall be necessary, in any consent of Noteholders under this
Section 8.02, to approve the particular form of any proposed amendment. The
manner of obtaining such consent and of evidencing the authorization of the
execution thereof by Noteholders shall be subject to such reasonable regulations
as the Trustee may prescribe.
(d) Any amendment or modification effected contrary to the provisions
of this Section 8.02 shall be void.
Section 8.03. Governing Law. This Agreement shall be construed in
accordance with the internal laws of the State of New York without regard to
conflict of laws principles and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 8.04. Notices, etc., to Trustee, Issuer and Servicer. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other document provided or permitted by this Agreement to be made
upon, given or furnished to, or filed with any party hereto shall be sufficient
for every purpose hereunder if in writing and telecopied or mailed, first-class
postage prepaid and addressed to the appropriate address below:
(a) to the Trustee at 00000 Xxxxxx Xxxx Xxxxxxx, Xxxxxxxx,
Xxxxxxxx 00000 (facsimile number (000) 000-0000), Attention: Corporate
Trust Services, Securities Administration, TRI Funding 1999-1, with a
copy to the Trustee at Sixth Street and Marquette Avenue, MAC
N9311-161, Xxxxxxxxxxx, XX 00000 (facsimile number (000) 000-0000),
Attention: Corporate Trust Services, Asset-Backed Administrations or at
any other address previously furnished in writing to the Issuer and the
Servicer; or
(b) to the Issuer at TRI Funding III, Inc., 0000 Xxxxxxx
Xxxx, Xxxxxxx, Xxxxxxxxxx 00000 (facsimile number (000) 000-0000),
Attention: Vice President, or at any other address previously furnished
in writing to the Trustee, the Noteholders and the Servicer by the
Issuer; or
(c) to the Servicer at Trendwest Resorts, Inc., 0000 Xxxxxxx
Xxxx, Xxxxxxx, Xxxxxxxxxx 00000 (facsimile number (000) 000-0000),
Attention: Executive Vice President, or at any other address previously
furnished in writing to the Trustee, the Noteholders and the Issuer; or
27
(d) to DCR at 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 (facsimile number (000) 000-0000), Attention: Asset-Backed
Securities/Timeshare Group or at any other address previously furnished
in writing to the Trustee and the Issuer; or
(e) to Fitch IBCA, Inc., at Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000 (facsimile (000) 000-0000), Attention: Asset-Backed
Securities or at any other address previously furnished in writing to
the Trustee, the Noteholders, the Servicer and the Issuer.
Section 8.05. Notices and Other Documents to Noteholders; Waiver. (a)
Where this Agreement provides for notice to Noteholders of any event, such
notice shall be in writing and sent (i) by telefacsimile if the sender on the
same day sends a confirming copy of such notice by a recognized overnight
delivery service (charges prepaid), or (ii) by registered or certified mail with
return receipt requested (postage prepaid), or (iii) by a recognized overnight
delivery service (with charges prepaid). Any such notice to a Noteholder or its
nominee must be sent to (i) such Person at the address specified for such
communications in the Note Register, or at such other address as the Noteholder
shall have specified to the Trustee in writing and (ii) if specified, to such
other Person as shall be identified in writing to the Trustee by each Noteholder
or its nominee. The Trustee acknowledges receipt of Annex 1 to the Note Purchase
Agreement, which sets forth such information with respect to the initial
Holders. Notice under this Section 8.05 will be deemed to be given only when
actually received.
(b) Where this Agreement provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
(c) Any reports, documents or other communications other than notices
to be sent to Noteholders may be telecopied or mailed, first class postage
prepaid and shall be addressed to the Noteholders and their nominees and
designees, if applicable, as set forth in paragraph (a) above.
Section 8.06. Severability of Provisions. If one or more of the
provisions of this Agreement shall be for any reason whatever held invalid, such
provisions shall be deemed severable from the remaining covenants and provisions
of this Agreement, and shall in no way affect the validity or enforceability of
such remaining provisions, the rights of any parties hereto, or the rights of
the Trustee or any Noteholder. To the extent permitted by law, the parties
hereto waive any provision of law which renders any provision of this Agreement
prohibited or unenforceable in any respect.
28
Section 8.07. Binding Effect. All provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns
of the parties hereto, and all such provisions shall inure to the benefit of the
Noteholders. This Agreement may not be modified except by a writing signed by
all parties hereto.
Section 8.08. Article Headings and Captions. The article headings and
captions in this Agreement are for convenience of reference only, and shall not
limit or otherwise affect the meaning hereof.
Section 8.09. Legal Holidays. In the case where the date on which any
action required to be taken, document required to be delivered or payment
required to be made is not a Business Day, such action, delivery or payment need
not be made on such date, but may be made on the next succeeding Business Day.
Section 8.10. Assignment for Security for the Notes. The Servicer
understands that the Issuer will assign to and grant to the Trustee a security
interest in all of its right, title and interest to this Agreement. The Servicer
consents to such assignment and grant and further agree that all
representations, warranties, covenants and agreements of the Servicer made
herein shall also be for the benefit of and inure to the Trustee and all Holders
from time to time of the Notes.
Section 8.11. No Servicing Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 5.02 and 5.04 hereof,
this Agreement may not be assigned by the Issuer, the Seller or the Servicer
(except with respect to the appointment of a subservicer) without the prior
written consent of the Holders of Notes representing not less than 66-2/3% in
principal amount of the Outstanding Notes of the Controlling Class.
Section 8.12. Counterparts. This Agreement may be executed in one or
more counterparts all of which together shall constitute one original document.
Section 8.13. Parties Will Not Institute Insolvency Proceedings. During
the term of this Agreement and for one year and one day after the termination
hereof, none of the parties hereto or any Affiliate thereof or any Holder of
Outstanding Notes (and each Holder of Outstanding Notes so agrees by acceptance
of a Note) will file any involuntary petition or otherwise institute any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or
other proceeding under any federal or state bankruptcy or similar law against
the Issuer.
29
IN WITNESS WHEREOF, the Issuer, Trendwest, the Servicer and the Trustee
have caused this Agreement to be duly executed by their respective officers or
authorized signatories thereunto duly authorized as of the date and year first
above written.
TRI FUNDING III, INC., as Issuer
By
Name:
Title:
TRENDWEST RESORTS, INC., as Servicer and for itself
By
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee
By
Name:
Title:
30
EXHIBIT A
FORM OF
MONTHLY SERVICER'S REPORT
EXHIBIT B
PERMITTED CHANGES TO PROPERTY MANAGEMENT AGREEMENT
1. The right of entry into resort units provision of the agreement may be
amended to accommodate emergency situations.
2. The permitted percentage interest that Trendwest has in an entity which
contracts with Trendwest may be decreased.
3. The maximum management fees paid to Trendwest may be decreased.
4. The Advances and Reimbursements provision may be amended so that
WorldMark will reimburse Trendwest for sums which were advanced by
Trendwest at Trendwest's cost rather than at a set interest rate.
5. The provision of the agreement authorizing Trendwest to pay itself its
management fee, reimbursements and authorized expenses may be amended
to require board approval should Trendwest seek reimbursement of
expenses in excess of the budgeted amount for such expenses.
6. The competition provision of the agreement may be amended so that
employees and managers of Trendwest and WorldMark may not in any way
obtain or retain the services of the other's employees for a period of
twelve months following the termination or expiration of the agreement.
7. Information relating to the names and addresses of any person named in
the agreement may be updated as necessary.
EXHIBIT C
FORM OF REPORT OF INDEPENDENT ACCOUNTANTS
