RECEIVABLES SALE AGREEMENT
DATED AS OF JANUARY 7, 2000
BETWEEN
TRENDWEST RESORTS, INC.
as Originator
AND
TW HOLDINGS III, INC.
as Buyer
TABLE OF CONTENTS
Page
ARTICLE I AMOUNTS AND TERMS OF THE PURCHASES..... .............................1
Section 1.1 Purchases of Receivables............................1
Section 1.2 Payment for the Purchases...........................3
Section 1.3 Adjustments for Dilutions...........................4
Section 1.4 Repurchase of Receivables...........................5
Section 1.5 Upgrade Contracts...................................7
Section 1.6 Payments and Computations, Etc......................7
Section 1.7 Transfer of Records.................................8
Section 1.8 Characterization....................................8
ARTICLE II REPRESENTATIONS AND WARRANTIES......................................9
Section 2.1 Representations and Warranties of Originator........9
ARTICLE III CONDITIONS OF PURCHASES...........................................14
Section 3.1 Conditions Precedent to Initial Purchase...........14
Section 3.2 Conditions Precedent to All Purchases..............14
ARTICLE IV COVENANTS..........................................................15
Section 4.1 Affirmative Covenants of Originator................15
Section 4.2 Negative Covenants of Originator...................20
ARTICLE V AMORTIZATION EVENTS.................................................21
Section 5.1 Amortization Events................................21
Section 5.2 Remedies...........................................22
ARTICLE VI INDEMNIFICATION....................................................23
Section 6.1 Indemnities by Originator..........................23
Section 6.2 Other Costs and Expenses...........................26
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ARTICLE VII MISCELLANEOUS.....................................................26
Section 7.1 Waivers and Amendments.............................26
Section 7.2 Notices............................................26
Section 7.3 Protection of Ownership Interests of Buyer.........27
Section 7.4 Confidentiality....................................28
Section 7.5 Bankruptcy Petition................................28
Section 7.6 CHOICE OF LAW......................................28
Section 7.7 CONSENT TO JURISDICTION............................28
Section 7.8 WAIVER OF JURY TRIAL...............................29
Section 7.9 Integration; Binding Effect; Survival of
Terms..............................................29
Section 7.10 Counterparts; Severability; Section References.....30
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Exhibits and Schedules
------------------------
Exhibit I - Definitions
Exhibit II - Principal Place of Business; Location(s) of Records;
Federal Employer Identification Number
Exhibit III - Account Numbers
Exhibit IV - Form of Compliance Certificate
Exhibit V - Credit and Collection Policy
Exhibit VI - Form of Subscription Agreement
Exhibit VII - Form of Subordinated Note
Exhibit VIII - Form of Vacation Owner Agreement
Exhibit IX - Form of Sale Assignment
Schedule A - List of Documents to Be Delivered to Buyer Prior to the
Initial Purchase
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RECEIVABLES SALE AGREEMENT
THIS RECEIVABLES SALE AGREEMENT, dated as of January 7, 2000 is by and
between Trendwest Resorts, Inc. ("TWRI"), an Oregon corporation ("Originator"),
TW Holdings III, Inc., a Delaware corporation ("Buyer"). Unless defined
elsewhere herein, capitalized terms used in this Agreement shall have the
meanings assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS
Originator now owns, and from time to time hereafter will own, Receivables.
Originator wishes to sell and assign to Buyer, and Buyer wishes to purchase from
Originator, all of Originator's right, title and interest in and to such
Receivables, together with the Related Security and Collections with respect
thereto.
Originator and Buyer intend the transactions contemplated hereby to be true
sales of the Receivables from Originator to Buyer, providing Buyer with the full
benefits of ownership of the Receivables, and Originator and Buyer do not intend
these transactions to be, or for any purpose to be characterized as, loans from
Buyer to Originator.
Upon each purchase of Receivables from Originator, Buyer will sell
undivided interests therein and in the associated Related Security and
Collections pursuant to that certain Receivables Purchase Agreement dated as of
January 7, 2000 (as the same May from time to time hereafter be amended,
supplemented, restated or otherwise modified, the "Purchase Agreement") among
Buyer, Originator, as Servicer, International Securitization Corporation
("Conduit"), the financial institutions from time to time party thereto as
"Financial Institutions" and Bank One, NA (Main Office Chicago), or any
successor agent appointed pursuant to the terms of the Purchase Agreement, as
agent for Conduit and such Financial Institutions (in such capacity, the
"Agent").
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1 Purchases of Receivables.
(a) On each Purchase Date hereunder, in consideration for the Purchase
Price and upon the terms and subject to the conditions set forth herein,
Originator shall sell, assign, transfer, set-over and otherwise convey to Buyer,
without recourse (except to the extent expressly provided herein), and Buyer
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shall purchase from Originator, all of Originator's right, title and interest in
and to all Receivables identified in the related Schedule of Receivables,
together with all Related Security relating thereto and all Collections thereof;
provided, however, that in no event shall Buyer be obligated to purchase, or
Originator be obligated to sell, any Receivable arising after the Amortization
Date. In accordance with the preceding sentence, on the date of the initial
Purchase, Buyer shall acquire all of Originator's right, title and interest in
and to all Receivables identified in the related Schedule of Receivables,
together with all Related Security relating thereto and all Collections thereof.
The acquisition by Buyer of the right, title and interest of Originator in the
applicable Receivables in connection with each Purchase hereunder is conditioned
upon and subject to Originator's receipt of the Purchase Price therefor in
accordance with Section 1.2.
(b) Not less than five Business Days prior to each date which Originator
proposes to be a Purchase Date, Originator shall deliver to Buyer (i) a notice
that Originator proposes to sell Receivables to Buyer on the specified Purchase
Date, and (ii) a Schedule of the Originated Receivables that Originator proposes
to sell to Buyer on such Purchase Date (a "Draft Schedule of Receivables"). The
Originator shall also deliver to the Custodian, for each Originated Receivable
on the Draft Schedule of Receivables, each Receivable Document listed in the
definition of "Receivable Documents."
(c) If Buyer is unwilling to effect a Purchase of Receivables on such
proposed Purchase Date, or if Buyer is willing to purchase some, but not all, of
such Originated Receivables on such proposed Purchase Date, then Buyer shall
deliver to Purchaser, within two Business Days following Buyer's receipt of
Originator's notice, a notice to such effect, including (if Buyer is willing to
purchase some but not all such Originated Receivables), a Schedule of the
Originated Receivables which Buyer is willing to purchase. If Buyer is unwilling
to effect a Purchase of Receivables on such Purchase Date, then such proposed
Purchase Date shall be abandoned. Otherwise, on such Purchase Date, a purchase
and sale of the Originated Receivables specified on the Schedule delivered by
Originator (or, if Buyer delivered a Schedule as provided in the preceding
sentence, then a purchase and sale of the Originated Receivables specified on
such Schedule (the applicable Schedule being the "Schedule of Receivables" for
such Purchase Date), shall occur pursuant to Section 1.1(a) on such Purchase
Date (subject to compliance with the conditions specified in Article III).
(d) In connection with consummation of any Purchase hereunder, Originator
will deliver to the Custodian an (i) executed Sale Assignment (substantially in
the form as Exhibit IX hereto) and (ii) the Schedule of Receivables. Buyer May
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request that Originator deliver, and Originator shall deliver, such approvals,
opinions, information, reports or documents as Buyer May reasonably request.
(e) It is the intention of the parties hereto that each Purchase of
Receivables made hereunder shall constitute a "true sale", which sales are
absolute and irrevocable and provide Buyer with the full benefits of ownership
of the Receivables. Except for adjustments for dilution pursuant to Section 1.3,
each sale of Receivables hereunder is made without recourse to Originator;
provided, however, that (i) Originator shall be liable to Buyer for all
representations, warranties and covenants made by Originator pursuant to the
terms of the Transaction Documents to which Originator is a party, and (ii) such
sale does not constitute and is not intended to result in an assumption by Buyer
or any assignee thereof of any obligation of Originator or any other Person
arising in connection with the Receivables, the related Contracts and/or other
Related Security or any other obligations of Originator. In view of the
intention of the parties hereto that the Purchases of Receivables made hereunder
shall constitute sales of such Receivables rather than loans secured thereby,
Originator agrees that it will, on or prior to the date hereof and in accordance
with Sections 4.1(e)(ii) and 4.2(f), xxxx its master data processing records
relating to the Receivables with a legend acceptable to Buyer and to the Agent
(as Buyer's assignee), evidencing that Buyer has purchased such Receivables as
provided in this Agreement and to note in its financial statements that such
Receivables have been sold to Buyer. Upon the request of Buyer or the Agent (as
Buyer's assignee), Originator or its Affiliate will execute and file such
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as May be necessary or
appropriate to perfect and maintain the perfection of Buyer's ownership interest
in the Receivables and the Related Security and Collections with respect
thereto, or as Buyer or the Agent (as Buyer's assignee) May reasonably request.
Section 1.2 Payment for the Purchases.
(a) Upon acceptance and approval by the Custodian of the documents
specified in Section 1.1(d) , the Buyer will transfer or cause to be transferred
to the Originator, an amount equal to the Purchase Price with respect to such
Purchase of Receivables. The Purchase Price for each Purchase shall be payable
in full by Buyer to Originator on the date of such Purchase, and shall be paid
to Originator in the following manner:
(i) by delivery of immediately available funds, to the extent of
(x) funds made available to Buyer in connection with its subsequent
sale of an interest in such Receivables to the Purchasers under the
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Purchase Agreement and (y) any Collections on Receivables or other
funds available to Buyer on such Purchase Date; and
(ii) the balance, by accepting a contribution to its capital
and/or with the proceeds of a borrowing from Originator of a
subordinated revolving loan (each, a "Subordinated Loan") in such
amounts as determined by Buyer, provided that the Subordinated Loan
made on the date of the initial Purchase by the Originator shall not
cause Net Worth to be less than the Required Capital Amount.
Subject to the limitations set forth in the preceding clause (ii), Originator
irrevocably agrees to advance each Subordinated Loan requested of it by Buyer on
or prior to the Facility Termination Date. The Subordinated Loans owing to
Originator shall be evidenced by, and shall be payable in accordance with the
terms and provisions of, the Subordinated Note and shall be payable solely from
funds which the Buyer is not required under the Purchase Agreement to set aside
for the benefit of, or otherwise pay over to, the Agent for the benefit of the
Purchasers.
(b) On each Settlement Date related to a Calculation Period, all
Collections paid to Buyer pursuant to the terms of the Purchase Agreement shall
be paid to the Originator to reduce the amounts owed by Buyer to Originator
under the Subordinated Note. If the balance on the Subordinated Note has been
reduced to zero and all other amounts owed thereunder have been paid, then Buyer
shall be entitled to retain any remaining Collections.
(c) In addition to such other information as May be included therein, each
Monthly Report shall set forth the following with respect to the related
Calculation Period: (i) the aggregate Outstanding Balance of Receivables created
by the Originator and conveyed in Purchases during such Calculation Period, as
well as the Net Receivables Balance (as defined in the Purchase Agreement)
included therein, (ii) the aggregate Purchase Price payable to the Originator in
respect of such Purchases, (iii) the aggregate amount of funds received by such
Originator during such Calculation Period which are to be applied toward the
aggregate Purchase Price owing for such Calculation Period pursuant to the first
sentence of this paragraph, (iv) the increase or decrease in the amount
outstanding under the Subordinated Note as of the end of such Calculation Period
after giving effect to the application of funds in paragraph (b) above and the
restrictions on Subordinated Loans set forth in paragraph (a) above, and (v) the
amount of any capital contribution made by to Buyer as of the end of such
Calculation Period pursuant to paragraph (a) above.
Section 1.3 Adjustments for Dilutions. If on any day:
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(a) the Outstanding Balance of a Receivable is:
(i) reduced as a result of any defective or rejected goods or
services, rescission of a Contract, any discount or any adjustment or
otherwise by Originator (other than cash Collections on account of the
Receivables),
(ii) reduced or canceled as a result of a setoff in respect of
any claim by any Person (whether such claim arises out of the same or
a related transaction or an unrelated transaction), or
(b) any of the representations and warranties set forth in Article II are
no longer true with respect to any Receivable,
then, in such event, Originator shall deposit into the Collection Account on the
second Business Day following the date (the "Dilution Date") of occurrence of an
event described in paragraphs (a) or (b) of this Section 1.3, an amount in
immediately available funds equal to the Accrued Balance of such Receivable as
of the Dilution Date.
Section 1.4 Repurchase of Receivables.
(a) From time to time the Buyer May convey back to Originator, at
Originator's option, (x) to the extent permitted pursuant to Section 1.4(c), any
Receivable which constituted a Charged-Off Receivable or a Defaulted Receivable
as of the last day of the related Calculation Period and (y) to the extent
permitted by Section 1.4(e), any Vacation Credit which constituted a Repossessed
Vacation Credit as of the last day of the related Calculation Period. Originator
shall provide the Agent with irrevocable written notice prior to the date upon
which such reconveyance shall occur of its intention to cause such reconveyance
to occur, which notice shall (i) state the amount of each form of consideration
described in Sections 1.4(b) and 1.4(e) which shall be paid to Buyer on such
Settlement Date, (ii) identify the Charged-Off Receivables or Defaulted
Receivables to be reconveyed to Seller and (iii) otherwise be satisfactory in
form and substance to Buyer.
(b) As consideration for the reconveyance of a Receivable pursuant to
Section 1.4(a)(x), Originator shall provide to Buyer, in immediately available
funds, an amount equal to the Outstanding Balance of such Receivable (prior to
any write-off thereof).
(c) The aggregate Outstanding Balance of Receivables (prior to any
write-off thereof) reconveyed pursuant to Section 1.4(a)(x) shall (i) at no time
exceed 10% of the result of (a) the aggregate initial Outstanding Balance of all
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Receivables conveyed from the Originator to the Buyer on any Purchase Date
reduced by (b) the aggregate Outstanding Balance (prior to any write-off
thereof) of all Receivables subsequently reconveyed from the Buyer to the
Originator, and (ii) in no one calendar year exceed $7,500,000.
(d) As consideration for any reconveyance pursuant to Section 1.4(a)(y) of
a Repossessed Vacation Credit, on the applicable Settlement Date, Originator
shall pay to Buyer in immediately available funds an amount equal to 25% of the
original purchase price paid by the defaulting Obligor for such Vacation Credit.
(e) Originator May not repurchase Repossessed Vacation Credits at any time
pursuant to Section 1.4(a)(y) unless each of the following conditions is
satisfied:
(i) either the Amortization Date or the Revolving Period
Termination Date has occurred under the Purchase Agreement;
(ii) Originator has theretofore repurchased the maximum amount of
Charged-off Receivables and Defaulted Receivables permitted to be
repurchased at such time pursuant to Sections 1.4(a)(x) and 1.4(c);
and
(iii) the aggregate Outstanding Balance of all Charged-off
Receivables and Defaulted Receivables related to Repossessed Vacation
Credits which have been repurchased pursuant to Section 1.4(a)(y),
including the Repossessed Vacation Credits to be repurchased on such
Settlement Date, does not exceed an amount equal to 5.0% of the
Outstanding Balance of Eligible Receivables as of the earlier to occur
of the Amortization Date and the Revolving Period Termination Date.
Seller May not repurchase any Repossessed Vacation Credits relating to a
Charged-off Receivable or a Defaulted Receivable unless Seller repurchases all
of the Repossessed Vacation Credits relating to such Charged-off Receivable or
Defaulted Receivable at such time.
(f) The rights of Originator pursuant to this Section 1.4 to repurchase
Charged-off Receivables, Defaulted Receivables and Repossessed Vacation Credits
shall be subject and subordinate to the rights of the Agent pursuant to Section
10.2 of the Purchase Agreement to sell, dispose or otherwise liquidate the
Receivables and the Related Security following the occurrence of an Amortization
Event. Such rights of the Originator shall not apply to any Charged-off
Receivables, Defaulted Receivables or Repossessed Vacation Credits which the
Agent or any Servicer has sold, nor shall they apply to any Charged-off
Receivables, Defaulted Receivables or Repossessed Vacation Credits as to which
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the Agent or any Servicer has provided at least five Business Days prior notice
to the Seller of its intention so to sell (unless, prior to the expiration of
such five Business Days, Originator has irrevocably committed to purchase such
Charged-off Receivables, Defaulted Receivables or Repossessed Vacation Credits
on the next succeeding Settlement Date).
Section 1.5 Upgrade Contracts.
(a) If at any time the Obligor of a Receivable enters into an Upgrade
Contract, Originator shall deliver (i) to the Buyer a notice indicating such
Upgrade and identifying the Receivable (the "Upgrade Receivable") represented by
such Upgrade Contract and (ii) to the Custodian, the Receivable Documents
related to such Upgrade Receivable.
(b) Buyer shall pay to Originator, in immediately available funds, an
amount equal to the excess, if any, of (x) the Outstanding Balance of such
Upgrade Receivable over (y) the Outstanding Balance of the existing receivable
(the "Pre-Upgrade Receivable") to which it is related.
(c) The Buyer will subsequently deliver to the Agent a notice in accordance
with Section 2.10 of the Purchase Agreement indicating such Upgrade and
identifying the Upgrade Receivable and the Pre-Upgrade Receivable.
(d) There shall be no limit on the number of Receivables related to Upgrade
Contracts substituted for under this Agreement.
Section 1.6 Payments and Computations, Etc. All amounts to be paid or
deposited by Buyer hereunder shall be paid or deposited in accordance with the
terms of the Agreement on the day when due in immediately available funds to the
account of Originator designated from time to time by Originator or as otherwise
directed by Originator. In the event that any payment owed by any Person
hereunder becomes due on a day that is not a Business Day, then such payment
shall be made on the next succeeding Business Day. If any Person fails to pay
any amount hereunder when due, such Person agrees to pay, on demand, the Default
Fee in respect thereof until paid in full; provided, however, that such Default
Fee shall not at any time exceed the maximum rate permitted by applicable law.
All c Payments and Computations, Etc. All omputations of interest payable
hereunder shall be made on the basis of a year of 360 days for the actual number
of days (including the first but excluding the last day) elapsed.
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Section 1.7 Transfer of Records.
(a) In connection with the Purchases of Receivables hereunder, Originator
hereby sells, transfers, assigns and otherwise conveys to Buyer all of
Originator's right and title to and interest in the Records relating to all
Receivables sold hereunder. There will be no need for any further documentation
in connection with any Purchase, other than documents specifically required by
this Agreement. In connection with such transfer, Originator hereby grants to
each of Buyer, the Agent and the Servicer an irrevocable, non-exclusive license
to use, without royalty or payment of any kind, all software used by Originator
to account for the Receivables, to the extent necessary to administer the
Receivables, whether such software is owned by Originator or is owned by others
and used by Originator under license agreements with respect thereto, provided
that should the consent of any licensor of Originator to such grant of the
license described herein be required, Originator hereby agrees that upon the
request of Buyer (or the Agent as Buyer's assignee), Originator will use its
reasonable efforts to obtain the consent of such third-party licensor. The
license granted hereby shall be irrevocable, and shall terminate on the date
this Agreement terminates in accordance with its terms.
(b) Originator (i) shall take such action requested by Buyer and/or the
Agent (as Buyer's assignee), from time to time hereafter, that May be necessary
or appropriate to ensure that Buyer and its assigns under the Purchase Agreement
have an enforceable ownership interest in the Records relating to the
Receivables purchased from Originator hereunder, and (ii) shall use its
reasonable efforts to ensure that Buyer, the Agent and the Servicer each has an
enforceable right (whether by license or sublicense or otherwise) to use all of
the computer software used to account for the Receivables and/or to recreate
such Records.
Section 1.8 Characterization. If, notwithstanding the intention of the
parties expressed in Section 1.1(c), any sale or contribution by Originator to
Buyer of Receivables hereunder shall be characterized as a secured loan and not
a sale, then this Agreement shall be deemed to constitute a security agreement
under the UCC and other applicable law. For this purpose and without being in
derogation of the parties' intention that each sale of Receivables hereunder
shall constitute a true sale thereof, Originator hereby grants to Buyer a duly
perfected security interest in all of Originator's right, title and interest in,
to and under all Receivables now existing and hereafter arising, all Collections
and Related Security with respect thereto, each Collection Account and all
proceeds of the foregoing, which security interest shall be prior to all other
Adverse Claims thereto. After the occurrence of an Amortization Event, Buyer and
its assigns shall have, in addition to the rights and remedies which they May
have under this Agreement, all other rights and remedies provided to a secured
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creditor after default under the UCC and other applicable law, which rights and
remedies shall be cumulative.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of Originator. Originator hereby
represents and warrants to Buyer, as to itself and as to WorldMark (to the
extent specific reference to WorldMark is made) that:
(a) Corporate Existence and Power. Originator is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, and is duly qualified to do business and is in good standing as a
foreign corporation, and has and holds all corporate power and all governmental
licenses, authorizations, consents and approvals required to carry on its
business in each jurisdiction in which its business is conducted, except where
failure to so qualify or so hold could not be reasonably expected to have a
Material Adverse Effect.
(b) Power and Authority; Due Authorization Execution and Delivery. The
execution and delivery by Originator of this Agreement and each other
Transaction Document to which it is a party, and the performance of its
obligations hereunder and thereunder and, Originator's use of the proceeds of
Purchases made hereunder, are within its corporate powers and authority and have
been duly authorized by all necessary corporate action on its part. This
Agreement and each other Transaction Document to which Originator is a party has
been duly executed and delivered by Originator.
(c) No Conflict. The execution and delivery by Originator of this Agreement
and each other Transaction Document to which it is a party, and the performance
of its obligations hereunder and thereunder do not contravene or violate (i) its
certificate or articles of incorporation or by-laws (or equivalent
organizational documents), (ii) any law, Rule or regulation applicable to it,
(iii) any restrictions under any agreement, contract or instrument to which it
is a party or by which it or any of its property is bound, or (iv) any order,
writ, judgment, award, injunction or decree binding on or affecting it or its
property, and do not result in the creation or imposition of any Adverse Claim
on assets of Originator or its Subsidiaries (except as created hereunder) and no
transaction contemplated hereby requires compliance with any bulk sales act or
similar law.
(d) Governmental Authorization. Other than the filing of the financing
statements required hereunder, no authorization or approval or other action by,
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and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution and delivery by Originator of this Agreement
and each other Transaction Document to which it is a party and the performance
of its obligations hereunder and thereunder.
(e) Actions, Suits.
(i) There are no actions, suits or proceedings pending, or to the
best of Originator's knowledge, threatened, against or affecting
Originator, or any of its or WorldMark's properties, in or before any
court that could be reasonably expected to have a Material Adverse
Effect.
(ii) Originator is not in default with respect to any order of
any court, arbitrator or governmental body.
(f) Binding Effect. This Agreement and each other Transaction Document to
which Originator is a party constitute the legal, valid and binding obligations
of Originator enforceable against Originator in accordance with their respective
terms, except as such enforcement May be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws relating to or limiting
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(g) Accuracy of Information. All information heretofore furnished by
Originator or any of its Affiliates to Buyer (or its assigns) for purposes of or
in connection with this Agreement, any of the other Transaction Documents or any
transaction contemplated hereby or thereby is, and all such information
hereafter furnished by Originator or any of its Affiliates to Buyer (or its
assigns) will be, true and accurate in every material respect on the date such
information is stated or certified and does not and will not contain any
material misstatement of fact or omit to state a material fact or any fact
necessary to make the statements contained therein not misleading.
(h) Use of Proceeds. No proceeds of any Purchase hereunder will be used (i)
for a purpose that violates, or would be inconsistent with, Regulation T, U or X
promulgated by the Board of Governors of the Federal Reserve System from time to
time or (ii) to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
(i) Good Title. Immediately prior to each Purchase hereunder, Originator
shall be the legal and beneficial owner of the Receivables and Related Security
with respect thereto, free and clear of any Adverse Claim, except as created by
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the Transaction Documents. There have been duly filed all financing statements
or other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect Originator's
ownership interest in each Receivable, its Collections and the Related Security.
(j) Perfection. This Agreement, together with the filing of the financing
statements contemplated hereby, is effective to, and shall, upon each Purchase
hereunder, transfer to Buyer (and Buyer shall acquire from Originator) legal and
equitable title to, with the right to sell and encumber each Receivable existing
and hereafter arising, together with the Related Security and Collections with
respect thereto, free and clear of any Adverse Claim, except as created by the
Transaction Documents. There have been duly filed all financing statements or
other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect Buyer's ownership
interest in the Receivables, the Related Security and the Collections.
(k) Places of Business. The principal places of business and chief
executive office of Originator and the offices where it keeps all of its Records
are located at the address(es) listed on Exhibit II or such other locations of
which Buyer has been notified in accordance with Section 4.2(a) in jurisdictions
where all action required by Section 4.2(a) has been taken and completed.
Originator's Federal Employer Identification Number is correctly set forth on
Exhibit II.
(l) Collections. The conditions and requirements set forth in Section
4.1(l) have at all times been satisfied and duly performed. The name and address
of the bank with which the Clearing Account is established, together with the
account numbers of the Clearing Account and the Collection Account, are listed
on Exhibit III.
(m) Material Adverse Effect. Since June 30, 1999 no event has occurred that
would have a Material Adverse Effect, including a Material Adverse Effect
regarding the collectibility of the Receivables.
(n) Names. In the past five (5) years, Originator has not used any
corporate names, trade names or assumed names other than the name in which it
has executed this Agreement.
(o) Ownership of Buyer Originator owns, directly or indirectly, 100% of the
issued and outstanding capital stock of Buyer, free and clear of any Adverse
Claim. Such capital stock is validly issued, fully paid and nonassessable, and
there are no options, warrants or other rights to acquire securities of Buyer.
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(p) Not a Holding Company or an Investment Company. Originator is not a
"holding company" or a "subsidiary holding company" of a "holding company"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended, or any successor statute. Originator is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or any
successor statute.
(q) Compliance with Law. Originator has complied in all respects with all
applicable laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it May be subject. Each Receivable, together with the
Contract related thereto, does not contravene any laws, rules or regulations
applicable thereto (including laws, rules and regulations relating to truth in
lending, fair credit billing, fair credit reporting, equal credit opportunity,
fair debt collection practices and privacy), and no part of such Contract is in
violation of any such law, Rule or regulation.
(r) Compliance with Credit and Collection Policy. Originator has complied
in all material respects with the Credit and Collection Policy with regard to
each Receivable and the related Contract, and has not made any material change
to such Credit and Collection Policy, except such material change as to which
Buyer (or its assigns) has been notified in accordance with Section 4.1(a)(vii).
(s) Payments to Originator. With respect to each Receivable transferred to
Buyer hereunder, the Purchase Price received by Originator constitutes
reasonably equivalent value in consideration therefor, and such transfer was not
made for or on account of an antecedent debt. No transfer by Originator of any
Receivable hereunder is or May be voidable under any Section of the Bankruptcy
Reform Act of 1978 (11 U.S.C. xx.xx. 101 et seq.), as amended.
(t) Enforceability of Contracts. Each Contract with respect to each
Receivable is effective to create, and has created, a legal, valid and binding
obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and all accrued interest thereon, enforceable
against the Obligor in accordance with its terms, except as such enforcement May
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable included in the Net Receivables
Balance was an Eligible Receivable on the date of its Purchase hereunder.
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(v) Year 2000. Originator (i) has reviewed the areas within its business
and operations which could be adversely affected by the Year 2000 Problem, (ii)
has developed a Year 2000 Plan to address the Year 2000 Problem on a timely
basis, (iii) is taking all actions necessary to meet the Schedule and goals of
the Year 2000 Plan and (iv) has established adequate reserves to implement the
Year 2000 Plan. Originator does not reasonably anticipate that the Year 2000
Problem could have a Material Adverse Effect.
(w) Accounting. The manner in which Originator accounts for the
transactions contemplated by this Agreement does not jeopardize the true sale
analysis.
(x) No Adverse Selection. Originator has not selected the Receivables to be
transferred hereunder from all eligible Originated Receivables based on criteria
which it believes would result in such transferred Receivables being of lesser
quality than the Originated Receivables not transferred hereunder.
(y) Title to Properties. WorldMark, directly or beneficially, owns good
record and marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect.
(z) Liabilities of WorldMark. WorldMark:
(i) has not voluntarily incurred or at any time become
voluntarily liable for any Indebtedness;
(ii) has not voluntarily allowed its property to become subject
to any Liens, nor is any of its property subject to any Liens, other
than (a) utility or other easements or licenses unrelated to any debt
of WorldMark or (b) Liens that in do not exceed, in aggregate,
$100,000; and
(iii) has not involuntarily incurred and is not involuntarily
liable for any debt, nor is any of its property involuntarily subject
to any Liens (other than utility or similar easements or licenses
unrelated to any debt of WorldMark) that individually or in the
aggregate (with respect to all such debt and the obligations secured
by all such Liens) exceed $1,000,000.
(aa) Environmental Matters. The Originator has conducted its operations and
kept and maintained its property in compliance with all Environmental Laws. The
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Originator has performed its duties under its management agreement with
WorldMark in material compliance with all Environmental Laws.
(bb) Conformity of Receivable Documents. The information set forth on each
Schedule of Receivables is accurate and is consistent with the terms of the
related Receivable Documents delivered to the Custodian.
(cc) No Subsidiaries of WorldMark. WorldMark has no Subsidiaries.
(dd) Insurance. Originator in its individual capacity and as property
manager for WorldMark maintains in effect, or causes to be maintained in effect,
such property, casualty and liability insurance covering its and WorldMark's
real property and personal property as Originator deems appropriate in its good
faith business judgement.
(ee) Compliance with Representations. On and as of the date of each
Purchase Date hereunder, Originator hereby represents and warrants that all of
the other representations and warranties set forth in this Article II are true
and correct on and as of the date of such Purchase (and after giving effect to
such Purchase) as though made on and as of each such Purchase Date.
ARTICLE III
CONDITIONS OF PURCHASES
Section 3.1 Conditions Precedent to Initial Purchase. The initial Purchase
under this Agreement is subject to the conditions precedent that () Buyer shall
have received on or before the applicable Purchase Date those documents listed
on Schedule A and () all of the conditions to the initial purchase under the
Purchase Agreement shall have been satisfied or waived in accordance with the
terms thereof.
Section 3.2 Conditions Precedent to All Purchases. Each Purchase shall be
subject to the further conditions precedent that:
(a) the Facility Termination Date shall not have occurred;
(b) Buyer (or its assigns) shall have received such other approvals,
opinions or documents as it May reasonably request;
(c) no Amortization Event or Potential Amortization Event shall have
occurred.
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As a further condition to each Purchase, on the applicable Purchase Date,
Originator represents and warrants that the representations and warranties set
forth in Article II are true and correct on and as of such Purchase Date (and
after giving effect thereto) as though made on and as of such date.
ARTICLE IV
COVENANTS
Section 4.1 Affirmative Covenants of Originator. Until the date on which
this Agreement terminates in accordance with its terms, Originator hereby
covenants as set forth below:
(a) Financial Reporting. Originator will maintain for itself and its
Subsidiaries a system of accounting established and administered in accordance
with GAAP, and furnish to Buyer (or its assigns):
(i) Annual Reporting. Such annual financial reports as required
by Section 7.1(a)(i) of the Purchase Agreement.
(ii) Quarterly Reporting. Such quarterly financial reports as
required by Section 7.1(a)(ii) of the Purchase Agreement.
(iii) Compliance Certificate. Together with the financial
statements required hereunder, a compliance certificate in
substantially the form of Exhibit IV signed by an Authorized Officer
of Originator and dated the date of such annual financial statement or
such quarterly financial statement, as the case May be.
(iv) Shareholders Statements and Reports. Promptly upon the
furnishing thereof to the shareholders of Originator or its
Affiliates, copies of all financial statements, reports and proxy
statements so furnished.
(v) S.E.C. Filings. Promptly upon the filing thereof, copies of
all registration statements and annual, quarterly, monthly or other
regular reports which Originator or its Affiliates or any of their
Subsidiaries May from time to time file with the Securities and
Exchange Commission.
(vi) Copies of Notices. Promptly upon its receipt of any notice,
request for consent, financial statements, certification, report or
other communication under or in connection with any Transaction
Document from any Person other than Buyer, the Agent or Conduit,
copies of the same.
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(vii) Change in Credit and Collection Policy. At least thirty
(30) days prior to the effectiveness of any material change in or
amendment to the Credit and Collection Policy, a copy of the Credit
and Collection Policy then in effect and a notice indicating such
change or amendment.
(viii) Other Information. Promptly, from time to time, such other
information, documents, records or reports relating to the Receivables
or the condition or operations, financial or otherwise, of Originator
and WorldMark as Buyer (or its assigns) May from time to time
reasonably request in order to protect the interests of Buyer (and its
assigns) under or as contemplated by this Agreement.
(b) Notices. Originator will notify the Buyer (or its assigns) in writing
of any of the following promptly upon learning of the occurrence thereof,
describing the same and, if applicable, the steps being taken with respect
thereto:
(i) Amortization Events or Potential Amortization Events. The
occurrence of each Amortization Event and each Potential Amortization
Event, as set forth in Article V of this Agreement, by a statement of
an Authorized Officer of Originator.
(ii) Judgment and Proceedings.
(A) The entry of any judgment or decree against WorldMark,
the Originator or any of the Originator's Subsidiaries if the
aggregate amount of all judgments and decrees then outstanding against
WorldMark, the Originator or the Originator's Subsidiaries exceeds
$1,000,000.
(B) The institution of any material litigation, arbitration
proceeding or governmental proceeding against WorldMark, the
Originator or the Originator's Subsidiaries.
(iii) Material Adverse Effect. The occurrence of any event or
condition that has, or could reasonably be expected to have, a
Material Adverse Effect, including a Material Adverse Effect on the
collectibility of the Receivables.
(iv) Defaults Under Other Agreements. The occurrence of a default
or an event of default under any other material financing arrangement
pursuant to which Originator is a debtor or an obligor.
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(v) Downgrade of the Originator. Any downgrade in the rating of
any Indebtedness or asset backed security of the Originator, or any of
its Subsidiaries or Affiliates, as applicable or as May become
applicable, by any nationally recognized rating agency, setting forth
the Indebtedness or asset backed security affected and the nature of
such change.
(vi) Default by Custodian. The occurrence of a default or event
of default under Article XV of the Purchase Agreement or any other
provision of the Purchase Agreement by the Custodian.
(c) Compliance with Laws and Preservation of Corporate Existence.
Originator will comply in all material respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
they May be subject. Originator will preserve and maintain its corporate
existence, rights, franchises and privileges in the jurisdiction of their
incorporation, and qualify and remain qualified in good standing as foreign
corporations in each jurisdiction where their businesses are conducted.
(d) Audits. Originator will furnish and will cause WorldMark to furnish to
Buyer (or its assigns) from time to time such information with respect to it and
the Receivables as Buyer (or its assigns) May reasonably request. Originator and
WorldMark will, from time to time during regular business hours as requested by
Buyer (or its assigns), upon reasonable notice, permit Buyer (or its assigns) or
their respective agents or representatives, (i) to examine and make copies of
and abstracts from all Records in the possession or under the control of
Originator relating to the Receivables and the Related Security, including the
related Contracts, and (ii) to visit the offices and properties of Originator
for the purpose of examining such materials described in clause (i) above, and
to discuss matters relating to Originator's and WorldMark's financial condition
or the Receivables and the Related Security or Originator's performance under
any of the Transaction Documents or Originator's performance under the Contracts
and, in each case, with any of the officers or employees of Originator having
knowledge of such matters. The cost of audits conducted pursuant to this Section
4.1 (d) will be borne solely by the Originator.
(e) Keeping and Marking of Records and Books.
(i) Originator will maintain and implement administrative and
operating procedures (including an ability to recreate records
evidencing Receivables in the event of the destruction of the
originals thereof), and keep and maintain (or will cause the Custodian
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to keep and maintain) all documents, books, records and other
information reasonably necessary or advisable for the collection of
all Receivables (including records adequate to permit the immediate
identification of each new Receivable and all Collections of and
adjustments to each existing Receivable). Originator will give Buyer
(or its assigns) notice of any material change in the administrative
and operating procedures referred to in the previous sentence.
(ii) Originator will (a) on or prior to the date hereof, xxxx its
master data processing records and other books and records relating to
the Receivables with a legend, acceptable to Buyer (or its assigns),
describing Buyer's ownership interests in the Receivables and further
describing the Purchaser Interests of the Agent (on behalf of the
Purchasers) under the Purchase Agreement and (b) upon the request of
Buyer (or its assigns), (x) xxxx each Contract with a legend
describing Buyer's ownership interests in the Receivables and further
describing the Purchaser Interests of the Agent (on behalf of the
Purchasers) and (y) deliver to the Custodian all Receivable Documents
(including all multiple originals of any such Contract) relating to
the Receivables.
(f) Compliance with Contracts and Credit and Collection Policy. Originator
will timely and fully (i) perform and comply with all provisions, covenants and
other promises required to be observed by it under the Contracts related to the
Receivables, and (ii) comply in all respects with the Credit and Collection
Policy in regard to each Receivable and the related Contract. Originator will
pay when due any taxes payable in connection with the Receivables, exclusive of
taxes on or measured by income or gross receipts of Buyer and its assigns.
(g) Ownership. Originator will take all necessary action to establish and
maintain, irrevocably in Buyer, legal and equitable title to the Receivables,
the Related Security and the Collections, free and clear of any Adverse Claims
other than Adverse Claims in favor of Buyer (and its assigns) (including the
filing of all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect Buyer's interest in such Receivables, Related Security and
Collections and such other action to perfect, protect or more fully evidence the
interest of Buyer as Buyer (or its assigns) May reasonably request).
(h) Purchasers' Reliance. Originator acknowledges that the Agent and the
Purchasers are entering into the transactions contemplated by the Purchase
Agreement in reliance upon Buyer's identity as a legal entity that is separate
from Originator and any Affiliates thereof. Therefore, from and after the date
of execution and delivery of this Agreement, Originator will take all reasonable
18
steps including all steps that Buyer or any assignee of Buyer May from time to
time reasonably request to maintain Buyer's identity as a separate legal entity
and to make it manifest to third parties that Buyer is an entity with assets and
liabilities distinct from those of Originator and any Affiliates thereof and not
just a division of Originator. Without limiting the generality of the foregoing
and in addition to the other covenants set forth herein, Originator (i) will not
hold itself out to third parties as liable for the debts of Buyer nor purport to
own the Receivables and other assets acquired by Buyer, (ii) will take all other
actions necessary on its part to ensure that Buyer is at all times in compliance
with the covenants set forth in Section 7.1(i) of the Purchase Agreement and
(iii) will cause all tax liabilities arising in connection with the transactions
contemplated herein or otherwise to be allocated between Originator and Buyer on
an arm's-length basis and in a manner consistent with the procedures set forth
in U.S. Treasury Regulations ss.ss.1.1502-33(d) and 1.1552-1.
(i) Taxes. Originator will file all tax returns and reports required by law
to be filed by it and promptly pay all taxes and governmental charges at any
time owing
(j) Insurance. Originator will maintain in effect, or cause to be
maintained in effect, at Originator's own expense, such property, casualty and
liability insurance covering its real property and personal property as
Originator deems appropriate in its good faith business judgement. The foregoing
requirements shall not be construed to negate, reduce or modify, and are in
addition to, Originator's obligations hereunder.
(k) Environmental Laws. TWRI shall, and shall cause each of its
Subsidiaries to conduct its operations and keep and maintain its property in
compliance with all Environmental Laws. TWRI shall perform its duties under its
management agreement with WorldMark in compliance with all Environmental Laws.
(l) Collections. Originator shall cause each Obligor to remit his or her
payments to a clearing account (the "Clearing Account") established at Commerce
Bank of Washington or another bank acceptable to the Agent in its sole
discretion. The Originator shall cause any payments made by Automatic Debit
Collection to be deposited directly into the Clearing Account from each
Obligor's relevant account. In the event any payments relating to Receivables
are remitted directly to Originator or any Affiliate of Originator, Originator
will remit (or will cause all such payments to be remitted) directly to the bank
where the Clearing Account is then established for deposit into the Clearing
Account within two (2) Business Days following receipt thereof and, at all times
prior to such remittance, Originator will itself hold or, if applicable, will
cause such payments to be held in trust for the exclusive benefit of Buyer and
its assigns.
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Section 4.2 Negative Covenants of Originator. Until the date on which this
Agreement terminates in accordance with its terms, Originator hereby covenants
that:
(a) Name Change, Offices and Records. Originator will not change its name,
identity or corporate structure (within the meaning of Section 9-402(7) of any
applicable enactment of the UCC) or relocate its chief executive office or any
office where Records are kept unless it shall have: (i) given Buyer (or its
assigns) at least forty-five (45) days' prior written notice thereof and (ii)
delivered to Buyer (or its assigns) all financing statements, instruments and
other documents requested by Buyer (or its assigns) in connection with such
change or relocation.
(b) Change in Payment Instructions to Obligors. Originator will not add or
terminate any Clearing Account agreement or make any change in the instructions
to Obligors regarding payments to be made to any Clearing Account, or amend or
supplement any agreement with the Custodian or grant any waiver of performance
thereunder, unless Buyer (or its assigns) shall have received, at least ten (10)
days before the proposed effective date therefor, (i) written notice of such
addition, termination or change and (ii) with respect to the addition of a
Clearing Account, an executed Clearing Account agreement with respect to the new
Clearing Account.
(c) Modifications to Contracts and Credit and Collection Policy. Originator
will not make any change to the Credit and Collection Policy that could
adversely affect the collectibility of the Receivables or decrease the credit
quality of any newly created Receivables. Except as otherwise permitted in its
capacity as Servicer pursuant to Section 8.2(d) of the Purchase Agreement,
Originator will not extend, amend or otherwise modify the terms of any
Receivable or any Contract related thereto other than in accordance with the
Credit and Collection Policy.
(d) Sales, Liens. Originator will not sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with respect to, or
create or suffer to exist any Adverse Claim upon (including the filing of any
financing statement) or with respect to, any Receivable, Related Security or
Collections, or upon or with respect to any Contract under which any Receivable
arises, or any Collection Account, or assign any right to receive income with
respect thereto (other than, in each case, the creation of the interests therein
in favor of Buyer provided for herein), and Originator will defend the right,
title and interest of Buyer in, to and under any of the foregoing property,
against all claims of third parties claiming through or under Originator.
However, no part of this Section 4.2(d) shall be construed as prohibiting an
assignment pursuant to Section 13.1 or Section 2.1 of the Purchase Agreement.
20
(e) No Adverse Selection. Originator shall not select the Receivables to be
transferred hereunder from all eligible Originated Receivables based on criteria
which it believes would result in such transferred Receivables being of lesser
quality than the Originated Receivables not transferred hereunder.
(f) Accounting for Purchases. Originator will not, and will not permit any
Affiliate to, account for or treat (whether in financial statements or
otherwise) the transactions contemplated hereby in any manner other than the
sale of the Receivables and the Related Security by Originator to Buyer or in
any other respect account for or treat the transactions contemplated hereby in
any manner other than as a sale of the Receivables and the Related Security by
Originator to Buyer except to the extent that such transactions are not
recognized on account of consolidated financial reporting in accordance with
GAAP.
ARTICLE V
AMORTIZATION EVENTS
Section 5.1 Amortization Events. The occurrence of any one or more of the
following events shall constitute an Amortization Event:
(a) Originator shall fail (i) to make any payment or deposit required
hereunder when due, or (ii) to perform or observe any term, covenant or
agreement hereunder (other than as referred to in clause (i) of this paragraph
(a)) or any other Transaction Document to which it is a party and such failure
in the case of this clause (ii) shall continue for three (3) consecutive
Business Days.
(b) Any representation, warranty, certification or statement made by
Originator in this Agreement, any other Transaction Document or in any other
document delivered pursuant hereto or thereto shall prove to have been incorrect
when made or deemed made, and the effects of such have not been cured within
three business days after the date the representation, warranty, certification
or statement was discovered, or should have been discovered, not to have been
correct.
(c) Failure of World Xxxx to pay any Indebtedness when due or of Originator
to pay any Indebtedness greater than $1,000,000 when due; or the default by
Originator in the performance of any term, provision or condition contained in
any agreement under which any such Indebtedness greater than $1,000,000 was
created or is governed, the effect of which is to cause, or to permit the holder
or holders of such Indebtedness to cause, such Indebtedness to become due prior
to its stated maturity; or any such Indebtedness of Originator shall be declared
21
to be due and payable or required to be prepaid (other than by a regularly
scheduled payment) prior to the date of maturity thereof.
(d) (i) Originator or any of its Subsidiaries shall generally not pay its
debts as such debts become due or shall admit in writing its inability to pay
its debts generally or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against Originator or any
of its Subsidiaries seeking to adjudicate it bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee or other similar
official for it or any substantial part of its property or (ii) Originator or
any of its Subsidiaries shall take any corporate action to authorize any of the
actions set forth in clause (i) above in this subsection (d).
(e) A date shall occur which is the 90th day following the earlier to occur
of (i) a public announcement of a Change of Control and (ii) a Change of
Control.
(f) One or more final judgments for the payment of money shall be entered
against Originator on claims not covered by insurance or as to which the
insurance carrier has denied its responsibility, and such judgment shall
continue unsatisfied and in effect for fifteen (15) consecutive days without a
stay of execution.
(g) WorldMark:
(i) voluntarily incurs or at any time become voluntarily liable
for any Indebtedness;
(ii) voluntarily allows its property to become subject to any
Liens, or subjects any of its property to any Liens, other than (a)
utility or other easements or licenses unrelated to any debt of
WorldMark or (b) Liens that in do not exceed, in aggregate, $100,000;
or
(iii) involuntarily incurs or becomes involuntarily liable for
any debt, or subjects any of its property involuntarily to any Liens
(other than utility or similar easements or licenses unrelated to any
debt of WorldMark) that individually or in the aggregate (with respect
to all such debt and the obligations secured by all such Liens) exceed
$1,000,000.
Section 5.2 Remedies. Upon the occurrence and during the continuation of an
Amortization Event, Buyer May take any of the following actions: (i) declare the
22
Amortization Date to have occurred, whereupon the Amortization Date shall
forthwith occur, without demand, protest or further notice of any kind, all of
which are hereby expressly waived by Originator; provided, however, that upon
the occurrence of an Amortization Event described in Section 5.1(d), or of an
actual or deemed entry of an order for relief with respect to Originator under
the Federal Bankruptcy Code, the Amortization Date shall automatically occur,
without demand, protest or any notice of any kind, all of which are hereby
expressly waived by Originator and (ii) to the fullest extent permitted by
applicable law, declare that the Default Fee shall accrue with respect to any
amounts then due and owing by Buyer to Originator. The aforementioned rights and
remedies shall be in addition to all other rights and remedies of Buyer and its
assigns available under this Agreement, by operation of law, at equity or
otherwise, all of which are hereby expressly preserved, including all rights and
remedies provided under the UCC, all of which rights shall be cumulative.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnities by Originator. Without limiting any other rights
that Buyer May have hereunder or under applicable law, Originator hereby agrees
to indemnify Buyer and its assigns, officers, directors, agents and employees
(each an "Indemnified Party") from and against any and all damages, losses,
claims, taxes, liabilities, costs, expenses and for all other amounts payable,
including reasonable attorneys' fees (which attorneys May be employees of Buyer)
and disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by any of them arising out of
or as a result of this Agreement or the acquisition, either directly or
indirectly, by Buyer of an interest in the Receivables, excluding, however:
(a) Indemnified Amounts to the extent a final judgment of a court of
competent jurisdiction holds that such Indemnified Amounts resulted from gross
negligence or willful misconduct on the part of the Indemnified Party seeking
indemnification;
(b) Indemnified Amounts to the extent the same includes losses in respect
of Receivables that are uncollectible on account of the insolvency, bankruptcy
or lack of creditworthiness of the related Obligor; or
(c) taxes imposed by the jurisdiction in which such Indemnified Party's
principal executive office is located, on or measured by the overall net income
23
of such Indemnified Party to the extent that the computation of such taxes is
consistent with the Intended Characterization;
provided, however, that nothing contained in this sentence shall limit the
liability of Originator or limit the recourse of Buyer to Originator for amounts
otherwise specifically provided to be paid by Originator under the terms of this
Agreement. Without limiting the generality of the foregoing indemnification,
Originator shall indemnify Buyer for Indemnified Amounts (including losses in
respect of uncollectible receivables, regardless of whether reimbursement
therefor would constitute recourse to Originator) relating to or resulting from:
(i) any representation or warranty made by Originator or
Custodian (or any officers of Originator, WorldMark or Custodian)
under or in connection with this Agreement, any other Transaction
Document or any other information or report delivered by Originator
pursuant hereto or thereto, which shall have been false or incorrect
when made or deemed made;
(ii) the failure by Originator , WorldMark or Custodian (with
respect to its duties under Article XV of the Purchase Agreement or
any other provision of the Purchase Agreement) to comply with any
applicable law, Rule or regulation with respect to any Receivable or
Contract related thereto, or the nonconformity of any Receivable or
Contract included therein with any such applicable law, Rule or
regulation or any failure of Originator, WorldMark or Custodian (with
respect to its duties under Article XV of the Purchase Agreement or
any other provision of the Purchase Agreement) to keep or perform any
of their respective obligations, express or implied, with respect to
any Contract;
(iii) any failure of Originator or Custodian to perform its
duties, covenants or other obligations in accordance with the
provisions of this Agreement or any other Transaction Document;
(iv) any lawsuit or legal claim arising out of or in connection
with the Resorts and Units, any defect in WorldMark's ownership of
title to, or leasehold rights in, the real property used in its
business, any Obligor's right to use the Resorts and Units, or any
rights or services that are the subject of any Contract;
(v) any products liability or similar claim arising out of or in
connection with rights or services that are the subject of any
Contract;
(vi) any dispute, claim, offset or defense (other than discharge
in bankruptcy of the Obligor) of the Obligor to the payment of any
24
Receivable (including a defense based on such Receivable or the
related Contract not being a legal, valid and binding obligation of
such Obligor enforceable against it in accordance with its terms), or
any other claim resulting from the sale of the service or rights
related to such Receivable or the furnishing or failure to provide for
such rights or furnish such services;
(vii) the commingling of Collections of Receivables at any time
with other funds;
(viii) any investigation, litigation or proceeding related to or
arising from this Agreement or any other Transaction Document, the
transactions contemplated hereby, the use of the proceeds of a
Purchase, the ownership of the Receivables or any other investigation,
litigation or proceeding relating to Originator, WorldMark or
Custodian in which any Indemnified Party becomes involved as a result
of any of the transactions contemplated hereby;
(ix) any inability to litigate any claim against any Obligor in
respect of any Receivable as a result of such Obligor being immune
from civil and commercial law and suit on the grounds of sovereignty
or otherwise from any legal action, suit or proceeding;
(x) any Amortization Event described in Section 5.1(d);
(xi) any failure to vest and maintain vested in Buyer, or to
transfer to Buyer, legal and equitable title to, and ownership of, the
Receivables, the Related Security (and the Collections, free and clear
of any Adverse Claim;
(xii) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivable, the Related Security and Collections with
respect thereto, and the proceeds of any thereof, whether at the time
of any Purchase or at any subsequent time;
(xiii) any action or omission by Originator, WorldMark or
Custodian which reduces or impairs the rights of Buyer with respect to
any Receivable or the value of any such Receivable;
(xiv) any attempt by any Person to void any Purchase hereunder
under statutory provisions or common law or equitable action; and
(xv) the Year 2000 Problem with respect to the Originator.
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Any Indemnified Amounts incurred by actions of the Custodian shall be payable by
the Custodian to the Buyer no later than the 30th day after a demand for payment
of the Buyer is delivered to the Custodian. Any such Indemnified Amounts not
paid by such date shall be immediately payable by the Originator to the Buyer.
Section 6.2 Other Costs and Expenses. Originator shall pay to Buyer on
demand all costs and out-of-pocket expenses in connection with the preparation,
execution, delivery and administration of this Agreement, the transactions
contemplated hereby and the other documents to be delivered hereunder.
Originator shall pay to Buyer on demand any and all costs and expenses of Buyer,
if any, including reasonable counsel fees and expenses in connection with the
enforcement of this Agreement and the other documents delivered hereunder and in
connection with any restructuring or workout of this Agreement or such
documents, or the administration of this Agreement following an Amortization
Event.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Waivers and Amendments.
(a) No failure or delay on the part of Buyer (or its assigns) in exercising
any power, right or remedy under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
remedy preclude any other further exercise thereof or the exercise of any other
power, right or remedy. The rights and remedies herein provided shall be
cumulative and nonexclusive of any rights or remedies provided by law. Any
waiver of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given.
(b) No provision of this Agreement May be amended, supplemented, modified
or waived except in writing signed by Originator and Buyer and, to the extent
required under the Purchase Agreement, the Agent, the Conduit, and the Financial
Institutions or the Required Financial Institutions.
Section 7.2 Notices. Except as provided below, all communications and
notices provided for hereunder shall be in writing (including bank wire,
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other parties hereto at their respective addresses or telecopy
numbers set forth on the signature pages hereof or at such other address or
telecopy number as such Person May hereafter specify for the purpose of notice
to each of the other parties hereto. Each such notice or other communication
shall be effective () if given by telecopy, upon the receipt thereof, () if
given by mail, at the time such communication is received via first class mail
26
or () if given by any other means, when received at the address specified in
this Section 7.2.
Section 7.3 Protection of Ownership Interests of Buyer.
(a) Originator agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that May be necessary or desirable, or that Buyer (or its assigns) May
reasonably request, to perfect, protect or more fully evidence the Purchaser
Interests, or to enable Buyer (or its assigns) to exercise and enforce their
rights and remedies hereunder. At any time after the occurrence or during the
continuation of an Amortization Event, Buyer (or its assigns) may, at
Originator's sole cost and expense, direct Originator to notify the Obligors of
Receivables of the ownership interests of Buyer under this Agreement and May
also direct that payments of all amounts due or that become due under any or all
Receivables be made directly to Buyer or its designee.
(b) If Originator or Custodian fails to perform any of its obligations
hereunder or under any other Transaction Document, Buyer (or its assigns) May
(but shall not be required to) perform, or cause performance of, such
obligation, and Buyer's (or such assigns') costs and expenses incurred in
connection therewith shall be payable by Originator as provided in Section 6.2.
Originator irrevocably authorizes Buyer (and its assigns) at any time and from
time to time in the sole discretion of Buyer (or its assigns), and appoints
Buyer (and its assigns) as its attorney(es)-in-fact, to act on behalf of
Originator (i) to execute on behalf of Originator as debtor and to file
financing statements necessary or desirable in Buyer's (or its assigns') sole
discretion to perfect and to maintain the perfection and priority of the
interest of Buyer in the Receivables and (ii) to file a carbon, photographic or
other reproduction of this Agreement or any financing statement with respect to
the Receivables as a financing statement in such offices as Buyer (or its
assigns) in their sole discretion deem necessary or desirable to perfect and to
maintain the perfection and priority of Buyer's interests in the Receivables.
This appointment is coupled with an interest and is irrevocable.
(c) If, at any time following an Amortization Event, in connection with the
sale, liquidation or disposition by the Agent, any Purchaser or any Servicer of
any Receivables, Vacation Credits or other Related Security, it is necessary to
obtain any license or to register or qualify any such Person or any such
collateral under any applicable law or regulation, Originator shall, at its
expense, take all actions that May be necessary or desirable, or that the Agent
May reasonably request, to assist in any such licensing, registration or
qualification, and the Originator shall reimburse the Agent, each Purchaser and
27
any such Servicer (other than Trendwest or any Affiliate thereof) for any fees,
costs or expenses incurred thereby.
Section 7.4 Confidentiality.
(a) Originator shall maintain and shall cause each of its employees and
officers to maintain the confidentiality of this Agreement and the other
confidential proprietary information with respect to the Agent and Conduit and
their respective businesses obtained by it or them in connection with the
structuring, negotiating and execution of the transactions contemplated herein,
except that Originator and its officers and employees May disclose such
information to Originator's external accountants and attorneys and as required
by any applicable law or order of any judicial or administrative proceeding.
(b) Anything herein to the contrary notwithstanding, Originator hereby
consents to the disclosure of any nonpublic information with respect to it (i)
to Buyer, the Agent, the Financial Institutions or Conduit by each other, (ii)
by Buyer, the Agent or the Purchasers to any prospective or actual assignee or
participant of any of them or (iii) by the Agent to any rating agency,
Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity
enhancement to Conduit or any entity organized for the purpose of purchasing, or
making loans secured by, financial assets for which Bank One acts as the
administrative agent and to any officers, directors, employees, outside
accountants and attorneys of any of the foregoing. In addition, the Purchasers
and the Agent May disclose any such nonpublic information pursuant to any law,
rule, regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings (whether or not having the force or effect
of law).
Section 7.5 Bankruptcy Petition. Originator hereby covenants and agrees
that, prior to the date that is one year and one day after the payment in full
of all outstanding senior Indebtedness of Conduit, it will not institute
against, or join any other Person in instituting against, Conduit any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceeding under the laws of the United States or any state of
the United States.
Section 7.6 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE
OF ILLINOIS.
Section 7.7 CONSENT TO JURISDICTION. ORIGINATOR HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
28
COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY ORIGINATOR PURSUANT TO
THIS AGREEMENT AND ORIGINATOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF
BUYER (OR ITS ASSIGNS) TO BRING PROCEEDINGS AGAINST ORIGINATOR IN THE COURTS OF
ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ORIGINATOR AGAINST BUYER (OR
ITS ASSIGNS) OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT
OR ANY DOCUMENT EXECUTED BY ORIGINATOR PURSUANT TO THIS AGREEMENT SHALL BE
BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
Section 7.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY
ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER
OR THEREUNDER.
Section 7.9 Integration; Binding Effect; Survival of Terms.
(a) This Agreement, the Subordinated Note, and the Subscription Agreement
contain the final and complete integration of all prior expressions by the
parties hereto with respect to the subject matter hereof and shall constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof superseding all prior oral or written understandings.
(b) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns (including
any trustee in bankruptcy). This Agreement shall create and constitute the
continuing obligations of the parties hereto in accordance with its terms and
shall remain in full force and effect until terminated in accordance with its
29
terms; provided, however, that the rights and remedies with respect to (i) any
breach of any representation and warranty made by Originator pursuant to Article
II, (ii) the indemnification and payment provisions of Article VI, and Section
7.5 shall be continuing and shall survive any termination of this Agreement.
Section 7.10 Counterparts; Severability; Section References. This Agreement
May be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Unless otherwise expressly indicated, all references herein
to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and
sections of, and schedules and exhibits to, this Agreement.
30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date hereof.
TRENDWEST RESORTS, INC.
By:________________________________
Name:
Title:
Address: 0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
TW HOLDINGS III, INC.
By:__________________________________
Name:
Title:
Address: 0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
31
EXHIBIT I
Definitions
This is Exhibit I to the Agreement (as hereinafter defined). As used in the
Agreement and the Exhibits, Schedules and Annexes thereto, capitalized terms
have the meanings set forth in this Exhibit I (such meanings to be equally
applicable to the singular and plural forms thereof). If a capitalized term is
used in the Agreement, or any Exhibit, Schedule or Annex thereto, and not
otherwise defined therein or in this Exhibit I, such term shall have the meaning
assigned thereto in Exhibit I to the Purchase Agreement.
"Accrued Balance" means, as to any Receivable, the Outstanding Balance of
such Receivable plus any accrued and unpaid interest thereon.
"Agent" has the meaning set forth in the Preliminary Statements to the
Agreement.
"Agreement" means the Receivables Sale Agreement, dated as of January 7,
2000, between Originator and Buyer, as the same May be amended, restated or
otherwise modified.
"Amortization Date" means the earliest to occur of (i) the Facility
Termination Date, (ii) any Business Day so designated by Originator or Buyer,
and (ii) the Business Day immediately prior to the occurrence of an Amortization
Event set forth in Section 5.1(d), (iii) the Business Day specified in a written
notice from Buyer to Originator following the occurrence of any other
Amortization Event, and (iv) the date which is 30 Business Days after Buyer's
receipt of written notice from Originator that it wishes to terminate the
Agreement.
"Amortization Event" has the meaning set forth in Section 5.1 of the
Agreement.
"Authorized Officer" means, with respect to Originator, its corporate
controller or chief financial officer or any other designated officer acceptable
to the Buyer.
"Bank One" means Bank One, NA (with its main office in Chicago, Illinois),
in its individual capacity, and its successors.
1
"Business Day" means any day on which banks are not authorized or required
to close in New York, New York or Chicago, Illinois and The Depository Trust
Company of New York is open for business.
"Buyer" has the meaning set forth in the preamble to the Agreement.
"Calculation Period" means each calendar month or portion thereof which
elapses during the term of the Agreement. The first Calculation Period shall
commence on the date of the initial Purchase of Receivables hereunder and the
final Calculation Period shall terminate on the Amortization Date.
"Change of Control" means the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 20% or more of the outstanding shares of voting stock of
Originator.
"Charged-Off Receivable" means a Receivable: (i) as to which the Obligor
thereof has taken any action, or suffered any event to occur, of the type
described in Section 10.1(d) of the Purchase Agreement (as if references to
Originating Party therein refer to such Obligor; (ii) as to which the Obligor
thereof, if a natural person, is deceased; (iii) which, consistent with the
Credit and Collection Policy, would be written off TWRI's books as
uncollectible; (iv) which has been identified by Seller as uncollectible; or (v)
as to which any payment, or part thereof, remains unpaid for 179 days or more
from the original due date for such payment.
"Clearing Account" has the meaning set forth in Section 4.1(l) of this
Agreement.
"Collection Account" has the meaning set forth in Section 2.8(c) of the
Purchase Agreement.
"Conduit" has the meaning set forth in the Preliminary Statements to the
Agreement.
"Contract" means a Vacation Owner Agreement and any and all other
instruments, agreements, invoices, or other writings pursuant to which
indebtedness of an Obligor to Originator arises or which evidences such
indebtedness.
"Credit and Collection Policy" means Originator's credit and collection
policies and practices relating to Contracts and Receivables existing on the
2
date hereof and summarized in Exhibit V, as modified from time to time in
accordance with the Agreement.
"Default Fee" means a per annum rate of interest equal to the sum of (i)
the Prime Rate, plus (ii) 2% per annum.
"Defaulted Receivable" means a Receivable on which payment of all or part
of the amount due remains unpaid for more than 90 and less than 179 days but
which is not a Charged-Off Receivable.
"Delinquent Receivable" means a Receivable as to which any payment, or part
thereof, remains unpaid for 31 or more days or more from the original due date
for such payment but which is not a Charged-Off Receivable.
"Dilutions" means, at any time, the aggregate amount of reductions or
cancellations described in Section 1.3(a) of the Agreement.
"Draft Schedule of Receivables" has the meaning set forth in Section 1.1.
"Eligible Receivable" means, at any time, an Originated Receivable:
(i) the Obligor of which (a) if a natural person, is a resident of the
United States or any Canadian province other than Quebec, (b) if a
corporation or other business organization, is organized under the laws of
the United States or any Canadian province other than Quebec or any
political subdivision thereof and has its chief executive office in the
United States or any Canadian province other than Quebec; (c) is not an
Affiliate of any of the parties hereto; and (d) is not a government or a
governmental subdivision or agency,
(ii) the Obligor of which is not the Obligor of any Delinquent
Receivable, Defaulted Receivable or Charged-Off Receivable,
(iii) which is not more than 30 days past due and which has never been
more than 30 days past due,
(iv) each payment (notwithstanding any payments made by the Obligor at
the time of entering into a Contract) under which by its terms is due and
payable within no more than 45 days of the original billing date therefor,
(v) which has not had its payment terms extended (other than in the
case of an Upgrade Contract),
3
(vi) the remaining term of which is not greater than 84 months,
(vii) on which one due payment has been made by the Obligor and
received (other than in the case of an Upgrade Contract),
(viii) which is an "account," "chattel paper" or "general intangible"
within the meaning of Section 9-105 or Section 9-106, respectively, of the
UCC of all applicable jurisdictions,
(ix) which is denominated and payable only in United States dollars in
the United States,
(x) which arises under a Contract which is in substantially the form
of one of the form contracts set forth on Exhibit VIII hereto or which has
been otherwise approved by the Agent in writing, which, together with such
Receivable, is in full force and effect and constitutes the legal, valid
and binding obligation of the related Obligor enforceable against such
Obligor in accordance with its terms subject to no offset, counterclaim or
other defense,
(xi) which arises under a Contract which (a) does not require the
Obligor under such Contract to consent to the transfer, sale or assignment
of the rights and duties of the seller under such Contract and (b) does not
contain a confidentiality provision that purports to restrict the ability
of any Purchaser to exercise its rights under this Agreement, including its
right to review the Contract,
(xii) which arises under a Contract that contains an obligation to pay
a specified sum of money,
(xiii) which, together with the Contract related thereto, does not
contravene any law, Rule or regulation applicable thereto (including any
law, Rule and regulation relating to truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt collection
practices and privacy) and with respect to which no part of the Contract
related thereto is in violation of any such law, Rule or regulation,
(xiv) which satisfies all applicable requirements of the Credit and
Collection Policy,
(xv) which was generated in the ordinary course of Originator's
business,
4
(xvi) which arises solely from the purchase of Vacation Credits by an
Obligor or from an Upgrade by an Obligor,
(xvii) as to which the Agent has not notified Buyer that the Agent has
determined that such Receivable or class of Receivables is not acceptable
as an Eligible Receivable, including because such Receivable arises under a
Contract that is not acceptable to the Agent,
(xviii) as to which, if such Receivable has been listed on a Schedule
of Exceptions delivered by the Custodian pursuant to Section 15.1(d) of
this Agreement, the Agent has consented in writing to the treatment of such
Receivable as an Eligible Receivable.
(xix) the Receivables File for which includes all related Receivable
Documents.
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any governmental authorities, in each case
relating to environmental, health, safety and land use matters.
"Facility Termination Date" means the earliest of (i) the occurrence of a
Amortization Event, (ii) 30 Business Days after the receipt of written
notification from Buyer to the Agent of Buyer's intention to terminate the
Liquidity Facility, and (iii) the Liquidity Termination Date.
"Federal Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as amended and any successor statute thereto.
"Financial Institutions" has the meaning set forth in the preamble to the
Purchase Agreement.
"GAAP" means generally accepted accounting principals as in effect from
time to time in the United States, consistently applied.
"Intended Characterization" means, for income tax purposes, the
characterization of the acquisition by the Purchasers of Purchaser Interests
under the Purchase Agreement as a loan or loans by the Purchasers to Buyer
secured by the Receivables, the Related Security and the Collections.
5
"Liquidity Termination Date" means January 5, 2001.
"Material Adverse Effect" means a material adverse effect on (i) the
financial condition or operations of Originator and its Subsidiaries, (ii) the
ability of Originator to perform its obligations under the Agreement or any
other Transaction Document, (iii) the legality, validity or enforceability of
the Agreement or any other Transaction Document, (iv) Originator's, Buyer's, the
Agent's or any Purchaser's interest in the Receivables generally or in any
significant portion of the Receivables, the Related Security or Collections with
respect thereto, or (v) the collectibility of the Receivables generally or of
any material portion of the Receivables.
"Net Value" means, as of any date of determination, an amount equal to the
sum of (i) the aggregate Outstanding Balance of the Receivables at such time,
minus (ii) the sum of (a) the aggregate Capital outstanding at such time, plus
(b) the Aggregate Reserves.
"Net Worth" means as of the last Business Day of each Calculation Period
preceding any date of determination, the excess, if any, of (a) the aggregate
Outstanding Balance of the Receivables at such time, over (b) the sum of (i) the
aggregate Capital outstanding at such time, plus (ii) the aggregate outstanding
principal balance of the Subordinated Loans (including any Subordinated Loan
proposed to be made on the date of determination).
"Obligor" means a Person obliged to make payments pursuant to a Contract.
"Original Balance" means, with respect to any Receivable, the Outstanding
Balance of such Receivable on the date it was purchased by Buyer.
"Originated Receivable" means the indebtedness and other obligations owed
by an Obligor to Originator (without giving effect to any transfer or conveyance
under the Agreement) or Buyer (after giving effect to the transfers under the
Agreement) whether constituting an account, chattel paper, instrument or general
intangible, arising under a contract and includes the obligation to pay any
Finance Charges with respect thereto. Indebtedness and other rights and
obligations arising from any one transaction, including indebtedness and other
rights and obligations represented by an individual invoice, shall constitute a
Receivable separate from a Receivable consisting of the indebtedness and other
rights and obligations arising from any other transaction.
"Originator" has the meaning set forth in the preamble to the Agreement.
6
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Potential Amortization Event" means an event which, with the passage of
time or the giving of notice, or both, would constitute an Amortization Event.
"Pre-Upgrade Receivable" has the meaning set forth in Section 1.5 of this
Agreement.
"Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by Bank One or its parent (which is not necessarily
the lowest rate charged to any customer), changing when and as said prime rate
changes.
"Purchase" means a purchase under the Agreement by Buyer from Originator of
Receivables, the Related Security and the Collections related thereto, together
with all related rights in connection therewith.
"Purchase Agreement" has the meaning set forth in the Preliminary
Statements to the Agreement.
"Purchase Date" means, as provided in Section 1.1(b) of the Agreement, any
Business Day selected by Originator on which a Purchase shall occur.
"Purchase Price" means, with respect to any Purchase on any date, the
aggregate price to be paid by Buyer to Originator for such Purchase in
accordance with Section 1.2 of the Agreement for the Receivables, Collections
and Related Security being sold to Buyer on such date, which price shall equal
the product of (x) the Original Balance of such Receivables, multiplied by (y)
the Purchase Price Factor then in effect.
"Purchase Price Credit" has the meaning set forth in Section 1.3 of the
Agreement.
"Purchase Price Factor" means a percentage calculated to provide Buyer with
a reasonable return on its investment in the Receivables after taking account of
(i) the time value of money based upon the anticipated dates of collection of
the Receivables and the cost to Buyer of financing its investment in the
Receivables during such period and (ii) the risk of nonpayment by the Obligors.
Originator and Buyer May agree from time to time to change the Purchase Price
Factor based on changes in one or more of the items affecting the calculation
thereof, provided that any change to the Purchase Price Factor shall take effect
as of the commencement of a Calculation Period, shall apply only prospectively
and shall not affect the Purchase Price payment in respect of Purchases which
7
occurred during any Calculation Period ending prior to the Calculation Period
during which Originator and Buyer agree to make such change. The initial
Purchase Price Factor shall be 100.0%.
"Purchaser" means Conduit or a Financial Institution, as applicable.
"Receivable" means an Originated Receivable that has been identified for
sale to the Buyer or sold to the Buyer, as the context May require, but shall
not include any Removed Receivable from and after the date on which such Removed
Receivable is repurchased by the Originator hereunder.
"Related Security" means, with respect to any Receivable:
(i) all security interests or liens and property subject thereto from
time to time, if any, purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or otherwise,
together with all financing statements and security agreements describing
any collateral securing such Receivable,
(ii) all guaranties, insurance and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to such Receivable or
otherwise,
(iii) all service contracts and other contracts and agreements
associated with such Receivable,
(iv) all Records related to such Receivable, and
(v) all proceeds of any of the foregoing.
"Repossessed Vacation Credits" means, with respect to a Charged-off
Receivable or a Defaulted Receivable, Vacation Credits which have been
repossessed from or returned by the Obligor on such Receivable (whether through
foreclosure, repossession, deed in lieu of foreclosure or other means).
"Required Capital Amount" means, as of any date of determination, an amount
equal to 3% of the Outstanding Balance of all Eligible Receivables.
"Resorts and Units" means those properties owned in fee simple by WorldMark
or in which WorldMark has a valid leasehold interest, which Obligors have
limited rights to use under the terms of the Contracts between Originator,
8
WorldMark and Obligors. This definition includes all Resorts and Units in
existence as of the date of this Agreement or which come into existence during
the term of this Agreement.
"Revolving Period Termination Date" means January 5, 2001, or as extended
upon written notice from the Agent, on behalf of the Purchasers, to the Buyer.
"Sale Assignment" means the executed assignment of Originated Receivables,
substantially in the form of Exhibit IX, in conjunction with a Purchase.
"Schedule of Receivables" has the meaning set forth in Section 1.1 of the
Agreement.
"Settlement Date" means the 20th day of each calendar month (or if such day
is not a Business Day, then the next Business Day).
"Subordinated Loan" has the meaning set forth in Section 1.2(a) of the
Agreement.
"Subordinated Note" means a promissory note in substantially the form of
Exhibit VII hereto as more fully described in Section 1.2 of the Agreement, as
the same May be amended, restated, supplemented or otherwise modified from time
to time.
"Subscription Agreement" means that certain Stockholder and Subscription
Agreement, dated as of January 7, 2000, between Originator and Buyer,
substantially in the form of Exhibit VI hereto.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, limited liability company, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of Originator.
"Transaction Documents" means, collectively, this Agreement, the
Receivables Purchase Agreement, each Collection Account Agreement, the
Subordinated Note, the Subscription Agreement and all other instruments,
documents and agreements executed and delivered in connection herewith.
9
"Upgrade" means the cancellation of an existing Contract and entry into a
new, 84-month Contract by an Obligor, WorldMark and TWRI, pursuant to which the
Obligor purchases additional Vacation Credits.
"Upgrade Contract" means the new Contract entered into by an Obligor, TWRI
and WorldMark related to an Upgrade by such Obligor.
"Upgrade Receivable" has the meaning set forth in Section 1.5 of this
Agreement.
"Vacation Credits" means ownership interests in WorldMark that entitle the
owner to use Resorts and Units.
"Vacation Owner Agreement" means such Contract between Originator,
WorldMark and any Obligor in substantially the same form as attached as Exhibit
I.
"WorldMark" has the meaning set forth in the preamble to the Agreement.
All accounting terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles. All terms used in
Article 9 of the UCC in the State of Illinois, and not specifically defined
herein, are used herein as defined in such Article 9.
10
EXHIBIT II
Places of Business; Locations of Records;
Federal Employer Identification Number(s)
Places of Business:
Trendwest Resorts, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
(000) 000-0000
(000) 000-0000 fax
Location of Records:
0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
(000) 000-0000
(000) 000-0000 fax
Federal Employer Identification Number: 00-0000000
EXHIBIT III
Account Numbers
Account Bank Name and Address Account Number
---------------- ----------------------------- --------------
Clearing Account Commerce Bank of Washington 1146602
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
EXHIBIT IV
Form of Compliance Certificate
This Compliance Certificate is furnished pursuant to that certain
Receivables Sale Agreement dated as of January 7, 2000, between Trendwest
Resorts Inc. and TW Holdings, III (the "Agreement"). Capitalized terms used and
not otherwise defined herein are used with the meanings attributed thereto in
the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected Vice President of Originator.
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of Originator and its Subsidiaries during the accounting period
covered by the attached financial statements.
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes an
Amortization Event or a Potential Amortization Event, as each such term is
defined under the Agreement, during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below.
4. Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which Originator has taken, is taking, or proposes to
take with respect to each such condition or event:
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this ___ day of ____________, ____.
_________________________________
[Name]
EXHIBIT V
Credit and Collection Policy
EXHIBIT VI
Form of Subscription Agreement
STOCKHOLDER AND SUBSCRIPTION AGREEMENT
THIS STOCKHOLDER AND SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of
January 7, 2000, is entered into by and between TW Holdings, III, Inc., a
Delaware corporation ("SPV"), and Trendwest Resorts, Inc., an Oregon corporation
("Parent"). Except as otherwise specifically provided herein, capitalized terms
used in this Agreement have the meanings ascribed thereto in the Receivables
Sale Agreement, dated as of even date herewith, between SPV and Parent (as
amended, restated, supplemented or otherwise modified from time to time, the
"Sale Agreement").
RECITALS
A. SPV has been organized under the laws of the State of Delaware for the
purpose of, among other things, purchasing, holding, financing, receiving and
transferring accounts receivable and related assets originated or otherwise held
by Parent.
B. Contemporaneously with the execution and delivery of this Agreement: (i)
Parent and SPV have entered into the Sale Agreement pursuant to which Parent
has, from and after the initial purchase date thereunder and prior to the
termination date specified therein, sold certain Receivables, Collections and
Related Security to SPV; and (ii) SPV, Parent, as Servicer, certain financial
institutions party thereto as "Purchasers," and Bank One, NA (Main Office
Chicago), as the "Agent" and the "Paying Agent," have entered into a Receivables
Purchase Agreement (as amended, restated, supplemented or otherwise modified
from time to time, the "Purchase Agreement") pursuant to which SPV will sell
"Purchaser Interests" to the Agent for the benefit of the Purchasers.
C. SPV desires to sell shares of its capital stock to Parent, and Parent
desires to purchase such shares, on the terms set forth in this Agreement.
NOW, THEREFORE, SPV and Parent agree as follows:
Section 1. Purchase and Sale of Capital Stock. Parent hereby purchases from
SPV, and SPV hereby issues and sells to Parent, 1,000 shares of common stock,
par value $0.01 per share, of SPV (the "Common Stock") for the Stock Purchase
Price set forth in Section 2(a). The shares of Common Stock being purchased
under this Agreement are referred to herein as the "Shares." Within three (3)
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Business Days from the date hereof, SPV shall deliver to Parent a certificate
registered in Parent's name representing the Shares.
Section 2. Consideration for Shares and Capital Contributions.
(a) Consideration for Shares. To induce SPV to enter into the Sale
Agreement and to enable SPV to fund its obligations thereunder by consummating
the transactions contemplated by the Purchase Agreement, and in reliance upon
the representations and warranties set forth herein, Parent hereby pays to SPV
on the date hereof the sum of $2,500,000 (the "Stock Purchase Price") in
consideration of the purchase of the Shares. The Stock Purchase Price shall take
the form of a transfer of cash, except that Parent may, in lieu of cash payment
of the Stock Purchase Price, offset the amount of the Stock Purchase Price
against the purchase price otherwise payable by SPV to Parent on the initial
purchase date pursuant to the Sale Agreement.
(b) Contributions After Initial Closing Date. From time to time Parent May
make additional capital contributions to SPV. All such contributions shall take
the form of a cash transfer, except that SPV agrees to, in lieu of cash payment
thereof, offset the amount of such contributions against the purchase price for
Receivables otherwise payable by SPV to Parent on the date of such capital
contributions. All of the Receivables so paid for through such offset shall
constitute purchased Receivables within the meaning of the Sale Agreement and
shall be subject to all of the representations, warranties and indemnities
otherwise made thereunder. It is expressly understood and agreed that Parent has
no obligations under this Agreement or otherwise to make any capital
contributions from and after payment of the Stock Purchase Price.
Section 3. Representations and Warranties of SPV. SPV represents and
warrants to Parent as follows:
(a) SPV is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to carry on its business as proposed to be
conducted on the date hereof.
(b) SPV has all requisite legal and corporate power to enter into this
Agreement, to issue the Shares and to perform its other obligations under this
Agreement.
(c) Upon receipt by SPV of the Stock Purchase Price and the issuance of the
Shares to Parent, the Shares will be duly authorized, validly issued, fully paid
and nonassessable.
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(d) SPV has taken all corporate action necessary for its authorization,
execution and delivery of, and, its performance under, this Agreement.
(e) This Agreement constitutes a legally valid and binding obligation of
SPV, enforceable against SPV in accordance with its terms, except that
enforceability May be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(f) SPV has filed its Certificate of Incorporation in the form attached
hereto as Annex A with the Secretary of State of Delaware and (ii) adopted
By-laws in the form attached hereto as Annex B.
(g) The issuance of the Shares by SPV hereunder is legally permitted by all
laws and regulations to which SPV is subject.
Section 4. Representations and Warranties of Parent. Parent represents and
warrants to SPV as follows:
(a) Parent is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Oregon, and has all requisite corporate
power and authority to carry on its business as conducted on the date hereof.
(b) Parent has all requisite legal and corporate power to enter into this
Agreement, to purchase the Shares and to perform its other obligations under
this Agreement.
(c) Parent has taken all corporate action necessary for its authorization,
execution and delivery of, and its performance under, this Agreement.
(d) This Agreement constitutes a legally valid and binding obligation of
Parent, enforceable against Parent in accordance with its terms, except that
enforceability May be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(e) Parent is purchasing the Shares for investment for its own account, not
as a nominee or agent, and not with a view to any distribution of any part
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thereof. Parent has no current intention of selling, granting a participation
in, or otherwise distributing, the shares.
(f) Parent understands that the Shares have not been registered under the
Securities Act of 1933, as amended, or under any other Federal or state law, and
that SPV does not contemplate such a registration.
(g) Parent has such knowledge, sophistication and experience in financial
and business matters that it is capable of evaluating the merits and risks of
the transactions contemplated by this Agreement, and has made such
investigations in connection herewith as have been deemed necessary or desirable
to make such evaluation.
(h) The purchase of the Shares by Parent is legally permitted by all laws
and regulations to which Parent is subject.
Section 5. Restrictions on Transfer Imposed by the Act; Legend.
(a) Legend. Each certificate representing any Shares shall be endorsed with
the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE NOT
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES ACT. SUCH SECURITIES SHALL NOT BE SOLD, PLEDGED,
HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED OR DISPOSED OF ABSENT
SUCH REGISTRATION, UNLESS, IN THE OPINION OF THE CORPORATION'S COUNSEL,
SUCH REGISTRATION IS NOT REQUIRED. IN ADDITION, THESE SECURITIES HAVE
BEEN ISSUED OR SOLD IN RELIANCE ON SECTION 4(2) OF THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER SUCH ACT.
(b) Registration of Transfers. SPV need not register a transfer of any
Shares unless the conditions specified in the legend set forth in Section 5(a)
hereof are satisfied. SPV May also instruct its transfer agent (which May be
SPV) not to register the transfer of any Shares unless the conditions specified
in the legend set forth in Section 5(a) hereof are satisfied.
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Section 6. Agreement to Vote. Parent hereby agrees and covenants to vote
all of the shares of Common Stock now or hereafter owned by it, whether
beneficially or otherwise, as is necessary at a meeting of stockholders of SPV,
or by written consent in lieu of any such meeting, to cause to be elected to,
and maintained on, SPV's board of directors at least one (1) person meeting the
qualifications of an Independent Director and selected in accordance with the
provisions of the Certificate of Incorporation of SPV.
Section 7. Successors and Assigns. Each party agrees that it will not
assign, sell, transfer, delegate, or otherwise dispose of, whether voluntarily
or involuntarily, or by operation of law, any right or obligation under this
Agreement except in connection with a transfer of Shares in compliance with the
terms and conditions hereof, as contemplated by Section 5(b) above, or otherwise
in accordance with the terms hereof. Any purported assignment, transfer or
delegation in violation of this Section 7 shall be null and void ab initio.
Subject to the foregoing limits on assignment and delegation and except as
otherwise provided herein, this Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective heirs, legatees, executors,
administrators, assignees and legal successors.
Section 8. Amendments and Waivers. Any term hereof May be amended and the
observance of any term hereof May be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of SPV and Parent. Any amendment or waiver so effected shall be binding
upon SPV and Parent.
Section 9. Further Acts. Each party agrees to perform any further acts and
execute and deliver any document which May be reasonably necessary to carry out
the provisions of this Agreement.
Section 10. Counterparts. This Agreement May be executed in any number of
counterparts, and all of such counterparts together will be deemed one
instrument.
Section 11. Notices. Any and all notices, acceptances, statements and other
communications to Parent in connection herewith shall be in writing, delivered
personally, by facsimile or certified mail, return receipt requested, and shall
be addressed to the address of Parent indicated on the stock transfer register
of SPV or, if no address is so indicated, to the address provided to SPV
pursuant to the Sale Agreement unless changed by written notice to SPV or its
successor.
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Section 12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, EXCEPT AND TO THE
EXTENT THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE IS APPLICABLE.
Section 13. Entire Agreement. This Agreement, together with the Sale
Agreement and the documents expressly to be delivered in connection therewith,
constitute the entire understanding and agreement between the parties hereto
with subject matter hereof and thereof.
Section 14. Severability of this Agreement. In case any provision of this
Agreement shall be invalid or unenforceable, the validity, legality and
enforceability of the remaining shall not in any way be affected or impaired
thereby.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
TW HOLDINGS III, INC.
By:_________________________________
Name:
Title:
TRENDWEST RESORTS, INC.
By:_________________________________
Name:
Title:
7
ANNEX A to Subscription Agreement
Certificate of Incorporation
Annex B to Subscription Agreement
By-Laws
EXHIBIT VII
Form of Subordinated Note
SUBORDINATED NOTE
January 7, 2000
1. Note. FOR VALUE RECEIVED, the undersigned, TW Holdings III, Inc., a
Delaware corporation ("SPV"), hereby unconditionally promises to pay to the
order of Trendwest Resorts, Inc., an Oregon corporation ("Originator"), in
lawful money of the United States of America and in immediately available funds,
on the date following the Amortization Date which is one year and one day after
the date on which (i) the Outstanding Balance of all Receivables sold under the
"Sale Agreement" referred to below has been reduced to zero and (ii) Originator
has paid to the Buyer all indemnities, adjustments and other amounts which May
be owed thereunder in connection with the Purchases (the "Collection Date"), the
aggregate unpaid principal sum outstanding of all "Subordinated Loans" made from
time to time by Originator to SPV pursuant to and in accordance with the terms
of that certain Receivables Sale Agreement dated as of January 7, 2000, between
Originator and SPV (as amended, restated, supplemented or otherwise modified
from time to time, the "Sale Agreement"). Reference to Section 1.2 of the Sale
Agreement is hereby made for a statement of the terms and conditions under which
the loans evidenced hereby have been and will be made. All terms which are
capitalized and used herein and which are not otherwise specifically defined
herein shall have the meanings ascribed to such terms in the Sale Agreement.
2. Interest. SPV further promises to pay interest on the outstanding unpaid
principal amount hereof from the date hereof until payment in full hereof at a
rate equal to 8.75%; provided, however, that if SPV shall default in the payment
of any principal hereof, SPV promises to pay, on demand, interest at the rate of
the 8.75% per annum on any such unpaid amounts, from the date such payment is
due to the date of actual payment. Interest shall be payable on the 20th day of
each month, or the next Business Day if such day is not a Business Day in
arrears; provided, however, that SPV May elect on the date any interest payment
is due hereunder to defer such payment and upon such election the amount of
interest due but unpaid on such date shall constitute principal under this
Subordinated Note. The outstanding principal of any loan made under this
Subordinated Note shall be due and payable on the Collection Date and May be
repaid or prepaid at any time without premium or penalty.
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3. Principal Payments. Originator is authorized and directed by SPV to
enter on the grid attached hereto, or, at its option, in its books and records,
the date and amount of each loan made by it which is evidenced by this
Subordinated Note and the amount of each payment of principal made by SPV, and
absent manifest error, such entries shall constitute prima facie evidence of the
accuracy of the information so entered; provided that neither the failure of
Originator to make any such entry or any error therein shall expand, limit or
affect the obligations of SPV hereunder.
4. Subordination. The indebtedness evidenced by this Subordinated Note is
subordinated to the prior payment in full of all of SPV's recourse obligations
under that certain Receivables Purchase Agreement dated as of January 7, 2000,
by and among SPV, Originator, as Servicer, Sage Systems, Inc., as "Custodian",
various "Purchasers" from time to time party thereto, and Bank One, NA (Main
Office Chicago), as the "Agent" and "Paying Agent" (as amended, restated,
supplemented or otherwise modified from time to time, the "Purchase Agreement").
The subordination provisions contained herein are for the direct benefit of, and
May be enforced by, the Agent and the Purchasers and/or any of their respective
assignees (collectively, the "Senior Claimants") under the Purchase Agreement.
Until the date on which all "Capital" outstanding under the Purchase Agreement
has been repaid in full and all other obligations of SPV and/or the Servicer
thereunder and under the "Fee Letter" referenced therein (all such obligations,
collectively, the "Senior Claim") have been indefeasibly paid and satisfied in
full, Originator shall not demand, accelerate, xxx for, take, receive or accept
from SPV, directly or indirectly, in cash or other property or by set-off or any
other manner (including from or by way of collateral) any payment or security of
all or any of the indebtedness under this Subordinated Note or exercise any
remedies or take any action or proceeding to enforce the same; provided,
however, that (i) Originator hereby agrees that it will not institute against
SPV any proceeding of the type described in Section 5.1(d) of the Sale Agreement
unless and until the Collection Date has occurred and (ii) nothing in this
paragraph shall restrict SPV from paying, or Originator from requesting, any
payments under this Subordinated Note so long as SPV is not required under the
Purchase Agreement to set aside for the benefit of, or otherwise pay over to,
the funds used for such payments to any of the Senior Claimants and further
provided that the making of such payment would not otherwise violate the terms
and provisions of the Purchase Agreement. Should any payment, distribution or
security or proceeds thereof be received by Originator in violation of the
immediately preceding sentence, Originator agrees that such payment shall be
segregated, received and held in trust for the benefit of, and deemed to be the
property of, and shall be immediately paid over and delivered to the Agent for
the benefit of the Senior Claimants.
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5. Bankruptcy; Insolvency. Upon the occurrence of any proceeding of the
type described in Section 5.1(d) of the Sale Agreement involving SPV as debtor,
then and in any such event the Senior Claimants shall receive payment in full of
all amounts due or to become due on or in respect of Capital and the Senior
Claim (including "CP Costs" and "Yield" accruing under the Purchase Agreement
after the commencement of any such proceeding, whether or not any or all of such
CP Costs or Yield is an allowable claim in any such proceeding) before
Originator is entitled to receive payment on account of this Subordinated Note,
and to that end, any payment or distribution of assets of SPV of any kind or
character, whether in cash, securities or other property, in any applicable
insolvency proceeding, which would otherwise be payable to or deliverable upon
or with respect to any or all indebtedness under this Subordinated Note, is
hereby assigned to and shall be paid or delivered by the Person making such
payment or delivery (whether a trustee in bankruptcy, a receiver, custodian or
liquidating trustee or otherwise) directly to the Agent for application to, or
as collateral for the payment of, the Senior Claim until such Senior Claim shall
have been paid in full and satisfied.
6. Amendments. This Subordinated Note shall not be amended or modified
except in accordance with Section 7.1 of the Sale Agreement. The terms of this
Subordinated Note May not be amended or otherwise modified without the prior
written consent of the Agent for the benefit of the Purchasers.
7. GOVERNING LAW. THIS SUBORDINATED NOTE HAS BEEN MADE AND DELIVERED AT
CHICAGO, ILLINOIS, AND SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF
THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS AND DECISIONS OF THE
STATE OF ILLINOIS. WHEREVER POSSIBLE EACH PROVISION OF THIS SUBORDINATED NOTE
SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER
APPLICABLE LAW, BUT IF ANY PROVISION OF THIS SUBORDINATED NOTE SHALL BE
PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
SUBORDINATED NOTE.
8. Waivers. All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of dishonor.
Originator additionally expressly waives all notice of the acceptance by any
Senior Claimant of the subordination and other provisions of this Subordinated
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Note and expressly waives reliance by any Senior Claimant upon the subordination
and other provisions herein provided.
9. Assignment. This Subordinated Note May not be assigned, pledged or
otherwise transferred to any party other than Originator without the prior
written consent of the Agent, and any such attempted transfer shall be void.
TW HOLDINGS III, INC.
By:_____________________________
Title:
4
Schedule
to
SUBORDINATED NOTE
SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
Date Amount of Amount of Principal Unpaid Principal Notation made
Subordinated Loan Paid Balance by
___________________ _____________________ ______________________ __________________ ______________
___________________ _____________________ ______________________ __________________ ______________
___________________ _____________________ ______________________ __________________ ______________
___________________ _____________________ ______________________ __________________ ______________
___________________ _____________________ ______________________ __________________ ______________
___________________ _____________________ ______________________ __________________ ______________
___________________ _____________________ ______________________ __________________ ______________
___________________ _____________________ ______________________ __________________ ______________
___________________ _____________________ ______________________ __________________ ______________
___________________ _____________________ ______________________ __________________ ______________
___________________ _____________________ ______________________ __________________ ______________
___________________ _____________________ ______________________ __________________ ______________
___________________ _____________________ ______________________ __________________ ______________
EXHIBIT VIII
Form of Vacation Owner Agreement
EXHIBIT IX
Form of Sale Assignment
TRENDWEST RESORTS, INC.
AND
TW HOLDINGS III, INC.
SALE ASSIGNMENT, dated as of [__], 200[_], between Trendwest Resorts, Inc.
(the "Seller") and TW Holdings III, Inc. (the "Buyer")
1. We refer to the Receivable Sale Agreement (the "Sale Agreement") dated
as of January 7, 2000 between the Seller and the Buyer. All provisions of such
Sale Agreement are incorporated herein by reference. All capitalized terms shall
have the meanings set forth in the Sale Agreement.
2. The Seller does hereby sell, transfer, assign, set over and convey to
the Buyer all right, title and interest of the Seller in and to the Receivables
listed on Schedule 1 hereto (each, a "Receivable"), and the Buyer does hereby
purchase each such Receivable.
3. The Outstanding Balance for the Receivables sold and purchased, pursuant
to paragraph 2 hereof is $[ ]. The Purchase Price for the Receivables sold and
purchased hereby is $ [__] ,representing the product of (x) the Original Balance
of such Receivables, multiplied by (y) the Purchase Price Factor (as defined in
the Sale Agreement) then in effect. The Purchase Price shall be payable in full
contemporaneously with the execution of this Sale Assignment, as provided in
Section 1.1 of the Sale Agreement.
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IN WITNESS WHEREOF, the parties have caused this Sale Assignment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
TRENDWEST RESORTS, INC.,
as Seller
By: _________________________
Name:
Title:
TW HOLDINGS III, INC.,
as Buyer
By: ________________________
Name:
Title:
2
SCHEDULE 2
SCHEDULE OF RECEIVABLES
Schedule A
DOCUMENTS TO BE DELIVERED TO BUYER
ON OR PRIOR TO THE INITIAL PURCHASE
1. Copy of the Resolutions of the Board of Directors of Originator
certified by its Secretary, authorizing Originator's execution,
delivery and performance of the Agreement and the other documents to
be delivered by it thereunder.
2. Articles or Certificate of Incorporation (or equivalent organizational
documents) of Originator certified by the Secretary of State of the
jurisdiction of incorporation of Originator on or within thirty (30)
days prior to the initial Purchase.
3. Good Standing Certificate for Originator issued by the Secretaries of
State of California, Oregon and Washington.
4. A certificate of the Secretary of Originator certifying: (i) the names
and signatures of the officers authorized on its behalf to execute the
Agreement and any other documents to be delivered by it thereunder and
(ii) a copy of Originator's By-Laws.
5. Time stamped receipt copies of proper financing statements, duly filed
under the UCC on or before the date of such initial Purchase in all
jurisdictions as May be necessary or, in the opinion of Buyer (or its
assigns), desirable, under the UCC of all appropriate jurisdictions or
any comparable law in order to perfect the ownership interests
contemplated by the Agreement.
6. Delivered simultaneous to the Initial Purchase, executed copies of
proper releases and UCC termination statements, ready for filing, if
any, necessary to release all security interests and other rights of
any Person in the Receivables, Contracts or Related Security
previously granted by Originator.
7. Executed Collection Account Agreements for each Lock-Box and
Collection Account.
8. A favorable opinion of legal counsel for Originator reasonably
acceptable to Buyer (or its assigns) which addresses the following
matters and such other matters as Buyer (or its assigns) Agent May
reasonably request:
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-- Originator is a corporation duly incorporated,
validly existing, and in good standing under the laws
of its state of incorporation.
-- Originator has all requisite authority to conduct its
business in each jurisdiction where failure to be so
qualified would have a material adverse effect on
Originator's business.
-- The execution and delivery by Originator of the
Agreement and each other Transaction Document to
which it is party and its performance of its
obligations thereunder have been duly authorized by
all necessary corporate action and proceedings,
corporate or otherwise, on the part of Originator and
will not:
(a) require any action by or in respect of, or
filing with, any governmental body, agency
or official (other than the filing of UCC
financing statements);
(b) contravene, or constitute a default under,
any provision of applicable law or
regulation or of its Articles of
Incorporation or Bylaws (or equivalent
organizational documents) or of any
agreement, judgment, injunction, order,
decree or other instrument binding upon
Originator; or
(c) result in the creation or imposition of any
Adverse Claim on assets of Originator or any
of its Subsidiaries (except as contemplated
by the Agreement).
-- The Agreement and each other Transaction Document to
which it is a party has been duly executed and
delivered by Originator (the Originating Parties) and
constitutes the legal, valid, and binding obligation
of Originator enforceable in accordance with its
terms, except to the extent the enforcement thereof
May be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights
generally and subject also to the availability of
equitable remedies if equitable remedies are sought.
-- Counsel is without knowledge of any matters or facts
contrary to the Representations and Warranties
contained in Section 2.1 of the Sales Agreement.
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-- Originator is not an "investment company" registered
or required to be registered under the Investment
Company Act of 1940.
10. A "true sale" opinion and "substantive consolidation" opinion of
counsel for Originator with respect to the transactions contemplated
by the Agreement and the Purchase Agreement.
11. A Compliance Certificate.
12. A direction letter executed by Originator authorizing Buyer and its
assigns, and directing warehousemen to allow Buyer and its assigns, to
inspect and make copies from Originator's books and records maintained
at off-site data processing or storage facilities.
13. A form of Monthly Report.
14. Executed copies of (i) all consents from and authorizations by any
Persons and (ii) all waivers and amendments to existing credit
facilities, that are necessary in connection with the Agreement.
16. State of Washington Public Offering Documents including (i)
Declaration of Vacation Owner Program for WorldMark certified by State
of Washington Department of Real Estate, (ii) statement compliance
with registration requirements of Oregon, Hawaii and California, and
(iii) statement of clear title, to WorldMark properties.
17. Good Standing Certificate for WorldMark issued by the Secretaries of
State of each jurisdiction where it has material operations.
18. A favorable opinion of in-house counsel to the originator stating
that, to the best of the opinion givers knowledge, there is no action,
suit or other proceeding against Originator, WorldMark or any
Affiliate of Originator or WorldMark, which would materially adversely
affect the business or financial condition of Originator or WorldMark
and their respective Affiliates taken as a whole or which would
materially adversely affect the ability of Originator to perform its
obligations under the Agreement.
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