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EXHIBIT 10.11
LOAN AND SECURITY AGREEMENT
LOAN AND SECURITY AGREEMENT ("Agreement") entered into as of May
5, 1993, by GREYHOUND FINANCIAL CORPORATION, a Delaware corporation ("Lender"),
and TRENDWEST RESORTS, INC., an Oregon corporation ("Borrower").
I. DEFINITIONS
As used in this Agreement and the other Documents (as defined
below) unless otherwise expressly indicated in this Agreement or
the other Documents, the following terms shall have the following
meanings (such meanings to be applicable equally both to the
singular and plural terms defined).
1.1 "Advance": an advance of the proceeds of the Loan by
Lender on behalf of Borrower in accordance with the terms
and provisions of this Agreement.
1.2 "Affiliate": with respect to Borrower or any Guarantor,
each person who or which, as to such entity, is now or
hereafter an "affiliated company" or an "affiliated
person" within the meaning of the Investment Companies
Act of 1940 (15 U.S.C. Section 8OA-1, et seq.).
1.3 "Agents": the Servicing Agent, the Lockbox Agent and the
Custodial Agent.
1.4 "Agreement": this Agreement, together with any and all
renewals, amendments, restatements or replacements of it.
1.5 "Applicable Usury Law": the usury law chosen by the
parties pursuant to the terms of paragraph 8.10 or such
other usury law which is applicable if such usury law is
not.
1.6 "Articles of Organization": the charter, articles, by-
laws, agreements and other written documents evidencing
the formation, organization and continuing existence of
an entity.
1.7 "Assignment": a written assignment of specific
Instruments and their proceeds, delivered by Borrower to
Lender in the form of Exhibit A.
1.8 "Borrowing Base": with respect to an Eligible Instrument,
an amount equal to the lesser of:
(a) eighty-five percent (85%) of the unpaid principal
balance of such Eligible Instrument; or
(b) ninety percent (90%) of the present value of the
unmatured installments of principal and interest
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such Eligible Instrument, discounted at the
applicable interest rate under the terms of
the Note.
1.9 "Borrowing Term": the period commencing on the date
of this Agreement and ending on the close of
Lender's normal business hours on the date (or if
not a Business Day, the first Business Day
thereafter) which is the earlier of (a) the date
twelve (12) months from the date of the first
Advance or (b) April 30, 1994.
1.10 "Business Day": any day other than a Saturday,
Sunday or a day on which banks in Phoenix, Arizona
are required to close.
1.11 "Commitment Fee": a commitment fee for the Loan
payable by Borrower to Lender in the amount of
$50,000.00.
1.12 "Custodial Agent": Sage Systems, Inc., a Washington
corporation, or its successor as Custodial Agent
under the Custodial Agreement.
1.13 "Custodial Agreement": an agreement in form and
substance satisfactory to Lender in its sole and
absolute discretion, to be made among Lender,
Borrower and Custodial Agent, which provides for
Custodial Agent to hold certain original and
photocopied documents constituting part of the
Receivables Collateral, together with any and all
renewals, amendments, restatements or replacements
of it.
1.14 "Default Rate": as defined in the Note.
1.15 "Documents": the Note, the Guarantee, the
Assignment, the Lockbox Agreement, the Servicing
Agreement, the Custodial Agreement, the
Environmental Certificate, the Subordination
Agreement(s), this Agreement and all other
documents executed in connection with the Loan,
together with any and all renewals, amendments,
restatements or replacements of such documents.
1.16 "Eligible Instrument": an Instrument which conforms
to the standards set forth in EXHIBIT B. An
Instrument that has qualified as an Eligible
Instrument shall cease to be an Eligible Instrument
upon the date of the first occurrence of any of the
following: (a) any installment due with respect to
that Instrument becomes more than fifty-nine (59)
days past due or (b) that Instrument otherwise
fails to continue to conform to the standards set
forth in EXHIBIT B.
1.17 "Environmental certificate": an environmental
certificate executed by Borrower and such other
persons or parties as required by Lender in the
form of EXHIBIT C, together
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with any and all renewals, amendments, restatements
or replacements of it.
1.18 "Event of Default": the meaning set forth in
paragraph 7.1 .
1.19 "Guarantee": the guarantee made by the Guarantor of
the Obligations and the subordination by Guarantor
to the Obligations, together with any and all
renewals, amendments, restatements or replacements
of it.
1.20 "Guarantor": Trendwest, Inc.
1.21 "Incipient Default": an event which after notice
and/or lapse of time would constitute an Event of
Default.
1.22 "Instrument": a Vacation Club owner Agreement
entered into between Borrower, as seller, and a
Purchaser, as buyer, for the sale and purchase of a
Time-Share Interest.
1.23 "Insurance Policies": such insurance policies
required by Lender, written by insurers and in
amounts and upon forms satisfactory to Lender, and
to be delivered to Lender, all consistent with
those requirements set forth in the certain letter
dated February 9, 1993, from Xxxxx X. Xxxxxx to
Xxxxxxx X. Sites.
1.24 "Loan": the loan made pursuant to this Agreement
and the other Documents.
1.25 "Lockbox Agent": First Interstate Bank of
Washington, N.A., or its successor as lockbox agent
under the Lockbox Agreement.
1.26 "Lockbox Agreement": an agreement in form and
substance satisfactory to Lender in its sole and
absolute discretion to be made between Lender,
Borrower and Lockbox Agent, which provides for the
Lockbox Agent to collect through a lockbox payments
made on Instruments constituting part of the
Receivables Collateral and to remit them to Lender,
together with any and all renewals, amendments,
restatements or replacements of it.
1.27 "Maturity Date": the date (or if not a Business
Day, the first Business Day thereafter) eighty-four
(84) months after the date of the last Advance.
1.28 "Maximum Loan Amount": Five Million United States
Dollars ($5,000,000.00).
1.29 "Note": the "Promissory Note" issued by Borrower
in the form of EXHIBIT D to evidence the Loan,
together with any
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and all renewals, amendments, restatements or
replacements of it.
1.30 "Obligations": all obligations, agreements, duties,
covenants and conditions that Borrower is now or
hereafter required to Perform under the Documents.
1.31 "Opening Prepayment Date": the date (or if not a
Business Day, the first Business Day thereafter)
two (2) years after the date of the last Advance.
1.32 "OPERF": Oregon Public Employees' Retirement Fund.
1.33 "OPERF Debt": the indebtedness owing by Borrower to
OPERF pursuant to a revolving loan agreement (as
renewed, modified, restated or replaced, "OPERF
Loan Agreement") providing for a line of credit
loan to Borrower, and other documents now or
hereafter evidencing, securing or otherwise
pertaining to borrowings obtained pursuant to the
OPERF Loan Agreement.
1.34 "Owner": an owner of a Time-Share Interest.
1.35 "Performance" or "Perform": full, timely and
faithful performance.
1.36 "Permitted Encumbrances": the rights, restrictions,
reservations, encumbrances, easements and liens of
record which Lender has agreed to accept as set
forth in EXHIBIT E.
1.37 "Prepayment Premium": an amount equal to (a) six
percent (6.0%) of the outstanding principal balance
of the Loan in the event of a prepayment of the
Loan occurring prior to the Opening Prepayment Date
or (b) a percent, determined in accordance with
Schedule 1, of the outstanding principal balance of
the Loan in the event of a prepayment of the Loan
occurring subsequent to the Opening Prepayment
Date.
1.38 "Project": a resort or part of a resort in which a
Vacation Club Unit is located, a current list of
all Projects being set forth as EXHIBIT F.
1.39 "Project Declaration": with respect to a Project,
the recorded document(s) pursuant to which the
Project and its common scheme are established and
governed.
1.40 "Project Governing Documents": with respect to a
Project, the Project Declaration, the Articles of
Organization for any Project Owner Association, and
any rules and regulations adopted by such entity or
entities pertaining to the use of the Project.
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1.41 "Project Owners Association": with respect to any
Project, an entity or entities in which the fee
simple owners and/or owners of other legal estates
are members and which has been established to
govern the Project in accordance with the recorded
documents establishing the Project and its common
scheme.
1.42 "Purchaser": a purchaser of a Time-Share Interest
from Borrower.
1.43 "Receivables Collateral": (a) the Instruments which
are now or hereafter assigned, endorsed or
delivered to Lender pursuant to this Agreement or
against which an Advance has been made; (b) all
rights under all documents evidencing, securing or
otherwise pertaining to such Instruments; (c) the
Insurance Policies in which Borrower has an
interest; (d) all rights under any and all escrow
agreements and accounts pertaining to the foregoing
or to the Time-Share Interests and related Vacation
Club Credits sold pursuant to the Instruments and
their proceeds; (e) the Vacation Club Reservation
System; (f) all files, books and records of
Borrower pertaining to the foregoing; and (g) the
proceeds from the foregoing.
1.44 "Resolutions": the corporate resolution of a
corporation certified as true and correct by an
authorized officer of such corporation or a
partnership certificate signed by all of the
general partners of such partnership.
1.45 "Security Interest": a perfected, direct and
exclusive first priority security interest in and
charge upon the property intended to be covered by
it.
1.46 "Servicing Agent": Sage Systems, Inc., a
Washington corporation, or its successor as
Servicing Agent under the Servicing Agreement.
1.47 "Servicing Agreement": an agreement in form and
substance satisfactory to Lender in its sole and
absolute discretion, to be made among Lender,
Borrower and Servicing Agent, which provides for
Servicing Agent to perform for the benefit of
Lender accounting, reporting and other servicing
functions with respect to the Instruments
constituting part of the Receivables Collateral,
together with any and all renewals, amendments,
restatements or replacements of it.
1.48 "Subordination Agreement(s)": the subordination
agreement(s) made and delivered to Lender pursuant
to paragraph 6.11.
1.49 "Term": the duration of this Agreement, commencing
on the date as of which this Agreement is entered
into and
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ending when all of the Obligations shall have been
Performed.
1.50 "Time-Share Interest": at membership in the
Vacation Club Association and Vacation Club
Credits, which entitle an Owner to temporary,
periodic use of the Vacation Club Units pursuant to
the Vacation Club Program during a term of not less
than forty (40) consecutive years.
1.51 "Title Assurances": a policy of title insurance
written in amounts, and upon forms, all reasonably
satisfactory to Lender, to evidence that the
Vacation Club Association holds good and marketable
title to the Vacation Club Units, subject only to
the Permitted Encumbrances and the Vacation Club
Declarations,
1.52 "Vacation Club Association": means WorldMark, The
Club, a nonprofit, mutual benefit corporation
organized under the laws of the State of
California, and formerly known as Club Esprit.
1.53 "Vacation Club Credits": the term of measurement
currently utilized by the Vacation Club Association
to measure the magnitude and extent of benefits and
obligations of an Owner as a member of the Vacation
Club Association.
1.54 "Vacation Club Declaration": a declaration which is
executed by Vacation Club Association and Borrower
dedicating a unit or units in a Project to the
Vacation Club Program, together with any and all
renewals, amendments, restatements or replacements
of it.
1.55 "Vacation Club Governing Documents": the Articles
of Organization of Vacation Club Association, all
Vacation Club Declarations, the Vacation Club
Management Agreement, the Vacation Club Program
Agreement, the Vacation Club Reimbursement
Agreement, and the Vacation Club Rules.
1.56 "Vacation Club Management Agreement": the
Management Agreement between Borrower and the
Association dated February 13, 1991, as amended by
instrument dated December 21, 1992, pursuant to
which Borrower manages the Vacation Club Program
described in the Vacation Club Owner Agreement and
the Vacation Club Governing Documents, together
with any and all renewals, amendments, restatements
or replacements of it.
1.57 "Vacation Club Owner Agreement": a purchase
contract and security agreement in the form
attached hereto as EXHIBIT M-1 or M-2, or such
other form as may be identical thereto in all
material respects or has been approved by Lender in
writing as contemplated by paragraph 6.4(d) by
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which a Purchaser purchases a Time-Share Interest
from Borrower.
1.58 "Vacation Club Program": the master program for the
use and enjoyment of Time-Share Interests by all
Owners based upon Vacation Club Credits allocated
to the Owners and Vacation Club Credit values
assigned to use of the Vacation Club Units,
1.59 "Vacation Club Program Agreement": the Vacation
Program Agreement (Second Amended) between Borrower
and the Vacation Club Association dated February
13, 1991, which established the rights and
obligations of the parties with respect to the
transfer of property by Borrower to the Vacation
Club Association, the sale of Vacation Club Credits
by Borrower, the encumbrance of Vacation Club Units
and the protection of Owners' use rights, together
with any and all renewals, amendments, restatements
or replacements of it.
1.60 "Vacation Club Reimbursement Agreement": the
Reimbursement Agreement (Second Amended) between
Borrower and the Vacation Club Association dated
February 13, 1991, which establishes Borrower's
obligation to pay the Vacation Club Association's
costs of operating the Vacation Club Program,
together with any and all renewals, amendments,
restatements or replacements of it.
1.61 "Vacation Club Reservation System": all computer
software, licenses, copyrights, patents, service
contracts and other contract rights and general
intangibles in which Borrower has an interest and
which are utilized in connection with maintaining
records of the availability of Vacation Club Units
and the number of unused Vacation Club credits
owned by each Owner and in handling reservations
and confirmations made by Owner for the use of
Vacation Club Credits, and the proceeds thereof.
1.62 "Vacation Club Rules": rules and regulations from
time to time adopted by Vacation Club Association
in accordance with the Vacation Club Governing
Documents and pertaining to the use of the Vacation
Club Units as part of the Vacation Club Program.
1.63 "Vacation Club Unit": a residential condominium
apartment owned by the Vacation Club Association,
together with all personal property located
therein.
1.64 "Wendts Subordination Agreement": the Subordination
Agreement by the Wendts to the Obligations with
respect to the Xxxxx Purchase Documents, together
with any and all renewals, amendments, restatements
or replacements of it.
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1.65 "Wendts Purchase Documents": that Purchase
Agreement dated as of December 30, 1992, between
Borrower and Eagle Crest Partnership Ltd., as
sellers, and Xxxxxxx X. Xxxxx and Xxxxxxxx X. Xxxxx
("Wendts"), as buyers, providing for the sale of
certain contracts receivable and promissory notes
and the Servicing Escrow Agreement dated as of
December 30, 1992, between the Wendts, Borrower,
and Sage Systems, Inc. and pertaining to the
purchased contracts receivable.
II. LOAN COMMITMENT; USE OF PROCEEDS
2.1 Lender hereby agrees, if Borrower has Performed all
of the Obligations then due, to make Advances to
Borrower. Advances shall be made against Eligible
Instruments at the time they are assigned to Lender
("Initial Availability Advances") in an amount
equal to the then Borrowing Base for such Eligible
Instruments. As Advances made against Eligible
Instruments are repaid, no additional Advances
("Additional Availability Advances") shall be made
against those same Eligible Instruments except at
the request of Borrower. If Borrower requests an
Additional Advance against previously assigned
Eligible Instruments such Advance shall be in an
amount less then or equal to the then Borrowing
Base of all previously assigned Eligible
Instruments less the aggregate unpaid principal
balance of all Advances previously made against
such Eligible Instruments. Any Advance made against
an Instrument substituted pursuant to paragraph 3.2
shall be deemed to be an Additional Availability
Advance; provided, however, that the substitution
of an Eligible Instrument for an ineligible
Instrument pursuant to paragraph 3.2 shall not be
deemed to be the making of an Initial Availability
Advance or Additional Availability Advance. Lender
shall have no obligation to make any Advance after
the Borrowing Term has expired.
2.2 The Loan is a revolving line of credit; however,
all of the Advances shall be viewed as a single
loan. Borrower shall not be entitled to obtain
Advances after the expiration of the Borrowing Term
unless Lender, in its sole and absolute discretion,
agrees in writing with Borrower to make Advances
thereafter on terms and conditions satisfactory to
Lender. This Agreement and Borrower's liability for
Performance of the Obligations shall continue,
however, until the end of the Term.
2.3 Borrower will use the proceeds of the Loan only for
Borrower's business purposes, which shall consist
of use for working capital.
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III. SECURITY
3.1 To secure the Performance of all of the
Obligations, Borrower hereby grants to Lender a
Security Interest in and assigns to Lender the
Receivables Collateral. Such Security Interest
shall be absolute, continuing and applicable to all
existing and future Advances and to all of the
Obligations. All of the Receivables Collateral
shall secure repayment of the Loan and the
Performance of the other Obligations. Borrower will
unconditionally deliver to the Custodial Agent, as
agent for Lender or as otherwise directed by
Lender, with full recourse, all Instruments which
are part of the Receivables Collateral. Lender is
hereby appointed Borrower's attorney-in-fact to
take any and all actions in Borrower's name and/or
on Borrower's behalf deemed necessary or
appropriate by Lender with respect to the
collection and remittance of payments (including
the endorsement of payment items) received on
account of the Receivables Collateral.
3.2 If a previously Eligible Instrument which is part
of the Receivables Collateral ceases to be an
Eligible Instrument, then within thirty (30) days
thereafter, Borrower will either (i) pay to Lender
an amount equal to the Borrowing Base of the
ineligible Instrument, together with interest,
costs and expenses attributable to it, or (ii)
replace such ineligible Instrument with an Eligible
Instrument or Eligible Instruments having a
Borrowing Base not less than the Borrowing Base
(calculated immediately before its ineligibility)
of the ineligible Instrument(s) being replaced.
Simultaneously with such payment or the delivery of
the replacement Instrument to Lender, Borrower will
deliver to Lender all of the items (except for a
"Request for Advance and Certification") required
to be delivered by Borrower to Lender pursuant to
paragraph 4.1, together with a "Borrower's
Certificate" in form and substance identical to
EXHIBIT G. If no Event of Default or Incipient
Default has occurred and is continuing, then within
a reasonable period of time after the substitution
of an Eligible Instrument for an ineligible
Instrument, Lender will reassign to Borrower,
without recourse or warranty of any kind, the
ineligible Instrument. Borrower will prepare the
reassignment instrument, which shall be in form and
substance identical to EXHIBIT G-1, and shall
deliver it to Lender for execution.
3.3 Borrower will deliver or cause to be delivered to
Lender and will maintain or cause to be maintained
throughout the Term in full force and effect the
Guarantee, the Subordination Agreement(s) and all
other security agreements required pursuant to the
Documents.
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3.4 Upon full Performance of all of the Obligations by
Borrower, Lender shall reassign to Borrower all
Instruments then held by Lender or an agent for
Lender pursuant to a reassignment instrument in
form and substance identical to EXHIBIT G-1
prepared and delivered to it by Borrower and shall
execute appropriate releases of all UCC financing
statements filed in connection with the Receivables
Collateral.
IV. ADVANCES
4.1 Lender's obligation to make the initial Advance and
subsequent Advances shall be subject to and
conditioned upon the terms and conditions set forth
in the following subparagraphs and elsewhere in
this Agreement being satisfied and remaining
satisfied during the Term.
(a) Borrower shall have delivered to Lender the
following Documents, duly executed, delivered
and in form and substance satisfactory to
Lender:
(i) the Note;
(ii) if not covered by a then effective
Assignment, an Assignment of the specific
Instruments for which the Advance is
requested;
(iii) if not already delivered to Custodial
Agent, as agent for Lender, or as
otherwise directed by Lender, any
Instruments for which the Advance is
requested, properly endorsed;
(iv) the Guarantee;
(v) the Environmental Certificate;
(vi) UCC financing statements for filing
and/or recording, as appropriate, where
necessary to perfect the Security
Interest in the security required
pursuant to the Documents;
(vii) favorable opinions from independent
counsel for Borrower in form and
substance substantially identical to
EXHIBITS H-1 AND H-2;
(viii)a favorable opinion from independent
counsel for Guarantor in form and
substance substantially identical to
EXHIBIT I;
(ix) the Lockbox Agreement;
(x) the Servicing Agreement;
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(xi) the Custodial Agreement;
(xii) the Wendts' Subordination Agreement;
(xiii) an agreement in form and substance
identical to EXHIBIT L to clarify
certain Vacation Club Governing
Documents;
(xiv) an agreement executed by OPERF and
Lender in form and substance identical
to EXHIBIT N; and
(xv) this Agreement.
(b) Borrower shall have delivered to Lender at least
ten (10) Business Days prior to the date of the
Advance, or in the case of the items called for in
item (x) at least five (5) Business Days prior to
the date of the Advance:
(i) the Articles of Organization of Borrower
and Guarantor;
(ii) the Resolutions of Borrower and
Guarantor authorizing the execution and
delivery of the Documents;
(iii) intentionally deleted;
(iv) a copy of the registrations/consents to
sell, the final subdivision public
reports/public offering statements
and/or prospectuses and approvals
thereof required to be issued by or used
in the states where the Projects are
located and other jurisdictions where
Time-Share Interests have been offered
for sale or sold;
(v) a copy, certified as true and complete
by Borrower, of the Project Declaration
for each Project, credit applications
and disclosures, and other documents and
exhibits which have been or are being
used by Borrower in connection with the
sale of Time-Share Interests;
(vi) the Insurance Policies;
(vii) the Title Assurances;
(viii) the items described in EXHIBIT J; and
(ix) such other items as Lender requests
which are reasonably necessary to
evaluate the request for the Advance and
the satisfaction of the conditions
precedent to the Advance.
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(c) No material adverse change shall
have occurred in the Vacation Club
Program or in Borrower's or any
Guarantor's business or financial
condition since the date of the
latest financial and operating
statements (given to Lender by or on
behalf of Borrower or any Guarantor.
(d) There shall have been no material,
adverse change in the warranties and
representations made in the
Documents by Borrower, any Guarantor
and/or any other surety for the
Performance of any of the
Obligations.
(e) Neither an Event of Default nor
Incipient Default shall have
occurred and be continuing.
(f) The interest rate applicable to the
Advance (before giving effect to any
savings clause) will not exceed the
maximum rate permitted by the
Applicable Usury Law.
(g) Borrower shall have paid to Lender
the Commitment Fee and all other
fees required to be paid at the time
of the Advance.
(h) Borrower shall not be entitled to
any Advance unless on or before May
15, 1993, all Documents have been
executed by the persons required to
do so and delivered to Lender.
4.2 Advances shall be requested in writing by Borrower
and shall not be made more frequently than twice
monthly or in amounts less than $100,000.00. In
addition to all other fees required to be paid
pursuant to this Agreement, Borrower shall pay to
Lender at the time of the second Advance in a month
a fee equal to the greater of (a) 0.25% of such
Advance or (b) $500.00.
4.3 Advances may be disbursed to Borrower by wire
transfer; or at the written direction of Borrower,
to others, either severally or jointly with
Borrower, for the credit or benefit of Borrower, by
check, draft or wire transfer. Lender shall have no
obligation to wire transfer any Advance to Borrower
or any other person at Borrower's direction, unless
Borrower has given Lender written wire transfer
instructions satisfactory to Lender at the time of
the Advance. Borrower will pay Lender's reasonable
charge in connection with any wire transfer, which
is currently $25.00. Lender may, at its option,
withhold from any Advance any sum then due to it
under the terms of the Documents or any amount for
which Borrower is obligated to reimburse Lender
pursuant to the Documents.
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4.4 Although Lender shall have no obligation to make
an Advance unless and until all of the conditions
precedent to the Advance have been satisfied,
Lender may, at its sole discretion, make Advances
prior to that time without waiving or releasing any
of the Obligations.
V. NOTE, MAINTENANCE OF BORROWING BASE; PAYMENTS; SERVICING AND COLLECTION
5.1 The Loan shall be evidenced by the Note and shall
be repaid in immediately available funds according
to the terms of the Note.
5.2 Without limitation of Borrower's Obligations under
paragraph 3.2, if the aggregate principal amount of
the Loan outstanding at any time shall exceed the
then Borrowing Base of all Eligible Instruments for
any reason other than an Instrument or Instruments
not qualifying or ceasing to qualify as Eligible
Instruments (which is addressed by paragraph 3.2
above), Borrower, without notice or demand, will
immediately make to Lender a principal payment in
an amount equal to such excess plus accrued and
unpaid interest on such principal payment.
5.3 Borrower will not be entitled to prepay, in whole
or in part, the Loan until the Opening Prepayment
Date except as expressly provided in this
paragraph. Borrower shall be entitled (and is
obligated) to prepay the Loan to the extent the
prepayment ("Normal Prepayment") results from the
application of payments required from obligors on
the Receivables Collateral (unless solicited by
Borrower in contravention of its Obligations) or
from performance by Borrower of its Obligations
under paragraph 3.2 or 5.2 (unless due to a
misrepresentation or breach of warranty concerning
the Receivables Collateral qualifying as Eligible
Instruments); and Borrower shall have no obligation
to pay any Prepayment Premium in connection with a
Normal Prepayment. Borrower shall also be entitled
to make a single prepayment of the Loan (which
prepayment may be in whole or in part) prior to the
expiration of the Borrowing Term; and although
Borrower shall have no obligation to pay any
Prepayment Premium at the time of such prepayment,
Borrower shall pay to Lender upon the expiration of
the Borrowing Term a Prepayment Premium in an
amount equal to the product of 6% times the excess
of (a) the amount of the prepayment made pursuant
to this sentence over (b) the aggregate Advances
made after such prepayment and before the
expiration of the Borrowing Term. Furthermore,
commencing on the Opening Prepayment Date, if
neither an Event of Default nor an Incipient
Default has occurred and is continuing, then
Borrower shall have the option to prepay the Loan
in full, but not in part, upon 60 days prior
written notice to Lender and the simultaneous
payment of the Loan and
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the Prepayment Premium on any date an installment
is due on the Note. If (a) there shall occur a
casualty to or condemnation of all or any portion
of the Project or an Event of Default and (b) such
occurrence results in acceleration or prepayment of
the Loan, a Prepayment Premium will be required in
the amount which shall be determined as of and due
on the earlier of the date of acceleration or
prepayment.
5.4 (a) Lockbox Agent shall collect payments on the
Instruments constituting part of the
Receivables Collateral and remit collected
payments to Lender on the fifteenth (15th)
day (or, if not a Business Day, the next
Business Day) and last Business Day of each
and every month after the date of first
Advance, according to the terms of the
Lockbox Agreement. Payments shall not be
deemed received by Lender until Lender
actually receives such payments from
Lockbox Agent. Servicing Agent shall
furnish to Lender at Borrower's sole cost
and expense, no later than the tenth (10th)
day of each month commencing with the first
full calendar month following the date of
this Agreement, a report, substantially in
the format of EXHIBIT K, which: (i) shows
as of the end of the prior month with
respect to each Instrument which
constitutes part of the Receivables
Collateral (A) all payments received,
allocated between principal, interest, late
charges and taxes, (B) the opening and
closing balance, (C) present value, (D)
average consumer interest rate, and (E)
extensions, refinances, prepayments, and
other similar adjustments; and (ii)
indicates (A) the average consumer interest
rate of all Instruments which constitute
part of the Receivables Collateral and (B)
delinquencies on principal and interest
payments of thirty (30), sixty (60) and
ninety (90) days and on principal, interest
and assessment payments in excess of ninety
(90) days. On the basis of such reports,
Lender will compute the amount, if any,
which was due and payable by Borrower
during the preceding month and will notify
Borrower of any amount due. If such reports
are not timely received, Lender may
estimate the amount which was due and
payable. Borrower will pay within five (5)
Business Days after demand the amount
determined by Lender to be due and payable.
If payment is made on the basis of Lender's
estimate and thereafter reports required by
this paragraph are received by Lender, the
estimated payment amount shall be adjusted
by an additional payment or a refund to the
correct amount, as the reports may
indicate; such additional amount to be paid
by Borrower upon demand and such refund to
be made by Lender within
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15
five (5) Business Days after receipt of
written request therefor by Borrower. At
the end of each calendar quarter, Borrower
will deliver or cause the Servicing Agent
to deliver to Lender a current list of the
names, addresses and phone numbers of the
obligors on each of the Instruments
constituting part of the Receivables
Collateral. Borrower will also deliver or
cause Servicing Agent to deliver to Lender,
promptly after receipt of a written request
for them, such other reports with respect
to Instruments constituting part of the
Receivables Collateral as Lender may from
time to time require.
(b) Custodial Agent, as agent for
Lender, shall hold original custody of all
Instruments constituting part of the
Receivables Collateral and, if required by
Lender, any other items required to be
delivered to Lender with respect to the
Receivables Collateral.
(c) Lender, subject to any restriction
contained in the Lockbox Agreement or the
Servicing Agreement, as the case may be,
may at any time and from time to time in
its discretion substitute or require
Borrower to substitute a successor or
successors to any Agent acting under the
Lockbox Agreement, the Servicing Agreement
or the Custodial Agreement.
5.5 Subject to Lender's rights under Article VII, all
proceeds from the Receivables Collateral (except
payments which are identified by Purchasers as tax
and insurance impounds or maintenance and other
assessment payments and are required to be so
treated by Borrower) and the other security shall
be applied as follows: first to the payment of all
late charges, costs, fees and expenses required by
the Documents to be paid by Borrower; second to
accrued and unpaid interest due on the Note; third
to the unpaid principal balance of the Note; and
then to the other Obligations in such order and
manner as Lender may determine. Unless and until
all the Obligations have been Performed, Borrower
shall have no right to any portion of the proceeds
of the Receivables Collateral.
5.6 Whether or not the proceeds from the Receivables
Collateral shall be sufficient for that purpose,
Borrower will pay when due all payments required to
be made pursuant to any of the Documents,
Borrower's Obligation to make such payments being
absolute and unconditional.
VI. BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
6.1 (a) Borrower is, and will remain at all times,
duly organized, validly existing and in
good standing
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under the laws of the State of Oregon and
in each jurisdiction in which it is selling
Time-Share Interests or where the location
or nature of its properties or its business
makes such qualification necessary.
Borrower has full authority to Perform the
Obligations and to carry on its business
and own its property.
(b) Borrower has full power and authority to grant the
Security Interest in the Receivables Collateral
and to execute and deliver the Documents and to
Perform the Obligations. All action necessary and
required by its Articles of Organization and all
applicable laws for the obtaining of the Loan and
for the execution and delivery of the Documents
executed and delivered in connection with the Loan
has been duly and effectively taken. The Documents
are and shall be legal, valid, binding and
enforceable against Borrower; and do not violate
the Applicable Usury Law or constitute a default or
result in the imposition of a lien under the terms
or provisions of any agreement to which Borrower is
a party. No consent of any governmental agency or
any other person not a party to this Agreement is
or will be required as a condition to the
execution, delivery or enforceability of the
Documents.
6.2 Except as referred to in EXHIBIT H-2, there is no
action, litigation or other proceeding pending or,
to Borrower's knowledge, threatened before any
court, arbitrator or governmental authority
involving Borrower, Vacation Club Association or
any of their respective properties, which might
materially adversely affect the Performance of the
Obligations, Vacation Club Program, the business or
financial condition of Borrower or the Vacation
Club Association, or the ability of Borrower to
Perform the Obligations. Borrower will promptly
notify Lender if any such action, litigation or
other proceeding is commenced or threatened.
6.3 (a) Borrower has sold or has offered for sale
Time-Share Interests only in California,
Washington and British Columbia and one
hundred percent (100%) of Time-Share
Interests have been sold in California and
Washington. Before it sells or offers for
sale Time-Share Interests in any other
jurisdictions, Borrower will promptly
notify Lender and provide Lender with
evidence that it has complied with all laws
of such jurisdiction governing its proposed
conduct.
(b) Borrower has complied, and will comply, in
all material respects, with all laws and
regulations of all governmental
jurisdictions in which Projects are located
or in which Time-Share Interests have
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been sold or offered for sale. Beginning
January 1, 1994, Borrower will not
advertise, offer for sale or sell
Time-Share Interests in any jurisdiction
unless Borrower is in strict compliance
with the registration and permit
requirements of such jurisdiction which
require that before Borrower may advertise,
offer for sale or sell Time-Share
Interests, it must first have registered
and received approval to sell such Time-
Share Interests.
(c) The time-share use and occupancy of
Vacation Club Units will not violate or
constitute a non-conforming use under any
private covenant or restriction or any
zoning, use or similar law, ordinance or
regulation affecting the use or occupancy
of the Vacation Club Units.
6.4 (a) Each Instrument assigned to Lender pursuant
to this Agreement shall be an Eligible
Instrument. Borrower has Performed all its
obligations to Purchasers, and there are no
executory obligations to Purchasers to be
Performed by Borrower, except those
described in the forms of Vacation Club
Owner Agreements attached as EXHIBITS M-1
AND M-2, all of which Borrower is ready,
willing and able to perform. Borrower
further warrants and guarantees the
enforceability of the Receivables
Collateral.
(b) Without the prior written consent of
Lender, Borrower will not cancel or
materially modify, or consent to or
acquiesce in any material modification to,
or solicit the prepayment of, any
Instrument which constitutes part of the
Receivables Collateral; or waive the timely
performance of the obligations of the
Purchaser under any such Instrument or its
security; or release the security for any
such Instrument. Borrower will not pay or
advance directly or indirectly for the
account of any Purchaser any sum owing by
the Purchaser under any Instrument which
constitutes part of the Receivables
Collateral.
(c) Borrower at all times will fulfill and will
cause its affiliates, agents and
independent contractors at all times to
fulfill all obligations to Purchasers.
(d) True and complete copies of the Vacation
Club Governing Documents (other than
Vacation Club Declarations for which a
prototype form has been provided), the
Project Declaration for each Project, the
form of Vacation Club Owner Agreement,
advertising materials (to the extent
advertising
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materials have been reasonably requested in
writing by Lender) and other documents and
exhibits thereto which have been and are
being used by Borrower in connection with
the sale or offering for sale of Time-Share
Interests have been delivered to Lender.
Borrower, without the prior written consent
of Lender, will not cancel or materially
modify any such documents except as
required by law and for advertising
materials and such amendments which are
necessary to annex additional Vacation Club
Units into the Vacation Club Program and
are otherwise in compliance with the terms
and conditions of this Agreement and the
Vacation Club Governing Documents. Borrower
will not annex additional Vacation Club
Units into the Vacation Club Program which
are not comparable in quality to those
which are currently a part of the Vacation
Club Program.
(e) Each owner is a member of the Vacation Club
Association, which has authority to levy
annual assessments to cover the costs of
maintaining and operating the Vacation Club
Program. Each Project has a Project Owner
Association of which Vacation Club
Association is a member and which has
authority to levy assessments to cover the
costs of maintaining and operating such
Project. Vacation Club Association and, to
the knowledge of Borrower, the Project
Owners Associations for the Projects are
solvent. Currently levied assessments upon
Owners are adequate to cover the costs of
maintaining and operating the Vacation Club
Program and to establish and maintain a
reasonable reserve for capital
improvements, and there are no events which
now are or could reasonably be foreseen by
Borrower which could give rise to a
material increase in such costs. To the
knowledge of Borrower, currently levied
assessments upon members of each Project
Owners Association and any required subsidy
payments from the developers of such
Projects are adequate to cover the costs of
maintaining and operating such Projects and
to maintain a reasonable reserve for
capital improvements; and there are no
events which now are or could reasonably be
foreseen by Borrower which could give rise
to a material increase in such costs.
Borrower will (i) use its best efforts to
cause the Vacation Club Association and the
Project Owners Associations for the
Projects to (A) discharge their respective
obligations under the Vacation Club
Governing Documents and the Project
Governing Documents and (B) maintain the
reserves described above; and (ii) pay to
the Vacation Club Association not less
often than every twelve (12) months an
amount not less than the difference
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between (A) the cumulative total
amount of the maintenance and
operating expenses incurred by the
Vacation Club Association, together
with a reasonable reserve for
capital improvements and the amount
of any installment of real property
taxes currently due and payable with
respect to the Vacation Club Units,
through the end of the calendar
month preceding the month in which
such payment is made and (B) the
cumulative total amount of
assessments payable to Vacation Club
Association by Owners other than
Borrower through the end of the
calendar month preceding the month
in which such payment is made.
(f) Vacation Club Association owns good
and marketable title to a fee
simple, possessory interest in and
to all Vacation Club Units, the
furnishings in the Vacation Club
Units, and other amenities which
have been promised or represented as
being available to Purchasers, free
and clear of liens and security
interests except for the Permitted
Encumbrances and Vacation Club
Declarations. To Borrower's
knowledge, each Project has adequate
legal access and will be served by
adequate utilities.
(g) Without limiting the generality of
any other provision contained in
this Agreement:
(i) Borrower will at all times
cause Vacation Club
Association to have good and
marketable title to a
sufficient number of Vacation
Club Units, free and clear of
all liens and encumbrances
other than the Permitted
Encumbrances and the Vacation
Club Declarations, so that,
over the remaining term of the
Vacation Club Owner
Agreements, the total number
of Vacation Club Credits held
by Owners does not exceed 100%
of the Vacation Club Credit
values reasonably assigned to
such Vacation Club Units or
such lesser percentage as may
be required by the Vacation
Club Governing Documents;
(ii) Borrower will maintain or
cause the Vacation Club
Association to maintain in
good condition and repair all
Vacation Club Units;
(iii) Borrower will maintain in good
condition and repair all
Projects in which the Vacation
Club Units are located and all
amenities related to the
Vacation Club Units, if such
improvements are owned by
Borrower or an Affiliate of
Borrower; and, if such
improvements are not owned by
Borrower or an Affiliate of
Borrower, will use reasonable
efforts to cause the owner
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of the improvements or the
appropriate Project Owners
Association to do so;
(iv) Borrower has recorded a
Vacation Club Declaration in
form and substance
substantially identical to
EXHIBIT M-3 on the real
property records of each
jurisdiction in which Vacation
Club Units are located;
(v) The Vacation Club Declaration
prototype form, the Vacation
Club Program Agreement, the
Vacation Club Reimbursement
Agreement, the Vacation Club
Management Agreement, the
Vacation Club Rules, and the
Articles of Organization of
the Vacation Club Association,
in form and substance
identical to EXHIBITS X-0
XXXXXXX X-0, are in full force
and effect and, except for the
Project Governing Documents
for each Project, constitute
the only governance documents
for the Vacation Club Program;
there are no amendments to
them, except as described in
this Agreement, and no party
is in default of its
obligations under any such
agreement;
(vi) Borrower will perform all of
its obligations under the
Vacation Club Governing
Documents; and
(vii) Borrower will not permit or
suffer to exist any liens or
encumbrances on the Vacation
Club Units, except for the
Permitted Encumbrances and the
Vacation Club Declarations.
6.5 Borrower will undertake the diligent and timely
collection of amounts delinquent under each
Instrument which constitutes part of the
Receivables Collateral and will bear the entire
expense of such collection. Lender shall have no
obligation to undertake any action to collect under
any Instrument.
6.6 Lender may notify Purchasers of the existence of
Lender's interest as assignee in the Receivables
Collateral and request from Purchasers any
information relating to the Receivables Collateral.
Borrower will deliver such notice under its
letterhead if requested.
6.7 Borrower, without the prior written consent of
Lender, will not: (a) sell, convey, pledge,
hypothecate, encumber or otherwise transfer any
security for the Performance of the Obligations;
(b) permit or suffer to exist any liens, security
interests or other encumbrances on any security for
the Performance of the Obligations, except for the
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Permitted Encumbrances, the Vacation Club
Declarations, and liens and security interests
expressly granted to Lender; (c) sell, lease,
transfer or dispose of all or substantially all of
its assets to another entity; or (d) permit or
suffer to exist any transfer of the control of
Borrower or Guarantor.
6.8 Borrower will, or will cause the Vacation Club
Association to, maintain and pay the cost of the
Insurance Policies and will deliver copies of the
Insurance Policies to Lender.
6.9 (a) The Documents and all certificates, financial
statements and written materials furnished to
Lender by or on behalf of Borrower in
connection with the Loan do not contain any
untrue statement of a material fact or omit to
state a fact which materially adversely affects
or in the future may materially adversely
affect the Receivables Collateral or any other
security for the Performance of the Obligations
or the business or financial condition of
Borrower or the Vacation Club Program.
(b) Lender's examination, inspection, or receipt of
information pertaining to the Receivables
Collateral or the Project and its proposed
operation shall not in any way be deemed to
reduce the full scope and protection of the
warranties, representations and Obligations
contained in this Agreement.
6-10 (a) On or before the tenth (10th) day of each
month, Borrower will cause to be furnished to
Lender (i) the reports required pursuant to
paragraph 5.4(a) and (ii) if requested by
Lender, a sales report for the prior month
showing the number of sales of Time-Share
Interests, their aggregate dollar amount and
related down payments.
(b) Borrower will furnish or cause to be furnished
to Lender within ninety (90) days after each
fiscal year of the subject, a copy of the
current annual financial statements of
Borrower, Guarantor and, subject to the best
efforts of Borrower, the Vacation Club
Association and each Project Owners
Association; and shall furnish or cause to be
furnished to Lender within 45 days after each
interim quarterly fiscal period of Borrower and
Guarantor a copy of the current financial
statements of Borrower and Guarantor for the
period commencing with the first day of the
fiscal year and concluding with such quarter
end. Such financial statements shall contain a
balance sheet
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as of the end of the relevant fiscal period and
statements of income and of cash flow for such
fiscal period (together, in each case, with the
comparable figures for the corresponding period
of the previous fiscal year), all in reasonable
detail. All financial statements shall be
prepared in accordance with generally accepted
accounting principles, consistently applied.
All financial statements of Borrower and
Guarantor required pursuant to this paragraph
shall be certified by their respective chief
financial officer. Borrower will use its best
efforts to cause annual financial statements of
the Vacation Club Association and each Project
Owners' Association to be certified by the
chief financial officer and managing agent for
such entity. Annual statements of Borrower and
Guarantor shall be audited and certified by a
recognized firm of certified public accountants
reasonably satisfactory to Lender. Together
with such financial statements, Borrower will
deliver to Lender a certificate signed by the
chief financial officer or managing general
partner, as the case may be, of Borrower
stating that there exists no Event of Default
or Incipient Default or, if any such Event of
Default or Incipient Default exists, specifying
the nature and period of its existence and what
action Borrower proposes to take with respect
to it.
(c) Borrower will deliver to Lender from time to
time, as available, and promptly upon any
material amendment, current price lists, sales
literature (to the extent requested in writing
by Lender) registrations/consents to sell,
final subdivisions public reports/public
offering statements/prospectuses, purchase
documents, and any other items requested by
Lender which relate to the Time-Share
Interests, to the use of the Vacation Club
Units, or to the Vacation Club Program.
(d) Borrower will at its reasonable expense permit
Lender and its representatives at all
reasonable times to inspect the Vacation Club
Units and to inspect, audit and copy Borrower's
records, provided that such inspections of
Vacation Club Units shall be reasonably
conducted by Lender, done on a sample basis to
the extent deemed prudent by Lender in its sole
and absolute judgment [which may include an
inspection of all Projects (i) in which the
Vacation Club Association, Borrower or an
Affiliate of Borrower owns fifty percent (50%)
of all units in the Project or (ii) in which
20% or more of all Vacation Club Units are
located] and made not more often than annually
unless, upon the
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subsequent inspection, an Event of Default
exists or a material, adverse event (such as
substantial destruction to a material number of
Units) has occurred; and shall make available
such further information as Lender may from
time to time reasonably request.
(e) Borrower will submit to Lender annually,
within twenty (20) days after each is
available, proposed annual maintenance and
operating budgets of the Vacation Club
Association and each Project Owners
Association, certified to be adequate by the
managing agent for such association and a
statement of the annual assessment to be levied
upon the Owners or the Vacation Club
Association, as the case may be; and will use
its best efforts to cause to be made available
to Lender, at Borrower's expense, for
inspection, auditing and copying, upon Lender's
request, the books of account, logs and records
of each such association.
(f) Borrower will deliver to Lender within twenty
(20) days after it is available, the quarterly
audited report prepared by the Washington
Department of Real Estate with respect to
Vacation Club Association's vacation credit
inventory. If the Washington Department of Real
Estate ceases to prepare such a report,
Borrower shall deliver to Lender a report of an
independent auditing firm addressed to Lender
verifying the cumulative number of Vacation
Club Credits represented by the Vacation Club
Units, the cumulative number of Vacation Club
Credits represented by Vacation Club Owner
Agreements which have not expired or been
terminated, and all financial transactions, if
any, of Vacation Club Association pertaining to
the sale or purchase of Vacation Club Units.
When Vacation Club Units are added to the
Vacation Club Program, Borrower will, within a
reasonable period of time thereafter, submit to
Lender the Title Assurances for such Vacation
Club Unit. Within 90 days after receipt of
written demand ("Title Information Demand") but
not more often than annually, Borrower will
provide to Lender current title information
("Title Information") consisting of statements
prepared by title underwriters satisfactory to
Lender reflecting the ownership and lien status
of or, at Borrower's option, Title Assurances
with regard to a number of Vacation Club Units
determined at the time of the Title Information
Demand as follows: the greater of (i) the then
total number of Projects or (ii) ten percent
(10%) of the then total number of Vacation Club
Units. Vacation Club Units to be covered by the
Title
-23-
24
Information shall be specified in the Title
Information Demand. If an Event of Default
exists and Lender has accelerated the Note,
Lender may require current Title Information
with respect to all Vacation Club Units. Title
Information shall be considered current if
dated not earlier than thirty (30) days from
the date delivered to Lender.
(g) Without limiting the generality of any other
provision of this Agreement, Lender or its
designee may, at Borrower's expense, audit the
system of Vacation Club Association and
Borrower utilized in tracking the cumulative
number of Vacation Club Credit values
represented by the Vacation Club Units and the
cumulative number of Vacation Club Credits
represented by Vacation Club Owner Agreements
which have not expired or been terminated.
(h) Borrower shall notify Lender when the
outstanding principal balance (including any
capitalized interest) of the OPERF Debt has
been reduced to $10,000,000.00.
(i) Borrower will promptly notify Lender if
Vacation Club Association elects not to renew
the Vacation Club Management Agreement with
Borrower, to terminate such Agreement with
Borrower or to remove Borrower as manager under
such Agreement.
6.11 Borrower will cause any and all indebtedness owing
by it to its shareholders, directors, officers or
partners, as the case may be, Guarantor(s), any
shareholder of Guarantor or the relatives and
Affiliates of Borrower or the foregoing
("Subordinating Parties") to be subordinated in all
aspects to the Obligations. Reasonable salaries and
reasonable fees for services which were actually
rendered and were reasonably required by Borrower
shall not be considered indebtedness for purposes
of this paragraph. However, if no Event of Default
exists and such payments are otherwise permitted
pursuant to paragraph 9.4, Borrower may make to
Subordinating Parties and Subordinating Parties may
retain payments then due and owing (other than by
way of acceleration) on indebtedness for borrowed
money. Furthermore, the subordination required of
the Wendts by virtue of the obligations of Borrower
under the Wendts Purchase Documents shall be
subject to the terms and conditions of the Wendts
Subordination Agreement.
6.12 Borrower and Vacation Club Association are not in
default of any payment on account of indebtedness
for borrowed money or of any repurchase obligations
in connection with a receivables purchase
financing, or in violation of or
-24-
25
in default under any material term in any
agreement, order, decree or judgment of any court,
arbitration or governmental authority to which
either of them is a party or by which either of
them is bound.
6.13 Borrower and Vacation Club Association have filed
all tax returns and paid all taxes, assessments,
levies and penalties, if any, required to be filed
by them or paid by them to any governmental or
quasi-governmental authority or subdivision,
including real estate taxes and assessments
relating to Vacation Club Association. Borrower
will provide to Lender not more than thirty (30)
days after such taxes and assessments become due
evidence that all taxes and assessments on the
Vacation Club Units have been paid in full.
6.14 Borrower will pay to Lender the Commitment Fee and,
in addition to that fee, $20,000.00 ("Documentation
Fee") for the preparation of the Documents executed
at or prior to the closing of the first Advance.
Borrower has paid to Lender $25,000.00 of the
Commitment Fee and the entire Documentation Fee.
Borrower will pay to Lender the $25,000.00 balance
of the Commitment Fee at the time the initial
Advance is made, but in no event later than May 30,
1993. Borrower acknowledges that the Commitment Fee
and the Documentation Fee have been earned and are
non-refundable. Borrower will pay on demand any
and all costs and expenses incurred by Lender in
connection with the initiation, documentation and
closing of the Loan, the making of Advances, the
protection of the security for the Performance of
the obligations, or the enforcement of the
Obligations against Borrower or Guarantor(s),
including, without limitation, all attorneys' and
other professionals' fees, consumer credit reports,
and revenue, documentary stamp and intangible
taxes; provided, however, that Lender shall pay and
be solely responsible for all expenses of its
employees prior to the first Advance, except for
travel expenses not exceeding $5,000.00.
Notwithstanding anything in this paragraph to the
contrary, Borrower will have no obligation to pay
or reimburse Lender for Lender's attorneys' fees
(but shall not be relieved of the obligation to pay
or reimburse Lender for the reasonable
out-of-pocket expenses of such attorneys) which are
incurred in connection with the original
preparation, negotiation and execution of the
Documents delivered prior to or in connection with
the first Advance ("Original Documents") or the
closing of the first Advance, except for such
attorneys' fees which are in excess of the
Documentation Fee and are caused by the negligence
or lack of diligence or cooperation by Borrower in
the negotiation of the Original Documents and the
closing of the first Advance, changes requested by
Borrower to that commitment letter from Lender to
-25-
26
Borrower dated December 8, 1992, or circumstances
which could not reasonably have been foreseen by
Lender.
6.15 Borrower will INDEMNIFY, PROTECT, HOLD HARMLESS,
AND DEFEND Lender, its successors, assigns and
shareholders (including corporate shareholders),
and the directors, officers, employees, agents and
servants of the foregoing, for, from and against
any and all losses, costs, expenses (including,
without limitation, court costs and attorneys'
fees), demands, claims, suits, proceedings (whether
civil or criminal), orders, judgments, penalties,
fines and other sanctions arising from or brought
in connection with (a) the Vacation Club Program,
the Vacation Club Units, the Projects, the security
for the Performance of the Obligations, Lender's
status by virtue of the creation of Security
Interests, the terms of the Documents or the
transactions related thereto, or any act or
omission of Borrower or any Agent, or their
respective employees, contractors or agents,
whether actual or alleged, and (b) any and all
brokers' commissions or finders' fees or other
costs of similar type by any party in connection
with the Loan. On written request by a person or
other entity covered by the above agreement of
indemnity, Borrower will undertake, at its own cost
and expense, on behalf of such indemnitee, using
counsel satisfactory to the indemnitee, the defense
of any legal action or proceeding to which such
person or entity shall be a party. At Lender's
option, Lender may at Borrower's expense prosecute
or defend any action involving the priority,
validity or enforceability of the Security
Interests in the Receivables Collateral and any
other security required pursuant to the Documents.
6.16 Borrower will execute or cause to be executed all
documents and do or cause to be done all acts
necessary for Lender to perfect and to continue the
perfection of the Security Interest of Lender in
the Receivables Collateral or the other security
required pursuant to the Documents or otherwise to
effect the intent and purposes of the Documents.
6.17 The representations, warranties and covenants
contained in this Article VI are in addition to,
and not in derogation of, the representations,
warranties and covenants contained elsewhere in the
Documents and shall be deemed to be made and
reaffirmed prior to the making of each Advance.
VII. DEFAULT
7.1 The occurrence of any of the following events or
conditions shall constitute an Event of Default by
Borrower under the Documents:
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(a) failure of Lender to receive from Borrower
within five (5) Business Days of the date
when due and payable (i) any amount payable
under the Note or (ii) any other payment due
under the Documents, except for the Note
payment due at the Maturity Date for which no
grace period is allowed;
(b) any representation or warranty of Borrower
contained in the Documents or in any
certificate furnished under the Documents
proves to be, in any material respect, false
or misleading as of the date deemed made and
such false or misleading representation is
not corrected to the reasonable satisfaction
of Lender within 30 days after notice thereof
to Borrower;
(c) a material default in the Performance of the
Obligations set forth in paragraph 3.2;
(d) a material default in the Performance of the
Obligations or a violation of any term,
covenant or provision of the Documents (other
than a default or violation referred to
elsewhere in this paragraph 7.1) which
continues unremedied (i) for a period of ten
(10) Business Days after notice of such
default or violation to Borrower in the case
of a default under or violation of paragraph
6.4(b) or 6.11 or any other default or
violation which can be cured by the payment
of money alone or (ii) for a period of thirty
(30) Business Days after notice to Borrower
in the case of any other default or
violation;
(e) an "Event of Default", as defined elsewhere
in any of the Documents, or in any agreement
between Borrower or any Affiliate of it, on
the one hand, and Lender or any Affiliate of
it on the other hand;
(f) any default by Borrower under any other
agreement evidencing, guaranteeing, or
securing borrowed money or a receivables
purchase financing that causes or results in
the acceleration of such indebtedness or
repurchase obligations of Borrower, which
accelerated payment or repurchase obligations
are in excess of $100,000.00 in the
aggregate;
(g) any final, non-appealable judgment or decree
for money damages or for a fine or penalty
against Borrower which is not paid and
discharged or stayed within thirty (30) days
thereafter and when aggregated with all other
judgment(s) or decree(s) that have remained
unpaid and undischarged or stayed for such
period is in excess of $100,000.00
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and such situation shall continue for ten
(10) Business Days after notice thereof to
Borrower;
(h) any party holding a lien or security interest
in the Receivables Collateral or any other
security for the Performance of the
Obligations or a lien (other than a lien
created by Purchaser solely with respect to
its Time-Share Interest) on any part of a
Vacation Club Unit commences foreclosure or
similar sale thereof;
(i) Borrower shall (i) generally not be paying
its debts as they become due, (ii) file or
consent by answer or otherwise to the filing
against it of a petition for relief or
reorganization, arrangement or liquidation or
any other petition in bankruptcy or
insolvency under the laws of any
jurisdiction, (iii) make an assignment for
the benefit of its creditors, (iv) consent to
the appointment of a custodian, receiver,
trustee or other officer with similar powers
for itself or any substantial part of its
property, (v) be adjudicated insolvent, (vi)
dissolve or commence to wind-up its affairs
or (vii) take any action for purposes of the
foregoing;
(j) a material adverse change in the Vacation
Club Program or in the business or financial
condition of Borrower or in the Receivables
Collateral or any other security for the
Performance of the Obligations, which change
is not enumerated in this paragraph 7.1 as
the result of which Lender in good xxxxx
xxxxx the prospect of Performance of the
Obligations impaired or its security for the
Performance of the Obligations imperiled;
(k) any of the events enumerated in paragraph
7.1(b), (f), (g), (i) or (j) occurs with
respect to any Guarantor or surety for the
Performance of the Obligations;
(l) failure of Lender to receive from Borrower,
within twenty (20) days of the date Borrower
knows or should have known of such change,
notice of any material change in any
representations or warranties in the
Documents or otherwise made in connection
with the Loan; or
(m) Borrower fails or defaults in its obligations
under paragraph 6.8.
7.2 At any time after an Event of Default has occurred
and while it is continuing, Lender may but without
obligation, in addition to the rights and powers
granted
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elsewhere in the Documents and not in limitation
thereof, do any one or more of the following:
(a) cease to make further Advances;
(b) declare the Note, together with prepayment
premiums and all other sums owing by
Borrower to Lender in connection with the
Documents, immediately due and payable
without notice, presentment, demand or
protest, which are hereby waived by
Borrower;
(c) with respect to the Receivables Collateral,
(i) institute collection, foreclosure and
other enforcement actions against Purchasers
and other persons obligated on the
Receivables Collateral, (ii) enter into
modification agreements and make extension
agreements with respect to payments and
other performances, (iii) release persons
liable for performance, (iv) settle and
compromise disputes with respect to payments
and performances claimed due, all without
notice to Borrower, without being called to
account for such actions by Borrower and
without relieving Borrower from Performance
of the Obligations, and (v) receive,
collect, open and read all mail of Borrower
for the purpose of obtaining all items
pertaining to the Receivables Collateral;
and
(d) proceed to protect and enforce its rights
and remedies under the Documents, to
foreclose or otherwise realize upon its
security for the Performance of the
Obligations, and/or to exercise any other
rights and remedies available to it at law,
in equity or by statute.
7.3 Notwithstanding anything in the Documents to the
contrary, while an Event of Default exists, any
cash received and retained by Lender in connection
with the Receivables Collateral may be applied to
payment of the Obligations in the manner provided
in paragraph 7.5.
7.4 (a) Lender shall have all of the rights and
remedies of a secured party under the
Uniform Commercial Code of the State of
Arizona and all other rights and remedies
accorded to a Secured Party at equity or
law. Any notice of sale or other disposition
of the Receivables Collateral given not less
than ten (10) Business Days prior to such
proposed action in connection with the
exercise of Lender's remedies shall
constitute reasonable and fair notice of
such action. Lender may postpone or adjourn
any such sale from time to time by
announcement at the time and place of sale
stated on the notice of sale or by
announcement of any adjourned sale, without
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being required to give a further notice of
sale. Any such sale may be for cash or, unless
prohibited by applicable law, upon such credit
or installment as Lender may determine.
Borrower shall be credited with the net
proceeds of such sale only when such proceeds
are actually received by Lender in good
current funds. Despite the consummation of any
such sale, Borrower shall remain liable for
any deficiency on the Obligations which
remains outstanding following such sale. All
net proceeds recovered pursuant to a sale
shall be applied in accordance with the
provisions of paragraph 7,5.
(b) Lender may, in the name of Borrower
or in its own name, make and execute
all conveyances, assignments and
transfers of the Receivables
Collateral sold in connection with
the exercise of Lender's remedies;
and Lender is hereby appointed
Borrower's attorney-in-fact for this
purpose.
(c) Upon request of Lender when an Event
of Default exists, Borrower shall
assemble the Receivables Collateral
not already in Lender's possession
and make it available to Lender at a
time and place designated by Lender.
7.5 The proceeds realized from any sale of all or any
part of the Receivables Collateral made in
connection with the exercise of Lender's remedies
shall be applied in the following order of
priorities; first, to the payment of all costs and
expenses of such sale, including without
limitation, reasonable compensation to Lender and
its agents, attorneys fees, and all other expenses,
liabilities and advances incurred or made by
Lender, its agents and attorneys, in connection
with such sale, and any other unreimbursed expenses
for which Lender may be reimbursed pursuant to the
Documents; second, to the payment of the other
Obligations, in such order and manner as Lender
shall in its discretion determine, with no amounts
applied to payment of principal until all interest
has been paid; and third, to the payment to
Borrower, its successors or assigns, or to
whomsoever may be lawfully entitled to receive the
same, or as a court of competent jurisdiction may
direct, of any surplus then remaining from such
proceeds.
7.6 Lender may, at its option, and without any
obligation to do so, pay, perform and discharge any
and all liabilities agreed to be paid or performed
in the Documents by Borrower, any Guarantor or any
surety for the Performance of the Obligations if
the person obligated fails to do so, For such
purposes Lender may use the proceeds of the
Receivables Collateral. All amounts expended by
Lender in so doing or in exercising its remedies
under the
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Documents following an Event of Default shall
become part of the Obligations, shall be
immediately due and payable by Borrower to Lender
upon demand, and shall bear interest at the Default
Rate from the dates of such expenditures until
paid.
7.7 No remedy in any Document conferred on or reserved
to Lender is intended to be exclusive of any other
remedy or remedies, but each and every such remedy
shall be cumulative and shall be in addition to
every other remedy given under any Document or now
or hereafter existing at law or in equity. No delay
or omission to exercise any right or power shall be
construed to be a waiver of or acquiescence to any
default or a waiver of any right or power; and
every such right and power may be exercised from
time to time and as often as may be deemed
expedient.
7.8 Borrower, for itself and for all who may claim
through or under it, hereby expressly waives and
releases all right to have the Receivables
Collateral or any other security for the
Performance of the Obligations, or any part of such
security, marshalled on any foreclosure sale or
other enforcement of Lender's rights and remedies.
7.9 For the purpose of exercising its rights and
remedies under Paragraph 7,2(c) and 7.6, Lender may
do so in Borrower's name or its name and is hereby
appointed as Borrower's attorney-in-fact to take
any and all actions in Borrower's name and/or on
Borrower's behalf as Lender may deem necessary or
appropriate in its sole and absolute discretion in
the accomplishment of such purposes.
VIII. CONSTRUCTION AND GENERAL TERMS
8.1 All moneys payable under the Documents shall be
paid to Lender at its address set forth on the
signature page of this Agreement in lawful monies
of the United States of America, unless otherwise
designated in the Documents or by Lender by notice.
8.2 The Documents exclusively and completely state the
rights and obligations of Lender and Borrower with
respect to the Loan. No modification, variation,
termination, discharge, abandonment or waiver of
any of the terms or conditions of the Documents
shall be valid unless in writing and signed by duly
authorized representatives of the party sought to
be bound by such action. The Documents supersede
any and all prior representations, warranties
and/or inducements, written or oral, heretofore
made by Lender concerning this transaction,
including any commitment for financing.
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32
8.3 The powers and agency granted to Lender by Borrower
in the Documents are coupled with an interest and
are irrevocable and are granted as cumulative to
Lender's other remedies for collection and
enforcement of the Obligations.
8.4 Any Document may be executed simultaneously in any
number of identical copies each of which shall
constitute an original for all purposes.
8.5 Except as otherwise expressly provided in the
Document, any notice required or permitted to be
given under any Document by Lender or Borrower to
the other shall be in writing and shall be (a)
personally delivered, (b) transmitted postage
prepaid by certified or registered mail, (c) sent
by overnight express carrier, or (d) sent by
telecopy, to Lender or Borrower at its address
and/or telecopy number as set forth on the
signature page of this Agreement, or at such other
address and/or telecopy number as either party may
designate for such purpose in a notice given to the
other xxxxx. Such notice shall be deemed received
upon the earliest of the following to occur: (a)
upon personal delivery; (b) on the third Business
Day following the day sent, if sent by registered
or certified mail; (c) on the next Business Day
following the day sent, if sent by overnight
express courier; and (d) on the day sent or if such
day is not a Business Day on the next Business Day
after the day sent, if sent by telecopy.
8.6 All the covenants of Borrower and all the rights
and remedies of the Lender contained in the
Documents shall bind Borrower, and, subject to the
restrictions on merger, consolidation and
assignment contained in the Documents, its
successors and assigns, and shall inure to the
benefit of Lender, its successors and assigns,
whether so expressed or not. Borrower may not
assign its rights in the Documents in whole or in
part. Except as may be expressly provided in a
Document, no person or other entity shall be deemed
a third party beneficiary of any provision of the
Documents.
8.7 If any one or more of the provisions contained in
any Document shall be held invalid, illegal or
unenforceable in any respect, the validity,
legality and enforceability of the remaining
provisions contained in the Document shall not in
any way be affected or impaired thereby.
8.8 Time is of the essence in the Performance of the
Obligations.
8.9 All headings are inserted for convenience only and
shall not affect any construction or interpretation
of the Documents. Unless otherwise indicated, all
references in
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a Document to clauses and other subdivisions refer
to the corresponding paragraphs, clauses and other
subdivisions of the Document; the words "herein",
"hereof", "hereto", hereunder" and words of similar
import refer to the Document as a whole and not to
any particular paragraph, clause or other
subdivision; the use of any gender shall be deemed
to include other genders, unless inappropriate; and
reference to a numbered or lettered subdivision of
an Article, or paragraph shall include relevant
matter within the Article or paragraph which is
applicable to but not within such numbered or
lettered subdivision. All Schedules and Exhibits
referred to in this Agreement are incorporated in
this Agreement by reference.
8.10 THE DOCUMENTS SHALL BE CONSTRUED AND GOVERNED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ARIZONA, AND TO THE EXTENT THEY PREEMPT THE LAWS OF
SUCH STATE, THE LAWS OF THE UNITED STATES; PROVIDED
THAT IF ANY OBLIGATION, AGREEMENT OR WAIVER ON THE
PART OF BORROWER OR ANY OTHER PERSON OBLIGATED
PRIMARILY OR SECONDARILY ON THE DOCUMENTS OR RIGHT
OF REMEDY OF LENDER WOULD BE INVALID OR
UNENFORCEABLE UNDER SUCH LAWS BUT WOULD BE VALID OR
ENFORCEABLE UNDER THE LAWS OF THE STATE OF OREGON,
THEN THE INTERNAL LAWS OF THE STATE OF OREGON SHALL
APPLY WITH RESPECT TO SUCH MATTER. BORROWER HEREBY
AGREES THAT, EXCEPT AS EXPRESSLY PROVIDED IN
ANOTHER DOCUMENT, ALL ACTIONS OR PROCEEDINGS
INITIATED BY BORROWER AND ARISING DIRECTLY OUT OF
THE DOCUMENTS SHALL BE LITIGATED IN THE SUPERIOR
COURT OF ARIZONA, MARICOPA COUNTY DIVISION, OR THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
ARIZONA, OR, IF LENDER INITIATES SUCH ACTION, ANY
COURT IN WHICH LENDER SHALL INITIATE SUCH ACTION TO
THE EXTENT SUCH COURT HAS JURISDICTION. BORROWER
HEREBY KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY
JURY IN ANY SUCH PROCEEDING, THIS PROVISION IS A
MATERIAL INDUCEMENT FOR LENDER'S MAKING THE LOAN TO
BORROWER.
[Borrower (initial ___________)]
8.11 It is the intent of the parties hereto to comply
with the Applicable Usury Law. Accordingly,
notwithstanding any provision to the contrary in
the Documents, in no event shall this Agreement or
the Documents require the payment or permit the
collection of interest in excess of the maximum
contract rate permitted by the Applicable Usury
Law.
8.12 LENDER DOES NOT HEREBY ASSUME AND SHALL HAVE NO
RESPONSIBILITY, OBLIGATION OR LIABILITY TO
PURCHASERS, LENDER'S RELATIONSHIP BEING THAT ONLY
OF A CREDITOR WHO HAS TAKEN, AS SECURITY FOR
INDEBTEDNESS OWED TO IT, A COLLATERAL ASSIGNMENT
FROM BORROWER OF THE INSTRUMENTS. EXCEPT AS
REQUIRED BY LAW, BORROWER WILL NOT, AT ANY TIME,
USE THE NAME OF OR MAKE REFERENCE TO LENDER WITH
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RESPECT TO THE PROJECT, THE SALE OF TIME-SHARE
INTERESTS OR. OTHERWISE, WITHOUT THE EXPRESS
WRITTEN CONSENT OF LENDER.
IX. SPECIAL PROVISIONS
9.1 As additional conditions precedent to the making
of the first Advance, the following must occur
prior to the making of the first Advance:
(a) Lender shall have received in form and
substance satisfactory to it, in its sole and
absolute discretion: (i) a UCC search with
respect to Borrower; (ii) lien, litigation and
judgment searches on Borrower, Guarantor and
their respective principals; (iii) Dun and
Bradstreet and credit bureau reports on
Borrower, Guarantor and their respective
principals; and (iv) available financial
statements for the most recent fiscal year end
for all Project Owner Associations for the
Projects, certified to be true and correct by
the respective managers of such associations;
(b) Lender shall have performed site inspections
of a sample of existing Projects, the results
of which site inspections must be satisfactory
to Lender, in its sole and absolute
discretion;
(c) Lender must have received and be satisfied
with, in its sole and absolute discretion,
financial statements and references for
Intercity Escrow Services and Sage Systems,
Inc.;
(d) Lender shall have received (i) evidence
satisfactory to it, in its sole and absolute
discretion, that Borrower is in full
compliance with its obligations under the loan
documents executed in connection with the
OPERF Debt, and no event has occurred which
would permit the acceleration of the OPERF
Debt; and (b) a favorable credit reference
from OPERF;
(e) Lender must be satisfied, in its sole and
absolute discretion, with the environmental
due diligence reviews of the Projects within
the Vacation Club Program; and
(f) Lender must be satisfied, in its sole and
absolute discretion, with the following:
(i) the manner in which legal title to each
Vacation Club Unit is conveyed to Vacation
Club Association and annexed into the
Vacation Club Program;
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(ii) how the ownership of the Vacation Club
Units within the Vacation Club Program
by Vacation Club Association is
accounted for on the financial
statements of Vacation Club Association
and Borrower;
(iii) the manner in which Vacation Club
Association is, and may be, owned,
operated, and controlled;
(iv) the manner in which Vacation Club Units
are transferred into or out of the
Vacation Club Program;
(v) the manner in which uninterrupted use,
and lien-free operation, subject only to
the Permitted Encumbrances, of all
Vacation Club Units is guaranteed to
Owners; and
(vi) all units within the Vacation Club
Program being fully complete units or
units for which completion is guaranteed
within a reasonable time period
("Completed Units");
9.2 Borrower covenants and agrees that it shall cause
expenses (i.e. expenses incurred from promotion,
lead generation and sale of Time-Share Interests
but excluding marketing overhead) incurred by it
with respect to the sales of Time-Share Interests
during each twelve month period terminating at the
end of each fiscal quarter of Borrower not to
exceed fifty percent (50%) of the net sales of
Time-Share Interests during such period.
9.3 Borrower hereby covenants and agrees that it shall
maintain a minimum tangible net worth in an amount
("Minimum Tangible Net Worth Requirement") not less
than: $3,500,000 until December 31, 1993 and
thereafter an amount equal in any calendar year to
the Minimum Tangible Net Worth Requirement for the
preceding calendar year plus 50% of the Borrower's
net income (but not, however, to be reduced by any
losses) for the preceding calendar year. As used in
this Agreement, the term "tangible net worth" means
the worth of tangible assets, such as plant
equipment, and current assets (but exclusive, for
example, of good will) over liabilities, all in
accordance with GAAP; and the term "net income"
means the net income of Borrower as determined in
accordance with GAAP.
9.4 Borrower will not make or suffer to exist any
distribution (including any distribution by way of
loan to or investment in) of Borrower's cash or
other assets to its shareholders unless: (a) at the
time of the distribution and after giving effect
thereto, no Event of
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Default or Incipient Default is outstanding; and
(b) after giving effect to the distribution, the
aggregate of all distributions would not exceed
100% of the lesser of (a) net cash flow after debt
service or (b) net income. For purposes of this
paragraph, "net cash flow" means net cash generated
by Borrower's operations and financing for a given
time period determined by subtracting cash outflows
from cash inflows, all in accordance with GAAP. Net
cash flow and net income shall each be determined
on a cumulative basis since December 31, 1992.
9.55 The annual and interim statements of Borrower shall
be accompanied by a certificate signed by its chief
financial officer, certifying Borrower's compliance
with paragraphs 9.2, 9.3 and 9.4 and setting forth
in reasonable detail the calculations upon which
the certification is based.
9.6 In addition to all other fees required to be paid
in connection with the Loan, Borrower shall pay to
Lender a fee ("Custodial Fee") equal to Ten Dollars
($10) per each Instrument which is delivered to
Lender in connection with the Loan and is in the
physical custody of Lender. The Custodial Fee for
an Instrument shall be paid by Borrower to Lender
at the time the Instrument is assigned to Lender.
After the Custodial Fee is paid for an Instrument,
no fee shall be payable to Lender for any
Instrument which is delivered to Lender pursuant to
paragraph 3.2 in replacement of an Instrument for
which Borrower has paid the Custodial Fee. Once a
Custodial Fee has been paid to Lender, Borrower
shall not be entitled to any reimbursement of any
portion thereof. No Custodial Fee shall be payable
to Lender so long as Custodial Agent has possession
of an Instrument, provided that Borrower shall pay
all fees of Custodial Agent.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in their respective names, personally or by their duly authorized
representatives as of the date above written.
"BORROWER" TRENDWEST RESORTS, INC., an
Oregon corporation
By:_____________________________
Print Name:_____________________
Title:__________________________
Address:
0000 Xxxx Xxxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
"LENDER" GREYHOUND FINANCIAL CORPORATION a
Delaware corporation
By:______________________________
Print Name:______________________
Title:___________________________
Address:
Dial Corporate Center
0000 X. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
(Attn: V.P. - Law)
Telecopy No.: (000) 000-0000
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38
LIST OF EXHIBITS
Schedule 1 Prepayment Schedule
Exhibit A Assignment of Purchase Agreements
Exhibit B Conditions of Eligible Instrument
Exhibit C Environmental Certificate
Exhibit D Promissory Note
Exhibit E Permitted Encumbrances
Exhibit F Description of Projects and Time-Share Interest
Exhibit G Borrower's Certificate
Exhibit G-1 Re-Assignment of Purchase Agreements
Exhibit H-1 Borrower's Opinion of Stoel Xxxxx Xxxxx, Xxxxx &
Grey Counsel
Exhibit H-2 Opinion of Xxxx Xxxxxx Xxxxx
Exhibit I Guarantor's Opinion of Counsel
Exhibit J Additional Condition to Advances
Exhibit J-1 Request for Advance and Certification
Exhibit K Borrower's Monthly Reports (Format)
Exhibit L Agreement to Clarify WorldMark Documents
Exhibit M-1 Form of Vacation Club Owners Agreement Used
Generally
Exhibit M-2 Form of Vacation Club Owners Agreement Used in
California
Exhibit M-3 Vacation Club Declaration
Exhibit M-4 Vacation Club Management Agreement
Exhibit M-5 Vacation Club Rules
Exhibit M-6 Articles of Organization of Vacation Club
Association
Exhibit M-7 Vacation Club Program Agreement
Exhibit M-8 Vacation Club Reimbursement Agreement
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Exhibit N OPERF Letter Agreement
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40
SCHEDULE 1 TO
LOAN AND SECURITY AGREEMENT
The Prepayment Premium at any time shall be equal to a percentage
of the then unpaid principal amount being prepaid, which percentage shall be
determined as follows:
Years After Opening Percentage of
Prepayment Date Prepayment
------------------- ----------------
1-2 4
3-4 3
5 2
Year 1 shall be the period of time commencing on the Opening
Prepayment Date and expiring twelve months thereafter. Year 2 begins upon the
expiration of Year 1 (i. e. the first anniversary of the Opening Prepayment
Date), Each succeeding year thereafter commencing with Year 2 shall be for a
period of twelve months, with Year 5 terminating eighty-four (84) months from
the date of the last Advance.
Notwithstanding anything herein to the contrary, Borrower's right
to prepay this Loan is limited to the terms and conditions set forth in the Loan
and Security Agreement.
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EXHIBIT A
ASSIGNMENT OF VACATION CLUB OWNER(S)
TRENDWEST RESORTS, INC,r an Oregon corporation
("Assignor"), as owner and holder of the Vacation Club Owner Agreement (s)
described on Schedule A attached hereto and by this reference incorporated
herein, for good and valuable consideration given to it by GREYHOUND FINANCIAL
CORPORATION, a Delaware corporation ("Assignee"), the receipt whereof is hereby
acknowledged, hereby grants, bargains, sells, assigns, transfers and sets over
unto Assignee its interest in and to such Vacation Club Owner Agreement(s), but
excepting its obligations to the purchasers under such Vacation Club Owner
Agreement(s) ;
TOGETHER WITH any and all promissory note(s)
evidencing the obligations of the purchasers) under the Vacation Club owner
Agreement(s) and other obligations of the purchasers) therein described, all
moneys due and -to become due thereunder, all interest thereon, and all rights
arising therefrom.
IN WITNESS WHEREOF, the Assignor has caused these
presents to be executed the day of
ASSIGNOR:
WITNESS: TRENDWEST RESORTS, INC. , an Oregon
corporation
___________________________________
By:________________________________
Print Name:________________________
Title:_____________________________
STATE OF_________________)
) ss
COUNTY OF________________)
BEFORE ME, the undersigned authority, a Notary
Public in and for said County and State, on this day personally appeared
_________________________, known to me to be the ____________________________
of TRENDWEST RESORTS, INC, an Oregon corporation, who acknowledged this
instrument on behalf of such corporation and that the same was the free act and
deed act of such corporation and that (s)he being authorized by proper authority
to do so, executed the same on behalf of such corporation for the purposes and
consideration therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the ________ day of
____________________, 19___.
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___________________________________
Notary Public in and for___________
County,____________________________.
My commission expires:
______________________
SCHEDULE A TO ASSIGNMENT OF VACATION CLUB OWNER AGREEMENT(S)*
Purchaser No. Date of Original Deferred
Agreement Balance of
Purchase Price
*All of such Vacation Club owner Agreements pertaining to the sale of
memberships and vacation credits in WorldMark, The Club, formerly known as Club
Esprit.
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EXHIBIT B
Conditions of Eligible Instrument
(a) Lender has a valid, direct and perfected first lien/security
interest in the Instrument and security therefor and has a valid
and perfected first priority right to payments.
(b) The Instrument does not represent a sale by Borrower, directly or
indirectly, to any of its shareholders, directors, officers,
partners, as the case may be, its agents, employees or creditors,
or any relative or affiliate of Borrower or the foregoing.
(c) Borrower has received from the Purchaser a minimum cash down
payment of 10% of the total sales price (no part which has been
advanced or loaned to the Purchaser by Borrower, directly or
indirectly).
(d) The Instrument must provide for consecutive monthly
installments of principal and interest in U. S. funds over a
term not exceeding eighty-four (84) months from the date of
its execution, with interest accruing on the unpaid principal
balance at not less that 10% per annum.
(e) The Instrument is at least thirty (30) days aged from the date
of its execution, at least one (1) monthly installment payment
of. principal and interest has been made by the Purchaser (no
part of which has been advanced or loaned to the Purchaser by
Borrower, directly or indirectly), no payment of principal and
interest is more than 29 days past due or has been deferred
past such period, and no payment of assessments levied by
Vacation Club Association against the Time-Share Interests
purchased thereby is more than 90 days past due or has been
deferred past such period.
(f) The Purchaser in all respects, including, without limitation,
its creditworthiness, is reasonably acceptable -to Lender; has
obtained from Borrower good and legal title to the purchased
TimeShare Interests, free and clear of all liens and security
interests other than the security interest granted to
Borrower; and the Purchaser must not have purchased more than
30,000 Vacation Club Credits in the Vacation Club Program.
(g) The Instrument is in form and substance substantially
identical to Exhibit M-1 or M-2 and is valid and enforceable
in accordance with its terms; the Instrument creates a valid,
direct, first security interest in the Vacation Club Credits
purchased thereby; upon the obligor's default under the
Instrument, subject only -to notice and a reasonable grace
period, payment of the balance of the indebtedness owing under
the Instrument may be immediately accelerated and the Time-
Share Interest may be terminated, with the Time-Share Interest
reverting to Borrower.
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(h) The Vacation Club Units and the amenities promised to the
Purchaser have been completed, fully furnished and approved
for occupancy (or completion and furnishing is guaranteed in
a reasonable period of time, to the satisfaction of Lender in
its sole and absolute discretion) and the furnishings in those
Vacation Club Units are free of any lien except for the
Permitted Encumbrances and the Vacation Club Declarations; no
Vacation Club Unit is subject to partition and the time-share
use of the Vacation Club Units and amenities conform to all
applicable restrictions and laws, necessary approvals having
been obtained.
(i) The Instrument and the related sale transaction comply with
all applicable laws; Borrower has performed all its
obligations due to the Purchaser and there are no executory
obligations to the Purchaser to be performed by Borrower,
except those described in the Vacation Club Owner Agreement;
and the Purchaser does not have any right of rescission, set-
off, abatement, counterclaim or the like.
(j) The Purchaser is a United States or Canadian resident, unless the
Purchasers of at least 90% of Time-Share Interests for which
Lender holds Instruments that are used in making Borrowing Base
computations are United States or Canadian
residents.
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EXHIBIT C
ENVIRONMENTAL CERTIFICATE WITH
REPRESENTATIONS, COVENANTS AND WARRANTIES
The undersigned TRENDWEST RESORTS, INC, , an Oregon corporation
("Indemnitor") . hereby executes this Certificate for the purpose of inducing
GREYHOUND FINANCIAL CORPORATION, a Delaware corporation ("Lender"), to make a
loan to it in a principal amount not to exceed at any time FIVE MILLION DOLLARS
($5,000,000.00) ("Loan"), The Loan is to be secured, directly or indirectly, by,
among other things, receivables arising from the sale of vacation credits and
memberships in the vacation club program ("Vacation Club Program") operated by
World Xxxx, The Club, and sold by Indemnitor, which give the purchasers the
right to use units in the condominium projects more particularly described in
Exhibit A attached hereto and made a part hereof and other units in other
projects which may be added to the Vacation Club Program (such projects,
collectively, "Property"). The documents now or hereafter evidencing, securing
or otherwise pertaining to the Loan are collectively referred to in this
Certificate as the "Loan Documents".
1. Representations, Covenants and Warranties, Except as may be
otherwise expressly stated in the Disclosure Schedule attached
hereto as Exhibit C and made a part hereof, Indemnitor hereby
represents, covenants and warrants to Lender and its successors
and assigns, as follows:
a. No substances known or suspected to pose a threat
to health or the environment ("Hazards") or
"hazardous substances" as defined below by
Applicable Environmental Laws in effect on the date
of the initial Advance (as defined in the Loan
Agreement) have been disposed of or otherwise
released in any material quantity or -are present
in any material quantity, on, over, beneath, in, or
upon the Developed Property (as defined in Exhibit
B) or, to -the knowledge! and belief of Indemnitor,
any adjacent parcels of real estate or any other
portion of the Property. Indemnitor will not cause
any Hazards or "hazardous substances" in any
material quantity to be disposed of or released or
present on, over, beneath, in or upon the Property,
or permit the Vacation Club Association (as defined
in the Loan Agreement) or the Owners (as defined in
the Loan Agreement) to take any such action.
Indemnitor will not cause any disposal or release
of "hazardous substances" on, over, beneath, in or
upon any parcels of property adjacent to the
Property and will use reasonable efforts to
preclude any disposal or release of "hazardous
substances" by it, the Vacation Club Association
and the owners in violation of Applicable
Environmental Laws, on, over, beneath, in or upon
the Property or any parcels of property adjacent to
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the Developed Property. To the knowledge and belief
of Indemnitor, no prior use of the Developed
Property either by Indemnitor or the prior owners
of the Developed Property or any other person or
entity has occurred which violates any "Applicable
Environmental Laws" as defined below. The terms
"hazardous substance", "release", "solid waste" and
"disposal" (or "disposed") shall each have the
broadest meanings specified in the Comprehensive
Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA") , the Resource
Conservation and Recovery Act of 1987, as amended
("RCRA"), the Toxic Substance Control Act, the
Clean Air Act, the Clean Water Act. and any other
federal, state or local law, ordinance, code, rule,
regulation, order or decree relating to or imposing
liability or standards of conduct concerning any
hazardous, toxic or dangerous waste or material, as
now or at any time hereafter in effect ("Applicable
Environmental Laws") , Notwithstanding the
foregoing, for purposes of this Certificate the
terms "Hazards" and "hazardous substances" shall be
limited to substances in concentrations and under
conditions that require remedial or removal action
under the Applicable Environmental Laws. "Material
quantity" when used in reference to Hazards or
"hazardous substances" herein shall mean such
Hazards or "hazardous substances" in concentrations
and under conditions that require remedial or
removal action under the Applicable Environmental
Laws.
b. To the knowledge and belief of Indemnitor, there
are no on-site or off-site locations where
hazardous substances, including such substances as
asbestos and polychlorinated biphenyls, or Hazards
from the Property have been disposed of.
c. To the knowledge and belief of Indemnitor, there
has been no litigation brought or threatened nor
any settlement reached with any parties alleging
the presence, disposal, release, or threatened
release, of any hazardous substance or Hazards on,
over, beneath, in or upon the Property.
d. To the knowledge and belief of Indemnitor, after
diligent investigation and inquiry with respect to
the Developed Property, the Property is not on the
CERCLA NATIONAL PRIORITY LIST or the State of
Oregon Confirmed Release list, and not on EPA's
Comprehensive Response, Compensation & Liability
System (CERCLIS) list or on any state environmental
agency list of sites under consideration for
CERCLIS or sites on which leaking underground
storage tanks have existed, or sites subject to any
environmentally related liens.
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e. Without limiting the generality of any other
provision of the documents executed in connection
with the Loan, the representations and warranties
contained in this Certificate related to the
Property shall be deemed to be made by Indemnitor
as to each project added to the Vacation Club
Program at the time of its addition.
f. Where a representation or warranty is expressly
limited to the knowledge and belief of Borrower,
such representation and warranty is made without
the requirement for any investigation or inquiry of
sources other than officers of Borrower having
management responsibility for such matters, except
as expressly provided in paragraph l,d.
2. Covenant to Clean Up and Notify. If Indemnitor causes any
Hazards or hazardous substances to be disposed of or released
on,, in,, from or affecting any portion of the Property or
permits the Vacation Club Association or the Owners to take
any such action, Indemnitor shall promptly clean up and remove
or otherwise properly manage such hazardous substances or
Hazards in accordance with all Applicable Environmental Laws,
to the reasonable satisfaction of Lender and shall provide
Lender, within thirty (30) days after demand by Lender, with
a bond, letter (of credit, or similar financial assurance
evidencing to Lender's satisfaction that sufficient funds are
available to pay the cost of removing, treating, and disposing
of such hazardous substances or Hazards and discharging any
assessments that may be established on the Property as a
result thereof.
3. Site Assessment. If Lender shall have reason to believe that
there are hazardous substances or Hazards affecting any of the
Developed Property, Lender (by its officers, employees and
agents) at any time and from time to time, either prior to or
after the occurrence of an Event of Default under the Loan
Documents, may contract for the services of persons (the "Site
Reviewers") to enter upon such Developed Property and perform
environmental site assessments ("Site Assessments") for the
purpose of determining whether there exists any environmental
condition that could result in any liability, cost, or expense
to the owner, occupier, or operator of such Developed Property
arising under any Applicable Environmental Laws, provided that
Lender shall be responsible for any injury, loss or damage
(including damage -to the Developed Property) caused by,
arising out of or in any way relating to the Site Assessments.
Lender shall notify Indemnitor of, and cooperate with
Indemnitor with respect to, the Site Assessments in order to
minimize interference with Indemnitor's use of the Developed
Property. The Site Reviewers shall perform such tests on the
property as may be necessary to conduct the Site Assessments
in the reasonable opinion of the Site Reviewers.
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Lender acknowledges that Indemnitor's right of access to the
Property is limited and that the right of access granted under
this paragraph is limited to the extent of Indemnitor's right of
access. Indemnitor will supply such information and make
available appropriate personnel as requested by the Site
Reviewers. on request, Lender shall make the results of such Site
Assessments fully available to Indemnitor.
4. Indemnification, Indemnitor covenants that Indemnitor will
indemnify, defend and hold harmless Lender and any current or
former officer, director, employee, shareholder or agent of
Lender (collectively, the "Indemnitees") for, from and against
any and all claims, losses, damages, response costs, clean-up
costs and expenses arising out of or in any way relating to
the existence of hazardous substances, solid waste or Hazards
over, beneath, in or upon the Property or a breach of the
representations, warranties, covenants and agreements set
forth in Paragraph El (collectively referred to herein as
"Claim" or "Claims"), including, but not limited to:
(a) claims of third parties (including governmental agencies) for
damages, penalties, response costs, clean-up costs, injunctive or
other relief; (b) costs and expenses of removal and restoration,
including fees of attorneys and experts, and costs of reporting
the existence of hazardous substances, solid waste or Hazards to
any governmental agency; and (c) any and all expenses or
obligations, including reasonable attorneys' fees, incurred at,
before and after any trial or appeal therefrom whether or not
taxable as costs, including, without limitation, reasonable
attorneys fees, witness fees, deposition costs, copying and
telephone charges and other expenses, -all of which shall be paid
by Indemnitor upon demand; provided, however, that this covenant
to indemnify shall not extend to Claims with respect to a
Property made on account of the storage, disposal or release of
hazardous substances or Hazards by any person other than
Indemnitor, its employees, agents or independent contractors
after Indemnitor ceases to possess an interest in the affected
Property.
5. Lender's Right to Remove Hazardous Materials. Lender shall
have the right, but not the obligation, without in any way
limiting Lender's other rights and remedies under the Loan
Documents, to enter onto the Developed Property or to take
such other actions as it deems necessary or advisable to clean
up, remove, resolve, or minimize the impact of, or otherwise
deal with, any hazardous substances, solid wastes or Hazards
on or affecting the Developed Property ("Lender's Cleanup
Action") following receipt of any notice from any person or
entity asserting the existence of any hazardous substances,
solid wastes or Hazards pertaining to the Developed Property
or any part of it that, if true, could result in an order,
notice, suit, imposition of a lien on the Property, or other
action or that, in Lenders sole and absolute judgment, could
expose Lender to liability or loss, provided that Lender shall
give Indemnitor the opportunity to perform Lender's Cleanup
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Action before commencing such Lender's Cleanup Action itself, and
further provided that Lender shall be responsible for any
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