EXHIBIT 10.6

 
EXECUTION COPY

 
SERIES 2002-1 SUPPLEMENT
Dated as of August 29, 2002
 
to
 
MASTER LOAN PURCHASE AGREEMENT
Dated as of August 29, 2002
 
Amended and Restated as of November 14, 2005

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CENDANT TIMESHARE CONDUIT RECEIVABLES FUNDING, LLC
LOAN-BACKED
VARIABLE FUNDING NOTES,
SERIES 2002-1

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by and between
 
TRENDWEST RESORTS, INC.,
 
as Seller
 
and
 
SIERRA DEPOSIT COMPANY, LLC,
as Purchaser

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TABLE OF CONTENTS

     
Page
   
Section 1.
 
Definitions
 
1
 
   
Section 2.
 
Sale
 
6
 
     
(a) Series 2002-1 Loans
 
6
 
     
(b) Filing of Financing Statements
 
6
 
     
(c) Delivery of Series 2002-1 Loan Schedule
 
7
 
     
(d) Purchase of Additional Series 2002-1 Loans
 
7
 
     
(e) Treatment as Sale
 
8
 
     
(f) Recharacterization
 
8
 
     
(g) Security Interest in Transferred Assets
 
8
 
     
(h) Transfer of Loans
 
9
 
   
Section 3.
 
Purchase Price
 
9
 
   
Section 4.
 
Payment of Purchase Price
 
9
 
   
Section 5.
 
Conditions Precedent to Sale of Series 2002-1 Loans and Additional Loans
 
9
 
     
(a) Conditions Precedent to Sale of Series 2002-1 Loans
 
9
 
     
(b) Conditions Precedent to Sale of Additional Loans
 
10
 
   
Section 6.
 
Representations and Warranties of the Seller
 
10
 
     
(a) [Reserved]
 
10
 
     
(b) Representations and Warranties Regarding the Series 2002-1 Loans
 
10
 
   
Section 7.
 
Repurchases or Substitution of Series 2002-1 Loans
 
11
 
     
(a) Repurchase or Substitution Obligation
 
11
 
     
(b) Repurchases and Substitutions
 
12
 
     
(c) Repurchases of Series 2002-1 Loans that Become Defaulted Loans
 
13
 
     
(d) Maximum Repurchases
 
13
 
   
Section 8.
 
Covenants of the Seller
 
13
 
   
Section 9.
 
Representations and Warranties of the Company
 
13
 
   
Section 10.
 
Covenants of the Company
 
13
 
   
Section 11.
 
Miscellaneous Provisions
 
14
 
     
(k) Ratification of Agreement
 
14
 
     
(l) Amendment
 
14
 
 

 

-i-

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(m) Counterparts
 
14
 
   
(n) GOVERNING LAW
 
14
 
   
(o) Successors and Assigns
 
14
 
 

 
 
-ii-

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THIS PURCHASE AGREEMENT SUPPLEMENT (this “PA Supplement”), dated as of August
29, 2002, as amended and restated as of November 14, 2005, is by and between
TRENDWEST RESORTS, INC., an Oregon corporation, as seller (the “Seller”) and
SIERRA DEPOSIT COMPANY, LLC, a Delaware limited liability company, as purchaser
(hereinafter referred to as the “Purchaser” or the “Company”).
 
Section 2 of the Agreement provides that the Seller may from time to time sell
and assign to the Company, and the Company may from time to time Purchase from
the Seller, all the Seller’s right, title and interest in, to and under Loans
listed on the Loan Schedule of the related PA Supplement on the Closing Date for
the related Series. The principal terms of the Purchase and sale of Loans for
each Series shall be set forth in a PA Supplement to the Agreement.
 
Pursuant to this PA Supplement and in accordance with Section 2 of the
Agreement, the Seller hereby sells to the Company, and the Company hereby
Purchases from the Seller, the Series 2002-1 Loans and the Seller and the
Company hereby specify the principal terms of such sales and Purchases.
 
The Company has determined with the agreement of the Seller that Loans purchased
from the Seller may be sold to Cendant Timeshare Conduit Receivables Funding,
LLC, formerly known as Sierra Receivables Funding Company, LLC (the “Initial
Issuer”) and pledged to secure notes issued by the Initial Issuer or may be sold
by the Company to an Additional Issuer and pledged to secure Notes issued by the
Additional Issuer. The Company may also, from time to time, purchase Loans from
the Initial Issuer and transfer such Loans to an Additional Issuer to be pledged
to secure an Additional Series.
 
The Seller and the Company agree that Loans sold to the Company under the
Agreement and the PA Supplement retain their character as Series 2002-1 Loans
whether sold to and retained by the Initial Issuer or reacquired by the Company
and transferred to an Additional Issuer.
 
The PA Supplement supplements the Master Loan Purchase Agreement dated as of
August 29, 2002, as amended and restated as of November 14, 2005 and as amended
from time to time. The Master Loan Purchase Agreement, as so amended, is the
“Agreement.” Terms used in this Amendment and not defined herein have the
meaning assigned in the Agreement.
 
  Section 1. Definitions.
 
All capitalized terms used herein and not otherwise defined herein have the
meanings ascribed to them in the Agreement. Each capitalized term defined herein
shall relate only to the Series 2002-1 Loans and to no other Loans purchased by
the Company from the Seller.
 
In the event that any term or provision contained herein shall conflict with or
be inconsistent with any term or provision contained in the Agreement, the terms
and provisions of this PA Supplement shall be controlling.
 
The words “hereof,” “herein” and “hereunder” and words of similar import when
used in this PA Supplement shall refer to this PA Supplement as a whole and not
to any particular provision of this PA Supplement; and Article, Section,
subsection, Schedule and Exhibit
 

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references contained in this PA Supplement are references to Articles, Sections,
subsections, Schedules and Exhibits in or to this PA Supplement unless otherwise
specified.
 
“Addition Date” shall mean the date from and after which Additional Loans are
sold pursuant to Section 2(d).
 
“Agreement” shall mean the Master Loan Purchase Agreement dated as of August 29,
2002, as amended and restated as of November 14, 2005, by and between the Seller
and the Purchaser, as the same may be amended, supplemented or otherwise
modified from time to time thereafter in accordance with its terms.
 
“Assignment” shall have the meaning set forth in Section 2(d)(iii)(E).
 
“Closing Date” shall mean August 29, 2002.
 
“Company” shall have the meaning set forth in the preamble.
 
“Cut-Off Date” shall mean August 27, 2002.
 
“Eligible Loan” shall mean a Series 2002-1 Loan:
 

 
(a)
with respect to which (i) the related Timeshare Property is not a Lot, (ii) the
related Timeshare Property has been purchased by an Obligor, (iii) except in the
case of a Green Loan, a certificate of occupancy for the related Timeshare
Property has been issued, (iv) except in the case of a Green Loan, the unit for
the related Timeshare Property is complete and ready for occupancy, is not in
need of material maintenance or repair, except for ordinary, routine maintenance
and repairs that are not substantial in nature or cost and contains no
structural defects materially affecting its value, (v) the related Timeshare
Property Regime is not in need of maintenance or repair, except for ordinary,
routine maintenance and repairs that are not substantial in nature or cost and
contains no structural defects materially affecting its value, (vi) there is no
legal, judicial or administrative proceeding pending, or to the Seller’s
knowledge threatened, for the total condemnation of the related Timeshare
Property or partial condemnation of any portion of the related Timeshare
Property Regime that would have a material adverse effect on the value of the
related Timeshare Property and (vii) the related Timeshare Property, if not
Vacation Credits, is not related to a Resort located outside of the United
States, Canada, Mexico or the United States Virgin Islands;

 

 
(b)
with respect to which the rights of the Obligor thereunder are subject to
declarations, covenants and restrictions of record affecting the Resort;

 

 
(c)
in the case of a Series 2002-1 Loan that is an Installment Contract, with
respect to which the Seller has a valid ownership or security interest in an
underlying Timeshare Property, subject only to Permitted Encumbrances, unless
the criteria in paragraph (d) are satisfied;

 

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(d)
with respect to which (i) if the related Timeshare Property has been deeded to
the Obligor of the related Series 2002-1 Loan, (A) the Seller has a valid and
enforceable first lien Mortgage on such Timeshare Property, except as such
enforceability may be limited by Debtor Relief Laws and as such enforceability
may be limited by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law, (B) such
Mortgage and related mortgage note have been assigned to the Collateral Agent,
(C) such Mortgage and the related note for such Mortgage have been transferred
or will be transferred to the custody of the Custodian in accordance with the
provisions of Section 6(c)(i) of the Agreement and (D) if any Mortgage relating
to such Series 2002-1 Loan is a deed of trust, a trustee duly qualified under
applicable law to serve as such has been properly designated in accordance with
applicable law and currently so serves or (ii) if the related Timeshare Property
has not been deeded to the Obligor of the related Series 2002-1 Loan, the Seller
has legal title to such Timeshare Property underlying the related Series 2002-1
Loan;

 

 
(e)
that was issued in a transaction that complied, and is in compliance, in all
material respects with all material requirements of applicable federal, state
and local law, except, with respect only to California Business and Professions
Code Section 11018.10, where such failure to comply would not have a Material
Adverse Effect on the Seller or a material adverse effect on such Series 2002-1
Loan;

 

 
(f)
that requires the Obligor to pay the unpaid principal balance over an original
term of not greater than 120 months and (ii) the original term of which does not
exceed 84 months unless (A) the Series 2002-1 Loan relates to a Timeshare
Upgrade or (B) the weighted average FICO score of all such Series 2002-1 Loans
with original terms longer than 84 months is at least 640 and (x) with respect
to Series 2002-1 Loans sold prior to November 14, 2005 has a FICO score not less
than 600 or (xi) with respect to Series 2002-1 Loans sold on or after November
14, 2005 has a FICO score not less than 550;

 

 
(g)
the Scheduled Payments on which are denominated and payable in United States
dollars;

 

 
(h)
that is not a Defective Loan or a Defaulted Loan;

 

 
(i)
that, with respect to Loans sold prior to July 28, 2004, is not a Delinquent
Loan and has never been a Defaulted Loan, as of the Cut-Off Date or related
Addition Cut Off Date, as applicable; or

 

 

that, with respect to Loans sold on or after July 28, 2004, is not a Delinquent
Loan and, unless it is a Permitted Deferred Loan, it has never been a Defaulted
Loan, as of the Addition Cut-Off Date;

 

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(j)
that does not (i) finance the purchase of credit life insurance and (ii)
finance, and was not originated in connection with, the “Explorer” program,
unless such Loan has been converted to be in connection with the WorldMark
program;

 

 
(k)
with respect to any Loan sold prior to July 28, 2004, no Due Date thereunder
occurring after the Cut-Off Date or the related Addition Cut-Off Date, as
applicable, has been deferred; (this provision (k) shall not be applicable to
Loans sold on or after July 28, 2004);

 

 
(l)
with respect to which the related Timeshare Property consists of Vacation
Credits or a UDI;

 

 
(m)
that was originated by the Seller and has been consistently serviced by the
Seller or by CTRG-CF, in each case in the ordinary course of their business and
in accordance with the Seller’s Customary Practices and Credit Standards and
Collection Policies;

 

 
(n)
that has not been specifically reserved against by the Seller or classified by
the Seller as uncollectible or charged off;

 

 
(o)
that arises from transactions in a jurisdiction in which the Seller is duly
qualified to do business, except where the failure to so qualify will not
adversely affect or impair the legality, validity, binding effect and
enforceability of such Series 2002-1 Loan;

 

 
(p)
that has not been cancelled or terminated by the related Obligor (regardless of
whether such Obligor is legally entitled to do so) and constitutes a legal,
valid, binding and enforceable obligation of the related Obligor, except as such
enforceability may be limited by Debtor Relief Laws and as such enforceability
may be limited by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law;

 

 
(q)
that is fully amortizing pursuant to a required schedule of substantially equal
monthly payments of principal and interest;

 

 
(r)
with respect to which (i) the downpayment has been made; and (ii) neither
statutory nor regulatory rescission rights exist with respect to the related
Obligor;

 

 
(s)
that had an Equity Percentage of 10% or more at the time of the sale of the
related Timeshare Property to the related Obligor (or, in the case of a Loan
relating to a Timeshare Upgrade, an Equity Percentage of 10% or more of the
value of all vacation credits owned by the related Obligor);

 

 
(t)
with respect to which the related Obligor has not at any time made a written
request for rescission of such Series 2002-1 Loan or otherwise stated in writing
that it does not intend to consummate such Loan or to fully perform under such
Series 2002-1 Loan;

 

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(u)
with respect to which at least one Scheduled Payment has been made by the
Obligor;

 

 
(v)
as of the Cut-Off Date or related Addition Cut-Off Date, as applicable, has an
outstanding loan balance not greater than $100,000; and

 

 
(w)
that, in the case of a Green Loan, (i) satisfies each of the eligibility
criteria set forth in paragraphs (a) through (v) above other than any such
criteria that cannot be satisfied due solely to (A) the related Green Timeshare
Property being located in a Resort that is not yet complete and ready for
occupancy; (B) the Seller not having a valid ownership interest in the related
Green Timeshare Property; or (C) the related Green Timeshare Property not having
been deeded to the Obligor or legal title not being held by the Nominee; and
(ii) the related Green Timeshare Property has a scheduled completion date no
more than six months following the Cut-Off Date or related Addition Cut-Off
Date, as applicable.

 
“Excess Concentration Amount” shall have the meaning set forth in the Series
2002-1 Supplement.
 
“Noteholder” shall mean any Series 2002-1 Noteholder and any holder of a note of
any Additional Series.
 
“PA Supplement” shall have the meaning set forth in the preamble.
 
“Permitted Deferred Loan” shall mean a Loan with respect to which the Obligor
has been granted an extension of the time required to pay the amounts due
thereon, provided that (i) any such extension was made in accordance with the
Credit Standards and Collection Policies and Customary Practices and (ii) such
Loan is not a Delinquent Loan as of the Addition Cut-Off Date.
 
“Pool Purchase Price” shall have the meaning set forth in Section 3.
 
“Purchase” shall have the meaning set forth in Section 2(e).
 
“Purchaser” shall have the meaning set forth in the preamble.
 
“Repurchase Date” shall have the meaning set forth in Section 7.
 
“Repurchase Price” shall have the meaning set forth in Section 7.
 
“Series Termination Date” shall mean, with respect to Series 2002-1, the date on
which all obligations with respect to the Series 2002-1 Notes issued under the
Series 2002-1 Supplement have been paid in full and the Series 2002-1 Supplement
is discharged and, with respect to any Additional Series, the date set forth in
the related Indenture and Servicing Agreement.
 

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“Series 2002-1 Additional Loan” shall mean each Additional Loan constituting one
of the Series 2002-1 Loans Purchased from the Seller on an Addition Cut-Off Date
and listed on Schedule 1 to the related Assignment.
 
“Series 2002-1 Loan” shall mean each Loan listed from time to time on the Series
2002-1 Loan Schedule whether such Loan is at such time a Series 2002-1 Pledged
Loan or is pledged to secure an Additional Series.
 
“Series 2002-1 Loan Schedule” shall mean the Loan Schedule for the Series 2002-1
Loans.
 
“Series 2002-1 Noteholder” shall mean any Noteholder under the Series 2002-1
Supplement.
 
“Series 2002-1 Pledged Loan” shall have the meaning set forth in the Series
2002-1 Supplement.
 
“Series 2002-1 Supplement” shall mean the supplement to the Master Indenture and
Servicing Agreement executed and delivered in connection with the original
issuance of the Series 2002-1 Notes and all amendments thereof and supplements
thereto.
 
“Substitution Adjustment Amount” shall have the meaning set forth in Section 7.
 
  Section 2.  Sale.
 
(a)
Series 2002-1 Loans. Subject to the terms and conditions and in reliance on the
representations, warranties, and covenants and agreements set forth in the
Agreement and this PA Supplement, the Seller hereby sells and assigns to the
Company, and the Company hereby Purchases from the Seller, without recourse
except as specifically set forth herein, all of the Seller’s right, title and
interest in, to and under the Initial Loans, if any, listed on the Series 2002-1
Loan Schedule delivered on the Closing Date, together with all Transferred
Assets relating thereto. The Series 2002-1 Additional Loans existing at the
close of business on the related Addition Cut-Off Date and all other Transferred
Assets relating thereto shall be sold by the Seller and purchased by the Company
on the related Addition Date. Notwithstanding the foregoing, and for avoidance
of doubt, the Seller does not assign, and the Purchaser does not agree to
assume, any obligations specific to the Seller as developer of any Timeshare
Property underlying an Installment Contract.

 
(b)
Filing of Financing Statements. In connection with the foregoing sale, the
Seller agrees to record and file a financing statement or statements (and
continuation statements or other amendments with respect to such financing
statements) with respect to the Series 2002-1 Loans and related Transferred
Assets described in Section 2(a) sold by the Seller hereunder meeting the
requirements of applicable state law in such manner and in such jurisdictions as
are necessary to perfect the interests of the Purchaser created hereby under the
applicable UCC and to deliver a file-stamped copy of such financing statements
and continuation statements (or other amendments) or other evidence of such
filings to the Purchaser.

  

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(c)
 Delivery of Series 2002-1 Loan Schedule. In connection with the sale and
conveyance hereunder, the Seller agrees on or prior to the Closing Date and on
or prior to the applicable Addition Date (in the case of Additional Series
2002-1 Loans) to indicate or cause to be indicated clearly and unambiguously in
its accounting, computer and other records that the Series 2002-1 Loans and
related Transferred Assets have been sold to the Purchaser pursuant to this PA
Supplement. In addition, in connection with the sale and conveyance hereunder,
the Seller agrees on or prior to the Closing Date and on or prior to the
applicable Addition Date (in the case of Additional Series 2002-1 Loans) to
deliver to the Company a Series 2002-1 Loan Schedule for such Series 2002-1
Loans or Additional Series 2002-1 Loans. The Seller and the Company agree that
the Series 2002-1 Loan Schedule shall include all Loans sold under the Agreement
and this PA Supplement whether such Loans are Series 2002-1 Pledged Loans or are
pledged to secure an Additional Series.

 
(d)
 Purchase of Additional Series 2002-1 Loans.

  
(i) [Reserved].
 
(ii) The Seller may, with the consent of the Purchaser, designate Eligible Loans
to be sold as Additional Series 2002-1 Loans.
 
(iii) On the Addition Date with respect to any Additional Series 2002-1 Loans,
such Additional Series 2002-1 Loans shall become Series 2002-1 Loans, and the
Purchaser shall Purchase the Seller’s right, title and interest in, to and under
the Additional Series 2002-1 Loans and the other related Transferred Assets as
provided in the Assignment, subject to the satisfaction of the following
conditions on such Addition Date:
 
(A) The Seller shall have delivered to the Purchaser copies of UCC financing
statements covering such Additional Series 2002-1 Loans, if necessary to perfect
the Purchaser’s first priority interest in such Series 2002-1 Additional Loans
and the other related Transferred Assets;
 
(B) On each of the Addition Cut-Off Date and the Addition Date, the sale of such
Additional Series 2002-1 Loans and the other related Transferred Assets to the
Purchaser shall not have caused the Seller’s insolvency or have been made in
contemplation of the Seller’s insolvency;
 
(C) No selection procedure shall have been utilized by the Seller that would
result in a selection of such Additional Series 2002-1 Loans (from the Eligible
Loans available to the Seller) that would be materially adverse to the interests
of the Purchaser as of the Addition Date;
 
(D) The Seller shall have indicated in its accounting, computer and other
records that the Additional Series 2002-1 Loans and the other related
Transferred Assets have been sold to the Purchaser and shall have delivered to
the Purchaser the required Series 2002-1 Loan Schedule;
 

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(E) The Seller and the Purchaser shall have entered into a duly executed,
written assignment substantially in the form of Exhibit B to the Agreement (an
“Assignment”);
 
(F) The Seller shall have delivered to the Purchaser an Officer’s Certificate of
the Seller dated the Addition Date, confirming, to the extent applicable, the
items set forth in Section 2(d)(iii) (A) through (E);
 
(G) The Seller shall have executed the letter agreement relating to the
amendment of documents and the letter agreement relating to inspections and
audits which agreements were entered into by CTRG-CF, formerly known as
Fairfield Acceptance Corporation—Nevada, the Purchaser and the Initial Issuer on
the date of this PA Supplement; and
 
(H) The Purchaser shall have paid the Additional Pool Purchase Price as provided
in Section 3 of the Agreement.
 
(iv) The Seller shall have no obligation to sell the Additional Series 2002-1
Loans if it has not been paid the Additional Pool Purchase Price therefor.
 
(e)
Treatment as Sale. It is the express and specific intent of the parties that the
sale of the Series 2002-1 Loans and related Transferred Assets from the Seller
to the Company as provided in this Section 2 (the “Purchase”) is and shall be
construed for all purposes as a true and absolute sale of such Series 2002-1
Loans and related Transferred Assets, shall be absolute and irrevocable and
provide the Company with the full benefits of ownership of the Series 2002-1
Loans and related Transferred Assets and will be treated as such for all federal
income tax reporting and all other purposes.

 
(f)
Recharacterization. Without prejudice to the provisions of Section 2(e)
providing for the absolute transfer of the Seller’s interest in the Series
2002-1 Loans and related Transferred Assets to the Company in order to secure
the prompt payment and performance of all of the obligations of the Seller to
the Company and the Company’s assignees arising in connection with the
Agreement, this PA Supplement and the other Facility Documents, whether now or
hereafter existing, due or to become due, direct or indirect, or absolute or
contingent, the Seller hereby assigns and grants to the Company a first priority
security interest in all of the Seller’s right, title and interest, whether now
owned or hereafter acquired, if any, in, to and under all of the Series 2002-1
Loans and related Transferred Assets and the proceeds thereof.

 
(g)
 Security Interest in Transferred Assets. The Seller acknowledges that the
Series 2002-1 Loans and related Transferred Assets are subject to the Lien of
the Series 2002-1 Supplement for the benefit of the Trustee and the Series
2002-1 Noteholders (or to the Collateral Agent on behalf of the Trustee and the
Series 2002-1 Noteholders). With respect to Series 2002-1 Loans and related
Transferred Assets which have been released from the Lien of the Series 2002-1
Supplement, conveyed to the Company and transferred by the Company to an
Additional Issuer, the Seller acknowledges that such Series 2002-1 Loans and
related Transferred Assets are subject to the Lien of the applicable Indenture
and Servicing Agreement for the benefit of the applicable Trustee and
Noteholders.

  

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(h)
Transfer of Loans. All Series 2002-1 Loans conveyed to the Company hereunder
shall be held by the Custodian pursuant to the terms of the Custodial Agreement
for the benefit of the Company, the respective Issuers, the respective Trustees
and the Collateral Agent. Upon each Purchase hereunder, the Custodian shall
execute and deliver to the Company a certificate acknowledging receipt of the
applicable Series 2002-1 Loans pursuant to the Custodial Agreement; provided
that, with respect to a Series 2002-1 Loan purchased on a Purchase Date, receipt
shall be timely delivered if it is delivered to the Company no later than
30 days after the Purchase Date for that Loan.
 
The Seller acknowledges that the Company will convey the Series 2002-1 Loans and
the other related Transferred Assets to the Initial Issuer or an Additional
Issuer and that the Initial Issuer or Additional Issuer will grant a security
interest in the Series 2002-1 Loans and other related Transferred Assets to the
Collateral Agent pursuant to the applicable Indenture and Servicing Agreement.
The Seller agrees that, upon such grant, the Initial Issuer or the Additional
Issuer and the Collateral Agent may enforce all of the Seller’s obligations
hereunder and under the Agreement directly, including without limitation the
repurchase obligations of the Seller set forth in Section 7.

  
 Section 3. Purchase Price.
 
No Series 2002-1 Loans shall be sold on the Closing Date. The purchase price for
Additional Loans sold on an Addition Date shall be the Additional Pool Purchase
Price.
 
 Section 4. Payment of Purchase Price.
 
Sections 4(a) through (c) are set forth in the Agreement.
 
(d) The closing shall take place at the offices of Orrick, Herrington &
Sutcliffe LLP, Washington Harbour, 3050 K Street, NW, Washington, D.C. 20007, at
10:00 a.m. local time on the Closing Date, or such other time and place as shall
be mutually agreed upon among the parties hereto.
 
Section 5. Conditions Precedent to Sale of Series 2002-1 Loans and Additional
Loans.
 
(a)
Conditions Precedent to Sale of Series 2002-1 Loans. The Purchaser’s obligations
hereunder to Purchase and pay for the Series 2002-1 Loans and related
Transferred Assets are subject to the fulfillment of the following conditions on
or before the Closing Date:

 

 
(i)
(A) The Purchaser shall have received the Series 2002-1 Pool Purchase Agreement
relating to each Series 2002-1 Loan executed by all the parties thereto and (B)
all conditions precedent to the sale of the Series 2002-1 Pool Loans thereunder
shall have been fulfilled to the extent they are capable of being fulfilled
prior to the performance by the Purchaser of its obligations under this PA
Supplement.

 

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(ii)
The representations and warranties of the Seller made in the Agreement and
herein shall be true and correct in all material respects on the Closing Date.

 
(b)
Conditions Precedent to Sale of Additional Loans. No Purchase of Additional
Loans and related Transferred Assets may be made hereunder until the Purchaser
shall have received each of the following in form and substance acceptable to
the Purchaser:

 
(i) 
Copies of search reports certified by parties acceptable to the Purchaser dated
a date reasonably prior to the initial Addition Date (A) listing all effective
financing statements which name the Seller (under its present name and any
previous names) as debtor or seller and which are filed with respect to the
Seller in each relevant jurisdiction, together with copies of such financing
statements (none of which shall cover any portion of the Series 2002-1 Loans
being purchased from the Seller and related Transferred Assets except as
contemplated by the Facility Documents);

 
(ii)
Copies of proper UCC Financing Statement Amendments (Form UCC3), if any,
necessary to terminate all security interests previously granted by the Seller
(except as contemplated by the Facility Documents);

 
(iii)
Copies of proper UCC Financing Statements (Form UCC1) naming the Seller as
debtor or seller of the Series 2002-1 Loans being purchased from the Seller and
related Transferred Assets, the Issuer as total assignee and the Purchaser as
assignor secured party, and such other similar instruments or documents with
respect to the Seller as may be necessary or in the opinion of the Purchaser
desirable under the UCC of all appropriate jurisdictions or any comparable law
to evidence the perfection of the Purchaser’s interest in the Series 2002-1
Loans and related Transferred Assets;

 
(iv)
An opinion or opinions of counsel to the Seller, in the form required by the
Purchaser, with respect to the following: (A) certain security interest matters,
and (B) “true sale” and substantive consolidation matters; and

 

 
(v)
Evidence that one or more Lockbox Accounts have been established.

 
Section 6. Representations and Warranties of the Seller.
 
(a)
 [Reserved].

 
(b)
 Representations and Warranties Regarding the Series 2002-1 Loans. The Seller
represents and warrants to the Company as of the Cut-Off Date and Addition
Cut-Off Date as to each Series 2002-1 Loan conveyed on and as of the Closing
Date or the related Addition Date, as applicable (except as otherwise expressly
stated) as follows:

  
(xxiii) Loan Schedule. The information set forth in the Series 2002-1 Loan
Schedule is true and correct with respect to such Series 2002-1 Loan.
 

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(xxiv) Good Title to Series 2002-1 Loans. The Seller has good and marketable
title to such Series 2002-1 Loan free and clear of any Lien other than Permitted
Encumbrances. (A) With respect to the related Timeshare Property that consists
of a Vacation Credit and the related Loan Documents, the Seller has not sold,
assigned or pledged such related Series 2002-1 Loan or any interest therein to
any Person other than the Company and (B) with respect to the related Timeshare
Property that consists of an UDI, the Assignment of Mortgage of such related
Mortgage from the Seller to the Company and each related endorsement of the
related Mortgage note constitutes a duly executed, legal, valid, binding and
enforceable sale, assignment or endorsement of such related Mortgage and related
Mortgage note, and all monies due or to become due thereunder and all proceeds
thereof.
 
(xxv) No Defaults. As of the Cut-Off Date or related Addition Cut-Off Date, as
applicable, such Series 2002-1 Loan is not a Defaulted Loan and no event has
occurred which, with the taking of any action or the expiration of any grace or
cure period or both, would cause such Series 2002-1 Loan to be a Defaulted Loan.
The Seller has not waived any such default, breach, violation or event
permitting acceleration with respect to such Series 2002-1 Loan.
 
(xxvi) Equal Installments. Such Series 2002-1 Loan has a fixed Loan Rate and
provides for substantially equal monthly payments that fully amortize the Series
2002-1 Loan over its term.

(xxvii) Excess Concentration Amount. The Purchase of such Series 2002-1 Loan
occurring on such Closing Date or Addition Date, as applicable, and the
inclusion of such Series 2002-1 Loan as a Series 2002-1 Pledged Loan pursuant to
the Series 2002-1 Supplement to the Indenture and Servicing Agreement, does not
cause an increase in the Excess Concentration Amount.

Sections 6(b)(i) through (xxii) are set forth in the Agreement.

Section 7. Repurchases or Substitution of Series 2002-1 Loans.
 
The parties understand and agree that references in this Section 7 to the
Issuer, Trustee or Master Servicer, shall in each case refer to the Issuer,
Trustee or Master Servicer for the Series to which the Loan to be repurchased is
then pledged.
 
(a)
 Repurchase or Substitution Obligation. Subject to Section 7(b), upon discovery
by the Seller or upon written notice from the Company, the Issuer or the Trustee
that any Series 2002-1 Loan is a Defective Loan, the Seller shall, within 90
days after the earlier of its discovery or receipt of notice thereof, cure such
Defective Loan in all material respects or either (i) repurchase such Defective
Loan from the Company or its assignee at the Repurchase Price or (ii) substitute
one or more Qualified Substitute Loans for such Defective Loan. For purposes of
this Agreement, the term “Repurchase Price” shall mean an amount equal to the
outstanding Principal Balance of such Defective Loan as of the close of business
on the Due Date immediately preceding the Payment Date on which the repurchase
is to be made, plus accrued but unpaid interest thereon to the date of the
repurchase. The Company hereby directs

 

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directs the Seller, for so long as the Indenture and Servicing Agreement is in
effect, to make such payment on its behalf to the Collection Account pursuant to
Section 7(b). The following defects with respect to documents in any Loan File,
solely to the extent they do not impair the validity or enforceability of the
subject document under applicable law, shall not be deemed to constitute a
breach of the representations and warranties contained in Section 6(b):
misspellings of or omissions of initials in names; name changes from divorce or
marriage; discrepancies as to payment dates in a Series 2002-1 Loan of no more
than 30 days; discrepancies as to Scheduled Payments of no more than $5.00;
discrepancies as to origination dates of not more than 30 days; inclusion of
additional parties other than the primary Obligor not listed in the Master
Servicer’s records or in the Series 2002-1 Loan Schedule and non-substantive
typographical errors and other non-substantive minor errors of a clerical or
administrative nature.

   
(b)
Repurchases and Substitutions. The Seller shall provide written notice to the
Company of any repurchase pursuant to Section 7(a) not less than two Business
Days prior to the date on which such repurchase is to be effected, specifying
the Defective Loan and the Repurchase Price therefor. Upon the repurchase of a
Defective Loan pursuant to Section 7(a), the Seller shall deposit the Repurchase
Price in the Collection Account on behalf of the Company no later than 12:00
noon, New York time, on the Payment Date on which such repurchase is made (the
“Repurchase Date”).

  
If the Seller elects to substitute a Qualified Substitute Loan or Loans for a
Defective Loan pursuant to this Section 7(b), the Seller shall deliver such
Qualified Substitute Loan in the same manner as the other Series 2002-1 Loans
sold hereunder, including delivery of the applicable Loan Documents as required
pursuant to the Custodial Agreement and satisfaction of the same conditions with
respect to such Qualified Substitute Loan as to the Purchase of Additional Loans
set forth in Section 2(d)(iii). Payments due with respect to Qualified
Substitute Loans prior to the last day of the Due Period next preceding the date
of substitution shall not be property of the Company, but will be retained by
the Master Servicer and remitted by the Master Servicer to the Seller on the
next succeeding Payment Date. Scheduled Payments due on a Defective Loan prior
to the last day of the Due Period next preceding the date of substitution shall
be property of the Company, and after such last day of the Due Period next
preceding the date of substitution the Seller shall be entitled to retain all
Scheduled Payments due thereafter and other amounts received in respect of such
Defective Loan. The Seller shall cause the Master Servicer to deliver a schedule
of any Defective Loans so removed and Qualified Substitute Loans so substituted
to the Company and such schedule shall be an amendment to the Series 2002-1 Loan
Schedule. Upon such substitution, the Qualified Substitute Loan or Loans shall
be subject to the terms of this PA Supplement in all respects, the Seller shall
be deemed to have made the representations and warranties with respect to each
Qualified Substitute Loan set forth in Section 6(b) of the Agreement and this PA
Supplement and Section 6(c) of the Agreement, in each case as of the date of
substitution, and the Seller shall be deemed to have made a representation and
warranty that each Loan so substituted is an Qualified Substitute Loan as of the
date of substitution. The Seller shall be obligated to repurchase or substitute
for any Eligible Substitute Loan as to which the Seller has breached the
Seller’s representations and warranties in Section 6(b) to the same extent as
for any other Series 2002-1 Loan, as provided herein. In connection with the
substitution of one or more Qualified Substitute Loans for one or more Defective
Loans, the Master Servicer shall determine the amount (such amount, a
“Substitution Adjustment Amount”), if any, by which the aggregate principal
balance of all such Qualified Substitute
 

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Loans as of the date of substitution is less than the aggregate principal
balance of all such Defective Loans (after application of the principal portion
of the Scheduled Payments due in the month of substitution that are to be
distributed to the Company in the month of substitution). The Seller shall
deposit the amount of such shortfall into the Collection Account in immediately
available funds on the date of substitution, without any reimbursement therefor.
 
Upon each repurchase or substitution, the Company shall automatically and
without further action sell, transfer, assign, set over and otherwise convey to
the Seller, without recourse, representation or warranty, all of the Company’s
right, title and interest in and to the related Defective Loan, the related
Timeshare Property, the Loan File relating thereto and any other related
Transferred Assets, all monies due or to become due with respect thereto and all
Collections with respect thereto (including payments received from Obligors from
and including the last day of the Due Period next preceding the date of
transfer, subject to the payment of any Substitution Adjustment Amount). The
Company shall execute such documents, releases and instruments of transfer or
assignment and take such other actions as shall reasonably be requested by the
Seller to effect the conveyance of such Defective Loan, the related Timeshare
Property and related Loan File pursuant to this Section 7(b).
 
Promptly after the occurrence of a Repurchase Date and after the repurchase of
Defective Loans in respect of which the Repurchase Price has been paid on such
date, the Seller shall direct the Master Servicer to delete such Defective Loans
from the Series 2002-1 Loan Schedule.
 
The obligation of the Seller to repurchase or substitute for any Defective Loan
shall constitute the sole remedy against the Seller with respect to any breach
of the representations and warranties set forth in Section 6(b) available
hereunder to the Company or its successors or assigns.
 
(c)
Repurchases of Series 2002-1 Loans that Become Defaulted Loans. If any Series
2002-1 Loan becomes a Defaulted Loan during any Due Period, the Seller may
repurchase such Defaulted Loan from the Company or its assignees at the
Repurchase Price therefor and in accordance with the additional provisions
applicable to repurchases of Defective Loans under Section 7(b).

 
(d)
Maximum Repurchases. Notwithstanding anything to the contrary in the Agreement
or this PA Supplement, no Defaulted Loans shall be repurchased by the Seller to
the extent that the aggregate principal balance of all Defaulted Loans so
repurchased is greater than the Defaulted Loan Repurchase Cap.

   
Section 8. Covenants of the Seller.
 
Section 8 is set forth in the Agreement.
 
Section 9. Representations and Warranties of the Company.
 
Section 9 is set forth in the Agreement.
 
Section 10. Covenants of the Company.
 

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Section 10 is set forth in the Agreement.
 
Section 11. Miscellaneous Provisions.
 
Sections 11(a) through (j) are set forth in the Agreement.
 
(k) Ratification of Agreement. As supplemented by this PA Supplement, the
Agreement is in all respects ratified and confirmed and the Agreement as so
supplemented by this PA Supplement shall be read, taken and construed as one and
the same instrument.
 
(l) Amendment. This PA Supplement may be amended from time to time or the
provisions hereof may be waived or otherwise modified by the parties hereto by
written agreement signed by the parties hereto.
 
(m) Counterparts. This PA Supplement may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.
 
(n) GOVERNING LAW. THIS PA SUPPLEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING §5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW, BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
 
(o) Successors and Assigns. This PA Supplement shall be binding upon each of the
Seller and the Company and their respective permitted successors and assigns,
and shall inure to the benefit of, and be enforceable by, each of the Seller and
the Company and each of the Issuer, the Trustee, the Collateral Agent and the
Noteholders.
 

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IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by
their respective officers thereunto duly authorized, all as of the day and year
first above written.
 
 
 
 
 
 
TRENDWEST RESORTS, INC.
 
 
 
 
By:
/s/Michael A. Hug

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Name: Michael A. Hug
Title: Senior Vice President and  Chief Financial Officer
 

 
 
 
 
 
SIERRA DEPOSIT COMPANY, LLC
 
 
 
 
By:
/s/ Mark A. Johnson

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Name: Mark A. Johnson
Title: President
 

 

 

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SCHEDULE 1
 
SERIES 2002-1 LOAN SCHEDULE
 

 
 
 

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