Master Loan Purchase Agreement (Trendwest) dated Nov 14, 2005



EXHIBIT
10.5




EXECUTION
COPY

 

 





















MASTER
LOAN PURCHASE AGREEMENT

Dated as
of August 29, 2002




Amended
and Restated as of November 14, 2005




by and
between

 

TRENDWEST
RESORTS, INC.,

 

as
Seller

 

and

 

SIERRA
DEPOSIT COMPANY, LLC

 

as
Purchaser

 




 










 

 































TABLE
OF CONTENTS

 


	 	 	 	 
      Page
	 
	 	
      Section
      1.

       
	
      Definitions

       
	
      1

       
	 
	 	
      Section
      2.

       
	
      Purchase
      and Sale of Loans

       
	
      14

       
	 
	 	
      Section
      3. 

       
	
      Pool
      Purchase Price

       
	
      14

       
	 
	 	
      Section
      4.

       
	
      Payment
      of Purchase Price

       
	
      15

       
	 
	 	 	
      (a)
      Closing Dates

       
	
      15

       
	 
	 	 	
      (b)
      Manner of Payment of Additional Pool Purchase Price

       
	
      15

       
	 
	 	 	
      (c)
      Scheduled Payments Under Loans and Cut-Off Date

       
	
      15

       
	 
	 	
      Section
      5.

       
	
      Conditions
      Precedent to Sale of Loans

       
	
      15

       
	 
	 	
      Section
      6.

       
	
      Representations
      and Warranties of the Seller

       
	
      15

       
	 
	 	 	
      (a)
      General Representations and Warranties of the Seller

       
	
      16

       
	 
	 	 	
      (b)
      Representations and Warranties Regarding the Loans

       
	
      19

       
	 
	 	 	
      (c)
      Representations and Warranties Regarding the Loan Files

       
	
      24

       
	 
	 	 	
      (d)
      Survival of Representations and Warranties

       
	
      24

       
	 
	 	 	
      (e)
      Indemnification of the Company

       
	
      24

       
	 
	 	
      Section
      7.

       
	
      Repurchases
      or Substitution of Loans for Breach of Representations and
      Warranties

       
	
      25

       
	 
	 	
      Section
      8.

       
	
      Covenants
      of the Seller

       
	
      25

       
	 
	 	 	
      (a)
      Affirmative Covenants of the Seller

       
	
      25

       
	 
	 	 	
      (b)
      Negative Covenants of the Seller

       
	
      28

       
	 
	 	
      Section
      9.

       
	
      Representations
      and Warranties of the Company

       
	
      30

       
	 
	 	
      Section
      10.

       
	
      Affirmative
      Covenants of the Company

       
	
      31

       
	 
	 	
      Section
      10A

       
	
      Negative
      Covenant of the Company

       
	
      32

       
	 
	 	
      Section
      11.

       
	
      Miscellaneous

       
	
      32

       
	 
	 	 	
      (a)
      Amendment

       
	
      32

       
	 
	 	 	
      (b)
      Assignment

       
	
      32

       
	 
	 	 	
      (c)
      Counterparts

       
	
      33

       
	 
	 	 	
      (d)
      Termination

       
	
      33

       
	 
	 	 	
      (e)
      GOVERNING LAW

       
	
      33

       
	 
	 	 	
      (f)
      Notices

       
	
      33

       
	 
	 	 	
      (g)
      Severability of Provisions

       
	
      33

       
	 
	 	 	
      (h)
      Successors and Assigns

       
	
      33

       
	 
	 	 	
      (i)
      Costs, Expenses and Taxes

       
	
      33

       
	 
	 	 	
      (j)
      No Bankruptcy Petition

       
	
      34

       
	 
	 	 	 	 	 






 







-i-















SCHEDULES





	 	
      Schedule
      1 

       
	
      -

       
	
      Loan
      Schedule

       
	 
	 	
      Schedule
      2 

       
	
      -

       
	
      Resorts

       
	 
	 	
      Schedule
      3 

       
	
      -

       
	
      Environmental
      Issues

       
	 
	 	
      Schedule
      4 

       
	
      -

       
	
      Lockbox
      Accounts

       
	 
	 	
      Schedule
      5

       
	
      -

       
	
      Litigation

       
	 






EXHIBITS





	 	
      Exhibit
      A

       
	 	
      Forms
      of Custodial Agreements

       
	 
	 	
      Exhibit
      B

       
	 	
      Form
      of Assignment of Additional Loans

       
	 
	 	
      Exhibit
      C

       
	 	
      Credit
      Standards and Collection Policies of Trendwest Resorts, Inc.

       
	 
	 	
      Exhibit
      D

       
	 	
      Forms
      of Loans

       
	 
	 	
      Exhibit
      E

       
	 	
      Forms
      of Lockbox Agreement

       
	 



 



-ii-


















 

MASTER
LOAN PURCHASE AGREEMENT

 

THIS
MASTER LOAN PURCHASE AGREEMENT (this “Agreement”), dated
as of August 29, 2002, as amended and restated as of November 14, 2005, is made
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”).

 

RECITALS

 

WHEREAS,
Trendwest has originated certain Loans in connection with the sale to Obligors
of Timeshare Properties at various Resorts;

 

WHEREAS,
each of the Seller and the Company wishes to enter into this Agreement and the
related Master Loan Purchase Agreement Supplement for each Series of Notes
(each, a “PA
Supplement”) in
order to, among other things, effect the sale to the Company on the related
Closing Date of Initial Loans and related Transferred Assets that the Seller
owns as of the close of business on the related Cut-Off Date, and the sale to
the Company of Additional Loans (including Additional Upgrade Balances) and
related Transferred Assets that the Seller will own from time to time thereafter
as of the close of business on the related Addition Cut-Off Dates;
and

 

WHEREAS,
the Company intends to transfer and assign the Loans and related Transferred
Assets to the various Issuers, which will then grant security interests in the
Loans and related Transferred Assets to Wachovia Bank, National Association, as
Collateral Agent on behalf of the various Trustees and the holders of Notes
issued from time to time pursuant to an Indenture and Servicing
Agreement.

 

NOW,
THEREFORE, in consideration of the purchase price set forth herein, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

 

Section
1.  Definitions.

 

Whenever
used in this Agreement, the following words and phrases shall have the following
meanings:

 

“Addition
Cut-Off Date” shall
mean, for Additional Loans of any Series, the date set forth in the related
Assignment.

 

“Addition
Date” shall
mean, with respect to any Series, the Addition Date as defined in the related PA
Supplement.

 

“Additional
Issuer” shall
mean an entity which is a subsidiary of the Purchaser, other than the Initial
Issuer, which purchases Loans from the Purchaser with the proceeds of a Series
of Notes issued by such entity and pledges the Loans to secure such Series of
Notes.

 







1












 

“Additional
Loan” shall
mean, with respect to any Series, each Installment Contract or other contract
for deed or contract or note secured by a mortgage, deed of trust, vendor’s lien
or retention of title, in each case relating to the sale of one or more
Timeshare Properties or Green Timeshare Properties to an Obligor and each
Additional Upgrade Balance, in each case constituting one of the Loans of such
Series purchased from the Seller on an Addition Cut-Off Date and listed on
Schedule 1 to the related Assignment.

 

“Additional
Pool Purchase Price” shall
have the meaning set forth in Section 3.

 

“Additional
Series” shall
mean a Series of Notes, other than the Series 2002-1 Notes.




“Additional
Upgrade Balance” shall
mean, with respect to any Loan, any future borrowing made by the related Obligor
pursuant to a modification of the Loan relating to a Timeshare Upgrade after the
Cut-Off Date or the Addition Cut-Off Date, as applicable, with respect to such
Loan, together with all money due or to become due in respect of such
borrowing.

 

“Affiliate” of any
Person shall mean any other Person controlling or controlled by or under common
control with such Person, and “control” shall mean the power to direct the
management and policies of such Person directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and “controlling”
and “controlled” shall have meanings correlative to the foregoing.

 

“Agreement” shall
mean this Agreement, as the same may be amended, supplemented or otherwise
modified from time to time.

 

“Amortization
Event” shall
mean, with respect to any Series, one or more of the events constituting an
Amortization Event as defined in the related Indenture Supplement.

 

“Assessments” shall
mean any assessments made with respect to a Timeshare Property, including but
not limited to real estate taxes, recreation fees, community club or property
owners’ association dues, water and sewer improvement district assessments or
other similar assessments, the nonpayment of which could result in the
imposition of a Lien or other encumbrance upon such Timeshare
Property.

 

“Assignment” shall
mean, with respect to any Series, an Assignment as defined in the related PA
Supplement.

 

“Assignment
of Mortgage” shall
mean any assignment (including any collateral assignment) of any
Mortgage.

 

“Bankruptcy
Code” shall
mean the United States Bankruptcy Code, Title 11 of the United States Code, as
amended.

 

“Benefit
Plan” shall
mean any employee benefit plan as defined in Section 3(3) of ERISA in respect of
which the Company or any ERISA Affiliate of the Company is, or at any time
during the immediately preceding six years was, an “employer” as defined in
Section 3(5) of ERISA.

 







2












 

“Business
Day” shall
mean any day other than (i) a Saturday or Sunday or (ii) a day on which banking
institutions in New York, New York, Las Vegas, Nevada, or the city in which the
Corporate Trust Office of the Trustee is located, or any other city specified in
the PA Supplement for a Series, are authorized or obligated by law or executive
order to be closed.

 

“Cendant” shall
mean Cendant Corporation, a Delaware corporation, or any successor
thereof.

 

“Closing
Date” shall
mean, with respect to any Series, the Closing Date as defined in the related PA
Supplement.

 

“Collateral” shall
have the meaning set forth in the Indenture and Servicing
Agreement.

 

“Collateral
Agency Agreement” shall
mean the Collateral Agency Agreement dated as of January 15, 1998 by and
between Wachovia Bank, National Association as successor Collateral Agent and
the secured parties named therein, as amended by the First Amendment dated as of
July 31, 1998, the Second Amendment dated as of July 25, 2000, the
Third Amendment dated as of July 1, 2001, the Fourth Amendment dated as of
August 29, 2002, the Fifth Amendment dated as of March 31, 2003, the Sixth
Amendment dated as of May 20, 2003, the Seventh Amendment dated as of December
5, 2003, the Eighth Amendment dated as of March 27, 2004 and the Ninth Amendment
dated as of August 11, 2005, as such Collateral Agency Agreement may be further
amended, supplemented or otherwise modified from time to time in accordance
therewith.

 

“Collateral
Agent” shall
mean Wachovia Bank, National Association, as Collateral Agent, its successors
and assigns and any entity which is substituted as Collateral Agent under the
terms of the Collateral Agency Agreement.

 

“Collection
Account” shall
mean with respect to any Series the account or accounts established as the
collection account for such Series pursuant to the Indenture and Servicing
Agreement under which such Series of Notes is issued.

 

“Collections” shall
mean, with respect to any Loan, all funds, cash collections and other cash
proceeds of such Loan, including without limitation (i) all Scheduled Payments
or recoveries made in the form of money, checks and like items to, or a wire
transfer or an automated clearinghouse transfer received in, any of the Lockbox
Accounts or received by the Issuer or the Master Servicer (or any Subservicer)
in respect of such Loan, (ii) all amounts received by the Issuer, the Master
Servicer (or any Subservicer) or the Trustee in respect of any Insurance
Proceeds relating to such Loan or the related Timeshare Property and (iii) all
amounts received by the Issuer, the Master Servicer (or any Subservicer) or the
Trustee in respect of any proceeds in respect of a condemnation of property in
any Resort, which proceeds relate to such Loan or the related Timeshare
Property.

 

“Company” shall
have the meaning set forth in the preamble.

 

“Contaminants” shall
have the meaning set forth in Section 6(b)(xii).

 

“Corporate
Trust Office,” with
respect to any Trustee, shall have the meaning set forth in the Indenture and
Servicing Agreement.

 







3












 

“Credit
Card Account” shall
mean an arrangement whereby an Obligor makes Scheduled Payments under a Loan via
pre-authorized debit to a Major Credit Card.

 

“Credit
Standards and Collection Policies” shall
mean the Credit Standards and Collection Policies of Trendwest, a copy of which
is attached to this Agreement as Exhibit C, as the same may be amended from time
to time in accordance with the provisions of Section 8(b)(iii).

 

“CTRG-CF” shall
mean Cendant Timeshare Resort Group-Consumer Finance, Inc., a Delaware
corporation formerly known as Fairfield Acceptance Corporation-Nevada, domiciled
in Nevada and a wholly-owned subsidiary of FRI.

 

“Custodial
Agreement” shall
mean the Fifth Amended and Restated Custodial Agreement dated as of August 11,
2005 by and between each of the Issuers, CTRG-CF, Trendwest, Wachovia Bank,
National Association as Custodian, the Trustees and the Collateral Agent, a copy
of which is attached to this Agreement as Exhibit A, as the same may be amended,
supplemented or otherwise modified from time to time thereafter in accordance
with the terms hereof.

 

“Custodian” shall
mean, at any time, the custodian under the Custodial Agreement at such
time.

 

“Customary
Practices” shall
mean the Master Servicer’s practices with respect to the servicing and
administration of Loans as in effect from time to time, which practices shall be
consistent with the practices employed by prudent lending institutions that
originate and service instruments similar to the Loans or other timeshare loans
in the jurisdictions in which the Resorts are located.

 

“Cut-Off
Date” shall
mean, with respect to any Series, the Cut-Off Date as defined in the related PA
Supplement.

 

“De
Minimus Levels” shall
have the meaning set forth in Section 6(b)(xii).

 

“Debtor
Relief Laws” shall
mean the Bankruptcy Code and all other applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payments or similar debtor relief laws from time to time in effect
affecting the rights of creditors generally.

 

“Defaulted
Loan” shall
mean any Loan (a) with any portion of a Scheduled Payment delinquent more than
90 days, (b) with respect to which the Master Servicer shall have determined in
good faith that the Obligor will not resume making Scheduled Payments,
(c) for which the related Obligor has been the subject of a proceeding
under a Debtor Relief Law or (d) for which cancellation or foreclosure
actions have been commenced.

 

“Defaulted
Loan Repurchase Cap” shall
mean, as of any date of determination, an amount equal to the product of (a)
16.0% multiplied
by (b) the
aggregate Loan principal balance of all Loans (calculated as of the Cut-Off Date
or related Addition Cut-Off Date, as applicable, for 

 







4












 

each
Loan) sold by the Seller to the Depositor pursuant to this Agreement on or prior
to such date of determination.

 

“Defective
Loan” shall
mean, with respect to any Series, any Loan with any uncured material breach of a
representation or warranty of the Seller set forth in Section 6(b) hereof and in
the related PA Supplement.

 

“Delinquent
Loan” shall
mean, with respect to any Series, a Loan with any portion of a Scheduled Payment
delinquent more than 30 days, other than any Loan that is a Defaulted
Loan.

 

“Depositor
Administrative Services Agreement” shall
mean the administrative services agreement dated as of August 29, 2002 by and
between CTRG-CF, as administrator, and the Company.

 

“Due
Date” shall
mean, with respect to any Loan, the date on which an Obligor is required to make
a Scheduled Payment thereon.

 

“Due
Period” shall
mean, with respect to any Payment Date, the immediately preceding calendar
month.

 

“Eligible
Loan” shall
mean, with respect to any Series, an Eligible Loan as defined in the related PA
Supplement.

 

“Environmental
Laws” shall
have the meaning set forth in Section 6(b)(xii).

 

“Equity
Percentage” shall
mean, with respect to a Loan, a fraction, expressed as a percentage, the
numerator of which
is the excess of (A)
the Timeshare Price of the related Timeshare Property relating to a Loan paid or
to be paid by an Obligor over (B) the
outstanding principal balance of such Loan at the time of sale of such Timeshare
Property to such Obligor (less the amount of any valid check presented by such
Obligor at the time of such sale that has cleared the payment system), and the
denominator of which
is the Timeshare Price of the related Timeshare Property, provided that any
cash downpayments or principal payments made on any initial Loan that have been
fully prepaid as part of a Timeshare Upgrade and financed downpayments under
such initial Loan financed over a period not exceeding six months from the date
of origination of such Loan that have actually been paid within such six-month
period shall be included for purposes of calculating the numerator of such
fraction.

 

“ERISA” shall
mean the Employee Retirement Income Security Act of 1974, as
amended.

 

“ERISA
Affiliate” shall
mean, with respect to any Person, (i) any corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Internal Revenue Code) as such Person; (ii) a trade or business (whether or
not incorporated) under common control (within the meaning of Section 414(c) of
the Internal Revenue Code) with such Person; or (iii) a member of the same
affiliated service group (within the meaning of Section 414(m) of the Internal
Revenue Code) as such Person, any corporation described in clause (i) or any
trade or business described in clause (ii).

 







5












 

“ERISA
Liabilities” shall
have the meaning set forth in Section 8(b)(vi).

 

“Event
of Default” shall
mean, with respect to any Series, one or more of the events constituting an
Event of Default under the related Indenture Supplement.

 

“Facility
Documents” shall
mean, collectively, this Agreement, each PA Supplement, each Indenture and
Servicing Agreement, each Indenture Supplement, each Pool
Purchase Agreement, the Custodial Agreement, the Lockbox Agreements, the
Collateral Agency Agreement, the Loan Conveyance Documents, the Depositor
Administrative Services Agreement, the Issuer Administrative Services Agreement,
the Financing Statements and all other agreements, documents and instruments
delivered pursuant thereto or in connection therewith.

 

“Fractional
Interests” shall
mean a fractional interest consisting of an ownership interest as tenant in
common in an individual lodging unit in a Resort.

 

“FRI” shall
mean Fairfield Resorts, Inc., a Delaware corporation and the parent corporation
of CTRG-CF.

 

“GAAP” shall
mean generally accepted accounting principles as in effect from time to time in
the United States.

 

“Grant” shall
have the meaning set forth in the Indenture and Servicing
Agreement.

 

“Green
Loan” shall
mean a Loan the proceeds of which are used to finance the purchase of a Green
Timeshare Property.

 

“Green
Timeshare Property” shall
mean a Timeshare Property for which construction on the related Resort has not
yet begun or is subject to completion.

 

“Indemnified
Amounts” shall
have the meaning set forth in Section 6(e).

 

“Indenture
and Servicing Agreement” shall
mean (i) the Master Indenture and Servicing Agreement dated as of August
29, 2002, as amended and restated as of November 14, 2005, together with the
Indenture Supplement, each as amended from time to time, and each among the
Initial Issuer, as issuer, CTRG-CF, as master servicer and Wachovia Bank,
National Association, as trustee and collateral agent, and (ii) with
respect to any Additional Series, the indenture and servicing agreement or
similar document or documents pursuant to which such Additional Series is issued
and in which the terms of such Additional Series are set forth.

 

“Indenture
Supplement” shall
mean (i) with respect to Series 2002-1, the supplement to the Master Indenture
and Servicing Agreement executed and delivered in connection with the issuance
of the Series 2002-1 Notes and all amendments thereof and supplements thereto
and (ii) with respect to any Additional Series, the Indenture and Servicing
Agreement for that Series.

 

“Independent
Director” shall
mean an individual who is an Independent Director as defined in the Limited
Liability Company Agreement of the Company as in effect on the date of this
Agreement.

 







6












 

“Initial
Closing Date” shall
mean August 29, 2002.

 

“Initial
Issuer” shall
mean Cendant Timeshare Conduit Receivables Funding, LLC formerly known as Sierra
Receivables Funding Company, LLC, a Delaware limited liability company as issuer
of the Series 2002-1 Notes. 

 

“Initial
Loan” shall
mean, with respect to any Series, each Loan listed on the related Loan Schedule
on the Closing Date for such Series.

 

“Insolvency
Event” shall
mean, with respect to a specified Person, (a) the filing of a decree or order
for relief by a court having jurisdiction in the premises in respect of such
Person or any substantial part of its property in an involuntary case under any
applicable Debtor Relief Law now or hereafter in effect, or the filing of a
petition against such Person in an involuntary case under any applicable Debtor
Relief Law now or hereafter in effect, which case remains unstayed and
undismissed within 30 days of such filing, or the appointing of a receiver,
conservator, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
ordering of the winding-up or liquidation of such Person’s business; or (b) the
commencement by such Person of a voluntary case under any applicable Debtor
Relief Law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such Debtor Relief
Law, or the consent by such Person to the appointment of or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors, or
the failure by such Person generally to pay its debts as such debts become due
or the admission by such Person of its inability to pay its debts generally as
they become due.




“Insolvency
Proceeding” shall
mean any proceeding relating to an Insolvency Event.

 

“Installment
Contract” shall
mean, with respect to any Series, an installment sale contract for deed and
retained title in a related Timeshare Property by and between the Seller and an
Obligor.

 

“Insurance
Proceeds” shall
mean proceeds of any insurance policy relating to any Loan or the related
Timeshare Property, including any refund of unearned premium, but only to the
extent such proceeds are not to be applied to the restoration of any
improvements on the related Timeshare Property or released to the Obligor in
accordance with Customary Practices.

 

“Internal
Revenue Code” shall
mean the United States Internal Revenue Code of 1986, as amended from time to
time.

 

“Issuer” shall
mean the Initial Issuer and each Additional Issuer. 

 

“Issuer
Administrative Services Agreement” shall
mean the administrative services agreement dated as of August 29, 2002 by and
between CTRG-CF as administrator and the Initial Issuer.

 







7












 

“Lien” shall
mean any security interest, mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever, including without limitation any conditional sale
or other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing and the filing of any financing
statement under the UCC (other than any such financing statement filed for
informational purposes only) or comparable law of any jurisdiction to evidence
any of the foregoing.

 

“Loan” shall
mean, with respect to any Series, each Installment Contract or other contract
for deed or contract or note secured by a mortgage, deed of trust, vendor’s lien
or retention of title, in each case relating to the sale of one or more
Timeshare Properties or Green Timeshare Properties to an Obligor, that is listed
on the Loan Schedule for such Series on the related Closing Date and any
Additional Loans that are listed from time to time on such Loan Schedule in
accordance with the related PA Supplement.

 

“Loan
Conveyance Documents” shall
mean, with respect to any Loan, (a) the Assignment of Additional Loans in
the form of Exhibit B, if applicable, and (b) any such other releases,
documents, instruments or agreements as may be required by the Company, the
Issuer or the Trustee in order to more fully effect the sale (including any
prior assignments) of such Loan and any related Transferred Assets.

 

“Loan
Documents” shall
mean, with respect to any Loan, all papers and documents related to such Loan,
including the original of all applicable promissory notes, stamped as required
by the Custodial Agreement, the original of any related recorded or (to the
extent permitted under this Agreement) unrecorded Mortgage (or a copy of such
recorded Mortgage if the original of the recorded Mortgage is not available,
certified to be a true and complete copy of the original) and a copy of any
recorded or (to the extent permitted under this Agreement) unrecorded warranty
deed transferring legal title to the related Timeshare Property to the Obligor;
provided,
however, that
the Loan Documents may be provided in microfiche or other electronic form to the
extent permitted under the Custodial Agreement.

 

“Loan
File” shall
mean, with respect to any Loan, the Loan Documents pertaining to such Loan and
any additional amendments, supplements, extensions, modifications or waiver
agreements required to be added to the Loan File pursuant to this Agreement, the
Credit Standards and Collection Policies and/or Customary
Practices.

 

“Loan
Pool” shall
mean, with respect to any Series, all Loans identified in the Loan Schedule for
such Series.

 

“Loan
Rate” shall
mean the annual rate at which interest accrues on any Loan, as modified from
time to time in accordance with the terms of any related Credit Standards and
Collection Policies.

 

“Loan
Schedule” shall
mean, with respect to any Series, the list of Loans attached to the related PA
Supplement as Schedule 1, as amended from time to time on each Addition Date and


 







8












 

Repurchase
Date as provided in the related PA Supplement, which list shall set forth the
following information with respect to each Loan therein as of the applicable
date:

 


	 	
      (a)
	
      the
      Loan number;




 


	 	
      (b)
	
      the
      Obligor’s name and the home address and telephone number for such Obligor
      set forth in the Loan;




 


	 	
      (c)
	
      the
      Resort in which the related Timeshare Property is located, if
      applicable;




 


	 	
      (d)
	
      as
      to Timeshare Properties other than UDIs, the number of Vacation Credits
      related thereto for which occupancy rights in a Timeshare Property may be
      redeemed and which are represented thereby;




 


	 	
      (e)
	
      the
      Loan Rate;




 


	 	
      (f)
	
      whether
      the Obligor has elected a PAC with respect to the
Loan;




 


	 	
      (g)
	
      the
      original term of the Loan;




 


	 	
      (h)
	
      the
      original Loan principal balance and outstanding Loan principal balance as
      of the Cut-Off Date or related Addition Cut-Off Date, as
      applicable;




 


	 	
      (i)
	
      the
      date of execution of the Loan;




 


	 	
      (j)
	
      the
      amount of the Scheduled Payment on the
Loan;




 


	 	
      (k)
	
      the
      original Timeshare Price and Equity Percentage;
and




 


	 	
      (l)
	
      with
      respect to UDI’s whether the related Timeshare Property has been deeded to
      the Obligor.




 

The Loan
Schedule also shall set forth the aggregate amounts described under clause (h)
above for all outstanding Loans. The Loan Schedule may be in the form of more
than one list, collectively setting forth all of the information
required.

 

“Lockbox
Account” shall
mean any of the accounts established pursuant to a Lockbox
Agreement.

 

“Lockbox
Agreement” shall
mean (i) with respect to Loans pledged to secure the Series 2002-1
Notes, any agreement substantially in the form of Exhibit E by and between the
Initial Issuer, the Trustee, the Master Servicer and the applicable Lockbox
Bank, which agreement sets forth the rights of the Issuer, the Trustee and the
applicable Lockbox Bank with respect to the disposition and application of the
Collections deposited in the applicable Lockbox Account, including without
limitation the right of the Trustee to direct the Lockbox Bank to remit all
Collections directly to the Trustee and (ii) with respect to Loans pledged to
secure an Additional Series, the lockbox agreements or similar arrangements
described in the applicable Indenture and Servicing Agreement.

 







9












 

“Lockbox
Bank” shall
mean any of the commercial banks holding one or more Lockbox Accounts for the
purpose of receiving Collections.

 

“Lot” shall
mean a fully or partially developed parcel of real estate.

 

“Major
Credit Card” shall
mean a credit card issued by any Visa USA, Inc., MasterCard International
Incorporated, American Express Company, Discover Bank or Diners Club
International Ltd. credit card entity.

 

“Master
Servicer” shall
mean, with respect to each Indenture and Servicing Agreement, the entity then
designated as the servicer or master servicer under such agreement.

 

“Material
Adverse Effect” shall
mean, with respect to any Person and any event or circumstance, a material
adverse effect on: (a) the business, properties, operations or condition
(financial or otherwise) of any of such Person; (b) the ability of such Person
to perform its respective obligations under any Facility Documents to which it
is a party; (c) the validity or enforceability of, or collectibility of amounts
payable under, any Facility Documents to which it is a party; (d) the status,
existence, perfection or priority of any Lien arising through or under such
Person under any Facility Documents to which it is a party; or (e) the value,
validity, enforceability or collectibility of the Loans pledged as collateral
for any Series of Notes or any of the other Transferred Assets pledged as
collateral for any Series of Notes.

 

“Mortgage” shall
mean any mortgage, deed of trust, purchase money deed of trust or deed to secure
debt encumbering the related Timeshare Property, granted by the related Obligor
to the Seller to secure payments or other obligations under a Loan.

 

“Multiemployer
Plan” shall
have the meaning set forth in Section 3(37) of ERISA.

 

“Note” shall
mean any Loan-backed note issued, executed and authenticated in accordance with
an Indenture and Servicing Agreement and, where appropriate, any related
Indenture Supplement.

 

“Noteholder” shall
have the meaning set forth in the Indenture and Servicing
Agreement.

 

“Obligor” shall
mean, with respect to any Loan, the Person or Persons obligated to make
Scheduled Payments thereon.

 

“Opinion
of Counsel” shall
mean a written opinion of counsel in form and substance reasonably satisfactory
to the recipient thereof.

 

“PAC” shall
mean an arrangement whereby an Obligor makes Scheduled Payments under a Loan via
pre-authorized bank account debit.

 

“PA
Supplement” shall
have the meaning set forth in the recitals.

 

“Payment
Date” shall
mean, with respect to any Series, the payment date set forth in the related
Indenture and Servicing Agreement or in the related Indenture Supplement, as
applicable.

 







10












 

“Permitted
Encumbrance” shall
mean, with respect to a Loan, any of the following Liens against the related
Timeshare Property: (i) the interest therein of the Obligor, (ii) the Lien of
due and unpaid Assessments, (iii) covenants, conditions and restrictions, rights
of way, easements and other matters of public record, such exceptions appearing
of record being consistent with the normal business practices of the Seller or
specifically disclosed in the applicable land sales registrations filed with the
applicable regulatory agencies and (iv) other matters to which properties of the
same type as those underlying such Loan are commonly subject that do not
materially interfere with the benefits of the security intended to be provided
by such Timeshare Property.

 

“Person” shall
mean any person or entity, including any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental entity or any other
organization or entity, whether or not a legal entity.

 

“Plan” shall
mean an employee benefit plan or other retirement arrangement subject to ERISA
or Section 4975 of the Internal Revenue Code of 1986, as amended from time to
time.

 

“Plan
Insolvency” shall
mean, with respect to any Multiemployer Plan, the condition that such Plan is
insolvent within the meaning of Section 4245 of ERISA.

 

“POA” shall
mean each property owners’ association or similar timeshare owner body for a
Timeshare Property Regime or Resort or portion thereof, in each case established
pursuant to the declarations, articles or similar charter documents applicable
to each such Timeshare Property Regime, Resort or portion thereof.

 

“Pool
Purchase Agreement” shall
mean (i) with respect to Series 2002-1 Notes, the master purchase agreement
dated as of August 29, 2002, as amended and restated as of November 14, 2005, by
and between the Company and the Initial Issuer and all amendments thereof and
supplements thereto and (ii) with respect to any Additional Series, the Term
Purchase Agreement by and between the Company and the Additional Issuer which
issues such Additional Series.

 

“Pool
Purchase Price” shall
mean, with respect to any Series, the Pool Purchase Price as defined in the
related PA Supplement.

 

“Post
Office Box” shall
mean each post office box to which Obligors are directed to mail payments in
respect of the Loans of any Series.

 

“Purchase” shall
mean, with respect to any Series, a Purchase as defined in the related PA
Supplement.

 

“Purchaser” shall
have the meaning set forth in the preamble.

 

“Qualified
Substitute Loan” shall
mean, with respect to any Series, a substitute Loan that (i) is an Eligible
Loan on the applicable date of substitution for such substitute Loan,
(ii) on such date of substitution has a Loan Rate not less than the Loan
Rate of the substituted Loan and (iii) is not selected in a manner adverse
to the Purchaser and its assignees.

 







11












 

“Records” shall
mean all copies of Loans (not including originals) and other documents, books,
records and other information (including without limitation computer programs,
tapes, discs, punch cards, data processing software and related property and
rights) maintained by the Seller or any of its respective Affiliates (not
including the Purchaser or the Issuer) with respect to Loans, the related
Transferred Assets and the related Obligors.

 

“Reorganization” shall
mean, with respect to any Multiemployer Plan, the condition that such Plan is in
reorganization within the meaning of Section 4241 of ERISA.

 

“Reportable
Event” shall
mean any of the events described in Section 4043 of ERISA.

 

“Repurchase
Date” shall
mean, with respect to any Series, the Repurchase Date as defined in the related
PA Supplement.

 

“Repurchase
Price” shall
mean, with respect to any Series, the Repurchase Price as defined in the related
PA Supplement.

 

“Reservation
System” shall
mean the system with respect to Timeshare Properties pursuant to which a
reservation for a particular location, time, length of stay and unit type is
received, accepted, modified or canceled.

 

“Reserve
Account” shall,
with respect to any Series, mean any reserve account established pursuant to the
related Indenture Supplement.

 

“Resort” shall
mean each resort or development listed on Schedule 2 (as such Schedule 2 may be
amended from time to time with the consent of the Company and the Seller in
connection with proposed sales of Additional Loans relating to resorts or
developments with respect to which Loans have not previously been sold under
this Agreement).

 

“Scheduled
Payment” shall
mean each scheduled monthly payment of principal and interest on a
Loan.

 

“Seller” shall
have the meaning set forth in the preamble.

 

“Series” shall
mean (i) with respect to the sale of Loans to the Purchaser pursuant to a PA
Supplement, all Loans sold pursuant to a PA Supplement and (ii) with respect to
Notes, the Series 2002-1 Notes or any Additional Series.

 

“Series
Termination Date” shall
mean, with respect to any Series, the Series Termination Date as defined in the
related PA Supplement or Indenture and Servicing Agreement.

 

“State” shall
mean any of the 50 United States or the District of Columbia.

 

“Subservicer” shall
have the meaning set forth in the Indenture and Servicing
Agreement.

 

“Subservicing
Agreement” shall
have the meaning set forth in the Indenture and Servicing
Agreement.

 







12












 

“Subsidiary” shall
mean, with respect to any Person, any corporation or other entity of which more
than 50% of the outstanding capital stock or other ownership interests having
ordinary voting power to elect a majority of the board of directors of such
corporation (notwithstanding that at the time capital stock of any other class
or classes of such corporation shall or might have voting power upon the
occurrence of any contingency) or other persons performing similar functions is
at the time directly or indirectly owned by such Person.

 

“Substitution
Adjustment Amount” shall,
with respect to any Series, have the meaning set forth in the related PA
Supplement.

 

“Term
Purchase Agreement” shall
mean a purchase agreement between the Purchaser and an Additional Issuer
pursuant to which the Purchaser sells Loans to the Additional Issuer and the
Additional Issuer purchases such Loans for the purpose of pledging the Loans to
secure a Series of Notes. 

 

“Timeshare
Price” shall
mean the original price of the Timeshare Property paid by an Obligor, plus any
accrued and unpaid interest and other amounts owed by the Obligor.

 

“Timeshare
Property” shall
mean the underlying ownership interest that is the subject of a Loan, which
ownership interest may be either a UDI or Vacation Credits.




“Timeshare
Property Regime” shall
mean any of the various interval ownership regimes located at a Resort, each of
which is an arrangement established under applicable state law whereby all or a
designated portion of a development is made subject to a declaration permitting
the transfer of Timeshare Properties therein, which Timeshare Properties shall,
in the case of UDIs, constitute real property under the applicable local law of
each of the jurisdictions in which such regime is located.

 

“Timeshare
Upgrade” shall
mean the upgrade by an Obligor of the Obligor’s existing Timeshare Property to
an upgraded Timeshare Property or an Obligor's purchase of an additional
Timeshare Property.

 

“Transferred
Assets” shall
mean, with respect to any Series, any and all right, title and interest of the
Seller in, to and under:

 

(a) the Loans
from time to time, including without limitation the Initial Loans as of the
close of business on the Cut-Off Date and the Additional Loans as of the close
of business on the related Addition Cut-Off Dates and all Scheduled Payments,
other Collections and other funds received in respect of such Initial Loans and
Additional Loans on or after the Cut-Off Date or Addition Cut-Off Date, as
applicable, and any other monies due or to become due on or after the Cut-Off
Date or Addition Cut-Off Date, as applicable, in respect of any such Loans, and
any security therefor;

 

(b) the
Timeshare Properties relating to the Loans;

 

(c) any
Mortgages relating to the Loans;

 







13












 

(d) any
Insurance Policies relating to the Loans;

 

(e) the Loan
Files and other Records relating to the Loans;

 

(f) the Loan
Conveyance Documents relating to the Loans;

 

(g) all
interest, dividends, cash, instruments, financial assets and other investment
property and other property from time to time received, receivable or otherwise
distributed in respect of, or in exchange for, or on account of, the sale or
other disposition of the Transferred Assets, and including all payments under
Insurance Policies (whether or not any of the Seller, the Purchaser, the Master
Servicer, the Issuer or the Trustee is the loss payee thereof) or any indemnity,
warranty or guaranty payable by reason of loss or damage to or otherwise with
respect to any Transferred Assets, and any security granted or purported to be
granted in respect of any Transferred Assets; and

 

(h) all
proceeds of any of the foregoing property described in clauses (a) through
(g).

 

“Trendwest” shall
mean Trendwest Resorts, Inc., a wholly-owned indirect Subsidiary of
Cendant.

 

“Trustee” shall
mean with respect to each Indenture and Servicing Agreement, the entity
designated as the trustee under such agreement.

 

“UCC” shall
mean the Uniform Commercial Code, as amended from time to time, as in effect in
any specified jurisdiction.

 

“UDI” shall
mean an individual interest in fee simple (as tenants in common with all other
undivided interest owners) in a lodging unit or group of lodging units at a
Resort, including, without limitation, a Fractional Interest.

 

“Vacation
Credits” shall
mean ownership interests in WorldMark that entitle the owner thereof to use
Resorts.

 

“WorldMark” shall
mean WorldMark, The Club, a California not-for-profit mutual benefit
corporation.

 

Section
2.  Purchase
and Sale of Loans.

 

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 the Loans listed on the Loan Schedule with respect to
the related PA Supplement. The principal terms of the Purchase and sale of Loans
for each Series shall be set forth in the related PA Supplement.

 

Section
3.  Pool
Purchase Price.

 







14












 

Provisions
with respect to the Purchase and sale of the Loans for each Series shall be set
forth in the related PA Supplement.

 

The
purchase price for any Additional Loans and other related Transferred Assets
(the “Additional
Pool Purchase Price”)
conveyed to the Company under this Agreement and the related PA Supplement on
each Addition Date shall be a dollar amount equal to the aggregate outstanding
principal balance of such Additional Loans sold on such date, subject to
adjustment to reflect such factors as the Company and the Seller mutually agree
will result in an Additional Pool Purchase Price equal to the fair market value
of such Additional Loans and other related Transferred Assets.

 

Section
4.  Payment
of Purchase Price.

 

(a)  Closing
Dates. On the
terms and subject to the conditions of this Agreement and the related PA
Supplement payment of the Pool Purchase Price for each Series shall be made by
the Company on the related Closing Date in immediately available funds to the
Seller to such accounts at such banks as the Seller shall designate to the
Company not less than one Business Day prior to the such Closing
Date.

 

(b)  Manner
of Payment of Additional Pool Purchase Price. On the
terms and subject to the conditions in this Agreement and the related PA
Supplement, the Company shall pay to the Seller, on each Business Day on which
any Additional Loans are purchased from the Seller by the Company pursuant to
Section 2 of the related PA Supplement, the Additional Pool Purchase Price for
such Additional Loans by paying such Additional Pool Purchase Price to the
Seller in cash.

 

(c)  Scheduled
Payments Under Loans and Cut-Off Date. The
Company shall be entitled to all Scheduled Payments, other Collections and all
other funds with respect to any Loan received on or after the related Cut-Off
Date or Addition Cut-Off Date, as applicable. The principal balance of each Loan
as of the related Cut-Off Date or Addition Cut-Off Date, as applicable, shall be
determined after deduction, in accordance with the terms of each such Loan, of
payments of principal received before such Cut-Off Date or Addition Cut-Off
Date.

 

Section
5.  Conditions
Precedent to Sale of Loans.

 

No
Purchase of Loans and related Transferred Assets shall be made hereunder or
under any PA Supplement on any date on which: 

 

(a) the
Company does not have sufficient funds available to pay the related Pool
Purchase Price or Additional Pool Purchase Price in cash; or

 

(b) an
Insolvency Event has occurred and is continuing with respect to the Seller or
the Company.

 

Section
6.  Representations
and Warranties of the Seller.

 







15












 

(a)  General
Representations and Warranties of the Seller. The
Seller represents and warrants as of each Closing Date and as of each Addition
Date, or as of such other date specified in such representation and warranty,
that:

 

(i)  Organization
and Good Standing.

 

(A) The
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the state of its organization and has full corporate power,
authority and legal right to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted, and to
execute, deliver and perform its obligations under this Agreement, any related
PA Supplement and each of the Facility Documents to which it is a party. The
Seller is organized in the jurisdiction set forth in the preamble. The Seller is
duly qualified to do business and is in good standing as a foreign corporation,
and has obtained all necessary licenses and approvals in each jurisdiction in
which failure to qualify or to obtain such licenses and approvals would render
any Loan unenforceable by the Seller.

 

(B) The name
of the Seller set forth in the preamble of this Agreement is its correct legal
name and such name has not been changed in the past six years. The Seller does
not utilize any trade names, assumed names, fictitious names or “doing business
names.”

 

(ii)  Due
Authorization and No Conflict. The
execution, delivery and performance by the Seller of each of the Facility
Documents to which it is a party, and the consummation by the Seller of the
transactions contemplated hereby and under each other Facility Document to which
it is a party, has been duly authorized by the Seller by all necessary corporate
action, does not contravene (i) the Seller’s charter or by-laws, (ii) any law,
rule or regulation applicable to the Seller, (iii) any contractual restriction
contained in any material indenture, loan or credit agreement, lease, mortgage,
deed of trust, security agreement, bond, note, or other material agreement or
instrument binding on the Seller or (iv) any order, writ, judgment, award,
injunction or decree binding on or affecting the Seller or its properties
(except where such contravention would not have a Material Adverse Effect with
respect to the Seller or its properties), and does not result in (except as
provided in the Facility Documents) or require the creation of any Lien upon or
with respect to any of its properties; and no transaction contemplated hereby
requires compliance with any bulk sales act or similar law. Each of the Facility
Documents to which the Seller is a party have been duly executed and delivered
on behalf of the Seller. To the extent that this representation is being made
with respect to Title I of ERISA or Section 4975 of the Code, it is made subject
to the assumption that none of the assets being used to purchase the Loans and
Transferred Assets constitute assets of any Benefit Plan or Plan with respect to
which the Seller is a party in interest or disqualified person.

 

(iii)  Governmental
and Other Consents. All
approvals, authorizations, consents or orders of any court or governmental
agency or body required in connection with the execution and delivery by the
Seller of this Agreement, any related PA 

 







16












 

Supplement
or any of the other Facility Documents to which it is a party, the consummation
by such party of the transactions contemplated hereby or thereby, the
performance by such party of and the compliance by such party with the terms
hereof or thereof, have been obtained, except where the failure so to do would
not have a Material Adverse Effect with respect to such Party.

 

(iv)  Enforceability
of Facility Documents. Each of
the Facility Documents to which the Seller is a party has been duly and validly
executed and delivered by the Seller and constitutes the legal, valid and
binding obligation of the Seller, enforceable against it in accordance with its
respective terms, except as enforceability may be subject to or limited by
Debtor Relief Laws or by general principles of equity (whether considered in a
suit at law or in equity).

 

(v)  No
Litigation. Except
as disclosed in Schedule 5 to this Agreement or to any Assignment, there are no
proceedings or investigations pending, or to the knowledge of the Seller
threatened, against the Seller before any court, regulatory body, administrative
agency, or other tribunal or governmental instrumentality (A) asserting the
invalidity of this Agreement or any of the other Facility Documents,
(B) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any of the other Facility Documents,
(C) seeking any determination or ruling that would adversely affect the
performance by the Seller of its obligations under this Agreement, any related
PA Supplement or any of the other Facility Documents to which it is a party,
(D) seeking any determination or ruling that would adversely affect the
validity or enforceability of this Agreement or any of the other Facility
Documents or (E) seeking any determination or ruling that would, if
adversely determined, be reasonably likely to have a Material Adverse Effect
with respect to such party.

 

(vi)  Governmental
Regulations. The
Seller is not (A) an “investment company” registered or required to be
registered under the Investment Company Act of 1940, as amended, or (B) a
“public utility company” or a “holding company,” a “subsidiary company” or an
“affiliate” of any public utility company within the meaning of Section 2(a)(5),
2(a)(7), 2(a)(8) or 2(a)(ii) of the Public Utility Holding Company Act of 1935,
as amended.

 

(vii)  Margin
Regulations. The
Seller is not engaged, principally or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying any
margin stock (as each such term is defined or used in any of Regulations T, U or
X of the Board of Governors of the Federal Reserve System). No part of the
proceeds of any of the notes issued by the Issuer has been used by the Seller
for so purchasing or carrying margin stock or for any purpose that violates or
would be inconsistent with the provisions of any of Regulations T, U or X
of the Board of Governors of the Federal Reserve System.

 

(viii)  Location
of Chief Executive Office and Records. The
principal place of business and chief executive office of the Seller, and the
office where the Seller maintains all of its Records, is 9805 Willows Road,
Redmond, Washington 98052. The Seller has not changed its principal place of
business or chief executive office (or the office where 

 







17












 

such
entity maintains all of its Records) during the previous six years. At any time
after the Initial Closing Date, upon 30 days’ prior written notice to the
Trustee as assignee of the Company and the Issuer, the Seller may change its
name or may change its type or its jurisdiction of organization to another
jurisdiction within the United States, but only so long as all action necessary
or reasonably requested by the Company to amend the existing financing
statements and to file additional financing statements in all applicable
jurisdictions to perfect the transfer of the Loans and the related Transferred
Assets is taken.

 

(ix)  Lockbox
Accounts. Except
in the case of any Lockbox Account pursuant to which only Collections in respect
of Loans subject to a PAC or Credit Card Account are deposited, the Seller has
filed a standing delivery order with the United States Postal Service
authorizing each Lockbox Bank to receive mail delivered to the related Post
Office Box. The account numbers of all Lockbox Accounts, together with the
names, addresses, ABA numbers and names of contact persons of all the Lockbox
Banks maintaining such Lockbox Accounts and the related Post Office Boxes (other
than those separately identified in an Indenture and Servicing Agreement), are
set forth in Schedule 4. From and after the Initial Closing Date, the Seller
shall not have any right, title and/or interest in or to any of the Lockbox
Accounts or the Post Office Boxes and will maintain no Lockbox accounts in its
own name for the collection of payments in respect of the Loans. The Seller has
no lockbox or other accounts for the collection of payments in respect of the
Loans other than the Lockbox Accounts.

 

(x)  Facility
Documents. This
Agreement and any PA Supplement are the only agreements pursuant to which the
Seller sells the Loans and other related Transferred Assets to the Company. The
Seller has furnished to the Company true, correct and complete copies of each
Facility Document to which the Seller is a party, each of which is in full force
and effect. Neither the Seller nor any of its Affiliates (not including the
Purchaser or the Issuer) is in default thereunder in any material
respect.

 

(xi)  Taxes. The
Seller has timely filed or caused to be filed all federal, state and local tax
returns required to be filed by it, and has paid or caused to be paid all taxes
shown to be due and payable on such returns or on any assessments received by
it, other than any taxes or assessments the validity of which are being
contested in good faith by appropriate proceedings and with respect to which the
Seller has set aside adequate reserves on its books in accordance with GAAP, and
which proceedings have not given rise to any Lien.

 

(xii)  Accounting
Treatment. The
Seller has accounted for the transactions contemplated in the Facility Documents
to which it is a party in accordance with GAAP.

 

(xiii)  ERISA. There
has been no (A) occurrence or expected occurrence of any Reportable Event with
respect to any Benefit Plan subject to Title IV of ERISA of the Seller or any
ERISA Affiliate, or any withdrawal from, or the termination, Reorganization or
Plan Insolvency of any Multiemployer Plan or (B) institution of proceedings or
the taking of any other action by Pension Benefit Guaranty Corporation or by the
Seller or any ERISA Affiliate or any such Multiemployer Plan with respect to the


 







18












 

withdrawal
from, or the termination, Reorganization or Plan Insolvency of, any such
Plan.

 

(xiv)  No
Adverse Selection. No
selection procedures materially adverse to the Company, the Issuer, the
Noteholders, the Trustee or the Collateral Agent have been employed by the
Seller in selecting the Loans for inclusion in the Loan Pool on such Closing
Date or Addition Date, as applicable.

 

(xv)  Vacation
Credit Program. As of
each Closing Date or any Addition Date, as applicable, for each Timeshare
Property Regime for which the related Timeshare Properties are comprised
primarily of Vacation Credits, the ratio of
(1) the total number of Vacation Credits actually allocated to such
Timeshare Property Regime for the succeeding twelve-month period to
(2) the total number of Vacation Credits allocable to available space in
such Timeshare Property Regime over such twelve-month period, does not exceed
1.0 to 1.0.

 

(xvi)  Separate
Identity. The
Seller and its Affiliates have observed the applicable legal requirements on
their part for the recognition of the Company as a legal entity separate and
apart from the Seller and any of its Affiliates (other than the Company) and
have taken all actions necessary on their part to be taken in order to ensure
that the facts and assumptions relating to the Company set forth in the opinion
of Orrick, Herrington & Sutcliffe LLP relating to substantive consolidation
matters with respect to the Seller and the Company are true and correct;
provided,
however, that
the Seller makes no representations or warranties in this Section 6(a)(xvi) with
respect to the Company or the Issuer.

 

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

 

(i)  Eligibility. Such
Loan is an Eligible Loan.

 

(ii)  No
Waivers. The
terms of such Loan have not been waived, altered, modified or extended in any
respect other than (A) modifications entered into in accordance with Customary
Practices and Credit Standards and Collections Policies that do not reduce the
amount or extend the maturity of required Scheduled Payments and (B)
modifications in the applicability of a PAC (which may result in a change in the
related Loan Rate).

 

(iii)  Binding
Obligation. Such
Loan is the legal, valid and binding obligation of the Obligor thereunder and is
enforceable against the Obligor in accordance with its terms, except as such
enforceability may be limited by Debtor Relief Laws or by general principles of
equity (whether considered in a suit at law or in equity).

 

(iv)  No
Defenses. Such
Loan is not subject to any statutory right of rescission, setoff, counterclaim
or defense, including without limitation the defense of usury.

 







19












 

(v)  Lawful
Assignment. Such
Loan was not originated in, and is not subject to the laws of, any jurisdiction
the laws of which would make the transfer of the Loan under this Agreement or
any PA Supplement unlawful.

 

(vi)  Compliance
with Law. The
Seller has complied with requirements of all material federal, state and local
laws (including without limitation usury, truth in lending and equal credit
opportunity laws) applicable to such Loan in all material respects 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 Loan. The related Timeshare Property Regime is
in compliance with any and all applicable zoning and building laws and
regulations and any other laws and regulations relating to the use and occupancy
of such Timeshare Property Regime, except where such noncompliance would not
have a Material Adverse Effect with respect to the Seller. The Seller has not
received notice of any material violation of any legal requirements applicable
to such Timeshare Property Regime, except where such violation would not have a
Material Adverse Effect with respect to the Seller. The Timeshare Property
Regime related to such Loan complies with all applicable state statutes,
including without limitation condominium statutes, timeshare statutes, HUD
filings relating to interstate land sales (if applicable) and the requirements
of any governmental authority or local authority having jurisdiction with
respect to such Timeshare Property Regime, and constitutes a valid and
conforming condominium and timeshare regime under the laws of the State in which
the related Resort is located, except where such noncompliance would not have a
Material Adverse Effect with respect to the Seller.

 

(vii)  Loan
in Force; No Subordination. Such
Loan is in full force and effect and has not been subordinated, satisfied in
whole or in part or rescinded.

 

(viii)  Capacity
of Parties. All
parties to such Loan had legal capacity to execute the Loan.

 

(ix)  Original
Loans. All
original executed copies of such Loans are or, within 30 days of Purchase, will
be in the custody of the Custodian except to the extent otherwise permitted
pursuant to Section 6(b)(xiv).

 

(x)  Loan
Form/Governing Law. Such
Loan was executed in substantially the form of one of the forms of Loan in
Exhibit D (as such Exhibit D may be amended from time to time with the consent
of the Seller and the Company), except for changes required by applicable law
and certain other modifications that do not, individually or in the aggregate,
affect the enforceability or collectibility of such Loan. In addition, such Loan
was originated in and is governed by the laws of the State in which the Loan was
executed.

 

(xi)  Interest
in Real Property. Each
Timeshare Property that is a UDI constitutes a fee simple interest in real
property and improvements on the real property.

 







20












 

(xii)  Environmental
Compliance. Each
Timeshare Property Regime related to a Loan is now, and at all times during the
Seller’s ownership thereof (or the ownership of any Affiliate thereof other than
the Company and the Issuer), has been free of contamination from any substance,
material or waste identified as toxic or hazardous according to any federal,
state or local law, rule, regulation or order governing, imposing standards of
conduct with respect to, or regulating in any way the discharge, generation,
removal, transportation, storage or handling of toxic or hazardous substances,
materials or waste or air or water pollution (hereinafter referred to as
“Environmental
Laws”),
including without limitation any PCB, radioactive substance, methane, asbestos,
volatile hydrocarbons, petroleum products or wastes, industrial solvents or any
other material or substance that now or hereafter may cause or constitute a
health, safety or other environmental hazard to any person or property (any such
substance together with any substance, material or waste identified as toxic or
hazardous under any Environmental Law now in effect or hereinafter enacted shall
be referred to herein as “Contaminants”), but
excluding from the foregoing any levels of Contaminants at or below which such
Environmental Laws do not apply (“De
Minimus Levels”).
Neither the Seller nor any Affiliate of the Seller (other than the Company and
the Issuer) has caused or suffered to occur any discharge, spill, uncontrolled
loss or seepage of any petroleum or chemical product or any Contaminant (except
for De Minimus Levels thereof) onto any property comprising or adjoining any
Timeshare Property Regime, and neither the Seller nor any Affiliate of the
Seller (other than the Company and the Issuer) nor any Obligor or occupant of
all or part of any Timeshare Property Regime is now or has been involved in
operations at the related Timeshare Property Regime that could lead to liability
for the Seller, the Company, any Affiliate of the Seller or any other owner of
such Timeshare Property Regime or the imposition of a Lien on such Timeshare
Property Regime under any Environmental Law. No practice, procedure or policy
employed by the Seller (or any Affiliate thereof other than the Company and the
Issuer) with respect to POAs for which the Seller acts as the manager or, to the
best knowledge of the Seller, by the manager of the POAs with respect to POAs
managed by parties unaffiliated with the Seller, violates any Environmental Law
that, if enforced, would reasonably be expected to (A) have a Material Adverse
Effect on such POA or the ability of such POA to do business, (B) have a
Material Adverse Effect on the financial condition of the POA or (C) constitute
grounds for the revocation of any license, charter, permit or registration that
is material to the conduct of the business of the POA.

 

Except as
set forth in Schedule 3, (1) all property owned, managed, or controlled by the
Seller or any Affiliate of the Seller (other than the Company and the Issuer)
and located within a Resort is now, and at all times during the Seller’s
ownership, management or control thereof (or the ownership, management or
control of any Affiliate thereof (other than the Company and the Issuer)) has
been free of contamination from any Contaminants, except for De Minimus Levels
thereof, (2) neither the Seller nor any Affiliate of the Seller (other than the
Company and the Issuer) has caused or suffered to occur any discharge, spill,
uncontrolled loss or seepage of any Contaminants onto any property comprising or
adjoining any of the Resorts, except for De Minimus Levels thereof, and (3)
neither the Seller nor any Affiliate of the Seller (other than the Company and
the Issuer) nor any Obligor or occupant of all or part of any of any Resort is
now or previously has been involved in operations at any Resort that could lead
to liability for the 

 







21







 


Seller,
the Company, any Affiliate of the Seller or any other owner of any Resort or the
imposition of a Lien on such Resort under any Environmental Law. None of the
matters set forth in Schedule 3 will have a Material Adverse Effect with respect
to the Company or its assignees or the interests of the Company or its assignees
in the Loans. Each Resort, and the present use thereof, does not violate any
Environmental Law in any manner that would materially adversely affect the value
or use of such Resort or the performance by the POAs of their respective
obligations under their applicable declarations, articles or similar charter
documents. There is no condition presently existing, and to the best knowledge
of the Seller no event has occurred or failed to occur with respect to any
Resort, relating to any Contaminants or compliance with any Environmental Laws
that would reasonably be expected to have a Materially Adverse Effect with
respect to such Resort, including in connection with the present use of such
Resort.

 

(xiii)  Tax
Liens. All
taxes applicable to such Loan and the related Timeshare Property have been paid,
except where the failure to pay such tax would not have a Material Adverse
Effect with respect to the Seller or its assignees or the Purchaser or the
collectibility or enforceability of the Loan. There are no delinquent tax liens
in respect of the Timeshare Property underlying such Loan.

 

(xiv)  Loan
Files. The
related Loan File contains the following Loan Documents (which may include
microfiche or other electronic copies of the Loan Documents to the extent
provided in the Custodial Agreement):

 

(A) at least
one original of each Loan (or, if the Loan and promissory note are contained in
separate documents, an original of the promissory note); provided,
however, that
the original Loan may have been removed from the Loan File in accordance with
the Custodial Agreement for the performance of collection services and other
routine servicing requirements; and

 

(B) for Loans
with respect to which the related Timeshare Property has been deeded out to the
related Obligor:

 

(1) a copy of
the deed for such Timeshare Property; and




(2) the
original recorded Mortgage (or a copy thereof, if applicable, for Mortgages that
have been submitted for recording as set forth herein) and Assignments of
Mortgages in favor of the Collateral Agent (or a copy of such recorded Mortgage
or Assignment of Mortgage, as the case may be, certified to be a true and
complete copy thereof, if the original of the recorded Mortgage or Assignment of
Mortgage is lost or destroyed), provided that in
the case of any Loan with respect to which the related Mortgage and/or deed has
been removed from the Loan File for review and recording in the local real
property recording office, the original Mortgage shall have been returned to the
Loan File no later than 180 days from the date on which the related Timeshare
Property is required to be deeded to an Obligor.

 







22












 

(xv)  Lockbox
Accounts. As of
the applicable Cut-Off Date, the Obligor of such Loan either:

 

(A) shall
have been instructed to remit Payments thereunder to a Post Office Box for
credit to a Lockbox Account or directly to a Lockbox Account, in each case
maintained at a Lockbox Bank pursuant to the terms of a Lockbox Agreement;
or

 

(B) has
entered into a PAC or Credit Card Account pursuant to which a deposit account of
such Obligor is made subject to a pre-authorized debit in respect of Payments as
they become due and payable, and the Seller has caused a Lockbox Bank to take
all necessary and appropriate action to ensure that each such pre-authorized
debit is credited directly to a Lockbox Account.

 

(xvi)  Ownership
Interest. As of
the Closing Date or related Addition Date, as applicable, the Seller has good
and marketable title to the Loan, free and clear of all Liens (other than
Permitted Encumbrances).

 

(xvii)  Interest
in Loan. Such
Loan constitutes either a “general intangible,” an “instrument,” “chattel paper”
or an “account” under the Uniform Commercial Code of the States of Delaware,
Oregon and New York.

 

(xviii)  Recordation
of Assignments. The
collateral Assignment of Mortgage to the Collateral Agent relating to the
Mortgage with respect to each Loan has been recorded or delivered for
recordation simultaneously with the related Mortgage to the proper office in the
jurisdiction in which the related Timeshare Property is located.

 

(xix)  Material
Disputes. To the
actual knowledge of the Seller, the Loan is not subject to any material
dispute.

 

(xx) Good
Title; No Liens. Upon
the Purchase hereunder occurring on such Closing Date or Addition Date, as
applicable, the Company will be the lawful owner of, and have good title to,
each Loan and all of the other related Transferred Assets that are the subject
of such Purchase, free and clear of any Liens (other than any Permitted
Encumbrances on the related Timeshare Properties). All Loans and related
Transferred Assets are purchased without recourse to the Seller except as
described in this Agreement and any PA Supplement. Such Purchase by the Company
under this Agreement and under any PA Supplement constitutes a valid and true
sale and transfer for consideration (and not merely the grant of a security
interest to secure a loan), enforceable against creditors of the Seller, and no
Loan or other related Transferred Assets that are the subject of such Purchase
will constitute property of the Seller after such Purchase. 

 

(xxi) Solvency. The
Seller, both prior to and immediately after giving effect to the Purchase of
Loans hereunder and under any PA Supplement occurring on such Closing Date or
Addition Date, as applicable, (A) is not insolvent (as such term is defined
in §101(32)(A) of the Bankruptcy Code), (B) is able to pay its debts as
they become due and (C) does not have unreasonably small capital for the
business in which it is engaged or for any business or transaction in which it
is about to engage.

 







23












 

(xxii) POA
Reserves. The
capital reserves and maintenance fee levels of the POAs related to each
Timeshare Property Regime underlying the Loans Purchased on such Closing Date or
Addition Date, as applicable, are adequate in light of the operating
requirements of such POAs.

 

(c)  Representations
and Warranties Regarding the Loan Files. The
Seller represents and warrants to the Company as of each Closing Date and
related Addition Date as to each Loan and the related Loan File conveyed by it
hereunder on and as of such Closing Date or related Addition Date, as applicable
(except as otherwise expressly stated) as follows:

 

(i)  Possession. On or
immediately prior to each Closing Date or related Addition Date, as applicable,
the Custodian will have possession of each original Loan and the related Loan
File and will have acknowledged such receipt, and its undertaking to hold such
original Loan and the related Loan File for purposes of perfection of the
Collateral Agent’s interest in such original Loan and the related Loan File;
provided,
however, that
the fact that any document not required to be in its respective Loan File
pursuant to Section 6(b)(xiv) of this Agreement is not in the possession of
the Custodian in its respective Loan File does not constitute a breach of this
representation.

 

(ii)  Marking
Records. On or
before each Closing Date or Addition Date, as applicable, the Seller shall have
caused the portions of its computer files relating to the Loans sold on such
date to the Company to be clearly and unambiguously marked to indicate that each
such Loan has been conveyed on such date to the Company.

 

(d)  Survival
of Representations and Warranties. It is
understood and agreed that the representations and warranties contained in this
Section 6 shall remain operative and in full force and effect, shall survive the
transfer and conveyance of the Loans with respect to any Series by the Seller to
the Company under this Agreement and any PA Supplement, the conveyance of the
Loans by the Company to the Initial Issuer or to an Additional Issuer pursuant
to the Pool Purchase Agreement and any Term Purchase Agreement and the Grant of
the Collateral by the Initial Issuer or any Additional Issuer to the Collateral
Agent and shall inure to the benefit of the Company, the respective Issuers, the
Trustees, the Collateral Agent and the Noteholders and their respective
designees, successors and assigns.

 

(e)  Indemnification
of the Company. The
Seller shall indemnify, defend and hold harmless the Company against any and all
claims, losses and liabilities, including reasonable attorneys’ fees (the
foregoing being collectively referred to as “Indemnified
Amounts”) that
may at any time be imposed on, incurred by or asserted against the Company as a
result of a breach by the Seller of any of its respective representations,
warranties or covenants hereunder. Except as otherwise provided in Section
11(i), the Seller shall pay to the Company, on demand, any and all amounts
necessary to indemnify the Company for (i) any and all recording and filing fees
in connection with the transfer of the Loans from the Seller to the Company, and
any and all liabilities with respect to, or resulting from any delay in paying
when due, any taxes (including sales, excise or property taxes) payable in
connection with the transfer of the Loans from the Seller to the Company and
(ii) costs, expenses and reasonable counsel fees in defending against the same.
The agreements in this Section 6(e) shall survive the termination of this
Agreement or any PA Supplement and the payment of all amounts payable hereunder,


 







24












 

under any
PA Supplement and under the Loans. For purposes of this Section 6(e), any
reference to the Company shall include any officer, director, employee or agent
thereof, or any successor or assignee thereof or of the Company.

 

Section
7.  Repurchases
or Substitution of Loans for Breach of Representations and
Warranties.

 

Provisions
with respect to the repurchase or substitution of Loans of any Series for breach
of representations and warranties under this Agreement and any PA Supplement
shall be set forth in the related PA Supplement.

 

Section
8.  Covenants
of the Seller.

 

(a)  Affirmative
Covenants of the Seller. The
Seller covenants and agrees that it will, at any time prior to the Termination
Date:

 

(i)  Compliance
with Laws, Etc. Comply
in all material respects with all applicable laws, rules, regulations and orders
with respect to it, its business and properties, provisions of ERISA, the
Internal Revenue Code and all applicable regulations and interpretations
thereunder, and all Loans and Facility Documents to which it is a
party.

 

(ii)  Preservation
of Corporate Existence.
Preserve and maintain its corporate existence, rights, franchises and privileges
in the jurisdiction of its incorporation, and qualify and remain qualified in
good standing as a foreign corporation, and maintain all necessary licenses and
approvals in each jurisdiction in which it does business, except where the
failure to preserve and maintain such existence, rights, franchises, privileges,
qualifications, licenses and approvals would not have a Material Adverse Effect
with respect to it.

 

(iii)  Audits. Upon at
least two Business Days notice during regular business hours, permit the Company
and/or its agents, representatives or assigns access:

 

(A) to the
offices and properties of the Seller in order to examine and make copies of and
abstracts from all books, correspondence and Records of the Seller as
appropriate to verify the Seller’s compliance with this Agreement, any PA
Supplement or any other Facility Documents to which the Seller is a party and
any other agreement contemplated hereby or thereby, and the Company and/or its
agents, representatives and assigns may examine and audit the same and make
photocopies, computer tapes or other computer replicas thereof, as appropriate,
and the Seller will provide to the Company and/or its agents, representatives
and assigns, at the expense of the Seller, such clerical and other assistance as
may be reasonably requested in connection therewith; and

 

(B) to the
officers or employees of the Seller designated by the Seller in order to discuss
matters relating to the Loans and the performance of the Seller hereunder, under
any PA Supplement or any other Facility Documents to which the Seller is a party
and any other agreement contemplated hereby or thereby, and 

 







25












 

under the
other Facility Documents to which it is a party with the officers or employees
of the Seller having knowledge of such matters.

 

Each such
audit shall be at the sole expense of the Seller. The Company shall be entitled
to conduct such audits as frequently as it deems reasonable in the exercise of
the Company’s reasonable commercial judgment; provided,
however, that
such audits shall not be conducted more frequently than annually unless an Event
of Default or an Amortization Event shall have occurred. The Company and its
agents, representatives and assigns also shall have the right to discuss the
Seller’s affairs with the officers, employees and independent accountants of the
Seller and to verify under appropriate procedures the validity, amount, quality,
quantity, value and condition of, or any other matter relating to, the Loans and
other related Transferred Assets.

 

(iv)  [Reserved.]

 

(v)  Performance
and Compliance with Receivables and Loans. At its
expense, timely and fully perform and comply in all material respects with the
Credit Standards and Collection Policies and Customary Practices with respect to
the Loans and with all provisions, covenants and other promises required to be
observed by the Seller under the Loans.

 

(vi)  [Reserved.]

 

(vii)  Ownership
Interest. Take
such action with respect to each Loan as is necessary to ensure that the Company
maintains a first priority ownership interest in such Loan and the other related
Transferred Assets, in each case free and clear of any Liens arising through or
under the Seller and, in the case of any Timeshare Properties, other than any
Permitted Encumbrance thereon, and respond to any inquiries with respect to
ownership of a Loan sold by it hereunder by stating that, from and after the
Initial Closing Date or related Addition Date, as applicable, it is no longer
the owner of such Loan and that ownership of such Loan has been transferred to
the Company.

 

(viii)  Instruments. Not
remove any portion of the Loans or related Transferred Assets with respect to
any Series that consists of money or is evidenced by an instrument, certificate
or other writing from the jurisdiction in which it was held under the related
Custodial Agreement unless the Company shall have first received an Opinion of
Counsel to the effect that the Company shall continue to have a first-priority
perfected ownership or security interest with respect to such property after
giving effect to such action or actions.

 

(ix)  No
Release. Not
take any action, and use its best efforts not to permit any action to be taken
by others, that would release any Person from such Person’s covenants or
obligations under any document, instrument or agreement relating to the Loans or
the other Transferred Assets, or result in the hypothecation, subordination,
termination or discharge of, or impair the validity or effectiveness of, any
such document, instrument or agreement, except as expressly provided in this
Agreement or any PA Supplement or such other instrument or
document.

 







26












 

(x)  Insurance
and Condemnation.

 

(A) The
Seller shall do or cause to be done all things that it may accomplish with a
reasonable amount of cost or effort to cause each of the POAs for each Resort,
in each case (1) to maintain one or more policies of “all-risk” property and
general liability insurance with financially sound and reputable insurers
providing coverage in scope and amount that (x) satisfy the requirements of the
declarations (or any similar charter document) governing the POA for the
maintenance of such insurance policies and (y) are at least consistent with the
scope and amount of such insurance coverage obtained by prudent POAs and/or
management of other similar developments in the same jurisdiction and (2) to the
extent the Seller is the property manager of the Resort and possesses the right
to direct the application of insurance proceeds, to use its best efforts to
apply the proceeds of any such insurance policies in the manner specified in the
related declarations (or any similar charter document) governing the POA and/or
any similar charter documents of such POA (which exercise of best efforts shall
include voting as a member of the POA or as a proxy or attorney-in-fact for a
member). For the avoidance of doubt, the parties acknowledge that the ultimate
discretion and control relating to the maintenance of any such insurance
policies is vested in the POA in accordance with the respective declaration (or
any similar charter document) relating to each Timeshare Property
Regime.

 

(B) The
Seller shall remit to the Collection Account the portion of any proceeds
received pursuant to a condemnation of property in any Resort relating to any
Timeshare Property to the extent the Obligors are required to make such
remittance under the terms of one or more Loans that have been sold to the
Company hereunder and under the related PA Supplement.

 

(xi)  Separate
Identity. Take
such action as is necessary to ensure compliance with Section 6(a)(xvi),
including taking all actions necessary on its part to be taken in order to
ensure that the facts and assumptions relating to the Company set forth in the
opinion of Orrick, Herrington & Sutcliffe LLP relating to substantive
consolidation matters with respect to the Seller and the Company are true and
correct.

 

(xii)  Computer
Files. Mark or
cause to be marked each Loan in its computer files as described in Section
6(c)(ii) and deliver to the Company, the Issuer, the Trustee and the Collateral
Agent a copy of the Loan Schedule for each Series as amended from time to
time.

 

(xiii)  Taxes. File or
cause to be filed, and cause each of its Affiliates with whom it shares
consolidated tax liability to file, all federal, state and local tax returns
that are required to be filed by it, except where the failure to file such
returns could not reasonably be expected to have a Material Adverse Effect with
respect to the Purchaser or the Seller, or otherwise be reasonably expected to
expose the Purchaser or the Seller to material liability. The Seller will pay or
cause to be paid all taxes shown to be due and payable on such returns or on any
assessments received by it, other than any taxes or assessments the validity of
which are being contested in good faith by appropriate 

 







27












 

proceedings
and with respect to which the Seller or the applicable Affiliate has set aside
adequate reserves on its books in accordance with GAAP, and which proceedings
could not reasonably be expected to have a Material Adverse Effect with respect
to the Purchaser or the Seller or otherwise be reasonably expected to expose the
Purchaser or the Seller to material liability.

 

(xiv)  Facility
Documents. Comply
in all material respects with the terms of, and employ the procedures outlined
under, this Agreement, any PA Supplement and all other Facility Documents to
which it is a party, and take all such action as may be from time to time
reasonably requested by the Company to maintain this Agreement, any PA
Supplement and all such other Facility Documents in full force and
effect.

 

(xv)  Loan
Schedule. With
respect to any Series, promptly amend the applicable Loan Schedule to reflect
terms or discrepancies that become known after each Closing Date or any Addition
Date, and promptly notify the Company, the Issuer, the Trustee and the
Collateral Agent of any such amendments.

 

(xvi)  Segregation
of Collections.
Prevent, to the extent within its control, the deposit into the Collection
Account or any Reserve Account of any funds other than Collections in respect of
the Loans with respect to any Series, and to the extent that, to its knowledge,
any such funds are nevertheless deposited into the Collection Account or any
Reserve Account, promptly identify any such funds to the Master Servicer for
segregation and remittance to the owner thereof.

 

(xvii)  Management
of Resorts. The
Seller hereby covenants and agrees (to the extent that the Seller is responsible
for maintaining or managing such Resort) to do or cause to be done all things
that it may accomplish with a reasonable amount of cost or effort in order to
maintain such Resort (including without limitation all grounds, waters and
improvements thereon and all other facilities related thereto) in at least as
good condition, repair and working order as would be customary for prudent
managers of similar timeshare properties.

 

(b)  Negative
Covenants of the Seller. The
Seller covenants and agrees that it will not, at any time prior to the final
Series Termination Date without the prior written consent of the
Company:

 

(i)  Sales,
Liens, Etc. Against Loans and Transferred Assets. Except
for the transfers hereunder, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist, any Lien arising through or
under it (other than, in the case of any Timeshare Properties, any Permitted
Encumbrances thereon) upon or with respect to any Loan or other Transferred
Asset or any interest therein. The Seller shall immediately notify the Company
of the existence of any Lien arising through or under it on any Loan or other
Transferred Asset.

 

(ii)  Extension
or Amendment of Loan Terms. Extend,
amend, waive or otherwise modify the terms of any Loan (other than as a result
of a Timeshare Upgrade or in accordance with Customary Practices) or permit the
rescission or cancellation of any 

 







28












 

Loan,
whether for any reason relating to a negative change in the related Obligor’s
creditworthiness or inability to make any payment under the Loan or
otherwise.

 

(iii)  Change
in Business or Credit Standards or Collection Policies.
(A) Make any change in the character of its business or (B) make any change
in the Credit Standards and Collection Policies or (C) deviate from the exercise
of Customary Practices, which change or deviation would, in any such case,
materially impair the value or collectibility of any Loan.

 

(iv)  Change
in Payment Instructions to Obligors. Add,
except in connection with the issuance of an Additional Series of Notes, or
terminate any bank as a bank holding any account for the collection of payments
in respect of the Loans from those listed in Exhibit E or make any change in its
instructions to Obligors regarding payments to be made to any Lockbox Account at
a Lockbox Bank, unless the Company and the Trustee shall have received
(A) 30 days’ prior written notice of such addition, termination or change,
(B) written confirmation from the Seller that, after the effectiveness of
any such termination, there will be at least one Lockbox in existence and
(C) prior to the date of such addition, termination or change,
(1) executed copies of Lockbox Agreements executed by each new Lockbox
Bank, the Seller, the Company, the Master Servicer and the Trustee and
(2) copies of all agreements and documents signed by either the Company or
the respective Lockbox Bank with respect to any new Lockbox Account.


 

(v)  Change
in Corporate Name, Etc. Make
any change to its name or its type or jurisdiction of organization that existed
on the Initial Closing Date without providing at least 30 days’ prior written
notice to the Company and the Trustee and taking all action necessary or
reasonably requested by the Trustee to amend its existing financing statements
and file additional financing statements in all applicable jurisdictions as are
necessary to maintain the perfection of the security interest of the
Company.

 

(vi)  ERISA
Matters. (A)
Engage or permit any ERISA Affiliate to engage in any prohibited transaction for
which an exemption is not available or has not previously been obtained from the
U.S. Department of Labor; (B) permit to exist any accumulated funding deficiency
(as defined in Section 302(a) of ERISA and Section 412(a) of the Internal
Revenue Code) or funding deficiency with respect to any Benefit Plan other than
a Multiemployer Plan; (C) fail to make any payments to any Multiemployer Plan
that the Seller or any ERISA Affiliate may be required to make under the
agreement relating to such Multiemployer Plan or any law pertaining thereto; (D)
terminate any Benefit Plan so as to result in any liability; (E) permit to exist
any occurrence of any Reportable Event that represents a material risk of a
liability of the Seller or any ERISA Affiliate under ERISA or the Internal
Revenue Code; provided, however, that the ERISA Affiliates of the Seller may
take or allow such prohibited transactions, accumulated funding deficiencies,
payments, terminations and Reportable Events described in clauses (A) through
(E) above so long as such events occurring within any fiscal year of the Seller,
in the aggregate, involve a payment of money by or an incurrence of liability of
any such ERISA Affiliate (collectively, “ERISA
Liabilities”) in an
amount that does not exceed $2,000,000 or otherwise result in liability that
would result in imposition of a lien.

 







29












 

(vii)  Terminate
or Reject Loans. Without
limiting the requirements of Section 8(b)(ii), terminate or reject any Loan
prior to the end of the term of such Loan, whether such rejection or early
termination is made pursuant to an equitable cause, statute, regulation,
judicial proceeding or other applicable law unless, prior to such termination or
rejection, such Loan and any related Transferred Assets have been repurchased by
the Seller pursuant to Section 7 of the related PA Supplement.

 

(viii)  Facility
Documents. Except
as otherwise permitted under Section 8(b)(ii), terminate, amend or otherwise
modify any Facility Document to which it is a party or grant any waiver or
consent thereunder.

 

(ix)  Insolvency
Proceedings.
Institute Insolvency Proceedings with respect to WorldMark, the Company or the
Issuer or consent to the institution of Insolvency Proceedings against
WorldMark, the Company or the Issuer, or take any corporate action in
furtherance of any such action.

 

Section
9.  Representations
and Warranties of the Company.

 

The
Company represents and warrants as of each Closing Date and Addition Date, or as
of such other date specified in such representation and warranty,
that:

 

(a)  The
Company is a limited liability company duly formed, validly existing and in good
standing under the laws of the State of Delaware and has full limited liability
company power, authority, and legal right to own its properties and conduct its
business as such properties are presently owned and as such business is
presently conducted, and to execute, deliver and perform its obligations under
this Agreement and any PA Supplement. The Company is duly qualified to do
business and is in good standing as a foreign entity, and has obtained all
necessary licenses and approvals in each jurisdiction necessary to carry on its
business as presently conducted and to perform its obligations under this
Agreement and any PA Supplement. One hundred percent (100%) of the outstanding
membership interests of the Company is directly owned (both beneficially and of
record) by CTRG-CF. Such membership interests are validly issued, fully paid and
nonassessable and there are no options, warrants or other rights to acquire
membership interests from the Company.

 

(b)  The
execution, delivery and performance of this Agreement and any PA Supplement by
the Company and the consummation by the Company of the transactions provided for
in this Agreement and any PA Supplement have been duly approved by all necessary
limited liability company action on the part of the Company.

 

(c)  This
Agreement and any PA Supplement constitutes the legal, valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
except as such enforceability may be subject to or limited by Debtor Relief Laws
and except as such enforceability may be limited by general principles of
equity.

 

(d)  The
execution and delivery by the Company of this Agreement and any PA Supplement,
the performance by the Company of the transactions contemplated hereby and the
fulfillment by the Company of the terms hereof applicable to the Company will
not conflict with, violate, result in any breach of the material terms and
provisions of, or constitute (with or 

 







30












 

without
notice or lapse of time or both) a material default under any provision of any
existing law or regulation or any order or decree of any court applicable to the
Company or its certificate of formation or limited liability company agreement
or any material indenture, contract, agreement, mortgage, deed of trust, or
other material instrument to which the Company is a party or by which it or its
properties is bound.

 

(e)  There are
no proceedings or investigations pending, or to the knowledge of the Company
threatened, against the Company before any court, regulatory body,
administrative agency, or other tribunal or governmental instrumentality (A)
asserting the invalidity of this Agreement or any PA Supplement,
(B) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any PA Supplement, (C) seeking any
determination or ruling that, in the reasonable judgment of the Company, would
adversely affect the performance by the Company of its obligations under this
Agreement or any PA Supplement or (D) seeking any determination or ruling
that would adversely affect the validity or enforceability of this Agreement or
any PA Supplement.

 

(f)  All
approvals, authorizations, consents, orders or other actions of any person or
entity or any governmental body or official required in connection with the
execution and delivery of this Agreement and any PA Supplement by the Company,
the performance by it of the transactions contemplated hereby and the
fulfillment by it of the terms hereof, have been obtained and are in full force
and effect.

 

(g)  The
Company is solvent and will not become insolvent immediately after giving effect
to the transactions contemplated by this Agreement and any PA Supplement, the
Company has not incurred debts beyond its ability to pay and, immediately after
giving effect to the transactions contemplated by this Agreement and any PA
Supplement, the Company shall have an adequate amount of capital to conduct its
business in the foreseeable future.

 

Section
10.  Affirmative
Covenants of the Company.

 

The
Company hereby acknowledges that the parties to the Facility Documents are
entering into the transactions contemplated by the Facility Documents in
reliance upon the Company’s identity as a legal entity separate from the Seller
and its Affiliates. From and after the date hereof until the final Series
Termination Date under any Indenture Supplement, the Company will take such
actions as shall be required in order that:

 

(a)  The
Company will conduct its business in office space allocated to it and for which
it pays an appropriate rent and overhead allocation;

 

(b)  The
Company will maintain corporate records and books of account separate from those
of the Seller and its Affiliates and telephone numbers and stationery that are
separate and distinct from those of the Seller and its Affiliates;

 

(c)  The
Company’s assets will be maintained in a manner that facilitates their
identification and segregation from those of any of the Seller and its
Affiliates;

 

(d)  The
Company will observe corporate formalities in its dealings with the public and
with the Seller and its Affiliates and, except as contemplated by the Facility


 







31












 

Documents,
funds or other assets of the Company will not be commingled with those of any of
the Seller and its Affiliates. The Company will at all times, in its dealings
with the public and with the Seller and its Affiliates, hold itself out and
conduct itself as a legal entity separate and distinct from the Seller and its
Affiliates. The Company will not maintain joint bank accounts or other
depository accounts to which the Seller and its Affiliates (other than the
Master Servicer) has independent access;

 

(e)  The duly
elected board of directors of the Company and duly appointed officers of the
Company will at all times have sole authority to control decisions and actions
with respect to the daily business affairs of the Company;

 

(f)  Not less
than one member of the Company’s board of directors will be an Independent
Director. The Company will observe those provisions in its limited liability
company agreement that provide that the Company’s board of directors will not
approve, or take any other action to cause the filing of, a voluntary bankruptcy
petition with respect to the Company unless the Independent Director and all
other members of the Company’s board of directors unanimously approve the taking
of such action in writing prior to the taking of such action;

 

(g)  The
Company will compensate each of its employees, consultants and agents from the
Company ’s own funds for services provided to the Company; and

 

(h)  Except as
contemplated by the Facility Documents, the Company will not hold itself out to
be responsible for the debts of the Seller and its Affiliates.

 

Section
10A Negative
Covenant of the Company.


 

The
Company covenants and agrees that it will not, at any time prior to the final
Series Termination Date institute Insolvency Proceedings with respect to
WorldMark or consent to the institution of Insolvency Proceedings against
WorldMark, or take any corporate action in furtherance of any such
action.

 

Section
11.  Miscellaneous.

 

(a)  Amendment. This
Agreement 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.

 

(b)  Assignment. The
Company has the right to assign its interests under this Agreement and any PA
Supplement as may be required to effect the purposes of the Pool Purchase
Agreement or any Term Purchase Agreement without the consent of the Seller, and
the assignee shall succeed to the rights hereunder of the Company. The Seller
agrees to perform its obligations hereunder for the benefit of the respective
Issuers, Trustees and Noteholders and for the benefit of the Collateral Agent,
and agrees that such parties are intended third party beneficiaries of this
Agreement and agrees that the Trustees (or the Collateral Agent) and (subject to
the terms and conditions of the applicable Indenture and Servicing Agreement and
any applicable Indenture Supplement) the Noteholders may enforce the provisions
of this 

 







32












 

Agreement
and any PA Supplement, exercise the rights of the Company and enforce the
obligations of the Seller hereunder without the consent of the
Company.

 

(c)  Counterparts. This
Agreement may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.

 

(d)  Termination. The
obligations of the Seller under this Agreement and any PA Supplement shall
survive the sale of the Loans to the Company and the Company’s transfer of the
Loans and other related Transferred Assets to the Issuer.

 

(e)  GOVERNING
LAW. THIS
AGREEMENT 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 REFERENCE TO ITS CONFLICT OF LAW PRINCIPLES.

 

(f)  Notices. All
demands and notices hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered at or mailed by certified mail, postage
prepaid and return receipt requested, or by express delivery service, to (i) in
the case of the Seller, Trendwest Resorts, Inc., 9805 Willows Road, Redmond,
Washington 98052, Attention: President, or such other address as may hereafter
be furnished to the Company in writing by the Seller and (ii) in the case of the
Company, Sierra Deposit Company, LLC, 10750 West Charleston Blvd., Suite 130,
Mailstop 2067, Las Vegas, Nevada 89135, Attention: President, or such other
address as may hereafter be furnished to the Seller in writing by the
Company.

 

(g)  Severability
of Provisions. If any
one or more of the covenants, agreements, provisions or terms of this Agreement
shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this
Agreement.

 

(h)  Successors
and Assigns. This
Agreement 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
each of the Seller and the Company and each of the Issuer, the Trustee and the
Collateral Agent to the extent explicitly contemplated hereby.

 

(i)  Costs,
Expenses and Taxes.

 

(a) The
Seller agrees to pay on demand to the Company all reasonable costs and expenses,
if any, incurred or reimbursed (or to be reimbursed) by the Company (including
reasonable counsel fees and expenses) in connection with the enforcement or
preservation of the rights and remedies under this Agreement and any PA
Supplement.

 

(b) The
Seller agrees to pay, indemnify and hold the Company harmless from and against
any and all stamp, sales, excise and other taxes and fees payable or determined
to be payable by or reimbursed (or to be reimbursed) by the Company in
connection with the execution, delivery, filing and recording 

 







33












 

of this
Agreement or any PA Supplement, and against any liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and
fees.

 

(j)  No
Bankruptcy Petition. The
Seller covenants and agrees not to institute against the Company or the Issuer,
or join any other person in instituting against the Company or the Issuer, any
proceeding under any Debtor Relief Law.

 











34
















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	 	 
	 	 	
      Name:
      Michael A. Hug

      Title:
      Senior Vice President and Chief Financial Officer
	 	 













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

      Title:
      President
	 	 




 


 







[Signature
page for Trendwest MLPA]

 























SCHEDULE
1







Loan
Schedule







To be
delivered on first sale of Loans.









 




















 

SCHEDULE
2




Resorts



	 	 
      Angels
      Camp

      Beachcomber

      Bear
      Lake

      Big
      Bear Lake

      Bison
      Ranch

      Bisontown
      I

      Branson

      Camlin

      Canadian

      Clear
      Lake

      Coeur
      d'Alene

      Coral
      Baja

      Denarau
      Island, Fiju

      Depoe
      Bay

      Depoe
      Bay II

      Discovery
      Bay

      Dolphin's
      Cove

      Eagle
      Crest

      Eagle
      Crest at Eagle Ridge

      Eagle
      Crest at Ridge Hawk

      Eagle
      Crest at River View

      Eagle
      Crest Hotel Condos

      Estes
      Park

      Galena

      Gleneden

      Grand
      Lake

      Harbor
      Village @ Bear Lake

      Kailua-Kona

      Kapaa
      Shore

      Kihei

      La
      Paloma

      Lake
      Chelan

      Lake
      of the Ozarks

      Las
      Vegas
	 	 
      Las
      Vegas South

      Mariner
      Village

      McCall

      Monterey
      Bay

      New
      Orleans at Avenue Plaza

      North
      Shore Estates I

      North
      Shore Estates II

      Ocean
      Breezes

      Ocean
      Walk

      Oceanside

      Orlando

      Palm
      Springs

      Park
      Village

      Pinetop

      Rancho
      Vistoso

      Reno

      Running
      Y Ranch

      San
      Francisco

      Schooner
      Landing

      Seaside

      Solvang

      South
      Shore

      St.
      George

      Steamboat
      Springs

      Sundance

      Surfside
      Inn

      Tahoe
      I & II

      Tahoe
      III

      Valley
      Isle

      Victoria

      Village
      at Leavenworth

      Whistler
      Cascade Lodge

      Windsor

      Wolf
      Creek Village

      Wolf
      Creek Village II
	 



 

 





















SCHEDULE
3







Environmental
Issues







None.









 




















SCHEDULE
4







Lockbox
Accounts







Clearing
Account established under the agreement listed in Exhibit E.








	
       

      Bank
	
      Account
      Name
	
       

      Account
	
      ABA
      Number
	
      Account
      Number
	
      Contact
      Person

	
      Bank
      of America
	
      Cendant
      Timeshare Conduit Receivables Funding, LLC - Trendwest
	
      Lockbox
	
      111000012
	
      3756240535
	
      Toni
      Krantz

      212-503-8471

	
      Bank
      of America
	
      Cendant
      Timeshare Conduit Receivables Funding, LLC - Trendwest
	
      Deposit
	
      111000012
	
      3756245158
	
      Toni
      Krantz

      212-503-8471

	
      JPMorgan
      Chase Bank
	
      Cendant
      Timeshare Conduit Receivables Funding, LLC - Trendwest
	
      ACH
      Collections
	
      021000021
	
      304194824
	
      Dorin
      Ladon

      312-954-9288











 




















 

SCHEDULE
5

 

Litigation

 

In
September 2002, the Office of the California Attorney General and the San Mateo
County District Attorney's office began an investigation of certain Trendwest
sales, telemarketing and collection practices. The matter was resolved in
October 2003, with Trendwest signing a stipulated judgment enjoining Trendwest
from certain business practices, requiring Trendwest to offer restitution to
certain consumers, and obligating Trendwest to pay costs and fines.

 

In
October 2003, as a result of an investigation by the California Department of
Real Estate ("DRE"), Trendwest entered into an agreement with the DRE whereby
Trendwest deposited $1.8 million into an escrow account to be paid to WorldMark
in the event the DRE determines, following an audit, that Trendwest owes money
to WorldMark as a result of certain Trendwest sales and marketing programs.
Trendwest is currently responding to the DRE's audit requests.




In early
February 2005, Trendwest's broker-of-record in Arizona received a letter from
the Arizona Department of Real Estate ("ADRE") stating that the ADRE had
initiated an investigation as a result of an audit conducted by the ADRE. The
auditors alleged numerous infractions relating to, among other things,
Trendwest's brokerage practices. Working with Arizona legal counsel, the broker
replied to the ADRE in late February 2005 acknowledging certain infractions and
providing evidence of remedial measures, and disputing certain other alleged
infractions. Trendwest is currently awaiting a reply from the ADRE.





























EXHIBIT
A


 




Forms
of Custodial Agreements





















 




















 

EXHIBIT
B




FORM OF
ASSIGNMENT OF ADDITIONAL LOANS

 

ASSIGNMENT
NO. __ OF ADDITIONAL LOANS dated as of _______, by and between TRENDWEST
RESORTS, INC., an Oregon corporation (the “Seller”) and
SIERRA DEPOSIT COMPANY LLC, a Delaware limited liability company (the
“Purchaser”),
pursuant to the Agreement referred to below.

 

WITNESSETH:

 

WHEREAS,
the Seller and the Purchaser are parties to the Master Loan Purchase Agreement
dated as of August 29, 2002, as amended and restated as of November 14, 2005,
and the Purchase Agreement Supplement dated as of August 29, 2002, as amended
and restated as of November 14, 2005 (the “PA
Supplement”) (as so
supplemented, and as such agreement may have been, or may from time to time be,
further amended, supplemented or otherwise modified, the “Agreement”);

 

WHEREAS,
pursuant to the Agreement, the Seller wishes to designate Additional Loans
(including Additional Upgrade Balances) to be included as Loans, and the Seller
wishes to sell its right, title and interest in and to the Additional Loans to
the Purchaser pursuant to this Assignment and the Agreement; and

 

WHEREAS,
the Purchaser wishes to purchase such Additional Loans subject to the terms and
conditions hereof.

 

NOW,
THEREFORE, the Seller and the Purchaser hereby agree as follows:

 

1. Defined
Terms. All
capitalized terms used herein shall have the meanings ascribed to them in the
Agreement unless otherwise defined herein.

 

“Addition
Cut-Off Date” shall
mean, with respect to the Additional Loans, __________.

 

“Addition
Date” shall
mean, with respect to the Additional Loans, __________.

 

“Additional
Loans” shall
mean the Additional Loans, as defined in the Agreement, that are sold hereby and
listed on Schedule 1.

 

“Additional
Transferred Assets” shall
have the meaning set forth in Section 3.

 

2. Designation
of Additional Loans. The
Seller delivers herewith a Loan Schedule containing a true and complete list of
the Additional Loans. Such Loan Schedule is incorporated into and made part of
this Assignment, shall be Schedule 1 to this Assignment and shall supplement
Schedule 1 to the Agreement.

 

3. Sale
of Additional Loans.

 

The
Seller does hereby sell, transfer, assign, set over and otherwise convey to the


 




















 

Purchaser,
without recourse except as provided in the Agreement, all of the Seller’s right,
title and interest in, to and under (i) the Additional Loans as of the
close of business on the Addition Cut-Off Date and all Scheduled Payments, other
Collections and other funds received in respect of such Additional Loans on or
after the Addition Cut-Off Date and any other monies due or to become due on or
after the Addition Cut-Off Date in respect of any such Additional Loans, and any
security therefor; (ii) the Timeshare Properties relating to the Timeshare
Property Loans to the extent that they relate to such Timeshare Properties;
(iii) any Mortgages relating to the Additional Loans; (iv) any Insurance
Policies relating to the Additional Loans; (v) the Loan Files and other Records
relating to the Additional Loans; (vi) the Loan Conveyance Documents relating to
the Additional Loans; (vii) all interest, dividends, cash, instruments,
financial assets and other investment property and other property from time to
time received, receivable or otherwise distributed in respect of, or in exchange
for, or on account of, the sale or other disposition of the Additional
Transferred Assets, and including all payments under Insurance Policies (whether
or not any of the Seller, the Purchaser, the Master Servicer, the Issuer or the
Trustee is the loss payee thereof) or any indemnity, warranty or guaranty
payable by reason of loss or damage to or otherwise with respect to any
Additional Transferred Assets, and any security granted or purported to be
granted in respect of any Additional Transferred Assets; and (viii) all proceeds
of any of the foregoing property described in clauses (i) through (vii)
(collectively, the “Additional
Transferred Assets”).

 

In
connection with the foregoing sale and if necessary, the Seller agrees to record
and file one or more financing statements (and continuation statements or other
amendments with respect to such financing statements when applicable) with
respect to the Additional Transferred Assets meeting the requirements of
applicable State law in such manner and in such jurisdictions as are necessary
to perfect the sale of the Additional Transferred Assets to the Purchaser, and
to deliver a file-stamped copy of such financing statements and continuation
statements (or other amendments) or other evidence of such filing to the
Purchaser.




In
connection with the foregoing sale, the Seller further agrees, on or prior to
the date of this Assignment, to cause the portions of its computer files
relating to the Additional Loans sold on such date to the Purchaser to be
clearly and unambiguously marked to indicate that each such Additional Loan has
been sold on such date to the Purchaser pursuant to the Agreement and this
Assignment.




It is the
express and specific intent of the parties that the transfer of the Additional
Loans and the other Transferred Assets relating thereto from the Seller to the
Purchaser as provided is and shall be construed for all purposes as a true and
absolute sale of such Additional Loans and Transferred Assets, shall be absolute
and irrevocable and provide the Purchaser with the full benefits of ownership of
the Additional Loans and related Transferred Assets and will be treated as such
for all federal income tax reporting and all other purposes. Without prejudice
to preceding sentence providing for the absolute transfer of the Seller’s
interest in the Additional Loans and other Transferred Assets to the Purchaser,
in order to secure the prompt payment and performance of all obligations of the
Seller to the Purchaser under the Agreement, 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 Purchaser 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 Additional Loans and the other
related Transferred Assets and the proceeds thereof. The Seller 

 




















 

acknowledges
that the Additional Loans and other related Transferred Assets are subject to
the Lien of the Indenture and Servicing Agreement for the benefit of the
Collateral Agent on behalf of the Trustee and the Noteholders.




4. Acceptance
by the Purchaser. The
Purchaser hereby acknowledges that, prior to or simultaneously with the
execution and delivery of this Assignment, the Seller delivered to the Purchaser
the Loan Schedule described in Section 2 of this Assignment with respect to all
Additional Loans.

 

5. Representations
and Warranties of the Seller. The
Seller hereby represents and warrants to the Purchaser on the Addition Date that
each representation and warranty to be made by it on such Addition Date pursuant
to the Agreement is true and correct, and that each such representation and
warranty is hereby incorporated herein by reference as though fully set out in
this Assignment.

 

6. Ratification
of the Agreement. The
Agreement is hereby ratified, and all references to the Agreement shall be
deemed from and after the Addition Date to be references to the Agreement as
supplemented and amended by this Assignment. Except as expressly amended hereby,
all the representations, warranties, terms, covenants and conditions of the
Agreement shall remain unamended and shall continue to be, and shall remain, in
full force and effect in accordance with its terms and except as expressly
provided herein shall not constitute or be deemed to constitute a waiver of
compliance with or consent to non-compliance with any term or provision of the
Agreement.

 

7. Counterparts. This
Assignment may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument.

 

8. GOVERNING
LAW. THIS
ASSIGNMENT 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 REFERENCE TO ITS CONFLICT OF LAW PRINCIPLES.

 

[The
remainder of this page is left blank intentionally.]

 






















IN
WITNESS WHEREOF, each of the parties hereto has caused this Assignment to be
duly executed by their respective officers as of the day and year first written
above.

 




	 	 	
      TRENDWEST
      RESORTS, INC.

      as Seller
	 	 
	 	
      By:
	 	 	 
	 	 	
      Name:
      

      Title:
      
	 	 













	 	 	
      SIERRA
      DEPOSIT COMPANY, LLC

      as Purchaser
	 	 
	 	
      By:
	 	 	 
	 	 	
      Name:
      

      Title:
      
	 	 




 

































EXHIBIT
C







Credit
Standard and Collection Policies






































EXHIBIT
D







Forms
of Loans






































EXHIBIT
E







Forms
of

Lockbox
Agreements