LOAN AND SECURITY AGREEMENT among SILVERLEAF RESORTS, INC. (as Borrower) and THE PARTIES WHICH HEREAFTER EXECUTE THIS AGREEMENT OR A JOINDER AGREEMENT (as Lenders) and LIBERTY BANK (as Lender and as Facility and Collateral Agent) As of September 28, 2007
Ex
10.1
Final
Execution Copy
9/27/07
among
SILVERLEAF
RESORTS, INC.
(as
Borrower)
and
THE
PARTIES WHICH HEREAFTER EXECUTE THIS AGREEMENT
OR
A
JOINDER AGREEMENT
(as
Lenders)
and
LIBERTY
BANK
(as
Lender and as Facility and Collateral Agent)
As
of
September 28, 2007
THIS
LOAN AND SECURITY AGREEMENT, dated as of September 28, 2007, entered
into by and among SILVERLEAF RESORTS, INC., a Texas
corporation, having an address of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ (as “Borrower”), the parties, including LIBERTY
BANK, a Connecticut nonstock mutual savings bank, having an office and
place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ which
execute and deliver this Agreement or a joinder agreement to this Agreement
in
their respective capacities as Lenders hereunder (collectively, the “Lenders”
and each individually a “Lender”) and LIBERTY BANK as facility
agent and collateral agent (“Agent”).
WITNESSETH:
WHEREAS,
Borrower is engaged in the business of acquiring, constructing, developing,
owning, managing, selling and otherwise dealing with Intervals at the Resorts
(as each such term is hereafter defined); and
WHEREAS,
in connection with the Loans to be made by Lenders pursuant to this Agreement,
Agent has agreed to act as facility agent and collateral agent for the other
Lenders and to perform such duties with respect to the Loans as are expressly
set forth herein;
WHEREAS,
Lenders, subject to the terms and conditions of this Loan and Security
Agreement, have agreed to provide to Borrower, for the purpose of providing
liquidity in connection with Borrower’s ownership and sale of Intervals, a loan
in the amount of the Commitment.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
in
this Agreement, and for other good and valuable consideration, the receipt
and
adequacy of which are acknowledged, the parties to this Agreement, intending
to
be legally bound, agree as follows:
Section
1-Definition Of Terms
1.1 Definitions. Capitalized
terms used in this Agreement are defined in this
Section 1. The definitions include the singular and
plural forms of the terms defined.
Account means an “account,” as that term is defined in the Code, and any and all supporting obligations in respect thereof.
Additional
Eligible Resorts or Additional Eligible Resort have the meanings
given to such terms in Section 3.5 hereof.
Advance
means a portion of the proceeds of the Loan advanced from time to time by
Lenders to Borrower in accordance with the terms of this Agreement.
Affiliate
means, with respect to Borrower or any other Person, any Person who, directly
or
indirectly through one or more intermediaries, controls, is controlled by,
or is
under common control with, such Person. For purposes of this
definition, “control” means the possession, directly or indirectly, of the power
to direct the management and policies of a Person, whether through the ownership
of stock, by contract, or otherwise; provided, however, that, in any
event: (a) any Person which owns directly or indirectly 10% or more of the
securities having ordinary voting power for the election of directors or
other
members of the governing body of a Person or 10% or more of the partnership
or
other ownership interests of a Person (other than as a limited partner of
such
Person) shall be deemed to control such Person, (b) each director (or comparable
manager) of a Person shall be deemed to be an Affiliate of such Person, and
(c)
each partnership or joint venture in which a Person is a partner or joint
venturer shall be deemed to be an Affiliate of such Person.
Agreement
means this Loan and Security Agreement by and among Borrower, Agent and each
Lender which executes this Agreement (including the Exhibits and Schedules
to
it) or a joinder agreement hereto, as it may be amended from time to
time.
Annual
Operating Plan means Borrower’s financial and business projections
for its operations for the upcoming fiscal twelve (12) month period inclusive
of
a budget and which shall represent Borrower’s good faith best estimate of its
future performance for the period covered thereby.
Applicable
Laws means all applicable laws, rules, regulations and orders of
any Governmental Authority.
Assignment
of Notes Receivable and Mortgages means a recordable Assignment of
Notes Receivable and Interval Mortgages, in the form attached hereto as
Exhibit A, made by Borrower in favor of Agent evidencing the assignment
to Agent, as collateral agent for each Lender, of all of the Pledged Notes
Receivable and Mortgages.
Availability
means, as of any date of determination, if such date is a Business Day, and
determined at the close of business on the immediately preceding Business
Day,
if such date of determination is not a Business Day, the amount that Borrower
is
entitled to borrow as Advances under Section 2.1 hereof (after giving
effect to all then outstanding Obligations).
Borrower
means Silverleaf Resorts, Inc., a Texas corporation.
Borrowing
Base means, with respect to each Eligible Note Receivable pledged
to Agent hereunder in connection with each Advance from and after the Closing
Date, an amount equal to seventy-five percent (75%) of the remaining principal
balance of each such Eligible Note Receivable.
Borrowing
Base Report means the form attached as Exhibit B hereof,
which report, from time to time shall be signed by the Chief Operating Officer,
Chief Financial Officer or Senior Vice President/Capital Markets or such
other
Person designated in writing by Borrower to Agent.
Business
Day means each day that is not a Saturday, a Sunday or a legal
holiday under the laws of the States of Texas or Connecticut.
Capital
Lease means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
Closing
Date means the date of this Agreement.
Code
means the Uniform Commercial Code (or any successor statute), as in effect
from
time to time, of the State of Connecticut or of any other state the laws
of
which are required as a result thereof to be applied in connection with the
issue of perfection or the effect of perfection of security interests;
provided that to the extent that the Code is used to define any term
herein or in any other Loan Documents and such term is defined differently
in
different Articles or divisions of the Code, the definition of such term
contained in Article 9 of the Connecticut Uniform Commercial Code shall
govern.
Collateral
means, collectively, all now owned or hereafter acquired right, title and
interest of Borrower, in all of the following:
(a) Pledged
Notes Receivable and all proceeds of or from them;
(b) Mortgages
and all proceeds of or from them;
(c) Documents,
instruments, accounts, chattel paper, and general intangibles relating to
the
Pledged Notes Receivable and the related Mortgages;
(d) All
books, records, reports, computer tapes, disks and software relating to the
Collateral; and
(e) Extensions,
additions, improvements, betterments, renewals, substitutions and replacements
of, for or to any of the Collateral, wherever located, together with the
products, proceeds, issues, rents and profits thereof, and any replacements,
additions or accessions thereto or substitutions thereof.
Commitment
means, singly, the obligation of each Lender to make a Loan or Loans to Borrower
in an aggregate amount not to exceed the Pro Rata Percentage for each Lender
of
each Advance and collectively, to all Loans to be made by all Lenders as
provided herein. The Commitment as of the Closing Date is the Maximum
Amount in the aggregate outstanding at any time during the Term of this
Agreement, and may from time to time be increased or decreased by Agent and
Lenders upon written a written agreement setting forth the terms and conditions
of any increase or decrease by and between Agent, Lenders and
Borrower.
Common
Elements means all common elements, including but not limited to
any limited common elements, as each such common element is defined or provided
for in the Declaration or other Timeshare Documents.
CSF
means CapitalSource Finance, LLC.
CSF
Facility means that certain credit facility provided by CSF to
Borrower pursuant to the CSF Documents.
CSF
Documents means the loan agreement, the promissory notes and all
other agreements or documents executed in connection with the CSF Facility,
as
each may be amended, restated or otherwise modified from time to
time.
Custodian
means ▇▇▇▇▇ Fargo Bank, National Association or ▇▇▇▇▇ Fargo Corporate Trust
Services having an address of 751 Kasota Ave, MAC# ▇▇▇▇▇-▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, or such other custodial Agent as may be approved by Agent
in writing from time to time. Custodian shall be Lender's Agent for
the purpose of maintaining possession of all present and future Collateral
documents described in Section 3.4 hereof.
Custodial
Agreement means the Custodial and Collateral Agency Agreement of
even date herewith, by and among Agent, as Agent for each Lender, Borrower
and
Custodian, pursuant to which the Custodian is to maintain possession of all
present and future Collateral documents described in Section 3.4
hereof, or any custodial agreement entered into as a replacement of such
agreement.
Daily
Balance means, with respect to each day during the term of this
Agreement, the amount of an Obligation owed at the end of such day.
Debtor
Relief Laws means any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
law, proceeding or device providing for the relief of debtors from time to
time
in effect and generally affecting the rights of creditors.
Declaration
or Declarations means, with respect to each Resort, the applicable
Declaration or Declarations described on Schedule 1.1(a)
hereto.
Declarant
Rights means the rights of the declarant in the Declaration for
each Resort.
Default
means an event or condition the occurrence of which immediately is or, with
a
lapse of time or the giving or notice or both, becomes an Event of
Default.
Default
Rate means the Interest Rate plus four hundred (400) basis points
per annum; provided, however, that the Default Rate shall in no event
exceed the highest interest rate permitted to be charged under applicable
usury
laws.
Designated
Account means account number 753813286 of Borrower maintained with
Borrower’s Designated Account Bank, or such other deposit account of Borrower
(located within the United States) that has been designated as such, in writing,
by Borrower to Agent.
Designated
Account Bank means ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank, ABA Number
▇▇▇▇▇▇▇▇▇.
Division
means the governmental authority of each state in which a Resort is located,
having jurisdiction over the establishment and operation of the Resorts in
question and the sale of Intervals at such Resort.
EBITDA
means, with respect to any Person for any period: (a) the sum of (i) net
income
(but excluding any extraordinary gains or losses or any gains or losses from
the
sale or disposition of assets other than in the ordinary course of business,
it
being agreed however that gains from the sale of Notes Receivable in connection
with securitization or conduit transactions shall be included in net income,
but
losses from such sales shall be deducted from ordinary income), (ii) interest
expense, (iii) depreciation and amortization and other non-cash items properly
deducted in determining net income, and (iv) federal, state and local income
taxes, in each case for such Person for such period, computed and calculated
in
accordance with GAAP minus (b) non-cash items properly added in determining
net
income, in each case for the corresponding period.
Eligible
Notes Receivable means those Pledged Notes Receivable which satisfy
each of the following criteria:
(a) Borrower
shall be the sole payee;
(b) it
arises from a bona fide sale by Borrower of one or more Intervals;
(c) the
Interval sale from which it arises shall not have been cancelled by Purchaser,
and any statutory or other applicable cancellation or rescission period shall
have expired and the Interval sale is otherwise in compliance with this
Agreement;
(d) it
is secured by a Mortgage on the purchased Interval;
(e) principal
and interest payments on it are payable to Borrower in legal tender of the
United States;
(f)
payments of principal and interest on it are payable in equal monthly
installments;
(g) it
shall have an original term of no more than one hundred twenty (120) months,
and
the weighted average term on all Eligible Notes Receivable in respect of
which
Advances are outstanding shall not be more than one hundred and eight (108)
months;
(h) a
cash down payment has been received from Purchaser or the maker in an amount
equal to at least ten percent (10%) of the actual purchase price of a one
week
Interval (at least fifteen percent (15%) in the case of a Purchaser with
a FICO
Score indicator of less than 615), and Purchaser shall have received no cash
or
other rebates of any kind;
(i)
the first payment under each Note Receivable must be due and payable to
Borrower within 45 days of the closing date of the purchase of the Interval,
no
monthly installment is more than thirty (30) days contractually past due
at the
time of an Advance in respect of such Note Receivable, nor more than sixty
(60)
days contractually past due at any time;
(j)
the rate of interest payable on the unpaid balance is at least ten percent
(10%), and the rate of interest on all Eligible Notes Receivable in respect
of
which Advances are outstanding shall not be less than fifteen percent (15%)
per
annum at any time, excluding from each minimum any Note Receivable under
which
the applicable Purchaser is paying a lower rate pursuant to the
SCRA;
(k)
the Purchaser of the related Interval has immediate access to the timeshare
“unit week” related to such purchase, and the related unit has been completed,
developed, and furnished in accordance with the specifications provided in
the
Purchaser’s purchase contract, public offering statement and other Timeshare
Documents; and Purchaser has, subject to the terms of the Declaration, purchase
contract, public offering statement and other Timeshare Documents, complete
and
unrestricted access to the related Interval and the Resort;
(l) neither
Purchaser of the related Interval or any other maker of the Note is an Affiliate
of, or related to, or employed by Borrower;
(m) Purchaser
or other maker has no claim against Borrower and no defense, set-off or
counterclaim with respect to the Note Receivable;
(n) the
maximum remaining principal balance of any such Note Receivable, whether
from an
individual Purchaser or a related group of Purchasers, shall not exceed $50,000
(or such greater amount as may be approved in writing in advance by Agent),
provided, that up to 5% of Eligible Receivables may have a maximum
balance not to exceed $75,000 per Note Receivable and/or $100,000 in the
aggregate for a related group of Purchasers;
(o) it
is executed by a U.S. citizen or legal resident; provided, however, that
up to
five percent (5%) of the outstanding principal balance of all Eligible Notes
Receivable may at any time be comprised of Notes Receivable executed by a
non-U.S. citizen or legal resident, provided that any such non-U.S.
citizen or legal resident Purchaser makes payments on the applicable Note
Receivable via Payment Authorization Agreement;
(p) the
original of such Note Receivable has been endorsed to Agent and delivered
to the
Custodian as provided in this Agreement, and the terms thereof and all
instruments related thereto shall comply in all respects with all applicable
federal and state laws and the regulations promulgated thereunder;
(q) the
Unit in which the timeshare Interval being financed or evidenced by such
Note
Receivable is located, shall not be subject to any Lien which is not previously
consented to in writing by Agent;
(r)
the Note Receivable is in full compliance with all Applicable Laws;
(s) no
modifications or extensions of the Note Receivable have been agreed to other
than as permitted under Section 3.6 hereof, nor is the Note Receivable
the result of a downgrade to cure a Purchaser default under another Note
Receivable;
(t)
the Note Receivable conforms to Borrower’s underwriting guidelines and criteria
as set forth on Schedule 1.1(b) hereof;
(u) the
Note Receivable is evidenced by standard legal documentation and on a form
reviewed by and acceptable to Agent;
(v) the
applicable Purchaser’s FICO Score is not less than 600, provided that 5%
of the outstanding principal balance of all Eligible Notes Receivable may
at any
time be comprised of Notes Receivable where the applicable Purchaser has
no FICO
Score, and 25% may at any time be comprised of Notes Receivable where the
applicable Purchaser has no FICO Score or a FICO Score below 600, and the
weighted average FICO Score (measured once at the time of funding) of Eligible
Notes Receivable in a funding may not be less than 650;
(w) if
the loan is a newly originated Note Receivable which is replacing an existing
Eligible Note Receivable pledged as Collateral under the Agreement and the
proceeds have been used to finance the purchase of an Interval which is being
upgraded by the Purchaser to a more expensive Interval:
(1) the
principal balance of the existing Eligible Note Receivable which is being
upgraded may still be included for purposes of calculating the Borrowing
Base
for a period of time expiring on the earlier to occur of (i) the 31st day
after
the consumer documents effecting the upgrade have been executed or (ii) the
date
on which any payment on such Eligible Note Receivable becomes thirty (30)
or
more days past due;
(2) on
or before the second Business Day after the expiration of the statutory
rescission period in connection with any consumer documents executed effecting
any upgrade involving an Eligible Note Receivable and in any event within
ten
(10) days of such upgrade, the Borrower shall deliver to the Agent or its
designee the original of the new promissory note, comparable instrument or
installment sale contract executed in connection with such upgrade duly endorsed
in blank by the Borrower and the Borrower will cause all payments made with
respect to such new promissory note, comparable instrument or installment
sale
contract to be forwarded to the lockbox;
(3) any
new upgraded Note Receivable involving a prior Eligible Note Receivable shall
only be included as part of the Borrowing Base if (i) the prior Eligible
Note
Receivable has been removed from the Borrowing Base and the new upgraded
Note
Receivable satisfies all conditions for an Eligible Note Receivable, and
(ii)
the subject Purchaser’s FICO Score is not less than 600 (unless the prior
Eligible Note Receivable had been paid in full or the subject Purchaser has
made
a cash downpayment of at least 20% of the difference between the sales price
of
the prior Eligible Note Receivable and the sales price of the new Eligible
Note
Receivable).
Encumbered
Intervals means the Intervals subject to the
Mortgages.
Environmental
Laws means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time, the Resource
Conservation and Recovery Act of 1976, as amended from time to time, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the federal
Clean Air Act, the federal Clean Water Act, the federal Safe Drinking Water
Act,
the federal Toxic Substances Control Act, the federal Hazardous Materials
Transportation Act, the federal Emergency Planning and Community Right to
Know
Act of 1986, the federal Endangered Species Act, the federal Occupational
Safety
and Health Act of 1970, the federal Water Pollution Control Act, all state
and
local environmental laws, rules and regulations of each state in which a
Resort
is located, as all of the foregoing legislation may be amended from time
to
time, and any regulations promulgated pursuant to the foregoing; together
with
any similar local, state or federal laws, rules, ordinances or regulations
either in existence as of the date hereof, or enacted or promulgated after
the
date of this Agreement, that concern the management, control, storage,
discharge, treatment, containment, removal and/or transport of Hazardous
Materials or other substances that are or may become a threat to public health
or the environment; together with any common law theory involving Hazardous
Materials or substances which are (or alleged to be) hazardous to human health
or the environment, based on nuisance, trespass, negligence, strict liability
or
other tortious conduct, or any other federal, state or local statute,
regulation, rule, policy, or determination pertaining to health, hygiene,
the
environment or environmental conditions.
Environmental
Indemnification Agreement means the Environmental Indemnification
Agreement made by Borrower to Agent pursuant to this Loan Agreement, as the
same
may be amended from time to time.
Event
of Default has the meaning given to it in Section 8.1
hereof.
Exchange
Company means Resort Condominiums International, Inc. (“RCI”) or
Interval International, Inc. (“II”).
FICO
Score means the credit score attributed to a Purchaser by the Fair
▇▇▇▇▇ Company or such similar credit score reporting company acceptable to
Lender. Where a Purchaser consists of more than one individual, then
the applicable FICO Score shall be deemed to mean that of the primary
obligor.
Final
Maturity Date means September 28, 2012 or such date as is thirty
six (36) months following the extension of any Revolving Loan
Period.
Financial
Statements means the balance sheets and statements of income and
expense of the Borrower, and the related notes and schedules delivered by
Borrower to Agent prior to the Closing Date and provided for in Section
4.4 (c) hereof; and the quarterly, annual and other periodic
financial statements and reports required to be provided to Agent pursuant
to
Section 7.1 (h) hereof.
GAAP
means generally accepted accounting principles, applied on a consistent basis,
as described in Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants and/or in statements of the Financial
Accounting Standards Board which are applicable in the circumstances as of
the
date in question.
Governmental
Authority means any federal, state, local, or other governmental or
administrative body, instrumentality, department, or agency or any court,
tribunal, administrative hearing body, arbitration panel, commission, or
other
similar dispute-resolving panel or body.
Hazardous
Materials means each of “hazardous substances,” “hazardous waste”
or “hazardous constituents,” “toxic substances”, and “solid waste”, as defined
in the Environmental Laws, and any other contaminant or any material, waste
or
substance which is petroleum or petroleum based, asbestos, polychlorinated
biphenyls, flammable explosives, or radioactive materials.
IRC
means the Internal Revenue Code of 1986, as in effect from time to
time.
IRS
means the Internal Revenue Service of the United States of America.
Indebtedness
means (a) all obligations for borrowed money, (b) all obligations evidenced
by
bonds, debentures, notes, or other similar instruments and all reimbursement
or
other obligations in respect of letters of credit, bankers acceptances, interest
rate swaps, or other financial products, (c) all obligations under Capital
Leases, (d) all obligations or liabilities of others secured by a Lien on
any
asset a Person or its Subsidiaries, irrespective of whether such obligation
or
liability is assumed, (e) all obligations for the deferred purchase price
of
assets (other than trade debt incurred in the ordinary course of business
and
repayable in accordance with customary trade practices), and (f) any obligation
of Borrower or its Subsidiaries guaranteeing or intended to guarantee (whether
directly or indirectly guaranteed, endorsed, co-made, discounted, or sold
with
recourse) any obligation of any other Person that constitutes Indebtedness
under
any of clauses (a) through (e) above.
Interest
Rate means a variable rate, adjusted as of each LIBO Rate
Determination Date, equal to the LIBO Rate, determined as of each LIBO Rate
Determination Date, plus two hundred and forty (240) basis points per
annum.
Interval
means, with respect to each Resort the undivided fractional fee interval
ownership interest as a tenant-in-common (sometimes referred to in the Timeshare
Documents as a vacation ownership interest, condoshare interest, or condoshare
week) in a Unit sold to a Purchaser by delivery of a deed for a time-share
period per calendar year (or, in the case of a biennial use period, per
alternate calendar year) of one week (as defined in the Declaration), together
with all appurtenant rights and interests, including, without limitation,
appurtenant rights to use Common Elements, and easement, license, access
and use
rights in and to all Resort facilities and amenities (as described in the
Declaration), all as more particularly described in the Declaration or other
Timeshare Documents. Notwithstanding the foregoing, the term
“Interval” shall also include, with respect to the Oak N’ Spruce
Resort only, the beneficial interest in the entity which owns each of the
Units
at the Oak N’ Spruce Resort, as evidenced by the delivery to the
Purchaser of any such beneficial interest of a certificate of beneficial
interest for a timeshare period per calendar year (or, in the case of biennial
use period, per alternate calendar year) of one week (as defined in the Oak
N’ Spruce Resort Declaration), together with all pertinent rights and
interests, including, without limitation, a pertinent right to use Common
Elements, and easements, license, access and use rights in and to all Oak
N’ Spruce Resort facilities and amenities, all as more particularly
described in the Declaration or other Timeshare Documents for the Oak
N’ Spruce Resort.
Lender
has meaning given to it in the preamble hereof, and shall include any other
Person made a party to this Agreement in accordance with the provisions of
Section 10.9 hereof.
Lender
Expenses means all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by Borrower or its Subsidiaries under
any of the Loan Documents that are paid or incurred by Agent or
any Lender, (b) fees or charges paid or incurred by Agent or
any Lender in connection with the Borrower and its Subsidiaries,
including, fees or charges for photocopying, notarization, couriers and
messengers, telecommunication, public record searches (including tax lien,
litigation, bankruptcy and UCC searches), filing, recording, publication,
appraisal (including periodic Collateral appraisals or business valuations
to
the extent of the fees and charges (and up to the amount of any limitation)
contained in this Agreement), (c) costs and expenses incurred by Agent or
any Lender in the disbursement of funds to Borrower (by wire transfer
or otherwise), (d) charges paid or incurred by Agent or any Lender
resulting from the dishonor of checks relating to the Borrower or associated
with the Collateral, (e) reasonable costs and expenses paid or incurred by
the
Agent or any Lender to correct any default or enforce any provision of the
Loan
Documents, or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale, or advertising to sell the
Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) audit fees and expenses of Agent or any Lender
related to audit examinations of the Books to the extent of the fees and
charges
(and up to the amount of any limitation) contained in this Agreement, (g)
reasonable costs and expenses of third party claims or any other suit paid
or
incurred by the Agent or any Lender in enforcing or defending the
Loan Documents or in connection with the transactions contemplated by the
Loan
Documents or the Agent or any Lender’s relationship with Borrower,
(h) Agent and each Lender’s and Participant’s reasonable fees and expenses
(including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, or amending the Loan Documents, and (i) Agent and
each
Lender’s and Participant’s reasonable fees and expenses (including attorneys
fees) incurred in terminating, enforcing (including attorneys fees and expenses
incurred in connection with a “workout,” a “restructuring,” or an Insolvency
Proceeding concerning Borrower or its Subsidiaries or in exercising rights
or
remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether suit is brought, or in taking any Remedial Action
concerning the Collateral.
Liberty
Bank means Liberty Bank, a Connecticut nonstock mutual savings
bank.
LIBO
Rate Determination Date means the first Business Day of each
month. Notwithstanding the foregoing, the initial LIBO Rate
Determination Date shall be the Closing Date.
LIBO
Rate means the London Interbank Offered Rate for one-month United
States dollar-denominated deposits as published under the designation “Money
Rates” in the “Money and Investing” section of The Wall Street Journal
(Eastern Edition) (the “WSJ”). In the event
that the LIBO Rate established by the WSJ shall no longer be available, due
to
either the nonexistence of the WSJ or the WSJ’s failure to publish such a rate,
then Lender shall choose a substitute rate based upon a national index, selected
by Lender in its sole discretion.
Lien
means any interest in property securing an obligation owed to, or claim by,
a
Person other than the owner of such property, whether such interest arises
in
equity or is based on the common law, statute, or contract.
Loan means,
as the context requires, singly each Advance and collectively all Advances
made
by Lenders to Borrower under or pursuant to this Agreement.
Loan
Documents means, collectively, this Agreement and the following
documents and instruments listed below as such agreements, documents,
instruments or certificates may be amended, renewed, extended, restated or
supplemented from time to time.
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(a)
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This
Agreement;
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(b)
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The
Note;
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(c)
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The
Environmental Indemnification
Agreement;
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(d)
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The
Assignment of Notes Receivable and
Mortgages;
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(e)
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Borrower’s
Certificate and Request for
Advance;
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(f)
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The
Lockbox Agreement;
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(g)
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The
Custodial Agreement;
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(h)
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The
Standby Servicing Agreement
Assignment;
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(i)
UCC financing statements covering the Collateral, to be filed with the
Texas
Secretary of State and the Secretary of State and/or such other office
where UCC
financing statements are required to be filed pursuant to the Code;
and
(j)
Such other agreements, documents, instruments, certificates and materials
as
Agent may request to evidence the Obligations; to evidence and perfect the
rights and Liens and security interests of Agent, as agent for Lenders,
contemplated by the Loan Documents, and to effectuate the transactions
contemplated herein, as such agreements, documents, instruments or certificates
may be hereafter amended, renewed, extended, restated or supplemented from
time
to time.
Loan
Year means the period from the Closing Date through the last day
of
the next full twelve (12) calendar month period and each twelve (12) calendar
month period thereafter.
Lockbox
Agent means ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank, a New York banking association
having a place of business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
or such other financial institution as may be approved by Agent in writing
from
time to time.
Lockbox
Agreement means the Lockbox Agreement of even date herewith, by and
among Borrower, Lenders, Agent, Servicing Agent and Lockbox Agent, pursuant
to
which the Lockbox Agent is to provide lockbox, reporting and related services
and is to provide for the receipt of payments on the Notes Receivable and
the
disbursement of such payments to Agent.
Mandatory
Prepayment means any prepayment required by Section 2.4 (b)
hereof.
Marketing
and Sales Expenses means all promotion, lead generation, sales
commissions and all other marketing expenses incurred or paid by Borrower
pursuant to any marketing agreements or otherwise.
Material
Adverse Change means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities
or
condition (financial or otherwise) of Borrower, taken as a whole, (b) a
material impairment of the ability of Borrower to perform its obligations
under
the Loan Documents or of the Lender’s ability to enforce the Obligations or
realize upon the Collateral, or (c) any impairment of the enforceability or
priority of the Lender’s Liens with respect to the Collateral.
Maximum
Amount means an aggregate amount not to exceed at any time
$37,500,000.00. provided that such maximum amount is subject to the restrictions
set forth in Section 2.1(a) hereof.
Mortgage
means a properly recorded, first priority mortgage, deed of trust, deed to
secure debt, assignment of beneficial interest or other security instrument,
as
applicable, executed and delivered by each Purchaser to Borrower, securing
a
Pledged Note Receivable and encumbering all of the right, title and interest
of
such Purchaser in the related Encumbered Interval and related or appurtenant
easement, access and use rights and benefits. Agent acknowledges that
assignments of beneficial interest executed by Purchasers of Intervals at
Oak
N’ Spruce Resort will not be recorded and that Borrower will not be
required to provide Agent or Lenders with any title insurance with respect
to
Intervals at Oak N’ Spruce Resort.
Note
means the Promissory Note of even date herewith in the amount of the
Maximum Amount, as amended, increased or extended from time to time, or any
new
promissory note issued in replacement (but not in repayment)
thereof.
Note
Receivable means a promissory note executed in favor of Borrower in
connection with a Purchaser’s acquisition of an Interval.
Obligations
means all Indebtedness due Agent, any Lender or any Affiliate of a Lender,
all
amounts due or becoming due to Agent or any Lender in respect of the Loan
under
any of the Loan Documents, including principal, interest, prepayment premiums,
contributions, taxes, insurance, loan charges, custodial fees, attorneys’ and
paralegals’ fees and expenses and other fees or expenses incurred by Agent or
any Lender or advanced to or on behalf of Borrower by Agent or any Lender
pursuant to any of the Loan Documents, and the prompt and complete payment
and
performance by the Borrower of all obligations, indebtedness and liabilities
pursuant to this Agreement or any of the Loan Documents or
otherwise.
Operating
Contract or Operating Contracts has the meaning given to it in
Section 6.20 hereof.
Origination
Fee has the meaning given to it in Section 4.2
hereof.
Participant
means, singly and collectively, any bank or other entity, which is indirectly
or
directly funding to or through Liberty Bank with respect to the Loan, in
whole
or in part, including, without limitation, any direct or indirect assignee
of
Liberty Bank in the Loan.
Payment
Authorization Agreement means a pre-authorized electronic debit
agreement by a Purchaser for payment of a Note Receivable.
Permitted
Discretion means a determination made in the exercise of reasonable
(from the perspective of a secured asset-based lender in the same or similar
circumstances) business judgment.
Person
means an individual, partnership, corporation, limited liability company,
trust,
unincorporated organization, other entity, or a government or agency or
political subdivision thereof.
Pledged
Notes Receivable means any Note Receivable which at any time has
been pledged to Agent on behalf of Lenders by Borrower pursuant to this
Agreement or any of the Loan Documents (and all replacements of such
Notes Receivable pursuant to Section 2.4(b) hereof.).
Prescribed
Laws means, collectively, (a) the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
Act
of 2001 (Public Law ▇▇▇ ▇▇) (▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇), (▇) Executive Order No.
13224
on Terrorist Financing, effective September 24, 2001, and relating to Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism, (c) the International Emergency Economic Power
Act, 50 U.S.C. § 1701 et seq., (d) the Trading with the Enemy Act, 50 U.S.C.
App. 1 et seq., and (d) all other Legal Requirements relating to money
laundering or terrorism, and, in each case, any Executive Orders or regulations
promulgated under any such laws.
Property
or Properties means any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
Pro
Rata Percentage means the applicable percentage of the Loan that
each Lender has agreed to make to Borrower pursuant to this Agreement as
set
forth in Schedule 1.0 hereof, as such percentage may from time to time be
amended by Agent and the applicable Lender.
Purchase
Price means the total purchase price of a timeshare Interval, as
set forth in the Timeshare Documents and Note Receivable relating to the
purchase of such Interval.
Purchaser
means any Person who purchases one or more Intervals.
Quarterly
Financial Report means, individually and collectively, as
applicable, the financial reports delivered in accordance with Section 7.1
(h)(i) hereof.
Renewal
Fee has the meaning given to it in Section 2.3(c)
hereof.
Resort
or Resorts (also “Eligible Resort” or “Eligible Resorts”) means,
individually and collectively, as applicable, each or all of the interval
ownership and time-share projects consisting of: (i) (A) ▇▇▇▇▇ Lake Ranch,
▇▇▇▇▇▇▇, Texas; (B) Piney Shores Resort, Conroe, Texas; (C) Lake O’ The Woods,
Flint, Texas; (D) Hill Country Resort, Canyon Lake, Texas; (E) Ozark Mountain
Resort, ▇▇▇▇▇▇▇▇▇▇ City, Missouri; (F) Holiday Hills Resort, Branson, Missouri;
(G) Fox River Resort, LaSalle County, Illinois; (H) Timber Creek Resort,
Jefferson County, Missouri (I) Oak N’ Spruce Resort, South ▇▇▇, Massachusetts;
(J) Apple Mountain Resort, Habersham County, Georgia; (K) The Villages, Flint,
Texas and (L) Silverleaf’s Seaside Resort, Galveston County, Texas; (M) Orlando
Breeze Resort, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ County, Florida (also sometimes individually
and
collectively referred to herein as the “Existing Resorts”) and (ii) subject to
Agent’s prior written approval and satisfaction by the Borrower of the
conditions precedent set forth in Sections 3.5 and 4.4
hereof, the Additional Eligible Resorts. The term “Resort” or
“Resorts” includes, among other things, the undivided annual or (biennial)
timeshare ownership interests (Intervals) in the respective Resorts, and
the
appurtenant exclusive rights to use Units in one or more buildings or phases
and
all appurtenant or related properties, amenities, facilities, equipment,
appliances, fixtures, easements, licenses, rights and interests, including
without limitation, the Common Elements, as established by and more fully
defined and described in the respective Declarations, and the other Timeshare
Documents.
Revolving
Loan Period means the period during the Term in which the Borrower
may borrow, repay and re-borrow Advances, commencing on the Closing Date
and
terminating on September 28, 2009 or such later date pursuant to Section
2.3(c).
Servicing
Agent means Lender’s exclusive Agent, which shall be such Person or
Persons designated by Borrower and approved by Agent in its sole discretion,
for
the purposes of billing and collecting amounts due on account of the Pledged
Notes Receivable, providing reports pursuant to the Lockbox Agreement and
performing other servicing functions not performed by the Lockbox
Agent. Borrower shall be the Servicing Agent until an Event of
Default shall have occurred and Agent replaces Borrower as Servicing Agent
as
provided in Section 9.1(i) hereof.
Silverleaf
Club means Silverleaf Club, a Texas non-profit
corporation.
Silverleaf
Finance II Documents means the loan agreement, the developer
transfer agreement, the demand notes and all other agreements or documents
executed in connection with the TFC Conduit Loan, as each may be amended,
restated or otherwise modified from time to time.
SCRA
means The Servicemembers ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code Appendix
Sections 501-593, which in relevant part limits to 6% per annum the interest
charged on credit obligations of active duty military members, reservists
who
are in active federal service, and National Guardsmen who are in active federal
service, applicable to all obligations entered into before beginning active
duty
if the military service materially affects his or her ability to meet such
obligations.
SPV
means any special purpose entity created for the purpose of effecting a
securitization of certain of the assets of Borrower.
SPV
Assets means those assets sold or conveyed by Borrower to the SPV
pursuant to the documents created for the securitization
transaction.
Standby
Servicer means the Person selected by Agent to act as standby
servicer in accordance with this Agreement. The Standby Servicer
shall be Concord Servicing Corporation.
Standby
Servicing Agreement means the agreement of even date herewith among
Borrower, Standby Servicer and Agent, as amended from time to time, pursuant
to
which the Standby Servicer shall provide servicing functions with respect
to the
Pledged Notes Receivable in accordance with Section 9.1(i)
hereof.
Subsidiary
means, with respect to a Person, a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns
or
controls the shares of Stock having ordinary voting power to elect a majority
of
the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other
entity.
Survey
means a plat or survey of the Resorts prepared by a licensed surveyor acceptable
to Agent.
Tangible
Net Worth means, with respect to any Person, the amount calculated
in accordance with GAAP as: (i) the consolidated net worth of such Person
and
its consolidated subsidiaries, minus (ii) the consolidated intangibles of
such
Person and its consolidated subsidiaries, including, without limitation,
goodwill, trademarks, tradenames, copyrights, patents, patent allocations,
licenses and rights in any of the foregoing and other items treated as
intangible in accordance with GAAP. Notwithstanding the foregoing, if
subsequent to the Closing Date deferred sales are no longer considered an
asset
under GAAP, Agent agrees, at the request of Borrower, to determine, in its
reasonable discretion, whether deferred sales should continue to be considered
an asset for purposes of determining Borrower’s Tangible Net Worth.
Term
means the period beginning on the Closing Date and ending on the Final Maturity
Date.
TFC
means Textron Financial Corporation.
TFC
Facility means that certain credit facility provided by TFC to
Borrower pursuant to the TFC Documents.
TFC
Documents means the loan agreement, the promissory notes and all
other agreements or documents executed in connection with the TFC Facility,
as
each may be amended, restated or otherwise modified from time to
time.
TFC
Conduit Loan means that certain loan facility provided by TFC in
accordance with the terms of the Silverleaf Finance II Documents.
Timeshare
Act means any statute, act, regulation, ordinance, rule or law
applicable to the establishment and operation of the Resorts and the sales
of
the Intervals.
Timeshare
Documents means any registration statement required under any
Timeshare Act approving the establishment and operation of the Resorts and
the
sales of Intervals.
Timeshare
Owners’ Association means, with respect to each Resort, the
applicable not-for-profit corporations described on Schedule 1.1(c)
hereof.
Total
Interest Expense means, for any period, the aggregate amount of
interest required to be paid or accrued by Borrower and its Subsidiaries
during
such period on all indebtedness of Borrower and its consolidated Subsidiaries
outstanding during all or any part of such period, whether such interest
was or
is required to be reflected as an item of expense or capitalized, including
payments consisting of interest in respect of any capitalized lease, or any
synthetic lease and including commitment fees, agency fees, facility fees,
balance deficiency fees and similar fees or expenses in connection with the
borrowing of money.
Transfer
Account means the account established by Agent to which all Loans
by Lenders will be made.
UBS
means UBS Real Estate Securities, Inc.
UBS
Facility means that certain credit facility provided by UBS
pursuant to the UBS Documents.
UBS
Documents means the loan agreement, the promissory notes and all
other agreements or documents executed in connection with the UBS Facility,
as
each may be amended, restated or otherwise modified from time to
time.
UCC
Financing Statements means the UCC-1 Financing Statements, naming
the Borrower as debtor and the Agent as secured party on behalf of Lenders,
heretofore or hereafter filed in connection with the Loan and all amendments
thereto.
Unit
means, with respect to each Resort, one living unit in a building incorporated
into the Resort pursuant to the Declaration, together with all related or
appurtenant interests in services, easements and other rights or benefits,
as
described and provided for in the Declaration, including but not limited
to the
right to use the Resort amenities and facilities in accordance with the
Timeshare Documents.
Unused
Line Fee has the meaning given to it in Section 2.3(c)
hereof.
Wellington
means New Wellington Financial, L.L.C., located in Charlottesville,
Virginia.
WFF means
▇▇▇▇▇ Fargo Foothill, LLC.
WFF
Facility means that certain credit facility provided by WFF to
Borrower pursuant to the WFF Documents.
WFF
Documents means the loan agreement, the promissory notes and all
other agreements or documents executed in connection with the WFF Facility,
as
each may be amended, restated or otherwise modified from time to
time.
1.2 Construction. Unless
the context of this Agreement clearly requires otherwise, references to the
plural include the singular, references to the singular include the plural,
the
term “including” is not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase
“and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and
similar terms in this Agreement refer to this Agreement as a whole and not
to
any particular provision of this Agreement. An Event of Default shall
“continue” or be “continuing” until such Event of Default has been waived in
writing by Lender. Section, subsection, clause, schedule, and exhibit
references are to sections, subsections, clauses, schedules and exhibits
in this
Agreement unless otherwise specified. Any reference in this Agreement
or in the Loan Documents to this Agreement, any of the Loan Documents or
any
other document or agreement shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, supplements,
and restatements thereto and thereof, as applicable.
1.3 Schedules
and Exhibits. All of the schedules and exhibits attached
to or referred to within this Agreement, as they may from time to time be
amended or restated, shall be deemed incorporated herein by
reference.
Section
2-The Loan
2.1 Revolving
Loan and Lending Limits.
(a) Revolving
Loan; Lending Limits; Making of Loans. Upon the terms
and subject to the conditions set forth herein (including without limitation
Sections 2.1(c) and 2.6 hereof), each Lender agrees severally, at
any time and from time to time during the Revolving Loan Period to make Advances
to Borrower and Borrower may borrow, repay and re-borrow during the Revolving
Loan Period, in an aggregate amount not to exceed at any time the lesser
of each
Lender’s Pro Rata Percentage of: (i) the Borrowing Base, (ii) the Availability
or (iii) the Commitment. The Revolving Loan Period shall be the
period during the Term in which the Borrower may borrow, repay and re-borrow
Advances.
Borrower
acknowledges, agrees and confirms that the obligations of all Lenders to
make
Loans under this Agreement to Borrower is limited to the lesser of: (i) the
Borrowing Base, (ii) the Availability or (iii) the
Commitment. Borrower further acknowledges, agrees and confirms that
the obligation of each Lender to make loans hereunder to Borrower is limited
to:
(i) with respect to each Advance hereunder, each Lender’s Pro Rata Percentage of
any such Advance hereunder and (ii) with respect to all Advances made hereunder,
such Lender’s obligation hereunder shall be limited to its commitment as set
forth on Schedule 1.0.
Each
Loan
by a Lender shall be made ratably in accordance with each Lender’s respective
Pro Rata Percentage, provided, however, that the failure of any Lender to
make
any required Loan shall not in itself relieve any other Lender of its obligation
to make any required Loan hereunder. Likewise, no Lender shall be
responsible or liable for the failure of any other Lender to make any Loan
required to be made by such other Lender, nor shall any Lender be obligated
to
make any Loan or Loans in excess of its respective Pro Rata Percentage, but
not
in excess of its Commitment, in the event that any other Lender fails or
refuses
to make a Loan or Loans as provided hereunder. As and when additional
Lenders execute and deliver this Agreement, then (A) such additional Lenders
shall be deemed to have simultaneously purchased from each of the other Lenders
who have previously executed and delivered this Agreement, a share in such
other
Lenders’ Loans so that the amount of the Loans of all Lenders shall be pro rata
as otherwise set forth above and (B) such other adjustments shall be made
from
time to time as shall be equitable to insure that the Advances to Borrower
are
made ratably by each Lender in accordance with its respective Pro Rata
Percentage.
(b) Advances
for Certain Fees. Borrower has advised Lender that Custodian
will ▇▇▇▇ on a monthly basis for its services. Borrower agrees that
upon receipt of a monthly billing from Custodian, it will, unless Custodian
shall have delivered such billing to Agent directly, review and approve such
billing or discuss and resolve with Custodian any discrepancies in such billing,
within five (5) days of receipt of such billing and advise Agent of Borrower’s
approval of such billing. Agent is authorized by Borrower to pay
directly to Custodian the amount of such billing as an Advance, to the extent
of
Availability, or as a deduction from the next requested Advance by
Borrower.
(c) Maximum
Amount of Advances. Notwithstanding anything to the
contrary contained herein, no Lender shall have an obligation to make an
Advance
of its Pro Rata Percentage thereof hereunder to the extent that (i) the
aggregate of Advances outstanding would cause the Loan to exceed the lesser
of
(A) Borrowing Base, (B) the Availability or (C) the Commitment, or (ii) in
an
amount which would cause the aggregate outstanding principal balance of Liberty
Bank’s Commitment retained by Liberty Bank and not participated to other lenders
to exceed Twenty-Five Million Dollars ($25,000,000); or (C) such an Advance
would cause such Lender or any Participant in such loans to violate any legal
lending limit under Section 2.5 hereof or otherwise.
(d) Note
Evidencing Borrower’s Obligations. Borrower’s
obligations to pay the principal of and interest on the Loan or Loans made
by
each Lender shall be evidenced by the Note to the Agent, as Agent for each
Lender, which Note shall be dated as of the date hereof and be in the principal
amount of the Maximum Amount. The Note will mature on the Final
Maturity Date, bear interest as provided in Section 2.2 hereof and
be otherwise entitled to the benefits of this
Agreement. Notwithstanding the stated principal amount of the Note,
the aggregate outstanding principal amount of the Loan at any time shall
be the
aggregate principal amount owing on the Note at such time. Agent
shall and is hereby authorized to record in its internal books and records
the
date and amount of each Advance made by Lenders, the Interest Rate and interest
period applicable thereto and each repayment thereof; and such books and
records
shall, as between Borrower and each Lender, absent manifest error, constitute
prima facie evidence of the accuracy of the information contained
therein. Failure by Agent to so record any Advance made by Lenders
(or any error in such recordation) or any payment thereon shall not affect
the
Obligations of Borrower under this Agreement or under the Note and shall
not
adversely affect Lender’s rights under this Agreement with respect to the
repayment thereof. At the election of any Lender, Borrower shall
execute and deliver to such Lender a note in a stated principal amount equal
to
such Lender’s Pro Rata Percentage of the Loan, which such note or notes shall be
on the same terms and conditions as provided above and which note or notes
shall
be included within the definition of “Note” as such term is used
herein.
(e) Notice
of Advances.
(i)
Upon receipt by Agent from Borrower of a written request for Advance in
accordance with Section 5 hereof and Borrower’s satisfaction of the
requirements set forth in Section 5 hereof, Agent shall give a written
notice (a “Notice of Borrowing”) to each Lender, (which
Notice of Borrowing shall be given to each Lender not less than two (2) Business
Days prior to the date of the proposed Advance), setting forth: (i) the
total amount of the Advance requested by Borrower; (ii) the Borrowing Base
received from Borrower supporting such requested Advance; (iii) the amount
of
all Loans remaining outstanding by each respective Lender; (iv) the outstanding
principal balance of the Loan; (v) each such Lender’s Pro Rata Percentage of the
requested Advance and (vi) the date on which such Advance is to be made;
or
(ii) at
its option, the Agent shall provide to each Lender: (A) each month by the
close
of business on the fifth (5th) Business Day following receipt by Agent from
Borrower, but in no event later than the 30th day of the month: (i) a reconciled
Borrowing Base Report in the form attached as Exhibit B hereof; and (ii)
an updated trial balance and aging report for the Pledged Notes Receivable
(a
“Collateral Data Report”); and (B) by the close of
business on the tenth (10th) Business Day following receipt by Agent from
Borrower of the Borrowing Base Report and the Collateral Data Report: (i)
a
summary of all Advances made by Agent during the immediately preceding month
(a
“Summary of Weekly Advances”); and (ii) a summary report
of Advances and repayments or collections for the immediately preceding month
and a calculation of the net Lender’s Advance required of such Lender with
respect to all Advances made during the immediately preceding month (a
“Lender Advance Report”).
(f) Disbursement
of Funds.
(i) If
Notice of Borrowing is provided in accordance with Section 2.1(e) above,
then after receiving a Notice of Borrowing from Agent, each Lender shall,
not
later than 11:00 a.m., Eastern Standard Time, on the date specified in such
Notice of Borrowing on which the proposed Advance is to be made, wire transfer
to Agent at the Transfer Account, in immediately available funds, an amount
equal to each such Lender’s Pro Rata Percentage of the proposed Advance as set
forth in the Notice of Borrowing. Upon Agent’s receipt of funds from
each Lender equal to the amount of the requested Advance, and subject to
Borrower’s compliance with the terms and conditions of this Agreement, Agent
shall disburse the Advance to Borrower by wire transfer of funds as directed
in
writing by Borrower. If Agent shall not receive funds from any Lender
as set forth above, then the amount of the Advance in question shall be
automatically reduced by an amount equal to the missing Lender’s Pro Rata
Percentage of the Advance in question, and Agent shall, subject to Borrower’s
compliance with the terms and conditions of this Agreement, disburse the
Advance
in the reduced amount to Borrower by wire transfer of funds as directed in
writing by Borrower. Agent, in its sole and absolute discretion, may
(but shall not be obligated to) make the full amount of the requested Advance
available to Borrower prior to the receipt by Agent from one or more Lenders
of
funds representing such Lender’s or Lenders’ Pro Rata Percentage of the Advance
in question. If the funds representing such Lender’s or Lenders’ Pro
Rata Percentage of the Advance in question are not received by Agent within
two
(2) Business Days of the date of such Advance, Borrower shall immediately,
upon
demand of Agent, repay such amount to Agent. Nothing herein shall be
deemed to relieve Agent or any Lender from its obligations hereunder or to
prejudice any rights Agent may have against any Lender as a result of any
Lender’s failure to make any Loan or Loans as provided herein; or
(ii) If
notice of Advances is provided in accordance with Section 2.1(e)
above, then by the close of business on the third (3rd) Business Day following
such Lender’s receipt of the Lender Advance Report, such Lender shall wire
transfer to Agent at the Transfer Account, in immediately available funds,
the
net amount due from such Lender as set forth in the Lender Advance
Report. If the funds representing such Lender’s amount of the Advance
or Advances in question are not received by Agent within five (5) Business
Days
of the date of such Lender’s receipt of the Lender Advance Report, Borrower
shall immediately, upon demand of Agent, repay such amount to
Agent. Nothing herein shall be deemed to relieve Agent or any Lender
from its obligations hereunder or to prejudice any rights Agent may have
against
any Lender as a result of any Lender’s failure to make any Loan or Loans as
provided herein.
(g)
Monthly
Collateral and
Borrowing Base Reporting. Within ten (10) days following
the end of any calendar month, Borrower shall provide to Agent: (i) an updated
Borrowing Base Report in the form attached as Exhibit B hereof; and (ii)
an updated trial balance and aging report for the Pledged Notes Receivable
(a
“Collateral Data Report”); and (iii) by the close of
business on the tenth (10th) Business Day following receipt by Agent from
Borrower of the Borrowing Base Report and the Collateral Data Report: (a)
a
summary of all Advances made by Agent during the immediately preceding month
(a
“Summary of Weekly Advances”); and (b) a summary report
of Advances and repayments or collections for the immediately preceding
month.
2.2 Interest
Rates.
(a) Interest
Rates. Except as provided in clause (b) below, all
Obligations that have been charged to the Loan pursuant to the terms hereof
shall bear interest on the Daily Balance thereof at a per annum rate equal
to
the Interest Rate from the date of Agent’s wiring of funds to Borrower through
the date of Agent’s receipt of repayment of the Loan (if received by Agent later
than noon, Eastern Standard Time, then interest accrual shall be through
the
next Business Day following such receipt).
(b) Default
Rate. Upon the occurrence and during the continuation of an
Event of Default (and at the election of Agent), all Obligations that have
been
charged to the Loan pursuant to the terms hereof shall bear interest on the
Daily Balance thereof at a per annum rate equal to the Default
Rate. Each Lender’s Loan shall bear interest at the Interest Rate or
the Default Rate as applicable as of the date funds are received by Agent
as
provided in Section 2.1(f) hereof through the date of Agent’s
wiring of repayment funds to each Lender in accordance with
Sections 2.1(f) and 2.3(d) hereof.
2.3 Payments. From
and after the Closing Date, Borrower agrees punctually to pay or cause to
be
paid to Agent, as Agent for each Lender, all principal and interest due under
the Note in respect of the Loans. Interest and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each
month
at any time that Obligations are outstanding. Borrower shall make the
following payments on the Loan:
(a) Monthly
Payments. Borrower shall direct or otherwise cause all
makers of all Pledged Notes Receivable to pay all monies due thereunder to
the
lockbox established pursuant to the Lockbox Agreement, or as otherwise required
by Agent. One hundred percent (100%) of the cleared funds collected
from the Pledged Notes Receivable each week will be paid to Agent by the
Lockbox
Agent pursuant to the Lockbox Agreement, and will be applied by Agent twice
monthly as follows: first to the payment of costs or expenses incurred by
Agent pursuant to this Agreement in creating, maintaining, protecting or
enforcing the Liens in and to the Collateral and in collecting any amounts
due
any Lender in connection with the Loan (“Collection Costs”) and
the balance to each Lender in accordance with the applicable percentage of
the
outstanding principal balance of the Loan that each Lender has made (the
“Pro Rata Payment Percentage”). Each Lender shall
apply each such payment in the following order: (i) to any interest accrued
at the Default Rate; (ii) then to interest accrued and payable at the
Interest Rate; and (iii) then to outstanding principal. In the event
that the cleared funds received by Agent are insufficient to pay the amounts
described in aforementioned clauses (i)-(ii), then Borrower shall pay the
difference to Agent on or before the fifth (5th) day of the following
month. In the event Borrower receives any payments on any of the
Pledged Notes Receivable directly from or on behalf of the maker or makers
thereof, Borrower shall receive all such payments in trust for the sole and
exclusive benefit of Lenders; and Borrower shall deliver to the Lockbox Agent
all such payments (in the form so received by Borrower) as and when received
by
Borrower, unless Agent shall have notified Borrower to deliver directly to
Agent
all payments in respect of the Pledged Notes Receivable which may be received
by
Borrower, in which event all such payments (in the form received) shall be
endorsed by Borrower to Agent, as agent for Lenders and delivered to Agent
promptly upon Borrower’s receipt thereof.
(b) Final
Payment. The entire outstanding principal amount of the
Loan, together with all other Obligations hereunder, shall be due and payable
on
the Final Maturity Date.
(c) Origination
Fee; Renewal Fee(s); Unused Line Fee(s). Borrower shall
pay the Origination Fee as prescribed in Section 4.2
hereof. In addition, annually for each twelve-month extension to the
Revolving Loan Period agreed to in writing by Agent, Lenders and Borrower
(and
without binding any of the foregoing parties in advance to enter into such
an
extension), Borrower shall pay a fee of 0.25% (each, a “Renewal Fee”) of the
Commitment on or before the effective date of such extension. In
addition, the Borrower shall pay an unused line fee (the “Unused Line Fee”)
calculated as of the last day of each calendar month equal to one quarter
of one
percent (0.250%) per annum of the difference between (i) the Maximum Amount,
and
(ii) the average outstanding principal balance of the Loan during such month,
due and payable by the fifteenth (15th) day
of the
following calendar month; provided, that the Unused Line Fee would be
waived: (A) through the last day of the sixth (6th) full
calendar
month after the Closing Date, and (B) for any calendar month where the average
outstanding principal balance of the Loan during such month exceeded
$15,000,000.
(d) Payments
to Lender. Agent may at its sole and absolute discretion
either: (i) promptly upon receipt wire transfer to any Lender its Pro Rata
Percentage of any payment received from Borrower in accordance with this
Section 2.3 or Section 2.4 hereof; or (ii) include any
Lender’s Pro Rata Percentage of any payment received from Borrower in accordance
with this Section 2.3 or Section 2.4 hereof in the Lender
Advance Report pursuant to Section 2.1(g), for transfer to Lender
pursuant to Section 2.1(f) hereof.
2.4 Prepayments.
(a) Voluntary
Prepayments. Except for regular payments of interest and
principal as provided hereunder, prepayments, (i) shall not be permitted
during
the Revolving Loan Period, and (ii) may be made in whole, but not in part,
upon
five (5) days prior written notice to the Agent at any time after the end
of the
Revolving Loan Period upon payment of the applicable Prepayment Premium (whether
such prepayment results from voluntary payments by Borrower, acceleration,
or
otherwise); provided, however, that (A) payments or prepayments of Pledged
Notes
Receivable made by Purchasers who are not directly or indirectly solicited
by
Borrower to make such prepayment shall not violate this Section 2.4(a),
and no Prepayment Premium shall be payable as a result of any such payment
by
Purchasers; and (B) if at any time the Borrower wishes to release any Pledged
Notes Receivable for the purpose of including those Pledged Notes Receivable
in
a securitization pooling or similar conduit transaction, after 30 days’ prior
written notice to Agent, Borrower may prepay the principal balance of the
Loan
in whole (but not in part), and no Prepayment Premium will be due where such
prepayment is the result of a securitization or similar conduit transaction
closing, as certified by Borrower to Agent.
(b) Mandatory
Prepayments.
(i) Overadvances. If
at any time the outstanding principal balance of the Loan exceeds the Borrowing
Base or the Commitment, Borrower shall immediately either (A) prepay the
Loan in
an amount necessary to reduce the outstanding principal balance of the Loan
to
an amount within the lending limits set forth in Section 2.1 hereof, or
(B) pledge and deliver to Agent such additional or replacement Eligible Notes
Receivable such that the remaining outstanding principal balance of the Loan
is
within the lending limits set forth in Section 2.1 hereof.
(ii) Ineligible
Pledged Notes Receivable. If at any time after the expiration of the
Revolving Loan Period, Agent determines that any Pledged Notes Receivable
which
are included in the Borrowing Base, do not qualify as Eligible Notes Receivable
(“Ineligible Notes Receivable”), then Borrower shall, within five (5) Business
Days after notice, either (A) prepay the Loan in an amount equal to the balance
due under such Pledged Note Receivable, or (B) replace the Ineligible Note
Receivable with an Eligible Note Receivable having an outstanding aggregate
principal balance equal to or in excess of the outstanding principal balance
of
such Ineligible Note Receivable. The pledge and delivery to Agent as
agent for Lenders of additional Eligible Notes Receivable shall comply with
the
document delivery and recordation requirements set forth in
Section 5.1 hereof.
(iii) No
Prepayment Premium. No Prepayment Premium shall be due in connection
with any mandatory prepayment made in accordance with
Sections 2.4(b)(i) or 2.4(b)(ii)
hereof.
(c) Prepayment
Premium. Except as specifically set forth in
Section 2.4(a) and 2.4(b) hereof, any prepayment of the Loan
pursuant to Section 2.4(a) hereof, whether prior to or after
acceleration based upon an Event of Default, hereof must be accompanied by
a
prepayment premium (the “Prepayment Premium”) calculated, as of immediately
prior to such prepayment, as follows:
|
Date
of Prepayment
|
Premium
|
|
|
During
the first Loan Year after expiration of the Revolving Loan
Period;
|
three
percent (3%) of the then outstanding balance of the
Loan;
|
|
|
During
the second Loan Year after expiration of the Revolving Loan
Period;
|
two
percent (2%) of the then outstanding balance of the
Loan;
|
|
|
During
the third Loan Year after expiration of the Revolving Loan
Period;
|
one
percent (1%) of the then outstanding balance of the Loan;
and
|
|
|
Thereafter;
|
none.
|
(d) Prepayment
Premium upon Acceleration. If the Loan is accelerated
based on an Event of Default prior to or after the expiration of the Revolving
Loan Period, or if Borrower undertakes a voluntary prepayment prior to
expiration of the Revolving Loan Period, at Agent’s sole discretion, payments on
the Loan must include the Prepayment Premium that would be applicable if
prepayment occurred in the first Loan Year after expiration of the Revolving
Loan Period.
2.5 Capital
Adequacy Event. If, after the date hereof, a Lender or
Participant determines that (i) the adoption of or change in any law, rule,
regulation or guideline regarding capital requirements for banks or bank
holding
companies, or any change in the interpretation or application thereof by
any
Governmental Authority charged with the administration thereof, or (ii)
compliance by Lender or Participant or its respective parent bank holding
company with any guideline, request, or directive of any such entity regarding
capital adequacy (whether or not having the force of law), has the effect
of
reducing the return on Lender’s or Participant’s or their respective holding
company’s capital as a consequence of such Lender’s or Participant’s agreements
hereunder to a level below that which such Lender or Participant or respective
holding company could have achieved but for such adoption, change, or compliance
(taking into consideration Lender’s or Participant’s or respective holding
company’s then existing policies with respect to capital adequacy and assuming
the full utilization of such entity’s capital) by any amount deemed by Lender or
Participant to be material, then Agent may notify Borrower
thereof. Following receipt of such notice, Borrower agrees to pay
Agent on demand the amount of such reduction of return of capital as and
when
such reduction is determined, payable within 90 days after presentation by
Lender or Participant of a statement in the amount and setting forth in
reasonable detail Lender’s or Participant calculation thereof and the
assumptions upon which such calculation was based (which statement shall
be
deemed true and correct absent manifest error). In determining such
amount, Lender or Participant may use any reasonable averaging and attribution
methods.
2.6 Suspension
of Advances.
(a) Suspension
of Sales. If any stay, order, cease and desist order,
injunction, temporary restraining order or similar judicial or non-judicial
sanction shall be issued limiting or otherwise materially adversely affecting
any Interval sales activities, other business operations in respect of the
Resorts, or the enforcement of the remedies of Agent and Lenders hereunder,
then, in such event, Agent and Lenders shall have no obligation to make any
Advances hereunder: (i) in respect of Pledged Notes Receivable from the sale
of
Intervals which are the subject of any stay, order, cease and desist order,
injunction, temporary restraining order or similar judicial or non-judicial
sanction that has been issued until the stay, order, cease and desist order,
injunction, temporary restraining order or similar judicial or non-judicial
sanction has been lifted or released to the satisfaction of Agent and (ii)
in
respect of Pledged Notes Receivable from the sale of Intervals at any Resort
if:
(x) the stay, order, cease and desist order, injunction, temporary restraining
order or similar judicial or non-judicial sanction in question has not been
lifted or released to the satisfaction of Agent within sixty (60) days of
its
issuance and (y) there is a reduction in the total number of sales of Intervals
by Borrower in any Loan Year of more than twenty percent (20%) from the total
number of sales of Intervals in the immediately preceding Loan
Year.
(b) Change
in Control. If there shall occur a change, singly or in
the aggregate, of more than fifty percent (50%) of the executive management
of
Borrower as described in Schedule 2.6 hereto, Agent shall have no
obligation to make any Advances hereunder, unless within thirty (30) days
prior
thereto Borrower provides Agent with written information setting forth the
replacement executive management personnel of Borrower together with a
description of those Persons’ experience, ability and reputation, and Agent,
acting in good faith, determines that the replacement management personnel’s
experience, ability and reputation is equal to or greater than that of
Borrower’s executive management as set forth on Schedule
2.6. Agent shall have no obligation to make any Advances
hereunder if more than two (2) of the five (5) Board of Directors’ positions are
controlled by the Borrower’s bond holders.
(c) Change
in Underwriting Standards. No Lender shall be obligated
to fund any Advance hereunder if there shall occur a change in the underwriting
standards, or the adherence thereto in the sole discretion of the Agent,
of
Borrower with respect to the qualification or eligibility of Purchaser’s which
in the Permitted Discretion of Agent causes or would most likely result in
a
Material Adverse Change in the Borrower’s business or if there shall occur a
change in the business of Borrower, which in the Permitted Discretion of
Agent
causes or would most likely result in a Material Adverse Change in the
Borrower’s business.
(d) Default
or Event of Default. No Lender shall be obligated to
fund any Advance hereunder if a Default or Event of Default shall have occurred
and be continuing.
2.7 Pro
Rata Treatment. Each repayment of principal and interest
shall be allocated among Lenders in accordance with their respective Pro
Rata
Payment Percentage. Each Lender agrees that in computing such
Lender’s portion of any Advance to be made hereunder, Agent may, in its
discretion, round each Lender’s such Advance to the next higher or lower whole
dollar amount. If any Lender shall, through the exercise of a right
of banker’s lien, set-off, counterclaim or otherwise, obtain payment with
respect to its Loans which results in its receiving more than its Pro Rata
Payment Percentage of any payments described above, then (A) such Lender
shall
be deemed to have simultaneously purchased from each of the other Lenders
a
share in such other Lender’s Loans so that the amount of the Loans of all
Lenders shall be pro rata as otherwise set forth above, (B) such Lender shall
immediately pay to the other Lenders their Pro Rata Payment Percentage of
the
payments otherwise received as consideration for such purchase and (C) such
other adjustments shall be made from time to time as shall be equitable to
insure that all Lenders share such payments ratably. If all or any
portion of any such excess payment is thereafter recovered from Lender which
received the same, the purchase provided in this Section 2.7 shall be
deemed to have been rescinded to the extent of such recovery, without
interest. Borrower expressly consents to the foregoing arrangements
and agrees that each Lender so purchasing a portion of another Lender’s loans
may exercise all rights of payment (including all rights of set-off, banker’s
lien or counterclaim) with respect to such portion as fully as if such Lender
were the direct holder of such portion.
Section
3-Collateral
3.1 Grant
of Security Interest. To secure the payment and
performance of the Obligations, for value received, Borrower unconditionally
and
irrevocably assigns, pledges and grants to Agent, as Agent for each
Lender:
(a) a
first priority security interest in the Eligible Notes Receivable pledged
to
Agent on behalf of Lenders as provided herein, the Mortgages with respect
thereto and that portion of the other Collateral related thereto;
(b) a
security interest in all books, records, reports, computer tapes, disks and
software relating to the Collateral and all extensions, additions, improvements,
betterments, renewals, substitutions and replacements of, for or to any of
the
Collateral, wherever located, together with the products, proceeds, issues,
rents and profits thereof, and any replacements, additions or accessions
thereto
or substitutions thereof.
For
convenience of administration, Agent is acting as agent for Lenders under
the
Agreement. Agent, as such agent, may execute any of its duties
hereunder by or through its agents, officers or employees and shall be entitled
to rely upon the advice of counsel as to its duties. Agent, as such
agent, shall not be liable to any Lender for any action taken or omitted
to be
taken by it in good faith and shall neither be responsible to Lenders for
the
consequences of any oversight or error of judgment nor be answerable to Lenders
for any loss unless the same shall happen through Agent’s gross negligence or
willful misconduct. To the extent that Agent, as such agent, shall
not be reimbursed by Borrower for any costs, liabilities or expenses incurred
in
such capacity, Lenders shall reimburse Agent therefor pro rata in accordance
with their respective Pro Rata Percentages (including Agent as a Lender for
this
purpose). Each Lender agrees that Agent shall be entitled to take and
shall only be required to take, any action which it is permitted to take
under
this Agreement.
3.2 Financing
Statements; Priority of Liens. Borrower agrees, at its
own expense, to authorize the filing of financing statements, continuation
statements and amendments provided for by the Code and to execute and deliver
any and all other instruments or documents and take such other action as
may be
required to perfect and to continue the perfection of Agent’s security interest
in the Collateral. Borrower hereby authorizes Agent to execute and/or file
on
Borrower’s behalf any such financing statements, continuation statements and
amendments. Each Lender shall have an equal security interest in the
Collateral based upon its Pro Rata Percentage and no Lender’s security interest
in the Collateral shall have priority over any other Lender’s security interest
in the Collateral.
3.3 Insurance. Insurance
coverage with respect to the Resort(s) is provided by the Silverleaf
Club. Borrower shall furnish Agent, upon request, with satisfactory
evidence that the Units, Buildings and Resorts are adequately
insured. Such insurance coverage shall insure against such risks, be
in such amounts, with such companies and on such other terms as Agent may
reasonably require. Each such policy shall name Agent as an
additional insured and loss payee as agent for Lenders, as their respective
interests may appear.
3.4 Protection
of Collateral; Reimbursement. The portion of the
Collateral consisting of: (i) the original Pledged Notes Receivable,
(ii) the original Mortgages, (iii) the original purchase contracts
(including addendum) related to such Pledged Notes Receivable and Mortgages,
(iv) originals or true copies of the related truth-in-lending disclosure,
loan application, warranty deed, and if required by Agent, the related
Purchaser’s acknowledgement receipt and the Exchange Company application and
disclosures and (v) such other items as Agent may determine from time to
time in
its Permitted Discretion, shall be delivered at Borrower’s expense to the
Custodian, and held in Custodian’s possession and control pursuant to the
Custodial Agreement. All fees and costs arising under the Custodial
Agreement shall be borne and paid by Borrower; and if Borrower fails to promptly
pay any portion thereof when due, Agent may, at its option, but shall not
be
required to, pay the same and charge Borrower’s account therefor, and Borrower
agrees promptly to reimburse Agent therefor with interest accruing thereon
daily
at the Default Rate. All sums so paid or incurred by Agent for any of
the foregoing and any and all other sums for which Borrower may become liable
hereunder and all costs and expenses (including attorneys’ and paralegals’ fees,
legal expenses and court costs) which Agent may incur in enforcing or protecting
its Lien on, or rights and interest in, the Collateral or any of its rights
or
remedies under this Agreement or any other Loan Document or with respect
to any
of the transactions hereunder or thereunder, until paid by Borrower to Agent
with interest at the Default Rate, shall be included among the Obligations,
and,
as such, shall be secured by all of the Collateral. Agent shall not
be liable or responsible in any way for the safekeeping of any of the Collateral
or for any loss or damage thereto or for any diminution in the value thereof,
or
for any act or default of the Custodian, Lockbox Agent, or Servicing Agent
or
any warehouseman, carrier, forwarding agency, or other Person
whomsoever.
3.5 Additional
Eligible Resorts. From time to time during the Term,
Borrower may propose to Agent that one or more additional time-share plans
and
projects owned and operated by Borrower be included among the Eligible Resorts
in respect of which Advances may be made. Any such proposal will be
in writing, and will be accompanied or supported by the due diligence and
supporting Borrower, Affiliate, project, financial and related information
identified in Section 4.4 hereof, and such other information as
Agent may require. Borrower will reasonably cooperate with Agent’s
underwriting and due diligence, and Borrower will be responsible for payment
upon billing for Agent’s and each Lender’s out-of-pocket expenses in connection
therewith. Subject to Agent’s satisfactory underwriting and due
diligence review, including satisfaction of the conditions in Sections
4.4 and 5 hereof as they relate to such additional time-share
resorts, Agent may, but shall not be required to, approve one or more such
additional time-share resorts, including future phases or condominiums in
an
Existing Eligible Resort, as an Eligible Resort qualifying for Advances under
and subject to the terms of this Agreement and the other Loan
Documents.
Subject
in each instance to Agent’s underwriting and due diligence review, and Agent’s
prior written approval, any project as may be approved by Agent and Lenders
after the Closing Date, if any, is hereinafter referred to as an “Additional
Eligible Resort”. Any Advances hereunder with respect to any
Additional Eligible Resort will be subject to all terms and conditions of
this
Agreement and the other Loan Documents.
3.6 Modification
of Eligible Notes Receivable. Notwithstanding anything
herein to the contrary, Borrower shall have the right to modify the interest
rate and term only of the Eligible Notes Receivable without Agent’s prior
consent, provided that: (i) any such change in the rate of interest on any
one
or more Eligible Notes Receivable shall not reduce the average interest rate
on
all Eligible Notes Receivable to less than ten percent (10%) per annum at
any
time (excluding Eligible Notes Receivable with a lower interest rate pursuant
to
the SCRA); (ii) the term of no Eligible Notes Receivable shall be increased
to a
term longer than one hundred twenty (120) months from the date of the first
required monthly payment of such Eligible Note Receivable, except that with
respect to any Eligible Note Receivable in respect of which one or more monthly
payments have been deferred, the term of such Eligible Note Receivable may
be
extended one month for each such deferred payment provided, however, that
in no
event shall the term of such Eligible Note Receivable be increased to a term
longer than one hundred twenty eight (128) months from the date of the first
required monthly payment of such Eligible Note Receivable; (iii) no Eligible
Note Receivable is so modified more than once in any twelve (12) month period
or
more than twice during the term of such Eligible Note Receivable, and (iv)
at no
time may Borrower so modify the terms of Eligible Notes Receivable constituting
more than ten percent (10%) of the outstanding principal balance of all Eligible
Notes Receivable at any time.
3.7 Assumption
of Obligations under Eligible Notes
Receivable. Notwithstanding anything herein to the
contrary, upon the sale by a Purchaser of an Interval, the new Purchaser
of the
Interval may be substituted as obligor under the Eligible Note Receivable
in
question, provided that: (i) said new Purchaser assumes in writing all of
the
obligations of the original obligor under the Eligible Note Receivable in
question; (ii) the Eligible Note Receivable continues to meet all of the
criteria for an Eligible Note Receivable as set forth herein and (iii) the
new
Purchaser has made a cash down payment equal to at least 10% of the original
sales price of the Interval in question, which down payment shall be in addition
to the cash down payment made by the original obligor.
3.8 Purchaser/Criteria. All
Eligible Notes Receivable pledged as Collateral to Agent subsequent to the
Closing Date will be underwritten in a manner consistent with the Borrower’s
general underwriting guidelines and criteria as set forth on
Schedule 1.1(b) hereof. Borrower shall not materially
alter its general underwriting criteria without the prior written approval
of
Agent, which approval Agent may withhold in its sole discretion. On a
semi-annual basis, Borrower shall provide Agent with written certification
that
the underwriting criteria as approved by Agent remain in full force and effect
and have not been revised or altered without Agent’s consent.
Section
4-Conditions Precedent To The Closing
4.1 Conditions
Precedent. The obligation of Agent and Lenders under
this Agreement and the obligation to fund any Advance, including the initial
Advance, hereunder shall be subject to the satisfaction of each of the following
conditions precedent, in addition to all of the conditions precedent set
forth
elsewhere in the Loan Documents:
(a) Representations,
Warranties, Covenants and Agreements. The
representations and warranties contained in the Loan Documents are and shall
be
true and correct in all respects, and all covenants and agreements have been
complied with and are correct in all respects, and all covenants and agreements
to have been complied with and performed by Borrower shall have been fully
complied with and performed to the satisfaction of Agent.
(b) No
Prohibited Acts. Borrower shall not have taken any
action or permitted any condition to exist which would have been prohibited
by
any provision of this Agreement or the Loan Documents.
(c) No
Changes. That all information and documents heretofore
delivered by Borrower to Agent with respect to Borrower or the Resorts remain
true and correct in all respects.
(d) Approval
of Documents Prior to Closing Date. Borrower has
delivered to Agent (with copies to Agent’s counsel), and Agent has reviewed and
approved the form and content of all of the items specified in
Subsection 4.1(d)(i) through 4.1(d)(v) hereof
(the “Submissions”). Agent shall have the right to review and approve
any changes to the form of any of the Submissions. If Agent
disapproves of any changes to any of the Submissions, Agent shall have the
right
to require Borrower either to cure or correct the defect objected to by Agent
or
to elect not to fund the Loan or any Advance. Under no circumstances
shall Agent’s failure to approve or disapprove a change to any of the
Submissions be deemed to be an approval of such Submissions. All of
the Submissions were and shall be prepared at Borrower’s sole cost and expense,
unless expressly stated to be an obligation and expense of Agent. Agent shall
have the right of prior approval of any Person responsible for preparing
a
Submission (“Preparer”) and may disapprove any Preparer in its sole discretion,
for any reason, including without limitation, that Agent believes that the
experience, skill, reputation or other aspect of the Preparer is unsatisfactory
in any respect. All Submissions required pursuant to this Agreement
shall be addressed to Agent and include the following language: “THE UNDERSIGNED
ACKNOWLEDGES THAT LIBERTY BANK, AS AGENT FOR EACH LENDER IS RELYING ON THE
WITHIN INFORMATION IN CONNECTION WITH ITS DETERMINATION TO MAKE A LOAN TO
SILVERLEAF RESORTS, INC. IN CONNECTION WITH THE SUBJECT
COLLATERAL.”
(i) A
certificate to be dated as of the Closing Date and signed by the president,
vice
president, or secretary of Borrower, certifying that the conditions specified
in
Sections 4.1(a), 4.1(b) and 4.1(c) hereof are
true;
(ii) Copies
of the articles of incorporation and any amendments thereto of Borrower not
previously delivered to Agent, certified to be true and complete by Borrower
and
the Secretary of State of the State of Texas and a current certificate of
good
standing for Borrower, and copies of any by-laws of Borrower and any amendments
thereto not previously delivered to Agent, certified to be true, correct
and
complete by the secretary or assistant secretary of Borrower;
(iii) A
certificate of the Secretary of Borrower certifying the adoption by the Board
of
Directors of Borrower of a resolution authorizing Borrower to enter into
and
execute this Agreement, the Note, and the other Loan Documents, to borrow
the
Loan from the Lenders, and to grant to Agent for the benefit of the Lenders
a
first priority security interest in and to the Collateral;
(iv) A
certificate of the secretary or assistant secretary of Borrower certifying
the
incumbency, and verifying the authenticity of the signatures, of the specified
officers of Borrower authorized to sign the Agreement, the Note and the other
Loan Documents; and
(v) Copies
or other evidence of all loans to Borrower from any officers, shareholders,
or
Affiliates of Borrower not previously delivered to Agent.
(e) Execution
and Delivery of Loan Documents. Borrower shall have
delivered to Agent, on or before the Closing Date, the following Loan Documents,
each of which when required, shall be in recordable form:
(i)
This Agreement;
(ii) Closing
Opinions for Borrower;
(iii) Note;
(iv) Environmental
Indemnification Agreement;
(v) Intercreditor
Agreement. Borrower, Agent, TFC, CSF and WFF shall have
executed and delivered to Agent, on or before the Closing Date, a modification
of the in-force intercreditor agreement for the purpose of adding Agent as
a
party thereto;
(vi) Pro
Forma Title Insurance Policies For Each Resort. Borrower
shall have provided Agent with a pro forma title insurance policy for each
Resort which shall be the form which will be issued to and obtained by Borrower
in connection with the pledge to Lender of an Eligible Note Receivable, subject
however to the provisions of Section 5.1(f); (it is acknowledged that the
condition in this subsection may not be satisfied by the Closing Date but
satisfaction shall be a condition of funding); and
(vii) Other
Items. Such other agreements, documents, instruments,
certificates and materials as Agent may request to evidence the Obligations;
to
evidence and perfect the rights and Liens and security interests of Agent
as
agent for Lenders contemplated by the Loan Documents, and to effectuate the
transactions contemplated herein.
(f) Closing Date
Conditions. On or before the Closing Date, the following
conditions shall be satisfied:
(i)
UCC Search. Agent shall have obtained, at
Borrower’s cost, such searches of the applicable public records as it deems
necessary under Texas, and other applicable law to verify that it will have
a
first and prior perfected Lien and security interest covering all of the
Collateral. Agent shall not be obligated to fund any Advance if Agent
determines that Lenders do not have a first and prior perfected lien and
security interest covering any portion of the Collateral, except as expressly
provided herein.
(ii) Litigation
Search. Agent shall have obtained, at Borrower’s cost,
an independent search to verify that there are no bankruptcy, foreclosure
actions or other material litigation or judgments pending or outstanding
against
the Resorts, any portion of the Collateral, Borrower, or any Affiliates of
Borrower (each a “Material Party”). The term “other material
litigation” as used herein shall not include matters in which (i) a
Material Party is plaintiff and no counterclaim is pending or (ii) which
Agent determines in its sole discretion exercised in good faith, are immaterial
due to settlement, insurance coverage, frivolity, or amount or nature of
claim. Lenders shall not be obligated to fund any Advance if Agent
determines that any such litigation is pending.
(iii) Insurance. Evidence
that Borrower is maintaining all policies of insurance required by and in
accordance with Section 7.1(d) hereof, including copies of
the most current paid insurance premium invoices;
(iv) Governmental
Permits. To the extent not previously delivered to
Agent, copies of all applicable government permits, approvals, consents,
licenses and certificates with respect to the use and operation of the
Resorts;
(g) Taxes. Evidence
satisfactory to Agent that all taxes and assessments owed by or for which
Borrower is responsible for collection have been paid with respect to the
Resorts and the Collateral, including but not limited to sales taxes, room
occupancy taxes, payroll taxes, personal property taxes, excise taxes,
intangible taxes, real property taxes and any assessments related to the
resorts
or the Collateral. Copies of the most current tax bills for the
Resorts shall be provided to Agent.
4.2 Origination
Fee; Expenses. Borrower shall have paid to Agent an
origination fee of $375,000 (the “Origination Fee”) together with all Lender
Expenses required to be paid pursuant to this Agreement. Lenders
shall have no obligation to fund the Loan or make the initial Advance or
any
subsequent Advance unless the amount of the Loan together with any moneys
paid
by Borrower is sufficient to satisfy all fees and expenses required to be
paid
pursuant to this Agreement.
4.3 Proceedings
Satisfactory. Borrower shall execute all of the Loan
Documents approved by Agent on the Closing Date, and all actions taken in
connection with the execution or delivery of the Loan Documents, and all
documents and papers relating thereto, shall be satisfactory to Agent and
its
counsel. Agent and its counsel shall have received copies of such
documents and papers as Agent or such counsel may reasonably request in
connection therewith, all in form and substance satisfactory to Agent and
its
counsel.
4.4 Conditions
Precedent to Funding of Advances with Respect to Additional Eligible
Resorts. As provided in Section 3.5
hereof, Borrower may propose to Agent that Agent approve one or more additional
timeshare plans for inclusion hereunder as an Additional Eligible Resort
in
respect of which Advances may be made. The obligation of Lenders to
fund any Advances with respect to an Additional Eligible Resort shall be
subject
to the satisfaction of each of the following conditions precedent, in addition
to all of the conditions precedent set forth elsewhere in the Loan
Documents:
(a) Representations,
Warranties, Covenants and Agreements. The
representations and warranties contained in the Loan Documents are and shall
be
true and correct in all respects, and all covenants and agreements have been
complied with and shall be correct in all respects, and all covenants and
agreements to have been complied with and performed by Borrower shall have
been
fully complied with and performed to the satisfaction of Agent.
(b) No
Prohibited Acts or Changes. Borrower shall not have
taken any action or permitted any condition to exist which would have been
prohibited by any provision of the Loan Documents and all information and
documents heretofore delivered by Borrower to Agent with respect to Borrower
or
the Resorts remain true and correct in all respects.
(c) Approval
of Documents Prior to Advance. Borrower has delivered or
caused to be delivered to Agent (with copies to Agent’s counsel), at least
fifteen (15) Business Days prior to the date of such Advance, and Agent has
reviewed and approved, at least five (5) Business Days prior to such date,
the
form and content of all of the items specified in each of the Submissions
required pursuant to this Section 4.4. Agent shall have
the right to review and approve any changes to the form of any of the
Submissions. If Agent disapproves of any changes to any of the
Submissions, Agent shall have the right to require Borrower either to cure
or
correct the defect objected to by Agent or to elect not to fund the Loan
or any
Advance. Under no circumstances shall Agent’s failure to approve or
disapprove a change to any of the Submissions be deemed to be an approval
of
such Submissions. All of the Submissions were and shall be prepared
at Borrower’s sole cost and expense, unless expressly stated to be an obligation
and expense of Agent. Agent shall have the right of prior approval of
any Preparer and may disapprove any Preparer in its sole discretion, for
any
reason, including without limitation, that Agent believes that the experience,
skill, reputation or other aspect of the Preparer is unsatisfactory in any
respect. All Submissions required pursuant to this Agreement shall be
addressed to Agent and include the following language: “THE UNDERSIGNED
ACKNOWLEDGES THAT LIBERTY BANK, AS AGENT FOR EACH LENDER IS RELYING ON THE
WITHIN INFORMATION IN CONNECTION WITH ITS DETERMINATION TO MAKE A LOAN TO
SILVERLEAF RESORTS, INC. IN CONNECTION WITH THE SUBJECT
COLLATERAL.”
(i) a
certificate in the form attached as Exhibit C, to be dated as of the date
of each such Advance and signed by the president, vice president, or secretary
of Borrower, certifying that the conditions specified in
Sections 4.4(a) and 4.4(b) hereof are true;
(ii) copies
of the articles of incorporation of Borrower, together with any amendments
thereto certified to be true and complete by Borrower and the Secretary of
State
of the State of Texas, a current certificate of good standing for Borrower
issued by the Secretary of State of the State of Texas, a current certificate
of
authority to conduct business issued by the secretary of state in each state
in
which the Borrower conducts business, and copies of the by-laws of Borrower
certified to be true, correct and complete by the secretary or assistant
secretary of Borrower;
(iii) a
Survey for each Additional Eligible Resort for which Eligible Notes Receivable
are being pledged to Agent in connection with the Advance in
question;
(iv) a
certificate of the secretary or assistant secretary of Borrower certifying
the
adoption by the board of directors thereof, respectively, of a resolution
authorizing the addition of the Resort in question as an Additional Eligible
Resort and to authorize Borrower to enter into, execute and deliver any
Documents in connection therewith;
(v) a
certificate of the secretary or assistant secretary of Borrower certifying
the
incumbency, and verifying the authenticity of the signatures, of the specified
officers of Borrower authorized to sign all documents required in connection
with such Additional Eligible Resort as required pursuant to this Section
4.4;
(vi) an
inspection report or reports covering each Additional Eligible Resort for
which
Eligible Notes Receivable are being pledged to Agent in connection with the
Advance in question, including without limitation all real property and personal
property subject to the Declaration and all adjacent property,
confirming:
(1) the
absence of Hazardous Materials on the personal property and real property
comprising each such Additional Eligible Resort;
(2) that
the inspection firm has obtained, reviewed and included within its report
a
CERCLIS printout from the Environmental Protection Agency (the “EPA”),
statements from the EPA and other applicable state and local authorities
and a
Phase I Environmental Audit, all of which information shall confirm that
there
are no known or suspected Hazardous Materials located at, used or stored
on, or
transported to or from each such Additional Eligible Resort or in such proximity
thereto as to create a material risk of contamination of each such Additional
Eligible Resort;
(vii) evidence
that Borrower is maintaining all policies of insurance required by and in
accordance with Section 7.1(d) hereof, including copies of
the most current paid insurance premium invoices;
(viii) evidence
that Borrower and the Timeshare Documents for each Additional Eligible Resort
for which Eligible Notes Receivable are being pledged to Agent as agent for
Lenders in connection with the Advance in question are in compliance with
all
Applicable Laws in connection with its sales of Intervals, including without
limitation, the Timeshare Acts;
(ix) a
current preliminary title report or certificate of title for each Additional
Eligible Resort for which Eligible Notes Receivable are being pledged to
Agent
in connection with the Advance in question, with copies of all title
exceptions;
(x) copies
of all applicable governmental permits, approvals, consents, licenses, and
certificates for the establishment of each Additional Eligible Resort for
which
Eligible Notes Receivable are being pledged to in connection with the Advance
in
question as timeshare projects in accordance with the applicable Timeshare
Act,
and for the occupancy and intended use and operation of each such Additional
Eligible Resort, including the Units, including a letter certification from
Borrower regarding zoning classification and compliance, letters or other
satisfactory evidence from utility companies, governmental entities or other
persons confirming that water, sewer (sanitary and storm), electricity, solid
waste disposal, telephone, police, fire and rescue services are being provided
to each Resort, and any business licenses necessary for operation of each
such
Additional Eligible Resort;
(xi) certified
true, correct and complete copies of all of the Timeshare Documents for each
Additional Eligible Resort for which Eligible Notes Receivable are being
pledged
to Agent as agent for Lenders in connection with the Advance in
question;
(xii) evidence
satisfactory to Agent that all taxes and assessments owed by or for which
Borrower is responsible for collection have been paid, including but not
limited
to sales taxes, room occupancy taxes, payroll taxes, personal property taxes,
excise taxes, intangibles taxes, real property taxes, and income taxes, and
any
assessments related to each Additional Eligible Resort for which Eligible
Notes
Receivable are being pledged to Agent as agent for Lenders in connection
with
the Advance in question and copies of the most current paid tax bills for
each
such Additional Eligible Resort evidencing that each such Additional Eligible
Resort have been segregated from all other property on the applicable municipal
taxrolls;
(xiii) written
confirmation from an architect covering each Additional Eligible Resort,
for
which Eligible Notes Receivable are being pledged to Agent as agent for Lenders
in connection with the Advance in question as to the physical condition of
the
improvements at each such Additional Eligible Resort, including that soil
conditions are sufficient to support all existing and any contemplated
improvements to the real property; which written confirmation shall be in
form
and substance reasonably acceptable to Agent;
(xiv) such
credit references on Borrower as Agent deems necessary in its sole
discretion;
(xv) copies
or other evidence of all loans to Borrower from any officers, shareholders,
or
Affiliates of Borrower, if any;
(xvi) a
commitment to issue Mortgagee Title Policies from Title Company for each
such
Additional Eligible Resort. Notwithstanding anything heretofore to
the contrary, if any claim, lien, encumbrance, charge or other matter arises
with respect to any Interval or Intervals for which an Eligible Note Receivable
has been pledged to Agent as agent for Lenders pursuant to this Agreement,
then,
in such event:
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a.
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The
Note Receivable with respect to the Interval in question shall
cease to be
an Eligible Note Receivable and Borrower immediately shall either
replace
the Note Receivable in question or make a Mandatory Prepayment,
if
necessary, as provided in Section 2.4(b) hereof;
and
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b.
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The
Resort at which the Interval in question is located shall cease
to be an
Additional Eligible Resort, unless and until Borrower shall cure
any such
claim, lien, encumbrance, charge or other matter to the satisfaction
of
Agent. Furthermore, any and all further requests for Advances
in respect of such Resort must be accompanied by satisfactory Mortgagee
Title Policies for all Intervals with respect to which such Advances
are
requested.
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(d) Financial
Statements To Be Delivered Prior to Advance. A current
set of the Financial Statements;
(e) Additional
Documents To Be Delivered Prior to ▇▇▇▇▇▇▇.▇▇ the extent not
previously delivered hereunder, Borrower will execute, or cause to be executed
with respect to each Additional Eligible Resort, an Assignment of Notes
Receivable and Mortgages, Borrower’s Affidavit with Respect to the Additional
Eligible Resorts and an Environmental Indemnification Agreement; and with
respect to any improvements, including any Units, constructed at a Resort
within
the twenty-four month period prior to any Advance with respect to an Additional
Eligible Resort, Borrower shall also deliver to Agent, for its approval,
such
documents and instruments as Agent may reasonably request in connection with
such newly constructed improvements, including, without limitation, copies
of
building permits, plans and specifications, construction and architectural
contracts, title insurance insuring over, among other things, mechanics liens,
certificates of occupancy and satisfactory evidence of the completion of
such
improvements and such other documents, instruments, agreements, tests, reports
and inspections as Agent may require with respect to Borrower or any applicable
Affiliate, the Loan or any Resort, including any Additional Eligible Resort;
and
upon request of Agent, Borrower shall deliver evidence, satisfactory to Agent,
that there is no material litigation, written complaint, suit, action, written
claim or written charge pending against Borrower or any Affiliate with any
court
or with any governmental authority with respect to the Resorts, the Timeshare
Documents, any Eligible Notes Receivable, any Interval, or any marketing,
offer
or sale of any Interval.
(f) Physical
Inspection. Agent shall be satisfied with its physical
inspection of the Additional Eligible Resorts.
(g) UCC
Search. Agent shall have obtained, at Borrower’s cost,
such searches of the applicable public records as it deems necessary under
all
applicable law to verify that it has a first and prior perfected Lien and
security interest covering all of the Collateral. Agent shall not be
obligated to fund any Advance if Agent determines that Lenders do not have
a
first and prior perfected lien and security interest covering any portion
of the
Collateral, except as expressly provided herein.
(h) Litigation
Search. Agent shall have obtained, at Borrower’s cost,
an independent search to verify that there are no bankruptcy, foreclosure
actions or other material litigation or judgments pending or outstanding
against
the Additional Eligible Resorts, any portion of the Collateral, Borrower,
or any
Affiliate, (each a “Material Party”). The term “other material
litigation” as used herein shall not include matters in which (i) a Material
Party is plaintiff and no counterclaim is pending or (ii) which Agent
determines, in its sole discretion, exercised in good faith, are immaterial
due
to settlement, insurance coverage, frivolity, or amount or nature of
claim. Agent shall not be obligated to fund any Advance if it
determines that any such litigation is pending.
(i) Opinions
of Borrower’s Counsel. Borrower shall deliver to Agent
for the benefit of Agent and each Lender, at Borrower’s sole cost and expense,
such opinions of counsel, including counsel admitted in each state in which
each
Additional Eligible Resort is located, as to such matters with respect to
Borrower and each Additional Eligible Resort as Agent may request, and in
form
and substance acceptable to Agent in its sole discretion.
(j) Funding
Procedure. Borrower shall have complied to Agent’s
satisfaction with each of the conditions precedent to funding of an Advance
set
forth in Section 5 hereof.
(k) Management
of Resort. Borrower shall provide evidence satisfactory
to Agent that Borrower, or an Affiliate, is the manager or operator of each
Resort, pursuant to a written management or operating agreement, in form
and
substance satisfactory to Agent, which with respect to all Resorts shall
have a
term of at least three years.
(l) Other
Items. Such other agreements, documents, instruments,
certificates and materials as Agent may request to determine the acceptability
of any such Additional Eligible Resort, to evidence the Obligations, to evidence
and perfect the rights and Liens and security interests of Agent contemplated
by
the Loan Documents, and to effectuate the transactions contemplated herein,
including, without limitation, true copies of all Resort Documents for each
such
Additional Eligible Resort, all Timeshare Documents and operating and management
contracts and agreements, evidence of compliance with the applicable Timeshare
Act and other Applicable Laws, evidence of all required governmental licenses
and permits; title searches; title commitments or policies, including complete
and legible copies of each title exception, engineering, environmental and
soil
reports and evidence of compliance with all applicable zoning and building
codes; each of which shall be satisfactory to Agent in its Permitted
Discretion.
Section
5-Funding Procedure
5.1 The
obligation of any Lender to make any Advance shall be subject to the
satisfaction of all of the following conditions precedent:
(a) Requests
for Advances. Each request for an Advance
shall:
(i)
be in writing in form attached hereto as Exhibit D, certify the amount of
the then-current Borrowing Base and specify the principal amount of the Advance
requested and designate the account to which the proceeds of such Advance
are to
be transferred;
(ii)
state that the representations and warranties of Borrower contained in the
Agreement and any closing or funding related certifications are true and
correct
as of the date of the request and, after giving effect to the making of such
requested Advance, will be true and correct as of the date on which the
requested Advance is to be made;
(iii) state
that no Default or Event of Default exists as of the date of the request
and,
after giving effect to the making of such requested Advance, no Default or
Event
of Default would exist as of the date on which the requested Advance is to
be
made;
(iv) be
delivered to the office of Agent at least five (5) Business Days prior to
the
date of the requested Advance;
(v) be
signed by a principal financial officer of Borrower;
(vi) certify
that Borrower has no knowledge of any asserted or threatened defense, offset,
counterclaim, discount or allowance in respect of each Note Receivable to
be
pledged in connection with such requested Advance, or in respect of any of
the
Pledged Notes Receivable;
(vii) contain
an aging report of the Pledged Notes Receivable; identifying, among other
things, which among them are Eligible Notes Receivable; and
(viii) contain
a delinquency report which shall be in form and substance satisfactory to
Agent
and shall show which of such Notes Receivable is delinquent and the duration
of
such delinquency, and which of such Pledged Notes Receivable is not an Eligible
Note Receivable;
(b) Loan
Documents/Collateral. Not less than five (5) Business
Days prior to the date of any Advance, Borrower shall have:
(i)
delivered to Agent a list of all Eligible Notes Receivable and related Mortgages
which are to be the subject of such requested Advance, indicating the unpaid
principal balance owing on each of the Pledged Notes Receivable deemed to
be an
Eligible Note Receivable, together with such additional information as Agent
may
require;
(ii) delivered
to Agent (or, if Agent shall so instruct, a designee appointed by Agent in
writing) (A) the original of each Pledged Note Receivable (duly endorsed
with the words “Pay to the order of Liberty Bank, as Agent, with recourse”),
(B) the original of each Mortgage securing such Pledged Notes Receivable,
(C) the original of each purchase contract (including addenda) relating to
the Pledged Notes Receivable and Mortgages, (D) originals or true copies of
the related truth-in-lending disclosures, loan application, warranty deed,
Payment Authorization Agreement and, if required by Agent, the related
Purchaser’s acknowledgement, receipt and exchange company application,
disclosures and materials, and (E) with respect to each Eligible Note Receivable
from the sale of Intervals at Oak N’ Spruce evidence satisfactory to
Agent of the filing in the appropriate recorder’s office of the original UCC-1
Financing Statement, naming the Purchaser of the Interval giving rise to
the
Eligible Note Receivable as debtor and Borrower as secured party (the “Purchaser
Financing Statement”), perfecting Borrower’s security interest in the applicable
Interval to secure the Purchaser’s obligations under the Eligible Note
Receivable and naming Borrower as assignor and Agent as assignee, assigning
to
Agent, all of Borrower’s right, title and interest under each Purchaser
Financing Statement.
(iii) delivered
to Agent a duly executed Assignment of Notes Receivable and Mortgages assigning
to Agent all of Borrower’s right, title and interest in and to each such Pledged
Note Receivable and the related Mortgage; and
(iv) subject
to Section 4.4(c)(xvi) hereof and the partial waiver set
forth in Section 5.1(f) hereof, delivered to Agent, with respect to
each Encumbered Interval, a commitment for a Mortgagee’s Title Policy showing
that the Mortgage in respect of such Interval has been assigned to Agent
and
insuring in favor of Agent the first priority Lien of such Mortgage in the
amount of the Advance to be made in respect of such Pledged Note Receivable,
with a satisfactory title insurance policy to be issued within forty five
(45)
days from the date of the Advance.
The
Mortgages and the assignments thereof to Agent shall each be duly recorded
in
the applicable land records. The Mortgagee’s Title Policies shall be
in form and substance satisfactory to Agent and shall be issued by a title
insurance company satisfactory to Agent (the “Title Company”), and name Borrower
as the insured party therein. The funding of the requested Advance,
delivery of the Collateral and issuance of the title insurance policy, and
recording of the assignments or any releases may, in Agent’s discretion, be
effected by way of an escrow arrangement with the Title Company or other
fiduciary, the form and substance of which shall be satisfactory to
Agent.
(c) Other
Conditions. In addition to the other conditions set
forth in this Agreement, the making of the initial or any subsequent Advance
shall be subject to the satisfaction of the following conditions:
(i)
no Default or Event of Default shall exist immediately prior to the making
of such requested Advance or, after giving effect thereto, immediately after
the
making of such requested Advance;
(ii) each
agreement required to have been executed and delivered in connection with
any
prior Advance shall be consistent with the terms of this Agreement and shall
be
in full force and effect;
(iii) the
date on which such requested Advance is to be made shall be a Business
Day;
(iv) Borrower
shall have delivered to Agent a certification showing the dollar amount of
the
requested Advance based on the Eligible Notes Receivable pledged to Agent,
and
the Notes Receivable being pledged contemporaneously with each requested
Advance
in the form attached hereto as Exhibit D;
(v) not
more than one Advance shall have previously been made in the same calendar
month
in which such requested Advance is to be made, unless Agent, in its sole
discretion, agrees to make an additional Advance during such calendar
month;
(vi) such
requested Advance shall be in a principal amount of not less than $50,000,
unless Agent, in its sole discretion, agrees to make an Advance in an amount
less than $50,000;
(vii) Agent
shall have determined that the requested Advance, when added to the aggregate
outstanding principal amount of all previous Advances, if any, does not,
based
on the Eligible Notes Receivable that have been duly pledged in favor of
Agent
exceed the lesser of: (i) total amount of the Borrowing Base, (ii) the
Availability or (iii) the Commitment;
(viii) if
Agent shall so require, Agent shall have received an executed closing protection
letter issued by the Title Company, which shall be reasonably acceptable
to
Agent; and
(ix) each
Lender shall have agreed to make and does make an Advance in an amount equal
to
its respective Pro Rata Percentage.
(d) Renewal
Fees; Unused Line Fee; Expenses. The Borrower shall have
paid any Renewal Fee and/or Unused Line Fee then due together with all Lender
Expenses required to be paid by Borrower pursuant to this Agreement in
connection with such requested Advance or any conditions related
thereto.
(e) Proceedings
Satisfactory. All actions taken in connection with such
requested Advance and all documents and papers relating thereto shall be
satisfactory to Agent and its counsel. Agent and its counsel shall
have received copies of such documents and papers as Agent or such counsel
may
reasonably request in connection with such requested Advance, all in form
and
substance reasonably satisfactory to Agent and its counsel.
(f) Partial
Waiver of Requirement for Title Insurance Policies Upon Satisfactory Maintenance
of Inventory Control Procedures. Anything in
Section 5.1(b)(iv) hereof to the contrary notwithstanding,
the delivery of a commitment for a Mortgagee Title Policy and a Mortgagee
Title
Policy shall be required only with respect to twenty-five percent (25%) of
the
Eligible Notes Receivable delivered to Agent in respect of each advance,
subject
to the following requirements and limitations:
(i)
Borrower shall be in full compliance with the Inventory Control Procedures
(as
defined in Section 6.23 hereof); and
(ii) Agent
shall have the right in its sole discretion to determine those Eligible Notes
Receivable in respect of which commitments for Mortgagee Title Policies and
also
the Mortgagee Title Policies themselves shall be required.
In
the
event that Borrower fails to satisfy the requirements of Subsection
5.1(f)(i)or should Agent discover unpermitted Liens or other
encumbrances on the Mortgagee Title Policies obtained randomly, then,
immediately upon such event, the partial waiver provided under this Section
5.1(f) shall no longer be effective and 100% compliance shall be
required.
Section
6-General Representations And Warranties
Borrower
hereby represents and warrants to Agent and each Lender as follows:
6.1 Organization,
Standing, Qualification. Borrower: (a) is a duly
organized and validly existing Texas corporation duly organized, validly
existing and in good standing under the laws of the State of Texas, and (b)
has
all requisite power, corporate or otherwise, to conduct its business and
to
execute and deliver, and to perform its obligations under, the Loan
Documents.
6.2 Authorization,
Enforceability, Etc.
(a) The
execution, delivery and performance by Borrower of the Loan Documents has
been
duly authorized by all necessary corporate action by Borrower and does not
and
will not: (i) violate any provision of the certificate or articles of
incorporation of Borrower, bylaws of Borrower, or any agreement, law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect to which Borrower is a party or is subject; (ii) result
in,
or require the creation or imposition of, any Lien upon or with respect to
any
asset of Borrower other than Liens in favor of Agent and Lenders; or (iii)
result in a breach of, or constitute a default by Borrower under, any indenture,
loan or credit agreement or any other agreement, document, instrument or
certificate to which Borrower is a party or by which it or any of its assets
are
bound or affected.
(b) No
approval, authorization, order, license, permit, franchise or consent of,
or
registration, declaration, qualification or filing with, any governmental
authority or other Person, including without limitation, the Division or
the
Timeshare Owners’ Association is required in connection with the execution,
delivery and performance by Borrower of any of the Loan Documents.
(c) The
Loan Documents constitute legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective
terms.
(d) Borrower
has, or will have, good and marketable title to the Collateral, free and
clear
of any lien, security interest, charge or encumbrance except for the security
interests created by this Agreement or any Loan Document or otherwise created
in
favor of Agent or those specifically consented to in writing by Agent or
permitted hereunder. No financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in
any
recording office, except such as may have been filed in favor of Lenders
hereunder or Agent as permitted hereunder.
(e) The
execution and delivery of the Loan Documents, the delivery and endorsement
to
Agent as agent for Lenders of the Pledged Notes Receivable, the filing of
the
UCC-1’s with the office of the secretary of state of the state in which Borrower
is organized and the Assignment of Notes Receivable and Mortgages in the
official records of the county in which the applicable Resort is located,
create
in favor of Agent as agent for Lenders a valid and perfected continuing first,
as applicable, priority security interest in the Collateral. The
Collateral shall secure the full payment and performance of the
Obligations.
(f) None
of the Pledged Notes Receivable is forged or has affixed thereto any
unauthorized signatures or has been entered into by any Person without the
required legal capacity; and during the term of the Agreement, none will
be
forged, or will have affixed thereto, any unauthorized signatures.
(g) Except
as permitted in Sections 3.6 and 3.7 hereof,
there have been no modifications or amendments to the Pledged Notes Receivable
or Mortgages.
(h) The
makers of the Eligible Notes Receivable have no defenses, offsets, counterclaims
or claims relating to the Eligible Notes Receivable or the
Mortgages.
(i)
The Pledged Notes Receivable and the Mortgages were executed and delivered
by Purchasers in favor of Borrower in connection with the purchase of the
related Encumbered Intervals.
(j)
The Mortgages constitute and will constitute valid and enforceable first
and
prior liens and security interests on the Encumbered Intervals.
(k) The
Pledged Notes Receivable and the Mortgages are and shall remain in full force
and effect, are and will be valid and binding obligations of the respective
makers in favor of Agent as holder on behalf of Lenders; and Borrower further
warrants and guarantees the value, quantity, sound condition, grade and quality
of the Encumbered Intervals and rights, properties, easements and interests
appurtenant or related thereto.
(l)
The grant of the security interests described herein has not affected and
will
not affect the validity or enforceability of the obligations of the respective
makers of the Pledged Notes Receivable under such Notes Receivable or the
respective Mortgages.
(m) Neither
Agent nor any Lender shall be required to take, and Borrower has taken any
and
all required steps to protect Agent and each Lender’s security interest in the
Collateral (other than maintaining possession of the portion of the Collateral
constituting instruments); and neither Agent nor any Lender is or shall be
required to collect or realize upon the Collateral or any distribution of
interest or principal, nor shall loss of, or damage to, the Collateral release
Borrower from any of the Obligations.
6.3 Financial
Statements and Business Condition. The Financial
Statements for the first six (6) months of the calendar year 2007, are, to
the
best of Borrower’s knowledge, accurate and fairly represent the financial
condition of the Borrower for the periods in question, subject to the written
qualifications set forth therein. To the best of Borrower’s
knowledge, there are no material liabilities, direct or indirect, fixed or
contingent, of Borrower, except as disclosed to Agent in writing.
6.4 Taxes.
In
accordance with the requirements set forth in the Declaration, Borrower
represents and warrants that Borrower, Silverleaf Club, or the applicable
Timeshare Owners’ Association, as required, has paid or will have paid in full,
prior to delinquency, all ad valorem taxes and other taxes and assessments
against the Resorts and the Collateral; and Borrower knows of no basis for
any
additional taxes or assessments against the Resorts or the
Collateral. Borrower, Silverleaf Club, or the applicable Timeshare
Owners’ Association, as the case may be, has filed all tax returns required to
have been filed by it and has paid or will pay prior to delinquency, all
taxes
shown to be due and payable on such returns, including interest and penalties
thereon, and all other taxes which are payable by it to the extent the same
have
become due and payable.
6.5 Title
to Properties: Prior Liens. Borrower has good and
marketable title to all of the Collateral and to all unsold Units and Intervals
at each Resort, and all rights, properties and benefits appurtenant to or
benefiting them. Borrower is not in default under any of the
documents evidencing or securing any indebtedness which is secured, wholly
or in
part, by any portion of any Resort or any portion or all the Collateral and
no
event has occurred which with the giving of notice, the passage of time or
both,
would constitute a default under any of the documents evidencing or securing
any
such indebtedness. Other than the Liens granted in favor of Agent and
the liens described in Schedule 6.5 attached hereto, there are no liens
or encumbrances against the Collateral, or against any Resort.
6.6 Subsidiaries,
Affiliates and Capital Structure. Borrower has no
Subsidiaries or Affiliates which have any involvement or interest in any
Resort
in any way. None of the Affiliates of Borrower are parties to any
proxies, voting trusts, shareholders agreements or similar arrangements pursuant
to which voting authority, rights or discretion with respect to Borrower
is
vested in any other Person.
6.7 Litigation,
Proceedings, Etc. Except for those matters identified in
Schedule 6.7 hereto, there are no actions, suits, proceedings, orders
or
injunctions pending or threatened against or affecting Borrower, the Resorts
or
the Timeshare Owners’ Association at law or in equity, or before or by any
governmental authority or other tribunal, which (a) could have a material
adverse effect on Borrower or (b) relate to the Loan or which could have a
material effect on the Collateral or the Resorts. Borrower has
received no notice from any court, governmental authority or other tribunal
alleging that Borrower or the Resorts have violated the Timeshare Act, any
of
the rules or regulations thereunder, the Declaration or any other Applicable
Laws, agreements or arrangements that could have any material effect on the
Loan, the Collateral or the Resorts.
6.8 Licenses,
Permits, Etc. Borrower, the Resorts, the Timeshare
Owners’ Associations or Borrower’s Affiliates involved in the operations of the
Resorts, and, to the best of Borrower’s knowledge after diligent inquiry, other
Persons involved in the operations of the Resorts, possess all requisite
franchises, certificates of convenience and necessity, operating rights,
approvals, licenses, permits, consents, authorizations, exemptions and orders
as
are necessary to carry on its or their business as now being conducted, without
any known conflict with the rights of others and, with respect to Borrower,
the
Resorts and the Timeshare Owners’ Associations, in each case subject to no
mortgage, pledge, Lien, lease, encumbrance, charge, security interest, title
retention agreement or option other than as provided for by this
Agreement.
6.9 Environmental
Matters. Except as otherwise noted on
Schedule 6.9: (a) no Resort contains any Hazardous Materials,
(b) no Hazardous Materials are used or stored at or transported to or from
the Resorts, (c) neither Borrower nor the Resorts nor any manager thereof
nor to Borrower’s knowledge, the Timeshare Owners’ Associations, have received
notice from any governmental agency, entity or other Person with regard to
Hazardous Materials on, under or affecting any Resort, and (d) neither
Borrower, the Resorts, nor any portion thereof, nor to Borrower’s knowledge
after diligent inquiry, the Timeshare Owners’ Associations, are in violation of
any Environmental Laws.
6.10 Full
Disclosure. No information, exhibit or written report or
the content of any schedule furnished by or on behalf of Borrower to Agent
or
any Lender in connection with the Loan or the Resorts contains any material
misstatement of fact or omits the statement of a material fact necessary
to make
the statement contained herein or therein not misleading. Borrower
knows of no fact or condition which will prevent the sale of Intervals to
Purchasers or prevent the operation of the Resorts in accordance with the
Declarations and related public offering statements, and in accordance with
applicable law, or prevent Borrower from performing its Obligations pursuant
to
the Loan Documents.
6.11 Use
of Proceeds/Margin Stock. None of the proceeds of the
Loan will be used to purchase or carry any margin stock (as defined under
Regulation G, T, S, X or U of the Board of Governors of the Federal Reserve
System, as in effect from time to time), and no portion of the proceeds of
the
Loan will be extended to others for the purpose of purchasing or carrying
margin
stock. None of the transactions contemplated in the Agreement
(including, without limitation, the use of the proceeds from the Loan) will
violate or result in the violation of Section 7 of the Securities Exchange
Act
of 1934, as amended, or any regulations issued pursuant thereto, including,
without limitation, Regulations G, T, S, U and X of the Board of Governors
of
the Federal Reserve System, 12 C.F.R., Chapter 11.
6.12 Defaults. Borrower
has no knowledge of any Default or Event of Default not disclosed to Agent
in
writing. Borrower has no knowledge of any default or event of default
under any loan facility or with any Lender. Borrower has no knowledge
of any condition or event, which, with the passage of time, notice or both,
would constitute an Event of Default or an event of default under any loan
facility or with any Lender.
6.13 Compliance
with Law. Borrower
(a)
is not in violation, nor are any of its Resorts, or the business operations
in
respect of any of the Resorts, or to Borrower’s knowledge after diligent
inquiry, the Timeshare Owners’ Association, in violation, of the Timeshare Act,
or any laws, ordinances, governmental rules or regulations of any state in
which
a Resort is located, any political subdivision of said states or any other
jurisdiction to which Borrower or the Resorts, or the business operations
conducted in respect of the Resorts, or the Timeshare Owners’ Association, are
subject;
(b)
has not failed, nor have the Resorts or, to Borrower’s knowledge, the
Timeshare Owners’ Associations failed, to obtain any consents or joinders, or
any approvals, licenses, permits, franchises or other governmental
authorizations, or to make or cause to be made any filings, submissions,
registrations or declarations with any government or agency or department
thereof, necessary to the establishment, ownership or operation of the Resorts
or any of Borrower’s Properties, or to the conduct of Borrower’s business,
including, without limitation, the operation of the Resorts and the sale,
or
offering for sale, of Intervals therein; which violation or failure to obtain
or
register materially adversely affects Borrower, the Resorts or the business,
prospects, profits, properties or condition (financial or otherwise) of Borrower
or the Resorts. Borrower has, to the extent required by its
activities and businesses, and the operations of the Resorts, fully complied
with: (1) all of the applicable provisions of (a) the Consumer Credit
Protection Act; (b) Regulation Z of the Federal Reserve Board;
(c) the Equal Credit Opportunity Act; (d) Regulation B of the
Federal Reserve Board; (e) the Federal Trade Commission’s 3-day cooling-off
Rule for Door-to-Door Sales; (f) Section 5 of the Federal Trade
Commission Act; (g) the Interstate Land Sales Full Disclosure Act (“ILSA”);
(h) federal postal laws; (i) applicable state and federal securities
laws; (j) applicable usury laws; (k) applicable trade practices, home
and telephone solicitation, sweepstakes, anti-lottery and consumer credit
and
protection laws; (l) applicable real estate sales licensing, disclosure,
reporting and escrow laws; (m) the Americans With Disabilities Act and
related accessibility guidelines (“ADA”); (n) the Real Estate Settlement
Procedures Act (“RESPA”); (o) all amendments to and rules and regulations
promulgated under the foregoing acts or laws; (p) the Federal Trade
Commission’s Privacy of Consumer Financial Information Rule and (q) other
applicable federal statutes and the rules and regulations promulgated
thereunder; and (2) all of the applicable provisions of the Timeshare Acts,
any law or laws of any state (and the rules and regulations promulgated
thereunder) relating to ownership, establishment or operation of the Resorts,
or
the sale, offering for sale, or financing of Intervals;
(c)
has made diligent inquiry, and to the best of Borrower’s knowledge,
all persons or entities owning an interest in Borrower: (i) are not currently
identified on any United States Office of Foreign Assets Control (“OFAC”) List;
and (ii) are not persons or entities with whom a citizen of the United States
is
prohibited to engage in transactions by any trade embargo, economic sanction,
or
other prohibition of Untied States law, regulation, or Executive Order of
the
President of the United States. The OFAC List currently is accessible
through the internet website ▇▇▇.▇▇▇▇▇.▇▇▇/▇▇▇▇/▇▇▇▇▇▇.▇▇▇.
(d)
represents and warrants that at all times throughout the term of the Loan,
(i) none of the funds or other assets of Borrower shall constitute property
of,
or shall be beneficially owned, directly or indirectly, by, any Person subject
to trade restrictions under the Prescribed Laws (each such Person, an “Embargoed
Person”), with the result that the investment in Borrower (whether directly or
indirectly), is or would be prohibited by law or the Loan made by Lender
is or
would be in violation of law; (ii) no Embargoed Person shall have any interest
of any nature whatsoever in Borrower with the result that the investment
in
Borrower (whether directly or indirectly), is or would be prohibited by law
or
the Loan is or would be in violation of law; and (iii) none of the funds
of
Borrower shall be derived from any unlawful activity with the result that
the
investment in Borrower (whether directly or indirectly), is or would be
prohibited by law or the Loan is or would be in violation of
law.
6.14 Restrictions
of Borrower. Borrower will not be, on or after the date
hereof, a party to any contract or agreement which prohibits Borrower’s
execution of or compliance with the terms of this Agreement or the other
Loan
Documents. Borrower has not agreed or consented to cause or permit in
the future (upon the happening of a contingency or otherwise) any of the
Collateral, whether now owned or hereafter acquired, to be subject to a Lien
except in favor of Agent as provided herein.
6.15 Broker’s
Fees. Borrower represents to Agent and each Lender that
it has not made any commitment or taken any action which will result in a
claim
for any brokers’, finders’ or other similar fees or commitments with respect to
the transactions described in the Agreement. Borrower agrees to
indemnify Agent and each Lender and save and hold Agent and each Lender harmless
from all claims of any Person for any broker’s or finder’s fee or commission
claimed by any party claiming to represent Borrower, and this indemnity shall
include reasonable attorneys’ fees and legal expenses. Borrower
acknowledges that Wellington has acted as a
broker/finder/intermediary on behalf of Agent, each Lender and Liberty Bank
in
connection with the transactions contemplated hereunder. Agent and
any successor agent, each Lender and Liberty Bank reserve the right to pay
Wellington such broker, finder or intermediary fee in connection with the
transactions contemplated hereunder, as Agent or such successor agent or
each
Lender or Liberty Bank may elect. Agent and any successor agent, each
Lender and Liberty Bank agrees to indemnify Borrower and save and hold Borrower
harmless from all claims of any Person for any broker’s or finder’s fee or
commission claimed by any party claiming to represent Agent and any successor
agent, each Lender and Liberty Bank, and this indemnity shall include reasonable
attorneys’ fees and legal expenses.
6.16 Deferred
Compensation Plans. Borrower has no pension, profit
sharing or other compensatory or similar plan (herein called a “Plan”) providing
for a program of deferred compensation for any employee or
officer. No fact or situation, including but not limited to, any
“Reportable Event,” as that term is defined in Section 4043 of the Employee
Retirement Income Security Act of 1974 as the same may be amended from time
to
time (“Pension Reform Act”), exists or will exist in connection with any Plan of
Borrower which might constitute grounds for termination of any Plan by the
Pension Benefit Guaranty Corporation or cause the appointment by the appropriate
United States District Court of a Trustee to administer any such
Plan. No “Prohibited Transaction” within the meaning of
Section 406 of the Pension Reform Act exists or will exist upon the
execution and delivery of the Agreement or the performance by the parties
hereto
of their respective duties and obligations hereunder. Borrower will
(1) at all times make prompt payment of contributions required to meet the
minimum funding standards set forth in Sections 302 through 305 of the Pension
Reform Act with respect to each of its Plans; (2) promptly, after the
filing thereof, furnish to Agent copies of each annual report required to
be
filed pursuant to Section 103 of the Pension Reform Act in connection with
each Plan for each Plan Year, including any certified financial statements
or
actuarial statements required pursuant to said Section 103; (3) notify
Agent immediately of any fact, including, but not limited to, any Reportable
Event arising in connection with any Plan which might constitute grounds
for
termination thereof by the Pension Benefit Guaranty Corporation or for the
appointment by the appropriate United States District Court of a Trustee
to
administer the Plan; and (4) notify Agent of any “Prohibited Transaction”
as that term is defined in Section 406 of the Pension Reform
Act. Borrower will not (a) engage in any Prohibited Transaction
or (b) terminate any such Plan in a manner which could result in the
imposition of a Lien on the Property of Borrower pursuant to Section 4068
of the Pension Reform Act.
6.17 Labor
Relations. The employees of Borrower are not a party to
any collective bargaining agreement with Borrower, and, to the best knowledge
of
Borrower and its officers, there are no material grievances, disputes or
controversies with any union or any other organization of Borrower’s employees,
or threats of strikes, work stoppages or any asserted pending demands for
collective bargaining by any union or organization.
6.18 Resort.
(a) Timeshare
Plan. Each Resort has been established and dedicated,
and is and will remain, a time-share plan and project in full compliance
with
all Applicable Laws and regulations, including without limitation, the Timeshare
Act.
(b) Access. Each
Resort has direct access to a publicly dedicated road and all roadways inside
each Resort are subject to an access and use easement or other dedication
or
provision that benefits and will continue to benefit all
Purchasers.
(c) Utilities. Electric,
sanitary and stormwater sewer, telephone, water facilities and other necessary
utilities are available in sufficient capacity to service each Resort and
any
easements necessary to the furnishing of such utility services have been
obtained and duly recorded, and inure to the benefit of each Resort and each
Timeshare Owners’ Association.
(d) Amenities. Each
Purchaser of an Interval has and will have access to and the full use and
enjoyment of all of the Common Elements and public utilities of the Resort
in
which such interval is located, all in accordance with the Declaration and
Timeshare Documents.
(e) Construction. All
costs arising from the construction or acquisition of any Units and any other
improvements and the purchase of any fixtures or equipment, inventory,
furnishings or other personalty located in, at, or on the Resorts have been
paid
or will be paid when due.
(f)
Sale of Intervals. The marketing, sale,
offering of sale, rental, solicitation of Purchasers or, if applicable, lessees,
and financing of Intervals in the Resort: (1) do not constitute the sale,
or the offering of sale, of Securities subject to the registration requirements
of the Securities Act of 1933, as amended, or any state securities law;
(2) do not violate the Timeshare Act or any land sales or consumer
protection law, statute or regulation of the state where the Resort is located
or any other state or jurisdiction in which a Purchaser resides or in which
sales or solicitation activities occur; and (3) do not violate any consumer
credit or usury statute of state where the Resort is located or any other
state
or jurisdiction in which a Purchaser resides or in which sales or solicitation
activities occur. All marketing and sales activities are performed by
employees of Borrower, all of whom are and shall be properly licensed in
accordance with Applicable Laws.
(g) Tangible
Property. Except for specific items which may be owned
by independent contractors, the machinery, equipment, fixtures, tools and
supplies used in connection with the Resort, including without limitation,
with
respect to the operations and maintenance of the Common Elements, are owned
either by Borrower, Silverleaf Club, or the applicable Timeshare Owners’
Association.
(h) Operating
Contracts. Borrower, Silverleaf Club, or the applicable
Timeshare Owners’ Association has entered into the contracts, agreements, and
arrangements necessary for the operation of the Resorts, including but not
limited to those with respect to utilities, maintenance, management, services,
marketing and sales.
6.19 Timeshare
Regimen Reports. Borrower has furnished to Agent true
and correct copies of the Timeshare Documents listed on Schedule 6.19,
which consist of all those placed on file by Borrower with the Divisions
or any
federal, state or local regulatory or recording agencies, offices or
departments. All such filings and/or recordations, and all joinders
and consents, necessary in order to establish the plan in respect of the
Resorts, including without limitation, the Units, Intervals, and all appurtenant
Common Elements, and all related use and access rights, have been done or
obtained and all laws, regulations and statutes, and all agreements or
arrangements, in connection therewith have been complied with.
6.20 Operating
Contracts. The contracts, agreements and arrangements
comprising those agreements or arrangements relating to the operation of
the
Resorts, including without limitation, with respect to utilities, maintenance,
management, services, marketing and sales under which the fees to be paid
equal
or exceed $50,000.00 (collectively, all such agreements and arrangements
are
referred to herein as the “Operating Contracts”) are unmodified and in full
force and effect and shall remain free and clear of any lien.
6.21 Architectural
and Environmental Control. All Units, Common Elements
and other improvements at, upon or appurtenant to the Resort are and will
be in
compliance with the design, use, architectural and environmental control
provisions, if any, set forth in the Declaration.
6.22 Tax
Identification. Borrower’s federal taxpayer’s
identification number is: ▇▇-▇▇▇▇▇▇▇.
6.23 Inventory
Control Procedures. Borrower has provided to Agent a
true and complete copy of Borrower's Inventory, Sales and Assignments procedures
(the "Inventory Control Procedures"), a copy of which is attached hereto
as
Exhibit E. Borrower is and shall at all times be in full
compliance with the Inventory Control Procedures from the date hereof until
the
Loan is repaid in full. Borrower shall permit Agent, its officers,
employees, auditors, and other agents or designees to review the books and
records of Borrower and make such other examinations and inspections as Agent
in
its sole discretion deems necessary to determine that Borrower is in full
compliance with such Inventory Control Procedures.
6.24 Additional
Representations and Warranties. This Agreement, the Note
and the other Loan Documents constitute the legal, valid and binding obligation
of Borrower, enforceable against Borrower in accordance with their respective
terms.
Section
7-Covenants
7.1 Affirmative
Covenants. So long as any portion of the Obligations
remains unsatisfied, Borrower hereby covenants and agrees with Agent and
each
Lender as follows:
(a)
Payment and Performance of
Obligations. Borrower shall pay all of the Loan and
related expenses when and as the same become due and payable, and Borrower
shall
strictly observe and perform all of the Obligations, including without
limitation, all covenants, agreements, terms, conditions and limitations
contained in the Loan Documents, and will do all things necessary which are
not
prohibited by law to prevent the occurrence of any Event of Default hereunder;
and Borrower will maintain an office or agency in the State of Texas where
notices, presentations and demands in respect of the Loan Documents may be
made
upon Borrower. Such office or agency and the books and records of
Borrower shall be maintained at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇
▇▇▇▇▇ until such time as Borrower shall so notify Agent, in writing, of any
change of location of such office or agency.
(b) Maintenance
of Existence, Qualification and Assets. Borrower shall
at all times (i) maintain its legal existence, (ii) maintain its
qualification to transact business and good standing in any state and in
any
jurisdiction where it conducts business in connection with the Resorts, and
(iii) comply or cause compliance with all governmental laws, rules,
regulations and ordinances applicable to the Resorts, Borrower or its business,
including, without limitation, the Timeshare Act.
(c) Consolidation
and Merger. Borrower will not consolidate with or merge
into any other Person or permit any other Person to consolidate with or merge
into it, unless: (i) Borrower is the continuing or surviving corporation
in any
such consolidation or merger and (ii) prior to and immediately after such
consolidation or merger, Borrower shall not be in default
hereunder.
(d) Maintenance
of Insurance. Borrower, or if required pursuant to the
Declaration, the Timeshare Owners’ Association, shall maintain (or Borrower
shall cause to be maintained) at all times during the term of this Agreement,
policies of insurance with premiums being paid when due, and shall deliver
to
Agent originals of insurance policies issued by insurance companies, in amounts,
in form and in substance, and with expiration dates, all acceptable to Agent
and
containing a waiver of subrogation rights by the insuring company, a
non-contributory standard mortgagee benefit clause, or their equivalents,
and a
mortgagee loss payable endorsement in favor of and satisfactory to Agent
on
behalf of each Lender, and breach of warranty coverage, providing the following
types of insurance on and with respect to Borrower (or, as appropriate, the
respective Associations) and the Resort:
(i) Fire
and extended coverage insurance (including lightning, hurricane, tornado,
wind
and water damage, vandalism and malicious mischief coverage) covering the
improvements and any personal property located in or on the Resorts in an
amount
not less than the full replacement value of such improvements and personal
property, and said policy of insurance shall provide for a deductible acceptable
to Agent, breach of warranty coverage, replacement cost endorsements
satisfactory to Agent, and shall not permit co-insurance;
(ii) Public
liability and property damage insurance covering the Units and the Resorts
in
amounts and on terms satisfactory to Agent; and
(iii) Such
other insurance on the Resorts or any replacements or substitutions therefor
including, without limitation, flood insurance (if the Property is or becomes
located in an area which is considered a flood risk by the U.S. Emergency
Management Agency or pursuant to the National Flood Insurance program), in
such
amounts and upon terms as may from time to time be reasonably required by
Agent.
To
the
extent any other timeshare receivable lender has any rights to approve the
form
of insurance policies with respect to the Resorts, the amounts of coverage
thereunder, the insurers under such policies, or the designation of an
attorney-in-fact for purposes of dealing with damage to any part of the Resorts
or insurance claims or matters related thereto, or any successor to such
attorney-in-fact, or any changes with respect to any of the foregoing, Borrower
shall take all steps as may be necessary (and, after turnover, if any, of
control of the Resort to the Timeshare Owners’ Association, Borrower shall use
its best efforts) to ensure that Agent on behalf of each Lender shall at
all
times have a co-equal right, with such other lender (including, without
limitation, Borrower or any third-party lender), to approve all such matters
and
any proposed changes in respect thereof; and Borrower shall not cause or
permit
any changes with respect to any insurance policies, insurers, coverage,
attorney-in-fact, or insurance trustee, if any, without Agent’s prior written
approval.
In
the
event of any insured loss or claim in respect of the Resorts or the Units,
Borrower shall apply (or cause to be applied), and Borrower covenants that
the
Timeshare Owners’ Association shall apply (or cause to be applied), all proceeds
of such insurance policies in a manner consistent with the Timeshare Documents
and the Timeshare Act.
All
insurance policies required pursuant to this Agreement (or the Timeshare
Documents or Timeshare Act) shall provide that the coverage afforded thereby
shall not expire or be amended, canceled, modified or terminated without
at
least thirty (30) days prior written notice to Agent. At least thirty
(30) days prior to the expiration date of each policy maintained pursuant
to
this Section 7.1(d), a renewal or replacement thereof satisfactory
to Agent shall be delivered to Agent. Borrower shall deliver or cause
to be delivered to Agent receipts evidencing the payment for all such insurance
policies and renewals or replacements.
In
the
event of any fire or other casualty to or with respect to the improvements
on or
at the Resorts, Borrower covenants that Borrower or the Timeshare Owners’
Association, as the case may be, will promptly restore or repair (or cause
to be
restored, repaired or replaced) the damaged improvements and repair or replace
any other personal property to the same condition as immediately prior to
such
fire or other casualty and, with respect to the improvements and personal
property on the Resorts, in accordance with the terms of the Timeshare Documents
or Timeshare Act. The insufficiency of any net insurance proceeds
shall in no way relieve Borrower or, as applicable, Borrower and Timeshare
Owners’ Association, of its obligation to restore, repair or replace such
improvements and other personal property in accordance with the terms hereof,
of
the Declaration or other Timeshare Documents or of the Timeshare Act, and
Borrower covenants that Borrower or, as the case may be, the Timeshare Owners’
Association, shall promptly comply and cause compliance with the provisions
of
the Declaration and other Timeshare Documents, or of the Timeshare Act relating
to such restoration, repair or replacement. Borrower shall, unless an Event
of
Default has occurred, apply all insurance proceeds payable to or received
by it,
in accordance with the applicable Declaration. If an Event of Default
has occurred, Agent may, in its sole discretion, apply all insurance proceeds
in
accordance with the applicable Declaration or to the repayment of the
Loan.
(e) Maintenance
of Security. Borrower shall execute and deliver (or
cause to be executed and delivered) to Agent all security agreements, financing
statement filing authorizations, assignments and such other agreements,
documents, instruments and certificates, and supplements and amendments thereto,
and take such other actions, as Agent deems necessary or appropriate in order
to
maintain as valid, enforceable and perfected first priority lien and security
interest, as applicable, all Liens and security interests in the Collateral
granted to Agent as agent for Lenders to secure the
Obligations. Except as permitted under Section 3.6, Borrower
shall not grant extensions of time for the payment of, compromise for less
than
the full face value or release in whole or in part, any Purchaser or other
Person liable for the payment of, or allow any credit whatsoever except for
the
amount of cash to be paid upon, any Collateral or any instrument, chattel
paper
or document representing the Collateral.
(f)
Payment of Taxes and Claims. Borrower
will pay, and, as applicable pursuant to the Declaration, Borrower covenants
that the Timeshare Owners’ Association will pay, when due, all taxes imposed
upon the Resorts, the Collateral, Borrower, the Timeshare Owners’ Association,
or any of its or their property, or with respect to any of its or their
franchises, businesses, income or profits, real and personal property, or
with
respect to the Loan or any of the Loan Documents; and Borrower and the Timeshare
Owners’ Association, as the case may be, shall pay all other charges and
assessments against Borrower, the Collateral and the Resorts before any claim
(including, without limitation, claims for labor, services, materials and
supplies) arises for sums which have become due and payable. Except
for Liens set forth on Schedule 6.5 and the Liens in favor of Agent on
behalf of Lenders granted pursuant to the Loan Documents, and except as
otherwise specifically provided for herein, Borrower covenants that no statutory
or other Liens whatsoever (including, without limitation, mechanics’,
materialmens’, judgment or tax liens) shall attach to any of the Collateral or
the Resorts except for such Liens as are expressly provided for pursuant
to the
Declaration. In the event any such Lien attaches to any of the
Collateral or the Resorts Borrower shall, within thirty (30) days after any
such
Lien attaches, either (i) cause such Lien to be released of record or
(ii) provide Agent with a bond in accordance with the Applicable Laws of
the State, issued by a corporate surety acceptable to Agent, in an amount
and
form acceptable to Agent.
(g) Inspections. Borrower
shall, at any time and from time to time and at the expense of Borrower,
permit
Agent or any Lender or its respective agents or representatives (provided
such
Lender has coordinated such inspection with Agent) to inspect the Resorts,
the
Collateral and if necessary, in Agent’s opinion, to ascertain or assure
Borrower’s compliance with the terms of this Agreement, any of Borrower’s other
assets or Property, and to examine and make copies of and abstracts from
its
and, to the extent it has access thereto or possession thereof, the Timeshare
Owners’ Association’s, books, accounts, records, original correspondence,
computer tapes, disks, software, and other papers as it may desire; and to
discuss its affairs, finances and accounts with any of its officers, employees,
Affiliates, contractors or independent public accountants (and by this provision
Borrower authorizes said accountants to discuss with Agent, its Agents or
representatives, the affairs, finances and accounts of
Borrower). Agent and each Lender agree to use reasonable efforts not
to unreasonably interfere with Borrower’s business operations in connection with
any such inspections. Without limiting the foregoing, Agent shall
have the right to make such credit investigations as Agent may deem appropriate
in connection with its review of Notes Receivable, and Borrower shall make
available to Agent all credit information in Borrower’s possession or under its
control or to which it may have access, with respect to Purchasers or other
obligors under Notes Receivable as Agent may request.
(h) Reporting
Requirements. So long as any portion of the Obligations
remains unsatisfied, Borrower shall furnish (or cause to be furnished, as
the
case may be) to Agent the following:
(i) The
Following Collateral Reports.
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Within
1 Business Day of occurrence or receipt
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(a) Upon
becoming aware of the existence of any condition or event which
constitutes a Default or an Event of Default, Borrower shall deliver
to
Agent a written notice specifying the nature and period of existence
thereof and what action Borrower is taking or proposes to take
with
respect thereto.
(b) Upon
becoming aware that the holder of any material obligation or of
any
evidence of material indebtedness of the Borrower has given notice
or
taken any other action with respect to a claimed default or event
of
default thereunder, a written notice specifying the notice given
or action
taken by such holder and the nature of the claimed default or event
of
default and what action the Borrower is taking or proposes to take
with
respect thereto;
(c) Promptly
upon receipt thereof, one (1) copy of each other report submitted
to
Borrower by independent public accountants or other Persons in
connection
with any annual, interim or special audit made by them of the books
of
Borrower;
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Weekly
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(d) None
at this time.
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|
Monthly
(not later than the 10th Business Day of each month)
|
(e)
a Borrowing Base Report and all supporting reports and documentation
which
includes a detailed calculation of the Availability as of the end
of the
month,
(f)
a reconciliation to the detailed calculation of the Availability
previously provided to Agent,
(g)
a confirmation of payment or reimbursement of all funds received
during
the prior month from Purchasers for homeowner fees and expenses
to each of
the Timeshare Owners’ Associations,
(h)
monthly aging Reports on all Notes Receivable
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|
Quarterly
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(i)
a sales report, detailing the sales of all Intervals at the Resorts
for
the period covered thereby, certified by Borrower to be true, correct
and
complete and otherwise in a form approved by Agent, provided however,
upon
30 days prior written notice Lender may require this report to
be
furnished on a monthly basis,
(j)
such additional information as Agent may request with respect to
the
Collateral, or the financial condition of Borrower,
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|
Annually
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(k)
a sales report, detailing the sales of all Intervals at the Resorts
for
the period covered thereby, certified by Borrower to be true, correct
and
complete and otherwise in a form approved by Agent, and
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|
Upon
request by Agent
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(l)
such other reports as to the Collateral, or the financial condition
of
Borrower, as Agent may request.
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In
addition, to the extent required by Agent, (i) in Agent’s Permitted Discretion,
Borrower agrees to facilitate the establishment of electronic collateral
reporting systems, which will be administered and maintained by Agent, and
to
cooperate with Agent to facilitate and implement a system of electronic
collateral reporting in order to provide electronic reporting of each of
the
items set forth above, provided however the cost to Borrower for such set
up of
the electronic collateral reporting systems shall not exceed $5,000, and
(ii) a
senior member of the management of Borrower or other representative acceptable
to Agent will meet with Agent, telephonically at least once in each calendar
quarter and in person once each six (6) months, to review and discuss matters
relating to Borrower’s business, prospects, projections and affairs as is
determined to be reasonable and appropriate by Agent.
(ii) Quarterly
and Annual Financial Reports. Within ninety (90) days of
each fiscal year end and within forty five (45) days of each fiscal or calendar
quarter end (in the event such the financial reports are not filed by such
dates, Borrower shall provide a copy of each application for extension
transmitted to each applicable taxing authority) or as soon as available,
but in
any event upon Borrower’s filing of its Securities and Exchange Commission Form
10-Q, a statement of income and expense and a balance sheet of Borrower for
the
calendar or fiscal period then ended, and in the case of the second, and
third
calendar or fiscal quarters ended a statement showing the period then ended
and
cumulative numbers for the portion of the year then ended, all in such detail
and scope as may be reasonably required by Agent and prepared by management
on a
basis consistent with prior accounting periods and accompanied by an Officer’s
Certificate in the form of Exhibit F. In addition to the
above, as soon as available, but in any event upon Borrower’s filing of its
Securities and Exchange Commission Form 10-K reflecting Borrowers financial
results for each calendar year or other fiscal year as may be applicable
(a
“Fiscal Year”), an audited statement of income and
expense of Borrower for the annual period ended as of the end of such Fiscal
Year, and a balance sheet of Borrower as of the end of such Fiscal Year,
all in
such detail and scope as may be reasonably required by Agent and prepared
in
accordance with GAAP and on a basis consistent with prior accounting
periods. Each annual financial statement of Borrower shall be
prepared by an independent certified public accountant, acceptable to Agent,
in
its sole discretion. Such audited annual statements shall also be in
form and content satisfactory to Agent.
(iii) Maintenance
of Inventory Control. Borrower shall maintain and at all
times fully comply with the Inventory Control Procedures from the date hereof
until the Loan is repaid in full. Borrower shall permit Agent, its
officers, employees, auditors, and other agents or designees to review the
books
and records of Borrower and make such other examinations and inspections
as
Agent in its sole discretion deems necessary to determine that Borrower is
in
full compliance with such Inventory Control Procedures.
(iv) Material
Adverse Developments. Immediately upon becoming aware of
any claim, action, proceeding, development or other information which may
materially and adversely affect Borrower, the Collateral, the Resorts, the
business, prospects, profits or condition (financial or otherwise) of Borrower,
or the ability of Borrower to perform its Obligations under the Agreement,
Borrower shall provide Agent with telephonic or telegraphic notice, followed
by
telefaxed and mailed written confirmation, specifying the nature of such
development or information and such anticipated effect;
(v) Other
Information. Borrower shall deliver to Agent: (i) within
five (5) days of the filing thereof with the United States Securities and
Exchange Commission, copies of each Form 8-K, 10-Q and 10-K filed by Borrower;
(ii) at least semi-annually during the Term (or more frequently upon request
of
Agent), current addresses and telephone numbers for each obligor under an
Eligible Note Receivable pledged to Agent on behalf of Lenders hereunder
and
(iii) any other information related to the Loan, the Collateral, the Resorts
or
Borrower as Agent may in good faith request including, without limitation,
annually, federal call reports relating to Lockbox Agent.
(vi) Annual
Operating Plan. On or before December 31 of each
calendar year, Borrower shall deliver to Agent its Annual Operating
Plan.
(i)
Records. Borrower shall keep adequate records
and books of account reflecting all financial transactions of Borrower and
with
respect to the Resorts in which complete entries will be made in accordance
with
GAAP. In addition, Borrower shall keep, and shall promptly deliver to
Agent upon Agent’s request therefor, complete, timely and accurate records of
all sales of Intervals and all payments in respect of Pledged Notes
Receivable.
(j)
Management. Borrower shall: (i) remain
engaged in the active management of the Resorts, (ii) unless Borrower notifies
Agent in writing at least thirty (30) days in advance of its new location,
retain its executive offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇
▇▇▇▇▇, and (iii) continue to perform duties substantially similar to those
presently performed as provided in the management agreement relating to each
Resort. No management agreement for any Resort shall be modified,
assigned, extended, terminated or entered into nor shall the current method
of
operation and management of the Resorts be changed in any material manner,
without the prior written approval of Agent.
(k) Operating
Contracts. Subject to the rights of the Timeshare
Owners’ Association as set forth in the Timeshare Documents, no Operating
Contract shall be modified, extended, terminated or entered into, without
the
prior written approval of Agent, if any such modification, extension,
termination or new agreement could have a material adverse impact on the
operation of the Resorts or the Collateral.
(l)
Notices. Borrower shall notify Agent within
five (5) Business Days of the occurrence of any event (i) as a result of
which any representation or warranty of Borrower contained in any Loan Documents
would be incorrect or materially misleading if made at that time, or
(ii) as a result of which Borrower is not in full compliance with all of
its covenants and agreements contained in this Agreement or any Loan Document,
or (iii) which constitutes or, with the passage of time, notice or a
determination by Agent would constitute, an Event of Default.
(m) Maintenance. Borrower
shall maintain, or shall cause to be maintained, or to the extent provided
for
pursuant to the Declaration, shall use its best efforts to cause the Timeshare
Owners’ Association to maintain, the Resorts in good repair, working order and
condition and shall make all necessary replacements and improvements to the
Resorts consisting of real property so that the value and operating efficiency
of the Resorts will be maintained at all times and so that the Resorts remain
in
compliance in all respects with the Timeshare Act, the Timeshare Documents
and
other applicable law.
(n) Claims. Borrower
shall promptly notify Agent of any claim, action or proceeding affecting
the
Resorts or Collateral, or any part thereof, or Agent or any Lender or any
of the
security interests or rights granted in favor of Agent hereunder or under
any of
the Loan Documents. At the request of Agent, Borrower shall appear in
and defend in favor of each Lender, at Borrower’s sole expense, any such claim,
action or proceeding.
(o) Registration
and Regulations.
(i) Local
Legal Compliance. Borrower will comply, and will cause
the Resorts to comply, with all applicable servitudes, restrictive covenants,
applicable planning, zoning or land use ordinances and building codes, all
applicable health and Environmental Laws and regulations, and all other
Applicable Laws, rules, regulations, agreements or
arrangements.
(ii) Registration
Compliance. Borrower will maintain, or cause to be
maintained, all necessary registrations, current filings, consents, franchises,
approvals, and exemption certificates, and Borrower will make or pay, or
cause
to be made or paid, all registrations, declarations or fees with the Division
and any other government or any agency or department thereof, whether in
the
state or another jurisdiction, required in connection with the Resorts and
the
occupancy, use and operation thereof, the incorporation of Units into the
time-share plan established pursuant to the Declaration and the other Timeshare
Documents, and the sale, advertising, marketing, and offering for sale of
Intervals. All such registrations, filings and reports will be
truthfully completed; and true and complete copies of such registrations,
applications, consents, licenses, permits, franchises, approvals, exemption
certificates, filings and reports will be delivered to
Agent. Borrower shall advise Agent of any changes with respect to its
marketing or sales programs in any jurisdiction, including jurisdictions
other
than the state, and at Agent’s request from time to time, Borrower shall deliver
to Agent: (A) written statements by the applicable state authorities, in
form acceptable to Agent, stating that no registration is necessary for the
sale
of Intervals in the particular state, (B) an opinion of counsel in form
acceptable to Agent and rendered by counsel acceptable to Agent, stating
that no
such registration is necessary, or (C) such other evidence of compliance
with Applicable Laws as Agent may require; and
(iii) Other
Compliance. Borrower has, in all material respects,
complied with and will comply with all laws and regulations of the United
States, the State of Texas, each state in which an applicable Resort or
Collateral is located, any political subdivision of either such state and
any
other governmental, quasi-governmental or administrative jurisdiction in
which
Intervals have been sold or offered for sale, or in which sales, offers of
sale
or solicitations with respect to the Resorts have been or will be conducted,
including to the extent applicable, but not limited to: (1) the Timeshare
Act; (2) the Consumer Credit Protection Act; (3) Regulation Z of
the Federal Reserve Board; (4) the Equal Credit Opportunity Act;
(5) Regulation B of the Federal Reserve Board; (6) the Federal
Trade Commission’s 3-day cooling-off Rule for Door-to-Door Sales;
(7) Section 5 of the Federal Trade Commission Act; (8) ILSA;
(9) federal postal laws; (10) applicable state and federal securities
laws; (11) applicable usury laws; (12) applicable trade practices,
home and telephone solicitation, sweepstakes, anti-lottery and consumer credit
and protection laws; (13) applicable real estate sales licensing,
disclosure, reporting and escrow laws; (14) the ADA; (15) RESPA;
(16) all amendments to and rules and regulations promulgated under the
foregoing acts or laws; (17) the Federal Trade Commission’s Privacy of Consumer
Financial Information Rule; (18) other applicable federal statutes and the
rules and regulations promulgated thereunder; and (19) any state law or law
of any state (and the rules and regulations promulgated thereunder) relating
to
ownership, establishment or operation of the Resort, or the sale, offering
for
sale, or financing of Intervals.
(p) Other
Documents. Borrower will maintain to the satisfaction of
Agent and make available to Agent and other Lenders, accurate and complete
files
relating to the Resorts, the Pledged Notes Receivable and other Collateral,
and
such files will contain true copies of each Pledged Note Receivable, as amended
from time to time, copies of all relevant credit memoranda relating to such
Notes Receivable and all collection information and correspondence relating
thereto. Without limiting the foregoing, Borrower shall maintain
evidence of its compliance with the requirements of Section 3.8
hereof.
(q) Further
Assurances. Borrower will execute and deliver, or cause
to be executed and delivered, such other and further agreements, documents,
instruments, certificates and assurances as, in the judgment of Agent exercised
in good faith may be necessary or appropriate to more effectively evidence
or
secure, and to ensure the performance of, the Obligations. In
addition, Borrower shall deliver to Agent from time to time upon each request
by
Agent such documents, instruments or other matters or items as Agent may
require
to evidence Borrower’s compliance with the covenants set forth in this
Section 7.1 and Section 3.8 hereof.
(r)
Utilities. Borrower will cause, or to the
extent provided for pursuant to the Declaration, covenants to use its best
efforts to ensure that the Timeshare Owners’ Association, or the manager of the
Resorts, as applicable, will cause, electric, sanitary and stormwater sewer,
water facilities, drainage facilities, solid waste disposal, telephone and
other
necessary utilities to be available to the Resorts in sufficient capacity
to
service the Resorts.
(s) Amenities. Borrower
will cause, or to the extent provided for pursuant to the Declarations, will
use
its best efforts to ensure that the Timeshare Owners’ Association, or the
manager of the Resort, as applicable, will cause, the Resorts to be maintained
in good condition and repair, and in accordance with the provisions of the
applicable Timeshare Documents, and Borrower will cause each Purchaser of
an
Interval at the Resorts to have continuing access to, and the use of, to
the
extent of such Purchaser’s time-share periods, all of the Common Elements and
related or appurtenant services, rights and benefits, all as provided in
the
Declaration and the Timeshare Documents.
(t) Transaction
Costs, Expenses and Fees. Whether or not the
transactions contemplated hereunder are completed, Borrower shall pay all
expenses of Agent, each Lender and any Participant, whether at the Closing
Date
or subsequent thereto relating to negotiating, preparing, documenting, closing
and enforcing this Agreement, including, but not limited to:
(i) the
cost of preparing, reproducing and binding this Agreement, the other Loan
Documents and all Exhibits and Schedules thereto;
(ii)
the reasonable fees and disbursements of Agent’s, each Lender’s and each
Participants’ counsel;
(iii) Agent’s,
each Lender’s and each Participants’ reasonable out-of-pocket
expenses;
(iv) all
reasonable fees and expenses (including fees and expenses of Agent’s, each
Lender’s and each Participants’ counsel) relating to any amendments, waivers,
consents or subsequent closings pursuant to the provisions hereof;
(v) all
costs, outlays, legal fees and expenses of every kind and character had or
incurred in (1) the interpretation or enforcement of any of the provisions
of,
or the creation, preservation or exercise of rights and remedies under, any
of
the Loan Documents including the costs of appeal (2) the preparation for,
negotiations regarding, consultations concerning, or the defense or prosecution
of legal proceedings involving any claim or claims made or threatened against
Agent arising out of this transaction or the protection of the Collateral
securing the Loan or Advances made hereunder, expressly including, without
limitation, the defense by Agent, each Lender and each Participant of any
legal
proceedings instituted or threatened by any Person to seek to recover or
set
aside any payment or setoff theretofore received or applied by Agent, each
Lender and each Participant with respect to the Obligations, and any and
all
appeals thereof; and (3) the advancement of any expenses provided for under
any
of the Loan Documents;
(vi) all
expenses relating to the maintenance and administration of the Lockbox and
Lockbox Account by the Lockbox Agent and Servicing and any escrow by the
Title
Company or any other escrow agent;
(vii) all
costs and expenses incurred by Agent under the Note, and all late charges
under
the Note;
(viii) all
real and personal property taxes and assessments, documentary stamp and
intangible taxes, sales taxes, recording fees, title insurance premiums and
other title charges, document copying, transmittal and binding costs, appraisal
fees, lien and judgment search costs, fees of architects, engineers,
environmental consultants, surveyors and any special consultants, construction
inspection fees, brokers fees, escrow fees, wire transfer fees, and all travel
and out-of-pocket expenses of Agent, each Lender and each Participant to
conduct
inspections or audits. Without limitation of the foregoing, Borrower shall
pay
the costs of UCC and other searches, UCC and other Loan Document recording
fees
and applicable taxes, and premiums on each Mortgagee Title Policy delivered
to
Agent pursuant to this Agreement; and
(ix)
audit, appraisal, and valuation fees and charges as follows: (i) a fee of
$950
per day, per auditor, plus out-of-pocket expenses for each financial audit
of
Borrower performed by personnel employed or contracted by Agent, which audits
shall be conducted at Borrower’s expense as frequently as Agent shall determine
and (ii) if implemented, a fee of $950 per day, per applicable individual,
plus out-of-pocket expenses for the establishment of electronic collateral
reporting systems, provided the aggregate fee to be paid by Borrower for
this
service shall not exceed $5,000.
With
respect to the fees payable by Borrower under clauses (ii), (iii), and (iv)
above, provided that no Event of Default or condition, omission or act which,
with the passage of time, notice or both, would constitute an Event of Default,
has occurred, Agent, each Lender and/or each Participant shall provide Borrower
in advance, as applicable, with good faith estimates of: (1) the reasonable
fees
and disbursements of such party’s counsel; (2) such party’s reasonable
out-of-pocket expenses; and (3) the reasonable fees and expenses of such
party
and its counsel relating to any amendments, waivers, consents or subsequent
closings pursuant to the provisions hereof, respectively; and such fees,
disbursements and expenses shall be in accordance with such good faith
estimates.
(u) Indemnification
of Agent and Lender. In addition to (and not in lieu of)
any other provisions of any Loan Document providing for indemnification in
favor
of Agent or Lenders, Borrower shall defend, indemnify and hold harmless Agent,
each Lender, each Participant, their respective subsidiaries, affiliates,
officers, directors, agents, employees, representatives, consultants,
contractors, servants, and attorneys, as well as the respective heirs, personal
representatives, successors or assigns of any or all of them (hereafter
collectively the “Indemnified Lender Parties”), from and against, and promptly
pay on demand or reimburse each of them with respect to, any and all
liabilities, claims, demands, losses, damages, costs and expenses (including
without limitation, reasonable attorneys’ and paralegals’ fees and costs),
actions or causes of action of any and every kind or nature whatsoever asserted
against or incurred by any of them by reason of or arising out of or in any
way
related or attributable to (i) this Agreement, the Loan Documents, or the
Collateral; (ii) the transactions contemplated under any of the Loan Documents
or any of the Timeshare Documents, including without limitation, those in
any
way relating to or arising out of the violation of any federal or state laws,
including the Timeshare Act; (iii) any breach of any covenant or agreement
or
the incorrectness or inaccuracy of any representation and warranty of Borrower
contained in this Agreement or any of the Loan Documents (including without
limitation any certification of Borrower delivered to Lender or Agent); (iv)
any
and all taxes, including real estate, personal property, sales, mortgage,
excise, intangible or transfer taxes, and any and all fees or charges,
including, without limitation under the Timeshare Act, which may at any time
arise or become due prior to the payment, performance and discharge in full
of
the Obligations; (v) the breach of any representation or warranty as set
forth
herein regarding any Environmental Laws; (vi) the failure of Borrower to
perform
any obligation or covenant herein required to be performed pursuant to any
Environmental Laws; (vii) the use, generation, storage, release, threatened
release, discharge, disposal or presence on, under or about the Resorts of
any
Hazardous Materials; (viii) the removal or remediation of any Hazardous
Materials from the Resorts required to be performed pursuant to any
Environmental Laws or as a result of recommendations of any environmental
consultant or as required by Agent; (ix) claims asserted by any Person
(including without limitation any governmental or quasi-governmental agency,
commission, department, instrumentality or body, court, arbitrator or
administrative board (collectively, a “Governmental Agency”), in connection with
or any in any way arising out of the presence, use, storage, disposal,
generation, transportation, release, or treatment of any Hazardous Materials
on,
in, under or affecting the Resorts; (x) the violation or claimed violation
of
any Environmental Laws in regard to the Resorts; or (xi) the preparation
of an
environmental audit or report on the Resorts, whether conducted by a Lender,
Agent, Borrower or a third-party, or the implementation of environmental
audit
recommendations. Such indemnification shall not give Borrower any
right to participate in the selection of counsel for Agent or any Lender
or the
conduct or settlement of any dispute or proceeding for which indemnification
may
be claimed. Agent and each Lender agree to give Borrower written
notice of the assertion of any claim or the commencement of any action or
lawsuit described in this Section 7.1(v). It is the express
intention of the parties hereto that the indemnity provided for in this
Section 7.1(v), as well as the disclaimers of liability referred to in
this Agreement, are intended to and shall protect and indemnify Agent and
each
Lender from the consequences of Agent’s and each Lender’s and each Participant’s
own negligence, whether or not that negligence is the sole or concurring
cause
of any liability, obligation, loss, damage, penalty, action, judgment, suit,
claim, cost, expense or disbursement provided, however, that Borrower shall
not
be required to protect and indemnify Agent or any Lender or any Participant
from
the consequences of Agent’s or any such Lender’s or any such Participant’s gross
negligence, where that gross negligence is the sole cause of the liability,
obligation, loss, damage, penalty, action, judgment, suit, claim, cost, expense
or disbursement for which indemnification or protection would otherwise be
required. The provisions of this Section 7.1(v) shall survive
the full payment, performance and discharge of the Obligations and the
termination of this Agreement, and shall continue thereafter in full force
and
effect. In addition to the above, Borrower has advised Agent that
payments from Purchasers will include reimbursements from such Purchasers
of
Time Share Owners’ Association fees and expenses and Borrower hereby authorizes
Agent to apply such payments and reimbursements to the outstanding Obligations
due from Borrower to Agent and Lenders and Borrower will pay not less frequently
than monthly all sums due to such Time Share Owners’
Associations. Borrower hereby indemnifies and holds Agent and each
Lender and each Participant harmless from the application of such payments
and
agrees that it is its sole responsibility to remit funds to each Time Share
Owners’ Association to reimburse such Time Share Owners’ Association for the
payments made by Purchasers.
(v) Standby
Servicer. Borrower will maintain the agreement for the
Standby Servicer in full force and effect. Borrower agrees that upon the
occurrence of a Default or Event of Default hereunder, the Standby Servicer
will
assume full control over the servicing of all Pledged Notes Receivable,
reporting solely to Agent, as provided in Section 9.1(i)
hereof.
(w) Additional
Loan Facility Documents. Borrower will comply with the
terms and conditions of the CSF Facility, the UBS Facility, the WFF Facility,
the TFC Facility and the TFC Conduit Loan. Nothing contained herein
shall prohibit or limit Borrower’s ability to amend or modify any of the CSF
Documents or any of the UBS Documents or any of the WFF Documents or any
of the
TFC Documents or any of the Silverleaf Finance II Documents or documents
evidencing any other indebtedness of Borrower, provided Borrower provides
Agent
with a copy of the fully executed loan documents promptly within ten (10)
days
after execution.
(x)
Financial Covenants.
(i) Tangible
Net Worth. Borrower shall, on and after the Closing
Date, at all times have and maintain a Tangible Net Worth of not less than
$100,000M plus 50% of aggregate amount of proceeds received by Borrower
after December 31, 2004 in connection with each issuance by Borrower of any
class or classes of capital stock after December 31, 2004, except for stock
issued to retire existing unsecured subordinated debt, plus
50% of the aggregate amount of net income (calculated in accordance with
GAAP)
of Borrower after December 31, 2004.
(ii) Marketing
and Sales Expenses. As of the last day of each fiscal
quarter, commencing with the fiscal quarter ending September 30, 2007, Borrower
will not permit the four quarter cumulative ratio of Marketing and Sales
Expenses to the Borrower’s vacation interval sales as recorded on the Borrower’s
financial statements for the immediately preceding four (4) consecutive fiscal
quarters of the Borrower to equal or exceed a ratio of .570 to 1.
(iii) Maximum
Loan Delinquency. Borrower will not permit as of the
last day of each calendar quarter its over 30-day delinquency rate on its
entire
Notes Receivable portfolio to be greater than ten percent (10%).
(iv) Interest
Coverage. For the calendar quarter of Borrower ending
September 30, 2007 and for each calendar quarter thereafter, the average
of the
Interest Coverage Ratio for Borrower for such calendar quarter and the Interest
Coverage Ratios for each of the three immediately preceding calendar quarters
shall be at least 1.25:1. The term Interest Coverage Ratio means with
respect to any Person for any calendar quarter, the ratio of (a) EBITDA for
such
period less capital expenditures as determined in accordance with GAAP, for
such
period to (b) the Total Interest Expense minus all non-cash items constituting
interest expense for such period.
(v) Profitable
Operations. Borrower will not permit consolidated net
income (a) for any fiscal year, commencing with the fiscal year ending December
31, 2005, to be less than $1.00 and (b) for any two consecutive fiscal quarters
(reviewed on an individual rather than on an aggregate basis) to be less
than
$1.00.
(vi) Maximum
Debt to Tangible Net Worth. Borrower shall maintain a
ratio of (i) the outstanding amount of Indebtedness of Borrower (excluding
Subordinated Debt), to (ii) Tangible Net Worth, each as measured on a fiscal
quarter-end basis commencing the calendar quarter ending September 30, 2007
and
for each fiscal quarter thereafter, which is less than or equal to 6.00 to
1.00
(non-recourse off balance sheet financing would not be included as Indebtedness
for the purposes of this covenant).
(vii) Minimum
FICO Scores. Borrower shall not permit, for any calendar
quarter, the weighted average FICO Credit Bureau Scores of all of Borrower’s
sales, not limited to those resulting in pledged Notes Receivable to Agent,
with
respect to which a FICO score can be obtained to be less than 640.
7.2 Negative
Covenants. So long as any portion of the Obligations
remain unsatisfied, Borrower hereby covenants and agrees with Agent and each
Lender as follows:
(a)
Limitation on Other Debt, Further
Encumbrances. Borrower will not obtain financing and
grant liens with respect to the Collateral. Notwithstanding anything
herein to the contrary, Borrower may, without first obtaining the written
consent of Agent obtain financing and grant liens with respect to any of
its
assets or other property except for the Collateral and those assets or property
restricted by a negative pledge provided: (i) Borrower provides ten days
prior
written notice to Agent setting forth the terms and conditions of such
financing; (ii) no Event of Default or condition, omission or act which,
with
the passage of time, notice or both, would constitute an Event of Default,
has
occurred; (iii) such financing does not result in an Event of Default hereunder
or under any documents evidencing any other indebtedness of Borrower; and
(iv)
Agent is promptly provided a copy of the fully executed loan documents relating
thereto.
(b) Restrictions
on Transfers. Except as hereinafter specifically
provided, Borrower shall not, whether voluntarily or involuntarily, by operation
of law or otherwise, (i) without obtaining the prior written consent of Agent
(which consent may be given, withheld or conditioned by Agent in Agent’s sole
discretion), transfer, sell, pledge, convey, hypothecate, factor or assign
all
or any portion of the Collateral, the Encumbered Intervals, the Common Elements
relating to the Encumbered Intervals or any Resort facilities or amenities,
or
contract to do any of the foregoing, including, without limitation, pursuant
to
options to purchase, and so-called installment sales contracts, land contracts,
or contracts for deed, provided that the foregoing restriction on transfers
shall not apply to the conveyance of SPV Assets to the SPV, (ii) without
obtaining the prior written consent of Agent (which consent may be given,
withheld or conditioned by Agent in Agent’s sole discretion), lease or license
all or any portion of the Collateral, the Encumbered Intervals, the Common
Elements relating to the Encumbered Intervals or any Resort facilities or
amenities (except for the license created in favor of SPV under any license
agreement with Borrower, Silverleaf Club or any timeshare owners association,
to
use or access the reservation system or related computer hardware or software
for any Resort), or change the legal or actual possession or use thereof,
(iii)
permit the assignment, transfer, delegation, change, modification or diminution
of the duties or responsibilities of Borrower, of any manager of the Resorts
approved by Agent as manager of the Resorts (except for an assignment of
such
duties to a professional management company or companies reasonably acceptable
to Agent in advance) without obtaining the prior written consent of Agent
(which
consent shall not be unreasonably withheld), or (iv) without obtaining the
prior
written consent of Agent (which consent may be given, withheld or conditioned
by
Agent in Agent’s sole discretion), cause or permit the assignment, pledge or
other encumbrance of any of the Operating Contracts or all or any portion
of
Borrower’s right, title or interest in the Declaration. Without
limiting the generality of the preceding sentence, and subject to the terms
of
this Agreement, the prior written consent of Agent (as specified above) shall
be
required for (A) any transfer of the Encumbered Intervals, the Common Elements
relating to the Encumbered Intervals or any Resort facilities or amenities
or
any part thereof made to a subsidiary or Affiliate or otherwise, (B) any
transfer of all or any part of the Encumbered Intervals, the Common Elements
relating to the Encumbered Intervals or any Resort facilities or amenities
by
Borrower to its stockholders or Affiliates or vice versa, and (C) any corporate
merger or consolidation, disposition or other reorganization, except as
permitted in Section 7.1(c) hereof. In the event
that Agent is willing to consent to a transfer which would otherwise be
prohibited by this Section 7.2(b) Agent may condition its
consent on such terms as it desires, including, without limitation, an increase
in the Interest Rate and the requirement that Borrower pay a transfer fee,
together with any expenses incurred by Agent in connection with the granting
of
such consent (including, without limitation, attorneys’ fees and
expenses). If Borrower violates the terms of this Section
7.2(b), in addition to any other rights or remedies which Agent
may
have herein, in any other Loan Document, or at law or in equity, Agent may
by
written notice to Borrower increase, effective immediately as of the date
of
such violation, the Interest Rate to the Default Rate.
(c) Use
of Lender or Agent’s Name. Borrower will not, and will
not permit any Affiliate to, without the prior written consent of Agent,
such
Lender or a Participant, use the name of Agent, any Lender or any Participant
or
the name of any affiliate of Agent, any Lender or any Participant in connection
with any of their respective businesses or activities, except in connection
with
internal business matters and as required in dealings with governmental
agencies.
(d)
Transactions with Affiliates. Except as
provided in the SPV Documents, without the prior written consent of Agent,
which
shall not unreasonably be withheld, Borrower will not enter into any transaction
with any Affiliate in connection with the Resorts, including, without
limitation, relating to the purchase, sale or exchange of any assets or
properties or the rendering of any service, except in the ordinary course
of,
and pursuant to the reasonable requirements of, the operations of the Resorts
and upon fair and reasonable terms.
(e)
Restrictive Covenants. Borrower will not
without Agent’s prior written consent seek, consent to, or otherwise acquiesce
in, any change in any private restrictive covenant, planning or zoning law
or
other public or private restriction, which would limit or alter the use of
the
Resorts.
(f)
Subordinated Obligations. Borrower will not,
directly or indirectly, (i) permit any payment to be made in respect of any
indebtedness, liabilities or obligations, direct or contingent (the
“Subordinated Debt”) to any of its shareholders or their affiliates or which are
subordinated by the terms thereof or by separate instrument to the payment
of
principal of, and interest on, the Note; (ii) permit the amendment,
rescission or other modification of any such subordination provisions of
any of
Borrower’s subordinated obligations in such a manner as to affect adversely the
Lien in and to the Collateral or Agent’ senior priority position and entitlement
as to payment and rights with respect to the Note and the Obligations, or
(iii) permit the prepayment or redemption, except for mandatory
prepayments, of all or any part of Borrower’s obligations to its shareholders,
or of any subordinated obligations of Borrower except in accordance with
the
terms of such subordination. Notwithstanding anything to the contrary
in this Section 7.2(f), so long as Borrower’s Tangible Net Worth
remains in compliance with Section 7.1(y)(i) hereof, Borrower may:
(i) retire unsecured subordinated debt, and/or (ii) declare dividends, buy
back
stock, and perform other equity transactions.
(g) Timeshare
Regime. Without Agent’s prior written consent, Borrower
shall not amend, modify or terminate the Declarations or other Timeshare
Documents, or any other restrictive covenants, agreements or easements regarding
the Resorts (except for routine non-substantive modifications which have
no
impact on the Collateral). Except as otherwise provided herein,
Borrower shall not assign its rights as developer under the Declarations
without
Agent’s prior written consent, or file or permit to be filed any additional
covenants, conditions, easements or restrictions against or affecting the
Resorts (or any portion thereof) without Agent’s prior written consent, which
consent shall not be unreasonably withheld.
(h) Name
Change. Borrower will not change its name or state of
organization.
(i)
Collateral. Borrower shall not take any
action (nor permit or consent to the taking of any action) which might impair
the value of the Collateral or any of the rights of Agent or any Lender in
the
Collateral, nor shall Borrower cause or permit any amendment to or modification
of the form or terms of any of the Pledged Notes Receivable, Mortgages or,
except as specifically provided herein above, the other Timeshare
Documents.
(j)
Marketing/Sales. Borrower shall not market,
attempt to sell or sell or permit or justify any sales or attempted sales
of any
Intervals except in compliance with the Timeshare Act and Applicable Laws
in
state and other jurisdictions where marketing, sales or solicitation activities
occur.
(k)
Modification of Other Documents. Borrower
shall not amend or modify the Standby Servicing Agreement, without the prior
written consent of Agent, which consent shall not be unreasonably
withheld.
(l)
Declarant’s Rights and Management
Agreements. Borrower covenants, pledges and agrees that
until the Loan and all other amounts due and owing under the this Agreement
and
the other Loan Documents are paid in full Borrower will not, voluntarily
or
involuntarily, directly or indirectly, mortgage, pledge, assign, sell, transfer,
hypothecate, encumber, convey or grant a security interest in any:
(i) contract or agreement, whether written, oral or otherwise, whether now
or
hereafter existing, including any management or operating contract and
agreement, between Borrower or any Affiliate of the Borrower and the governing
body of any Resort, with respect to the management and operation of the Resort;
or (ii) any rights of the Declarant (the “Declarant Rights”) arising under the
Declaration creating any Resort, or under the Bylaws for the Resort, whether
now
or hereafter existing.
(m) Modifications
of Documents, Additional Loan Facility Documents, Silverleaf Finance II
Documents and Other Debt Instruments. Nothing contained
herein shall prohibit or limit Borrower’s ability to amend or modify any of the
CSF Documents or any of the WFF Documents or any of the TFC Documents or
any of
the Silverleaf Finance II Documents or any of the UBS Documents or documents
evidencing any other indebtedness of Borrower, provided Borrower provides
Agent
with a copy of the fully executed loan documents promptly within ten (10)
days
after execution.
(n) Change
in Certain Accounting Practices. Borrower covenants,
pledges and agrees that until the Loan and all other amounts due and owing
under
the this Agreement and the other Loan Documents are paid in full Borrower
will
not, voluntarily or involuntarily, directly or indirectly, without the prior
written consent of Agent and each Lender, make any change to the existing
policies of Borrower in connection with its accounting for delinquent
accounts.
Section
8-Events Of Default
8.1 Nature
of Events. An “Event of Default” shall exist if any of
the following shall occur:
(a) Payments. If
Borrower shall fail to make, as and when due, any payment or mandatory
prepayment of principal, interest, fees or other amounts with respect to
the
Loan and such failure shall continue for five (5) days after notice of such
failure is provided by Agent.
(b) Covenant
Defaults. If Borrower shall fail to perform or observe
any covenant, agreement or warranty contained in this Agreement or in any
of the
Loan Documents, (other than with respect to: (i) the failure to make timely
payments in respect of the Loan as provided in Section 8.1(a)
hereof; (ii) the failure to deliver payments made under the Pledged Notes
Receivable directly to Agent as required pursuant to Section 2.3 hereof
as provided in Section 8.1(h) hereof; or (iii) violation of:
(y) the financial covenants in Section 7.1(y) hereof; or (z) any negative
covenants in Section 7.2 hereof) and, such failure shall continue for
fifteen (15) days after notice of such failure is provided by Agent, provided
however, that if Borrower commences to cure such failure within such 15 day
period, but, because of the nature of such failure, cure cannot be completed
within 15 days notwithstanding diligent effort to do so, then, provided Borrower
diligently seeks to complete such cure, an Event of Default shall not result
unless such failure continues for a total of thirty (30) days and provided
further that it shall not be a Default or an Event of Default, if during
the
initial sixty (60) days after the Closing Date Borrower is not able to achieve
compliance with all covenants relating to the Collateral.
(c) Warranties
or Representations. If any representation or other
statement made by or on behalf of Borrower in this Agreement, in any of the
Loan
Documents or in any instrument furnished in compliance with or in reference
to
the Loan Documents, is false, misleading or incorrect in any material respect
as
of the date made or reaffirmed.
(d) Enforceability
of Liens. If any lien or security interest granted by
Borrower to Agent in connection with the Loan is or becomes invalid or
unenforceable or is not, or ceases to be, a perfected first priority lien
or
security interest, as applicable, in favor of Agent, encumbering the asset
which
it is intended to encumber, and Borrower fails to cause such lien or security
interest to become a valid, enforceable, first and prior lien or security
interest in a manner satisfactory to Agent within ten (10) days after Agent
delivers written notice thereof to Borrower.
(e) Involuntary
Proceedings. If a case is commenced or a petition is
filed against Borrower under any Debtor Relief Law; a receiver, liquidator
or
trustee of Borrower or of any material asset of Borrower is appointed by
court
order and such order remains in effect for more than forty-five (45) days;
or if
any material asset of Borrower is sequestered by court order and such order
remains in effect for more than forty-five (45) days.
(f) Proceedings. If
Borrower voluntarily seeks, consents to or acquiesces in the benefit of any
provision of any Debtor Relief Law, whether now or hereafter in effect; consents
to the filing of any petition against it under such law; makes an assignment
for
the benefit of its creditors; admits in writing its inability to pay its
debts
generally as they become due; or consents or suffers to the appointment of
a
receiver, trustee, liquidator or conservator for it, or any part of its,
assets.
(g) Attachment,
Judgment, Tax Liens. The issuance, filing, levy or
seizure against the Collateral, or, with respect to the Resorts or the
Obligations, against Borrower of one or more attachments, injunctions,
executions, tax liens or judgments for the payment of money cumulatively
in
excess of $100,000.00, which is not discharged in full or stayed within thirty
(30) days after issuance or filing.
(h) Failure
to Deposit Proceeds. If Borrower shall fail to deliver
payments made under the Pledged Notes Receivable directly to Agent as required
pursuant to Section 2.3 hereof, or if Borrower shall take any other act
which Agent or any Lender shall deem to be a conversion of the Collateral
or
fraudulent with respect to Agent or any Lender.
(i)
Timeshare Documents. If the Declaration, any
of the other documents creating or governing the Resorts, its timeshare regime,
or the Timeshare Owners’ Association, or the restrictive covenants with respect
to the Resorts, shall be terminated, amended or modified without Agent’s prior
written consent (except for routine non-substantive modifications which have
no
impact on the Collateral).
(j)
Removal of Collateral. If Borrower conceals,
removes, transfers, conveys, assigns or permits to be concealed, removed,
transferred, conveyed or assigned, any of the Collateral in violation of
the
terms of the Loan Documents or with the intent to hinder, delay or defraud
its
creditors or any of them including, without limitation, Agent or any
Lender.
(k)
Other Defaults. If a material default shall
occur in any of the covenants or Obligations set forth in any of the Loan
Documents.
(l)
Material Adverse
Change. Any material adverse change in the financial
condition of Borrower or in the condition of the Collateral. For
purposes of this provision, a decline in the net worth of Borrower of
$500,000.00 or less shall not be considered a material adverse
change.
(m) Default
by Borrower in Other Agreements. Any default as defined
in the applicable loan agreement, by Borrower (i) in the payment of any
indebtedness to any lender, including any indebtedness owed under the CSF
Facility, the UBS Facility, the TFC Facility, the TFC Conduit Loan or the
WFF
Facility; (ii) in the payment or performance of other indebtedness for borrowed
money or obligations secured by any part of the Resort; (iii) in the payment
or
performance of other material indebtedness or obligations (material indebtedness
or obligations being defined for purposes of this provision as any indebtedness
or obligation in excess of $200,000) where such default accelerates or permits
the acceleration (after the giving of notice or passage of time or both)
of the
maturity of such indebtedness, or permits the holders of such indebtedness
to
elect a majority of the board of directors of Borrower (whether or not such
default[s] have been waived by such holder) or (iv) the acceleration by CSF
under the CSF Documents, UBS under the UBS Documents, TFC under the TFC
Documents or the Silverleaf Finance II Documents, or WFF under the WFF
Documents, or the bondholders of their respective credit
facilities.
(n) Use
of Resorts. Any act or failure to act by Borrower which
materially and adversely limits the rights of Purchasers to use Common Elements,
and related or appurtenant easement, access and use rights and benefits of
any
of the Resorts, including but not limited to a default by Borrower or any
Affiliate under any loan document or Declaration to which Borrower or any
Affiliate is a party.
(o) Violation
of Negative Covenants. Borrower violates any negative
covenants set forth in Section 7.2 hereof.
(p) Violation
of Financial Covenants. Borrower violates any financial
covenants set forth in Section 7.1(y) hereof.
(q) Use
of Loan Proceeds. If the proceeds of any Advance are
used in contravention of Section 6.11
hereof.
Section
9-Remedies
9.1 Remedies
Upon Default. Should an Event of Default occur, Agent on
behalf of each Lender, may, take any one or more of the actions described
in
this Section 9, all without notice to Borrower:
(a) Acceleration. Without
demand or notice of any nature whatsoever, declare the unpaid balance of
the
Loans, or any part thereof, immediately due and payable, whereupon the same
shall be due and payable.
(b) Termination
of Obligation to Advance. Terminate any obligation of
Lenders to lend under this Agreement in its entirety, or any portion of any
such
commitment, to the extent Agent shall deem appropriate, all without notice
to
Borrower.
(c) Judgment. Reduce
each Lender’s claim to judgment, foreclose or otherwise enforce each Lender’s
security interest in all or any part of the Collateral by any available judicial
or other procedure under law.
(d) Sale
of Collateral. After notification, if any, provided for
in Section 9.2 hereof, Agent may sell or otherwise dispose
of, at the office of Agent, or elsewhere, as chosen by Agent, all or any
part of
the Collateral, and any such sale or other disposition may be as a unit or
in
parcels, by public or private proceedings, and by way of one or more contracts
(it being agreed that the sale of any part of the Collateral shall not exhaust
Agent’s power of sale, but sales may be made from time to time until all of the
Collateral has been sold or until the Obligations have been paid in full
and
fully performed), and at any such sale it shall not be necessary to exhibit
the
Collateral. Borrower hereby acknowledges and agrees that a private
sale or sales of the Collateral, after notification as provided for in
Section 9.2 hereof, shall constitute a commercially
reasonable disposition of the Collateral sold at any such sale or sales,
and
otherwise, commercially reasonable action on the part of Agent.
(e) Retention
of Collateral. At its discretion, retain such portion of
the Collateral as shall aggregate in value to an amount equal to the aggregate
amount of the Loans, in satisfaction of the Obligations, whenever the
circumstances are such that Agent is entitled on behalf of Lenders and elects
to
do so under applicable law.
(f)
Receiver. Apply by appropriate judicial
proceedings for appointment of a receiver for the Collateral, or any part
thereof, and Borrower hereby consents to any such appointment.
(g) Purchase
of Collateral. Buy the Collateral at any public or
private sale.
(h) Exercise
of Other Rights. Agent on behalf of each Lender, shall
have all the rights and remedies of a secured party under the Code and other
legal and equitable rights to which it may be entitled, including, without
limitation, and without notice to Borrower, the right to continue to collect
all
payments made on the Pledged Notes Receivable, and to apply such payments
to the
Obligations, and to ▇▇▇ in its own name the maker of any defaulted Pledged
Notes
Receivable. Agent may also exercise any and all other rights or
remedies afforded by any other Applicable Laws or by the Loan Documents as Agent
shall deem appropriate, at law, in equity or otherwise, including, but not
limited to, the right to bring suit or other proceeding, either for specific
performance of any covenant or condition contained in the Loan Documents
or in
aid of the exercise of any right or remedy granted to Agent in the Loan
Documents. Agent shall also have the right to require Borrower to
assemble any of the Collateral not in Agent’s possession, at Borrower’s expense,
and make it available to Agent at a place to be determined by Agent which
is
reasonably convenient to both parties, and Agent shall, on behalf of the
Lenders, have the right to take immediate possession of all of the Collateral,
and may enter the Resorts or any of the premises of Borrower or wherever
the
Collateral shall be located, with or without process of law wherever the
Collateral may be, and, to the extent such premises are not the property
of
Agent, to keep and store the same on said premises until sold (and if said
premises be the property of Borrower, Borrower agrees not to charge Agent
or any
Lender for use and occupancy, rent, or storage of the Collateral, for a period
of at least ninety (90) days after sale or disposition of the
Collateral).
(i) Replacement
of Servicer. Without demand or notice of any nature
whatsoever, upon an Event of Default, Agent may terminate any then existing
servicing agreement and replace any then existing Servicer with the Standby
Servicer, pursuant to the terms of the Standby Servicing Agreement of even
date
herewith, or such other servicer as Agent may select in its Permitted
Discretion.
9.2 Notice
of Sale. Reasonable notification of time and place of
any public sale of the Collateral or reasonable notification of the time
after
which any private sale or other intended disposition of the Collateral is
to be
made shall be sent to Borrower and to any other person entitled under the
Code
to notice; provided, however, that if the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Agent
may sell or otherwise dispose of the Collateral without notification,
advertisement or other notice of any kind. It is agreed that notice
sent not less than five (5) calendar days prior to the taking of the action
to
which such notice relates is reasonable notification and notice for the purposes
of this Section 9.2. Agent shall have the right to bid
at any public or private sale on behalf of Lenders. Out of money
arising from any such sale, Agent shall retain an amount equal to all of
its
costs and charges, including attorneys’ fees for advice, counsel or other legal
services or for pursuing, reclaiming, seeking to reclaim, taking, keeping,
removing, storing and advertising such Collateral for sale, selling same
and any
and all other charges and expenses in connection therewith and in satisfying
any
prior Liens thereon. Any balance shall be applied upon the
Obligations, and in the event of deficiency, Borrower shall remain liable
to
Lenders. In the event of any surplus, such surplus shall be paid to
Borrower or to such other Persons as may be legally entitled to such
surplus. If, by reason of any suit or proceeding of any kind, nature
or description against Borrower, or by Borrower or any other party against
Agent
or any Lender, which in Agent’s sole discretion makes it advisable for Agent to
seek counsel for the protection and preservation of Lenders’ security interest,
or to defend the interest of Lenders, such expenses and counsel fees shall
be
allowed to Agent and the same shall be made a further charge and Lien upon
the
Collateral.
In
view
of the fact that federal and state securities laws may impose certain
restrictions on the methods by which a sale of Collateral comprised of
Securities may be effected after an Event of Default, Borrower agrees that
upon
the occurrence or existence of an Event of Default, Agent may, on behalf
of
Lenders, from time to time, attempt to sell all or any part of such Collateral
by means of a private placement restricting the bidding and prospective
purchasers to whose who will represent and agree that they are purchasing
for
investment only and not for, or with a view to, distribution. In so
doing, Agent may solicit offers to buy such Collateral, or any part of it
for
cash, from a limited number of investors deemed by Agent, in its reasonable
judgment, to be responsible parties who might be interested in purchasing
the
Collateral, and if Agent solicits such offers from not less than two (2)
such
investors, then the acceptance by Agent of the highest offer obtained therefrom
shall be deemed to be a commercially reasonable method of disposition of
such
Collateral.
9.3 Application
of Collateral; Termination of Agreements. Upon the
occurrence of any Event of Default: (i) each Lender may, with or without
proceeding with such sale or foreclosure or demanding payment or performance
of
the Obligations, without notice, terminate each Lender’s further performance
under this Agreement or any other agreement or agreements between Lender
and
Borrower, without further liability or obligation by Agent or any Lender;
(ii)
Agent may, on behalf of Lenders, at any time, appropriate and apply on any
Obligations any and all Collateral in its, the Custodian’s, or the Lockbox
Agent’s possession and (iii) each Lender may apply any and all balances,
credits, deposits, accounts, reserves, indebtedness or other moneys due or
owing
to Borrower held by Lender hereunder or under any other financing agreement
or
otherwise, whether accrued or not. Neither such termination, nor the
termination of this Agreement by lapse of time, the giving of notice or
otherwise, shall absolve, release or otherwise affect the liability of Borrower
in respect of transactions prior to such termination, or affect any of the
Liens, security interests, rights, powers and remedies of Agent or Lenders,
but
they shall, in all events, continue until all of the Obligations are
satisfied.
9.4 Rights
of Agent Regarding Collateral. In addition to all other
rights possessed by Agent or Lenders, Agent, at its option, may on behalf
of
each Lender from time to time after there shall have occurred an Event of
Default, and so long as such Event of Default remains uncured, at its sole
discretion, take the following actions:
(a) Transfer
all or any part of the Collateral into the name of Agent or its
nominee;
(b) Take
control of any proceeds of any of the Collateral;
(c) Extend
or renew the Loan and grant releases, compromises or indulgences with respect
to
the Obligations, any portion thereof, any extension or renewal thereof, or
any
security therefor, to any obligor hereunder or thereunder; and
(d) Exchange
certificates or instruments representing or evidencing the Collateral for
certificates or instruments of smaller or larger denominations for any purpose
consistent with the terms of this Agreement.
9.5 Delegation
of Duties and Rights. Agent may execute any of its
duties and/or exercise any of its rights or remedies under the Loan Documents
by
or through its officers, directors, employees, attorneys, agents or other
representatives. Agent or any Lender or Liberty Bank may use
Wellington to perform certain services in connection with the transactions
contemplated under the Loan Documents. Agent or any Lender or Liberty
Bank may pay Wellington or any other Persons performing services for Agent
such
compensation as Agent or any Lender or Liberty Bank may elect.
9.6 Agent
and/or Lenders not in Control. Except as expressly
provided herein or in any Loan Document, none of the covenants or other
provisions contained in this Agreement or in any Loan Document shall give
Agent
or any Lender the right or power to exercise control over the affairs and/or
management of Borrower.
9.7 Waivers. The
acceptance by Agent or any Lender at any time and from time to time of partial
payments of the Loan or performance of the Obligations shall not be deemed
to be
a waiver of any Event of Default then existing. No waiver by Agent or
any Lender of any Event of Default shall be deemed to be a waiver of any
other
or subsequent Event of Default. No delay or omission by Agent or any
Lender in exercising any right or remedy under the Loan Documents shall impair
such right or remedy or be construed as a waiver thereof or an acquiescence
therein, nor shall any single or partial exercise of any such right or remedy
preclude other or further exercise thereof, or the exercise of any other
right
or remedy under the Loan Documents or otherwise. Further, except as
otherwise expressly provided in this Agreement or by applicable law, Borrower
and each and every surety, endorser, guarantor and other party liable for
the
payment or performance of all or any portion of the Obligations, severally
waive
notice of the occurrence of any Event of Default, presentment and demand
for
payment, protest, and notice of protest, notice of intention to accelerate,
acceleration and nonpayment, and agree that their liability shall not be
affected by any renewal or extension in the time of payment of the Loan,
or by
any release or change in any security for the payment or performance of the
Loan, regardless of the number of such renewals, extensions, releases or
changes.
9.8 Cumulative
Rights. All rights and remedies available to any Lender
or Agent under the Loan Documents shall be cumulative of and in addition
to all
other rights and remedies granted under any of the Loan Document, at law
or in
equity, whether or not the Loan is due and payable and whether or not Agent
shall have instituted any suit for collection or other action in connection
with
the Loan Documents.
9.9 Expenditures
by Agent or Lender. Any sums expended by or on behalf of
Agent or by Lenders pursuant to the exercise of any right or remedy provided
herein shall become part of the Obligations and shall bear interest at the
Default Rate, from the date of such expenditure until the date
repaid.
9.10 Diminution
in Value of Collateral. Neither Agent nor any Lender
shall have any liability or responsibility whatsoever for any diminution
or loss
in value of any of the Collateral, specifically including that which may
arise
from Agent or any Lender’s negligence or inadvertence, whether such negligence
or inadvertence is the sole or concurring cause of any damage.
9.11 Agent’s
Knowledge. Agent shall not be deemed to have knowledge
or notice of the occurrence of any Event of Default unless Agent has actual
knowledge of the Event of Default or has received a notice from a Lender
or
Borrower referring to this Agreement and describing such Event of
Default. Each Lender agrees that upon learning of the existence of an
Event of Default, it will promptly notify Agent thereof in
writing. Any such notice by a Lender, shall be in writing sufficient
to identify the nature of the Event of Default.
9.12 Lender’s
Enforcement Rights. Each Lender has assigned to Agent
its absolute and unconditional right to enforce the payment of its
Note. No Lender may unilaterally enforce any Lien or security
interest in the Collateral, or bring suit against Borrower to enforce such
Lender’s rights hereunder or under its Note.
Section
10-Certain Rights Of Lender
10.1 Protection
of Collateral. Agent on behalf of each
Lender may at any time and from time to time take such actions as Agent deems
necessary or appropriate to protect the Lender’s Liens and security interests in
and to preserve the Collateral, and to establish, maintain and protect the
enforceability of Lender’s rights with respect thereto, all at the expense of
Borrower. Borrower agrees to cooperate fully with all of Agent’s
efforts to preserve the Collateral and Lender’s Liens, security interests and
rights and will take such actions to preserve the Collateral and Lender’s Liens,
security interests and rights as Agent may direct, including, without
limitation, by promptly paying upon Lender’s demand therefor, all documentary
stamp taxes or other taxes that may be or may become due in respect of any
of
the Collateral. All of Agent’s expenses of preserving the Collateral
and each Lender’s liens and security interests and rights therein shall be added
to the Loan.
10.2 Performance
by Agent. If Borrower fails to perform any agreement
contained herein, Agent may itself perform, or cause the performance of,
such
agreement, and the expenses of Agent or Liberty Bank incurred in connection
therewith shall be payable by Borrower under Section 10.5
hereof. In no event, however, shall Agent or any Lender have any
obligation or duties whatsoever to perform any covenant or agreement of Borrower
contained herein or in any of the Loan Documents, Timeshare Documents or
Operating Contracts, and any such performance by Agent shall be wholly
discretionary with Agent. The performance by Agent, of any agreement
or covenant of Borrower on any occasion shall not give rise to any duty on
the
part of Agent to perform any such agreements or covenants on any other occasion
or at any time. In addition, Borrower acknowledges that neither Agent
nor any Lender shall at any time or under any circumstances whatsoever have
any
duty to Borrower or to any third party to exercise any of Lender’s rights or
remedies hereunder.
10.3 No
Liability of Agent or Lender. Neither
the acceptance of this Agreement by Agent and each Lender, nor the exercise
of
any rights hereunder by Lender or Agent on its behalf, shall be construed
in any
way as an assumption by Agent or any Lender of any obligations, responsibilities
or duties of Borrower arising in connection with any Resort or under the
Timeshare Documents or Timeshare Acts, or under any of the Operating Contracts,
or in connection with any other business of Borrower, or the Collateral,
or
otherwise bind Agent or any Lender to the performance of any obligations
with
respect to any Resort or the Collateral; it being expressly understood that
neither Agent nor Lender shall be obligated to perform, observe or discharge
any
obligation, responsibility, duty, or liability of Borrower with respect to
any
Resort or any of the Collateral, or under any of the Timeshare Documents,
the
Timeshare Acts or under any of the Operating Contracts, including, but not
limited to, appearing in or defending any action, expending any money or
incurring any expense in connection therewith. Without limitation of
the foregoing, neither this Agreement, any action or actions on the part
of
Agent taken hereunder, prior to or following the occurrence of an Event of
Default shall constitute an assumption by Agent of any obligations of Borrower
with respect to any Resort or any documents or instruments executed in
connection therewith, and Borrower shall continue to be liable for all of
its
obligations thereunder or with respect thereto. Borrower agrees to
indemnify, protect, defend and hold Agent and each Lender harmless from and
against any and all claims, demands, causes of action, losses, damages,
liabilities, suits, costs and expenses, including, without limitation,
attorneys’ fees and court costs, asserted against or incurred by Agent and each
Lender by reason of, arising out of, or connected in any way with
(i) any failure or alleged failure of Borrower to perform
any of its covenants or obligations with respect to each Resort or to the
Purchasers of any of the Intervals, (ii) a breach of any
certification, representation, warranty or covenant of Borrower set forth
in any
of the Loan Documents, (iii) the ownership of the Pledged
Notes Receivable and the rights, titles and interests assigned hereby, or
intended so to be, (iv) the debtor-creditor relationships
between Borrower on the one hand, and the Agent or Lender, on the other,
or
(v) the operation of the Resorts or sale of
Intervals. The obligations of Borrower to indemnify, protect, defend
and hold Agent and each Lender harmless as provided in this Agreement are
absolute, unconditional, present and continuing, and shall not be dependent
upon
or affected by the genuineness, validity, regularity or enforceability of
any
claim, demand or suit from which Agent or any Lender is
indemnified. The indemnity provisions in this
Section 10.3 shall survive the satisfaction of the
Obligations and termination of this Agreement, and remain binding and
enforceable against the Borrower, or its successors or
assigns. Borrower hereby waives all notices with respect to any
losses, damages, liabilities, suits, costs and expenses, and all other demands
whatsoever hereby indemnified, and agrees that its obligations under this
Agreement shall not be affected by any circumstances, whether or not referred
to
above, which might otherwise constitute legal or equitable discharges of
its
obligations hereunder.
10.4 Right
to Defend Action Affecting Security. Agent may, at
Borrower’s expense, appear in and defend any action or proceeding at law or in
equity which Agent in good faith believes may affect the security interests
granted under this Agreement, including without limitation, with respect
to the
Collateral or the value of thereof or each Lender’s rights under any of the Loan
Documents.
10.5 Expenses. All
expenses payable by Borrower, under any provision of this Agreement shall
be an
Obligation of the Borrower and shall be paid by Borrower to Agent, upon demand,
and shall bear interest at the Default Rate from the date of expense until
repaid by Borrower.
10.6 Lender’s
Right of Set-Off. Each Lender shall have the right to
set-off against any Collateral any Obligations then due and unpaid by Borrower
provided that Lender remits to Agent all such sums received as a result of
such
set-off so that Agent may insure the distribution thereof in accordance with
each Lenders Pro Rata Payment Percentage.
10.7 No
Waiver. No failure or delay on the part of Agent in
exercising any right, remedy or power under this Agreement or in giving or
insisting upon strict performance by Borrower hereunder or in giving notice
hereunder shall operate as a waiver of the same or any other power or right,
and
no single or partial exercise of any such power or right shall preclude any
other or further exercise thereof or the exercise of any other such power
or
right. Agent, notwithstanding any such failure, shall have the right
thereafter to insist upon the strict performance by Borrower of any and all
of
the terms and provisions of this Agreement to be performed by
Borrower. The collection and application of proceeds, the entering
and taking possession of the Collateral, and the exercise by Agent of the
rights
of Lenders contained in the Loan Documents and this Agreement shall not cure
or
waive any default, or affect any notice of default, or invalidate any acts
done
pursuant to such notice. No waiver by Agent or any Lender of any
breach or default of or by any party hereunder shall be deemed to alter or
affect Lender’s rights hereunder with respect to any prior or subsequent
default.
10.8 Right
of Agent to Extend Time of Payment, Substitute, Release Security,
Etc. Without affecting the liability of any Person or
entity including without limitation, for the payment of any of the Obligations
or without affecting or impairing Lender’s Lien on the Collateral, or the
remainder thereof, as security for the full amount of the Loan unpaid and
the
Obligations, Agent may from time to time, without notice:
(a) release any Person liable for the payment of the Loan,
(b) extend the time or otherwise alter the terms of
payment of the Loan, (c) accept additional security for
the Obligations of any kind, including deeds of trust or mortgages and security
agreements, (d) alter, substitute or release any property
securing the Obligations, (e) realize upon any collateral
for the payment of all or any portion of the Loan in such order and manner
as it
may deem fit, or (f) join in any subordination or other
agreement affecting this Agreement or the lien or charge thereof.
10.9
Additional Lender, Assignments and
Participations
(a) Any
Lender may assign and participate and delegate to one or more assignees or
participants (each an “Assignee”) all, or any ratable part of all, of the
Obligations and the other rights and obligations of Lender hereunder and
under
the other Loan Documents; provided, however, that each Lender so
doing shall give Agent concurrent written notice of each such assignment
and
provided further that Agent shall continue to deal solely and directly only
with
each Lender in connection with the interest so assigned to an
Assignee. In the event that a Lender participates or sells its
interest in the Loan to any other Person, Lender shall have no further
responsibilities or liabilities in connection with the sold or participated
portion of the Loan, including without limitation the obligation to
fund Advances related to such sold or participated portions, after the date
of
such sale or participation. All of such responsibilities and
liabilities after the date of such sale shall be those of the Participant
or the
purchaser of Lender’s interest.
(b) In
connection with any such assignment or participation or proposed assignment
or
participation, any Lender may disclose all documents and information which
it
now or hereafter may have relating to Borrower and its businesses.
(c) Any
other provision in this Agreement notwithstanding, any Lender which is a
banking
institution may at any time create a security interest in, or pledge, all
or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve
Bank
or U.S. Treasury Regulation 31 CFR §203.24, and such Federal Reserve Bank may
enforce sole through Agent such pledge or security interest in any manner
permitted under Applicable Laws but at all times subject to the rights and
limitations contained herein.
(d) Agent
and Borrower acknowledge that as of the date hereof, each Lender and each
Participant is identified on Schedule 1.0 hereof. Subsequent
to the date hereof, in the event that Agent desires to allow another party
to
executed a joinder agreement or become a Lender under the provisions of this
Agreement, or to become a Participant of a Lender, Borrower shall
have a right of prior approval of such action, provided that Borrower
shall not unreasonably withhold its approval of any additional Lender or
Participant and provided further that Borrower’s non response for a period of
ten (10) Business Days after being notified by Agent of such action shall
be
deemed to be approval of Borrower to such action of Agent and/or
Lender.
(e) Each
Lender is severally bound by this Agreement. There shall be no joint
obligations of Lenders under this Agreement. No Lender shall be
responsible for the failure by any other Lender to perform its obligations
under
this Agreement or any of the Loan Documents. The Commitment of any
Lender shall not be increased or decreased as a result of the failure of
any
other Lender to perform its obligations under this Agreement or any of the
Loan
Documents. The failure of any Lender to fund its Commitment under
this Agreement shall not excuse any other Lender from its obligations to
fund
its Commitment.
10.10 Notice
to Purchaser. Borrower authorizes any of Agent, Lockbox
Agent or Servicing Agent (but none of Agent, Lockbox Agent nor Servicing
Agent
shall be obligated) to communicate at any time and from time to time with
any
Purchaser or any other Person primarily or secondarily liable under a Pledged
Note Receivable with regard to the Lien of Agent thereon and any other matter
relating thereto, and by no later than the Closing Date, Borrower shall deliver
to Agent a notification to the Purchasers executed in blank by Borrower and
in
form acceptable to Agent, pursuant to which the Purchasers (or other obligors)
may be directed to remit all payments in respect of the Collateral as Agent
may
require.
10.11 Collection
of the Notes. Borrower hereby directs and authorizes
each party liable for the payment of the Pledged Notes Receivable, and by
no
later than the Closing Date shall direct in writing each such party, to pay
each
installment thereon to Lockbox Agent pursuant to the Lockbox Agreement, unless
and until directed otherwise by written notice from Agent or, at Agent’s
direction, from Borrower, after which such parties are and shall be directed
to
make all further payments on the Pledged Notes Receivable in accordance with
the
directions of Agent.
Following
the occurrence of an Event of Default, Agent shall have the right to require
that all payments becoming due under the Pledged Notes Receivable be paid
directly to Agent, as agent for Lenders, and Agent is hereby authorized to
receive, collect, hold and apply the same in accordance with the provisions
of
this Agreement. In the event that following the occurrence of an
Event of Default, Agent or Lockbox Agent does not receive any installment
of
principal or interest due and payable under any of the Pledged Notes Receivable
on or prior to the date upon which such installment becomes due, Agent may,
at
its election (but without any obligation to do so), give or cause Lockbox
Agent
to give notice of such default to the defaulting party or parties, and Agent
shall have the right (but not the obligation), subject to the terms of such
Notes, to accelerate payment of the unpaid balance of any of the Pledged
Notes
Receivable in default and to foreclose each of the Mortgages securing the
payment thereof, and to enforce any other remedies available to the holder
of
such Pledged Notes Receivable with respect to such default. Borrower
hereby further authorizes, directs and empowers Agent (and Lockbox Agent
or any
other Person as may be designated by Agent in writing) to collect and receive
all checks and drafts evidencing such payments and to endorse such checks
or
drafts in the name of Borrower and upon such endorsements, to collect and
receive the money therefor. The right to endorse checks and drafts
granted pursuant to the preceding sentence is irrevocable by Borrower, and
the
banks or banks paying such checks or drafts upon such endorsements, as well
as
the signers of the same, shall be as fully protected as though the checks
or
drafts have been endorsed by Borrower.
10.12 Power
of Attorney. Borrower does hereby irrevocably constitute
and appoint Agent as Borrower’s true and lawful Agent and attorney-in-fact, with
full power of substitution, for Borrower and in Borrower’s name, place and
stead, or otherwise, to (a) endorse any checks or drafts
payable to Borrower in the name of Borrower and in favor of Agent on behalf
of
each Lender, (b) to demand and receive from time to time
any and all property, rights, titles, interests and liens hereby sold, assigned
and transferred, or intended so to be, and to give receipts for same,
(c) from time to time to institute and prosecute in
Agent’s own name any and all proceedings at law, in equity, or otherwise, that
Agent may deem proper in order to collect, assert or enforce any claim, right
or
title, of any kind, in and to the property, rights, titles, interests and
liens
hereby sold, assigned or transferred, or intended so to be, and to defend
and
compromise any and all actions, suits or proceedings in respect of any of
the
said property, rights, titles, interests and liens,
(d) upon an Event of Default to change the Borrower’s post
office mailing address, and (e) generally to do all and
any such acts and things in relation to the Collateral as Agent shall in
good
▇▇▇▇▇ ▇▇▇▇ advisable. Borrower hereby declares that the appointment
made and the powers granted pursuant to this Section 10.12 are coupled
with an interest and are and shall be irrevocable by Borrower in any manner,
or
for any reason, unless and until a release of the same is executed by Agent
and
duly recorded in the appropriate public records of Dallas County,
Texas.
10.13 Relief
from Automatic Stay, Etc. To the fullest extent
permitted by law, in the event the Borrower shall make application for or
seek
relief or protection under the federal bankruptcy code (“Bankruptcy Code”) or
other Debtor Relief Laws, or in the event that any involuntary petition is
filed
against the Borrower under such Code or other Debtor Relief Laws, and not
dismissed with prejudice within 45 days, the automatic stay provisions of
Section 362 of the Bankruptcy Code are hereby modified as to Agent and each
Lender to the extent necessary to implement the provisions hereof permitting
set-off and the filing of UCC Financing Statements or other instruments or
documents; and Agent and each Lender shall automatically and without demand
or
notice (each of which is hereby waived) be entitled to immediate relief from
any
automatic stay imposed by Section 362 of the Bankruptcy Code or otherwise,
on or
against the exercise of the rights and remedies otherwise available to Lenders
as provided in the Loan Documents.
Section
11-Term Of Agreement
This
Agreement shall continue in full force and effect and the security interests
granted hereby and the duties, covenants and liabilities of Borrower hereunder
and all the terms, conditions and provisions hereof relating thereto shall
continue to be fully operative until all of the Obligations have been satisfied
in full. Borrower expressly agrees that if Borrower makes a payment
to Agent on behalf of any Lender, which payment or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, or
otherwise required to be repaid to a trustee, receiver or any other party
under
any Debtor Relief Laws, state or federal law, common law or equitable cause,
then to the extent of such repayment, the Obligations or any part thereof
intended to be satisfied and the Liens provided for hereunder securing the
same
shall be revived and continued in full force and effect as if said payment
had
not been made.
Section
12-Miscellaneous
12.1 Notices. All
notices, requests and other communications to any party hereunder shall be
in
writing and shall be given to such party at its address set forth below or
at
such other address as such party may hereafter specify for the purpose of
notice
to Agent, any Lender or Borrower. Each such notice, request or other
communication shall be effective (a) if given by mail,
when such notice is deposited in the United States Mail with first class
postage
prepaid, addressed as aforesaid, provided that such mailing is by registered
or
certified mail, return receipt requested, (b) if given by
overnight delivery, when deposited with a nationally recognized overnight
delivery service such as Federal Express or Airborne with all fees and charges
prepaid, addressed as provided below, or (c) if given by
any other means, when delivered at the address specified in this Section
12.1.
|
If
to Borrower:
|
|
Silverleaf
Resorts, Inc.
|
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
||
|
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
||
|
Attn:
Mr. ▇▇▇▇▇▇ ▇▇▇▇, CEO
|
||
|
With
a Copy to:
|
Meadows,
Owens, Collier, Reed, Cousins and Blau
|
|
|
3700
Nations Bank Plaza
|
||
|
▇▇▇
▇▇▇▇ ▇▇.
|
||
|
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
||
|
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
|
||
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If
to Lender:
|
Liberty
Bank
|
|
|
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
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||
|
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
|
||
|
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
|
||
|
Fax
No. (▇▇▇) ▇▇▇-▇▇▇▇
|
||
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With
a Copy to:
|
Polivy
& ▇▇▇▇▇▇▇▇, LLC
|
|
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Six
Central Row, 2nd Floor
|
||
|
▇.▇.
▇▇▇ ▇▇▇▇▇▇
|
||
|
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
|
||
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
|
||
|
▇▇▇▇
▇. ▇▇▇▇▇▇▇, Esq.
|
||
|
Phone:
(▇▇▇) ▇▇▇-▇▇▇▇
|
||
|
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
|
||
|
▇▇▇▇▇▇▇@▇▇▇.▇▇▇
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||
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▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
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12.2 Survival. All
representations, warranties, covenants and agreements made by Borrower herein,
in the other Loan Documents or in any other agreement, document, instrument
or
certificate delivered by or on behalf of Borrower under or pursuant to the
Loan
Documents shall be considered to have been relied upon by Lenders and shall
survive the delivery to Lenders of such Loan Documents (and each part thereof),
regardless of any investigation made by or on behalf of Lenders.
12.3 Governing
Law and Venue.
(a) THE
VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY
PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER
LOAN
DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF,
AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS
ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED
UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF
CONNECTICUT, EXCLUSIVE OF ITS CHOICE OF LAWS PRINCIPLES.
(b) THE
PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE TRIED AND LITIGATED IN THE
UNITED
STATES FEDERAL COURTS LOCATED IN THE DISTRICT OF CONNECTICUT OR IN THE
CONNECTICUT SUPERIOR COURT LOCATED IN MIDDLESEX COUNTY, CONNECTICUT,
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDER’S OPTION, IN THE COURTS
OF ANY JURISDICTION WHERE LENDER ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND LENDER WAIVE,
TO THE EXTENT PERMITTED UNDER APPLICABLE LAWS, ANY RIGHT EACH MAY HAVE TO
ASSERT
THE DOCTRINE OF FORUMNONCONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
12.3(b).
12.4 Limitation
on Interest. Agent and each Lender and Borrower intend
to comply at all times with applicable usury laws. All agreements
between Agent, each Lender and Borrower, whether now existing or hereafter
arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of the maturity
of the
Note or otherwise, shall the interest contracted for, charged, received,
paid or
agreed to be paid to Agent or any Lender exceed the highest lawful rate
permissible under applicable usury laws. If, from any circumstance
whatsoever fulfillment of any provision hereof, of the Note or of any other
Loan
Documents shall involve transcending the limit of such validity prescribed
by
any law which a court of competent jurisdiction may deem applicable hereto,
then
ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such
validity; and if from any circumstance Agent or any Lender shall ever receive
anything of value deemed interest by applicable law which would exceed the
highest lawful rate, such amount which would be excessive interest shall
be
applied to the reduction of the principal of the Loan and not to the payment
of
interest, or if such excessive interest exceeds the unpaid balance of principal
of the Loan, such excess shall be refunded to Borrower. All interest
paid or agreed to be paid to Lenders shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the
full
period until payment in full of the principal so that the interest on the
Loan
for such full period shall not exceed the highest lawful
rate. Borrower agrees that in determining whether or not any interest
payment under the Loan Documents exceeds the highest lawful rate, any
non-principal payment (except payments specifically described in the Loan
Documents as “interest”) including without limitation, prepayment fees and late
charges, shall to the maximum extent not prohibited by law, be an expense,
fee,
premium or penalty rather than interest. Agent and each Lender hereby
expressly disclaim any intent to contract for, charge or receive interest
in an
amount which exceeds the highest lawful rate. The provisions of the
Note, this Agreement, and all other Loan Documents are hereby modified to
the
extent necessary to conform with the limitations and provisions of this
Section 12.4, and this Section 12.4 shall govern over all other
provisions in any document or agreement now or hereafter
existing. This Section 12.4 shall never be superseded or
waived unless there is a written document executed by Agent, each Lender
and the
Borrower, expressly declaring the usury limitation of this Agreement to be
null
and void, and no other method or language shall be effective to supersede
or
waive this paragraph.
12.5 Invalid
Provisions. If any provision of this Agreement or any of
the other Loan Documents is held to be illegal, invalid or unenforceable
under
present or future laws effective during the term thereof, such provision
shall
be fully severable, this Agreement and the other Loan Documents shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof or thereof, and the remaining provisions
hereof or thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision there shall be added automatically as a part of this
Agreement and/or the Loan Documents (as the case may be) a provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid and enforceable.
12.6 Successors
and Assigns. This Agreement and the other Loan Documents
shall be binding upon and inure to the benefit of Borrower, Agent and each
Lender and their respective successors and assigns; provided that Borrower
may
not transfer or assign any of its rights or obligations under this Agreement,
or
the other Loan Documents without the prior written consent of
Agent. This Agreement and the transactions provided for or
contemplated hereunder or under any of the Loan Documents are intended solely
for the benefit of the parties hereto. No third party shall have any
rights or derive any benefits under or with respect to this Agreement, or
the
other Loan Documents except as provided in advance in a writing signed on
behalf
of Agent and each Lender.
12.7 Amendment. This
Agreement may not be amended or modified, and no term or provision hereof
may be
waived, except by written instrument signed by the Borrower and Agent on
behalf
of itself and Lenders.
12.8 Counterparts;
Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect
as if the signature thereto and hereto were on the same
instrument. This Agreement shall become effective upon Agent’s
receipt of one or more counterparts hereof signed by Borrower.
12.9 Lender
and Agent Not Fiduciaries. The relationship between
Borrower, Agent and each Lender is solely that of debtor and creditor, and
Agent
and Lenders have no fiduciary or other special relationship with Borrower,
and
no term or provision of any of the Loan Documents shall be construed so as
to
deem the relationship between Borrower, Agent and Lenders to be other than
that
of debtor and creditor.
12.10 Return
of Notes Receivable.
(a) In
the event Borrower complies with its Obligations under
Section 2.4(b) of this Agreement with respect to Pledged
Notes Receivable pursuant to which a default by the Purchaser thereof has
occurred, and Borrower thereafter desires to enforce such Note Receivable
against the Purchaser thereof, then provided that no Event of Default has
occurred which has not been cured to Agent’s satisfaction (as evidenced by a
written acceptance of such cure executed by Agent), and no event has occurred
which with notice, the passage of time or both, would constitute an Event
of
Default, then within thirty (30) days after its receipt of a written request
from Borrower, Agent shall deliver such ineligible Note Receivable to Borrower,
provided that such delivery shall be for the sole purpose of enforcing Agent’s
rights thereunder and Agent, notwithstanding such delivery, shall continue
to
have, on behalf of Lenders, a first priority security interest in any such
note.
(b) In
the event that all Obligations hereunder are fully satisfied, then within
a
reasonable time thereafter, Agent shall endorse the Pledged Notes Receivable
“Pay to the order of Silverleaf Resorts, Inc. without recourse”, and deliver
such Pledged Notes Receivable, together with any other nonrecourse Collateral
reassignment documents requested and prepared by Borrower, at Borrower’s sole
cost and expense.
12.11 Accounting
Principles. Where the character or amount of any asset
or liability or item of income or expense is required to be determined or
any
consolidation or other accounting computation is required to be made for
the
purposes of this Agreement, the same shall be determined or made in accordance
with GAAP consistently applied at the time in effect, to the extent applicable,
except where such principles are inconsistent with the requirements of this
Agreement.
12.12
Total Agreement. This Agreement and the other
Loan Documents, including the Exhibits and Schedules to them, is the entire
agreement between the parties relating to the subject matter hereof,
incorporates or rescinds all prior agreements and understandings between
the
parties hereto relating to the subject matter hereof, cannot be changed or
terminated orally or by course of conduct, and shall be deemed effective
as of
the date it is accepted by Agent at the offices set forth above. The
documents evidencing the Additional Credit Facility shall remain in full
force
and effect.
12.13 Waiver
of Jury Trial. TO THE FULLEST EXTENT NOT PROHIBITED
BY APPLICABLE LAW WHICH CANNOT BE WAIVED, BORROWER, AGENT AND EACH LENDER
HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVE ANY AND ALL RIGHT
TO
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND OR CLARIFY
ANY
RIGHT, POWER, REMEDY OR DEFENSE ARISING OUT OF OR RELATED TO THIS AGREEMENT,
THE
OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN,
WHETHER SOUNDING IN TORT OR CONTRACT OR OTHERWISE, OR WITH RESPECT TO ANY
COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS
OF ANY PARTY; AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED
BEFORE A JUDGE AND NOT BEFORE A JURY, AND THAT ANY PARTY TO THIS AGREEMENT
MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN
EVIDENCE OF THE CONSENT OF BORROWER, AGENT AND LENDER TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY. EACH OF BORROWER, AGENT AND ANY LENDER
FURTHER WAIVES ANY RIGHT TO SEEK TO CONSOLIDATE ANY SUCH LITIGATION IN WHICH
A
JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL
CANNOT OR HAS NOT BEEN WAIVED. FURTHER, BORROWER HEREBY CERTIFIES
THAT NO REPRESENTATIVE OF AGENT OR ANY LENDER NOR ANY AGENT’S OR LENDER’S
COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT AGENT OR LENDER WOULD
NOT,
IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO
JURY
TRIAL PROVISION. BORROWER ACKNOWLEDGES THAT THE PROVISIONS OF THIS
SECTION 12.13 ARE A MATERIAL INDUCEMENT
TO LENDER’S ACCEPTANCE OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. BORROWER ACKNOWLEDGES THAT IT
HAS HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING THIS SECTION, THAT
IT
FULLY UNDERSTANDS ITS TERMS, CONTENT AND EFFECT, AND THAT IT VOLUNTARILY
AND
KNOWINGLY AGREES TO THE TERMS OF THIS SECTION.
The
waiver and stipulations of Borrower, Agent and each Lender in this
Section 12.13 shall survive the final payment or performance
of all of the Obligations of Borrower and the resulting termination of this
Agreement.
12.14 Incorporation
of Exhibits. This Agreement, together with all Exhibits
and Schedules hereto, constitute one document and agreement which is referred
to
herein by the use of the defined term “Agreement.” Such Exhibits and Schedules
are incorporated herein as to fully set out in this Agreement. The
definitions contained in any part of this Agreement shall apply to all parts
of
this Agreement.
12.15 Consent
to Advertising and Publicity. Borrower hereby consents
that Agent and each Lender may issue and disseminate to the public information
describing the credit accommodation entered into pursuant to this Agreement,
including the names and addresses of Borrower and any subsidiaries and
Affiliates, the amount and a general description of Borrower’s
business.
12.16 Directly
or Indirectly. Where any provision in the Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provisions shall be applicable whether such action is taken
directly or indirectly by such Person.
12.17 Headings. Section
headings have been inserted in the Agreement as a matter of convenience of
reference only; such section headings are not a part of the Agreement and
shall
not be used in the interpretation of this Agreement.
12.18 Gender
and Number. Words of any gender in this Agreement shall
include each other gender and the singular shall mean the plural and vice
versa
where appropriate.
12.19 Revival
and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by Borrower or the transfer to Agent or any Lender
of
any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors’ rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers
of
property (collectively, a “Voidable Transfer”), and if any Lender is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to
any
such Voidable Transfer, or the amount thereof that any Lender is required
or
elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of such Lender related thereto, the liability of Borrower
automatically shall be revived, reinstated, and restored and shall exist
as
though such Voidable Transfer had never been made.
12.20 Confidentiality. Agent
and each Lender for itself and an Assignee of such lender, agrees that material,
non-public information regarding Borrower, its operations, assets, and existing
and contemplated Annual Operating Plans shall be treated by Agent and each
Lender in a confidential manner, and shall not be disclosed by Agent or any
Lender to Persons who are not parties to this Agreement, except: (a)
to attorneys for and other advisors, accountants, auditors, and consultants
to
any Lender, (b) to Subsidiaries of Agent or any Lender and Agent or Lender
affiliated entities, provided that any such Subsidiary or affiliated entity
shall have agreed to receive such information hereunder subject to the terms
of
this Section 12.20, (c) as may be required by statute, decision, or
judicial or administrative order, rule, or regulation, (d) as may be agreed
to
in advance by Borrower or as requested or required by any Governmental Authority
pursuant to any subpoena or other legal process, (e) as to any such information
that is or becomes generally available to the public (other than as a result
of
prohibited disclosure by Agent or any Lender), (f) in connection with any
assignment, prospective assignment, sale, prospective sale, participation
or
prospective participations, or pledge or prospective pledge of any Lender’s
interest under this Agreement, provided that any such assignee, prospective
assignee, purchaser, prospective purchaser, Participant, prospective
participant, pledgee, or prospective pledgee shall have agreed in writing
to
receive such information hereunder subject to the terms of this Section
12.20, and (g) in connection with any litigation or other adversary
proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties
under
this Agreement or the other Loan Documents. The provisions of this
Section 12.20 shall survive for 2 years after the payment in full of the
Obligations. Anything contained herein or in any other Loan Document
to the contrary notwithstanding, the obligations of confidentiality contained
herein and therein, as they relate to the transactions contemplated hereby,
shall not apply to the federal tax structure or federal tax treatment of
such
transactions, and each party hereto (and any employee, representative, of
Agent
or of any Lender or of any other party hereto) may disclose to any and all
Persons, without limitation of any kind, the federal tax structure and federal
tax treatment of such transactions (including all written materials related
to
such tax structure and tax treatment). The preceding sentence is
intended to cause the transactions contemplated hereby to not be treated
as
having been offered under conditions of confidentiality for purposes of Section
1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations
promulgated under Section 6011 of the IRC, and shall be construed in a manner
consistent with such purpose. In addition, each party hereto
acknowledges that it has no proprietary or exclusive rights to the tax structure
of the transactions contemplated hereby or any tax matter or tax idea related
thereto.
12.21 Commercial
Transaction Waiver. BORROWER ACKNOWLEDGES
THAT THIS IS A “COMMERCIAL TRANSACTION” AS SUCH IS DEFINED IN CHAPTER 903a OF
THE CONNECTICUT GENERAL STATUTES, AS AMENDED. BORROWER FURTHER ACKNOWLEDGES
THAT, PURSUANT TO SUCH SECTION, IT HAS A RIGHT TO NOTICE OF AND HEARING PRIOR
TO
THE ISSUANCE OF ANY “PREJUDGMENT REMEDY”. NOTWITHSTANDING THE FOREGOING,
BORROWER HEREBY WAIVES ALL RIGHTS TO SUCH NOTICE, JUDICIAL HEARING OR PRIOR
COURT ORDER IN CONNECTION WITH ANY SUIT ON THIS AGREEMENT, THE NOTE, THE
GUARANTY, ANY OF THE LOAN DOCUMENTS OR ANY EXTENSIONS OR RENEWALS OF THE
SAME.
12.22 Foreign
Assets Control Regulations, Patriot Act, Etc.
(a) Borrower
acknowledges and agrees that neither the requesting or borrowing of Advances
or
the use of the proceeds of the Loan will be (i) in contravention of any
Prescribed Law, or (ii) in contravention of Executive Order No. 13,224, of
September 23, 2001 issued by the President of the United States (Executive
Order
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit, or Support Terrorism), as may be amended or supplemented from
time to
time (the "Anti-Terrorism Order"), or (iii) on behalf of
terrorists or terrorist organizations, including those persons or entities
that
are included on any relevant lists maintained by the United Nations, North
Atlantic Treaty Organization, Organization of Economic Cooperation and
Development, Financial Action Task Force, U.S. Office of Foreign Assets Control,
U.S. Securities & Exchange Commission, U.S. Federal Bureau of Investigation,
U.S. Central Intelligence Agency, U.S. Internal Revenue Service, or any country
or organization, all as may be amended from time to time. No
Affiliate of Borrower is or will be a person described in section 1 of the
Anti-Terrorism Order and no Affiliate of Borrower will engage in any dealings
or
transactions, or otherwise be associated with any such person.
(b) Borrower
further acknowledges and agrees that the making of the Loan to Borrower does
not
violate any Prescribed Law, or the Trading with the Enemy Act (50 U.S.C.
§1 et
seq., as amended), or any foreign asset control regulations of the United
States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended), or any enabling
legislation or executive order relating thereto.
(c) Borrower
warrants that none of the cash or property that any Affiliate has paid or
contributed, or will pay or contribute to Borrower has been or shall be such
as
is described in Section 12.22(a)(i), (ii) or (iii)
hereof or derived from, or related to, any activity that is deemed criminal
under United States laws.
(d) Borrower
agrees to provide to the Lender any additional information regarding all
Affiliates of Borrower that Lender deems necessary or convenient to ensure
compliance with all applicable laws concerning money laundering and similar
activities and Borrower understands and agrees that if, at any time, it is
discovered that any of the representations contained in this Section
12.22 are incorrect, or, if otherwise required by Applicable Law or
regulation related to money laundering and similar activities, Lender may
undertake appropriate actions to ensure compliance with Applicable Laws and
regulations.
Section
13-Agent
13.1 Authorization
and Action. Each Lender hereby accepts the appointment
of and irrevocably (but subject to Section 13.8 hereof)
authorizes Agent to take such action as Agent on its behalf and to exercise
such
powers as are expressly delegated to Agent by the terms hereof, together
with
such powers as are reasonably incidental thereto. Agent shall not be
required to take any action which exposes Agent to personal liability or
which
is contrary to this Agreement or applicable law. Agent agrees to give
to each Lender prompt notice of each notice given to it by Borrower pursuant
to
the terms of this Agreement. The appointment and authority of Agent
hereunder shall terminate upon the payment of the Obligations in
full.
13.2 Nature
of Agent’s Duties. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or in
the
other Loan Documents. The duties of Agent shall be mechanical and
administrative in nature. Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender. Nothing
in this Agreement or any of the Loan Documents, express or implied, is intended
to or shall be construed to impose upon Agent any obligations in respect
of this
Agreement or any of the Loan Documents except as expressly set forth herein
or
therein. Agent shall not have any duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit
or
other information with respect to Borrower, whether coming into its possession
before the date hereof or at any time or times thereafter (except as expressly
set forth in this Agreement). If Agent seeks the consent or approval
of Lenders, to the taking or refraining from taking any action hereunder,
Agent
shall send notice thereof to each Lender.
13.3 UCC
Filings. Each of Borrower, Agent and Lender expressly
recognizes and agrees that Agent shall be listed as the assignee or secured
party of record on the various UCC filings required to be made hereunder
in
order to perfect the grant of a security interest in the Collateral herein
for
the benefit of Lenders, that such listing shall be for administrative
convenience only in creating a single secured party to take certain actions
hereunder on behalf of the holders of the Obligations, and that such listing
will not affect in any way the status of such holders as the beneficial holders
of such security interest. In addition, such listing shall impose no
duties on Agent other than those expressly and specifically undertaken in
accordance with this Section 13.
13.4 Agent’s
Reliance, Etc. Neither Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted
to
be taken by it or them as Agent under or in connection with this Agreement
(including Agent’s servicing, administering or collecting Receivables) except
for its or their own gross negligence or willful misconduct. Without
limiting the foregoing, Agent: (i) may consult with legal counsel (including
counsel for Borrower), independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken
in
good faith by it in accordance with the advice of such counsel, accountants
or
experts; (ii) makes no warranty or representation to Lender and shall not
be
responsible to any Lender for any statements, warranties or representations
made
in or in connection with this Agreement; (iii) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the
terms,
covenants or conditions of this Agreement on the part of Borrower or to inspect
the property (including the books and records) of Borrower (except as otherwise
expressly set forth in this Agreement); (iv) shall not be responsible to
any
Lender for the due execution, legality, validity, enforceability, genuineness,
sufficiency, or value of this Agreement, or any other instrument or document
furnished pursuant hereto, or any certificate, report, statement or other
document referred to or provided for in, or received by Agent under or in
connection with, the Loan Documents, or for any failure of Borrower or any
of
its Affiliates to perform its obligation under the Loan Documents; and (v)
shall
incur no liability under or in respect of this Agreement by acting upon any
notice (including notice by telephone), consent, certificate or other instrument
or writing (which may be by telex or telecopier) believed by it to be genuine
and to be or to have been signed or sent by the proper party or
parties. Agent may, but shall not be required to, at any time request
instructions from Lenders with respect to any actions or approvals which
by the
terms of this Agreement or of any of the other Loan Documents Agent is permitted
or required to take or to grant, and Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval and shall not
be
under any liability whatsoever to any Person for refraining from any action
or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from the requisite Lender, as applicable in
accordance with this Agreement. Without limiting the foregoing,
Lender shall not have any right of action whatsoever against Agent as a result
of Agent acting or refraining from acting under this Agreement or any of
the
other Loan Documents in accordance with the instructions of the requisite
Lender
as applicable in accordance with this Agreement. Agent shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation reasonably believed by it or them to be genuine
and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including counsel to Borrower),
independent accountants and other experts selected by Agent.
13.5 Agent
and Affiliates. To the extent that Agent or any of its
Affiliates are or shall become Lenders hereunder, Agent or such Affiliate,
in
such capacity, shall have each and every right and power under this Agreement
as
would any other Lender hereunder (including the right to vote upon any matter
upon which any of Lenders are entitled to vote) and, without exception, may
exercise the same as though it were not an Agent. Agent and its
Affiliates may engage in any kind of business with Borrower, any of its
Affiliates and any Person who may do business with or own securities of Borrower
or any of its Affiliates, all as if it were not an Agent hereunder and without
any duty to account therefor to Lenders.
13.6 Credit
Decision. Independently, and without reliance upon
Agent, each Lender has, to the extent it deems appropriate, made and shall
continue to make (a) its own independent investigation of the financial affairs
and business affairs of Borrower in connection with any action or inaction
with
respect to the transactions contemplated herein, and (b) its own evaluation
of
the creditworthiness of Borrower and of the value of the Collateral, and,
except
as expressly provided in this Agreement, Agent has had and shall have no
duty or
responsibility to provide any Lender with any credit or other information
with
respect thereto. Agent shall not be responsible to any Lender for any
recitals, statements, representation or warranties herein or in any document,
certificate or other writing delivered in connection herewith (unless made
by
Agent) or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, priority or sufficiency of this Agreement
(except with respect to Agent’s obligations hereunder) or the Loan Documents or
the financial condition of Borrower or the value of the
Collateral. Except as expressly herein provided with respect to its
duties as agent, Agent shall not be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Agreement or the Loan Documents, the financial condition
of
Borrower, or the existence or possible existence of any Event of
Default.
13.7 Indemnification. Each
Lender agrees to indemnify Agent (to the extent not reimbursed by Borrower),
ratably in accordance with each Lender’s Pro Rata Payment Percentage, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements of any kind
or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any action
taken or omitted by Agent under this Agreement; provided, however, that no
Lender shall be liable for any portion of such liabilities, obligations,
losses,
damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
resulting from Agent’s gross negligence or willful
misconduct. Without limiting the generality of the foregoing, each
Lender agrees to reimburse Agent (to the extent not reimbursed by Borrower)
ratably in accordance with Lender’s Pro Rata Payment Percentage, promptly upon
demand, for any out-of-pocket expenses (including reasonable counsel fees)
incurred by Agent in connection with the administration, modification, amendment
or enforcement (whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of its rights or responsibilities under, this
Agreement. The rights of Agent under this
Section 13.7 shall survive the termination of this
Agreement. For purposes of this paragraph, the term “Agent” shall
include Agent, its agents (including without limitation Wellington), its
affiliates and their respective officers, directors, employees and
agents.
13.8 Successor
Agent. Agent may resign at any time by giving thirty
days notice thereof to Lenders and Borrower. Upon any such
resignation, Lenders, including Liberty Bank, shall have the right to appoint
a
successor Agent, and such resignation shall not be effective until such
successor Agent is appointed and has accepted such appointment. If no
successor Agent shall have been so appointed and accepted such appointment
within seventy-five (75) days after Agent’s giving of notice of resignation,
then Agent may, on behalf of Lenders, appoint a successor Agent, which successor
Agent shall be experienced in the types of transactions contemplated by this
Agreement. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and
become
vested with all of the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from all further duties
and
obligations under this Agreement. After any retiring Agent’s
resignation hereunder as Agent, the provisions of this Section 13.8 shall
inure to its benefit as to any actions taken or omitted to be taken by it
while
it was Agent under this Agreement.
13.9 Duty
of Care. Agent shall endeavor to exercise the same care
in its administration of the Loan Documents as it exercises with respect
to
similar transactions in which it is involved and where no other co-lenders
are
involved; provided that the liability of Agent for failing to do so shall
be
limited as provided in the preceding paragraphs of this Section
13.9.
13.10 Delegation
of Agency.
(a) If
at any time or times it shall be necessary or prudent in connection with
the
exercise or protection of Agent’s rights hereunder in order to conform to any
law of any jurisdiction in which any of the Collateral shall be located,
or
Agent shall be advised by counsel that it is so necessary or prudent in the
interest of Lenders, or Agent shall deem it necessary for its own protection
in
the performance of its duties hereunder Agent and, to the extent required
by
Agent, Borrower shall execute and deliver all instruments and agreements
reasonably necessary or proper to constitute another bank or trust company,
or
one or more individuals approved by Agent (each an “Approved Delegate”), either
to act as co-agent or co-agents or trustee of all or any of the Collateral,
jointly with Agent originally named herein or any successor, or to act as
separate agent or agents or trustee of any such Collateral. Every
separate agent and every co-agent and every trustee, other than any agent
which
may be appointed as successor to Agent, shall, to the extent permitted by
applicable law, be appointed to act and be such, subject to the following
provisions and conditions, namely:
(i) except
as otherwise provided herein, all rights, remedies, powers, duties and
obligations conferred upon, reserved or imposed upon Agent in respect of
the
custody, control and management of moneys, paper or securities shall be
exercised solely by Agent hereunder;
(ii) all
rights, remedies, powers, duties and obligations conferred upon, reserved
to or
imposed upon Agent hereunder shall be conferred, reserved or imposed and
exercised or performed by Agent except to the extent that the instrument
appointing such separate agent or separate agents or co-agent or co-agents
or
trustee shall otherwise provide, and except to the extent that under any
law of
any jurisdiction in which any particular act or acts are to be performed,
Agent
shall be incompetent or unqualified to perform such act or acts, in which
event
such rights, remedies, powers, duties and obligations shall be exercised
and
performed by such separate agents or co-agent or co-agents to the extent
specifically directed in writing by Agent;
(iii) no
power given thereby to, or which it is provided hereby may be exercised by,
any
such separate agent or separate agents or co-agent or co-agents or trustee
shall
be exercised hereunder by such separate agent or separate agents or co-agent
or
co-agents or trustee except jointly with, or with the consent in writing
of,
anything herein contained to the contrary notwithstanding;
(iv) no
separate agent or co-agent or trustee constituted under this
Section 13.10 shall be personally liable by reason of any act
or omission of any other agent, separate agent, co-agent or trustee hereunder;
and
(v) Agent,
at any time by an instrument in writing, executed by it, may accept the
resignation of or remove any such separate agent or co-agent or trustee of
Agent, and in that case, by an instrument in writing executed by Agent and
Borrower (to the extent necessary or requested by Agent) jointly may appoint
a
successor to such separate agent or co-agent or trustee, as the case may
be,
anything therein contained to the contrary notwithstanding. In the
event that Borrower shall not have joined in the execution of any such
instrument with a Person or entity within ten (10) days after the receipt
of a
written request from Agent to do so, Agent, acting alone, may appoint a
successor and may execute any instrument in connection therewith, and Borrower
hereby irrevocably appoints Agent its agent and attorney to act for it in
such
connection in either of such contingencies.
In
the
event that Borrower shall not have joined in the execution of such instruments
or agreements with any Approved Delegate within thirty (30) Business Days
after
the receipt of a written request from Agent to do so, Borrower hereby
irrevocably appoints Agent as its agent and attorney to act for it under
the
foregoing provisions of this Section 7.2(m) in such
contingency, it being understood that the power of attorney granted hereunder
is
coupled with an interest.
(b)
Agent may execute any of its duties under the Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel, and
other specialists and advisors (including affiliates of such Agent) selected
by
it, concerning all matters pertaining to such duties. Agent shall not
be responsible for the negligence or misconduct of any such agents,
attorneys-in-fact, counsel and other specialists and advisors selected by
it
with reasonable care.
13.11 Agent’s
Responsibilities.
(a) Each
subsequent holder of any Note by its acceptance thereof irrevocably joins
in the
designation of Liberty Bank as agent for Lenders as provided herein with
the
same force and effect as if it were an original Lender hereunder and signatory
hereto. Liberty Bank hereby accepts such designation and appointment
as agent. Agent, acting as such under the provisions of this
Agreement, or under any other instrument or document delivered pursuant hereto,
shall not be liable or responsible, directly or indirectly, for any action
taken, or omitted to be taken, by it in good faith, nor shall Agent be liable
or
responsible for the consequences of any oversight or error of judgment on
its
part, but Agent shall only be liable or responsible for any loss suffered
by any
of Lenders hereunder provided such loss was caused by Agent’s gross negligence
or willful misconduct. Agent shall not, by any action or inaction
hereunder, be deemed to make any representation or warranty regarding the
legality, legal effect or sufficiency of any act of Borrower in connection
with,
or under any of the provisions of, this Agreement, or any instrument or document
delivered pursuant thereto, or the validity or enforceability of any instrument
or document furnished to Agent pursuant to this Agreement. Agent
shall have no liability or responsibility in connection with the collection
or
payment of any sums due to Lenders by Borrower, the sole responsibility of
Agent
being to account to Lenders only for monies actually received by
it. Agent shall have no obligation to make any application of any
funds received by it until such funds are immediately available at Agent’s
office. Any monies received by Agent need not be segregated from
other funds except to the extent required by law, and Agent shall not be
liable
for interest on any funds received by it. Agent shall not be charged
with knowledge of any facts which would prohibit the making of any payment
of
monies in accordance with the provisions of this Agreement unless and until
Agent shall have received written notice thereof at its office from Borrower
or
any Lender. The duties of Agent shall be mechanical and
administrative in nature, Agent shall not, by reason of this Agreement, be
deemed a fiduciary in respect of Lenders, and nothing in this Agreement shall
impose upon Agent any obligations in respect of this Agreement except as
expressly herein set forth.
(b) Agent
shall have the right to exercise all the rights granted to, and exercisable
by,
it under this Agreement and any instrument or document delivered pursuant
to
this Agreement, in such manner from time to time, as Agent in its sole
discretion, shall deem proper.
(c) Agent
agrees to provide each Lender with notice (and copies of documents, as
appropriate) of the any amendment, waiver or modification of the terms of
this
Agreement entered in accordance with Section 7.2(m) hereof;
(d) Except
as otherwise provided in this Agreement, Agent shall be entitled, at its
option,
from time to time and at any time, to enter into any amendment of, or waive
compliance with the terms of this Agreement without obtaining prior approval
from any Lender.
13.12 Power
of Attorney. Each Lender does hereby irrevocably
constitute and appoint Agent as its true and lawful agent and attorney-in-fact,
with full power of substitution, for and in its name, place and stead, or
otherwise, to (a) demand and receive from time to time any and all property,
rights, titles, interests and liens hereby sold, assigned and transferred,
or
intended so to be, and to give receipts for same, (b) from time to time to
institute and prosecute in Agent’s own name any and all proceedings at law, in
equity, or otherwise, that Agent may deem proper in order to collect, assert
or
enforce any claim, right or title, of any kind, in and to the property, rights,
titles, interests and liens hereby sold, assigned or transferred, or intended
so
to be, and to defend and compromise any and all actions, suits or proceedings
in
respect of any of the said property, rights, titles, interests and liens,
and
(c) generally to do all and any such acts and things in relation to the
Loans, the Collateral and this Agreement as Agent shall in good ▇▇▇▇▇ ▇▇▇▇
advisable. Each Lender hereby declares that the appointment made and
the powers granted pursuant to this Section 13.12 are coupled
with an interest and are and shall be irrevocable by it in any manner, or
for
any reason, unless and until the repayment in full of the
Obligation.
13.13 Ratification
and Confirmation. Borrower hereby ratifies, confirms,
assumes and agrees to be bound by all statements, covenants and agreements
set
forth in the this Agreement and the other Loan Documents. Borrower
reaffirms, restates and incorporates by reference all of the covenants and
agreements made in the Loan Documents as if the same were made as of this
date. Borrower agrees to pay the Loan and all related expenses, as
and when due and payable in accordance with this Agreement and the other
Loan
Documents, and to observe and perform the Obligations, and do all things
necessary which are not prohibited by law to prevent the occurrence of any
Event
of Default. In addition, to further secure, and to evidence and
confirm the securing of, the prompt and complete payment and performance
by
Borrower of the Loan and all of the Obligations, for value received, Borrower
unconditionally and irrevocably assigns, pledges and grants to Agent, and
hereby
confirms or reaffirm the prior granting to Agent of, a continuing first priority
Lien, mortgage and security interest in and to all of the Collateral, whether
now existing or hereafter acquired. Also, as provided in the Loan
Documents, the Loan is and shall be further secured by the Liens and security
interests in favor of Agent in the properties and interests relating to
Additional Eligible Resorts, which now or hereafter serve as collateral security
for any Obligations. On the date hereof and thereafter upon
satisfaction of the requirements for approval by Agent of Additional Eligible
Resorts, Borrower shall record, or cause to be recorded, such mortgages,
deeds
of trust, deeds to secure debt, assignments, pledges, security agreements
and
UCC Financing Statements in the appropriate public records of the state in
which
each Resort is located to further evidence and perfect Agent’s Lien on the
Collateral. Borrower agrees to deliver or cause to be delivered by
its Affiliates, such mortgages, deeds of trust, deeds to secure debt,
assignments, pledges, security agreements and UCC Financing Statements as
Agent
may deem necessary to further evidence and perfect Agent’s Lien on the
Collateral.
13.14 Estoppel. The
Loan constitutes valuable consideration to Borrower. This Agreement
and the other Loan Documents and the Loan modifications and transactions
provided for or contemplated hereunder or thereunder, shall in no way adversely
affect the Lien or perfection or priority of any Lien of Agent as of the
date
hereof in and to any Collateral, and are not intended to constitute, and
do not
constitute or give rise to, any novation, cancellation or extinguishment
of any
of Borrower’s Obligations existing as of the Closing Date to Agent, or of any
interests owned or held by Agent (and not previously released) in and to
any of
the Collateral; it being the intention of the parties that the transactions
provided for or contemplated herein shall be effectuated without any
interruption in the continuity of the value and consideration received by
Borrower, and of the attachment, perfection, priority and continuation in
favor
of Agent in and to all Collateral and proceeds.
13.15 Participation
Agreement. Nothing in this Section 13 shall affect
or limit any Participant’s rights or any of the Agent’s obligations under each
Participant’s respective participation agreement with the
Agent.
13.16 Withholding
Taxes.
(a) If
any Lender is a “foreign person” within the meaning of the IRC and such Lender
claims exemption from, or a reduction of, U.S. withholding tax under Sections
1441 or 1442 of the IRC, such Lender agrees with and in favor of Agent and
Borrower, to deliver to Agent and Borrower:
(i) if
such Lender claims an exemption from withholding tax pursuant to its portfolio
interest exception, (A) a statement of the Lender, signed under penalty of
perjury, that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of
the IRC, (II) a 10% shareholder of Borrower (within the meaning of
Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation
related to Borrower within the meaning of Section 864(d)(4) of the IRC, and
(B)
a properly completed and executed IRS Form W-8BEN, before the first payment
of
any interest under this Agreement and at any other time reasonably requested
by
Agent or Borrower;
(ii) if
such Lender claims an exemption from, or a reduction of, withholding tax
under a
United States tax treaty, properly completed and executed IRS Form W-8BEN
before
the first payment of any interest under this Agreement and at any other time
reasonably requested by Agent or Borrower;
(iii) if
such Lender claims that interest paid under this Agreement is exempt from
United
States withholding tax because it is effectively connected with a United
States
trade or business of such Lender, two properly completed and executed copies
of
IRS Form W-8ECI before the first payment of any interest is due under this
Agreement and at any other time reasonably requested by Agent or Borrower;
and
(iv) such
other form or forms as may be required under the IRC or other laws of the
United
States as a condition to exemption from, or reduction of, United States
withholding tax.
Such
Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption
or
reduction.
(b) If
any Lender claims exemption from, or reduction of, withholding tax under
a
United States tax treaty by providing IRS Form W-8BEN and such Lender sells,
assigns, grants a participation in, or otherwise transfers all or part of
the
Obligations of Borrower to such Lender, such Lender agrees to notify Agent
of
the percentage amount in which it is no longer the beneficial owner of
Obligations of Borrower to such Lender. To the extent of such
percentage amount, Agent will treat such Lender’s IRS Form W-8BEN as no longer
valid.
(c) If
any Lender is entitled to a reduction in the applicable withholding tax,
Agent
may withhold from any interest payment to such Lender an amount equivalent
to
the applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by subsection
(a) of this Section 13.16 are not delivered to Agent, then Agent may
withhold from any interest payment to such Lender not providing such forms
or
other documentation an amount equivalent to the applicable withholding
tax.
(d)
If the IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the appropriate
form
was not delivered, was not properly executed, or because such Lender failed
to
notify Agent of a change in circumstances which rendered the exemption from,
or
reduction of, withholding tax ineffective, or for any other reason) such
Lender
shall indemnify and hold Agent harmless for all amounts paid, directly or
indirectly, by Agent as tax or otherwise, including penalties and interest,
and
including any taxes imposed by any jurisdiction on the amounts payable to
Agent
under this Section 13.16, together with all costs and expenses (including
attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
(e) All
payments made by Borrower hereunder or under any note will be made without
setoff, counterclaim, or other defense, except as required by Applicable
Laws
other than for Taxes (as defined below). All such payments will be
made free and clear of, and without deduction or withholding for, any present
or
future taxes, levies, imposts, duties, fees, assessments or other charges
of
whatever nature now or hereafter imposed by any jurisdiction (other than
the
United States) or by any political subdivision or taxing authority thereof
or
therein (other than of the United States) with respect to such payments (but
excluding, any tax imposed by any jurisdiction or by any political subdivision
or taxing authority thereof or therein (i) measured by or based on the net
income or net profits of a Lender, or (ii) to the extent that such tax results
from a change in the circumstances of the Lender, including a change in the
residence, place of organization, or principal place of business of the Lender,
or a change in the branch or lending office of the Lender participating in
the
transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively
as
“Taxes”). If any Taxes are so levied or imposed, Borrower
agrees to pay the full amount of such Taxes, and such additional amounts
as may
be necessary so that every payment of all amounts due under this Agreement
or under any note, including any amount paid pursuant to this
Section 13.16(e) after withholding or deduction for or on account of
any Taxes, will not be less than the amount provided for herein;
provided, however, that Borrower shall not be required to increase
any such amounts payable to Agent or any Lender (i) that is not organized
under
the laws of the United States, if such Person fails to comply with the other
requirements of this Section 13.16, or (ii) if the increase in such
amount payable results from Agent’s or such Lender’s own willful misconduct
or gross negligence. Borrower will furnish to Agent as promptly as
possible after the date the payment of any Taxes is due pursuant to Applicable
Laws certified copies of tax receipts evidencing such payment by
Borrower.
13.17 Agent
in Individual Capacity. Liberty Bank and its Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in, and generally engage in any kind of banking,
trust, financial advisory, underwriting, or other business with Borrower
and its
Subsidiaries and Affiliates and any other Person party to any Loan Documents
as
though Liberty Bank were not Agent hereunder, and, in each case, without
notice
to or consent of the other Lenders. The other Lenders acknowledge
that, pursuant to such activities, Liberty Bank or its Affiliates may receive
information regarding Borrower or its Affiliates and any other Person party
to
any Loan Documents that is subject to confidentiality obligations in favor
of
Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to
them. The terms “Lender” and “Lenders” include Liberty Bank in its
individual capacity.
[THE
REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
IN
WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
duly executed and delivered effective as of the date first above
written.
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BORROWER:
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SILVERLEAF
RESORTS, INC., a Texas
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corporation
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/S/
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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By:
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/S/
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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|
|
Name:
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▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇.
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||
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Title:
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Chief
Financial Officer
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STATE
OF TEXAS
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)
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|
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)
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ss:
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COUNTY
OF DALLAS
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)
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The
foregoing instrument was acknowledged before me this 28th day of
September, 2007 by ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Chief Financial Officer of
Silverleaf Resorts, Inc., a Texas corporation, on behalf of the
Corporation.
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/S/
▇▇▇ ▇. ▇▇▇▇▇▇▇
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Commissioner
of the Superior Court
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Notary
Public
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My
Commission Expires: July 1,
2009
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LENDER:
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LIBERTY
BANK,
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a
Connecticut nonstock mutual savings bank
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/S/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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By:
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/S/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, Vice President
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STATE
OF CONNECTICUT
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)
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)
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ss:
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COUNTY
OF MIDDLESEX
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)
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The
foregoing instrument was acknowledged before me this 1st day of
October, 2007 by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, a Vice President of Liberty Bank, a
Connecticut nonstock mutual savings bank, on behalf of the bank.
| /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | |||
| Notary Public | |||
| My Commission Expires: | |||
| AGENT: | |||
| LIBERTY BANK, | |||
| a Connecticut nonstock mutual savings bank | |||
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/S/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
By:
|
/S/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
|
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, Vice President
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|||
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STATE
OF CONNECTIUT
|
)
|
|
|
)
|
ss:
|
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COUNTY
OF MIDDLESEX
|
)
|
The
foregoing instrument was acknowledged before me this 1ST day of
October, 2007 by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, a Vice President of Liberty Bank, a
Connecticut nonstock mutual savings bank, on behalf of the bank.
|
/S/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Notary
Public
|
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My
Commission Expires:
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LIST
OF
SCHEDULES AND EXHIBITS
SCHEDULES:
Schedule
1.0-Identification of Lenders and Their Respective Pro Rata
Percentage
Schedule
1.1(a)-List of Resort Declarations
Schedule
1.1(b)-Underwriting Guidelines and Criteria
Schedule
1.1(c)-List of Timeshare Owner Associations
Schedule
2.6-List of Borrower’s Executive Management
Schedule
6.5-Permitted Liens
Schedule
6.7-Pending Material Litigation
Schedule
6.9-List of Environmental Matters
Schedule
6.19-List of Time Share Reports and Documents
EXHIBITS
Exhibit
A- Assignment of Notes and Mortgages
Exhibit
B- Borrowing Base Report
Exhibit
C-Closing Certificate
Exhibit
D-Certificate and Request for Advance
Exhibit
E-Inventory Control Procedures
Exhibit
F-Officer’s Certificate For Financial Statements