EXHIBIT 10.5
AMENDED AND RESTATED
LOAN, SECURITY AND AGENCY AGREEMENT
(TRANCHE B)
among
SILVERLEAF RESORTS, INC.
(as Borrower)
BANK OF SCOTLAND
▇▇▇▇▇▇▇ BANK
and
THE PARTIES WHICH HEREAFTER EXECUTE THIS AGREEMENT
(as Lenders)
and
TEXTRON FINANCIAL CORPORATION
(as Lender and Facility and Collateral Agent)
As of April 30, 2002
AMENDED AND RESTATED
LOAN, SECURITY AND AGENCY AGREEMENT
(TRANCHE B)
THIS AMENDED AND RESTATED LOAN, SECURITY AND AGENCY AGREEMENT (TRANCHE B), dated
as of April 30, 2002, entered into by and among SILVERLEAF RESORTS, INC. (as
"Borrower"), the parties, including TEXTRON FINANCIAL CORPORATION ("TFC"), a
Delaware corporation and BANK OF SCOTLAND, which execute and deliver this
Agreement in their respective capacities as lenders hereunder (collectively, the
"Lenders" and each individually, a "Lender") and TEXTRON FINANCIAL CORPORATION
as facility agent and collateral agent ("Agent").
WITNESSETH:
WHEREAS, Agent and Borrower were parties to that certain Loan, Security
and Agency Agreement dated as of December 16, 1999, pursuant to which the
Borrower executed its Secured Promissory Note in favor of the Agent, as agent
for Lenders, in the amount of $71,000,000.00, as amended to date (the "ORIGINAL
NOTE");
WHEREAS, Agent and Borrower entered into a First Amendment to Loan,
Security and Agency Agreement dated as of April 17, 2001 (the "FIRST AMENDMENT")
to, among other things, incorporate the terms of a certain Forbearance Agreement
dated as of April 6, 2001; and
WHEREAS, pursuant to the First Amendment the Original Note was replaced
by an Amended and Restated Secured Promissory Note in the original principal
amount of $61,000,000 in favor of TFC (the "TFC Note") and a Secured Promissory
Note in the original principal amount of $10,000,000 in favor of Bank of
Scotland (the "BOS Note", and together with the TFC Note, singly and
collectively the "Note").
WHEREAS, the Lenders and Borrower have agreed to enter into this
Agreement, as such term is hereafter defined, to restructure and modify the
Loan, including separating the Loan into two separate components - the Revolving
Loan Component in the amount of up to $56,104,200.00 and the Term Loan Component
in the amount of up to $14,895,800.00;
WHEREAS, pursuant to this Agreement, the Commitment, as such term is
hereinafter defined, shall be reduced to $63,022,000.00 less the outstanding
principal balance of the Term Loan Component from time to time and the aggregate
Commitment hereunder, under the Additional Credit Facility and the Tranche C
Facility, as such terms are hereinafter defined, shall be reduced to
$136,000,000.00 less the outstanding principal balance of the Term Loan
Component and the aggregate term loan component of the Additional Credit
Facility and the Tranche C Facility from time to time;
WHEREAS, pursuant to this Agreement, the Original Note will be replaced
by: (i) an Amended and Restated Secured Promissory Note or Notes in the
aggregate original principal amount of $56,104,200.00 in favor of Agent, as
agent for each of the Lenders (singly and collectively the "REVOLVING LOAN
COMPONENT NOTE") and (ii) a Secured Promissory Note or Notes in the aggregate
original principal amount of $14,895,800.00 in favor of Agent, as agent for each
of the Lenders (singly and collectively the "TERM LOAN COMPONENT NOTE", and
together with the Revolving Loan Component Note, sometimes referred to herein
singly and collectively as the "NOTE");
WHEREAS, in connection with the Loans to be made by Lenders pursuant to
this Agreement, Textron Financial Corporation 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, the Lenders and Borrower have agreed to enter into this
Agreement to amend and restate the Original Agreement; and
WHEREAS, Borrower acknowledges, agrees and confirms that if Borrower
fails to satisfy any of the conditions set forth in Section 4 hereof, as
determined by TFC, in its sole and absolute discretion, on or before May 31,
2002, then this Agreement, and the obligations of TFC and each Lender hereunder,
shall be null and void in all respects AB INITIO. In such event, the terms and
conditions of the Original Loan Agreement, as modified by the Forbearance
Agreement, shall continue to control with respect to the Loan; Borrower further
acknowledges, confirms and agrees that until such time as Borrower has satisfied
all of the conditions set forth in Section 4 hereof, as determined by TFC, in
its sole and absolute discretion, the Loan shall continue to be governed by the
terms and provisions set forth in the Original Loan Agreement, as modified by
the Forbearance Agreement.
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 Capitalized terms used in this Agreement are defined in this
Section 1.1. The definitions include the singular and plural forms of the terms
defined.
(a) ADDITIONAL CREDIT FACILITY. The term "Additional Credit Facility"
shall mean that certain $72,000,000.00 credit facility (also known as the
"TRANCHE A CREDIT FACILITY") provided by TFC and certain other Persons to
Borrower pursuant to that certain Amended and Restated Loan,
Security and Agency Agreement (Tranche A) dated of even date herewith by and
among Borrower, TFC and each Person which executes such agreement as a lender,
as it may be amended from time to time (the "ADDITIONAL CREDIT FACILITY LOAN
AGREEMENT").
(b) ADDITIONAL ELIGIBLE RESORTS or ADDITIONAL ELIGIBLE RESORT. The
terms "Additional Eligible Resorts" and "Additional Eligible Resort" shall have
the meanings ascribed to such terms in Section 3.7 hereof.
(c) ADDITIONAL RESORT COLLATERAL. The term "Additional Resort
Collateral" shall mean singly and collectively, the development rights, real
property, fixtures and other personal property, including all management
agreements for the Resorts, now owned or hereafter acquired by Borrower and
described on Schedule 1.1(c) attached hereto. "Additional Resort Collateral"
shall not include the promissory notes and other property of Silverleaf Finance
I, Inc., that constitute "Pledged Assets" under the DZ Documents.
(d) ADDITIONAL RESORT COLLATERAL MORTGAGES. A properly recorded, first
priority mortgage, deed of trust, deed to secure debt or other security
instrument, as applicable, executed and delivered by Borrower to Agent, as agent
on behalf of each Lender, encumbering all of the right, title and interest of
Borrower in that portion of the Additional Resort Collateral constituting real
property.
(e) ADDITIONAL RESORT COLLATERAL ASSIGNMENTS. The term "Additional
Resort Collateral Assignments" shall mean singly and collectively: (i) a first
priority security agreement executed and delivered by Borrower to Agent, on
behalf of each Lender, granting to Agent, on behalf of each Lender, a first
priority security interest in that portion of the Additional Resort Collateral
constituting personal property, and (ii) a first priority security agreement
executed and delivered by Borrower to Agent, on behalf of each Lender, granting
to Agent, on behalf of each Lender, a first priority security interest in that
portion of the Additional Resort Collateral constituting development rights.
(f) ADVANCE. A portion of the proceeds of the Loans advanced from time
to time by Lenders to Borrower in accordance with the terms of this Agreement.
(g) AFFILIATE. Any party controlled by, controlling, or under common
control with, Borrower.
(h) AGREEMENT. This Amended and Restated Loan, Security and Agency
Agreement by and among Borrower, Agent and each Lender which executes this
Agreement (including the Exhibits and Schedules to it), as it may be amended
from time to time.
(i) ASSIGNMENT OF MANAGEMENT AGREEMENTS. The term "Assignment of
Management Agreements" shall mean the assignment, in the form attached hereto as
Exhibit A, by Borrower to Agent, of all of Borrower's rights under each
management agreement for the Resorts.
(j) ASSIGNMENT OF NOTES RECEIVABLE AND MORTGAGES. The term "Assignment
of Notes Receivable and Mortgages" shall mean a recordable Collateral Assignment
of Notes Receivable and Mortgages, in the form attached hereto as Exhibit A,
made by Borrower in favor of Agent, as collateral agent for each Lender,
evidencing the assignment to Agent, as collateral agent for each Lender, of all
of the Pledged Notes Receivable and Mortgages. Each such assignment shall, from
and after the date hereof, indicate by notation on the first page thereof that
it is either a "Tranche B-Revolving Loan Component" assignment or a "Tranche
B-Term Loan Component" assignment.
(k) BOND HOLDER EXCHANGE TRANSACTION. The term "Bond Holder Exchange
Transaction" shall mean that certain senior subordinate note holder exchange
transaction on the terms and conditions outlined in that certain term sheet
dated October 19, 2001 (the "BOND HOLDER EXCHANGE TRANSACTION LETTER"), a copy
of which is attached hereto as Exhibit E, and which is to be consummated
pursuant to the documents listed on Schedule 1.1(k) hereto (the "BOND HOLDER
EXCHANGE DOCUMENTS").
(l) BORROWING BASE. With respect to each Eligible Note Receivable,
pledged to Agent hereunder in connection with each Advance under the Revolving
Loan Component from and after the date hereof, an amount equal to seventy-five
percent (75%) of the remaining principal balance of each such Eligible Note
Receivable. Notwithstanding anything herein to the contrary, the total aggregate
outstanding principal balance of the Revolving Loan Component and the Term Loan
Component divided by the aggregate outstanding principal balance of all Eligible
Notes Receivable pledged to Agent shall not exceed the Maximum Effective Advance
Rate, as such term is defined herein.
(m) BUSINESS PLAN. The term "Business Plan" shall mean the five (5)
year "Stand Alone" business plan prepared by Borrower and attached hereto as
Exhibit F. The Business Plan includes the "Impact on Lenders Worksheet" setting
forth the amounts to be advanced by each of the Lenders, ▇▇▇▇▇▇ and Sovereign
pursuant to their respective credit facilities (the "SENIOR LENDER ADVANCE
SCHEDULE").
(n) CASH AND CASH EQUIVALENTS. Unrestricted (i) cash; (ii) marketable
direct obligations issued or unconditionally guaranteed by the United States
government and backed by the full faith and credit of the United States
government; and (iii) domestic and Eurodollar certificates of deposit and time
deposits, bankers' acceptances and floating rate certificates of deposit issued
by any commercial bank organized under the laws of the United States, any state
thereof, the District of Columbia, any foreign bank, or its branches or agencies
(fully protected against currency fluctuations), which, at the time of
acquisition, are rated A-1 (or better) by Standard & Poor's Rating Group or P-1
(or better) by ▇▇▇▇▇'▇ Investor Service, Inc. provided that the maturities of
such Cash and Cash Equivalents shall not exceed one year.
(o) CODE. The Uniform Commercial Code in force in the State of Rhode
Island as amended from time to time.
(p) COLLATERAL. Collectively, all now owned or hereafter acquired
right, title and interest
of Borrower, in all of the following:
(i) Pledged Notes Receivable (including all Notes Receivable
comprising the Ineligible Note Portfolio) and all proceeds of
or from them;
(ii) Mortgages and all proceeds of or from them (including the
Mortgages securing the Notes Receivable comprising the
Ineligible Note Portfolio);
(iii) Documents, instruments, accounts, chattel paper, and
general intangibles relating to the Pledged Notes Receivable
(including any relating to the Ineligible Note Portfolio) and
the related Mortgages;
(iv) the Land;
(v) the Additional Resort Collateral;
(vi) the Silverleaf Finance I, Inc. Stock;
(vii) INTENTIONALLY OMITTED;
(viii) the Standby Servicing Agreement;
(ix) the Standby Management Agreement;
(x) All collateral under the Additional Credit Facility, the
▇▇▇▇▇▇ Facility, the Sovereign Facility, the Tranche C
Facility and the Inventory Loan, as each such term is herein
defined;
(xi) Intentionally Omitted;
(xii) All books, records, reports, computer tapes, disks and
software relating to the Collateral; and
(xiii) 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.
(q) COMMITMENT. The term "Commitment" shall refer singly to the
obligation of each Lender to make a Loan or Loans under the Revolving Loan
Component 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 under the Revolving Loan Component as provided herein. The
maximum aggregate Commitment of the Lenders hereunder shall not exceed (i)
$63,022,000.00 minus (ii) the outstanding principal balance of the Term Loan
Component from time to time. The
Commitment and the Maximum Available Amount shall be subject to reduction as
provided in Section 2.1(a). The maximum aggregate Commitment under this
Agreement, the Additional Credit Facility and the Tranche C Facility shall be
$136,000,000.00 less the outstanding principal balance of the Term Loan
Component and the aggregate term loan component of the Additional Credit
Facility and the Tranche C Facility from time to time, which maximum aggregate
Commitment shall be reduced as provided in Section 2.1(a).
(r) COMMON ELEMENTS. 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.
(s) DEBTOR RELIEF LAWS. 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.
(t) DECLARATION OR DECLARATIONS. With respect to each Resort, the
applicable Declaration or Declarations described on Schedule 1.1(t) attached
hereto.
(u) DEFAULT. 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.
(v) DEFAULT RATE. The term "Default Rate" shall have the meaning given
to such term in the Note.
(w) DZ FACILITY. The term "DZ Facility" shall mean that certain note
purchase facility to be provided by DZ Bank AG Deutsche
Zentral-Genossenschaftsbank, as agent for Autobahn Funding Company, LLC ("DZ")
to Borrower, on the terms outlined in the DZ Letter Agreement, dated December
12, 2001, as supplemented by that certain letter agreement by and between
Borrower and DZ dated February 7, 2002, and attached hereto as Exhibit G
(collectively, the "DZ LETTER AGREEMENT") and evidenced by the documents listed
on Schedule 1.1(w) hereto (the "DZ DOCUMENTS").
(x) DIVISION OR COMMISSION. The governmental authority of each state in
which a Resort is located, having jurisdiction over the establishment and
operation of the Resort in question and the sale of Intervals at such Resort.
(y) EBITDA. The term 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), (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.
(z) EFFECTIVE ADVANCE RATE. The term "Effective Advance Rate" shall
mean the aggregate outstanding principal balance of the Revolving Loan Component
and the Term Loan Component divided by the aggregate outstanding principal
balance of all Eligible Notes Receivable pledged to Agent hereunder. The
Effective Advance Rate shall at no time exceed 95% (the "Maximum Effective
Advance Rate"). In addition, the Effective Advance Rate determined with respect
to the aggregate of the Loan, the Additional Credit Facility and the Tranche C
Facility (collectively "TFC's Facilities") shall at no time exceed 95% of the
aggregate outstanding principal balance of all Eligible Notes Receivable pledged
to TFC, as agent or lender as applicable, under TFC's Facilities.
(aa) EFFECTIVE DATE. The term "Effective Date" shall have the meaning
given in Section 14.1 hereof.
(bb) ELIGIBLE NOTES RECEIVABLE. Those Pledged Notes Receivable which
satisfy each of the following criteria:
(i) Borrower shall be the sole payee;
(ii) it arises from a bona fide sale by Borrower of one or
more Intervals;
(iii) 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;
(iv) it is secured by a Mortgage on the purchased Interval;
(v) principal and interest payments on it are payable to
Borrower in legal tender of the United States;
(vi) payments of principal and interest on it are payable in
equal monthly installments;
(vii) it shall have an original term of no more than one
hundred twenty (120) months;
(viii) 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 each Interval, and Purchaser
shall have received no cash or other rebates of any kind;
(ix) the average number of monthly payments made by all
Purchasers pursuant to all Eligible Notes Receivable pledged
hereunder shall at all times be at least seven (7) monthly
payments;
(x) no monthly installment is more than thirty (30) days
contractually past due at the time of an Advance in respect of
such Eligible Note Receivable, or more than sixty (60) days
contractually past due at any time;
(xi) the rate of interest payable on the unpaid balance is at
least the rate required so that when the Advance is made in
respect of such Eligible Note Receivable the average interest
rate on all Eligible Notes Receivable in respect of which
Advances are outstanding shall not be less than twelve and
one-half percent (12.5%) per annum at any time;
(xii) Purchaser of the related Interval has immediate access,
for the timeshare "unit week" related to such purchase, to the
Interval described in the Mortgage securing such Eligible Note
Receivable, which Interval 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;
(xiii) neither Purchaser of the related Interval or any other
maker of the Note is an Affiliate of, or related to, or
employed by Borrower;
(xiv) Purchaser or other maker has no claim against Borrower
and no defense, set-off or counterclaim with respect to the
Note Receivable;
(xv) the maximum remaining principal balance of any such Note
Receivable shall not exceed $25,000 and the total maximum
remaining principal balance of the Notes Receivable executed
by any one Purchaser or other maker shall not exceed $25,000
in the aggregate (or such greater amount as may be approved in
writing in advance by Agent);
(xvi) it is executed by a U.S. or Canadian resident; provided,
however, that no more than ten percent (10%) of the
outstanding principal balance of all Eligible Notes Receivable
shall at any time be comprised of Notes Receivable executed by
Canadian residents, and, to the extent such outstanding
principal balance of such Notes exceeds ten percent (10%),
they shall not be considered Eligible Notes Receivable;
(xvii) the original of such Note Receivable has been endorsed
to Agent and delivered to Agent 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; and
(xviii) 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.
(xix) If the loan is a newly originated Eligible 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; and
(3) any new upgraded Note Receivable involving a
prior Eligible Note Receivable shall only be included as part
of the Borrowing Base if 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.
Notwithstanding anything herein to the contrary, Lenders shall be under
no obligation to make Advances in respect of:
(i) Crown Resorts Notes Receivable (i.e. Notes Receivable
relating to intervals at the Crown Resorts listed on Schedule
4.5(c)(iii)) if Advances have already been made under this
Loan, the Additional Credit Facility and/or the Tranche C
Facility, in total, in respect of 681 Crown Resorts Notes
Receivable, exclusive of [x] Notes Receivable relating to
intervals at the Quail Hollow Resort and [z] any other Crown
Resort Notes Receivable for which Borrower shall have
delivered to Agent an acceptable Mortgagee Title Insurance
Policy insuring the Mortgage securing such Crown Resort Note
Receivable; and
(ii) Notes Receivable from Oak N' Spruce Resort if any such
Advance,
together with any prior Advances made in respect of Notes
Receivable from Oak N' Spruce Resort under this Loan
Agreement, the Additional Credit Facility, the Tranche C
Facility and/or the Inventory Loan would exceed, in the
aggregate, $32,000,000.00.
(cc) ENCUMBERED INTERVALS. The Intervals subject to the Mortgages.
(dd) ENVIRONMENTAL LAWS. Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time ("CERCLA"),
the Resource Conservation and Recovery Act of 1976, as amended from time to time
("RCRA"), 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 or any of the Land 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.
(ee) ENVIRONMENTAL INDEMNIFICATION AGREEMENT. The term "Environmental
Indemnification Agreement" shall mean the Environmental Indemnification
Agreement, in the form attached as Exhibit A, to be made by Borrower to Lenders
pursuant to this Agreement, as the same may be amended from time to time.
(ff) EURODOLLAR BUSINESS DAY. Eurodollar Business Day shall mean any
day on which commercial banks are open for international business (including
dealings in dollar deposits) in London, England.
(gg) EXCHANGE COMPANY. Resort Condominiums International, Inc. ("RCI").
(hh) EVENT OF DEFAULT. Defined in Section 8.1 of this Agreement.
(ii) FACILITY FEE. The term "Facility Fee" shall mean the facility fee
set forth in the Fee Letter, which shall be payable in accordance with Section
2.7.
(jj) FEE LETTER. The term "Fee Letter" shall mean that certain fee
letter dated March 28,
2001, describing the Facility Fee.
(kk) FINAL MATURITY DATE. The term "Final Maturity Date" shall mean,
with respect to the Revolving Loan Component Note the earlier of (a) March 31,
2007 or (b) the weighted average maturity date of the Pledged Notes Receivable
pledged as Collateral as of the end of the Revolving Loan Term, as determined by
the Agent in its reasonable discretion, and with respect to the Term Loan
Component Note, March 31, 2007.
(ll) FINANCIAL STATEMENTS. The tax returns and balance sheets and
statements of income and expense of Borrower, and the related notes and
schedules delivered by Borrower to Lenders prior to the date of this Agreement
(the "CLOSING DATE") and provided for in Section 4.5(c) of this Agreement; and
the monthly, quarterly and annual financial statements and reports required to
be provided to Lenders pursuant to Section 7.1(h) (i), (ii) and (iii).
(mm) FORBEARANCE AGREEMENT. The term "Forbearance Agreement" shall mean
that certain Forbearance Agreement dated April 6, 2001, by and among Borrower
and Agent, as amended from time to time.
(nn) FORBEARANCE TERMINATION EVENT. The term "Forbearance Termination
Event" shall have the same meaning as the term "Termination Event" described in
the Forbearance Agreement.
(oo) GAAP. 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.
(pp) HAZARDOUS MATERIALS. "Hazardous substances," "hazardous waste" or
"hazardous constituents," "toxic substances", or "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.
(qq) ▇▇▇▇▇▇ FACILITY. The term "▇▇▇▇▇▇ Facility" shall mean, singly and
collectively, those certain credit facilities provided by ▇▇▇▇▇▇ Financial
Corporation ("▇▇▇▇▇▇") to Borrower pursuant to the documents listed on Schedule
1.1 (qq) hereto (the "▇▇▇▇▇▇ DOCUMENTS").
(rr) INELIGIBLE NOTE PORTFOLIO. The term "Ineligible Note Portfolio"
shall mean certain of Borrower's Notes Receivable and Mortgages which are not
currently pledged to any other Person, which are listed in Exhibit K attached
hereto and which shall be held by Borrower, as agent for and on behalf of each
Lender, unless and until an Event of Default shall occur, in which case the
Ineligible Note Portfolio shall be delivered to Agent in accordance with Section
3.2 hereof.
(ss) INTEREST RATE. The Interest Rate on the Revolving Loan Component
Note shall be a variable rate, adjusted as of each LIBOR Determination Date,
equal to the sum of LIBOR,
determined as of each LIBOR Determination Date, plus three percent (3%) per
annum, provided, however, that at no time shall the Interest Rate on the
Revolving Loan Component Note be less than six percent (6%) per annum. The
Interest Rate with respect to the Term Loan Component Note shall be a fixed rate
of interest equal to eight percent (8%) per annum.
(tt) INTERVAL. With respect to each Resort the undivided fractional fee
interval ownership interest as a tenant-in-common (sometime referred to in the
Timeshare Documents as a 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 in and to 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 in and to 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.
(uu) INVENTORY LOAN. The term "Inventory Loan" shall mean that certain
$10,000,000 time share interval inventory loan provided by TFC to Borrower
pursuant to that certain Loan and Security Agreement dated December 16, 1999 by
and between TFC and Borrower, as amended by the First Amendment to Loan and
Security Agreement dated April 17, 2001 and as further amended by the Second
Amendment to Loan and Security Agreement dated of even date herewith (the
"INVENTORY LOAN AGREEMENT").
(vv) LAND. The term "Land" shall mean the real property described in
Schedule 1.1(vv) hereof.
(ww) LAND MORTGAGE OR LAND MORTGAGES. The term "Land Mortgage" or "Land
Mortgages" shall mean singly and collectively, a properly recorded, first
priority mortgage, deed of trust, deed to secure debt, assignment of beneficial
interest or other security instrument encumbering all of the right, title and
interest of Borrower in the Land and securing the Loan, as modified and amended
by mortgage modifications, in the form attached hereto as Exhibit A.
(xx) LIEN. 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.
(yy) LIBOR shall mean, with respect to any LIBOR Rate Period, the rate
per annum
(rounded upwards, if necessary, to the nearest one-sixteenth (1/16th) of one
percent (1%)) reported at 11:00 a.m. London time on the first day of each LIBOR
Rate Period (or if such date is not a Eurodollar Business Day, the immediately
preceding Eurodollar Business Day) (such date, the "LIBOR DETERMINATION DATE"),
on Dow ▇▇▇▇▇ Telerate Service Page 3750 (British Bankers Association Settlement
Rate) as the non-reserve adjusted London Interbank Offered Rate for U.S. dollar
deposits having a ninety (90) day term (or on such other page as may replace
said Page 3750 on that service or such other service or services as may be
nominated by the British Bankers Association for the purpose of displaying such
rate, all as determined by Agent in its sole but good faith discretion). In the
event that (i) more than one such LIBOR is provided, the average of such rates
shall apply, or (ii) no such LIBOR is published, then LIBOR shall be determined
from such comparable financial reporting company as Agent in its sole but good
faith discretion shall determine. LIBOR for any LIBOR Rate Period shall be
adjusted from time to time by increasing the rate thereof to compensate Agent
and any Lender for any aggregate reserve requirements (including, without
limitation, all basic, supplemental, marginal and other reserve requirements and
taking into account any transitional adjustments or other scheduled changes in
reserve requirements during any LIBOR Rate Period) which are required to be
maintained by Agent or any Lender with respect to "Eurocurrency Liabilities" (as
presently defined in Regulation D of the Board of Governors of the Federal
Reserve System) of the same term under Regulation D, or any other regulations of
a Governmental Authority having jurisdiction over Agent or any Lender of similar
effect.
(zz) LIBOR RATE PERIOD shall mean each successive ninety (90) day
period during the Term. The initial LIBOR Rate Period shall commence on the date
of the first Advance hereunder (or if such day is not a Eurodollar Business Day,
the immediately preceding Eurodollar Business Day) and shall terminate on a date
which is ninety days thereafter (or if such day is not a Eurodollar Business
Day, the immediately preceding Eurodollar Business Day). Each LIBOR Rate Period
after the initial LIBOR Rate Period shall commence on the first Eurodollar
Business Day immediately following the expiration of the immediately preceding
LIBOR Rate Period and shall terminate ninety days thereafter (or if such day is
not a Eurodollar Business Day, the immediately preceding Eurodollar Business
Day).
(aaa) LOAN OR LOANS. The terms "Loan" and "Loans" mean, as the context
requires, singly each loan and collectively all loans made by TFC to Borrower
prior to the date hereof pursuant to the Original Loan Agreement. The term
"Loan" shall also mean, as the context requires, collectively all Loans made by
all Lenders to Borrower hereunder. From and after the Effective Date, the Loan
shall consist of the Revolving Loan Component in the maximum amount of
$56,104,200.00 and the Term Loan Component in the maximum amount of
$14,895,800.00, which amounts shall be repaid as provided in Section 2.4 hereof.
Notwithstanding the foregoing, in the event that TFC shall elect to fund any
portion of the Loan without additional Lenders, the terms "Loan" and "Loans"
mean singly each loan and collectively all loans previously made pursuant to the
Original Loan Agreement and to be made by TFC to Borrower pursuant to this
Agreement, subject to the limitations set forth in Section 2.9 hereof.
(bbb) LOAN DOCUMENTS. 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.
(i) THIS AGREEMENT;
(ii) THE ORIGINAL LOAN AGREEMENT;
(iii) THE REVOLVING LOAN COMPONENT NOTE;
(iv) THE TERM LOAN COMPONENT NOTE;
(v) THE ENVIRONMENTAL INDEMNIFICATION AGREEMENT;
(vi) THE ASSIGNMENT OF NOTES RECEIVABLE AND MORTGAGES;
(vii) BORROWER'S CERTIFICATE AND REQUEST FOR ADVANCE;
(viii) THE LOCKBOX AGREEMENT;
(ix) THE LAND MORTGAGE;
(x) THE ADDITIONAL RESORT COLLATERAL MORTGAGES;
(xi) THE ADDITIONAL RESORT COLLATERAL ASSIGNMENT;
(xii) THE STOCK PLEDGE AGREEMENT;
(xiii) ASSIGNMENT OF MANAGEMENT AGREEMENTS;
(xiv) THE STANDBY MANAGEMENT AGREEMENT ASSIGNMENT;
(xv) THE STANDBY SERVICING AGREEMENT ASSIGNMENT;
(xvi) THE ASSIGNMENT OF MORTGAGES;
(xvii) FINANCING STATEMENTS; 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
(xviii) 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, as such agreements, documents,
instruments or certificates may be hereafter amended, renewed,
extended, restated or supplemented from time to time.
(ccc) LOAN YEAR. The period from the date that TFC determines in its
sole discretion that all conditions set forth in Section 4 hereof have been
satisfied, which date shall not be later than May 31, 2002, through March 31,
2003 and each twelve (12) calendar month period thereafter.
(ddd) LOCKBOX AGENT. The ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ 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.
(eee) LOCKBOX AGREEMENT. The Lockbox and Servicing Agreement, dated as
of December 16, 1999, 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.
(fff) MARKETING AND SALES EXPENSES. Shall mean all promotion, lead
generation, sales commissions and all other marketing expenses incurred or paid
by Borrower pursuant to any marketing agreements or otherwise.
(ggg) MANDATORY PREPAYMENT. Any prepayment required by Sections 2.4(a),
2.4(c), 2.4(d), 2.4(e) and 2.5(b) of this Agreement.
(hhh) MORTGAGE. 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 Common
Elements, and related or appurtenant easement, access and use rights and
benefits.
(iii) NET SECURITIZATION CASH FLOW. All right, title and interest of
Silverleaf Finance I, Inc., a wholly owned subsidiary of Borrower, in any excess
cash flow derived from the Notes Receivable sold by Silverleaf Finance I, Inc.
to DZ pursuant to the DZ Documents.
(jjj) NOTE. Singly and collectively, the Revolving Loan Component Note
and the Term Loan Component Note.
(kkk) NOTE RECEIVABLE. A promissory note executed in favor of Borrower
in connection with a Purchaser's acquisition of an Interval.
(lll) OBLIGATIONS. All amounts due or becoming due to each Lender in
respect of the Loan or Loans under any of the Loan Documents, the Tranche C
Facility, the Additional Credit
Facility and the Inventory Loan, 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 a Lender or advanced to or on behalf of Borrower by a Lender pursuant to any
of the Loan Documents, and the prompt and complete payment and performance by
Borrower of all obligations, indebtedness and liabilities pursuant to this
Agreement or any of the Loan Documents or otherwise
(mmm) OPERATING CONTRACT OR OPERATING CONTRACTS. As defined in Section
6.20.
(nnn) OPERATING EXPENSES. Shall mean the total of all expenditures,
computed in accordance with Generally Accepted Accounting Principles, of
whatever kind relating to the ownership, operation, maintenance and management
of the Resorts that are incurred on a regular monthly or other periodic basis,
including, without limitation, utilities, ordinary and capital repairs and
maintenance, insurance premiums, license fees, property taxes and assessments,
management fees, payroll and related taxes, computer processing charges,
operational equipment or other lease payments as approved by Agent, and other
similar costs.
(ooo) PARTICIPANT. Participant shall mean, singly and collectively, any
bank or other entity, which is indirectly or directly funding any Lender with
respect to the Loan, in whole or in part, including, without limitation, any
direct or indirect assignee of, or participant in, the Loan.
(ppp) PAYMENT AUTHORIZATION AGREEMENT. Pre-authorized electronic debit
agreement by Purchaser for payment of a Note Receivable.
(qqq) PERSON. An individual, partnership, corporation, limited
liability company, trust, unincorporated organization, other entity, or a
government or agency or political subdivision thereof.
(rrr) PLEDGED NOTES RECEIVABLE. 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, including an Ineligible Note Receivable.
(sss) PROPERTY OR PROPERTIES. Any interest in any kind of property or
asset, whether real, personal or mixed, tangible or intangible.
(ttt) PRIME RATE. The highest prime rate of interest from time to time
announced or published in the Money Rates column of the Wall Street Journal
(Eastern Edition) (the "WSJ"). In the event that the prime rate announced or
published in the WSJ shall no longer be available, due to the nonexistence of
the WSJ or the WSJ's failure to publish or announce a prime rate, then the Prime
Rate shall be the highest prime rate published by a major money center bank
selected by Agent.
(uuu) PRO RATA PERCENTAGE. The applicable percentage of the Loan that
each Lender has agreed to make to Borrower pursuant to this Agreement.
(vvv) PURCHASE PRICE. 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.
(www) PURCHASER. Any Person who purchases one or more Intervals.
(xxx) RESORT OR RESORTS (ALSO "ELIGIBLE RESORT" OR "ELIGIBLE RESORTS").
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; (L) Silverleaf's Seaside Resort, Galveston County, Texas; (M) Tansi
Resort-Hiawatha Manor, Cumberland County, Tennessee; (N) Tansi Resort-Hiawatha
Manor I, Cumberland County, Tennessee and (O) Tansi Resort-Hiawatha Manor West,
Cumberland County, Tennessee (also sometimes individually and collectively
referred to herein as the "Existing Resorts") and (ii) subject to Agent's prior
written approval and satisfaction by Borrower of the conditions precedent set
forth in Sections 3.7 and 4.5 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.
(yyy) REVENUES. Shall mean all proceeds from the sale of Intervals,
regardless of whether such proceeds are in the form of cash or Notes Receivable.
(zzz) REVOLVING LOAN COMPONENT. Shall mean that portion of the Loan in
the amount of $56,104,200.00 on the terms and conditions described in Sections
2.1, 2.3, 2.4 and 2.5 hereof, which amount shall be repaid as provided in
Section 2.4 and Section 2.5(b) hereof.
(aaaa) REVOLVING LOAN COMPONENT NOTE. Shall mean that certain Amended
and Restated Note or Notes, in the form attached hereto as Exhibit A, dated the
date hereof, and executed and delivered by Borrower to Agent, as agent on behalf
of each Lender (subject to Section 2.1(d) hereof) evidencing the Revolving Loan
Component.
(bbbb) REVOLVING LOAN TERM. Shall mean the period commencing on the
Effective Date and ending on March 31,
2004.
(cccc) SECURITY. Shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
(dddd) SERVICING AGENT. Agent'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: (i) an Event of Default
shall have occurred and Agent replaces Borrower as Servicing Agent as provided
in Section 9.1(i) or (ii) Agent elects to appoint the Standby Servicer in
accordance with Section 10.14 hereof.
(eeee) SILVERLEAF CLUB. Shall mean Silverleaf Club, a Texas non-profit
corporation.
(ffff) INTENTIONALLY OMITTED.
(gggg) INTENTIONALLY OMITTED.
(hhhh) STOCK PLEDGE AGREEMENT. Shall mean the agreement in the form
attached hereto as Exhibit A, pursuant to which all issued and outstanding
shares of Silverleaf Finance I, Inc.'s capital stock and all right, title and
interest in such shares, all certificates, instruments or other documents
evidencing or representing the same and all dividends and distributions
therefrom, including dividends and distributions paid in stock (the "SILVERLEAF
FINANCE I, INC. STOCK") are pledged to Agent, as agent for each Lender, as
security for the Loan.
(iiii) SOVEREIGN FACILITY. The term "Sovereign Facility" shall mean
that certain credit facility provided by Sovereign Bank ("SOVEREIGN") to
Borrower pursuant to the documents listed on Schedule 1.1(iiii) hereto (the
"SOVEREIGN DOCUMENTS").
(jjjj) STANDBY MANAGER. Shall mean the Person selected by Borrower, and
acceptable to Agent, in its sole discretion, to act as standby manager of
Borrower's Resorts in accordance with this Agreement. Subject to the review and
approval of the Standby Management Agreement by Agent, in its sole discretion,
Agent hereby approves J & J Limited, Inc. as the initial Standby Manager.
(kkkk) STANDBY MANAGEMENT AGREEMENT. Shall mean the agreement to be
entered into between the Standby Manager and Borrower providing for the
management of Borrower's Resorts on the occurrence of an Event of Default
hereunder.
(llll) STANDBY MANAGEMENT AGREEMENT ASSIGNMENT. Shall mean the
assignment, in the form attached hereto as Exhibit A, by Borrower to Agent, as
agent for each Lender, of all of Borrower's rights under the Standby Management
Agreement.
(mmmm) STANDBY SERVICER. Shall mean the Person selected by Agent to act
as standby servicer in accordance with
this Agreement. The current Standby Servicer is Concord Servicing Corporation.
(nnnn) STANDBY SERVICING AGREEMENT. Shall mean the agreement pursuant
to which the
Standby Servicer shall provide servicing functions with respect to the Pledged
Notes Receivable upon the occurrence of an Event of Default hereunder in
accordance with Sections 9.1(i) and 10.14 hereof.
(oooo) STANDBY SERVICING AGREEMENT ASSIGNMENT. Shall mean the
assignment, in the form attached hereto as Exhibit A, pursuant to which Borrower
assigns to Agent, as agent for each Lender, all of Borrower's rights under the
Standby Servicing Agreement.
(pppp) SURVEY. A plat or survey of the Resort, the Land and that
portion of the Additional Resort Collateral constituting real property, prepared
by a licensed surveyor acceptable to Agent and in a form acceptable to Agent.
(qqqq) TERM. With respect to the Revolving Loan Component, a period
beginning on the Effective Date and ending on the Final Maturity Date. With
respect to the Term Loan Component, a period of five (5) years from the
Effective Date.
(rrrr) TERM LOAN COMPONENT. Shall mean that portion of the Loan in the
amount of $14,895,800.00 on the terms and conditions set forth in Sections 2.2,
2.3, 2.4 and 2.5 hereof, which amount shall be repaid as provided in Section 2.4
and Section 2.5(b) hereof.
(ssss) TERM LOAN COMPONENT NOTE. Shall mean that Secured Promissory
Note or Notes, in the form attached hereto as Exhibit A, dated the date hereof,
and executed and delivered by Borrower to Agent, as agent on behalf of each
Lender (subject to Section 2.2 hereof) evidencing the Term Loan Component.
(tttt) INTENTIONALLY OMITTED.
(uuuu) TIMESHARE ACT. Any statute, act, regulation, ordinance, rule or
law applicable to the establishment and operation of the Resorts and the sales
of the Intervals.
(vvvv) TIMESHARE DOCUMENTS. Any registration statement required under
any Timeshare Act approving the establishment and operation of the Resorts and
the sales of Intervals.
(wwww) TIMESHARE OWNERS' ASSOCIATION. With respect to each Resort, the
applicable not-for-profit corporations described on Schedule 1.1(wwww).
(xxxx) TANGIBLE NET WORTH. 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, plus
(ii) to the extent not otherwise included in such consolidated net worth,
unsecured subordinated debt of such Person and its consolidated subsidiaries,
the terms and conditions of which are reasonably satisfactory to Agent, minus
(iii) 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 Effective 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.
(yyyy) TOTAL INTEREST EXPENSE. 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 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.
(zzzz) INTENTIONALLY OMITTED.
(aaaaa) TRANCHE C FACILITY. The term "Tranche C Facility" shall mean
that certain $10,200,000 credit facility provided by TFC to Borrower pursuant to
that certain Loan And Security Agreement dated April 17, 2001 (the "TRANCHE C
LOAN AGREEMENT") by and between Borrower and TFC, as amended by a First
Amendment to Loan and Security Agreement of even date herewith.
(bbbbb) TRANSFER ACCOUNT. The account established by Agent, as
described in Schedule B hereto, to which all Loans by Lenders will be made.
(ccccc) TAX REFUND. The term "Tax Refund" means that certain corporate
tax refund of Borrower for the 1998 and 1999 tax years in the estimated amount
of $5,000,000.00.
(ddddd) INTENTIONALLY OMITTED.
(eeeee) UCC FINANCING STATEMENTS. The UCC-1 Financing Statements,
naming Borrower as debtor and Agent as secured party on behalf of Lenders,
heretofore or hereafter filed in connection with the Loans and all amendments
thereto.
(fffff) UNIT. 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 Common Elements and 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.
(ggggg) VOLUNTARY PREPAYMENT. Any voluntary prepayment of the Loan
permitted to be made by Borrower under the terms of this Agreement.
SECTION 2 -- THE LOAN
2.1 REVOLVING LOAN COMPONENT AND LENDING LIMITS.
(a) REVOLVING LOAN COMPONENT. Upon the terms and subject to the
conditions set forth in this Agreement, each Lender agrees severally, at any
time and from time to time during the Revolving Loan Term, to make a loan or
loans to Borrower, and Borrower may borrow, repay and reborrow during the
Revolving Loan Term, with respect to the Revolving Loan Component only, in an
aggregate amount not to exceed at any time the lesser of: (i) each Lender's Pro
Rata Percentage of the amount of the Borrowing Base or (ii) the lending limits
set forth in section 2.1(b) hereof. Notwithstanding anything herein to the
contrary, the aggregate balance of all Advances, shall not exceed $63,022,000.00
less the aggregate outstanding principal balance of the Term Loan Component from
time to time (the "MAXIMUM AVAILABLE AMOUNT"). Borrower's right to receive
Advances hereunder shall also be subject to the terms and conditions set forth
in that certain Intercreditor Agreement between Lender, Borrower, ▇▇▇▇▇▇ and
Sovereign dated of even date herewith. Borrower acknowledges, confirms and
agrees that TFC shall have the right to allocate any request for an Advance
hereunder to this Loan, the Additional Credit Facility and/or the Tranche C
Facility in such manner as TFC may elect in its sole and absolute discretion.
Notwithstanding anything herein to the contrary, Borrower acknowledges, confirms
and agrees that it shall not be entitled to receive, nor shall any Lender be
required to make, any Advance if and to the extent that: (i) Borrower has failed
to substantially adhere to the Business Plan, including the Senior Lender
Advance Schedule, as determined by Agent in its sole and absolute discretion; or
(ii) the most recent weekly flash report delivered in accordance with Section
7.1(h)(xii) hereof (a "WEEKLY FLASH REPORT"), indicates that Borrower has in
excess of five million dollars ($5,000,000) in available unrestricted cash.
Borrower acknowledges, agrees and confirms that as provided in the
Business Plan, the Commitment and the Maximum Available Amount shall be reduced
to the following amounts: (i) on and after March 31, 2004 - approximately
$48,657,000, less the outstanding principal balance of the Term Loan Component
from time to time; (ii) on and after March 31, 2005 - approximately $34,755,000,
less the outstanding principal balance of the Term Loan Component from time to
time; and (iii) on and after March 31, 2006 - approximately $32,438,000, less
the outstanding principal balance of the Term Loan Component from time to time.
On or after the Effective Date, the aggregate amount of the Commitment
provided hereunder, under the Additional Credit Facility and the Tranche C
Facility shall be equal to $136,000,000.00 less the aggregate principal balance
of the Term Loan Components hereunder, under the Additional Credit Facility and
under the Tranche C Facility. Borrower further acknowledges, confirms and agrees
that the aggregate Commitment under this Agreement, the Additional Credit
Facility and the Tranche C Facility shall be reduced to the following amounts:
(i) after March 31, 2004 - $105,000,000.00, less the aggregate outstanding
principal balance of the Term Loan Component of each such facility from time to
time; (ii) after March 31, 2005 - $75,000,000.00, less the aggregate outstanding
principal balance of the Term Loan Component of each such facility from time to
time; and (iii) after March 31, 2006 - $70,000,000.00, less the aggregate
outstanding principal balance of the Term Loan Component of each such facility
from time to time.
(b) LENDING LIMITS. Borrower acknowledges, agrees and confirms that the
obligations of all Lenders, including TFC, to make Loans under this Agreement to
Borrower is limited to the lesser of: (i) the Borrowing Base or (ii) the Maximum
Available Amount. Borrower further acknowledges, agrees and confirms that the
obligation of each Lender, including TFC, 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 Pro
Rata Percentage of the Maximum Available Amount. Notwithstanding anything
heretofore to the contrary, Borrower acknowledges, agrees and confirms that
Lenders shall have no obligation to make any Advance, nor shall Borrower be
entitled to receive any Advance, if at any time, (x) the aggregate outstanding
principal balance of the Revolving Loan Component and the Term Loan Component
divided by the aggregate unpaid principal balance of all Eligible Notes
Receivable pledged to Agent hereunder is, or would be as a result of any
Advance, be in excess of the Maximum Effective Advance Rate, (y) Borrower has
failed to substantially adhere to the Business Plan, including the Senior Lender
Advance Schedule, as determined by Agent in its sole and absolute discretion; or
(z) the most recent Weekly Flash Report indicates that Borrower has in excess of
five million dollars ($5,000,000) in available unrestricted cash. Borrower
acknowledges, agrees and confirms that Lenders' obligation to Borrower and
Borrower's right to borrow under this Agreement is subject to the satisfaction
of the conditions set forth in Section 4 hereof on or before May 31, 2002. Until
such time as Agent determines that the conditions set forth in Section 4 hereof
have been satisfied, all of Borrower's rights with respect to Advances shall be
governed by and construed in accordance with the terms and conditions of the
Original Loan Agreement, as modified by the Forbearance Agreement and the letter
agreement dated April 15, 2002 (the "EXTENSION LETTER"). If the conditions set
forth in Section 4 are not satisfied on or before May 31, 2002, then this
Agreement, and the respective rights and obligations of the parties hereto,
shall be null and void AB INITIO and of no further force and effect and the
respective rights and obligations of Borrower, TFC and the other Lenders shall
be governed by the terms and conditions of the Original Loan Agreement, as
modified by the Forbearance Agreement. Anything contained in this Section 2.1(b)
to the contrary notwithstanding, the Maximum Available Amount may also be
reduced in accordance with Section 13.11 hereof.
(c) MAKING OF LOANS. Each Loan under the Revolving Loan Component 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, including TFC, 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, including TFC,
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, other than TFC, execute and deliver this Agreement,
then (A) such additional Lenders shall be deemed to have simultaneously
purchased from each of the other Lenders which has 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.
(d) NOTE EVIDENCING BORROWER'S OBLIGATIONS. Borrower acknowledges,
agrees and confirms that as of the date hereof the outstanding principal balance
of the Revolving Loan Component is $56,104,200.00, which amount shall be repaid
as provided in Section 2.4 hereof. Borrower's obligations to pay the principal
of and interest on the Loan or Loans made by each Lender under the Revolving
Loan Component shall be evidenced by a Revolving Loan Component Note to Agent,
as agent for each Lender, which Note shall be dated as of the date hereof and be
in the stated principal amount of the Revolving Loan Component. The Note will
mature on the Final Maturity Date, bear interest as provided in Section 2.3
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 on the grid attached to the Note (or, alternatively, 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 grid or other 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 Revolving Loan Component
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 "Revolving Loan Component 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) in the form attached hereto as Exhibit B, setting
forth: (i) the total amount of the Advance requested by Borrower; (ii) the
aggregate amount of all Loans previously made by each respective Lender; (iii)
the outstanding principal balance of the Revolving Loan Component; (iv) the
outstanding principal balance of the Term Loan Component; (v) the current
Interest Rate as determined in accordance with Section 2.3 hereof; (vi) each
such Lender's Pro Rata Percentage of the requested Advance and (vii) the date on
which such Advance is to be made:
at the option of the Agent:
(ii) 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) an
updated borrowing base report (a "BORROWING BASE REPORT") in the form attached
as Exhibit L; 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
documents described in Section 2.1(e)(ii)(A) above: (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 Advances is provided in accordance with
Section 2.1(e)(i) 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 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 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)(ii) 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 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) ▇▇▇▇▇▇ AND SOVEREIGN OBLIGATION TO FUND. Notwithstanding anything
herein to the contrary, the obligation of each Lender to make any Advance under
this Agreement shall be subject to and conditioned upon both ▇▇▇▇▇▇ and
Sovereign each making advances to Borrower substantially in accordance with the
Business Plan, including the Senior Lender Advance Schedule, which Agent agrees
will be determined on a quarterly basis commencing April 1, 2002. Lenders shall
have no obligation to make any Advance hereunder in the event that either
Sovereign or ▇▇▇▇▇▇ terminates its respective facility or fails to make advances
as provided in the Business Plan, including the Senior Lender Advance Schedule,
which Agent agrees will be determined on a quarterly basis commencing April 1,
2002.
2.2 TERM LOAN COMPONENT. Borrower acknowledges, agrees and confirms
that as of the date hereof the outstanding principal balance of the Term Loan
Component is $14,895,800.00, which amount shall be repaid as provided in Section
2.4. Borrower further acknowledges, agrees and confirms that Borrower shall have
no right to re-borrow or borrow, nor shall Lenders have any obligation to make
any additional loan or loans to Borrower with respect to the Term Loan
Component. Borrower's obligation to repay the principal of and interest on the
Loan or Loans comprising the Term Loan Component shall be evidenced by a Term
Loan Component Note to Agent, as agent for each Lender, which Note shall be
dated as of the date hereof and be in the stated principal amount of the Term
Loan Component, increased by the Facility Fee. The Term Loan Component Note will
mature on the Final Maturity Date, bear interest as provided in Section 2.3 and
be otherwise entitled to the benefits of this Agreement. At the election of any
Lender, Borrower shall execute and deliver to such Lender, a Term Loan Component
Note in a stated principal amount equal to such Lender's Pro Rata Percentage of
the Loan, which 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 "Term Loan Component Note" as such term is used herein.
2.3 INTEREST RATE. From and after the Effective Date, with respect to
the Revolving Loan Component, including each Loan hereafter made pursuant to
Section 2.1(a) hereof, the Revolving Loan Component shall bear interest at the
Interest Rate applicable to the Revolving Loan Component as of the date funds
are received by Agent as provided in Section 2.1(f) through each Lender's
receipt of repayment of the Revolving Loan Component in accordance with Section
2.4 (if received by a Lender later than 1:00 p.m., Eastern Standard Time, then
interest accrual shall be through the next Business Day following such receipt).
From and after the Effective Date, the Term Loan Component shall bear interest
at the Interest Rate applicable to the Term Loan Component through each Lender's
receipt of payment of the Term Loan Component as provided in Section 2.4.
Immediately upon the occurrence of an Event of Default and after the Final
Maturity Date (if the Loan is not paid in full on the Final Maturity Date), at
Agent's election, in its sole discretion, the entire Loan will bear interest at
the Default Rate. Prior to the Effective Date, the Loan shall bear
interest as provided in the Original Agreement.
2.4 PAYMENTS. From and after the Effective Date, Borrower agrees
punctually to pay or cause to be paid to Agent, as agent for each Lender, all
principal and interest due under each Note in respect of the Loans. Borrower
shall make the following payments on the Loan:
(a) INITIAL LOAN PAYDOWN. On or before May 31, 2002, Borrower shall
make, from the proceeds of the DZ Facility, a payment on the Revolving Loan
Component in the amount of approximately $12,274,000.
(b) MONTHLY PAYMENTS. (1) Revolving Loan Component. 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 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 to 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") as provided in Section 2.8 hereof. Each Lender shall apply each
such payment in the following order: (i) to any interest accrued at the
applicable Default Rate on the Revolving Loan Component; (ii) then to interest
at the applicable Interest Rate on the Revolving Loan Component; and (iii) then
to principal on the Revolving Loan Component. 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. (2)
Term Loan Component. Borrower shall pay to Agent on or before the tenth day of
each month an amount equal to: (i) all interest accrued at the applicable
Default Rate on the Term Loan Component; plus (ii) all interest due and payable
as of the last day of the immediately preceding month; plus (iii) a principal
payment sufficient to amortize the Term Loan Component in full on the basis of a
twenty (20) year amortization schedule. In the event that Borrower fails to make
the payment in question, Agent may, at its option, on or before the tenth day of
each month, make an Advance with respect to the Revolving Loan Component and
apply such Advance to the payment of amounts due in respect of the Term Loan
Component as provided immediately above.
(c) MANDATORY TERM LOAN COMPONENT FUND UP PREPAYMENT. If and to the
extent that:
(i) at the end of each calendar quarter during the first two (2) years of the
Term following the Effective Date, commencing the calendar quarter ending June
30,2002 (x) the outstanding principal balance of all Loans made with respect to
the Revolving Loan Component is less than seventy percent (70%) of the then
outstanding principal balance of the Eligible Notes Receivable pledged to Agent
with respect to such Loans (such difference being hereinafter referred to as an
"AVAILABLE FUND-UP AMOUNT") and (y) provided Borrower has available unrestricted
cash of five million dollars ($5,000,000.00) or more as indicated in the most
recent Weekly Flash Report or (ii) at the end of each calendar quarter
commencing the calendar quarter ending June 30, 2004 (x) the outstanding
principal balance of all Loans made with respect to the Revolving Loan Component
is less than seventy-five percent (75%) of the then outstanding principal
balance of the Eligible Notes Receivable pledged to Agent with respect to such
Loans (such difference also being referred to as an "AVAILABLE FUND-UP AMOUNT")
and (y) provided Borrower has available unrestricted cash of five million
dollars ($5,000,000.00) or more as indicated in the most recent Weekly Flash
Report, then Borrower agrees that Agent may, on the last Business Day of each
such calendar quarter, make an Advance with respect to the Revolving Loan
Component in an amount equal to such Available Fund Up Amount and apply such
Advance to the repayment of the Term Loan Component as follows: (i) first to
interest at the applicable Default Rate; (ii) then to interest at the applicable
Interest Rate and (iii) then to reduction of principal of the Term Loan
Component until such time as the Term Loan Component is paid in full.
(d) FURTHER QUARTERLY PAYMENTS. If, at the end of any calendar quarter
commencing April 1, 2002, Borrower has available unrestricted cash exceeding
five million dollars ($5,000,000.00), as indicated on the most recent Weekly
Flash Report (the "ADDITIONAL AVAILABLE AMOUNT"), then Borrower agrees to repay
the Loan in an amount equal to such Additional Available Amount and such amount
will be applied as follows: (i) first to interest at the applicable Default
Rate; (ii) then to interest at the applicable Interest Rate; (iii) then to the
reduction of principal of the Term Loan Component until such time as the Term
Loan Component is paid in full and (iv) then to the repayment of the Revolving
Loan Component as provided in Section 2.4(b) above.
(e) LOAN BALANCE REDUCTION. Notwithstanding anything hereto to the
contrary, Borrower agrees that on and after March 31, 2004, the outstanding
principal balance of the Loan shall be reduced in substantial accordance with
the Business Plan.
(f) 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.
(g) PAYMENTS TO LENDER. Promptly upon receipt by Agent of any payment
from Borrower in accordance with this Section 2.4, and after payment of any
Collection Costs, Agent shall promptly wire transfer to each Lender as described
in Schedule C hereto, in immediately available funds, each such Lender's Pro
Rata Percentage of the payment in question.
Prior to the Effective Date, Borrower shall make payments as provided
in the Original Loan Agreement.
2.5 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. Borrower may repay the Loan, either in whole
or in part, at any time, provided that any such prepayment shall be in
increments of not less than $100,000.00.
(b) MANDATORY PREPAYMENTS. If at any time and for any reason: (i) the
outstanding unpaid principal balance of the Revolving Loan Component shall
exceed the Maximum Available Amount, as reduced in accordance with Section
2.1(a); (ii) the outstanding unpaid principal balance of the Revolving Loan
Component divided by the aggregate outstanding principal balance of all Eligible
Notes Receivable pledged to Agent hereunder shall exceed the Borrowing Base; or
(iii) the outstanding unpaid principal balance of both the Revolving Loan
Component and the Term Loan Component divided by the aggregate outstanding
principal balance of all Eligible Notes Receivable pledged to Agent hereunder
shall exceed the Maximum Effective Advance Rate (each an "EXCESS FUNDING") then,
within five (5) Business Days following Borrower's receipt of telecopied notice
from Agent of the occurrence of such excess or, absent such telecopied notice,
within fifteen (15) days after the end of the calendar month in which such
excess occurred: (x) In the case of an Excess Funding described in (i) above,
Borrower shall promptly repay the principal balance of the Revolving Loan
Component in an amount equal to such Excess Funding or (y) in the case of an
Excess Funding described in (ii) and (iii) above, Borrower shall prepay the
principal balance of the Term Loan Component (and if necessary the Revolving
Loan Component) in an amount equal to such Excess Funding. If Agent has
determined that Notes Receivable have been delivered to Agent and were included
in the Borrowing Base, which Notes Receivable did not or no longer qualify as
Eligible Notes Receivable ("INELIGIBLE NOTES RECEIVABLE"), provided that an
Excess Funding exists, Borrower shall substitute Eligible Notes Receivable for
such Ineligible Notes Receivable and thereby increase the aggregate principal
amount of Eligible Notes Receivable pledged to Agent as agent for Lenders so
that Excess Funding is eliminated. 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 of this Agreement
and shall be accompanied by a written certification of Borrower to the effect
that such additional Pledged Notes Receivable are Eligible Notes Receivable, and
that, giving effect to the pledge to Agent as agent for Lenders of such Eligible
Note Receivable: (i) the outstanding unpaid principal balance of the Revolving
Loan Component divided by the aggregate outstanding principal balance of all
Eligible Notes Receivable pledged to Agent hereunder is equal to or less than
the Borrowing Base and (ii) the outstanding unpaid principal balance of both the
Revolving Loan Component and the Term Loan Component divided by the aggregate
outstanding principal balance of all Eligible Notes Receivable pledged to Agent
hereunder is equal to or less than the Maximum Effective Advance Rate. If
Borrower elects to prepay the excess principal balance of the Loan pursuant to
this Section 2.5(b), no prepayment premium shall be payable in connection with
such prepayment.
(c) PREMIUMS. Subject to Section 2.6 hereof, no prepayment premium
shall be required in connection with any prepayment of the principal balance of
the Loan hereunder.
2.6 PAYMENT OF FUNDING LOSSES AND OTHER AMOUNTS RELATING TO LIBOR
CONTRACT, ETC.
(a) FUNDING LOSSES: BREAKING OF LIBOR CONTRACT, CHANGE IN LAW, ETC.
Borrower hereby agrees to pay to Agent on behalf of each Lender any amount
necessary to compensate any Lender for any losses or costs (including, without
limitation, the costs of breaking any "LIBOR" contract, if applicable, or
funding losses determined on the basis of Lender's reinvestment rate and the
interest rate thereon) (collectively, "FUNDING LOSSES") sustained by any Lender:
(i) if the Loan, or any portion hereof, is prepaid for any reason whatsoever on
any date other than the Final Maturity Date (including, without limitation, from
condemnation or insurance proceeds); (ii) upon the conversion of the interest
rate on the Loan to an interest rate based on the Prime Rate in accordance with
Section 2.6(b) hereof; (iii) as a consequence of the reduction of any amounts
received or receivable from Borrower, in either case, due to the introduction
of, or any change in, law or applicable regulation or treaty (including the
administration or interpretation thereof), whether or not having the force of
law, or due to the compliance by any Lender with any directive, whether or not
having the force of law, or request from any central bank or domestic or foreign
governmental authority, agency or instrumentality having jurisdiction; (iv) as a
consequence of the breaking of any LIBOR contract and/or (v) any other set of
circumstances not attributable to any Lender's acts. Payment of Funding Losses
hereunder shall be in addition to any obligation to pay any other amounts due
and owing under this Agreement or any other Loan Documents.
(b) CONVERSION TO INTEREST RATE BASED ON PRIME RATE. If Agent
determines (which determination shall be conclusive and binding upon Borrower,
absent manifest error) (i) that dollar deposits in an amount approximately equal
to the then outstanding principal balance of the Loan are not generally
available at such time in the London Interbank Market for deposits in
Eurodollars, (ii) that the rate at which such deposits are being offered will
not adequately and fairly reflect the cost to Lenders of maintaining the
Interest Rate based on LIBOR, or of funding the same in such market for such
Interest Accrual Period, due to circumstances affecting the London Interbank
Market generally, (iii) that reasonable means do not exist for ascertaining
LIBOR, (iv) that the Interest Rate based on LIBOR would be in excess of the
maximum interest rate which Borrower may by law pay, then, in any such event, or
(v) any LIBOR contract is broken as a result of the sale, pledge, refinancing or
securitization in bulk of Eligible Notes Receivable relating to the Resorts by
Borrower, Agent shall so notify Borrower and, as of the date of such
notification with respect to an event described in clauses (ii), (iv) or (v)
above, or as of the expiration of the applicable LIBOR Rate Period with respect
to an event described in clause (i) or (iii) above, interest shall accrue at a
rate equal to the Prime Rate plus a sufficient spread so that the resulting per
annum interest rate is approximately equal to what the rate would have been
based on LIBOR plus three percent (3.0%) per annum (but in no event less than
six percent (6.0%) per annum), which new rate shall apply until such time as the
situations described above are no longer in effect, or as otherwise provided
herein; provided, however, if the situation described in clause (ii) above
occurs, (x) Borrower shall have the option, to be exercised by written notice to
Agent, to pay to Agent on behalf of Lenders (in the manner reasonably required
by Agent) for such increased cost of maintaining the Interest Rate based on
LIBOR, and (y) if the same only affects a portion of the Loan, then only such
portion shall have interest accrue at a rate equal to the Prime Rate plus a
sufficient spread so that the resulting per annum interest rate is approximately
equal to what the rate would have been based on LIBOR plus three percent (3.0%)
per annum (but in no event less than six percent (6.0%) per
annum), and interest shall continue to accrue on the remaining portion at the
Interest Rate based on LIBOR.
(c) BACK-UP INTEREST RATE BASED ON PRIME RATE. If the introduction of,
or any change in, any law, regulation or treaty, or in the interpretation
thereof by any governmental authority charged with the administration or
interpretation thereof, shall make it unlawful for any Lender to maintain the
Interest Rate based on LIBOR with respect to the Loan, or any portion thereof,
or to fund the Loan, or any portion thereof, in Eurodollars in the London
Interbank Market, then, (i) the Loan (or such portion of the Loan) shall, with
respect to such Lender, thereafter bear interest at a rate equal to the Prime
Rate plus a sufficient spread so that the resulting per annum interest rate is
approximately equal to what the rate would have been based on LIBOR plus three
percent (3.0%) per annum (but in no event less than six percent (6.0%) per
annum), (unless the Default Rate shall be applicable), and (ii) Borrower shall
pay to Agent on behalf of any such Lender the amount of Funding Losses (if any)
incurred in connection with such conversion. Interest shall accrue at a rate
equal to the Prime Rate plus a sufficient spread so that the resulting per annum
interest rate is approximately equal to what the rate would have been based on
LIBOR plus three percent (3.0%) per annum (but in no event less than six percent
(6.0%) per annum), which new rate shall continue until such date, if any, as the
situation described in this Section 2.6(c) is no longer in effect.
(d) CAPITAL ADEQUACY EVENTS, ETC. If Agent shall have determined that
the applicability of any law, rule, regulation or guideline adopted pursuant to
or arising out of the July 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards", or the adoption of any other law,
rule, regulation or guideline (including, but not limited to, any United States
law, rule, regulation or guideline) regarding capital adequacy, or any change
becoming effective in any of the foregoing or in the enforcement or
interpretation or administration of any of the foregoing by any court or any
domestic or foreign governmental authority, central bank or comparable agency
charged with the enforcement or interpretation or administration thereof, or
compliance by any Lender, with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on the capital of any Lender or any Lender's holding company, as the case
may be, to a level below that which any Lender or its holding company, as the
case may be, could have achieved but for such applicability, adoption, change or
compliance (taking into consideration each Lender's or its holding company's, as
the case may be, policies with respect to capital adequacy) (the foregoing being
hereinafter referred to as "CAPITAL ADEQUACY EVENTS"), then, upon demand by
Agent, Borrower shall pay to Agent on behalf of any such Lender, from time to
time, such additional amount or amounts as will compensate any such Lender for
any such reduction suffered.
(e) PAYMENT OF AMOUNTS DUE UNDER SECTION 2.6. Any amount payable by
Borrower under Section 2.6(a) or 2.6(d) hereof shall be paid to Agent on behalf
of Lenders within five (5) days of receipt by Borrower of a certificate signed
by an officer of Agent setting forth the amount due and the basis for the
determination of such amount, which statement shall be conclusive and
binding upon Borrower, absent manifest error. Failure on the part of Agent to
demand payment from Borrower for any such amount attributable to any particular
period shall not constitute a waiver of Agent's or any Lender's right to demand
payment of such amount for any subsequent or prior period. Agent shall use
reasonable efforts to deliver to Borrower prompt notice of any event described
in Sections 2.6(a) or 2.6(d) hereof and of the amount to be paid under this
Section 2.6(e) as a result thereof; provided, however, any failure by Agent to
so notify Borrower shall not affect Borrower's obligation to make the payments
to be made under this Section 2.6(e) as a result thereof. All amounts which may
become due and payable by Borrower in accordance with the provisions of this
Section 2.6(e) shall constitute additional interest hereunder and shall be
secured by this Agreement and the other Loan Documents.
2.7 FACILITY FEE. Borrower acknowledges and agrees that a Facility Fee
in the amount set forth in the Fee Letter is due and payable exclusively to
Lenders. Borrower acknowledges, agrees and confirms that each Lender has earned
its respective Pro Rata Percentage of the Facility Fee notwithstanding whether
the Loan or any portion is funded and further agrees that the Facility Fee shall
be paid at closing from the proceeds of the Term Loan Component and is included
in the current outstanding principal balance of the Term Loan Component and
shall be repaid by Borrower to Lenders as part of the Term Loan Component Note.
2.8 PRO RATA TREATMENT. Each repayment of principal and interest on the
Revolving Loan Component and Term Loan Component 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 2.8 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.
2.9 MAXIMUM OBLIGATION OF TEXTRON FINANCIAL CORPORATION UNDER THE LOAN,
THE ADDITIONAL CREDIT FACILITY, THE TRANCHE C FACILITY AND THE INVENTORY LOAN.
Borrower acknowledges, agrees and confirms that notwithstanding anything to the
contrary herein, in any other Loan Document or in any document evidencing or
securing the Additional Credit Facility or the Tranche C Facility, TFC, as a
Lender, shall not be obligated to fund any Advance hereunder,
which when taken together with the loans or advances made by TFC to Borrower
under this Agreement, the Additional Credit Facility and the Tranche C Facility,
would cause the aggregate amount of such loans and advances by TFC to Borrower
to exceed a maximum aggregate amount of $50,200,000.00 prior to the Effective
Date and: (i) after the Effective Date and prior to March 31, 2004,
$44,567,000.00; (ii) after March 31, 2004 and prior to March 31, 2005,
$34,409,000.00; (iii) after March 31, 2005 and prior to March 31, 2006,
$24,577,000.00; and (iv) after March 31, 2006, $22,939,000.00. TFC's maximum
obligation under the Inventory Loan shall be $10,000,000.00 throughout the term
of the Inventory Loan.
2.10 SUSPENSION OF ADVANCES.
(a) SUSPENSION OF SALES. If any stay, order, cease and desist order,
injunction, temporary restraining order or similar judicial or nonjudicial
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 nonjudicial
sanction has been issued until the stay, order, cease and desist order,
injunction, temporary restraining order or similar judicial or nonjudicial
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 nonjudicial 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 2.10(b) hereto, Lender shall have no
obligation to make any Advances hereunder, unless within thirty (30) days prior
thereto Borrower provides Lender 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
as set forth on Schedule 2.10(b). Notwithstanding the foregoing, the makeup of
the Borrower's Board of Directors may be altered in accordance with the Bond
Holder Exchange Documents, provided that 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 Bond Holders.
(c) FAILURE TO ADHERE TO BUSINESS PLAN/DEFAULT OR EVENT OF DEFAULT.
Agent and Lenders shall not be obligated to fund any Advance hereunder if: (i)
Borrower shall fail to substantially adhere to the Business Plan (including the
Senior Lender Advance Schedule) as determined by Agent in its sole and absolute
discretion or (ii) a Default or Event of Default shall have occurred and be
continuing.
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 continuing
first priority security interest in and to the Collateral to further secure the
payment and performance of the Obligations. To further secure the payment and
performance of the Obligations, Borrower shall also execute and deliver to
Agent, as agent for each Lender: (i) the modifications to the Land Mortgages in
the applicable form attached hereto as Exhibit A, granting Agent, as agent for
each Lender, a first priority mortgage lien on the Land and (ii) the Additional
Resort Collateral Mortgages, in the applicable form attached hereto as Exhibit
A, granting Agent, as agent for each Lender, a first priority mortgage lien on
that portion of the Additional Resort Collateral consisting of real property. To
further secure the payment and performance of the Obligations, Borrower shall
further execute and deliver to Agent, as agent for each Lender: (1) the
Additional Resort Collateral Assignment, in the applicable form attached hereto
as Exhibit A, granting Agent, as agent for each Lender, a first priority
security interest on that portion of the Additional Resort Collateral consisting
of personal property; (2) the Stock Pledge Agreement, in the applicable form
attached hereto as Exhibit A, granting Agent, as agent for each Lender, a first
priority security interest in the Silverleaf Finance I, Inc. Stock; (3) the
Standby Management Agreement Assignment, in the applicable form attached hereto
as Exhibit A, assigning to Agent, as agent for each Lender, all of Borrower's
right, title and interest in the Standby Management Agreement Assignment; and
(4) the Standby Servicing Agreement Assignment, in the applicable form attached
hereto as Exhibit A, assigning to Agent, as agent for each Lender, all of
Borrower's right, title and interest in the Standby Servicing Agreement. 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
Lenders 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 one of Lenders 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.
Notwithstanding anything herein to the contrary, Borrower acknowledges
and agrees as follows:
(a) The Revolving Loan Component shall be secured by:
(i) 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;
(ii) a first priority security interest in the Ineligible Note
Portfolio, the Mortgages with respect thereto and that portion
of the other Collateral related thereto;
(iii) a second priority security interest, subject only to the
security interest securing the Term Loan Component and the
Inventory Loan, in the Silverleaf Finance I, Inc. Stock and
the Additional Resort Collateral.
(b) The Term Loan Component shall be secured by:
(i) a first priority security interest in the Additional
Resort Collateral;
(ii) a first priority security interest in Borrower's
Silverleaf Finance I, Inc. Stock;
(iii) Intentionally Omitted;
(iv) a second priority security interest, subject only to the
security interest securing the Revolving Loan Component, 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; and
(v) second priority security interest, subject only to the
security interest securing the Revolving Loan Component, in
the Ineligible Note Portfolio, the Mortgages with respect
thereto and the other Collateral related thereto.
In addition to the foregoing, Borrower acknowledges, agrees and
confirms that the security interest granted to Agent, on behalf of Lenders, in
all other Collateral to secure the Loan, including the Land, the Standby
Management Agreement, the Standby Servicing Agreement and the other collateral
securing the ▇▇▇▇▇▇ Facility, the Sovereign Facility, the Additional Credit
Facility, the Tranche C Facility and the Inventory Loan shall be equal in
priority as between the Revolving Loan Component and the Term Loan Component
and, with respect to the collateral securing the ▇▇▇▇▇▇ Facility, the Sovereign
Facility, the Additional Credit Facility, the Tranche C Facility and the
Inventory Loan, subject only to the security interests securing such facilities.
For purposes hereof, the reference to "collateral securing the ▇▇▇▇▇▇ Facility"
and "collateral securing the Sovereign Facility" shall mean the Notes Receivable
and related Mortgages exclusively assigned to ▇▇▇▇▇▇ or Sovereign in connection
with an advance under their respective loan documents.
3.2 SECURITY INTEREST IN ALL PLEDGED NOTES RECEIVABLE. Notwithstanding
that Lenders may be obligated, subject to the conditions of the Loan Documents,
to make Advances only in respect of Eligible Notes Receivable pledged to Agent,
Lenders shall have a continuing security interest in all of the Pledged Notes
Receivable, including all Notes Receivable in the Ineligible Note Portfolio and
any Notes Receivable pledged to ▇▇▇▇▇▇ or Sovereign and Agent may, on behalf of
Lenders, collect all payments made under or in respect of all such Notes
Receivable, including,
without limitation, Eligible Notes Receivable that are or may become ineligible,
until any of the same may be released by Agent, if at all, pursuant to Section
12.10 or Section 7.2(a) below. Notwithstanding anything heretofore to the
contrary, unless and until an Event of Default shall occur, Borrower, as agent
for and on behalf of Lenders, shall retain possession of and collect all
payments under or in respect of all Notes Receivable in the Ineligible Note
Portfolio. By executing this Agreement, Borrower acknowledges and agrees that it
is holding such Notes Receivable as bailee and agent for the Agent. Borrower
shall hold and designate such Notes Receivable in a manner which clearly
indicates that they are being held by Borrower as bailee on behalf of Agent.
Upon the occurrence of an Event of Default, Borrower shall promptly deliver to
Agent, as agent for each Lender, Sovereign and ▇▇▇▇▇▇, all original Notes
Receivable comprising the Ineligible Note Portfolio and to the extent not
previously delivered to Agent, the documents listed in Section 5.1(b) hereof and
with respect thereto and after such Event of Default Agent shall have the right
to collect all proceeds therefrom and apply the same to payment of the
Obligations as set forth in Section 2.4(b) hereof.
To perfect the security interest of Agent, as agent for each Lender, in
the Ineligible Note Portfolio, Borrower agrees, subject to Agent's prior
approval, to execute and cause to be filed, at Borrower's sole cost and expense,
UCC-1 financing statement(s) with the appropriate state and local governmental
authorities as requested by Agent. Borrower also shall execute and deliver in
escrow to Agent, as agent and on behalf of each Lender, Sovereign and ▇▇▇▇▇▇, an
assignment of Mortgages in the form attached hereto as Exhibit A (the
"ASSIGNMENT OF MORTGAGES") and as approved by Agent, Sovereign and ▇▇▇▇▇▇ at
their sole and absolute discretion, assigning equally to each of Agent, as agent
for each Lender, ▇▇▇▇▇▇ and Sovereign, all of Borrower's rights, title and
interests in each and all of the Mortgages relating to the Notes Receivable in
the Ineligible Note Portfolio. Borrower further agrees to promptly execute and
deliver modifications or additional Assignments of Mortgages requested by Agent,
▇▇▇▇▇▇ and Sovereign in order to continue the security interests of Agent,
▇▇▇▇▇▇ and Sovereign in the Ineligible Note Portfolio. Borrower acknowledges and
agrees that upon an Event of Default, Agent, or a designee as designated by
Agent, ▇▇▇▇▇▇ and Sovereign pursuant to the terms of the Intercreditor
Agreement, shall have the right to automatically record, at Borrower's sole cost
and expense, all such Assignments of Mortgages executed by Borrower and
delivered to Agent in accordance with the terms of this Section 3.2.
3.3 FINANCING STATEMENTS. Borrower agrees, at its own expense, to
execute the financing statements, continuation statements and amendments
provided for by the Code together with 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 interests in the Collateral.
Borrower hereby authorizes Agent to execute and/or file on Borrower's behalf any
such financing statements, continuation statements and amendments.
3.4 PRIORITY OF EACH LENDER'S LIENS. 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.
3.5 INSURANCE. Insurance coverage with respect to the Resort(s) is
provided by the Timeshare Owners' Association. Borrower shall furnish Agent,
upon request, with satisfactory evidence that the Units, Buildings and Resorts
are adequately insured. Borrower shall furnish to Agent evidence of insurance
coverage with respect to the Land, that portion of the Additional Resort
Collateral constituting real property and such other portion of the Additional
Resort Collateral as Agent may reasonably request. 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. In the event of a loss or damage to any portion
of the Additional Resort Collateral constituting real property, Borrower shall,
unless an Event of Default exists, apply the proceeds of any such insurance
policy to restoration and repair of the Additional Resort Collateral in question
in accordance with the applicable Declaration. If an Event of Default has
occurred, Agent may, in its sole discretion, apply the proceeds of any such
insurance policy to restoration and repair of such Additional Resort Collateral
in question in accordance with the applicable Declaration or to the repayment of
the Loan in accordance with Section 2.4 hereof.
3.6 PROTECTION OF COLLATERAL; REIMBURSEMENT. The portion of the
Collateral consisting of: (i) the original Pledged Notes Receivable (including,
but subject to Section 3.2 hereof, the Ineligible Note Portfolio), (ii) the
original Mortgages, (iii) the original purchase contract (including addendum)
related to such Pledged Notes Receivable and Mortgages, and (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, shall be delivered
at Borrower's expense to Agent, as agent for Lenders, at its East Hartford,
Connecticut office, and held in Agent's possession and control until the
Obligations are fully satisfied; and Borrower shall pay to Agent at the time of
each Advance, to reimburse Agent for Agent's administrative costs, a custodial
fee of $10.00 for each Pledged Note Receivable (and related Collateral)
delivered into Agent's physical possession. The portion of the Collateral
delivered to Agent as described above shall be segregated by Agent and stored in
a fire-resistant filing cabinet; and Borrower agrees that such storage is and
shall be deemed to constitute reasonable care by Agent with respect to such
Collateral. All insurance expenses and all expenses of protecting the
Collateral, including without limitation, storing, warehousing, insuring,
handling, maintaining and shipping the Collateral, and any and all excise,
property, intangibles, sales and use taxes imposed by any state, federal or
local authority on any of the Collateral or in respect of the sale thereof 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. Provided that Agent retains the original
Pledged Notes Receivable and Mortgages, and
originals or copies of the related Timeshare Documents delivered to it and
listed above, in a fire-resistant filing cabinet as provided above, 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 any warehouseman, carrier, forwarding
agency, Lockbox Agent, Servicing Agent or any other Person whomsoever.
3.7 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 4.5 hereto, 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 out-of-pocket
expenses in connection therewith. Subject to: (i) Agent's satisfactory
underwriting and due diligence review, including satisfaction of the conditions
in Sections 4 and 5 hereof as they relate to such additional time-share resorts,
and (ii) consent of such Lenders (including TFC) whose total Pro Rata Payment
Percentage is equal to or exceeds sixty-six and two-thirds percent (66 2/3%) of
the outstanding principal balance of the Loan, 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. Notwithstanding the foregoing, in the event that a
Lender does not consent to the approval of such additional time-share resort,
then such Lender shall not be obligated to fund any Advances hereunder with
respect to Pledged Notes Receivable originating from such resort.
Subject in each instance to Agent's acceptable underwriting and due
diligence review, consent of such Lenders (including TFC) whose total Pro Rata
Payment Percentage is equal to or exceeds sixty-six and two-thirds percent
(66 2/3%) of the outstanding principal balance of the Loan and Agent's prior
written approval, any project as may be approved by Agent and Lenders after the
Effective 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. Notwithstanding anything in this Section 3.7 to the contrary, Agent
may, in its sole and absolute discretion, require that the Lenders (including
TFC) unanimously consent to the approval of any project as an Additional
Eligible Resort.
3.8 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 twelve and one half percent (12 1/2%)
per annum at any time; (ii) the term of no Eligible Notes Receivable shall be
increased to a term longer than one hundred twenty (120) months from its
original date; (iii) at no time may Borrower so modify the terms of Eligible
Notes Receivable constituting more than fifteen
percent (15%) of the outstanding principal balance of all Eligible Notes
Receivable at any time; (iv) Borrower immediately provides Agent with notice of
any such modification together with any original documentation evidencing such
modification and (v) no Eligible Note Receivable is modified more than once in
any twelve (12) month period or more than twice during the term of such Eligible
Note Receivable.
3.9 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.
3.10 TAX REFUND. Borrower agrees that it shall use the proceeds of the
Tax Refund strictly to fund Operating Expenses in accordance with the Business
Plan and for no other reason, without Agent's prior written consent. Borrower
agrees to use the Tax Refund before requesting any Advance hereunder. Upon
request of Agent, Borrower shall promptly provide to Agent such evidence as
Agent may request as to the manner in which the proceeds of the Tax Refund are
being used.
3.11 PURCHASER/CRITERIA. All Eligible Notes Receivable pledged as
Collateral to Agent subsequent to the Effective Date will be underwritten in a
manner consistent with the Borrower's general underwriting criteria, as approved
in writing by Agent, including, without limitation: (i) the requirement that a
majority of sales shall be made to Purchasers with minimum annual income as
follows: $35,000 for purchasers residing in the state of Texas, $40,000 for
purchasers residing in the state of Illinois, and $45,000 for purchasers
residing in the state of Massachusetts, (ii) the requirement that each Purchaser
shall have a major credit card issued in his or her name, with a copy of such
credit card maintained in Borrower's file for such Purchaser, and (iii) the
requirement that the weighted average FICO Credit Bureau Scores of all
Purchasers with respect to which a FICO score can be obtained be not less than
640, provided that the aggregate outstanding principal balance of Eligible Notes
Receivable pledged to Agent with respect to which a FICO score can not be
obtained, does not exceed ten percent (10%) of the aggregate outstanding
principal amount of all Eligible Notes Receivable pledged to Agent. 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.
3.12 REPLACEMENT NOTES RECEIVABLE. Except as may be provided in the
Business Plan, Ineligible Notes Receivable, as such term is defined in Section
2.5(b), shall be replaced with Eligible Notes Receivable, to the extent
available, on a dollar for dollar basis, provided, however, that if Borrower is
unable to deliver Eligible Notes Receivable to replace any Ineligible Notes
Receivable, Borrower shall deliver additional Notes Receivable, if available, to
Agent
whether or not such additional Notes Receivable satisfy the criteria for
Eligible Notes Receivable. In the event that any Eligible Note Receivable
becomes available thereafter, the Borrower shall promptly substitute such
Eligible Note Receivable for the Ineligible Note Receivable pledged to Agent.
3.13 CROSS COLLATERALIZATION. The Collateral also secures the
Obligations of Borrower under the Additional Credit Facility, the Inventory
Loan, and the Tranche C Facility. Upon repayment of this Loan and the
satisfaction by Borrower of all of the Obligations under this Loan, the
Collateral shall continue to secure the Additional Credit Facility, the
Inventory Loan and the Tranche C Facility, as provided in the documents
evidencing and securing the Additional Credit Facility, the Inventory Loan and
the Tranche C Facility. Borrower further acknowledges and agrees that upon
repayment in full of the ▇▇▇▇▇▇ Facility and/or the Sovereign Facility, Agent's
security interest in the collateral securing such facilities shall automatically
become a first priority security interest securing the Borrower's Obligations
hereunder and under the Additional Credit Facility, the Tranche C Facility and
the Inventory Facility and Borrower shall take such steps as Agent may request
to deliver such collateral to Agent and to confirm Agent's first priority
security interest therein. Notwithstanding the foregoing: (a) when the Term Loan
Component and the Inventory Loan are paid in full, the Additional Resort
Collateral shall be released from the Lien of the security interest granted to
Agent hereunder provided: (i) an Event of Default has not occurred; and (ii) the
Additional Resort Collateral is also released from any lien granted to Sovereign
pursuant to the Sovereign Documents; (b) when both the Term Loan Component and
the Inventory Loan are paid in full, the Silverleaf Finance I, Inc. Stock shall
be released from the Lien of the security interest granted to Agent hereunder
provided: (i) an Event of Default has not occurred; and (ii) the Silverleaf
Finance I, Inc. Stock is also released from any lien granted to Sovereign
pursuant to the Sovereign Documents.
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, the Business Plan or the Existing Resorts,
including information and documents delivered in connection with the Additional
Credit Facility, the Forbearance Agreement, the Tranche C Facility and the
Inventory Loan, remain true and correct in all respects.
(d) APPROVAL OF DOCUMENTS PRIOR TO EFFECTIVE DATE. Borrower has
delivered to Agent (with copies to Agent's counsel), prior to the Effective
Date, and Agent has reviewed and approved, prior to the Effective Date, the form
and content of all of the items specified in Subsection 4.1(d)(i) through (vi)
below (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 TEXTRON
FINANCIAL CORPORATION 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 A, to be
dated as of the Effective Date and signed by the president,
vice president, or secretary of Borrower, certifying that the
conditions specified in Sections 4.1(a), (b) and (c) above are
true;
(ii) Copies of any amendments to the articles of incorporation
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 amendments to the by-laws of
Borrower 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 Notes, and the other Loan Documents, to borrow
the Loan from Lenders, and to grant to 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 Notes 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 Effective Date, the following Loan
Documents, each of which shall be in the form of the respective Loan Documents
attached hereto as Exhibit A, and each of which when required, shall be in
recordable form:
(i) THIS AGREEMENT.
(ii) CLOSING OPINIONS FOR BORROWER.
(iii) REVOLVING LOAN COMPONENT NOTE.
(iv) TERM LOAN COMPONENT NOTE.
(v) ADDITIONAL RESORT COLLATERAL MORTGAGE.
(vi) ADDITIONAL RESORT COLLATERAL ASSIGNMENTS.
(vii) STOCK PLEDGE AGREEMENT. Together with delivery of all
original stock certificates indorsed to Agent, as agent for
each Lender and Sovereign.
(viii) ASSIGNMENT OF MORTGAGES.
(ix) ASSIGNMENT OF NOTES RECEIVABLE AND MORTGAGES.
(x) ENVIRONMENTAL INDEMNITY AGREEMENT. An Environmental
Indemnity Agreement, executed by Borrower in favor of each
Lender.
(xi) LOCKBOX AGREEMENT CONFIRMATION. The Lockbox Agreement
confirmation, executed by Lockbox Agent, Agent, on behalf of
each Lender, and Borrower.
(xii) MODIFICATION TO LAND MORTGAGES. Borrower shall have
executed and delivered to Agent, on or before the date hereof,
modifications to the Land Mortgages, each of which shall be in
the form attached hereto as Exhibit A, and each of which shall
be in recordable form.
(xiii) STANDBY SERVICING AGREEMENT ASSIGNMENT.
(xiv) INTERCREDITOR AGREEMENT. Borrower, ▇▇▇▇▇▇ and Sovereign
shall have
executed and delivered to Agent, on or before the date hereof,
the intercreditor agreement, in the form attached hereto as
Exhibit A.
(xv) FINANCING STATEMENTS. Original UCC financing statements
covering the Collateral, filed with the Secretary of State of
Texas.
(xvi) STANDBY MANAGEMENT AGREEMENT ASSIGNMENT.
(xvii) ASSIGNMENT OF MANAGEMENT AGREEMENTS.
(xviii) 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) ▇▇▇▇▇▇ FACILITY AND SOVEREIGN FACILITY MODIFICATION. On or before
the Effective Date, Borrower shall deliver to Agent, evidence satisfactory to
Agent, that the ▇▇▇▇▇▇ Facility and the Sovereign Facility have each been
modified in accordance with the Business Plan and Agent has been provided with
copies of all of the executed ▇▇▇▇▇▇ Documents modifications and the executed
Sovereign Documents modifications;
(g) EFFECTIVE DATE CONDITIONS. On or before the Effective Date, the
following conditions shall be satisfied:
(i) PHYSICAL INSPECTION. Agent shall be satisfied with its
physical inspection of the Resorts.
(ii) 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 has a first or second, as applicable, 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 or
second, as applicable, and prior perfected lien and security
interest covering any portion of the Collateral, except as
expressly provided herein.
(iii) 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.
(iv) TITLE SEARCHES. Title Searches for each real property
comprising the Additional Resort Collateral and each real
property comprising the Land, together with legible copies of
each exception or matter noted thereon.
(v) TITLE INSURANCE POLICIES:
(1) Borrower shall deliver to Agent, with respect to
each parcel of real property comprising the Land, an
endorsement to the existing mortgagee's title insurance policy
(the "LAND MORTGAGE TITLE POLICY ENDORSEMENT") updating each
applicable policy previously issued with respect to the Land
through the date hereof and indicating that the applicable
Land Mortgage, as modified to date, is a first priority Lien
on the land in question. Such Land Mortgage Title Policy
Endorsement shall be an amount equal to the fair market value
of the Land, and issued by companies and in form and substance
satisfactory to Agent in its sole discretion.
(2) Borrower shall deliver to Agent, with respect to
each parcel of real property comprising the Additional Resort
Collateral, a mortgagee's title insurance policy (the
"ADDITIONAL RESORT COLLATERAL TITLE POLICY") in the full
amount of the appraised value of each such parcel, indicating
that the applicable Additional Resort Mortgage is a first
priority Lien on the parcel in question. The title policy
shall be in form and substance, and contain such endorsements,
as are satisfactory to Agent in its sole discretion, and shall
be issued by a title insurance company satisfactory to Agent.
(3) Borrower shall be responsible for the payment of
all costs and expenses of the foregoing title policies and
endorsements.
(vi) INTENTIONALLY OMITTED.
(vii) SURVEYS. To the extent not previously delivered to
Agent, Borrower shall deliver to Agent, at its sole cost and
expense: (i) an ALTA survey of each parcel comprising the
Additional Resort Collateral and the Land, which surveys shall
be in form and substance satisfactory to Agent and the
applicable title company, and shall be certified by the
surveyor to Agent and the applicable title company, on such
form of certification as may be approved by Agent; or (ii)
legible recorded plats of the parcel comprising the Additional
Resort Collateral and the Land, provided such recorded plats
are in form and substance reasonably satisfactory to Agent and
Title Company and are sufficient to remove the survey
exception from the title policy issued with respect thereto.
(viii) RECORDING OF MODIFICATIONS TO LAND MORTGAGES AND
ADDITIONAL COLLATERAL MORTGAGES. The Additional Resort
Collateral Mortgages and modifications to the Land Mortgages
shall have been duly recorded in the applicable land records
for each state in which the Land and the Additional Resort
Collateral is located.
(ix) ENVIRONMENTAL REPORT. To the extent not previously
delivered to Agent, an Environmental Report or Reports
covering the Land and that portion of the Additional Resort
Collateral which is real property confirming:
(1) that soil conditions are sufficient to support
all existing and any contemplated improvements to such real
property;
(2) the absence of Hazardous Materials on such real
property;
(3) that the issuer of the report has obtained,
reviewed and included with its report a CERCLIS printout from
the Environmental Protection Agency (the "EPA"), statements
from the EPA and other applicable and state local authorities
and such other information as Agent may reasonably require,
including without limitation 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 the real property in question,
or in such proximity thereto as to create a material risk of
contamination thereof.
(x) 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;
(xi) 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, the Land and
that portion of the Additional Resort Collateral constituting
real property;
(xii) TAXES. Evidence satisfactory to Agent that all taxes and
assessments owed by or for which Borrower is responsible for
collection had 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, the Land and
that portion of the Additional Resort Collateral constituting
real property shall be provided to Agent;
(xiii) DZ FACILITY. Evidence satisfactory to Agent that the DZ
Facility has closed on terms and conditions set forth in the
DZ Letter Agreement and has been
documented in form and substance reasonably satisfactory to
Agent and Agent has been provided with copies of all of the
executed DZ Documents.
(xiv) LOAN PAYDOWN FROM THE PROCEEDS OF THE DZ FACILITY.
Interest on the Revolving Loan Component and the Term Loan
Component shall be paid in full to the Effective Date and
approximately $12,274,000 shall be paid down on the principal
balance of the Revolving Loan Component. Interest on the
▇▇▇▇▇▇ Facility shall be paid in full to the Effective Date.
Interest on the Sovereign Facility shall be paid in full to
the Effective Date and approximately $9,504,000 shall be paid
down on the principal balance of the Sovereign Facility.
(xv) STANDBY MANAGER. Borrower will have entered into the
Standby Management Agreement in form and substance
satisfactory to Agent, in its sole discretion, with the
Standby Manager. On and after an Event of Default, the Standby
Manager shall be responsible for, among other things: (i)
managing the operation of the Resorts, the related amenities,
the Additional Resort Collateral and any other Collateral that
Agent deems necessary, (ii) monitoring or supervising the
marketing, sale, resale and financing of Intervals pledged to
Agent as Collateral and (iii) such other duties and
responsibilities Agent may request, from time to time, in its
sole discretion, which are related to the operation of the
Resorts and related amenities, the Additional Resort
Collateral, the Intervals and any other Collateral that Agent
deems necessary. Borrower shall provide Agent with a list in
form and substance satisfactory to Agent, in its sole
discretion, of the duties and responsibilities associated with
the operation of the Resorts.
(xvi) FORBEARANCE AGREEMENT. All of the terms and conditions
of the Forbearance Agreement shall have been satisfied to the
satisfaction of Agent and Agent shall have determined that no
Forbearance Termination Event shall have occurred and be
continuing.
(xvii) BOND HOLDER EXCHANGE TRANSACTION CONSUMMATION. Evidence
satisfactory to Agent in its sole discretion that the Bond
Holder Exchange Transaction outlined in the Bond Holder
Exchange Transaction Letter, a copy of which is attached
hereto as Exhibit E, as approved by Agent, has been accepted
by the requisite number of bond holders and the Bond Holder
Exchange Transaction shall have fully closed. Agent shall be
provided with copies of all of the executed Bond Holder
Exchange Documents.
(xviii) ZONING. To the extent not previously provided by
Borrower to Agent, and if requested by Agent, evidence that
the use and operation of the portions of the Additional Resort
Collateral comprised of real property comply with all
applicable zoning, building, health, safety and fire codes and
regulations.
(xix) RESORT CONSULTANT. The Borrower, at its own expense,
shall retain a
consultant of recognized standing, acceptable to Agent in its
sole discretion (the "Resort Consultant"). The Resort
Consultant shall have such duties and responsibilities as
Agent may request, in its sole discretion, from time to time,
including without limitation: (1) preparation of a report
evaluating Borrower's business and the operation of the
Resorts to be delivered to Agent within ten (10) days after
the Effective Date; (2) on an ongoing basis monitoring: (a)
the operations of Borrower, including the offer and sale of
Intervals by Borrower and the financing by Borrower of such
sales, (b) Borrower's compliance with the Business Plan, (c)
Borrower's operation of the Silverleaf Club and (d) Borrower's
and/or Silverleaf's Club's management and operation of the
Resorts, the related amenities and the Additional Resort
Collateral; and (3) submission of weekly written reports to
Agent as to the foregoing. The Agreement with the Resort
Consultant shall be in form and substance acceptable to Agent
in its sole discretion and shall be assigned by Borrower to
Agent as security for the Obligations. Notwithstanding the
foregoing, Borrower and Agent acknowledge and agree that the
Resort Consultant may also perform the duties of the Standby
Manager.
(xx) ESTOPPEL LETTERS. Borrower shall deliver to Agent, with
respect to each Resort, an estoppel letter, executed by the
applicable Timeshare Owners' Association in the form attached
hereto as Exhibit A.
IN THE EVENT THAT AGENT DETERMINES, IN ITS SOLE AND ABSOLUTE
DISCRETION, THAT ANY OF THE CONDITIONS SET FORTH IN SECTION 4.1, 4.3, OR 4.4 ARE
NOT SATISFIED ON OR BEFORE MAY 31, 2002, THEN THIS AGREEMENT, AND THE
OBLIGATIONS OF AGENT AND EACH LENDER HEREUNDER, SHALL BE NULL AND VOID IN ALL
RESPECTS AB INITIO. IN SUCH EVENT, THE ORIGINAL LOAN AGREEMENT AND THE TERMS AND
CONDITIONS THEREIN SET FORTH, AS MODIFIED BY THE FORBEARANCE AGREEMENT, SHALL
GOVERN AND CONTROL BORROWER'S OBLIGATION WITH RESPECT TO REPAYMENT IN FULL OF
THE OBLIGATIONS, AS SUCH TERM IS DEFINED IN THE ORIGINAL LOAN AGREEMENT.
4.2 EFFECTIVE DATE ADVANCES. In the event that Borrower desires Lenders
to make an Advance on the Effective Date, then, in addition to all of the
conditions precedent set forth in this Section 4, Borrower shall have complied
with all of the requirements of Section 5 below at least five (5) Business Days
prior to the Effective Date.
4.3 EXPENSES. Borrower shall have paid all fees and expenses required
to be paid pursuant to this Agreement. Lenders shall have no obligation to fund
any Loan or make the initial Advance or any subsequent Advance unless (a) the
amount of the initial Advance together with any moneys paid by Borrower is
sufficient to satisfy all fees and expenses required to be paid pursuant to this
Agreement, and (b) the Advance will not be used for any of the uses set forth in
Section 6.11.
4.4 PROCEEDINGS SATISFACTORY. Borrower shall execute all of the Loan
Documents approved by Agent on the Effective 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.
4.5 CONDITIONS PRECEDENT TO FUNDING OF ADVANCES WITH RESPECT TO
ADDITIONAL ELIGIBLE RESORTS. As provided in Section 3.7 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. 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.
(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 each Advance, and Agent has
reviewed and approved, at least five (5) Business Days prior to the date of each
Advance, the form and content of all of the items specified in each of the
Submissions required pursuant to this Section 4.5. 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 on behalf of Lenders 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 TEXTRON FINANCIAL CORPORATION 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 A, 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
4.5(a) and (b) above 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 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) except for the Resorts listed on Schedule 4.5(c)(iii)
(the "CROWN RESORTS"), a Survey for each Additional Eligible
Resort for which Eligible Notes Receivable are being pledged
to Agent in connection with the Advance in question; and with
respect to each Crown Resort, a legible, full size copy of the
recorded plat for each such Resort;
(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 4.5;
(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 Agent as agent for Lenders 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, other than a Crown 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.
Each architect rendering such written confirmation shall be
licensed as an architect in the state of Texas;
(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, Agent and
each Lender agree that Borrower shall not be required to
provide such a commitment or a Mortgagee Title Insurance
Policy with respect to any Crown Resort (other than the Quail
Hollow Resort), or, until such time as deeded Intervals are
permitted under local law governing the Oak N' Spruce Resort,
the Oak N' Spruce Resort in order to qualify any such Resort
as an 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:
(a) 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 as provided in
Section 2.5(b) hereof; and
(b) 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.
(xvii) the Financial Statements;
(xviii) to the extent not previously delivered hereunder or in
connection with the Existing Credit Facility or the Inventory
Loan, Borrower will execute, or cause to be
executed with respect to each Additional Eligible Resort, a
confirmation that the Assignment of Additional Resort
Collateral covers any management agreement with respect to
such Additional Resort, an Assignment of Notes Receivable and
Mortgages, Borrower's Affidavit with Respect to the Additional
Eligible Resorts and an Environmental Indemnification
Agreement, each in the form attached hereto as Exhibit A;
(xix) 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;
(xx) 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
(xxi) Upon request of Agent, Borrower shall deliver to Agent
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 Resort, the Timeshare Documents, any Eligible Notes
Receivable, any Interval, or any marketing, offer or sale of
any Interval.
(d) PHYSICAL INSPECTION. Agent shall be satisfied with its physical
inspection of the Additional Eligible Resorts.
(e) 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 or second, as applicable, 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 or second, as applicable, and prior perfected lien and security
interest covering any portion of the Collateral, except as expressly provided
herein.
(f) 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.
(g) 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.
(h) 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.
(i) 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 (other than
the Crown Resorts) shall have a term which shall expire no earlier April 1,
2009. With respect to each Crown Resort only, each such Resort may qualify as an
Additional Eligible Resort (subject to satisfaction by Borrower of the
conditions set forth in this Section 4.5), so long as Borrower, or an Affiliate,
is the manager or operator of each such Resort, pursuant to a written management
or operating agreement, in form and substance satisfactory to Agent. Borrower
agrees to provide an estoppel letter, in form and substance acceptable to Agent,
from the applicable Timeshare Owner's Association. Each such management
agreement constitutes a part of the Additional Resort Collateral and is assigned
to Agent, on behalf of Lenders, to secure the Obligations as provided herein.
(j) 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 sole and absolute
discretion.
SECTION 5 -- FUNDING PROCEDURE
5.1 The obligation of any Lender to make any loan 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 C and
shall certify the amount of the then-current Borrowing Base
and the then-current Effective Advance Rate, 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
Textron Financial Corporation 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: (i) 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 (ii) a UCC-3 Assignment, naming Borrower as
assignor and Agent as assignee on behalf of Lenders, assigning
to Agent, on behalf of Lenders, 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 4.5(c)(xvi) 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 on the date of Advance.
The Mortgages and the assignments thereof to Agent shall each have been
duly recorded in the applicable land records which are described in Schedule D
hereof. 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 Agent as the insured party
therein as agent for Lenders. 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 requested 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 C;
(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: (i) exceed the total amount of the Borrowing Base, or
(ii) cause the Effective Advance Rate, determined with respect
to the aggregate of the Loan, the Additional Credit Facility
and the Tranche C Facility, to exceed 95%;
(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;
(ix) each Lender shall have agreed to make and does make an
Advance in an amount equal to its respective Pro Rata
Percentage;
(x) the most recent Weekly Flash Report indicates that
Borrower has less than five million dollars ($5,000,000) in
available unrestricted cash;
(xi) ▇▇▇▇▇▇ and Sovereign fund their respective portion in
accordance with Section 2.1(g) and as provided in the
Intercreditor Agreement; and
(xii) there are insufficient proceeds from the Tax Refund to
pay Operating Expenses as provided in the Business Plan.
(d) EXPENSES. Borrower shall have paid all fees and 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 herein); 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
Subparagraph 5.1(f)(i), then, immediately upon such failure, the partial waiver
provided under this subparagraph shall no longer be effective.
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
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, ▇▇▇▇▇▇ or Sovereign 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 or second, 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 3.8 and 3.9 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 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 Weekly Flash
Reports, the Monthly Financial Reports for the first ten (10) months of the
calendar year 2001 and the Alternative Financial Models dated December 4, 2001
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, including the fact that such
statements and reports are preliminary and subject to completion of the audit
thereof and that Borrower anticipates adjustments thereto which may
significantly affect the results thereof, including an estimated reduction in
shareholder equity of $63,000,000. 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 or 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
Resort and the Collateral; and Borrower knows of no basis for any additional
taxes or assessments against the Resorts or the Collateral. Borrower or the
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. Borrower has paid or will have paid in full,
prior to delinquency, all ad valorem taxes and other assessments against that
portion of the Additional Resort Collateral constituting real
property and against the Land, and Borrower knows of no basis for any additional
taxes or assessments against the Land or other such real property.
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, the Liens granted to secure the
Additional Credit Facility, the Tranche C Facility and the Inventory Loan and
the Liens described in Schedule 6.5 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 Resort 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 Resort. Borrower has received no notice
from any court, governmental authority or other tribunal alleging that Borrower
or the Resort 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.
Borrower has all permits, licenses and consents for the ownership and use of the
Land and the Additional Resort Collateral.
6.9 ENVIRONMENTAL MATTERS. Except as otherwise noted on Schedule 6.9:
(a) neither the Land, any portion of the Additional Resort Collateral consisting
of real property or any Resort
contains any Hazardous Materials, (b) no Hazardous Materials are used or stored
at or transported to or from the Resorts, the Land or any portion of the
Additional Resort Collateral consisting of real property, (c) neither Borrower
nor the Resorts nor any manager thereof or 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, the Land or any portion of the Additional Resort
Collateral consisting of real property, and (d) neither Borrower nor the
Resorts, the Land or any portion of the Additional Resort Collateral consisting
of real property, 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. (a) The proceeds of the Loan, the
Additional Credit Facility, the Tranche C Facility, the Inventory Loan, the
▇▇▇▇▇▇ Loan, the Tax Refund, the Sovereign Loan, the DZ Facility and any cash
dividend or other cash distribution Borrower receives from Silverleaf Finance I,
Inc. will be used strictly in accordance with the Business Plan and for no other
purpose and (b) none of the proceeds of the Loan will be used to purchase or
carry any "margin stock" (as defined under Regulation 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, U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter 11.
6.12 DEFAULTS. Except for the Specified Events of Default (as defined
in the Forbearance Agreement) during the Forbearance Period (as defined in the
Forbearance Agreement), Borrower has no knowledge of any Default or Event of
Default not disclosed to Agent in writing. Except for the specified events of
default under the forbearance agreement between Borrower and ▇▇▇▇▇▇ or the
forbearance agreement between Borrower and Sovereign, Borrower has no knowledge
of any default or event of default under the ▇▇▇▇▇▇ Documents or the Sovereign
Documents, except as disclosed to Agent in writing, and neither ▇▇▇▇▇▇ nor
Sovereign has accelerated any loan obligation of Borrower on account of any such
specified default or event of default.
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; and
(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 Resort, or the sale, offering for sale, or financing of
Intervals.
6.14 RESTRICTIONS OF BORROWER. Except for this Agreement and the Loan
Documents, the Inventory Loan Documents, the Tranche A Loan Documents, the
Tranche C Loan Documents, the ▇▇▇▇▇▇ Documents and the Sovereign Documents,
Borrower will not be, on or after the date hereof, a party to any contract or
agreement which restricts its right or ability to incur indebtedness or
prohibits Borrower's execution of or compliance with the terms of this
Agreement, the other Loan Documents, the Inventory Loan Loan Agreement, the
Tranche C Facility Loan Agreement, the Additional Credit Facility Loan
Agreement, the ▇▇▇▇▇▇ Documents, the Bond Holder Exchange Documents, the
Sovereign Documents or the DZ 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, and, with respect to the
Land, the Additional Resort Collateral, the Silverleaf Finance I. Inc., Stock
and the Ineligible Notes Receivable, in favor of ▇▇▇▇▇▇ and
Sovereign, as applicable.
6.15 BROKER'S FEES. Borrower, Agent and each Lender represent to each
other that none of them has 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, 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 or the applicable Timeshare Owners' Association.
(h) OPERATING CONTRACTS. Borrower 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 (hereinbelow defined as "Operating
Contracts").
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/SOCIAL SECURITY NUMBERS. 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
Schedule 6.23.
6.24 LAND.
(a) FIRST LIEN. Subject to the other first lien rights of ▇▇▇▇▇▇ and
Sovereign as provided in the Intercreditor Agreement, upon execution and
recording of the modification to the Land Mortgages, as modified, Lender will
continue to have a valid first lien on the Land.
(b) ACCESS. The Land has adequate legal rights of access to a public
way.
(c) SINGLE TAX LOT. Each portion of the Land constituting real property
consists of a single tax lot. No portion of said lot covers property other than
the land in question and no portion of the land in question lies in any other
tax lot.
(d) FLOOD ZONE. Except as is disclosed in the surveys of each portion
of the Land that have been or will be provided to Lender, no portion of the land
in question is located in a flood hazard area as defined by the Federal
Insurance Administration.
(e) SEISMIC EXPOSURE. No portion of the Land is located in a zone 3 or
zone 4 of the "Seismic Zone Map of the U.S."
(f) CONDEMNATION. No part of the Land has been taken in condemnation or
other like proceedings nor is any proceeding pending, threatened or known to be
contemplated for the partial or the total condemnation or taking of any portion
of the Land.
(g) NO PURCHASE OPTIONS. No person or entity has an option to purchase
the Land, or any portion thereof, or any interest therein.
6.25 ADDITIONAL RESORT COLLATERAL.
(a) FIRST LIEN. Subject to the other first lien rights of ▇▇▇▇▇▇ and
Sovereign as provided in the Intercreditor Agreement, upon execution and
delivery of the Additional Resort Collateral Assignments and execution and
recording of the Additional Resort Collateral Mortgages, Lender will have a
valid first lien in the Additional Resort Collateral.
(b) ACCESS. The portion of the Additional Resort Collateral
constituting real property has adequate legal rights of access to a public way.
(c) INTENTIONALLY OMITTED.
(d) FLOOD ZONE. Except as is disclosed in the surveys of the portion of
the Additional Resort Collateral constituting real property that have been or
will be provided to Lender, no portion of such land is located in a flood hazard
area as defined by the Federal Insurance Administration.
(e) SEISMIC EXPOSURE. No portion of the Additional Resort Collateral
constituting real property is located in a zone 3 or zone 4 of the "Seismic Zone
Map of the U.S."
(f) CONDEMNATION. No portion of the Additional Resort Collateral
constituting real property has been taken in condemnation or other like
proceedings nor is any proceeding pending, threatened or known to be
contemplated for the partial or the total condemnation or taking of any portion
of such land.
(g) NO PURCHASE OPTIONS. No person or entity has an option to purchase
any portion of the Additional Resort Collateral, or any portion thereof, or any
interest therein.
6.26 ADDITIONAL REPRESENTATIONS AND WARRANTIES. This Agreement, the
Original 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. Borrower ratifies and confirms each
covenant and agreement made under the Original Agreement and the other Loan
Documents, except as provided in the Forbearance Agreement.
6.27 ▇▇▇▇▇▇ AND SOVEREIGN FACILITIES. The modifications of the ▇▇▇▇▇▇
Facility and the Sovereign Facility on terms and conditions as provided in the
Business Plan, have closed and Agent has been provided with true and correct
copies of the ▇▇▇▇▇▇ Documents and the Sovereign Documents, as so modified.
There is no event of default or event which, with the passage of time, notice or
both, would constitute an event of default under either the ▇▇▇▇▇▇ Facility or
the Sovereign Facility and Borrower is in good standing under both of such
facilities.
6.28 BOND HOLDER EXCHANGE TRANSACTION. The Bond Holder Exchange Letter
has not been amended, modified or otherwise rescinded.
6.29 DZ FACILITY. The DZ Letter Agreement is in full force and effect
and has not been amended, modified or otherwise rescinded.
6.30 STANDBY SERVICER. Borrower has entered into the Standby Servicing
Agreement, a copy of which is attached hereto as Exhibit I, with the Standby
Servicer, and such agreement is in full force and effect and has not been
modified, amended or terminated.
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,
other than a Specified Event of Default (as defined in the Forbearance
Agreement); 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 Resort, and (iii) comply or
cause compliance with all governmental laws, rules, regulations and ordinances
applicable to the Resort, 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 Resort and any real
property constituting part of the Additional Resort
Collateral, 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 Resort in amounts and on terms satisfactory to Agent; and
(iii) Such other insurance on the Resort and any real property
constituting part of the Additional Resort Collateral 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 Resort, 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
Resort 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 Resort or
any real property comprising the Additional Resort Collateral, 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 Resort or any real property comprising the Additional
Resort Collateral, 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 Resort or any real property comprising the Additional Resort
Collateral, 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 in accordance with
Section 2.4 hereof.
(e) MAINTENANCE OF SECURITY. Borrower shall execute and deliver (or
cause to be executed and delivered) to Agent all security agreements, financing
statements, 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 or second priority liens and security interests,
as applicable, all Liens and security interests in the Collateral granted to
Agent as agent for Lenders to secure the Obligations. 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 Resort, 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, 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
Resort before any claim (including, without limitation, claims for labor,
services, materials and supplies) arises for sums which have become due and
payable. Except
for the Liens in connection with the Additional Credit Facility, the Tranche C
Facility and the Inventory Loan 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 Resort
except for such Liens as are expressly provided for pursuant to the Declaration,
which shall, in any event, be subordinate to the Lien of Agent on behalf of
Lenders. In the event any such Lien attaches to any of the Collateral or the
Resort 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 their respective
agents or representatives (provided such Lender has coordinated such inspection
with Agent) to inspect the Resort, 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
remain unsatisfied, Borrower shall furnish (or cause to be furnished, as the
case may be) to Agent the following:
(i) MONTHLY FINANCIAL REPORTS. As soon as available and in any
event within ten (10) days after the end of each calendar
month, a report showing (i) the trial balance of the Pledged
Notes Receivable, (ii) an aging report on the Pledged Notes
Receivable, (iii) a report detailing the collections on each of
the Pledged Notes Receivable, (iv) a Borrowing Base Report, (v)
monthly reports from the Lockbox Agent required pursuant to the
Lockbox Agreement, and (vi) a report in form satisfactory to
Agent indicating, among other things, the conformity of the
Borrower's business to the Business Plan and any variances
therefrom during the preceding calendar month.
(ii) QUARTERLY FINANCIAL REPORTS. As soon as available and in
any event within forty-five (45) days after the end of each
fiscal quarter, copies of income statements and balance sheets
for the operations of each Resort and for Borrower, certified
by the Chief Financial Officer of Borrower.
(iii) ANNUAL FINANCIAL REPORTS. As soon as available and in
any event within ninety (90) days after the end of each
calendar year or other fiscal year as may be applicable with
respect to Borrower (a "FISCAL YEAR"), a 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 Lender and prepared in
accordance with GAAP and on a basis consistent with prior
accounting periods. Notwithstanding the foregoing, Borrower
shall deliver its annual financial statements for Fiscal Years
2000 and 2001 within 90 days of the Effective Date. Each
annual financial statement of Borrower shall be prepared by an
independent certified public accountant and certified by
Borrower to be true, correct and complete, and shall otherwise
be in form acceptable to Lender. In the event that Lender,
acting in good faith, is not satisfied with any such Financial
Statement, and if Borrower fails to provide Lender with new
Financial Statements acceptable to Lender within fifteen (15)
days after Lender delivers written notice of such
dissatisfaction to Borrower, then, at Lender's request,
Borrower shall furnish to Lender copies of audited income
statements and balance sheets certified by an independent
certified public accountant acceptable to Lender and prepared
in accordance with GAAP and on a basis consistent with prior
accounting periods. Such audited annual statements shall also
be in form and content satisfactory to Lender. If the figures
for net and total operating income (as such terms are defined
in accordance with GAAP) in the audited annual statements do
not vary by more than five percent (5%) from the figures in
the unaudited annual statements, Lender shall bear, pro rata
based upon its Pro Rata Percentage, the cost of the certified
public accountant's audit. If, however, such figures vary by
more than five percent (5%), Borrower shall bear the cost of
such certified public accountant's audit;
(iv) OFFICER'S CERTIFICATE. Each set of annual Financial
Statements or reports delivered to Agent pursuant to Sections
7.1(h)(i), (ii) and (iii) of this Agreement will be
accompanied by a certificate of the President or the Treasurer
of Borrower in the form attached as Exhibit D setting forth
that the signers have reviewed the relevant terms of the
Agreement (and all other agreements and exhibits between the
parties) and have made, or caused to be made, under their
supervision, a review of the transactions and conditions of
Borrower from the beginning of the period covered by the
Financial Statements or reports being delivered therewith to
the date of the certificate and that such review has not
disclosed the existence during such period of any condition or
event which constitutes a Default or Event of Default or, if
any such condition or event existed or exists or will exist,
specifying the nature and
period of existence thereof and what action Borrower has taken
or proposes to take with respect thereto;
(v) SALES REPORTS. Concurrently with the financial statements
required pursuant to Section 7.1(h)(i), (ii) and (iii),
Borrower shall deliver to Agent, 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;
(vi) AUDIT REPORTS. 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;
(vii) NOTICE OF DEFAULT OR EVENT OF DEFAULT. Except for a
Specified Event of Default identified in the Forbearance
Agreement, immediately upon becoming aware of the existence of
any condition or event which constitutes a Default or an Event
of Default, or upon becoming aware of any acceleration with
respect to any Specified Event of Default, a written notice
specifying, as applicable, the nature and period of existence
thereof and what action Borrower is taking or proposes to take
with respect thereto;
(viii) NOTICE OF CLAIMED DEFAULT. Except for a Specified Event
of Default identified in the Forbearance Agreement,
immediately upon becoming aware of a claim of Default or Event
of Default, a written notice specifying, as applicable, the
nature and period of existence thereof and what action
Borrower is taking or proposes to take with respect thereto;
(ix) 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.
(x) MATERIAL ADVERSE DEVELOPMENTS. Except as provided in the
Business Plan, 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;
(xi) 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 Resort or Borrower as
Agent may in good faith request including, without limitation,
annually, federal call reports relating to Lockbox Agent; and
(xii) WEEKLY FINANCIAL REPORTS. Weekly "flash reports"
consisting of the number of showings of the Resorts to
prospective purchasers of Intervals, gross sales reports,
accounts payable reports, accounts receivable reports and cash
balances before 5:00 p.m. (eastern standard time) on each
Thursday during the term hereof.
(i) RECORDS. Borrower shall keep adequate records and books of account
reflecting all financial transactions of Borrower and with respect to the Resort
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, except as contemplated in Section 7.1(y) hereof.
(k) FICA. Borrower shall furnish to Agent within thirty (30) days after
the expiration of each calendar quarter proof reasonably satisfactory to Agent
that Borrower's obligations to make deposits for F.I.C.A., social security and
withholding taxes have been satisfied.
(l) 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 Resort or
the Collateral.
(m) 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.
(n) 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
Resort and that portion of the Additional Resort Collateral consisting of real
property in good repair, working order and condition and shall make all
necessary replacements and improvements to the Resort and that portion of the
Additional Resort Collateral consisting of real property so that the value and
operating efficiency of the Resort and that portion of the Additional Resort
Collateral consisting of real property will be maintained at all times and so
that the Resort and that portion of the Additional Resort Collateral consisting
of real property remains in compliance in all respects with the Timeshare Act,
the Timeshare Documents and other applicable law.
(o) CLAIMS. Borrower shall promptly notify Agent of any claim, action
or proceeding affecting the Resort or Collateral, or any part thereof, or Agent,
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.
(p) REGISTRATION AND REGULATIONS.
(i) LOCAL LEGAL COMPLIANCE. Borrower will comply, and will
cause the Resort, the Land and each portion of the Additional
Resort Collateral constituting real property 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 Resort 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, the each
state in which an applicable Resort, the Land 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 Resort 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.
(r) OTHER DOCUMENTS. Borrower will maintain to the satisfaction of
Agent and make available to Agent and the other Lenders, accurate and complete
files relating to the Resort, 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 3.11.
(s) 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 3.11.
(t) 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 Resort, 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 Resort in sufficient capacity to service the Resort.
(u) 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 Resort 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 Resort 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.
(v) EXPENSES AND CLOSING FEES. Whether or not the transactions
contemplated hereunder are completed, Borrower shall pay all
expenses of Agent, each Lender and each of TFC's participants
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 fees and disbursements of Agent's, each Lender's and
each of TFC's participants' counsel;
(iii) Agent's, each Lender's and each of TFC's participants'
out-of-pocket expenses;
(iv) all fees and expenses (including fees and expenses of
Agent's, each Lender's and each of TFC's 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 of TFC's participants 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 of TFC's
participants 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) the custodial fees payable to Agent with respect to the
original Pledged Notes Receivable and related Collateral;
(viii) all costs and expenses incurred by Agent under the
Note, and all late charges under the Note; and
(ix) 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 of TFC's
participants 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.
(w) INDEMNIFICATION OF AGENT AND LENDERS. 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 and each Lender, 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 any 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 Resort of any
Hazardous Materials; (viii) the removal or remediation of any Hazardous
Materials from the Resort 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
Resort; (x) the violation or claimed violation of any Environmental Laws in
regard to the Resort; or (xi) the preparation of an environmental audit or
report on the Resort, 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. It is the
express intention of the parties hereto that the indemnity provided for in this
Section, 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 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 from the consequences of Agent's or any such Lender'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 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.
(x) OPERATION OF BORROWER'S BUSINESS. Borrower will operate its
business in substantial compliance with the Business Plan, including the Senior
Lender Advance Schedule.
(y) STANDBY MANAGER, RESORT CONSULTANT AND STANDBY SERVICER. Borrower
will enter into agreements for the Standby Manager and the Resort Consultant on
or before the Effective Date and will maintain such agreements in full force and
effect. 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: (1) Agent may, with the approval of a majority of the
Borrower's Board of Directors, which approval shall not be unreasonably withheld
or delayed, terminate any then existing management agreements and replace any
existing manager with such manager as Agent may select, provided however, if:
(x) the obligations have become immediately due and payable in accordance with
Section 9.1 (a) hereof, or (y) Agent elects to have J & J Limited, Inc. act as
Standby Manager, then no such approval of Borrower's Board of Directors shall be
required; and (2) the Standby Servicer will assume full control over the
servicing of all Pledged Notes Receivable, reporting solely to Agent, as
provided in Sections 9.1(i) and 10.14 hereof.
(z) DZ FACILITY. The DZ Letter Agreement remains in full force and
effect and has not been amended, modified or rescinded and Borrower will
diligently commence and proceed to close the DZ Facility on or before May 31,
2002 as contemplated in the DZ Letter Agreement and the Business Plan, and will
promptly provide Agent with true and correct copies of the DZ Documents.
(aa) BOND HOLDER EXCHANGE TRANSACTION. Borrower will act diligently and
in good faith to cause the requisite number of bond holders to accept the offer
to participate in the Bond Holder Exchange Transaction on the terms set forth in
the Bond Holder Exchange Letter and to close the Bond Holder Exchange
Transaction on or before May 31, 2002, and promptly provide Agent with true and
correct copies of all documents executed and/or delivered in connection with the
Bond Holder Exchange Transaction.
(bb) ▇▇▇▇▇▇ FACILITY, SOVEREIGN FACILITY, DZ FACILITY AND BOND HOLDER
EXCHANGE TRANSACTION. Borrower will comply with each of the terms and conditions
of the ▇▇▇▇▇▇ Facility, the Sovereign Facility, the DZ Facility and the Bond
Holder Exchange Documents and will promptly deliver to Agent, upon receipt by
Borrower, copies of any notices received by Borrower in connection with any of
the forgoing credit facilities.
(cc) FINANCIAL COVENANTS.
(i) TANGIBLE NET WORTH. Borrower shall at all times have
and maintain a Tangible Net Worth in an amount which
shall not be less than an amount equal to (A) the
greater of (1) $100,000,000 or (2) an amount equal to
90% of the Tangible Net Worth of Borrower as of
September 30, 2001 plus (B) one hundred percent
(100%) of the aggregate amount of proceeds received
by Borrower after January 1, 2002 in connection with
(1) each issuance by Borrower of any class or classes
of capital stock after January 1, 2002 and (2) each
incurrence of Indebtedness after January 1, 2002,
other than Indebtedness which shall be the most
senior Indebtedness of Borrower plus (C) one hundred
percent (100%) of the aggregate amount of net income
(calculated in accordance with GAAP) of Borrower
after January 1, 2002.
(ii) MARKETING AND SALES EXPENSES. Borrower will not
permit as of March 31, 2002 and as of the last day of
each calendar quarter thereafter the ratio of
Marketing and Sales Expenses for any calendar
quarter, singly and on a
cumulative basis, during the specified period below
(the "REFERENCE PERIOD") to Borrower's net proceeds
from the sale of Intervals for such Reference Period
to equal or exceed the ratio set forth opposite such
period described in the table below during such
Reference Period:
Period Ratio
------ -----
4/1/02 - 12/31/02 .550 to 1
1/1/03 - thereafter .525 to 1
(iii) MINIMUM 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 (including, without limitation,
all Eligible Notes Receivable pledged to Agent under
the Agreement and all Notes Receivable pledged
pursuant to the ▇▇▇▇▇▇ Facility and the Sovereign
Facility) to be greater than twenty-five percent
(25%). If, as of the last day of each calendar
quarter, Borrower's over 30-day delinquency on its
entire Notes Receivable portfolio (including, without
limitation, all Eligible Notes Receivable pledged to
Agent under the Agreement and all Notes Receivable
pledged pursuant to the ▇▇▇▇▇▇ Facility and the
Sovereign Facility) is greater than twenty percent
(20%), then Agent shall have the right to conduct an
audit, at Borrower's sole cost and expense, of all
Borrower's Notes Receivable pledged to the Lenders
hereunder.
(iv) INTEREST COVERAGE. (i) For the calendar quarter of
Borrower ending June 30, 2002, the Interest Coverage
Ratio for Borrower shall be at least 1.1:1; (ii) for
the calendar quarter of Borrower ending September 30,
2002, the average of the Interest Coverage Ratio of
Borrower of such calendar quarter and the Interest
Coverage Ratio for the immediately preceding calendar
quarter shall be at least 1.1:1, (iii) for the
calendar quarter of Borrower ending December 31,
2002, the average of the Interest Coverage Ratio of
Borrower for such calendar quarter and the Interest
Coverage Ratios for the two immediately preceding
calendar quarters shall be at least 1.1:1; (iv) for
each calendar quarter of Borrower beginning with, and
including, the calendar quarter ending March 31, 2003
and for each calendar quarter of Borrower thereafter,
the average of the Interest Coverage Ratio of
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 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,
2002, to be less than $1.00 and (b) for any two
consecutive fiscal quarters (treated as a single
accounting period) to be less than $1.00.
(dd) NET SECURITIZATION CASH FLOW. Borrower will cause Silverleaf
Finance I, Inc. to declare, at least quarterly, a cash dividend payable to
Borrower, in an amount equal to the Net Securitization Cash Flow for such
quarter. If no Default or Event of Default has occurred, Borrower agrees to use
such dividends for payment of Operating Expenses as provided in the Business
Plan and for no other purpose. If a Default or Event of Default has occurred,
then all such dividends shall be paid directly to Agent, as agent for each
Lender, and applied by Agent in repayment of the Term Loan Component as provided
in Section 2.4(b). Borrower shall provide Agent with notice of Silverleaf
Finance I, Inc.'s declaration of a cash dividend, together with a certification
that: (i) states whether a Default or Event of Default exists, and (ii) contains
a calculation of the Net Securitization Cash Flow.
(ee) SALE OR SECURITIZATIONS OF NOTES RECEIVABLE. Borrower shall use
its best efforts to sell and/or securitize the Notes Receivable pledged to Agent
as security for the Loan, and the proceeds of any such sale or securitization
shall be applied first to repayment of the Revolving Loan Component as provided
in Section 2.4(b), and then after the Revolving Loan Component has been paid in
full, to repayment of the Term Loan Component as provided in Section 2.4(b).
Borrower agrees to provide Agent with written notice prior to any such sale or
securitization and agrees to deliver to Agent copies of all documents executed
in connection therewith. Any such sale or securitization shall be acceptable to
Agent in its sole and absolute discretion. The proceeds received from any such
securitization shall be used to pay down the Loan in accordance with the
Business Plan.
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 or any of its
other assets or property, except as hereafter provided. Prior to March 31, 2003,
Borrower will not obtain financing and grant liens with respect to any of
Borrower's unpledged Notes Receivable, except as provided in this Agreement, the
Additional Credit Facility, the Tranche C Facility, the Inventory Loan, the
▇▇▇▇▇▇ Facility, and the Sovereign Facility, without the Agent's prior written
consent, which consent will not be unreasonably withheld. As a condition to such
consent, Agent may require that all proceeds of such financing be applied in
repayment of the Loan as provided in Section 2.4 hereof so as to reduce the
Effective Advance Rate, and may require advances to be funded from the Revolving
Loan Component prior to advances from such other financing. At any time after
March 31, 2003, Borrower may obtain financing and grant liens with respect to
any of Borrower's unpledged Notes Receivable in an amount not to exceed twenty
million dollars ($20,000,000.00), without Agent's consent provided that: (i) no
Default or Event of Default has occurred; (ii) and such financing does
not result in (x) Borrower's failure to substantially adhere to the Business
Plan or (y) an Event of Default; and (iii) Agent may require advances to be
funded from the Revolving Loan Component prior to advances from such other
financing. At any time after March 31, 2003, if Borrower wishes to obtain
financing in excess of twenty million dollars ($20,000,000.00) which will be
secured by any of Borrower's unpledged Notes Receivable, Borrower will obtain
Agent's written consent, which consent will not be unreasonably withheld.
Borrower may obtain unsecured financing provided: (i) Borrower provides prior
written notice to Agent setting forth the terms and conditions thereof; (ii)
Agent is provided a copy of the loan documents thereof; and (iii) such financing
does not result in Borrower's inability to substantially adhere to the Business
Plan, as determined by Agent in its sole and absolute discretion.
(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", (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, 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 Resort approved by Agent as manager of the
Resort (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). 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 A LENDER'S OR AGENT'S NAME. Borrower will not, and will not
permit any Affiliate to, without the prior written consent of Agent, such Lender
or such TFC participant, use the name of Agent, any Lender or any TFC
participant or the name of any affiliate of Agent, any Lender or any TFC
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. 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 Resort.
(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 Lenders' 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.
(g) TIMESHARE REGIME. Without Agent's prior written consent, which
consent shall not be unreasonably withheld as to changes necessary to implement
the Business Plan, 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 or in the Sovereign Documents, 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.
(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 Lenders 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) MODIFICATIONS OF ▇▇▇▇▇▇ DOCUMENTS, DZ DOCUMENTS, BOND HOLDER
EXCHANGE DOCUMENTS, SOVEREIGN DOCUMENTS AND OTHER DEBT INSTRUMENTS. Borrower
shall not amend or modify the ▇▇▇▇▇▇ Documents, the Sovereign Documents, DZ
Documents, Bond Holder Exchange Documents or the documents evidencing any other
indebtedness of Borrower, nor shall Borrower extend, modify, increase or
terminate the ▇▇▇▇▇▇ Facility, DZ Facility, the Bond Holder Exchange
Transaction, the Sovereign Facility or any other credit facility or loan,
without the prior written consent of Lender, which consent shall not be
unreasonably withheld.
(l) COMPENSATION OF SENIOR MANAGEMENT. The compensation payable to the
senior management of Borrower, as a group, shall not be increased by more than
twenty-five percent (25%) each year, with the increase in the first year
following the Effective Date being measured against the compensation payable to
the senior management of Borrower as of December 31, 2001, which compensation is
set forth on Schedule 7.2(l). The Borrower represents and warrants that Schedule
7.2(l) accurately sets forth such compensation.
(m) NO NEW CONSTRUCTION. Borrower will not, without Agent's prior
written approval, construct any improvements (excluding resort amenities) on any
Resorts, Land or any portion of the Additional Resort Collateral constituting
real property, unless such improvements are contemplated in the Business Plan.
(n) MODIFICATION OF OTHER DOCUMENTS. Borrower shall not amend or modify
the Standby Management Agreement or the Standby Servicing Agreement, without the
prior written consent of Agent, which consent shall not be unreasonably
withheld.
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); (ii) the failure
to deliver payments made under the Pledged Notes Receivable directly to Agent as
required pursuant to Section 2.4 above as provided in Section 8.1(h); or (iii)
violation of (x) the financial covenants in Section 7.1(cc) or (y) any negative
covenants in Section 7.2) 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.
(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 Lenders in connection with the Loan is or becomes invalid or
unenforceable or is not, or ceases to be, a perfected first or second priority
lien or security interest, as applicable, in favor of Agent, for itself and as
agent for the Lenders, 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 or second, as applicable, 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 Resort 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 2.4 above, or if Borrower shall take any other act which
Agent shall deem to be a conversion of the Collateral or fraudulent with respect
to any Lender.
(i) TIMESHARE DOCUMENTS. If the Declaration, any of the other documents
creating or governing the Resort, its timeshare regime, or the Timeshare Owners'
Association, or the restrictive covenants with respect to the Resort, 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, 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
$100,000.00 or less shall not be considered a material adverse change.
(m) DEFAULT BY BORROWER IN OTHER AGREEMENTS. Except for any Specified
Event of Default (as provided in the Forbearance Agreement), which Specified
Events of Default shall include a prior existing default under the ▇▇▇▇▇▇
Facility or the Sovereign Facility, any default by Borrower (i) in the payment
of any indebtedness to any Lender, including any indebtedness owed to Agent
under the ▇▇▇▇▇▇ Facility, DZ Facility, Sovereign Facility, Bond Holder Exchange
Transaction, Tranche C Facility, Additional Credit Facility or the Inventory
Loan, (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 ▇▇▇▇▇▇,
Sovereign, DZ or the bondholders of their respective credit facilities.
(n) LOSS OF LICENSE. The loss, revocation or failure to renew or file
for renewal of any registration, approval, license, permit or franchise now held
or hereafter acquired by Borrower or with respect to any Resort, or the failure
to pay any fee, which is necessary for the continued operation of any Resort or
Borrower's business in the same manner as it is being conducted at the time of
such loss, revocation, failure to renew or failure to pay.
(o) VIOLATION OF NEGATIVE COVENANTS. Borrower violates any negative
covenants set forth in Section 7.2.
(p) VIOLATION OF FINANCIAL COVENANTS. Borrower violates any financial
covenants set forth in Section 7.1(cc).
(q) USE OF LOAN PROCEEDS. If the proceeds of any Advance are used for
any purpose not set forth in the Business Plan or in contravention of Section
6.11(b).
(r) RECEIVABLE ADVANCES IN EXCESS OF BORROWING BASE OR LOAN IN EXCESS
OF MAXIMUM EFFECTIVE ADVANCE RATE. If the outstanding aggregate principal
balance of all Advances exceeds the Borrowing Base or if the outstanding
aggregate principal balance of the Revolving Loan Component and the Term Loan
Component divided by the aggregated outstanding principal balance of Eligible
Notes Receivable pledged to Agent hereunder exceeds the Maximum Effective
Advance Rate.
(s) FAILURE OF DZ FACILITY AND/OR BOND HOLDER EXCHANGE TRANSACTION TO
CLOSE. If either the DZ Facility or the Bond Holder Exchange Transaction shall
fail to close on the terms and conditions set forth, respectively, in the DZ
Letter Agreement and the Bond Holder Exchange Letter, on or before May 31, 2002.
(t) DZ FACILITY NOTES RECEIVABLE PURCHASES. If DZ does not purchase
Notes Receivable in substantially the amounts and during the periods specified
in the Business Plan or if the proceeds of such purchase are insufficient to
make the principal payments described in Section 2.4 hereof or if Borrower fails
to apply such proceeds to repayment of the Loan as provided in Section 2.4
hereof.
SECTION 9 -- REMEDIES
9.1 REMEDIES UPON DEFAULT. Should an Event of Default occur, Agent, on
behalf of each Lender, may, and upon request of Lenders having at the time of
such request total Pro Rata Percentages of more than 66 2/3%, Agent shall, 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 AND FORECLOSURE OF MORTGAGES. After
notification, if any, provided for in Section 9.2 below, 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, 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. Agent shall also have the right, in
accordance with the laws of the State in which any Collateral consisting of real
property is located, to foreclose the lien of the Land Mortgages and/or the
Additional Resort Collateral Mortgages.
(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 shall, on behalf of each Lender, have the right to take immediate
possession of all of the Collateral, and may enter the Resort 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 MANAGER AND SERVICER. Without demand or notice of
any nature whatsoever, upon an Event of Default, Agent may: (1) terminate any
then existing management agreements and with the approval of a majority of the
Borrower's Board of Directors, which approval shall not be unreasonably withheld
or delayed, replace any existing manager with such manager as Agent may select,
provided however, if: (x) the Obligations have become immediately due and
payable in accordance with Section 9.1 (a) hereof, or (y) Agent elects to have
J & J Limited, Inc. act as Standby Manager , then no such approval shall be
required; and (2) terminate any then existing servicing agreement and replace
any then existing Servicer with the Standby Servicer or such other servicer as
Agent may select in its sole and absolute discretion. Agent shall also have the
right to assume management of the Resorts.
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 such
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 any 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 (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 any Lender hereunder or under any other financing agreement or otherwise,
whether accrued or not, subject to Section 2.8 hereof. 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 LENDER 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.
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 on behalf of Lenders 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 LENDERS OR AGENT. Any sums expended by or on behalf
of Agent or 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, but specifically
excluding any diminution or loss in value which is actually and proximately
caused by Agent's failure to retain the Pledged Notes Receivable in a
fire-resistant filing cabinet as provided in Section 3.6 above.
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 LENDERS
10.1 PROTECTION OF COLLATERAL. Agent on behalf of each Lender may at
any time and from time to time take such actions as it deems necessary or
appropriate to protect 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 on behalf of Lenders, and the expenses of Agent incurred in connection
therewith shall be payable by Borrower under Section 10.5 below. 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 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 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, nor the acquisition of the Pledged Notes Receivable and
the Mortgages by Agent prior to or following the occurrence of an Event of
Default shall constitute an assumption by Agent or any Lender of any obligations
of Borrower with respect to any Resort or the Pledged Notes Receivable, the
Mortgages 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 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, the Mortgages 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
Purchasers, Agent or Lender, as the case may be, on the other, or (v) the
Pledged Notes Receivable, the Mortgages or 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 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
Pledged Notes Receivable or Mortgages, the value of the Collateral 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 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. Subject to Section 2.8 hereof, each
Lender shall have the right to set-off against any Collateral any Obligations
then due and unpaid by Borrower, provided Borrower is in Default.
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, any Purchasers, 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,
subject to Section 13.11 hereof, 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 ASSIGNMENT OF LENDER'S INTEREST. Each Lender shall have the right
to assign its Loans and all or any portion of its rights in or pursuant to this
Agreement or any of the Loan Documents to any subsequent holder or holders of
its Note or the Obligations evidenced thereby, provided that each Lender shall
give Agent concurrent written notice of each such assignment.
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 Effective 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 Effective 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 as provided
in Section 10.11 above, (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 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 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 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 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.
10.14 STANDBY SERVICER. Borrower acknowledges and agrees that upon
written notice from Agent, to be given at any time during the term of the Loan
in Agent's sole and absolute discretion, the Servicing Agent shall be replaced
by the Standby Servicer, or such other servicing entity as may be selected by
Agent in its sole and absolute discretion, for the purpose of servicing all
Notes Receivable comprising the Collateral.
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 either
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.
IF TO LENDER: Textron Financial Corporation
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Accounting Department/Collections
Bank of Scotland
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Special Assets
IF TO AGENT: Textron Financial Corporation
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Accounting Department/Collections
WITH A COPY TO: Textron Financial Corporation
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Division Counsel (RRD)
AND TO: Textron Financial Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Division President
Notwithstanding the foregoing, copies of the requests or notices from
Borrower to Lender or Agent which are specified in the Sections of this
Agreement listed below shall not be delivered to Providence,
Rhode Island as
provided above, but rather shall be delivered in accordance with this Section
12.1 to Textron Financial Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Division President.
The applicable Sections of
this Agreement are Section 2.4(a) Voluntary Prepayments, Section 5(a) Request
for Advances, and Section 12.10 Return of Notes Receivable. In addition, all
documents, instruments and other items to be delivered to Lenders from time to
time pursuant to this Agreement shall be delivered to Agent's office at ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
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. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT
AS MAY BE EXPRESSLY PROVIDED THEREIN TO THE CONTRARY) SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
RHODE ISLAND, EXCLUSIVE OF
ITS CHOICE OF LAWS PRINCIPLES.
12.4 LIMITATION ON INTEREST. Agent, 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 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 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, and this Section shall govern over all other
provisions in any document or agreement now
or hereafter existing. This Section shall never be superseded or waived unless
there is a written document executed by Agent, each Lender and 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, the Commitment 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, the Commitment 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
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 LENDERS 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
2.5(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, the Tranche C Facility and the Inventory Loan shall remain in full
force and effect.
12.13 LITIGATION. 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. EACH OF BORROWER, AGENT AND EACH
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 OR AGENT OF AGENT OR ANY LENDER, NOR AGENT'S OR ANY LENDER'S
COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT AGENT OR ANY 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
ARE A MATERIAL INDUCEMENT TO AGENT'S AND EACH LENDER'S ACCEPTANCE OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
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 OF TIMESHARE DOCUMENTS.
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.
SECTION 13 - AGENT
13.1 AUTHORIZATION AND ACTION. Each Lender hereby accepts the
appointment of and
irrevocably (but subject to Section 13.8) 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 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 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 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 TFC, 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 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 or
participants 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.
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 13.10 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 TFC as agent for Lenders as provided
herein with the same force and effect as if it were an original Lender hereunder
and signatory hereto. TFC 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 following:
(i) Agent's actual knowledge that any event or condition
exists that would permit a Lender to refuse to make an Advance
(including but not limited to those events or conditions
provided in Sections 2.1(a) and 2.1(b) hereof);
(ii) Agent's receipt of any notice from any party to the
Intercreditor Agreement;
(iii) Agent's receipt of any notice or request from Borrower
regarding a proposed modification, waiver or consent, provided
however, Agent shall not be required to provide notice unless
Agent finds such proposed modification, waiver or consent
acceptable and intends to recommend approval of such proposed
modification, waiver or consent to the Lenders;
(iv) Failure of any Lender to make a required Advance or other
accommodation within ten (10) business days of the time period
specified in Section 2.1(f) hereof;
(v) Notice of ▇▇▇▇▇▇ or Sovereign ceasing to make advances
under their respective loan facilities, or TFC ceasing or
refusing to make advances under the Additional Credit Facility
or the Tranche C Facility;
(vi) Copies of any information/notices provided to Agent by
Borrower pursuant to Sections 5.1(a), 7.1(h), 7.1(i), 7.1(m),
7.1(o), 7.1(s) and 7.1(dd) hereof; and
(vii) Reasonable prior written notice of Agent's intent to
exercise its rights under Section 7.1(g). The scope of any
examination, audit or inspection conducted by Agent pursuant
to said Section 7.1(g) (including but not limited to setting
the parameters of any sample pool that is the subject of such
examination, audit or inspection) shall be reasonably
acceptable to each Lender.
(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 the Loan Agreement without
obtaining prior approval from any Lender, provided that, without the prior
approval of each Lender in each instance, Agent may not: (i) reduce the
principal amount of the Loan; (ii) change the Borrowing Base (advance rate)
(provided, however, Agent may reduce the Borrowing Base for a limited time (not
more than sixty (60) days) to adjust an over-advance circumstance); (iii) change
the definition of Eligible Notes Receivable; (iv) decrease the Interest Rate;
(v) extend the Final Maturity Date of the Loan; (vi) waive or excuse any
payment; (vii) release any material Collateral or any material third party
obligor (except as expressly authorized by this Agreement in the normal course
of Borrower's business); (viii) waive an Event of Default; or (ix) waive any of
the Advance requirements set forth in Section 5.1. Notwithstanding the
foregoing, Agent may take any such actions referred to in such preceding
sentences and each Lender shall be bound thereby, with the consent of such
Lenders (including Agent as a Lender for this purpose) whose total Pro Rata
Payment Percentage is equal to or exceeds sixty-six and two-thirds percent
(66 2/3%) of the outstanding principal balance of the Loan.
Notwithstanding the foregoing, in the event that a Lender does not
consent to any of the amendments or waivers requiring sixty-six and two-thirds
percent (66 2/3%) consent under the previous paragraph, then such Lender shall
not be obligated to fund any additional Advances hereunder but it shall continue
to receive its Pro Rata Payment Percentage of each repayment of principal and
interest on the Loan in accordance with the terms of this Agreement and shall be
repaid in full over a period not to exceed the then existing Final Maturity Date
under the Loan. Furthermore, in the event a Lender does not consent to any
amendment or waivers regarding: (i) reduction of the principal amount of the
Loan; (ii) reduction in the release price as to any Collateral or any other
change with regard to release of Collateral; (iii) reduction of the Interest
Rate; (iv) any express change in the Effective Advance Rate which adversely
impacts the Collateral as to such Lender; or (v) any subordination or release of
any material Collateral, except as set forth in this Agreement or the Loan
Documents, then in any of such events any such modification shall be applicable
only to new money advanced by Agent and such changes shall not be applicable in
any way to the existing balance due under the Loan as of the date of such
change. Notwithstanding anything to the contrary contained in this Section
13.11(d), Agent may, in its sole and absolute discretion, require that the
Lenders (including TFC) unanimously consent to the approval of any such
action(s) referred to in this Section 13.11(d) before any such action(s) is
taken. Borrower acknowledges and agrees that in the event that a Lender does not
consent to any of the amendments or waivers requiring sixty-six and two-thirds
percent (66 2/3%) consent under the previous paragraph and such Lender is not
obligated to fund any additional Advances hereunder, the Maximum Available
Amount shall be reduced by an amount equal to the amount of any unused portion
of such Lender's Commitment.
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 Original 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 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. Borrower acknowledges, agrees and confirms that: (a)
Advances under the Original Agreement have been made prior to the date hereof;
(b) all such Advances made prior to the date hereof were made in favor of the
Original Borrower and Borrower in respect of the Existing Eligible Resorts; (c)
Advances made prior to the date hereof under the Original Agreement are deemed
as having been made for the benefit of Borrower and Borrower acknowledges and
agrees that Borrower received a direct and substantial financial benefit from
such Advances and (d) immediately prior to the date hereof, and without giving
effect to any Advances that may be made pursuant to this Agreement, the status
of the Loan, including the outstanding principal balance thereof is as reflected
in the Loan Funding Report delivered to and approved by Agent, a copy of which
is attached as Exhibit J.
The Loan constitutes valuable consideration to Borrower, which
consideration is uninterrupted and continuous since the dates on which the Loan
was first made. 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 of the Participants' rights or Agent's obligations under each
Participant's respective participation agreement with the Agent.
SECTION 14 - SPECIAL CONDITIONS
14.1 EFFECTIVE DATE. BORROWER ACKNOWLEDGES, AGREES AND CONFIRMS THAT
THE TERMS AND CONDITIONS OF THIS AGREEMENT, INCLUDING ANY OBLIGATION OF LENDERS
TO MAKE ANY ADVANCE HEREUNDER, SHALL NOT BECOME EFFECTIVE UNTIL THE EFFECTIVE
DATE, AS SUCH TERM IS HEREINAFTER DEFINED. FOR PURPOSES OF THIS AGREEMENT, THE
TERM "EFFECTIVE DATE" SHALL MEAN THE DATE ON WHICH AGENT DETERMINES, IN ITS SOLE
AND ABSOLUTE DISCRETION, THAT EACH OF THE CONDITIONS SET FORTH IN SECTION 4
HEREOF HAVE BEEN SATISFIED, INCLUDING BUT NOT LIMITED TO: (i) THE CLOSING OF THE
DZ FACILITY IN ACCORDANCE WITH THE TERMS AND CONDITIONS OUTLINED IN THE DZ
LETTER AGREEMENT AND THE BUSINESS PLAN; (ii) THE CONSUMMATION OF THE BOND HOLDER
EXCHANGE TRANSACTION IN ACCORDANCE WITH THE TERMS AND CONDITIONS OUTLINED IN THE
BOND HOLDER EXCHANGE LETTER AND THE BUSINESS PLAN; (iii) THE APPROVAL OF THIS
AGREEMENT (AND THE MODIFICATION OF THE ORIGINAL AGREEMENT AS CONTEMPLATED
HEREIN) BY EACH LENDER AND PARTICIPANT; AND (iv) THE CLOSING OF THE SOVEREIGN
FACILITY AND ▇▇▇▇▇▇ FACILITY IN ACCORDANCE WITH THE BUSINESS PLAN. IN THE EVENT
THAT THE EFFECTIVE DATE DOES NOT OCCUR ON OR BEFORE MAY 31, 2002, THEN THIS
AGREEMENT, AND ALL OF THE OBLIGATIONS OF AGENT AND LENDERS HEREUNDER, INCLUDING
THE OBLIGATION TO MAKE ANY ADVANCE HEREUNDER SHALL BE VOID AB INITIO, AS IF THIS
AGREEMENT WAS NEVER ENTERED INTO. IN SUCH EVENT, THE LOAN, AND THE RIGHTS AND
OBLIGATIONS OF BORROWER WITH RESPECT THERETO, SHALL BE GOVERNED IN ALL RESPECTS
BY THE TERMS AND CONDITIONS SET FORTH IN THE ORIGINAL LOAN AGREEMENT, AS
MODIFIED BY THE FORBEARANCE AGREEMENT. BORROWER EXPRESSLY ACKNOWLEDGES, AGREES
AND CONFIRMS THAT TIME IS OF THE UTMOST ESSENCE WITH RESPECT TO THE EFFECTIVE
DATE OCCURRING ON OR BEFORE MAY 31, 2002. ON THE
EFFECTIVE DATE, AND SO LONG AS EACH CONDITION PRECEDENT SET FORTH IN THIS
AGREEMENT HAS BEEN SATISFIED, THE LENDERS AGREE TO WAIVE ALL PRIOR DEFAULTS AND
EVENTS OF DEFAULT UNDER THE ORIGINAL LOAN AGREEMENT, INCLUDING BUT NOT LIMITED
TO THE SPECIFIED EVENTS OF DEFAULT PROVIDED IN THE FORBEARANCE AGREEMENT.
14.2 DZ BANK FACILITY CONDITIONS. Agent, for itself and on behalf of
each Lender acknowledges and agrees that: (i) the transfer of Notes Receivable
to Silverleaf Finance I, Inc. in connection with the DZ Facility is a true sale
and not a financing transaction; (ii) no Lender or Agent will consolidate
Silverleaf Finance I, Inc. with the Borrower in the event of a bankruptcy; and
(iii) no Lender or Agent will take any action to the contrary in the case of a
bankruptcy of Borrower or otherwise.
14.3 RELEASE. IN ORDER TO INDUCE AGENT, LENDERS AND PARTICIPANTS TO
ENTER INTO THIS AGREEMENT, BORROWER ACKNOWLEDGES AND AGREES THAT: (i) BORROWER
HAS NO CLAIM OR CAUSE OF ACTION AGAINST AGENT, ANY LENDER OR ANY PARTICIPANT (OR
ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS); (ii) BORROWER
HAS NO OFFSET RIGHT, COUNTERCLAIM OR DEFENSE OF ANY KIND AGAINST ANY OF ITS
OBLIGATIONS, INDEBTEDNESS OR LIABILITIES TO AGENT, ANY LENDER OR ANY
PARTICIPANT; AND (iii) EACH OF AGENT, LENDERS AND PARTICIPANTS HAS HERETOFORE
PROPERLY PERFORMED AND SATISFIED IN A TIMELY MANNER ALL OF ITS OBLIGATIONS TO
BORROWER. BORROWER WISHES TO ELIMINATE ANY POSSIBILITY THAT ANY PAST CONDITIONS,
ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS WOULD IMPAIR OR OTHERWISE
ADVERSELY AFFECT AGENT'S, ANY OF LENDERS' OR ANY OF PARTICIPANTS' RIGHTS,
INTERESTS, CONTRACTS, COLLATERAL SECURITY OR REMEDIES. THEREFORE, BORROWER
UNCONDITIONALLY RELEASES, WAIVES AND FOREVER DISCHARGES (A) ANY AND ALL
LIABILITIES, OBLIGATIONS, DUTIES, PROMISES OR INDEBTEDNESS OF ANY KIND OF AGENT,
ANY LENDER OR ANY PARTICIPANT TO BORROWER, EXCEPT THE OBLIGATIONS TO BE
PERFORMED BY AGENT, ANY LENDER OR ANY PARTICIPANT ON OR AFTER THE DATE HEREOF AS
EXPRESSLY STATED IN THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND (B) ALL
CLAIMS, OFFSETS, CAUSES OF ACTION, SUITS OR DEFENSES OF ANY KIND WHATSOEVER (IF
ANY), WHETHER ARISING AT LAW OR IN EQUITY, WHETHER KNOWN OR UNKNOWN, WHICH
BORROWER MIGHT OTHERWISE HAVE AGAINST AGENT, ANY LENDER, ANY PARTICIPANT OR ANY
OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS, IN EITHER CASE (A)
OR (B), ON ACCOUNT OF ANY PAST OR PRESENTLY EXISTING CONDITION, ACT, OMISSION,
EVENT, CONTRACT, LIABILITY, OBLIGATION, INDEBTEDNESS, CLAIM, CAUSE OF ACTION,
DEFENSE, CIRCUMSTANCE OR MATTER OF ANY KIND.
IN WITNESS WHEREOF, Borrower, Bank of Scotland and Agent, for itself
and as agent for each of the Lenders, have caused this Agreement to be duly
executed and delivered effective as of the date first above written.
BORROWER:
SILVERLEAF RESORTS, INC., a Texas
corporation
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------- --------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: CFO
STATE OF TEXAS )
) ss:
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me this 24th day of
April, 2002 by ▇▇▇▇▇ ▇. ▇▇▇▇▇, CFO of Silverleaf Resorts, Inc., a Texas
corporation, on behalf of the Corporation.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Commissioner of the Superior Court
Notary Public
My Commission Expires: February 11, 2006
LENDER:
BANK OF SCOTLAND, a
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------- -------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
STATE OF NEW YORK )
) ss:
COUNTY OF MANHATTAN )
The foregoing instrument was acknowledged before me this 26th day of
April, 2002 by ▇▇▇▇▇▇ ▇▇▇▇▇▇, VP of Bank of Scotland, a __________, on behalf of
the _____________.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Commissioner of the Superior Court
Notary Public
My Commission Expires:September 25, 2002
LENDER:
▇▇▇▇▇▇▇ BANK,
a federal savings bank
[illegible] By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------- ---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Asst. V.P.
STATE OF CONNECTICUT )
) ss:
COUNTY OF HARTFORD )
The foregoing instrument was acknowledged before me this 25th day of
April, 2002 by ▇▇▇▇▇ ▇▇▇▇▇▇, Asst. V.P. of ▇▇▇▇▇▇▇ BANK, a federal savings
bank, on behalf of the bank.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Commissioner of the Superior Court
Notary Public
My Commission Expires: August 31, 2001
LENDER:
TEXTRON FINANCIAL CORPORATION,
a Delaware corporation
[illegible] By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------- --------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: VP
STATE OF CONNECTICUT )
) ss:
COUNTY OF HARTFORD )
The foregoing instrument was acknowledged before me this 26th day of
April, 2002 by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, VP of TEXTRON FINANCIAL CORPORATION, a
Delaware corporation, on behalf of the corporation.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Commissioner of the Superior Court
Notary Public
My Commission Expires: August 31, 2004
AGENT:
TEXTRON FINANCIAL CORPORATION,
a Delaware corporation as
Agent for each Financial
Institution listed on Schedule A
[illegible] By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------- ---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: VP
STATE OF CONNECTICUT )
) ss:
COUNTY OF HARTFORD )
The foregoing instrument was acknowledged before me this 26th day of
April, 2002 by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, VP of TEXTRON FINANCIAL CORPORATION, a
Delaware corporation, on behalf of the corporation.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Commissioner of the Superior Court
Notary Public
My Commission Expires: August 31, 2004
Exhibits:
Schedule A Description of Lenders