Ex. 10.2
RECEIVABLES LOAN AND SECURITY AGREEMENT
$50,000,000 Revolving Senior Credit Facility
provided by CAPITALSOURCE FINANCE LLC
to
SILVERLEAF RESORTS, INC.
As of April 29, 2005
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITION OF TERMS................................................................ 1
1.1 Advance.......................................................................... 1
1.2 Affiliate........................................................................ 1
1.3 Agreement........................................................................ 2
1.4 Applicable Laws.................................................................. 2
1.5 Approved Escrow Account.......................................................... 2
1.6 Backup Servicer.................................................................. 2
1.7 Backup Servicing Agreement....................................................... 2
1.8 Bond Holder Exchange Transaction................................................. 2
1.9 Borrower......................................................................... 2
1.10 Borrowing Base................................................................... 2
1.11 Business Day..................................................................... 2
1.12 Capital Lease.................................................................... 2
1.13 Cash Flow........................................................................ 2
1.14 Change in Management............................................................. 3
1.15 Closing Date..................................................................... 3
1.16 Code............................................................................. 3
1.17 Collateral....................................................................... 3
1.18 Commitment Fee................................................................... 4
1.19 Common Elements.................................................................. 4
1.20 Consolidated Net Income.......................................................... 4
1.21 Consumer Loan.................................................................... 4
1.22 Credit Files..................................................................... 4
1.23 Custodial Agreement.............................................................. 4
1.24 Custodian........................................................................ 4
1.25 Debt............................................................................. 4
1.26 Debt Service Coverage Ratio...................................................... 5
1.27 Debtor Relief Laws............................................................... 5
1.28 Declaration...................................................................... 5
1.29 Default.......................................................................... 5
1.30 Default Rate..................................................................... 5
1.31 Delinquent Note Receivable....................................................... 5
1.32 DZ Facility...................................................................... 5
1.33 EBITDA........................................................................... 5
1.34 Eligible Deferred Note Receivable................................................ 6
1.35 Eligible Note Receivable......................................................... 6
1.36 Encumbered Timeshare Interest.................................................... 8
1.37 Environmental Laws............................................................... 8
1.38 Event of Default................................................................. 9
1.39 Exchange Company................................................................. 9
1.40 Executive Management Member...................................................... 9
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1.41 FICO............................................................................. 9
1.42 Financial Statements............................................................. 9
1.43 Furnishings...................................................................... 9
1.44 GAAP............................................................................. 9
1.45 Hazardous Materials.............................................................. 9
1.46 Hazardous Materials Indemnity Agreement.......................................... 9
1.47 Improvements..................................................................... 10
1.48 Initial Advance.................................................................. 10
1.49 Interest Expense................................................................. 10
1.50 Interest Rate.................................................................... 10
1.51 Inventory Loan................................................................... 10
1.52 Inventory Loan Agreement......................................................... 10
1.53 Inventory Loan Documents......................................................... 10
1.54 Leverage Ratio................................................................... 10
1.55 LIBOR Rate....................................................................... 10
1.56 Lien............................................................................. 11
1.57 Loan............................................................................. 11
1.58 Loan Documents................................................................... 11
1.59 Lockbox Agent.................................................................... 11
1.60 Lockbox Agreement................................................................ 12
1.61 Loss of License.................................................................. 12
1.62 Mandatory Prepayment............................................................. 12
1.63 Maturity Date.................................................................... 12
1.64 Maximum Loan Amount.............................................................. 12
1.65 Negative Pledge.................................................................. 12
1.66 Net Income....................................................................... 12
1.67 Net Sales........................................................................ 12
1.68 Note Receivable.................................................................. 12
1.69 Oak N' Spruce Resort............................................................. 12
1.70 Obligations...................................................................... 12
1.71 Orlando Breeze Resort Club....................................................... 13
1.72 Payment Authorization Agreement.................................................. 13
1.73 Permitted Discretion............................................................. 13
1.74 Permitted Liens and Encumbrances................................................. 13
1.75 Person........................................................................... 13
1.76 Pledged Note Receivable.......................................................... 13
1.77 Property......................................................................... 13
1.78 PropertyRelated Contracts........................................................ 13
1.79 Purchase Agreement............................................................... 13
1.80 Purchase Price................................................................... 13
1.81 Purchaser........................................................................ 13
1.82 Receivables Loan Approved Resorts................................................ 13
1.83 Resort Facilities................................................................ 14
1.84 Revolving Credit Period.......................................................... 14
1.85 Sales and Marketing Costs........................................................ 14
1.86 Servicing Agreement.............................................................. 14
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1.87 Silverleaf Club.................................................................. 14
1.88 Sovereign Facility............................................................... 14
1.89 Suspension of Sales Order or Sanction............................................ 14
1.90 Tangible Net Worth............................................................... 14
1.91 Textron Facility................................................................. 14
1.92 Timeshare Act.................................................................... 15
1.93 Timeshare Association............................................................ 15
1.94 Timeshare Documents.............................................................. 15
1.95 Timeshare Interest............................................................... 15
1.96 Timeshare Interest Mortgage...................................................... 15
1.97 Title Insurance Company.......................................................... 15
1.98 Title Policy..................................................................... 15
1.99 Unit............................................................................. 15
1.100 Unused Line Fee.................................................................. 15
1.101 Upgraded Note Receivable......................................................... 16
1.102 Use Agreement.................................................................... 16
1.103 Voting Equity.................................................................... 16
SECTION 2. THE LOAN........................................................................... 16
2.1 Purposes......................................................................... 16
2.2 Advances......................................................................... 16
2.3 Interest Rate.................................................................... 16
2.4 Payments......................................................................... 17
2.5 Prepayments...................................................................... 18
2.6 Reassignment by Lender........................................................... 19
2.7 Breakage Costs................................................................... 19
2.8 Additional Increased Costs....................................................... 19
2.9 Basis For Determining Interest Rate Inadequate or Unfair......................... 20
2.10 Notes. Borrower agrees that:.................................................... 20
SECTION 3. COLLATERAL......................................................................... 21
3.1 Grant of Security Interest....................................................... 21
3.2 Security Interest in All Pledged Notes Receivable................................ 21
3.3 Financing Statements............................................................. 21
3.4 Location of Collateral........................................................... 21
3.5 Protection of Collateral; Reimbursement.......................................... 21
3.6 Cross-Collateralization and Default.............................................. 22
3.7 Liability........................................................................ 22
SECTION 4. CONDITIONS PRECEDENT TO CLOSING AND FUNDING PROCEDURES............................. 23
4.1 Conditions Precedent............................................................. 23
4.2 Funding Procedures............................................................... 26
SECTION 5. GENERAL REPRESENTATIONS AND WARRANTIES............................................. 30
5.1 Organization, Standing, Qualification............................................ 30
5.2 Authorization, Enforceability, Etc............................................... 30
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5.3 Financial Statements and Business Condition...................................... 32
5.4 Taxes............................................................................ 32
5.5 Title to Collateral and Other Properties; Prior Liens............................ 32
5.6 Litigation, Proceedings, Etc..................................................... 32
5.7 Licenses, Permits, Etc........................................................... 33
5.8 Environmental Matters............................................................ 33
5.9 Full Disclosure.................................................................. 33
5.10 Use of Proceeds/Margin Stock..................................................... 33
5.11 No Defaults...................................................................... 34
5.12 Restrictions on Borrower......................................................... 34
5.13 Broker's Fees.................................................................... 34
5.14 Tax Identification Number........................................................ 34
5.15 Legal Compliance................................................................. 34
5.16 Deferred Compensation Plans...................................................... 35
5.17 Labor Relations.................................................................. 35
5.18 Receivables Loan Approved Resorts................................................ 36
5.19 Timeshare Documents and Reports.................................................. 36
5.20 Reliance by Lender............................................................... 37
5.21 Vacation Club.................................................................... 37
SECTION 6. COVENANTS.......................................................................... 37
6.1 Affirmative Covenants............................................................ 37
6.2 Negative Covenants............................................................... 49
SECTION 7. EVENTS OF DEFAULT.................................................................. 51
7.1 Payment Default.................................................................. 51
7.2 Covenant Defaults................................................................ 51
7.3 Warranties or Representations.................................................... 51
7.4 Enforceability................................................................... 52
7.5 Insolvency....................................................................... 52
7.6 Involuntary Proceedings.......................................................... 52
7.7 Voluntary Proceedings............................................................ 52
7.8 Attachment; Judgment; Tax Liens.................................................. 52
7.9 Failure to Deposit Proceeds...................................................... 52
7.10 Timeshare Documents.............................................................. 52
7.11 Removal of Collateral............................................................ 52
7.12 Other Defaults................................................................... 53
7.13 Material Adverse Change.......................................................... 53
7.14 Default by Borrower in Other Agreements.......................................... 53
7.15 Violation of Negative Covenants.................................................. 53
7.16 Declaration...................................................................... 53
7.17 Transfer of Property............................................................. 53
7.18 Lien Against Collateral.......................................................... 53
7.19 Title............................................................................ 53
7.20 Loss of License.................................................................. 53
7.21 Suspension of Sales.............................................................. 53
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SECTION 8. REMEDIES........................................................................... 54
8.1 Remedies Upon Default............................................................ 54
8.2 Notice of Sale................................................................... 55
8.3 Application of Collateral; Termination of Agreements............................. 56
8.4 Rights of Lender Regarding Collateral............................................ 56
8.5 Delegation of Duties and Rights.................................................. 57
8.6 Waivers.......................................................................... 57
8.7 Cumulative Rights................................................................ 57
8.8 Expenditures by Lender........................................................... 57
8.9 Diminution in Value of Collateral................................................ 58
SECTION 9. CERTAIN RIGHTS OF LENDER........................................................... 58
9.1 Protection of Collateral......................................................... 58
9.2 Performance by Lender............................................................ 58
9.3 No Liability of Lender........................................................... 58
9.4 Right to Defend Action Affecting Security........................................ 59
9.5 Expenses......................................................................... 59
9.6 Lender's Right of SetOff......................................................... 60
9.7 Right of Lender to Extend Time of Payment, Substitute, Release Security, Etc..... 60
9.8 Assignment of Lender's Interest.................................................. 60
9.9 Notice to Purchaser.............................................................. 60
9.10 Collection of Pledged Notes Receivable........................................... 60
9.11 Power of Attorney................................................................ 61
9.12 Relief from Automatic Stay, Etc.................................................. 61
9.13 Investigations and Inquiries..................................................... 61
9.14 Verification of Use.............................................................. 62
SECTION 10. TERM OF AGREEMENT................................................................. 62
SECTION 11. MISCELLANEOUS..................................................................... 62
11.1 Notices.......................................................................... 62
11.2 Survival......................................................................... 63
11.3 Governing Law.................................................................... 63
11.4 Limitation on Interest........................................................... 64
11.5 Invalid Provisions............................................................... 64
11.6 Successors and Assigns........................................................... 65
11.7 Amendment........................................................................ 66
11.8 Counterparts; Effectiveness...................................................... 66
11.9 Lender Not a Fiduciary........................................................... 66
11.10 Release and Return of Notes Receivable........................................... 66
11.11 Accounting Principles............................................................ 67
11.12 Entire Agreement................................................................. 67
11.13 Litigation....................................................................... 67
11.14 Incorporation of Exhibits and Schedules.......................................... 67
11.15 Consent to Advertising and Publicity............................................. 68
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11.16 Directly or Indirectly........................................................... 68
11.17 Captions......................................................................... 68
11.18 Gender........................................................................... 68
11.19 No Duty.......................................................................... 68
11.20 Submissions...................................................................... 68
11.21 Confidentiality.................................................................. 69
11.22 Borrower's Acknowledgment........................................................ 69
11.23 No Offset........................................................................ 69
LIST OF EXHIBITS
EXHIBIT "A" - Form of Custodial Agreement
EXHIBIT "B" - Form of Master Pledge and Assignment of Notes Receivable and
Timeshare Interest Mortgages
EXHIBIT "C" - Form of Lockbox Agreement
EXHIBIT "D" - Resort Facilities
EXHIBIT "E" - Permitted Liens and Encumbrances
EXHIBIT "F" - Receivables Loan Approved Resorts
EXHIBIT "G" - Form of Reassignment
EXHIBIT "H" - Description of Pending Litigation
EXHIBIT "I" - Form of Advance Request
EXHIBIT "J" - Form of Supplemental Pledge and Assignment of Notes Receivable
and Timeshare Interest Mortgages
EXHIBIT "K" - List of States in which Borrower is Registered or Exempt
EXHIBIT "L" - List of Timeshare Documents
EXHIBIT "M" - Borrowing Base Certificate
EXHIBIT "N" - Listing of amounts owed to Timeshare Association
RECEIVABLES LOAN AND SECURITY AGREEMENT
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RECEIVABLES LOAN AND SECURITY AGREEMENT
THIS RECEIVABLES LOAN AND SECURITY AGREEMENT (the "Agreement") is made and
entered into as of April 29, 2005, by and between SILVERLEAF RESORTS INC., a
Texas corporation ("Borrower"), and CAPITALSOURCE FINANCE LLC, a Delaware
limited liability company ("Lender").
RECITALS
WHEREAS, Borrower is the fee owner of the Property, subject to the sale of
Timeshare Interests to Purchasers;
WHEREAS, Purchasers who finance the acquisition of their Timeshare
Interests execute a Note Receivable and a related Timeshare Interest Mortgage in
favor of Borrower;
WHEREAS, Lender desires to make a Loan to Borrower in an amount not to
exceed Fifty Million Dollars ($50,000,000) which is to be secured by certain
Pledged Notes Receivable and Timeshare Interest Mortgages pledged and assigned
by Borrower to Lender;
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties to this Agreement,
intending to be legally bound, hereby agree as follows:
SECTION 1. DEFINITION OF TERMS
The capitalized terms used in this Agreement are defined in this Section
1. The definitions include the singular and plural forms of the terms defined.
1.1 Advance. A portion of the proceeds of the Loan advanced from time to
time by Lender to Borrower in accordance with the terms of this Agreement.
1.2 Affiliate. Any Person:
(a) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
such Person;
(b) which beneficially owns or holds 5% or more of any class of
the Voting Equity of such Person; or
(c) 5% or more of the Voting Equity of which is beneficially owned
or held by such Person.
The term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of Voting Equity, other voting securities,
by contract or otherwise.
RECEIVABLES LOAN AND SECURITY AGREEMENT
1.3 Agreement. This Receivables Loan and Security Agreement by and
between Borrower and Lender (including the exhibits and schedules hereto), as it
may be amended and/or restated from time to time.
1.4 Applicable Laws. Any and all federal, state, and local statutes,
ordinances, rules, regulations, court orders and decrees, administrative orders
and decrees, and other legal requirements of any and every conceivable type to
which Borrower or any portion thereof, or all or any portion of the Collateral
is or becomes subject from time to time, including but not limited to those
governing the marketing and sale of Timeshare Interests at or with respect to
the Receivables Loan Approved Resorts, as the same have been or may in the
future be amended from time to time.
1.5 Approved Escrow Account. As defined in the Inventory Loan Agreement.
1.6 Backup Servicer. Concord Servicing Corporation, or such other
servicer acceptable to Lender in its Permitted Discretion.
1.7 Backup Servicing Agreement. The agreement pursuant to which the
Backup Servicer shall provide servicing functions with respect to the Pledged
Notes Receivable.
1.8 Bond Holder Exchange Transaction. Those certain senior subordinate
note holder exchange transactions consummated pursuant to (a) that certain
Indenture dated as of May 2, 2002 between Silverleaf Resorts, Inc. and ▇▇▇▇▇
Fargo Bank Minnesota, NA., and all documents related thereto, and (b) that
certain Indenture dated as of July 7, 2004 between Silverleaf Resorts, Inc. and
▇▇▇▇▇ Fargo Bank, NA., and all documents related thereto, as amended,
supplemented and modified from time to time.
1.9 Borrower. Silverleaf Resorts Inc., a Texas corporation, together
with its successors and assigns.
1.10 Borrowing Base. As applicable, during the Revolving Credit Period,
the lesser of (i) the Maximum Loan Amount and (ii) seventyfive percent (75%) of
the aggregate outstanding principal balance of all Eligible Notes Receivable
pledged to Lender as partial security for the Loan as of the date in question.
1.11 Business Day. Each day that is not a Saturday, Sunday, or a legal
holiday under the laws of the State of Maryland, State of Texas or the United
States, and if the applicable Business Day relates to the Loan, such day must
also be a day on which dealings are carried on in the London interbank market.
1.12 Capital Lease. As to any Person, a lease of any interest in any kind
of property or asset by that Person as lessee that is, should be or should have
been recorded as a "capital lease" in accordance with GAAP.
1.13 Cash Flow. In respect of any period, the sum of (a) Net Income of
Borrower for such period and (b) the amount of all depreciation and amortization
allowances and other noncash expenses of Borrower, but only to the extent
deducted in the determination of Net Income of Borrower for such period.
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1.14 Change in Management. A change of more than fifty percent (50%), in
the aggregate, of the following members of the executive management team of
Borrower: ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇'▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇.
1.15 Closing Date. The date of this Agreement.
1.16 Code. The version of the Uniform Commercial Code in effect from time
to time in the State of Maryland, as amended from time to time.
1.17 Collateral.
(a) A first priority security interest in and to the Pledged Notes
Receivable and related Credit Files generated from the sale of Timeshare
Interests at the Receivables Loan Approved Resorts, together with all accounts,
chattel paper and general intangibles related thereto and the cash and noncash
proceeds thereof;
(b) A first and unconditional collateral assignment of the
Timeshare Interest Mortgages encumbering the Timeshare Interests financed by the
Pledged Notes Receivable and, to the extent of Borrower's interest as mortgagee
with respect to each Timeshare Interest Mortgage assigned to Lender, the
Encumbered Timeshare Interests, together with all appurtenant rights and
interests, including, without limitation, appurtenant rights and interests in
and to the Common Elements, and easement, license and use rights in and to all
facilities, all as described, defined and set forth in the Declaration;
(c) A first priority security interest in and to all documents,
instruments, accounts, chattel paper, and general intangibles relating to the
Pledged Notes Receivable, and related Timeshare Interest Mortgages and the other
Collateral (including the cash and noncash proceeds thereof);
(d) All rights in, to and under all Payment Authorization
Agreements signed and delivered by or on behalf of each Purchaser of an
Encumbered Timeshare Interest and all accounts and proceeds relating thereto or
deriving therefrom;
(e) Any rights inuring to Borrower as a "preferred mortgagee" or a
"mortgagee" in connection with any Encumbered Timeshare Interest as provided in
the Declaration;
(f) 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, and all rights in or under insurance policies and to the proceeds of
any insurance policies covering any of the other Collateral, all rights to
unearned or refunded insurance premiums, and the proceeds of any condemnation
awards or any claims regarding any of the other Collateral; and
(g) A first priority security interest in and to all books,
records, reports, computer tapes, computer disks and software relating to all or
any portion of the Collateral;
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(h) All rights of Borrower or its successors or assigns under any
Timeshare Documents, relating to any Encumbered Timeshare Interest; and
(i) First priority Liens and security interests in and to all
documents, instruments, accounts, chattel paper, and general intangibles
relating to the Pledged Notes Receivable and the other Collateral, including the
cash and noncash proceeds thereof.
1.18 Commitment Fee. An amount equal to $500,000 which was earned upon
execution of this Agreement.
1.19 Common Elements. Common Elements (as such term is defined in the
Declaration), including, without limitation, the recreational and service
facilities as well as the land (excluding land comprising part of a Unit) which
are included within each Receivables Loan Approved Resort all owned by Borrower
for the common use and enjoyment of Purchasers of Timeshare Interests.
1.20 Consolidated Net Income. With respect to any period, the aggregate
stated income statement amount of net income of Borrower and its subsidiaries,
after deduction of all expenses, taxes and other proper charges paid during such
period, excluding extraordinary profits, gains or losses, determined on a
consolidated basis in accordance with GAAP.
1.21 Consumer Loan. Any purchase money loan that is evidenced by a
Pledged Note Receivable, the proceeds of which are applied by the maker of such
Pledged Note Receivable toward the Purchase Price of a Timeshare Interest.
1.22 Credit Files. All Notes Receivable, the related mortgages, the
related federal truth-in-lending disclosure statements, the Purchase Agreement,
all RESPA and related notices.
1.23 Custodial Agreement. That certain Custodial Agreement by and among
Borrower, Lender and Custodian in substantially the form of Exhibit "A,"
attached hereto and incorporated herein by this reference, pursuant to which
Custodian will maintain custody of all original Pledged Notes Receivable and
Purchase Agreements and certain original and duplicate documents and instruments
related thereto and take certain actions in connection therewith.
1.24 Custodian. ▇▇▇▇▇ Fargo Bank, National Association or such other
Person as Lender, in its sole discretion, engages from time to time, at
Borrower's sole cost and expense pursuant to the terms of the Custodial
Agreement, to maintain custody of all original Pledged Notes Receivable and
certain original and duplicate documents and instruments related thereto and
take certain actions in connection therewith.
1.25 Debt. Of any Person means, without duplication, (a) all obligations
of such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person under conditional
sale or other title retention agreements relating to property acquired by such
Person, (d) all obligations of such Person in respect of the deferred purchase
price of property or services, (e) all Debt of others secured by (or for which
the holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the Debt secured thereby has been
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assumed, (f) all guarantees by such Person of Debt of others, (g) all Capital
Leases of such Person, (h) all obligations, contingent or otherwise, of such
Person as an account party in respect of letters of credit and letters of
guaranty and (i) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances. The Debt of any Person shall include the Debt
of any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefore.
1.26 Debt Service Coverage Ratio. At any time of determination, the ratio
of (a) EBITDA of Borrower and its subsidiaries on a consolidated basis, less
capital expenditures for the immediately preceding twelve (12) calendar months
to (b) the cash Interest Expenses (including all capitalized interest related to
the Bond Holder Exchange Transaction which has been expensed but not yet paid by
Borrower in full) of Borrower and its subsidiaries on a consolidated basis for
the immediately preceding twelve (12) calendar months.
1.27 Debtor Relief Laws. Any applicable liquidation, conservatorship,
receivership, 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.
1.28 Declaration. Collectively, each of the declarations, covenants,
conditions and restrictions, or other restrictive covenants encumbering all or
any portion of a Receivables Loan Approved Resort where Timeshare Interests
owned by Borrower are located, filed in the appropriate official records of the
county where such Receivables Loan Approved Resort is located, and delivered to
Lender prior to any Advance being made by Lender to finance a Note Receivable
related to such Timeshare Interest.
1.29 Default. An event or condition, the occurrence of which immediately
is or, with the lapse of time or the giving or notice or both, would become, an
Event of Default hereunder.
1.30 Default Rate. As to the Loan, the Interest Rate plus four percent
(4%) per annum; provided, however, that the Default Rate shall in no event
exceed the highest interest rate permitted to be charged under any applicable
usury laws.
1.31 Delinquent Note Receivable. A Note Receivable that is greater than
thirty (30) days past due.
1.32 DZ Facility. That certain note purchase facility provided by DZ Bank
AG Deutsche ZentralGenossenschaftsbank ("DZ"), as agent for Autobahn Funding
Company, LLC, to Borrower pursuant to that certain Amended and Restated
Receivables Loan and Security Agreement dated April 30, 2002, as amended, and
all documents and other instruments executed in connection therewith, as
amended, supplemented and modified from time to time.
1.33 EBITDA. For any date of determination, the sum, without duplication,
of the following for Borrower and its subsidiaries on a consolidated basis: Net
Income determined in accordance with GAAP, plus, (a) Interest Expense, (b) taxes
on income, whether paid, payable or accrued, (c) depreciation expense, (d)
amortization expense, and (e) loss from any sale of assets,
RECEIVABLES LOAN AND SECURITY AGREEMENT
5
other than sales in the ordinary course of business, minus (a) gains from any
sale of assets, other than sales in the ordinary course of business and (b)
other extraordinary or nonrecurring gains, all of the foregoing determined in
accordance with GAAP.
1.34 Eligible Deferred Note Receivable. An Eligible Note Receivable for
which Borrower has allowed a Purchaser to defer payment; provided, however, (i)
payment on such Eligible Note Receivable shall not have been deferred more than
(a) once in any twelve (12) month period or (b) twice since origination, (ii) no
more than six payments shall have been deferred in the aggregate on such
Eligible Note Receivable and (iii) the Purchaser shall have made at least two
(2) timely payments on such Eligible Note Receivable prior to Borrower accepting
any deferment.
1.35 Eligible Note Receivable. A Pledged Note Receivable that satisfies
each of the following conditions:
(a) The Pledged Note Receivable arises from a bona fide sale by
Borrower of one (1) or more Timeshare Interests to a Purchaser;
(b) The Timeshare Interest sale from which it arises has not been
canceled by the Purchaser or Borrower, any statutory or other applicable
cancellation or rescission period has expired, the Timeshare Interest purchased
by the Purchaser has not been surrendered in accordance with any applicable
terms of the relevant Purchase Agreement, and the related Timeshare Interest
sale complies fully with the terms, provisions, and conditions of this
Agreement, the other Loan Documents, the Timeshare Documents, and all Applicable
Laws;
(c) The Pledged Note Receivable is secured by a first priority
Timeshare Interest Mortgage on the purchased Timeshare Interest;
(d) The Pledged Note Receivable evidences the personal obligation
of the applicable Purchaser to pay the balance due on the Purchase Price of the
Timeshare Interest being acquired by such Purchaser, all as described and set
forth in the Purchase Agreement to which such Pledged Note Receivable pertains;
(e) Principal and interest payments on the Pledged Note Receivable
are payable to Borrower in legal tender of the United States and are made by the
applicable Purchaser and not by Borrower or Affiliate thereof;
(f) Scheduled payments of principal and interest on the Pledged
Note Receivable are due in equal monthly installments;
(g) The Pledged Note Receivable has an original term of no greater
than one hundred twenty (120) months;
(h) A cash down payment and/or other cash payments have been
received from the Purchaser or the maker of the Pledged Note Receivable in an
amount equal to at least ten percent (10%) of the original purchase price of the
relevant Timeshare Interest, no portion of such down payment has been paid or
loaned to the Purchaser by Borrower, and the Purchaser has received no cash or
other rebates of any kind; provided, however, if such Purchaser has a FICO
RECEIVABLES LOAN AND SECURITY AGREEMENT
6
score below 550, then a cash down payment and/or other cash payments shall have
been received from such Purchaser or the maker of such Pledged Note Receivable
in an amount equal to at least fifteen percent (15%) of the original purchase
price of such relevant Timeshare Interest;
(i) No monthly installment due with respect to a Pledged Note
Receivable is more than thirty (30) days' contractually past due as of the date
of the initial Advance on such Pledged Note Receivable and subsequent to the
initial Advance on a Pledged Note Receivable, no monthly installment due with
respect to such Pledged Note Receivable is more than sixty (60) days
contractually past due;
(j) The first monthly installment due with respect to the Pledged
Note Receivable is no more than forty-five (45) days after the date of such
Pledged Note Receivable.
(k) The Purchaser of the relevant Timeshare Interest has, subject
to the terms of the Declaration and the other Timeshare Documents, access to a
Unit within the Property developed in accordance with the specifications
provided in the Purchase Agreement, and a certificate of occupancy has been
issued for such Unit;
(l) Neither the Purchaser of the relevant Timeshare Interest nor
any other maker of the Pledged Note Receivable is an Affiliate of, related to,
or employed by Borrower;
(m) The Purchaser or other obligor has no bona fide claim against
Borrower or any Affiliate of Borrower and no defense, setoff, or counterclaim
exists with respect to the Pledged Note Receivable;
(n) The maximum outstanding principal balance of any Pledged Note
Receivable hereunder does not exceed $30,000 and the maximum aggregate exposure
by any one obligor shall not exceed two (2) Pledged Notes Receivable, without
the prior written consent of Lender;
(o) The Pledged Note Receivable is made by a U.S. resident unless
otherwise approved by Lender; provided, however, up to ten percent (10%) of the
Loan as measured by aggregate outstanding principal balance may be used to
finance Notes Receivable made by an underlying obligor who is not a U.S.
resident so long as Lender approves the collection methodology in its sole
discretion.
(p) The original of the Pledged Note Receivable and all related
documents and instruments have been endorsed in the manner prescribed by Lender
and delivered to Lender or Custodian as provided herein, and all such related
documents and instruments otherwise comply in all respects with all Applicable
Laws;
(q) The form of promissory note, Timeshare Interest Mortgage,
federal truth-in-lending disclosure statement, Purchase Agreement, loan
application and all other documents and instruments corresponding to the
Timeshare Interest purchase transaction giving rise to such Note Receivable
shall be in form and content acceptable to Lender and approved in advance by
Lender in writing;
RECEIVABLES LOAN AND SECURITY AGREEMENT
7
(r) The Unit corresponding to such Pledged Note Receivable is
subject to property insurance acceptable to Lender in its sole discretion;
(s) The Unit, and the Lien evidenced by the Timeshare Mortgage,
corresponding to such Pledged Note Receivable is subject to title insurance
acceptable to Lender in its sole discretion; provided, however, any Pledged Note
Receivable relating to Oak N' Spruce Resort shall not be required to be subject
to title insurance;
(t) If the Timeshare Interest securing such Pledged Note
Receivable relates to Oak N' Spruce Resort, then Lender shall have received an
Assignment of Certificate of Beneficial Interest securing such Pledged Note
Receivable acceptable to Lender in its sole discretion and Borrower shall have
filed a UCC1 financing statement in the state where the Purchaser is located
naming Borrower as the secured party and Lender as Borrower's assignee; and
(u) The portfolio of all Pledged Notes Receivable hereunder shall
at all times satisfy the following additional requirements:
(i) The average unpaid principal balance shall not exceed
$20,000, without Lender's prior written consent;
(ii) The minimum weighted average annual interest rate of all
Pledged Notes Receivable shall be greater than fourteen percent (14%);
(iii) No more than twenty percent (20%) of all Pledged Notes
Receivable shall have an interest rate of less than fourteen and onehalf
percent (14.5%) per annum;
(iv) The weighted average obligor FICO credit score shall be
greater than 610, unless otherwise agreed to by Lender in its sole
discretion;
(v) The weighted average original term until maturity for
all Pledged Notes Receivable shall not exceed ninetysix (96) months;
(vi) No more than five percent (5%) of the unpaid principal
balance of all Pledged Note Receivables shall be related to downgraded
Timeshare Interests; and
(vii) No more than ten percent (10%) of all Pledged Notes
Receivable shall be Eligible Deferred Notes Receivable.
1.36 Encumbered Timeshare Interest. The Timeshare Interest that is
encumbered by the Liens of the Timeshare Interest Mortgages which are pledged
and assigned to Lender.
1.37 Environmental Laws. The 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
RECEIVABLES LOAN AND SECURITY AGREEMENT
8
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, and any and all comparable statutes or
ordinances enacted in the State of Texas or any other state where a Receivables
Loan Approved Resort is located, as all of the foregoing laws may be amended
from time to time, and any rules or regulations promulgated pursuant to the
foregoing; together with any similar local, state or federal statutes,
ordinances, rules, 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, ordinance, regulation, rule, policy, or determination
pertaining to health, hygiene, the environment, or environmental conditions.
1.38 Event of Default. Defined in Section 7 of this Agreement.
1.39 Exchange Company. Resort Condominiums International, Inc., Interval
International, Inc. or another internationally recognized timeshare exchange
company acceptable to Lender.
1.40 Executive Management Member. Each of ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇'▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇.
1.41 FICO. The credit scoring system used by Fair ▇▇▇▇▇ and Company.
1.42 Financial Statements. The tax returns, balance sheets, and statements
of income and expense of Borrower and the related notes and schedules delivered
by Borrower prior to the Closing Date; and the monthly, quarterly, and annual
financial statements and reports required to be provided to Lender pursuant to
Section 6.1(g) hereof.
1.43 Furnishings. The furnishings, furniture, equipment, appliances and
fixtures provided by the Silverleaf Club for use within the Units.
1.44 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 under the
circumstances as of the date in question.
1.45 Hazardous Materials. "Hazardous substances," "hazardous waste,"
"hazardous constituents," "toxic substances," or "solid waste," as defined in
the Environmental Laws, and any other contaminant or any material, waste, or
substance that is petroleum or petroleum based, asbestos, polychlorinated
biphenyls, flammable explosives, or radioactive materials.
1.46 Hazardous Materials Indemnity Agreement. That certain Hazardous
Materials Indemnity Agreement of even date herewith executed by Borrower in
favor of Lender.
RECEIVABLES LOAN AND SECURITY AGREEMENT
9
1.47 Improvements. All Units, Common Areas and other buildings,
structures, recreational facilities, and appurtenances now located on the
Property.
1.48 Initial Advance. The first Advance under the Loan which shall occur
or be deemed to have occurred on or promptly following the Closing Date.
1.49 Interest Expense. For any date of determination, total interest
expense (including attributable to Capital Leases in accordance with GAAP) with
respect to all outstanding Debt of Borrower including capitalized interest but
excluding commissions, discounts and other fees owed with respect to letters of
credit and bankers' acceptance financing and net costs under any interest rate
SWAP agreements.
1.50 Interest Rate. On any date, for all Advances and Obligations, unless
otherwise set forth in this Agreement, the fluctuating rate of interest per
annum equal to the sum of the LIBOR Rate in effect on such day, plus four and
one-quarter percent (4.25%) per annum. The Interest Rate shall be calculated
based on a three hundred sixty (360) day year and charged for the actual number
of days elapsed.
1.51 Inventory Loan. That certain senior mortgage loan provided by Lender
to Borrower pursuant to the Inventory Loan Agreement in the maximum principal
amount of $15,000,000.
1.52 Inventory Loan Agreement. That certain Inventory Loan and Security
Agreement, dated as of the date hereof, by and between Borrower and Lender.
1.53 Inventory Loan Documents. All documents, instruments, agreements and
other contracts executed or delivered in connection with the Inventory Loan
Agreement.
1.54 Leverage Ratio. As of any date of determination, the ratio of (i) the
sum of amounts outstanding under this Agreement plus any other Debt of Borrower
and its subsidiaries on a consolidated basis (other than off balance sheet debt
that is non-recourse to Borrower and approved by Lender in its Permitted
Discretion) to (ii) Borrower's and its subsidiaries' Tangible Net Worth, on a
consolidated basis.
1.55 LIBOR Rate. At the time of determination thereof, a variable rate of
interest equal to (a) at Lender's election (i) the rate described as the "London
Interbank Offered Rate" for three months in the Money Rates section of The Wall
Street Journal, or (ii) the rate of interest determined by Lender in accordance
with its usual procedures (which determination shall be conclusive absent
manifest error) to be the London interbank offered rate for U.S. Dollars for a
three month period based upon the information presented on Telerate Systems at
page 3750 as of 11:00 a.m. (London time) on the day of determination of such
LIBOR Rate, divided by (b) a number equal to 1.00 minus the aggregate (without
duplication) of the rates (expressed as a decimal) of reserve requirements
applicable to Lender in effect on the day of determination of such LIBOR Rate
(the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of
1% per annum). If the Telerate Systems (or its successor) or The Wall Street
Journal ceases to provide such quotes, a comparable replacement, as determined
by Lender, may be used by Lender. If on any date of determination (a) more than
one "London Interbank Offered Rate" for a three month period is published in The
Wall Street Journal, or (b) more than one London
RECEIVABLES LOAN AND SECURITY AGREEMENT
10
interbank offered rate for a three month period appears on the Telerate System
at Page 3750, the highest of such rates will be the rate used for such day.
1.56 Lien. Any interest in property securing an obligation owed to, or
valid claim by, a Person other than the owner of such property, whether such
interest arises in equity or is based on common law, statute, or contract.
1.57 Loan. The maximum $50,000,000 credit facility as described in this
Agreement and evidenced and secured by the Loan Documents.
1.58 Loan Documents. Collectively, the following documents and
instruments, as each may be amended, renewed, extended, restated, or
supplemented from time to time:
(a) This Agreement;
(b) The Note (if any);
(c) The Negative Pledge;
(d) Each intercreditor agreement entered into pursuant to Section
4.1(p);
(e) The Master Pledge and Assignment of Notes Receivable and
Timeshare Interest Mortgages (in the form of Exhibit "B," attached hereto and
incorporated herein by this reference);
(f) The Custodial Agreement;
(g) The Lockbox Agreement;
(h) The Servicing Agreement;
(i) The Backup Servicing Agreement;
(j) The Hazardous Materials Indemnity Agreement;
(k) UCC-1 financing statements covering the Collateral, to be filed
with the Texas Secretary of State and in any other jurisdiction deemed
appropriate by Lender, in its sole discretion;
(l) The Inventory Loan Agreement and the Inventory Loan Documents;
(m) All such other assignments, agreements, documents, instruments,
certificates, and materials as Lender may require in order to evidence or secure
the Obligations, to evidence and perfect the rights, Liens, and security
interests of Lender contemplated by the Loan Documents, and otherwise to
effectuate the transactions contemplated hereby.
1.59 Lockbox Agent. JPMorgan Chase Bank, N.A., or such other Person as may
be approved by Lender in writing from time to time, as Lender's exclusive agent
for the collection of all payments made on the Pledged Notes Receivable.
RECEIVABLES LOAN AND SECURITY AGREEMENT
11
1.60 Lockbox Agreement. That certain agreement by and among Lender,
Borrower, and Lockbox Agent in substantially the form of Exhibit "C," attached
hereto and incorporated herein by this reference, pursuant to which Lockbox
Agent is engaged, at Borrower's sole cost and expense, as Lender's exclusive
agent to receive, deposit, and disburse all amounts paid by each Purchaser or
other obligor pursuant to any Pledged Note Receivable to which such Purchaser or
other obligor is a party, as well as certain financial reporting services.
1.61 Loss of License. The suspension, loss, revocation, or failure to
renew or file for renewal of any legally required registration, approval,
license, permit, or franchise now held or hereafter acquired by Borrower with
respect to the Receivables Loan Approved Resorts or the marketing or sale of
Timeshare Interests thereat or with respect thereto, or the failure to pay any
amount which is necessary for the continued operation of the Receivables Loan
Approved Resorts in compliance with all Applicable Laws.
1.62 Mandatory Prepayment. Any prepayment of the Loan required by Section
2.5 of this Agreement.
1.63 Maturity Date. April 29, 2008.
1.64 Maximum Loan Amount. The maximum principal balance of the Loan which
can be outstanding at any time is Fifty Million Dollars ($50,000,000).
1.65 Negative Pledge. Collectively, those certain negative pledge
agreements executed by Borrower in favor of Lender related to Borrower's
agreement not to grant any Lien on any Resort Facilities, any rights of Borrower
as Declarant, or any contracts or management agreements between Borrower and
Silverleaf Club, or any other Property-Related Contracts.
1.66 Net Income. Net income (or loss) determined in conformity with GAAP.
1.67 Net Sales. The contractual purchase price of a Timeshare Interest
sale where the recession period has expired.
1.68 Note Receivable. A promissory note made and executed by a Purchaser
in favor of Borrower in connection with such Purchaser's acquisition of a
Timeshare Interest.
1.69 Oak N' Spruce Resort. That certain Receivables Loan Approved Resort
located at ▇▇▇, Berkshire County, Massachusetts and part of the Silverleaf Club.
1.70 Obligations. All indebtedness, liabilities, obligations, and
responsibilities, both financial and otherwise, to which Borrower is subject
under any of the Loan Documents, including but not limited to all amounts due or
becoming due to Lender in respect of the Loan or any of the Loan Documents,
including principal, interest, prepayment premiums, contributions, taxes,
insurance premiums, loan charges, custodial fees, reasonable attorneys' and
paralegals' fees and expenses and other fees or expenses which are incurred by
Lender or advanced to or on behalf of Borrower by Lender, pursuant to any of the
Loan Documents or in connection with Lender's enforcement of the prompt and
complete payment and performance by Borrower of all indebtedness, liabilities
and obligations pursuant to this Agreement, any of the other Loan Documents, or
otherwise.
RECEIVABLES LOAN AND SECURITY AGREEMENT
12
1.71 Orlando Breeze Resort Club. Orlando Breeze Resort Club, a Texas
non-profit corporation.
1.72 Payment Authorization Agreement. The pre-authorized debit agreement
executed by a Purchaser which provides for the payment of a Note Receivable.
1.73 Permitted Discretion. A determination or judgment made on good faith
in the exercise of reasonable (from the perspective of a secured lender) credit
or business judgment.
1.74 Permitted Liens and Encumbrances. Those Liens and encumbrances
affecting all or any portion of the Collateral to which Lender consents, as set
forth on Exhibit "E," attached hereto and incorporated herein by this reference.
1.75 Person. An individual, corporation, partnership, limited liability
company, association, trust, government or political subdivision or agency
thereof, or other legal entity.
1.76 Pledged Note Receivable. A Note Receivable that has been and remains
pledged to Lender by Borrower, pursuant to this Agreement or any of the other
Loan Documents.
1.77 Property. Collectively, all of Borrower's right, title and interest
in and to all Timeshare Interests, all Receivables Loan Approved Resorts, all
voting rights with respect to all Declarations, and all other personal property
related thereto.
1.78 Property-Related Contracts. All franchises, permits, trade names,
trademarks (and goodwill associated therewith), approvals, leasehold interests
(whether as lessor or lessee or sublessor or sublessee), management contracts,
marketing contracts, maintenance contracts, utility contracts, security
contracts, other servicing contracts, licensing contracts or other similar
contracts, and all guaranties of any of the foregoing, whether existing as of
the Closing Date or arising after the date hereof, relating, in each case, to
each Receivables Loan Approved Resort (and the Timeshare Interests and/or the
Units related thereto).
1.79 Purchase Agreement. The Contract for Purchase and Sale executed by a
Purchaser and Borrower for the Purchaser's acquisition of a Timeshare Interest
at the Property.
1.80 Purchase Price. The total purchase price of a Timeshare Interest, as
set forth in the Timeshare Documents relating to the purchase of such Timeshare
Interest.
1.81 Purchaser. Any individual(s) who acquires one (1) or more Timeshare
Interests.
1.82 Receivables Loan Approved Resorts. Collectively, Oak N' Spruce, each
of the resorts owned by Borrower or an Affiliate of Borrower located in
Habersham County, Georgia, Lake County, Illinois, Comal County, Texas, Taney
County, Missouri, Wood County, Texas, ▇▇▇▇▇ County, Texas, Stone County,
Missouri, ▇▇▇▇▇▇▇▇▇▇ County, Texas, Galveston County, Texas and Jefferson
County, Missouri, each included in the Silverleaf Club, and Orlando Breeze
Resort located in Polk County Florida, all as more particularly described on
Exhibit "F" attached hereto, and all additional timeshare resorts or similar
real property developments approved from time to time by Lender in its sole
discretion where a Timeshare Interest owned by Borrower is located, together
with all improvements now or hereafter located thereon including, as
RECEIVABLES LOAN AND SECURITY AGREEMENT
13
applicable, all roadways, easements, Common Elements, Furnishings, Resort
Facilities, equipment, fixtures, licenses and all other appurtenances thereunto
belonging.
1.83 Resort Facilities. Those facilities and amenities at the Receivables
Loan Approved Resorts that are available for use by Purchasers of Timeshare
Interests in such Receivables Loan Approved Resort and that are more
particularly described in Exhibit "D" attached hereto. In certain cases such
facilities and amenities are not located within the boundaries of the timeshare
regime at the applicable Receivables Loan Approved Resort as established
pursuant to the applicable Declaration, but in such cases are subject to a Use
Agreement.
1.84 Revolving Credit Period. The period of time commencing on the Closing
Date and expiring on the Maturity Date.
1.85 Sales and Marketing Costs. All promotion, lead generation, sales
commissions and other marketing expenses and costs incurred by Borrower in
connection with selling and marketing of Timeshare Interests in each Receivables
Loan Approved Resort.
1.86 Servicing Agreement. That certain servicing agreement dated as of the
date hereof, in form and substance satisfactory to Lender in its sole
discretion, between Lender and Borrower, as servicer.
1.87 Silverleaf Club. Silverleaf Club, a Texas non-profit corporation.
1.88 Sovereign Facility. Individually and collectively, each of those
certain credit facility provided by Sovereign Bank to Borrower pursuant to (a)
that certain Second Amended and Restated Revolving Credit Agreement dated as of
July 30, 2004, and (b) that certain Inventory and Receivables Revolving Credit
Agreement dated as of July 30, 2004, including all other documents and
instruments executed in connection therewith, as all of the same have been and
may hereafter be amended, supplemented and modified from time to time.
1.89 Suspension of Sales Order or Sanction. The issuance of any stay
order, cease and desist order or similar judicial or nonjudicial sanction
prohibiting the sale or marketing of Timeshare Interests.
1.90 Tangible Net Worth. For any Person, at a particular date, (a) the
aggregate amount of all assets of such Person as may be properly classified as
such in accordance with GAAP consistently applied excluding such other assets as
are properly classified as intangible assets under GAAP, less (b) the aggregate
amount of all liabilities of such Person, plus subordinated debt (excluding
accrued interest on such subordinated debt) of such Person as approved by
Lender.
1.91 Textron Facility. Individually and collectively, those certain credit
facilities provided by Textron Financial Corporation to Borrower pursuant to (a)
that certain Amended and Restated Loan, Security and Agency Agreement (Tranche
A) dated as of ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) that certain Amended and Restated Loan,
Security and Agency Agreement (Tranche B) dated as of April 30, 2002, (c) that
certain Loan and Security Agreement (Tranche C) dated as of April 17, 2001, and
(d) that certain Amended and Restated Loan and Security Agreement dated as of
RECEIVABLES LOAN AND SECURITY AGREEMENT
14
March 5, 2004, and all documents and other instruments executed in connection
therewith, as all of the same have been and may hereafter be amended,
supplemented and modified from time to time.
1.92 Timeshare Act. Any statute, act, regulation, ordinance, rule or law
applicable to the establishment and operation of the Receivables Loan Approved
Resorts and the sale of Timeshare Interests.
1.93 Timeshare Association. Individually and collectively, those certain
non-profit corporations, or any successor associations thereto, created in the
Declaration.
1.94 Timeshare Documents. The Declaration, the bylaws and rules and
regulations of the Timeshare Association, and all other documents and
instruments relating to the Property, the Timeshare Association, and/or the
Units, Common Areas, or Timeshare Interests thereat, including but not limited
to public offering statements, Purchase Agreements, promissory notes, federal
truth-in-lending disclosures, advertising and promotional materials of any and
every type, contracts and agreements to which the Timeshare Association is
subject, and any and all other documents, instruments, and other materials used,
directly or indirectly, in connection with the marketing, sale, and financing of
such Timeshare Interests. Each Timeshare Document shall be reviewed by Lender
and accepted by Lender as a condition precedent to the Initial Advance.
1.95 Timeshare Interest. A fee simple ownership interest in a Unit located
at a Receivables Loan Approved Resort to be sold by Borrower to Purchasers
comprised of either: (i) a Timeshare Interest which provides a Purchaser with a
seven (7) consecutive day right of occupancy in a Unit located in a Receivables
Loan Approved Resort every year ("Weekly Timeshare Interest"); or (ii) any
combination of a Timeshare Interest which provides a Purchaser with a seven (7)
consecutive day right of occupancy in a Timeshare Unit located in a Receivables
Loan Approved Resort every other year ("Bi-annual Timeshare Interest"), as set
forth in the applicable Declaration, with such interest being entitled to the
right to the possession, use and occupancy of a Unit located in a Receivables
Loan Approved Resort during the applicable time periods sold for such Weekly
Timeshare Interest or Bi-annual Timeshare Interest, as applicable, and the use
of all Common Elements and Resort Facilities.
1.96 Timeshare Interest Mortgage. A recorded, first priority mortgage
executed and delivered by each Purchaser to Borrower, securing a Pledged Note
Receivable and encumbering all of the right, title and interest of each
Purchaser in the related Timeshare Interest. With respect to Oak N' Spruce
Resort only, an Assignment of Certificate of Beneficial Interest executed by
each Purchaser and delivered to Borrower.
1.97 Title Insurance Company. Chicago Title Insurance Company, or such
other title insurance company as is acceptable to Lender, in its sole
discretion.
1.98 Title Policy. Defined in Section 4.1(h) of this Agreement.
1.99 Unit. A part of the Property which is designated for occupancy.
1.100 Unused Line Fee. An amount calculated as of the last day of each
month equal to one-quarter of one percent (0.25%) per annum of the difference
between (i) the Maximum Loan
RECEIVABLES LOAN AND SECURITY AGREEMENT
15
Amount and (ii) the average outstanding principal balance of the Loan during
such month commencing on the first day of the seventh (7th) month following the
Closing Date, payable monthly in arrears by the first Business Day of the
following month during the term of the Loan. Notwithstanding the foregoing, the
Unused Line Fee shall be waived in the event the average outstanding principal
balance of the Loan is in excess of $20,000,000 during such period.
1.101 Upgraded Note Receivable. An Eligible Note Receivable made by the
maker of an existing Pledged Note Receivable which is assigned to Lender in
replacement of such Pledged Note Receivable and which satisfies the criteria
established in this Agreement (other than clause (h) of the definition of
Eligible Note Receivable; provided, that the sum of such maker's (i) down
payment on such existing Pledged Note Receivable plus (ii) existing equity in
such existing Pledged Note Receivable shall be equal to at least ten percent
(10%) of the original purchase price of the relevant Timeshare Interest).
1.102 Use Agreement. Each of those certain Recreation and Use Agreements
whereby Purchasers have been granted the right to use and enjoy the Resort
Facilities.
1.103 Voting Equity. Securities of any class or classes of a corporation
the holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors (or Persons performing similar
functions) of such corporation or, in the case of a Person which is not a
corporation, securities or similar equity or partnership interests which entitle
the holder thereof to elect, select or control the management or policies of
such Person.
SECTION 2. THE LOAN
Lender hereby agrees to make the Loan in accordance with all of the terms,
provisions, and conditions hereof and of the other Loan Documents.
2.1 Purposes. The proceeds of the Loan shall be used to pay all
indebtedness secured by any liens (other than liens in favor of Lender)
encumbering the Timeshare Interests related to the Pledged Notes Receivable and
for working capital purposes. In addition, proceeds of the Loan shall be used to
pay Borrower's costs associated with the closing of the Loan.
2.2 Advances. So long as (i) no Event of Default exists and is continuing
or (ii) Lender has not delivered notice of the occurrence of a Default as set
forth in Sections 7.1 or 7.2 hereof and the failure to comply or violation
subject of such notice has not been satisfied or cured by Borrower, Lender shall
advance to Borrower, and Borrower may borrow, repay and re-borrow principal
under the Loan, to be disbursed to Borrower in a series of Advances during the
Revolving Credit Period, not to exceed at the time of any Advance an outstanding
balance greater than the Borrowing Base. Advances shall be made in amounts of at
least $50,000 but not more often than weekly.
2.3 Interest Rate. The aggregate principal amount of all Advances of the
Loan that are outstanding from time to time shall bear interest at a rate equal
to the Interest Rate. Interest shall be due and payable monthly in arrears on
the first Business Day of each month. The average monthly outstanding principal
balance of the Loan shall bear interest in arrears as of Lender's wiring of
funds through its receipt of repayment of the Loan (if received by Lender later
than 1:00 p.m. eastern time, then interest accrual shall be through the next
Business Day
RECEIVABLES LOAN AND SECURITY AGREEMENT
16
following such receipt). If any statement furnished by Lender for the amount of
a monthly payment due exceeded the actual amount that should have been paid
because the LIBOR Rate decreased and such decrease was not reflected in the
monthly statement, Borrower shall make the payment specified in the monthly
statement from Lender and Borrower shall receive a credit for the overpayment,
which credit shall be applied towards the next subsequent monthly payment due
hereunder. If any statement furnished by Lender for the amount of a monthly
payment due was less than the actual amount that should have been paid because
the LIBOR Rate increased and such increase was not reflected in the monthly
statement, Borrower shall make the payment specified in the monthly statement
from Lender and Borrower shall be required to pay any resulting underpayment
with the next subsequent monthly payment due hereunder. Immediately upon the
occurrence of a Default or Event of Default and after the Maturity Date (if the
Loan is not paid in full on the Maturity Date), at Lender's election, in its
sole discretion, the Loan shall bear interest at the Default Rate. Lender may
assess a late charge equal to five percent (5%) of each delinquent payment due
hereunder if such payment is not paid by the time and in the manner required.
2.4 Payments. Borrower agrees punctually to pay or cause to be paid to
Lender, via wire transfer, or through application of funds from the Lockbox
Account all principal and interest due under the Loan and other payments due
hereunder as follows:
(a) Weekly Payments From Lockbox Account.
(i) Lockbox Account. Borrower shall direct or otherwise cause
the makers of each Pledged Note Receivable, in writing, to pay directly to
Lockbox Agent all interest, principal, prepayments (both voluntary and
mandatory), and other amounts of any and every description payable to
Borrower by or on behalf of such maker pursuant to the applicable Pledged
Note Receivable, the related Timeshare Interest Mortgage, or any other
related documents or instruments. Such amounts shall be deposited by
Lockbox Agent into the lockbox account established and maintained by
Lockbox Agent in accordance with the provisions of the Lockbox Agreement
(the "Lockbox Account") by 5:00 p.m. eastern time on each and every
Business Day, prior to the Maturity Date. Lockbox Agent shall be
responsible pursuant to the terms of the Lockbox Agreement for remitting
to Lender, via wire transfer, 100% of cleared funds collected from the
Pledged Notes Receivable in the Lockbox Account.
(ii) Application of Funds. All amounts received by Lender
shall be applied by Lender on a weekly basis beginning on the last
Business Day of each week in the following order of priority (A) first, to
reimburse Lender for all costs, expenses, and other amounts due Lender
hereunder or pursuant to the other Loan Documents other than principal and
interest, including, without limitation, the costs, expenses and other
amounts due Custodian; (B) second, to pay Lender all accrued but unpaid
interest due under the Note; (C) third, to reduce the outstanding
principal balance of the Loan as sufficient to maintain the Borrowing
Base; (D) fourth, to reduce the outstanding principal balance of the Loan;
and (E) fifth, to the payment of any other Obligations outstanding under
this Agreement. If the amount of funds received by Lender from the Lockbox
Agent with respect to any week is insufficient to pay in full the amounts
provided for in clauses (A), (B) and (C) of the preceding sentence for
such week, without notice or
RECEIVABLES LOAN AND SECURITY AGREEMENT
17
demand, Borrower shall pay the difference to Lender within the first seven
(7) days of the next succeeding week.
(iii) Borrower's Receipt of Payments. 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 Lender, and
Borrower shall deliver to the Lockbox Agent all such payments (in the form
so received from Borrower) as and when received by Borrower unless Lender
shall have notified Borrower to deliver directly to Lender 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 Lender and delivered to Lender promptly upon Borrower's
receipt thereof.
(b) Final Payment. Notwithstanding any term, provision, or condition
hereof to the contrary, the entire outstanding principal balance of the Loan,
together with any and all accrued but unpaid interest thereon and all other
Obligations, shall be paid in full via wire transfer by Borrower to Lender on or
before the Maturity Date, as such may be extended pursuant to the terms of this
Agreement.
(c) Payment of Fees. Borrower agrees to pay Lender each of the
following fees:
(i) Commitment Fee -- $500,000 is non-refundable and deemed
earned at Closing and payable on the Closing Date; and
(ii) Unused Line Fee -- which is due commencing on the first
day of the seventh (7th) month following the Closing Date and is payable
monthly in arrears by the first Business Day of the following month during
the term of the Loan; and which at such time shall automatically be paid
from the proceeds of the Lockbox Account; provided, that the Unused Line
Fee shall cease to accrue during any time the outstanding principal amount
of the Loan exceeds $20,000,000.
2.5 Prepayments.
(a) Voluntary Prepayments. The Loan may not be prepaid in whole
during the Revolving Credit Period; provided, however, subject to the terms of
this Agreement, Borrower may prepay the Loan, in whole or in part, upon any
whole loan sale, off balance sheet conduit sale or securitization, upon thirty
(30) days' prior written notice to Lender, so long as the Loan or this Agreement
shall not be terminated. Any such prepayment must include all outstanding
principal, accrued but unpaid interest, and all other Obligations.
(b) Mandatory Prepayments. If at any time and for any reason, the
outstanding unpaid principal balance of the Loan exceeds the aggregate amount of
the Borrowing Base, Borrower shall either (A) prepay the principal balance of
the Loan in an amount equal to the difference between the then aggregate
outstanding principal balance of the Loan and the amount of the Borrowing Base,
or (B) increase the aggregate principal amount of Eligible Notes Receivable,
pledged to Lender so that the Borrowing Base exceeds the then outstanding
principal balance of the Loan. The pledge and delivery to Lender of additional
RECEIVABLES LOAN AND SECURITY AGREEMENT
18
Eligible Notes Receivable shall comply with the document delivery and
recordation requirements set forth in Section 4.2(b) 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 Lender of such Eligible Note Receivable, the
outstanding unpaid principal balance of the Loan is equal to or less than the
Borrowing Base. Notwithstanding the foregoing, Borrower shall prepay the entire
outstanding principal balance of the Inventory Loan upon repayment in full of
the Loan and termination of this Agreement prior to the Maturity Date.
2.6 Reassignment by Lender. In the event (a) the obligation under a
Pledged Note Receivable and the related Timeshare Interest Mortgage has been
satisfied in full by its maker or makers and all amounts paid thereunder
actually received in good funds by Lender, (b) Borrower replaces a Pledged Note
Receivable with an Eligible Note Receivable in accordance with the terms of this
Agreement, or (c) another event occurs pursuant to which Lender in its
reasonable discretion agrees with Borrower that a Pledged Note Receivable shall
be returned to Borrower and Lender's lien with respect to the related Timeshare
Interest Mortgage shall be released, Lender, upon receipt of a written request
from Borrower, shall promptly reassign any Timeshare Interest Mortgage and
endorse the related Pledged Note Receivable to Borrower, without recourse, in
the form attached hereto as Exhibit "G" Lender shall cause all original
collateral files related thereto to be returned to Borrower.
2.7 Breakage Costs. Borrower hereby agrees to pay to Lender any amount
necessary to compensate Lender for any losses or costs sustained by Lender if
the Loan, or any portion thereof, is prepaid for any reason whatsoever on any
date other than the Maturity Date or as the consequence of the breaking of any
LIBOR contract.
2.8 Additional Increased Costs. In the event that after the date of this
Agreement, any applicable law, treaty or governmental regulation, or any change
therein or in the interpretation or application thereof, or compliance by Lender
(for purposes of this Section 2.9, the term "Lender" shall include Lender and
any corporation or bank controlling Lender) and the office or branch where
Lender (as so defined) makes or maintains the Loan with any request or directive
(whether or not having the force of law) from any central bank or other
financial, monetary or other authority, shall:
(a) subject Lender to any tax of any kind whatsoever with respect to
this Agreement or any other Loan Document or change the basis of taxation of
payments to Lender of principal, fees, interest or any other amount payable
hereunder or under any other Loan Documents (except for changes in the rate of
tax on the overall net income of Lender by the jurisdiction in which it
maintains its principal office);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by, any office of
Lender, including (without limitation) pursuant to Regulation D of the Board of
Governors of the Federal Reserve System; or
(c) impose on Lender or the London interbank Eurodollar market any
other condition with respect to this Agreement or any Loan Document;
RECEIVABLES LOAN AND SECURITY AGREEMENT
19
and the result of any of the foregoing is to increase the cost to Lender
of making, renewing or maintaining the Loan hereunder by an amount that Lender
deems to be material or to reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of the Loan by an amount that
Lender deems to be material, then, in any case Borrower shall promptly pay
Lender, upon its demand, such additional amount as will compensate Lender for
such additional cost or such reduction, as the case may be, provided that the
foregoing shall not apply to increased costs which are reflected in the LIBOR
Rate. Lender shall certify the amount of such additional cost or reduced amount
to Borrower, and such certification shall be conclusive absent manifest error.
2.9 Basis For Determining Interest Rate Inadequate or Unfair. In the event
that Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the LIBOR Rate
for the Loan;
(b) dollar deposits for three months are not available in the London
interbank Eurodollar market; or
(c) any applicable law, treaty, regulation or directive, or any
change therein or in the interpretation or application thereof, shall make it
unlawful for Lender (for purposes of this subsection the term "Lender" shall
include the office or branch where Lender or any corporation or bank controlling
such Lender makes or maintains the Loans) to make or maintain the Loan;
then Lender shall give Borrower prompt written, telephonic or telegraphic notice
of such determination.
2.10 Notes. Borrower agrees that:
(a) upon written notice by Lender to Borrower that a promissory note
or other evidence of indebtedness is requested by Lender to evidence the Loan
and other obligations owing or payable to, or to be made by, Lender, Borrower
promptly shall (and in any event within three (3) Business Days of any such
request) execute and deliver to Lender an appropriate promissory note or notes
in form and substance reasonably satisfactory to Lender and Borrower, payable to
the order of Lender in a principal amount equal to the amount of the Loan owing
or payable to Lender;
(b) all references to "Note" or "Notes" in the Loan Documents shall
mean Notes, if any, to the extent issued (and not returned to Borrower for
cancellation) hereunder, as the same may be amended, supplemented, modified,
divided and/or restated and in effect from time to time; and
(c) upon Lender's written request, and in any event within three (3)
Business Days of any such request, Borrower shall execute and deliver to Lender
new Notes and/or split or divide the Notes, or any of them, in exchange for the
then existing subject Notes, in such smaller amounts or denominations as Lender
shall specify; provided, that the aggregate principal amount of such new, split
or divided Notes shall not exceed the aggregate principal amount of the Notes
outstanding at the time such request is made; and provided, further, that such
Notes
RECEIVABLES LOAN AND SECURITY AGREEMENT
20
that are replaced shall then be deemed no longer outstanding hereunder and
replaced by such new Notes and returned to Borrower within a reasonable period
of time after Lender's receipt of the replacement Notes.
(d) Upon receipt of evidence reasonably satisfactory to Borrower of
the mutilation, destruction, loss or theft of any Notes and the ownership
thereof, Borrower shall, upon the written request of the holder of such Notes,
execute and deliver in replacement thereof new Notes in the same form, in the
same original principal amount and dated the same date as the Notes so
mutilated, destroyed, lost or stolen; and such Notes so mutilated, destroyed,
lost or stolen shall then be deemed no longer outstanding hereunder. If the
Notes being replaced have been mutilated, they shall be surrendered to Borrower;
and if such replaced Notes have been destroyed, lost or stolen, such holder
shall furnish Borrower with an indemnity in writing to indemnify, defend and
save it harmless in respect of such replaced Notes.
SECTION 3. COLLATERAL
3.1 Grant of Security Interest. To secure the payment and performance when
due of the Obligations, for value received, Borrower hereby unconditionally and
irrevocably assigns, pledges, and grants to Lender a continuing first priority
security interest in and to the Collateral.
3.2 Security Interest in All Pledged Notes Receivable. Notwithstanding
that Lender is obligated, subject to the terms and conditions set forth herein
and in the other Loan Documents, to make an Advance only in respect of Eligible
Notes Receivable, Lender shall have a continuing security interest in and to all
of the Pledged Notes Receivable and may collect and shall receive all payments
made under or in respect of all Pledged Notes Receivable, including Eligible
Notes Receivable that may become ineligible, until any of the same are released
by Lender, if at all, pursuant to Section 11.10 below.
3.3 Financing Statements. Borrower agrees, at its own expense, to execute
the financing statements provided for by the Code, together with any and all
other appropriate instruments and documents, and to take such other action as
may be required, in Lender's reasonable judgment, in order to perfect and to
continue the perfection of Lender's security interests in the Collateral and
unless prohibited by law, Borrower hereby authorizes Lender to execute and file
any such financing statements on Borrower's behalf.
3.4 Location of Collateral. All tangible Collateral (other than Collateral
delivered to Lender or Custodian) shall remain, at all times, within the
Property or at the offices of Borrower, and Borrower may not transfer or cause
the transfer of any such Collateral from such premises without the prior written
approval of Lender.
3.5 Protection of Collateral; Reimbursement.
(a) Pledged Notes Receivable and Related Documents. The portion of
the Collateral consisting of (i) the original Pledged Notes Receivable; (ii) the
original Purchase Agreements (including any addenda thereto) related to such
Pledged Notes Receivable; and (iii) originals or true copies of the related
Timeshare Interest Mortgages, truth-in-lending disclosure statements and, if
required by Lender, loan applications, any related Purchaser's or owner's
acknowledgments and understandings, certificates of title, public offering
statement and other
RECEIVABLES LOAN AND SECURITY AGREEMENT
21
receipts, Payment Authorization Agreements and Exchange Company applications and
disclosures shall be delivered, at Borrower's expense, to Lender at its address
as set forth in Section 11.1 hereof and, except as otherwise expressly provided
herein to the contrary, held in Lender's possession, custody, and control until
all of the Obligations have been fully satisfied or Lender expressly agrees to
release such documents. Alternatively, Lender, in its sole discretion, may elect
for Custodian to accept delivery of and maintain possession, custody, and
control of all such documents and instruments on behalf of Lender during such
period of time. Each original Pledged Note Receivable in favor of Borrower and
delivered by Borrower to Lender shall be duly endorsed by Borrower with the
words: "Pay to the order of CAPITALSOURCE FINANCE LLC, together with its
successors and assigns, with recourse."
(b) Storage; Liability. The portion of the Collateral delivered to
Lender or Custodian as described above shall be segregated by Lender or
Custodian, as the case may be, and stored in a secure, fire-resistant filing
cabinet, access to which is limited in a commercially reasonable manner.
Borrower agrees that such storage is and shall be deemed to constitute
reasonable care by Lender with respect to such Collateral. Except to the extent
expressly included in the Custodian's fee as set forth in the Custodial
Agreement, all insurance and other expenses of protecting the Collateral,
including, without limitation, storing, warehousing, insuring, handling,
maintaining, and shipping the Collateral, and any and all excise, property,
intangible, sales, and use taxes imposed by any state, federal, or local
governmental authority on any of the Collateral or in respect of the sale
thereof shall be paid by Borrower. Provided that Lender or Custodian retains the
original Pledged Notes Receivable and related Timeshare Interest Mortgages and
originals or copies of the related Timeshare Documents, delivered to it and
stores it in a secure, fire-resistant filing cabinet as provided above, Lender
shall not be liable or responsible in any way for the safekeeping 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, Custodian, or any other Person whomsoever, excluding
damages or losses that occur as a result of Lender's gross negligence or willful
misconduct.
3.6 Cross-Collateralization and Default. The Collateral shall secure all
of the Obligations. All Liens, pledges, assignments, mortgages, security
interests, and other collateral granted to or for the benefit of Lender pursuant
hereto or any other related documents or instruments shall also secure the
Obligations as well as the "Obligations" as defined in the Inventory Loan
Agreement. In addition, the Loan and all other loans made by Lender to Borrower
or any Affiliate of Borrower (including, but not limited to, the Inventory Loan)
shall be cross-defaulted such that any event of default with respect to any such
loan shall constitute an Event of Default hereunder, and vice versa.
3.7 Liability. Any and all amounts for which Borrower may become liable
hereunder and all costs and expenses (including reasonable attorneys' and
paralegals' fees, legal expenses, and court costs) that Lender actually incurs
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 in respect to any of the transactions to be had hereunder or
thereunder, until paid by Borrower to Lender with interest at the Default Rate,
shall be included among the Obligations and, as such, shall be secured by all of
the Collateral.
RECEIVABLES LOAN AND SECURITY AGREEMENT
22
SECTION 4. CONDITIONS PRECEDENT TO CLOSING AND FUNDING PROCEDURES
The obligation of Lender to enter into this Agreement and to fund the Loan
shall be subject to the complete satisfaction of each of the conditions
precedent set forth below and elsewhere in the Loan Documents:
4.1 Conditions Precedent. On or prior to the Closing Date:
(a) Execution and Delivery. Borrower shall execute and cause to be
notarized, witnessed, and attested, as appropriate, and delivered to Lender the
Loan Documents, together with such additional documents and certifications as
Lender and its counsel may reasonably require in order to ensure that all
conditions precedent to the closing of the Loan and the making of Advances
hereunder have been satisfied in all respects.
(b) Opinion of Borrower's Counsel. Lender shall have received from
duly licensed outside counsel for Borrower acceptable to Lender such legal
opinions, in form and substance satisfactory to Lender, covering such items as
may be required by Lender, in its sole discretion, including, without
limitation, that the Loan Documents are valid, binding, and legally enforceable
in accordance with their terms and that they do not violate any applicable usury
or other Applicable Laws and the delivery and endorsement by Borrower of such
Pledged Notes Receivable in the manner prescribed herein, the execution and
delivery to Lender of a Master Pledge and Assignment of Note Receivables and
Timeshare Interest Mortgages, and, with respect to Receivables Loan Approved
Resorts other than Oak N' Spruce Resort, the recordation of such Master Pledge
and Assignment of Notes Receivable and Timeshare Interest Mortgages and a
corresponding UCC Financing Statement with the Texas Secretary of State will
create in favor of Lender a valid and perfected continuing first priority Lien
and security interest in and to such Pledged Notes Receivable.
(c) Representations, Warranties, Covenants, and Agreements. The
representations and warranties contained in the Loan Documents and in any
certificates delivered to Lender in connection with the closing shall be true
and correct in all material respects, and all covenants and agreements required
to have been complied with and performed by Borrower shall have been fully
complied with and performed to the satisfaction of Lender.
(d) Borrower's Background Documents. Borrower shall have delivered
to Lender and Lender shall have approved each of the following:
(i) Borrower's Organizational Documents. Copies of Borrower's
organizational documents, including but not limited to its certificate of
incorporation and bylaws, together with any amendments thereto, certified
to be true and complete by the Secretary of Borrower.
(ii) Good Standing Certificate. Current good standing
certificate for Borrower issued by the Texas Secretary of State.
(iii) Authorizations; Resolutions; Incumbency Certificates. A
certified resolution of Borrower authorizing the execution of all Loan
Documents and the
RECEIVABLES LOAN AND SECURITY AGREEMENT
23
performance of all Obligations thereunder. Such resolution shall be
accompanied by a certificate from Borrower, signed by a duly authorized
officer of Borrower and dated as of the Closing Date, indicating the
incumbency, authority, and signatures of the members or officers of such
entity authorized to sign, on behalf of such entity, this Agreement and
the other Loan Documents to which such entity is a party.
(e) Financial Statements. Lender shall have received and approved
the Financial Statements required pursuant hereto, or otherwise required by
Lender, for Borrower, all in form and substance satisfactory to Lender.
(f) Proceedings Satisfactory. All actions taken in connection with
the execution and delivery of the Loan Documents, and all documents and papers
related thereto, shall be completely satisfactory to Lender and its counsel.
Lender and its counsel shall have received copies of all such documents,
instruments, and other items as Lender or its counsel may reasonably request in
connection therewith, all in form and substance satisfactory to Lender and its
counsel.
(g) Expenses. Borrower shall have paid all fees, expenses, and other
amounts required to be paid prior to or on the Closing Date, pursuant to this
Agreement.
(h) Title Insurance. Borrower shall deliver or cause to be delivered
to Lender a mortgagee's title insurance commitment at the time of each Advance
covering Timeshare Interest Mortgages which are included as part of such Advance
(other than Timeshare Interest Mortgages covering Timeshare Interests in Oak N'
Spruce Resort), underwritten by a company acceptable to Lender in all respects,
to insure the lien of each Timeshare Interest pledged to Lender in an amount not
less than the applicable Pledged Notes Receivable balance and containing such
affirmative coverage as Lender deems reasonably necessary. A mortgagee title
insurance policy consistent with the subject title insurance commitment and
naming Borrower, its successors and assigns as insured mortgagee shall be
delivered with respect to the Timeshare Interest Mortgages which make up each
Advance (other than Timeshare Interest Mortgages covering Timeshare Interests in
Oak N' Spruce Resort) within sixty (60) days of the date of the Advance on such
Pledged Notes Receivable and must insure that the applicable Timeshare Interest
Mortgage creates a first priority lien in and to the financed Timeshare Interest
in favor or Lender, as assignee of Borrower, with such exceptions and conditions
to title as Lender shall approve in writing.
(i) Purchase Agreement. Borrower shall deliver to Lender or, at the
option of Lender in its sole discretion, Custodian, each Pledged Note Receivable
endorsed to the order of Lender and an original Purchase Agreement, disclosure
statement, copy of the Timeshare Interest Mortgage and the Master Pledge and
Assignment of Notes Receivable and Timeshare Interest Mortgages in respect of
each of the Eligible Notes Receivable which Borrower proposes to assign to
Lender and upon which Borrower is basing the requested Advance, together with
copies of the settlement statement and other documents as further described in
the Custodial Agreement.
(j) Evidence of Insurance. Lender has received certified copies of
all insurance policies and endorsements thereto or other evidence satisfactory
to Lender, in its sole
RECEIVABLES LOAN AND SECURITY AGREEMENT
24
discretion. In addition, Lender has written evidence that Borrower has obtained
and maintained all policies of insurance required by and in accordance with
Section 6.1(c) hereof, including but not limited to copies of the most current
paid insurance premium invoices for such policies.
(k) Applicable Laws. Lender has received evidence satisfactory to
Lender that all existing Improvements at the Property are and will be in
compliance with all applicable zoning, building, and other Applicable Laws in
connection with the establishment of the Property, the operation of the
Property, the sale, use and marketing of Timeshare Interests, and the occupancy
of Units at the Property.
(l) Litigation. Other than those certain matters described in
Exhibit "H" hereto, there is no pending or threatened bankruptcy, foreclosure,
or other material litigation or judgments outstanding against or with respect to
the Property, all or any portion of the Collateral or Borrower (each a "Material
Party"). The term "other material litigation" as used herein shall not include
matters in which (i) a Material Party is a plaintiff and no counterclaim is
pending; or (ii) Lender determines, in its sole discretion, that such litigation
is immaterial due to settlement, insurance coverage, frivolity, or amount or
nature of claim. Lender shall have obtained an independent search, at Borrower's
expense, confirming that no such bankruptcy, foreclosure action, or other
material litigation or judgment exists.
(m) Code/Other Searches. Lender has obtained such searches of the
applicable public records as it deems necessary under all Applicable Laws to
verify that it has a first and prior perfected Lien and security interest
covering all of the Collateral.
(n) Taxes and Assessments. Lender has received copies of the most
current tax bills related to the Property, including the real property, and
Timeshare Interests, together with evidence satisfactory to it that all taxes
and assessments owed by or for which Borrower is responsible for collection have
been paid prior to becoming delinquent, which taxes and assessments include,
without limitation, sales taxes, room occupancy taxes, payroll taxes, personal
property taxes, excise taxes, intangible taxes, real property taxes, income
taxes, and any assessments related to the Property and/or the real property, or
Timeshare Interests. Lender shall also have received information satisfactory to
Lender disclosing the tax identification numbers, tax rates, estimated tax
values, assessment ratios, and estimated assessment values or amounts with
respect to its interest in the Property and the real property and the identities
of the taxing authorities having jurisdiction over the real property and the
Property as well as the instrumentalities and entities having the power and
jurisdiction to impose assessments against the real property or the Property.
(o) Intercreditor Agreements. Lender shall have entered into
intercreditor agreements, in form and substance satisfactory to Lender, with
each of Textron Finance Corporation, Sovereign Bank and any other lenders or
financial institutions from time to time providing financing to Borrower and its
Affiliates as requested by Lender from time to time.
(p) Physical Inspection. Lender may, in its sole discretion, cause
to be made its own physical inspection of the Property or its Collateral. If
Lender's physical inspection indicates that any structural or mechanical defect
exists with respect to all or any portion of the Property or its Collateral
(including Units which include Timeshare Interests which are related to
RECEIVABLES LOAN AND SECURITY AGREEMENT
25
any Pledged Note Receivable), Lender shall have the right to engage an
independent engineering firm to prepare a structural and mechanical engineering
report covering the Property confirming that the Property and the improvements
thereat are in all material respects mechanically and structurally sound. If the
structure is found to be defective, the cost of any requisite remedial work with
respect to the mechanical and structural condition of the Property which is
required as a result of the findings of such report which raise questions about
the structural soundness of the Property shall be borne entirely by Borrower.
(q) Permits and Approvals. Lender has received copies of
satisfactory evidence that the real property, the Units, and other improvements
thereto, and the use of the Property are in compliance with all Applicable Laws,
including, without limitation: (i) Environmental Laws; (ii) erosion control
ordinances; (iii) doing-business and licensing laws, including those governing
alcohol and beverages; (iv) the Americans with Disabilities Act of 1990 and any
other laws protecting disabled or handicapped persons; and (v) zoning laws. All
such permits and approvals granted to Borrower shall continue to be legally
valid and shall remain in full force and effect for so long as any Obligations
remain outstanding.
(r) Timeshare Interest Sales. Lender has received written evidence
to the effect that Borrower has complied in all respects with all Applicable
Laws relating to the marketing and sale of Timeshare Interests, including but
not limited to any Encumbered Timeshare Interests, at or with respect to the
Property, including but not limited to timeshare registration statutes, rules,
and regulations.
(s) Compliance with Applicable Laws. Lender has received written
evidence satisfactory to it, in its Permitted Discretion, that all Units in
which Borrower is selling Timeshare Interests have been properly submitted to
the Declaration in full compliance with all Applicable Laws.
(t) Inventory Loan Conditions. Each of the conditions to the initial
advance under the Inventory Loan Agreement shall have been satisfied.
(u) Miscellaneous. Such other matters as Lender shall reasonably
require.
True copies or to the extent required hereby, originals of all of the
above referenced documents, instruments, forms, opinions, and other materials
shall be delivered to Lender or its Counsel prior to the Closing Date.
4.2 Funding Procedures.
(a) Initial Advance. Subject to all of the terms, provisions, and
conditions hereof and of the other Loan Documents, Lender shall make an Initial
Advance to Borrower exclusively for the purposes set forth in Section 2 above
promptly following Lender's perfection of its Liens and security interests in
all other Collateral, and Borrower's complete satisfaction of all other
conditions precedent to such Initial Advance set forth herein and in the other
Loan Documents.
RECEIVABLES LOAN AND SECURITY AGREEMENT
26
(b) Requests for Advances. Each request for an Advance under the
Loan shall be completed on the appropriate form attached hereto as Exhibit "I"
attached hereto and incorporated herein by this reference (the "Advance
Request") and shall:
(i) Be in writing (in the form of Exhibit "I");
(ii) Specify the principal amount of the Advance requested;
(iii) Confirm the amount of the then current Borrowing Base
(and provide back up as requested by Lender);
(iv) Confirm that all representations and warranties of
Borrower contained in this Agreement are true and correct as of the date
of the Advance Request and, after giving effect to the making of the
requested Advance, will be true and correct as of the date on which the
Advance is to be made;
(v) State that no Default or Event of Default exists as of the
date of the Advance Request and, after giving effect to the making of such
Advance, no Default or Event of Default would exist as of the date on
which the Advance is to be made;
(vi) Be delivered to the office of Lender as set forth in
Section 11.1 hereof at least five (5) Business Days prior to the date of
the requested Advance;
(vii) Be signed by a duly authorized officer of Borrower;
(viii) Be accompanied by Borrower's sworn written certificate
to the effect that, to the best knowledge of Borrower and to the extent
applicable, Borrower:
(A) Has received no notice of any asserted or threatened
defense, offset, counterclaim, discount, or allowance in respect of
each Eligible Note Receivable to be pledged to Lender through a
collateral assignment of all of Borrower's right, title, and
interest therein in connection with such Advance; and
(B) Has received no notice of any asserted or threatened
defense, offset, counterclaim, discount, or allowance in respect of
any Eligible Note Receivable or Pledged Note Receivable.
(ix) Be accompanied by such additional items as Lender shall
reasonably require, including, without limitation:
(A) An aging report, in form and substance satisfactory
to Lender in its sole discretion, on the applicable Pledged Notes
Receivable; and
(B) A delinquency report, in form and substance
satisfactory to Lender in its sole discretion, showing which Notes
Receivable in connection with the Advance are contractually past due
and the duration of each such delinquency.
RECEIVABLES LOAN AND SECURITY AGREEMENT
27
(x) Provided that no Default or Event of Default hereunder
has occurred and is continuing, each Advance shall be made within three
(3) Business Days following the last to occur of (a) Lender's receipt of
the Advance Request (as hereinafter defined) and all items required to be
submitted to Lender hereunder, including but not limited to those items
referenced in this Section 4.2 (to the extent applicable) and (b) Lender's
receipt of a written certification from Custodian that confirms that
Custodian has in its possession each of the documents, instruments, and
other items required to be delivered to Custodian pursuant to the
Custodial Agreement (unless Lender, in its sole discretion, has elected to
take possession of such documents, instruments, and other items itself).
(c) Loan Documents/Collateral. Not less than five (5) days prior to
the date of any Advance (unless Lender, in its sole discretion, elects to
shorten such time frame), Borrower shall have:
(i) Delivered to Lender and Custodian a list of all Eligible
Notes Receivable, that are intended 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 Lender may request;
(ii) Delivered to Lender and Custodian (or, if Lender shall so
instruct, a designee appointed by Lender in writing) all documents,
instruments, and other items described in Section 4.1 above and in the
Custodial Agreement;
(iii) Delivered to Lender (or if Lender shall so instruct, a
designee appointed by Lender in writing) for the Initial Advance only an
original Master Pledge and Assignment of Notes Receivable and Timeshare
Interest Mortgages, duly executed and in proper form for recording,
assigning to Lender all of Borrower's right, title and interest in and to
each Pledged Note Receivable identified in the exhibit or schedule
thereto, together with all accounts, chattel paper and general intangibles
related thereto and the cash and non-cash proceeds thereof ("Master
Collateral Assignment"). Such Master Collateral Assignment shall be
recorded in connection with the Initial Advance. In addition, if
applicable, Borrower shall have delivered to Lender (or if Lender shall so
instruct to Custodian) for each Advance subsequent to the Initial Advance
a Supplemental Pledge and Assignment of Notes Receivable and Timeshare
Interest Mortgages in the form of Exhibit "J" hereto, duly executed and in
proper form for recording, assigning to Lender all of Borrower's right,
title, and interest in and to each such Pledged Note Receivable and
Timeshare Interest Mortgages identified in the exhibit or schedule
thereto, together with all accounts, chattel paper, and general
intangibles related thereto and the cash and non-cash proceeds thereof
("Supplemental Collateral Assignment"). Such Master Collateral Assignment
(for the Initial Advance only) and such Supplemental Collateral Assignment
(for each Advance subsequent to the Initial Advance) shall be recorded in
the Public Records of Habersham County, Georgia; Lake County, Illinois;
Comal County, Texas; Taney County, Missouri; Wood County, Texas; ▇▇▇▇▇
County, Texas; Stone County, Missouri; ▇▇▇▇▇▇▇▇▇▇ County, Texas; Galveston
County, Texas; Jefferson County, Missouri; and Polk County, Florida, as
applicable.
RECEIVABLES LOAN AND SECURITY AGREEMENT
28
(iv) With respect to any Advance in connection with Pledged
Notes Receivable generated at Oak N' Spruce Resort, delivered to Lender an
Assignment of Certificate of Beneficial Interest securing such Pledged
Note Receivable acceptable to Lender in its sole discretion and evidence
that Borrower has filed a UCC-1 financing statement in the state where the
Purchaser is located naming Borrower as the secured party and Lender as
Borrower's assignee.
(v) Lender and Borrower agree that in accordance with the
terms herewith, that Lender shall make Advances to Borrower upon receipt
of an Advance Request without the requirement that the Borrower submit
additional Notes Receivable for funding so long as there is availability
under the Borrowing Base at the time of such Advance Request.
(vi) For the Initial Advance only, delivered to Lender (or if
Lender shall so instruct, a designee appointed by Lender in writing)
original UCC-1 financing statements covering the Collateral in general, to
be recorded with the Secretary of State of the State of Texas.
The Timeshare Interest Mortgages relating to each Pledged Note Receivable
collaterally assigned to Lender must have evidence thereon of payment of all
required documentary stamps and intangible taxes, if any.
(d) Other Conditions. In addition to the other conditions set forth
in this Agreement, the making of any Advance shall be subject to the complete
satisfaction of all of the following conditions:
(i) No Default or Event of Default exists immediately prior to
the making of such requested Advance or, after giving effect thereto,
immediately after the making of such requested Advance;
(ii) The Pledged Note Receivable as to which such Advance is
sought is not located at a Receivables Loan Approved Resort where a Loss
of License has occurred;
(iii) The Pledged Note Receivable as to which such Advance is
sought is not located at a Receivables Loan Approved Resort where Borrower
has received a Suspension of Sales Order or Sanction;
(iv) The date on which any Advance is to be made is a Business
Day;
(v) Lender has determined that each Pledged Note Receivable as
to which such Advance is sought is an Eligible Note Receivable and that
such requested Advance will not be in an amount greater than the Borrowing
Base;
(vi) Lender has determined that the weighted average FICO
score for the aggregate Pledged Note Receivables as to which such Advance
is sought is greater than 640;
RECEIVABLES LOAN AND SECURITY AGREEMENT
29
(vii) Lender has determined that no more than twenty-five
percent (25%) of the unpaid principal balance of the aggregate Pledged
Note Receivables as to which such Advance is sought shall have makers with
FICO scores below 600 (including makers who have no FICO score at all);
(viii) Lender has determined that no more than five percent
(5%) of the unpaid principal balance for the aggregate Pledged Note
Receivables as to which such Advance is sought shall have makers who have
no FICO score at all;
(ix) Lender has determined that no more than five percent (5%)
of the unpaid principal balance of the aggregate Pledged Note Receivables
as to which such Advance is sought shall be related to downgraded
Timeshare Interests;
(x) All representations and warranties contained herein, in
the other Loan Documents, and in any certificates delivered to Lender in
connection with the Loan are true and correct in all material respects;
(xi) Lender has received evidence satisfactory to Lender, in
its reasonable discretion, that the Receivables Loan Approved Resorts and
the Silverleaf Club are affiliated with the Exchange Company; and
(xii) Lender has received evidence satisfactory to Lender, in
its Permitted Discretion, that all of Borrower's interest in the
Receivables Loan Approved Resort (including the marketing and sale of
Timeshare Interests thereat or with respect thereto) and the Collateral is
in full compliance with all Applicable Laws.
SECTION 5. GENERAL REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender as follows:
5.1 Organization, Standing, Qualification. Borrower is a Texas corporation
organized, validly existing, and in good standing under the laws of the State of
Texas and as a foreign corporation under the laws of each jurisdiction in which
the character or location of the properties owned by it or the business
transacted by it requires licensing and qualification. Borrower has all
requisite power to conduct its business and to execute, deliver, and perform its
obligations under the Loan Documents.
5.2 Authorization, Enforceability, Etc.
(a) The execution, delivery and performance by Borrower of the Loan
Documents to which it is a party has been duly authorized by all necessary
corporate action by Borrower and does not and will not (i) violate any provision
of Borrower's certificate of incorporation or bylaws or other agreement,
statute, 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 Lender and
the Permitted Liens and Encumbrances; 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
RECEIVABLES LOAN AND SECURITY AGREEMENT
30
to which Borrower is a party or by which it or any of its assets are bound or
affected, including but not limited to any loan from or agreement of any type
with a third party lender.
(b) No approval, authorization, order, license, permit, franchise,
or consent of, or registration, declaration, qualification, or filing with, any
governmental authority or other Person is required in connection with the
execution, delivery, and performance by Borrower of any of the Loan Documents to
which it is a party in addition to those that have already been obtained.
(c) The Loan Documents constitute legal, valid, and binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms.
(d) The execution and delivery of the Loan Documents, the delivery
and endorsement to Lender of the Pledged Notes Receivable, the filing of a UCC-1
financing statement with the Secretary of State of the State of Texas, and the
recordation (as appropriate) of the Master Collateral Assignment (with respect
to the Initial Advance) and the Supplemental Collateral Assignment (with respect
to all subsequent Advances) and the other Loan Documents create in favor of
Lender valid and perfected first priority Liens and security interests in and to
all of the Collateral other than Collateral related to Oak N' Spruce Resort.
With respect to Oak N' Spruce Resort, the execution and delivery of the Loan
Documents, the delivery and endorsement to Lender of the Pledged Notes
Receivable, the filing of a UCC-1 financing statement with the Secretary of
State of the State of Texas, the delivery of an Assignment of Certificate of
Beneficial Interest securing such Pledged Note Receivable and the filing of a
UCC-1 financing statement in the state where the Purchaser is located naming
Borrower as the secured party and Lender as Borrower's assignee and the other
Loan Documents create in favor of Lender valid and perfected first priority
Liens and security interests in and to all of the Collateral related to Oak N'
Spruce Resort. The Collateral secures the full payment and performance of the
Obligations.
(e) To the best of Borrower's knowledge, 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.
(f) There have been no material modifications or amendments
whatsoever to the Pledged Notes Receivable, other than those expressly approved
by Lender in writing, the originals of which have been delivered to Custodian.
(g) To the best of Borrower's knowledge, the makers of the Eligible
Notes Receivable have no defenses, offsets, claims, or counterclaims, relating
thereto or to the related Timeshare Interest Mortgages or any other related
documents or instruments.
(h) The Pledged Notes Receivable are and shall remain in full force
and effect as valid and binding obligations of the respective makers thereof in
favor of Lender, as the collateral assignee of Borrower's right, title, and
interest therein.
(i) The grant of the security interests described herein by Borrower
in favor of Lender has not adversely affected and will not adversely affect the
validity or enforceability
RECEIVABLES LOAN AND SECURITY AGREEMENT
31
of the obligations of the respective makers of the Pledged Notes Receivable
thereunder or pursuant to their respective Timeshare Interest Mortgages or any
related documents or instruments.
(j) Lender is not and shall not be required to take, and Borrower
has taken, any and all required steps to perfect and maintain Lender's security
interests in the Collateral (other than maintaining or causing Custodian to
maintain possession, custody, and control of the portion of the Collateral
constituting instruments and timely filing continuation statements for UCC
financing statements); and Lender is not and shall not be required to collect or
realize upon the Collateral or any distribution of interest or principal, nor
shall loss of, or damage to, any Collateral release Borrower from any of the
Obligations.
5.3 Financial Statements and Business Condition. The Financial Statements
fairly present the respective financial conditions and results of operations of
Borrower as of the date or dates thereof and for the periods covered thereby.
There are no material liabilities, direct or indirect, fixed or contingent, of
Borrower as of the dates of such Financial Statements that are not reflected
therein or in the notes thereto that have not otherwise been disclosed to Lender
in writing. There has been no material adverse change in the financial condition
of Borrower from the financial condition shown in its Financial Statements, nor
has Borrower incurred any material liabilities, direct or indirect, fixed or
contingent, that are not shown in its Financial Statements. Borrower is able to
pay all of its debts as they become due, and Borrower will maintain such solvent
financial condition, giving effect to the Obligations, as long as Borrower is
obligated to Lender under this Agreement or any of the other Loan Documents.
Borrower's Obligations under this Agreement and the other Loan Documents will
not render Borrower unable to pay its debts as they become due.
5.4 Taxes. Borrower represents and warrants that (a) it has paid in full
all ad valorem taxes and other taxes and assessments levied against the Property
which are due and payable, and Borrower knows of no basis for any additional
taxes or assessments against the Property or Collateral; and (b) it 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, and all other taxes that are payable by it. No
tax audit is pending or threatened with respect to Borrower.
5.5 Title to Collateral and Other Properties; Prior Liens. Borrower has
good and marketable title to all of the Collateral, including but not limited to
all interest of Borrower, as mortgagee under the Encumbered Timeshare Interests,
and Pledged Notes Receivable, together with all rights, properties, and benefits
appurtenant or related thereto. Other than those granted in favor of Lender,
there are no Liens, security interests, charges, or other encumbrances against
all or any portion of the Collateral, except for the Permitted Liens and
Encumbrances set forth in Exhibit "E," hereto. No financing statement or other
instrument similar in effect covering all or any portion of the Collateral, is
on file in any filing or recording office, except such as may have been filed or
recorded in favor of Lender. Borrower does not own any Furnishings or other
tangible personal property in any Unit located at any Receivables Loan Approved
Resort.
5.6 Litigation, Proceedings, Etc. There are no actions, suits,
proceedings, orders, or injunctions pending or threatened against or affecting
Borrower, its Affiliates, or the Property, at law or in equity, or before or by
any governmental authority or other tribunal, which (a) could
RECEIVABLES LOAN AND SECURITY AGREEMENT
32
have a material adverse effect on Borrower, any Affiliate of Borrower, or the
Property that have not been fully disclosed to Lender in writing; or (b) could
have a material adverse effect on all or any portion of the Collateral. Exhibit
"H," attached hereto and incorporated herein by this reference, describes all
currently pending litigation against Borrower or any Affiliate of Borrower.
5.7 Licenses, Permits, Etc. Borrower possesses and will at all times
continue to possess all requisite franchises, certificates of convenience and
necessity, operating rights, approvals, licenses, permits, consents,
authorizations, exemptions, and orders as are reasonably necessary or
appropriate to carry on its business as it is now being conducted, without any
known conflict with the rights of others and, with respect to Borrower and the
Collateral, in each case subject to no mortgage, pledge, Lien, lease,
encumbrance, charge, security interest, title retention agreement, or option
other than the Permitted Liens and Encumbrances. All such franchises,
certificates of convenience and necessity, operating rights, approvals,
licenses, permits, consents, authorizations, exemptions, and orders are
presently in full force and effect, and there is no action currently pending or
threatened effort to revoke or modify any of them.
5.8 Environmental Matters. The Property contains no Hazardous Materials,
and no Hazardous Materials are used or stored at or transported to or from the
Property. Neither Borrower nor any representative of Borrower has received
notice from any governmental agency or other Person with regard to Hazardous
Materials on, under, or affecting all or any portion of the Collateral, and
neither Borrower nor any Collateral are in violation of any Environmental Laws.
5.9 Full Disclosure. NO INFORMATION, EXHIBIT, OR WRITTEN REPORT OR THE
CONTENT OF ANY SCHEDULE FURNISHED BY OR ON BEHALF OF BORROWER TO LENDER IN
CONNECTION WITH THE LOAN, OR THE COLLATERAL, AND NO REPRESENTATION OR STATEMENT
MADE BY BORROWER IN ANY LOAN DOCUMENT, 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. TO THE BEST OF ITS KNOWLEDGE,
BORROWER KNOWS OF NO FACT OR CONDITION THAT COULD ADVERSELY AFFECT THE OPERATION
OF, AND/OR SALES OF TIMESHARE INTERESTS WITH RESPECT TO, THE PROPERTY IN
ACCORDANCE WITH ALL APPLICABLE LAWS OR IMPEDE OR PRECLUDE BORROWER'S PERFORMANCE
OF ITS OBLIGATIONS PURSUANT TO THE LOAN DOCUMENTS.
Borrower's Initials: /S/ HJW
5.10 Use of Proceeds/Margin Stock. None of the proceeds of the Loan will
be used to purchase or carry any "margin stock" (as defined under Regulation 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 this 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 T, U and X of the
Board of Governors of the Federal Reserve
RECEIVABLES LOAN AND SECURITY AGREEMENT
33
System, 12 C.F.R. Part 11. The proceeds of the Loan will be disbursed for the
purposes set forth in Section 2.1 hereof.
5.11 No Defaults. No Default or Event of Default exists, and there is no
breach or violation in any material respect of any term of any document,
contract, agreement, charter instrument, bylaws, or other instrument to which
Borrower is a party or by which it may be bound.
5.12 Restrictions on Borrower. Borrower is not a party to any contract or
agreement, or subject to any Lien, charge, or restriction, that materially and
adversely affects its business. Borrower will not be, on or after the Closing
Date, a party to any contract or agreement that restricts its right or ability
to incur indebtedness (other than the agreements executed in connection with the
Sovereign Facility) and Borrower shall not be party to a contract or agreement
that prohibits Borrower's execution and delivery of, or compliance with the
terms of, this Agreement or the other Loan Documents. Borrower has not agreed or
consented to cause or permit in the future (upon the happening of any
contingency or otherwise) any of the Collateral, whether now owned or hereafter
acquired, to be subject to a Lien except in favor of Lender as provided
hereunder and the Permitted Liens and Encumbrances.
5.13 Broker's Fees. Lender and Borrower each represent to each other that
neither of them has made any commitment or taken any action that could result in
a claim for any broker's, finder's, or other similar fees or commissions with
respect to the Loan as contemplated by this Agreement. Borrower agrees to
indemnify Lender and save and hold Lender harmless from and against all claims
of any Person for any broker's or finder's fee, commission, or similar amount,
unless such claim arises as the result of any commitment or action of Lender,
and this indemnity shall include reasonable attorneys' fees and legal expenses.
Lender agrees to indemnify Borrower and save and hold it harmless from and
against all claims of any Person for any broker's or finder's fee, commission,
or similar amount, unless such claim arises as the result of any commitment or
action of Borrower, and this indemnity shall include reasonable attorneys' fees
and legal expenses.
5.14 Tax Identification Number. Borrower's federal taxpayer identification
number is ▇▇-▇▇▇▇▇▇▇.
5.15 Legal Compliance. Borrower has, in all material respects, complied
fully with all Applicable Laws in connection with the Property and the
Collateral, including but not limited to (i) the Interstate Land Sales Full
Disclosure Act; (ii) any applicable condominium and timeshare statutes, rules,
and regulations, including but not limited to, those governing the
administration and operation of the Timeshare Association and those requiring
registration of the Timeshare Interests as a legal prerequisite to the marketing
and sale thereof, including, without limitation, the Timeshare Act. (iii)
Regulation Z of the Federal Reserve Board; (iv) the Equal Credit Opportunity
Act; (v) Regulation B of the Federal Reserve Board; (vi) Section 5 of the
Federal Trade Commission Act; (vii) all applicable state and federal securities
laws; (viii) all applicable usury laws; (ix) all applicable trade practices,
home and telephone solicitation, sweepstakes, lottery, and other consumer credit
and protection laws; (x) all applicable real estate sales licensing, disclosure,
reporting, and escrow laws; (xi) the Americans with Disabilities Act of 1990 and
all other accessibility requirements; (xii) the federal postal laws; (xiii) the
Real Estate
RECEIVABLES LOAN AND SECURITY AGREEMENT
34
Settlement Procedures Act; (xiv) the Fair Housing Act of 1968;(xv) the FTC
Privacy Act and (xvi) all amendments to and rules and regulations promulgated
under the foregoing, all if and as applicable. Furthermore, the Property and the
improvements (including the Improvements) thereat have been constructed and are
and will continue to be operated in compliance with all applicable zoning
requirements, building codes, subdivision ordinances, licensing requirements,
all covenants, conditions, and restrictions of record, and all other Applicable
Laws. Borrower has registered or is exempt from registration in each of the
states set forth on Exhibit "K" attached hereto. Borrower's marketing and sales
practices are in compliance with all Applicable Laws including, without
limitation, its lead generation techniques. Borrower has not been contacted or
notified of any Federal Trade Commission or Texas trade commission inquiry or
investigation or any Department of Justice or Texas Attorney General inquiry or
investigation in connection with the marketing and sale of Timeshare Interests.
5.16 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 (the "Pension Reform Act"), exists
or will exist in connection with any Plan of Borrower that 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 this Agreement or the performance by the parties
hereto of their respective duties and obligations hereunder. Borrower will (a)
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 their Plans; (b) promptly, after the filing thereof,
furnish to Lender 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; (c) notify Lender immediately of any
fact, including but not limited to any Reportable Event arising in connection
with any Plan that might constitute grounds for the 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 (d) notify
Lender 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 that could result in the
imposition of a Lien on any asset of Borrower, pursuant to Section 4068 of the
Pension Reform Act.
5.17 Labor Relations. Borrower's employees are not parties to any
collective bargaining agreement with Borrower and, to the best of Borrower's
knowledge, 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.
RECEIVABLES LOAN AND SECURITY AGREEMENT
35
5.18 Receivables Loan Approved Resorts.
(a) Timeshare Plan. Each Receivables Loan Approved Resort shall be
subjected to the Declaration. Each Receivables Loan Approved Resort will remain
a timeshare plan and project in full compliance with all Applicable Laws. All
Units and Common Elements are subject to the provisions of the Declaration. All
Resort Facilities are subject to a Use Agreement. Upon filing of the
Declaration, Borrower will not vote and will use its best efforts to ensure that
the Timeshare Association does not vote to terminate or amend the Declaration in
any material respect without the prior written approval of Lender.
(b) Access. Each Receivables Loan Approved Resort and all Units and
Common Areas thereat have direct access to publicly dedicated roads, and all
roadways inside each Receivables Loan Approved Resort have been completed and
are subject to an access and use easement or other dedication or provision that
benefits and will continue to benefit all Purchasers.
(c) Utilities. Electricity, sanitary and stormwater sewer,
telephone, water, and other reasonably necessary utilities are available, and
there is sufficient capacity to service the Encumbered Timeshare Interests,
including, without limitation, all real property and Units not submitted to the
Declaration as of the Closing Date. Any easements necessary to the furnishing of
such utility services have been obtained, duly recorded, and inure to the
benefit of all Purchasers.
(d) Amenities. Each Purchaser of a Timeshare Interest has and will
continue to have access to and the full use and enjoyment of all of the Common
Areas and public utilities of each Receivables Loan Approved Resort, all in
accordance with the Declaration and the other Timeshare Documents, as
applicable. Any recreational or other commonly used facilities which are
available for use by Purchasers or which may be made available in the future
shall also be available for use by short-term renters, transient guests or users
of accommodations which may be part of such Receivables Loan Approved Resort and
such rights shall continue for the benefit of Lender and any such users in the
event Lender or a successor or assign were to obtain title to all or a part of
the Property.
(e) Assessments. Each Purchaser will automatically be a member of
the Timeshare Association, which shall be a non-profit corporation that has the
authority to levy annual assessments to cover the costs of maintaining and
operating each Receivables Loan Approved Resort. There are no events which
currently exist or could reasonably be foreseen by Borrower that could give rise
to a material increase in such costs.
(f) 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 Receivables Loan Approved Resorts have been paid or will be paid when
due.
5.19 Timeshare Documents and Reports. Borrower has furnished Lender with
true and correct copies of the Timeshare Documents listed on Exhibit "L" hereto,
the form and content of which have been submitted to all applicable governmental
authorities, to the extent required,
RECEIVABLES LOAN AND SECURITY AGREEMENT
36
prior to the Closing Date. All such filings and/or recordations, and all
joinders and consents, necessary in order to establish the plan in respect of
the Receivables Loan Approved Resorts, including, without limitation, the Units,
the Timeshare Interests, and all appurtenant Common Areas, and all related use
and access rights, have been done or obtained and all laws, regulations and
statutes, and all agreements and arrangements, in connection therewith have been
complied with.
5.20 Reliance by Lender. All representations, warranties, covenants, and
agreements made herein or in any certificate or other document delivered to
Lender by or on behalf of Borrower, pursuant to or in connection with this
Agreement, shall be deemed to have been relied upon by Lender, notwithstanding
any investigation heretofore or hereafter conducted by or on behalf of Lender,
and shall survive the making of any Advances and payments contemplated hereby.
5.21 Vacation Club. Borrower represents and warrants that the Property is
not a part of any vacation club. Prior to converting any Purchasers of a
Timeshare Interest which is related to a Pledged Note Receivable to membership
in a vacation club, Borrower acknowledges it is required to notify in writing
and obtain the written consent of Lender to conversion to such vacation club.
SECTION 6. COVENANTS
6.1 Affirmative Covenants. For so long as any of Borrower's Obligations
remain unsatisfied, Borrower hereby covenants and agrees with Lender as follows:
(a) Payment and Performance of Obligations. Borrower shall repay all
of the Loan and all related amounts 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
that are not prohibited by law to prevent the occurrence of any Default or Event
of Default hereunder; and Borrower will maintain an office or agency in the
State of Texas where notices, presentations, and demands in respect of the Loan
Documents may be made upon Borrower.
(b) Maintenance of Existence, Qualification and Assets. Borrower
shall at all times (i) maintain its legal existence; (ii) maintain its
qualification, where required, to transact business and good standing in the
State of Texas and in any other jurisdiction in which it conducts business; and
(iii) comply or cause its compliance with all Applicable Laws.
(c) Maintenance of Insurance. Borrower shall ensure that policies of
insurance with premiums therefor being paid when due, are maintained and shall
deliver to Lender originals of insurance policies (together with paid premium
invoices in respect thereof) issued by such insurance companies, in such
amounts, in such form, in such substance, and with such expiration dates, as are
acceptable to Lender, in its sole discretion, and containing waivers of
subrogation rights by the insuring company, non-contributory standard mortgagee
benefit clauses or their equivalents, and mortgagee loss payable endorsements in
favor of and
RECEIVABLES LOAN AND SECURITY AGREEMENT
37
satisfactory to Lender and breach of warranty coverage, providing the following
types of insurance on and with respect to Borrower and the Property:
(i) As to all Improvements that have already been completed as
of the date hereof, "All Risk Special Form" insurance coverage (including
fire, lightning, wind damage (inclusive of hurricane and tornado), water
damage, vandalism, and malicious mischief coverage) covering all real and
personal property that comprises the Property, 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
Lender, breach of warranty coverage, and replacement cost endorsements
satisfactory to Lender, and shall not permit co-insurance. All insurance
shall specifically cover architectural and engineering fees necessary to
repair or replace any insured portion of the Property and shall cover
debris removal;
(ii) Public liability and property damage insurance covering
the Property (including coverage for liquor-related liability) in amounts
and on terms satisfactory to Lender, in its sole discretion; and
(iii) Such other insurance on the Property or any replacements
or substitutions therefor, including, without limitation, rent loss,
business interruption, flood insurance (if any Receivables Loan Approved
Resort is or becomes located in an area that 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 such terms as may from time
to time reasonably be required by Lender.
Lender shall expressly be named a mortgagee and loss payee in each
insurance policy described in this Section 6.1(c). To the extent that any
"institutional mortgagee," "institutional lender," "mortgagee, or "secured
party" (as defined or used in the Declaration) other than Lender has any rights
to approve the form of insurance policies with respect to the Property, 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 Property 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 or appropriate, in
Lender's sole discretion, to ensure that Lender shall at all times have a
co-equal right with such other "institutional mortgagee," "institutional
lender," or other "mortgagee" (including, without limitation, any third-party
lender), to approve all such matters and any proposed changes in respect
thereof; and Borrower shall not cause and shall use its best efforts to prohibit
any material changes with respect to any insurance policies, insurers, coverage,
attorney-in-fact or insurance trustee, if any, without Lender's prior written
approval which shall not be unreasonably withheld or delayed.
In the event of any insured loss or claim in respect of all or any
portion of the Property, Borrower shall cause all proceeds of such insurance
policies to be applied in a manner consistent with the Timeshare Documents
and/or all Applicable Laws.
All insurance policies required pursuant to this Agreement (or the
Timeshare Documents) shall provide that the coverage afforded thereby shall not
expire or be amended,
RECEIVABLES LOAN AND SECURITY AGREEMENT
38
canceled, modified, or terminated without at least thirty (30) days' prior
written notice to Lender and contain a provision affirming Lender's rights and
benefits thereunder, despite any violation of the applicable policy terms by
Borrower or other Person. At least thirty (30) days prior to the expiration date
of each policy maintained pursuant to this Section 6.1(c), a certified copy of a
renewal or replacement thereof satisfactory to Lender shall be delivered to
Lender, along with evidence satisfactory to Lender that the premium therefor has
been paid in full. The delivery of any insurance policies hereunder shall
constitute an assignment of all unearned premiums as further security for the
Obligations. In the event that all required premium payments for all such
insurance policies are not paid at least thirty (30) days prior to the
expiration date of each policy maintained pursuant to this Section 6.1(c),
Borrower shall, immediately upon receiving notice thereof, notify Lender in
writing of such failure to timely pay the required insurance premiums. Borrower
shall make a good faith inquiry on a regular basis to the Silverleaf Club to
determine whether all insurance premiums for which it is responsible with
respect to insurance on all or any portion of the Collateral have been timely
paid. If Borrower determines upon such inquiry or otherwise that any required
insurance premiums have not been paid, Borrower shall immediately notify Lender
of such failure to timely pay the required insurance premium, and Borrower shall
have thirty (30) days from receipt of a written request from Lender to cause the
required insurance premiums to be paid. If the required insurance premiums are
not paid within such thirty (30) day period, Lender may, in its sole discretion,
without any obligation to do so, choose to pay such required insurance premiums,
in which case Borrower shall pay Lender interest at the Default Rate on any
amounts so advanced. Lender may also, in its sole discretion, in the event any
required insurance premiums are not paid when due, establish an insurance escrow
account from which Lender may make insurance payments when insurance premiums
shall become due. If any required insurance premiums are not paid as required
and Lender elects not to pay such insurance premiums or establish an escrow
account for payment thereof, such failure shall constitute an Event of Default
hereunder.
In the event of any fire or other casualty to or with respect to all
or any portion of the Property, Borrower covenants that it shall use
commercially reasonable best efforts to cause the prompt restoration, repair, or
replacement of the damaged portion(s) or the Property and the repair or
replacement of any other personal property to the same condition as immediately
prior to such fire or other casualty and, with respect to the real and personal
property comprising the Property, in accordance with the terms of the Timeshare
Documents and/or all Applicable Laws. The insufficiency of any net insurance
proceeds shall in no way relieve Borrower from its obligations as set forth
herein. In Lender's sole discretion, any and all insurance proceeds payable to
or received by Lender pursuant to the Declaration or the applicable insurance
policies may be applied to the payment of the Obligations, whether or not due
and in whatever order Lender elects, consistent with the terms of the applicable
insurance policy and the Declaration.
Borrower shall in good faith cooperate with Lender (to the extent
Lender's rights are not adverse to the rights of any other lender) in obtaining
for Lender the benefits of any insurance or other proceeds lawfully or equitably
payable to Borrower in connection with the transactions contemplated hereby and
in paying any Obligation (including the payment by Borrower of the expense of an
independent appraisal on behalf of Lender in case of a fire or other casualty
affecting the Property).
RECEIVABLES LOAN AND SECURITY AGREEMENT
39
(d) Maintenance of Collateral. Borrower shall execute and deliver
(or cause to be executed and delivered) to Lender all security agreements,
financing statements, assignments, and such other agreements, documents,
instruments, and certificates, and all supplements and amendments thereto, and
take all such other actions, as Lender deems necessary or appropriate in order
to maintain as valid, enforceable, and perfected first priority Liens and
security interests, all Liens and security interests in the Collateral granted
to Lender to secure the Obligations. Except as described in Section 1.34,
Borrower shall not grant extensions of time for the payment of, or 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 Pledged Note Receivable, or any
other instrument, chattel paper, or document that constitutes the Collateral.
(e) Payment of Taxes and Claims. Borrower agrees to pay or cause to
be paid, prior to becoming delinquent, all taxes, charges, and assessments of
any kind imposed on or with respect to the Loan or any of the Loan Documents,
the Property or any other Collateral, including but not limited to the
Encumbered Timeshare Interests, together with any revenue, income, or profits
derived therefrom. To the extent that any such taxes, charges, or assessments
are payable by the Silverleaf Club or Orlando Breeze Resort Club, Borrower shall
make good faith inquiry on a regular basis to determine whether all such taxes,
charges, and assessments have been paid. Borrower shall immediately notify
Lender in writing of any failure to timely pay any such taxes, charges, or
assessments. In the event that Lender determines (through notice or otherwise)
that any such taxes, charges, or assessments have not been paid when due,
Borrower shall have thirty (30) days from receipt of a written request for
payment from Lender to cause the required taxes, charges, or assessments to be
paid. If such required taxes, charges, and assessments (and any applicable late
charges and interest) are not paid within such thirty (30) day period, Lender
may, in its sole discretion, without any obligation to do so, choose to pay such
taxes, charges, or assessments on behalf of Borrower, in which case Borrower
shall pay Lender interest at the Default Rate on any amounts so advanced. In the
event Lender elects not to pay the required taxes, charges, or assessments and
the same are not paid as set forth above, such failure shall constitute an Event
of Default hereunder. Borrower shall pay, where applicable, on a timely basis
all other charges and assessments levied against Borrower, the Property (to the
extent charges and assessments are due from Borrower) or any other Collateral,
including but not limited to the Encumbered Timeshare Interests, together with
any revenue, income, or profits derived therefrom (including, without
limitation, claims for labor, services, materials, or supplies). Except for the
Liens in favor of Lender granted pursuant to the Loan Documents, and except as
otherwise specifically provided for herein, Borrower covenants and agrees that
in the event that any statutory or other Lien (including, without limitation,
any mechanics', materialmen's, judgment, or tax liens) attaches to any of the
Collateral (except for the Permitted Liens and Encumbrances), Borrower shall,
within thirty (30) days after any such Lien attaches, either (i) cause such Lien
to be released of record; or (ii) provide Lender with a bond in accordance with
the applicable laws of the State of Texas issued by a corporate surety
acceptable to Lender, in its sole discretion, in an amount and form acceptable
to Lender.
(f) Inspections. Borrower shall, at any time and from time to time,
upon reasonable notice and at the expense of Borrower, including but not limited
to the travel expenses of Lender's agents, permit Lender and its agents and
representatives to inspect the Property, any Collateral, or any of Borrower's
assets, including but not limited to all documents,
RECEIVABLES LOAN AND SECURITY AGREEMENT
40
bank statements, and other records within Borrower's possession, custody, or
control, and to examine and make copies and abstracts thereof; and to discuss
its affairs, finances, and accounts with any of their officers, employees,
Affiliates, contractors, or independent certified public accountants (and by
this provision, Borrower authorizes said accountants to discuss with Lender, its
agents or representatives, the affairs, finances, and accounts of Borrower).
Without limiting the foregoing, Lender shall have the right to make such credit
investigations as Lender may deem appropriate, in its sole discretion, in
connection with its review of any Notes Receivable. Borrower shall make
available to Lender all such credit and other information in its custody,
possession, or control or to which it may have access with respect to any
Purchasers or other obligors with respect to any Notes Receivable as Lender may
request. Unless not required by Lender, Borrower agrees to meet with Lender on a
quarterly basis in person or by teleconference.
(g) Reporting Requirements. For so long as any of the Obligations
remain unsatisfied, Borrower shall furnish (or cause to be furnished, as the
case may be) to Lender, in each case certified in writing by Borrower as true
and correct, the following items in form and substance acceptable to Lender, as
appropriate:
(i) Monthly Collateral Reports. As soon as available and in
any event within fifteen (15) days after the end of each calendar month:
(i) a report showing the trial balance of the Pledged Notes Receivable;
(ii) a current aging report on the Pledged Notes Receivable; (iii) a
report detailing all amounts of every possible description received by or
on behalf of Borrower with respect to each Pledged Note Receivable during
the preceding calendar month and how such amounts were allocated between
principal, interest, and other categories; (iv) a delinquency report on
all Pledged Notes Receivable; (v) monthly reports from Lockbox Agent as
required pursuant to the Lockbox Agreement; and (vi) such other monthly
reports and other information as shall reasonably be requested by Lender;
(ii) Monthly Financial Reports. As soon as available and in
any event within thirty (30) days following the end of each calendar
month, unaudited statements of income and expense of Borrower and the
Timeshare Association for the monthly period in question, balance sheets
of Borrower and the Timeshare Association as of the last day of such
calendar month and a statement of cash flows of Borrower and the Timeshare
Association during such calendar month, all in such detail and scope as
may be reasonably required by Lender, prepared in accordance with GAAP and
on a basis consistent with prior accounting periods and certified as true
and correct by Borrower's chief financial officers. In the event that the
aforesaid monthly financial statements are not in form and content
satisfactory to Lender, in its sole determination, Borrower shall, within
30 days of the receipt of Lender's written request therefor, deliver to
Lender revised financial statements addressing any issues identified by
Lender. The aforesaid audited financial statements shall be in form and
content satisfactory to Lender;
(iii) Annual Audited Financial Reports. As soon as available
and in any event within ninety (90) days (one hundred twenty (120) days in
the case of Silverleaf Club and Orlando Breeze Resort Club) after the end
of each of calendar year or other fiscal year as may be applicable with
respect to Borrower, Silverleaf Club and Orlando Breeze Resort Club (as
applicable, a "Fiscal Year"), statements of income and
RECEIVABLES LOAN AND SECURITY AGREEMENT
41
expense of each such entity (including Borrower and the Timeshare
Association) for the annual period ended as of the end of such Fiscal
Year, balance sheets of each such entity as of the end of such Fiscal Year
and a statement of cash flows of such entity during such Fiscal Year, all
in such detail and scope as may be reasonably required by Lender and
prepared and audited by an independent certified public accounting firm
acceptable to Lender in accordance with GAAP and on a basis consistent
with prior accounting periods. The annual financial statements of Borrower
shall be certified by the chief financial officer of Borrower to be true,
correct, and complete, and shall otherwise be in form acceptable to
Lender;
(iv) Borrowing Base Certificate. Within fifteen (15) days
after the end of each month, Borrower shall deliver to Lender a Borrowing
Base Certificate in substantially the form of Exhibit "M" attached hereto.
(v) Officer's Certificate. The Financial Statements or reports
delivered to the Lender pursuant to Sections 6.1(g)(i), (ii), and (iii)
hereof shall be accompanied by a certificate of Borrower setting forth
that the signer has reviewed the relevant terms of this Agreement (and all
other agreements and exhibits between the relevant parties), has made, or
caused to be made, under its 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 that 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;
(vi) Audit Reports. Promptly upon receipt thereof, two (2)
copies 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. Promptly upon
becoming aware of the existence of any condition or event that constitutes
a Default or an Event of Default hereunder or pursuant to any of the other
Loan Documents, a written notice specifying 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. Promptly upon becoming aware
that the holder of any material obligation or of any evidence of material
indebtedness of Borrower has given notice or taken any other action with
respect to a claimed default or event of default with respect thereto, a
written notice specifying the notice given or action taken by such holder
and the nature of the claimed default or event of default and what action
Borrower is taking or proposes to take with respect thereto;
(ix) Hazardous Materials. Borrower shall promptly notify
Lender of any change in the nature or extent of any Hazardous Materials
maintained on or under any of the real property or used in connection
therewith, and will deliver to Lender copies
RECEIVABLES LOAN AND SECURITY AGREEMENT
42
of any citation, order, notice, or other governmental or other
communication received with respect to any Hazardous Materials or other
environmentally regulated substances affecting the Property. In the event
Lender has some reason to believe there are Hazardous Materials or other
environmentally regulated substances affecting the Property, then Lender
shall have the right to require Borrower to perform on an annual basis (at
Borrower's expense) an environmental audit of the Property and, if deemed
reasonably necessary by Lender, an environmental risk assessment, each of
which must be satisfactory to Lender, in its sole discretion. Each such
audit and/or risk assessment shall be conducted by a licensed
environmental consultant;
(x) Material Adverse Developments. Within fifteen (15) days
after the end of each fiscal quarter, Borrower shall provide to Lender a
report of any pending or threatened claim, action, proceeding, litigation,
development, or any other information, whether of the type referenced in
Section 5.7 hereof or otherwise, that could materially and adversely
affect Borrower, the Receivables Loan Approved Resorts, or all or any
portion of the Collateral, including but not limited to the ability of
Borrower to perform its Obligations hereunder;
(xi) Financial Information. As promptly as possible after the
receipt thereof, all financial statements, reserve studies and reports,
budgets and other information distributed by Silverleaf Club and Orlando
Breeze Resort Club; Borrower, as declarant or otherwise, shall cause
Silverleaf Club and Orlando Breeze Resort Club to prepare annual financial
statements and an annual budget as provided in the Declaration, as the
case may be, and shall thereafter immediately deliver the same to Lender;
and
(xii) Other Information. Borrower shall promptly deliver to
Lender any other available information related to the Loan, the
Collateral, Borrower, or the Property as Lender may in good faith request.
(h) Records. Borrower shall keep detailed accurate books and records
of account in accordance with GAAP and all Applicable Laws reflecting all
financial transactions of Borrower with respect to the Property, including but
not limited to the marketing and sale of Timeshare Interests thereat and with
respect thereto and the rental of Units on a transient basis to members of the
general public.
(i) Notices. Borrower shall notify Lender within ten (10) Business
Days of the occurrence of any event (i) as a result of which any representation
or warranty of Borrower contained in any Loan Document would be incorrect or
materially misleading if made at that time; (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 other Loan Document; or (iii) which constitutes or, with
the passage of time, notice, or a determination by Lender would constitute an
Event of Default.
(j) Maintenance. Borrower shall use its best efforts to cause
Silverleaf Club to maintain the Property in good repair, working order, and
condition and to make all necessary replacements and improvements to the
Property so that the value and operating efficiency of the
RECEIVABLES LOAN AND SECURITY AGREEMENT
43
Property will be maintained at all times and so that the Property remains in
full compliance with all Applicable Laws.
(k) Claims. Borrower shall promptly notify Lender of any material
claim, action, or proceeding affecting the Property or all or any portion of the
Collateral, or any of the Liens, security interests, or rights granted in favor
of Lender hereunder or pursuant to any of the other Loan Documents. At the
request of Lender, Borrower shall appear in and defend in favor of Lender, at
Borrower's sole expense, with regard to any such claim, action, or proceeding
which might adversely affect the value of all or any portion of the Collateral
or any rights and remedies of Lender under this Agreement or pursuant to any of
the other Loan Documents.
(l) Registration and Regulations.
(i) Local Legal Compliance. Borrower will comply with all
applicable servitudes, restrictive covenants, and Applicable Laws,
including but not limited to, those specified in Section 5.16 hereof. All
inspections, licenses, approvals, and permits required to be made or
issued in respect of all or any portion of the Property have been made or
issued by the appropriate governmental authorities, and the use and
occupancy of the Receivables Loan Approved Resorts, including, but not
limited, to Timeshare Interests deemed to be owned by Borrower, for their
intended purposes is lawful under all Applicable Laws. The use and
occupancy of the buildings and Units on a timeshared basis will not
violate or constitute a non-conforming use under any private covenant or
restriction or any zoning, land use, or similar statute, ordinance, rule,
or regulation; and
(ii) Registration Compliance. Borrower shall at all times
maintain or cause to be maintained all necessary registrations, filings,
consents, franchises, approvals, and exemption certificates, and Borrower
will make or pay, or cause to be made or paid, all registrations,
declaration, or fees with all applicable regulatory authorities and any
other governmental agencies or departments thereof, whether in the State
of Texas or any other jurisdiction, required in connection with the
marketing and sale of Timeshare Interests at or with respect to the
Receivables Loan Approved Resorts and the occupancy, use, and operation
thereof. 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 Lender
upon request. Borrower shall promptly advise Lender of any material
changes with respect to its marketing or sales programs in any
jurisdiction, including jurisdictions other than the State of Texas, and
at Lender's request from time to time, Borrower shall deliver to Lender
(A) written statements by any applicable governmental authorities, in form
acceptable to Lender, stating that no registration is necessary for the
sale of Timeshare Interests in the particular state; (B) an opinion of
counsel in form acceptable to Lender and rendered by counsel acceptable to
Lender, stating that no such registration is necessary; or (C) such other
evidence of compliance with all Applicable Laws as Lender may require.
(m) Other Documents. Borrower shall maintain to the satisfaction of
Lender, and make available to Lender for inspection, accurate and complete files
relating to the Pledged
RECEIVABLES LOAN AND SECURITY AGREEMENT
44
Notes Receivable, and all of the other Collateral, and such files shall contain
true copies of each Pledged Note Receivable, as amended from time to time (but
only with Lender's prior written consent or as provided in Section 1.34), copies
of all relevant credit memoranda relating to such Pledged Notes Receivable, and
all collection information and correspondence relating thereto.
(n) Further Assurances. Borrower shall 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 Lender
exercised in good faith, may be necessary or appropriate in order more
effectively to evidence or secure, and to ensure the performance of, the
Obligations. In addition, Borrower shall deliver to Lender from time to time,
upon request by Lender, such documents, instruments, and other materials or
items as Lender may reasonably require to evidence Borrower's compliance with
the covenants set forth in this Section 6.1.
(o) Expenses and Closing Fees. Whether or not the transactions
contemplated hereunder are consummated, Borrower shall pay all expenses of
Lender relating to negotiating, preparing, documenting, closing, and enforcing
this Agreement and the other Loan Documents, including, but not limited to:
(i) The actual cost of preparing, reproducing, and binding
this Agreement, the other Loan Documents, and all exhibits and schedules
thereto;
(ii) The reasonable fees and disbursements of Lender's and
Borrower's counsel (both internal and external);
(iii) Lender's expenses (including audits, credit
investigations, inspections and internal legal and accounting);
(iv) All fees and expenses (including reasonable fees and
expenses of Lender's internal and external counsel) relating to any
amendments, waivers, consents, or subsequent closings or other
transactions pursuant to the provisions hereof;
(v) All costs, outlays, legal fees, and expenses of every kind
and character had or incurred by Lender in: (A) the interpretation or
enforcement of any of the provisions of, or the creation, preservation, or
exercise by Lender of its rights and remedies under, any of the Loan
Documents, including the costs of appeal; (B) the preparation for,
negotiations regarding, consultations concerning, or the defense or
prosecution of legal proceedings involving any claim or claims made or
threatened against Lender arising out of this transaction or the
preservation or protection of the Collateral securing the Loan or Advances
made hereunder, expressly including, without limitation, the defense by
Lender of any legal proceedings instituted or threatened by any Person to
seek to recover or set aside any payment or set off theretofore received
or applied by Lender with respect to the Obligations, and any and all
appeals thereof; and (C) the advancement of any expenses provided for
under any of the Loan Documents;
(vi) All fees and expenses of the Title Insurance Company,
Lockbox Agent and Custodian;
RECEIVABLES LOAN AND SECURITY AGREEMENT
45
(vii) All costs and expenses incurred by Lender under the
Note, and all late charges payable thereunder; and
(viii) To the extent the same are not paid by the Timeshare
Association, Purchasers or third parties, all real and personal property
taxes and assessments attributable to Timeshare Interests owned by
Borrower or an Affiliate of Borrower, 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 Lender to conduct
inspections or audits. Without limiting any of the foregoing, Borrower
shall pay the costs of Code and other searches, Code and other Loan
Document recording and filing fees, and applicable taxes and premiums on
each mortgagee policy of title insurance delivered to Lender pursuant to
this Agreement.
(p) Indemnification of Lender. In addition to (and not in lieu of)
any other provisions hereof or of any other Loan Document providing for
indemnification in favor of Lender, Borrower hereby defends, indemnifies, and
holds harmless Lender, its subsidiaries, Affiliates, officers, directors,
agents, employees, representatives, consultants, contractors, servants, and
attorneys, as well as the respective heirs, personal representatives,
successors, and assigns of any or all of them (hereinafter collectively referred
to as the "Indemnified Lender Parties"), from and against, and agree promptly to
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,
directly or indirectly, related or attributable to: (i) this Agreement, the
other Loan Documents or the Collateral; (ii) the transactions contemplated under
any of the Loan Documents, including, without limitation, those in any way
relating to or arising out of the violation of any Applicable Laws; (iii) any
breach of any covenant or agreement or the incorrectness or inaccuracy of any
representation or warranty of Borrower contained in this Agreement or any of the
other Loan Documents (including, without limitation, any certification of
Borrower delivered to Lender), including, but not limited to, the failure of any
Pledged Note Receivable to be legally enforceable by Lender in the event that it
succeeds to all right, title, and interest of Borrower therein in accordance
with the provisions hereof or any of the other Loan Documents; (iv) any and all
taxes, including real estate, personal property, sales, mortgage, excise,
intangible, or transfer taxes (but excluding all franchise taxes, taxes on
capital and net worth, gross receipts taxes, and taxes imposed on gross or net
income), and any and all fees or charges that 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 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 Property of any Hazardous
Materials (except to the extent that liability of the Indemnified Lender Party
with respect to such matter would not exist but for the acts or omissions of
such Indemnified Lender Party); (viii) the removal or remediation of any
Hazardous Materials from the Property required to be performed pursuant to
RECEIVABLES LOAN AND SECURITY AGREEMENT
46
any Environmental Laws or as a result of recommendations of any environmental
consultant or as required by Lender; (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 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 Property;
(x) the violation or claimed violation of any Environmental Laws in regard to
the Property; (xi) the preparation of an environmental audit or report on the
Property not to exceed one (1) per calendar year and premised upon the Lender's
reasonable belief of the existence of a violation of Environmental Laws, whether
conducted by Lender, Borrower, or another Person; (xii) the exercise by Borrower
of any rights or remedies under any Timeshare Documents; (xiii) the exercise by
Lender of any rights or remedies under this Agreement or any of the other Loan
Documents; (xiv) any misappropriation of funds by Borrower, any Affiliate of
Borrower or any party acting on their behalf; (xv) any theft by Borrower, any
Affiliate of Borrower or any party acting on their behalf; (xvi) any disposition
of the Collateral by Borrower, any Affiliate of Borrower or any party acting on
their behalf; or (xvii) any unauthorized Change in Management. Such
indemnification shall not give Borrower any right to participate in the
selection of counsel for Lender or the conduct or settlement of any dispute or
proceeding for which indemnification may be claimed. 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. Notwithstanding the foregoing provisions of this
Section 6.1(q) to the contrary, Borrower shall not indemnify or hold Lender
harmless from and against any liabilities, claims, demands, losses, damages,
costs, or expenses incurred by Lender solely as a result of Lender's own gross
negligence or willful misconduct.
(q) Use of Borrower's Name. Borrower shall at all times during the
term of the Loan permit Lender to use the name of Borrower in any press release,
advertisement, or other promotional material disseminated regarding the Loan;
provided, however, Borrower shall have the prior right to receive and approve
such use in writing.
(r) No Amounts Due. Borrower shall use its best efforts to cause the
Silverleaf Club to deliver a statement to Borrower, which Borrower shall provide
to Lender at the end of each calendar year, commencing in the present calendar
year and continuing throughout the term of the Loan, indicating that no amounts
due and payable to the Silverleaf Club from Borrower, or any Affiliate of
Borrower, are delinquent and that all taxes and insurance premiums payable by
the Silverleaf Club have been paid prior to becoming delinquent. In the event
that any such amount due and owing to the Silverleaf Club by Borrower is
delinquent such amount may be paid directly to the Silverleaf Club by Lender as
an Advance hereunder. Borrower hereby covenants that as of the date of this
Agreement, neither Borrower nor an Affiliate of Borrower owes any amount to the
Silverleaf Club except as otherwise disclosed on Exhibit "N" attached hereto.
Borrower agrees to use its best efforts to obtain for Lender on an annual basis,
within one hundred and twenty (120) days after the end of the fiscal year of the
Silverleaf Club, the proposed annual operating and capital budget of the
Silverleaf Club for the next fiscal year and the Financial Statements of the
Silverleaf Club for such fiscal year, in a format acceptable to Lender in its
sole discretion.
RECEIVABLES LOAN AND SECURITY AGREEMENT
47
(s) Textron Facility, Sovereign Facility and DZ Facility. Borrower
will comply with each of the terms and conditions of any subordinated
indebtedness, the Textron Facility, the Sovereign Facility and the DZ Facility
and will promptly deliver to Lender, upon receipt by Borrower, copies of any
notices received by Borrower in connection with any of the foregoing credit
facilities.
(t) Minimum Tangible Net Worth. Borrower shall at all times maintain
a minimum Tangible Net Worth in an amount not less than (i) $100,000,000 as of
December 31, 2004, and (ii) $100,000,000, plus fifty percent (50%) of Borrower's
quarterly Consolidated Net Income for each calendar quarter thereafter.
(u) Minimum Net Income. Commencing March 31, 2005, and as of the
last day of each calendar quarter thereafter, for the four (4) calendar quarter
period ending on such date, Borrower and its subsidiaries shall have, on a
consolidated basis, a Net Income of not less than $1.00.
(v) Minimum Debt Service Coverage Ratio. Borrower shall maintain as
of the last day of any calendar quarter a Debt Service Coverage Ratio of not
less than 1.25 to 1.00 for the period of four consecutive calendar quarters then
ended on such day.
(w) Maximum Leverage Ratio. Borrower shall maintain a Leverage Ratio
of not greater than 6.0 to 1.0 at all times during the term of the Loan.
(x) Proceeds. Immediately upon Borrower's receipt of proceeds from
the sale of any of the Collateral, Borrower shall deliver such proceeds to
Lender in their original form and, pending delivery to Lender, Borrower will
hold such proceeds as agent for Lender and in trust for Lender.
(y) Loan Servicing. Upon an Event of Default, at Lender's sole
option, Borrower shall hire a servicing agent acceptable to Lender in its sole
discretion who shall then receive compensation from Borrower at a market rate
for a servicing agent, and Borrower shall enter into a servicing agreement, in
form and substance satisfactory to Lender in its sole discretion, with such
servicing agent. All servicing fees, and the costs and expenses of such
servicing agent shall be paid by Borrower.
(z) Custodian. Lender shall have the right at any time to utilize
Custodian to maintain custody of the Collateral. Borrower agrees not to
interfere with Custodian's performance of its duties under the Custodial
Agreement or to take any action that would be inconsistent in any way with the
terms of the Custodial Agreement. All custodial fees, and the costs and expenses
of the Custodian, shall be paid by Borrower.
(aa) Re-assignment of Delinquent Financed Note Receivables(bb) . As
long as Borrower is in compliance with its obligations under this Agreement and
the other Loan Documents, including the Borrowing Base, Lender shall release its
security interest in the Delinquent Pledged Notes Receivable (as defined below).
For purposes of this Section 6.1(aa), the term "Delinquent Pledged Note
Receivable" shall mean a Note Receivable for which a payment installment is more
than one hundred twenty (120) days past due on a contractual basis.
RECEIVABLES LOAN AND SECURITY AGREEMENT
48
(cc) Maintaining Affiliation with Exchange Company. Following the
date hereof and thereafter until Borrower has paid to Lender all sums due under
this Agreement and all documents delivered pursuant hereto, Borrower shall cause
each Receivables Loan Approved Resort and the Silverleaf Club to maintain in
good standing its membership with the Exchange Company or other major
internationally recognized timeshare exchange company acceptable to Lender with
its corporate headquarters in the United States.
(dd) Property-Related Contracts. Except as required by Applicable
Laws, or if otherwise waived by Lender, and if such amendment to, modification
or new Property-Related Contract described below will have, or could reasonably
be expected to have a material adverse effect on Borrower's ability to pay the
Loan or the value of the Collateral, or Lender's Liens on the Collateral or the
priority of any such Lien, Borrower shall not modify, amend, or enter into, or
(subject to the rights and obligations of any Timeshare Association and its
members under any Declaration or any Timeshare Association's Articles of
Incorporation or By-Laws) permit to be modified, amended, or enter into, any
Property-Related Contract without the prior written consent of Lender, which
consent shall not be unreasonably withheld. Borrower shall perform all of its
obligations in a timely fashion under each Property-Related Contract. For
purposes of this Section 6.1(dd), and for no other purpose, section or reference
in this Agreement or any other Loan Document, the term, "Property-Related
Contracts" shall not include sales and marketing agreements or contracts related
to the sales of Timeshare Interests, or any employment related agreements or
contracts between Borrower and either (i) any Executive Management Member or
(ii) any member of senior management of Borrower.
6.2 Negative Covenants. For so long as any portion of the Obligations
remains unsatisfied, Borrower hereby covenants and agrees with Lender as
follows:
(a) Limitation on Other Liens/Further Encumbrances of Collateral and
Other Property. Without the prior written consent of Lender, which may be
granted, withheld, or conditioned, in Lender's sole and absolute discretion,
Borrower shall not obtain financing or grant Liens with respect to all or any
portion of the Collateral (whether now existing or created hereafter) other than
those in favor of Lender and the Permitted Liens and Encumbrances.
(b) No Other Indebtedness. Borrower shall not incur any Indebtedness
for borrowed money secured by all or any Collateral without Lenders' prior
written consent; provided, however, that in the event Borrower enters into a
credit facility for borrowed money from any other senior lender providing
indebtedness to Borrower, Borrower shall use its best efforts to provide to
Lender an Intercreditor Agreement related to such credit facility and the
collateral granted to such other senior lender related thereto.
(c) Restrictions on Transfers, Consolidations, and Mergers. Except
for the Permitted Liens and Encumbrances, Borrower shall not, without obtaining
the prior written consent of Lender (which consent may be given, withheld, or
conditioned by Lender, in Lender's sole discretion), whether voluntarily or
involuntarily, by operation of law or otherwise: (i) transfer, sell, pledge,
convey, hypothecate, factor, or assign all or any portion of the Collateral,
other than the sale of Timeshare Interests in the ordinary course of Borrower's
business; or (ii) lease or license any portion of the Collateral, or change the
legal or actual possession or use thereof. Without limiting the generality of
the preceding sentence, and subject to the terms of
RECEIVABLES LOAN AND SECURITY AGREEMENT
49
this Agreement, the prior written consent of Lender shall be required for (A)
any transfer of the Collateral or any part thereof to a subsidiary or other
Affiliate of Borrower or otherwise; or (B) any merger or consolidation,
disposition, or other reorganization of Borrower other than any such merger or
consolidation, disposition, or other reorganization of Borrower after the
consummation of which Borrower is the surviving entity and for which Lender has
given its consent, such consent not to be unreasonably withheld; provided,
however, that in the event Lender does not consent to such merger or
consolidation and Borrower elects to close such transaction, Borrower shall have
the right to refinance Lender and pay to Lender in cash in full all outstanding
Obligations hereunder (including accrued and unpaid interest thereon). In the
event that Lender, in its reasonable discretion, is willing to consent to a
transfer that would otherwise be prohibited by this Section 6.2(c), Lender may
condition its consent on such terms and conditions 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 Lender in
connection with the granting of such consent (including, without limitation,
attorneys' fees and expenses). If Borrower violates the terms of this Section
6.2(c), in addition to any other rights or remedies that Lender may have
hereunder, pursuant to any other Loan Document, or at law or in equity, Lender
may, upon written notice to Borrower, increase, effective immediately as of the
date of such violation, the Interest Rate to the Default Rate.
(d) Transactions with Affiliates. Without the prior written consent
of Lender, Borrower shall not enter into any transaction with any Affiliate
thereof in connection with all or any portion of the Collateral, except in the
ordinary course of Borrower's business with terms equivalent to an otherwise
"arms-length" transaction.
(e) Name Change. Borrower shall not change its name, its chief
executive office, or the locations at which it does business without providing
Lender at least thirty (30) days' prior written notice thereof and executing, at
Borrower's sole expense, such UCC-3 amendments and all other documents and
instruments as Lender, in its sole discretion, deems reasonably necessary or
appropriate in order to continue the perfection of its Lien in and to all of the
Collateral.
(f) Collateral. Borrower shall not take any action (or permit or
consent to the taking of any action) that might materially impair the value of
all or any portion of the Collateral of the rights of Lender with respect to the
Collateral, nor shall Borrower cause or permit any material amendment to or
modification of the form or terms of any of the Pledged Notes Receivable (except
as provided for in Section 1.34), or Timeshare Documents, including but not
limited to the Declaration, without Lender's prior written consent.
(g) Timeshare Documents. Without Lender's prior written consent,
Borrower shall not in any material respect amend or modify or terminate the
Declaration or other Timeshare Documents.
(h) Marketing/Sales. Borrower shall not market, attempt to sell or
sell or permit or justify any sales or attempted sales of any Timeshare
Interests except in compliance with the Timeshare Act and Applicable Laws in the
states and other jurisdictions where marketing, sales or solicitation activities
occur. Borrower shall not sell more than fifty-two (52) Timeshare Interests in
any Unit in the Receivables Loan Approved Resorts.
RECEIVABLES LOAN AND SECURITY AGREEMENT
50
(i) Collateral. Borrower shall not take any action (nor permit or
consent to the taking of any action) which might reasonably be anticipated to
impair the value of the Collateral or any rights of Lender in the Collateral.
(j) Distributions. After the occurrence and during the continuation
of any Default or Event of Default, Borrower shall not make or pay any
distribution (in cash or property) for so long as any Obligations or other
amounts are outstanding under this Agreement or any other Loan Document.
(k) Maximum Delinquency. Borrower will not permit as of the last day
of each calendar month, for the immediately preceding twelve (12) calendar
months, on a rolling twelve (12) month basis, its over 30-day delinquency rate
on its entire Notes Receivable portfolio serviced by Borrower (including,
without limitation, all Pledged Notes Receivable and all Notes Receivable
pledged pursuant to the Textron Facility, the DZ Facility and the Sovereign
Facility) to be greater than ten percent (10%).
(l) Net Income. Borrower shall not have a Consolidated Net Income of
less than $0.00 for any two (2) consecutive calendar quarters.
(m) Maximum Sales Costs. As of the last day of each calendar
quarter, commencing with the calendar quarter ending June 30, 2005, Borrower
will not permit the four quarter cumulative ratio of Marketing and Sales Costs
to the Borrower's net proceeds from the sale of Timeshare Interests as recorded
on the Borrower's financial statements for the immediately preceding four (4)
consecutive fiscal quarters of the Borrower to equal or exceed a ratio of .550
to 1. Notwithstanding the foregoing, in the event that Borrower delivers written
evidence satisfactory to Lender that the above-referenced ratio is no longer
required to be tested under each of the Textron Facility and the Sovereign
Facility, such ratio shall not be tested under this Agreement.
SECTION 7. EVENTS OF DEFAULT
An "Event of Default" shall exist if any of the following occurs:
7.1 Payment Default. If Borrower fails to make, as and when due, whether
by acceleration or otherwise, any payment or mandatory prepayment of principal,
interest, or other fees or amounts of any and every kind due hereunder or
pursuant to any of the other Loan Documents, and any such failure remains
uncured for three (3) calendar days after Lender has provided Borrower with
written or verbal notice thereof.
7.2 Covenant Defaults. If Borrower fails fully and timely to perform or
observe any non-monetary covenant, agreement, or warranty contained in this
Agreement (other than defaults relating to Sections 6.1(f), 6.1(t), 6.1(u),
6.1(v), 6.1(w) and Section 6.2 hereof, for which there shall be no cure period)
or in any of the other Loan Documents and such failure shall continue for
fifteen (15) days after notice of such failure is provided by Lender to
Borrower.
7.3 Warranties or Representations. If any statement or representation made
by or on behalf of Borrower in this Agreement, in any of the other Loan
Documents, or in any document,
RECEIVABLES LOAN AND SECURITY AGREEMENT
51
instrument, certificate, opinion, or other item furnished pursuant to the Loan
Documents, is false, misleading, or incorrect in any material respect as of the
date made or reaffirmed.
7.4 Enforceability. If (a) any Lien granted by Borrower to Lender in
connection with the Loan is or becomes invalid or unenforceable or is not, or
ceases to be, a perfected first priority Lien in favor of Lender encumbering the
asset which it is intended to encumber, and Borrower fails to cause such Lien to
become a valid, enforceable, first and prior Lien in a manner satisfactory to
Lender, in its sole discretion, within five (5) days after Lender delivers
written notice thereof to Borrower; or (b) if any material term, provision, or
condition of any Loan Document becomes invalid or unenforceable by Lender and
its successors and assigns.
7.5 Insolvency. If Borrower becomes insolvent or otherwise generally
unable to pay its debts as and when they become due or payable.
7.6 Involuntary Proceedings. If a case is commenced or a petition is filed
against Borrower under any Debtor Relief Law, a receiver, conservator,
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 sixty (60) days.
7.7 Voluntary 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
to or suffers the appointment of a receiver, trustee, liquidator, or conservator
for it or any part of its assets.
7.8 Attachment; Judgment; Tax Liens. The issuance, filing, levy, on all or
any portion of the Collateral of Borrower, of one (1) or more attachments,
injunctions, executions, tax liens, or judgments for the payment of money
cumulatively in excess of $50,000, that is not discharged in full or stayed
within thirty (30) days after such issuance, filing, levy, or seizure.
7.9 Failure to Deposit Proceeds. If Borrower fails to deliver any payments
received under any Pledged Note Receivable directly to Lender or Lockbox Agent
as required by Section 2.4 hereof, or if Borrower takes any other action which
Lender shall deem to be a conversion of all or any portion of the Collateral or
fraudulent with respect to Lender.
7.10 Timeshare Documents. If the Declaration, any of the other documents
creating or governing any Receivables Loan Approved Resort, its timeshare regime
or the Timeshare Association, or the restrictive covenants with respect to such
Receivables Loan Approved Resort, shall be terminated, amended or modified
without Lender's prior written consent (except for routine non-substantive
modifications which have no impact on the Collateral).
7.11 Removal of Collateral. If Borrower conceals, removes, transfers,
conveys, assigns, or permits to be concealed, removed, transferred, conveyed, or
assigned, any of the Collateral, other than in the ordinary course of Borrower's
business, in violation of the terms of any of the Loan Documents or with the
intent to hinder, delay, or defraud their creditors or any of them, including,
without limitation, Lender.
RECEIVABLES LOAN AND SECURITY AGREEMENT
52
7.12 Other Defaults. If any default or event of default occurs in
connection with any other loans or financing arrangements that Borrower, or any
of Borrower's Affiliates may have with Lender, including, but not limited to,
the Inventory Loan.
7.13 Material Adverse Change. If there occurs any material adverse change
in the financial condition of Borrower which is not otherwise reflected in the
Financial Statements.
7.14 Default by Borrower in Other Agreements. Any default by Borrower (a)
in the payment of any indebtedness to Lender; (b) in the payment or performance
of other indebtedness for borrowed money or obligations in excess of $100,000
secured by all or any portion of the Collateral; or (c) in the payment or
performance of any other material indebtedness or obligations (including any
indebtedness owed pursuant to the Textron Facility, the DZ Facility, the
Sovereign Facility of the Bond Holder-Exchange Transaction).
7.15 Violation of Negative Covenants. If Borrower violates any negative
covenant set forth in Section 6.2 hereof.
7.16 Declaration. If the Declaration or the timeshare regime created
thereby at any Receivables Loan Approved Resort is in any material respect
amended or modified or restated, terminated or assigned without Lender's prior
written consent.
7.17 Transfer of Property. Except for the sale of Timeshare Interests in
the ordinary course of Borrower's business in accordance with the terms hereof
and of the other Loan Documents, and except for transfers due to involuntary
condemnation that do not render its interest in the Property useless for its
intended purpose, if Borrower, without Lender's prior written consent, sells,
conveys, or further encumbers all or any part of its interest in the Collateral.
7.18 Lien Against Collateral. Except for the Permitted Liens and
Encumbrances or as otherwise specifically provided herein to the contrary, if
Borrower grants any Lien, security interest, or other encumbrance upon or all or
any portion of the Collateral other than in favor of Lender, unless approved by
Lender in writing, in its sole and absolute discretion.
7.19 Title. If any violation or breach shall occur in any agreement,
covenant, or restriction affecting title to any Encumbered Timeshare Interests,
including but not limited to any Permitted Liens and Encumbrances, and such
violation or breach is not cured within any time frame allowed hereunder or
thereunder.
7.20 Loss of License. A Loss of License shall have occurred with respect
to all of the Receivables Loan Approved Resorts and such Loss of License shall
have been outstanding for more than 90 days following such occurrence.
7.21 Suspension of Sales. Borrower has received a Suspension of Sales
Order or Sanction with respect to all of the Receivables Loan Approved Resorts
and such Suspension of Sales Order or Sanction shall have been outstanding for
more than 90 days from the date of its entry and shall not have been discharged
in full or stayed by appeal, bond or otherwise.
RECEIVABLES LOAN AND SECURITY AGREEMENT
53
SECTION 8. REMEDIES
8.1 Remedies Upon Default. Should a Default or an Event of Default occur,
Lender may immediately take any one (1) or more of the actions described in this
Section 8, all without notice to Borrower:
(a) Acceleration. Declare the unpaid balance of the Loan, or any
part thereof, immediately due and payable, whereupon the same shall be due and
payable to Lender.
(b) Termination of Obligation to Advance. Terminate any commitment
or obligation of Lender hereunder to make Advances of the Loan in its entirety,
or any portion of any such commitment, and/or terminate Lender's further
performance under this Agreement and/or any other document or instrument to
which Lender and Borrower (or any Affiliate of Borrower) are parties, without
further liability or obligation to Borrower, to the extent Lender shall deem
appropriate.
(c) Judgment. Reduce Lender's claim to judgment, foreclose, and/or
otherwise enforce each Lien and security interest of Lender in and to all or any
part of the Collateral by any judicial or other procedure available to Lender.
(d) Sale of Collateral. Exercise all the rights and remedies of a
secured party under the Code (whether or not the Code applies to the affected
Collateral), including (i) require Borrower to, and Borrower hereby agrees that
it will, at its expense and upon request of Lender forthwith, assemble all or
part of the Collateral as directed by Lender and make it available to Lender at
a place to be designated by Lender that is reasonably convenient to both
parties; (ii) enter upon any premises of Borrower and take possession of the
Collateral; and (iii) sell the Collateral or any part thereof in one (1) or more
parcels at public or private sale, at any of Lender's offices or elsewhere, at
such time or times, for cash, on credit, or for future delivery, and at such
price or prices and upon such other terms as Lender may deem commercially
reasonable. Borrower agrees that, to the extent notice of sale shall be required
by law, ten (10) days' notice of the time and place of any sale shall constitute
reasonable notification. At any sale of the Collateral, if permitted by law,
Lender may bid (which bid may be, in whole or in part, in the form of
cancellation of indebtedness) for the purchase of the Collateral or any portion
thereof for the account of Lender. Borrower shall remain liable for any
deficiency. Lender shall not be required to proceed against any Collateral but
may proceed against any or Borrower directly. To the extent permitted by law,
Borrower hereby specifically waives all rights of redemption, stay, or appraisal
that it has or may have under any law now existing or hereafter enacted.
(e) Retention of Collateral. At its discretion, retain such portion
of the Collateral as shall aggregate in value to an amount equal to the total
amount owed by Borrower pursuant to the Loan Documents, in satisfaction of the
Obligations, whenever the circumstances are such that Lender is entitled and
elects to do so under applicable law.
(f) Receiver. Apply by appropriate procedures for the appointment of
a receiver who shall have the authority to enter upon and take possession of any
or all of the Collateral, collect the rents and profits generated therefrom, and
apply the same as the court may
RECEIVABLES LOAN AND SECURITY AGREEMENT
54
direct. Borrower hereby consents to any such appointment. The receiver shall
have all of the rights and powers permitted under the laws of the State of
Texas.
(g) Purchase of Collateral. Buy all or any part of the Collateral at
any public or private sale.
(h) Exercise of Other Rights. 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 other maker of any defaulted Pledged Note Receivable. Lender
may also exercise any and all other rights or remedies afforded by any other
Applicable Laws or by the Loan Documents, as Lender 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 Lender in the Loan Documents. Lender shall also have the
right to require Borrower to assemble any of the Collateral not in Lender's
possession, at Borrower's expense, and make it available to Lender at a place to
be determined by Lender that is reasonably convenient to both parties, and
Lender shall have the right to take immediate possession of all or any portion
of the Collateral and may enter the Receivables Loan Approved Resorts or any of
the premises of Borrower or wherever the Collateral shall be located, with or
without process of law wherever the Collateral may be, and, to the extent such
premises are not the property of Lender, 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 Lender for use and occupancy, rent, or storage of the
Collateral, for a period of at least sixty (60) days after sale or disposition
of the Collateral).
8.2 Notice of Sale. Reasonable notification of the 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, Lender may
sell or otherwise dispose of the Collateral without advertisement or other
notice of any kind. It is agreed that notice sent not less than ten (10)
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 8.2. Lender
shall have the right to bid at any public or private sale on its own behalf. Out
of money arising from any such sale, Lender shall retain an amount equal to all
costs and charges, including attorneys' fees, that it has incurred or may incur
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 against the Obligations, and in the event of deficiency,
Borrower shall remain liable to Lender. 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 Lender, which in Lender's sole discretion makes it advisable for Lender
to seek counsel for the protection and preservation of its Liens and security
interests, or to defend its own interest, such expenses and
RECEIVABLES LOAN AND SECURITY AGREEMENT
55
counsel fees shall be allowed to Lender, and the same shall be made a further
charge and Lien upon the Collateral.
In view of the fact that federal, state, and other securities laws may
impose certain restrictions on the methods by which a sale of certain Collateral
may be effected after an Event of Default, Borrower agrees that upon the
occurrence or existence of a Default or Event of Default, Lender may, 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 those
who will represent and agree that they are purchasing for investment only and
not for, or with a view to, distribution. In so doing, Lender may solicit offers
to buy such Collateral, or any part of it for cash, from a limited number of
investors deemed by Lender, in its reasonable judgment, to be responsible
parties who might be interested in purchasing the Collateral, and if Lender
solicits such offers from not less than two (2) such investors, then the
acceptance by Lender of the highest offer obtained therefrom shall be deemed to
be a commercially reasonable method of disposition of such Collateral.
8.3 Application of Collateral; Termination of Agreements. Upon the
occurrence of any Default or Event of Default, Lender may, with or without
proceeding with such sale or foreclosure or demanding payment or performance of
the Obligations, without notice, terminate Lender's further performance under
this Agreement or any other agreement or agreements between Lender and Borrower
or any Affiliate thereof, without further liability or obligation by Lender, and
may also, at any time, appropriate and apply on any Obligations any and all
Collateral in its, Custodian's or Lockbox Agent's possession, custodian, or
control any and all balances, credits, deposits, accounts, reserves,
indebtedness, or other monies due or owing to Borrower held by Lender hereunder
or under any other financing agreement or otherwise, whether accrued or not.
Neither such termination, nor the termination of this Agreement by lapse of
time, the giving of notice, or otherwise, shall absolve, release, or otherwise
affect the liability of Borrower in respect of transactions prior to such
termination, or affect any of the Liens, security interests, rights, powers, and
remedies of Lender, but they shall, in all events, continue until all of the
Obligations have been satisfied in full.
8.4 Rights of Lender Regarding Collateral. In addition to all other rights
possessed by Lender, Lender, at its option, may from time to time after there
shall have occurred a Default or an Event of Default, and for so long as such
Default or Event of Default remains uncured, in its sole discretion, take the
following actions:
(a) Transfer all or any part of the Collateral into the name of
Lender or its nominee;
(b) Take control of the 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
RECEIVABLES LOAN AND SECURITY AGREEMENT
56
(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.
8.5 Delegation of Duties and Rights. Lender may perform 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. To the maximum extent practicable in light of all relevant
facts and circumstances, Lender will attempt to avoid any duplication of effort
and cost to Borrower in connection with any such delegation on Lender's part.
8.6 Waivers. THE ACCEPTANCE BY 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 DEFAULT OR EVENT OF DEFAULT THEN EXISTING. NO
WAIVER BY LENDER OF ANY DEFAULT OR EVENT OF DEFAULT SHALL BE DEEMED TO BE A
WAIVER OF ANY OTHER OR SUBSEQUENT DEFAULT OR EVENT OF DEFAULT. NO DELAY OR
OMISSION BY 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 EXERCISES 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 PERSON LIABLE FOR THE
PAYMENT OR PERFORMANCE OF ALL OR ANY PORTION OF THE OBLIGATIONS, SEVERALLY WAIVE
NOTICE OF THE OCCURRENCE OF ANY DEFAULT, 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.
Borrower's Initials: /S/ HJW
8.7 Cumulative Rights. All rights and remedies available to Lender under
the Loan Documents shall be cumulative of and in addition to all other rights
and remedies granted to Lender under any of the Loan Documents, at law, or in
equity, whether or not the Loan is due and payable and whether or not Lender
shall have instituted any suit for collection or other action in connection with
or pursuant to the Loan Documents.
8.8 Expenditures by Lender. Any amounts expended by or on behalf of Lender
pursuant to the exercise of any right or remedy provided herein or available at
law or in equity
RECEIVABLES LOAN AND SECURITY AGREEMENT
57
shall be deemed an Advance hereunder, become part of the Obligations, and shall
bear interest at the Default Rate from the date of such expenditure until the
date repaid.
8.9 Diminution in Value of Collateral. Lender shall not have any liability
or responsibility whatsoever for any diminution or loss in value of any of the
Collateral.
SECTION 9. CERTAIN RIGHTS OF LENDER
9.1 Protection of Collateral. Lender may, at any time and from time to
time, take such actions as Lender 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 Lender'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 Lender 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 Lender's reasonable expenses of
preserving the Collateral and its Liens and security interests and rights
therein shall be added to the principal amount of the Loan and secured by the
Collateral.
9.2 Performance by Lender. If Borrower fails to perform any agreement
contained herein, subject to any notice or cure periods, Lender may itself
perform, or cause the performance of, such agreement, and the expenses of Lender
incurred in connection therewith shall be payable by Borrower under Section 9.5
below. In no event, however, shall Lender have any obligation or duty whatsoever
to perform any covenant or agreement of Borrower contained herein, in any of the
other Loan Documents, or in any Timeshare Documents, and any such performance by
Lender shall be wholly discretionary with Lender. The performance by Lender of
any agreement or covenant of Borrower on any occasion shall not give rise to any
duty on the part of Lender to perform any such agreements or covenants on any
other occasion or at any time. In addition, Borrower acknowledges that Lender
shall not at any time or under any circumstances whatsoever have any duty to
Borrower or to any other Person to exercise any of Lender's rights or remedies
hereunder.
9.3 No Liability of Lender. Lender is obligated to perform all covenants
and obligations of Lender hereunder, including but not limited to making
Advances to Borrower, subject to all of the terms, provisions, and conditions
hereof and of the other Loan Documents. However, neither the execution of this
Agreement or any of the other Loan Documents by Lender nor the exercise of any
rights hereunder or thereunder by Lender shall be construed in any way as an
assumption by Lender of any obligations, responsibilities, or duties of Borrower
arising in connection with the Property, all or any portion of the Collateral,
under any Timeshare Documents, under any Applicable Laws, or in connection with
any other business of Borrower or the Collateral, nor shall it otherwise bind
Lender to the performance of any obligations with respect to the Property, or
the Collateral, it being expressly understood that Lender shall not be obligated
to perform, observe, or discharge any obligation, responsibility, duty, or
liability of Borrower with respect to the Property, any of the Collateral, under
any of the Timeshare Documents, or under any Applicable Laws, including, but not
limited to, appearing in or defending any action, expending any money, or
incurring any expense in connection therewith.
RECEIVABLES LOAN AND SECURITY AGREEMENT
58
Without limiting the foregoing, neither this Agreement, any action or actions on
the part of Lender taken hereunder nor the acquisition of the Pledged Notes
Receivable, and/or the other Collateral by Lender prior to or following the
occurrence of a Default or an Event of Default shall constitute an assumption by
Lender of any obligations of Borrower with respect to the Property or such
Collateral, 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 hereby agrees to indemnify, protect, defend,
and hold Lender harmless from and against any and all claims, demands, causes of
action, losses, damages, liabilities, suits, costs, and expenses, including,
without limitation, reasonable attorneys' fees and court costs, asserted against
or incurred by Lender by reason of, arising out of, or connected in any way with
(a) any failure or alleged failure of Borrower to perform any of its covenants
or obligations with respect to the Property or all or any portion of the
Collateral; (b) a breach of any certification, representation, warranty, or
covenant of Borrower set forth in any of the Loan Documents; (c) the ownership
of the Pledged Notes Receivable, the other Collateral, and the rights, titles,
and interests assigned hereby, or intended so to be; (d) the debtor-creditor
relationships between Borrower, on the one hand, and the Purchasers or Lender,
as the case may be, on the other; or (e) the Pledged Notes Receivable, or the
management or operation of the Property. The obligations of Borrower to
indemnify, protect, defend, and hold 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 Lender is indemnified.
The indemnity provisions in this Section 9.3 shall survive the complete
satisfaction of the Obligations and the termination of this Agreement and remain
binding and enforceable against Borrower, together with any of its successors
and 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, that might otherwise constitute legal or equitable discharges of its
obligations hereunder. If a court of competent jurisdiction should determine
that Borrower is entitled to recover damages from Lender for any reason or upon
any cause, claim, or counterclaim, in connection with the Loan or the
transactions provided for or contemplated pursuant to this Agreement or the
other Loan Documents, Borrower stipulates and agrees that any such damages or
awards shall be limited to compensatory damages only, and that under no
circumstances whatsoever shall Lender be liable to Borrower, or any Affiliate
thereof for exemplary or punitive damages, all of which are hereby waived by
Borrower.
9.4 Right to Defend Action Affecting Security. Lender may, at Borrower's
expense, appear in and defend any action or proceeding, at law or in equity,
that Lender in good faith believes may affect the Liens or security interests
granted under this Agreement, including, without limitation, with respect to the
Pledged Notes Receivable, the Collateral, or Lender's rights under any of the
Loan Documents.
9.5 Expenses. All expenses payable by Borrower under any provision of this
Agreement shall be Obligations of Borrower, and if paid by Lender, shall be
repaid by Borrower to Lender, upon demand, and shall bear interest at the
Default Rate from the date of payment of such expense(s) by Lender until repaid
by Borrower.
RECEIVABLES LOAN AND SECURITY AGREEMENT
59
9.6 Lender's Right of Set-Off. Lender shall have the right to set-off
against any or all of the Collateral any Obligations then due and unpaid by
Borrower.
9.7 Right of Lender to Extend Time of Payment, Substitute, Release
Security, Etc. Without affecting the liability of any Person for the payment of
any of the Obligations and without affecting or impairing Lender's Lien and
other rights in and to the Collateral, or the remainder thereof, as security for
the full amount of the Loan unpaid and the Obligations, Lender 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 as provided herein in such order and
manner as it may deem fit; and/or (f) join in any subordination or other
agreement affecting this Agreement or the lien or charge thereof.
9.8 Assignment of Lender's Interest. Lender shall have the right to assign
the Loan and all or any portion of its rights in or pursuant to this Agreement
or any of the other Loan Documents to any subsequent holder or holders of the
Note.
9.9 Notice to Purchaser. Borrower hereby authorizes Lender and Lockbox
Agent (but neither Lender nor Lockbox 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 the Lender thereon and any other matter relating thereto, and by no
later than the Closing Date, Borrower shall deliver to Lender notifications to
the Purchasers executed in blank by Borrower and in form acceptable to Lender,
pursuant to which such Purchasers (or other obligors) are directed to remit all
payments in respect of the Collateral to Lockbox Agent or as Lender may
otherwise require.
9.10 Collection of Pledged Notes Receivable. Borrower hereby directs and
authorizes each Purchaser and any other Person liable for the payment of any
Pledged Note Receivable, and promptly after the Closing Date, shall direct in
writing each such Person, to pay each installment due thereon directly to
Lockbox Agent, pursuant to the Lockbox Agreement, unless and until directed
otherwise by written notice from Lender or, at Lender'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
Lender. Following the occurrence of a Default or Event of Default, Lender shall
have the right to require that all payments becoming due under the Pledged Notes
Receivable be paid directly to Lender, and Lender is hereby authorized to
receive, collect, hold, and apply the same in accordance with the provisions of
this Agreement but shall provide Borrower with accountings of all such activity
on at least as frequent a basis as Lockbox Agent was obligated to provide
accountings to Lender and Borrower, pursuant to the Lockbox Agreement. In the
event that following the occurrence of a Default or an Event of Default, Lender
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, Lender may, at its election (but
without any obligation to do so), give or cause Lockbox Agent to give notice of
such event of default to the defaulting party or parties, and Lender shall have
the right (but not the obligation), subject to the terms of such instruments, to
accelerate payment of the unpaid balance of any of the Pledged Notes Receivable
in default to
RECEIVABLES LOAN AND SECURITY AGREEMENT
60
foreclose each of the Timeshare Interest Mortgages securing the payment thereof
and to enforce any other remedies available to the holder of such Pledged Notes
Receivable, with respect to such event of default. Borrower hereby further
authorizes, directs, and empowers Lender (and Lockbox Agent or any other Person
as may be designated by Lender 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 had been
endorsed by Borrower.
9.11 Power of Attorney. Borrower does hereby irrevocably constitute and
appoint Lender 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 Lender as provided in Section 9.10 above;
(b) to demand and receive from time to time any and all property, rights,
titles, interests, and Liens (which are related to Lender's Collateral) hereby
sold, assigned, and transferred, or intended so to be, and to give receipts for
same; (c) upon a Default or an Event of Default, to collect all rent, revenues,
and income, pursuant to the terms of any Pledged Note Receivable and relocated
Timeshare Interest Mortgage; (d) from time to time, to institute and prosecute,
in Lender's own name, any and all proceedings at law, in equity, or otherwise,
that Lender 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; (e) upon a
Default or an Event of Default, to change Borrower's post office mailing
addresses in connection with the Collateral; and (f) generally to do all and any
such acts and things in relation to the Collateral as Lender shall in good ▇▇▇▇▇
▇▇▇▇ advisable, subject to the terms, provisions, and conditions hereof.
Borrower hereby declares that the appointment made and the powers granted
pursuant to this Section 9.11 are coupled with an interest and are and shall be
irrevocable by Borrower in any manner, or for any reason.
9.12 Relief from Automatic Stay, Etc. To the fullest extent permitted by
law, in the event that Borrower shall make application for or seek relief or
protection under the federal bankruptcy code (the "Bankruptcy Code") or any
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 forty-five (45) days, the automatic stay provisions of
Section 362 of the Bankruptcy Code are hereby modified as to 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 Lender
shall automatically and without demand or notice (each of which is hereby waived
by Borrower) 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 Lender as provided in the Loan
Documents.
9.13 Investigations and Inquiries. Borrower hereby authorizes Lender to
conduct such investigations and inquiries concerning Borrower, the Property, the
Purchasers, and the Collateral, as Lender, in its sole discretion, deems
necessary or desirable in connection with its
RECEIVABLES LOAN AND SECURITY AGREEMENT
61
monitoring of the Loan and the Collateral therefor, and all such Persons of whom
Lender may make such inquiry are empowered to cooperate with, and to provide all
requested information to, Lender.
9.14 Verification of Use. Lender shall be under no duty or obligation to
ascertain the manner in which Borrower has used or will use the proceeds of the
Loan. Lender's sole obligation shall be to advance the proceeds of the Loan
subject to, and in strict accordance with, the terms, provisions, and conditions
of this Agreement and the other Loan Documents. Lender's obligation to fund the
Loan is limited to the principal amount set forth herein and in the Note.
Borrower is solely responsible for obtaining any other financing that may be
necessary in order to enable it to repay the Loan on or prior to the Maturity
Date. It is expressly understood that Lender has no responsibility or obligation
whatsoever to provide to Borrower any further financing, whether in connection
with the Property or otherwise.
SECTION 10. TERM OF AGREEMENT
This Agreement shall continue in full force and effect, and the Liens and
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 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 and security interests 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 11. MISCELLANEOUS
11.1 Notices. All notices or demands by either party to the other relating
to this Agreement shall, except as otherwise provided herein (including, without
limitation, Section 7.1), be in writing and (i) sent by certified or registered
United States mail, first class postage prepaid and return receipt requested, or
(ii) by a nationally recognized overnight courier service with all delivery fees
prepaid, or (iii) by facsimile or other electronic transmission (including
e-mail). Notices shall be deemed received (a) on the 4th succeeding Business Day
following deposit in the United States mail, certified or registered and first
class postage prepaid and return receipt requested, or (b) upon delivery if sent
by nationally recognized overnight courier with all delivery fees prepaid, or
(c) if transmitted by facsimile, when properly transmitted, upon receipt of
confirmation of transmission by the tramsmitter (except that, if such notice or
other communication is not given during normal business hours for the recipient,
such notice or other communication shall be deemed received at the opening of
business the next Business Day of the recipient), or (d) if transmitted by other
electronic transmission, when properly transmitted, upon the sender's receipt of
an acknowledgement from the intended recipient (such as by the "return receipt
requested" function, return e-mail or other written acknowledgement), provided
that, if such notice or other communication is not given during normal business
hours for the recipient, such notice or other communication shall be deemed to
RECEIVABLES LOAN AND SECURITY AGREEMENT
62
have been received at the opening of business on the next Business Day for the
recipient. Notices and demands shall be addressed, if to Borrower, at the
mailing address or facsimile or other electronic address set forth in this
Section 11.1 or to such other address as Borrower may from time to time specify
in writing or, if to Lender, at the mailing address or facsimile or other
electronic address of Lender set forth in this Section 11.1 or to such other
address as Lender may from time to time specify in writing to Borrower.
If to Borrower: Silverleaf Resorts Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
With a copy to: Meadows, Owens, Collier, Reed, Cousins & Blau,
LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
If to Lender: CapitalSource Finance LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: SFG - Portfolio Manager
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
11.2 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 Lender and shall survive the delivery to Lender of such Loan Documents (and
each part thereof), regardless of any investigation made by or on behalf of
Lender.
11.3 Governing Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT AS
EXPRESSLY PROVIDED THEREIN TO THE CONTRARY) SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND, EXCLUSIVE OF ANY CHOICE OF
LAW PRINCIPLES THAT WOULD RESULT IN A CHOICE OF LAW OTHER THAN THE LAWS OF SUCH
STATE. LENDER AND BORROWER HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN ▇▇▇▇▇▇▇▇▇▇ COUNTY, MARYLAND OR THE SOUTHERN
DIVISION OF THE DISTRICT OF MARYLAND, AND IRREVOCABLY AGREE THAT, SUBJECT TO
LENDER'S ELECTION, ALL ACTIONS OR
RECEIVABLES LOAN AND SECURITY AGREEMENT
63
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. LENDER AND BORROWER EXPRESSLY
SUBMIT AND CONSENT TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY
DEFENSE OF FORUM NON CONVENIENS. BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE ON IT BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO IT AT THE
ADDRESS SET FORTH HEREIN, AND SERVICE SO MADE SHALL BE DEEMED COMPLETE TEN (10)
DAYS AFTER THE SAME HAS BEEN POSTED.
Borrower's Initials: /S/ HJW
11.4 Limitation on Interest. Lender and Borrower intend to comply at all
times with all applicable usury laws. All agreements between 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 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 Document 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 Lender shall
ever receive anything of value deemed interest by applicable law that would
exceed the highest lawful rate, such amount which would be excessive interest
shall be applied to the reduction of the outstanding principal balance of the
Loan and not to the payment of interest, or if such excessive interest exceeds
the unpaid principal balance of the Loan, such excess shall be refunded to
Borrower. All interest paid or agreed to be paid to Lender 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 deemed an expense, fee,
premium, or penalty rather than interest. Lender hereby expressly disclaims any
intent to contract for, charge, or receive interest in an amount that 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 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.
11.5 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
RECEIVABLES LOAN AND SECURITY AGREEMENT
64
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. Any provision of this Agreement or any other Loan Document
that is held to be illegal, invalid, or unenforceable in a particular
jurisdiction shall remain valid and enforceable in all other jurisdictions.
Furthermore, in lieu of any such illegal, invalid, or unenforceable provision,
there shall be added automatically as a part of this Agreement and/or the other
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.
11.6 Successors and Assigns. This Agreement and the other Loan Documents
shall be binding upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns; provided, however, that Borrower may not
transfer or assign any of its rights or obligations under this Agreement or the
other Loan Documents without the prior written consent of Lender, which consent
may be granted or withheld in Lender's sole and absolute discretion. This
Agreement and the transactions provided for or contemplated hereunder or under
any of the other Loan Documents are intended solely for the benefit of the
parties hereto. No third party shall have any rights or derive any benefits
under or with respect to this Agreement or the other Loan Documents except as
specifically set forth herein or otherwise provided in a written document signed
by Borrower and Lender. No Person other than Borrower shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make Advances in the absence of
strict compliance with any or all thereof, and no other Person, other than
Borrower, under any circumstances whatsoever, shall be deemed to be a
beneficiary of such conditions, any or all of which Lender freely may waive, in
whole or in part, at any time if, in its sole discretion, it deems it desirable
to do so. In particular, Lender makes no representation and assumes no
obligation as to third parties concerning the quality of construction of the
Improvements or the absence therefrom of defects. In this connection, Borrower
agrees to and shall indemnify Lender from any liability, claim, or loss,
together with attorneys' fees and costs, resulting from the disbursement of Loan
proceeds or from the condition of the Improvements, whether related to the
quality of construction or otherwise, and whether arising during or after the
term of the Loan. This provision shall survive the repayment of the Loan and
continue in full force and effect so long as the possibility of such liability
or claim exists.
Lender may, in the ordinary course of its business and in accordance with
applicable law, at any time sell or otherwise transfer or assign to one (1) or
more financial institutions or other entities ("Assignees") all or any portion
of its rights hereunder or pursuant to the Note, or any or all of the other Loan
Documents. Any such assignment shall be effected by Lender's execution of an
assignment in such form as may be agreed to by the parties thereto and may be
accompanied by a release by Lender of its right, title, and interest hereunder
and pursuant to any of the other Loan Documents in and to all or any portion of
the Collateral. Although the consent of Borrower shall not be required prior to
any such assignment's becoming effective, Lender agrees to provide Borrower with
prompt written notice of any such assignment. In the event of any such
assignment by Lender to an Assignee, Lender's obligations under the Loan
Documents shall remain unchanged, and Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations. The foregoing
notwithstanding, Borrower shall be directly obligated to each Assignee with
respect to the Obligations assigned to such Assignee and
RECEIVABLES LOAN AND SECURITY AGREEMENT
65
shall have no rights of setoff or other remedies against the Assignee as a
consequence of Lender's acts or omissions under this Agreement subsequent to
such assignment.
Upon the consummation of any assignment to an Assignee pursuant to this
Section, Lender and Borrower shall, if Lender or Assignee desires that the
assignment be evidenced in part by one (1) or more new promissory notes, make
appropriate arrangements for such new promissory note(s) or, as appropriate, one
(1) or more replacement promissory notes to be issued to Lender and for the new
promissory note(s) or, as appropriate, replacement promissory note(s), to be
issued to Assignee, in each case in principal amounts reflecting their
respective rights to payment.
11.7 Amendment. This Agreement (including all exhibits and schedules
hereto) may not be amended or modified, and no term, provision, or condition
hereof may be waived, except by a written instrument that is signed by all of
the parties hereto.
11.8 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 Lender's receipt of one (1) or more
counterparts hereof signed by Borrower and Lender.
11.9 Lender Not a Fiduciary. The relationship between Borrower and Lender
is solely that of debtor and creditor, and Lender has 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,
and Lender to be other than that of debtor and creditor.
11.10 Release and Return of Notes Receivable.
(a) In the event that Borrower complies fully with its Obligations
under Section 2.5(b) of this Agreement with respect to any Pledged Note
Receivable that ceases to be an Eligible Note Receivable, and Borrower
thereafter desires to enforce such ineligible Note Receivable against the maker
thereof, then provided that no Default or Event of Default then exists and no
event has occurred which with notice, the passage of time, or both, would
constitute a Default or an Event of Default, within sixty (60) days after its
receipt of a written request from Borrower, Lender shall endorse the ineligible
Note Receivable using the words "Pay to the order of Silverleaf Resorts Inc.,
without recourse," and deliver such ineligible Note Receivable to Borrower.
(b) In the event that all Obligations hereunder are fully satisfied,
then within a reasonable time thereafter, Lender shall endorse the Pledged Notes
Receivable using the words "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, free and clear of any Liens or
encumbrances by any Person claiming by, through, or under Lender.
(c) With respect to any Pledged Note Receivable that is not an
Eligible Note Receivable, upon Borrower's request, Lender shall direct Custodian
to return the Credit File relating to such Pledged Note Receivable to Borrower
at its earliest convenience.
RECEIVABLES LOAN AND SECURITY AGREEMENT
66
11.11 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.
11.12 Entire Agreement. This Agreement and the other Loan Documents,
including the exhibits and schedules to them, comprise the entire agreement
between the parties relating to the subject matter hereof and supersede all
prior agreements and understandings, both oral and written, between the parties
hereto relating to the subject matter hereof, may not be changed or terminated
orally or by course of conduct, and shall be deemed effective as of the Closing
Date.
11.13 Litigation. TO THE FULLEST EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, BORROWER AND 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 ORAL 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. BORROWER AND LENDER FURTHER WAIVE 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 CERTIFY THAT NO REPRESENTATIVE OR AGENT OF LENDER,
INCLUDING LENDER'S COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT 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 LENDER'S ACCEPTANCE OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
Borrower's Initials: /S/ HJW
The waiver and stipulations of Borrower and Lender in this Section 11.13
shall survive the final payment or performance of all of the Obligations and the
resulting termination of this Agreement.
11.14 Incorporation of Exhibits and Schedules. This Agreement, together
with all exhibits and schedules hereto, constitute one (1) document and
agreement that is referred to herein by the use of the defined term "Agreement."
Such exhibits and schedules are incorporated herein as though fully set out in
this Agreement. The definitions contained in any part of this Agreement shall
apply to all parts of this Agreement.
RECEIVABLES LOAN AND SECURITY AGREEMENT
67
11.15 Consent to Advertising and Publicity. Borrower hereby consents to
Lender's issuance and dissemination to the public of information describing the
credit accommodation entered into pursuant to this Agreement, consisting of the
name and address of Borrower, the Loan's principal amount, and the Collateral
therefor.
11.16 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.
11.17 Captions. Section captions have been included in this Agreement for
convenience of reference only and should not be relied upon or used in
interpreting the meaning or intent of any provision hereof.
11.18 Gender. Words of any gender in this Agreement shall include both
genders, where appropriate.
11.19 No Duty. All attorneys, accountants, appraisers, consultants,
custodians, and other professionals retained by Lender in connection with the
Loan shall have the right to act exclusively in the interest of Lender and shall
have no duty of disclosure, duty of loyalty, duty of care, or other duty or
obligation of any kind or nature whatsoever to Borrower, or any other Person.
11.20 Submissions.
(a) All documents, agreements, reports, surveys, appraisals,
insurance policies, references, financial information, and other submissions
required to be furnished by Borrower to Lender hereunder or pursuant to any of
the other Loan Documents (collectively "Submissions") shall be in form and
content satisfactory to Lender, in its sole discretion, and prepared at
Borrower's sole expense.
(b) Lender shall have the prior right of approval of any Person
responsible for preparing a Submission (a "Preparer") which approval shall not
be unreasonably withheld or delayed.
(c) Borrower shall exercise its commercially reasonable best efforts
to ensure that all reports and appraisals required to be furnished by Borrower
to Lender hereunder or pursuant to any of the other Loan Documents are
specifically addressed to Lender and include the following statement:
THE UNDERSIGNED ACKNOWLEDGES THAT CAPITALSOURCE FINANCE LLC IS
RELYING ON THE WITHIN INFORMATION IN CONNECTION WITH ITS ADVANCES TO
BORROWER ON THE SUBJECT PROPERTY.
(d) Whether or not expressly stated herein, all consents and
approvals granted by Lender hereunder shall be valid and effective only if
contained in a written document or instrument that has been signed by a duly
authorized representative of Lender.
RECEIVABLES LOAN AND SECURITY AGREEMENT
68
11.21 Confidentiality. Each party hereto acknowledges and agrees that the
material terms hereof and of the other Loan Documents are and shall remain
strictly confidential. No party hereto shall ever disclose the material terms
and provisions hereof without the express prior written consent of the other
parties; provided, however, material terms and provisions of this Agreement
which appear in recorded or filed documents or which are disclosed to a party's
shareholders, officers, directors, principals, Affiliates, attorneys,
accountants, or lenders, or if required by law or subpoena, shall not constitute
a breach of this Section 11.21. The parties hereto shall take all appropriate
measures to prevent the inadvertent or unintentional disclosure of the material
terms and provisions hereof.
11.22 Borrower's Acknowledgment. Borrower acknowledges and agrees that
Lender is under no obligation to enter into any other agreement or perform any
other services for Borrower except as expressly set forth in this Agreement and
the other Loan Documents. Any other transaction or relationship between Borrower
and Lender shall be evidenced by other documentation, shall be separate and
independent from the Loan, and shall have no effect on Borrower's obligations to
Lender with respect to the Loan or Lender's remedies under the Loan Documents.
Borrower acknowledges and agrees that no discussions or oral agreements
heretofore or hereafter occurring between Borrower and Lender shall have any
legal effect unless embodied in a written agreement executed by all relevant
parties. Furthermore, no other written agreement between the parties and their
Affiliates and the performance of the parties thereunder shall have any legal
effect whatsoever on Borrower's obligations or Lender's remedies under this
Agreement and the other Loan Documents.
Borrower's Initials: /S/ HJW
11.23 No Offset. Borrower understands and agrees that Borrower's payment
obligations hereunder and under the other Loan Documents are absolute and
unconditional without any right of rescission, setoff, counterclaim or defense
for any reason against Lender notwithstanding any damage to, defects in or
destruction of any Collateral or any other event, including obsolescence of any
property or improvements. Except as expressly provided for herein, Borrower
hereby waives setoff, counterclaim, demand, presentment, protest, all defenses
with respect to any and all instruments and all notices and demands of any
description, and the pleading of any statute of limitations as a defense to any
demand under this Agreement and any other Loan Document. Borrower hereby waives
any and all defenses and counterclaims it may have or could interpose in any
action or procedure brought by Lender to obtain an order of court recognizing
the assignment of, or lien of Lender in and to, any Collateral.
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69
IN WITNESS WHEREOF, Borrower and Lender 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
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: CFO
LENDER:
CAPITALSOURCE FINANCE LLC,
a Delaware limited liability company
By: /S/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: General Counsel
List of Exhibits to Agreement not filed herewith:
Exhibit "A": Form of Custodial Agreement
Exhibit "B": Form of Master Pledge and Assignment of Notes Receivable and
Timeshare Interest Mortgages
Exhibit "C": Form of Lockbox Agreement
Exhibit "D": Resort Facilities
Exhibit "E": Permitted Liens and Encumbrances
Exhibit "F": Receivables Loan Approved Resorts
Exhibit "G": Form of Reassignment
Exhibit "H": Description Of Pending Litigation
Exhibit "I": Form of Advance Request
RECEIVABLES LOAN AND SECURITY AGREEMENT
Exhibit "J": Form of Supplemental Pledge and Assignment of Notes Receivable and
Timeshare Interest Mortgages
Exhibit "K": List of States in which Borrower is Registered or Exempt
Exhibit "L": List of Timeshare Documents
Exhibit "M": Borrowing Base Certificate
Exhibit "N": Listing of amounts owed to Timeshare Association
RECEIVABLES LOAN AND SECURITY AGREEMENT