LOAN SALE AGREEMENT AMONG SILVERLEAF FINANCE IV, LLC, as Seller, SILVERLEAF FINANCE V, L.P., as Purchaser AND SILVERLEAF RESORTS, INC., as Servicer DATED AS OF AUGUST 1, 2006
EXHIBIT
10.4
AMONG
SILVERLEAF
FINANCE IV, LLC,
as
Seller,
SILVERLEAF
FINANCE V, L.P.,
as
Purchaser
AND
SILVERLEAF
RESORTS, INC., as
Servicer
DATED
AS
OF AUGUST 1, 2006
This
LOAN
SALE AGREEMENT (this “Agreement”), dated
as
of August 1, 2006, is among Silverleaf Finance IV, LLC, a Delaware limited
liability company (“Seller”),
Silverleaf
Finance V, L.P., a Delaware limited partnership (the “Purchaser”),
Silverleaf Resorts, Inc., a Texas corporation, in its capacity as servicer
(the
“Servicer”)
and
their respective permitted successors and assigns.
W
I T
N E S S E T H:
WHEREAS,
the Purchaser has been established as a bankruptcy-remote entity for the purpose
of acquiring (i) a certain pool of timeshare loans (the “Mortgage
Loans”)
each
evidenced by a promissory note and secured by a first Mortgage on a fractional
fee simple timeshare interest in a Unit, (ii) a pool of timeshare loans (the
“Oak
N’ Spruce Loans”),
each
evidenced by a purchase and finance agreement (a “Finance
Agreement”)
for
the purchase of a certificate of beneficial interest in the Oak N’ Spruce Resort
Trust evidencing the right of the owner thereof to use and occupy a fixed unit
at Oak N’ Spruce Resort at a fixed period of time (the Mortgage Loans and Oak N’
Spruce Loans, together, the “Timeshare
Loans”),
(iii)
any Qualified
Substitute Timeshare Loans and
Subsequent Timeshare Loans
and (iv)
all Related Security in respect of the Timeshare Loans and Oak N’ Spruce Loans.
A “Timeshare
Property”
shall
consist of (i) in the case of a Timeshare Loan, a fractional fee simple
timeshare interest in a residential unit (a residential timeshare unit herein
referred to as a “Unit”)
in a
Resort or (ii) in the case of an Oak N’ Spruce Loan, a certificate of beneficial
interest (“Oak
N’ Spruce Certificate”)
in the
Oak N’ Spruce Resort Trust. The Timeshare Loans, Timeshare Properties, Mortgage
Note, any Related Security and other conveyed property related thereto and
additional collateral, collectively, are the “Transferred
Assets.”
WHEREAS,
on August 29, 2006 (the “Closing
Date”)
and on
each Transfer
Date,
the
Purchaser intends to pledge such Transferred Assets acquired thereby to ▇▇▇▇▇
Fargo Bank National Association, as indenture trustee (in such capacity, the
“Securitization
Indenture Trustee”),
custodian (in such capacity, the “Securitization
Custodian”)
and
backup servicer, pursuant to an indenture, dated as of August 1, 2006 (the
“Securitization
Indenture”),
by
and among the Purchaser, Silverleaf Finance V, LLC, as the general partner
of
the Purchaser (the “General
Partner”),
the
Servicer and the Securitization Indenture Trustee, to secure the Purchaser’s (i)
5.760% Timeshare Loan-Backed Notes, Series 2006-A, Class A Notes, (ii) 5.909%
Timeshare Loan-Backed Notes, Series 2006-A, Class B Notes, (iii) 6.456%
Timeshare Loan-Backed Notes, Series 2006-A, Class C Notes, (iv) 7.249% Timeshare
Loan-Backed Notes, Series 2006-A, Class D Notes, (v) 7.793% Timeshare
Loan-Backed Notes, Series 2006-A, Class E Notes, (vi) 8.287% Timeshare
Loan-Backed Notes, Series 2006-A, Class F Notes, and (vii) 10.000% Timeshare
Loan-Backed Notes, Series 2006-A, Class G Notes (collectively, the “Securitization
Notes”);
WHEREAS,
proceeds from the sale of the Securitization Notes will be used by the
Purchaser, in part, to (i) pay the Seller the purchase price for the Timeshare
Loans and (ii) pay certain expenses incurred in connection with the issuance
of
the Securitization Notes.
WHEREAS,
the Seller will derive an economic benefit from the transfer
hereunder
of the Timeshare Loans to the Purchaser.
NOW,
THEREFORE, in consideration of the mutual covenants set forth herein, and for
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto covenant and agree as follows:
SECTION
1. Definitions;
Interpretation.
Capitalized terms used herein but not defined herein shall have the respective
meanings specified in “Standard Definitions” attached hereto as Annex
A.
SECTION
2. Acquisition
of Timeshare Loans.
(a)
Initial
Timeshare Loans.
(i) Effective
as of the Closing Date, but subject to the terms and conditions of this
Agreement (including, without limitation, subsection
(f)
below),
the Seller hereby sells (“Sells,”
“Sale”
or
“Sold”)
and
otherwise transfers, assigns, and conveys to the Purchaser, without recourse
(except to the extent specifically provided herein), and the Purchaser hereby
agrees to purchase and otherwise acquires, all right, title and interest of
the
Seller in and to the Timeshare Loans included on the schedule delivered to
the
Purchaser on the Closing Date (as further described in subsection
(g)
below),
together with the Timeshare Properties, Related Security and other conveyed
property related thereto. In connection with the initial transfer, Seller shall
transfer or cause the deposit into the Lockbox Account of all amounts received
by the Seller on account of such Timeshare Loans, Timeshare Properties, Related
Security and other conveyed property related thereto and additional collateral
hereunder due on and after the Initial Cut-Off Date within two (2) Business
Days
of the receipt thereof.
(ii) The
Seller hereby acknowledges that each sale and conveyance to the Purchaser
hereunder is absolute and irrevocable, without reservation or retention of
any
interest whatsoever by the Seller.
(b)
[Intentionally
Omitted].
(c)
Delivery
of Timeshare Loan Documents.
In
connection with the sale, transfer, assignment and conveyance of any Timeshare
Loans hereunder, the Purchaser hereby directs the Seller, and the Seller hereby
agrees to deliver or cause to be delivered to the Securitization Custodian
all
related Timeshare Loan Files and to the Servicer all related Timeshare Loan
Servicing Files.
(d)
Collections.
The
Seller shall deposit or cause to be deposited all collections in respect of
the
Timeshare Loans received by the Seller or any of its Affiliates on and after
the
related Cut-Off Date in the Lockbox Account.
(e)
Limitation
of Liability.
Neither
the Purchaser nor any subsequent assignee
of
the
Purchaser shall have any obligation or liability with respect to any Timeshare
Loan nor shall the Purchaser or any subsequent assignee have any liability
to
any Obligor in respect of any Timeshare Loan. No such obligation or liability
is
intended to be assumed by the Purchaser, the Seller or any subsequent assignee
herewith and any such liability is hereby expressly disclaimed.
(f)
Purchase
Price.
The
price paid for Timeshare Loans, Timeshare Properties, Related Security and
other
conveyed property related thereto and additional collateral which are Sold
hereunder shall be the Timeshare Loan Acquisition Price with respect thereto.
Such Timeshare Loan Acquisition Price shall be paid by means of an immediate
cash payment to the Seller by wire transfer on the applicable conveyance date
to
an account designated by the Seller on or before such conveyance date.
(g)
Schedule
of Timeshare Loans.
Upon
the Seller’s Sale of the Timeshare Loans, Timeshare Properties, Related Security
and other conveyed property related thereto and additional collateral to the
Purchaser, the Seller shall deliver a Schedule of Timeshare Loans, Timeshare
Properties, Related Security and other conveyed property related thereto and
additional collateral, which schedule shall be attached hereto as Schedule
III
and made
a part hereof. Each schedule so delivered shall supersede any prior schedules
so
delivered.
SECTION
3. Intended
Characterization, Grant of Security Interest.
It is
the intention of the parties hereto that the transfers of Timeshare Loans to
be
made pursuant to the terms hereof shall constitute a sale and an absolute
assignment by the Seller to the Purchaser and not a loan secured by the
Timeshare Loans. In the event, however, that a court of competent jurisdiction
were to hold that any such transfer constitutes a loan and not a sale, it is
the
intention of the parties hereto that the Seller shall be deemed to have granted
and does hereby grant to the Purchaser as of the date hereof a first priority
perfected security interest in all of Seller’s right, title and interest in, to
and under the Transferred Assets specified in Section 2 hereof and that with
respect to such conveyance, this Agreement shall constitute a security agreement
under applicable law. In the event of the characterization of any such transfer
as a loan, the amount of interest payable or paid with respect to such loan
under the terms of this Agreement shall be limited to an amount which shall
not
exceed the maximum non-usurious rate of interest allowed by the applicable
state
law or any applicable law of the United States permitting a higher maximum
non-usurious rate that preempts such applicable state law, which could lawfully
be contracted for, charged or received (the “Highest
Lawful Rate”).
In
the event any payment of interest on any such loan exceeds the Highest Lawful
Rate, the parties hereto stipulate that (a) to the extent possible given the
term of such loan, such excess amount previously paid or to be paid with respect
to such loan be applied to reduce the principal balance of such loan, and the
provisions thereof immediately be deemed reformed and the amounts thereafter
collectible thereunder reduced, without the necessity of the execution of any
new document, so as to comply with the then applicable law, but so as to permit
the recovery of the fullest amount otherwise called for thereunder and (b)
to
the extent that the reduction of the principal balance of, and the amounts
collectible under, such loan and the reformation of the provisions thereof
described in the immediately preceding clause (a) is not possible given the
term
of such loan, such excess amount will be deemed to have been paid with respect
to such loan as a result of an error and upon discovery of such error or upon
notice thereof by any party hereto such amount shall be refunded by the
recipient thereof.
The
characterization of the Seller as “debtor” and the Purchaser as “secured party”
in any financing statement required hereunder is solely for protective purposes
and shall in no way be construed as being contrary to the intent of the parties
that this transaction be treated as a sale to the Purchaser of such Seller’s
entire right, title and interest in and to the Transferred Assets.
Each
of
the Seller, the Purchaser and any of their Affiliates hereby agrees to make
the
appropriate entries in its general accounting records and to indicate that
the
Timeshare Loans have been transferred to the Purchaser.
SECTION
4. Conditions
Precedent to Acquisition of Timeshare Loans by the Purchaser.
The
obligations of the Purchaser to purchase any Timeshare Loans hereunder shall
be
subject to the satisfaction of the following conditions:
(a)
All
representations and warranties of the Seller and the Servicer contained in
Section 5 and in Schedule
I
hereof,
and all information provided in the Schedule of Timeshare Loans related thereto
shall be true and correct as of the Closing Date or the Transfer Date, as
applicable, and each of the Seller and the Servicer shall have delivered to
the
Purchaser, the Securitization Indenture Trustee and UBS Securities LLC (the
“Initial
Purchaser”)
an
officer’s certificate (the “Officer’s
Certificate”)
to
such effect.
(b)
On or
prior to the Closing Date or a Transfer Date, as applicable, the Seller (and,
with regard to a Transfer Date, the Servicer) shall have delivered or shall
have
caused the delivery of (i) the related Timeshare Loan Files to the
Securitization Custodian and the Securitization Custodian shall have delivered
a
receipt therefore pursuant to the Custodial Agreement, (ii) the Timeshare Loan
Servicing Files to the Servicer, and (iii) all documents and certifications
required pursuant to the terms of the Custodial Agreement and the Escrow and
Closing Agreement.
(c)
The
Seller shall have delivered or shall have caused to be delivered all other
information theretofore required or reasonably requested by the Purchaser to
be
delivered by the Seller or performed or caused to be performed all other
obligations required to be performed as of the Closing Date, including all
filings, recordings and/or registrations as may be necessary in the reasonable
opinion of the Purchaser or the Securitization Indenture Trustee to establish
and preserve the right, title and interest of the Purchaser or the
Securitization Indenture Trustee, as the case may be, in the related Timeshare
Loans.
(d)
With
regard to each Transfer Date, the Servicer shall have delivered or shall have
caused to be delivered all other information theretofore required or reasonably
requested by the Purchaser to be delivered by the Servicer or performed or
caused to be performed all other obligations required to be performed as of
such
Transfer Date, including all filings, recordings and/or registrations as may
be
necessary in the reasonable opinion of the Purchaser or the Securitization
Indenture Trustee to establish and preserve the right, title and interest of
the
Purchaser or the Securitization Indenture Trustee, as the case may be, in the
related Timeshare Loans.
(e)
On or
before the Closing Date, the Purchaser, the General Partner, the
Servicer,
the Backup Servicer and the Securitization Indenture Trustee shall have entered
into the Securitization Indenture.
(f)
The
Securitization Notes shall be issued and sold on the Closing Date, and the
Purchaser shall receive the full consideration due it upon the issuance of
the
Securitization Notes, and the Purchaser shall have applied such consideration
to
the extent necessary, to pay the Timeshare Loan Acquisition Price for each
Timeshare Loan.
(g)
Each
Timeshare Loan conveyed on a Transfer Date in accordance with Section 6(a)
hereof shall satisfy each of the criteria specified in the definition of
“Qualified
Substitute Timeshare Loan”
and
each of the conditions herein and in the Securitization Indenture for
substitution of Timeshare Loans shall have been satisfied.
(h)
The
Purchaser shall have received such other certificates and opinions as it shall
reasonably request.
SECTION
5. Representations
and Warranties and Certain Covenants of Seller and Servicer.
(a)
The
Seller represents and warrants to the Purchaser and the Securitization Indenture
Trustee for the benefit of the Securitization Noteholders, as of the Closing
Date (with respect to the Timeshare Loans transferred on the Closing Date)
as
follows:
(i)
Due
Incorporation; Valid Existence; Good Standing.
It is a
limited liability company duly organized and validly existing in good standing
under the laws of the jurisdiction of its incorporation; and is duly qualified
to do business as a foreign entity and in good standing under the laws of each
jurisdiction where the character of its property, the nature of its business
or
the performance of its obligations under this Agreement makes such qualification
necessary, except where the failure to be so qualified will not have a material
adverse effect on its business or its ability to perform its obligations under
this Agreement or any other related documents (the “Transaction
Documents”)
to
which it is a party or under the transactions contemplated hereunder or
thereunder or the validity or enforceability of the Timeshare Loans.
(ii)
Possession
of Licenses, Certificates, Franchises and Permits.
It
holds all licenses, certificates, franchises and permits from all governmental
authorities necessary for the conduct of its business, except where the failure
to hold such licenses, certificates, franchises and permits would not materially
and adversely affect its ability to perform its obligations under this Agreement
or any other Transaction Document to which it is a party or under the
transactions contemplated hereunder or thereunder or the validity or
enforceability of the Timeshare Loans, and has received no notice of proceedings
relating to the revocation of any such license, certificate, franchise or
permit, which singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect its ability
to perform its obligations under this Agreement or any other Transaction
Document to which it is a party or under the transactions contemplated hereunder
or thereunder or the validity or enforceability of the Timeshare
Loans.
(iii)
Limited
Liability Company Authority and Power.
It has,
and at all times during the term of this Agreement will have, all requisite
limited liability company power and authority to own its properties, to conduct
its business, to execute and deliver this Agreement and all documents and
transactions contemplated hereunder and to perform all of its obligations under
this Agreement and any other Transaction Document to which it is a party or
under the transactions contemplated hereunder or thereunder.
(iv)
Authorization,
Execution and Delivery Valid and Binding.
This
Agreement and all other Transaction Documents and instruments required or
contemplated hereby to be executed and delivered by the Seller have been duly
authorized, executed and delivered by the Seller and, assuming the due execution
and delivery by, the other party or parties hereto and thereto, constitute
legal, valid and binding agreements enforceable against the Seller in accordance
with their respective terms subject, as to enforceability, to bankruptcy,
insolvency, reorganization, liquidation, dissolution, moratorium and other
similar applicable laws affecting the enforceability of creditors’ rights
generally applicable in the event of the bankruptcy, insolvency, reorganization,
liquidation or dissolution, as applicable, of the Seller and to general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law.
(v)
No
Violation of Law, Rule, Regulation, etc.
The
execution, delivery and performance by the Seller of this Agreement and any
other Transaction Document to which it is a party do not and will not (A)
violate any of the provisions of its certificate of formation or limited
liability company agreement, (B) violate any provision of any law, governmental
rule or regulation currently in effect applicable to it or its properties or
by
which it or its properties may be bound or affected, including, without
limitation, any bulk transfer laws, where such violation would have a material
adverse effect on its ability to perform its obligations under this Agreement
or
any other Transaction Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Timeshare Loans, (C) violate any judgment, decree, writ, injunction, award,
determination or order currently in effect applicable to it or its properties
or
by which it or its properties are bound or affected, where such violation would
have a material adverse effect on its ability to perform its obligations under
this Agreement or any other Transaction Document to which it is a party or
under
the transactions contemplated hereunder or thereunder or the validity or
enforceability of the Timeshare Loans, (D) conflict with, or result in a breach
of, or constitute a default under, any of the provisions of any indenture,
mortgage, deed of trust, contract or other instrument to which it is a party
or
by which it is bound where such violation would have a material adverse effect
on its ability to perform its obligations under this Agreement or any other
Transaction Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Timeshare Loans or (E) result in the creation or imposition of any Lien upon
any
of its properties pursuant to the terms of any such indenture, mortgage, deed
of
trust, contract or other instrument.
(vi)
Governmental
Consent.
No
consent, approval, order or authorization of, and no filing with or notice
to,
any court or other Governmental Authority in respect of the Seller is required
which has not been obtained in connection with the authorization,
execution,
delivery or performance by the Seller of this Agreement or any of the other
Transaction Documents to which Seller is a party or under the transactions
contemplated hereunder or thereunder, including, without limitation, the
transfer of the Timeshare Loans and the creation of the security interest of
the
Purchaser therein pursuant to Section 3 hereof.
(vii)
Defaults.
It is
not in default under any material agreement, contract, instrument or indenture
to which it is a party or by which it or its properties is or are bound, or
with
respect to any order of any court, administrative agency, arbitrator or
governmental body, in each case, which would have a material adverse effect
on
the transactions contemplated hereunder or on its business, operations,
financial condition or assets, and no event has occurred which with notice
or
lapse of time or both would constitute such a default with respect to any such
agreement, contract, instrument or indenture, or with respect to any such order
of any court, administrative agency, arbitrator or governmental body.
(viii)
Insolvency.
It is
solvent and will not be rendered insolvent by the transfer of Timeshare Loans
hereunder. On and after the Closing Date, it will not engage in any business
or
transaction the result of which would cause the property remaining with it
to
constitute an unreasonably small amount of capital.
(ix)
Pending
Litigation or Other Proceedings.
There
is no pending or, to its Knowledge, threatened action, suit, proceeding or
investigation before any court, administrative agency, arbitrator or
governmental body against or affecting it which, if decided adversely, would
materially and adversely affect (A) its condition (financial or otherwise),
its
business or operations, (B) its ability to perform its obligations under, or
the
validity or enforceability of, this Agreement or any other documents or
transactions contemplated under this Agreement including, without limitation,
its ability to foreclose or otherwise enforce the Liens of the Timeshare Loans,
or (C) any Timeshare Loan or title of any Obligor to any related Timeshare
Property.
(x)
Information.
No
document, certificate or report furnished or required to be furnished by or
on
behalf of it pursuant to this Agreement or any other Transaction Document,
contains or will contain when furnished any untrue statement of a material
fact
or fails or will fail to state a material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances in
which it was made. There are no facts known to it which, individually or in
the
aggregate, materially adversely affect, or which (aside from general economic
trends) may reasonably be expected to materially adversely affect in the future,
its financial condition or assets or business, or which may impair its ability
to perform its obligations under this Agreement, which have not been disclosed
herein or therein or in the certificates and other documents furnished to the
Purchaser by or on its behalf pursuant hereto or thereto specifically for use
in
connection with the transactions contemplated hereby or thereby.
(xi)
No
Deficiency Accumulation.
It is
not aware of any outstanding “accumulated funding deficiency” (as such term is
defined under ERISA and the Code) with respect to any “employee benefit plan”
(as such term is defined under ERISA)
sponsored
by it.
(xii)
Taxes.
It has
filed all tax returns (federal, state and local) which it reasonably believes
are required to be filed and has paid or made adequate provision for the payment
of all taxes, assessments and other governmental charges due from it or is
contesting any such tax, assessment or other governmental charge in good faith
through appropriate proceedings or except where the failure to file or pay
will
not have a material adverse effect on the rights and interests of the Purchaser
or any of its subsequent assignees. It knows of no basis for any material
additional tax assessment for any fiscal year for which adequate reserves have
not been established. It shall pay all such taxes, assessments and governmental
charges when due.
(xiii)
Place
of Business.
The
principal place of business and chief executive office where it keeps its
records concerning the Timeshare Loans will be ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (or such other place specified by it by written notice
to
the Purchaser and the Securitization Indenture Trustee). It is a limited
liability company formed under the laws of the State of Delaware.
(xiv)
Securities
Laws.
It is
not an “investment company” or a company “controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940, as amended. No portion
of the Timeshare Loan Acquisition Price for each of the Timeshare Loans will
be
used by it to acquire any security in any transaction which is subject to
Section 13 or Section 14 of the Securities Exchange Act of 1934, as
amended.
(xv)
Transactions
in Ordinary Course.
The
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller.
(xvi)
Name.
The
legal name of the Seller is as set forth in the signature page of this Agreement
and the Seller does not have any tradenames, fictitious names, assumed names
or
“doing business as” names.
(xvii)
Custodial
Files.
The
Seller shall, on or prior to the Closing Date, have delivered or caused the
delivery to the Securitization Custodian a Timeshare Loan File for each
Timeshare Loan, which Timeshare Loan File shall be complete and verified by
the
Securitization Custodian in accordance with the Custodial
Agreement.
(xviii)
No
Conveyance.
The
Seller agrees not to convey and to ensure no party under its control conveys
any
interest in a Resort relating to a Timeshare Loan without obtaining Rating
Agency Confirmation if such conveyance is reasonably likely to have a material
adverse affect on the Securitization Noteholders.
(b)
The
Servicer represents and warrants to the Purchaser and the Securitization
Indenture Trustee for the benefit of the Securitization Noteholders, as of
the
Closing Date (with respect to the Timeshare Loans transferred on the Closing
Date) and on each Transfer Date (with respect to Qualified Substitute Timeshare
Loans) as follows:
(i)
Due
Incorporation; Valid Existence; Good Standing.
It is a
corporation duly
organized
and validly existing in good standing under the laws of the jurisdiction of
its
incorporation; and is duly qualified to do business as a foreign corporation
and
in good standing under the laws of each jurisdiction where the character of
its
property, the nature of its business or the performance of its obligations
under
this Agreement makes such qualification necessary, except where the failure
to
be so qualified will not have a material adverse effect on its business or
its
ability to perform its obligations under the Transaction Documents to
which
it is a party or under the transactions contemplated hereunder or thereunder
or
the validity or enforceability of the Timeshare Loans.
(ii)
Possession
of Licenses, Certificates, Franchises and Permits.
It
holds all licenses, certificates, franchises and permits from all governmental
authorities necessary for the conduct of its business, except where the failure
to hold such licenses, certificates, franchises and permits would not materially
and adversely affect its ability to perform its obligations under this Agreement
or any other Transaction Document to which it is a party or under the
transactions contemplated hereunder or thereunder or the validity or
enforceability of the Timeshare Loans, and has received no notice of proceedings
relating to the revocation of any such license, certificate, franchise or
permit, which singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect its ability
to perform its obligations under this Agreement or any other Transaction
Document to which it is a party or under the transactions contemplated hereunder
or thereunder or the validity or enforceability of the Timeshare
Loans.
(iii)
Corporate
Authority and Power.
It has,
and at all times during the term of this Agreement will have, all requisite
corporate power and authority to own its properties, to conduct its business,
to
execute and deliver this Agreement and all documents and transactions
contemplated hereunder and to perform all of its obligations under this
Agreement and any other Transaction Document to which it is a party or under
the
transactions contemplated hereunder or thereunder.
(iv)
Authorization,
Execution and Delivery Valid and Binding.
This
Agreement and all other Transaction Documents and instruments required or
contemplated hereby to be executed and delivered by the Servicer have been
duly
authorized, executed and delivered by the Servicer and, assuming the due
execution and delivery by, the other party or parties hereto and thereto,
constitute legal, valid and binding agreements enforceable against the Servicer
in accordance with their respective terms subject, as to enforceability, to
bankruptcy, insolvency, reorganization, liquidation, dissolution, moratorium
and
other similar applicable laws affecting the enforceability of creditors’ rights
generally applicable in the event of the bankruptcy, insolvency, reorganization,
liquidation or dissolution, as applicable, of the Servicer and to general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law.
(v)
No
Violation of Law, Rule, Regulation, etc.
The
execution, delivery and performance by the Servicer of this Agreement and any
other Transaction Document to which it is a party do not and will not (A)
violate any of the provisions of its articles of incorporation or bylaws, (B)
violate any provision of any law, governmental rule or
regulation
currently in effect applicable to it or its properties or by which it or its
properties may be bound or affected, including, without limitation, any bulk
transfer laws, where such violation would have a material adverse effect on
its
ability to perform its obligations under this Agreement or any other Transaction
Document to which it is a party or under the transactions contemplated hereunder
or thereunder or the validity or enforceability of the Timeshare Loans, (C)
violate any judgment, decree, writ, injunction, award, determination or order
currently in effect applicable to it or its properties or by which it or its
properties are bound or affected, where such violation would have a material
adverse effect on its ability to perform its obligations under this Agreement
or
any other Transaction Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Timeshare Loans, (D) conflict with, or result in a breach of, or constitute
a
default under, any of the provisions of any indenture, mortgage, deed of trust,
contract or other instrument to which it is a party or by which it is bound
where such violation would have a material adverse effect on its ability to
perform its obligations under this Agreement or any other Transaction Document
to which it is a party or under the transactions contemplated hereunder or
thereunder or the validity or enforceability of the Timeshare Loans or (E)
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, mortgage, deed of trust, contract
or other instrument.
(vi)
Governmental
Consent.
No
consent, approval, order or authorization of, and no filing with or notice
to,
any court or other Governmental Authority in respect of the Servicer is required
which has not been obtained in connection with the authorization, execution,
delivery or performance by the Servicer of this Agreement or any of the other
Transaction Documents to which the Servicer is a party or under the transactions
contemplated hereunder or thereunder.
(vii)
Defaults.
It is
not in default under any material agreement, contract, instrument or indenture
to which it is a party or by which it or its properties is or are bound, or
with
respect to any order of any court, administrative agency, arbitrator or
governmental body, in each case, which would have a material adverse effect
on
the transactions contemplated hereunder or on its business, operations,
financial condition or assets, and no event has occurred which with notice
or
lapse of time or both would constitute such a default with respect to any such
agreement, contract, instrument or indenture, or with respect to any such order
of any court, administrative agency, arbitrator or governmental body.
(viii)
Pending
Litigation or Other Proceedings.
Other
than as described in the Offering Circular, there is no pending or, to its
Knowledge, threatened action, suit, proceeding or investigation before any
court, administrative agency, arbitrator or governmental body against or
affecting it which, if decided adversely, would materially and adversely affect
(A) its condition (financial or otherwise), its business or operations, (B)
its
ability to perform its obligations under, or the validity or enforceability
of,
this Agreement or any other documents or transactions contemplated under this
Agreement including, without limitation, its ability to foreclose or otherwise
enforce the Liens of the Timeshare Loans, or (C) any Timeshare Loan or title
of
any Obligor to any related
Timeshare
Property.
(ix)
Information.
No
document, certificate or report furnished or required to be furnished by or
on
behalf of it pursuant to this Agreement or any other Transaction Document,
contains or will contain when furnished any untrue statement of a material
fact
or fails or will fail to state a material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances in
which it was made. There are no facts known to it which, individually or in
the
aggregate, materially adversely affect, or which (aside from general economic
trends) may reasonably be expected to materially adversely affect in the future,
its financial condition or assets or business, or which may impair its ability
to perform its obligations under this Agreement, which have not been disclosed
herein or therein or in the certificates and other documents furnished to the
Purchaser by or on its behalf pursuant hereto or thereto specifically for use
in
connection with the transactions contemplated hereby or thereby.
(x)
No
Deficiency Accumulation.
It is
not aware of any outstanding “accumulated funding deficiency” (as such term is
defined under ERISA and the Code) with respect to any “employee benefit plan”
(as such term is defined under ERISA) sponsored by it.
(xi)
Taxes.
It has
filed all tax returns (federal, state and local) which it reasonably believes
are required to be filed and has paid or made adequate provision for the payment
of all taxes, assessments and other governmental charges due from it or is
contesting any such tax, assessment or other governmental charge in good faith
through appropriate proceedings or except where the failure to file or pay
will
not have a material adverse effect on the rights and interests of the Purchaser
or any of its subsequent assignees. It knows of no basis for any material
additional tax assessment for any fiscal year for which adequate reserves have
not been established. It shall pay all such taxes, assessments and governmental
charges when due.
(xii)
Securities
Laws.
It is
not an “investment company” or a company “controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.
(xiii)
Transactions
in Ordinary Course.
The
transactions contemplated by this Agreement are in the ordinary course of
business of the Servicer.
(xiv)
Foreign
Tax Liability.
It is
not aware of any Obligor under a Timeshare Loan who has withheld any portion
of
payments due under such Timeshare Loan because of the requirements of a foreign
taxing authority, and no foreign taxing authority has contacted it concerning
a
withholding or other foreign tax liability.
(xv)
Oak
N’
Spruce Loans.
With
respect to Timeshare Loans that are Oak N’ Spruce Loans:
(A)
The
Oak N’ Spruce Trust is a trust duly, formed, validly existing, and in good
standing under the laws of the Commonwealth of Massachusetts. The Oak N’ Spruce
Trust is authorized to transact business
in
no
other state;
(B)
Silverleaf possesses all requisite franchises, operating rights, licenses,
permits, consents, authorizations, exemptions and orders as are necessary to
discharge its obligations under the Finance Agreement;
(C)
Silverleaf holds all right, title and interest in and to all of the Timeshare
Properties related to the Oak N’ Spruce Loans solely for the benefit of the
beneficiaries referred to in, and subject in each case to the provisions of,
the
Finance Agreement and the other documents and agreements related
thereto;
(D)
There
are no actions, suits, proceedings, orders or injunctions pending against the
Oak N’ Spruce Trust or Oak N’ Spruce Trustee, at law or in equity, or before or
by any governmental authority which, if adversely determined, could reasonably
be expect to have a material adverse effect on the Trust Estate or the Oak
N’
Spruce Trustee’s ability to perform its obligations under the Trust
Documents;
(E)
Neither the Oak N’ Spruce Trust nor the Oak N’ Spruce Trustee has incurred any
indebtedness for borrowed money (directly, by guarantee, or
otherwise);
(F)
All
ad valorem taxes and other taxes and assessments against the Oak N’ Spruce Trust
and/or its trust estate have been paid when due and neither the Servicer nor
the
Oak N’ Spruce Trustee knows of any basis for any additional taxes or assessments
against any such property. The Oak N’ Spruce Trust has filed all required tax
returns and has paid all taxes shown to be due and payable on such returns,
including all taxes in respect of sales of Owner Beneficiary Rights (as defined
in the Finance Agreement);
(G)
The
Oak N’ Spruce Trust and the Oak N’ Spruce Trustee are in compliance with all
applicable laws, statutes, rules and governmental regulations applicable to
it
and in compliance with each instrument, agreement or document to which it is
a
party or by which it is bound, including, without limitation, the Finance
Agreement except where the failure to comply herein would not materially and
adversely affect its ability to perform its obligations under this Agreement
or
any other Transaction Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Timeshare Loans;
(H)
Silverleaf shall continue to control and manage the Oak N’ Spruce Trust, and
Silverleaf shall not take any action to cause the Oak N’ Spruce Trustee to
control or manage the Oak N’ Spruce Trust;
(I)
The
Oak N’ Spruce Trustee is a wholly-owned subsidiary of
Silverleaf
and is controlled by Silverleaf. Silverleaf shall cause Silverleaf Berkshires,
Inc. to remain the Oak N’ Spruce Trustee and a wholly-owned subsidiary of
Silverleaf, and Silverleaf shall maintain the existence of Silverleaf
Berkshires, Inc. as a Texas corporation, with all the requisite corporate powers
and authority as exists on the Closing Date; and
(J)
Silverleaf shall comply, and shall cause the Oak N’ Spruce Trustee to comply,
with all the terms and conditions of the Oak N’ Spruce Trust Agreement and all
other related documents.
(xvi)
Servicing.
It is
the initial Servicer and has been servicing the Timeshare Loans in accordance
with the Servicing Standard.
(xvii)
Certified
Copy of Contract for Sale.
It
represents and warrants that each Contract for Sale contained in a Timeshare
Loan File is a true, correct and accurate copy of the original Contract for
Sale.
(xviii)
No
Conveyance.
Silverleaf agrees not to convey and to ensure no party under its control conveys
any interest in a Resort relating to a Timeshare Loan without obtaining Rating
Agency Confirmation if such conveyance is reasonably likely to have a material
adverse affect on the Securitization Noteholders.
(xix)
Timeshare
Loan Documents.
The
Servicer represents and warrants that all of the documents evidencing each
of
the Timeshare Loans are identical in all material respects to the form
determined to be valid, binding and enforceable in the applicable state by
the
corresponding local counsel opinion issued by (I) ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.,
dated as of August 29, 2006, pertaining to Georgia law matters, (II) ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, LLP, dated as of August 29, 2006, pertaining to
Massachusetts law matters, (III) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, dated as of August
29, 2006, pertaining to Missouri law matters, (IV) Mayer, Brown, ▇▇▇▇ & Maw
LLP, dated as of August 29, 2006, pertaining to Illinois law matters, (V)
Meadows, Owens, Collier, Reed, Cousins & Blau, L.L.P., dated as of August
29, 2006, pertaining to Texas law matters, and (VI) Holland and Knight LLP,
dated as of August 29, 2006, pertaining to Florida law matters (collectively,
the “Local
Counsel Opinions”).
(xx)
Timeshare
Marketing Materials and Disclosure Statements.
The
Servicer represents and warrants that it has provided each of the law firms
issuing the Local Counsel Opinions all of the existing marketing materials
and
disclosure statements in connection with the respective Resort. Moreover, no
other marketing materials and disclosure statements exist except for those
provided to the respective law firm issuing the Local Counsel
Opinion.
(xxi)
Local
Counsel Opinions.
The
facts regarding Silverleaf, the Resorts, the Timeshare Loans and related matters
set forth or assumed in the Local Counsel Opinions are true and correct in
all
material respects.
(xxii)
Bankruptcy
Opinion.
The
facts regarding Silverleaf, the Purchaser, the Resorts, the Timeshare Loans
and
related matters set forth or assumed in the opinion
issued
by
Mayer, Brown, ▇▇▇▇ & Maw LLP dated as of August 29, 2006 pertaining to
bankruptcy law matters are, and shall continue to be so long as the
Securitization Notes are outstanding, true and correct in all material
respects.
(xxiii)
Custodial
Files.
The
Servicer shall, on or prior to each Transfer Date, have delivered or caused
the
delivery to the Securitization Custodian a Timeshare Loan File for each
Timeshare Loan, which Timeshare Loan File shall be complete and verified by
the
Securitization Custodian in accordance with the Custodial
Agreement.
(xxiv)
Escrow
Documents.
The
Servicer shall, on or prior to the ninetieth
day following the Closing Date and each Transfer Date, as applicable, deliver
or
cause the delivery to the Securitization Custodian of the following:
(I) with
respect to each Mortgage Loan and pre-July ▇▇▇▇ ▇▇▇ ▇’ Spruce Loan listed on the
Schedule of Prior Secured Party’s Collateral provided by the Seller, an original
recorded Reassignment of Mortgage (which may be a part of a blanket reassignment
of more than one Mortgage Loan or pre-July ▇▇▇▇ ▇▇▇ ▇’ Spruce Loan), showing a
complete chain of title from the Prior Secured Party to Seller to the
Securitization Indenture Trustee on behalf of the Securitization Noteholders
signed
by
an Authorized Officer of the Seller, Purchaser and each intervening party with
evidence of proper recordation or evidence from a third party that submitted
such assignment for recording that such assignment has been submitted for
recordation, (II)(a) with respect to each pre-July ▇▇▇▇ ▇▇▇ ▇’ Spruce Loan
listed on the Schedule of Prior Secured Party’s Collateral provided by the
Seller, a file-stamped Oak N’ Spruce Financing Statement Amendment evidencing
the security interest of the Securitization Indenture Trustee and its assigns
by
naming the Obligor with respect to the related pre-July ▇▇▇▇ ▇▇▇ ▇’ Spruce Loan
as debtor, the Securitization Indenture Trustee on behalf of the Securitization
Noteholders as the secured party/assignee, and “▇▇▇▇▇ Fargo Bank, National
Association as Trustee for UBS Real Estate Securities Inc., as Noteholder,” as
the assignor, and (b) with respect to each post-July ▇▇▇▇ ▇▇▇ ▇’ Spruce Loan
listed on the Schedule of Prior Secured Party’s Oak N’ Spruce Loans provided by
the Seller, a file-stamped Oak N’ Spruce Financing Statement Amendment
evidencing the security interest of the Securitization Indenture Trustee and
its
assigns by naming the Obligor with respect to the related post-July ▇▇▇▇ ▇▇▇
▇’
Spruce Loan as debtor, the Securitization Indenture Trustee on behalf of the
Securitization Noteholders as the secured party/assignee, and “▇▇▇▇▇ Fargo Bank,
National Association as Trustee for UBS Real Estate Securities Inc., as
Noteholder,” as the assignor (or,
in
the alternative, such Oak N’ Spruce Financing Statement Amendment may be in the
form of an electronic spreadsheet submitted to the Custodian directly by a
third
party service company listing the filing number, date of filing, debtor and
secured party and accompanied by a certification of filing by the third party
service company),
and
(III) all other recorded and/or filed documents provided under the Escrow
Agreement.
(xxv)
Prior
Secured Parties’ Documents.
In
accordance with the Escrow Agreement, the Servicer shall deliver or cause the
delivery to the Escrow Agent of the Paydown Letters, Direction Letters, Prior
Secured Party Allonges and any other documents required in respect of the
Seller.
(xxvi)
Title
Policies.
In
accordance with the Escrow Agreement, the Servicer
shall
deliver or cause the delivery of the Title Policies (as defined in the Escrow
Agreement) within 90 days of the Closing Date and each Transfer Date, as
applicable.
(c)
The
Servicer hereby makes the representations and warranties relating to the
Timeshare Loans contained in Schedule I hereto for the benefit of the Purchaser
and its assignees as of the Closing Date (with respect to each Timeshare Loan
transferred on the Closing Date) and as of each Transfer Date (with respect
to
each Qualified Substitute Timeshare Loan transferred on such Transfer Date),
as
applicable.
(d)
It is
understood and agreed that the representations, warranties and covenants set
forth in this Section 5 shall survive the (i) transfer of each Timeshare Loan
to
the Purchaser and (ii) the subsequent pledge of such Timeshare Loans and rights
and remedies hereunder to the Securitization Indenture Trustee on behalf of
the
Securitization Noteholders and shall continue so long as any such Timeshare
Loans shall remain outstanding or until such time as such Timeshare Loans are
repurchased, purchased or a Qualified Substitute Timeshare Loan is provided
pursuant to Section 6 hereof. Each of the Seller and the Servicer acknowledges
that it has been advised that the Purchaser intends to pledge, transfer, assign
and convey all of its right, title and interest in and to each Timeshare Loan
and its rights and remedies under this Agreement to the Securitization Indenture
Trustee on behalf of the Securitization Noteholders. The Seller and the Servicer
agree that, upon any such assignment, the Securitization Indenture Trustee
may
enforce directly, without joinder of the Purchaser (but subject to any defense
that Seller or the Servicer, as applicable, may have under this Agreement)
all
rights and remedies hereunder.
(e)
With
respect to any representations and warranties contained in Section 5 which
are
made to the Servicer’s Knowledge, if it is discovered that any representation
and warranty is inaccurate and such inaccuracy materially and adversely affects
the value of a Timeshare Loan or the interests of the Purchaser or any
subsequent assignee thereof, then notwithstanding such lack of Knowledge of
the
accuracy of such representation and warranty at the time such representation
or
warranty was made (without regard to any Knowledge qualifiers), such inaccuracy
shall be deemed a breach of such representation or warranty for purposes of
the
repurchase or substitution obligations described in Sections 6(a)(i) or (ii)
below.
SECTION
6. Repurchases and Substitutions.
(a)
Mandatory
Repurchases and Substitutions for Breaches of Representations and
Warranties.
Upon
the receipt of notice by the Servicer of a breach of any of its respective
representations and warranties (as of the date on which such representation
or
warranty was made) or covenants in Section 5 which materially and adversely
affects the value of a Timeshare Loan or the interests of the Purchaser or
any
subsequent assignee of the Purchaser therein, the Servicer shall, within 60
days
of receipt of such notice, cure in all material respects the circumstance or
condition which has caused such representation or warranty to be incorrect
or
covenant to be breached or either (i) repurchase the Purchaser’s or its
assignee’s interest in such related defective Timeshare Loan (the “Defective
Timeshare Loan”)
from
the Purchaser or its assignee at the Repurchase Price or (ii) provide one or
more Qualified Substitute Timeshare Loans and pay the related Substitution
Shortfall Amounts, if any.
(b)
Payment
of Repurchase Prices and Substitution Shortfall Amounts.
The
Purchaser hereby directs and the Servicer hereby agrees to remit or cause to
be
remitted all amounts in respect of Repurchase Prices and Substitution Shortfall
Amounts payable during the related Due Period in immediately available funds
to
the Securitization Indenture Trustee to be deposited in the Collection Account
on the related Transfer Date in accordance with the provisions of the
Securitization Indenture. In the event that more than one Timeshare Loan is
substituted pursuant to Section 6(a) hereof on any Transfer Date, the
Substitution Shortfall Amounts and the Loan Balances of Qualified Substitute
Timeshare Loans shall be calculated on an aggregate basis for all substitutions
made on such Transfer Date.
(c)
Schedule
of Timeshare Loans.
The
Purchaser hereby directs and the Servicer hereby agrees, on each date on which
a
Timeshare Loan has been repurchased or substituted to provide the Purchaser
and
the Securitization Indenture Trustee with an electronic supplement to
Schedule
III
hereto
and the Schedule of Timeshare Loans reflecting the removal or substitution
of
such Timeshare Loans and subjecting any Qualified Substitute Timeshare Loans
to
the provisions of this Agreement.
(d)
Qualified
Substitute Timeshare Loans.
On the
related Transfer Date, the Purchaser hereby directs and the Servicer hereby
agrees to deliver or to cause the delivery of the Timeshare Loan Files of the
related Qualified Substitute Timeshare Loans to the Securitization Indenture
Trustee or to the Securitization Custodian, at the direction of the
Securitization Indenture Trustee, on the related Transfer Date in accordance
with the provisions of the Securitization Indenture. As of such related Transfer
Date, the Servicer does hereby transfer, assign, sell and grant to the
Purchaser, without recourse (except as provided in Section 6 and Section 8
hereof), any and all of the Servicer’s right, title and interest in and to (i)
each Qualified Substitute Timeshare Loan conveyed to the Purchaser on such
Transfer Date, (ii) the Receivables in respect of the Qualified Substitute
Timeshare Loans due after the related Cut-Off Date, (iii) the related Timeshare
Loan Documents (excluding any rights as developer or declarant under the
Timeshare Declaration, the Timeshare Program Consumer Documents or the Timeshare
Program Governing Documents), (iv) all Related Security in respect of such
Qualified Substitute Timeshare Loans, and (v) all income, payments, proceeds
and
other benefits and rights related to any of the foregoing. Upon such sale,
the
ownership of each Qualified Substitute Timeshare Loan and all collections
allocable to principal and
interest
thereon since the related Cut-Off Date and all other property interests or
rights conveyed pursuant to and referenced in this Section 6(d) shall
immediately vest in the Purchaser, its successors and assigns. The Servicer
shall not take any action inconsistent with such ownership nor claim any
ownership interest in any Qualified Substitute Timeshare Loan for any purpose
whatsoever other than consolidated financial and federal and state income tax
reporting. The Servicer agrees that such Qualified Substitute Timeshare Loans
shall be subject to the provisions of this Agreement.
(e)
Officer’s
Certificate.
The
Servicer shall, on each related Transfer Date, certify in writing to the
Purchaser and the Securitization Indenture Trustee that each new Timeshare
Loan
meets all the criteria of the definition of “Qualified Substitute Timeshare
Loan” and that (i) the Timeshare Loan Files for such Qualified Substitute
Timeshare Loans have been delivered to the Securitization Custodian, and (ii)
the Timeshare Loan Servicing Files for such Qualified Substitute Timeshare
Loans
have been delivered to the Servicer.
(f)
Release.
In
connection with any repurchase or substitution of one or more Timeshare Loans
contemplated by this Section 6, upon satisfaction of the conditions contained
in
this Section 6, the Purchaser and the Securitization Indenture Trustee shall
execute and deliver or shall cause the execution and delivery of such releases
and instruments of transfer or assignment presented to it by the Servicer,
in
each case, without recourse, as shall be necessary to vest in the Servicer
or
its designee (or to evidence the vesting in such Person of) the legal and
beneficial ownership of such released Timeshare Loans. The Purchaser shall
cause
the Securitization Indenture Trustee to cause the Securitization Custodian
to
release the related Timeshare Loan Files to Servicer or its designee and the
Servicer to release the related Timeshare Loan Servicing Files to itself or
its
designee.
(g)
Sole
Remedy.
It is
understood and agreed that the obligations of the Servicer contained in Section
6(a) to cure a material breach, or to repurchase or substitute related Defective
Timeshare Loans and the obligation of the Servicer to indemnify pursuant to
Section 8 shall constitute the sole remedies available to the Purchaser or
its
subsequent assignees for the breaches of any of its representations or
warranties of the Servicer contained in Section 5, and such remedies are not
intended to and do not constitute “credit recourse” to the
Servicer.
SECTION
7. Additional
Covenants of the Seller and the Servicer.
(a)
The
Seller hereby covenants and agrees with the Purchaser as follows:
(i)
It
shall comply with all applicable laws, rules, regulations and orders applicable
to it and its business and properties except where the failure to comply will
not have a material adverse effect on its business or its ability to perform
its
obligations under this Agreement or any other Transaction Document to which
it
is a party or under the transactions contemplated hereunder or thereunder or
the
validity or enforceability of the Timeshare Loans.
(ii)
It
shall preserve and maintain for itself its existence (corporate or otherwise),
rights, franchises and privileges in the jurisdiction of its organization and
except where
the
failure to so preserve and maintain will not have a material adverse effect
on
its business or its ability to perform its obligations under this Agreement
or
any other Transaction Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity of enforceability of the
Timeshare Loans.
(iii)
On
or prior to the Closing Date, it shall indicate in its and any applicable
Affiliate’s computer files and other records that each Timeshare Loan has been
sold to the Purchaser.
(iv)
It
shall respond to any inquiries with respect to ownership of a Timeshare Loan
by
stating that such Timeshare Loan has been sold to the Purchaser and that the
Purchaser is the owner of such Timeshare Loan.
(v)
On or
prior to the Closing Date, it shall file or cause to be filed, at its expense,
financing statements in favor of the Purchaser and the Securitization Indenture
Trustee on behalf of the Securitization Noteholders, with respect to the
Timeshare Loans transferred hereunder, in the form and manner reasonably
requested by the Purchaser. It shall deliver file-stamped copies of such
financing statements to the Purchaser and the Securitization Indenture Trustee
on behalf of the Securitization Noteholders.
(vi)
It
agrees from time to time, at its expense, promptly to execute and deliver all
further instruments and documents, and to take all further actions, that may
be
necessary, or that the Purchaser or the Securitization Indenture Trustee may
reasonably request, to perfect, protect or more fully evidence the sale of
the
Timeshare Loans, or to enable the Purchaser or the Securitization Indenture
Trustee to exercise and enforce its rights and remedies hereunder or under
any
Timeshare Loan including, but not limited to, powers of attorney, UCC financing
statements and assignments of mortgage.
(vii)
Any
change in the legal name of the Seller and any use by it of any tradename,
fictitious name, assumed name or “doing business as” name occurring after the
Closing Date shall be promptly disclosed to the Purchaser and the Securitization
Indenture Trustee in writing.
(viii)
Upon the discovery or receipt of notice by a Responsible Officer of the Seller
of a breach of any of its representations or warranties and covenants contained
herein, the Seller shall promptly disclose to the Purchaser and the
Securitization Indenture Trustee, in reasonable detail, the nature of such
breach.
(ix)
In
the event that the Seller shall receive any payments in respect of a Timeshare
Loan after the Closing Date or Transfer Date, as applicable (including any
insurance proceeds that are not payable to the related Obligor), it shall,
within two (2) Business Days of receipt, transfer or cause to be transferred,
such payments to the Lockbox Account.
(x)
The
Seller will keep its principal place of business and chief executive office
and
the office where it keeps its records concerning the Timeshare Loans at the
address of the Seller listed herein.
(xi)
In
the event that the Seller or the Purchaser or any assignee of the Purchaser
should receive actual notice of any transfer taxes arising out of the transfer,
assignment and conveyance of a Timeshare Loan from the Seller to the Purchaser,
on written demand by the Purchaser, or upon the Seller otherwise being given
notice thereof, the Seller shall pay, and otherwise indemnify and hold the
Purchaser, and any subsequent assignee harmless, on an after-tax basis, from
and
against any and all such transfer taxes.
(xii)
The
Seller authorizes the Purchaser and the Securitization Indenture Trustee to
file
continuation statements, and amendments thereto, relating to the Timeshare
Loans
and all payments made with regard to the related Timeshare Loans without the
signature of the Seller where permitted by law. A photocopy or other
reproduction of this Agreement shall be sufficient as a financing statement
where permitted by law. The Purchaser confirms that it is not its present
intention to file a photocopy or other reproduction of this Agreement as a
financing statement, but reserves the right to do so if, in its good faith
determination, there is at such time no reasonable alternative remaining to
it.
(xiii)
The Seller shall not prepare any financial statements or other statements
(including any tax filings) which shall account for the transactions
contemplated by this Agreement in any manner other than as the sale of the
Timeshare Loans, Timeshare Properties, Related Security and other conveyed
property related thereto and additional collateral by the Seller to the
Purchaser.
(b)
The
Servicer hereby covenants and agrees with the Purchaser as follows:
(i)
It
shall comply with all applicable laws, rules, regulations and orders applicable
to it and its business and properties except where the failure to comply will
not have a material adverse effect on its business or its ability to perform
its
obligations under this Agreement or any other Transaction Document to which
it
is a party or under the transactions contemplated hereunder or thereunder or
the
validity or enforceability of the Timeshare Loans.
(ii)
It
shall preserve and maintain for itself its existence (corporate or otherwise),
rights, franchises and privileges in the jurisdiction of its organization and
except where the failure to so preserve and maintain will not have a material
adverse effect on its business or its ability to perform its obligations under
this Agreement or any other Transaction Document to which it is a party or
under
the transactions contemplated hereunder or thereunder or the validity of
enforceability of the Timeshare Loans.
(iii)
On
or prior to the Closing Date or a Transfer Date, as applicable, it shall
indicate in its and any applicable Affiliate’s computer files and other records
that each Timeshare Loan has been sold to the Purchaser.
(iv)
It
shall respond to any inquiries with respect to ownership of a Timeshare Loan
by
stating that such Timeshare Loan has been sold to the Purchaser and that the
Purchaser is the owner of such Timeshare Loan.
(v)
It
agrees from time to time, at its expense, promptly to execute and
deliver
all
further instruments and documents, and to take all further actions, that may
be
necessary, or that the Purchaser or the Securitization Indenture Trustee may
reasonably request, to perfect, protect or more fully evidence the sale of
the
Timeshare Loans, or to enable the Purchaser or the Securitization Indenture
Trustee to exercise and enforce its rights and remedies hereunder or under
any
Timeshare Loan including, but not limited to, powers of attorney, UCC financing
statements and assignments of mortgage.
(vi)
Upon
the discovery or receipt of notice by a Responsible Officer of the Servicer
of a
breach of any of its representations or warranties and covenants contained
herein, the Servicer shall promptly disclose to the Purchaser and the
Securitization Indenture Trustee, in reasonable detail, the nature of such
breach.
(vii)
In
the event that the Servicer shall receive any payments in respect of a Timeshare
Loan after the Closing Date or Transfer Date, as applicable (including any
insurance proceeds that are not payable to the related Obligor), it shall,
within two (2) Business Days of receipt, transfer or cause to be transferred,
such payments to the Lockbox Account.
(viii)
In
the event that the Servicer or the Purchaser or any assignee of the Purchaser
should receive actual notice of any transfer taxes arising out of the transfer,
assignment and conveyance of a Timeshare Loan from the Servicer to the
Purchaser, on written demand by the Purchaser, or upon the Servicer otherwise
being given notice thereof, the Servicer shall pay, and otherwise indemnify
and
hold the Purchaser, and any subsequent assignee harmless, on an after-tax basis,
from and against any and all such transfer taxes.
(ix)
The
Servicer authorizes the Purchaser and the Securitization Indenture Trustee
to
file continuation statements, and amendments thereto, relating to the Timeshare
Loans and all payments made with regard to the related Timeshare Loans without
the signature of the Servicer where permitted by law. A photocopy or other
reproduction of this Agreement shall be sufficient as a financing statement
where permitted by law. The Purchaser confirms that it is not its present
intention to file a photocopy or other reproduction of this Agreement as a
financing statement, but reserves the right to do so if, in its good faith
determination, there is at such time no reasonable alternative remaining to
it.
(x)
The
Servicer shall not prepare any financial statements or other statements
(including any tax filings) which shall account for the transactions
contemplated by this Agreement in any manner other than as the sale of the
Timeshare Loans, Timeshare Properties, Related Security and other conveyed
property related thereto and additional collateral by the Seller to the
Purchaser and the substitution of the Qualified Substitute Timeshare Loans
by
the Servicer.
SECTION
8. Indemnification.
(a)
(i) The
Seller hereby agrees to indemnify the Purchaser, the Securitization Indenture
Trustee, the Securitization Noteholders and the Initial Purchaser
(collectively,
the “Indemnified
Parties”)
against any and all claims, losses or liabilities (including reasonable legal
fees and related costs) that the Purchaser, the Securitization Indenture
Trustee, the Securitization Noteholders or the Initial Purchaser may sustain
directly related to any breach of the representations and warranties and
covenants of the Seller under Section 5 hereof (the “Seller
Indemnified Amounts”) excluding,
however (A) Seller Indemnified Amounts to the extent resulting from the gross
negligence or willful misconduct on the part of such Indemnified Party; (B)
any
recourse for any uncollectible Timeshare Loan not related to a breach of
representation or warranty; or (C) income or similar taxes by such Indemnified
Party arising out of or as a result of this Agreement or the transfer of the
Timeshare Loans.
(ii)
The
Servicer hereby agrees to indemnify the Indemnified Parties against any and
all
claims, losses or liabilities (including reasonable legal fees and related
costs) that the Purchaser, the Securitization Indenture Trustee, the
Securitization Noteholders or the Initial Purchaser may sustain directly related
to any breach of the representations and warranties and covenants of the
Servicer under Section 5 hereof (the “Servicer
Indemnified Amounts”) excluding,
however (A) Servicer Indemnified Amounts to the extent resulting from the gross
negligence or willful misconduct on the part of such Indemnified Party; (B)
any
recourse for any uncollectible Timeshare Loan not related to a breach of
representation or warranty; (C) recourse to the Servicer for a related Defective
Timeshare Loan so long as the same is cured, substituted or repurchased pursuant
to Section 6 hereof; or (D) income or similar taxes by such Indemnified Party
arising out of or as a result of this Agreement or the transfer of the Timeshare
Loans.
(iii)
The
parties hereto shall (A) promptly notify the other parties hereto, the
Securitization Indenture Trustee, and the Initial Purchaser if a claim is made
by a third party with respect to this Agreement or the Timeshare Loans, and
relating to (1) the failure by the Seller or the Servicer, as applicable, to
perform its duties in accordance with the terms of this Agreement or (2) a
breach of the Seller’s or the Servicer’s representations, covenants or
warranties contained in this Agreement, (B) assume (with the consent of the
Purchaser, the Securitization Indenture Trustee, the Securitization Noteholders
or the Initial Purchaser, as applicable, which consent shall not be unreasonably
withheld) the defense of any such claim and pay all expenses in connection
therewith, including legal counsel fees and (C) promptly pay, discharge and
satisfy any judgment, order or decree which may be entered against it or the
Purchaser, the Securitization Indenture Trustee, the Securitization Noteholders
or the Initial Purchaser in respect of such claim. If the Seller or the Servicer
shall have made any indemnity payment pursuant to this Section 8 and the
recipient thereafter collects from another Person any amount relating to the
matters covered by the foregoing indemnity, the recipient shall promptly repay
such amount to the Seller or the Servicer, as applicable.
(b)
The
obligations of each of the Seller and the Servicer under this Section 8 to
indemnify the Purchaser, the Securitization Indenture Trustee, the
Securitization Noteholders and the Initial Purchaser shall survive the
termination of this Agreement and continue until the Notes are paid in full
or
otherwise released or discharged.
SECTION
9. No
Proceedings.
Each of
the Seller and Servicer hereby agrees that
it
will
not, directly or indirectly, institute, or cause to be instituted, or join
any
Person in instituting, against the Purchaser or any Association, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law so long as
there shall not have elapsed one year plus one day since the latest maturing
Securitization Notes issued by the Purchaser. The Purchaser hereby agrees that
it will not, directly or indirectly, institute, or cause to be instituted,
or
join any Person in instituting, against the Seller any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law so long as
there shall not have elapsed one year plus one day since the latest maturing
Securitization Notes issued by the Purchaser.
SECTION
10. Notices,
Etc.
All
notices and other communications provided for hereunder shall, unless otherwise
stated herein, be in writing and mailed or telecommunicated, or delivered as
to
each party hereto, at its address set forth below or at such other address
as
shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall not be effective until
received by the party to whom such notice or communication is
addressed.
Seller
Silverleaf
Finance IV, LLC
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Chief Financial Officer
Telecopier:
▇▇▇-▇▇▇-▇▇▇▇
Servicer
Silverleaf
Resorts, Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇, Chief Executive Officer
Telecopier:
▇▇▇-▇▇▇-▇▇▇▇
Purchaser
Silverleaf
Finance V, L.P.
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Chief Financial Officer
Telecopier:
▇▇▇-▇▇▇-▇▇▇▇
SECTION
11. No
Waiver; Remedies.
No
failure on the part of the Purchaser, the Securitization Indenture Trustee
or
any assignee thereof to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any other remedies provided by law.
SECTION
12. Binding
Effect; Assignability.
This
Agreement shall be binding upon and inure to the benefit of the Seller, the
Servicer, the Purchaser and their respective successors and assigns. Any
assignee shall be an express third party beneficiary of this Agreement, entitled
to directly enforce this Agreement. Each of the Seller and the Servicer may
not
assign any of its rights and obligations hereunder or any interest herein
without the prior written consent of the Purchaser and any assignee thereof.
The
Purchaser may, and intends to, assign all of its rights to the Securitization
Indenture Trustee on behalf of the Securitization Noteholders, and each of
the
Seller and the Servicer consents to any such assignments. This Agreement shall
create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until
its
termination; provided, however, that the rights and remedies with respect to
any
breach of any representation and warranty made by the Seller or the Servicer
pursuant to Section 5, and the cure, repurchase or substitution and
indemnification obligations shall be continuing and shall survive any
termination of this Agreement and the resignation or termination of the Servicer
pursuant to the Securitization Indenture, but such rights and remedies may
be
enforced only by the Purchaser and the Securitization Indenture
Trustee.
SECTION
13. Amendments;
Consents and Waivers.
No
modification, amendment or waiver of, or with respect to, any provision of
this
Agreement, and all other agreements, instruments and documents delivered
thereto, nor consent to any departure by the Seller or the Servicer from any
of
the terms or conditions thereof shall be effective unless it shall be in writing
and signed by each of the parties hereto, the written consent of the
Securitization Indenture Trustee on behalf of the Securitization Noteholders
is
given and confirmation from the Rating Agencies that such action will not result
in a downgrade, withdrawal or qualification of any rating assigned to a Class
of
Notes is received. The Purchaser shall provide or cause to be provided to the
Securitization Indenture Trustee and the Rating Agencies any such proposed
modifications, amendments or waivers. Any waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No consent
to
or demand by the Seller or Servicer in any case shall, in itself, entitle it
to
any other consent or further notice or demand in similar or other circumstances.
Each of the Seller and the Servicer acknowledges that in connection with the
intended assignment by the Purchaser of all of its right, title and interest
in
and to each Timeshare Loan to the Securitization Indenture Trustee on behalf
of
the Securitization Noteholders, the Purchaser intends to issue the Notes, the
proceeds of which will be used by the Purchaser, in part, to purchase the
Timeshare Loans hereunder.
SECTION
14. Severability.
In case
any provision in or obligation under this Agreement shall be invalid, illegal
or
unenforceable in any jurisdiction, the validity, legality and enforceability
of
the remaining provisions or obligations, or of such provision or obligation,
shall not in any way be affected or impaired thereby in any other jurisdiction.
Without limiting the generality of the foregoing, in the event that a
Governmental Authority determines that the Purchaser may not purchase or acquire
Timeshare Loans, the transactions evidenced hereby shall constitute a loan
and
not a purchase and sale, notwithstanding the otherwise applicable intent of
the
parties hereto, and the Seller shall be deemed to have granted to the Purchaser
as of the date hereof, a first priority perfected security interest in all
of
the Seller’s right, title and interest in, to and under such Timeshare Loans and
the related property as described in Section 2 hereof.
SECTION
15. GOVERNING
LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL.
(A)
THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF
THE STATE OF NEW YORK WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF
LAW.
(B)
THE
PARTIES TO THIS AGREEMENT HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
THE
COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED
IN
THE BOROUGH OF MANHATTAN IN NEW YORK CITY AND EACH WAIVES PERSONAL SERVICE
OF
ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE
MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH ON THE SIGNATURE
PAGE
HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER
THE
SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE PARTIES
HERETO EACH WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING IN THIS SECTION 15 SHALL AFFECT THE RIGHT OF THE PARTIES TO
THIS
AGREEMENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
THE RIGHT OF ANY OF THEM TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF
ANY
OTHER JURISDICTION.
(C)
THE
SELLER, SERVICER AND PURCHASER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF
ANY
ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY
TO
THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO
THIS
AGREEMENT. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY THE SELLER, SERVICER AND PURCHASER AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO TRIAL BY
JURY
WOULD OTHERWISE ACCRUE OR EXIST. THE SELLER, SERVICER AND PURCHASER ARE HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY THE SELLER, SERVICER AND PURCHASER.
SECTION
16. Heading.
The
headings herein are for purposes of reference only and shall not otherwise
affect the meaning or interpretation of any provision hereof.
SECTION
17. Execution
in Counterparts.
This
Agreement may be executed by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and both of which
when taken together shall constitute one and the same agreement.
SECTION
18. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by
their respective officers thereunto duty authorized, as of the date first above
written.
Very
truly yours,
SILVERLEAF
FINANCE IV, LLC, as Seller
|
By:
|
/S/
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
|
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. |
|
Title:
|
Vice
President, Treasurer and Chief Financial
Officer
|
SILVERLEAF
FINANCE V, L.P., as Purchaser
| By: |
SILVERLEAF
FINANCE V, LLC,
its
general partner
|
| By: |
/S/
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
|
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. |
| Title: | Vice President, Treasurer and Chief Financial Officer |
SILVERLEAF
RESORTS, INC., as Servicer
|
By:
|
/S/
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
|
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. |
|
Title:
|
CFO
|
[Signature
Page to the Loan Sale Agreement]
List
of
Exhibits and Schedules to Agreement Not Filed Herewith:
Schedule
I
Appendix
A—Standard Definitions
Schedule
II—Exceptions
Schedule
II—Schedule of Timeshare Loans
Exhibit
A—ACH Form