Ex. 10.50
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
(Inventory Loan)
between
SILVERLEAF RESORTS, INC.
(as Borrower)
and
TEXTRON FINANCIAL CORPORATION
(as Lender)
As of March 5, 2004
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
(INVENTORY LOAN)
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of March 5,
2004, entered into by SILVERLEAF RESORTS, INC., a Texas corporation, (as
"Borrower"), and TEXTRON FINANCIAL CORPORATION, a Delaware corporation as
("Lender").
WITNESSETH:
WHEREAS, Borrower is engaged in the business of acquiring, constructing,
developing, owning, managing, selling and otherwise dealing with Intervals at
the Resorts (as each such term is hereafter defined);
WHEREAS, Lender and Borrower are parties to that certain Loan and Security
Agreement, dated as of December 16, 1999, as amended by that certain First
Amendment to Loan and Security Agreement, dated as of April 17, 2001, as further
amended by that certain Second Amendment to Loan and Security Agreement, dated
as of April 30, 2002, as further amended by that certain Letter Amendment, dated
as of March 27, 2003, and as further amended by that certain Third Amendment to
Loan and Security Agreement (Inventory Loan), dated as of December 19, 2003
(collectively, the "ORIGINAL LOAN AGREEMENT").
WHEREAS, pursuant to the Original Loan Agreement, Lender agreed, subject to the
terms and conditions of the Original Loan Agreement, to provide to Borrower, for
the purpose of providing liquidity in connection with Borrower's ownership,
purchase and warehousing of Intervals (as such term is hereinafter defined), a
loan in the maximum amount of $10,000,000 (the "EXISTING INVENTORY LOAN"), which
loan is evidenced by Borrower's Amended and Restated Secured Promissory Note,
dated as of December 16, 1999 (the "EXISTING NOTE");
WHEREAS, Borrower has requested and Lender has agreed, subject to the terms and
conditions herein, that Lender make an additional inventory loan to Borrower in
the maximum amount of $8,000,000 (the "NEW INVENTORY LOAN") for the purpose of
repaying in full the ▇▇▇▇▇▇ Inventory Loan and providing additional liquidity to
Borrower for the Inventory; and
WHEREAS, Borrower and Lender have agreed to enter into this Agreement amending
and restating the Original Loan Agreement to provide for, among other things,
the New Inventory Loan.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which are acknowledged, the parties hereto, intending to
be legally bound, agree to amend and restate the Original Loan Agreement in its
entirety as follows:
SECTION 1 -- DEFINITION OF TERMS
1.1 Capitalized terms used in this Agreement are defined in this
Section 1.1. The definitions include the singular and plural forms of the terms
defined.
(a) ADDITIONAL CREDIT FACILITY. The term "Additional
Credit Facility" shall mean that certain $10,200,000 credit facility provided by
Lender to Borrower pursuant to that certain Loan and Security Agreement dated
April 17, 2001 by and between Borrower and Lender, as amended by the First
Amendment to Loan and Security Agreement dated April 30, 2002, as further
amended by Letter Amendment dated as of March 27, 2003, as further amended by
Second Amendment to Loan and Security Agreement dated as of December 19, 2003,
as further amended by Letter Amendment dated of even date herewith and as may
hereafter be further amended from time to time (the "ADDITIONAL CREDIT LOAN
AGREEMENT")."
(b) ADDITIONAL ELIGIBLE RESORTS or ADDITIONAL ELIGIBLE
RESORT. The terms "Additional Eligible Resorts" and "Additional Eligible Resort"
shall have the meanings ascribed to such terms in Section 3.4 hereof.
(c) ADDITIONAL RESORT COLLATERAL. The term "Additional
Resort Collateral" shall mean singly and collectively, the development rights,
real property, fixtures and other personal property, including all management
agreements for the Resorts, now owned or hereafter acquired by Borrower and
described on Schedule 1.1(c). "Additional Resort Collateral" shall not include
the promissory notes and other property of Silverleaf Finance I, Inc., that
constitute "Pledged Assets" under the DZ Documents or the promissory notes and
other property of Silverleaf Finance II, Inc. that constitute "conveyed assets"
or collateral under the Silverleaf Finance II Documents.
(d) ADDITIONAL RESORT COLLATERAL MORTGAGES. A properly
recorded, first priority mortgage, deed of trust, deed to secure debt or other
security instrument, as applicable, executed and delivered by the Borrower to
Lender, encumbering all of the right, title and interest of Borrower in that
portion of the Additional Resort Collateral constituting real property.
(e) ADDITIONAL RESORT COLLATERAL ASSIGNMENTS. The term
"Additional Resort Collateral Assignments" shall mean singly and collectively:
(i) a first priority security agreement executed and delivered by Borrower to
Lender granting to Lender, a first priority security interest in that portion of
the Additional Resort Collateral constituting personal property, and (ii) a
first priority security agreement executed and delivered by Borrower to Lender,
granting to Lender, a first priority security interest in that portion of the
Additional Resort Collateral constituting development rights.
(f) ADVANCE. A portion of the proceeds of the Loan
advanced by the Lender to the Borrower in accordance with the terms of this
Agreement.
(g) AFFILIATE. Any party controlled by, controlling, or
under common control with, the Borrower.
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(h) AGREEMENT. This Amended and Restated Loan and
Security Agreement (including the Exhibits and Schedules to it), as may
hereafter be amended from time to time, by and between Borrower and Lender.
(i) ASSIGNMENT OF MANAGEMENT AGREEMENTS. The term
"Assignment of Management Agreements" shall mean the assignment, in the form
attached hereto as Exhibit A, by Borrower to Lender, as may hereafter be amended
from time to time, assigning all of Borrower's rights under each management
agreement for the Resorts.
(j) BOND HOLDER EXCHANGE TRANSACTION. The term "Bond
Holder Exchange Transaction" shall mean that certain senior subordinate note
holder exchange transaction on the terms and conditions outlined in that certain
term sheet dated October 19, 2001 (the "BOND HOLDER EXCHANGE TRANSACTION
LETTER"), a copy of which is attached hereto as Exhibit E, and which is
evidenced by the documents listed on Schedule 1.1(j) hereto, as may hereafter be
amended from time to time, (the "BOND HOLDER EXCHANGE DOCUMENTS").
(k) BUSINESS DAY. Each day that is not a Saturday, a
Sunday or a legal holiday under the laws of the State of Rhode Island, the State
of Connecticut or the State of Texas.
(l) BUSINESS PLAN. The term "Business Plan" shall mean
the five (5) year "Stand Alone" business plan prepared by Borrower and attached
hereto as Exhibit F. The Business Plan includes the "Impact on Lenders
Worksheet" setting forth the amounts to be advanced by the Lender, ▇▇▇▇▇▇ and
Sovereign pursuant to their respective credit facilities (the "SENIOR LENDER
ADVANCE SCHEDULE")."
(m) CASH AND CASH EQUIVALENTS. Unrestricted (i) cash;
(ii) marketable direct obligations issued or unconditionally guaranteed by the
United States government and backed by the full faith and credit of the United
States government; and (iii) domestic and Eurodollar certificates of deposit and
time deposits, bankers' acceptances and floating rate certificates of deposit
issued by any commercial bank organized under the laws of the United States, any
state thereof, the District of Columbia, any foreign bank, or its branches or
agencies (fully protected against currency fluctuations), which, at the time of
acquisition, are rated A-1 (or better) by Standard & Poor's Rating Group or P-1
(or better) by ▇▇▇▇▇'▇ Investor Service, Inc. provided that the maturities of
such Cash and Cash Equivalents shall not exceed one year.
(n) CLOSING DATE. The date of this Agreement.
(o) CODE. The Uniform Commercial Code in force in the
State of Rhode Island as amended from time to time.
(p) COLLATERAL. Collectively, all now owned or hereafter
acquired right, title and interest of Borrower, in all of the following:
(i) the Inventory;
(ii) Documents, instruments, accounts, chattel
paper, and general intangibles relating to the Inventory;
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(iii) Pledged Notes Receivable (including all
Notes Receivable comprising the Ineligible Notes Portfolio)
and all proceeds of or from them;
(iv) the mortgages securing such Pledged Notes
Receivable and all proceeds of or from them;
(v) Documents, instruments, accounts, chattel
paper, and general intangibles relating to the Pledged Notes
Receivable, (including any relating to the Ineligible Note
Portfolio) and the mortgages securing such Pledged Notes
Receivable;
(vi) the Land;
(vii) the Additional Resort Collateral;
(viii) the Silverleaf Finance I, Inc. Stock;
(ix) the Standby Servicing Agreement;
(x) the Standby Management Agreement;
(xi) all collateral under the Additional Credit
Facility, the Sovereign Facility and the Existing Credit
Facilities, as each such term is herein defined;
(xii) the Silverleaf Finance II Stock;
(xiii) the Silverleaf Finance II Subordinated Note;
(xiv) all books, records, reports, computer tapes,
disks and software relating to the Collateral; and
(xv) all extensions, additions, improvements,
betterments, renewals, substitutions and replacements of, for
or to any of the Collateral, wherever located, together with
the products, proceeds, issues, rents and profits thereof, and
any replacements, additions or accessions thereto or
substitutions thereof."
(q) COMMITMENT FEE. Collectively: (a) The commitment fee
for the Existing Inventory Loan in the amount of $100,000, that has been paid by
Borrower in accordance with the terms of Section 2.6(a) hereof; and (b) the
commitment fee for the New Inventory Loan in the amount of $80,000, that is to
be paid in accordance with the terms of Section 2.6(b) hereof.
(r) COMMON ELEMENTS. All common elements, including but
not limited to any limited common elements, as each such common element is
defined or provided for in the Declaration or other Timeshare Documents.
(s) DEBTOR RELIEF LAWS. Any applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization or similar law, proceeding or
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device providing for the relief of debtors from time to time in effect and
generally affecting the rights of creditors.
(t) DECLARATION OR DECLARATIONS. With respect to each
Resort, the applicable Declaration or Declarations described on Schedule 1.1(t)
attached hereto.
(u) DEFAULT. An event or condition the occurrence of
which immediately is or, with a lapse of time, the giving of notice or both,
becomes an Event of Default.
(v) DEFAULT RATE. The term "Default Rate" shall have the
meaning ascribed to such term in the Note.
(w) DIVISION OR COMMISSION. The governmental authority of
each state in which a Resort is located, having jurisdiction over the
establishment and operation of the Resort in question and the sale of Intervals
at such Resort.
(x) DZ FACILITY. The term "DZ Facility" shall mean that
certain note purchase facility to be provided by DZ Bank AG Deutsche Zentral
Genossenschaftsbank, as agent for Autobahn Funding Company, LLC ("DZ") to
Borrower, on the terms outlined in the DZ Letter Agreement, dated December 12,
2001, as supplemented by that certain letter agreement by and between Borrower
and DZ dated February 7, 2002, attached hereto as Exhibit G (collectively, the
"DZ LETTER AGREEMENT") and evidenced by the documents listed on Schedule 1.1(x)
hereto, as may hereafter be amended from time to time (the "DZ DOCUMENTS")."
(y) EBITDA. The term EBITDA means, with respect to any
Person for any period, (a) the sum of (i) net income (but excluding any
extraordinary gains or losses or any gains or losses from the sale or
disposition of assets other than in the ordinary course of business), (ii)
interest expense, (iii) depreciation and amortization and other non-cash items
properly deducted in determining net income, and (iv) federal, state and local
income taxes, in each case for such Person for such period, computed and
calculated in accordance with GAAP minus (b) non-cash items properly added in
determining net income, in each case for the corresponding period.
(z) ENVIRONMENTAL LAWS. Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to time
("CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended from
time to time ("RCRA"), the Superfund Amendments and Reauthorization Act of 1986,
as amended, the federal Clean Air Act, the federal Clean Water Act, the federal
Safe Drinking Water Act, the federal Toxic Substances Control Act, the federal
Hazardous Materials Transportation Act, the federal Emergency Planning and
Community Right to Know Act of 1986, the federal Endangered Species Act, the
federal Occupational Safety and Health Act of 1970, the federal Water Pollution
Control Act, all state and local environmental laws, rules and regulations of
each state in which a Resort or any of the Land is located, as all of the
foregoing legislation may be amended from time to time, and any regulations
promulgated pursuant to the foregoing; together with any similar local, state or
federal laws, rules, ordinances or regulations either in existence as of the
date hereof, or enacted or promulgated after the date of this Agreement, that
concern the management, control, storage, discharge, treatment, containment,
removal and/or transport of
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Hazardous Materials or other substances that are or may become a threat to
public health or the environment; together with any common law theory involving
Hazardous Materials or substances which are (or alleged to be) hazardous to
human health or the environment, based on nuisance, trespass, negligence, strict
liability or other tortious conduct, or any other federal, state or local
statute, regulation, rule, policy, or determination pertaining to health,
hygiene, the environment or environmental conditions.
(aa) ENVIRONMENTAL INDEMNIFICATION AGREEMENT. The term
"Environmental Indemnification Agreement" shall mean the Environmental
Indemnification Agreement, in the form attached as Exhibit A, to be made by the
Borrower to the Lender pursuant to this Agreement, as the same may hereafter be
amended from time to time.
(bb) EURODOLLAR BUSINESS DAY. Eurodollar Business Day
shall mean any day on which commercial banks are open for international business
(including dealings in dollar deposits) in London, England.
(cc) EVENT OF DEFAULT. The term "Event of Default" shall
have the meaning given to such term in Section 8.1 of this Agreement.
(dd) EXISTING CREDIT FACILITIES. The term "Existing Credit
Facilities" shall mean singly and collectively: (i) that certain $75,000,000
credit facility provided by Lender to Borrower pursuant to that certain Amended
and Restated Loan, Security and Agency Agreement dated as of April 30, 2002, as
amended by Letter Amendment dated as of March 27, 2003, as further amended by
First Amendment to Amended and Restated Loan, Security and Agency Agreement
dated as of December 19, 2003, as further amended by Letter Amendment dated of
even date herewith and as may hereafter be further amended from time to time
(collectively the "TRANCHE A LOAN AGREEMENT") and (ii) that certain $71,000,000
credit facility provided by Lender to Borrower pursuant to that certain Amended
and Restated Loan, Security and Agency Agreement dated as of April 30, 2002, as
amended by Letter Amendment dated as of March 27, 2003, as further amended by
First Amendment to Amended and Restated Loan, Security and Agency Agreement
dated as of December 19, 2003, as further amended by Letter Amendment dated of
even date herewith and as may hereafter be further amended from time to time
(collectively the "TRANCHE B LOAN AGREEMENT").
(ee) EXISTING INVENTORY LOAN. The "Existing Inventory
Loan" means that certain $10,000,000 credit facility provided by Lender to
Borrower pursuant to the Original Loan Agreement and this Agreement and
evidenced by the Existing Inventory Loan Note.
(ff) EXISTING INVENTORY LOAN NOTE. The term "Existing
Inventory Loan Note" shall mean that certain Amended and Restated Secured
Promissory Note dated April 30, 2003 made by Borrower to lender to evidence the
Existing Inventory Loan in the maximum principal amount of $10,000,000, as may
hereafter be amended from time to time.
(gg) INTENTIONALLY OMITTED.
(hh) INTENTIONALLY OMITTED.
(ii) INTENTIONALLY OMITTED.
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(jj) INTENTIONALLY OMITTED.
(kk) INTENTIONALLY OMITTED.
(ll) FINAL MATURITY DATE. March 31, 2007.
(mm) FINANCIAL STATEMENTS. The tax returns and balance
sheets and statements of income and expense of the Borrower, and the related
notes and schedules delivered by Borrower to Lender prior to the Closing Date
and provided for in Section 4.5(c)(xvii) of this Agreement; and the monthly,
quarterly and annual financial statements and reports required to be provided to
Lender pursuant to Section 7.1(h)
(nn) INTENTIONALLY OMITTED.
(oo) INTENTIONALLY OMITTED.
(pp) GAAP. Generally accepted accounting principles,
applied on a consistent basis, as described in Opinions of the Accounting
Principles Board of the American Institute of Certified Public Accountants
and/or in statements of the Financial Accounting Standards Board which are
applicable in the circumstances as of the date in question
(qq) HAZARDOUS MATERIALS. "Hazardous substances,"
"hazardous waste" or "hazardous constituents," "toxic substances", or "solid
waste", as defined in the Environmental Laws, and any other contaminant or any
material, waste or substance which is petroleum or petroleum based, asbestos,
polychlorinated biphenyls, flammable explosives, or radioactive materials.
(rr) ▇▇▇▇▇▇ FACILITY. The term "▇▇▇▇▇▇ Facility" shall
mean that certain credit facility provided by ▇▇▇▇▇▇ Financial Corporation
("▇▇▇▇▇▇") to Borrower pursuant to the documents listed on Schedule 1.1 (rr)
hereto, as may hereafter be amended from time to time, (the "▇▇▇▇▇▇ DOCUMENTS").
(ss) INELIGIBLE NOTE PORTFOLIO. The term "Ineligible Note
Portfolio" shall mean certain of Borrower's Notes Receivable and mortgages
securing such Notes Receivable that are not currently pledged to any other
Person, that are listed in Exhibit D attached hereto and that shall be held by
Borrower, as agent for and on behalf of Lender, unless and until an Event of
Default shall occur, in which case the Ineligible Note Portfolio shall be
delivered to Lender in accordance with Section 3.7 hereof.
(tt) INTEREST RATE. The Interest Rate on the Existing
Inventory Loan Note shall be a variable rate, adjusted as of each LIBOR
Determination Date, equal to the sum of LIBOR, determined as of each LIBOR
Determination Date, plus three and one-quarter percent (3.25%) per annum. The
Interest Rate on the New Inventory Loan Note shall be a variable rate, adjusted
as of each Prime Rate Determination Date, equal to the sum of the Prime Rate,
determined as of each Prime Rate Determination Date, plus three percent (3.0%)
per annum, provided, however, that at no time shall the Interest Rate on the New
Inventory Loan Note be less than six percent (6.0%) per annum.
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(uu) INTERVAL. With respect to each Resort the undivided
fractional fee interval ownership interest as a tenant-in-common ((sometime
referred to in the Timeshare Documents as a condoshare interest or condoshare
week) in a Unit to be sold to a Purchaser by delivery of a deed for a time-share
period per calendar year (or, in the case of a biennial use period, per
alternate calendar year) of one week (as defined in the Declaration), together
with all appurtenant rights and interests, including, without limitation,
appurtenant rights in and to Common Elements, and easement, license, access and
use rights in and to all Resort facilities and amenities (as described in the
Declaration), all as more particularly described in the Declaration or other
Timeshare Documents. Notwithstanding the foregoing, the term "Interval" shall
also include, with respect to the Oak `N Spruce Resort only, the beneficial
interest in the entity which owns each of the Units at the Oak `N Spruce Resort,
as evidenced by the delivery to the Purchaser of any such beneficial interest of
a certificate of beneficial interest for a timeshare period per calendar year
(or, in the case of biennial use period, per alternate calendar year) of one
week (as defined in the Oak N' Spruce Resort Declaration), together with all
pertinent rights and interests, including, without limitation, a pertinent right
in and to Common Elements, and easements, license, access and use rights in and
to all Oak `N Spruce Resort facilities and amenities, all as more particularly
described in the Declaration or other Timeshare Documents for the Oak `N Spruce
Resort.
(vv) INTERVAL RELEASE THRESHOLD. The term "Interval
Release Threshold" shall mean 110% of the Required Retail Value of the
Inventory. By way of example only, if the Required Retail Value of the Inventory
is $66,666,666.66, the Inventory Release Threshold will be $73,333,333.33.
(ww) INVENTORY. The term "Inventory" shall mean the
Intervals from Eligible Resorts, fee title to which is held by the Borrower and
on which Lender is granted a first mortgage lien to secure the Loan.
(xx) LAND. The term "Land" shall mean the real property
described in Schedule 1.1 (xx) hereof.
(yy) LAND MORTGAGE OR LAND MORTGAGES. The term "Land
Mortgage" or "Land Mortgages" shall mean singly and collectively, a properly
recorded, first priority mortgage, deed of trust, deed to secure debt,
assignment of beneficial interest or other security instrument encumbering all
of the right, title and interest of Borrower in the Land and securing the Loan.
(zz) LIEN. Any interest in property securing an obligation
owed to, or claim by, a Person other than the owner of such property, whether
such interest arises in equity or is based on the common law, statute, or
contract.
(aaa) LIBOR. The term "LIBOR" shall mean, with respect to
any LIBOR Rate Period, the rate per annum (rounded upwards, if necessary, to the
nearest one-sixteenth (1/16th) of one percent (1%)) reported at 11:00 a.m.
London time on the first day of each LIBOR Rate Period (or if such date is not a
Eurodollar Business Day, the immediately preceding Eurodollar Business Day)
(such date, the "LIBOR DETERMINATION DATE"), on Dow ▇▇▇▇▇ Telerate Service Page
3750 (British Bankers Association Settlement Rate) as the non-reserve adjusted
▇▇▇▇▇▇
▇
▇▇▇▇▇▇▇▇▇ Offered Rate for U.S. dollar deposits having a ninety (90) day term
(or on such other page as may replace said Page 3750 on that service or such
other service or services as may be nominated by the British Bankers Association
for the purpose of displaying such rate, all as determined by Lender in its sole
but good faith discretion). In the event that (i) more than one such LIBOR is
provided, the average of such rates shall apply, or (ii) no such LIBOR is
published, then LIBOR shall be determined from such comparable financial
reporting company as Lender in its sole but good faith discretion shall
determine. LIBOR for any LIBOR Rate Period shall be adjusted from time to time
by increasing the rate thereof to compensate Lender for any aggregate reserve
requirements (including, without limitation, all basic, supplemental, marginal
and other reserve requirements and taking into account any transitional
adjustments or other scheduled changes in reserve requirements during any LIBOR
Rate Period) which are required to be maintained by Lender with respect to
"Eurocurrency Liabilities" (as presently defined in Regulation D of the Board of
Governors of the Federal Reserve System) of the same term under Regulation D, or
any other regulations of a Governmental Authority having jurisdiction over
Lender of similar effect.
(bbb) LIBOR RATE PERIOD. The term "LIBOR Rate period" shall
mean each successive ninety (90) day period during the Term. The initial LIBOR
Rate Period shall commence on the date of this Agreement (or if such day is not
a Eurodollar Business Day, the immediately preceding Eurodollar Business Day)
and shall terminate on a date which is thirty days thereafter (or if such day is
not a Eurodollar Business Day, the immediately preceding Eurodollar Business
Day). Each LIBOR Rate Period after the initial LIBOR Rate Period shall commence
on the first Eurodollar Business Day immediately following the expiration of the
immediately preceding LIBOR Rate Period and shall terminate ninety days
thereafter (or if such day is not a Eurodollar Business Day, the immediately
preceding Eurodollar Business Day).
(ccc) LOAN OR LOANS. The terms "Loan" and "Loans" mean, as
the context requires, singly each loan and collectively all loans made by Lender
to Borrower prior to the date hereof pursuant to the Original Loan Agreement.
The term "Loan" shall also mean, as the context requires, collectively all Loans
made by Lender to Borrower under this Agreement. From and after the date hereof,
the Loan shall consist of the Existing Inventory Loan in the maximum amount of
$10,000,000.00 and the New Inventory Loan in the maximum amount of
$8,000,000.00, which amounts shall be repaid as provided in Sections 2.3 and 2.4
hereof.
(ddd) LOAN DOCUMENTS. Collectively, this Agreement and the
following documents and instruments listed below as such agreements, documents,
instruments or certificates may be amended, renewed, extended, restated or
supplemented from time to time.
(i) THIS AGREEMENT;
(ii) THE ORIGINAL LOAN AGREEMENT;
(iii) THE EXISTING INVENTORY LOAN NOTE;
(iv) THE NEW INVENTORY LOAN NOTE;
(v) THE ENVIRONMENTAL INDEMNIFICATION AGREEMENT;
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(vi) THE MORTGAGES;
(vii) BORROWER'S CERTIFICATE AND REQUEST FOR
ADVANCE;
(viii) THE MODIFICATION(S) OF MORTGAGES;
(ix) THE LAND MORTGAGES;
(x) THE ADDITIONAL RESORT COLLATERAL MORTGAGES;
(xi) THE ADDITIONAL RESORT COLLATERAL
ASSIGNMENTS;
(xii) THE STOCK PLEDGE AGREEMENT;
(xiii) THE STANDBY MANAGEMENT AGREEMENT ASSIGNMENT;
(xiv) THE ASSIGNMENT OF MANAGEMENT AGREEMENTS;
(xv) THE ASSIGNMENT OF MORTGAGES;
(xvi) SILVERLEAF FINANCE II STOCK AND SUBORDINATED
NOTE PLEDGE AGREEMENT;
(xvii) INTERCREDITOR AGREEMENT;
(xviii) FINANCING STATEMENTS; UCC financing
statements covering the Collateral, to be filed with the Texas
Secretary of State and the Secretary of State and/or such
other office where UCC financing statements are filed in each
state in which the Collateral is located; and
(xix) OTHER ITEMS; Such other agreements,
documents, instruments, certificates and materials as Lender
may request to evidence the Obligations; to evidence and
perfect the rights and Liens and security interests of the
Lender contemplated by the Loan Documents, and to effectuate
the transactions contemplated herein, as such agreements,
documents, instruments or certificates may be hereafter
amended, renewed, extended, restated or supplemented from time
to time.
(eee) LOAN YEAR. The period from the Closing Date through
the last day of the next full twelve (12) calendar month period and each twelve
(12) calendar month period thereafter.
(fff) LOAN TO RETAIL VALUE RATIO. The term "Loan to Retail
Value Ratio" shall mean the ratio of the outstanding principal balance of the
Loan, from time to time, to the Retail Value of the Inventory. The "Loan to
Retail Value Ratio" shall be 15%; provided, however, that from and after the
reduction in the principal balance of the New Inventory Loan as provided in
Section 2.4(b)(ii), the Loan to Retail Value Ratio for the New Inventory Loan
only shall be 11% (the Loan to Retail Value Ratio for the Existing Loan shall
remain at 15%).
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(ggg) MANDATORY PREPAYMENT. Any prepayment required by
Section 2.4(b) of this Agreement.
(hhh) MARKETING AND SALES EXPENSES. Shall mean all
promotion, lead generation, sales commissions and all other marketing expenses
incurred or paid by Borrower pursuant to any marketing agreements or otherwise.
(iii) MORTGAGE OR MORTGAGES. A properly recorded, first
priority mortgage, deed of trust, deed to secure debt, assignment of beneficial
interest or other security instrument, as applicable, in the form attached
hereto as Exhibit A (with such changes as may be necessary to comply with the
law of the state in which the Inventory in question is located) executed and
delivered by Borrower to Lender encumbering all of the right, title and interest
of the Borrower in the Inventory and Common Elements, and related or appurtenant
easement, access and use rights and benefits.
(jjj) MODIFICATION(S) OF MORTGAGES. Properly recorded
amendment and restatement(s) or modification(s) of any existing Mortgages, in
form and substance reasonably acceptable to Lender, for the purpose of securing
the Loan, including the New Inventory Loan.
(kkk) NEGATIVE PLEDGE AGREEMENT The Negative Pledge
Agreement, in the form attached as Exhibit A, made by the Borrower and each
applicable Affiliate to the Lender pursuant to this Agreement, as the same may
be amended from time to time.
(lll) NET SECURITIZATION CASH FLOW. The term "Net
Securitization Cash Flow" shall mean: (i) all right, title and interest of
Silverleaf Finance I, Inc., a wholly owned subsidiary of Borrower in any excess
cash flow derived from the Notes Receivable sold by Silverleaf Finance I, Inc.
to DZ pursuant to the DZ Documents and (ii) all right, title and interest of
Silverleaf Finance II, Inc., a wholly owned subsidiary of Borrower, in any
excess cash flow derived from the Notes Receivable sold by Borrower to
Silverleaf Finance II, Inc. and then sold by Silverleaf Finance II, Inc. to
Textron Financial Corporation, as Group Two Lender under the Silverleaf Finance
II Documents.
(mmm) NEW INVENTORY LOAN. The term "New Inventory Loan"
shall mean that certain $8,000,000.00 credit facility provided by Lender to
Borrower pursuant to this Agreement and evidenced by the New Inventory Loan
Note.
(nnn) NEW INVENTORY LOAN NOTE. The term "New Inventory Loan
Note" shall mean that certain Secured Promissory Note in the form attached as
Exhibit A dated as of the date hereof made by Borrower to Lender to evidence the
New Inventory Loan in the maximum principal amount of $8,000,000.00, as may
hereafter be amended from time to time.
(ooo) NOTE. Singly and collectively, the Existing Inventory
Loan Note and the New Inventory Loan Note.
(ppp) NOTE RECEIVABLE. A promissory note executed in favor
of Borrower in connection with a Purchaser's acquisition of an Interval.
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(qqq) OBLIGATIONS. All amounts due or becoming due to
Lender in respect of the Loan under any of the Loan Documents, including
principal, interest, prepayment premiums, contributions, taxes, insurance, loan
charges, custodial fees, attorneys' and paralegals' fees and expenses and other
fees or expenses incurred by Lender or advanced to or on behalf of Borrower by
Lender pursuant to any of the Loan Documents, and the prompt and complete
payment and performance by the Borrower of all obligations, indebtedness and
liabilities pursuant to this Agreement or any of the Loan Documents or otherwise
(rrr) OPERATING CONTRACT OR OPERATING CONTRACTS. As defined
in Section 6.20.
(sss) OPERATING EXPENSES. Shall mean the total of all
expenditures, computed in accordance with Generally Accepted Accounting
Principles, of whatever kind relating to the ownership, operation, maintenance
and management of the Resorts that are incurred on a regular monthly or other
periodic basis, including, without limitation, utilities, ordinary and capital
repairs and maintenance, insurance premiums, license fees, property taxes and
assessments, management fees, payroll and related taxes, computer processing
charges, operational equipment or other lease payments as approved by Lender,
and other similar costs.
(ttt) PERSON. An individual, partnership, corporation,
limited liability company, trust, unincorporated organization, other entity, or
a government or agency or political subdivision thereof.
(uuu) PLEDGED NOTE RECEIVABLE. Any Note Receivable that at
any time has been pledged to Lender by Borrower pursuant to this Agreement or
any of the other Loan Documents, including any Ineligible Note Receivable.
(vvv) PRIME RATE DETERMINATION DATE. The term "Prime Rate
Determination Date" shall mean the first day of each month, provided, however,
that if the first day of any month is not a Business Day, than the Prime Rate
Determination Date for such month shall be the Business Day immediately
preceding the first day of the month in question. Notwithstanding the foregoing,
the initial Prime Rate Determination Date shall be the Closing Date.
(www) PRIME RATE. The highest prime rate of interest from
time to time announced or published in the Money Rates column of the Wall Street
Journal (Eastern Edition) (the "WSJ"). In the event that the prime rate
established by the WSJ shall no longer be available, due to either the non
existence of the WSJ or the WSJ's failure to publish a prime rate, then the
Prime Rate shall be the highest prime rate published by a major money center
bank selected by Lender.
(xxx) PROPERTY OR PROPERTIES. Any interest in any kind of
property or asset, whether real, personal or mixed, tangible or intangible.
(yyy) PURCHASE PRICE. The total purchase price of an
Interval, as approved by Lender from time to time, relating to the sale by the
Borrower to a Purchaser of an Interval comprising a part of the Inventory.
(zzz) PURCHASER. Any Person who purchases one or more
Intervals.
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(aaaa) RELEASE PRICE. The term "Release Price" shall have
the meaning ascribed to such term in Section 2.3(b)hereof.
(bbbb) RETAIL VALUE. The term "Retail Value" shall mean the
fair market value of the Inventory and each Interval constituting part of the
Inventory, as determined by Lender in its sole discretion.
(cccc) REQUIRED RETAIL VALUE. The term "Required Retail
Value" shall mean the aggregate Retail Value of the Inventory, such that the
ratio of the outstanding balance of the Loan, from time to time, to the
aggregate Retail Value of the Inventory does not exceed the Loan to Retail Value
Ratio. By way of example, if the outstanding principal balance of the Loan is
$10,000,000, the Required Retail Value of the Inventory will be $66,666,666.66.
(dddd)) RESORT OR RESORTS (ALSO "ELIGIBLE RESORT" OR
"ELIGIBLE RESORTS"). Individually and collectively, as applicable, each or all
of the interval ownership and time-share projects consisting of: (i) (A) ▇▇▇▇▇
Lake Ranch, ▇▇▇▇▇▇▇, Texas; (B) Piney Shores Resort, Conroe, Texas; (C) Lake O'
The Woods, Flint, Texas; (D) Hill Country Resort, Canyon Lake, Texas; (E) Ozark
Mountain Resort, ▇▇▇▇▇▇▇▇▇▇ City, Missouri; (F) Holiday Hills Resort, Branson,
Missouri; (G) Fox River Resort, LaSalle County, Illinois; (H) Timber Creek
Resort, Jefferson County, Missouri; (I) Oak N' Spruce Resort, South ▇▇▇,
Massachusetts; (J) Apple Mountain Resort, Habersham County, Georgia; (K) The
Villages, Flint, Texas and (L) Silverleaf's Seaside Resort, Galveston County,
Texas (also sometimes individually and collectively referred to herein as the
"Existing Resorts") and (ii) subject to Lender's prior written approval and
satisfaction by the Borrower of the conditions precedent set forth in Sections
3.4 and 4.5 hereof, the Additional Eligible Resorts. The term "Resort" or
"Resorts" includes, among other things, the undivided annual or (biennial)
timeshare ownership interests (Intervals) in the respective Resorts, and the
appurtenant exclusive rights to use Units in one or more buildings or phases and
all appurtenant or related properties, amenities, facilities, equipment,
appliances, fixtures, easements, licenses, rights and interests, including
without limitation, the Common Elements, as established by and more fully
defined and described in the respective Declarations, and the other Timeshare
Documents.
(eeee) REVENUES. The term "Revenues" shall mean all proceeds
for the sale of Intervals, regardless of whether such proceeds are in the form
of cash or Notes Receivables.
(ffff) SILVERLEAF FINANCE II DOCUMENTS. Shall mean the SPV
Loan Agreement, the Developer Transfer Agreement, the Demand Notes and all other
agreements or documents executed in connection with the TFC Conduit Loan, as
each may be amended, restated or otherwise modified from time to time.
(gggg) SILVERLEAF FINANCE II STOCK. Shall mean all equity
interests in Silverleaf Finance II, Inc., all documents, certificates or
instruments representing any of the foregoing and all cash, securities,
dividends, rights and other property at any time received or receivable in
respect of or in exchange for the foregoing, and all proceeds of the foregoing.
(hhhh) SILVERLEAF FINANCE II SUBORDINATED NOTE. Shall mean
the Subordinated Note, dated as of December 19, 2003, payable by SPV to the
order of Silverleaf Resorts, Inc.,
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and any other promissory note issued in replacement or restatement thereof, or
otherwise issued to evidence SPV's obligation to pay the deferred purchase price
of Receivables under the Developer Transfer Agreement which is part of the
Silverleaf Finance II Documents, in each case as amended or otherwise modified
from time to time, and all proceeds of the foregoing.
(iiii) SILVERLEAF FINANCE II STOCK AND SUBORDINATED NOTE
PLEDGE AGREEMENT. Shall mean the agreement previously executed by Borrower,
pursuant to which the Silverleaf Finance II Stock and the Silverleaf Finance II
Subordinated Note is pledged to Lender, as security for the Loan.
(jjjj) SOVEREIGN FACILITY. The term "Sovereign Facility"
shall mean that certain credit facility provided by Sovereign to Borrower
pursuant to the documents listed on Schedule 1.1 (jjjj) hereto (the "SOVEREIGN
DOCUMENTS).
(kkkk) SPV. Shall mean Silverleaf Finance II, Inc., a
Delaware corporation.
(llll) SPV ASSETS. Shall mean all assets sold or conveyed by
Borrower to the SPV pursuant to the Silverleaf Finance II Documents.
(mmmm) SPV SUBORDINATION AGREEMENT. Shall mean that certain
Subordination Agreement relating to TFC's interest in the Silverleaf Finance II
Stock and the Silverleaf Finance II Subordinated Note, dated as of December 19,
2003 by and among Textron Financial Corporation, in its capacity as Lender and
in its capacity as lender under the Group Two Documents (as such term is defined
in the SPV Subordination Agreement), as may be amended, restated or modified
from time to time."
(nnnn) STANDBY MANAGER. Shall mean the Person selected by
Borrower, and acceptable to Lender, in its sole discretion, to act as standby
manager of Borrower's Resorts in accordance with this Agreement. Lender hereby
approves J&J Limited, Inc. as the initial Standby Manager.
(oooo) STANDBY MANAGEMENT AGREEMENT. Shall mean the
agreement that has been entered into between the Standby Manager and Borrower
providing for the management of Borrower's business and the Resorts on the
occurrence of an Event of Default hereunder.
(pppp) STANDBY MANAGEMENT AGREEMENT ASSIGNMENT. Shall mean
the assignment by Borrower to Lender of all of Borrower's rights under the
Standby Management Agreement
(qqqq) STOCK PLEDGE AGREEMENT. Shall mean the agreement
previously delivered by Borrower, pursuant to which all issued and outstanding
shares of Silverleaf Finance I, Inc.'s capital stock and all right, title and
interest in such shares, all certificates, instruments or other documents
evidencing or representing the same and all dividends and distributions
therefrom, including dividends and distributions paid in stock (the "SILVERLEAF
FINANCE I, INC. STOCK") are pledged to Lender as security for the Loan.
(rrrr) SURVEY. A plat or survey of the Resort prepared by a
licensed surveyor acceptable to Lender and in a form acceptable to Lender.
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(ssss) TANGIBLE NET WORTH. Tangible Net Worth means, with
respect to any Person, the amount calculated in accordance with GAAP as (i) the
consolidated net worth of such Person and its consolidated subsidiaries, plus
(ii) to the extent not otherwise included in such consolidated net worth,
unsecured subordinated debt of such Person and its consolidated subsidiaries,
the terms and conditions of which are reasonably satisfactory to Lender, minus
(iii) the consolidated intangibles of such Person and its consolidated
subsidiaries, including, without limitation, goodwill, trademarks, tradenames,
copyrights, patents, patent allocations, licenses and rights in any of the
foregoing and other items treated as intangible in accordance with GAAP.
Notwithstanding the foregoing, if subsequent to the Effective Date deferred
sales are no longer considered an asset under GAAP, Lender agrees, at the
request of Borrower, to determine, in its reasonable discretion, whether
deferred sales should continue to be considered an asset for purposes of
determining Borrower's Tangible Net Worth.
(tttt) INTENTIONALLY OMITTED.
(uuuu) TERM. A period of 3 years from the Closing Date, plus
the number of days from the Closing Date to the end of the month in which the
Closing Date occurs.
(vvvv) TERM SHEET. Singly and collectively: (i) the term
sheet issued by Lender with respect to the Existing Inventory Loan, as amended
by the term sheet dated March 28, 2001, issued by Lender with respect to the
Existing Inventory Loan, and (ii) the Commitment Letter dated February 17, 2004
issued by Lender with respect to the New Inventory Loan, copies of each are
attached hereto as Schedule 1.1(vvvv).
(wwww) TFC CONDUIT LOAN. Shall mean that certain loan
facility provided by Textron Financial Corporation to SPV in accordance with the
terms of the Silverleaf Finance II Documents.
(xxxx) TIMESHARE ACT. Any statute, act, regulation,
ordinance, rule or law applicable to the establishment and operation of the
Resorts and the sales of the Intervals.
(yyyy) TIMESHARE DOCUMENTS. Any registration statement
required under any Timeshare Act approving the establishment and operation of
the Resorts and the sales of Intervals.
(zzzz) TIMESHARE OWNERS' ASSOCIATION. With respect to each
Resort, the Silverleaf Club, a Texas non-profit corporation, and the applicable
not-for-profit corporations described on Schedule 1.1(zzzz).
(aaaaa) TOTAL INTEREST EXPENSE. For any period, the aggregate
amount of interest required to be paid or accrued by Borrower and its
subsidiaries during such period on all indebtedness of Borrower and its
subsidiaries outstanding during all or any part of such period, whether such
interest was or is required to be reflected as an item of expense or
capitalized, including payments consisting of interest in respect of any
capitalized lease, or any synthetic lease and including commitment fees, agency
fees, facility fees, balance deficiency fees and similar fees or expenses in
connection with the borrowing of money.
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(bbbbb) UCC FINANCING STATEMENTS. The UCC-1 Financing
Statements, naming the Borrower as debtor and the Lender as secured party,
heretofore or hereafter filed in connection with the Loan and all amendments
thereto.
(ccccc) UNIT. With respect to each Resort, one living unit in
a building incorporated into the Resort pursuant to the Declaration, together
with all related or appurtenant Common Elements and related or appurtenant
interests in services, easements and other rights or benefits, as described and
provided for in the Declaration, including but not limited to the right to use
the Resort amenities and facilities in accordance with the Timeshare Documents.
SECTION 2 -- THE LOAN
2.1 REVOLVING LOAN AND LENDING LIMITS. Upon the terms and subject
to the conditions set forth in this Agreement, including but not limited to
Section 2.8 hereof, the Lender shall make Advances to the Borrower, and the
Borrower may borrow, repay and reborrow during the Revolving Loan Period, as
such term is hereafter defined, principal under the Existing Inventory Loan and
the New Inventory Loan in an amount not to exceed at any time in the aggregate
the lesser of: (i) the Loan to Retail Value Ratio of the Required Retail Value
of the Inventory or (ii) $18,000,000.00 (such amount being the aggregate
principal amount of the Existing Inventory Loan and the New Inventory Loan), as
reduced as set forth in Section 2.4(b)(ii) hereof. Borrower acknowledges and
agrees that Lender may make Advances from the Existing Inventory Loan and/or the
New Inventory Loan in such manner and amount as Lender may determine in its sole
discretion. The Revolving Loan Period shall be the period during the Term in
which the Borrower may borrower, repay and reborrow Advances and shall terminate
in all respects on March 31, 2006. Borrower's right to receive Advances
hereunder shall also be subject to the terms and conditions set forth in that
certain Second Amended and Restated Intercreditor Agreement between Lender,
▇▇▇▇▇▇, Borrower and Sovereign dated of even date herewith, as amended hereafter
(the "INTERCREDITOR AGREEMENT"). Notwithstanding anything herein to the
contrary, Borrower acknowledges, confirms and agrees that it shall not be
entitled to receive, nor shall Lender be required to make, any Advance if and to
the extent that Borrower has failed to substantially adhere to the Business
Plan, including the Senior Lender Advance Schedule, as determined by Lender in
its sole and absolute discretion.
2.2 INTEREST RATE. From and after the Closing Date, (i) with
respect to the Existing Inventory Loan, the aggregate principal balance of all
Advances made with respect to the Existing Inventory Loan shall bear interest at
a rate equal to the Interest Rate applicable to the Existing Inventory Loan; and
(ii) with respect to the New Inventory Loan, the aggregate principal balance of
all Advances made with respect to the New Inventory Loan shall bear interest at
the Interest Rate applicable to the New Inventory Loan. The aggregate principal
amount of all Advances, that are outstanding from time to time, will bear
interest at a rate equal to the applicable Interest Rate. Each Advance shall
bear interest at the applicable Interest Rate as of Lender's wiring of funds
through Lender's receipt of repayment of the Loan (if received by Lender later
than 12 noon, Eastern Standard Time, then interest accrual shall be through the
next Business Day following such receipt). Immediately upon the occurrence of an
Event of Default and after the Final Maturity Date (if the Loan is not paid in
full on the Final Maturity Date), at Lender's election in its sole discretion,
the Loan will bear interest at the Default Rate.
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2.3 PAYMENTS. The Borrower agrees punctually to pay or cause to be
paid to the Lender, all principal and interest due under the Note in respect of
the Loan made by the Lender hereunder. The Borrower shall make the following
payments on the Loan:
(a) MONTHLY PAYMENTS. The Borrower shall pay to the
Lender, on the first day of each month during the Term, commencing on April 1,
2004, interest on the outstanding principal balance of the Loan, from time to
time, at the applicable Interest Rate. Lender shall apply each such payment in
the following order: (i) to the payment of all costs or expenses incurred by the
Lender pursuant to this Agreement in creating, maintaining, protecting or
enforcing the Liens in and to the Collateral and in collecting any amount due to
Lender in connection with the Loan; (ii) to any interest accrued at the Default
Rate; (iii) to the payment of accrued and unpaid interest at the applicable
Interest Rate; and (iv) to the reduction of the principal balance of the
Existing Inventory Loan and the New Inventory Loan in such order and manner as
Lender may determine in its sole discretion. If the amount of the funds received
by Lender with respect to any month is insufficient to pay in full all amounts
due from Borrower to Lender under this Agreement, Borrower shall pay the
difference to Lender on or before the fifth (5th) day after notice from Lender
to Borrower advising Borrower of such insufficiency.
(b) INTERVAL RELEASE PRICE PAYMENTS. Prior to the release
by Lender of any Interval from the Collateral in accordance with Section 2.10
hereof, the Borrower shall pay to the Lender an amount equal to the greater of:
(i) $1,600.00 for each such Interval, or (ii) an amount necessary to fully repay
the Loan upon sale of 75% of the Inventory (the "RELEASE PRICE"), which payment
shall be applied by Lender in accordance with Section 3(a); provided, however,
that if the Retail Value of the Inventory, as determined by the Lender, is equal
to or greater than the Interval Release Threshold, the Borrower shall not be
required to pay a Release Payment with respect to the release of any Interval
for so long as the Retail Value of the Inventory equals or exceeds the Interval
Release Threshold.
(c) FINAL PAYMENT. The entire outstanding principal
amount of the Loan together with all other Obligations shall be paid in full by
not later than the Final Maturity Date.
2.4 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. Borrower may not voluntarily
prepay the Loan, in whole or in part, except that: (i) provided that no Event of
Default shall have occurred and be continuing and (ii) Borrower pays the Release
Price in accordance with Section 2.3(b) hereof, then at any time during the Term
of the Loan, the Loan may be prepaid in part in connection with any prepayment
which arises from release of any Interval from the Collateral, subject to
Section 2.10 hereof.
(b) MANDATORY PREPAYMENTS.
(i) If at any time and for any reason, the
outstanding unpaid principal balance of the Loan shall exceed
the amount which satisfies the Loan to Retail Value Ratio,
then, within five (5) Business Days following Borrower's
receipt of telecopied notice from Lender of the occurrence of
such excess or, absent such telecopied notice, within fifteen
(15) days after the end of the calendar month in
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which such excess occurred, Borrower shall either: (x) prepay
the principal balance of the Loan in an amount equal to the
difference between the aggregate principal amount of the Loan
and the amount necessary to comply with the Loan to Retail
Value Ratio of the Inventory or (y) Borrower shall grant to
Lender a first mortgage Lien on additional Intervals from
Eligible Resorts so that the Retail Value of the Inventory,
including such additional Intervals, equals or exceeds the
Required Retail Value of the Inventory and the Loan to Retail
Value Ratio is satisfied. In granting to Lender a first
mortgage lien on such additional Intervals, Borrower shall
comply with the document delivery and recordation requirements
set forth in Section 4 of this Agreement and Borrower shall
deliver to Lender its written certification that the Retail
Value of the Inventory, including such additional Intervals,
is equal to or greater than the Required Retail Value and
satisfies the Loan to Retail Value Ratio. If Borrower elects
to prepay the excess principal balance of the Loan pursuant to
this Section (i) above, no prepayment premium shall be payable
in connection with such prepayment.
(ii) On or before August 31, 2004, Borrower shall
prepay the sum of $2,000,000 on the New Inventory Loan so that
the outstanding principal balance of the New Inventory Loan
(and Lender's commitment to make Advances under the New
Inventory Loan) shall be reduced to $6,000,000.00. From and
after August 31, 2004, the maximum amount available for
Advances under the New Inventory Loan shall be $6,000,000.00
and the maximum aggregate principal amount under the Existing
Inventory Loan and the New Inventory Loan shall be
$16,000,000, subject to Section 2.1 hereof.
(c) PREMIUMS. Notwithstanding anything herein contained
to the contrary, any prepayment under this Section 2.4 must include all accrued
but unpaid interest, and accrued but unpaid contributions, taxes, insurance,
loan charges custodial fees, attorneys' and paralegals' fees and expenses,
amounts due pursuant to Section 2.5 hereof as a result of a Funding Loss and
other fees or expenses incurred by Lender or advanced to or on behalf of
Borrower by Lender pursuant to any of the Loan Documents accrued but unpaid.
(d) USE OF PROGRAM RESERVE ACCOUNT WITHDRAWALS AND
SURPLUS UNDER THE TFC CONDUIT LOAN. To the extent that funds are made available
to SPV from the Program Reserve Account in accordance with Section 5.1(e) of the
Loan and Security Agreement which is part of the Silverleaf Finance II
Documents, to the extent permitted by law and the Silverleaf Finance II
Documents, Borrower shall cause SPV to distribute such funds to Borrower and
Borrower shall make payment in the amount of such distribution to Lender and
Sovereign to be applied in the order set forth in that certain Intercreditor
Agreement between Lender, ▇▇▇▇▇▇ and Sovereign dated of even date herewith. To
the extent that Borrower receives any distributions from the SPV in respect of
any Surplus Payments, as such term is defined in the Silverleaf Finance II
Documents, such funds shall be used by Borrower strictly to fund Operating
Expenses in accordance with the Business Plan and for no other reason, without
Lender's prior written consent.
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2.5 PAYMENT OF FUNDING LOSSES AND OTHER AMOUNTS RELATING TO LIBOR
CONTRACT, ETC.
(a) Funding Losses: Breaking of LIBOR contract, Change in
Law, Etc. Borrower hereby agrees to pay to Lender any amount necessary to
compensate Lender for any losses or costs (including, without limitation, the
costs of breaking any "LIBOR" contract, if applicable, or funding losses
determined on the basis of Lender's reinvestment rate and the interest rate
thereon) (collectively, "FUNDING LOSSES") sustained by Lender: (i) if the Loan,
or any portion hereof, is prepaid for any reason whatsoever on any date other
than the Final Maturity Date (including, without limitation, from condemnation
or insurance proceeds); (ii) upon the conversion of the interest rate on the
Loan to an interest rate based on the Prime Rate in accordance with Section (b)
hereof; (iii) as a consequence of the reduction of any amounts received or
receivable from Borrower, in either case, due to the introduction of, or any
change in, law or applicable regulation or treaty (including the administration
or interpretation thereof), whether or not having the force of law, or due to
the compliance by Lender with any directive, whether or not having the force of
law, or request from any central bank or domestic or foreign governmental
authority, agency or instrumentality having jurisdiction; (iv) as a consequence
of the breaking of any LIBOR contract and/or (v) any other set of circumstances
not attributable to Lender's acts. Payment of Funding Losses hereunder shall be
in addition to any obligation to pay any other amounts due and owing under this
Agreement or any other Loan Documents.
(b) Conversion to Interest Rate Based on Prime Rate. If
Lender determines (which determination shall be conclusive and binding upon
Borrower, absent manifest error) (i) that dollar deposits in an amount
approximately equal to the then outstanding principal balance of the Loan are
not generally available at such time in the London Interbank Market for deposits
in Eurodollars, (ii) that the rate at which such deposits are being offered will
not adequately and fairly reflect the cost to Lender of maintaining the Interest
Rate based on LIBOR, or of funding the same in such market for such Interest
Accrual Period, due to circumstances affecting the London Interbank Market
generally, (iii) that reasonable means do not exist for ascertaining LIBOR, (iv)
that the Interest Rate based on LIBOR would be in excess of the maximum interest
rate which Borrower may by law pay, then, in any such event, or (v) any LIBOR
contract is broken as a result of the sale in bulk of Inventory relating to the
Resorts by Borrower, Lender shall so notify Borrower and, as of the date of such
notification with respect to an event described in clauses (ii), (iv) or (v)
above, or as of the expiration of the applicable LIBOR Rate Period with respect
to an event described in clause (i) or (iii) above, interest shall accrue at a
rate equal to the Prime Rate plus a sufficient spread so that the resulting per
annum interest rate is approximately equal to what the rate would have been
based on LIBOR plus three and one-quarter percent (3.25%) per annum, which new
rate shall apply until such time as the situations described above are no longer
in effect, or as otherwise provided herein; provided, however, if the situation
described in clause (ii) above occurs, (x) Borrower shall have the option, to be
exercised by written notice to Lender, to pay to Lender (in the manner
reasonably required by Lender) for such increased cost of maintaining the
Interest Rate based on LIBOR, and (y) if the same only affects a portion of the
Loan, then only such portion shall have interest accrue at a rate equal to the
Prime Rate plus a sufficient spread so that the resulting per annum interest
rate is approximately equal to what the rate would have been based on LIBOR plus
three and one-quarter percent (3.25%) per annum, and interest shall continue to
accrue on the remaining portion at the Interest Rate based on LIBOR.
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(c) Back-Up Interest Rate Based on Prime Rate. If the
introduction of, or any change in, any law, regulation or treaty, or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof, shall make it unlawful for Lender to
maintain the Interest Rate based on LIBOR with respect to the Loan, or any
portion thereof, or to fund the Loan, or any portion thereof, in Eurodollars in
the London Interbank Market, then, (i) the Loan (or such portion of the Loan)
shall, with respect to Lender, thereafter bear interest shall accrue at a rate
equal to the Prime Rate plus a sufficient spread so that the resulting per annum
interest rate is approximately equal to what the rate would have been based on
LIBOR plus three and one-quarter percent (3.25%) per annum (unless the Default
Rate shall be applicable), and (ii) Borrower shall pay to Lender the amount of
Funding Losses (if any) incurred in connection with such conversion. The accrual
of interest shall accrue at a rate equal to the Prime Rate plus a sufficient
spread so that the resulting per annum interest rate is approximately equal to
what the rate would have been based on LIBOR plus three and one-quarter percent
(3.25%) per annum, which new rate shall continue until such date, if any, as the
situation described in this Section (c) is no longer in effect.
(d) Capital Adequacy Events, Etc. If Lender shall have
determined that the applicability of any law, rule, regulation or guideline
adopted pursuant to or arising out of the July 1988 report of the Basle
Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or the
adoption of any other law, rule, regulation or guideline (including, but not
limited to, any United States law, rule, regulation or guideline) regarding
capital adequacy, or any change becoming effective in any of the foregoing or in
the enforcement or interpretation or administration of any of the foregoing by
any court or any domestic or foreign governmental authority, central bank or
comparable agency charged with the enforcement or interpretation or
administration thereof, or compliance by Lender, with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the capital of Lender or Lender's holding
company, as the case may be, to a level below that which Lender or its holding
company, as the case may be, could have achieved but for such applicability,
adoption, change or compliance (taking into consideration Lender's or its
holding company, as the case may be, policies with respect to capital adequacy)
(the foregoing being hereinafter referred to as "CAPITAL ADEQUACY EVENTS"),
then, upon demand by Lender, Borrower shall pay to Lender on behalf of any such
Lender, from time to time, such additional amount or amounts as will compensate
Lender for any such reduction suffered.
(e) Payment of Amounts Due under Section 2.5. Any amount
payable by Borrower under Section (a) or (d) hereof shall be paid to Lender
within five (5) days of receipt by Borrower of a certificate signed by an
officer of Lender setting forth the amount due and the basis for the
determination of such amount, which statement shall be conclusive and binding
upon Borrower, absent manifest error. Failure on the part of Lender to demand
payment from Borrower for any such amount attributable to any particular period
shall not constitute a waiver of Lender's right to demand payment of such amount
for any subsequent or prior period. Lender shall use reasonable efforts to
deliver to Borrower prompt notice of any event described in Section (a) or (d)
hereof and of the amount to be paid under this Section (e) as a result thereof;
provided, however, any failure by Lender to so notify Borrower shall not affect
Borrower's obligation to make the payments to be made under this Section (e) as
a result thereof. All
20
amounts which may become due and payable by Borrower in accordance with the
provisions of this Section (e) shall constitute additional interest hereunder
and shall be secured by this Agreement and the other Loan Documents."
2.6 COMMITMENT FEE.
(a) EXISTING INVENTORY LOAN COMMITMENT FEE. Borrower
acknowledges and agrees that a Commitment Fee of $100,000 was due and payable
exclusively to Lender in connection with the Existing Inventory Loan and Lender
acknowledges receipt and payment of such Commitment Fee.
(b) NEW INVENTORY LOAN COMMITMENT FEE. Borrower
acknowledges and agrees that a Commitment Fee of $80,000 shall be due and
payable exclusively to Lender in connection with the New Inventory Loan, and
that such Commitment shall be payable by Borrower to Lender on the date of the
initial Advance of the New Inventory Loan.
2.7 LOAN TERM. The term of the Loan shall terminate on March 31,
2007.
2.8 MAXIMUM OBLIGATION OF LENDER UNDER THE LOAN, THE EXISTING
CREDIT FACILITY AND THE ADDITIONAL CREDIT FACILITY. Borrower acknowledges,
agrees and confirms that notwithstanding anything to the contrary herein, in any
other Loan Document or in any document evidencing or securing the Existing
Inventory Loan, the New Inventory Loan, the Existing Credit Facilities or the
Additional Credit Facility, Lender shall not be obligated to fund any Advance
hereunder, which when taken together with the Loans or Advances made by Lender,
on its own behalf as Lender (and as opposed to Advances required to be made by
Lender's participants and co-lenders under the Existing Credit Facilities), to
the Borrower under this Agreement, the Original Loan Agreement, the Existing
Credit Facilities and the Additional Credit Facility, would cause the aggregate
amount of such Loans and Advances by Lender, on its own behalf, to Borrower to
exceed a maximum aggregate amount of: (i) prior to August 31, 2004-$56,996,300
and (ii) after August 31,2004 and prior to the Final Maturity Date-$54,996,300.
2.9 SUSPENSION OF ADVANCES.
(a) Suspension of Sales. If any stay, order, cease and
desist order, injunction, temporary restraining order or similar judicial or
nonjudicial sanction shall be issued limiting or otherwise materially adversely
affecting any Interval sales activities, other business operations in respect of
the Resorts, or the enforcement of the remedies of the Lender hereunder, then,
in such event, the Lender shall have no obligation to make any Advances
hereunder: (i) in respect of Intervals which are the subject of any stay, order,
cease and desist order, injunction, temporary restraining order or similar
judicial or nonjudicial sanction has been issued until the stay, order, cease
and desist order, injunction, temporary restraining order or similar judicial or
nonjudicial sanction has been lifted or released to the satisfaction of the
Lender and (ii) in respect of Intervals at any Resort if: (x) the stay, order,
cease and desist order, injunction, temporary restraining order or similar
judicial or nonjudicial sanction in question has not been lifted or released to
the satisfaction of the Lender within sixty (60) days of its issuance and (y)
there is a reduction in the total number of sales of Intervals by the Borrower
in any Loan Year of more than twenty percent (20%) from the total number of
sales of Intervals in the immediately preceding Loan Year.
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(b) Change in Control. If there shall occur a change,
singly or in the aggregate, of more than fifty percent (50%) of the executive
management of Borrower as described in Schedule 2.9(b) hereto, Lender shall have
no obligation to make any Advances hereunder, unless within thirty (30) days
prior thereto Borrower provides Lender with written information setting forth
the replacement executive management personnel of Borrower together with a
description of those Persons' experience, ability and reputation, and Lender,
acting in good faith, determines that the replacement management personnel's
experience, ability and reputation is equal to or greater than that of Borrower
as set forth on Schedule 2.9(b). Notwithstanding the foregoing, the makeup of
the Borrower's Board of Directors may be altered in accordance with the Bond
Holder Exchange Documents, provided that Lender shall have no obligation to make
any Advances hereunder if more than two (2) of the five (5) Board of Directors'
positions are controlled by the Bond Holders.
(c) Failure to Adhere to Business Plan/Default or Event
of Default. Lender shall not be obligated to fund any Advance hereunder if: (i)
Borrower shall fail to substantially adhere to the Business Plan (including the
Senior Lender Advance Schedule) as determined by Lender in its sole and absolute
discretion or (ii) a Default or Event of Default shall have occurred and be
continuing.
2.10 RELEASE OF INTERVALS FROM INVENTORY. Upon written request of
the Borrower, and provided that no Event of Default shall have occurred and be
continuing hereunder, Lender shall release from the Collateral, one or more
Intervals subject to the following conditions: (i) payment by Borrower to Lender
at the time of such release of the Release Price for each such Interval and (ii)
the remaining Collateral satisfies the Required Retail Value.
2.11 LIMITATIONS ON ADVANCES WITH RESPECT TO OAK N' SPRUCE RESORT.
Notwithstanding anything herein to the contrary, the Lender shall be under no
obligation to make Advances in respect of Intervals from Oak N' Spruce Resort if
any such Advance, together with any prior Advances made under this Loan
Agreement, the Original Loan Agreement, the Additional Credit Facility and/or
the Existing Credit Facilities, would exceed, in the aggregate, $32,000,000.00,
subject to Section 4.5(c)(xvi).
SECTION 3 -- COLLATERAL GRANT OF SECURITY INTEREST
3.1 GRANT OF SECURITY INTEREST. To secure the payment and
performance of the Obligations, for value received, Borrower unconditionally and
irrevocably assigns, pledges and grants to Lender a continuing first priority
security interest in and to the Collateral (other than as set forth below). To
further secure the payment and performance of the Obligations, Borrower shall
also execute and deliver to Lender: (i) the Land Mortgages, granting Lender a
first priority mortgage lien on the Land and (ii) the Additional Resort
Collateral Mortgages granting Lender a first priority mortgage lien on that
portion of the Additional Resort Collateral consisting of real property. To
further secure the payment and performance of the Obligations, Borrower shall
further execute and deliver to Lender: (1) the Additional Resort Collateral
Assignments granting Lender a first priority security interest on that portion
of the Additional Resort Collateral consisting of personal property; (2) the
Stock Pledge Agreement granting Lender a first priority security interest in the
Silverleaf Finance I, Inc. Stock; (3) the Amended Standby Management Agreement
Assignment, assigning to Lender, all of Borrower's right, title and interest in
the
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Amended Standby Management Agreement; and (4) the Silverleaf Finance II Stock
and Subordinated Note Pledge Agreement granting Lender a junior and subordinate
security interest in the Silverleaf Finance II Stock and the Silverleaf Finance
II Subordinated Note, subject to the terms and conditions set forth in the SPV
Subordination Agreement.
Notwithstanding anything herein to the contrary, Borrower acknowledges
and agrees as follows:
The Loan shall be secured by:
(i) a first priority security interest in the Inventory;
(ii) a second priority security interest in the Silverleaf Finance
I, Inc. Stock and the Additional Resort Collateral, subject
only to the first priority security interest securing the Term
Loan Component of the Additional Credit Facility and the
Existing Credit Facilities and a subordinate security interest
in the Silverleaf Finance II Stock and the Silverleaf Finance
II Subordinated Note subject to the security interest securing
the Term Loan Component of the Additional Credit Facility and
the Existing Credit Facilities and subject to the terms and
conditions set forth in the SPV Subordination Agreement; and
(iii) a second priority security interest in all Notes Receivable
and the Ineligible Note Portfolio and the mortgages securing
the same, subject only to the first priority security interest
securing the revolving loan component of the Additional Credit
Facility, the Existing Credit Facilities and the Sovereign
Facility.
In addition to the foregoing, Borrower acknowledges, agrees and
confirms that the security interest granted to Lender, in all other Collateral
to secure the Loan, including the Land, the Standby Management Agreement and the
other collateral securing the Sovereign Facility, the Additional Credit Facility
and the Existing Credit Facilities shall be equal in priority as between the
Loan, the Additional Credit Facility and the Existing Credit Facilities and,
with respect to the collateral securing the Sovereign Facility, the Additional
Credit Facility and the Existing Credit Facilities, subject only to the security
interests securing such facilities. For purposes hereof, the reference to
"collateral securing the Sovereign Facility" shall mean the Notes Receivable and
related mortgages exclusively assigned to Sovereign in connection with an
advance under its loan documents.
3.2 FINANCING STATEMENTS. Borrower agrees, at its own expense, to
execute the financing statements provided for by the Code together with any and
all other instruments or documents and take such other action as may be required
to perfect and to continue the perfection of 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 the Borrower's behalf.
3.3 INSURANCE. Borrower shall maintain insurance coverage on the
Resorts and the Collateral in accordance with Section 7.1(d) hereof.
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3.4 SUBSTITUTION OF INVENTORY. Lender agrees that Borrower may,
from time to time during the Term hereof, replace any Interval or Intervals by
granting to Lender a first mortgage Lien on a new Interval or Intervals owned by
the Borrower at an Eligible Resort. In granting to Lender a first mortgage Lien
on any such new Interval or Intervals, Borrower shall comply with the document
delivery and recordation requirements set forth in Section 4 of this Agreement
and Borrower shall deliver to Lender its written certification that the Retail
Value of the Inventory after any such substitution, is equal to or greater than
the Required Retail Value and satisfies the Loan to Value Ratio. In connection
with any such replacement of Inventory under this Section 3.4 or Section 2.4(b)
hereof, Borrower may propose to Lender that one or more additional time-share
plans and projects owned and operated by Borrower be included among the Eligible
Resorts . Any such proposal will be in writing, and will be accompanied or
supported by the due diligence and supporting Borrower, Affiliate, project,
financial and related information identified in Section 4 hereto, and such other
information as Lender may require. Borrower will reasonably cooperate with
Lender's underwriting and due diligence, and Borrower will be responsible for
payment upon billing for Lender's out-of-pocket expenses in connection
therewith. Subject to Lender's satisfactory underwriting and due diligence
review, including satisfaction of the conditions in Section 4 and Section 5
hereof as they relate to such additional time-share resorts, Lender may, but
shall not be required to, approve one or more such additional time-share
resorts, including future phases or condominiums in an Existing Eligible Resort,
as an Eligible Resort. Subject in each instance to Lender's acceptable
underwriting and due diligence review, and Lender's prior written approval, any
project as may be approved by Lender after the Closing Date, if any, is
hereinafter referred to singly as an "ADDITIONAL ELIGIBLE RESORT" and
collectively as the "ADDITIONAL ELIGIBLE RESORTS."
3.5 CROSS COLLATERALIZATION. The Collateral also secures the
Obligations of Borrower under the Additional Credit Facility and the Existing
Credit Facilities. Upon repayment of this Loan and the satisfaction by Borrower
of all of the Obligations, the Collateral shall continue to secure the
Additional Credit Facility and the Existing Credit Facilities, as provided in
the documents evidencing and securing the Additional Credit Facility and the
Existing Credit Facilities. Borrower further acknowledges and agrees that upon
repayment in full of the Sovereign Facility, Lender's security interest in the
collateral securing such facility shall automatically become a first priority
security interest for securing the Borrower's Obligations hereunder and under
the Additional Credit Facility and the Existing Credit Facilities and Borrower
shall take such steps as Lender may request to deliver such collateral to Lender
and to confirm Lender's first priority security interest therein.
Notwithstanding the foregoing: (a) when the term loan component of the
Additional Credit Facility and the Existing Credit Facilities and the Loan are
paid in full, the Additional Resort Collateral shall be released from the Lien
of the security interest granted to Lender hereunder provided: (i) an Event of
Default has not occurred; and (ii) the Additional Resort Collateral is also
released from any lien granted to Sovereign pursuant to the Sovereign Documents;
and (b) when both the term loan component of the Additional Credit Facility and
the Existing Credit Facilities and the Loan are paid in full, the Silverleaf
Finance I, Inc., Stock shall be released from the Lien of the security interest
granted to Lender hereunder provided: (i) an Event of Default has not occurred;
and (ii) the Silverleaf Finance I, Inc., Stock is also released from any lien
granted to Sovereign pursuant to Sovereign Documents; (c) when the Term Loan
Component, the Revolving Loan Component and the Loan are paid in full, the
Silverleaf Finance II Stock and the Silverleaf Finance II Subordinated Note
shall be released from the Lien of the security interest granted to Lender
hereunder provided: (i)
24
an Event of Default has not occurred; and (ii) the Silverleaf Finance II Stock
and the Silverleaf Finance II Subordinated Note are also released from any lien
granted to Sovereign pursuant to the Sovereign Documents.
3.6 INTENTIONALLY OMITTED.
3.7 SECURITY INTEREST IN ALL PLEDGED NOTES RECEIVABLE. Lender
shall have a continuing security interest in all of the Pledged Notes
Receivable, including all Notes Receivable in the Ineligible Note Portfolio and
any Notes Receivable pledged to Sovereign and Lender may collect all payments
made under or in respect of all such Notes Receivable, including, without
limitation, Eligible Notes Receivable that are or may become ineligible, until
any of the same may be released by Lender, if at all, pursuant to Section 12.10
of the Tranche A Loan Agreement or Section 7.2(a) below. Notwithstanding
anything heretofore to the contrary, unless and until an Event of Default shall
occur, Borrower, as agent for and on behalf of Lender, shall retain possession
of and collect all payments under or in respect of all Notes Receivable in the
Ineligible Note Portfolio. By executing this Agreement, Borrower acknowledges
and agrees that it is holding such Notes Receivable as bailee and agent for
Lender. Borrower shall hold and designate such Notes Receivable in a manner that
clearly indicates that they are being held by Borrower as bailee on behalf of
Lender. Upon the occurrence of an Event of Default, Borrower shall promptly
deliver to Lender, for itself and as agent for Sovereign, all original Notes
Receivable comprising the Ineligible Note Portfolio and to the extent not
previously delivered to Lender, the documents listed in Section 5.1(b) of the
Tranche A Loan Agreement and with respect thereto and after such Event of
Default Lender shall have the right to collect all proceeds therefrom and apply
the same to payment of the Obligations as set forth in Section 2.3(a) hereof.
To perfect the security interest of Lender in the Ineligible Note
Portfolio, Borrower agrees, subject to Lender's prior approval, to execute and
cause to be filed, at Borrower's sole cost and expense, UCC-1 financing
statement(s) with the appropriate state and local governmental authorities as
requested by Lender. Borrower also shall execute and deliver in escrow to
Lender, for itself and as agent on behalf of Sovereign, an assignment of
Mortgages (the "ASSIGNMENT(S) OF MORTGAGES") and as approved by Lender and
Sovereign at their sole and absolute discretion, assigning equally to Lender and
Sovereign all of Borrower's rights, title and interests in each and all of the
Mortgages relating to the Notes Receivable in the Ineligible Note Portfolio.
Borrower further agrees to promptly execute and deliver modifications or
additional Assignments of Mortgages requested by Lender and Sovereign in order
to continue the security interests of Lender and Sovereign in the Ineligible
Note Portfolio. Borrower acknowledges and agrees that upon an Event of Default,
Lender, or a designee as designated by Lender and Sovereign pursuant to the
terms of the Intercreditor Agreement, shall have the right to automatically
record, at Borrower's sole cost and expense, all such Assignments of Mortgages
executed by Borrower and delivered to Lender in accordance with the terms of
this Section 3.7.
SECTION 4 -- CONDITIONS PRECEDENT TO THE CLOSING
4.1 CONDITIONS PRECEDENT. The obligation of Lender to enter into
this Agreement and to fund the initial Advance shall be subject to the
satisfaction of each of the following conditions precedent, in addition to all
of the conditions precedent set forth elsewhere in the Loan Documents:
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(a) REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. The representations and warranties contained in the Loan Documents
are and shall be true and correct in all respects, and all covenants and
agreements have been complied with and correct in all respects, and all
covenants and agreements to have been complied with and performed by Borrower
shall have been fully complied with and performed to the satisfaction of Lender.
(b) NO PROHIBITED ACTS. Borrower shall not have taken any
action or permitted any condition to exist that would have been prohibited by
any provision of this Agreement or the Loan Documents.
(c) NO CHANGES. That all information and documents
heretofore delivered by Borrower to Lender with respect to the Existing Resorts,
including information and documents delivered in connection with the Existing
Credit Facilities and/or the Additional Resort Facility, remain true and correct
in all respects.
(d) APPROVAL OF DOCUMENTS PRIOR TO CLOSING DATE. Borrower
has delivered to Lender (with copies to Lender's counsel), at least fifteen (15)
Business Days prior to the Closing Date, and Lender has reviewed and approved,
at least five (5) Business Days prior to the Closing Date, the form and content
of all of the items specified in Section 4.1(d)(i) through (vi) below (the
"SUBMISSIONS"). Lender shall have the right to review and approve any changes to
the form of any of the Submissions. If Lender disapproves of any changes to any
of the Submissions, Lender shall have the right to require Borrower either to
cure or correct the defect objected to by Lender or to elect not to fund the
Loan or any Advance. Under no circumstances shall Lender's failure to approve or
disapprove a change to any of the Submissions be deemed to be an approval of
such Submissions. All of the Submissions were and shall be prepared at
Borrower's sole cost and expense, unless expressly stated to be an obligation
and expense of Lender. Lender shall have the right of prior approval of any
Person responsible for preparing a Submission ("PREPARER") and may disapprove
any Preparer in its sole discretion, for any reason, including without
limitation, that Lender believes that the experience, skill, reputation or other
aspect of the Preparer is unsatisfactory in any respect. All Submissions
required pursuant to this Agreement shall be addressed to Lender and include the
following language: "THE UNDERSIGNED ACKNOWLEDGES THAT TEXTRON FINANCIAL
CORPORATION IS RELYING ON THE WITHIN INFORMATION IN CONNECTION WITH ITS
DETERMINATION TO MAKE A LOAN TO SILVERLEAF RESORTS, INC. IN CONNECTION WITH THE
SUBJECT COLLATERAL."
(i) A certificate in the form attached as
Exhibit A, to be dated as of the Closing Date and signed by
the president, vice president, or secretary of the Borrower,
certifying that the conditions specified in Sections (a), (b)
and (c) above are true;
(i) Copies of any amendments to the articles of
incorporation of Borrower not previously delivered to the
Lender, certified to be true and complete by Borrower and the
Secretary of State of the State of Texas and a current
certificate of good standing for Borrower, and copies of any
amendments to the by-laws of Borrower not previously delivered
to the Lender, certified to be true, correct and complete by
the secretary or assistant secretary of Borrower;
26
(iii) a certificate of the Secretary of the
Borrower certifying the adoption by the Board of Directors of
the Borrower of a resolution authorizing Borrower to enter
into and execute this Agreement, the Note, and the other Loan
Documents, to borrow the Loan from Lender, and to grant to
Lender a first priority security interest in and to the
Collateral;
(iv) a certificate of the secretary or assistant
secretary of Borrower certifying the incumbency, and verifying
the authenticity of the signatures, of the specified officers
of Borrower authorized to sign the Agreement, the Note and the
other Loan Document; and
(v) Copies or other evidence of all loans to
Borrower from any officers, shareholders, or Affiliates of
Borrower not previously delivered to the Lender.
(vi) Commitment to issue Mortgagee Title Policies
(as defined below) from the Title Company.
(e) EXECUTION AND DELIVERY OF LOAN DOCUMENTS. Borrower
shall have executed and/or delivered to Lender, on or before the Closing Date,
to the extent not previously executed and delivered, the following Loan
Documents:
(i) THIS AGREEMENT.
(ii) EXISTING INVENTORY LOAN NOTE.
(iii) NEW INVENTORY LOAN NOTE. In the form
attached hereto as Exhibit A.
(iv) ADDITIONAL RESORT COLLATERAL MORTGAGES.
(v) ADDITIONAL RESORT COLLATERAL ASSIGNMENTS.
(vi) STOCK PLEDGE AGREEMENT. Together with
delivery of all original stock certificates indorsed to Agent,
as agent for each Lender and Sovereign.
(vii) ENVIRONMENTAL INDEMNIFICATION AGREEMENT. In
the form attached hereto as Exhibit A.
(viii) LAND MORTGAGES.
(ix) INTERCREDITOR AGREEMENT. Borrower, ▇▇▇▇▇▇
and Sovereign shall have executed and delivered to Lender, on
or before the date hereof, the Amended and Restated
Intercreditor Agreement, in the form attached hereto as
Exhibit C.
(x) MORTGAGES. In the form attached hereto as
Exhibit A.
(xi) MODIFICATION(S) OF MORTGAGES.
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(xii) FINANCING STATEMENTS. Original UCC financing
statements covering the Collateral, filed with the Secretary
of State of Texas and with the appropriate jurisdiction in
which filing is required to perfect a security interest in the
Collateral.
(xiii) STANDBY MANAGEMENT AGREEMENT ASSIGNMENT.
(xiv) ASSIGNMENT OF MANAGEMENT AGREEMENTS. In the
form attached hereto as Exhibit A.
(xv) SILVERLEAF FINANCE II STOCK AND SUBORDINATE
NOTE PLEDGE AGREEMENT.
(xvi) BORROWER'S CERTIFICATE AND REQUEST FOR
ADVANCE. In the form attached hereto as Exhibit B.
(xvii) OTHER ITEMS. Such other agreements,
documents, instruments, certificates and materials as Lender
may request to evidence the Obligations; to evidence and
perfect the rights and Liens and security interests of Lender
contemplated by the Loan Documents, and to effectuate the
transactions contemplated herein.
(f) ▇▇▇▇▇▇ FACILITY MODIFICATION. On or before the
Closing Date, Borrower shall deliver to Lender, evidence satisfactory to Lender,
that the ▇▇▇▇▇▇ Facility has been modified as set forth in the Term Sheet
applicable to the New Inventory Loan and in a manner acceptable to Lender in its
sole and absolute discretion and Lender has been provided with true, correct and
complete copy of all of the executed modifications to the ▇▇▇▇▇▇ Documents.
(g) PHYSICAL INSPECTION. Lender shall be satisfied with
its physical inspection of the Resorts.
(h) UCC SEARCH. Lender shall have obtained, at Borrower's
cost, such searches of the applicable public records as it deems necessary under
all applicable law to verify that it has a first or second, as applicable, and
prior perfected Lien and security interest covering all of the Collateral.
Lender shall not be obligated to fund any Advance if Lender determines that
Lender does not have a first or second, as applicable, and prior perfected lien
and security interest covering any portion of the Collateral.
(i) LITIGATION SEARCH. Lender shall have obtained, at
Borrower's cost, an independent search to verify that there are no bankruptcy,
foreclosure actions or other material litigation or judgments pending or
outstanding against the Resorts, any portion of the Collateral, Borrower, or any
Affiliates of Borrower (each a "MATERIAL PARTY"). The term "other material
litigation" as used herein shall not include matters in which (i) a Material
Party is plaintiff and no counterclaim is pending or (ii) which Lender
determines, in its sole discretion exercised in good faith, are immaterial due
to settlement, insurance coverage, frivolity, or amount or nature of claim.
Lender shall not be obligated to fund any Advance if it determines that any such
litigation is pending.
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(j) OPINION OF COUNSEL. An opinion or opinions of
Borrower's Counsel in form and substance acceptable to Lender.
(k) LAND MORTGAGES, MORTGAGES AND/OR MODIFICATION(S) OF
MORTGAGES. Borrower shall have executed and delivered to Lender, on or before
the Closing Date, the Land Mortgages, the Mortgages and the Modification(s) of
Mortgages, each of which shall be in form and substance acceptable to Lender,
and each of which shall be in recordable form.
(j) INTENTIONALLY OMITTED.
(m) RECORDING OF LAND MORTGAGES, MORTGAGES AND/OR
MODIFICATION(S) TO MORTGAGES. The Land Mortgages, the Mortgages and the
Modification(s) of Mortgages shall have been duly recorded in the applicable
land records for each state in which the Land is located.
(n) TITLE INSURANCE COMMITMENT. Subject to Section 4.5(c)
(xvi) and Section 5.2(e), a commitment to issue Mortgagee Title Policies from
the Title Company for each Interval constituting part of the Inventory
(o) INTENTIONALLY OMITTED.
4.2 CLOSING DATE ADVANCE. In the event that Borrower desires
Lender to make an Advance on the Closing Date, then, in addition to all of the
conditions precedent set forth in this Section 4, Borrower shall have complied
with all of the requirements of Section 5 below at least five (5) Business Days
prior to the Closing Date.
4.3 EXPENSES. Borrower shall have paid all fees and expenses
required to be paid pursuant to this Agreement. Lender shall have no obligation
to fund the Loan or make the initial Advance or any subsequent Advance unless
(a) the amount of the Loan together with any moneys paid by Borrower is
sufficient to satisfy all fees and expenses required to be paid pursuant to this
Agreement, and (b) the proceeds of the Advance will not be used for any of the
uses set forth in Section 6.11(b).
4.4 PROCEEDINGS SATISFACTORY. Borrower shall execute all of the
Loan Documents approved by Lender on the Closing Date, and all actions taken in
connection with the execution or delivery of the Loan Documents, and all
documents and papers relating thereto, shall be satisfactory to Lender and its
counsel. Lender and its counsel shall have received copies of such documents and
papers as Lender or such counsel may reasonably request in connection therewith,
all in form and substance satisfactory to Lender and its counsel.
4.5 CONDITIONS PRECEDENT TO FUNDING OF ADVANCES WITH RESPECT TO
ADDITIONAL ELIGIBLE RESORTS. As provided in Section 3.4 hereof, Borrower may
propose to Lender that Lender approve one or more additional timeshare plans for
inclusion hereunder as an Additional Eligible Resort in respect of which
Intervals may be accepted as part of the Inventory and Advances may be made. The
obligation of Lender to fund any Advance with respect to any Interval from an
Additional Resort shall be subject to the satisfaction of each of the following
conditions precedent, in addition to all of the conditions precedent set forth
elsewhere in the Loan Documents:
29
(a) Representations, Warranties, Covenants and Agreements. The
representations and warranties contained in the Loan Documents are and shall be
true and correct in all respects, and all covenants and agreements have been
complied with and correct in all respects, and all covenants and agreements to
have been complied with and performed by Borrower shall have been fully complied
with and performed to the satisfaction of Lender.
(b) No Prohibited Acts. Borrower shall not have taken any action
or permitted any condition to exist which would have been prohibited by any
provision of the Loan Documents.
(c) Approval of Documents Prior to Advance. Borrower has delivered
or caused to be delivered to Lender (with copies to Lender's counsel, at least
fifteen (15) Business Days prior to the date of each such Advance), and Lender
has reviewed and approved, at least five (5) Business Days prior to such date,
the form and content of all of the items specified in each of the Submissions
required pursuant to this Section 4.5. Lender shall have the right to review and
approve any changes to the form of any of the Submissions. If Lender disapproves
of any changes to any of the Submissions, Lender shall have the right to require
Borrower either to cure or correct the defect objected to by Lender or to elect
not to fund the Loan or any Advance with respect to any such Interval. Under no
circumstances shall Lender's failure to approve or disapprove a change to any of
the Submissions be deemed to be an approval of such Submissions. All of the
Submissions were and shall be prepared at Borrower's sole cost and expense,
unless expressly stated to be an obligation and expense of Lender. Lender shall
have the right of prior approval of any Preparer and may disapprove any Preparer
in its sole discretion, for any reason, including without limitation, that
Lender believes that the experience, skill, reputation or other aspect of the
Preparer is unsatisfactory in any respect. All Submissions required pursuant to
this Agreement shall be addressed to Lender and include the following language:
"THE UNDERSIGNED ACKNOWLEDGES THAT TEXTRON FINANCIAL CORPORATION IS RELYING ON
THE WITHIN INFORMATION IN CONNECTION WITH ITS DETERMINATION TO MAKE A LOAN TO
SILVERLEAF RESORTS, INC. IN CONNECTION WITH THE SUBJECT COLLATERAL."
(i) a certificate in the form attached as Exhibit A, to be dated
as of the date of each such Advance and signed by the
president, vice president, or secretary of the Borrower,
certifying that the conditions specified in Sections (a) and
(b) above are true;
(ii) copies of the articles of incorporation of Borrower, together
with any amendments thereto certified to be true and complete
by Borrower and the Secretary of State of the State of Texas,
a current certificate of good standing for Borrower issued by
the Secretary of State of the State of Texas, a current
certificate of authority to conduct business issued by the
secretary of state in each state in which the Borrower
conducts business, and copies of the by-laws of Borrower
certified to be true, correct and complete by the secretary or
assistant secretary of Borrower;
(iii) a Survey for each Additional Eligible Resort for which a
mortgage lien is being granted to the Lender on Intervals in
connection with the Advance in question;
30
(iv) a certificate of the secretary or assistant secretary of
Borrower certifying the adoption by the board of directors
thereof, respectively, of a resolution authorizing the
addition of the Resort in question as an Additional Eligible
Resort and to authorize Borrower to enter into, execute and
deliver any Documents in connection therewith;
(v) a certificate of the secretary or assistant secretary of
Borrower certifying the incumbency, and verifying the
authenticity of the signatures, of the specified officers of
Borrower authorized to sign all documents required in
connection with such Additional Eligible Resort as required
pursuant to this Section 4.5;
(vi) an inspection report or reports covering each Additional
Eligible Resort for which a mortgage lien is being granted to
the Lender on Intervals in connection with the Advance in
question, including without limitation all real property and
personal property subject to the Declaration and all adjacent
property, confirming:
(1) the absence of Hazardous Materials on the
personal property and real property comprising each
such Additional Eligible Resort;
(2) that the inspection firm has obtained, reviewed
and included within its report a CERCLIS printout
from the Environmental Protection Agency (the "EPA"),
statements from the EPA and other applicable state
and local authorities and a Phase I Environmental
Audit, all of which information shall confirm that
there are no known or suspected Hazardous Materials
located at, used or stored on, or transported to or
from each such Additional Eligible Resort or in such
proximity thereto as to create a material risk of
contamination of each such Additional Eligible
Resort;
(vii) evidence that Borrower is maintaining all policies of
insurance required by and in accordance with Section 7.1(d)
hereof, including copies of the most current paid insurance
premium invoices;
(viii) evidence that Borrower and the Timeshare Documents for each
Additional Eligible Resort for which a mortgage lien is being
granted to the Lender on Intervals in connection with the
Advance in question are in compliance with all applicable laws
in connection with its sales of Intervals, including without
limitation, the Timeshare Acts;
(ix) a current preliminary title report or certificate of title for
each Additional Eligible Resort for which a mortgage lien is
being granted to the Lender on Intervals in connection with
the Advance in question, with copies of all title exceptions;
(x) copies of all applicable governmental permits, approvals,
consents, licenses, and certificates for the establishment of
each Additional Eligible Resort for which a mortgage lien is
being granted to the Lender on Intervals in connection with
the Advance in question as timeshare projects in accordance
with the applicable Timeshare Act, and for the occupancy and
intended use and operation of each
31
such Additional Eligible Resort, including the Units,
including a letter certification from Borrower regarding
zoning classification and compliance, letters or other
satisfactory evidence from utility companies, governmental
entities or other persons confirming that water, sewer
(sanitary and storm), electricity, solid waste disposal,
telephone, police, fire and rescue services are being provided
to each Resort, and any business licenses necessary for
operation of each such Additional Eligible Resort;
(xi) certified true, correct and complete copies of all of the
Timeshare Documents for each Additional Eligible Resort for
which a mortgage lien is being granted to Lender on Intervals
in connection with the Advance in question;
(xii) evidence satisfactory to Lender that all taxes and assessments
owed by or for which Borrower is responsible for collection
have been paid, including but not limited to sales taxes, room
occupancy taxes, payroll taxes, personal property taxes,
excise taxes, intangibles taxes, real property taxes, and
income taxes, and any assessments related to each Additional
Eligible Resort for which a mortgage lien is being granted to
Lender on Intervals in connection with the Advance in question
and copies of the most current paid tax bills for each such
Additional Eligible Resort evidencing that each such
Additional Eligible Resort have been segregated from all other
property on the applicable municipal taxrolls;
(xiii) written confirmation from an architect covering each
Additional Eligible Resort for which a mortgage lien is being
granted to Lender on Intervals in connection with the Advance
in question as to the physical condition of the improvements
at each such Additional Eligible Resort, including that soil
conditions are sufficient to support all existing and any
contemplated improvements to the real property; which written
confirmation shall be in form and substance reasonably
acceptable to the Lender. Each architect rendering such
written confirmation shall be licensed as an architect in the
state of Texas;
(xiv) such credit references on Borrower as Lender deems necessary
in its sole discretion;
(xv) copies or other evidence of all loans to Borrower from any
officers, shareholders, or Affiliates of Borrower, if any;
(xvi) a commitment to issue Mortgagee Title Policies from the Title
Company for each Interval constituting part of the Inventory.
Notwithstanding anything heretofore to the contrary, until
such time as deeded Intervals are permitted under local law
governing the Oak N' Spruce Resort, Lender agrees that
Borrower shall not be required to provide such a commitment or
a Mortgagee Title Insurance Policy with respect to the Oak `N
Spruce Resort in order to qualify any such Resort as an
Additional Eligible Resort, provided, however, that under no
circumstance shall the portion of Loan secured by Intervals
from the Oak N' Spruce Resort exceed $1,000,000.00 in the
aggregate. Notwithstanding anything heretofore to the
contrary, if any claim, lien, encumbrance, charge or other
matter arises with
32
respect to any Interval or Intervals which constitutes part of
the Collateral pursuant to this Agreement and for which
Borrower has not provided a Mortgagee Title Policy, then, in
such event:
(a) The Interval in question shall cease to
constitute Inventory and the Borrower
immediately shall either replace the
Mortgage with respect to the Interval in
question with a Mortgage on an Interval
acceptable to Lender in its sole discretion
or make a Mandatory Prepayment as provided
in Section 2.4(b)(i) hereof; and
(b) The Resort at which the Interval in question
is located shall cease to be an Additional
Eligible Resort, unless and until the
Borrower shall cure any such claim, lien,
encumbrance, charge or other matter to the
satisfaction of the Lender. Furthermore, any
and all further requests for Advances in
respect of Intervals from the Resort in
question must thereafter be accompanied by
satisfactory Mortgagee Title Policies;
(xvii) the Financial Statements;
(xviii) to the extent not previously delivered pursuant to the
Additional Credit Facility, the Existing Credit Facility or
hereunder, Borrower will execute, or cause to be executed with
respect to each Additional Eligible Resort, a Negative Pledge,
Borrower's Affidavit with Respect to the Additional Eligible
Resorts and an Environmental Indemnification Agreement, each
in the form attached hereto as Exhibit A;
(xix) with respect to any improvements, including any Units,
constructed at a Resort within the twenty-four month period
prior to the approval of any Additional Eligible Resort,
Borrower shall also deliver to Lender, for its approval, such
documents and instruments as Lender may reasonably request in
connection with such newly constructed improvements,
including, without limitation, copies of building permits,
plans and specifications construction and architectural
contracts, title insurance insuring over, among other things,
mechanics liens, certificates of occupancy and satisfactory
evidence of the completion of such improvements;
(xx) such other documents, instruments, agreements, tests, reports
and inspections as the Lender may require with respect to the
Borrower or any applicable Affiliate, the Loan or any Resort,
including any Additional Eligible Resort; and
(xxi) Upon request of the Lender, Borrower shall deliver to the
Lender evidence, satisfactory to the Lender, that there is no
material litigation, written complaint, suit, action, written
claim or written charge pending against the Borrower or any
Affiliate with any court or with any governmental authority
with respect to the Resort, the Timeshare Documents, any
Interval, or any marketing, offer or sale of any Interval.
33
(d) Physical Inspection. Lender shall be satisfied with its
physical inspection of the Additional Eligible Resorts.
(e) UCC Search. Lender shall have obtained, at Borrower's cost,
such searches of the applicable public records as it deems necessary under all
applicable law to verify that it has a first and prior perfected Lien and
security interest covering all of the Collateral. Lender shall not be obligated
to fund any Advance if Lender determines that it does not have a first and prior
perfected lien and security interest covering any portion of the Collateral.
(f) Litigation Search. Lender shall have obtained, at Borrower's
cost, an independent search to verify that there are no bankruptcy, foreclosure
actions or other material litigation or judgments pending or outstanding against
the Additional Eligible Resorts, any portion of the Collateral, Borrower, or any
Affiliate, (each a "MATERIAL PARTY"). The term "other material litigation" as
used herein shall not include matters in which (i) a Material Party is plaintiff
and no counterclaim is pending or (ii) which Lender determines, in its sole
discretion exercised in good faith, are immaterial due to settlement, insurance
coverage, frivolity, or amount or nature of claim. Lender shall not be obligated
to fund any Advance if it determines that any such litigation is pending.
(g) Opinions of Borrower's Counsel. Borrower shall deliver to
Lender, for the benefit of Lender, at Borrower's sole cost and expense, such
opinions of counsel, including counsel admitted in each state in which each
Additional Eligible Resort is located, as to such matters with respect to the
Borrower and each Additional Eligible Resort as Lender may request, and in form
and substance acceptable to Lender in its sole discretion.
(h) Funding Procedure. Borrower shall have complied to Lender's
satisfaction with each of the conditions precedent to funding of any Advance set
forth in Section 5 hereof.
(i) Management of Resort. Borrower shall provide evidence
satisfactory to Lender that Borrower, or an Affiliate, is the manager or
operator of each Resort, pursuant to a written management or operating
agreement, in form and substance satisfactory to Lender, which with respect to
all Resorts shall have a term which shall expire no earlier April 1, 2009.
Borrower agrees to provide an estoppel letter, in form and substance acceptable
to Lender, from the applicable Timeshare Owner's Association.
(j) Other Items. Such other agreements, documents, instruments,
certificates and materials as Lender may request to determine the acceptability
of any such Additional Eligible Resort, to evidence the Obligations; to evidence
and perfect the rights and Liens and security interests of Lender contemplated
by the Loan Documents, and to effectuate the transactions contemplated herein,
including, without limitation, true copies of all Resort Documents for each such
Additional Eligible Resort, all Timeshare Documents and operating and management
contracts and agreements, evidence of with the applicable Timeshare Act and
other applicable laws, evidence of all required governmental licenses and
permits; title searches; title commitments or policies, including. Complete and
legible copies of each title exception, engineering, environmental and soil
reports, evidence of compliance with all applicable zoning and building codes;
each of which shall be satisfactory to Lender in its sole and absolute
discretion.
34
4.6 EFFECTIVENESS. Notwithstanding anything herein to the
contrary, Lender's obligation to make Advances of the New Inventory Loan shall
not become effective unless and until:
(a) Lender receives the modifications of the ▇▇▇▇▇▇
Documents, each of which shall be in form and substance acceptable to Lender in
its sole discretion;
(b) Lender receives evidence, satisfactory to it in its
sole discretion, that ▇▇▇▇▇▇ has released all of its security interests in the
Land, the Inventory, the Additional Resort Collateral and in all other
collateral securing the Sovereign Facility, the Additional Credit Facility, the
Existing Credit Facilities and this Loan;
(c) Sovereign and ▇▇▇▇▇▇ have executed and delivered the
Intercreditor Agreement in form and substance acceptable to Lender in its sole
discretion;
(d) Lender has received the opinions of Borrower's
counsel, in form and substance satisfactory to Lender in its sole discretion;
(e) Lender has received title policies or title
commitments, in form and substance and issued by companies acceptable to Lender
in its sole discretion, insuring the Mortgages as a first priority Lien on the
Intervals, subject only to those matters as are approved by Lender in its sole
discretion; and
(f) No Default or Event of Default has occurred under
this Agreement, the ▇▇▇▇▇▇ Documents, the DZ Documents, the TFC Conduit Loan,
the Sovereign documents or the documents evidencing and securing the Additional
Credit Facility or the Existing Credit Facilities.
SECTION 5 -- FUNDING PROCEDURE
The obligation of Lender to make any Advance, shall be subject to the
satisfaction of all of the following conditions precedent:
5.1 REQUESTS FOR ADVANCES. Each request for an Advance shall:
(a) be in writing in form attached hereto as Exhibit B
and shall certify the amount of the then-current Loan to Retail Value Ratio,
specify the principal amount of the Advance requested and designate the account
to which the proceeds of such Advance are to be transferred;
(b) state that the representations and warranties of the
Borrower contained in the Agreement and any closing or funding related
certifications are true and correct as of the date of the request and, after
giving effect to the making of such requested Advance, will be true and correct
as of the date on which the requested Advance is to be made;
(c) state that no Default or Event of Default exists as
of the date of the request and, after giving effect to the making of the
requested Advance, no Default or Event of Default would exist as of the date on
which the requested Advance is to be made;
35
(d) be delivered to the office of Lender at least five
(5) Business Days prior to the date of the requested Advance; and
(e) be signed by a principal financial officer of the
Borrower.
5.2 LOAN DOCUMENTS/COLLATERAL. Not less than five (5) Business
Days prior to the date of any Advance, the Borrower shall have:
(a) delivered to Lender a list of all Intervals which are
to be the subject of such requested Advance, together with such additional
information as Lender may require;
(b) delivered to Lender (or, if Lender shall so instruct,
a designee appointed by Lender in writing), to the extent available, (a) the
original or certified copies of any deed or beneficial interest certificate, or
other documents evidencing conveyance of the Interval in question to the
Borrower, (b) a copy of any title policy received by the Borrower in connection
with its acquisition of the Interval in question, and (c) original or true
copies of any purchase contract (including addenda) or other agreements entered
into by the Borrower with any person with respect to the sale by the Borrower to
any Purchaser of the Interval in question;
(c) delivered to Lender a duly executed Mortgage or
Mortgages granting to Lender a first mortgage lien on the Inventory;
(d) original UCC financing statements covering the
Collateral, filed with the Secretary of State of Texas and the Secretary of
State of each state in which the Collateral is located; and
(e) subject to Section 4.5(c)(xvi) hereof, delivered to
Lender, with respect to each Interval constituting a part of the Inventory, a
commitment for a mortgagee's title insurance policy showing that the Mortgage in
respect of such Interval insuring in favor of Lender the first priority Lien of
such Mortgage in the amount of the Advance to be made in respect of such
Interval (or in case of any Modification(s) to Mortgage, an endorsement to the
existing mortgagee's title insurance policy endorsing said policy to reflect
such Modification(s) of Mortgage), with a satisfactory title insurance policy to
be issued within a reasonable time following the requested Advance.
The Mortgages to Lender shall each have been duly recorded in
the applicable land records which are described in Schedule A hereof. The
mortgagee's title insurance policies shall be in form and substance satisfactory
to Lender and shall be issued by a title insurance company satisfactory to
Lender (the "TITLE COMPANY"), and name Lender as the insured party therein. The
funding of the Advance, delivery of the Collateral and issuance of the title
insurance policy, and recording of the mortgages or any releases may, in
Lender's discretion, be effected by way of an escrow arrangement with the Title
Company or other fiduciary, the form and substance of which shall be
satisfactory to Lender.
5.3 OTHER CONDITIONS. In addition to the other conditions set
forth in this Agreement, the making of the initial or any subsequent Advance
shall be subject to the satisfaction of the following conditions:
36
(a) no Default or Event of Default shall exist
immediately prior to the making of such requested Advance or, after giving
effect thereto, immediately after the making of such requested Advance;
(b) each agreement required to have been executed and
delivered in connection with any prior Advance shall be consistent with the
terms of this Agreement and shall be in full force and effect;
(c) the date on which such requested Advance is to be
made shall be a Business Day;
(d) Borrower shall have delivered to Lender a
certification showing the Retail Value of each Interval and Lender shall be
satisfied with the Retail Value of each Interval in its sole discretion. The
dollar amount of the requested Advance shall be based on the Retail Value of the
Intervals on which the Lender is being granted a Mortgage;
(e) Not more than one Advance shall have previously been
made in the same calendar month in which such requested Advance is to be made,
unless Lender, in its sole discretion, agrees to make an additional Advance
during such calendar month;
(f) Such requested Advance shall be in a principal amount
of not less than $50,000.00, unless Lender, in its sole discretion, agrees to
make an Advance in an amount less than $50,000.00;
(g) Lender shall have determined that the requested
Advance does not exceed the total amount of the Loan to Retail Value Ratio,
based on the Retail Value of the Inventory on which Lender has been granted a
first mortgage lien; and
(h) If Lender shall so require, Lender shall have
received an executed Closing Protection Letter issued by the Title Company,
which shall be reasonably acceptable to Lender.
5.4 EXPENSES. The Borrower shall have paid all fees and expenses
required to be paid by Borrower pursuant to this Agreement in connection with
such requested Advance or any conditions related thereto.
5.5 PROCEEDINGS SATISFACTORY. All actions taken in connection with
such requested Advance and all documents and papers relating thereto shall be
satisfactory to Lender and its counsel. Lender and its counsel shall have
received copies of such documents and papers as the Lender or such counsel may
reasonably request in connection with such requested Advance, all in form and
substance reasonably satisfactory to the Lender and its counsel.
SECTION 6 -- GENERAL REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender as follows:
6.1 Organization, Standing, Qualification. Borrower (a) is a duly
organized and validly existing Texas corporation duly organized, validly
existing and in good standing under the laws of the State of Texas, and (b) as
all requisite power, corporate or otherwise, to conduct
37
its business and to execute and deliver, and to perform its obligations under,
the Loan Documents.
6.2 AUTHORIZATION, ENFORCEABILITY, ETC.
(a) The execution, delivery and performance by Borrower
of the Loan Documents has been duly authorized by all necessary corporate action
by Borrower and does not and will not (i) violate any provision of the
certificate or articles of incorporation of Borrower, bylaws of Borrower, or any
agreement, law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect to which Borrower is a party or is
subject; (ii) result in, or require the creation or imposition of, any Lien upon
or with respect to any asset of Borrower other than Liens in favor of Lender; or
(iii) result in a breach of, or constitute a default by Borrower under, any
indenture, loan or credit agreement or any other agreement, document, instrument
or certificate to which Borrower is a party or by which it or any of its assets
are bound or affected.
(b) No approval, authorization, order, license, permit,
franchise or consent of, or registration, declaration, qualification or filing
with, any governmental authority or other Person, including without limitation,
the Division or the Timeshare Owners' Association is required in connection with
the execution, delivery and performance by Borrower of any of the Loan
Documents.
(c) The Loan Documents constitute legal, valid and
binding obligations of Borrower, enforceable against Borrower in accordance with
their respective terms.
(d) Borrower has good and marketable title to the
Collateral, free and clear of any lien, security interest, charge or encumbrance
except for the security interests created by this Agreement or any Loan Document
or otherwise created in favor of Lender or those specifically consented to in
writing by the Lender. No financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of Lender hereunder.
(e) The execution and delivery of the Loan Documents, the
filing of the UCC-1's with the office of the secretary of state of the state in
which the applicable Resort is located and the Mortgages in the official records
of the county in which the applicable Resort is located, create in favor of
Lender a valid and perfected continuing first priority security interest in the
Collateral. The Collateral shall secure the full payment and performance of the
Obligations.
(f) The Mortgages constitute and will constitute valid
and enforceable first and prior liens and security interests on the Inventory.
(g) The Loan documents are in full force and effect, are
and will be valid and binding obligations of the respective makers in favor of
Lender, and the Borrower further warrants and guarantees the value, quantity,
sound condition, grade and quality of the Inventory and rights, properties,
easements and interests appurtenant or related thereto.
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(h) Lender shall not be required to take, and the
Borrower has taken any and all required steps to protect Lender's security
interest in the Collateral (other than maintaining possession of the portion of
the Collateral constituting instruments); and Lender is not or 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, the Collateral release
the Borrower from any of the Obligations.
6.3 FINANCIAL STATEMENTS AND BUSINESS CONDITION. The Weekly Flash
Reports, the Monthly Financial Reports for the first nine (9) months of the
calendar year 2003 and the Alternative Financial Models dated November 13, 2003,
are, to the best of Borrower's knowledge, accurate and fairly represent the
financial condition of the Borrower for the periods in question, subject to the
written qualifications set forth therein. To the best of Borrower's knowledge,
there are no material liabilities, direct or indirect, fixed or contingent, of
Borrower, except as disclosed to Lender in writing.
6.4 TAXES. In accordance with the requirements set forth in the
Declaration, Borrower represents and warrants that Borrower or Timeshare Owners'
Association, as required, has paid or will have paid in full, prior to
delinquency, all ad valorem taxes and other taxes and assessments against the
Resort and the Collateral; and Borrower knows of no basis for any additional
taxes or assessments against the Resorts or the Collateral. Borrower or the
Timeshare Owners' Association, as the case may be, has filed all tax returns
required to have been filed by it and has paid or will pay prior to delinquency,
all taxes shown to be due and payable on such returns, including interest and
penalties thereon, and all other taxes which are payable by it to the extent the
same have become due and payable. Borrower has paid or will have paid in full,
prior to delinquency, all ad valorem taxes and other assessments against that
portion of the Additional Resort Collateral constituting real property and
against the Land, and Borrower knows of no basis for any additional taxes or
assessments against the Land or other such real property.
6.5 TITLE TO PROPERTIES: PRIOR LIENS. Borrower has good and
marketable title to all of the Collateral, and to all unsold Units and Intervals
at each Resort, and all rights, properties and benefits appurtenant to or
benefiting them. Borrower is not in default under any of the documents
evidencing or securing any indebtedness which is secured, wholly or in part, by
any portion of any Resort or any portion or all the Collateral and no event has
occurred which with the giving of notice, the passage of time or both, would
constitute a default under any of the documents evidencing or securing any such
indebtedness. Other than the Liens granted in favor of Lender and Sovereign, the
Liens granted to secure the Additional Credit Facility and the Existing Credit
Facilities and the Liens described in Schedule 6.5 hereto, there are no liens or
encumbrances against the Collateral, or against any Resort.
6.6 SUBSIDIARIES. Borrower has no subsidiaries or Affiliates which
have any involvement or interest in any Resort in any way. None of the
Affiliates of Borrower are parties to any proxies, voting trusts, shareholders
agreements or similar arrangements pursuant to which voting authority, rights or
discretion with respect to the Borrower is vested in any other Person.
6.7 LITIGATION, PROCEEDINGS, ETC. Except for those matters
identified in Schedule 6.7 hereto, there are no actions, suits, proceedings,
orders or injunctions pending or threatened against or affecting Borrower, the
Resort or the Timeshare Owners' Association at law or in equity, or before or by
any governmental authority or other tribunal, which (a) could have a
39
material adverse effect on Borrower or (b) relate to the Loan or which could
have a material effect on the Collateral or the Resort. Borrower has received no
notice from any court, governmental authority or other tribunal alleging that
Borrower or the Resort have violated the Timeshare Act, any of the rules or
regulations thereunder, the Declaration or any other applicable laws, agreements
or arrangements that could have any material effect on the Loan, the Collateral
or the Resorts.
6.8 LICENSES, PERMITS, ETC. The Borrower, the Resorts, the
Timeshare Owners' Associations or Borrower's Affiliates, including, but not
limited to, Silverleaf Club, Inc., involved in the operations of the Resorts,
and, to the best of Borrower's knowledge after diligent inquiry, other Persons
involved in the operations of the Resorts, possess all requisite franchises,
certificates of convenience and necessity, operating rights, approvals,
licenses, permits, consents, authorizations, exemptions and orders as are
necessary to carry on its or their business as now being conducted, without any
known conflict with the rights of others and, with respect to the Borrower, the
Resorts and the Timeshare Owners' Associations, in each case subject to no
mortgage, pledge, Lien, lease, encumbrance, charge, security interest, title
retention agreement or option other than as provided for by this Agreement.
Borrower has all permits, licenses and consents for the ownership and use of the
Land.
6.9 ENVIRONMENTAL MATTERS. Except as otherwise noted on Schedule
6.9: (a) neither the Land, any portion of the Additional Resort Collateral
consisting of real property or any Resort contains any Hazardous Materials, (b)
no Hazardous Materials are used or stored at or transported to or from the
Resorts, the Land or any portion of the Additional Resort Collateral consisting
of real property, (c) neither Borrower nor the Resorts nor any manager thereof
or to Borrower's knowledge, the Timeshare Owners' Associations, have received
notice from any governmental agency, entity or other Person with regard to
Hazardous Materials on, under or affecting any Resort, the Land or any portion
of the Additional Resort Collateral consisting of real property, and (d) neither
Borrower nor the Resorts, the Land or any portion of the Additional Resort
Collateral consisting of real property, nor any portion thereof, nor to
Borrower's knowledge after diligent inquiry, the Timeshare Owners' Associations,
are in violation of any Environmental Laws.
6.10 FULL DISCLOSURE. No information, exhibit or written report or
the content of any schedule furnished by or on behalf of Borrower to Lender in
connection with the Loan or the Resorts contains any material misstatement of
fact or omits the statement of a material fact necessary to make the statement
contained herein or therein not misleading. Borrower knows of no fact or
condition which will prevent the sale of Intervals to Purchasers or prevent the
operation of the Resorts in accordance with the Declarations and related public
offering statements, and in accordance with applicable law, or prevent
Borrower's performing its Obligations pursuant to the Loan Documents.
6.11 USE OF PROCEEDS/MARGIN STOCK. (a) The proceeds of the Loan,
the ▇▇▇▇▇▇ Loan, the Sovereign Loan, the DZ Facility and any cash dividend or
other cash distribution Borrower receives from Silverleaf Finance I, Inc. or
Silverleaf Finance II, Inc. have been used and will be used strictly in
accordance with the Business Plan and for no other purpose and (b) none of the
proceeds of the Loan will be used to purchase or carry any "margin stock" (as
defined under Regulation U of the Board of Governors of the Federal Reserve
System, as in effect from time to
40
time), and no portion of the proceeds of the Loan will be extended to others for
the purpose of purchasing or carrying margin stock. None of the transactions
contemplated in the Agreement (including, without limitation, the use of the
proceeds from the Loan) will violate or result in the violation of Section 7 of
the Securities Exchange Act of 1934, as amended, or any regulations issued
pursuant thereto, including, without limitation, Regulations G, T, U and X of
the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter 11.
6.12 COMPLIANCE WITH LAW. The Borrower
(a) is not in violation, nor are any of its Resorts, or
the business operations in respect of any of the Resorts, or to the Borrower's
knowledge after diligent inquiry, the Timeshare Owners' Association, in
violation, of the Timeshare Act, or any laws, ordinances, governmental rules or
regulations of any state in which a Resort is located, any political subdivision
of said states or any other jurisdiction to which the Borrower or the Resorts,
or the business operations conducted in respect of the Resorts, or the Timeshare
Owners' Association, are subject; and
(b) has not failed, nor have the Resorts or, to
Borrower's knowledge, the Timeshare Owners' Associations failed, to obtain any
consents or joinders, or any approvals, licenses, permits, franchises or other
governmental authorizations, or to make or cause to be made any filings,
submissions, registrations or declarations with any government or agency or
department thereof, necessary to the establishment, ownership or operation of
the Resorts or any of Borrower's Properties, or to the conduct of Borrower's
business, including, without limitation, the operation of the Resorts and the
sale, or offering for sale, of Intervals therein; which violation or failure to
obtain or register materially adversely affects the Borrower, the Resorts or the
business, prospects, profits, properties or condition (financial or otherwise)
of the Borrower or the Resorts. The Borrower has, to the extent required by its
activities and businesses, and the operations of the Resorts, fully complied
with (1) all of the applicable provisions of (a) the Consumer Credit Protection
Act; (b) Regulation Z of the Federal Reserve Board; (c) the Equal Credit
Opportunity Act; (d) Regulation B of the Federal Reserve Board; (e) the Federal
Trade Commission's 3-day cooling-off Rule for Door-to-Door Sales; (f) Section 5
of the Federal Trade Commission Act; (g) the Interstate Land Sales Full
Disclosure Act ("ILSA"); (h) federal postal laws; (i) applicable state and
federal securities laws; (j) applicable usury laws; (k) applicable trade
practices, home and telephone solicitation, sweepstakes, anti-lottery and
consumer credit and protection laws; (l) applicable real estate sales licensing,
disclosure, reporting and escrow laws; (m) the Americans With Disabilities Act
and related accessibility guidelines ("ADA"); (n) the Real Estate Settlement
Procedures Act ("RESPA"); (o) all amendments to and rules and regulations
promulgated under the foregoing acts or laws; and (p) other applicable federal
statutes and the rules and regulations promulgated thereunder; and (2) all of
the applicable provisions of the Timeshare Acts, any law or laws of any state
(and the rules and regulations promulgated thereunder) relating to ownership,
establishment or operation of the Resort, or the sale, offering for sale, or
financing of Intervals.
6.13 DEFAULTS. Borrower has no knowledge of any Default or Event of
Default not disclosed to Lender in writing except for the specified events of
default under the forbearance agreement between Borrower and ▇▇▇▇▇▇ or the
forbearance agreement between Borrower and Sovereign, Borrower has no knowledge
of any default or event of default under the ▇▇▇▇▇▇
41
Documents or the Sovereign Documents, except as disclosed to Lender in writing,
and neither ▇▇▇▇▇▇ nor Sovereign has accelerated any loan obligation of Borrower
on account of any such specified default or event of default.
6.14 RESTRICTIONS OF BORROWER. Except for this Agreement and the
Loan Documents, the Tranche A Loan Documents, the Tranche B Loan Documents, the
Tranche C Loan Documents, the Sovereign Documents, the DZ Documents or the
Silverleaf Finance II Documents, the Borrower will not be, on or after the date
hereof, a party to any contract or agreement which restricts its right or
ability to incur indebtedness or prohibits Borrower's execution of or compliance
with the terms of this Agreement, the other Loan Documents, the Tranche A Loan
Documents, the Tranche B Loan Documents, the Tranche C Loan Documents, the
▇▇▇▇▇▇ Documents, the Bond Holder Exchange Documents, the Sovereign Documents
the DZ Facility Documents or the Silverleaf Finance II Documents. The Borrower
has not agreed or consented to cause or permit in the future (upon the happening
of a contingency or otherwise) any of the Collateral, whether now owned or
hereafter acquired, to be subject to a Lien except in favor of Lender as
provided herein, and, with respect to the Land, the Additional Resort
Collateral, the Silverleaf Finance I. Inc., Stock and the Ineligible Notes
Receivable, the Silverleaf Finance II Subordinated Note and the Silverleaf
Finance II Stock, in favor of Sovereign and Lender, as applicable.
6.15 BROKER'S FEES. Borrower and Lender represent to each other
that neither of them has made any commitment or taken any action which will
result in a claim for any brokers', finders' or other similar fees or
commitments with respect to the transactions described in the Agreement. The
Borrower agrees to indemnify Lender and save and hold Lender harmless from all
claims of any Person for any broker's or finder's fee or commission, and this
indemnity shall include reasonable attorneys' fees and legal expenses.
6.16 DEFERRED COMPENSATION PLANS. The Borrower has no pension,
profit sharing or other compensatory or similar plan (herein called a "Plan")
providing for a program of deferred compensation for any employee or officer. No
fact or situation, including but not limited to, any "Reportable Event," as that
term is defined in Section 4043 of the Employee Retirement Income Security Act
of 1974 as the same may be amended from time to time ("Pension Reform Act"),
exists or will exist in connection with any Plan of the Borrower which might
constitute grounds for termination of any Plan by the Pension Benefit Guaranty
Corporation or cause the appointment by the appropriate United States District
Court of a Trustee to administer any such Plan. No "Prohibited Transaction"
within the meaning of Section 406 of the Pension Reform Act exists or will exist
upon the execution and delivery of the Agreement or the performance by the
parties hereto of their respective duties and obligations hereunder. The
Borrower will (1) at all times make prompt payment of contributions required to
meet the minimum funding standards set forth in Sections 302 through 305 of the
Pension Reform Act with respect to each of its Plans; (2) promptly, after the
filing thereof, furnish to the 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; (3) notify the
Lender immediately of any fact, including, but not limited to, any Reportable
Event arising in connection with any Plan which might constitute grounds for
termination thereof by the Pension Benefit Guaranty Corporation or for the
appointment by the appropriate United States District Court of a Trustee to
administer the
42
Plan; and (4) notify the Lender of any "Prohibited Transaction" as that term is
defined in Section 406 of the Pension Reform Act. The Borrower will not (a)
engage in any Prohibited Transaction or (b) terminate any such Plan in a manner
which could result in the imposition of a Lien on the Property of the Borrower
pursuant to Section 4068 of the Pension Reform Act.
6.17 LABOR RELATIONS. The employees of the Borrower are not a party
to any collective bargaining agreement with the Borrower, and, to the best
knowledge of the Borrower and its officers, there are no material grievances,
disputes or controversies with any union or any other organization of the
Borrower's employees, or threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.
6.18 RESORT.
(a) TIMESHARE PLAN. Each Resort has been established and
dedicated, and is and will remain, a time-share plan and project in full
compliance with all applicable laws and regulations, including without
limitation, the Timeshare Act.
(b) ACCESS. Each Resort has direct access to a publicly
dedicated road and all roadways inside each Resort are subject to an access and
use easement or other dedication or provision that benefits and will continue to
benefit all Purchasers.
(c) UTILITIES. Electric, sanitary and stormwater sewer,
telephone, water facilities and other necessary utilities are available in
sufficient capacity to service each Resort and any easements necessary to the
furnishing of such utility services have been obtained and duly recorded, and
inure to the benefit of each Resort and each Timeshare Owners' Association.
(d) AMENITIES. Each Purchaser of an Interval has and will
have access to and the full use and enjoyment of all of the Common Elements and
public utilities of the Resort in which such interval is located, all in
accordance with the Declaration and Timeshare Documents.
(e) CONSTRUCTION. All costs arising from the construction
or acquisition of any Units and any other improvements and the purchase of any
fixtures or equipment, inventory, furnishings or other personalty located in,
at, or on the Resorts have been paid or will be paid when due.
(f) SALE OF INTERVALS. The marketing, sale, offering of
sale, rental, solicitation of Purchasers or, if applicable, lessees, and
financing of Intervals in the Resort (1) do not constitute the sale, or the
offering of sale, of Securities subject to the registration requirements of the
Securities Act of 1933, as amended, or any state securities law; (2) do not
violate the Timeshare Act or any land sales or consumer protection law, statute
or regulation of state or any other state or jurisdiction in which a Purchaser
resides or in which sales or solicitation activities occur; and (3) do not
violate any consumer credit or usury statute of state or any other state or
jurisdiction in which a Purchaser resides or in which sales or solicitation
activities occur. All marketing and sales activities are performed by employees
of Borrower, all of whom are and shall be properly licensed in accordance with
applicable laws.
(g) TANGIBLE PROPERTY. Except for specific items which
may be owned by independent contractors, the machinery, equipment, fixtures,
tools and supplies used in
43
connection with the Resort, including without limitation, with respect to the
operations and maintenance of the Common Elements, are owned either by the
Borrower or the applicable Timeshare Owners' Association.
(h) OPERATING CONTRACTS. Borrower has entered into the
contracts, agreements, and arrangements necessary for the operation of the
Resorts, including but not limited to those with respect to utilities,
maintenance, management, services, marketing and sales (hereinbelow defined as
"Operating Contracts").
6.19 TIMESHARE REGIME REPORTS. The Borrower has furnished to the
Lender true and correct copies of the Timeshare Documents listed on Schedule
6.19, which consist of all those placed on file by the Borrower with the
Divisions or any federal, state or local regulatory or recording agencies,
offices or departments. All such filings and/or recordations, and all joinders
and consents necessary in order to establish the plan in respect of the Resorts,
including without limitation, the Units, Intervals, and all appurtenant Common
Elements, and all related use and access rights, have been done or obtained and
all laws, regulations and statutes, and all agreements or arrangements, in
connection therewith have been complied with.
6.20 OPERATING CONTRACTS. The contracts, agreements and
arrangements necessary, in Lender's reasonable judgement, to the operation of
the Resorts, including without limitation, with respect to utilities,
maintenance, management, services, marketing and sales under which the fees to
be paid equal or exceed $50,000.00 (collectively, all such agreements and
arrangements referred to herein as the "OPERATING CONTRACTS") are unmodified and
in full force and effect and shall remain free and clear of any Lien.
6.21 ARCHITECTURAL AND ENVIRONMENTAL CONTROL. All Units, Common
Elements and other improvements at, upon or appurtenant to the Resort are and
will be in compliance with the design, use, architectural and environmental
control provisions, if any, set forth in the Declaration.
6.22 TAX IDENTIFICATION/SOCIAL SECURITY NUMBERS. The Borrower's
federal taxpayer's identification number is: ▇▇-▇▇▇▇▇▇▇.
6.23 INVENTORY CONTROL PROCEDURES. Borrower has provided to Lender
a true and complete copy of the Borrower's Inventory, Sales and Assignments
procedures (the "INVENTORY CONTROL PROCEDURES"), a copy of which is attached
hereto as Schedule 6.23.
6.24 LAND.
(a) FIRST LIEN. Subject to the other first lien rights of
Sovereign as provided in the Intercreditor Agreement, upon execution and
recording of the Land Mortgages, Lender will have a valid first lien on the
Land.
(b) ACCESS. The Land has adequate legal rights of access
to a public way.
(c) SINGLE TAX LOT. Each parcel of the Land consists of a
single tax lot. No portion of said lot covers property other than the Land in
question and no portion of the Land in question lies in any other tax lot.
44
(d) FLOOD ZONE. Except as is disclosed in the surveys of
the Land that have been or will be provided to Lender, no portion of the Land is
located in a flood hazard area as defined by the Federal Insurance
Administration.
(e) SEISMIC EXPOSURE. No portion of the Land is located
in a zone 3 or zone 4 of the "Seismic Zone Map of the U.S."
(f) IMPROVEMENTS. No improvements, buildings or other
structures are located on the Land.
(g) CONDEMNATION. No part of the Land has been taken in
condemnation or other like proceedings nor is any preceding pending, threatened
or known to be contemplated for the partial or the total condemnation or taking
of any portion of the Land.
(h) NO PURCHASE OPTIONS. No person or entity has an
option to purchase the Land, or any portion thereof, or any interest therein.
6.25 ADDITIONAL REPRESENTATIONS AND WARRANTIES. This Agreement, the
Original Agreement, the Note and the other Loan Documents constitute the legal,
valid and binding obligation of Borrower, enforceable against Borrower in
accordance with their respective terms. Borrower ratifies and confirms each
covenant and agreement made under the Original Agreement and the other Loan
Documents.
6.26 ADDITIONAL RESORT COLLATERAL.
(a) FIRST LIEN. Subject to the other first lien rights of
Sovereign as provided in the Intercreditor Agreement, upon execution and
delivery of the Additional Resort Collateral Assignments and execution and
recording of the Additional Resort Collateral Mortgages, Lender will have a
valid first lien in the Additional Resort Collateral.
(b) ACCESS. The portion of the Additional Resort
Collateral constituting real property has adequate legal rights of access to a
public way.
(c) FLOOD ZONE. Except as is disclosed in the surveys of
the portion of the Additional Resort Collateral constituting real property that
have been or will be provided to Lender, no portion of such land is located in a
flood hazard area as defined by the Federal Insurance Administration.
(d) SEISMIC EXPOSURE. No portion of the Additional Resort
Collateral constituting real property is located in a zone 3 or zone 4 of the
"Seismic Zone Map of the U.S."
(e) CONDEMNATION. No portion of the Additional Resort
Collateral constituting real property has been taken in condemnation or other
like proceedings nor is any proceeding pending, threatened or known to be
contemplated for the partial or the total condemnation or taking of any portion
of such land.
(f) NO PURCHASE OPTIONS. No person or entity has an
option to purchase any portion of the Additional Resort Collateral, or any
portion thereof, or any interest therein.
45
6.27 ▇▇▇▇▇▇ AND SOVEREIGN FACILITIES. The modifications of the
▇▇▇▇▇▇ Facility and the Sovereign Facility on terms and conditions as provided
in the Business Plan, have closed and Lender has been provided with true and
correct copies of the ▇▇▇▇▇▇ Documents and the Sovereign Documents, as so
modified. There is no event of default or event which, with the passage of time,
notice or both, would constitute an event of default under either the ▇▇▇▇▇▇
Facility or the Sovereign Facility and Borrower is in good standing under both
of such facilities.
6.28 BOND HOLDER EXCHANGE TRANSACTION DOCUMENTS. The Bond Holder
Exchange Documents have not been amended, modified or otherwise rescinded and
are in full force and effect.
6.29 DZ FACILITY. The DZ Letter Agreement and the DZ Documents are
in full force and effect and have not been amended, modified or otherwise
rescinded.
6.30 INVENTORY.
(a) FIRST LIEN. Upon execution, delivery and recording of
the Mortgages and/or the Modification(s) of Mortgages, Lender will have a valid,
first priority mortgage lien on the Inventory, and the Inventory will be subject
to no other Lien, except for the subordinate security interests granted to
Sovereign pursuant to the Sovereign Documents.
(b) NO PURCHASE OPTIONS. No person or entity has an
option to purchase any portion of the Inventory, or any portion thereof, or any
interest therein.
6.31 RELEASE OF ▇▇▇▇▇▇ SECURITY INTERESTS AND LIENS. ▇▇▇▇▇▇ has
released, or will release, prior to the date of the initial Advance of the New
Inventory Loan, its security in and Lien on all of the Collateral.
SECTION 7 -- COVENANTS
7.1 AFFIRMATIVE COVENANTS. So long as any portion of the
Obligations remains unsatisfied, Borrower hereby covenants and agrees with
Lender as follows:
(a) PAYMENT AND PERFORMANCE OF OBLIGATIONS. Borrower
shall pay all of the Loan and related expenses when and as the same become due
and payable, and Borrower shall strictly observe and perform all of the
Obligations, including without limitation, all covenants, agreements, terms,
conditions and limitations contained in the Loan Documents, and will do all
things necessary which are not prohibited by law to prevent the occurrence of
any Event of Default hereunder; and Borrower will maintain an office or agency
in the State of Texas where notices, presentations and demands in respect of the
Loan Documents may be made upon Borrower. Such office or agency and the books
and records of Borrower shall be maintained at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ until such time as Borrower shall so notify Agent, in
writing, of any change of location of such office or agency.
(b) MAINTENANCE OF EXISTENCE, QUALIFICATION AND ASSETS.
Borrower shall at all times (I) maintain its legal existence, (II) maintain its
qualification to transact business and good standing in any state and in any
jurisdiction where it conducts business in connection with the Resort, and (III)
comply or cause compliance with all governmental laws, rules, regulations
46
and ordinances applicable to the Resort, the Borrower or its business,
including, without limitation, the Timeshare Act.
(c) CONSOLIDATION AND MERGER. Borrower will not
consolidate with or merge into any other Person or permit any other Person to
consolidate with or merge into it, unless: (i) Borrower is the continuing or
surviving corporation in any such consolidation or merger and (ii) prior to and
immediately after such consolidation or merger, Borrower shall not be in default
hereunder.
(d) MAINTENANCE OF INSURANCE. Borrower, or if required
pursuant to the Declaration, the Timeshare Owners' Association, shall maintain
(or Borrower shall cause to be maintained) at all times during the term of this
Agreement, policies of insurance with premiums being paid when due, and shall
deliver to Lender originals of insurance policies issued by insurance companies,
in amounts, in form and in substance, and with expiration dates, all acceptable
to Lender and each containing a waiver of subrogation rights by the insuring
company, a non-contributory standard mortgagee benefit clause, or their
equivalents, and a mortgagee loss payable endorsement in favor of and
satisfactory to Lender, and breach of warranty coverage, providing the following
types of insurance on and with respect to Borrower (or, as appropriate, the
respective Associations), the Land, the Additional Resort Collateral, the Units
and the Resorts:
(i) Fire and extended coverage insurance
(including lightning, hurricane, tornado, wind and water
damage, vandalism and malicious mischief coverage) covering
the Units, improvements and any personal property located in
or on the Resorts and any real property constituting part of
the Additional Resort Collateral, in an amount not less than
the full replacement value of such Units, improvements and
personal property, and said policy of insurance shall provide
for a deductible acceptable to Lender, breach of warranty
coverage, replacement cost endorsements satisfactory to
Lender, and shall not permit co-insurance;
(ii) Public liability and property damage
insurance covering the Land, the Additional Resort Collateral,
the Units and the Resorts in amounts and on terms satisfactory
to Lender; and
(iii) Such other insurance on the Units, Resorts
and any real property constituting part of the Additional
Resort Collateral or any replacements or substitutions
therefor including, without limitation, flood insurance (if
the Property is or becomes located in an area which is
considered a flood risk by the U.S. Emergency Management
Agency or pursuant to the National Flood Insurance program),
in such amounts and upon terms as may from time to time be
reasonably required by Lender.
To the extent any other timeshare receivable lender has any
rights to approve the form of insurance policies with respect to the Resorts,
the amounts of coverage thereunder, the insurers under such policies, or the
designation of an attorney in fact for purposes of dealing with damage to any
part of any Resort or insurance claims or matters related thereto, or any
successor to such attorney in fact, or any changes with respect to any of the
foregoing, Borrower shall take
47
all steps as may be necessary (and, after turnover, if any, of control of a
Resort to the Timeshare Owners' Association, Borrower shall use its best
efforts) to ensure that Lender shall at all times have a co-equal right, with
such other lender (including, without limitation, Borrower or any third-party
lender), to approve all such matters and any proposed changes in respect
thereof; and Borrower shall not cause or permit any changes with respect to any
insurance policies, insurers, coverage, attorney in fact, or insurance trustee,
if any, without Lender's prior written approval.
In the event of any insured loss or claim in respect of the
Resorts, the Units or any real property comprising the Additional Resort
Collateral, Borrower shall apply (or cause to be applied), and Borrower
covenants that the Timeshare Owners' Association shall apply (or cause to be
applied), all proceeds of such insurance policies in a manner consistent with
the Timeshare Documents and the Timeshare Act.
All insurance policies required pursuant to this Agreement (or
the Timeshare Documents or Timeshare Act) shall provide that the coverage
afforded thereby shall not expire or be amended, canceled, modified or
terminated without at least thirty (30) days prior written notice to Lender. At
least thirty (30) days prior to the expiration date of each policy maintained
pursuant to this Section (d), a renewal or replacement thereof satisfactory to
Lender shall be delivered to Lender. Borrower shall deliver or cause to be
delivered to Lender receipts evidencing the payment for all such insurance
policies and renewals or replacements.
In the event of any fire or other casualty to or with respect
to the improvements on or at the Resorts or any real property comprising the
Additional Resort Collateral, Borrower covenants that Borrower or the Timeshare
Owners' Association, as the case may be, will promptly restore or repair (or
cause to be restored, repaired or replaced) the damaged improvements and repair
or replace any other personal property to the same condition as immediately
prior to such fire or other casualty and, with respect to the improvements and
personal property on the Resorts or any real property comprising the Additional
Resort Collateral, in accordance with the terms of the Timeshare Documents or
Timeshare Act. The insufficiency of any net insurance proceeds shall in no way
relieve Borrower or, as applicable, Borrower and Timeshare Owners' Association,
of its obligation to restore, repair or replace such improvements and other
personal property in accordance with the terms hereof, of the Declaration or
other Timeshare Documents or of the Timeshare Act, and Borrower covenants that
Borrower or, as the case may be, the Timeshare Owners' Association, shall
promptly comply and cause compliance with the provisions of the Declaration and
other Timeshare Documents, or of the Timeshare Act relating to such restoration,
repair or replacement. Borrower shall, unless an Event of Default has occurred,
apply all insurance proceeds payable to or received by it, in accordance with
the applicable Declaration. If an Event of Default has occurred, Lender may, in
its sole discretion, apply all insurance proceeds in accordance with the
applicable Declaration or to the repayment of the Loan in accordance with
Sections 2.3 and 2.4 hereof.
(e) MAINTENANCE OF SECURITY. 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 supplements and amendments thereto,
and take such other actions, as Lender deems necessary or
48
appropriate in order to maintain as valid, enforceable and perfected first or
second priority liens and security interests, as applicable, all Liens and
security interests in the Collateral granted to Lender to secure the
Obligations. Borrower shall not grant extensions of time for the payment of,
compromise for less than the full face value or release in whole or in part, any
Purchaser or other Person liable for the payment of, or allow any credit
whatsoever except for the amount of cash to be paid upon, any Collateral or any
instrument, chattel paper or document representing the Collateral.
(f) PAYMENT OF TAXES AND CLAIMS. Borrower will pay, and,
as applicable pursuant to the Declaration, Borrower covenants that the Timeshare
Owners' Association will pay, when due, all taxes imposed upon the Resort, the
Collateral, the Borrower, the Timeshare Owners' Association, or any of its or
their property, or with respect to any of its or their franchises, businesses,
income or profits, or with respect to the Loan or any of the Loan Documents; and
Borrower and the Timeshare Owners' Association, as the case may be, shall pay
all other charges and assessments against Borrower, the Collateral and the
Resort before any claim (including, without limitation, claims for labor,
services, materials and supplies) arises for sums which have become due and
payable. Except for the Liens in connection with the Existing Credit Facility
and the Additional Credit Facility and the Liens in favor of Lender granted
pursuant to the Loan Documents, and except as otherwise specifically provided
for herein, Borrower covenants that no statutory or other Liens whatsoever
(including, without limitation, mechanics', materialmens', judgment or tax
liens) shall attach to any of the Collateral or the Resort except for such Liens
as are expressly provided for pursuant to the Declaration, which shall, in any
event, be subordinate to the Lien of Lender. In the event any such Lien attaches
to any of the Collateral or the Resort Borrower shall, within thirty (30) days
after any such Lien attaches, either (i) cause such Lien to be released of
record or (ii) provide Lender with a bond in accordance with the applicable laws
of the State, issued by a corporate surety acceptable to Lender, in an amount
and form acceptable to Lender.
(g) INSPECTIONS. Borrower shall, at any time and from
time to time and at the expense of Borrower, permit Lender or its agents or
representatives to inspect the Resort, the Collateral and if necessary, in
Lender's opinion, to ascertain or assure Borrower's compliance with the terms of
this Agreement, any of the Borrower's other assets or Property, and to examine
and make copies of and abstracts from its and, to the extent it has access
thereto or possession thereof, the Timeshare Owners' Association's, books,
accounts, records, original correspondence, computer tapes, disks, software, and
other papers as it may desire; and to discuss its affairs, finances and accounts
with any of its officers, employees, Affiliates, contractors or independent
public accountants (and by this provision Borrower authorizes said accountants
to discuss with Lender, its agents or representatives, the affairs, finances and
accounts of Borrower). Lender agrees to use reasonable efforts not to
unreasonably interfere with Borrower's business operations in connection with
any such inspections.
(h) REPORTING REQUIREMENTS. So long as any portion of the
Obligations remain unsatisfied, Borrower shall furnish (or cause to be
furnished, as the case may be) to Lender the following:
(i) SALES REPORTS. Borrower shall deliver to
Lender monthly, quarterly and annually, a sales report,
detailing the sales of all Intervals at the
49
Resorts for the period covered thereby, certified by Borrower
to be true, correct and complete and otherwise in a form
approved by Lender;
(ii) ANNUAL FINANCIAL REPORTS. As soon as
available and in any event within ninety (90) days after the
end of each calendar year or other fiscal year as may be
applicable with respect to Borrower (a "FISCAL YEAR"), a
statement of income and expense of Borrower for the annual
period ended as of the end of such Fiscal Year, and a balance
sheet of Borrower as of the end of such Fiscal Year, all in
such detail and scope as may be reasonably required by Lender
and prepared in accordance with GAAP and on a basis consistent
with prior accounting periods. Each annual financial statement
of Borrower shall be prepared by an independent certified
public accountant and certified by Borrower to be true,
correct and complete, and shall otherwise be in form
acceptable to Lender. In the event that Lender, acting in good
faith, is not satisfied with any such Financial Statement, and
if Borrower fails to provide Lender with new Financial
Statements acceptable to Lender within fifteen (15) days after
Lender delivers written notice of such dissatisfaction to
Borrower, then, at Lender's request, Borrower shall furnish to
Lender copies of audited income statements and balance sheets
certified by an independent certified public accountant
acceptable to Lender and prepared in accordance with GAAP and
on a basis consistent with prior accounting periods. Such
audited annual statements shall also be in form and content
satisfactory to Lender. If the figures for net and total
operating income (as such terms are defined in accordance with
GAAP) in the audited annual statements do not vary by more
than five percent (5%) from the figures in the unaudited
annual statements, Lender shall bear the cost of the certified
public accountant's audit. If, however, such figures vary by
more than five percent (5%), Borrower shall bear the cost of
such certified public accountant's audit.
(iii) NOTICE OF DEFAULT OR EVENT OF DEFAULT.
Immediately upon becoming aware of the existence of any
condition or event which constitutes a Default or an Event of
Default, Borrower shall deliver to Lender a written notice
specifying the nature and period of existence thereof and what
action Borrower is taking or proposes to take with respect
thereto.
(iv) NOTICE OF CLAIMED DEFAULT. Immediately upon
becoming aware that the holder of any material obligation or
of any evidence of material indebtedness of the Borrower has
given notice or taken any other action with respect to a
claimed default or event of default thereunder, a written
notice specifying the notice given or action taken by such
holder and the nature of the claimed default or event of
default and what action the Borrower is taking or proposes to
take with respect thereto;
(v) MAINTENANCE OF INVENTORY CONTROL. Borrower
shall maintain and at all times fully comply with the
Inventory Control Procedures from the date hereof until the
Loan is repaid in full. Borrower shall permit Lender, its
officers, employees, auditors, and other agents or designees
to review the books and records of Borrower and make such
other examinations and inspections as Lender
50
in its sole discretion deems necessary to determine that
Borrower is in full compliance with such Inventory Control
Procedures.
(vi) MATERIAL ADVERSE DEVELOPMENTS. Except as
provided in the Business Plan, immediately upon becoming aware
of any claim, action, proceeding, development or other
information which may materially and adversely affect the
Borrower, the Collateral, the Resort, the business, prospects,
profits or condition (financial or otherwise) of the Borrower,
or the ability of the Borrower to perform its Obligations
under the Agreement, Borrower shall provide Lender with
telephonic or telegraphic notice, followed by telefaxed and
mailed written confirmation, specifying the nature of such
development or information and such anticipated effect.
(vii) INTENTIONALLY OMITTED.
(viii) OTHER INFORMATION. Borrower shall deliver to
Lender: (i) within five (5) days of the filing thereof with
the United States Securities and Exchange Commission, copies
of each Form 8-K, 10-Q and 10-K filed by Borrower; and (ii)
any other information related to the Loan, the Collateral, the
Resort or Borrower as Lender may in good faith request.
(ix) WEEKLY FINANCIAL REPORTS. Weekly "flash
reports" consisting of the number of showings of the Resorts
to prospective purchasers of Intervals, gross sales reports,
accountants payables reports, accounts receivables reports and
cash balances before 5:00 p.m. (eastern standard time) on each
Thursday during the term hereof.
(i) RECORDS. Borrower shall keep adequate records and
books of account reflecting all financial transactions of Borrower and with
respect to the Resort in which complete entries will be made in accordance with
GAAP. In addition, Borrower shall keep, and shall promptly deliver to Lender
upon Lender's request therefore, complete, timely and accurate records of all
sales of Intervals.
(j) MANAGEMENT. Borrower shall: (i) remain engaged in the
active management of the Resorts, (ii) unless Borrower notifies Lender in
writing at least thirty (30) days in advance of its new location, it will retain
its executive offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
and (iii) will continue to perform duties substantially similar to those
presently performed as provided in the management agreement relating to each
Resort. No management agreement for any Resort shall be modified, assigned,
extended, terminated or entered into nor shall the current method of operation
and management of the Resorts be changed in any material manner, without the
prior written approval of Lender.
(k) FICA. Borrower shall furnish to Lender within thirty
(30) days after the expiration of each calendar quarter proof reasonably
satisfactory to Lender that Borrower's obligations to make deposits for
F.I.C.A., social security and withholding taxes have been satisfied.
51
(l) OPERATING CONTRACTS. Subject to the rights of the
Timeshare Owners' Association as set forth in the Timeshare Documents, no
Operating Contract shall be modified, extended, terminated or entered into,
without the prior written approval of Lender, if any such modification,
extension, termination or new agreement could have an adverse impact on the
operation of the Resort or the Collateral.
(m) NOTICES. Borrower shall notify Lender within five (5)
Business Days of the occurrence of any event (i) as a result of which any
representation or warranty of Borrower contained in any Loan Documents would be
incorrect or materially misleading if made at that time, or (ii) as a result of
which Borrower is not in full compliance with all of its covenants and
agreements contained in this Agreement or any Loan Document, or (iii) which
constitutes or, with the passage of time, notice or a determination by Lender
would constitute, an Event of Default.
(n) MAINTENANCE. Borrower shall maintain, or shall cause
to be maintained, or to the extent provided for pursuant to the Declaration,
shall use its best efforts to cause the Timeshare Owners' Association to
maintain, the Resort and that portion of the Additional Resort Collateral
consisting of real property in good repair, working order and condition and
shall make all necessary replacements and improvements to the Resort and that
portion of the Additional Resort Collateral consisting of real property so that
the value and operating efficiency of the Resort and that portion of the
Additional Resort Collateral consisting of real property will be maintained at
all times and so that the Resort and that portion of the Additional Resort
Collateral consisting of real property remains in compliance in all respects
with the Timeshare Act, the Timeshare Documents and other applicable law.
(o) CLAIMS. Borrower shall promptly notify Lender of any
claim, action or proceeding affecting the Resort or Collateral, or any part
thereof, or Lender, or any of the security interests or rights granted in favor
of Lender hereunder or under any of the 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.
(p) REGISTRATION AND REGULATIONS.
(i) LOCAL LEGAL COMPLIANCE. Borrower will
comply, and will cause the Resort, the Land and each portion
of the Additional Resort Collateral constituting real property
to comply, with all applicable servitudes, restrictive
covenants, applicable planning, zoning or land use ordinances
and building codes, all applicable health and Environmental
Laws and regulations, and all other applicable laws, rules,
regulations, agreements or arrangements.
(ii) REGISTRATION COMPLIANCE. The Borrower will
maintain, or cause to be maintained, all necessary
registrations, current filings, consents, franchises,
approvals, and exemption certificates, and the Borrower will
make or pay, or cause to be made or paid, all registrations,
declarations or fees with the Division and any other
government or any agency or department thereof, whether in the
state or another jurisdiction, required in connection with the
Resort and the occupancy, use and operation thereof, the
incorporation of Units into the time-
52
share plan established pursuant to the Declaration and the
other Timeshare Documents, and the sale, advertising,
marketing, and offering for sale of Intervals. All such
registrations, filings and reports will be truthfully
completed; and true and complete copies of such registrations,
applications, consents, licenses, permits, franchises,
approvals, exemption certificates, filings and reports will be
delivered to the Lender. Borrower shall advise Lender of any
changes with respect to its marketing or sales programs in any
jurisdiction, including jurisdictions other than the state,
and at Lender's request from time to time, Borrower shall
deliver to Lender: (A) written statements by the applicable
state authorities, in form acceptable to Lender, stating that
no registration is necessary for the sale of Intervals 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 applicable laws as Lender
may require; and
(iii) OTHER COMPLIANCE. Borrower has, in all
material respects, complied with and will comply with all laws
and regulations of the United States, the State of Texas, each
state in which an applicable Resort, the Land or Collateral is
located, any political subdivision of either such state and
any other governmental, quasi-governmental or administrative
jurisdiction in which Intervals have been sold or offered for
sale, or in which sales, offers of sale or solicitations with
respect to the Resort have been or will be conducted,
including to the extent applicable, but not limited to: (1)
the Timeshare Act; (2) the Consumer Credit Protection Act; (3)
Regulation Z of the Federal Reserve Board; (4) the Equal
Credit Opportunity Act; (5) Regulation B of the Federal
Reserve Board; (6) the Federal Trade Commission's 3 day
cooling off Rule for Door to Door Sales; (7) Section 5 of the
Federal Trade Commission Act; (8) ILSA; (9) federal postal
laws; (10) applicable state and federal securities laws; (11)
applicable usury laws; (12) applicable trade practices, home
and telephone solicitation, sweepstakes, anti-lottery and
consumer credit and protection laws; (13) applicable real
estate sales licensing, disclosure, reporting and escrow laws;
(14) the ADA; (15) RESPA; (16) all amendments to and rules and
regulations promulgated under the foregoing acts or laws; (17)
the Federal Trade Commission's Privacy of Consumer Financial
Information Rule; (18) other applicable federal statutes and
the rules and regulations promulgated thereunder; and (19) any
state law or law of any state (and the rules and regulations
promulgated thereunder) relating to ownership, establishment
or operation of the Resort, or the sale, offering for sale, or
financing of Intervals.
(q) OTHER DOCUMENTS. The Borrower will maintain to the
satisfaction of the Lender, and make available to Lender, accurate and complete
files relating to the Resort, the Pledged Notes Receivable and other Collateral,
and such files will contain true copies of each Pledged Note Receivable, as
amended from time to time, copies of all relevant credit memoranda relating to
such Notes Receivable and all collection information and correspondence relating
thereto.
53
(r) FURTHER ASSURANCES. Borrower will execute and
deliver, or cause to be executed and delivered, such other and further
agreements, documents, instruments, certificates and assurances as, in the
judgment of Lender exercised in good faith may be necessary or appropriate to
more effectively evidence or secure, and to ensure the performance of, the
Obligations. In addition, Borrower shall deliver to Lender from time to time
upon each request by Lender such documents, instruments or other matters or
items as Lender may require to evidence Borrower's compliance with the covenants
set forth in this Section 7.1.
(s) UTILITIES. The Borrower will cause, or to the extent
provided for pursuant to the Declaration, covenants to use its best efforts to
ensure that the Timeshare Owners' Association, or the manager of the Resort, as
applicable, will cause, electric, sanitary and stormwater sewer, water
facilities, drainage facilities, solid waste disposal, telephone and other
necessary utilities to be available to the Resort in sufficient capacity to
service the Resort.
(t) AMENITIES. The Borrower will cause, or to the extent
provided for pursuant to the Declarations, will use its best efforts to ensure
that the Timeshare Owners' Association, or the manager of the Resort, as
applicable, will cause, the Resort to be maintained in good condition and
repair, and in accordance with the provisions of the applicable Timeshare
Documents, and the Borrower will cause each Purchaser of an Interval at the
Resort to have continuing access to, and the use of, to the extent of such
Purchaser's time-share periods, all of the Common Elements and related or
appurtenant services, rights and benefits, all as provided in the Declaration
and the Timeshare Documents.
(u) EXPENSES AND CLOSING FEES. Whether or not the
transactions contemplated hereunder are completed, the Borrower shall pay all
expenses of the Lender relating to negotiating, preparing, documenting, closing
and enforcing this Agreement, including, but not limited to:
(i) the cost of preparing, reproducing and
binding this Agreement, the other Loan Documents and all
Exhibits and Schedules thereto;
(ii) the fees and disbursements of Lender's
counsel;
(iii) Lender's out-of-pocket expenses;
(iv) all fees and expenses (including fees and
expenses of the Lender's counsel) relating to any amendments,
waivers, consents or subsequent closings pursuant to the
provisions hereof;
(v) all costs, outlays, legal fees and expenses
of every kind and character had or incurred in (1) the
interpretation or enforcement of any of the provisions of, or
the creation, preservation or exercise of rights and remedies
under, any of the Loan Documents including the costs of appeal
(2) the preparation for, negotiations regarding, consultations
concerning, or the defense or prosecution of legal proceedings
involving any claim or claims made or threatened against the
Lender arising out of this transaction or the protection of
the Collateral securing the Loan or Advances made hereunder,
expressly including, without limitation, the defense by Lender
of any legal proceedings
54
instituted or threatened by any Person to seek to recover or
set aside any payment or setoff theretofore received or
applied by the Lender with respect to the Obligations, and any
and all appeals thereof; and (3) the advancement of any
expenses provided for under any of the Loan Documents;
(vi) all expenses relating to the maintenance and
administration of any other escrow agent;
(vii) all costs and expenses incurred by Lender
under the Note, and all late charges under the Note; and
(viii) all real and personal property taxes and
assessments, documentary stamp and intangible taxes, sales
taxes, recording fees, title insurance premiums and other
title charges, document copying, transmittal and binding
costs, appraisal fees, lien and judgment search costs, fees of
architects, engineers, environmental consultants, surveyors
and any special consultants, construction inspection fees,
brokers fees, escrow fees, wire transfer fees, and all travel
and out-of-pocket expenses of Lender to conduct inspections or
audits; Without limitation of the foregoing, Borrower shall
pay the costs of UCC and other searches, UCC and other Loan
Document recording fees and applicable taxes, and premiums on
each Mortgagee Policy of Title Insurance delivered to Lender
pursuant to this Agreement.
(v) INDEMNIFICATION OF LENDER. In addition to (and not in
lieu of) any other provisions of any Loan Document providing for indemnification
in favor of the Lender, the Borrower shall defend, indemnify and hold harmless
Lender, its subsidiaries, affiliates, officers, directors, agents, employees,
representatives, consultants, contractors, servants, and attorneys, as well as
the respective heirs, personal representatives, successors or assigns of any or
all of them (hereafter collectively the "Indemnified Lender Parties"), from and
against, and promptly pay on demand or reimburse each of them with respect to,
any and all liabilities, claims, demands, losses, damages, costs and expenses
(including without limitation, reasonable attorneys' and paralegals' fees and
costs), actions or causes of action of any and every kind or nature whatsoever
asserted against or incurred by any of them by reason of or arising out of or in
any way related or attributable to (i) this Agreement, the Loan Documents, the
Loan or the Collateral; (ii) the transactions contemplated under any of the Loan
Documents or any of the Timeshare Documents, including without limitation, those
in any way relating to or arising out of the violation of any federal or state
laws, including the Timeshare Act; (iii) any breach of any covenant or agreement
or the incorrectness or inaccuracy of any representation and warranty of the
Borrower contained in this Agreement or any of the Loan Documents (including
without limitation any certification of the Borrower delivered to a Lender; (iv)
any and all taxes, including real estate, personal property, sales, mortgage,
excise, intangible or transfer taxes, and any and all fees or charges,
including, without limitation under the Timeshare Act, which may at any time
arise or become due prior to the payment, performance and discharge in full of
the Obligations; (v) the breach of any representation or warranty as set forth
herein regarding any Environmental Laws; (vi) the failure of Borrower to perform
any obligation or covenant herein required to be performed pursuant to any
Environmental Laws; (vii) the use, generation, storage, release, threatened
release, discharge, disposal or presence on, under or about the Resort of any
55
Hazardous Materials; (viii) the removal or remediation of any Hazardous
Materials from the Resort required to be performed pursuant to any Environmental
Laws or as a result of recommendations of any environmental consultant or as
required by 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
(collectively, a "Governmental Agency"), in connection with or any in any way
arising out of the presence, use, storage, disposal, generation, transportation,
release, or treatment of any Hazardous Materials on, in, under or affecting the
Resort; (x) the violation or claimed violation of any Environmental Laws in
regard to the Resort; or (xi) the preparation of an environmental audit or
report on the Resort, whether conducted by Lender, Borrower or a third-party, or
the implementation of environmental audit recommendations. Such indemnification
shall not give Borrower any right to participate in the selection of counsel for
Lender or the conduct or settlement of any dispute or proceeding for which
indemnification may be claimed. Lender agrees to give Borrower written notice of
the assertion of any claim or the commencement of any action or lawsuit
described in this Section (v). It is the express intention of the parties hereto
that the indemnity provided for in this Section (v), as well as the disclaimers
of liability referred to in this Agreement, are intended to and shall protect
and indemnify Lender from the consequences of Lender's own negligence, whether
or not that negligence is the sole or concurring cause of any liability,
obligation. loss, damage, penalty, action, judgment, suit, claim, cost, expense
or disbursement provided, however, that Borrower shall not be required to
protect and indemnify Lender from the consequences of Lender's gross negligence,
where that gross negligence is the sole cause of the liability, obligation,
loss, damage, penalty, action, judgment, suit, claim, cost, expense or
disbursement for which indemnification or protection would otherwise be
required. The provisions of this Section (v) shall survive the full payment,
performance and discharge of the Obligations and the termination of this
Agreement, and shall continue thereafter in full force and effect.
(w) STANDBY MANAGER AND RESORT CONSULTANT. Borrower has
entered into agreements for the Standby Manager and the Resort Consultant and
such agreements are and will be maintained in full force and effect. In the
event that such agreements for the Standby Manager and the Resort Consultant
expire before the Final Maturity Date, such agreements shall be extended or
shall be replaced, before their expiration, with agreements for a Standby
Manager and a Resort Consultant that expire no sooner than the Final Maturity
Date. Borrower will maintain the agreement for the Standby Servicer in full
force and effect. Borrower agrees that upon the occurrence of a Default or Event
of Default hereunder: (1) Lender may, with the approval of a majority of the
Borrower's Board of Directors, which approval shall not be unreasonably withheld
or delayed, terminate any then existing management agreements and replace any
existing manager with such manager as Lender may select, provided however, if:
(x) the obligations have become immediately due and payable in accordance with
Section 9.1(a) hereof, or (y) Lender elects to have J & J Limited, Inc. act as
Standby Manager, then no such approval of Borrower's Board of Directors shall be
required; and (2) The Standby Servicer will assume full control over the
servicing of all Pledged Notes Receivable, reporting solely to Lender, as
provided in Section 10.14 of the Tranche A Loan Agreement.
(x) INTENTIONALLY OMITTED.
56
(y) ▇▇▇▇▇▇ FACILITY, SOVEREIGN FACILITY, DZ FACILITY, TFC
CONDUIT LOAN AND BOND HOLDER EXCHANGE TRANSACTION. Borrower will comply with
each of the terms and conditions of the ▇▇▇▇▇▇ Facility, the Sovereign Facility,
the DZ Facility, the TFC Conduit Loan and the Bond Holder Exchange Documents and
will promptly deliver to Lender, upon receipt by Borrower, copies of any notices
received by Borrower in connection with any of the forgoing credit facilities.
(z) FINANCIAL COVENANTS.
(i) TANGIBLE NET WORTH. Borrower shall at all
times have and maintain a Tangible Net Worth in an amount
which shall not be less than an amount equal to (A) the
greater of (1) $100,000,000 or (2) an amount equal to 90% of
the Tangible Net Worth of Borrower as of September 30, 2001
plus (B) one hundred percent (100%) of the aggregate amount of
proceeds received by Borrower after January 1, 2002 in
connection with (1) each issuance by Borrower of any class or
classes of capital stock after January 1, 2002 and (2) each
incurrence of Indebtedness after January 1, 2002, other than
Indebtedness which shall be the most senior Indebtedness of
Borrower plus (C) one hundred percent (100%) of the aggregate
amount of net income (calculated in accordance with GAAP) of
Borrower after January 1, 2002.
(ii) MARKETING AND SALES EXPENSES. As of the last
day of each fiscal quarter, commencing with the fiscal quarter
ending March 31, 2003, Borrower will not permit the four
quarter cumulative ratio of Marketing and Sales Expenses to
the Borrower's net proceeds from the sale of Intervals 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.
(iii) MINIMUM LOAN DELINQUENCY. Borrower will not
permit as of the last day of each calendar quarter its over
30-day delinquency rate on its entire Notes Receivable
portfolio (including, without limitation, all Pledged Notes
Receivable pledged to Lender hereunder, under the Additional
Credit Facility and the Existing Credit Facilities and all
Notes Receivable pledged pursuant to the ▇▇▇▇▇▇ Facility and
the Sovereign Facility) to be greater than twenty-five percent
(25%). If, as of the last day of each calendar quarter,
Borrower's over 30-day delinquency on its entire Pledged Notes
portfolio (including, without limitation, all Notes Receivable
pledged to Lender under the Additional Credit Facility and the
Existing Credit Facilities and all Notes Receivable pledged
pursuant to the ▇▇▇▇▇▇ Facility and the Sovereign Facility) is
greater than twenty percent (20%), then Lender shall have the
right to conduct an audit, at Borrower's sole cost and
expense, of all Borrower's Notes Receivable pledged to Lender
hereunder.
(iv) INTEREST COVERAGE. Subject to the provisions
of that certain Waiver Letter dated November 17, 2003 by
Lender to Borrower (THE "NOVEMBER LETTER AGREEMENT"), (i) For
the calendar quarter of Borrower ending June 30, 2002, the
Interest Coverage Ratio for Borrower shall be at least 1.1:1;
(ii) for the calendar quarter of Borrower ending September 30,
2002, the average of the
57
Interest Coverage Ratio of Borrower of such calendar quarter
and the Interest Coverage Ratio for the immediately preceding
calendar quarter shall be at least 1.1:1, (iii) for the
calendar quarter of Borrower ending December 31, 2002, the
average of the Interest Coverage Ratio of Borrower for such
calendar quarter and the Interest Coverage Ratios for the two
immediately preceding calendar quarters shall be at least
1.1:1; (iv) for each calendar quarter of Borrower beginning
with, and including, the calendar quarter ending March 31,
2003 and for each calendar quarter of Borrower thereafter, the
average of the Interest Coverage Ratio of Borrower for such
calendar quarter and the Interest Coverage Ratios for each of
the three immediately preceding calendar quarters shall be at
least 1.25:1. The term Interest Coverage Ratio means with
respect to any Person for any calendar quarter, the ratio of
(a) EBITDA for such period less capital expenditures as
determined in accordance with GAAP, for such period to (b) the
interest expense minus all non-cash items constituting
interest expense for such period.
(v) PROFITABLE OPERATIONS. Subject to the
provisions of the November Letter Agreement, Borrower will not
permit Consolidated Net Income (a) for any fiscal year,
commencing with the fiscal year ending December 31, 2002, to
be less than $1.00 and (b) for any two consecutive fiscal
quarters (reviewed on an individual rather than on an
aggregate basis) to be less than $1.00.
(aa) INTENTIONALLY OMITTED.
(bb) NET SECURITIZATION CASH FLOW. (i) Borrower will cause
Silverleaf Finance I, Inc. to declare, at least quarterly, a cash dividend
payable to Borrower, in an amount equal to the Net Securitization Cash Flow for
such quarter. If no Default or Event of Default has occurred, Borrower agrees to
use such dividends for payment of Operating Expenses as provided in the Business
Plan and for no other purpose. If a Default or Event of Default has occurred,
then all such dividends shall be paid directly to Lender and applied in
accordance with this Agreement, the Additional Credit Facility Loan Agreement,
the Tranche A Loan Agreement and the Tranche B Loan Agreement, subject to the
terms and provisions of the Intercreditor Agreement. Borrower shall provide
Lender with notice of Silverleaf Finance I, Inc.'s declaration of a cash
dividend, together with a certification that: (i) states whether a Default or
Event of Default exists, and (ii) contains a calculation of the Net
Securitization Cash Flow.
(ii) Borrower will cause Silverleaf Finance II, Inc. to declare, at
least quarterly, a cash dividend payable to Borrower and/or a payment in respect
of the Silverleaf Finance II Subordinated Note in an aggregate amount equal to
the Net Securitization Cash Flow in respect of Silverleaf Finance II, Inc. for
such quarter. If no Default or Event of Default has occurred, Borrower agrees to
use such dividends or payments for payment of Operating Expenses as provided in
the Business Plan and for no other purpose. If a Default or Event of Default has
occurred, then all such dividends shall be paid directly to Lender and applied
in accordance with this Agreement, the Additional Credit Facility Loan
Agreement, the Tranche A Loan Agreement and the Tranche B Loan Agreement,
subject to the terms and provisions of the Intercreditor Agreement. Borrower
shall provide Lender with notice of Silverleaf Finance II, Inc.'s declaration of
a cash dividend or a payment on the Silverleaf Finance II Subordinated Note,
58
together with a certification that: (i) states whether a Default or Event of
Default exists, and (ii) contains a calculation of the Net Securitization Cash
Flow.
(cc) MODIFICATION OF ▇▇▇▇▇▇ LOAN DOCUMENTS. Borrower shall
cause the ▇▇▇▇▇▇ Loan Documents to be modified to: (i) extend the maturity date
of the ▇▇▇▇▇▇ Facility to February 28, 2006; (ii) absolutely release ▇▇▇▇▇▇'▇
security interest in and Lien on all of the Collateral; (iii) consent to the
extension of the maturity date of the debt evidenced by the Bond Holder Exchange
Documents and (iv) delete any restriction on or prohibition of, or requirement
of ▇▇▇▇▇▇ consent to, the modification, amendment or restructuring of the
Business Plan, the Standby Management Agreement, the Loan Documents, the
Sovereign Loan Documents, the DZ Documents, the Silverleaf Finance II Document
or the loan documents evidencing and securing the Additional Credit Facility or
the Existing Credit Facilities. Borrower agrees not to enter into or consent to
any other amendment to or modification of the ▇▇▇▇▇▇ Loan Documents with respect
to the items described in the aforementioned sentence.
7.2 NEGATIVE COVENANTS. So long as any portion of the Obligations
remain unsatisfied, Borrower hereby covenants and agrees with Lender as follows:
(a) LIMITATION ON OTHER DEBT, FURTHER ENCUMBRANCES.
Borrower will not obtain financing and grant liens with respect to the
Collateral or any of its other assets or property, except as hereafter provided.
Prior to March 31, 2003, Borrower will not obtain financing and grant liens with
respect to any of Borrower's unpledged Notes Receivable, except as provided in
the Additional Credit Facility, the Existing Credit Facilities and the Sovereign
Facility, without the Lender's prior written consent, which consent will not be
unreasonably withheld. As a condition to such consent, Lender may require that
all proceeds of such financing be applied in repayment of the Loan as provided
in Section 2.3(a) hereof or in repayment of the Additional Credit Facility or
the Existing Credit Facilities. At any time after March 31, 2003, Borrower may
obtain financing and grant liens with respect to any of Borrower's unpledged
Notes Receivable in an amount not to exceed twenty million dollars
($20,000,000.00), without Lender's consent provided that: (i) no Default or
Event of Default has occurred; (ii) and such financing does not result in (x)
Borrower's failure to substantially adhere to the Business Plan or (y) an Event
of Default; and (iii) Lender may require advances to be funded from the
Revolving Loan Component of the Additional Credit Facility or the Existing
Credit Facilities prior to advances from such other financing. At any time after
March 31, 2003, if Borrower wishes to obtain financing in excess of twenty
million dollars ($20,000,000.00) which will be secured by any of Borrower's
unpledged Notes Receivable, Borrower will obtain Lender's written consent, which
consent will not be unreasonably withheld. Borrower may obtain unsecured
financing provided: (i) Borrower provides prior written notice to Lender setting
forth the terms and conditions thereof; (ii) Lender is provided a copy of the
loan documents thereof; and (iii) such financing does not result in Borrower's
inability to substantially adhere to the Business Plan, as determined by Lender
in its sole and absolute discretion.
(b) RESTRICTIONS ON TRANSFERS. Except as hereinafter
specifically provided, Borrower shall not, whether voluntarily or involuntarily,
by operation of law or otherwise, (i) without obtaining the prior written
consent of Lender (which consent may be given, withheld or conditioned by Lender
in Lender's sole discretion), transfer, sell, pledge, convey, hypothecate,
factor or assign all or any portion of the Collateral, the Encumbered Intervals,
the Common
59
Elements relating to the Inventory or any Resort facilities or amenities, or
contract to do any of the foregoing, including, without limitation, pursuant to
options to purchase, and so-called "installment sales contracts", "land
contracts", or "contracts for deed", provided that the foregoing restriction on
transfers shall not apply to the conveyance of SPV Assets to the SPV in
accordance with the Silverleaf Finance II Documents, (ii) without obtaining the
prior written consent of Lender (which consent may be given, withheld or
conditioned by Lender in Lender's sole discretion), lease or license all or any
portion of the Collateral, the Inventory, the Common Elements relating to the
Inventory or any Resort facilities or amenities (except for the license created
in favor of SPV under any license agreement with Borrower, Silverleaf Club or
any timeshare owners association, to use or access the reservation system or
related computer hardware or software for any Resort), or change the legal or
actual possession or use thereof, (iii) permit the assignment, transfer,
delegation, change, modification or diminution of the duties or responsibilities
of Borrower, of any manager of the Resort approved by Lender as manager of the
Resort (except for an assignment of such duties to a professional management
company or companies reasonably acceptable to Lender in advance) without
obtaining the prior written consent of Lender (which consent shall not be
unreasonably withheld), or (iv) without obtaining the prior written consent of
Lender (which consent may be given, withheld or conditioned by Lender in
Lender's sole discretion), cause or permit the assignment, pledge or other
encumbrance of any of the Operating Contracts or all or any portion of
Borrower's right, title or interest in the Declaration. Without limiting the
generality of the preceding sentence, and subject to the terms of this
Agreement, the prior written consent of Lender (as specified above) shall be
required for (A) any transfer of the Inventory, the Common Elements relating to
the Inventory or any Resort facilities or amenities or any part thereof made to
a subsidiary or Affiliate or otherwise, (B) any transfer of all or any part of
the Inventory, the Common Elements relating to the Inventory or any Resort
facilities or amenities by Borrower to its stockholders or Affiliates or vice
versa, and (C) any corporate merger or consolidation, disposition or other
reorganization, except as permitted in Section 7.1(c) hereof. In the event that
Lender is willing to consent to a transfer which would otherwise be prohibited
by this Section (b) Lender may condition its consent on such terms as it
desires, including, without limitation, an increase in the Interest Rate and the
requirement that Borrower pay a transfer fee, together with any expenses
incurred by Lender in connection with the granting of such consent (including,
without limitation, attorneys' fees and expenses). If Borrower violates the
terms of this Section (b), in addition to any other rights or remedies which
Lender may have herein, in any other Loan Document, or at law or in equity,
Lender may by written notice to Borrower increase, effective immediately as of
the date of such violation, the Interest Rate to the Default Rate.
(c) USE OF A LENDER'S NAME. Borrower will not, and will
not permit any Affiliate to, without the prior written consent of Lender, use
the name of Lender or the name of any affiliate of Lender in connection with any
of their respective businesses or activities, except in connection with internal
business matters and as required in dealings with governmental agencies.
(d) TRANSACTIONS WITH AFFILIATES. Except as provided in
the Silverleaf Finance II Documents, without the prior written consent of
Lender, which shall not unreasonably be withheld, Borrower will not enter into
any transaction with any Affiliate in connection with the Resorts, including,
without limitation, relating to the purchase, sale or exchange any assets or
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properties or the rendering of any service, except in the ordinary course of,
and pursuant to the reasonable requirements of, the operations of the Resorts
and upon fair and reasonable terms.
(e) RESTRICTIVE COVENANTS. Borrower will not without
Lender's prior written consent seek, consent to, or otherwise acquiesce in, any
change in any private restrictive covenant, planning or zoning law or other
public or private restriction, which would limit or alter the use of the Resort.
(f) SUBORDINATED OBLIGATIONS. Borrower will not, directly
or indirectly, (i) permit any payment to be made in respect of any indebtedness,
liabilities or obligations, direct or contingent, (the "SUBORDINATED DEBT") to
any of its shareholders or their affiliates or which are subordinated by the
terms thereof or by separate instrument to the payment of principal of, and
interest on, the Note; (ii) permit the amendment, rescission or other
modification of any such subordination provisions of any of the Borrower's
subordinated obligations in such a manner as to affect adversely the Lien in and
to the Collateral or Lender's senior priority position and entitlement as to
payment and rights with respect to the Note and the Obligations, or (iii) permit
the prepayment or redemption, except for mandatory prepayments, of all or any
part of Borrower's obligations to its shareholders, or of any subordinated
obligations of the Borrower except in accordance with the terms of such
subordination.
(g) TIMESHARE REGIME. Without Lender's prior written
consent, which consent shall not be unreasonably withheld as to changes
necessary to implement the Business Plan, Borrower shall not amend, modify or
terminate the Declarations or other Timeshare Documents, or any other
restrictive covenants, agreements or easements regarding the Resorts (except for
routine non-substantive modifications which have no impact on the Collateral and
except for amendments or modifications of the Timeshare Documents and/or
Declarations, a list of which is attached hereto as Schedule 6.19). Except as
otherwise provided herein or in the Sovereign Documents, Borrower shall not
assign its rights as "developer" under the Declarations without Lender's prior
written consent, or file or permit to be filed any additional covenants,
conditions, easements or restrictions against or affecting the Resorts (or any
portion thereof) without Lender's prior written consent, which consent shall not
be unreasonably withheld.
(h) NAME CHANGE. Borrower will not change its name.
(i) COLLATERAL. Borrower shall not take any action (nor
permit or consent to the taking of any action) which might impair the value of
the Collateral or any of the rights of the Lenders in the Collateral, except
with respect to the Silverleaf Finance II Stock and the Silverleaf Finance II
Subordinated Note as provided in the Silverleaf Finance II Documents, nor shall
Borrower cause or permit any amendment to or modification of the Timeshare
Documents.
(j) MARKETING/SALES. Borrower shall not market, attempt
to sell or sell or permit or justify any sales or attempted sales of any
Intervals except in compliance with the Timeshare Act and applicable laws in
state and other jurisdictions where marketing, sales or solicitation activities
occur.
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(k) MODIFICATIONS OF ▇▇▇▇▇▇ DOCUMENTS, DZ DOCUMENTS, BOND
HOLDER EXCHANGE DOCUMENTS, SOVEREIGN DOCUMENTS, SILVERLEAF FINANCE II DOCUMENTS
AND OTHER DEBT INSTRUMENTS. Borrower shall not amend or modify the Sovereign
Documents, the DZ Documents, the Bondholder Exchange Documents, the Silverleaf
Finance II Documents or the documents evidencing any other indebtedness of
Borrower, nor shall Borrower extend, modify, increase or terminate the DZ
Facility, the Bond Holder Exchange Transaction, the Sovereign Facility, the TFC
Conduit Loan or any other credit facility or loan, without the prior written
consent of Lender, which consent shall not be unreasonably withheld. Borrower
shall not agree to any modification of the maturity date of the ▇▇▇▇▇▇ Facility
so that it matures prior to February 28, 2006.
(l) COMPENSATION OF SENIOR MANAGEMENT. The compensation
payable to the senior management of Borrower, as a group, shall not be increased
by more than twenty-five percent (25%) each year, with the increase in the first
year following the Effective Date being measured against the compensation
payable to the senior management of Borrower as of December 31, 2001, which
compensation is set forth on Schedule 7.2(l). The Borrower represents and
warrants that Schedule 7.2(l) accurately sets forth such compensation.
(m) NO NEW CONSTRUCTION. Borrower will not, without
Lender's prior written approval, construct any improvements (excluding resort
amenities) on any Resorts, Land or any portion of the Additional Resort
Collateral constituting real property, unless such improvements are contemplated
in the Business Plan.
7.3 OPERATION OF BORROWER'S BUSINESS. Borrower will operate its
business in substantial compliance with the Business Plan, including the Senior
Lender Advance Schedule.
SECTION 8 -- EVENTS OF DEFAULT
8.1 NATURE OF EVENTS. An "Event of Default" shall exist if any of
the following shall occur:
(a) PAYMENTS. If Borrower shall fail to make, as and when
due, any payment or mandatory prepayment of principal, interest, fees or other
amounts with respect to the Loan and such failure shall continue for five (5)
days after notice of such failure is provided by Lender.
(b) COVENANT DEFAULTS. If Borrower shall fail to perform
or observe any covenant, agreement or warranty contained in this Agreement or in
any of the Loan Documents, including a failure by Borrower to comply with the
Business Plan, (other than with respect to the failure to make timely payments
in respect of the Loan as provided in Section 8.1(a) or violation of (i) the
financial covenants in Section 7.2(z) or (ii) any negative covenants in Section
7.2) and, such failure shall continue for fifteen (15) days after notice of such
failure is provided by Lender, provided however, that if Borrower commences to
cure such failure within such 15 day period, but, because of the nature of such
failure, cure cannot be completed within 15 days notwithstanding diligent effort
to do so, then, provided Borrower diligently seeks to complete such cure, an
Event of Default shall not result unless such failure continues for a total of
thirty (30) days.
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(c) WARRANTIES OR REPRESENTATIONS. If any representation
or other statement made by or on behalf of Borrower in this Agreement, in any of
the Loan Documents or in any instrument furnished in compliance with or in
reference to the Loan Documents, is false, misleading or incorrect in any
material respect as of the date made or reaffirmed.
(d) ENFORCEABILITY OF LIENS. If any lien or security
interest granted by Borrower to the Lenders in connection with the Loan is or
becomes invalid or unenforceable or is not, or ceases to be, a perfected first
priority lien or security interest in favor of the Lender encumbering the asset
to which it is intended to encumber, and Borrower fails to cause such lien or
security interest to become a valid, enforceable, first and prior lien or
security interest in a manner satisfactory to Lender within ten (10) days after
Lender delivers written notice thereof to Borrower.
(e) INVOLUNTARY PROCEEDINGS. If a case is commenced or a
petition is filed against Borrower under any Debtor Relief Law; a receiver,
liquidator or trustee of Borrower or of any material asset of Borrower is
appointed by court order and such order remains in effect for more than
forty-five (45) days; or if any material asset of Borrower is sequestered by
court order and such order remains in effect for more than forty-five (45) days.
(f) PROCEEDINGS. If Borrower voluntarily seek, consent to
or acquiesce in the benefit of any provision of any Debtor Relief Law, whether
now or hereafter in effect; consent to the filing of any petition against it
under such law; make an assignment for the benefit of its creditors; admit in
writing its inability to pay its debts generally as they become due; or consents
or suffers to the appointment of a receiver, trustee, liquidator or conservator
for it, him or her or any part of its, his or her assets.
(g) ATTACHMENT, JUDGMENT, TAX LIENS. The issuance,
filing, levy or seizure against the Collateral, or, with respect to the Resort
or the Obligations, against the Borrower of one or more attachments,
injunctions, executions, tax liens or judgments for the payment of money
cumulatively in excess of $100,000, which is not discharged in full or stayed
within thirty (30) days after issuance or filing.
(h) TIMESHARE DOCUMENTS. If the Declaration, any of the
other documents creating or governing the Resort, its timeshare regime, or the
Timeshare Owners' Association, or the restrictive covenants with respect to the
Resort, shall be terminated, amended or modified without Lender's prior written
consent (except for routine non-substantive modifications which have no impact
on the Collateral).
(i) REMOVAL OF COLLATERAL. If Borrower conceals, removes,
transfers, conveys, assigns or permits to be concealed, removed, transferred,
conveyed or assigned, any of the Collateral in violation of the terms of the
Loan Documents or with the intent to hinder, delay or defraud its creditors or
any of them including, without limitation, Lender.
(j) OTHER DEFAULTS. If a material default shall occur in
any of the covenants or Obligations set forth in any of the Loan Documents.
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(k) MATERIAL ADVERSE CHANGE. Subject to the terms of the
Business Plan, any material adverse change in the financial condition of the
Borrower or the condition of the Collateral from and after the date hereof.
(l) DEFAULT BY BORROWER IN OTHER AGREEMENTS. Except for
any "Waived Defaults" under the November Letter Agreement which Waived Defaults
include prior existing defaults under the ▇▇▇▇▇▇ Facility or the Sovereign
Facility, any default as defined in the applicable loan agreement, by Borrower
(i) in the payment of any indebtedness to any Lender, including any indebtedness
owed to Lender under the ▇▇▇▇▇▇ Facility, DZ Facility, Sovereign Facility, Bond
Holder Exchange Transaction, Additional Credit Facility or the Existing Credit
Facilities, or the TFC Conduit Loan; (ii) in the payment or performance of other
indebtedness for borrowed money or obligations secured by any part of the
Resort; (iii) in the payment or performance of other material indebtedness or
obligations (material indebtedness or obligations being defined for purposes of
this provision as any indebtedness or obligation in excess of $200,000) where
such default accelerates or permits the acceleration (after the giving of notice
or passage of time or both) of the maturity of such indebtedness, or permits the
holders of such indebtedness to elect a majority of the board of directors of
Borrower (whether or not such default[s] have been waived by such holder) or
(iv) the acceleration by ▇▇▇▇▇▇, Sovereign, DZ or the bondholders of their
respective credit facilities or the acceleration of the TFC Conduit Loan.
(m) LOSS OF LICENSE. The loss, revocation or failure to
renew or file for renewal of any registration, approval, license, permit or
franchise now held or hereafter acquired by the Borrower or with respect to any
Resort, or the failure to pay any fee, which is necessary for the continued
operation of any Resort or the Borrower's business in the same manner as it is
being conducted at the time of such loss, revocation, failure to renew or
failure to pay.
(n) VIOLATION OF NEGATIVE COVENANTS. Borrower violates
any negative covenants set forth in Section 7.2.
(o) VIOLATION OF FINANCIAL COVENANTS. Borrower violates
any financial covenants set forth in Section 7.1(z).
(p) USE OF LOAN PROCEEDS. If the proceeds of any Advance
are used for any purpose not set forth in the Business Plan or in contravention
of Section 6.11(b).
SECTION 9 -- REMEDIES
9.1 REMEDIES UPON DEFAULT. Should an Event of Default occur,
Lender may take any one or more of the actions described in this Section 9, all
without notice to Borrower:
(a) ACCELERATION. Without demand or notice of any nature
whatsoever, declare the unpaid balance of the Loans, or any part thereof,
immediately due and payable, whereupon the same shall be due and payable.
(b) TERMINATION OF OBLIGATION TO MAKE ADVANCE. Terminate
any obligation of the Lender to lend under this Agreement in its entirety, or
any portion of any such commitment, to the extent Lender shall deem appropriate,
all without notice to Borrower.
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(c) JUDGMENT. Reduce Lender's claim to judgment,
foreclose or otherwise enforce Lender's security interest in all or any part of
the Collateral by any available judicial or other procedure under law.
(d) SALE OF COLLATERAL AND FORECLOSURE OF LAND MORTGAGES.
After notification, if any, provided for in Section 9.2 below, Lender may sell
or otherwise dispose of, at the office of Lender, or elsewhere, as chosen by
Lender, all or any part of the Collateral, and any such sale or other
disposition may be as a unit or in parcels, by public or private proceedings,
and by way of one or more contracts (it being agreed that the sale of any part
of the Collateral shall not exhaust Lender's power of sale, but sales may be
made from time to time until all of the Collateral has been sold or until the
Obligations have been paid in full and fully performed), and at any such sale it
shall not be necessary to exhibit the Collateral. Borrower hereby acknowledges
and agrees that a private sale or sales of the Collateral, after notification as
provided for in Section 9.2, shall constitute a commercially reasonable
disposition of the Collateral sold at any such sale or sales, and otherwise,
commercially reasonable action on the part of Lender. Lender shall also have the
right, in accordance with the laws of the States in which the Land is located,
to foreclose the lien of the Land Mortgages.
(e) RETENTION OF COLLATERAL. At its discretion, retain
such portion of the Collateral as shall aggregate in value to an amount equal to
the aggregate amount of the Loans, in satisfaction of the Obligations, whenever
the circumstances are such that Lender is entitled and elects to do so under
applicable law.
(f) RECEIVER. Apply by appropriate judicial proceedings
for appointment of a receiver for the Collateral, or any part thereof, and
Borrower hereby consents to any such appointment.
(g) PURCHASE OF COLLATERAL. Buy the Collateral at any
public or private sale.
(h) EXERCISE OF OTHER RIGHTS. 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. 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 the
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 which is reasonably convenient to both parties, and Lender shall have
the right to take immediate possession of all of the Collateral, and may enter
the Resort or any of the premises of Borrower or wherever the Collateral shall
be located, with or without process of law wherever the Collateral may be, and,
to the extent such premises are not the property of 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 ninety (90) days after sale
or disposition of the Collateral).
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(i) REPLACEMENT OF MANAGER. Without demand or notice of
any nature whatsoever, upon an Event of Default, Lender may: (1) terminate any
then existing management agreements and with the approval of a majority of the
Borrower's Board of Directors, which approval shall not be unreasonably withheld
or delayed, replace any existing manager with such manager as Lender may select,
provided however, if: (x) the Obligations have become immediately due and
payable in accordance with Section (a) hereof, or (y) Lender elects to have J &
J Limited, Inc. act as Standby, then no such approval shall be required; and (2)
terminate any then existing servicing agreement and replace any then existing
Servicer with the Standby Servicer or such other servicer as Lender may select
in its sole and absolute discretion. Lender shall also have the right to assume
management of the Resorts.
9.2 NOTICE OF SALE. Reasonable notification of time and place of
any public sale of the Collateral or reasonable notification of the time after
which any private sale or other intended disposition of the Collateral is to be
made shall be sent to Borrower and to any other person entitled under the Code
to notice; provided, however, that if the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Lender may sell or otherwise dispose of the Collateral without notification,
advertisement or other notice of any kind. It is agreed that notice sent not
less than five (5) calendar days prior to the taking of the action to which such
notice relates is reasonable notification and notice for the purposes of this
Section 9.2. 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 of its costs and charges, including attorneys' fees for
advice, counsel or other legal services or for pursuing, reclaiming, seeking to
reclaim, taking, keeping, removing, storing and advertising such Collateral for
sale, selling same and any and all other charges and expenses in connection
therewith and in satisfying any prior Liens thereon. Any balance shall be
applied upon the Obligations, and in the event of deficiency, the Borrower shall
remain liable to the Lender. In the event of any surplus, such surplus shall be
paid to the 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 the Borrower, or by the 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 security interest, or to
defend the interest of the Lender, such expenses and 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 and state securities laws may impose
certain restrictions on the methods by which a sale of Collateral comprised of
Securities may be effected after an Event of Default, Borrower agrees that upon
the occurrence or existence of an Event of Default, 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 whose who will
represent and agree that they are purchasing for investment only and not for, or
with a view to, distribution. In so doing, 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.
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9.3 APPLICATION OF COLLATERAL; TERMINATION OF AGREEMENTS. Upon the
occurrence of any Event of Default: (i) 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 the Borrower,
without further liability or obligation by Lender; (ii) Lender, at any time,
appropriate and apply on any Obligations any and all Collateral in its
possession and (iii) Lender may apply any and all balances, credits, deposits,
accounts, reserves, indebtedness or other moneys due or owing to the 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 the Borrower in respect of
transactions prior to such termination, or affect any of the Liens, security
interests, rights, powers and remedies of the Lender, but they shall, in all
events, continue until all of the Obligations are satisfied.
9.4 RIGHTS OF LENDER REGARDING COLLATERAL. In addition to all
other rights possessed by the Lender, Lender, at its option, may on its behalf
from time to time after there shall have occurred an Event of Default, and so
long as such Event of Default remains uncured, at its sole discretion, take the
following actions:
(a) Transfer all or any part of the Collateral into the
name of Lender or its nominee;
(b) Take control of any proceeds of any of the
Collateral;
(c) Extend or renew the Loan and grant releases,
compromises or indulgences with respect to the Obligations, any portion thereof,
any extension or renewal thereof, or any security therefor, to any obligor
hereunder or thereunder; and
(d) Exchange certificates or instruments representing or
evidencing the Collateral for certificates or instruments of smaller or larger
denominations for any purpose consistent with the terms of this Agreement.
9.5 DELEGATION OF DUTIES AND RIGHTS. Lender may execute any of its
duties and/or exercise any of its rights or remedies under the Loan Documents by
or through its officers, directors, employees, attorneys, agents or other
representatives.
9.6 LENDER NOT IN CONTROL. None of the covenants or other
provisions contained in this Agreement or in any Loan Document shall give Lender
the right or power to exercise control over the affairs and/or management of
Borrower.
9.7 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 Event of Default then existing. No waiver by
Lender of any Event of Default shall be deemed to be a waiver of any other or
subsequent Event of Default. No delay or omission by Lender in exercising any
right or remedy under the Loan Documents shall impair such right or remedy or be
construed as a waiver thereof or an acquiescence therein, nor shall any single
or partial exercise of any such right or remedy preclude other or further
exercise thereof, or the exercise of any other right or remedy under the Loan
Documents or otherwise. Further, except
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as otherwise expressly provided in this Agreement or by applicable law, Borrower
and each and every surety, endorser, guarantor and other party liable for the
payment or performance of all or any portion of the Obligations, severally waive
notice of the occurrence of any Event of Default, presentment and demand for
payment, protest, and notice of protest, notice of intention to accelerate,
acceleration and nonpayment, and agree that their liability shall not be
affected by any renewal or extension in the time of payment of the Loan, or by
any release or change in any security for the payment or performance of the
Loan, regardless of the number of such renewals, extensions, releases or
changes.
9.8 CUMULATIVE RIGHTS. All rights and remedies available to the
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 Document, 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 the Loan Documents.
9.9 EXPENDITURES BY LENDER. Any sums expended by or on behalf of
Lender pursuant to the exercise of any right or remedy provided herein shall
become part of the Obligations and shall bear interest at the Default Rate, from
the date of such expenditure until the date repaid.
9.10 DIMINUTION IN VALUE OF COLLATERAL. Lender shall not have any
liability or responsibility whatsoever for any diminution or loss in value of
any of the Collateral, specifically including that which may arise from Lender's
negligence or inadvertence, whether such negligence or inadvertence is the sole
or concurring cause of any damage.
9.11 LENDER'S KNOWLEDGE. The Lender shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default unless the Lender
has actual knowledge of the Event of Default or has received a notice the
Borrower referring to this Agreement and describing such Event of Default.
SECTION 10 -- CERTAIN RIGHTS OF LENDER
10.1 PROTECTION OF COLLATERAL. Lender may at any time and from time
to time take such actions as Lender deems necessary or appropriate to protect
the Lender's Liens and security interests in and to preserve the Collateral, and
to establish, maintain and protect the enforceability of Lender's rights with
respect thereto, all at the expense of Borrower. Borrower agrees to cooperate
fully with all of 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 expenses of preserving
the Collateral and Lender's liens and security interests and rights therein
shall be added to the Loan.
10.2 PERFORMANCE BY LENDER. If Borrower fails to perform any
agreement contained herein, 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
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10.5 below. In no event, however, shall Lender have any obligation or duties
whatsoever to perform any covenant or agreement of Borrower contained herein or
in any of the Loan Documents, Timeshare Documents or Operating Contracts, and
any such performance by 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 third party to
exercise any of Lender's rights or remedies hereunder.
10.3 NO LIABILITY OF LENDER. Neither the acceptance of this
Agreement by Lender, nor the exercise of any rights hereunder 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 any Resort or
under the Timeshare Documents or Timeshare Acts, or under any of the Operating
Contracts, or in connection with any other business of Borrower, or the
Collateral, or otherwise bind Lender to the performance of any obligations with
respect to any Resort 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 any Resort or any
of the Collateral, or under any of the Timeshare Documents, the Timeshare Acts
or under any of the Operating Contracts, including, but not limited to,
appearing in or defending any action, expending any money or incurring any
expense in connection therewith. Without limitation of the foregoing, neither
this Agreement, any action or actions on the part of Lender taken hereunder,
prior to or following the occurrence of an Event of Default shall constitute an
assumption by Lender of any obligations of Borrower with respect to any Resort
or any documents or instruments executed in connection therewith, and Borrower
shall continue to be liable for all of its obligations thereunder or with
respect thereto. Borrower agrees to indemnify, protect, defend and hold Lender
harmless from and against any and all claims, demands, causes of action, losses,
damages, liabilities, suits, costs and expenses, including, without limitation,
attorneys' fees and court costs, asserted against or incurred by Lender by
reason of, arising out of, or connected in any way with (I) any failure or
alleged failure of Borrower to perform any of its covenants or obligations with
respect to each Resort or to the Purchasers of any of the Intervals, (II) a
breach of any certification, representation, warranty or covenant of Borrower
set forth in any of the Loan Documents, (III) the ownership of the Inventory and
the rights, titles and interests assigned hereby, or intended so to be, (IV) the
debtor-creditor relationships between Borrower on the one hand, and the Lender,
on the other, or (V) the operation of the Resorts or sale of Intervals. The
obligations of Borrower to indemnify, protect, defend and hold 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 10.3 shall
survive the satisfaction of the Obligations and termination of this Agreement,
and remain binding and enforceable against the Borrower, or its successors or
assigns. Borrower hereby waives all notices with respect to any losses, damages,
liabilities, suits, costs and expenses, and all other demands whatsoever hereby
indemnified, and agrees that its obligations under this Agreement shall not be
affected by any circumstances, whether or not referred to above, which might
otherwise constitute legal or equitable discharges of its obligations hereunder.
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10.4 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 which Lender in good faith believes may affect the security interests
granted under this Agreement, including without limitation, with respect to the
value of the Collateral or Lender's rights under any of the Loan Documents.
10.5 EXPENSES. All expenses payable by Borrower, under any
provision of this Agreement shall be an Obligation of the Borrower and shall be
paid by Borrower to Lender, upon demand, and shall bear interest at the Default
Rate from the date of expense until repaid by Borrower.
10.6 LENDER'S RIGHT OF SET-OFF. Lender shall have the right to
set-off against any Collateral any Obligations then due and unpaid by Borrower.
10.7 NO WAIVER. No failure or delay on the part of Lender in
exercising any right, remedy or power under this Agreement or in giving or
insisting upon strict performance by Borrower hereunder or in giving notice
hereunder shall operate as a waiver of the same or any other power or right, and
no single or partial exercise of any such power or right shall preclude any
other or further exercise thereof or the exercise of any other such power or
right. Lender, notwithstanding any such failure, shall have the right thereafter
to insist upon the strict performance by Borrower of any and all of the terms
and provisions of this Agreement to be performed by Borrower. The collection and
application of proceeds, the entering and taking possession of the Collateral,
and the exercise by Lender of its rights contained in the Loan Documents and
this Agreement shall not cure or waive any default, or affect any notice of
default, or invalidate any acts done pursuant to such notice. No waiver by
Lender of any breach or default of or by any party hereunder shall be deemed to
alter or affect Lender's rights hereunder with respect to any prior or
subsequent default.
10.8 RIGHT OF LENDER TO EXTEND TIME OF PAYMENT, SUBSTITUTE, RELEASE
SECURITY, ETC. Without affecting the liability of any Person or entity including
without limitation, for the payment of any of the Obligations or without
affecting or impairing Lender's Lien on the Collateral, or the remainder
thereof, as security for the full amount of the Loan unpaid and the Obligations,
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 in such order
and manner as it may deem fit, or (f) join in any subordination or other
agreement affecting this Agreement or the lien or charge thereof.
10.9 ASSIGNMENT OF LENDER'S INTEREST. 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 Loan Documents to any subsequent holder or holders of
the Note or the Obligations evidenced thereby.
10.10 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,
70
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, (B) to demand and receive from time to time any and all
property, rights, titles, interests and liens hereby sold, assigned and
transferred, or intended so to be, and to give receipts for same, (C) from time
to time to institute and prosecute in 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, (D) upon an Event of Default to change the
Borrower's post office mailing address, and (E) generally to do all and any such
acts and things in relation to the Collateral as Lender shall in good ▇▇▇▇▇ ▇▇▇▇
advisable. Borrower hereby declares that the appointment made and the powers
granted pursuant to this Section 10.10 are coupled with an interest and are and
shall be irrevocable by Borrower in any manner, or for any reason, unless and
until a release of the same is executed by Lender and duly recorded in the
appropriate public records of Dallas County, Texas.
10.11 RELIEF FROM AUTOMATIC STAY, ETC. To the fullest extent
permitted by law, in the event the Borrower shall make application for or seek
relief or protection under the federal bankruptcy code ("Bankruptcy Code") or
other Debtor Relief Laws, or in the event that any involuntary petition is filed
against the Borrower under such Code or other Debtor Relief Laws, and not
dismissed with prejudice within 45 days, the automatic stay provisions of
Section 362 of the Bankruptcy Code are hereby modified as to 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) 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 the Lender as provided in the
Loan Documents.
SECTION 11 -- TERM OF AGREEMENT
This Agreement shall continue in full force and effect and the security
interests granted hereby and the duties, covenants and liabilities of the
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. The Borrower expressly agrees that if the 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 provided for hereunder securing the same shall be revived and
continued in full force and effect as if said payment had not been made.
SECTION 12 -- MISCELLANEOUS
12.1 NOTICES. All notices, requests and other communications to
either party hereunder shall be in writing and shall be given to such party at
its address set forth below or at such other address as such party may hereafter
specify for the purpose of notice to Lender or Borrower. Each such notice,
request or other communication shall be effective (a) if given by mail, when
71
such notice is deposited in the United States Mail with first class postage
prepaid, addressed as aforesaid, provided that such mailing is by registered or
certified mail, return receipt requested, (b) if given by overnight delivery,
when deposited with a nationally recognized overnight delivery service such as
Federal Express or Airborne with all fees and charges prepaid, addressed as
provided below, or (c) if given by any other means, when delivered at the
address specified in this Section 12.1.
IF TO BORROWER: Silverleaf Resorts, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇▇▇ ▇▇▇▇, CEO
WITH A COPY TO: Meadows, Owens, Collier, Reed, Cousins and Blau
3700 Nations Bank Plaza
▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
IF TO LENDER: Textron Financial Corporation
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Collections
WITH A COPY TO: Textron Financial Corporation
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Division Counsel (RRD)
AND TO: Textron Financial Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Division President
Notwithstanding the foregoing, copies of the requests or notices from
Borrower to Lender which are specified in the Sections of this Agreement listed
below shall not be delivered to Providence, Rhode Island as provided above, but
rather shall be delivered in accordance with this Section 12.1 to Textron
Financial Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President. The applicable
Sections of this Agreement are Section 2.4(a) Voluntary Prepayments and Section
5.1 Request for Advances. In addition, all documents, instruments and other
items to be delivered to the Lender from time to time pursuant to this Agreement
shall be delivered to Lender's office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇."
12.2 SURVIVAL. All representations, warranties, covenants and
agreements made by Borrower herein, in the other Loan Documents or in any other
agreement, document, instrument or certificate delivered by or on behalf of
Borrower under or pursuant to the Loan Documents
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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.
12.3 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(EXCEPT AS MAY BE EXPRESSLY PROVIDED THEREIN TO THE CONTRARY) SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF RHODE ISLAND,
EXCLUSIVE OF ITS CHOICE OF LAWS PRINCIPLES.
12.4 LIMITATION ON INTEREST. Lender and Borrower intend to comply
at all times with applicable usury laws. All agreements between the 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 Documents shall involve transcending the limit of such validity
prescribed by any law which a Court of Competent jurisdiction may deem
applicable hereto, then ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity; and if from any circumstance Lender shall
ever receive anything of value deemed interest by applicable law which would
exceed the highest lawful rate, such amount which would be excessive interest
shall be applied to the reduction of the principal of the Loan and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance of
principal of the Loan, such excess shall be refunded to Borrower. All interest
paid or agreed to be paid to the 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 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 which exceeds the highest lawful rate. The provisions of
the Note, this Agreement, and all other Loan Documents are hereby modified to
the extent necessary to conform with the limitations and provisions of this
Section 12.4, and this Section 12.4 shall govern over all other provisions in
any document or agreement now or hereafter existing. This Section 12.4 shall
never be superseded or waived unless there is a written document executed by
Lender and the Borrower, expressly declaring the usury limitation of this
Agreement to be null and void, and no other method or language shall be
effective to supersede or waive this paragraph.
12.5 INVALID PROVISIONS. If any provision of this Agreement or any
of the other Loan Documents is held to be illegal, invalid or unenforceable
under present or future laws effective during the term thereof, such provision
shall be fully severable, this Agreement and the other Loan Documents shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof or thereof, and the remaining provisions
hereof or thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or
73
unenforceable provision or by its severance therefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision there shall be added
automatically as a part of this Agreement and/or the Loan Documents (as the case
may be) a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
12.6 SUCCESSORS AND ASSIGNS. This Agreement and the other Loan
Documents shall be binding upon and inure to the benefit of Borrower and Lender
and their respective successors and assigns; provided that Borrower may not
transfer or assign any of its rights or obligations under this Agreement, or the
other Loan Documents without the prior written consent of Lender. This Agreement
and the transactions provided for or contemplated hereunder or under any of the
Loan Documents are intended solely for the benefit of the parties hereto. No
third party shall have any rights or derive any benefits under or with respect
to this Agreement, or the other Loan Documents except as provided in advance in
a writing signed on behalf of Lender.
12.7 AMENDMENT. This Agreement may not be amended or modified, and
no term or provision hereof may be waived, except by written instrument signed
by the Borrower and the Lender.
12.8 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signature thereto and hereto were on the same instrument. This
Agreement shall become effective upon Lender's receipt of one or more
counterparts hereof signed by Borrower.
12.9 LENDER NOT 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.
12.10 ACCOUNTING PRINCIPALS. Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be determined or made in accordance
with GAAP consistently applied at the time in effect, to the extent applicable,
except where such principles are inconsistent with the requirements of this
Agreement.
12.11 TOTAL AGREEMENT. This Agreement and the other Loan Documents,
including the Exhibits and Schedules to them, is the entire agreement between
the parties relating to the subject matter hereof, incorporates or rescinds all
prior agreements and understandings between the parties hereto relating to the
subject matter hereof, cannot be changed or terminated orally or by course of
conduct, and shall be deemed effective as of the date it is accepted by Lender
at the offices set forth above. The documents evidencing the Existing Credit
Facilities and the Additional Credit Facility shall remain in full force and
effect.
12.12 LITIGATION. TO THE FULLEST EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, THE BORROWER AND LENDER HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ANY AND ALL RIGHT TO A TRIAL
BY JURY IN ANY
74
ACTION OR PROCEEDING TO ENFORCE OR DEFEND OR CLARIFY ANY RIGHT, POWER, REMEDY OR
DEFENSE ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS,
OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, WHETHER SOUNDING IN TORT OR
CONTRACT OR OTHERWISE, OR WITH RESPECT TO ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY; AND
EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A JUDGE AND
NOT BEFORE A JURY. EACH OF THE BORROWER AND LENDER FURTHER WAIVES ANY RIGHT TO
SEEK TO CONSOLIDATE ANY SUCH LITIGATION IN WHICH A JURY TRIAL HAS BEEN WAIVED
WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED.
FURTHER, THE BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF
LENDER, NOR 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. THE BORROWER ACKNOWLEDGES THAT THE PROVISIONS
OF THIS SECTION ARE A MATERIAL INDUCEMENT TO LENDER'S ACCEPTANCE OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
The waiver and stipulations of the Borrower and Lender in this Section
12.12 shall survive the final payment or performance of all of the Obligations
of the Borrower and the resulting termination of this Agreement.
12.13 INCORPORATION OF EXHIBITS. This Agreement, together with all
Exhibits and Schedules hereto, constitute one document and agreement which is
referred to herein by the use of the defined term "Agreement." Such Exhibits and
Schedules are incorporated herein as to fully set out in this Agreement. The
definitions contained in any part of this Agreement shall apply to all parts of
this Agreement.
12.14 CONSENT TO ADVERTISING AND PUBLICITY OF TIMESHARE DOCUMENTS.
The Borrower hereby consents that Lender may issue and disseminate to the public
information describing the credit accommodation entered into pursuant to this
Agreement, including the names and addresses of Borrower and any subsidiaries
and Affiliates, the amount and a general description of the Borrower's business.
12.15 DIRECTLY OR INDIRECTLY. Where any provision in the Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provisions shall be applicable whether such action is taken
directly or indirectly by such Person.
12.16 HEADINGS. Section headings have been inserted in the Agreement
as a matter of convenience of reference only; such Section headings are not a
part of the Agreement and shall not be used in the interpretation of this
Agreement.
12.17 GENDER AND NUMBER. Words of any gender in this Agreement shall
include each other gender and the singular shall mean the plural and vice versa
where appropriate.
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12.18 RATIFICATION AND CONFIRMATION. Except as herein expressly
amended, Borrower hereby ratifies, confirms, assumes and agrees to be bound by
all of representations, warranties, statements, covenants and agreements set
forth in the Original Loan Agreement and the other Loan Documents, as previously
amended. The Borrower reaffirms, restates and incorporates by reference all of
the representations, warranties, covenants and agreements made in the Loan
Documents as if the same were made as of this date. The Borrower agrees to pay
the Loan and all related expenses, as and when due and payable in accordance
with the Original Loan Agreement, this Agreement and the other Loan Documents,
and to observe and perform the Obligations, and do all things necessary which
are not prohibited by law to prevent the occurrence of any Event of Default. In
addition, to further secure, and to evidence and confirm the securing of, the
prompt and complete payment and performance by the Borrower of the Loan and all
of the Obligations, for value received, Borrower unconditionally and irrevocably
assigns, pledges and grants to Lender, and hereby confirms or reaffirms the
prior granting to Lender of, a continuing first priority Lien, mortgage and
security interest in and to all of the Collateral, except as otherwise set forth
herein, whether now existing or hereafter acquired. Also, as provided in the
Loan Documents, the Loan is and shall be further secured by the Liens and
security interests in favor of Lender in the properties and interests relating
to Additional Eligible Resorts, which now or hereafter serve as collateral
security for any Obligations. Upon satisfaction of the requirements for approval
by Lender of Additional Resorts, Borrower shall record, or cause to be recorded,
such mortgages, deeds of trust, deeds to secure debt, assignments, pledges,
security agreements and UCC Financing Statements in the appropriate public
records of the state in which each Resort is located to further evidence and
perfect Lender's Lien on the Collateral. Borrower agrees to deliver or cause to
be delivered by its Affiliates, such mortgages, deeds of trust, deeds to secure
debt, assignments, pledges, security agreements and UCC Financing Statements as
Lender may deem necessary to further evidence and perfect the Lender's Lien on
the Collateral.
12.19 ESTOPPEL. Borrower acknowledges, agrees and confirms that: (a)
Advances under the Original Loan Agreement have been made prior to the date
hereof; (b) all such Advances made prior to the Closing Date were made in favor
of the Borrower in respect of the Existing Eligible Resorts; (c) Advances made
prior to the Closing Date are deemed as having been made for the benefit of the
Borrower and Borrower acknowledges and agrees that Borrower received a direct
and substantial financial benefit from such Advances and (d) immediately prior
to the Closing Date, and without giving effect to any Advances that may be made
pursuant to this Agreement, the status of the Loan, including the outstanding
principal balance thereof is as reflected in the Loan Funding Report delivered
to and approved by Lender in connection with this Agreement.
The Loan constitutes valuable consideration to the Borrower, which
consideration is uninterrupted and continuous since the dates on which the Loan
was first made. This Agreement and the other Loan Documents and the Loan
modifications and transactions provided for or contemplated hereunder or
thereunder, shall in no way adversely affect the Lien or perfection or priority
of any Lien of Lender as of the date hereof in and to any Collateral, and are
not intended to constitute, and do not constitute or give rise to, any novation,
cancellation or extinguishment of any of Borrower's Obligations existing as of
the Closing Date to Lender, or of any interests owned or held by Lender (and not
previously released) in and to any of the Collateral; it being the intention of
the parties that the transactions provided for or contemplated herein shall be
76
effectuated without any interruption in the continuity of the value and
consideration received by Borrower, and of the attachment, perfection, priority
and continuation in favor of Lender in and to all Collateral and proceeds.
SECTION 13 -- SPECIAL CONDITIONS
13.1 EFFECTIVE DATE. BORROWER ACKNOWLEDGES, AGREES AND CONFIRMS
THAT THE TERMS AND CONDITIONS OF THIS AGREEMENT, INCLUDING ANY OBLIGATION OF
LENDER TO MAKE ANY ADVANCE OF THE NEW INVENTORY LOAN, SHALL NOT BECOME EFFECTIVE
UNTIL THE SATISFACTION OF ALL CONDITIONS SET FORTH IN SECTION 4 AND SECTION 5
HEREOF. IN THE EVENT THAT THE SATISFACTION OF SUCH CONDITIONS DOES NOT OCCUR ON
OR BEFORE MARCH 31, 2004, THEN THE OBLIGATION OF LENDER TO MAKE ANY ADVANCE OF
THE NEW INVENTORY LOAN SHALL BE VOID AB INITIO. BORROWER EXPRESSLY ACKNOWLEDGES,
AGREES AND CONFIRMS THAT TIME IS OF THE UTMOST ESSENCE WITH RESPECT TO ALL SUCH
CONDITIONS BEING SATISFIED OCCURRING ON OR BEFORE MAY 31, 2004.
13.2 DZ BANK FACILITY CONDITIONS. Lender acknowledges and agrees
that: (i) the transfer of Notes Receivable to Silverleaf Finance I, Inc. in
connection with the DZ Facility is a true sale and not a financing transaction;
(ii) Lender will not consolidate Silverleaf Finance I, Inc. with the Borrower in
the event of a bankruptcy; and (iii) Lender will not take any action to the
contrary in the case of a bankruptcy of Borrower or otherwise.
13.3 RELEASE. IN ORDER TO INDUCE LENDER TO ENTER INTO THIS
AGREEMENT, BORROWER ACKNOWLEDGES AND AGREES THAT: (i) BORROWER HAS NO CLAIM OR
CAUSE OF ACTION AGAINST LENDER (OR ANY OF IT'S DIRECTORS, OFFICERS, EMPLOYEES OR
AGENTS); (ii) BORROWER HAS NO OFFSET RIGHT, COUNTERCLAIM OR DEFENSE OF ANY KIND
AGAINST ANY OF ITS OBLIGATIONS, INDEBTEDNESS OR LIABILITIES TO LENDER; AND (iii)
LENDER HAS HERETOFORE PROPERLY PERFORMED AND SATISFIED IN A TIMELY MANNER ALL OF
ITS OBLIGATIONS TO BORROWER. BORROWER WISHES TO ELIMINATE ANY POSSIBILITY THAT
ANY PAST CONDITIONS, ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS WOULD
IMPAIR OR OTHERWISE ADVERSELY AFFECT LENDER'S RIGHTS, INTERESTS, CONTRACTS,
COLLATERAL SECURITY OR REMEDIES. THEREFORE, BORROWER UNCONDITIONALLY RELEASES,
WAIVES AND FOREVER DISCHARGES (A) ANY AND ALL LIABILITIES, OBLIGATIONS, DUTIES,
PROMISES OR INDEBTEDNESS OF LENDER TO BORROWER, EXCEPT THE OBLIGATIONS TO BE
PERFORMED BY LENDER ON OR AFTER THE DATE HEREOF AS EXPRESSLY STATED IN THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND (B) ALL CLAIMS, OFFSETS, CAUSES OF
ACTION, SUITS OR DEFENSES OF ANY KIND WHATSOEVER (IF ANY), WHETHER ARISING AT
LAW OR IN EQUITY, WHETHER KNOWN OR UNKNOWN, WHICH BORROWER MIGHT OTHERWISE HAVE
AGAINST LENDER OR ANY OF IT'S DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS, IN
EITHER CASE (A) OR (B), ON ACCOUNT OF ANY
77
PAST OR PRESENTLY EXISTING CONDITION, ACT, OMISSION, EVENT, CONTRACT, LIABILITY,
OBLIGATION, INDEBTEDNESS, CLAIM, CAUSE OF ACTION, DEFENSE, CIRCUMSTANCE OR
MATTER OF ANY KIND.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
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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
/S/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------- ------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: CFO
LENDER:
TEXTRON FINANCIAL CORPORATION,
a Delaware corporation
/S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: CFO
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▇▇▇▇▇ ▇▇ ▇▇▇▇▇ )
) ss:
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me this 8th day of
March, 2004 by ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., CFO of Silverleaf Resorts, Inc., a Texas
corporation, on behalf of the Corporation.
/S/ ▇. ▇▇▇▇▇ CLOSE
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State of Texas
Notary Public
My Commission Expires: ▇-▇▇-▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ )
) ss:
COUNTY OF HARTFORD )
The foregoing instrument was acknowledged before me this 9th day of
March __, 2004 by ▇▇▇▇ ▇'▇▇▇▇▇▇▇▇, Vice President of TEXTRON FINANCIAL
CORPORATION, a Delaware corporation, on behalf of the corporation.
/S/ ▇.▇. ▇▇▇▇▇▇▇▇
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Commissioner of the Superior Court
Notary Public
My Commission Expires: 2-28-09
80
Exhibits and Schedules to Agreement:
Schedule A List of Land Recording Offices and Interval Recording
Offices
Schedule 1.1(c) Additional Resort Collateral
Schedule 1.1(j) List of Bond Holder Exchange Documents
Schedule 1.1(t) List of Resort Declarations
Schedule 1.1(x) List of DZ Documents
Schedule 1.1(xx) Land
Schedule 1.1 (jjjj) List of Sovereign Documents
Schedule 1.1 (vvvv) Term Sheet and Commitment Letter
Schedule 1.1 (zzzz) List of Timeshare Owner Associations
Schedule 2.10(b) List of Borrower's Executive Management
Schedule 6.5 Liens
Schedule 6.7 Pending or Threatened Litigation
Schedule 6.9 List of Environmental Matters
Schedule 6.23 Inventory Control Procedures
Schedule 6.19 List of Time Share Documents
Schedule 7.2(l) List of Executive Compensation
Exhibit A Loan Documents
Exhibit B Borrower's Certificate and Request for Advance
Exhibit C Amended and Restated Intercreditor Agreement
Exhibit D List of Ineligible Notes
Exhibit E Bondholder Exchange Transaction Letter
Exhibit F Business Plan
Exhibit G DZ Letter