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Ex 10.1

Final Execution Copy
9/27/07

LOAN AND SECURITY AGREEMENT

among
SILVERLEAF RESORTS, INC.
(as Borrower)

and
THE PARTIES WHICH HEREAFTER EXECUTE THIS AGREEMENT
OR A JOINDER AGREEMENT
(as Lenders)

and
LIBERTY BANK
(as Lender and as Facility and Collateral Agent)

As of September 28, 2007

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LOAN AND SECURITY AGREEMENT
 
THIS LOAN AND SECURITY AGREEMENT, dated as of September 28, 2007, entered into
by and among SILVERLEAF RESORTS, INC., a Texas corporation, having an address of
1221 River Bend Drive, Suite 120, Dallas, Texas 75247 (as “Borrower”), the
parties, including  LIBERTY BANK, a Connecticut nonstock mutual savings bank,
having an office and place of business at 315 Main Street, Middletown,
Connecticut 06457 which execute and deliver this Agreement or a joinder
agreement to this Agreement in their respective capacities as Lenders hereunder
(collectively, the “Lenders” and each individually a “Lender”) and LIBERTY BANK
as facility agent and collateral agent (“Agent”).
 
WITNESSETH:
 
WHEREAS, Borrower is engaged in the business of acquiring, constructing,
developing, owning, managing, selling and otherwise dealing with Intervals at
the Resorts (as each such term is hereafter defined); and

WHEREAS, in connection with the Loans to be made by Lenders pursuant to this
Agreement, Agent has agreed to act as facility agent and collateral agent for
the other Lenders and to perform such duties with respect to the Loans as are
expressly set forth herein;

WHEREAS, Lenders, subject to the terms and conditions of this Loan and Security
Agreement, have agreed to provide to Borrower, for the purpose of providing
liquidity in connection with Borrower’s ownership and sale of Intervals, a loan
in the amount of the Commitment.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which are acknowledged, the parties to this Agreement,
intending to be legally bound, agree as follows:
 
Section 1-Definition Of Terms
 
1.1           Definitions.  Capitalized terms used in this Agreement are defined
in this Section  1. The definitions include the singular and plural forms of the
terms defined.

Account means an “account,” as that term is defined in the Code, and any and all
supporting obligations in respect thereof.
 
Additional Eligible Resorts or Additional Eligible Resort have the meanings
given to such terms in Section 3.5 hereof.
 
Advance means a portion of the proceeds of the Loan advanced from time to time
by Lenders to Borrower in accordance with the terms of this Agreement.
 
Affiliate means, with respect to Borrower or any other Person, any Person who,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person.  For purposes of
this definition, “control” means the possession, directly or indirectly, of the
power to direct the management and policies of a Person, whether through the
ownership of stock, by contract, or otherwise; provided, however, that, in any
event: (a) any Person which owns directly or indirectly 10% or more of the
securities having ordinary voting power for the election of directors or other
members of the governing body of a Person or 10% or more of the partnership or
other ownership interests of a Person (other than as a limited partner of such
Person) shall be deemed to control such Person, (b) each director (or comparable
manager) of a Person shall be deemed to be an Affiliate of such Person, and (c)
each partnership or joint venture in which a Person is a partner or joint
venturer shall be deemed to be an Affiliate of such Person.
 

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Agreement means this Loan and Security Agreement by and among Borrower, Agent
and each Lender which executes this Agreement (including the Exhibits and
Schedules to it) or a joinder agreement hereto, as it may be amended from time
to time.
 
Annual Operating Plan means Borrower’s financial and business projections for
its operations for the upcoming fiscal twelve (12) month period inclusive of a
budget and which shall represent Borrower’s good faith best estimate of its
future performance for the period covered thereby.
 
Applicable Laws means all applicable laws, rules, regulations and orders of any
Governmental Authority.
 
Assignment of Notes Receivable and Mortgages means a recordable Assignment of
Notes Receivable and Interval Mortgages, in the form attached hereto as Exhibit
A, made by Borrower in favor of Agent evidencing the assignment to Agent, as
collateral agent for each Lender, of all of the Pledged Notes Receivable and
Mortgages.
 
Availability means, as of any date of determination, if such date is a Business
Day, and determined at the close of business on the immediately preceding
Business Day, if such date of determination is not a Business Day, the amount
that Borrower is entitled to borrow as Advances under Section 2.1 hereof (after
giving effect to all then outstanding Obligations).
 
Borrower means Silverleaf Resorts, Inc., a Texas corporation.
 
Borrowing Base means, with respect to each Eligible Note Receivable pledged to
Agent hereunder in connection with each Advance from and after the Closing Date,
an amount equal to seventy-five percent (75%) of the remaining principal balance
of each such Eligible Note Receivable.
 
Borrowing Base Report means the form attached as Exhibit B hereof, which report,
from time to time shall be signed by the Chief Operating Officer, Chief
Financial Officer or Senior Vice President/Capital Markets or such other Person
designated in writing by Borrower to Agent.
 
Business Day means each day that is not a Saturday, a Sunday or a legal holiday
under the laws of the States of Texas or Connecticut.
 
Capital Lease means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
 
Closing Date means the date of this Agreement.
 
Code means the Uniform Commercial Code (or any successor statute), as in effect
from time to time, of the State of Connecticut or of any other state the laws of
which are required as a result thereof to be applied in connection with the
issue of perfection or the effect of perfection of security interests; provided
that to the extent that the Code is used to define any term herein or in any
other Loan Documents and such term is defined differently in different Articles
or divisions of the Code, the definition of such term contained in Article 9 of
the Connecticut Uniform Commercial Code shall govern.
 

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Collateral means, collectively, all now owned or hereafter acquired right, title
and interest of Borrower, in all of the following:
 
(a)           Pledged Notes Receivable and all proceeds of or from them;
 
(b)           Mortgages and all proceeds of or from them;
 
(c)           Documents, instruments, accounts, chattel paper, and general
intangibles relating to the Pledged Notes Receivable and the related Mortgages;
 
(d)           All books, records, reports, computer tapes, disks and software
relating to the Collateral; and
 
(e)           Extensions, additions, improvements, betterments, renewals,
substitutions and replacements of, for or to any of the Collateral, wherever
located, together with the products, proceeds, issues, rents and profits
thereof, and any replacements, additions or accessions thereto or substitutions
thereof.
 
Commitment means, singly, the obligation of each Lender to make a Loan or Loans
to Borrower in an aggregate amount not to exceed the Pro Rata Percentage for
each Lender of each Advance and collectively, to all Loans to be made by all
Lenders as provided herein.  The Commitment as of the Closing Date is the
Maximum Amount in the aggregate outstanding at any time during the Term of this
Agreement, and may from time to time be increased or decreased by Agent and
Lenders upon written a written agreement setting forth the terms and conditions
of any increase or decrease by and between Agent, Lenders and Borrower.  
 
Common Elements means all common elements, including but not limited to any
limited common elements, as each such common element is defined or provided for
in the Declaration or other Timeshare Documents.
 
CSF means CapitalSource Finance, LLC.
 
CSF Facility means that certain credit facility provided by CSF to Borrower
pursuant to the CSF Documents.
 
CSF Documents means the loan agreement, the promissory notes and all other
agreements or documents executed in connection with the CSF Facility, as each
may be amended, restated or otherwise modified from time to time.
 
Custodian means Wells Fargo Bank, National Association or Wells Fargo Corporate
Trust Services having an address of 751 Kasota Ave, MAC# N9328-011, Minneapolis,
MN  55414, or such other custodial Agent as may be approved by Agent in writing
from time to time.  Custodian shall be Lender's Agent for the purpose of
maintaining possession of all present and future Collateral documents described
in Section 3.4 hereof.

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Custodial Agreement means the Custodial and Collateral Agency Agreement of even
date herewith, by and among Agent, as Agent for each Lender, Borrower and
Custodian, pursuant to which the Custodian is to maintain possession of all
present and future Collateral documents described in Section 3.4 hereof, or any
custodial agreement entered into as a replacement of such agreement.
 
Daily Balance means, with respect to each day during the term of this Agreement,
the amount of an Obligation owed at the end of such day.
 
Debtor Relief Laws means any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
law, proceeding or device providing for the relief of debtors from time to time
in effect and generally affecting the rights of creditors.
 
Declaration or Declarations means, with respect to each Resort, the applicable
Declaration or Declarations described on Schedule 1.1(a) hereto.
 
Declarant Rights means the rights of the declarant in the Declaration for each
Resort.
 
Default means an event or condition the occurrence of which immediately is or,
with a lapse of time or the giving or notice or both, becomes an Event of
Default.
 
Default Rate means the Interest Rate plus four hundred (400) basis points per
annum; provided, however, that the Default Rate shall in no event exceed the
highest interest rate permitted to be charged under applicable usury laws.
 
Designated Account means account number 753813286 of Borrower maintained with
Borrower’s Designated Account Bank, or such other deposit account of Borrower
(located within the United States) that has been designated as such, in writing,
by Borrower to Agent.
 
Designated Account Bank means JP Morgan Chase Bank, ABA Number 113000609.
 
Division means the governmental authority of each state in which a Resort is
located, having jurisdiction over the establishment and operation of the Resorts
in question and the sale of Intervals at such Resort.
 
EBITDA means, with respect to any Person for any period: (a) the sum of (i) net
income (but excluding any extraordinary gains or losses or any gains or losses
from the sale or disposition of assets other than in the ordinary course of
business, it being agreed however that gains from the sale of Notes Receivable
in connection with securitization or conduit transactions shall be included in
net income, but losses from such sales shall be deducted from ordinary income),
(ii) interest expense, (iii) depreciation and amortization and other non-cash
items properly deducted in determining net income, and (iv) federal, state and
local income taxes, in each case for such Person for such period, computed and
calculated in accordance with GAAP minus (b) non-cash items properly added in
determining net income, in each case for the corresponding period.
 
Eligible Notes Receivable means those Pledged Notes Receivable which satisfy
each of the following criteria:
 

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(a)           Borrower shall be the sole payee;
 
(b)           it arises from a bona fide sale by Borrower of one or more
Intervals;
 
(c)           the Interval sale from which it arises shall not have been
cancelled by Purchaser, and any statutory or other applicable cancellation or
rescission period shall have expired and the Interval sale is otherwise in
compliance with this Agreement;
 
(d)           it is secured by a Mortgage on the purchased Interval;
 
(e)           principal and interest payments on it are payable to Borrower in
legal tender of the United States;
 
(f)            payments of principal and interest on it are payable in equal
monthly installments;
 
(g)           it shall have an original term of no more than one hundred twenty
(120) months, and the weighted average term on all Eligible Notes Receivable in
respect of which Advances are outstanding shall not be more than one hundred and
eight (108) months;
 
(h)           a cash down payment has been received from Purchaser or the maker
in an amount equal to at least ten percent (10%) of the actual purchase price of
a one week Interval (at least fifteen percent (15%) in the case of a Purchaser
with a FICO Score indicator of less than 615), and Purchaser shall have received
no cash or other rebates of any kind;
 
(i)            the first payment under each Note Receivable must be due and
payable to Borrower within 45 days of the closing date of the purchase of the
Interval, no monthly installment is more than thirty (30) days contractually
past due at the time of an Advance in respect of such Note Receivable, nor more
than sixty (60) days contractually past due at any time;
 
(j)            the rate of interest payable on the unpaid balance is at least
ten percent (10%), and the rate of interest on all Eligible Notes Receivable in
respect of which Advances are outstanding shall not be less than fifteen percent
(15%) per annum at any time, excluding from each minimum any Note Receivable
under which the applicable Purchaser is paying a lower rate pursuant to the
SCRA;
 
(k)           the Purchaser of the related Interval has immediate access to the
timeshare “unit week” related to such purchase, and the related unit has been
completed, developed, and furnished in accordance with the specifications
provided in the Purchaser’s purchase contract, public offering statement and
other Timeshare Documents; and Purchaser has, subject to the terms of the
Declaration, purchase contract, public offering statement and other Timeshare
Documents, complete and unrestricted access to the related Interval and the
Resort;
 
(l)            neither Purchaser of the related Interval or any other maker of
the Note is an Affiliate of, or related to, or employed by Borrower;
 
(m)          Purchaser or other maker has no claim against Borrower and no
defense, set-off or counterclaim with respect to the Note Receivable;
 
(n)           the maximum remaining principal balance of any such Note
Receivable, whether from an individual Purchaser or a related group of
Purchasers, shall not exceed $50,000 (or such greater amount as may be approved
in writing in advance by Agent), provided, that up to 5% of Eligible Receivables
may have a maximum balance not to exceed $75,000 per Note Receivable and/or
$100,000 in the aggregate for a related group of Purchasers;
 

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(o)           it is executed by a U.S. citizen or legal resident; provided,
however, that up to five percent (5%) of the outstanding principal balance of
all Eligible Notes Receivable may at any time be comprised of Notes Receivable
executed by a non-U.S. citizen or legal resident, provided that any such
non-U.S. citizen or legal resident Purchaser makes payments on the applicable
Note Receivable via Payment Authorization Agreement;
 
(p)           the original of such Note Receivable has been endorsed to Agent
and delivered to the Custodian as provided in this Agreement, and the terms
thereof and all instruments related thereto shall comply in all respects with
all applicable federal and state laws and the regulations promulgated
thereunder;
 
(q)           the Unit in which the timeshare Interval being financed or
evidenced by such Note Receivable is located, shall not be subject to any Lien
which is not previously consented to in writing by Agent;
 
(r)            the Note Receivable is in full compliance with all Applicable
Laws;
 
(s)           no modifications or extensions of the Note Receivable have been
agreed to other than as permitted under Section 3.6 hereof, nor is the Note
Receivable the result of a downgrade to cure a Purchaser default under another
Note Receivable;
 
(t)            the Note Receivable conforms to Borrower’s underwriting
guidelines and criteria as set forth on Schedule 1.1(b) hereof;
 
(u)           the Note Receivable is evidenced by standard legal documentation
and on a form reviewed by and acceptable to Agent;
 
(v)           the applicable Purchaser’s FICO Score is not less than 600,
provided that 5% of the outstanding principal balance of all Eligible Notes
Receivable may at any time be comprised of Notes Receivable where the applicable
Purchaser has no FICO Score, and 25% may at any time be comprised of Notes
Receivable where the applicable Purchaser has no FICO Score or a FICO Score
below 600, and the weighted average FICO Score (measured once at the time of
funding) of Eligible Notes Receivable in a funding may not be less than 650;
 
(w)           if the loan is a newly originated Note Receivable which is
replacing an existing Eligible Note Receivable pledged as Collateral under the
Agreement and the proceeds have been used to finance the purchase of an Interval
which is being upgraded by the Purchaser to a more expensive Interval:
 
(1)           the principal balance of the existing Eligible Note Receivable
which is being upgraded may still be included for purposes of calculating the
Borrowing Base for a period of time expiring on the earlier to occur of (i) the
31st day after the consumer documents effecting the upgrade have been executed
or (ii) the date on which any payment on such Eligible Note Receivable becomes
thirty (30) or more days past due;
 
 
(2)           on or before the second Business Day after the expiration of the
statutory rescission period in connection with any consumer documents executed
effecting any upgrade involving an Eligible Note Receivable and in any event
within ten (10) days of such upgrade, the Borrower shall deliver to the Agent or
its designee the original of the new promissory note, comparable instrument or
installment sale contract executed in connection with such upgrade duly endorsed
in blank by the Borrower and the Borrower will cause all payments made with
respect to such new promissory note, comparable instrument or installment sale
contract to be forwarded to the lockbox;
 

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(3)           any new upgraded Note Receivable involving a prior Eligible Note
Receivable shall only be included as part of the Borrowing Base if (i) the prior
Eligible Note Receivable has been removed from the Borrowing Base and the new
upgraded Note Receivable satisfies all conditions for an Eligible Note
Receivable, and (ii) the subject Purchaser’s FICO Score is not less than 600
(unless the prior Eligible Note Receivable had been paid in full or the subject
Purchaser has made a cash downpayment of at least 20% of the difference between
the sales price of the prior Eligible Note Receivable and the sales price of the
new Eligible Note Receivable).
 
Encumbered Intervals means the Intervals subject to the Mortgages.
 
Environmental Laws means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time, the Resource
Conservation and Recovery Act of 1976, as amended from time to time, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the federal
Clean Air Act, the federal Clean Water Act, the federal Safe Drinking Water Act,
the federal Toxic Substances Control Act, the federal Hazardous Materials
Transportation Act, the federal Emergency Planning and Community Right to Know
Act of 1986, the federal Endangered Species Act, the federal Occupational Safety
and Health Act of 1970, the federal Water Pollution Control Act, all state and
local environmental laws, rules and regulations of each state in which a Resort
is located, as all of the foregoing legislation may be amended from time to
time, and any regulations promulgated pursuant to the foregoing; together with
any similar local, state or federal laws, rules, ordinances or regulations
either in existence as of the date hereof, or enacted or promulgated after the
date of this Agreement, that concern the management, control, storage,
discharge, treatment, containment, removal and/or transport of Hazardous
Materials or other substances that are or may become a threat to public health
or the environment; together with any common law theory involving Hazardous
Materials or substances which are (or alleged to be) hazardous to human health
or the environment, based on nuisance, trespass, negligence, strict liability or
other tortious conduct, or any other federal, state or local statute,
regulation, rule, policy, or determination pertaining to health, hygiene, the
environment or environmental conditions.
 
Environmental Indemnification Agreement means the Environmental Indemnification
Agreement made by Borrower to Agent pursuant to this Loan Agreement, as the same
may be amended from time to time.
 
Event of Default has the meaning given to it in Section 8.1 hereof.
 
Exchange Company means Resort Condominiums International, Inc. (“RCI”) or
Interval International, Inc. (“II”).
 
FICO Score means the credit score attributed to a Purchaser by the Fair Isaac
Company or such similar credit score reporting company acceptable to
Lender.  Where a Purchaser consists of more than one individual, then the
applicable FICO Score shall be deemed to mean that of the primary obligor.
 

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Final Maturity Date means September 28, 2012 or such date as is thirty six (36)
months following the extension of any Revolving Loan Period.
 
Financial Statements means the balance sheets and statements of income and
expense of the Borrower, and the related notes and schedules delivered by
Borrower to Agent prior to the Closing Date and provided for in Section 4.4 (c)
hereof; and the quarterly, annual and other periodic financial statements and
reports required to be provided to Agent pursuant to Section 7.1 (h) hereof.
 
GAAP means generally accepted accounting principles, applied on a consistent
basis, as described in Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and/or in statements of the
Financial Accounting Standards Board which are applicable in the circumstances
as of the date in question.
 
Governmental Authority means any federal, state, local, or other governmental or
administrative body, instrumentality, department, or agency or any court,
tribunal, administrative hearing body, arbitration panel, commission, or other
similar dispute-resolving panel or body.
 
Hazardous Materials means each of “hazardous substances,” “hazardous waste” or
“hazardous constituents,” “toxic substances”, and “solid waste”, as defined in
the Environmental Laws, and any other contaminant or any material, waste or
substance which is petroleum or petroleum based, asbestos, polychlorinated
biphenyls, flammable explosives, or radioactive materials.
 
IRC means the Internal Revenue Code of 1986, as in effect from time to time.
 
IRS means the Internal Revenue Service of the United States of America.
 
Indebtedness means (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset a Person or its Subsidiaries, irrespective of
whether such obligation or liability is assumed, (e) all obligations for the
deferred purchase price of assets (other than trade debt incurred in the
ordinary course of business and repayable in accordance with customary trade
practices), and (f) any obligation of Borrower or its Subsidiaries guaranteeing
or intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse) any obligation of any other Person
that constitutes Indebtedness under any of clauses (a) through (e) above.
 
Interest Rate means a variable rate, adjusted as of each LIBO Rate Determination
Date, equal to the LIBO Rate, determined as of each LIBO Rate Determination
Date, plus two hundred and forty (240) basis points per annum.
 
Interval means, with respect to each Resort the undivided fractional fee
interval ownership interest as a tenant-in-common (sometimes referred to in the
Timeshare Documents as a vacation ownership interest, condoshare interest, or
condoshare week) in a Unit sold to a Purchaser by delivery of a deed for a
time-share period per calendar year (or, in the case of a biennial use period,
per alternate calendar year) of one week (as defined in the Declaration),
together with all appurtenant rights and interests, including, without
limitation, appurtenant rights to use Common Elements, and easement, license,
access and use rights in and to all Resort facilities and amenities (as
described in the Declaration), all as more particularly described in the
Declaration or other Timeshare Documents.  Notwithstanding the foregoing, the
term “Interval” shall also include, with respect to the Oak N’  Spruce Resort
only, the beneficial interest in the entity which owns each of the Units at the
Oak N’  Spruce Resort, as evidenced by the delivery to the Purchaser of any such
beneficial interest of a certificate of beneficial interest for a timeshare
period per calendar year (or, in the case of biennial use period, per alternate
calendar year) of one week (as defined in the Oak N’  Spruce Resort
Declaration), together with all pertinent rights and interests, including,
without limitation, a pertinent right to use Common Elements, and easements,
license, access and use rights in and to all Oak N’  Spruce Resort facilities
and amenities, all as more particularly described in the Declaration or other
Timeshare Documents for the Oak N’  Spruce Resort.
 

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Lender has meaning given to it in the preamble hereof, and shall include any
other Person made a party to this Agreement in accordance with the provisions of
Section 10.9 hereof.
 
Lender Expenses means all (a) costs or expenses (including taxes, and insurance
premiums) required to be paid by Borrower or its Subsidiaries under any of the
Loan Documents that are paid or incurred by Agent or any  Lender, (b) fees or
charges paid or incurred by Agent or any  Lender in connection with the Borrower
and its Subsidiaries, including, fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, litigation, bankruptcy and UCC searches), filing, recording,
publication, appraisal (including periodic Collateral appraisals or business
valuations to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement), (c) costs and expenses incurred by
Agent or any  Lender in the disbursement of funds to Borrower (by wire transfer
or otherwise), (d) charges paid or incurred by Agent or any  Lender resulting
from the dishonor of checks relating to the Borrower or associated with the
Collateral, (e) reasonable costs and expenses paid or incurred by the Agent or
any Lender to correct any default or enforce any provision of the Loan
Documents, or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale, or advertising to sell the
Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) audit fees and expenses of Agent or any  Lender related to
audit examinations of the Books to the extent of the fees and charges (and up to
the amount of any limitation) contained in this Agreement, (g) reasonable costs
and expenses of third party claims or any other suit paid or incurred by the
Agent or any  Lender in enforcing or defending the Loan Documents or in
connection with the transactions contemplated by the Loan Documents or the Agent
or any  Lender’s relationship with Borrower, (h) Agent and each Lender’s and
Participant’s reasonable fees and expenses (including attorneys fees) incurred
in advising, structuring, drafting, reviewing, administering, or amending the
Loan Documents, and (i) Agent and each Lender’s and Participant’s reasonable
fees and expenses (including attorneys fees) incurred in terminating, enforcing
(including attorneys fees and expenses incurred in connection with a “workout,”
a “restructuring,” or an Insolvency Proceeding concerning Borrower or its
Subsidiaries or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.
 
Liberty Bank means Liberty Bank, a Connecticut nonstock mutual savings bank.
 
LIBO Rate Determination Date means the first Business Day of each
month.  Notwithstanding the foregoing, the initial LIBO Rate Determination Date
shall be the Closing Date.
 
LIBO Rate means the London Interbank Offered Rate for one-month United States
dollar-denominated deposits as published under the designation “Money Rates” in
the “Money and Investing” section of The Wall Street Journal (Eastern Edition)
(the “WSJ”).  In the event that the LIBO Rate established by the WSJ shall no
longer be available, due to either the nonexistence of the WSJ or the WSJ’s
failure to publish such a rate, then Lender shall choose a substitute rate based
upon a national index, selected by Lender in its sole discretion.
 

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Lien means any interest in property securing an obligation owed to, or claim by,
a Person other than the owner of such property, whether such interest arises in
equity or is based on the common law, statute, or contract.
 
Loan  means, as the context requires, singly each Advance and collectively all
Advances made by Lenders to Borrower under or pursuant to this Agreement.
 
Loan Documents means, collectively, this Agreement and the following documents
and instruments listed below as such agreements, documents, instruments or
certificates may be amended, renewed, extended, restated or supplemented from
time to time.
 
 
(a)
This Agreement;

 
 
(b)
The Note;

 
 
(c)
The Environmental Indemnification Agreement;

 
 
(d)
The Assignment of Notes Receivable and Mortgages;

 
 
(e)
Borrower’s Certificate and Request for Advance;

 
 
(f)
The Lockbox Agreement;

 
 
(g)
The Custodial Agreement;

 
 
(h)
The Standby Servicing Agreement Assignment;

 
(i)            UCC financing statements covering the Collateral, to be filed
with the Texas Secretary of State and the Secretary of State and/or such other
office where UCC financing statements are required to be filed pursuant to the
Code; and
 
(j)            Such other agreements, documents, instruments, certificates and
materials as Agent may request to evidence the Obligations; to evidence and
perfect the rights and Liens and security interests of Agent, as agent for
Lenders, contemplated by the Loan Documents, and to effectuate the transactions
contemplated herein, as such agreements, documents, instruments or certificates
may be hereafter amended, renewed, extended, restated or supplemented from time
to time.
 
Loan Year means the period from the Closing Date through the last day of the
next full twelve (12) calendar month period and each twelve (12) calendar month
period thereafter.
 
Lockbox Agent means JP Morgan Chase Bank, a New York banking association having
a place of business at 2200 Ross Avenue, Dallas, Texas 75201, or such other
financial institution as may be approved by Agent in writing from time to time.
 
Lockbox Agreement means the Lockbox Agreement of even date herewith, by and
among Borrower, Lenders, Agent, Servicing Agent and Lockbox Agent, pursuant to
which the Lockbox Agent is to provide lockbox, reporting and related services
and is to provide for the receipt of payments on the Notes Receivable and the
disbursement of such payments to Agent.

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Mandatory Prepayment means any prepayment required by Section 2.4 (b) hereof.
 
Marketing and Sales Expenses means all promotion, lead generation, sales
commissions and all other marketing expenses incurred or paid by Borrower
pursuant to any marketing agreements or otherwise.
 
Material Adverse Change means (a) a material adverse change in the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Borrower, taken as a whole, (b) a material
impairment of the ability of Borrower to perform its obligations under the Loan
Documents or of the Lender’s ability to enforce the Obligations or realize upon
the Collateral, or (c) any impairment of the enforceability or priority of the
Lender’s Liens with respect to the Collateral.
 
Maximum Amount means an aggregate amount not to exceed at any time
$37,500,000.00. provided that such maximum amount is subject to the restrictions
set forth in Section 2.1(a) hereof.
 
Mortgage means a properly recorded, first priority mortgage, deed of trust, deed
to secure debt, assignment of beneficial interest or other security instrument,
as applicable, executed and delivered by each Purchaser to Borrower, securing a
Pledged Note Receivable and encumbering all of the right, title and interest of
such Purchaser in the related Encumbered Interval and related or appurtenant
easement, access and use rights and benefits.  Agent acknowledges that
assignments of beneficial interest executed by Purchasers of Intervals at Oak
N’  Spruce Resort will not be recorded and that Borrower will not be required to
provide Agent or Lenders with any title insurance with respect to Intervals at
Oak N’ Spruce Resort.
 
Note means the  Promissory Note of even date herewith in the amount of the
Maximum Amount, as amended, increased or extended from time to time, or any new
promissory note issued in replacement (but not in repayment) thereof.
 
Note Receivable means a promissory note executed in favor of Borrower in
connection with a Purchaser’s acquisition of an Interval.
 
Obligations means all Indebtedness due Agent, any Lender or any Affiliate of a
Lender, all amounts due or becoming due to Agent or any Lender in respect of the
Loan under any of the Loan Documents, including principal, interest, prepayment
premiums, contributions, taxes, insurance, loan charges, custodial fees,
attorneys’ and paralegals’ fees and expenses and other fees or expenses incurred
by Agent or any Lender or advanced to or on behalf of Borrower by Agent or any
Lender pursuant to any of the Loan Documents, and the prompt and complete
payment and performance by the Borrower of all obligations, indebtedness and
liabilities pursuant to this Agreement or any of the Loan Documents or
otherwise.
 
Operating Contract or Operating Contracts has the meaning given to it in
Section 6.20 hereof.
 
Origination Fee has the meaning given to it in Section 4.2 hereof.
 

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Participant means, singly and collectively, any bank or other entity, which is
indirectly or directly funding to or through Liberty Bank with respect to the
Loan, in whole or in part, including, without limitation, any direct or indirect
assignee of Liberty Bank in the Loan.
 
Payment Authorization Agreement means a pre-authorized electronic debit
agreement by a Purchaser for payment of a Note Receivable.
 
Permitted Discretion means a determination made in the exercise of reasonable
(from the perspective of a secured asset-based lender in the same or similar
circumstances) business judgment.
 
Person means an individual, partnership, corporation, limited liability company,
trust, unincorporated organization, other entity, or a government or agency or
political subdivision thereof.
 
Pledged Notes Receivable means any Note Receivable which at any time has been
pledged to Agent on behalf of Lenders by Borrower pursuant to this Agreement or
any of the Loan Documents  (and all replacements of such Notes Receivable
pursuant to Section 2.4(b) hereof.).
 
Prescribed Laws means, collectively, (a) the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001 (Public Law 107 56) (the USA PATRIOT Act), (b) Executive Order No. 13224
on Terrorist Financing, effective September 24, 2001, and relating to Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism, (c) the International Emergency Economic Power
Act, 50 U.S.C. § 1701 et seq., (d) the Trading with the Enemy Act, 50 U.S.C.
App. 1 et seq., and (d) all other Legal Requirements relating to money
laundering or terrorism, and, in each case, any Executive Orders or regulations
promulgated under any such laws.
 
Property or Properties means any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
 
Pro Rata Percentage means the applicable percentage of the Loan that each Lender
has agreed to make to Borrower pursuant to this Agreement as set forth in
Schedule 1.0 hereof, as such percentage may from time to time be amended by
Agent and the applicable Lender.
 
Purchase Price means the total purchase price of a timeshare Interval, as set
forth in the Timeshare Documents and Note Receivable relating to the purchase of
such Interval.
 
Purchaser means any Person who purchases one or more Intervals.
 
Quarterly Financial Report means, individually and collectively, as applicable,
the financial reports delivered in accordance with Section 7.1 (h)(i) hereof.
 
Renewal Fee has the meaning given to it in Section 2.3(c) hereof.
 
Resort or Resorts (also “Eligible Resort” or “Eligible Resorts”) means,
individually and collectively, as applicable, each or all of the interval
ownership and time-share projects consisting of: (i) (A) Holly Lake Ranch,
Hawkins, 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, Kimberling 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 Lee, Massachusetts;
(J) Apple Mountain Resort, Habersham County, Georgia; (K) The Villages, Flint,
Texas and (L) Silverleaf’s Seaside Resort, Galveston County, Texas; (M) Orlando
Breeze Resort, Davenport, Polk County, Florida (also sometimes individually and
collectively referred to herein as the “Existing Resorts”) and (ii) subject to
Agent’s prior written approval and satisfaction by the Borrower of the
conditions precedent set forth in Sections 3.5 and 4.4 hereof, the Additional
Eligible Resorts.  The term “Resort” or “Resorts” includes, among other things,
the undivided annual or (biennial) timeshare ownership interests (Intervals) in
the respective Resorts, and the appurtenant exclusive rights to use Units in one
or more buildings or phases and all appurtenant or related properties,
amenities, facilities, equipment, appliances, fixtures, easements, licenses,
rights and interests, including without limitation, the Common Elements, as
established by and more fully defined and described in the respective
Declarations, and the other Timeshare Documents.
 

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Revolving Loan Period means the period during the Term in which the Borrower may
borrow, repay and re-borrow Advances, commencing on the Closing Date and
terminating on September 28, 2009 or such later date pursuant to Section 2.3(c).
 
Servicing Agent means Lender’s exclusive Agent, which shall be such Person or
Persons designated by Borrower and approved by Agent in its sole discretion, for
the purposes of billing and collecting amounts due on account of the Pledged
Notes Receivable, providing reports pursuant to the Lockbox Agreement and
performing other servicing functions not performed by the Lockbox
Agent.  Borrower shall be the Servicing Agent until an Event of Default shall
have occurred and Agent replaces Borrower as Servicing Agent as provided in
Section 9.1(i) hereof.
 
Silverleaf Club means Silverleaf Club, a Texas non-profit corporation.
 
Silverleaf Finance II Documents means the loan agreement, the developer transfer
agreement, the demand notes and all other agreements or documents executed in
connection with the TFC Conduit Loan, as each may be amended, restated or
otherwise modified from time to time.
 
SCRA means The Servicemembers Civil Relief Act, 50 United States Code Appendix
Sections 501-593, which in relevant part limits to 6% per annum the interest
charged on credit obligations of active duty military members, reservists who
are in active federal service, and National Guardsmen who are in active federal
service, applicable to all obligations entered into before beginning active duty
if the military service materially affects his or her ability to meet such
obligations.
 
SPV means any special purpose entity created for the purpose of effecting a
securitization of certain of the assets of Borrower.
 
SPV Assets means those assets sold or conveyed by Borrower to the SPV pursuant
to the documents created for the securitization transaction.
 
Standby Servicer means the Person selected by Agent to act as standby servicer
in accordance with this Agreement.  The Standby Servicer shall be Concord
Servicing Corporation.
 
Standby Servicing Agreement means the agreement of even date herewith among
Borrower, Standby Servicer and Agent, as amended from time to time, pursuant to
which the Standby Servicer shall provide servicing functions with respect to the
Pledged Notes Receivable in accordance with Section 9.1(i) hereof.
 

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Subsidiary means, with respect to a Person, a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
 
Survey means a plat or survey of the Resorts prepared by a licensed surveyor
acceptable to Agent.
 
Tangible Net Worth means, with respect to any Person, the amount calculated in
accordance with GAAP as: (i) the consolidated net worth of such Person and its
consolidated subsidiaries, minus (ii) the consolidated intangibles of such
Person and its consolidated subsidiaries, including, without limitation,
goodwill, trademarks, tradenames, copyrights, patents, patent allocations,
licenses and rights in any of the foregoing and other items treated as
intangible in accordance with GAAP.  Notwithstanding the foregoing, if
subsequent to the Closing Date deferred sales are no longer considered an asset
under GAAP, Agent agrees, at the request of Borrower, to determine, in its
reasonable discretion, whether deferred sales should continue to be considered
an asset for purposes of determining Borrower’s Tangible Net Worth.
 
Term means the period beginning on the Closing Date and ending on the Final
Maturity Date.
 
TFC means Textron Financial Corporation.
 
TFC Facility means that certain credit facility provided by TFC to Borrower
pursuant to the TFC Documents.
 
TFC Documents means the loan agreement, the promissory notes and all other
agreements or documents executed in connection with the TFC Facility, as each
may be amended, restated or otherwise modified from time to time.
 
TFC Conduit Loan means that certain loan facility provided by TFC in accordance
with the terms of the Silverleaf Finance II Documents.
 
Timeshare Act means any statute, act, regulation, ordinance, rule or law
applicable to the establishment and operation of the Resorts and the sales of
the Intervals.
 
Timeshare Documents means any registration statement required under any
Timeshare Act approving the establishment and operation of the Resorts and the
sales of Intervals.
 
Timeshare Owners’ Association means, with respect to each Resort, the applicable
not-for-profit corporations described on Schedule 1.1(c) hereof.
 
Total Interest Expense means, for any period, the aggregate amount of interest
required to be paid or accrued by Borrower and its Subsidiaries during such
period on all indebtedness of Borrower and its consolidated Subsidiaries
outstanding during all or any part of such period, whether such interest was or
is required to be reflected as an item of expense or capitalized, including
payments consisting of interest in respect of any capitalized lease, or any
synthetic lease and including commitment fees, agency fees, facility fees,
balance deficiency fees and similar fees or expenses in connection with the
borrowing of money.
 

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Transfer Account means the account established by Agent to which all Loans by
Lenders will be made.
 
UBS means UBS Real Estate Securities, Inc.
 
UBS Facility means that certain credit facility provided by UBS pursuant to the
UBS Documents.
 
UBS Documents means the loan agreement, the promissory notes and all other
agreements or documents executed in connection with the UBS Facility, as each
may be amended, restated or otherwise modified from time to time.
 
UCC Financing Statements means the UCC-1 Financing Statements, naming the
Borrower as debtor and the Agent as secured party on behalf of Lenders,
heretofore or hereafter filed in connection with the Loan and all amendments
thereto.
 
Unit means, with respect to each Resort, one living unit in a building
incorporated into the Resort pursuant to the Declaration, together with all
related or appurtenant interests in services, easements and other rights or
benefits, as described and provided for in the Declaration, including but not
limited to the right to use the Resort amenities and facilities in accordance
with the Timeshare Documents.
 
Unused Line Fee has the meaning given to it in Section 2.3(c) hereof.
 
Wellington means New Wellington Financial, L.L.C., located in Charlottesville,
Virginia.
 
WFF means Wells Fargo Foothill, LLC.
 
WFF Facility means that certain credit facility provided by WFF to Borrower
pursuant to the WFF Documents.
 
WFF Documents means the loan agreement, the promissory notes and all other
agreements or documents executed in connection with the WFF Facility, as each
may be amended, restated or otherwise modified from time to time.
 
1.2           Construction.  Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term “including” is not limiting, and the
term “or” has, except where otherwise indicated, the inclusive meaning
represented by the phrase “and/or.”  The words “hereof,” “herein,” “hereby,”
“hereunder,” and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement.  An Event of
Default shall “continue” or be “continuing” until such Event of Default has been
waived in writing by Lender.  Section, subsection, clause, schedule, and exhibit
references are to sections, subsections, clauses, schedules and exhibits in this
Agreement unless otherwise specified.  Any reference in this Agreement or in the
Loan Documents to this Agreement, any of the Loan Documents or any other
document or agreement shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, supplements,
and restatements thereto and thereof, as applicable.
 

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1.3           Schedules and Exhibits.  All of the schedules and exhibits
attached to or referred to within this Agreement, as they may from time to time
be amended or restated, shall be deemed incorporated herein by reference.
 
Section 2-The Loan
 
2.1           Revolving Loan and Lending Limits.
 
(a)        Revolving Loan; Lending Limits; Making of Loans.  Upon the terms and
subject to the conditions set forth herein (including without limitation
Sections 2.1(c) and 2.6 hereof), each Lender agrees severally, at any time and
from time to time during the Revolving Loan Period to make Advances to Borrower
and Borrower may borrow, repay and re-borrow during the Revolving Loan Period,
in an aggregate amount not to exceed at any time the lesser of each Lender’s Pro
Rata Percentage of: (i) the Borrowing Base, (ii) the Availability or (iii) the
Commitment.  The Revolving Loan Period shall be the period during the Term in
which the Borrower may borrow, repay and re-borrow Advances.
 
Borrower acknowledges, agrees and confirms that the obligations of all Lenders
to make Loans under this Agreement to Borrower is limited to the lesser of: (i)
the Borrowing Base, (ii) the Availability or (iii) the Commitment.  Borrower
further acknowledges, agrees and confirms that the obligation of each Lender to
make loans hereunder to Borrower is limited to: (i) with respect to each Advance
hereunder, each Lender’s Pro Rata Percentage of any such Advance hereunder and
(ii) with respect to all Advances made hereunder, such Lender’s obligation
hereunder shall be limited to its commitment as set forth on Schedule 1.0.
 
Each Loan by a Lender shall be made ratably in accordance with each Lender’s
respective Pro Rata Percentage, provided, however, that the failure of any
Lender to make any required Loan shall not in itself relieve any other Lender of
its obligation to make any required Loan hereunder.  Likewise, no Lender shall
be responsible or liable for the failure of any other Lender to make any Loan
required to be made by such other Lender, nor shall any Lender be obligated to
make any Loan or Loans in excess of its respective Pro Rata Percentage, but not
in excess of its Commitment, in the event that any other Lender fails or refuses
to make a Loan or Loans as provided hereunder.  As and when additional Lenders
execute and deliver this Agreement, then (A) such additional Lenders shall be
deemed to have simultaneously purchased from each of the other Lenders who have
previously executed and delivered this Agreement, a share in such other Lenders’
Loans so that the amount of the Loans of all Lenders shall be pro rata as
otherwise set forth above and (B) such other adjustments shall be made from time
to time as shall be equitable to insure that the Advances to Borrower are made
ratably by each Lender in accordance with its respective Pro Rata Percentage.

(b)            Advances for Certain Fees.  Borrower has advised Lender that
Custodian will bill on a monthly basis for its services.  Borrower agrees that
upon receipt of a monthly billing from Custodian, it will, unless Custodian
shall have delivered such billing to Agent directly, review and approve such
billing or discuss and resolve with Custodian any discrepancies in such billing,
within five (5) days of receipt of such billing and advise Agent of Borrower’s
approval of such billing.  Agent is authorized by Borrower to pay directly to
Custodian the amount of such billing as an Advance, to the extent of
Availability, or as a deduction from the next requested Advance by Borrower.
 
(c)            Maximum Amount of Advances.  Notwithstanding anything to the
contrary contained herein, no Lender shall have an obligation to make an Advance
of its Pro Rata Percentage thereof hereunder to the extent that (i) the
aggregate of Advances outstanding would cause the Loan to exceed the lesser of
(A) Borrowing Base, (B) the Availability or (C) the Commitment, or (ii) in an
amount which would cause the aggregate outstanding principal balance of Liberty
Bank’s Commitment retained by Liberty Bank and not participated to other lenders
to exceed Twenty-Five Million Dollars ($25,000,000); or (C) such an Advance
would cause such Lender or any Participant in such loans to violate any legal
lending limit under Section 2.5 hereof or otherwise.

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(d)            Note Evidencing Borrower’s Obligations.  Borrower’s obligations
to pay the principal of and interest on the Loan or Loans made by each Lender
shall be evidenced by the Note to the Agent, as Agent for each Lender, which
Note shall be dated as of the date hereof and be in the principal amount of the
Maximum Amount.  The Note will mature on the Final Maturity Date, bear interest
as provided in Section 2.2 hereof and be otherwise entitled to the benefits of
this Agreement.  Notwithstanding the stated principal amount of the Note, the
aggregate outstanding principal amount of the Loan at any time shall be the
aggregate principal amount owing on the Note at such time.  Agent shall and is
hereby authorized to record in its internal books and records the date and
amount of each Advance made by Lenders, the Interest Rate and interest period
applicable thereto and each repayment thereof; and such books and records shall,
as between Borrower and each Lender, absent manifest error, constitute prima
facie evidence of the accuracy of the information contained therein.  Failure by
Agent to so record any Advance made by Lenders (or any error in such
recordation) or any payment thereon shall not affect the Obligations of Borrower
under this Agreement or under the Note and shall not adversely affect Lender’s
rights under this Agreement with respect to the repayment thereof.  At the
election of any Lender, Borrower shall execute and deliver to such Lender a note
in a stated principal amount equal to such Lender’s Pro Rata Percentage of the
Loan, which such note or notes shall be on the same terms and conditions as
provided above and which note or notes shall be included within the definition
of “Note” as such term is used herein.
 
(e)            Notice of Advances.  
 
(i)            Upon receipt by Agent from Borrower of a written request for
Advance in accordance with Section 5 hereof and Borrower’s satisfaction of the
requirements set forth in Section 5 hereof, Agent shall give a written notice (a
“Notice of Borrowing”) to each Lender, (which Notice of Borrowing shall be given
to each Lender not less than two (2) Business Days prior to the date of the
proposed Advance), setting forth: (i) the total amount of the Advance requested
by Borrower; (ii) the Borrowing Base received from Borrower supporting such
requested Advance; (iii) the amount of all Loans remaining outstanding by each
respective Lender; (iv) the outstanding principal balance of the Loan; (v) each
such Lender’s Pro Rata Percentage of the requested Advance and (vi) the date on
which such Advance is to be made; or
 
(ii)           at its option, the Agent shall provide to each Lender: (A) each
month by the close of business on the fifth (5th) Business Day following receipt
by Agent from Borrower, but in no event later than the 30th day of the month:
(i) a reconciled Borrowing Base Report in the form attached as Exhibit B hereof;
and (ii) an updated trial balance and aging report for the Pledged Notes
Receivable (a “Collateral Data Report”); and (B) by the close of business on the
tenth (10th) Business Day following receipt by Agent from Borrower of the
Borrowing Base Report and the Collateral Data Report: (i) a summary of all
Advances made by Agent during the immediately preceding month (a “Summary of
Weekly Advances”); and (ii) a summary report of Advances and repayments or
collections for the immediately preceding month and a calculation of the net
Lender’s Advance required of such Lender with respect to all Advances made
during the immediately preceding month (a “Lender Advance Report”).
 

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(f)    Disbursement of Funds.
 
(i)           If Notice of Borrowing is provided in accordance with Section
2.1(e) above, then after receiving a Notice of Borrowing from Agent, each Lender
shall, not later than 11:00 a.m., Eastern Standard Time, on the date specified
in such Notice of Borrowing on which the proposed Advance is to be made, wire
transfer to Agent at the Transfer Account, in immediately available funds, an
amount equal to each such Lender’s Pro Rata Percentage of the proposed Advance
as set forth in the Notice of Borrowing.  Upon Agent’s receipt of funds from
each Lender equal to the amount of the requested Advance, and subject to
Borrower’s compliance with the terms and conditions of this Agreement, Agent
shall disburse the Advance to Borrower by wire transfer of funds as directed in
writing by Borrower.  If Agent shall not receive funds from any Lender as set
forth above, then the amount of the Advance in question shall be automatically
reduced by an amount equal to the missing Lender’s Pro Rata Percentage of the
Advance in question, and Agent shall, subject to Borrower’s compliance with the
terms and conditions of this Agreement, disburse the Advance in the reduced
amount to Borrower by wire transfer of funds as directed in writing by
Borrower.  Agent, in its sole and absolute discretion, may (but shall not be
obligated to) make the full amount of the requested Advance available to
Borrower prior to the receipt by Agent from one or more Lenders of funds
representing such Lender’s or Lenders’ Pro Rata Percentage of the Advance in
question.  If the funds representing such Lender’s or Lenders’ Pro Rata
Percentage of the Advance in question are not received by Agent within two (2)
Business Days of the date of such Advance, Borrower shall immediately, upon
demand of Agent, repay such amount to Agent.  Nothing herein shall be deemed to
relieve Agent or any Lender from its obligations hereunder or to prejudice any
rights Agent may have against any Lender as a result of any Lender’s failure to
make any Loan or Loans as provided herein; or
 
(ii)           If notice of Advances is provided in accordance with
Section 2.1(e) above, then by the close of business on the third (3rd) Business
Day following such Lender’s receipt of the Lender Advance Report, such Lender
shall wire transfer to Agent at the Transfer Account, in immediately available
funds, the net amount due from such Lender as set forth in the Lender Advance
Report.  If the funds representing such Lender’s amount of the Advance or
Advances in question are not received by Agent within five (5) Business Days of
the date of such Lender’s receipt of the Lender Advance Report, Borrower shall
immediately, upon demand of Agent, repay such amount to Agent.  Nothing herein
shall be deemed to relieve Agent or any Lender from its obligations hereunder or
to prejudice any rights Agent may have against any Lender as a result of any
Lender’s failure to make any Loan or Loans as provided herein.
 
(g)           Monthly Collateral and Borrowing Base Reporting.  Within ten (10)
days following the end of any calendar month, Borrower shall provide to Agent:
(i) an updated Borrowing Base Report in the form attached as Exhibit B hereof;
and (ii) an updated trial balance and aging report for the Pledged Notes
Receivable (a “Collateral Data Report”); and (iii) by the close of business on
the tenth (10th) Business Day following receipt by Agent from Borrower of the
Borrowing Base Report and the Collateral Data Report: (a) a summary of all
Advances made by Agent during the immediately preceding month (a “Summary of
Weekly Advances”); and (b) a summary report of Advances and repayments or
collections for the immediately preceding month.

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2.2           Interest Rates.  
 
(a)            Interest Rates.  Except as provided in clause (b) below, all
Obligations that have been charged to the Loan pursuant to the terms hereof
shall bear interest on the Daily Balance thereof at a per annum rate equal to
the Interest Rate from the date of Agent’s wiring of funds to Borrower through
the date of Agent’s receipt of repayment of the Loan (if received by Agent later
than noon, Eastern Standard Time, then interest accrual shall be through the
next Business Day following such receipt).
 
(b)            Default Rate.  Upon the occurrence and during the continuation of
an Event of Default (and at the election of Agent), all Obligations that have
been charged to the Loan pursuant to the terms hereof shall bear interest on the
Daily Balance thereof at a per annum rate equal to the Default Rate.  Each
Lender’s Loan shall bear interest at the Interest Rate or the Default Rate as
applicable as of the date funds are received by Agent as provided in
Section 2.1(f) hereof through the date of Agent’s wiring of repayment funds to
each Lender in accordance with Sections 2.1(f) and 2.3(d) hereof.
 
2.3           Payments.  From and after the Closing Date, Borrower agrees
punctually to pay or cause to be paid to Agent, as Agent for each Lender, all
principal and interest due under the Note in respect of the Loans.  Interest and
all other fees payable hereunder shall be due and payable, in arrears, on the
first day of each month at any time that Obligations are outstanding.  Borrower
shall make the following payments on the Loan:
 
(a)            Monthly Payments.  Borrower shall direct or otherwise cause all
makers of all Pledged Notes Receivable to pay all monies due thereunder to the
lockbox established pursuant to the Lockbox Agreement, or as otherwise required
by Agent.  One hundred percent (100%) of the cleared funds collected from the
Pledged Notes Receivable each week will be paid to Agent by the Lockbox Agent
pursuant to the Lockbox Agreement, and will be applied by Agent twice monthly as
follows: first to the payment of costs or expenses incurred by Agent pursuant to
this Agreement in creating, maintaining, protecting or enforcing the Liens in
and to the Collateral and in collecting any amounts due any Lender in connection
with the Loan (“Collection Costs”) and the balance to each Lender in accordance
with the applicable percentage of the outstanding principal balance of the Loan
that each Lender has made (the “Pro Rata Payment Percentage”).  Each Lender
shall apply each such payment in the following order: (i) to any interest
accrued at the Default Rate; (ii) then to interest accrued and payable at the
Interest Rate; and (iii) then to outstanding principal.  In the event that the
cleared funds received by Agent are insufficient to pay the amounts described in
aforementioned clauses (i)-(ii), then Borrower shall pay the difference to Agent
on or before the fifth (5th) day of the following month.  In the event Borrower
receives any payments on any of the Pledged Notes Receivable directly from or on
behalf of the maker or makers thereof, Borrower shall receive all such payments
in trust for the sole and exclusive benefit of Lenders; and Borrower shall
deliver to the Lockbox Agent all such payments (in the form so received by
Borrower) as and when received by Borrower, unless Agent shall have notified
Borrower to deliver directly to Agent all payments in respect of the Pledged
Notes Receivable which may be received by Borrower, in which event all such
payments (in the form received) shall be endorsed by Borrower to Agent, as agent
for Lenders and delivered to Agent promptly upon Borrower’s receipt thereof.
 
(b)            Final Payment.  The entire outstanding principal amount of the
Loan, together with all other Obligations hereunder, shall be due and payable on
the Final Maturity Date.
 
(c)            Origination Fee; Renewal Fee(s); Unused Line Fee(s).  Borrower
shall pay the Origination Fee as prescribed in Section 4.2 hereof.  In addition,
annually for each twelve-month extension to the Revolving Loan Period agreed to
in writing by Agent, Lenders and Borrower (and without binding any of the
foregoing parties in advance to enter into such an extension), Borrower shall
pay a fee of 0.25% (each, a “Renewal Fee”) of the Commitment on or before the
effective date of such extension.  In addition, the Borrower shall pay an unused
line fee (the “Unused Line Fee”) calculated as of the last day of each calendar
month equal to one quarter of one percent (0.250%) per annum of the difference
between (i) the Maximum Amount, and (ii) the average outstanding principal
balance of the Loan during such month, due and payable by the fifteenth (15th)
day of the following calendar month; provided, that the Unused Line Fee would be
waived: (A) through the last day of the sixth (6th) full calendar month after
the Closing Date, and (B) for any calendar month where the average outstanding
principal balance of the Loan during such month exceeded $15,000,000.
 

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(d)            Payments to Lender.  Agent may at its sole and absolute
discretion either: (i) promptly upon receipt wire transfer to any Lender its Pro
Rata Percentage of any payment received from Borrower in accordance with this
Section 2.3 or Section 2.4 hereof; or (ii) include any Lender’s Pro Rata
Percentage of any payment received from Borrower in accordance with this Section
2.3 or Section 2.4 hereof in the Lender Advance Report pursuant to Section
2.1(g), for transfer to Lender pursuant to Section 2.1(f) hereof.
 
2.4           Prepayments.
 
(a)            Voluntary Prepayments.  Except for regular payments of interest
and principal as provided hereunder, prepayments, (i) shall not be permitted
during the Revolving Loan Period, and (ii) may be made in whole, but not in
part, upon five (5) days prior written notice to the Agent at any time after the
end of the Revolving Loan Period upon payment of the applicable Prepayment
Premium (whether such prepayment results from voluntary payments by Borrower,
acceleration, or otherwise); provided, however, that (A) payments or prepayments
of Pledged Notes Receivable made by Purchasers who are not directly or
indirectly solicited by Borrower to make such prepayment shall not violate this
Section 2.4(a), and no Prepayment Premium shall be payable as a result of any
such payment by Purchasers; and (B) if at any time the Borrower wishes to
release any Pledged Notes Receivable for the purpose of including those Pledged
Notes Receivable in a securitization pooling or similar conduit transaction,
after 30 days’ prior written notice to Agent, Borrower may prepay the principal
balance of the Loan in whole (but not in part), and no Prepayment Premium will
be due where such prepayment is the result of a securitization or similar
conduit transaction closing, as certified by Borrower to Agent.  
 
(b)            Mandatory Prepayments.
 
(i)       Overadvances.  If at any time the outstanding principal balance of the
Loan exceeds the Borrowing Base or the Commitment, Borrower shall immediately
either (A) prepay the Loan in an amount necessary to reduce the outstanding
principal balance of the Loan to an amount within the lending limits set forth
in Section 2.1 hereof, or (B) pledge and deliver to Agent such additional or
replacement Eligible Notes Receivable such that the remaining outstanding
principal balance of the Loan is within the lending limits set forth in Section
2.1 hereof.
 
(ii)      Ineligible Pledged Notes Receivable.  If at any time after the
expiration of the Revolving Loan Period, Agent determines that any Pledged Notes
Receivable which are included in the Borrowing Base, do not qualify as Eligible
Notes Receivable (“Ineligible Notes Receivable”), then Borrower shall, within
five (5) Business Days after notice, either (A) prepay the Loan in an amount
equal to the balance due under such Pledged Note Receivable, or (B) replace the
Ineligible Note Receivable with an Eligible Note Receivable having an
outstanding aggregate principal balance equal to or in excess of the outstanding
principal balance of such Ineligible Note Receivable.  The pledge and delivery
to Agent as agent for Lenders of additional Eligible Notes Receivable shall
comply with the document delivery and recordation requirements set forth in
Section 5.1 hereof.

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(iii)     No Prepayment Premium.  No Prepayment Premium shall be due in
connection with any mandatory prepayment made in accordance with
Sections 2.4(b)(i) or 2.4(b)(ii) hereof.
 
(c)            Prepayment Premium.  Except as specifically set forth in
Section 2.4(a) and 2.4(b) hereof, any prepayment of the Loan pursuant to
Section 2.4(a) hereof, whether prior to or after acceleration based upon an
Event of Default, hereof must be accompanied by a prepayment premium (the
“Prepayment Premium”) calculated, as of immediately prior to such prepayment, as
follows:
 
Date of Prepayment
 
Premium
     
During the first Loan Year after expiration of the Revolving Loan Period;
 
three percent (3%) of the then outstanding balance of the Loan;
           
During the second Loan Year after expiration of the Revolving Loan Period;
 
two percent (2%) of the then outstanding balance of the Loan;
     
During the third Loan Year after expiration of the Revolving Loan Period;
 
one percent (1%) of the then outstanding balance of the Loan; and
     
Thereafter;
 
none.

 
(d)           Prepayment Premium upon Acceleration.  If the Loan is accelerated
based on an Event of Default prior to or after the expiration of the Revolving
Loan Period, or if Borrower undertakes a voluntary prepayment prior to
expiration of the Revolving Loan Period, at Agent’s sole discretion, payments on
the Loan must include the Prepayment Premium that would be applicable if
prepayment occurred in the first Loan Year after expiration of the Revolving
Loan Period.
 
2.5           Capital Adequacy Event.  If, after the date hereof, a Lender or
Participant determines that (i) the adoption of or change in any law, rule,
regulation or guideline regarding capital requirements for banks or bank holding
companies, or any change in the interpretation or application thereof by any
Governmental Authority charged with the administration thereof, or (ii)
compliance by Lender or Participant or its respective parent bank holding
company with any guideline, request, or directive of any such entity regarding
capital adequacy (whether or not having the force of law), has the effect of
reducing the return on Lender’s or Participant’s or their respective holding
company’s capital as a consequence of such Lender’s or Participant’s agreements
hereunder to a level below that which such Lender or Participant or respective
holding company could have achieved but for such adoption, change, or compliance
(taking into consideration Lender’s or Participant’s or respective holding
company’s then existing policies with respect to capital adequacy and assuming
the full utilization of such entity’s capital) by any amount deemed by Lender or
Participant to be material, then Agent may notify Borrower thereof.  Following
receipt of such notice, Borrower agrees to pay Agent on demand the amount of
such reduction of return of capital as and when such reduction is determined,
payable within 90 days after presentation by Lender or Participant of a
statement in the amount and setting forth in reasonable detail Lender’s or
Participant calculation thereof and the assumptions upon which such calculation
was based (which statement shall be deemed true and correct absent manifest
error).  In determining such amount, Lender or Participant may use any
reasonable averaging and attribution methods.
 

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2.6           Suspension of Advances.
 
(a)            Suspension of Sales.  If any stay, order, cease and desist order,
injunction, temporary restraining order or similar judicial or non-judicial
sanction shall be issued limiting or otherwise materially adversely affecting
any Interval sales activities, other business operations in respect of the
Resorts, or the enforcement of the remedies of Agent and Lenders hereunder,
then, in such event, Agent and Lenders shall have no obligation to make any
Advances hereunder: (i) in respect of Pledged Notes Receivable from the sale of
Intervals which are the subject of any stay, order, cease and desist order,
injunction, temporary restraining order or similar judicial or non-judicial
sanction that has been issued until the stay, order, cease and desist order,
injunction, temporary restraining order or similar judicial or non-judicial
sanction has been lifted or released to the satisfaction of Agent and (ii) in
respect of Pledged Notes Receivable from the sale of Intervals at any Resort if:
(x) the stay, order, cease and desist order, injunction, temporary restraining
order or similar judicial or non-judicial sanction in question has not been
lifted or released to the satisfaction of Agent within sixty (60) days of its
issuance and (y) there is a reduction in the total number of sales of Intervals
by Borrower in any Loan Year of more than twenty percent (20%) from the total
number of sales of Intervals in the immediately preceding Loan Year.
 
(b)            Change in Control.  If there shall occur a change, singly or in
the aggregate, of more than fifty percent (50%) of the executive management of
Borrower as described in Schedule 2.6 hereto, Agent shall have no obligation to
make any Advances hereunder, unless within thirty (30) days prior thereto
Borrower provides Agent with written information setting forth the replacement
executive management personnel of Borrower together with a description of those
Persons’ experience, ability and reputation, and Agent, acting in good faith,
determines that the replacement management personnel’s experience, ability and
reputation is equal to or greater than that of Borrower’s executive management
as set forth on Schedule 2.6.  Agent shall have no obligation to make any
Advances hereunder if more than two (2) of the five (5) Board of Directors’
positions are controlled by the Borrower’s bond holders.
 
(c)            Change in Underwriting Standards.  No Lender shall be obligated
to fund any Advance hereunder if there shall occur a change in the underwriting
standards, or the adherence thereto in the sole discretion of the Agent, of
Borrower with respect to the qualification or eligibility of Purchaser’s which
in the Permitted Discretion of Agent causes or would most likely result in a
Material Adverse Change in the Borrower’s business or if there shall occur a
change in the business of Borrower, which in the Permitted Discretion of Agent
causes or would most likely result in a Material Adverse Change in the
Borrower’s business.
 
(d)            Default or Event of Default.  No Lender shall be obligated to
fund any Advance hereunder if a Default or Event of Default shall have occurred
and be continuing.
 
2.7           Pro Rata Treatment.  Each repayment of principal and interest
shall be allocated among Lenders in accordance with their respective Pro Rata
Payment Percentage.  Each Lender agrees that in computing such Lender’s portion
of any Advance to be made hereunder, Agent may, in its discretion, round each
Lender’s such Advance to the next higher or lower whole dollar amount.  If any
Lender shall, through the exercise of a right of banker’s lien, set-off,
counterclaim or otherwise, obtain payment with respect to its Loans which
results in its receiving more than its Pro Rata Payment Percentage of any
payments described above, then (A) such Lender shall be deemed to have
simultaneously purchased from each of the other Lenders a share in such other
Lender’s Loans so that the amount of the Loans of all Lenders shall be pro rata
as otherwise set forth above, (B) such Lender shall immediately pay to the other
Lenders their Pro Rata Payment Percentage of the payments otherwise received as
consideration for such purchase and (C) such other adjustments shall be made
from time to time as shall be equitable to insure that all Lenders share such
payments ratably.  If all or any portion of any such excess payment is
thereafter recovered from Lender which received the same, the purchase provided
in this Section 2.7 shall be deemed to have been rescinded to the extent of such
recovery, without interest.  Borrower expressly consents to the foregoing
arrangements and agrees that each Lender so purchasing a portion of another
Lender’s loans may exercise all rights of payment (including all rights of
set-off, banker’s lien or counterclaim) with respect to such portion as fully as
if such Lender were the direct holder of such portion.
 

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Section 3-Collateral
 
3.1           Grant of Security Interest.  To secure the payment and performance
of the Obligations, for value received, Borrower unconditionally and irrevocably
assigns, pledges and grants to Agent, as Agent for each Lender:
 
(a)           a first priority security interest in the Eligible Notes
Receivable pledged to Agent on behalf of Lenders as provided herein, the
Mortgages with respect thereto and that portion of the other Collateral related
thereto;
 
(b)           a security interest in all books, records, reports, computer
tapes, disks and software relating to the Collateral and all extensions,
additions, improvements, betterments, renewals, substitutions and replacements
of, for or to any of the Collateral, wherever located, together with the
products, proceeds, issues, rents and profits thereof, and any replacements,
additions or accessions thereto or substitutions thereof.
 
For convenience of administration, Agent is acting as agent for Lenders under
the Agreement.  Agent, as such agent, may execute any of its duties hereunder by
or through its agents, officers or employees and shall be entitled to rely upon
the advice of counsel as to its duties.  Agent, as such agent, shall not be
liable to any Lender for any action taken or omitted to be taken by it in good
faith and shall neither be responsible to Lenders for the consequences of any
oversight or error of judgment nor be answerable to Lenders for any loss unless
the same shall happen through Agent’s gross negligence or willful
misconduct.  To the extent that Agent, as such agent, shall not be reimbursed by
Borrower for any costs, liabilities or expenses incurred in such capacity,
Lenders shall reimburse Agent therefor pro rata in accordance with their
respective Pro Rata Percentages (including Agent as a Lender for this
purpose).  Each Lender agrees that Agent shall be entitled to take and shall
only be required to take, any action which it is permitted to take under this
Agreement.
 
3.2           Financing Statements; Priority of Liens.  Borrower agrees, at its
own expense, to authorize the filing of financing statements, continuation
statements and amendments provided for by the Code and to execute and deliver
any and all other instruments or documents and take such other action as may be
required to perfect and to continue the perfection of Agent’s security interest
in the Collateral. Borrower hereby authorizes Agent to execute and/or file on
Borrower’s behalf any such financing statements, continuation statements and
amendments.  Each Lender shall have an equal security interest in the Collateral
based upon its Pro Rata Percentage and no Lender’s security interest in the
Collateral shall have priority over any other Lender’s security interest in the
Collateral.
 

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3.3           Insurance.  Insurance coverage with respect to the Resort(s) is
provided by the Silverleaf Club.  Borrower shall furnish Agent, upon request,
with satisfactory evidence that the Units, Buildings and Resorts are adequately
insured.  Such insurance coverage shall insure against such risks, be in such
amounts, with such companies and on such other terms as Agent may reasonably
require.  Each such policy shall name Agent as an additional insured and loss
payee as agent for Lenders, as their respective interests may appear.
 
3.4           Protection of Collateral; Reimbursement.  The portion of the
Collateral consisting of: (i) the original Pledged Notes Receivable, (ii) the
original Mortgages, (iii) the original purchase contracts (including addendum)
related to such Pledged Notes Receivable and Mortgages, (iv) originals or true
copies of the related truth-in-lending disclosure, loan application, warranty
deed, and if required by Agent, the related Purchaser’s acknowledgement receipt
and the Exchange Company application and disclosures and (v) such other items as
Agent may determine from time to time in its Permitted Discretion, shall be
delivered at Borrower’s expense to the Custodian, and held in Custodian’s
possession and control pursuant to the Custodial Agreement.  All fees and costs
arising under the Custodial Agreement shall be borne and paid by Borrower; and
if Borrower fails to promptly pay any portion thereof when due, Agent may, at
its option, but shall not be required to, pay the same and charge Borrower’s
account therefor, and Borrower agrees promptly to reimburse Agent therefor with
interest accruing thereon daily at the Default Rate.  All sums so paid or
incurred by Agent for any of the foregoing and any and all other sums for which
Borrower may become liable hereunder and all costs and expenses (including
attorneys’ and paralegals’ fees, legal expenses and court costs) which Agent may
incur in enforcing or protecting its Lien on, or rights and interest in, the
Collateral or any of its rights or remedies under this Agreement or any other
Loan Document or with respect to any of the transactions hereunder or
thereunder, until paid by Borrower to Agent with interest at the Default Rate,
shall be included among the Obligations, and, as such, shall be secured by all
of the Collateral.  Agent shall not be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto or for
any diminution in the value thereof, or for any act or default of the Custodian,
Lockbox Agent, or Servicing Agent or any warehouseman, carrier, forwarding
agency, or other Person whomsoever.
 
3.5           Additional Eligible Resorts.  From time to time during the Term,
Borrower may propose to Agent that one or more additional time-share plans and
projects owned and operated by Borrower be included among the Eligible Resorts
in respect of which Advances may be made.  Any such proposal will be in writing,
and will be accompanied or supported by the due diligence and supporting
Borrower, Affiliate, project, financial and related information identified in
Section 4.4 hereof, and such other information as Agent may require.  Borrower
will reasonably cooperate with Agent’s underwriting and due diligence, and
Borrower will be responsible for payment upon billing for Agent’s and each
Lender’s out-of-pocket expenses in connection therewith.  Subject to Agent’s
satisfactory underwriting and due diligence review, including satisfaction of
the conditions in Sections 4.4 and 5 hereof as they relate to such additional
time-share resorts, Agent may, but shall not be required to, approve one or more
such additional time-share resorts, including future phases or condominiums in
an Existing Eligible Resort, as an Eligible Resort qualifying for Advances under
and subject to the terms of this Agreement and the other Loan Documents.
 
Subject in each instance to Agent’s underwriting and due diligence review, and
Agent’s prior written approval, any project as may be approved by Agent and
Lenders after the Closing Date, if any, is hereinafter referred to as an
“Additional Eligible Resort”.  Any Advances hereunder with respect to any
Additional Eligible Resort will be subject to all terms and conditions of this
Agreement and the other Loan Documents.
 

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3.6           Modification of Eligible Notes Receivable.  Notwithstanding
anything herein to the contrary, Borrower shall have the right to modify the
interest rate and term only of the Eligible Notes Receivable without Agent’s
prior consent, provided that: (i) any such change in the rate of interest on any
one or more Eligible Notes Receivable shall not reduce the average interest rate
on all Eligible Notes Receivable to less than ten percent (10%) per annum at any
time (excluding Eligible Notes Receivable with a lower interest rate pursuant to
the SCRA); (ii) the term of no Eligible Notes Receivable shall be increased to a
term longer than one hundred twenty (120) months from the date of the first
required monthly payment of such Eligible Note Receivable, except that with
respect to any Eligible Note Receivable in respect of which one or more monthly
payments have been deferred, the term of such Eligible Note Receivable may be
extended one month for each such deferred payment provided, however, that in no
event shall the term of such Eligible Note Receivable be increased to a term
longer than one hundred twenty eight (128) months from the date of the first
required monthly payment of such Eligible Note Receivable; (iii) no Eligible
Note Receivable is so modified more than once in any twelve (12) month period or
more than twice during the term of such Eligible Note Receivable, and (iv) at no
time may Borrower so modify the terms of Eligible Notes Receivable constituting
more than ten percent (10%) of the outstanding principal balance of all Eligible
Notes Receivable at any time.
 
3.7           Assumption of Obligations under Eligible Notes
Receivable.  Notwithstanding anything herein to the contrary, upon the sale by a
Purchaser of an Interval, the new Purchaser of the Interval may be substituted
as obligor under the Eligible Note Receivable in question, provided that: (i)
said new Purchaser assumes in writing all of the obligations of the original
obligor under the Eligible Note Receivable in question; (ii) the Eligible Note
Receivable continues to meet all of the criteria for an Eligible Note Receivable
as set forth herein and (iii) the new Purchaser has made a cash down payment
equal to at least 10% of the original sales price of the Interval in question,
which down payment shall be in addition to the cash down payment made by the
original obligor.
 
3.8           Purchaser/Criteria.  All Eligible Notes Receivable pledged as
Collateral to Agent subsequent to the Closing Date will be underwritten in a
manner consistent with the Borrower’s general underwriting guidelines and
criteria as set forth on Schedule 1.1(b) hereof.  Borrower shall not materially
alter its general underwriting criteria without the prior written approval of
Agent, which approval Agent may withhold in its sole discretion.  On a
semi-annual basis, Borrower shall provide Agent with written certification that
the underwriting criteria as approved by Agent remain in full force and effect
and have not been revised or altered without Agent’s consent.
 
Section 4-Conditions Precedent To The Closing
 
4.1           Conditions Precedent.  The obligation of Agent and Lenders under
this Agreement and the obligation to fund any Advance, including the initial
Advance, hereunder shall be subject to the satisfaction of each of the following
conditions precedent, in addition to all of the conditions precedent set forth
elsewhere in the Loan Documents:
 
(a)            Representations, Warranties, Covenants and Agreements.  The
representations and warranties contained in the Loan Documents are and shall be
true and correct in all respects, and all covenants and agreements have been
complied with and are correct in all respects, and all covenants and agreements
to have been complied with and performed by Borrower shall have been fully
complied with and performed to the satisfaction of Agent.

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(b)           No Prohibited Acts.  Borrower shall not have taken any action or
permitted any condition to exist which would have been prohibited by any
provision of this Agreement or the Loan Documents.
 
(c)            No Changes.  That all information and documents heretofore
delivered by Borrower to Agent with respect to Borrower or the Resorts remain
true and correct in all respects.
 
(d)            Approval of Documents Prior to Closing Date.  Borrower has
delivered to Agent (with copies to Agent’s counsel), and Agent has reviewed and
approved the form and content of all of the items specified in
Subsection 4.1(d)(i) through 4.1(d)(v) hereof (the “Submissions”).  Agent shall
have the right to review and approve any changes to the form of any of the
Submissions.  If Agent disapproves of any changes to any of the Submissions,
Agent shall have the right to require Borrower either to cure or correct the
defect objected to by Agent or to elect not to fund the Loan or any
Advance.  Under no circumstances shall Agent’s failure to approve or disapprove
a change to any of the Submissions be deemed to be an approval of such
Submissions.  All of the Submissions were and shall be prepared at Borrower’s
sole cost and expense, unless expressly stated to be an obligation and expense
of Agent. Agent shall have the right of prior approval of any Person responsible
for preparing a Submission (“Preparer”) and may disapprove any Preparer in its
sole discretion, for any reason, including without limitation, that Agent
believes that the experience, skill, reputation or other aspect of the Preparer
is unsatisfactory in any respect.  All Submissions required pursuant to this
Agreement shall be addressed to Agent and include the following language: “THE
UNDERSIGNED ACKNOWLEDGES THAT LIBERTY BANK, AS AGENT FOR EACH LENDER IS RELYING
ON THE WITHIN INFORMATION IN CONNECTION WITH ITS DETERMINATION TO MAKE A LOAN TO
SILVERLEAF RESORTS, INC. IN CONNECTION WITH THE SUBJECT COLLATERAL.”
 
(i)            A certificate to be dated as of the Closing Date and signed by
the president, vice president, or secretary of Borrower, certifying that the
conditions specified in Sections 4.1(a), 4.1(b) and 4.1(c) hereof are true;
 
(ii)           Copies of the articles of incorporation and any amendments
thereto of Borrower not previously delivered to Agent, certified to be true and
complete by Borrower and the Secretary of State of the State of Texas and a
current certificate of good standing for Borrower, and copies of any by-laws of
Borrower and any amendments thereto not previously delivered to Agent, certified
to be true, correct and complete by the secretary or assistant secretary of
Borrower;
 
(iii)          A certificate of the Secretary of Borrower certifying the
adoption by the Board of Directors of Borrower of a resolution authorizing
Borrower to enter into and execute this Agreement, the Note, and the other Loan
Documents, to borrow the Loan from the Lenders, and to grant to Agent for the
benefit of the Lenders a first priority security interest in and to the
Collateral;
 
(iv)          A certificate of the secretary or assistant secretary of Borrower
certifying the incumbency, and verifying the authenticity of the signatures, of
the specified officers of Borrower authorized to sign the Agreement, the Note
and the other Loan Documents; and

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(v)           Copies or other evidence of all loans to Borrower from any
officers, shareholders, or Affiliates of Borrower not previously delivered to
Agent.
 
(e)           Execution and Delivery of Loan Documents.  Borrower shall have
delivered to Agent, on or before the Closing Date, the following Loan Documents,
each of which when required, shall be in recordable form:
 
(i)            This Agreement;
 
(ii)           Closing Opinions for Borrower;
 
(iii)          Note;
 
(iv)          Environmental Indemnification Agreement;
 
(v)           Intercreditor Agreement.  Borrower, Agent, TFC, CSF and WFF shall
have executed and delivered to Agent, on or before the Closing Date, a
modification of the in-force intercreditor agreement for the purpose of adding
Agent as a party thereto;
 
(vi)          Pro Forma Title Insurance Policies For Each Resort.  Borrower
shall have provided Agent with a pro forma title insurance policy for each
Resort which shall be the form which will be issued to and obtained by Borrower
in connection with the pledge to Lender of an Eligible Note Receivable, subject
however to the provisions of Section 5.1(f); (it is acknowledged that the
condition in this subsection may not be satisfied by the Closing Date but
satisfaction shall be a condition of funding); and
 
(vii)         Other Items.  Such other agreements, documents, instruments,
certificates and materials as Agent may request to evidence the Obligations; to
evidence and perfect the rights and Liens and security interests of Agent as
agent for Lenders contemplated by the Loan Documents, and to effectuate the
transactions contemplated herein.
 
(f)            Closing  Date Conditions.  On or before the Closing Date, the
following conditions shall be satisfied:
 
(i)            UCC Search.  Agent shall have obtained, at Borrower’s cost, such
searches of the applicable public records as it deems necessary under Texas, and
other applicable law to verify that it will have a first and prior perfected
Lien and security interest covering all of the Collateral.  Agent shall not be
obligated to fund any Advance if Agent determines that Lenders do not have a
first and prior perfected lien and security interest covering any portion of the
Collateral, except as expressly provided herein.
 
(ii)           Litigation Search.  Agent shall have obtained, at Borrower’s
cost, an independent search to verify that there are no bankruptcy, foreclosure
actions or other material litigation or judgments pending or outstanding against
the Resorts, any portion of the Collateral, Borrower, or any Affiliates of
Borrower (each a “Material Party”).  The term “other material litigation” as
used herein shall not include matters in which (i) a Material Party is plaintiff
and no counterclaim is pending or (ii) which Agent determines in its sole
discretion exercised in good faith, are immaterial due to settlement, insurance
coverage, frivolity, or amount or nature of claim.  Lenders shall not be
obligated to fund any Advance if Agent determines that any such litigation is
pending.

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(iii)      Insurance.  Evidence that Borrower is maintaining all policies of
insurance required by and in accordance with Section 7.1(d) hereof, including
copies of the most current paid insurance premium invoices;
 
(iv)     Governmental Permits.  To the extent not previously delivered to Agent,
copies of all applicable government permits, approvals, consents, licenses and
certificates with respect to the use and operation of the Resorts;
 
(g)            Taxes.  Evidence satisfactory to Agent that all taxes and
assessments owed by or for which Borrower is responsible for collection have
been paid with respect to the Resorts and the Collateral, including but not
limited to sales taxes, room occupancy taxes, payroll taxes, personal property
taxes, excise taxes, intangible taxes, real property taxes and any assessments
related to the resorts or the Collateral.  Copies of the most current tax bills
for the Resorts shall be provided to Agent.
 
4.2           Origination Fee; Expenses.  Borrower shall have paid to Agent an
origination fee of $375,000 (the “Origination Fee”) together with all Lender
Expenses required to be paid pursuant to this Agreement.  Lenders shall have no
obligation to fund the Loan or make the initial Advance or any subsequent
Advance unless the amount of the Loan together with any moneys paid by Borrower
is sufficient to satisfy all fees and expenses required to be paid pursuant to
this Agreement.
 
4.3           Proceedings Satisfactory.  Borrower shall execute all of the Loan
Documents approved by Agent on the Closing Date, and all actions taken in
connection with the execution or delivery of the Loan Documents, and all
documents and papers relating thereto, shall be satisfactory to Agent and its
counsel.  Agent and its counsel shall have received copies of such documents and
papers as Agent or such counsel may reasonably request in connection therewith,
all in form and substance satisfactory to Agent and its counsel.
 
4.4           Conditions Precedent to Funding of Advances with Respect to
Additional Eligible Resorts.  As provided in Section 3.5 hereof, Borrower may
propose to Agent that Agent approve one or more additional timeshare plans for
inclusion hereunder as an Additional Eligible Resort in respect of which
Advances may be made.  The obligation of Lenders to fund any Advances with
respect to an Additional Eligible Resort shall be subject to the satisfaction of
each of the following conditions precedent, in addition to all of the conditions
precedent set forth elsewhere in the Loan Documents:
 
(a)            Representations, Warranties, Covenants and Agreements.  The
representations and warranties contained in the Loan Documents are and shall be
true and correct in all respects, and all covenants and agreements have been
complied with and shall be correct in all respects, and all covenants and
agreements to have been complied with and performed by Borrower shall have been
fully complied with and performed to the satisfaction of Agent.
 
(b)            No Prohibited Acts or Changes.  Borrower shall not have taken any
action or permitted any condition to exist which would have been prohibited by
any provision of the Loan Documents and all information and documents heretofore
delivered by Borrower to Agent with respect to Borrower or the Resorts remain
true and correct in all respects.

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(c)            Approval of Documents Prior to Advance.  Borrower has delivered
or caused to be delivered to Agent (with copies to Agent’s counsel), at least
fifteen (15) Business Days prior to the date of such Advance, and Agent has
reviewed and approved, at least five (5) Business Days prior to such date, the
form and content of all of the items specified in each of the Submissions
required pursuant to this Section 4.4.  Agent shall have the right to review and
approve any changes to the form of any of the Submissions.  If Agent disapproves
of any changes to any of the Submissions, Agent shall have the right to require
Borrower either to cure or correct the defect objected to by Agent or to elect
not to fund the Loan or any Advance.  Under no circumstances shall Agent’s
failure to approve or disapprove a change to any of the Submissions be deemed to
be an approval of such Submissions.  All of the Submissions were and shall be
prepared at Borrower’s sole cost and expense, unless expressly stated to be an
obligation and expense of Agent.  Agent shall have the right of prior approval
of any Preparer and may disapprove any Preparer in its sole discretion, for any
reason, including without limitation, that Agent believes that the experience,
skill, reputation or other aspect of the Preparer is unsatisfactory in any
respect.  All Submissions required pursuant to this Agreement shall be addressed
to Agent and include the following language: “THE UNDERSIGNED ACKNOWLEDGES THAT
LIBERTY BANK, AS AGENT FOR EACH LENDER IS RELYING ON THE WITHIN INFORMATION IN
CONNECTION WITH ITS DETERMINATION TO MAKE A LOAN TO SILVERLEAF RESORTS, INC. IN
CONNECTION WITH THE SUBJECT COLLATERAL.”
 
(i)           a certificate in the form attached as Exhibit C, to be dated as of
the date of each such Advance and signed by the president, vice president, or
secretary of Borrower, certifying that the conditions specified in
Sections 4.4(a) and 4.4(b) hereof are true;
 
(ii)           copies of the articles of incorporation of Borrower, together
with any amendments thereto certified to be true and complete by Borrower and
the Secretary of State of the State of Texas, a current certificate of good
standing for Borrower issued by the Secretary of State of the State of Texas, a
current certificate of authority to conduct business issued by the secretary of
state in each state in which the Borrower conducts business, and copies of the
by-laws of Borrower certified to be true, correct and complete by the secretary
or assistant secretary of Borrower;
 
(iii)          a Survey for each Additional Eligible Resort for which Eligible
Notes Receivable are being pledged to Agent in connection with the Advance in
question;
 
(iv)          a certificate of the secretary or assistant secretary of Borrower
certifying the adoption by the board of directors thereof, respectively, of a
resolution authorizing the addition of the Resort in question as an Additional
Eligible Resort and to authorize Borrower to enter into, execute and deliver any
Documents in connection therewith;
 
(v)           a certificate of the secretary or assistant secretary of Borrower
certifying the incumbency, and verifying the authenticity of the signatures, of
the specified officers of Borrower authorized to sign all documents required in
connection with such Additional Eligible Resort as required pursuant to this
Section 4.4;

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(vi)           an inspection report or reports covering each Additional Eligible
Resort for which Eligible Notes Receivable are being pledged to Agent in
connection with the Advance in question, including without limitation all real
property and personal property subject to the Declaration and all adjacent
property, confirming:
 
(1)           the absence of Hazardous Materials on the personal property and
real property comprising each such Additional Eligible Resort;
 
(2)           that the inspection firm has obtained, reviewed and included
within its report a CERCLIS printout from the Environmental Protection Agency
(the “EPA”), statements from the EPA and other applicable state and local
authorities and a Phase I Environmental Audit, all of which information shall
confirm that there are no known or suspected Hazardous Materials located at,
used or stored on, or transported to or from each such Additional Eligible
Resort or in such proximity thereto as to create a material risk of
contamination of each such Additional Eligible Resort;
 
(vii)         evidence that Borrower is maintaining all policies of insurance
required by and in accordance with Section 7.1(d) hereof, including copies of
the most current paid insurance premium invoices;
 
(viii)        evidence that Borrower and the Timeshare Documents for each
Additional Eligible Resort for which Eligible Notes Receivable are being pledged
to Agent as agent for Lenders in connection with the Advance in question are in
compliance with all Applicable Laws in connection with its sales of Intervals,
including without limitation, the Timeshare Acts;
 
(ix)           a current preliminary title report or certificate of title for
each Additional Eligible Resort for which Eligible Notes Receivable are being
pledged to Agent in connection with the Advance in question, with copies of all
title exceptions;
 
(x)           copies of all applicable governmental permits, approvals,
consents, licenses, and certificates for the establishment of each Additional
Eligible Resort for which Eligible Notes Receivable are being pledged to in
connection with the Advance in question as timeshare projects in accordance with
the applicable Timeshare Act, and for the occupancy and intended use and
operation of each such Additional Eligible Resort, including the Units,
including a letter certification from Borrower regarding zoning classification
and compliance, letters or other satisfactory evidence from utility companies,
governmental entities or other persons confirming that water, sewer (sanitary
and storm), electricity, solid waste disposal, telephone, police, fire and
rescue services are being provided to each Resort, and any business licenses
necessary for operation of each such Additional Eligible Resort;
 
(xi)           certified true, correct and complete copies of all of the
Timeshare Documents for each Additional Eligible Resort for which Eligible Notes
Receivable are being pledged to Agent as agent for Lenders in connection with
the Advance in question;

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(xii)          evidence satisfactory to Agent that all taxes and assessments
owed by or for which Borrower is responsible for collection have been paid,
including but not limited to sales taxes, room occupancy taxes, payroll taxes,
personal property taxes, excise taxes, intangibles taxes, real property taxes,
and income taxes, and any assessments related to each Additional Eligible Resort
for which Eligible Notes Receivable are being pledged to Agent as agent for
Lenders in connection with the Advance in question and copies of the most
current paid tax bills for each such Additional Eligible Resort evidencing that
each such Additional Eligible Resort have been segregated from all other
property on the applicable municipal taxrolls;
 
(xiii)         written confirmation from an architect covering each Additional
Eligible Resort, for which Eligible Notes Receivable are being pledged to Agent
as agent for Lenders in connection with the Advance in question as to the
physical condition of the improvements at each such Additional Eligible Resort,
including that soil conditions are sufficient to support all existing and any
contemplated improvements to the real property; which written confirmation shall
be in form and substance reasonably acceptable to Agent;
 
(xiv)         such credit references on Borrower as Agent deems necessary in its
sole discretion;
 
(xv)          copies or other evidence of all loans to Borrower from any
officers, shareholders, or Affiliates of Borrower, if any;
 
(xvi)         a commitment to issue Mortgagee Title Policies from Title Company
for each such Additional Eligible Resort.  Notwithstanding anything heretofore
to the contrary, if any claim, lien, encumbrance, charge or other matter arises
with respect to any Interval or Intervals for which an Eligible Note Receivable
has been pledged to Agent as agent for Lenders pursuant to this Agreement, then,
in such event:
 
 
a.
The Note Receivable with respect to the Interval in question shall cease to be
an Eligible Note Receivable and Borrower immediately shall either replace the
Note Receivable in question or make a Mandatory Prepayment, if necessary, as
provided in Section 2.4(b) hereof; and

 
 
b.
The Resort at which the Interval in question is located shall cease to be an
Additional Eligible Resort, unless and until Borrower shall cure any such claim,
lien, encumbrance, charge or other matter to the satisfaction of
Agent.  Furthermore, any and all further requests for Advances in respect of
such Resort must be accompanied by satisfactory Mortgagee Title Policies for all
Intervals with respect to which such Advances are requested.

 
(d)            Financial Statements To Be Delivered Prior to Advance.  A current
set of the Financial Statements;

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(e)            Additional Documents To Be Delivered Prior to Advance.To the
extent not previously delivered hereunder, Borrower will execute, or cause to be
executed with respect to each Additional Eligible Resort, an Assignment of Notes
Receivable and Mortgages, Borrower’s Affidavit with Respect to the Additional
Eligible Resorts and an Environmental Indemnification Agreement; and with
respect to any improvements, including any Units, constructed at a Resort within
the twenty-four month period prior to any Advance with respect to an Additional
Eligible Resort, Borrower shall also deliver to Agent, for its approval, such
documents and instruments as Agent may reasonably request in connection with
such newly constructed improvements, including, without limitation, copies of
building permits, plans and specifications, construction and architectural
contracts, title insurance insuring over, among other things, mechanics liens,
certificates of occupancy and satisfactory evidence of the completion of such
improvements and such other documents, instruments, agreements, tests, reports
and inspections as Agent may require with respect to Borrower or any applicable
Affiliate, the Loan or any Resort, including any Additional Eligible Resort; and
upon request of Agent, Borrower shall deliver evidence, satisfactory to Agent,
that there is no material litigation, written complaint, suit, action, written
claim or written charge pending against Borrower or any Affiliate with any court
or with any governmental authority with respect to the Resorts, the Timeshare
Documents, any Eligible Notes Receivable, any Interval, or any marketing, offer
or sale of any Interval.
 
(f)             Physical Inspection.  Agent shall be satisfied with its physical
inspection of the Additional Eligible Resorts.
 
(g)            UCC Search.  Agent shall have obtained, at Borrower’s cost, such
searches of the applicable public records as it deems necessary under all
applicable law to verify that it has a first and prior perfected Lien and
security interest covering all of the Collateral.  Agent shall not be obligated
to fund any Advance if Agent determines that Lenders do not have a first and
prior perfected lien and security interest covering any portion of the
Collateral, except as expressly provided herein.
 
(h)            Litigation Search.  Agent shall have obtained, at Borrower’s
cost, an independent search to verify that there are no bankruptcy, foreclosure
actions or other material litigation or judgments pending or outstanding against
the Additional Eligible Resorts, any portion of the Collateral, Borrower, or any
Affiliate, (each a “Material Party”).  The term “other material litigation” as
used herein shall not include matters in which (i) a Material Party is plaintiff
and no counterclaim is pending or (ii) which Agent determines, in its sole
discretion, exercised in good faith, are immaterial due to settlement, insurance
coverage, frivolity, or amount or nature of claim.  Agent shall not be obligated
to fund any Advance if it determines that any such litigation is pending.
 
(i)             Opinions of Borrower’s Counsel.  Borrower shall deliver to Agent
for the benefit of Agent and each Lender, at Borrower’s sole cost and expense,
such opinions of counsel, including counsel admitted in each state in which each
Additional Eligible Resort is located, as to such matters with respect to
Borrower and each Additional Eligible Resort as Agent may request, and in form
and substance acceptable to Agent in its sole discretion.
 
(j)             Funding Procedure.  Borrower shall have complied to Agent’s
satisfaction with each of the conditions precedent to funding of an Advance set
forth in Section 5 hereof.

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(k)            Management of Resort.  Borrower shall provide evidence
satisfactory to Agent that Borrower, or an Affiliate, is the manager or operator
of each Resort, pursuant to a written management or operating agreement, in form
and substance satisfactory to Agent, which with respect to all Resorts shall
have a term of at least three years.
 
(l)             Other Items.  Such other agreements, documents, instruments,
certificates and materials as Agent may request to determine the acceptability
of any such Additional Eligible Resort, to evidence the Obligations, to evidence
and perfect the rights and Liens and security interests of Agent contemplated by
the Loan Documents, and to effectuate the transactions contemplated herein,
including, without limitation, true copies of all Resort Documents for each such
Additional Eligible Resort, all Timeshare Documents and operating and management
contracts and agreements, evidence of compliance with the applicable Timeshare
Act and other Applicable Laws, evidence of all required governmental licenses
and permits; title searches; title commitments or policies, including complete
and legible copies of each title exception, engineering, environmental and soil
reports and evidence of compliance with all applicable zoning and building
codes; each of which shall be satisfactory to Agent in its Permitted Discretion.
 
 
Section 5-Funding Procedure
 
5.1           The obligation of any Lender to make any Advance shall be subject
to the satisfaction of all of the following conditions precedent:
 
(a)           Requests for Advances.  Each request for an Advance shall:
 
(i)             be in writing in form attached hereto as Exhibit D, certify the
amount of the then-current Borrowing Base and specify the principal amount of
the Advance requested and designate the account to which the proceeds of such
Advance are to be transferred;
 
(ii)            state that the representations and warranties of Borrower
contained in the Agreement and any closing or funding related certifications are
true and correct as of the date of the request and, after giving effect to the
making of such requested Advance, will be true and correct as of the date on
which the requested Advance is to be made;
 
(iii)           state that no Default or Event of Default exists as of the date
of the request and, after giving effect to the making of such requested Advance,
no Default or Event of Default would exist as of the date on which the requested
Advance is to be made;
 
(iv)          be delivered to the office of Agent at least five (5) Business
Days prior to the date of the requested Advance;
 
(v)           be signed by a principal financial officer of Borrower;
 
(vi)           certify that Borrower has no knowledge of any asserted or
threatened defense, offset, counterclaim, discount or allowance in respect of
each Note Receivable to be pledged in connection with such requested Advance, or
in respect of any of the Pledged Notes Receivable;

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(vii)          contain an aging report of the Pledged Notes Receivable;
identifying, among other things, which among them are Eligible Notes Receivable;
and
 
(viii)         contain a delinquency report which shall be in form and substance
satisfactory to Agent and shall show which of such Notes Receivable is
delinquent and the duration of such delinquency, and which of such Pledged Notes
Receivable is not an Eligible Note Receivable;
 
(b)           Loan Documents/Collateral.  Not less than five (5) Business Days
prior to the date of any Advance, Borrower shall have:
 
(i)            delivered to Agent a list of all Eligible Notes Receivable and
related Mortgages which are to be the subject of such requested Advance,
indicating the unpaid principal balance owing on each of the Pledged Notes
Receivable deemed to be an Eligible Note Receivable, together with such
additional information as Agent may require;
 
(ii)           delivered to Agent (or, if Agent shall so instruct, a designee
appointed by Agent in writing) (A) the original of each Pledged Note Receivable
(duly endorsed with the words “Pay to the order of Liberty Bank, as Agent, with
recourse”), (B) the original of each Mortgage securing such Pledged Notes
Receivable, (C) the original of each purchase contract (including addenda)
relating to the Pledged Notes Receivable and Mortgages, (D) originals or true
copies of the related truth-in-lending disclosures, loan application, warranty
deed, Payment Authorization Agreement and, if required by Agent, the related
Purchaser’s acknowledgement, receipt and exchange company application,
disclosures and materials, and (E) with respect to each Eligible Note Receivable
from the sale of Intervals at Oak N’  Spruce evidence satisfactory to Agent of
the filing in the appropriate recorder’s office of the original UCC-1 Financing
Statement, naming the Purchaser of the Interval giving rise to the Eligible Note
Receivable as debtor and Borrower as secured party (the “Purchaser Financing
Statement”), perfecting Borrower’s security interest in the applicable Interval
to secure the Purchaser’s obligations under the Eligible Note Receivable and
naming Borrower as assignor and Agent as assignee, assigning to Agent, all of
Borrower’s right, title and interest under each Purchaser Financing Statement.
 
(iii)           delivered to Agent a duly executed Assignment of Notes
Receivable and Mortgages assigning to Agent all of Borrower’s right, title and
interest in and to each such Pledged Note Receivable and the related Mortgage;
and
 
(iv)           subject to Section 4.4(c)(xvi) hereof and the partial waiver set
forth in Section 5.1(f) hereof, delivered to Agent, with respect to each
Encumbered Interval, a commitment for a Mortgagee’s Title Policy showing that
the Mortgage in respect of such Interval has been assigned to Agent and insuring
in favor of Agent the first priority Lien of such Mortgage in the amount of the
Advance to be made in respect of such Pledged Note Receivable, with a
satisfactory title insurance policy to be issued within forty five (45) days
from the date of the Advance.

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The Mortgages and the assignments thereof to Agent shall each be duly recorded
in the applicable land records.  The Mortgagee’s Title Policies shall be in form
and substance satisfactory to Agent and shall be issued by a title insurance
company satisfactory to Agent (the “Title Company”), and name Borrower as the
insured party therein.  The funding of the requested Advance, delivery of the
Collateral and issuance of the title insurance policy, and recording of the
assignments or any releases may, in Agent’s discretion, be effected by way of an
escrow arrangement with the Title Company or other fiduciary, the form and
substance of which shall be satisfactory to Agent.
 
(c)           Other Conditions.  In addition to the other conditions set forth
in this Agreement, the making of the initial or any subsequent Advance shall be
subject to the satisfaction of the following conditions:
 
(i)            no Default or Event of Default shall exist immediately prior to
the making of such requested Advance or, after giving effect thereto,
immediately after the making of such requested Advance;
 
(ii)           each agreement required to have been executed and delivered in
connection with any prior Advance shall be consistent with the terms of this
Agreement and shall be in full force and effect;
 
(iii)          the date on which such requested Advance is to be made shall be a
Business Day;
 
(iv)          Borrower shall have delivered to Agent a certification showing the
dollar amount of the requested Advance based on the Eligible Notes Receivable
pledged to Agent, and the Notes Receivable being pledged contemporaneously with
each requested Advance in the form attached hereto as Exhibit D;
 
(v)           not more than one Advance shall have previously been made in the
same calendar month in which such requested Advance is to be made, unless Agent,
in its sole discretion, agrees to make an additional Advance during such
calendar month;
 
(vi)          such requested Advance shall be in a principal amount of not less
than $50,000, unless Agent, in its sole discretion, agrees to make an Advance in
an amount less than $50,000;
 
(vii)         Agent shall have determined that the requested Advance, when added
to the aggregate outstanding principal amount of all previous Advances, if any,
does not, based on the Eligible Notes Receivable that have been duly pledged in
favor of Agent exceed the lesser of: (i) total amount of the Borrowing Base,
(ii) the Availability or (iii) the Commitment;
 
(viii)        if Agent shall so require, Agent shall have received an executed
closing protection letter issued by the Title Company, which shall be reasonably
acceptable to Agent; and
 
(ix)          each Lender shall have agreed to make and does make an Advance in
an amount equal to its respective Pro Rata Percentage.

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(d)           Renewal Fees; Unused Line Fee; Expenses.  The Borrower shall have
paid any Renewal Fee and/or Unused Line Fee then due together with all Lender
Expenses required to be paid by Borrower pursuant to this Agreement in
connection with such requested Advance or any conditions related thereto.
 
(e)           Proceedings Satisfactory.  All actions taken in connection with
such requested Advance and all documents and papers relating thereto shall be
satisfactory to Agent and its counsel.  Agent and its counsel shall have
received copies of such documents and papers as Agent or such counsel may
reasonably request in connection with such requested Advance, all in form and
substance reasonably satisfactory to Agent and its counsel.
 
(f)           Partial Waiver of Requirement for Title Insurance Policies Upon
Satisfactory Maintenance of Inventory Control Procedures.  Anything in
Section 5.1(b)(iv) hereof to the contrary notwithstanding, the delivery of a
commitment for a Mortgagee Title Policy and a Mortgagee Title Policy shall be
required only with respect to twenty-five percent (25%) of the Eligible Notes
Receivable delivered to Agent in respect of each advance, subject to the
following requirements and limitations:
 
(i)            Borrower shall be in full compliance with the Inventory Control
Procedures (as defined in Section 6.23 hereof); and
 
(ii)           Agent shall have the right in its sole discretion to determine
those Eligible Notes Receivable in respect of which commitments for Mortgagee
Title Policies and also the Mortgagee Title Policies themselves shall be
required.
 
In the event that Borrower fails to satisfy the requirements of Subsection
5.1(f)(i)or should Agent discover unpermitted Liens or other encumbrances on the
Mortgagee Title Policies obtained randomly, then, immediately upon such event,
the partial waiver provided under this Section 5.1(f) shall no longer be
effective and 100% compliance shall be required.
 
Section 6-General Representations And Warranties
 
Borrower hereby represents and warrants to Agent and each Lender as follows:
 
6.1           Organization, Standing, Qualification.  Borrower: (a) is a duly
organized and validly existing Texas corporation duly organized, validly
existing and in good standing under the laws of the State of Texas, and (b) has
all requisite power, corporate or otherwise, to conduct its business and to
execute and deliver, and to perform its obligations under, the Loan Documents.
 
6.2           Authorization, Enforceability, Etc.
 
(a)           The execution, delivery and performance by Borrower of the Loan
Documents has been duly authorized by all necessary corporate action by Borrower
and does not and will not: (i) violate any provision of the certificate or
articles of incorporation of Borrower, bylaws of Borrower, or any agreement,
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award presently in effect to which Borrower is a party or is subject; (ii)
result in, or require the creation or imposition of, any Lien upon or with
respect to any asset of Borrower other than Liens in favor of Agent and Lenders;
or (iii) result in a breach of, or constitute a default by Borrower under, any
indenture, loan or credit agreement or any other agreement, document, instrument
or certificate to which Borrower is a party or by which it or any of its assets
are bound or affected.

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(b)           No approval, authorization, order, license, permit, franchise or
consent of, or registration, declaration, qualification or filing with, any
governmental authority or other Person, including without limitation, the
Division or the Timeshare Owners’ Association is required in connection with the
execution, delivery and performance by Borrower of any of the Loan Documents.
 
(c)           The Loan Documents constitute legal, valid and binding obligations
of Borrower, enforceable against Borrower in accordance with their respective
terms.
 
(d)           Borrower has, or will have, good and marketable title to the
Collateral, free and clear of any lien, security interest, charge or encumbrance
except for the security interests created by this Agreement or any Loan Document
or otherwise created in favor of Agent or those specifically consented to in
writing by Agent or permitted hereunder.  No financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any recording office, except such as may have been filed in favor of
Lenders hereunder or Agent as permitted hereunder.
 
(e)           The execution and delivery of the Loan Documents, the delivery and
endorsement to Agent as agent for Lenders of the Pledged Notes Receivable, the
filing of the UCC-1’s with the office of the secretary of state of the state in
which Borrower is organized and the Assignment of Notes Receivable and Mortgages
in the official records of the county in which the applicable Resort is located,
create in favor of Agent as agent for Lenders a valid and perfected continuing
first, as applicable, priority security interest in the Collateral.  The
Collateral shall secure the full payment and performance of the Obligations.
 
(f)           None of the Pledged Notes Receivable is forged or has affixed
thereto any unauthorized signatures or has been entered into by any Person
without the required legal capacity; and during the term of the Agreement, none
will be forged, or will have affixed thereto, any unauthorized signatures.
 
(g)           Except as permitted in Sections 3.6 and 3.7 hereof, there have
been no modifications or amendments to the Pledged Notes Receivable or
Mortgages.
 
(h)           The makers of the Eligible Notes Receivable have no defenses,
offsets, counterclaims or claims relating to the Eligible Notes Receivable or
the Mortgages.
 
(i)            The Pledged Notes Receivable and the Mortgages were executed and
delivered by Purchasers in favor of Borrower in connection with the purchase of
the related Encumbered Intervals.
 
(j)            The Mortgages constitute and will constitute valid and
enforceable first and prior liens and security interests on the Encumbered
Intervals.
 
(k)           The Pledged Notes Receivable and the Mortgages are and shall
remain in full force and effect, are and will be valid and binding obligations
of the respective makers in favor of Agent as holder on behalf of Lenders; and
Borrower further warrants and guarantees the value, quantity, sound condition,
grade and quality of the Encumbered Intervals and rights, properties, easements
and interests appurtenant or related thereto.

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(l)            The grant of the security interests described herein has not
affected and will not affect the validity or enforceability of the obligations
of the respective makers of the Pledged Notes Receivable under such Notes
Receivable or the respective Mortgages.
 
(m)           Neither Agent nor any Lender shall be required to take, and
Borrower has taken any and all required steps to protect Agent and each Lender’s
security interest in the Collateral (other than maintaining possession of the
portion of the Collateral constituting instruments); and neither Agent nor any
Lender is or shall be required to collect or realize upon the Collateral or any
distribution of interest or principal, nor shall loss of, or damage to, the
Collateral release Borrower from any of the Obligations.
 
6.3           Financial Statements and Business Condition.  The Financial
Statements for the first six (6) months of the calendar year 2007, are, to the
best of Borrower’s knowledge, accurate and fairly represent the financial
condition of the Borrower for the periods in question, subject to the written
qualifications set forth therein.  To the best of Borrower’s knowledge, there
are no material liabilities, direct or indirect, fixed or contingent, of
Borrower, except as disclosed to Agent in writing.
 
6.4           Taxes.  In accordance with the requirements set forth in the
Declaration, Borrower represents and warrants that Borrower, Silverleaf Club, or
the applicable Timeshare Owners’ Association, as required, has paid or will have
paid in full, prior to delinquency, all ad valorem taxes and other taxes and
assessments against the Resorts and the Collateral; and Borrower knows of no
basis for any additional taxes or assessments against the Resorts or the
Collateral.  Borrower, Silverleaf Club, or the applicable Timeshare Owners’
Association, as the case may be, has filed all tax returns required to have been
filed by it and has paid or will pay prior to delinquency, all taxes shown to be
due and payable on such returns, including interest and penalties thereon, and
all other taxes which are payable by it to the extent the same have become due
and payable.
 
6.5           Title to Properties: Prior Liens.  Borrower has good and
marketable title to all of the Collateral and to all unsold Units and Intervals
at each Resort, and all rights, properties and benefits appurtenant to or
benefiting them.  Borrower is not in default under any of the documents
evidencing or securing any indebtedness which is secured, wholly or in part, by
any portion of any Resort or any portion or all the Collateral and no event has
occurred which with the giving of notice, the passage of time or both, would
constitute a default under any of the documents evidencing or securing any such
indebtedness.  Other than the Liens granted in favor of Agent and the liens
described in Schedule 6.5 attached hereto, there are no liens or encumbrances
against the Collateral, or against any Resort.
 
6.6           Subsidiaries, Affiliates and Capital Structure.  Borrower has no
Subsidiaries or Affiliates which have any involvement or interest in any Resort
in any way.  None of the Affiliates of Borrower are parties to any proxies,
voting trusts, shareholders agreements or similar arrangements pursuant to which
voting authority, rights or discretion with respect to Borrower is vested in any
other Person.
 
6.7           Litigation, Proceedings, Etc.  Except for those matters identified
in Schedule 6.7 hereto, there are no actions, suits, proceedings, orders or
injunctions pending or threatened against or affecting Borrower, the Resorts or
the Timeshare Owners’ Association at law or in equity, or before or by any
governmental authority or other tribunal, which (a) could have a material
adverse effect on Borrower or (b) relate to the Loan or which could have a
material effect on the Collateral or the Resorts.  Borrower has received no
notice from any court, governmental authority or other tribunal alleging that
Borrower or the Resorts have violated the Timeshare Act, any of the rules or
regulations thereunder, the Declaration or any other Applicable Laws, agreements
or arrangements that could have any material effect on the Loan, the Collateral
or the Resorts.

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6.8           Licenses, Permits, Etc.  Borrower, the Resorts, the Timeshare
Owners’ Associations or Borrower’s Affiliates involved in the operations of the
Resorts, and, to the best of Borrower’s knowledge after diligent inquiry, other
Persons involved in the operations of the Resorts, possess all requisite
franchises, certificates of convenience and necessity, operating rights,
approvals, licenses, permits, consents, authorizations, exemptions and orders as
are necessary to carry on its or their business as now being conducted, without
any known conflict with the rights of others and, with respect to Borrower, the
Resorts and the Timeshare Owners’ Associations, in each case subject to no
mortgage, pledge, Lien, lease, encumbrance, charge, security interest, title
retention agreement or option other than as provided for by this Agreement.
 
6.9           Environmental Matters.  Except as otherwise noted on Schedule 6.9:
(a) no Resort contains any Hazardous Materials, (b) no Hazardous Materials are
used or stored at or transported to or from the Resorts, (c) neither Borrower
nor the Resorts nor any manager thereof nor to Borrower’s knowledge, the
Timeshare Owners’ Associations, have received notice from any governmental
agency, entity or other Person with regard to Hazardous Materials on, under or
affecting any Resort, and (d) neither Borrower, the Resorts, nor any portion
thereof, nor to Borrower’s knowledge after diligent inquiry, the Timeshare
Owners’ Associations, are in violation of any Environmental Laws.
 
6.10          Full Disclosure.  No information, exhibit or written report or the
content of any schedule furnished by or on behalf of Borrower to Agent or any
Lender in connection with the Loan or the Resorts contains any material
misstatement of fact or omits the statement of a material fact necessary to make
the statement contained herein or therein not misleading.  Borrower knows of no
fact or condition which will prevent the sale of Intervals to Purchasers or
prevent the operation of the Resorts in accordance with the Declarations and
related public offering statements, and in accordance with applicable law, or
prevent Borrower from performing its Obligations pursuant to the Loan Documents.
 
6.11          Use of Proceeds/Margin Stock.  None of the proceeds of the Loan
will be used to purchase or carry any margin stock (as defined under Regulation
G, T, S, X or U of the Board of Governors of the Federal Reserve System, as in
effect from time to time), and no portion of the proceeds of the Loan will be
extended to others for the purpose of purchasing or carrying margin stock.  None
of the transactions contemplated in the Agreement (including, without
limitation, the use of the proceeds from the Loan) will violate or result in the
violation of Section 7 of the Securities Exchange Act of 1934, as amended, or
any regulations issued pursuant thereto, including, without limitation,
Regulations G, T, S, U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Chapter 11.
 
6.12          Defaults.  Borrower has no knowledge of any Default or Event of
Default not disclosed to Agent in writing.  Borrower has no knowledge of any
default or event of default under any loan facility or with any
Lender.  Borrower has no knowledge of any condition or event, which, with the
passage of time, notice or both, would constitute an Event of Default or an
event of default under any loan facility or with any Lender.
 
6.13          Compliance with Law.  Borrower

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(a)            is not in violation, nor are any of its Resorts, or the business
operations in respect of any of the Resorts, or to Borrower’s knowledge after
diligent inquiry, the Timeshare Owners’ Association, in violation, of the
Timeshare Act, or any laws, ordinances, governmental rules or regulations of any
state in which a Resort is located, any political subdivision of said states or
any other jurisdiction to which Borrower or the Resorts, or the business
operations conducted in respect of the Resorts, or the Timeshare Owners’
Association, are subject;
 
(b)            has not failed, nor have the Resorts or, to Borrower’s knowledge,
the Timeshare Owners’ Associations failed, to obtain any consents or joinders,
or any approvals, licenses, permits, franchises or other governmental
authorizations, or to make or cause to be made any filings, submissions,
registrations or declarations with any government or agency or department
thereof, necessary to the establishment, ownership or operation of the Resorts
or any of Borrower’s Properties, or to the conduct of Borrower’s business,
including, without limitation, the operation of the Resorts and the sale, or
offering for sale, of Intervals therein; which violation or failure to obtain or
register materially adversely affects Borrower, the Resorts or the business,
prospects, profits, properties or condition (financial or otherwise) of Borrower
or the Resorts.  Borrower has, to the extent required by its activities and
businesses, and the operations of the Resorts, fully complied with: (1) all of
the applicable provisions of (a) the Consumer Credit Protection Act;
(b) Regulation Z of the Federal Reserve Board; (c) the Equal Credit Opportunity
Act; (d) Regulation B of the Federal Reserve Board; (e) the Federal Trade
Commission’s 3-day cooling-off Rule for Door-to-Door Sales; (f) Section 5 of the
Federal Trade Commission Act; (g) the Interstate Land Sales Full Disclosure Act
(“ILSA”); (h) federal postal laws; (i) applicable state and federal securities
laws; (j) applicable usury laws; (k) applicable trade practices, home and
telephone solicitation, sweepstakes, anti-lottery and consumer credit and
protection laws; (l) applicable real estate sales licensing, disclosure,
reporting and escrow laws; (m) the Americans With Disabilities Act and related
accessibility guidelines (“ADA”); (n) the Real Estate Settlement Procedures Act
(“RESPA”); (o) all amendments to and rules and regulations promulgated under the
foregoing acts or laws; (p) the Federal Trade Commission’s Privacy of Consumer
Financial Information Rule and (q) other applicable federal statutes and the
rules and regulations promulgated thereunder; and (2) all of the applicable
provisions of the Timeshare Acts, any law or laws of any state (and the rules
and regulations promulgated thereunder) relating to ownership, establishment or
operation of the Resorts, or the sale, offering for sale, or financing of
Intervals;
 
(c)            has made diligent inquiry, and to the best of Borrower’s
knowledge, all persons or entities owning an interest in Borrower: (i) are not
currently identified on any United States Office of Foreign Assets Control
(“OFAC”) List; and (ii) are not persons or entities with whom a citizen of the
United States is prohibited to engage in transactions by any trade embargo,
economic sanction, or other prohibition of Untied States law, regulation, or
Executive Order of the President of the United States.  The OFAC List currently
is accessible through the internet website www.treas.gov/ofac/t11sdn.pdf.
 
(d)            represents and warrants that at all times throughout the term of
the Loan, (i) none of the funds or other assets of Borrower shall constitute
property of, or shall be beneficially owned, directly or indirectly, by, any
Person subject to trade restrictions under the Prescribed Laws (each such
Person, an “Embargoed Person”), with the result that the investment in Borrower
(whether directly or indirectly), is or would be prohibited by law or the Loan
made by Lender is or would be in violation of law; (ii) no Embargoed Person
shall have any interest of any nature whatsoever in Borrower with the result
that the investment in Borrower (whether directly or indirectly), is or would be
prohibited by law or the Loan is or would be in violation of law; and (iii) none
of the funds of Borrower shall be derived from any unlawful activity with the
result that the investment in Borrower (whether directly or indirectly), is or
would be prohibited by law or the Loan is or would be in violation of law.

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6.14          Restrictions of Borrower.  Borrower will not be, on or after the
date hereof, a party to any contract or agreement which prohibits Borrower’s
execution of or compliance with the terms of this Agreement or the other Loan
Documents.  Borrower has not agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any of the Collateral,
whether now owned or hereafter acquired, to be subject to a Lien except in favor
of Agent as provided herein.
 
6.15          Broker’s Fees.  Borrower represents to Agent and each Lender that
it has not made any commitment or taken any action which will result in a claim
for any brokers’, finders’ or other similar fees or commitments with respect to
the transactions described in the Agreement.  Borrower agrees to indemnify Agent
and each Lender and save and hold Agent and each Lender harmless from all claims
of any Person for any broker’s or finder’s fee or commission claimed by any
party claiming to represent Borrower, and this indemnity shall include
reasonable attorneys’ fees and legal expenses.  Borrower acknowledges that
Wellington has acted as a broker/finder/intermediary on behalf of Agent, each
Lender and Liberty Bank in connection with the transactions contemplated
hereunder.  Agent and any successor agent, each Lender and Liberty Bank reserve
the right to pay Wellington such broker, finder or intermediary fee in
connection with the transactions contemplated hereunder, as Agent or such
successor agent or each Lender or Liberty Bank may elect.  Agent and any
successor agent, each Lender and Liberty Bank agrees to indemnify Borrower and
save and hold Borrower harmless from all claims of any Person for any broker’s
or finder’s fee or commission claimed by any party claiming to represent Agent
and any successor agent, each Lender and Liberty Bank, and this indemnity shall
include reasonable attorneys’ fees and legal expenses.
 
6.16          Deferred Compensation Plans.  Borrower has no pension, profit
sharing or other compensatory or similar plan (herein called a “Plan”) providing
for a program of deferred compensation for any employee or officer.  No fact or
situation, including but not limited to, any “Reportable Event,” as that term is
defined in Section 4043 of the Employee Retirement Income Security Act of 1974
as the same may be amended from time to time (“Pension Reform Act”), exists or
will exist in connection with any Plan of Borrower which might constitute
grounds for termination of any Plan by the Pension Benefit Guaranty Corporation
or cause the appointment by the appropriate United States District Court of a
Trustee to administer any such Plan.  No “Prohibited Transaction” within the
meaning of Section 406 of the Pension Reform Act exists or will exist upon the
execution and delivery of the Agreement or the performance by the parties hereto
of their respective duties and obligations hereunder.  Borrower will (1) at all
times make prompt payment of contributions required to meet the minimum funding
standards set forth in Sections 302 through 305 of the Pension Reform Act with
respect to each of its Plans; (2) promptly, after the filing thereof, furnish to
Agent copies of each annual report required to be filed pursuant to Section 103
of the Pension Reform Act in connection with each Plan for each Plan Year,
including any certified financial statements or actuarial statements required
pursuant to said Section 103; (3) notify Agent immediately of any fact,
including, but not limited to, any Reportable Event arising in connection with
any Plan which might constitute grounds for termination thereof by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate United
States District Court of a Trustee to administer the Plan; and (4) notify Agent
of any “Prohibited Transaction” as that term is defined in Section 406 of the
Pension Reform Act.  Borrower will not (a) engage in any Prohibited Transaction
or (b) terminate any such Plan in a manner which could result in the imposition
of a Lien on the Property of Borrower pursuant to Section 4068 of the Pension
Reform Act.

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6.17          Labor Relations.  The employees of Borrower are not a party to any
collective bargaining agreement with Borrower, and, to the best knowledge of
Borrower and its officers, there are no material grievances, disputes or
controversies with any union or any other organization of Borrower’s employees,
or threats of strikes, work stoppages or any asserted pending demands for
collective bargaining by any union or organization.
 
6.18          Resort.
 
(a)           Timeshare Plan.  Each Resort has been established and dedicated,
and is and will remain, a time-share plan and project in full compliance with
all Applicable Laws and regulations, including without limitation, the Timeshare
Act.
 
(b)           Access.  Each Resort has direct access to a publicly dedicated
road and all roadways inside each Resort are subject to an access and use
easement or other dedication or provision that benefits and will continue to
benefit all Purchasers.
 
(c)           Utilities.  Electric, sanitary and stormwater sewer, telephone,
water facilities and other necessary utilities are available in sufficient
capacity to service each Resort and any easements necessary to the furnishing of
such utility services have been obtained and duly recorded, and inure to the
benefit of each Resort and each Timeshare Owners’ Association.
 
(d)           Amenities.  Each Purchaser of an Interval has and will have access
to and the full use and enjoyment of all of the Common Elements and public
utilities of the Resort in which such interval is located, all in accordance
with the Declaration and Timeshare Documents.
 
(e)           Construction.  All costs arising from the construction or
acquisition of any Units and any other improvements and the purchase of any
fixtures or equipment, inventory, furnishings or other personalty located in,
at, or on the Resorts have been paid or will be paid when due.
 
(f)            Sale of Intervals.  The marketing, sale, offering of sale,
rental, solicitation of Purchasers or, if applicable, lessees, and financing of
Intervals in the Resort: (1) do not constitute the sale, or the offering of
sale, of Securities subject to the registration requirements of the Securities
Act of 1933, as amended, or any state securities law; (2) do not violate the
Timeshare Act or any land sales or consumer protection law, statute or
regulation of the state where the Resort is located or any other state or
jurisdiction in which a Purchaser resides or in which sales or solicitation
activities occur; and (3) do not violate any consumer credit or usury statute of
state where the Resort is located or any other state or jurisdiction in which a
Purchaser resides or in which sales or solicitation activities occur.  All
marketing and sales activities are performed by employees of Borrower, all of
whom are and shall be properly licensed in accordance with Applicable Laws.
 
(g)           Tangible Property.  Except for specific items which may be owned
by independent contractors, the machinery, equipment, fixtures, tools and
supplies used in connection with the Resort, including without limitation, with
respect to the operations and maintenance of the Common Elements, are owned
either by Borrower, Silverleaf Club, or the applicable Timeshare Owners’
Association.
 
(h)           Operating Contracts.  Borrower, Silverleaf Club, or the applicable
Timeshare Owners’ Association has entered into the contracts, agreements, and
arrangements necessary for the operation of the Resorts, including but not
limited to those with respect to utilities, maintenance, management, services,
marketing and sales.

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6.19         Timeshare Regimen Reports.  Borrower has furnished to Agent true
and correct copies of the Timeshare Documents listed on Schedule 6.19, which
consist of all those placed on file by Borrower with the Divisions or any
federal, state or local regulatory or recording agencies, offices or
departments.  All such filings and/or recordations, and all joinders and
consents, necessary in order to establish the plan in respect of the Resorts,
including without limitation, the Units, Intervals, and all appurtenant Common
Elements, and all related use and access rights, have been done or obtained and
all laws, regulations and statutes, and all agreements or arrangements, in
connection therewith have been complied with.
 
6.20         Operating Contracts.  The contracts, agreements and arrangements
comprising those agreements or arrangements relating to the operation of the
Resorts, including without limitation, with respect to utilities, maintenance,
management, services, marketing and sales under which the fees to be paid equal
or exceed $50,000.00 (collectively, all such agreements and arrangements are
referred to herein as the “Operating Contracts”) are unmodified and in full
force and effect and shall remain free and clear of any lien.
 
6.21         Architectural and Environmental Control.  All Units, Common
Elements and other improvements at, upon or appurtenant to the Resort are and
will be in compliance with the design, use, architectural and environmental
control provisions, if any, set forth in the Declaration.
 
6.22         Tax Identification.  Borrower’s federal taxpayer’s identification
number is: 75-2259890.
 
6.23         Inventory Control Procedures.  Borrower has provided to Agent a
true and complete copy of Borrower's Inventory, Sales and Assignments procedures
(the "Inventory Control Procedures"), a copy of which is attached hereto as
Exhibit E.  Borrower is and shall at all times be in full compliance with the
Inventory Control Procedures from the date hereof until the Loan is repaid in
full.  Borrower shall permit Agent, its officers, employees, auditors, and other
agents or designees to review the books and records of Borrower and make such
other examinations and inspections as Agent in its sole discretion deems
necessary to determine that Borrower is in full compliance with such Inventory
Control Procedures.
 
6.24         Additional Representations and Warranties.  This Agreement, the
Note and the other Loan Documents constitute the legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with their
respective terms.
 
Section 7-Covenants
 
7.1           Affirmative Covenants.  So long as any portion of the Obligations
remains unsatisfied, Borrower hereby covenants and agrees with Agent and each
Lender as follows:
 
(a)            Payment and Performance of Obligations.  Borrower shall pay all
of the Loan and related expenses when and as the same become due and payable,
and Borrower shall strictly observe and perform all of the Obligations,
including without limitation, all covenants, agreements, terms, conditions and
limitations contained in the Loan Documents, and will do all things necessary
which are not prohibited by law to prevent the occurrence of any Event of
Default hereunder; and Borrower will maintain an office or agency in the State
of Texas where notices, presentations and demands in respect of the Loan
Documents may be made upon Borrower.  Such office or agency and the books and
records of Borrower shall be maintained at 1221 Riverbend Drive, Suite 120,
Dallas, Texas 75221 until such time as Borrower shall so notify Agent, in
writing, of any change of location of such office or agency.
 

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(b)           Maintenance of Existence, Qualification and Assets.  Borrower
shall at all times (i) maintain its legal existence, (ii) maintain its
qualification to transact business and good standing in any state and in any
jurisdiction where it conducts business in connection with the Resorts, and
(iii) comply or cause compliance with all governmental laws, rules, regulations
and ordinances applicable to the Resorts, Borrower or its business, including,
without limitation, the Timeshare Act.
 
(c)           Consolidation and Merger.  Borrower will not consolidate with or
merge into any other Person or permit any other Person to consolidate with or
merge into it, unless: (i) Borrower is the continuing or surviving corporation
in any such consolidation or merger and (ii) prior to and immediately after such
consolidation or merger, Borrower shall not be in default hereunder.
 
(d)           Maintenance of Insurance.  Borrower, or if required pursuant to
the Declaration, the Timeshare Owners’ Association, shall maintain (or Borrower
shall cause to be maintained) at all times during the term of this Agreement,
policies of insurance with premiums being paid when due, and shall deliver to
Agent originals of insurance policies issued by insurance companies, in amounts,
in form and in substance, and with expiration dates, all acceptable to Agent and
containing a waiver of subrogation rights by the insuring company, a
non-contributory standard mortgagee benefit clause, or their equivalents, and a
mortgagee loss payable endorsement in favor of and satisfactory to Agent on
behalf of each Lender, and breach of warranty coverage, providing the following
types of insurance on and with respect to Borrower (or, as appropriate, the
respective Associations) and the Resort:
 
(i)        Fire and extended coverage insurance (including lightning, hurricane,
tornado, wind and water damage, vandalism and malicious mischief coverage)
covering the improvements and any personal property located in or on the Resorts
in an amount not less than the full replacement value of such improvements and
personal property, and said policy of insurance shall provide for a deductible
acceptable to Agent, breach of warranty coverage, replacement cost endorsements
satisfactory to Agent, and shall not permit co-insurance;
 
(ii)       Public liability and property damage insurance covering the Units and
the Resorts in amounts and on terms satisfactory to Agent; and
 
(iii)      Such other insurance on the Resorts or any replacements or
substitutions therefor including, without limitation, flood insurance (if the
Property is or becomes located in an area which is considered a flood risk by
the U.S. Emergency Management Agency or pursuant to the National Flood Insurance
program), in such amounts and upon terms as may from time to time be reasonably
required by Agent.
 
To the extent any other timeshare receivable lender has any rights to approve
the form of insurance policies with respect to the Resorts, the amounts of
coverage thereunder, the insurers under such policies, or the designation of an
attorney-in-fact for purposes of dealing with damage to any part of the Resorts
or insurance claims or matters related thereto, or any successor to such
attorney-in-fact, or any changes with respect to any of the foregoing, Borrower
shall take all steps as may be necessary (and, after turnover, if any, of
control of the Resort to the Timeshare Owners’ Association, Borrower shall use
its best efforts) to ensure that Agent on behalf of each Lender shall at all
times have a co-equal right, with such other lender (including, without
limitation, Borrower or any third-party lender), to approve all such matters and
any proposed changes in respect thereof; and Borrower shall not cause or permit
any changes with respect to any insurance policies, insurers, coverage,
attorney-in-fact, or insurance trustee, if any, without Agent’s prior written
approval.

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In the event of any insured loss or claim in respect of the Resorts or the
Units, Borrower shall apply (or cause to be applied), and Borrower covenants
that the Timeshare Owners’ Association shall apply (or cause to be applied), all
proceeds of such insurance policies in a manner consistent with the Timeshare
Documents and the Timeshare Act.
 
All insurance policies required pursuant to this Agreement (or the Timeshare
Documents or Timeshare Act) shall provide that the coverage afforded thereby
shall not expire or be amended, canceled, modified or terminated without at
least thirty (30) days prior written notice to Agent.  At least thirty (30) days
prior to the expiration date of each policy maintained pursuant to this Section
7.1(d), a renewal or replacement thereof satisfactory to Agent shall be
delivered to Agent.  Borrower shall deliver or cause to be delivered to Agent
receipts evidencing the payment for all such insurance policies and renewals or
replacements.
 
In the event of any fire or other casualty to or with respect to the
improvements on or at the Resorts, Borrower covenants that Borrower or the
Timeshare Owners’ Association, as the case may be, will promptly restore or
repair (or cause to be restored, repaired or replaced) the damaged improvements
and repair or replace any other personal property to the same condition as
immediately prior to such fire or other casualty and, with respect to the
improvements and personal property on the Resorts, in accordance with the terms
of the Timeshare Documents or Timeshare Act.  The insufficiency of any net
insurance proceeds shall in no way relieve Borrower or, as applicable, Borrower
and Timeshare Owners’ Association, of its obligation to restore, repair or
replace such improvements and other personal property in accordance with the
terms hereof, of the Declaration or other Timeshare Documents or of the
Timeshare Act, and Borrower covenants that Borrower or, as the case may be, the
Timeshare Owners’ Association, shall promptly comply and cause compliance with
the provisions of the Declaration and other Timeshare Documents, or of the
Timeshare Act relating to such restoration, repair or replacement. Borrower
shall, unless an Event of Default has occurred, apply all insurance proceeds
payable to or received by it, in accordance with the applicable Declaration.  If
an Event of Default has occurred, Agent may, in its sole discretion, apply all
insurance proceeds in accordance with the applicable Declaration or to the
repayment of the Loan.
 
(e)           Maintenance of Security.  Borrower shall execute and deliver (or
cause to be executed and delivered) to Agent all security agreements, financing
statement filing authorizations, assignments and such other agreements,
documents, instruments and certificates, and supplements and amendments thereto,
and take such other actions, as Agent deems necessary or appropriate in order to
maintain as valid, enforceable and perfected first priority lien and security
interest, as applicable, all Liens and security interests in the Collateral
granted to Agent as agent for Lenders to secure the Obligations.  Except as
permitted under Section 3.6, Borrower shall not grant extensions of time for the
payment of, compromise for less than the full face value or release in whole or
in part, any Purchaser or other Person liable for the payment of, or allow any
credit whatsoever except for the amount of cash to be paid upon, any Collateral
or any instrument, chattel paper or document representing the Collateral.
 
(f)            Payment of Taxes and Claims.  Borrower will pay, and, as
applicable pursuant to the Declaration, Borrower covenants that the Timeshare
Owners’ Association will pay, when due, all taxes imposed upon the Resorts, the
Collateral, Borrower, the Timeshare Owners’ Association, or any of its or their
property, or with respect to any of its or their franchises, businesses, income
or profits, real and personal property, or with respect to the Loan or any of
the Loan Documents; and Borrower and the Timeshare Owners’ Association, as the
case may be, shall pay all other charges and assessments against Borrower, the
Collateral and the Resorts before any claim (including, without limitation,
claims for labor, services, materials and supplies) arises for sums which have
become due and payable.  Except for Liens set forth on Schedule 6.5 and the
Liens in favor of Agent on behalf of Lenders granted pursuant to the Loan
Documents, and except as otherwise specifically provided for herein, Borrower
covenants that no statutory or other Liens whatsoever (including, without
limitation, mechanics’, materialmens’, judgment or tax liens) shall attach to
any of the Collateral or the Resorts except for such Liens as are expressly
provided for pursuant to the Declaration.  In the event any such Lien attaches
to any of the Collateral or the Resorts Borrower shall, within thirty (30) days
after any such Lien attaches, either (i) cause such Lien to be released of
record or (ii) provide Agent with a bond in accordance with the Applicable Laws
of the State, issued by a corporate surety acceptable to Agent, in an amount and
form acceptable to Agent.

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(g)           Inspections.  Borrower shall, at any time and from time to time
and at the expense of Borrower, permit Agent or any Lender or its respective
agents or representatives (provided such Lender has coordinated such inspection
with Agent) to inspect the Resorts, the Collateral and if necessary, in Agent’s
opinion, to ascertain or assure Borrower’s compliance with the terms of this
Agreement, any of Borrower’s other assets or Property, and to examine and make
copies of and abstracts from its and, to the extent it has access thereto or
possession thereof, the Timeshare Owners’ Association’s, books, accounts,
records, original correspondence, computer tapes, disks, software, and other
papers as it may desire; and to discuss its affairs, finances and accounts with
any of its officers, employees, Affiliates, contractors or independent public
accountants (and by this provision Borrower authorizes said accountants to
discuss with Agent, its Agents or representatives, the affairs, finances and
accounts of Borrower).  Agent and each Lender agree to use reasonable efforts
not to unreasonably interfere with Borrower’s business operations in connection
with any such inspections.  Without limiting the foregoing, Agent shall have the
right to make such credit investigations as Agent may deem appropriate in
connection with its review of Notes Receivable, and Borrower shall make
available to Agent all credit information in Borrower’s possession or under its
control or to which it may have access, with respect to Purchasers or other
obligors under Notes Receivable as Agent may request.
 
(h)           Reporting Requirements.  So long as any portion of the Obligations
remains unsatisfied, Borrower shall furnish (or cause to be furnished, as the
case may be) to Agent the following:
 
(i)            The Following Collateral Reports.  
 
Within 1 Business Day of occurrence or receipt
(a)          Upon becoming aware of the existence of any condition or event
which constitutes a Default or an Event of Default, Borrower shall deliver to
Agent a written notice specifying the nature and period of existence thereof and
what action Borrower is taking or proposes to take with respect thereto.
(b)          Upon becoming aware that the holder of any material obligation or
of any evidence of material indebtedness of the Borrower has given notice or
taken any other action with respect to a claimed default or event of default
thereunder, a written notice specifying the notice given or action taken by such
holder and the nature of the claimed default or event of default and what action
the Borrower is taking or proposes to take with respect thereto;
(c)          Promptly upon receipt thereof, one (1) copy of each other report
submitted to Borrower by independent public accountants or other Persons in
connection with any annual, interim or special audit made by them of the books
of Borrower;
 
Weekly
(d)          None at this time.
 
Monthly (not later than the 10th Business Day of each month)
(e)           a Borrowing Base Report and all supporting reports and
documentation which includes a detailed calculation of the Availability as of
the end of the month,
(f)            a reconciliation to the detailed calculation of the Availability
previously provided to Agent,
(g)           a confirmation of payment or reimbursement of all funds received
during the prior month from Purchasers for homeowner fees and expenses to each
of the Timeshare Owners’ Associations,
(h)           monthly aging Reports on all Notes Receivable
 
Quarterly
(i)            a sales report, detailing the sales of all Intervals at the
Resorts for the period covered thereby, certified by Borrower to be true,
correct and complete and otherwise in a form approved by Agent, provided
however, upon 30 days prior written notice Lender may require this report to be
furnished on a monthly basis,
(j)            such additional information as Agent may request with respect to
the Collateral, or the financial condition of Borrower,
 
Annually
 
(k)           a sales report, detailing the sales of all Intervals at the
Resorts for the period covered thereby, certified by Borrower to be true,
correct and complete and otherwise in a form approved by Agent, and
 
Upon request by Agent
 
(l)            such other reports as to the Collateral, or the financial
condition of Borrower, as Agent may request.
 

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In addition, to the extent required by Agent, (i) in Agent’s Permitted
Discretion, Borrower agrees to facilitate the establishment of electronic
collateral reporting systems, which will be administered and maintained by
Agent, and to cooperate with Agent to facilitate and implement a system of
electronic collateral reporting in order to provide electronic reporting of each
of the items set forth above, provided however the cost to Borrower for such set
up of the electronic collateral reporting systems shall not exceed $5,000, and
(ii) a senior member of the management of Borrower or other representative
acceptable to Agent will meet with Agent, telephonically at least once in each
calendar quarter and in person once each six (6) months, to review and discuss
matters relating to Borrower’s business, prospects, projections and affairs as
is determined to be reasonable and appropriate by Agent.
 
(ii)      Quarterly and Annual Financial Reports.  Within ninety (90) days of
each fiscal year end and within forty five (45) days of each fiscal or calendar
quarter end (in the event such the financial reports are not filed by such
dates, Borrower shall provide a copy of each application for extension
transmitted to each applicable taxing authority) or as soon as available, but in
any event upon Borrower’s filing of its Securities and Exchange Commission Form
10-Q, a statement of income and expense and a balance sheet of Borrower for the
calendar or fiscal period then ended, and in the case of the second, and third
calendar or fiscal quarters ended a statement showing the period then ended and
cumulative numbers for the portion of the year then ended, all in such detail
and scope as may be reasonably required by Agent and prepared by management on a
basis consistent with prior accounting periods and accompanied by an Officer’s
Certificate in the form of Exhibit F.  In addition to the above, as soon as
available, but in any event upon Borrower’s filing of its Securities and
Exchange Commission Form 10-K reflecting Borrowers financial results for each
calendar year or other fiscal year as may be applicable (a “Fiscal Year”), an
audited statement of income and expense of Borrower for the annual period ended
as of the end of such Fiscal Year, and a balance sheet of Borrower as of the end
of such Fiscal Year, all in such detail and scope as may be reasonably required
by Agent and prepared in accordance with GAAP and on a basis consistent with
prior accounting periods.  Each annual financial statement of Borrower shall be
prepared by an independent certified public accountant, acceptable to Agent, in
its sole discretion.  Such audited annual statements shall also be in form and
content satisfactory to Agent.

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(iii)     Maintenance of Inventory Control.  Borrower shall maintain and at all
times fully comply with the Inventory Control Procedures from the date hereof
until the Loan is repaid in full.  Borrower shall permit Agent, its officers,
employees, auditors, and other agents or designees to review the books and
records of Borrower and make such other examinations and inspections as Agent in
its sole discretion deems necessary to determine that Borrower is in full
compliance with such Inventory Control Procedures.
 
(iv)     Material Adverse Developments.  Immediately upon becoming aware of any
claim, action, proceeding, development or other information which may materially
and adversely affect Borrower, the Collateral, the Resorts, the business,
prospects, profits or condition (financial or otherwise) of Borrower, or the
ability of Borrower to perform its Obligations under the Agreement, Borrower
shall provide Agent with telephonic or telegraphic notice, followed by telefaxed
and mailed written confirmation, specifying the nature of such development or
information and such anticipated effect;
 
(v)      Other Information.  Borrower shall deliver to Agent: (i) within five
(5) days of the filing thereof with the United States Securities and Exchange
Commission, copies of each Form 8-K, 10-Q and 10-K filed by Borrower; (ii) at
least semi-annually during the Term (or more frequently upon request of Agent),
current addresses and telephone numbers for each obligor under an Eligible Note
Receivable pledged to Agent on behalf of Lenders hereunder and (iii) any other
information related to the Loan, the Collateral, the Resorts or Borrower as
Agent may in good faith request including, without limitation, annually, federal
call reports relating to Lockbox Agent.
 
(vi)     Annual Operating Plan.  On or before December 31 of each calendar year,
Borrower shall deliver to Agent its Annual Operating Plan.

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(i)            Records.  Borrower shall keep adequate records and books of
account reflecting all financial transactions of Borrower and with respect to
the Resorts in which complete entries will be made in accordance with GAAP.  In
addition, Borrower shall keep, and shall promptly deliver to Agent upon Agent’s
request therefor, complete, timely and accurate records of all sales of
Intervals and all payments in respect of Pledged Notes Receivable.
 
(j)            Management.  Borrower shall: (i) remain engaged in the active
management of the Resorts, (ii) unless Borrower notifies Agent in writing at
least thirty (30) days in advance of its new location, retain its executive
offices at 1221 Riverbend Drive, Suite 120, Dallas, Texas 75221, and (iii)
continue to perform duties substantially similar to those presently performed as
provided in the management agreement relating to each Resort.  No management
agreement for any Resort shall be modified, assigned, extended, terminated or
entered into nor shall the current method of operation and management of the
Resorts be changed in any material manner, without the prior written approval of
Agent.
 
(k)            Operating Contracts.  Subject to the rights of the Timeshare
Owners’ Association as set forth in the Timeshare Documents, no Operating
Contract shall be modified, extended, terminated or entered into, without the
prior written approval of Agent, if any such modification, extension,
termination or new agreement could have a material adverse impact on the
operation of the Resorts or the Collateral.
 
(l)            Notices.  Borrower shall notify Agent within five (5) Business
Days of the occurrence of any event (i) as a result of which any representation
or warranty of Borrower contained in any Loan Documents would be incorrect or
materially misleading if made at that time, or (ii) as a result of which
Borrower is not in full compliance with all of its covenants and agreements
contained in this Agreement or any Loan Document, or (iii) which constitutes or,
with the passage of time, notice or a determination by Agent would constitute,
an Event of Default.
 
(m)           Maintenance.  Borrower shall maintain, or shall cause to be
maintained, or to the extent provided for pursuant to the Declaration, shall use
its best efforts to cause the Timeshare Owners’ Association to maintain, the
Resorts in good repair, working order and condition and shall make all necessary
replacements and improvements to the Resorts consisting of real property so that
the value and operating efficiency of the Resorts will be maintained at all
times and so that the Resorts remain in compliance in all respects with the
Timeshare Act, the Timeshare Documents and other applicable law.
 
(n)           Claims.  Borrower shall promptly notify Agent of any claim, action
or proceeding affecting the Resorts or Collateral, or any part thereof, or Agent
or any Lender or any of the security interests or rights granted in favor of
Agent hereunder or under any of the Loan Documents.  At the request of Agent,
Borrower shall appear in and defend in favor of each Lender, at Borrower’s sole
expense, any such claim, action or proceeding.
 
(o)           Registration and Regulations.
 
(i)        Local Legal Compliance.  Borrower will comply, and will cause the
Resorts to comply, with all applicable servitudes, restrictive covenants,
applicable planning, zoning or land use ordinances and building codes, all
applicable health and Environmental Laws and regulations, and all other
Applicable Laws, rules, regulations, agreements or arrangements.

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(ii)       Registration Compliance.  Borrower will maintain, or cause to be
maintained, all necessary registrations, current filings, consents, franchises,
approvals, and exemption certificates, and Borrower will make or pay, or cause
to be made or paid, all registrations, declarations or fees with the Division
and any other government or any agency or department thereof, whether in the
state or another jurisdiction, required in connection with the Resorts and the
occupancy, use and operation thereof, the incorporation of Units into the
time-share plan established pursuant to the Declaration and the other Timeshare
Documents, and the sale, advertising, marketing, and offering for sale of
Intervals.  All such registrations, filings and reports will be truthfully
completed; and true and complete copies of such registrations, applications,
consents, licenses, permits, franchises, approvals, exemption certificates,
filings and reports will be delivered to Agent.  Borrower shall advise Agent of
any changes with respect to its marketing or sales programs in any jurisdiction,
including jurisdictions other than the state, and at Agent’s request from time
to time, Borrower shall deliver to Agent: (A) written statements by the
applicable state authorities, in form acceptable to Agent, stating that no
registration is necessary for the sale of Intervals in the particular state,
(B) an opinion of counsel in form acceptable to Agent and rendered by counsel
acceptable to Agent, stating that no such registration is necessary, or (C) such
other evidence of compliance with Applicable Laws as Agent may require; and
 
(iii)      Other Compliance.  Borrower has, in all material respects, complied
with and will comply with all laws and regulations of the United States, the
State of Texas, each state in which an applicable Resort or Collateral is
located, any political subdivision of either such state and any other
governmental, quasi-governmental or administrative jurisdiction in which
Intervals have been sold or offered for sale, or in which sales, offers of sale
or solicitations with respect to the Resorts have been or will be conducted,
including to the extent applicable, but not limited to: (1) the Timeshare Act;
(2) the Consumer Credit Protection Act; (3) Regulation Z of the Federal Reserve
Board; (4) the Equal Credit Opportunity Act; (5) Regulation B of the Federal
Reserve Board; (6) the Federal Trade Commission’s 3-day cooling-off Rule for
Door-to-Door Sales; (7) Section 5 of the Federal Trade Commission Act; (8) ILSA;
(9) federal postal laws; (10) applicable state and federal securities laws;
(11) applicable usury laws; (12) applicable trade practices, home and telephone
solicitation, sweepstakes, anti-lottery and consumer credit and protection laws;
(13) applicable real estate sales licensing, disclosure, reporting and escrow
laws; (14) the ADA; (15) RESPA; (16) all amendments to and rules and regulations
promulgated under the foregoing acts or laws; (17) the Federal Trade
Commission’s Privacy of Consumer Financial Information Rule; (18) other
applicable federal statutes and the rules and regulations promulgated
thereunder; and (19) any state law or law of any state (and the rules and
regulations promulgated thereunder) relating to ownership, establishment or
operation of the Resort, or the sale, offering for sale, or financing of
Intervals.
 
(p)           Other Documents.  Borrower will maintain to the satisfaction of
Agent and make available to Agent and other Lenders, accurate and complete files
relating to the Resorts, the Pledged Notes Receivable and other Collateral, and
such files will contain true copies of each Pledged Note Receivable, as amended
from time to time, copies of all relevant credit memoranda relating to such
Notes Receivable and all collection information and correspondence relating
thereto.  Without limiting the foregoing, Borrower shall maintain evidence of
its compliance with the requirements of Section 3.8 hereof.

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(q)           Further Assurances.  Borrower will execute and deliver, or cause
to be executed and delivered, such other and further agreements, documents,
instruments, certificates and assurances as, in the judgment of Agent exercised
in good faith may be necessary or appropriate to more effectively evidence or
secure, and to ensure the performance of, the Obligations.  In addition,
Borrower shall deliver to Agent from time to time upon each request by Agent
such documents, instruments or other matters or items as Agent may require to
evidence Borrower’s compliance with the covenants set forth in this Section 7.1
and Section 3.8 hereof.
 
(r)            Utilities.  Borrower will cause, or to the extent provided for
pursuant to the Declaration, covenants to use its best efforts to ensure that
the Timeshare Owners’ Association, or the manager of the Resorts, as applicable,
will cause, electric, sanitary and stormwater sewer, water facilities, drainage
facilities, solid waste disposal, telephone and other necessary utilities to be
available to the Resorts in sufficient capacity to service the Resorts.
 
(s)           Amenities.  Borrower will cause, or to the extent provided for
pursuant to the Declarations, will use its best efforts to ensure that the
Timeshare Owners’ Association, or the manager of the Resort, as applicable, will
cause, the Resorts to be maintained in good condition and repair, and in
accordance with the provisions of the applicable Timeshare Documents, and
Borrower will cause each Purchaser of an Interval at the Resorts to have
continuing access to, and the use of, to the extent of such Purchaser’s
time-share periods, all of the Common Elements and related or appurtenant
services, rights and benefits, all as provided in the Declaration and the
Timeshare Documents.
 
(t)           Transaction Costs, Expenses and Fees.  Whether or not the
transactions contemplated hereunder are completed, Borrower shall pay all
expenses of Agent, each Lender and any Participant, whether at the Closing Date
or subsequent thereto relating to negotiating, preparing, documenting, closing
and enforcing this Agreement, including, but not limited to:
 
(i)        the cost of preparing, reproducing and binding this Agreement, the
other Loan Documents and all Exhibits and Schedules thereto;
 
(ii)       the reasonable fees and disbursements of Agent’s, each Lender’s and
each Participants’ counsel;
 
(iii)      Agent’s, each Lender’s and each Participants’ reasonable
out-of-pocket expenses;
 
(iv)     all reasonable fees and expenses (including fees and expenses of
Agent’s, each Lender’s and each Participants’ counsel) relating to any
amendments, waivers, consents or subsequent closings pursuant to the provisions
hereof;
 
(v)      all costs, outlays, legal fees and expenses of every kind and character
had or incurred in (1) the interpretation or enforcement of any of the
provisions of, or the creation, preservation or exercise of rights and remedies
under, any of the Loan Documents including the costs of appeal (2) the
preparation for, negotiations regarding, consultations concerning, or the
defense or prosecution of legal proceedings involving any claim or claims made
or threatened against Agent arising out of this transaction or the protection of
the Collateral securing the Loan or Advances made hereunder, expressly
including, without limitation, the defense by Agent, each Lender and each
Participant of any legal proceedings instituted or threatened by any Person to
seek to recover or set aside any payment or setoff theretofore received or
applied by Agent, each Lender and each Participant with respect to the
Obligations, and any and all appeals thereof; and (3) the advancement of any
expenses provided for under any of the Loan Documents;

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(vi)     all expenses relating to the maintenance and administration of the
Lockbox and Lockbox Account by the Lockbox Agent and Servicing and any escrow by
the Title Company or any other escrow agent;
 
(vii)    all costs and expenses incurred by Agent under the Note, and all late
charges under the Note;
 
(viii)   all real and personal property taxes and assessments, documentary stamp
and intangible taxes, sales taxes, recording fees, title insurance premiums and
other title charges, document copying, transmittal and binding costs, appraisal
fees, lien and judgment search costs, fees of architects, engineers,
environmental consultants, surveyors and any special consultants, construction
inspection fees, brokers fees, escrow fees, wire transfer fees, and all travel
and out-of-pocket expenses of Agent, each Lender and each Participant to conduct
inspections or audits. Without limitation of the foregoing, Borrower shall pay
the costs of UCC and other searches, UCC and other Loan Document recording fees
and applicable taxes, and premiums on each Mortgagee Title Policy delivered to
Agent pursuant to this Agreement; and
 
(ix)      audit, appraisal, and valuation fees and charges as follows: (i) a fee
of $950 per day, per auditor, plus out-of-pocket expenses for each financial
audit of Borrower performed by personnel employed or contracted by Agent, which
audits shall be conducted at Borrower’s expense as frequently as Agent shall
determine and (ii) if implemented, a fee of $950 per day, per applicable
individual, plus out-of-pocket expenses for the establishment of electronic
collateral reporting systems, provided the aggregate fee to be paid by Borrower
for this service shall not exceed $5,000.
 
With respect to the fees payable by Borrower under clauses (ii), (iii), and (iv)
above, provided that no Event of Default or condition, omission or act which,
with the passage of time, notice or both, would constitute an Event of Default,
has occurred, Agent, each Lender and/or each Participant shall provide Borrower
in advance, as applicable, with good faith estimates of: (1) the reasonable fees
and disbursements of such party’s counsel; (2) such party’s reasonable
out-of-pocket expenses; and (3) the reasonable fees and expenses of such party
and its counsel relating to any amendments, waivers, consents or subsequent
closings pursuant to the provisions hereof, respectively; and such fees,
disbursements and expenses shall be in accordance with such good faith
estimates.

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(u)           Indemnification of Agent and Lender.  In addition to (and not in
lieu of) any other provisions of any Loan Document providing for indemnification
in favor of Agent or Lenders, Borrower shall defend, indemnify and hold harmless
Agent, each Lender, each Participant, their respective subsidiaries, affiliates,
officers, directors, agents, employees, representatives, consultants,
contractors, servants, and attorneys, as well as the respective heirs, personal
representatives, successors or assigns of any or all of them (hereafter
collectively the “Indemnified Lender Parties”), from and against, and promptly
pay on demand or reimburse each of them with respect to, any and all
liabilities, claims, demands, losses, damages, costs and expenses (including
without limitation, reasonable attorneys’ and paralegals’ fees and costs),
actions or causes of action of any and every kind or nature whatsoever asserted
against or incurred by any of them by reason of or arising out of or in any way
related or attributable to (i) this Agreement, the Loan Documents, or the
Collateral; (ii) the transactions contemplated under any of the Loan Documents
or any of the Timeshare Documents, including without limitation, those in any
way relating to or arising out of the violation of any federal or state laws,
including the Timeshare Act; (iii) any breach of any covenant or agreement or
the incorrectness or inaccuracy of any representation and warranty of Borrower
contained in this Agreement or any of the Loan Documents (including without
limitation any certification of Borrower delivered to Lender or Agent); (iv) any
and all taxes, including real estate, personal property, sales, mortgage,
excise, intangible or transfer taxes, and any and all fees or charges,
including, without limitation under the Timeshare Act, which may at any time
arise or become due prior to the payment, performance and discharge in full of
the Obligations; (v) the breach of any representation or warranty as set forth
herein regarding any Environmental Laws; (vi) the failure of Borrower to perform
any obligation or covenant herein required to be performed pursuant to any
Environmental Laws; (vii) the use, generation, storage, release, threatened
release, discharge, disposal or presence on, under or about the Resorts of any
Hazardous Materials; (viii) the removal or remediation of any Hazardous
Materials from the Resorts required to be performed pursuant to any
Environmental Laws or as a result of recommendations of any environmental
consultant or as required by Agent; (ix) claims asserted by any Person
(including without limitation any governmental or quasi-governmental agency,
commission, department, instrumentality or body, court, arbitrator or
administrative board (collectively, a “Governmental Agency”), in connection with
or any in any way arising out of the presence, use, storage, disposal,
generation, transportation, release, or treatment of any Hazardous Materials on,
in, under or affecting the Resorts; (x) the violation or claimed violation of
any Environmental Laws in regard to the Resorts; or (xi) the preparation of an
environmental audit or report on the Resorts, whether conducted by a Lender,
Agent, Borrower or a third-party, or the implementation of environmental audit
recommendations.  Such indemnification shall not give Borrower any right to
participate in the selection of counsel for Agent or any Lender or the conduct
or settlement of any dispute or proceeding for which indemnification may be
claimed.  Agent and each Lender agree to give Borrower written notice of the
assertion of any claim or the commencement of any action or lawsuit described in
this Section 7.1(v).  It is the express intention of the parties hereto that the
indemnity provided for in this Section 7.1(v), as well as the disclaimers of
liability referred to in this Agreement, are intended to and shall protect and
indemnify Agent and each Lender from the consequences of Agent’s and each
Lender’s and each Participant’s own negligence, whether or not that negligence
is the sole or concurring cause of any liability, obligation, loss, damage,
penalty, action, judgment, suit, claim, cost, expense or disbursement provided,
however, that Borrower shall not be required to protect and indemnify Agent or
any Lender or any Participant from the consequences of Agent’s or any such
Lender’s or any such Participant’s gross negligence, where that gross negligence
is the sole cause of the liability, obligation, loss, damage, penalty, action,
judgment, suit, claim, cost, expense or disbursement for which indemnification
or protection would otherwise be required.  The provisions of this Section
7.1(v) shall survive the full payment, performance and discharge of the
Obligations and the termination of this Agreement, and shall continue thereafter
in full force and effect.  In addition to the above, Borrower has advised Agent
that payments from Purchasers will include reimbursements from such Purchasers
of Time Share Owners’ Association fees and expenses and Borrower hereby
authorizes Agent to apply such payments and reimbursements to the outstanding
Obligations due from Borrower to Agent and Lenders and Borrower will pay not
less frequently than monthly all sums due to such Time Share Owners’
Associations.  Borrower hereby indemnifies and holds Agent and each Lender and
each Participant harmless from the application of such payments and agrees that
it is its sole responsibility to remit funds to each Time Share Owners’
Association to reimburse such Time Share Owners’ Association for the payments
made by Purchasers.

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(v)           Standby Servicer.  Borrower will maintain the agreement for the
Standby Servicer in full force and effect. Borrower agrees that upon the
occurrence of a Default or Event of Default hereunder, the Standby Servicer will
assume full control over the servicing of all Pledged Notes Receivable,
reporting solely to Agent, as provided in Section 9.1(i) hereof.
 
(w)           Additional Loan Facility Documents.  Borrower will comply with the
terms and conditions of the CSF Facility, the UBS Facility, the WFF Facility,
the TFC Facility and the TFC Conduit Loan.  Nothing contained herein shall
prohibit or limit Borrower’s ability to amend or modify any of the CSF Documents
or any of the UBS Documents or any of the WFF Documents or any of the TFC
Documents or any of the Silverleaf Finance II Documents or documents evidencing
any other indebtedness of Borrower, provided Borrower provides Agent with a copy
of the fully executed loan documents promptly within ten (10) days after
execution.
 
(x)            Financial Covenants.
 
(i)        Tangible Net Worth.  Borrower shall, on and after the Closing Date,
at all times have and maintain a Tangible Net Worth of not less than $100,000M
plus 50% of aggregate amount of proceeds received by Borrower after December 31,
2004 in connection with each issuance by Borrower of any class or classes of
capital stock after December 31, 2004, except for stock issued to retire
existing unsecured subordinated debt, plus 50% of the aggregate amount of net
income (calculated in accordance with GAAP) of Borrower after December 31, 2004.
 
(ii)       Marketing and Sales Expenses.  As of the last day of each fiscal
quarter, commencing with the fiscal quarter ending September 30, 2007, Borrower
will not permit the four quarter cumulative ratio of Marketing and Sales
Expenses to the Borrower’s vacation interval sales as recorded on the Borrower’s
financial statements for the immediately preceding four (4) consecutive fiscal
quarters of the Borrower to equal or exceed a ratio of .570 to 1.
 
(iii)      Maximum Loan Delinquency.  Borrower will not permit as of the last
day of each calendar quarter its over 30-day delinquency rate on its entire
Notes Receivable portfolio to be greater than ten percent (10%).
 
(iv)      Interest Coverage.  For the calendar quarter of Borrower ending
September 30, 2007 and for each calendar quarter thereafter, the average of the
Interest Coverage Ratio for Borrower for such calendar quarter and the Interest
Coverage Ratios for each of the three immediately preceding calendar quarters
shall be at least 1.25:1.  The term Interest Coverage Ratio means with respect
to any Person for any calendar quarter, the ratio of (a) EBITDA for such period
less capital expenditures as determined in accordance with GAAP, for such period
to (b) the Total Interest Expense minus all non-cash items constituting interest
expense for such period.

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(v)           Profitable Operations.  Borrower will not permit consolidated net
income (a) for any fiscal year, commencing with the fiscal year ending December
31, 2005, to be less than $1.00 and (b) for any two consecutive fiscal quarters
(reviewed on an individual rather than on an aggregate basis) to be less than
$1.00.
 
(vi)           Maximum Debt to Tangible Net Worth.  Borrower shall maintain a
ratio of (i) the outstanding amount of Indebtedness of Borrower (excluding
Subordinated Debt), to (ii) Tangible Net Worth, each as measured on a fiscal
quarter-end basis commencing the calendar quarter ending September 30, 2007 and
for each fiscal quarter thereafter, which is less than or equal to 6.00 to 1.00
(non-recourse off balance sheet financing would not be included as Indebtedness
for the purposes of this covenant).
 
(vii)          Minimum FICO Scores.  Borrower shall not permit, for any calendar
quarter, the weighted average FICO Credit Bureau Scores of all of Borrower’s
sales, not limited to those resulting in pledged Notes Receivable to Agent, with
respect to which a FICO score can be obtained to be less than 640.
 
7.2           Negative Covenants.  So long as any portion of the Obligations
remain unsatisfied, Borrower hereby covenants and agrees with Agent and each
Lender as follows:
 
(a)            Limitation on Other Debt, Further Encumbrances.  Borrower will
not obtain financing and grant liens with respect to the
Collateral.  Notwithstanding anything herein to the contrary, Borrower may,
without first obtaining the written consent of Agent obtain financing and grant
liens with respect to any of its assets or other property except for the
Collateral and those assets or property restricted by a negative pledge
provided: (i) Borrower provides ten days prior written notice to Agent setting
forth the terms and conditions of such financing; (ii) no Event of Default or
condition, omission or act which, with the passage of time, notice or both,
would constitute an Event of Default, has occurred; (iii) such financing does
not result in an Event of Default hereunder or under any documents evidencing
any other indebtedness of Borrower; and (iv) Agent is promptly provided a copy
of the fully executed loan documents relating thereto.
 
(b)           Restrictions on Transfers.  Except as hereinafter specifically
provided, Borrower shall not, whether voluntarily or involuntarily, by operation
of law or otherwise, (i) without obtaining the prior written consent of Agent
(which consent may be given, withheld or conditioned by Agent in Agent’s sole
discretion), transfer, sell, pledge, convey, hypothecate, factor or assign all
or any portion of the Collateral, the Encumbered Intervals, the Common Elements
relating to the Encumbered Intervals or any Resort facilities or amenities, or
contract to do any of the foregoing, including, without limitation, pursuant to
options to purchase, and so-called installment sales contracts, land contracts,
or contracts for deed, provided that the foregoing restriction on transfers
shall not apply to the conveyance of SPV Assets to the SPV, (ii) without
obtaining the prior written consent of Agent (which consent may be given,
withheld or conditioned by Agent in Agent’s sole discretion), lease or license
all or any portion of the Collateral, the Encumbered Intervals, the Common
Elements relating to the Encumbered Intervals or any Resort facilities or
amenities (except for the license created in favor of SPV under any license
agreement with Borrower, Silverleaf Club or any timeshare owners association, to
use or access the reservation system or related computer hardware or software
for any Resort), or change the legal or actual possession or use thereof, (iii)
permit the assignment, transfer, delegation, change, modification or diminution
of the duties or responsibilities of Borrower, of any manager of the Resorts
approved by Agent as manager of the Resorts (except for an assignment of such
duties to a professional management company or companies reasonably acceptable
to Agent in advance) without obtaining the prior written consent of Agent (which
consent shall not be unreasonably withheld), or (iv) without obtaining the prior
written consent of Agent (which consent may be given, withheld or conditioned by
Agent in Agent’s sole discretion), cause or permit the assignment, pledge or
other encumbrance of any of the Operating Contracts or all or any portion of
Borrower’s right, title or interest in the Declaration.  Without limiting the
generality of the preceding sentence, and subject to the terms of this
Agreement, the prior written consent of Agent (as specified above) shall be
required for (A) any transfer of the Encumbered Intervals, the Common Elements
relating to the Encumbered Intervals or any Resort facilities or amenities or
any part thereof made to a subsidiary or Affiliate or otherwise, (B) any
transfer of all or any part of the Encumbered Intervals, the Common Elements
relating to the Encumbered Intervals or any Resort facilities or amenities by
Borrower to its stockholders or Affiliates or vice versa, and (C) any corporate
merger or consolidation, disposition or other reorganization, except as
permitted in Section 7.1(c) hereof.  In the event that Agent is willing to
consent to a transfer which would otherwise be prohibited by this Section 7.2(b)
Agent may condition its consent on such terms as it desires, including, without
limitation, an increase in the Interest Rate and the requirement that Borrower
pay a transfer fee, together with any expenses incurred by Agent in connection
with the granting of such consent (including, without limitation, attorneys’
fees and expenses).  If Borrower violates the terms of this Section 7.2(b), in
addition to any other rights or remedies which Agent may have herein, in any
other Loan Document, or at law or in equity, Agent may by written notice to
Borrower increase, effective immediately as of the date of such violation, the
Interest Rate to the Default Rate.

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(c)            Use of Lender or Agent’s Name.  Borrower will not, and will not
permit any Affiliate to, without the prior written consent of Agent, such Lender
or a Participant, use the name of Agent, any Lender or any Participant or the
name of any affiliate of Agent, any Lender or any Participant in connection with
any of their respective businesses or activities, except in connection with
internal business matters and as required in dealings with governmental
agencies.
 
(d)            Transactions with Affiliates.  Except as provided in the SPV
Documents, without the prior written consent of Agent, which shall not
unreasonably be withheld, Borrower will not enter into any transaction with any
Affiliate in connection with the Resorts, including, without limitation,
relating to the purchase, sale or exchange of any assets or properties or the
rendering of any service, except in the ordinary course of, and pursuant to the
reasonable requirements of, the operations of the Resorts and upon fair and
reasonable terms.
 
(e)            Restrictive Covenants.  Borrower will not without Agent’s prior
written consent seek, consent to, or otherwise acquiesce in, any change in any
private restrictive covenant, planning or zoning law or other public or private
restriction, which would limit or alter the use of the Resorts.
 
(f)            Subordinated Obligations.  Borrower will not, directly or
indirectly, (i) permit any payment to be made in respect of any indebtedness,
liabilities or obligations, direct or contingent (the “Subordinated Debt”) to
any of its shareholders or their affiliates or which are subordinated by the
terms thereof or by separate instrument to the payment of principal of, and
interest on, the Note; (ii) permit the amendment, rescission or other
modification of any such subordination provisions of any of Borrower’s
subordinated obligations in such a manner as to affect adversely the Lien in and
to the Collateral or Agent’ senior priority position and entitlement as to
payment and rights with respect to the Note and the Obligations, or (iii) permit
the prepayment or redemption, except for mandatory prepayments, of all or any
part of Borrower’s obligations to its shareholders, or of any subordinated
obligations of Borrower except in accordance with the terms of such
subordination.  Notwithstanding anything to the contrary in this Section 7.2(f),
so long as Borrower’s Tangible Net Worth remains in compliance with
Section 7.1(y)(i) hereof, Borrower may: (i) retire unsecured subordinated debt,
and/or (ii) declare dividends, buy back stock, and perform other equity
transactions.

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(g)           Timeshare Regime.  Without Agent’s prior written consent, Borrower
shall not amend, modify or terminate the Declarations or other Timeshare
Documents, or any other restrictive covenants, agreements or easements regarding
the Resorts (except for routine non-substantive modifications which have no
impact on the Collateral).  Except as otherwise provided herein, Borrower shall
not assign its rights as developer under the Declarations without Agent’s prior
written consent, or file or permit to be filed any additional covenants,
conditions, easements or restrictions against or affecting the Resorts (or any
portion thereof) without Agent’s prior written consent, which consent shall not
be unreasonably withheld.
 
(h)           Name Change.  Borrower will not change its name or state of
organization.
 
(i)            Collateral.  Borrower shall not take any action (nor permit or
consent to the taking of any action) which might impair the value of the
Collateral or any of the rights of Agent or any Lender in the Collateral, nor
shall Borrower cause or permit any amendment to or modification of the form or
terms of any of the Pledged Notes Receivable, Mortgages or, except as
specifically provided herein above, the other Timeshare Documents.
 
(j)            Marketing/Sales.  Borrower shall not market, attempt to sell or
sell or permit or justify any sales or attempted sales of any Intervals except
in compliance with the Timeshare Act and Applicable Laws in state and other
jurisdictions where marketing, sales or solicitation activities occur.
 
(k)            Modification of Other Documents.  Borrower shall not amend or
modify the Standby Servicing Agreement, without the prior written consent of
Agent, which consent shall not be unreasonably withheld.
 
(l)            Declarant’s Rights and Management Agreements.  Borrower
covenants, pledges and agrees that until the Loan and all other amounts due and
owing under the this Agreement and the other Loan Documents are paid in full
Borrower will not, voluntarily or involuntarily, directly or indirectly,
mortgage, pledge, assign, sell, transfer, hypothecate, encumber, convey or grant
a security interest in  any: (i) contract or agreement, whether written, oral or
otherwise, whether now or hereafter existing, including any management or
operating contract and agreement, between Borrower or any Affiliate of the
Borrower and the governing body of any Resort, with respect to the management
and operation of the Resort; or (ii) any rights of the Declarant (the “Declarant
Rights”) arising under the Declaration creating any Resort, or under the Bylaws
for the Resort, whether now or hereafter existing.
 
(m)           Modifications of Documents, Additional Loan Facility Documents,
Silverleaf Finance II Documents and Other Debt Instruments.  Nothing contained
herein shall prohibit or limit Borrower’s ability to amend or modify any of the
CSF Documents or any of the WFF Documents or any of the TFC Documents or any of
the Silverleaf Finance II Documents or any of the UBS Documents or documents
evidencing any other indebtedness of Borrower, provided Borrower provides Agent
with a copy of the fully executed loan documents promptly within ten (10) days
after execution.
 
(n)           Change in Certain Accounting Practices.  Borrower covenants,
pledges and agrees that until the Loan and all other amounts due and owing under
the this Agreement and the other Loan Documents are paid in full Borrower will
not, voluntarily or involuntarily, directly or indirectly, without the prior
written consent of Agent and each Lender, make any change to the existing
policies of Borrower in connection with its accounting for delinquent accounts.

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Section 8-Events Of Default
 
8.1           Nature of Events.  An “Event of Default” shall exist if any of the
following shall occur:
 
(a)           Payments.  If Borrower shall fail to make, as and when due, any
payment or mandatory prepayment of principal, interest, fees or other amounts
with respect to the Loan and such failure shall continue for five (5) days after
notice of such failure is provided by Agent.
 
(b)           Covenant Defaults.  If Borrower shall fail to perform or observe
any covenant, agreement or warranty contained in this Agreement or in any of the
Loan Documents, (other than with respect to: (i) the failure to make timely
payments in respect of the Loan as provided in Section 8.1(a) hereof; (ii) the
failure to deliver payments made under the Pledged Notes Receivable directly to
Agent as required pursuant to Section 2.3 hereof as provided in Section 8.1(h)
hereof; or (iii) violation of: (y) the financial covenants in Section 7.1(y)
hereof; or (z) any negative covenants in Section 7.2 hereof) and, such failure
shall continue for fifteen (15) days after notice of such failure is provided by
Agent, provided however, that if Borrower commences to cure such failure within
such 15 day period, but, because of the nature of such failure, cure cannot be
completed within 15 days notwithstanding diligent effort to do so, then,
provided Borrower diligently seeks to complete such cure, an Event of Default
shall not result unless such failure continues for a total of thirty (30) days
and provided further that it shall not be a Default or an Event of Default, if
during the initial sixty (60) days after the Closing Date Borrower is not able
to achieve compliance with all covenants relating to the Collateral.
 
(c)           Warranties or Representations.  If any representation or other
statement made by or on behalf of Borrower in this Agreement, in any of the Loan
Documents or in any instrument furnished in compliance with or in reference to
the Loan Documents, is false, misleading or incorrect in any material respect as
of the date made or reaffirmed.
 
(d)           Enforceability of Liens.  If any lien or security interest granted
by Borrower to Agent in connection with the Loan is or becomes invalid or
unenforceable or is not, or ceases to be, a perfected first priority lien or
security interest, as applicable, in favor of Agent, encumbering the asset which
it is intended to encumber, and Borrower fails to cause such lien or security
interest to become a valid, enforceable, first and prior lien or security
interest in a manner satisfactory to Agent within ten (10) days after Agent
delivers written notice thereof to Borrower.
 
(e)           Involuntary Proceedings.  If a case is commenced or a petition is
filed against Borrower under any Debtor Relief Law; a receiver, liquidator or
trustee of Borrower or of any material asset of Borrower is appointed by court
order and such order remains in effect for more than forty-five (45) days; or if
any material asset of Borrower is sequestered by court order and such order
remains in effect for more than forty-five (45) days.
 
(f)           Proceedings.  If Borrower voluntarily seeks, consents to or
acquiesces in the benefit of any provision of any Debtor Relief Law, whether now
or hereafter in effect; consents to the filing of any petition against it under
such law; makes an assignment for the benefit of its creditors; admits in
writing its inability to pay its debts generally as they become due; or consents
or suffers to the appointment of a receiver, trustee, liquidator or conservator
for it, or any part of its, assets.
 
(g)           Attachment, Judgment, Tax Liens.  The issuance, filing, levy or
seizure against the Collateral, or, with respect to the Resorts or the
Obligations, against Borrower of one or more attachments, injunctions,
executions, tax liens or judgments for the payment of money cumulatively in
excess of $100,000.00, which is not discharged in full or stayed within thirty
(30) days after issuance or filing.

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(h)           Failure to Deposit Proceeds.  If Borrower shall fail to deliver
payments made under the Pledged Notes Receivable directly to Agent as required
pursuant to Section 2.3 hereof, or if Borrower shall take any other act which
Agent or any Lender shall deem to be a conversion of the Collateral or
fraudulent with respect to Agent or any Lender.
 
(i)            Timeshare Documents.  If the Declaration, any of the other
documents creating or governing the Resorts, its timeshare regime, or the
Timeshare Owners’ Association, or the restrictive covenants with respect to the
Resorts, shall be terminated, amended or modified without Agent’s prior written
consent (except for routine non-substantive modifications which have no impact
on the Collateral).
 
(j)            Removal of Collateral.  If Borrower conceals, removes, transfers,
conveys, assigns or permits to be concealed, removed, transferred, conveyed or
assigned, any of the Collateral in violation of the terms of the Loan Documents
or with the intent to hinder, delay or defraud its creditors or any of them
including, without limitation, Agent or any Lender.
 
(k)            Other Defaults.  If a material default shall occur in any of the
covenants or Obligations set forth in any of the Loan Documents.
 
(l)            Material Adverse Change.  Any material adverse change in the
financial condition of Borrower or in the condition of the Collateral.  For
purposes of this provision, a decline in the net worth of Borrower of
$500,000.00 or less shall not be considered a material adverse change.
 
(m)           Default by Borrower in Other Agreements.  Any default as defined
in the applicable loan agreement, by Borrower (i) in the payment of any
indebtedness to any lender, including any indebtedness owed under the CSF
Facility, the UBS Facility, the TFC Facility, the TFC Conduit Loan or the WFF
Facility; (ii) in the payment or performance of other indebtedness for borrowed
money or obligations secured by any part of the Resort; (iii) in the payment or
performance of other material indebtedness or obligations (material indebtedness
or obligations being defined for purposes of this provision as any indebtedness
or obligation in excess of $200,000) where such default accelerates or permits
the acceleration (after the giving of notice or passage of time or both) of the
maturity of such indebtedness, or permits the holders of such indebtedness to
elect a majority of the board of directors of Borrower (whether or not such
default[s] have been waived by such holder) or (iv) the acceleration by CSF
under the CSF Documents, UBS under the UBS Documents, TFC under the TFC
Documents or the Silverleaf Finance II Documents, or WFF under the WFF
Documents, or the bondholders of their respective credit facilities.
 
(n)           Use of Resorts.  Any act or failure to act by Borrower which
materially and adversely limits the rights of Purchasers to use Common Elements,
and related or appurtenant easement, access and use rights and benefits of any
of the Resorts, including but not limited to a default by Borrower or any
Affiliate under any loan document or Declaration to which Borrower or any
Affiliate is a party.
 
(o)           Violation of Negative Covenants.  Borrower violates any negative
covenants set forth in Section 7.2 hereof.
 
(p)           Violation of Financial Covenants.  Borrower violates any financial
covenants set forth in Section 7.1(y) hereof.
 

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(q)           Use of Loan Proceeds.  If the proceeds of any Advance are used in
contravention of Section 6.11 hereof.

Section 9-Remedies
 
9.1           Remedies Upon Default.  Should an Event of Default occur, Agent on
behalf of each Lender, may, take any one or more of the actions described in
this Section 9, all without notice to Borrower:
 
(a)           Acceleration.  Without demand or notice of any nature whatsoever,
declare the unpaid balance of the Loans, or any part thereof, immediately due
and payable, whereupon the same shall be due and payable.
 
(b)           Termination of Obligation to Advance.  Terminate any obligation of
Lenders to lend under this Agreement in its entirety, or any portion of any such
commitment, to the extent Agent shall deem appropriate, all without notice to
Borrower.
 
(c)           Judgment.  Reduce each Lender’s claim to judgment, foreclose or
otherwise enforce each Lender’s security interest in all or any part of the
Collateral by any available judicial or other procedure under law.
 
(d)           Sale of Collateral.  After notification, if any, provided for in
Section 9.2 hereof, Agent may sell or otherwise dispose of, at the office of
Agent, or elsewhere, as chosen by Agent, all or any part of the Collateral, and
any such sale or other disposition may be as a unit or in parcels, by public or
private proceedings, and by way of one or more contracts (it being agreed that
the sale of any part of the Collateral shall not exhaust Agent’s power of sale,
but sales may be made from time to time until all of the Collateral has been
sold or until the Obligations have been paid in full and fully performed), and
at any such sale it shall not be necessary to exhibit the Collateral.  Borrower
hereby acknowledges and agrees that a private sale or sales of the Collateral,
after notification as provided for in Section 9.2 hereof, shall constitute a
commercially reasonable disposition of the Collateral sold at any such sale or
sales, and otherwise, commercially reasonable action on the part of Agent.
 
(e)           Retention of Collateral.  At its discretion, retain such portion
of the Collateral as shall aggregate in value to an amount equal to the
aggregate amount of the Loans, in satisfaction of the Obligations, whenever the
circumstances are such that Agent is entitled on behalf of Lenders and elects to
do so under applicable law.
 
(f)            Receiver.  Apply by appropriate judicial proceedings for
appointment of a receiver for the Collateral, or any part thereof, and Borrower
hereby consents to any such appointment.
 
(g)           Purchase of Collateral.  Buy the Collateral at any public or
private sale.
 
(h)           Exercise of Other Rights.  Agent on behalf of each Lender, shall
have all the rights and remedies of a secured party under the Code and other
legal and equitable rights to which it may be entitled, including, without
limitation, and without notice to Borrower, the right to continue to collect all
payments made on the Pledged Notes Receivable, and to apply such payments to the
Obligations, and to sue in its own name the maker of any defaulted Pledged Notes
Receivable.  Agent may also exercise any and all other rights or remedies
afforded by any other Applicable Laws or by the Loan Documents as Agent shall
deem appropriate, at law, in equity or otherwise, including, but not limited to,
the right to bring suit or other proceeding, either for specific performance of
any covenant or condition contained in the Loan Documents or in aid of the
exercise of any right or remedy granted to Agent in the Loan Documents.  Agent
shall also have the right to require Borrower to assemble any of the Collateral
not in Agent’s possession, at Borrower’s expense, and make it available to Agent
at a place to be determined by Agent which is reasonably convenient to both
parties, and Agent shall, on behalf of the Lenders, have the right to take
immediate possession of all of the Collateral, and may enter the Resorts or any
of the premises of Borrower or wherever the Collateral shall be located, with or
without process of law wherever the Collateral may be, and, to the extent such
premises are not the property of Agent, to keep and store the same on said
premises until sold (and if said premises be the property of Borrower, Borrower
agrees not to charge Agent or any Lender for use and occupancy, rent, or storage
of the Collateral, for a period of at least ninety (90) days after sale or
disposition of the Collateral).

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(i)        Replacement of Servicer.  Without demand or notice of any nature
whatsoever, upon an Event of Default, Agent may terminate any then existing
servicing agreement and replace any then existing Servicer with the Standby
Servicer, pursuant to the terms of the Standby Servicing Agreement of even date
herewith, or such other servicer as Agent may select in its Permitted
Discretion.  
 
9.2           Notice of Sale.  Reasonable notification of time and place of any
public sale of the Collateral or reasonable notification of the time after which
any private sale or other intended disposition of the Collateral is to be made
shall be sent to Borrower and to any other person entitled under the Code to
notice; provided, however, that if the Collateral threatens to decline speedily
in value or is of a type customarily sold on a recognized market, Agent may sell
or otherwise dispose of the Collateral without notification, advertisement or
other notice of any kind.  It is agreed that notice sent not less than five (5)
calendar days prior to the taking of the action to which such notice relates is
reasonable notification and notice for the purposes of this Section 9.2.  Agent
shall have the right to bid at any public or private sale on behalf of
Lenders.  Out of money arising from any such sale, Agent shall retain an amount
equal to all of its costs and charges, including attorneys’ fees for advice,
counsel or other legal services or for pursuing, reclaiming, seeking to reclaim,
taking, keeping, removing, storing and advertising such Collateral for sale,
selling same and any and all other charges and expenses in connection therewith
and in satisfying any prior Liens thereon.  Any balance shall be applied upon
the Obligations, and in the event of deficiency, Borrower shall remain liable to
Lenders.  In the event of any surplus, such surplus shall be paid to Borrower or
to such other Persons as may be legally entitled to such surplus.  If, by reason
of any suit or proceeding of any kind, nature or description against Borrower,
or by Borrower or any other party against Agent or any Lender, which in Agent’s
sole discretion makes it advisable for Agent to seek counsel for the protection
and preservation of Lenders’ security interest, or to defend the interest of
Lenders, such expenses and counsel fees shall be allowed to Agent and the same
shall be made a further charge and Lien upon the Collateral.
 
In view of the fact that federal and state securities laws may impose certain
restrictions on the methods by which a sale of Collateral comprised of
Securities may be effected after an Event of Default, Borrower agrees that upon
the occurrence or existence of an Event of Default, Agent may, on behalf of
Lenders, from time to time, attempt to sell all or any part of such Collateral
by means of a private placement restricting the bidding and prospective
purchasers to whose who will represent and agree that they are purchasing for
investment only and not for, or with a view to, distribution.  In so doing,
Agent may solicit offers to buy such Collateral, or any part of it for cash,
from a limited number of investors deemed by Agent, in its reasonable judgment,
to be responsible parties who might be interested in purchasing the Collateral,
and if Agent solicits such offers from not less than two (2) such investors,
then the acceptance by Agent of the highest offer obtained therefrom shall be
deemed to be a commercially reasonable method of disposition of such Collateral.

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9.3           Application of Collateral; Termination of Agreements.  Upon the
occurrence of any Event of Default: (i) each Lender may, with or without
proceeding with such sale or foreclosure or demanding payment or performance of
the Obligations, without notice, terminate each Lender’s further performance
under this Agreement or any other agreement or agreements between Lender and
Borrower, without further liability or obligation by Agent or any Lender; (ii)
Agent may, on behalf of Lenders, at any time, appropriate and apply on any
Obligations any and all Collateral in its, the Custodian’s, or the Lockbox
Agent’s possession and (iii) each Lender may apply any and all balances,
credits, deposits, accounts, reserves, indebtedness or other moneys due or owing
to Borrower held by Lender hereunder or under any other financing agreement or
otherwise, whether accrued or not.  Neither such termination, nor the
termination of this Agreement by lapse of time, the giving of notice or
otherwise, shall absolve, release or otherwise affect the liability of Borrower
in respect of transactions prior to such termination, or affect any of the
Liens, security interests, rights, powers and remedies of Agent or Lenders, but
they shall, in all events, continue until all of the Obligations are satisfied.
 
9.4           Rights of Agent Regarding Collateral.  In addition to all other
rights possessed by Agent or Lenders, Agent, at its option, may on behalf of
each Lender from time to time after there shall have occurred an Event of
Default, and so long as such Event of Default remains uncured, at its sole
discretion, take the following actions:
 
(a)           Transfer all or any part of the Collateral into the name of Agent
or its nominee;
 
(b)           Take control of any proceeds of any of the Collateral;
 
(c)           Extend or renew the Loan and grant releases, compromises or
indulgences with respect to the Obligations, any portion thereof, any extension
or renewal thereof, or any security therefor, to any obligor hereunder or
thereunder; and
 
(d)           Exchange certificates or instruments representing or evidencing
the Collateral for certificates or instruments of smaller or larger
denominations for any purpose consistent with the terms of this Agreement.
 
9.5           Delegation of Duties and Rights.  Agent may execute any of its
duties and/or exercise any of its rights or remedies under the Loan Documents by
or through its officers, directors, employees, attorneys, agents or other
representatives.  Agent or any Lender or Liberty Bank may use Wellington to
perform certain services in connection with the transactions contemplated under
the Loan Documents.  Agent or any Lender or Liberty Bank may pay Wellington or
any other Persons performing services for Agent such compensation as Agent or
any Lender or Liberty Bank may elect.
 
9.6           Agent and/or Lenders not in Control.  Except as expressly provided
herein or in any Loan Document, none of the covenants or other provisions
contained in this Agreement or in any Loan Document shall give Agent or any
Lender the right or power to exercise control over the affairs and/or management
of Borrower.
 
9.7           Waivers.  The acceptance by Agent or any Lender at any time and
from time to time of partial payments of the Loan or performance of the
Obligations shall not be deemed to be a waiver of any Event of Default then
existing.  No waiver by Agent or any Lender of any Event of Default shall be
deemed to be a waiver of any other or subsequent Event of Default.  No delay or
omission by Agent or any Lender in exercising any right or remedy under the Loan
Documents shall impair such right or remedy or be construed as a waiver thereof
or an acquiescence therein, nor shall any single or partial exercise of any such
right or remedy preclude other or further exercise thereof, or the exercise of
any other right or remedy under the Loan Documents or otherwise.  Further,
except as otherwise expressly provided in this Agreement or by applicable law,
Borrower and each and every surety, endorser, guarantor and other party liable
for the payment or performance of all or any portion of the Obligations,
severally waive notice of the occurrence of any Event of Default, presentment
and demand for payment, protest, and notice of protest, notice of intention to
accelerate, acceleration and nonpayment, and agree that their liability shall
not be affected by any renewal or extension in the time of payment of the Loan,
or by any release or change in any security for the payment or performance of
the Loan, regardless of the number of such renewals, extensions, releases or
changes.

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9.8           Cumulative Rights.  All rights and remedies available to any
Lender or Agent under the Loan Documents shall be cumulative of and in addition
to all other rights and remedies granted under any of the Loan Document, at law
or in equity, whether or not the Loan is due and payable and whether or not
Agent shall have instituted any suit for collection or other action in
connection with the Loan Documents.
 
9.9           Expenditures by Agent or Lender.  Any sums expended by or on
behalf of Agent or by Lenders pursuant to the exercise of any right or remedy
provided herein shall become part of the Obligations and shall bear interest at
the Default Rate, from the date of such expenditure until the date repaid.
 
9.10         Diminution in Value of Collateral.  Neither Agent nor any Lender
shall have any liability or responsibility whatsoever for any diminution or loss
in value of any of the Collateral, specifically including that which may arise
from Agent or any Lender’s negligence or inadvertence, whether such negligence
or inadvertence is the sole or concurring cause of any damage.
 
9.11         Agent’s Knowledge.  Agent shall not be deemed to have knowledge or
notice of the occurrence of any Event of Default unless Agent has actual
knowledge of the Event of Default or has received a notice from a Lender or
Borrower referring to this Agreement and describing such Event of Default.  Each
Lender agrees that upon learning of the existence of an Event of Default, it
will promptly notify Agent thereof in writing.  Any such notice by a Lender,
shall be in writing sufficient to identify the nature of the Event of Default.
 
9.12         Lender’s Enforcement Rights.  Each Lender has assigned to Agent its
absolute and unconditional right to enforce the payment of its Note.  No Lender
may unilaterally enforce any Lien or security interest in the Collateral, or
bring suit against Borrower to enforce such Lender’s rights hereunder or under
its Note.
 
Section 10-Certain Rights Of Lender
 
10.1         Protection of Collateral.  Agent on behalf of each Lender may at
any time and from time to time take such actions as Agent deems necessary or
appropriate to protect the Lender’s Liens and security interests in and to
preserve the Collateral, and to establish, maintain and protect the
enforceability of Lender’s rights with respect thereto, all at the expense of
Borrower.  Borrower agrees to cooperate fully with all of Agent’s efforts to
preserve the Collateral and Lender’s Liens, security interests and rights and
will take such actions to preserve the Collateral and Lender’s Liens, security
interests and rights as Agent may direct, including, without limitation, by
promptly paying upon Lender’s demand therefor, all documentary stamp taxes or
other taxes that may be or may become due in respect of any of the
Collateral.  All of Agent’s expenses of preserving the Collateral and each
Lender’s liens and security interests and rights therein shall be added to the
Loan.

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10.2         Performance by Agent.  If Borrower fails to perform any agreement
contained herein, Agent may itself perform, or cause the performance of, such
agreement, and the expenses of Agent or Liberty Bank incurred in connection
therewith shall be payable by Borrower under Section 10.5 hereof.  In no event,
however, shall Agent or any Lender have any obligation or duties whatsoever to
perform any covenant or agreement of Borrower contained herein or in any of the
Loan Documents, Timeshare Documents or Operating Contracts, and any such
performance by Agent shall be wholly discretionary with Agent.  The performance
by Agent, of any agreement or covenant of Borrower on any occasion shall not
give rise to any duty on the part of Agent to perform any such agreements or
covenants on any other occasion or at any time.  In addition, Borrower
acknowledges that neither Agent nor any Lender shall at any time or under any
circumstances whatsoever have any duty to Borrower or to any third party to
exercise any of Lender’s rights or remedies hereunder.
 
10.3         No Liability of Agent or Lender.  Neither the acceptance of this
Agreement by Agent and each Lender, nor the exercise of any rights hereunder by
Lender or Agent on its behalf, shall be construed in any way as an assumption by
Agent or any Lender of any obligations, responsibilities or duties of Borrower
arising in connection with any Resort or under the Timeshare Documents or
Timeshare Acts, or under any of the Operating Contracts, or in connection with
any other business of Borrower, or the Collateral, or otherwise bind Agent or
any Lender to the performance of any obligations with respect to any Resort or
the Collateral; it being expressly understood that neither Agent nor Lender
shall be obligated to perform, observe or discharge any obligation,
responsibility, duty, or liability of Borrower with respect to any Resort or any
of the Collateral, or under any of the Timeshare Documents, the Timeshare Acts
or under any of the Operating Contracts, including, but not limited to,
appearing in or defending any action, expending any money or incurring any
expense in connection therewith.  Without limitation of the foregoing, neither
this Agreement, any action or actions on the part of Agent taken hereunder,
prior to or following the occurrence of an Event of Default shall constitute an
assumption by Agent of any obligations of Borrower with respect to any Resort or
any documents or instruments executed in connection therewith, and Borrower
shall continue to be liable for all of its obligations thereunder or with
respect thereto.  Borrower agrees to indemnify, protect, defend and hold Agent
and each Lender harmless from and against any and all claims, demands, causes of
action, losses, damages, liabilities, suits, costs and expenses, including,
without limitation, attorneys’ fees and court costs, asserted against or
incurred by Agent and each Lender by reason of, arising out of, or connected in
any way with (i) any failure or alleged failure of Borrower to perform any of
its covenants or obligations with respect to each Resort or to the Purchasers of
any of the Intervals, (ii) a breach of any certification, representation,
warranty or covenant of Borrower set forth in any of the Loan Documents,
(iii) the ownership of the Pledged Notes Receivable and the rights, titles and
interests assigned hereby, or intended so to be, (iv) the debtor-creditor
relationships between Borrower on the one hand, and the Agent or Lender, on the
other, or (v) the operation of the Resorts or sale of Intervals.  The
obligations of Borrower to indemnify, protect, defend and hold Agent and each
Lender harmless as provided in this Agreement are absolute, unconditional,
present and continuing, and shall not be dependent upon or affected by the
genuineness, validity, regularity or enforceability of any claim, demand or suit
from which Agent or any Lender is indemnified.  The indemnity provisions in this
Section 10.3 shall survive the satisfaction of the Obligations and termination
of this Agreement, and remain binding and enforceable against the Borrower, or
its successors or assigns.  Borrower hereby waives all notices with respect to
any losses, damages, liabilities, suits, costs and expenses, and all other
demands whatsoever hereby indemnified, and agrees that its obligations under
this Agreement shall not be affected by any circumstances, whether or not
referred to above, which might otherwise constitute legal or equitable
discharges of its obligations hereunder.

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10.4          Right to Defend Action Affecting Security.  Agent may, at
Borrower’s expense, appear in and defend any action or proceeding at law or in
equity which Agent in good faith believes may affect the security interests
granted under this Agreement, including without limitation, with respect to the
Collateral or the value of thereof or each Lender’s rights under any of the Loan
Documents.
 
10.5          Expenses.  All expenses payable by Borrower, under any provision
of this Agreement shall be an Obligation of the Borrower and shall be paid by
Borrower to Agent, upon demand, and shall bear interest at the Default Rate from
the date of expense until repaid by Borrower.
 
10.6          Lender’s Right of Set-Off.  Each Lender shall have the right to
set-off against any Collateral any Obligations then due and unpaid by Borrower
provided that Lender remits to Agent all such sums received as a result of such
set-off so that Agent may insure the distribution thereof in accordance with
each Lenders Pro Rata Payment Percentage.
 
10.7          No Waiver.  No failure or delay on the part of Agent in exercising
any right, remedy or power under this Agreement or in giving or insisting upon
strict performance by Borrower hereunder or in giving notice hereunder shall
operate as a waiver of the same or any other power or right, and no single or
partial exercise of any such power or right shall preclude any other or further
exercise thereof or the exercise of any other such power or right.  Agent,
notwithstanding any such failure, shall have the right thereafter to insist upon
the strict performance by Borrower of any and all of the terms and provisions of
this Agreement to be performed by Borrower.  The collection and application of
proceeds, the entering and taking possession of the Collateral, and the exercise
by Agent of the rights of Lenders contained in the Loan Documents and this
Agreement shall not cure or waive any default, or affect any notice of default,
or invalidate any acts done pursuant to such notice.  No waiver by Agent or any
Lender of any breach or default of or by any party hereunder shall be deemed to
alter or affect Lender’s rights hereunder with respect to any prior or
subsequent default.
 
10.8          Right of Agent to Extend Time of Payment, Substitute, Release
Security, Etc.  Without affecting the liability of any Person or entity
including without limitation, for the payment of any of the Obligations or
without affecting or impairing Lender’s Lien on the Collateral, or the remainder
thereof, as security for the full amount of the Loan unpaid and the Obligations,
Agent may from time to time, without notice: (a) release any Person liable for
the payment of the Loan, (b) extend the time or otherwise alter the terms of
payment of the Loan, (c) accept additional security for the Obligations of any
kind, including deeds of trust or mortgages and security agreements, (d) alter,
substitute or release any property securing the Obligations, (e) realize upon
any collateral for the payment of all or any portion of the Loan in such order
and manner as it may deem fit, or (f) join in any subordination or other
agreement affecting this Agreement or the lien or charge thereof.
 
10.9          Additional Lender, Assignments and Participations
 
(a)           Any Lender may assign and participate and delegate to one or more
assignees or participants (each an “Assignee”) all, or any ratable part of all,
of the Obligations and the other rights and obligations of Lender hereunder and
under the other Loan Documents; provided, however, that each Lender so doing
shall give Agent concurrent written notice of each such assignment and provided
further that Agent shall continue to deal solely and directly only with each
Lender in connection with the interest so assigned to an Assignee.  In the event
that a Lender participates or sells its interest in the Loan to any other
Person, Lender shall have no further responsibilities or liabilities in
connection with the sold or participated portion of the  Loan, including without
limitation the obligation to fund Advances related to such sold or participated
portions, after the date of such sale or participation.  All of such
responsibilities and liabilities after the date of such sale shall be those of
the Participant or the purchaser of Lender’s interest.

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(b)           In connection with any such assignment or participation or
proposed assignment or participation, any Lender may disclose all documents and
information which it now or hereafter may have relating to Borrower and its
businesses.
 
(c)           Any other provision in this Agreement notwithstanding, any Lender
which is a banking institution may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this Agreement in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Bank or U.S. Treasury Regulation 31 CFR §203.24, and such Federal
Reserve Bank may enforce sole through Agent such pledge or security interest in
any manner permitted under Applicable Laws but at all times subject to the
rights and limitations contained herein.
 
(d)           Agent and Borrower acknowledge that as of the date hereof, each
Lender and each Participant is identified on Schedule 1.0 hereof.  Subsequent to
the date hereof, in the event that Agent desires to allow another party to
executed a joinder agreement or become a Lender under the provisions of this
Agreement, or to become a Participant of a Lender, Borrower shall have  a right
of prior approval of such action, provided that Borrower shall not unreasonably
withhold its approval of any additional Lender or Participant and provided
further that Borrower’s non response for a period of ten (10) Business Days
after being notified by Agent of such action shall be deemed to be approval of
Borrower to such action of Agent and/or Lender.
 
(e)           Each Lender is severally bound by this Agreement.  There shall be
no joint obligations of Lenders under this Agreement.  No Lender shall be
responsible for the failure by any other Lender to perform its obligations under
this Agreement or any of the Loan Documents.  The Commitment of any Lender shall
not be increased or decreased as a result of the failure of any other Lender to
perform its obligations under this Agreement or any of the Loan Documents.  The
failure of any Lender to fund its Commitment under this Agreement shall not
excuse any other Lender from its obligations to fund its Commitment.
 
10.10        Notice to Purchaser.  Borrower authorizes any of Agent, Lockbox
Agent or Servicing Agent (but none of Agent, Lockbox Agent nor Servicing Agent
shall be obligated) to communicate at any time and from time to time with any
Purchaser or any other Person primarily or secondarily liable under a Pledged
Note Receivable with regard to the Lien of Agent thereon and any other matter
relating thereto, and by no later than the Closing Date, Borrower shall deliver
to Agent a notification to the Purchasers executed in blank by Borrower and in
form acceptable to Agent, pursuant to which the Purchasers (or other obligors)
may be directed to remit all payments in respect of the Collateral as Agent may
require.
 
10.11        Collection of the Notes.  Borrower hereby directs and authorizes
each party liable for the payment of the Pledged Notes Receivable, and by no
later than the Closing Date shall direct in writing each such party, to pay each
installment thereon to Lockbox Agent pursuant to the Lockbox Agreement, unless
and until directed otherwise by written notice from Agent or, at Agent’s
direction, from Borrower, after which such parties are and shall be directed to
make all further payments on the Pledged Notes Receivable in accordance with the
directions of Agent.
 
Following the occurrence of an Event of Default, Agent shall have the right to
require that all payments becoming due under the Pledged Notes Receivable be
paid directly to Agent, as agent for Lenders, and Agent is hereby authorized to
receive, collect, hold and apply the same in accordance with the provisions of
this Agreement.  In the event that following the occurrence of an Event of
Default, Agent or Lockbox Agent does not receive any installment of principal or
interest due and payable under any of the Pledged Notes Receivable on or prior
to the date upon which such installment becomes due, Agent may, at its election
(but without any obligation to do so), give or cause Lockbox Agent to give
notice of such default to the defaulting party or parties, and Agent shall have
the right (but not the obligation), subject to the terms of such Notes, to
accelerate payment of the unpaid balance of any of the Pledged Notes Receivable
in default and to foreclose each of the Mortgages securing the payment thereof,
and to enforce any other remedies available to the holder of such Pledged Notes
Receivable with respect to such default.  Borrower hereby further authorizes,
directs and empowers Agent (and Lockbox Agent or any other Person as may be
designated by Agent in writing) to collect and receive all checks and drafts
evidencing such payments and to endorse such checks or drafts in the name of
Borrower and upon such endorsements, to collect and receive the money
therefor.  The right to endorse checks and drafts granted pursuant to the
preceding sentence is irrevocable by Borrower, and the banks or banks paying
such checks or drafts upon such endorsements, as well as the signers of the
same, shall be as fully protected as though the checks or drafts have been
endorsed by Borrower.

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10.12        Power of Attorney.  Borrower does hereby irrevocably constitute and
appoint Agent as Borrower’s true and lawful Agent and attorney-in-fact, with
full power of substitution, for Borrower and in Borrower’s name, place and
stead, or otherwise, to (a) endorse any checks or drafts payable to Borrower in
the name of Borrower and in favor of Agent on behalf of each Lender, (b) to
demand and receive from time to time any and all property, rights, titles,
interests and liens hereby sold, assigned and transferred, or intended so to be,
and to give receipts for same, (c) from time to time to institute and prosecute
in Agent’s own name any and all proceedings at law, in equity, or otherwise,
that Agent may deem proper in order to collect, assert or enforce any claim,
right or title, of any kind, in and to the property, rights, titles, interests
and liens hereby sold, assigned or transferred, or intended so to be, and to
defend and compromise any and all actions, suits or proceedings in respect of
any of the said property, rights, titles, interests and liens, (d) upon an Event
of Default to change the Borrower’s post office mailing address, and
(e) generally to do all and any such acts and things in relation to the
Collateral as Agent shall in good faith deem advisable.  Borrower hereby
declares that the appointment made and the powers granted pursuant to this
Section 10.12 are coupled with an interest and are and shall be irrevocable by
Borrower in any manner, or for any reason, unless and until a release of the
same is executed by Agent and duly recorded in the appropriate public records of
Dallas County, Texas.
 
10.13        Relief from Automatic Stay, Etc.  To the fullest extent permitted
by law, in the event the Borrower shall make application for or seek relief or
protection under the federal bankruptcy code (“Bankruptcy Code”) or other Debtor
Relief Laws, or in the event that any involuntary petition is filed against the
Borrower under such Code or other Debtor Relief Laws, and not dismissed with
prejudice within 45 days, the automatic stay provisions of Section 362 of the
Bankruptcy Code are hereby modified as to Agent and each Lender to the extent
necessary to implement the provisions hereof permitting set-off and the filing
of UCC Financing Statements or other instruments or documents; and Agent and
each Lender shall automatically and without demand or notice (each of which is
hereby waived) be entitled to immediate relief from any automatic stay imposed
by Section 362 of the Bankruptcy Code or otherwise, on or against the exercise
of the rights and remedies otherwise available to Lenders as provided in the
Loan Documents.
 
Section 11-Term Of Agreement
 
This Agreement shall continue in full force and effect and the security
interests granted hereby and the duties, covenants and liabilities of Borrower
hereunder and all the terms, conditions and provisions hereof relating thereto
shall continue to be fully operative until all of the Obligations have been
satisfied in full.  Borrower expressly agrees that if Borrower makes a payment
to Agent on behalf of any Lender, which payment or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, or
otherwise required to be repaid to a trustee, receiver or any other party under
any Debtor Relief Laws, state or federal law, common law or equitable cause,
then to the extent of such repayment, the Obligations or any part thereof
intended to be satisfied and the Liens provided for hereunder securing the same
shall be revived and continued in full force and effect as if said payment had
not been made.

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Section 12-Miscellaneous
 
12.1           Notices.  All notices, requests and other communications to any
party hereunder shall be in writing and shall be given to such party at its
address set forth below or at such other address as such party may hereafter
specify for the purpose of notice to Agent, any Lender or Borrower.  Each such
notice, request or other communication shall be effective (a) if given by mail,
when such notice is deposited in the United States Mail with first class postage
prepaid, addressed as aforesaid, provided that such mailing is by registered or
certified mail, return receipt requested, (b) if given by overnight delivery,
when deposited with a nationally recognized overnight delivery service such as
Federal Express or Airborne with all fees and charges prepaid, addressed as
provided below, or (c) if given by any other means, when delivered at the
address specified in this Section 12.1.
 
If to Borrower:
 
Silverleaf Resorts, Inc.
   
1221 Riverbend Drive, Suite 120
   
Dallas, TX 75221
   
Attn: Mr. Robert Mead, CEO
           
With a Copy to:
 
Meadows, Owens, Collier, Reed, Cousins and Blau
   
3700 Nations Bank Plaza
   
901 Main St.
   
Dallas, TX 75202
   
Attn: George R. Bedell, Esq.
     
If to Lender:
 
Liberty Bank
   
315 Main Street
   
Middletown, Connecticut 06457
   
Attn: Steven J. Zarrella, Vice President
   
Fax No. (860) 344-9217
     
With a Copy to:
 
Polivy & Taschner, LLC
   
Six Central Row, 2nd Floor
   
P.O. Box 230294
   
Hartford, CT  06123-0294
   
Richard B. Polivy, Esq.
   
Dale M. Clayton, Esq.
   
Phone: (860) 560-1180
   
Fax:  (860) 560-1354
   
RPolivy@aol.com
   
dmclaytonesq@sbcglobal.net

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12.2          Survival.  All representations, warranties, covenants and
agreements made by Borrower herein, in the other Loan Documents or in any other
agreement, document, instrument or certificate delivered by or on behalf of
Borrower under or pursuant to the Loan Documents shall be considered to have
been relied upon by Lenders and shall survive the delivery to Lenders of such
Loan Documents (and each part thereof), regardless of any investigation made by
or on behalf of Lenders.
 
12.3          Governing Law and Venue.
 
(a)           THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CONNECTICUT, EXCLUSIVE OF ITS CHOICE OF LAWS
PRINCIPLES.
 
(b)           THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE TRIED AND
LITIGATED IN THE UNITED STATES FEDERAL COURTS LOCATED IN THE DISTRICT OF
CONNECTICUT OR IN THE CONNECTICUT SUPERIOR COURT LOCATED IN MIDDLESEX COUNTY,
CONNECTICUT, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDER’S OPTION, IN THE COURTS
OF ANY JURISDICTION WHERE LENDER ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  BORROWER AND LENDER WAIVE, TO THE
EXTENT PERMITTED UNDER APPLICABLE LAWS, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUMNONCONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12.3(b).
 
12.4           Limitation on Interest.  Agent and each Lender and Borrower
intend to comply at all times with applicable usury laws.  All agreements
between Agent, each Lender and Borrower, whether now existing or hereafter
arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of the maturity of the
Note or otherwise, shall the interest contracted for, charged, received, paid or
agreed to be paid to Agent or any Lender exceed the highest lawful rate
permissible under applicable usury laws.  If, from any circumstance whatsoever
fulfillment of any provision hereof, of the Note or of any other Loan Documents
shall involve transcending the limit of such validity prescribed by any law
which a court of competent jurisdiction may deem applicable hereto, then ipso
facto, the obligation to be fulfilled shall be reduced to the limit of such
validity; and if from any circumstance Agent or any Lender shall ever receive
anything of value deemed interest by applicable law which would exceed the
highest lawful rate, such amount which would be excessive interest shall be
applied to the reduction of the principal of the Loan and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of principal
of the Loan, such excess shall be refunded to Borrower.  All interest paid or
agreed to be paid to Lenders shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread throughout the full period until
payment in full of the principal so that the interest on the Loan for such full
period shall not exceed the highest lawful rate.  Borrower agrees that in
determining whether or not any interest payment under the Loan Documents exceeds
the highest lawful rate, any non-principal payment (except payments specifically
described in the Loan Documents as “interest”) including without limitation,
prepayment fees and late charges, shall to the maximum extent not prohibited by
law, be an expense, fee, premium or penalty rather than interest.  Agent and
each Lender hereby expressly disclaim any intent to contract for, charge or
receive interest in an amount which exceeds the highest lawful rate.  The
provisions of the Note, this Agreement, and all other Loan Documents are hereby
modified to the extent necessary to conform with the limitations and provisions
of this Section 12.4, and this Section 12.4 shall govern over all other
provisions in any document or agreement now or hereafter existing.  This Section
12.4 shall never be superseded or waived unless there is a written document
executed by Agent, each Lender and the Borrower, expressly declaring the usury
limitation of this Agreement to be null and void, and no other method or
language shall be effective to supersede or waive this paragraph.
 

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12.5          Invalid Provisions.  If any provision of this Agreement or any of
the other Loan Documents is held to be illegal, invalid or unenforceable under
present or future laws effective during the term thereof, such provision shall
be fully severable, this Agreement and the other Loan Documents shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof or thereof, and the remaining provisions
hereof or thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
therefrom.  Furthermore, in lieu of such illegal, invalid or unenforceable
provision there shall be added automatically as a part of this Agreement and/or
the Loan Documents (as the case may be) a provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and be legal,
valid and enforceable.
 
12.6          Successors and Assigns.  This Agreement and the other Loan
Documents shall be binding upon and inure to the benefit of Borrower, Agent and
each Lender and their respective successors and assigns; provided that Borrower
may not transfer or assign any of its rights or obligations under this
Agreement, or the other Loan Documents without the prior written consent of
Agent.  This Agreement and the transactions provided for or contemplated
hereunder or under any of the Loan Documents are intended solely for the benefit
of the parties hereto.  No third party shall have any rights or derive any
benefits under or with respect to this Agreement, or the other Loan Documents
except as provided in advance in a writing signed on behalf of Agent and each
Lender.
 
12.7          Amendment.  This Agreement may not be amended or modified, and no
term or provision hereof may be waived, except by written instrument signed by
the Borrower and Agent on behalf of itself and Lenders.
 
12.8          Counterparts; Effectiveness.  This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signature thereto and hereto were on the same instrument.  This
Agreement shall become effective upon Agent’s receipt of one or more
counterparts hereof signed by Borrower.
 
12.9          Lender and Agent Not Fiduciaries.  The relationship between
Borrower, Agent and each Lender is solely that of debtor and creditor, and Agent
and Lenders have no fiduciary or other special relationship with Borrower, and
no term or provision of any of the Loan Documents shall be construed so as to
deem the relationship between Borrower, Agent and Lenders to be other than that
of debtor and creditor.
 
12.10        Return of Notes Receivable.
 
(a)           In the event Borrower complies with its Obligations under
Section 2.4(b) of this Agreement with respect to Pledged Notes Receivable
pursuant to which a default by the Purchaser thereof has occurred, and Borrower
thereafter desires to enforce such Note Receivable against the Purchaser
thereof, then provided that no Event of Default has occurred which has not been
cured to Agent’s satisfaction (as evidenced by a written acceptance of such cure
executed by Agent), and no event has occurred which with notice, the passage of
time or both, would constitute an Event of Default, then within thirty (30) days
after its receipt of a written request from Borrower, Agent shall deliver such
ineligible Note Receivable to Borrower, provided that such delivery shall be for
the sole purpose of enforcing Agent’s rights thereunder and Agent,
notwithstanding such delivery, shall continue to have, on behalf of Lenders, a
first priority security interest in any such note.

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(b)           In the event that all Obligations hereunder are fully satisfied,
then within a reasonable time thereafter, Agent shall endorse the Pledged Notes
Receivable “Pay to the order of Silverleaf Resorts, Inc. without recourse”, and
deliver such Pledged Notes Receivable, together with any other nonrecourse
Collateral reassignment documents requested and prepared by Borrower, at
Borrower’s sole cost and expense.
 
12.11        Accounting Principles.  Where the character or amount of any asset
or liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be determined or made in accordance
with GAAP consistently applied at the time in effect, to the extent applicable,
except where such principles are inconsistent with the requirements of this
Agreement.
 
12.12        Total Agreement.  This Agreement and the other Loan Documents,
including the Exhibits and Schedules to them, is the entire agreement between
the parties relating to the subject matter hereof, incorporates or rescinds all
prior agreements and understandings between the parties hereto relating to the
subject matter hereof, cannot be changed or terminated orally or by course of
conduct, and shall be deemed effective as of the date it is accepted by Agent at
the offices set forth above.  The documents evidencing the Additional Credit
Facility shall remain in full force and effect.
 
12.13        Waiver of Jury Trial.  TO THE FULLEST EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, BORROWER, AGENT AND EACH LENDER HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVE ANY AND ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND OR CLARIFY ANY
RIGHT, POWER, REMEDY OR DEFENSE ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN,
WHETHER SOUNDING IN TORT OR CONTRACT OR OTHERWISE, OR WITH RESPECT TO ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY; AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A JUDGE AND NOT BEFORE A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF BORROWER, AGENT AND LENDER TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.  EACH OF BORROWER, AGENT AND ANY LENDER FURTHER WAIVES
ANY RIGHT TO SEEK TO CONSOLIDATE ANY SUCH LITIGATION IN WHICH A JURY TRIAL HAS
BEEN WAIVED WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL CANNOT OR HAS NOT
BEEN WAIVED.  FURTHER, BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OF AGENT
OR ANY LENDER NOR ANY AGENT’S OR LENDER’S COUNSEL HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT AGENT OR LENDER WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK
TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.  BORROWER ACKNOWLEDGES
THAT THE PROVISIONS OF THIS SECTION 12.13 ARE A MATERIAL INDUCEMENT TO LENDER’S
ACCEPTANCE OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.  BORROWER
ACKNOWLEDGES THAT  IT HAS HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING
THIS SECTION, THAT IT FULLY UNDERSTANDS ITS TERMS, CONTENT AND EFFECT, AND THAT
IT VOLUNTARILY AND KNOWINGLY AGREES TO THE TERMS OF THIS SECTION.

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The waiver and stipulations of Borrower, Agent and each Lender in this
Section 12.13 shall survive the final payment or performance of all of the
Obligations of Borrower and the resulting termination of this Agreement.
 
12.14        Incorporation of Exhibits.  This Agreement, together with all
Exhibits and Schedules hereto, constitute one document and agreement which is
referred to herein by the use of the defined term “Agreement.” Such Exhibits and
Schedules are incorporated herein as to fully set out in this Agreement.  The
definitions contained in any part of this Agreement shall apply to all parts of
this Agreement.
 
12.15        Consent to Advertising and Publicity.  Borrower hereby consents
that Agent and each Lender may issue and disseminate to the public information
describing the credit accommodation entered into pursuant to this Agreement,
including the names and addresses of Borrower and any subsidiaries and
Affiliates, the amount and a general description of Borrower’s business.
 
12.16        Directly or Indirectly.  Where any provision in the Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provisions shall be applicable whether such action is taken
directly or indirectly by such Person.
 
12.17        Headings.  Section headings have been inserted in the Agreement as
a matter of convenience of reference only; such section headings are not a part
of the Agreement and shall not be used in the interpretation of this Agreement.
 
12.18        Gender and Number.  Words of any gender in this Agreement shall
include each other gender and the singular shall mean the plural and vice versa
where appropriate.
 
12.19        Revival and Reinstatement of Obligations.  If the incurrence or
payment of the Obligations by Borrower or the transfer to Agent or any Lender of
any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors’ rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a “Voidable Transfer”), and if any Lender is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that any Lender is required or elects to repay
or restore, and as to all reasonable costs, expenses, and attorneys fees of such
Lender related thereto, the liability of Borrower automatically shall be
revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.
 
12.20        Confidentiality.  Agent and each Lender for itself and an Assignee
of such lender, agrees that material, non-public information regarding Borrower,
its operations, assets, and existing and contemplated Annual Operating Plans
shall be treated by Agent and each Lender in a confidential manner, and shall
not be disclosed by Agent or any Lender to Persons who are not parties to this
Agreement, except:  (a) to attorneys for and other advisors, accountants,
auditors, and consultants to any Lender, (b) to Subsidiaries of Agent or any
Lender and Agent or Lender affiliated entities, provided that any such
Subsidiary or affiliated entity shall have agreed to receive such information
hereunder subject to the terms of this Section 12.20, (c) as may be required by
statute, decision, or judicial or administrative order, rule, or regulation, (d)
as may be agreed to in advance by Borrower or as requested or required by any
Governmental Authority pursuant to any subpoena or other legal process, (e) as
to any such information that is or becomes generally available to the public
(other than as a result of prohibited disclosure by Agent or any Lender), (f) in
connection with any assignment, prospective assignment, sale, prospective sale,
participation or prospective participations, or pledge or prospective pledge of
any Lender’s interest under this Agreement, provided that any such assignee,
prospective assignee, purchaser, prospective purchaser, Participant, prospective
participant, pledgee, or prospective pledgee shall have agreed in writing to
receive such information hereunder subject to the terms of this Section 12.20,
and (g) in connection with any litigation or other adversary proceeding
involving parties hereto which such litigation or adversary proceeding involves
claims related to the rights or duties of such parties under this Agreement or
the other Loan Documents.  The provisions of this Section 12.20 shall survive
for 2 years after the payment in full of the Obligations.  Anything contained
herein or in any other Loan Document to the contrary notwithstanding, the
obligations of confidentiality contained herein and therein, as they relate to
the transactions contemplated hereby, shall not apply to the federal tax
structure or federal tax treatment of such transactions, and each party hereto
(and any employee, representative, of Agent or of any Lender or of any other
party hereto) may disclose to any and all Persons, without limitation of any
kind, the federal tax structure and federal tax treatment of such transactions
(including all written materials related to such tax structure and tax
treatment).  The preceding sentence is intended to cause the transactions
contemplated hereby to not be treated as having been offered under conditions of
confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor
provision) of the Treasury Regulations promulgated under Section 6011 of the
IRC, and shall be construed in a manner consistent with such purpose.  In
addition, each party hereto acknowledges that it has no proprietary or exclusive
rights to the tax structure of the transactions contemplated hereby or any tax
matter or tax idea related thereto.

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12.21        Commercial Transaction Waiver. BORROWER ACKNOWLEDGES THAT THIS IS A
“COMMERCIAL TRANSACTION” AS SUCH IS DEFINED IN CHAPTER 903a OF THE CONNECTICUT
GENERAL STATUTES, AS AMENDED. BORROWER FURTHER ACKNOWLEDGES THAT, PURSUANT TO
SUCH SECTION, IT HAS A RIGHT TO NOTICE OF AND HEARING PRIOR TO THE ISSUANCE OF
ANY “PREJUDGMENT REMEDY”. NOTWITHSTANDING THE FOREGOING, BORROWER HEREBY WAIVES
ALL RIGHTS TO SUCH NOTICE, JUDICIAL HEARING OR PRIOR COURT ORDER IN CONNECTION
WITH ANY SUIT ON THIS AGREEMENT, THE NOTE, THE GUARANTY, ANY OF THE LOAN
DOCUMENTS OR ANY EXTENSIONS OR RENEWALS OF THE SAME.
 
12.22        Foreign Assets Control Regulations, Patriot Act, Etc.
 
(a)           Borrower acknowledges and agrees that neither the requesting or
borrowing of Advances or the use of the proceeds of the Loan will be (i) in
contravention of any Prescribed Law, or (ii) in contravention of Executive Order
No. 13,224, of September 23, 2001 issued by the President of the United States
(Executive Order Blocking Property and Prohibiting Transactions with Persons Who
Commit, Threaten to Commit, or Support Terrorism), as may be amended or
supplemented from time to time (the "Anti-Terrorism Order"), or (iii) on behalf
of terrorists or terrorist organizations, including those persons or entities
that are included on any relevant lists maintained by the United Nations, North
Atlantic Treaty Organization, Organization of Economic Cooperation and
Development, Financial Action Task Force, U.S. Office of Foreign Assets Control,
U.S. Securities & Exchange Commission, U.S. Federal Bureau of Investigation,
U.S. Central Intelligence Agency, U.S. Internal Revenue Service, or any country
or organization, all as may be amended from time to time.  No Affiliate of
Borrower is or will be a person described in section 1 of the Anti-Terrorism
Order and no Affiliate of Borrower will engage in any dealings or transactions,
or otherwise be associated with any such person.

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(b)           Borrower further acknowledges and agrees that the making of the
Loan to Borrower does not violate any Prescribed Law, or the Trading with the
Enemy Act (50 U.S.C. §1 et seq., as amended), or any foreign asset control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended), or any enabling legislation or executive order relating
thereto.
 
(c)           Borrower warrants that none of the cash or property that any
Affiliate has paid or contributed, or will pay or contribute to Borrower has
been or shall be such as is described in Section 12.22(a)(i), (ii) or (iii)
hereof or derived from, or related to, any activity that is deemed criminal
under United States laws.
 
(d)           Borrower agrees to provide to the Lender any additional
information regarding all Affiliates of Borrower that Lender deems necessary or
convenient to ensure compliance with all applicable laws concerning money
laundering and similar activities and Borrower understands and agrees that if,
at any time, it is discovered that any of the representations contained in this
Section 12.22 are incorrect, or, if otherwise required by Applicable Law or
regulation related to money laundering and similar activities, Lender may
undertake appropriate actions to ensure compliance with Applicable Laws and
regulations.
 
Section 13-Agent
 
13.1          Authorization and Action.  Each Lender hereby accepts the
appointment of and irrevocably (but subject to Section 13.8 hereof) authorizes
Agent to take such action as Agent on its behalf and to exercise such powers as
are expressly delegated to Agent by the terms hereof, together with such powers
as are reasonably incidental thereto.  Agent shall not be required to take any
action which exposes Agent to personal liability or which is contrary to this
Agreement or applicable law.  Agent agrees to give to each Lender prompt notice
of each notice given to it by Borrower pursuant to the terms of this
Agreement.  The appointment and authority of Agent hereunder shall terminate
upon the payment of the Obligations in full.
 
13.2          Nature of Agent’s Duties.  Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or in the
other Loan Documents.  The duties of Agent shall be mechanical and
administrative in nature.  Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender.  Nothing in this Agreement or
any of the Loan Documents, express or implied, is intended to or shall be
construed to impose upon Agent any obligations in respect of this Agreement or
any of the Loan Documents except as expressly set forth herein or
therein.  Agent shall not have any duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or other
information with respect to Borrower, whether coming into its possession before
the date hereof or at any time or times thereafter (except as expressly set
forth in this Agreement).  If Agent seeks the consent or approval of Lenders, to
the taking or refraining from taking any action hereunder, Agent shall send
notice thereof to each Lender.
 
13.3          UCC Filings.  Each of Borrower, Agent and Lender expressly
recognizes and agrees that Agent shall be listed as the assignee or secured
party of record on the various UCC filings required to be made hereunder in
order to perfect the grant of a security interest in the Collateral herein for
the benefit of Lenders, that such listing shall be for administrative
convenience only in creating a single secured party to take certain actions
hereunder on behalf of the holders of the Obligations, and that such listing
will not affect in any way the status of such holders as the beneficial holders
of such security interest.  In addition, such listing shall impose no duties on
Agent other than those expressly and specifically undertaken in accordance with
this Section 13.

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13.4          Agent’s Reliance, Etc.  Neither Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them as Agent under or in connection with this Agreement
(including Agent’s servicing, administering or collecting Receivables) except
for its or their own gross negligence or willful misconduct.  Without limiting
the foregoing, Agent: (i) may consult with legal counsel (including counsel for
Borrower), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (ii)
makes no warranty or representation to Lender and shall not be responsible to
any Lender for any statements, warranties or representations made in or in
connection with this Agreement; (iii) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of Borrower or to inspect the property
(including the books and records) of Borrower (except as otherwise expressly set
forth in this Agreement); (iv) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness, sufficiency, or
value of this Agreement, or any other instrument or document furnished pursuant
hereto, or any certificate, report, statement or other document referred to or
provided for in, or received by Agent under or in connection with, the Loan
Documents, or for any failure of Borrower or any of its Affiliates to perform
its obligation under the Loan Documents; and (v) shall incur no liability under
or in respect of this Agreement by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing (which may be by
telex or telecopier) believed by it to be genuine and to be or to have been
signed or sent by the proper party or parties.  Agent may, but shall not be
required to, at any time request instructions from Lenders with respect to any
actions or approvals which by the terms of this Agreement or of any of the other
Loan Documents Agent is permitted or required to take or to grant, and Agent
shall be absolutely entitled to refrain from taking any action or to withhold
any approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any of the Loan
Documents until it shall have received such instructions from the requisite
Lender, as applicable in accordance with this Agreement.  Without limiting the
foregoing, Lender shall not have any right of action whatsoever against Agent as
a result of Agent acting or refraining from acting under this Agreement or any
of the other Loan Documents in accordance with the instructions of the requisite
Lender as applicable in accordance with this Agreement.  Agent shall be entitled
to rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation reasonably believed by it or them to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including counsel to Borrower),
independent accountants and other experts selected by Agent.
 
13.5           Agent and Affiliates.  To the extent that Agent or any of its
Affiliates are or shall become Lenders hereunder, Agent or such Affiliate, in
such capacity, shall have each and every right and power under this Agreement as
would any other Lender hereunder (including the right to vote upon any matter
upon which any of Lenders are entitled to vote) and, without exception, may
exercise the same as though it were not an Agent.  Agent and its Affiliates may
engage in any kind of business with Borrower, any of its Affiliates and any
Person who may do business with or own securities of Borrower or any of its
Affiliates, all as if it were not an Agent hereunder and without any duty to
account therefor to Lenders.

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13.6          Credit Decision.  Independently, and without reliance upon Agent,
each Lender has, to the extent it deems appropriate, made and shall continue to
make (a) its own independent investigation of the financial affairs and business
affairs of Borrower in connection with any action or inaction with respect to
the transactions contemplated herein, and (b) its own evaluation of the
creditworthiness of Borrower and of the value of the Collateral, and, except as
expressly provided in this Agreement, Agent has had and shall have no duty or
responsibility to provide any Lender with any credit or other information with
respect thereto.  Agent shall not be responsible to any Lender for any recitals,
statements, representation or warranties herein or in any document, certificate
or other writing delivered in connection herewith (unless made by Agent) or for
the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement (except with respect
to Agent’s obligations hereunder) or the Loan Documents or the financial
condition of Borrower or the value of the Collateral.  Except as expressly
herein provided with respect to its duties as agent, Agent shall not be required
to make any inquiry concerning either the performance or observance of any of
the terms, provisions or conditions of this Agreement or the Loan Documents, the
financial condition of Borrower, or the existence or possible existence of any
Event of Default.
 
13.7          Indemnification.  Each Lender agrees to indemnify Agent (to the
extent not reimbursed by Borrower), ratably in accordance with each Lender’s Pro
Rata Payment Percentage, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by Agent under this Agreement;
provided, however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, or disbursements resulting from Agent’s gross negligence or
willful misconduct.  Without limiting the generality of the foregoing, each
Lender agrees to reimburse Agent (to the extent not reimbursed by Borrower)
ratably in accordance with Lender’s Pro Rata Payment Percentage, promptly upon
demand, for any out-of-pocket expenses (including reasonable counsel fees)
incurred by Agent in connection with the administration, modification, amendment
or enforcement (whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of its rights or responsibilities under, this
Agreement.  The rights of Agent under this Section 13.7 shall survive the
termination of this Agreement.  For purposes of this paragraph, the term “Agent”
shall include Agent, its agents (including without limitation Wellington), its
affiliates and their respective officers, directors, employees and agents.
 
13.8          Successor Agent.  Agent may resign at any time by giving thirty
days notice thereof to Lenders and Borrower.  Upon any such resignation,
Lenders, including Liberty Bank, shall have the right to appoint a successor
Agent, and such resignation shall not be effective until such successor Agent is
appointed and has accepted such appointment.  If no successor Agent shall have
been so appointed and accepted such appointment within seventy-five (75) days
after Agent’s giving of notice of resignation, then Agent may, on behalf of
Lenders, appoint a successor Agent, which successor Agent shall be experienced
in the types of transactions contemplated by this Agreement.  Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from all further duties and obligations under this
Agreement.  After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Section 13.8 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.

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13.9          Duty of Care.  Agent shall endeavor to exercise the same care in
its administration of the Loan Documents as it exercises with respect to similar
transactions in which it is involved and where no other co-lenders are involved;
provided that the liability of Agent for failing to do so shall be limited as
provided in the preceding paragraphs of this Section 13.9.
 
13.10        Delegation of Agency.
 
(a)           If at any time or times it shall be necessary or prudent in
connection with the exercise or protection of Agent’s rights hereunder in order
to conform to any law of any jurisdiction in which any of the Collateral shall
be located, or Agent shall be advised by counsel that it is so necessary or
prudent in the interest of Lenders, or Agent shall deem it necessary for its own
protection in the performance of its duties hereunder Agent and, to the extent
required by Agent, Borrower shall execute and deliver all instruments and
agreements reasonably necessary or proper to constitute another bank or trust
company, or one or more individuals approved by Agent (each an “Approved
Delegate”), either to act as co-agent or co-agents or trustee of all or any of
the Collateral, jointly with Agent originally named herein or any successor, or
to act as separate agent or agents or trustee of any such Collateral.  Every
separate agent and every co-agent and every trustee, other than any agent which
may be appointed as successor to Agent, shall, to the extent permitted by
applicable law, be appointed to act and be such, subject to the following
provisions and conditions, namely:
 
(i)        except as otherwise provided herein, all rights, remedies, powers,
duties and obligations conferred upon, reserved or imposed upon Agent in respect
of the custody, control and management of moneys, paper or securities shall be
exercised solely by Agent hereunder;
 
(ii)       all rights, remedies, powers, duties and obligations conferred upon,
reserved to or imposed upon Agent hereunder shall be conferred, reserved or
imposed and exercised or performed by Agent except to the extent that the
instrument appointing such separate agent or separate agents or co-agent or
co-agents or trustee shall otherwise provide, and except to the extent that
under any law of any jurisdiction in which any particular act or acts are to be
performed, Agent shall be incompetent or unqualified to perform such act or
acts, in which event such rights, remedies, powers, duties and obligations shall
be exercised and performed by such separate agents or co-agent or co-agents to
the extent specifically directed in writing by Agent;
 
(iii)      no power given thereby to, or which it is provided hereby may be
exercised by, any such separate agent or separate agents or co-agent or
co-agents or trustee shall be exercised hereunder by such separate agent or
separate agents or co-agent or co-agents or trustee except jointly with, or with
the consent in writing of, anything herein contained to the contrary
notwithstanding;
 
(iv)     no separate agent or co-agent or trustee constituted under this
Section 13.10 shall be personally liable by reason of any act or omission of any
other agent, separate agent, co-agent or trustee hereunder; and
 
(v)      Agent, at any time by an instrument in writing, executed by it, may
accept the resignation of or remove any such separate agent or co-agent or
trustee of Agent, and in that case, by an instrument in writing executed by
Agent and Borrower (to the extent necessary or requested by Agent) jointly may
appoint a successor to such separate agent or co-agent or trustee, as the case
may be, anything therein contained to the contrary notwithstanding.  In the
event that Borrower shall not have joined in the execution of any such
instrument with a Person or entity within ten (10) days after the receipt of a
written request from Agent to do so, Agent, acting alone, may appoint a
successor and may execute any instrument in connection therewith, and Borrower
hereby irrevocably appoints Agent its agent and attorney to act for it in such
connection in either of such contingencies.

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In the event that Borrower shall not have joined in the execution of such
instruments or agreements with any Approved Delegate within thirty (30) Business
Days after the receipt of a written request from Agent to do so, Borrower hereby
irrevocably appoints Agent as its agent and attorney to act for it under the
foregoing provisions of this Section 7.2(m) in such contingency, it being
understood that the power of attorney granted hereunder is coupled with an
interest.
 
(b)            Agent may execute any of its duties under the Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel, and other specialists and advisors (including affiliates of such Agent)
selected by it, concerning all matters pertaining to such duties.  Agent shall
not be responsible for the negligence or misconduct of any such agents,
attorneys-in-fact, counsel and other specialists and advisors selected by it
with reasonable care.
 
13.11        Agent’s Responsibilities.
 
(a)            Each subsequent holder of any Note by its acceptance thereof
irrevocably joins in the designation of Liberty Bank as agent for Lenders as
provided herein with the same force and effect as if it were an original Lender
hereunder and signatory hereto.  Liberty Bank hereby accepts such designation
and appointment as agent.  Agent, acting as such under the provisions of this
Agreement, or under any other instrument or document delivered pursuant hereto,
shall not be liable or responsible, directly or indirectly, for any action
taken, or omitted to be taken, by it in good faith, nor shall Agent be liable or
responsible for the consequences of any oversight or error of judgment on its
part, but Agent shall only be liable or responsible for any loss suffered by any
of Lenders hereunder provided such loss was caused by Agent’s gross negligence
or willful misconduct.  Agent shall not, by any action or inaction hereunder, be
deemed to make any representation or warranty regarding the legality, legal
effect or sufficiency of any act of Borrower in connection with, or under any of
the provisions of, this Agreement, or any instrument or document delivered
pursuant thereto, or the validity or enforceability of any instrument or
document furnished to Agent pursuant to this Agreement.  Agent shall have no
liability or responsibility in connection with the collection or payment of any
sums due to Lenders by Borrower, the sole responsibility of Agent being to
account to Lenders only for monies actually received by it.  Agent shall have no
obligation to make any application of any funds received by it until such funds
are immediately available at Agent’s office.  Any monies received by Agent need
not be segregated from other funds except to the extent required by law, and
Agent shall not be liable for interest on any funds received by it.  Agent shall
not be charged with knowledge of any facts which would prohibit the making of
any payment of monies in accordance with the provisions of this Agreement unless
and until Agent shall have received written notice thereof at its office from
Borrower or any Lender.  The duties of Agent shall be mechanical and
administrative in nature, Agent shall not, by reason of this Agreement, be
deemed a fiduciary in respect of Lenders, and nothing in this Agreement shall
impose upon Agent any obligations in respect of this Agreement except as
expressly herein set forth.

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(b)            Agent shall have the right to exercise all the rights granted to,
and exercisable by, it under this Agreement and any instrument or document
delivered pursuant to this Agreement, in such manner from time to time, as Agent
in its sole discretion, shall deem proper.
 
(c)            Agent agrees to provide each Lender with notice (and copies of
documents, as appropriate) of the any amendment, waiver or modification of the
terms of this Agreement entered in accordance with Section 7.2(m) hereof;
 
(d)            Except as otherwise provided in this Agreement, Agent shall be
entitled, at its option, from time to time and at any time, to enter into any
amendment of, or waive compliance with the terms of this Agreement without
obtaining prior approval from any Lender.
 
13.12        Power of Attorney.  Each Lender does hereby irrevocably constitute
and appoint Agent as its true and lawful agent and attorney-in-fact, with full
power of substitution, for and in its name, place and stead, or otherwise, to
(a) demand and receive from time to time any and all property, rights, titles,
interests and liens hereby sold, assigned and transferred, or intended so to be,
and to give receipts for same, (b) from time to time to institute and prosecute
in Agent’s own name any and all proceedings at law, in equity, or otherwise,
that Agent may deem proper in order to collect, assert or enforce any claim,
right or title, of any kind, in and to the property, rights, titles, interests
and liens hereby sold, assigned or transferred, or intended so to be, and to
defend and compromise any and all actions, suits or proceedings in respect of
any of the said property, rights, titles, interests and liens, and (c) generally
to do all and any such acts and things in relation to the Loans, the Collateral
and this Agreement as Agent shall in good faith deem advisable.  Each Lender
hereby declares that the appointment made and the powers granted pursuant to
this Section 13.12 are coupled with an interest and are and shall be irrevocable
by it in any manner, or for any reason, unless and until the repayment in full
of the Obligation.
 
13.13        Ratification and Confirmation.  Borrower hereby ratifies, confirms,
assumes and agrees to be bound by all statements, covenants and agreements set
forth in the this Agreement and the other Loan Documents.  Borrower reaffirms,
restates and incorporates by reference all of the covenants and agreements made
in the Loan Documents as if the same were made as of this date.  Borrower agrees
to pay the Loan and all related expenses, as and when due and payable in
accordance with this Agreement and the other Loan Documents, and to observe and
perform the Obligations, and do all things necessary which are not prohibited by
law to prevent the occurrence of any Event of Default.  In addition, to further
secure, and to evidence and confirm the securing of, the prompt and complete
payment and performance by Borrower of the Loan and all of the Obligations, for
value received, Borrower unconditionally and irrevocably assigns, pledges and
grants to Agent, and hereby confirms or reaffirm the prior granting to Agent of,
a continuing first priority Lien, mortgage and security interest in and to all
of the Collateral, whether now existing or hereafter acquired.  Also, as
provided in the Loan Documents, the Loan is and shall be further secured by the
Liens and security interests in favor of Agent in the properties and interests
relating to Additional Eligible Resorts, which now or hereafter serve as
collateral security for any Obligations.  On the date hereof and thereafter upon
satisfaction of the requirements for approval by Agent of Additional Eligible
Resorts, Borrower shall record, or cause to be recorded, such mortgages, deeds
of trust, deeds to secure debt, assignments, pledges, security agreements and
UCC Financing Statements in the appropriate public records of the state in which
each Resort is located to further evidence and perfect Agent’s Lien on the
Collateral.  Borrower agrees to deliver or cause to be delivered by its
Affiliates, such mortgages, deeds of trust, deeds to secure debt, assignments,
pledges, security agreements and UCC Financing Statements as Agent may deem
necessary to further evidence and perfect Agent’s Lien on the Collateral.

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13.14        Estoppel.  The Loan constitutes valuable consideration to
Borrower.  This Agreement and the other Loan Documents and the Loan
modifications and transactions provided for or contemplated hereunder or
thereunder, shall in no way adversely affect the Lien or perfection or priority
of any Lien of Agent as of the date hereof in and to any Collateral, and are not
intended to constitute, and do not constitute or give rise to, any novation,
cancellation or extinguishment of any of Borrower’s Obligations existing as of
the Closing Date to Agent, or of any interests owned or held by Agent (and not
previously released) in and to any of the Collateral; it being the intention of
the parties that the transactions provided for or contemplated herein shall be
effectuated without any interruption in the continuity of the value and
consideration received by Borrower, and of the attachment, perfection, priority
and continuation in favor of Agent in and to all Collateral and proceeds.
 
13.15        Participation Agreement.  Nothing in this Section 13 shall affect
or limit any Participant’s rights or any of the Agent’s obligations under each
Participant’s respective participation agreement with the Agent.  
 
13.16        Withholding Taxes.
 
(a)            If any Lender is a “foreign person” within the meaning of the IRC
and such Lender claims exemption from, or a reduction of, U.S. withholding tax
under Sections 1441 or 1442 of the IRC, such Lender agrees with and in favor of
Agent and Borrower, to deliver to Agent and Borrower:
 
(i)       if such Lender claims an exemption from withholding tax pursuant to
its portfolio interest exception, (A) a statement of the Lender, signed under
penalty of perjury, that it is not a (I) a “bank” as described in Section
881(c)(3)(A) of the IRC, (II) a 10% shareholder of Borrower (within the meaning
of Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation
related to Borrower within the meaning of Section 864(d)(4) of the IRC, and (B)
a properly completed and executed IRS Form W-8BEN, before the first payment of
any interest under this Agreement and at any other time reasonably requested by
Agent or Borrower;
 
(ii)       if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed and
executed IRS Form W-8BEN before the first payment of any interest under this
Agreement and at any other time reasonably requested by Agent or Borrower;
 
(iii)      if such Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively connected
with a United States trade or business of such Lender, two properly completed
and executed copies of IRS Form W-8ECI before the first payment of any interest
is due under this Agreement and at any other time reasonably requested by Agent
or Borrower; and
 
(iv)     such other form or forms as may be required under the IRC or other laws
of the United States as a condition to exemption from, or reduction of, United
States withholding tax.
 
Such Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.

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(b)            If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form W-8BEN and such
Lender sells, assigns, grants a participation in, or otherwise transfers all or
part of the Obligations of Borrower to such Lender, such Lender agrees to notify
Agent of the percentage amount in which it is no longer the beneficial owner of
Obligations of Borrower to such Lender.  To the extent of such percentage
amount, Agent will treat such Lender’s IRS Form W-8BEN as no longer valid.
 
(c)            If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction.  If the forms or other documentation required by subsection (a)
of this Section 13.16 are not delivered to Agent, then Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
 
(d)            If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section 13.16, together with all costs and expenses
(including attorneys fees and expenses).  The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
 
(e)            All payments made by Borrower hereunder or under any note will be
made without setoff, counterclaim, or other defense, except as required by
Applicable Laws other than for Taxes (as defined below).  All such payments will
be made free and clear of, and without deduction or withholding for, any present
or future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction (other than the
United States) or by any political subdivision or taxing authority thereof or
therein (other than of the United States) with respect to such payments (but
excluding, any tax imposed by any jurisdiction or by any political subdivision
or taxing authority thereof or therein (i) measured by or based on the net
income or net profits of a Lender, or (ii) to the extent that such tax results
from a change in the circumstances of the Lender, including a change in the
residence, place of organization, or principal place of business of the Lender,
or a change in the branch or lending office of the Lender participating in the
transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
“Taxes”).  If any Taxes are so levied or imposed, Borrower agrees to pay the
full amount of such Taxes, and such additional amounts as may be necessary so
that every pay­ment of all amounts due under this Agreement or under any note,
including any amount paid pursuant to this Section 13.16(e) after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein; provided, however, that Borrower shall not be required to
increase any such amounts payable to Agent or any Lender (i) that is not
organized under the laws of the United States, if such Person fails to comply
with the other requirements of this Section 13.16, or (ii) if the increase in
such amount payable results from Agent’s or such Lender’s own willful
mis­conduct or gross negligence.  Borrower will furnish to Agent as promptly as
possible after the date the payment of any Taxes is due pursuant to Applicable
Laws certified copies of tax receipts evidencing such payment by Borrower.

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13.17        Agent in Individual Capacity.  Liberty Bank and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrower and its
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though Liberty Bank were not Agent hereunder, and, in each case, without notice
to or consent of the other Lenders.  The other Lenders acknowledge that,
pursuant to such activities, Liberty Bank or its Affiliates may receive
information regarding Borrower or its Affiliates and any other Person party to
any Loan Documents that is subject to confidentiality obligations in favor of
Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to
them.  The terms “Lender” and “Lenders” include Liberty Bank in its individual
capacity.
 
 
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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/ PATRICIA K. DOREY 
 
By:
/S/ HARRY J. WHITE, JR.
    
Name:
Harry J. White, Jr.
    
Title:
Chief Financial Officer

STATE OF TEXAS
)
    
)
ss: 
COUNTY OF DALLAS
)
  

The foregoing instrument was acknowledged before me this 28th day of
September, 2007 by Harry J. White, Jr., Chief Financial Officer of Silverleaf
Resorts, Inc., a Texas corporation, on behalf of the Corporation.

 
/S/ KIM W. MURDOCK
 
Commissioner of the Superior Court
 
Notary Public
 
My Commission Expires:  July 1, 2009

 

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LENDER:  
            
LIBERTY BANK,  
   
a Connecticut nonstock mutual savings bank  
                 
/S/ RICHARD POLIVY
 
By:
/S/ STEVEN J. ZARRELLA  
     
Steven J. Zarrella, Vice President  

STATE OF CONNECTICUT
)
   
)
ss:
COUNTY OF MIDDLESEX
)
 

 
The foregoing instrument was acknowledged before me this 1st day of
October, 2007 by STEVEN J. ZARRELLA, a Vice President of Liberty Bank, a
Connecticut nonstock mutual savings bank, on behalf of the bank.

    /S/ RICHARD POLIVY     Notary Public     My Commission Expires:             
          AGENT:            LIBERTY BANK,     a Connecticut nonstock mutual
savings bank       
/S/ RICHARD POLIVY
 
By:
/S/ STEVEN J. ZARRELLA
     
Steven J. Zarrella, Vice President

STATE OF CONNECTIUT
)
   
)
ss:
COUNTY OF MIDDLESEX
)
 

The foregoing instrument was acknowledged before me this 1ST day of
October, 2007 by STEVEN J. ZARRELLA, a Vice President of Liberty Bank, a
Connecticut nonstock mutual savings bank, on behalf of the bank.

 
/S/ RICHARD POLIVY
 
Notary Public
 
My Commission Expires:

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LIST OF SCHEDULES AND EXHIBITS
 
SCHEDULES:
Schedule 1.0-Identification of Lenders and Their Respective Pro Rata Percentage
Schedule 1.1(a)-List of Resort Declarations
Schedule 1.1(b)-Underwriting Guidelines and Criteria
Schedule 1.1(c)-List of Timeshare Owner Associations
Schedule 2.6-List of Borrower’s Executive Management
Schedule 6.5-Permitted Liens
Schedule 6.7-Pending Material Litigation
Schedule 6.9-List of Environmental Matters
Schedule 6.19-List of Time Share Reports and Documents

EXHIBITS
Exhibit A- Assignment of Notes and Mortgages
Exhibit B- Borrowing Base Report
Exhibit C-Closing Certificate
Exhibit D-Certificate and Request for Advance
Exhibit E-Inventory Control Procedures
Exhibit F-Officer’s Certificate For Financial Statements
 
 

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