EX. 10.3
 
TRANSFER AGREEMENT
 
between
 
SILVERLEAF RESORTS, INC.
 
AND
 
SILVERLEAF FINANCE VIII, LLC
 
DATED AS OF DECEMBER 1, 2010

 
 

 

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TRANSFER AGREEMENT
 
This TRANSFER AGREEMENT (this “Agreement”), dated as of December 1, 2010, is
between Silverleaf Resorts, Inc., a Texas corporation (the “Originator”) and
Silverleaf Finance VIII, LLC, a Delaware limited liability company (the
“Issuer”), and their respective permitted successors and assigns.
W I T N E S S E T H:
WHEREAS, the Issuer has been established as a bankruptcy-remote entity for the
purpose of acquiring (i) an initial pool of timeshare loans acquired on the
Closing Date (the “Initial Timeshare Loans”) consisting of (a) a pool of
timeshare loans (the “Mortgage Loans”) each evidenced by a promissory note and
secured by a first Mortgage on a fractional fee simple timeshare interest in a
Unit, and (b) a pool of timeshare loans (the “Oak N' Spruce Loans”), each
evidenced by a purchase and finance agreement (a “Finance Agreement”) for the
purchase of a certificate of beneficial interest in the Oak N' Spruce Resort
Trust evidencing the right of the owner thereof to use and occupy a fixed unit
at Oak N' Spruce Resort at a fixed period of time, (iii) any Qualified
Substitute Timeshare Loans and Subsequent Timeshare Loans and (iv) all Related
Security in respect of the Timeshare Loans and Oak N' Spruce Loans. A “Timeshare
Property” shall consist of (i) in the case of a Mortgage Loan, a fractional fee
simple timeshare interest in a residential unit (a residential timeshare unit
herein referred to as a “Unit”) in a Resort or (ii) in the case of an Oak N'
Spruce Loan, a certificate of beneficial interest (“Oak N' Spruce Certificate”)
in the Oak N' Spruce Resort Trust. The Initial Timeshare Loans, the Qualified
Substitute Timeshare Loans, the Subsequent Timeshare Loans, Timeshare
Properties, Mortgage Note, any Related Security and other conveyed property
related thereto and additional collateral, in each case conveyed hereunder,
collectively, are the “Transferred Assets.”
WHEREAS, on December 27, 2010 (the “Closing Date”) and on each Transfer Date,
the Issuer intends to pledge such Transferred Assets acquired thereby to Wells
Fargo Bank National Association, as indenture trustee (in such capacity, the
“Securitization Indenture Trustee”), custodian (in such capacity, the
“Securitization Custodian”) and backup servicer, pursuant to an indenture, dated
as of December 1, 2010 (the “Securitization Indenture”), by and among the
Issuer, Silverleaf Resorts, Inc., in its capacity as servicer (the
“Securitization Servicer”) and the Securitization Indenture Trustee, to secure
the Issuer's (i) 6.000% Timeshare Loan-Backed Notes, Series 2010-B, Class A
Notes and (ii) 8.475% Timeshare Loan-Backed Notes, Series 2010-B, Class B Notes
(collectively, the “Securitization Notes”);
WHEREAS, proceeds from the sale of the Securitization Notes will be used by the
Issuer, in part, to (i) pay the Originator the purchase price for the Timeshare
Loans and (ii) pay certain expenses incurred in connection with the issuance of
the Securitization Notes.
WHEREAS, the Originator will derive an economic benefit from the transfer
hereunder of the Timeshare Loans to the Issuer.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and
for other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto covenant and agree as follows:
SECTION 1.Definitions; Interpretation. Capitalized terms used herein but not
defined herein shall have the respective meanings specified in “Standard
Definitions” attached hereto as Annex A.
SECTION 2.Acquisition of Timeshare Loans.
(a)Initial Timeshare Loans.
(i)Effective as of the Closing Date, but subject to the terms and conditions of
this Agreement (including, without limitation, subsection (f) below), the
Originator hereby sells (“Sells,” “Sale” or “Sold”) or contributes (“Contribute”
or “Contribution”) (in each case to the extent described in subsection (f)
below) and otherwise transfers, assigns, and conveys to the Issuer, without
recourse (except for Defective Timeshare Loans to the extent specifically
provided herein), and the Issuer hereby agrees to purchase or accept a
contribution of (in each case to the extent described in subsection (f) below)
and otherwise acquires, all right, title and interest of the Originator in and
to the Timeshare Loans included on the schedule delivered to the Issuer on the
Closing Date (as further described in Section 4(i) below), together with the
Timeshare Properties, Related Security and other conveyed property related
thereto. In connection with the initial transfer, the Originator shall transfer,
or cause the deposit, into the Lockbox Account of all amounts received by the
Originator on account of such Timeshare Loans, Timeshare Properties, Related
Security and other conveyed property related thereto and additional collateral
hereunder due on and after the Initial Cut-Off Date within two (2) Business Days
of the receipt thereof.
(ii)The Originator hereby acknowledges that each sale, contribution and
conveyance to the Issuer hereunder is absolute and irrevocable, without
reservation or retention of any interest whatsoever by the Originator.
(b)Subsequent Timeshare Loans.
(i)Effective as of each applicable Transfer Date, but subject to the terms and
conditions of this Agreement (including, without limitation, subsections (f) and
(g) below), the Originator shall Sell or Contribute (in each case to the extent
described in subsection (f) below) and otherwise transfer, assign, and convey to
the Issuer, without recourse (except to the extent specifically provided
herein), and the Issuer hereby agrees to purchase or accept a contribution of
(in each case to the extent described in subsection (f) below) and otherwise
acquire, all right, title and interest of the Originator in and to the
Subsequent Timeshare Loans included on the schedule delivered to the Issuer on
the applicable Transfer Date (as further described in Section 4(i) below),
together with the Timeshare Properties, Related Security and other conveyed
property related thereto. In connection with any such transfer, Originator shall
transfer, or cause the deposit, into the Lockbox Account of all amounts received
by the Originator on account of such Subsequent Timeshare Loans, Timeshare
Properties, Related Security and other conveyed property related thereto and
additional collateral hereunder due on and after the related Cut-Off Date within
two (2) Business Days of the receipt thereof.
(ii)The Originator hereby acknowledges that each sale, contribution and
conveyance to the Issuer hereunder is absolute and irrevocable, without
reservation or retention of any interest whatsoever by the Originator.
(c)Delivery of Timeshare Loan Documents. In connection with the sale, transfer,
contribution, assignment and conveyance of any Timeshare Loan hereunder, the
Issuer hereby directs the Originator and the Originator hereby agrees to deliver
or cause to be delivered to the Securitization Custodian, all related Timeshare
Loan Files and to the Securitization Servicer all related Timeshare Loan
Servicing Files.
(d)Collections. The Originator shall deposit or cause to be deposited all
collections in respect of the Initial Timeshare Loans, the Subsequent Timeshare
Loans and the Qualified Substitute Timeshare Loans (collectively, the “Timeshare
Loans”) received by the Originator or any of its Affiliates on and after the
related Cut-Off Date in the Lockbox Account.
(e)Limitation of Liability. None of the Issuer or any subsequent assignee of the
Issuer shall have any obligation or liability with respect to any Timeshare Loan
nor shall the Issuer or any subsequent assignee have any liability to any
Obligor in respect of any Timeshare Loan. No such obligation or liability is
intended to be assumed by the Issuer, the Originator or any subsequent assignee
herewith and any such liability is hereby expressly disclaimed.
(f)Purchase Price/Capital Contribution. The price paid for Timeshare Loans,
Timeshare Properties, Related Security and other conveyed property related
thereto and additional collateral which are Sold hereunder shall be the
Timeshare Loan Acquisition Price with respect thereto. Such Timeshare Loan
Acquisition Price shall be paid by means of an immediate cash payment to the
Originator by wire transfer on the applicable conveyance date to an account
designated by the Originator on or before such conveyance date or by means of
proper accounting entries being entered upon the accounts and records of the
Originator and the Issuer on the applicable conveyance date. To the extent that
the cash amount received for any Timeshare Loans, Timeshare Properties, Related
Security and other conveyed property related thereto and additional collateral
Sold by the Originator to the Issuer hereunder is less than the Timeshare Loan
Acquisition Price of such property at the time of the applicable Sale, the
shortfall shall be deemed to have been Contributed by the Originator to the
capital of the Issuer on the applicable conveyance date.
(g)The Originator shall transfer to the Issuer the Subsequent Timeshare Loans
and the Issuer shall cause to be released funds from the Prefunding Account,
only upon satisfaction of each of the following conditions on or prior to the
related Transfer Date:
(i)The Originator shall have delivered to the Securitization Indenture Trustee a
Schedule of Timeshare Loans listing the Subsequent Loans to be conveyed on such
Transfer Date, and shall have confirmed each condition precedent specified in
this Section 2(g) (which confirmation shall be deemed satisfied by delivering
the Schedule of Timeshare Loans listing the Subsequent Timeshare Loans to the
Securitization Indenture Trustee);
(ii)As of each Transfer Date, the Originator (a) shall not be insolvent nor will
be made insolvent by such transfers, nor shall it be aware of any pending
insolvency, (b) shall not intend to incur nor believe that it shall incur debts
that would be beyond its ability to pay as such debts mature, (c) shall not make
such transfer with actual intent to hinder, delay or defraud any Person, and (d)
shall not have assets that constitute unreasonably small capital to carry out
its business as then conducted;
(iii)Each such Subsequent Timeshare Loan satisfies the representations and
warranties set forth in this Agreement (including in Section 5 and in Schedule I
hereof) and the Originator shall have performed all obligations to be performed
by it hereunder on or prior to such Transfer Date;
(iv)Such transfer shall not result in a material adverse tax consequence to the
Originator or the Securitization Noteholders;
(v)The Prefunding Termination Date shall not have occurred;
(vi)The Originator shall have provided the Securitization Indenture Trustee and
the Rating Agency with an Addition Notice not later than three Business Days
prior to such Transfer Date and shall have provided any information reasonably
requested by either of them with respect to the related Subsequent Timeshare
Loans;
(vii)The Originator shall have deposited in the Collection Account all
Collections in respect of the related Subsequent Timeshare Loans due on and
after the related Cut-Off Date; and
(viii)All the provisions of the Escrow and Closing Agreement and the Custodial
Agreement shall have been complied with.
SECTION 3.Intended Characterization, Grant of Security Interest. It is the
intention of the parties hereto that the transfers of Timeshare Loans to be made
pursuant to the terms hereof shall constitute a sale and/or contribution and an
absolute assignment by the Originator to the Issuer and not a loan secured by
the Timeshare Loans. In the event, however, that a court of competent
jurisdiction were to hold that any such transfer constitutes a loan and not a
sale and/or contribution, it is the intention of the parties hereto that the
Originator shall be deemed to have granted and does hereby grant to the Issuer
as of the date hereof a first priority perfected security interest in all of
Originator's right, title and interest in, to and under the Transferred Assets
specified in Section 2 hereof and that with respect to such conveyance, this
Agreement shall constitute a security agreement under applicable law. In the
event of the characterization of any such transfer as a loan, the amount of
interest payable or paid with respect to such loan under the terms of this
Agreement shall be limited to an amount which shall not exceed the maximum
non-usurious rate of interest allowed by the applicable state law or any
applicable law of the United States permitting a higher maximum non-usurious
rate that preempts such applicable state law, which could lawfully be contracted
for, charged or received (the “Highest Lawful Rate”). In the event any payment
of interest on any such loan exceeds the Highest Lawful Rate, the parties hereto
stipulate that (a) to the extent possible given the term of such loan, such
excess amount previously paid or to be paid with respect to such loan be applied
to reduce the principal balance of such loan, and the provisions thereof
immediately be deemed reformed and the amounts thereafter collectible thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the then applicable law, but so as to permit the recovery of the
fullest amount otherwise called for thereunder and (b) to the extent that the
reduction of the principal balance of, and the amounts collectible under, such
loan and the reformation of the provisions thereof described in the immediately
preceding clause (a) is not possible given the term of such loan, such excess
amount will be deemed to have been paid with respect to such loan as a result of
an error and upon discovery of such error or upon notice thereof by any party
hereto such amount shall be refunded by the recipient thereof.
The characterization of the Originator as “debtor” and the Issuer as “secured
party” in any financing statement required hereunder is solely for protective
purposes and shall in no way be construed as being contrary to the intent of the
parties that this transaction be treated as a sale and/or contribution to the
Issuer of such Originator's entire right, title and interest in and to the
Transferred Assets.
Each of the Originator, the Issuer and any of their Affiliates hereby agrees to
make the appropriate entries in its general accounting records and to indicate
that the Timeshare Loans have been transferred to the Issuer.
SECTION 4.Conditions Precedent to Acquisition of Timeshare Loans by the Issuer.
The obligations of the Issuer to purchase any Timeshare Loans hereunder shall be
subject to the satisfaction of the following conditions:
(a)All representations and warranties of the Originator contained in Section 5
and in Schedule I hereof, and all information provided in the Schedule of
Timeshare Loans related thereto shall be true and correct as of the Closing Date
or the Transfer Date, as applicable, and the Originator shall have delivered to
the Issuer, the Securitization Indenture Trustee and BB&T Capital Markets, a
division of Scott & Stringfellow, LLC (the “Initial Purchaser”) an officer's
certificate (the “Officer's Certificate”) to such effect.
(b)On or prior to the Closing Date or a Transfer Date, as applicable, the
Originator shall have delivered or shall have caused the delivery of (i) the
related Timeshare Loan Files to the Securitization Custodian and the
Securitization Custodian shall have delivered a receipt therefore pursuant to
the Custodial Agreement, (ii) the Timeshare Loan Servicing Files to the
Securitization Servicer, and (iii) all documents and certifications required
pursuant to the terms of the Custodial Agreement and the Escrow and Closing
Agreement.
(c)The Originator shall have delivered or shall have caused to be delivered all
other information theretofore required or reasonably requested by the Issuer to
be delivered by the Originator or performed or caused to be performed all other
obligations required to be performed as of the Closing Date or Transfer Date, as
the case may be, including all filings, recordings and/or registrations as may
be necessary in the reasonable opinion of the Issuer or the Securitization
Indenture Trustee to establish and preserve the right, title and interest of the
Issuer or the Securitization Indenture Trustee, as the case may be, in the
related Timeshare Loans.
(d)On or before the Closing Date, the Issuer, the Securitization Servicer, the
Backup Servicer and the Securitization Indenture Trustee shall have entered into
the Securitization Indenture.
(e)The Securitization Notes shall be issued and sold on the Closing Date, and
the Issuer shall receive the full consideration due it upon the issuance of the
Securitization Notes, and the Issuer shall have applied such consideration to
the extent necessary, to pay that certain price (the “Timeshare Loan Acquisition
Price”) for each Timeshare Loan, except to the extent that the Originator has
made a Contribution to the Issuer pursuant to Section 2(f).
(f)Each Timeshare Loan conveyed on a Transfer Date in accordance with Section
6(a) hereof shall satisfy each of the criteria specified in the definition of
“Qualified Substitute Timeshare Loan” and each of the conditions herein and in
the Securitization Indenture for substitution of Timeshare Loans shall have been
satisfied.
(g)Each Timeshare Loan conveyed on a Transfer Date in accordance with Section
2(b) hereof shall satisfy each of the criteria specified in the definition of
“Subsequent Timeshare Loan” and each of the conditions herein and in the
Securitization Indenture for conveyance of Subsequent Timeshare Loans shall have
been satisfied.
(h)The Issuer shall have received such other certificates and opinions as it
shall reasonably request.
(i)On or prior to the Closing Date or a Transfer Date, as applicable, the
Originator shall deliver a Schedule of Timeshare Loans, which Schedule shall be
attached hereto as Schedule III and made a part hereof. Each Schedule so
delivered shall supersede any prior Schedules so delivered.
SECTION 5.Representations and Warranties and Certain Covenants of the
Originator.
(a)Originator represents and warrants to the Issuer and the Securitization
Indenture Trustee for the benefit of the Securitization Noteholders, as of the
Closing Date (with respect to the Timeshare Loans transferred on the Closing
Date) and on each Transfer Date (with respect to Qualified Substitute Timeshare
Loans and Subsequent Timeshare Loans transferred on such Transfer Date) as
follows:
(i)Due Incorporation; Valid Existence; Good Standing. It is a corporation duly
organized and validly existing in good standing under the laws of the
jurisdiction of its incorporation; and is duly qualified to do business as a
foreign corporation and in good standing under the laws of each jurisdiction
where the character of its property, the nature of its business or the
performance of its obligations under this Agreement makes such qualification
necessary, except where the failure to be so qualified will not have a material
adverse effect on its business or its ability to perform its obligations under
this Agreement, or any other related documents (the “Transaction Documents”) to
which it is a party or under the transactions contemplated hereunder or
thereunder or the validity or enforceability of the Timeshare Loans.
(ii)Possession of Licenses, Certificates, Franchises and Permits. It holds all
licenses, certificates, franchises and permits from all governmental authorities
necessary for the conduct of its business, except where the failure to hold such
licenses, certificates, franchises and permits would not materially and
adversely affect its ability to perform its obligations under this Agreement or
any other Transaction Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Timeshare Loans, and has received no notice of proceedings relating to the
revocation of any such license, certificate, franchise or permit, which singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially and adversely affect its ability to perform its
obligations under this Agreement or any other Transaction Document to which it
is a party or under the transactions contemplated hereunder or thereunder or the
validity or enforceability of the Timeshare Loans.
(iii)Corporate Authority and Power. It has, and at all times during the term of
this Agreement will have, all requisite corporate power and authority to own its
properties, to conduct its business, to execute and deliver this Agreement and
all documents and transactions contemplated hereunder and to perform all of its
obligations under this Agreement and any other Transaction Document to which it
is a party or under the transactions contemplated hereunder or thereunder.
(iv)Authorization, Execution and Delivery Valid and Binding. This Agreement and
all other Transaction Documents and instruments required or contemplated hereby
to be executed and delivered by it have been duly authorized, executed and
delivered by it and, assuming the due execution and delivery by, the other party
or parties hereto and thereto, constitute legal, valid and binding agreements
enforceable against it in accordance with their respective terms subject, as to
enforceability, to bankruptcy, insolvency, reorganization, liquidation,
dissolution, moratorium and other similar applicable laws affecting the
enforceability of creditors' rights generally applicable in the event of the
bankruptcy, insolvency, reorganization, liquidation or dissolution, as
applicable, of it and to general principles of equity, regardless of whether
such enforceability shall be considered in a proceeding in equity or at law.
(v)No Violation of Law, Rule, Regulation, etc. The execution, delivery and
performance by it of this Agreement and any other Transaction Document to which
it is a party do not and will not (A) violate any of the provisions of its
articles of incorporation or bylaws, (B) violate any provision of any law,
governmental rule or regulation currently in effect applicable to it or its
properties or by which it or its properties may be bound or affected, including,
without limitation, any bulk transfer laws, where such violation would have a
material adverse effect on its ability to perform its obligations under this
Agreement or any other Transaction Document to which it is a party or under the
transactions contemplated hereunder or thereunder or the validity or
enforceability of the Timeshare Loans, (C) violate any judgment, decree, writ,
injunction, award, determination or order currently in effect applicable to it
or its properties or by which it or its properties are bound or affected, where
such violation would have a material adverse effect on its ability to perform
its obligations under this Agreement or any other Transaction Document to which
it is a party or under the transactions contemplated hereunder or thereunder or
the validity or enforceability of the Timeshare Loans, (D) conflict with, or
result in a breach of, or constitute a default under, any of the provisions of
any indenture, mortgage, deed of trust, contract or other instrument to which it
is a party or by which it is bound where such violation would have a material
adverse effect on its ability to perform its obligations under this Agreement or
any other Transaction Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Timeshare Loans or (E) result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, mortgage, deed of
trust, contract or other instrument.
(vi)Governmental Consent. No consent, approval, order or authorization of, and
no filing with or notice to, any court or other Governmental Authority in
respect of it is required which has not been obtained in connection with the
authorization, execution, delivery or performance by it of this Agreement or any
of the other Transaction Documents to which it is a party or under the
transactions contemplated hereunder or thereunder, including, without
limitation, the transfer of the Timeshare Loans and the creation of the security
interest of the Issuer therein pursuant to Section 3 hereof.
(vii)Defaults. It is not in default under any material agreement, contract,
instrument or indenture to which it is a party or by which it or its properties
is or are bound, or with respect to any order of any court, administrative
agency, arbitrator or governmental body, in each case, which would have a
material adverse effect on the transactions contemplated hereunder or on its
business, operations, financial condition or assets, and no event has occurred
which with notice or lapse of time or both would constitute such a default with
respect to any such agreement, contract, instrument or indenture, or with
respect to any such order of any court, administrative agency, arbitrator or
governmental body.
(viii)Insolvency. It is solvent and will not be rendered insolvent by the
transfer of Timeshare Loans hereunder. On and after the Closing Date, it will
not (i) engage in any business or transaction the result of which would cause
the property remaining with it to constitute an unreasonably small amount of
capital, (ii) intend to incur nor believe it will incur debts that would be
beyond its ability to pay as such debts mature or (iii) make any transfer
hereunder with actual intent to hinder, delay or defraud any person.
(ix)Pending Litigation or Other Proceedings. Other than as described in the
Offering Circular, there is no pending or, to its Knowledge, threatened action,
suit, proceeding or investigation before any court, administrative agency,
arbitrator or governmental body against or affecting it which, if decided
adversely, would materially and adversely affect (A) its condition (financial or
otherwise), its business or operations, (B) its ability to perform its
obligations under, or the validity or enforceability of, this Agreement or any
other documents or transactions contemplated under this Agreement including,
without limitation, its ability to foreclose or otherwise enforce the Liens of
the Timeshare Loans, or (C) any Timeshare Loan or title of any Obligor to any
related Timeshare Property.
(x)Information. No document, certificate or report furnished or required to be
furnished by or on behalf of it pursuant to this Agreement or any other
Transaction Document, contains or will contain when furnished any untrue
statement of a material fact or fails or will fail to state a material fact
necessary in order to make the statements contained therein not misleading in
light of the circumstances in which it was made. There are no facts known to it
which, individually or in the aggregate, materially adversely affect, or which
(aside from general economic trends) may reasonably be expected to materially
adversely affect in the future, its financial condition or assets or business,
or which may impair its or the Originator's ability to perform its respective
obligations under this Agreement, which have not been disclosed herein or
therein or in the certificates and other documents furnished to the Issuer by or
on its behalf pursuant hereto or thereto specifically for use in connection with
the transactions contemplated hereby or thereby.
(xi)Foreign Tax Liability. It is not aware of any Obligor under a Timeshare Loan
who has withheld any portion of payments due under such Timeshare Loan because
of the requirements of a foreign taxing authority, and no foreign taxing
authority has contacted it concerning a withholding or other foreign tax
liability.
(xii)No Deficiency Accumulation. To the Originator's Knowledge: (i) with respect
to plan years beginning prior to January 1, 2008, neither the Originator nor any
of its Commonly Controlled Affiliates (as defined below) has any “accumulated
funding deficiency” (as such term is defined under ERISA and the Code), whether
or not waived, with respect to any Employee Pension Benefit Plan (as defined
below), and no event has occurred or circumstance exists that may result in any
accumulated funding deficiency as of the last day of any plan year beginning
before January 1, 2008 of any such plan; (ii) with respect to plan years
beginning after December 31, 2007, neither the Originator nor any of its
Commonly Controlled Affiliates has any unpaid “minimum required contribution”
(as such term is defined under ERISA and the Code) with respect to any Employee
Pension Benefit Plan, whether or not such unpaid minimum required contribution
is waived, and no event has occurred or circumstance exists that may result in
any unpaid minimum required contribution as of the last day of the current plan
year of any such plan; (iii) the Originator and each of its Commonly Controlled
Affiliates has no outstanding liability for any undisputed contribution required
under any Originator Multiemployer Plan (as defined below); and (iv) the
Originator and each of its Commonly Controlled Affiliates has no outstanding
liability for any material disputed contribution required under any Originator
Multiemployer Plan, (a) Neither the Originator nor any of its Commonly
Controlled Affiliates has incurred any Withdrawal Liability (as defined below)
and (b) no event has occurred or circumstance exists that could result in any
Withdrawal Liability. Neither the Originator nor any of its Commonly Controlled
Affiliates has received notification of the reorganization, termination,
partition, or insolvency of any Originator Multiemployer Plan. For purposes of
this subsection, “Commonly Controlled Affiliates” means those direct or indirect
affiliates of the Originator that would be considered a single employer with the
Originator under Section 414(b), (c), (m), or (o) of the Code; “Employee Pension
Benefit Plan” means an employee pension benefit plan, as such term is defined in
Section 3(2) of ERISA, that is sponsored, maintained or contributed to by the
Originator or any of its Commonly Controlled Affiliates (other than an
Originator Multiemployer Plan); “Multiemployer Plan” means a multiemployer plan
as such term is defined in Section 3(37) of ERISA; “Originator Multiemployer
Plan” means a Multiemployer Plan to which the Originator or any of its Commonly
Controlled Affiliates contributes or in which the Originator or any of its
Commonly Controlled Affiliates participates; and “Withdrawal Liability” means
liability as determined under ERISA for the complete or partial withdrawal of
the Originator or any of its Commonly Controlled Affiliates from a Multiemployer
Plan.
(xiii)Taxes. It has filed all tax returns (federal, state and local) which it
reasonably believes are required to be filed and has paid or made adequate
provision for the payment of all taxes, assessments and other governmental
charges due from it or is contesting any such tax, assessment or other
governmental charge in good faith through appropriate proceedings or except
where the failure to file or pay will not have a material adverse effect on the
rights and interests of the Issuer or any of its subsequent assignees. It knows
of no basis for any material additional tax assessment for any fiscal year for
which adequate reserves have not been established. It shall pay all such taxes,
assessments and governmental charges when due.
(xiv)Place of Business. The principal place of business and chief executive
office where it keeps its records concerning the Timeshare Loans will be 1221
Riverbend Drive, Suite 120, Dallas, Texas 75247 (or such other place specified
by it by written notice to the Issuer and the Securitization Indenture Trustee).
It is a corporation formed under the laws of the State of Texas.
(xv)Securities Laws. It is not an “investment company” or a company “controlled”
by an “investment company” within the meaning of the Investment Company Act of
1940, as amended. No portion of the Timeshare Loan Acquisition Price for each of
the Timeshare Loans will be used by it or the Originator to acquire any security
in any transaction which is subject to Section 13 or Section 14 of the
Securities Exchange Act of 1934, as amended.
(xvi)Oak N' Spruce Loans. With respect to Timeshare Loans that are Oak N' Spruce
Loans:
(A)The Oak N' Spruce Trust is a trust duly, formed, validly existing, and in
good standing under the laws of the Commonwealth of Massachusetts. The Oak N'
Spruce Trust is authorized to transact business in no other state;
(B)It possesses all requisite franchises, operating rights, licenses, permits,
consents, authorizations, exemptions and orders as are necessary to discharge
its obligations under the Finance Agreement;
(C)It holds all right, title and interest in and to all of the Timeshare
Properties related to the Oak N' Spruce Loans solely for the benefit of the
beneficiaries referred to in, and subject in each case to the provisions of, the
Finance Agreement and the other documents and agreements related thereto;
(D)There are no actions, suits, proceedings, orders or injunctions pending
against the Oak N' Spruce Trust or Oak N' Spruce Trustee, at law or in equity,
or before or by any governmental authority which, if adversely determined, could
reasonably be expect to have a material adverse effect on the Trust Estate or
the Oak N' Spruce Trustee's ability to perform its obligations under the Trust
Documents;
(E)Neither the Oak N' Spruce Trust nor the Oak N' Spruce Trustee has incurred
any indebtedness for borrowed money (directly, by guarantee, or otherwise);
(F)All ad valorem taxes and other taxes and assessments against the Oak N'
Spruce Trust and/or its trust estate have been paid when due and neither the
Originator nor the Oak N' Spruce Trustee knows of any basis for any additional
taxes or assessments against any such property. The Oak N' Spruce Trust has
filed all required tax returns and has paid all taxes shown to be due and
payable on such returns, including all taxes in respect of sales of Owner
Beneficiary Rights (as defined in the Finance Agreement);
(G)The Oak N' Spruce Trust and the Oak N' Spruce Trustee are in compliance with
all applicable laws, statutes, rules and governmental regulations applicable to
it and in compliance with each instrument, agreement or document to which it is
a party or by which it is bound, including, without limitation, the Finance
Agreement except where the failure to comply herein would not materially and
adversely affect its ability to perform its obligations under this Agreement or
any other Transaction Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Timeshare Loans;
(H)It shall continue to control and manage the Oak N' Spruce Trust, and
Originator shall not take any action to cause the Oak N' Spruce Trustee to
control or manage the Oak N' Spruce Trust;
(I)The Oak N' Spruce Trustee is a wholly-owned subsidiary of it and is
controlled by it. It shall cause Silverleaf Berkshires, Inc. to remain the Oak
N' Spruce Trustee and a wholly-owned subsidiary of it, and it shall maintain the
existence of Silverleaf Berkshires, Inc. as a Texas corporation, with all the
requisite corporate powers and authority as exists on the Closing Date; and
(J)It shall comply, and shall cause the Oak N' Spruce Trustee to comply, with
all the terms and conditions of the Oak N' Spruce Trust Agreement and all other
related documents.
(xvii)Servicing. It is the initial Servicer and has been servicing the Timeshare
Loans in accordance with the Servicing Standard.
(xviii)Certified Copy of Contract for Sale. It represents and warrants that each
Contract for Sale contained in a Timeshare Loan File is a true, correct and
accurate copy of the original Contract for Sale.
(xix)Transactions in Ordinary Course. The transactions contemplated by this
Agreement are in its ordinary course of business.
(xx)Name. Its legal name is as set forth in the signature page of this Agreement
and it does not have any tradenames, fictitious names, assumed names or “doing
business as” names.
(xxi)No Conveyance. It agrees not to convey and to ensure no party under its
control conveys any interest in a Resort relating to a Timeshare Loan without
obtaining Rating Agency Confirmation if such conveyance is reasonably likely to
have a material adverse affect on the Securitization Noteholders.
(xxii)Timeshare Loan Documents. It represents and warrants that all of the
documents evidencing each of the Timeshare Loans are identical in all material
respects to the form determined to be valid, binding and enforceable in the
applicable state by the corresponding local counsel opinion issued by (I)
Weinstock & Scavo, P.C., dated December 27, 2010 , pertaining to Georgia law
matters, (II) Bulkley, Richardson and Gelinas, LLP, dated December 27, 2010,
pertaining to Massachusetts law matters, (III) Stinson Morrison Hecker LLP,
dated December 27, 2010, pertaining to Missouri law matters, (IV) Mayer Brown
LLP, dated December 27, 2010, pertaining to Illinois law matters, (V) Meadows,
Collier, Reed, Cousins, Crouch & Ungerman L.L.P., dated December 27, 2010,
pertaining to Texas law matters, and (VI) Holland and Knight LLP, dated December
27, 2010, pertaining to Florida law matters (collectively, the “Local Counsel
Opinions”).
(xxiii)Timeshare Marketing Materials and Disclosure Statements. It represents
and warrants that it has provided each of the law firms issuing the Local
Counsel Opinions all of the existing marketing materials and disclosure
statements in connection with the respective Resort. Moreover, no other
marketing materials and disclosure statements exist except for those provided to
the respective law firm issuing the Local Counsel Opinion.
(xxiv)Local Counsel Opinions. The facts regarding the Originator, the Resorts,
the Timeshare Loans and related matters set forth or assumed in the Local
Counsel Opinions are true and correct in all material respects.
(xxv)Bankruptcy Opinion. The facts regarding the Originator, the Issuer, the
Resorts, the Timeshare Loans and related matters set forth or assumed in the
opinion issued by Kramer Levin Naftalis & Frankel LLP dated as of December 27,
2010 pertaining to bankruptcy law matters are, and shall continue to be so long
as the Securitization Notes are outstanding, true and correct in all material
respects.
(xxvi)Custodial Files. It shall, on or prior to the Closing Date and each
Transfer Date, have delivered or caused the delivery to the Securitization
Custodian a Timeshare Loan File for each Timeshare Loan, which Timeshare Loan
File shall be complete and verified by the Securitization Custodian in
accordance with the Custodial Agreement.
(xxvii)Escrow Documents. It shall, on or prior to the ninetieth day following
the Closing Date and each Transfer Date, as applicable, deliver or cause the
delivery to the Securitization Custodian of the following: (I) with respect to
each Mortgage Loan and pre-July 2004 Oak N' Spruce Loan listed on the related
Schedule of Mortgage Loans, an original recorded Assignment of Mortgage (which
may be a part of a blanket assignment of more than one Mortgage Loan or pre-July
2004 Oak N' Spruce Loan), showing a complete chain of title from Originator to
the Securitization Indenture Trustee on behalf of the Securitization Noteholders
signed by an Authorized Officer of the Originator and each intervening party
with evidence of proper recordation or evidence from a third party that
submitted such assignment for recording that such assignment has been submitted
for recordation; (II) with respect to each post-July 2004 Oak N' Spruce Loan
listed on the related Schedule of Oak N' Spruce Loans, a file-stamped Oak N'
Spruce Financing Statement evidencing the security interest of the
Securitization Indenture Trustee and its assigns by naming the Obligor with
respect to the related post-July 2004 Oak N' Spruce Loan as debtor, naming the
Originator as secured party/assignor, and by naming the Securitization Indenture
Trustee on behalf of the Securitization Noteholders as the secured
party/assignee (or, in the alternative, in the form of an electronic spreadsheet
submitted to the Securitization Custodian directly by a third party service
company listing the filing number, date of filing, debtor and secured party and
accompanied by a certification of filing by the third party service company);
(III) with respect to each Mortgage Loan and pre-July 2004 Oak N' Spruce Loan
listed on the related Schedule of Prior Secured Party's Collateral, an original
recorded Reassignment of Mortgage (which may be a part of a blanket reassignment
of more than one Mortgage Loan or pre-July 2004 Oak N' Spruce Loan), showing a
complete chain of title from the Prior Secured Party to the Originator to the
Securitization Indenture Trustee on behalf of the Securitization Noteholders
signed by an Authorized Officer of the Prior Secured Party, the Originator,
Issuer and each intervening party with evidence of proper recordation or
evidence from a third party that submitted such assignment for recording that
such assignment has been submitted for recordation; (IV)(a) with respect to each
pre-July 2004 Oak N' Spruce Loan listed on the related Schedule of Prior Secured
Party's Collateral, a file-stamped Oak N' Spruce Financing Statement Amendment
evidencing the security interest of the Securitization Indenture Trustee and its
assigns by naming the Obligor with respect to the related pre-July 2004 Oak N'
Spruce Loan as debtor, the Securitization Indenture Trustee on behalf of the
Securitization Noteholders as the secured party/assignee, and the Prior Secured
Party as the assignor, and (b) with respect to each post-July 2004 Oak N' Spruce
Loan listed on the related Schedule of Prior Secured Party's Oak N' Spruce
Loans, a file-stamped Oak N' Spruce Financing Statement Amendment evidencing the
security interest of the Securitization Indenture Trustee and its assigns by
naming the Obligor with respect to the related post-July 2004 Oak N' Spruce Loan
as debtor, the Securitization Indenture Trustee on behalf of the Securitization
Noteholders as the secured party/assignee, and the Prior Secured Party as the
assignor (or, with respect to clauses (IV)(a) and (b) hereof, such Oak N' Spruce
Financing Statement Amendment may be delivered in the form of an electronic
spreadsheet submitted to the Securitization Custodian directly by a third party
service company listing the filing number, date of filing, debtor and secured
party and accompanied by a certification of filing by the third party service
company); and (V) all other recorded and/or filed documents provided under the
Escrow Agreement.
(xxviii)  Prior Secured Parties' Documents. In accordance with the Escrow
Agreement, it shall deliver or cause the delivery to the Escrow Agent of the
Paydown Letters, Direction Letters, Prior Secured Party Allonges and any other
documents required in respect of each of the Prior Secured Parties.
(xxix)Title Policies. In accordance with the Escrow Agreement, it shall deliver
or cause the delivery of the Title Policies (as defined in the Escrow Agreement)
within 90 days of the Closing Date and each Transfer Date, as applicable.
(xxx)No Material Adverse Tax Consequence: No transfer of the Timeshare Loans
hereunder shall result in a material adverse tax consequence to the Originator
or the Securitization Noteholder.
(b)The Originator hereby makes the representations and warranties relating to
the Timeshare Loans contained in Schedule I hereto for the benefit of the Issuer
and its assignees as of the Closing Date (with respect to each Timeshare Loan
transferred on the Closing Date) and as of each Transfer Date (with respect to
each Qualified Substitute Timeshare Loan and each Subsequent Timeshare Loan
transferred on such Transfer Date), as applicable.
(c)It is understood and agreed that the representations, warranties and
covenants set forth in this Section 5 shall survive the (i) transfer of each
Timeshare Loan to the Issuer and (ii) the subsequent pledge of such Timeshare
Loans and rights and remedies hereunder to the Securitization Indenture Trustee
on behalf of the Securitization Noteholders and shall continue so long as any
such Timeshare Loans shall remain outstanding or until such time as such
Timeshare Loans are repurchased, purchased or a Qualified Substitute Timeshare
Loan is provided pursuant to Section 6 hereof. The Originator acknowledges that
it has been advised that the Issuer intends to pledge, transfer, assign and
convey all of its right, title and interest in and to each Timeshare Loan and
its rights and remedies under this Agreement to the Securitization Indenture
Trustee on behalf of the Securitization Noteholders. The Originator agrees that,
upon any such assignment, the Securitization Indenture Trustee may enforce
directly, without joinder of the Issuer (but subject to any defense that the
Originator may have under this Agreement) all rights and remedies hereunder.
(d)With respect to any representations and warranties contained in Section 5
which are made to the Originator's Knowledge, if it is discovered that any
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of a Timeshare Loan or the interests of the Issuer
or any subsequent assignee thereof, then notwithstanding such lack of Knowledge
of the accuracy of such representation and warranty at the time such
representation or warranty was made (without regard to any Knowledge
qualifiers), such inaccuracy shall be deemed a breach of such representation or
warranty for purposes of the repurchase or substitution obligations described in
Sections 6(a)(i) or (ii) below.
SECTION 6.Repurchases and Substitutions.
(a)Mandatory Repurchases and Substitutions for Breaches of Representations and
Warranties. Upon the receipt of notice by the Originator of a breach of any of
its respective representations and warranties (as of the date on which such
representation or warranty was made) or covenants in Section 5 which materially
and adversely affects the value of a Timeshare Loan or the interests of the
Issuer or any subsequent assignee of the Issuer therein, the Originator shall
within 60 days of receipt of such notice, cure in all material respects the
circumstance or condition which has caused such representation or warranty to be
incorrect or covenant to be breached or either (i) repurchase the Issuer's or
its assignee's interest in such related defective Timeshare Loan (the “Defective
Timeshare Loan”) from the Issuer or its assignee at the Repurchase Price or (ii)
provide one or more Qualified Substitute Timeshare Loans and pay the related
Substitution Shortfall Amounts, if any.
(b)Repurchase of Upgraded Timeshare Loans. With respect to any Upgraded
Timeshare Loan in the pool of Timeshare Loans that have been conveyed to the
Issuer under this Agreement or the Loan Sale Agreement (the “Timeshare Loan
Pool”), on any date, the Originator shall prepay such Upgraded Timeshare Loan on
behalf of the related Obligor by depositing the related Repurchase Price in the
Collection Account as set forth in Section 4.5(e) of the Indenture.
(c)Optional Purchases of Defaulted Timeshare Loans. With respect to any
Timeshare Loan that has become a Defaulted Timeshare Loan in the Timeshare Loan
Pool, during the Due Period in which such Timeshare Loan became a Defaulted
Timeshare Loan, the Originator shall have the option, but not the obligation, to
purchase the Defaulted Timeshare Loan at a purchase price equal to the
Repurchase Price; provided, however, that the option to purchase a Defaulted
Timeshare Loan pursuant to this Section 6(c) is limited on any date to the
Optional Purchase Limit. If the Originator shall purchase Defaulted Timeshare
Loans as provided herein, the Originator shall deposit the related Repurchase
Price, in the Collection Account as set forth in Section 4.5(e) of the
Indenture.
(d)Optional Purchase of Force Majeure Loans. If a Force Majeure Event occurs at
a Resort, the Originator shall have the option, but not the obligation, to
purchase the related Force Majeure Loans in the Timeshare Loan Pool, so long as
such Timeshare Loans have not become Defaulted Timeshare Loans. The Originator
will have the option to purchase a Force Majeure Loan at the Force Majeure
Purchase Price; provided, however, that (i) the Originator's option to purchase
a Force Majeure Loan is limited on any date to the Force Majeure Purchase
LimitOptional Purchase Limit and (ii) the Originator shall have the right to
exercise such purchase option for a Force Majeure Loan only if the related Force
Majeure Purchase Price equals or exceeds the Loan Balance of such Force Majeure
Loan as of the date of such purchase, plus all accrued and unpaid interest
thereon.
(e)Payment of Repurchase Prices and Substitution Shortfall Amounts. The Issuer
hereby directs and the Originator hereby agrees to remit or cause to be remitted
all amounts in respect of Repurchase Prices, Force Majeure Purchase Prices and
Substitution Shortfall Amounts payable during the related Due Period in
immediately available funds to the Securitization Indenture Trustee to be
deposited in the Collection Account on the related Transfer Date in accordance
with the provisions of the Indenture. In the event that more than one Timeshare
Loan is substituted pursuant to Section 6(a) hereof on any Transfer Date, the
Substitution Shortfall Amounts and the Loan Balances of Qualified Substitute
Timeshare Loans shall be calculated on an aggregate basis for all substitutions
made on such Transfer Date.
(f)Schedule of Timeshare Loans. The Issuer hereby directs and the Originator
hereby agrees, on each date on which a Timeshare Loan has been repurchased,
purchased, substituted or otherwise added (i.e., in the case of Subsequent
Timeshare Loans) to provide the Issuer and the Securitization Indenture Trustee
with an electronic supplement to Schedule III hereto and the Schedule of
Timeshare Loans reflecting the removal, substitution and/or other addition of
such Timeshare Loans and subjecting any Qualified Substitute Timeshare Loans and
Subsequent Timeshare Loans to the provisions of this Agreement.
(g)Qualified Substitute Timeshare Loans. On the related Transfer Date, the
Issuer hereby directs and the Originator hereby agrees to deliver or to cause
the delivery of the Timeshare Loan Files of the related Qualified Substitute
Timeshare Loans to the Securitization Indenture Trustee or to the Securitization
Custodian, at the direction of the Securitization Indenture Trustee, on the
related Transfer Date in accordance with the provisions of the Securitization
Indenture. As of such related Transfer Date, the Originator does hereby
transfer, assign, sell, contribute and grant to the Issuer, without recourse
(except as provided in Section 6 and Section 8 hereof), any and all of the
Originator's right, title and interest in and to (i) each Qualified Substitute
Timeshare Loan conveyed to the Issuer on such Transfer Date, (ii) the
Receivables in respect of the Qualified Substitute Timeshare Loans due after the
related Cut-Off Date, (iii) the related Timeshare Loan Documents (excluding any
rights as developer or declarant under the Timeshare Declaration, the Timeshare
Program Consumer Documents or the Timeshare Program Governing Documents), (iv)
all Related Security in respect of such Qualified Substitute Timeshare Loans,
and (v) all income, payments, proceeds and other benefits and rights related to
any of the foregoing. Upon such sale and/or contribution, the ownership of each
Qualified Substitute Timeshare Loan and all collections allocable to principal
and interest thereon since the related Cut-Off Date and all other property
interests or rights conveyed pursuant to and referenced in this Section 6(g)
shall immediately vest in the Issuer, its successors and assigns. The Originator
shall not take any action inconsistent with such ownership nor claim any
ownership interest in any Qualified Substitute Timeshare Loan for any purpose
whatsoever other than consolidated financial and federal and state income tax
reporting. The Originator agrees that such Qualified Substitute Timeshare Loans
shall be subject to the provisions of this Agreement.
(h)Officer's Certificate. The Originator shall, on each related Transfer Date,
certify in writing to the Issuer and the Securitization Indenture Trustee that
each new Timeshare Loan meets all the criteria of the definition of “Qualified
Substitute Timeshare Loan” and that (i) the Timeshare Loan Files for such
Qualified Substitute Timeshare Loans have been delivered to the Securitization
Custodian, and (ii) the Timeshare Loan Servicing Files for such Qualified
Substitute Timeshare Loans have been delivered to the Securitization Servicer.
(i)Release. In connection with any repurchase, purchase or substitution of one
or more Timeshare Loans contemplated by this Section 6, upon satisfaction of the
conditions contained in this Section 6, the Issuer and the Securitization
Indenture Trustee shall execute and deliver or shall cause the execution and
delivery of such releases and instruments of transfer or assignment presented to
it by the Originator, in each case, without recourse, as shall be necessary to
vest in the Originator or its designee (or to evidence the vesting in such
Person of) the legal and beneficial ownership of such released Timeshare Loans.
The Issuer shall cause the Securitization Indenture Trustee to cause the
Securitization Custodian to release the related Timeshare Loan Files to the
Originator or its designee and the Securitization Servicer to release the
related Timeshare Loan Servicing Files to the Originator or its designee.
(j)Sole Remedy. It is understood and agreed that the obligations of the
Originator contained in Section 6(a) to cure a material breach, or to repurchase
or substitute related Defective Timeshare Loans and the obligation of the
Originator to indemnify pursuant to Section 8 shall constitute the sole remedies
available to the Issuer or its subsequent assignees for the breaches of any of
its representations or warranties contained in Section 5, and such remedies are
not intended to and do not constitute “credit recourse” to the Originator.
SECTION 7.Additional Covenants of the Originator.
(a)The Originator hereby covenants and agrees with the Issuer as follows:
(i)It shall comply with all applicable laws, rules, regulations and orders
applicable to it and its business and properties except where the failure to
comply will not have a material adverse effect on its business or its ability to
perform its obligations under this Agreement or any other Transaction Document
to which it is a party or under the transactions contemplated hereunder or
thereunder or the validity or enforceability of the Timeshare Loans.
(ii)It shall preserve and maintain for itself its existence (corporate or
otherwise), rights, franchises and privileges in the jurisdiction of its
organization and except where the failure to so preserve and maintain will not
have a material adverse effect on its business or its ability to perform its
obligations under this Agreement or any other Transaction Document to which it
is a party or under the transactions contemplated hereunder or thereunder or the
validity of enforceability of the Timeshare Loans.
(iii)On or prior to the Closing Date or a Transfer Date, as applicable, it shall
indicate in its and any applicable Affiliate's computer files and other records
that each Timeshare Loan has been sold to the Issuer.
(iv)It shall respond to any inquiries with respect to ownership of a Timeshare
Loan by stating that such Timeshare Loan has been sold to the Issuer and that
the Issuer is the owner of such Timeshare Loan.
(v)On or prior to the Closing Date, it shall file at its own expense financing
statements with respect to the Transferred Assets transferred hereunder, naming
the Originator as debtor and naming as secured parties the Issuer and the
Securitization Indenture Trustee on behalf of the Securitization Noteholders, in
the form and manner reasonably requested by the Issuer. It shall deliver
file-stamped copies of such financing statements to the Issuer and the
Securitization Indenture Trustee on behalf of the Securitization Noteholders.
(vi)It agrees from time to time, at its expense, promptly to execute and deliver
all further instruments and documents, and to take all further actions, that may
be necessary, or that the Issuer or the Securitization Indenture Trustee may
reasonably request, to perfect, protect or more fully evidence the sale or
contribution of the Timeshare Loans, or to enable the Issuer or the
Securitization Indenture Trustee to exercise and enforce its rights and remedies
hereunder or under any Timeshare Loan including, but not limited to, powers of
attorney, UCC financing statements and assignments of mortgage.
(vii)Any change in its legal name and any use by it of any tradename, fictitious
name, assumed name or “doing business as” name occurring after the Closing Date
shall be promptly disclosed to the Issuer and the Securitization Indenture
Trustee in writing.
(viii)Upon the discovery or receipt of notice by a Responsible Officer of it of
a breach of any of its representations or warranties and covenants contained
herein, it shall promptly disclose to the Issuer and the Securitization
Indenture Trustee, in reasonable detail, the nature of such breach.
(ix)In the event that it shall receive any payments in respect of a Timeshare
Loan after the Closing Date or Transfer Date, as applicable (including any
insurance proceeds that are not payable to the related Obligor), it shall,
within two (2) Business Days of receipt, transfer or cause to be transferred,
such payments to the Lockbox Account.
(x)It will keep its principal place of business and chief executive office and
the office where it keeps its records concerning the Timeshare Loans at its
address listed herein.
(xi)In the event that it or the Issuer or any assignee of the Issuer should
receive actual notice of any transfer taxes arising out of the transfer,
assignment and conveyance of a Timeshare Loan from it to the Issuer, on written
demand by the Issuer, or upon it otherwise being given notice thereof, it shall
pay, and otherwise indemnify and hold the Issuer, and any subsequent assignee
harmless, on an after-tax basis, from and against any and all such transfer
taxes.
(xii)It authorizes the Issuer and the Securitization Indenture Trustee to file
continuation statements, and amendments thereto, relating to the Timeshare Loans
and all payments made with regard to the related Timeshare Loans without its
signature where permitted by law. A photocopy or other reproduction of this
Agreement shall be sufficient as a financing statement where permitted by law.
The Issuer confirms that it is not its present intention to file a photocopy or
other reproduction of this Agreement as a financing statement, but reserves the
right to do so if, in its good faith determination, there is at such time no
reasonable alternative remaining to it.
(xiii)It shall not prepare any financial statements or other statements
(including any tax filings) which shall account for the transactions
contemplated by this Agreement in any manner other than as the sale of, or a
capital contribution of, the Timeshare Loans, Timeshare Properties, Related
Security and other conveyed property related thereto and additional collateral
by it to the Issuer.
SECTION 8.Indemnification.
(a)The Originator hereby agrees to indemnify the Issuer, the Securitization
Indenture Trustee, the Securitization Noteholders and the Initial Purchaser
(collectively, the “Indemnified Parties”) against any and all claims, losses or
liabilities (including reasonable legal fees and related costs) that the Issuer,
the Securitization Indenture Trustee, the Securitization Noteholders or the
Initial Purchaser may sustain directly related to any breach of the
representations and warranties and covenants of the Originator under Section 5
hereof (the “Indemnified Amounts”) excluding, however (i) Indemnified Amounts to
the extent resulting from the gross negligence or willful misconduct on the part
of such Indemnified Party; (ii) any recourse for any uncollectible Timeshare
Loan not related to a breach of representation or warranty; (iii) recourse to
the Originator for a related Defective Timeshare Loan so long as the same is
cured, substituted or repurchased pursuant to Section 6 hereof; or (iv) income
or similar taxes by such Indemnified Party arising out of or as a result of this
Agreement or the transfer of the Timeshare Loans. The parties hereto shall (A)
promptly notify the other parties hereto, the Securitization Indenture Trustee,
and the Initial Purchaser if a claim is made by a third party with respect to
this Agreement or the Timeshare Loans, and relating to (1) the failure by the
Originator to perform its duties in accordance with the terms of this Agreement
or (2) a breach of the Originator's representations, covenants or warranties
contained in this Agreement, (B) assume (with the consent of the Issuer, the
Securitization Indenture Trustee, the Securitization Noteholders or the Initial
Purchaser, as applicable, which consent shall not be unreasonably withheld) the
defense of any such claim and pay all expenses in connection therewith,
including legal counsel fees and (C) promptly pay, discharge and satisfy any
judgment, order or decree which may be entered against it or the Issuer, the
Securitization Indenture Trustee, the Securitization Noteholders or the Initial
Purchaser in respect of such claim. If the Originator shall have made any
indemnity payment pursuant to this Section 8 and the recipient thereafter
collects from another Person any amount relating to the matters covered by the
foregoing indemnity, the recipient shall promptly repay such amount to the
Originator.
(b)The obligations of the Originator under this Section 8 to indemnify the
Issuer, the Securitization Indenture Trustee, the Securitization Noteholders and
the Initial Purchaser shall survive the termination of this Agreement and
continue until the Notes are paid in full or otherwise released or discharged.
SECTION 9.No Proceedings. The Originator hereby agrees that it will not,
directly or indirectly, institute, or cause to be instituted, or join any Person
in instituting, against the Issuer or any Association, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law so long as
there shall not have elapsed one year plus one day since the latest maturing
Securitization Notes issued by the Issuer.
SECTION 10.Notices, Etc. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing and mailed or
sent by confirmable electronic means, or delivered as to each party hereto, at
its address set forth below or at such other address as shall be designated by
such party in a written notice to the other parties hereto. All such notices and
communications shall not be effective until received by the party to whom such
notice or communication is addressed.
Issuer
 
Silverleaf Finance VIII, LLC
1221 Riverbend Drive, Suite 262
Dallas, Texas 75247
Attention: Harry J. White, Jr., Chief Financial Officer
Facsimile No.: 214-631-4981
 
Originator
 
Silverleaf Resorts, Inc.
1221 Riverbend Drive, Suite 120
Dallas, Texas 75247
Attention: Robert E. Mead, Chief Executive Officer
Facsimile No.: 214-905-0519

 
SECTION 11.No Waiver; Remedies. No failure on the part of the Issuer, the
Securitization Indenture Trustee or any assignee thereof to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any other remedies provided
by law.
SECTION 12.Binding Effect; Assignability. This Agreement shall be binding upon
and inure to the benefit of the Originator, the Issuer and their respective
successors and assigns. Any assignee shall be an express third party beneficiary
of this Agreement, entitled to directly enforce this Agreement. The Originator
may not assign any of its rights and obligations hereunder or any interest
herein without the prior written consent of the Issuer and any assignee thereof.
The Issuer may, and intends to, assign all of its rights to the Securitization
Indenture Trustee on behalf of the Securitization Noteholders, and the
Originator consents to any such assignments. This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms, and shall remain in full force and effect until its termination;
provided, however, that the rights and remedies with respect to any breach of
any representation and warranty made by the Originator pursuant to Section 5,
and the cure, repurchase or substitution and indemnification obligations shall
be continuing and shall survive any termination of this Agreement, but such
rights and remedies may be enforced only by the Issuer and the Securitization
Indenture Trustee.
SECTION 13.Amendments; Consents and Waivers. No modification, amendment or
waiver of, or with respect to, any provision of this Agreement, and all other
agreements, instruments and documents delivered thereto, nor consent to any
departure by the Originator from any of the terms or conditions thereof shall be
effective unless it shall be in writing and signed by each of the parties
hereto, the written consent of the Securitization Indenture Trustee on behalf of
the Securitization Noteholders is given and confirmation from the Rating Agency
that such action will not result in a downgrade, withdrawal or qualification of
any rating assigned to a Class of Notes is received. The Issuer shall provide or
cause to be provided to the Securitization Indenture Trustee and the Rating
Agency any such proposed modifications, amendments or waivers. Any waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No consent to or demand by the Originator in any case shall, in
itself, entitle it to any other consent or further notice or demand in similar
or other circumstances. The Originator acknowledges that in connection with the
intended assignment by the Issuer of all of its right, title and interest in and
to each Timeshare Loan to the Securitization Indenture Trustee on behalf of the
Securitization Noteholders, the Issuer intends to issue the Notes, the proceeds
of which will be used by the Issuer, in part, to purchase the Timeshare Loans
hereunder. The parties hereto agree that all communications, reports, notices
and any other item sent to the Rating Agency pursuant to this Agreement shall
simultaneously be e-mailed to SFVIII@structuredfn.com.
 
SECTION 14.Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation, shall not in any way be
affected or impaired thereby in any other jurisdiction. Without limiting the
generality of the foregoing, in the event that a Governmental Authority
determines that the Issuer may not purchase or acquire Timeshare Loans, the
transactions evidenced hereby shall constitute a loan and not a purchase and
sale or contribution, notwithstanding the otherwise applicable intent of the
parties hereto, and the Originator shall be deemed to have granted to the Issuer
as of the date hereof, a first priority perfected security interest in all of
the Originator's right, title and interest in, to and under such Timeshare Loans
and the related property as described in Section 2 hereof.
 
SECTION 15.GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
(A)THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF
LAW OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK.
(B)THE PARTIES TO THIS AGREEMENT HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT
LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY AND EACH WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH ON THE
SIGNATURE PAGE HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE
DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE
PREPAID. THE PARTIES HERETO EACH WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 15 SHALL AFFECT THE RIGHT OF
THE PARTIES TO THIS AGREEMENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY OF THEM TO BRING ANY ACTION OR
PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(C)SILVERLEAF AND ISSUER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS
AGREEMENT. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY THE ORIGINATOR AND ISSUER AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO TRIAL BY JURY
WOULD OTHERWISE ACCRUE OR EXIST. THE ORIGINATOR AND ISSUER ARE HEREBY AUTHORIZED
TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF
THIS WAIVER BY THE ORIGINATOR AND ISSUER.
 
SECTION 16.Heading. The headings herein are for purposes of reference only and
shall not otherwise affect the meaning or interpretation of any provision
hereof.
SECTION 17.Execution in Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and both of which when taken together shall constitute
one and the same agreement. Delivery of an executed counterpart of this
Agreement by facsimile or other electronic transmission (i.e., “pdf” or “tif”)
shall be effective as delivery of a manually executed counterpart hereof.
 
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duty authorized, as of the date first above
written.
 
Very truly yours,
 
SILVERLEAF FINANCE VIII, LLC, as Issuer
 
 
By:
/S/ HARRY J. WHITE, JR.
Name:
Harry J. White, Jr.
Title:
Vice President, Treasurer & Chief Financial Officer
 
 
SILVERLEAF RESORTS, INC.
 
 
By:
/S/ HARRY J. WHITE, JR.
Name:
Harry J. White, Jr.
Title:
Chief Financial Officer