AMENDED AND RESTATED SALE AND SERVICING
AGREEMENT

among

SILVERLEAF FINANCE IV, LLC, as
Purchaser,

SILVERLEAF RESORTS, INC., as
Seller and Servicer,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Backup Servicer, Trustee and Account Intermediary

Dated as of
December 22, 2006
 

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TABLE OF CONTENTS
 

Article I DEFINITIONS
1
   
 Section 1.1
 Definitions
1
 Section 1.2
 Other Definitional Provisions
1
 Section 1.3
 Calculations
2
 Section 1.4
 Material Adverse Effect
2
     
Article II CONVEYANCE OF RECEIVABLES
2
   
 Section 2.1
 Conveyance of Receivables
2
 Section 2.2
 Transfers Intended as Sale
5
 Section 2.3
 Further Encumbrance of Receivables and Other Conveyed Property
5
     
Article III THE RECEIVABLES
5
   
 Section 3.1
 Representations, Warranties and Certain Covenants of Seller
5
 Section 3.2
 Repurchases and Substitutions
9
 Section 3.3
 Custody of Timeshare Loan Files
12
 Section 3.4
 Trustee to Obtain Fidelity Insurance
12
     
Article IV ADMINISTRATION AND SERVICING OF RECEIVABLES
12
   
 Section 4.1
 Duties of the Servicer
12
 Section 4.2
 Collection of Receivable Payments; Lockbox Agreements; Other Duties of the
Servicer
13
 Section 4.3
 Realization Upon Receivables
15
 Section 4.4
 [RESERVED]
16
 Section 4.5
 Maintenance of Security Interests
16
 Section 4.6
 Additional Covenants of Servicer
17
 Section 4.7
 Purchase of Receivables Upon Breach of Covenant
18
 Section 4.8
 Servicing Fee
18
 Section 4.9
 Servicer’s Certificate
19
 Section 4.10
 Annual Statement as to Compliance, Notice of Servicer Termination Event
19
 Section 4.11
 Independent Accountants’ Reports
19
 Section 4.12
 Independent Accountants’ Review of Receivables File
20
 Section 4.13
 Report on Proceedings and Servicer Termination Event
20
 Section 4.14
 Access to Certain Documentation and Information Regarding Receivables
20
 Section 4.15
 Verification of Servicer’s Certificate
20
 Section 4.16
 [RESERVED]
22
 Section 4.17
 Fidelity Bond and Errors and Omissions Insurance
22
 Section 4.18
 Lien Searches; Opinions as to Transfers and Security Interests
22
 Section 4.19
 Subservicing Arrangements
23
     
Article V ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO THE NOTEHOLDER
23
   
 Section 5.1
 Establishment of Pledged Accounts
23
 Section 5.2
 [RESERVED]
25
 Section 5.3
 Certain Reimbursements to the Servicer
25
 Section 5.4
 [RESERVED]
25
 Section 5.5
 Reserve Account
25
 Section 5.6
 Additional Deposits
26
 Section 5.7
 Distributions
26
 Section 5.8
 Note Distribution Account
27
 Section 5.9
 Statements to the Noteholder
28
     
Article VI [RESERVED]
29
   
Article VII THE PURCHASER
29
   
 Section 7.1
 Representations of Purchaser
29
     
Article VIII THE SELLER
30

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 Section 8.1
 Representations of Seller
30
 Section 8.2
 Additional Covenants of the Seller
33
 Section 8.3
 Liability of Seller; Indemnities
35
 Section 8.4
 Merger or Consolidation of Seller
36
 Section 8.5
 Limitation on Liability of Seller and Others
36
     
Article IX THE SERVICER
36
   
 Section 9.1
 Representations of Servicer
36
 Section 9.2
 Liability of Servicer; Indemnities
39
 Section 9.3
 Merger or Consolidation of the Servicer or Backup Servicer, and Assumption of
the
       
 Obligations of the Backup Servicer
40
   
 Section 9.4
 [RESERVED]
40
 Section 9.5
 [RESERVED]
40
 Section 9.6
 Servicer and Backup Servicer Not to Resign
41
 Section 9.7
 Reporting Requirements
41
     
Article X DEFAULT
41
   
 Section 10.1
 Servicer Termination Events
41
 Section 10.2
 Consequences of a Servicer Termination Event
43
 Section 10.3
 Appointment of Successor
44
 Section 10.4
 Notification of Termination and Appointment
45
 Section 10.5
 Waiver of Past Defaults
45
 Section 10.6
 Action Upon Certain Failures of the Servicer
45
 Section 10.7
 Continued Errors
45
     
Article XI MISCELLANEOUS PROVISIONS
45
   
 Section 11.1
 Amendment
45
 Section 11.2
 Protection of Title to Property. (a)
46
 Section 11.4
 Assignment
48
 Section 11.5
 Limitations on Rights of Others
48
 Section 11.6
 Severability
48
 Section 11.7
 Separate Counterparts
48
 Section 11.8
 Headings
48
 Section 11.9
 Governing Law
48
 Section 11.10
 Assignment to Trustee
48
 Section 11.11
 Nonpetition Covenants
48
 Section 11.12
 Limitation of Liability of Trustee
49
 Section 11.13
 Independence of the Servicer
49
 Section 11.14
 No Joint Venture
49
 Section 11.15
 Intention of Parties Regarding Delaware Securitization Act
49
 Section 11.16
 Special Supplemental Agreement
49
 Section 11.17
 Limited Recourse
49
 Section 11.18
 Acknowledgement of Roles
50
 Section 11.19
 Termination
50
 Section 11.20
 Submission to Jurisdiction
50
 Section 11.21
 Waiver of Trial by Jury
50
 Section 11.22
 Process Agent
50
 Section 11.23
 No Set-Off
51
 Section 11.24
 No Waiver; Cumulative Remedies
51
 Section 11.25
 Merger and Integration
51

 
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SCHEDULES

Schedule A
-
[Intentionally Omitted]

Schedule B
-
Location for Delivery of Timeshare Loan Files

Schedule C
-
Form of Trial Balance Report/Delinquency Report

     

EXHIBITS     

     

Exhibit A 
- 
Form of Servicer’s Certificate 

Exhibit B 
- 
Eligibility Criteria 

Exhibit C 
- 
Form of Assignment 

Exhibit D 
- 
Form of Addition Notice 

Exhibit E 
- 
ACH Form 

Exhibit F 
- 
List of Silverleaf Executive Management 

Exhibit G 
- 
Record Layout 

Exhibit H 
- 
Servicer’s Monthly Representation Certificate 

Exhibit I 
- 
Escrow Agent Wiring Instructions  

Exhibit J 
- 
Form of Waiver Letter 

Exhibit K 
- 
Credit Policy/Collection Policy 

Exhibit L 
- 
Form of Notice of Non-Titled Loans 

     

ANNEXES     

     

Annex A  -  Amended and Restated Defined Terms 

 
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AMENDED AND RESTATED SALE AND SERVICING AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this “Agreement”) dated as of December 22,
2006, among SILVERLEAF FINANCE IV, LLC, a Delaware limited liability company
(the “Purchaser”), SILVERLEAF RESORTS, INC., a Texas corporation (in its
capacities as Seller, the “Seller” and as Servicer, the “Servicer,”
respectively), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association (in its capacities as Backup Servicer, the “Backup Servicer,” as
Trustee, the “Trustee,” and as Account Intermediary, the “Account
Intermediary”).

WHEREAS, the parties hereto agree to amend and restate in its entirety that
certain Sale and Servicing Agreement, dated as of March 2, 2006, among the
Purchaser, the Seller, the Servicer, the Backup Servicer, the Trustee and the
Account Intermediary;

WHEREAS, the Purchaser desires to purchase, from time to time, a portfolio of
receivables arising in connection with the sales of vacation ownership interests
by Silverleaf Resorts, Inc.;

WHEREAS, the Purchaser intends to finance such purchases by issuing the Note,
secured by the Receivables and the Other Conveyed Property, pursuant to the
Indenture (as defined below);

WHEREAS, the Seller is willing to sell such Receivables and the Other Conveyed
Property to the Purchaser from time to time; and

WHEREAS, the Servicer is willing to service all such Receivables and related
Other Conveyed Property.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS
 
Section 1.1 Definitions. Capitalized terms used in this Agreement and not
otherwise defined in this Agreement, shall have the meanings set forth in Annex
A attached hereto.
 
Section 1.2 Other Definitional Provisions.

(a) All terms defined in this Agreement shall have the defined meanings when
used in any instrument governed hereby and in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein.

(b) Accounting terms used but not defined or partly defined in this Agreement,
in any instrument governed hereby or in any certificate or other document made
or delivered pursuant hereto, to the extent not defined, shall have the
respective meanings given to them under U.S. generally accepted accounting
principles as in effect on the date of this Agreement or any such instrument,
certificate or other document, as applicable. To the extent that the definitions
of accounting terms in this Agreement or in any such instrument, certificate or
other document are inconsistent with the meanings of such terms under U.S.
generally accepted accounting principles, the definitions contained in this
Agreement or in any such instrument, certificate or other document shall
control.

(c) The words “hereof,” “herein,” “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.

(d) Section, Schedule and Exhibit references contained in this Agreement are
references to Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term “including” shall mean “including without
limitation.”

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(e) The definitions contained in this Agreement are applicable to the singular
as well as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such terms.

(f) Any agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such agreement,
instrument or statute as the same may from time to time be amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments and instruments associated therewith; all references to a
Person include its permitted successors and assigns.
 
Section 1.3 Calculations. Other than as expressly set forth herein or in any of
the other Basic Documents, all calculations of the amount of the Servicing Fee,
Backup Servicing Fee and the Trustee Fee shall be made on the basis of a 360-day
year consisting of twelve 30-day months. All calculations of the Commitment Fee
and the Noteholder’s Monthly Interest Distributable Amount shall be made on the
basis of the actual number of days in the Accrual Period or Interest Period, as
applicable, and 360 days in the calendar year. All references to the Principal
Balance of a Receivable as of any day shall refer to the close of business on
such day.
 
Section 1.4 Material Adverse Effect. Whenever a determination is to be made
under this Agreement whether a breach of a representation, warranty or covenant
has or could have a material adverse effect on a Receivable, Other Conveyed
Property or the interest therein of the Purchaser and the Noteholder (or any
similar or analogous determination), such determination shall be made by the
Noteholder in its sole and reasonable discretion.

ARTICLE II

CONVEYANCE OF RECEIVABLES
 
Section 2.1 Conveyance of Receivables

(a) In consideration of the Purchaser’s delivery to or upon the order of the
Seller on any Funding Date of the Purchase Price therefor, the Seller does
hereby sell, transfer, assign, set over and otherwise convey to the Purchaser,
without recourse (subject to the obligations set forth herein) all right, title
and interest of the Seller, whether now existing or hereafter arising, in, to
and under:

(i)the Receivables listed in the Schedule of Receivables from time to time;

(ii)Timeshare Loans relating to the Receivables and all monies received under
the Receivables and the Timeshare Loans on and after the related Cutoff Date and
all Net Liquidation Proceeds received with respect to the Receivables and the
Timeshare Loans after the related Cutoff Date;

(iii)with respect to any Timeshare Loan, all of the Seller’s interest in the
Timeshare Property arising under or in connection with the related Mortgage,
Financing Agreement, Oak N’ Spruce Certificate and the related Timeshare Loan
Documents;

(iv)all other security interests or liens and property subject thereto from time
to time purporting to secure payment of such Timeshare Loan, together with all
mortgages, assignments and financing statements signed by an Obligor describing
any collateral securing such Timeshare Loan;

(v)all guarantees, insurance and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such Timeshare
Loan and all proceeds thereof (including, but not limited to, any insurance
proceeds to the extent they are not used to rebuild or repair a Unit);

(vi)Reserved;

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(vii)the Timeshare Loan File related to each Receivable and all other security
and books, records and computer tapes relating to the foregoing;

(viii)all amounts and property from time to time held in or credited to the
Collection Account or the Lockbox Account;

(ix)all property (including the right to receive future Net Liquidation
Proceeds) that secures a Receivable that has been acquired by or on behalf of
the Purchaser pursuant to a liquidation of such Receivable; and

(x)all present and future claims, demands, causes and choses in action in
respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing.

(b) The Seller shall transfer to the Purchaser the Receivables and the other
property and rights related thereto described in paragraph (a) above only upon
the satisfaction of each of the conditions set forth below on or prior to the
related Funding Date. In addition to constituting conditions precedent to any
purchase hereunder and under each Assignment, the following shall also be
conditions precedent to any Advance on any Funding Date under the terms of the
Note Purchase Agreement:

(i)the Seller shall have provided the Purchaser, the Trustee and the Noteholder
with an Addition Notice substantially in the form of Exhibit D hereto (which
shall include supplements to the Schedule of Receivables) not later than three
Business Days prior to such Funding Date and shall have provided any information
reasonably requested by any of the foregoing with respect to the Related
Receivables;

(ii)the Seller shall, to the extent required by Section 4.2 of this Agreement,
have deposited in the Collection Account all collections received after the
Cutoff Date in respect of the Related Receivables to be purchased on such
Funding Date;

(iii)as of each Funding Date, (A) the Seller shall not be insolvent and shall
not become insolvent as a result of the transfer of Related Receivables on such
Funding Date, (B) the Seller shall not intend to incur or believe that it shall
incur debts that would be beyond its ability to pay as such debts mature, (C)
such transfer shall not have been made with actual intent to hinder, delay or
defraud any Person and (D) the assets of the Seller shall not constitute
unreasonably small capital to carry out its business as then conducted;

(iv)the Facility Termination Date shall not have occurred;

(v)the Servicer shall have established one or more Lockbox Accounts acceptable
to the Noteholder;

(vi)each of the representations and warranties made by the Seller pursuant to
Section 3.1 and the other Basic Documents with respect to the Related
Receivables to be purchased on such Funding Date shall be true and correct as of
the related Funding Date and the Seller shall have performed all obligations to
be performed by it hereunder or in any Assignment on or prior to such Funding
Date;

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(vii)the Seller shall, at its own expense, on or prior to the Funding Date,
indicate in its computer files that the Related Receivables to be purchased on
such Funding Date have been sold to the Purchaser pursuant to this Agreement or
an Assignment, as applicable;

(viii)the Seller shall have taken any action required to maintain (i) the first
priority perfected ownership interest of the Purchaser in the Related
Receivables and Other Conveyed Property and (ii) the first priority perfected
security interest of the Trustee in the Collateral;

(ix)no selection procedures adverse to the interests of the Noteholder shall
have been utilized in selecting the Related Receivables to be sold on such
Funding Date;

(x)the addition of any such Related Receivables to be purchased on such Funding
Date shall not result in a material adverse tax consequence to the Noteholder or
the Purchaser;

(xi)the Seller shall have delivered to the Noteholder and the Trustee an
Officers’ Certificate confirming the satisfaction of each condition precedent
specified in this paragraph (b);

(xii)no Funding Termination Event, Servicer Termination Event, Event of Default
or any event that, with the giving of notice or the passage of time, would
constitute a Funding Termination Event, or Servicer Termination Event or Event
of Default, shall have occurred and be continuing;

(xiii)the Custodian shall have confirmed receipt of the related Timeshare Loan
File (with the exception of the original mortgagee title insurance policy or
master policy referencing each Timeshare Loan and covering Silverleaf Resorts,
Inc., its successors and assigns, which shall be delivered by the Escrow Agent
within 90 days of the related Funding Date, except with respect to any
Non-Titled Loans, as described in Section 3.1(a)(xxvii) below), for each Related
Receivable included in the Borrowing Base calculation and shall have delivered a
copy to the Noteholder, the Servicer and the Trustee of a Trust Receipt with
respect to the Timeshare Loan Files related to the Related Receivables to be
purchased on such Funding Date;

(xiv)the Seller shall have filed or caused to be filed all necessary UCC-l
financing statements (or amendments thereto) necessary to maintain (in each case
assuming for purposes of this clause (xiv) that such perfection may be achieved
by making the appropriate filings), or taken any other steps necessary to
maintain, (1) the first, priority, perfected ownership interest of Purchaser and
(2) the first priority, perfected security interest of the Trustee, with respect
to the Related Receivables and Other Conveyed Property and the Collateral,
respectively to be transferred on such Funding Date;

(xv)the Seller shall have executed and delivered to the Purchaser and the
Noteholder an Assignment in the form of Exhibit C;

(xvi)the Noteholder Excess Principal Event Date shall not have occurred;

(xvii)each of the Escrow Agent and Custodian shall have delivered its respective
certifications in accordance with the Escrow Agreement;

(xviii)each of the conditions precedent to such Advance set forth in the
Indenture and the Note Purchase Agreement shall have been satisfied; and

(xix)the Structuring Fee shall have been paid to the Noteholder in full.

Unless waived by the Noteholder in writing, the Seller covenants that in the
event any of the foregoing conditions precedent are not satisfied with respect
to any Related Receivable on the date required as specified above, the Seller
will immediately repurchase such Related Receivable from the Purchaser, at a
price equal to the Purchase Amount thereof, in the manner specified in Section
3.2 and Section 4.7. The Trustee may rely on the accuracy of the Officers’
Certificate delivered pursuant to item (xi) above without independent inquiry or
verification.

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(c) Payment of Purchase Price. In consideration for the sale of the Related
Receivables and Other Conveyed Property described in Section 2.1(a) or the
related Assignment, the Purchaser shall, on each Funding Date on which Related
Receivables are transferred hereunder, pay to or upon the order of the Seller
the applicable Purchase Price in the following manner: (i) cash in an amount
equal to the amount of the Advance received by the Purchaser under the Note on
such Funding Date and (ii) to the extent the Purchase Price for the related
Receivables and Other Conveyed Property exceeds the amount of cash described in
(i), such excess shall be treated as a capital contribution by the Seller to the
Purchaser. On any Funding Date on which funds are on deposit in the Principal
Funding Account, the Purchaser may direct the Trustee to withdraw therefrom an
amount equal to the lesser of (i) the Purchase Price to be paid to the Seller
for Related Receivables and Other Conveyed Property to be conveyed to the
Purchaser and pledged to the Trustee on such Funding Date (or a portion thereof)
and (ii) the amount on deposit in the Principal Funding Account, and, subject to
the satisfaction of the conditions set forth in Section 2.1(b) after giving
effect to such withdrawal, in consideration for the sale of the Related
Receivables and Other Conveyed Property on such Funding Date, pay such amount to
the Escrow Agent pursuant to the wiring instructions set forth on Exhibit I
(which wiring instructions may be updated from time to time by the Escrow
Agent), which amount will be disbursed by the Escrow Agent in accordance with
the Escrow Agreement.
 
Section 2.2 Transfers Intended as Sale. It is the intention of the Seller that
each transfer and assignment contemplated by this Agreement and each Assignment
shall constitute a sale of the Related Receivables and Other Conveyed Property
from the Seller to the Purchaser free and clear of all liens and rights of
others and it is intended that the beneficial interest in and title to the
Related Receivables and Other Conveyed Property shall not be part of the
Seller’s estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. In the event that, notwithstanding
the intent of the Seller, the transfer and assignment contemplated hereby or by
any Assignment is held not to be a sale, this Agreement and each Assignment
shall constitute a security agreement and a grant of a security interest in the
property referred to in Section 2.1 and each Assignment to the Purchaser, which
security interest has been assigned to the Trustee, acting on behalf of the
Noteholder.
 
Section 2.3 Further Encumbrance of Receivables and Other Conveyed Property.

(a) Immediately upon the conveyance to the Purchaser by the Seller of the
Related Receivables and any item of the related Other Conveyed Property pursuant
to Section 2.1 and the related Assignment, all right, title and interest of the
Seller in and to such Related Receivables and Other Conveyed Property shall
terminate, and all such right, title and interest shall vest in the Purchaser.

(b) Immediately upon the vesting of any Related Receivables and the related
Other Conveyed Property in the Purchaser, the Purchaser shall have the sole
right to pledge or otherwise encumber such Related Receivables and the related
Other Conveyed Property. Pursuant to the Indenture, the Purchaser shall grant a
security interest in the Collateral to secure the repayment of the Note.

(c) The Trustee shall, at such time as (i) the Facility Termination Date has
occurred, (ii) there is no Note outstanding and (iii) all sums due to the
Trustee and the Noteholder pursuant to the Basic Documents have been paid,
release any remaining portion of the Receivables and the Other Conveyed Property
to the Purchaser.

ARTICLE III

THE RECEIVABLES
 
Section 3.1 Representations, Warranties and Certain Covenants of Seller.

(a) The Seller makes the following representations and warranties as to the
Receivables and the Other Conveyed Property to the Purchaser and to the Trustee
for the benefit of the Noteholder on which the Purchaser relies in acquiring the
Receivables and the Other Conveyed Property and on which the Noteholder has
relied in purchasing the Note and will rely in paying the Advance Amount to the
Purchaser. Such representations and warranties speak as of the Closing Date and
as of each Funding Date; provided that to the extent such representations and
warranties relate to the Related Receivables conveyed on any Funding Date, such
representations and warranties shall speak as of the related Funding Date, but
shall survive the sale, transfer and assignment of such Related Receivables to
the Purchaser and the pledge thereof by the Purchaser to the Trustee for the
benefit of the Noteholder pursuant to the Indenture.

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(i)Characteristics of Receivables. Each Receivable is related to, and payable
pursuant to, an Eligible Timeshare Loan.

(ii)Additional Receivables Characteristics. As of the related Funding Date, as
applicable:

(A) after the pledge of each Related Receivable pursuant to the Indenture, the
Net Spread shall not be less than 5.0%;

(B) after the pledge of each Related Receivable pursuant to the Indenture, the
weighted average Timeshare Loan Rate of all the Eligible Timeshare Loans shall
be no less than 15% and the weighted average original term to maturity of all
the Eligible Timeshare Loans shall not exceed 108 months; and

(C) after the pledge of each Related Receivable pursuant to the Indenture, the
Aggregate Principal Balance of Eligible Timeshare Loans with a related Obligor
having a FICO score of greater than or equal to 500 and less than 600 as of the
date of origination of such Timeshare Loan shall not exceed 20% of the Aggregate
Principal Balance of all Eligible Receivables.

(iii)Schedule of Receivables. The information with respect to the Related
Receivables set forth in Schedule A to the related Assignment is true and
correct in all material respects as of the close of business on the related
Cutoff Date, and no selection procedures adverse to the Noteholder have been
utilized in selecting the Related Receivables to be sold hereunder.

(iv)No Government Obligor. None of the Related Receivables are due from the
United States of America or any State or from any agency, department, or
instrumentality of the United States of America or any State.

(v)Security Interest. Immediately subsequent to the sale, assignment and
transfer thereof to the Purchaser, each Related Receivable shall be secured by a
validly perfected first priority security interest in the related Timeshare
Property in favor of the Seller as secured party which has been validly assigned
to the Purchaser, and such assigned security interest is prior to all other
liens upon and security interests in such Timeshare Property which now exist or
may hereafter arise or be created.

(vi)Servicemembers. No Related Receivable has been modified as a result of
application of the Servicemembers Civil Relief Act, as amended.

(vii)Title. It is the intention of the Seller that each transfer and assignment
herein contemplated constitutes a sale of the Related Receivables and the
related Other Conveyed Property from the Seller to the Purchaser and that the
beneficial interest in and title to such Related Receivables and related Other
Conveyed Property not be part of the Seller’s estate in the event of the filing
of a bankruptcy petition by or against the Seller under any bankruptcy law. No
Related Receivable or related Other Conveyed Property has been sold,
transferred, assigned, or pledged by the Seller to any Person other than the
Purchaser and by the Purchaser to any Person other than the Trustee. Immediately
prior to each transfer and assignment herein contemplated, the Seller had good
and marketable title to each Related Receivable and related Other Conveyed
Property and was the sole owner thereof, free and clear of all liens, claims,
encumbrances, security interests, and rights of others, and, immediately upon
the transfer thereof to the Purchaser and the concurrent pledge to the Trustee
under the Indenture, the Trustee for the benefit of the Noteholder shall have a
valid and enforceable first priority security interest in the Collateral, free
and clear of all liens, encumbrances, security interests, and rights of others,
and such transfer has been perfected under the UCC and all other applicable law.

(viii)Lawful Assignment. No Related Receivable has been originated in, or is
subject to the laws of, any jurisdiction under which the sale, transfer, and
assignment of such Related Receivable under this Agreement or pursuant to
transfers of the Note shall be unlawful, void, or voidable. None of the Seller
or any Affiliate thereof has entered into any agreement with any account debtor
that prohibits, restricts or conditions the assignment of any portion of the
Related Receivables.

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(ix)All Filings Made. All filings (including, without limitation, UCC filings or
other actions) necessary in any jurisdiction to give: (a) the Purchaser a first
priority perfected ownership interest in the Receivables and the Other Conveyed
Property, including, without limitation, the proceeds of the Receivables (to the
extent that the Purchaser can obtain such first priority perfected security
interest pursuant to one or more filings) and (b) the Trustee, for the benefit
of the Noteholder, a first priority perfected security interest in the
Collateral have been made, taken or performed.

(x)Timeshare Loan File; One Original. The Seller has delivered to the Trustee,
at the location specified in Schedule B hereto, a complete Timeshare Loan File
with respect to each Related Receivable, and the Custodian has delivered to the
Trustee, the Servicer, the Purchaser and the Noteholder a copy of the Trust
Receipt therefor. There is only one original executed copy of each Timeshare
Loan Document.

(xi)Post-Office Box. On or prior to the next billing period after the related
Cutoff Date, the Servicer will notify each Obligor to make payments with respect
to its respective Related Receivables after the related Cutoff Date directly to
the Post-Office Box, and will provide each Obligor with a monthly statement in
order to enable such Obligor to make payments directly to the Post-Office Box.

(xii)No Impairment. Neither Seller nor the Purchaser has done anything to convey
any right to any Person that would result in such Person having a right to
payments due under any Related Receivables, related Other Conveyed Property or
otherwise to impair the rights of the Purchaser, the Trustee or the Noteholder
in any Related Receivable, related Other Conveyed Property or the proceeds
thereof.

(xiii)Creation of Security Interest. This Agreement creates a valid and
continuing security interest (as defined in the UCC) in the Receivables and the
Other Conveyed Property in favor of the Purchaser, which security interest is
prior to all other Liens and is enforceable as such as against creditors of and
purchasers from the Seller.

(xiv)Perfection of Security Interest in the Receivables and Other Conveyed
Property. The Seller has caused the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the security interest in the Receivables and
the Other Conveyed Property granted to the Purchaser hereunder pursuant to
Section 2.1 and the related Assignment.

(xv)No Other Security Interests. Other than the security interest granted to the
Purchaser pursuant to Section 2.1 and the related Assignment, the Seller has not
pledged, assigned, sold, granted a security interest in, or otherwise conveyed
any of the Receivables or the Other Conveyed Property, other than such security
interests as are released at or before the conveyance thereof. The Seller has
not authorized the filing of and is not aware of any financing statements filed
against the Seller that include a description of collateral covering any portion
of the Receivables and the Other Conveyed Property other than any financing
statement relating to the security interest granted to the Purchaser hereunder
or that has been terminated or released as to the Receivables and the Other
Conveyed Property. The Seller is not aware of any judgment or tax lien filings
against the Seller.

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(xvi)Notations on Contracts; Financing Statement Disclosure. The Timeshare Loan
Files that constitute or evidence the Receivables do not have any marks or
notations indicating that they have been pledged, assigned or otherwise conveyed
to any Person other than the Purchaser and/or the Trustee for the benefit of the
Noteholder. All financing statements filed or to be filed against the Seller in
favor of the Purchaser in connection herewith describing the Receivables and the
Other Conveyed Property contain a statement to the following effect: “A purchase
of or security interest in any collateral described in this financing statement
will violate the rights of the secured party.”

(xvii)Records. On or prior to each Funding Date, the Seller will have caused its
records (including electronic ledgers) relating to each Related Receivable and
Other Conveyed Property to be conveyed by it on such Funding Date to be clearly
and unambiguously marked to reflect that such Related Receivable and Other
Conveyed Property was conveyed by it to the Purchaser.

(xviii)Computer Information. The computer diskette, computer tape or other
electronic transmission made available by the Seller to the Purchaser on each
Funding Date is, as of the related Cutoff Date, complete and accurate and
includes a description of the same Receivables described in Schedule A to the
related Assignment.

(xix)Timeshare Loan Documents. All of the documents evidencing each of the
Receivables and the Other Conveyed Property are in a 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 as of March 2,
2006 pertaining to Georgia law matters, (II) Bulkley, Richardson and Gelinas,
LLP dated as of March 2, 2006 pertaining to Massachusetts law matters, (III)
Stinson Morrison Hecker LLP dated as of March 2, 2006 pertaining to Missouri law
matters, (IV) Mayer, Brown, Rowe & Maw LLP dated as of March 2, 2006 pertaining
to Illinois law matters, (V) Meadows, Owens, Collier, Reed, Cousins & Blau,
L.L.P. dated as of March 2, 2006 pertaining to Texas law matters and (VI)
Holland & Knight LLP dated as of March 2, 2006 pertaining to Florida law matters
(collectively, the “Local Counsel Opinions”).

(xx)Timeshare Marketing Materials and Disclosure Statements. The Seller has
provided each of the law firms issuing the Local Counsel Opinions all of the
existing marketing materials and disclosure statements in connection with the
respective Resort. Moreover, no other marketing materials and disclosure
statements exist except for those provided to the respective law firm issuing
the Local Counsel Opinion.

(xxi)Local Counsel Opinions. The facts regarding the Seller, the Resorts, the
Receivables, the Timeshare Loans, the Other Conveyed Property and related
matters set forth or assumed in the Local Counsel Opinions are true and correct
in all material respects.

(xxii)Bankruptcy Opinion. The facts regarding the Seller, the Issuer, the
Resorts, the receivables, the Timeshare Loans, the Other Conveyed Property and
related matters set forth or assumed in the opinion issued by Mayer, Brown, Rowe
& Maw LLP dated as of March 2, 2006, and the update of such opinion issued by
Mayer, Brown, Rowe & Maw LLP dated as of December 22, 2006, pertaining to
bankruptcy law matters are true and correct in all material respects.

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(xxiii)Custodial Files. The Seller shall, prior to the Closing Date and each
Funding Date, in accordance with this Agreement and the Custodial Agreement,
have delivered or caused the delivery to the Custodian a Timeshare Loan File for
each Timeshare Loan, which Timeshare Loan File shall be complete and verified by
the Custodian in accordance with the Custodial Agreement.

(xxiv)No Conveyance. The Seller agrees not to convey and to ensure no party
under its control conveys any interest in a Resort relating to a Receivable
without obtaining the written consent of the Noteholder prior to such conveyance
if such conveyance is reasonably likely to have a material adverse effect on the
performance or value of such Receivable or related Timeshare Loan.

(xxv)Escrow Documents and Oak N’ Spruce Financing Documents. Originator shall,
on or prior to the ninetieth day following the date of the Escrow Agreement and
on or prior to the ninetieth day following each Funding Date, deliver or cause
the delivery to the Custodian the following: (I) with respect to a Mortgage
Loan, an original recorded Assignment of Mortgage (which may be a part of a
blanket assignment of more than one Mortgage Loan), showing a complete chain of
title from the Seller to the Trustee on behalf of the Noteholder signed by an
Authorized Officer of the Seller and each intervening party with evidence of
proper recordation; (II) with respect to an Oak N’ Spruce Loan (pre-July 2004),
an original recorded Mortgage and Assignment of Beneficial Interest with
Property Description Addendum or Assignment of Beneficial Interest with Property
Description Addendum (which may be a part of a blanket assignment of more than
one Oak N’ Spruce Loan), showing a complete chain of title from the Seller to
the Trustee on behalf of the Noteholder signed by an Authorized Officer of the
Seller 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; (III) with respect to an Oak
N’ Spruce Loan (post-July 2004), a file stamped Oak N’ Spruce Financing
Statement evidencing the security interest of the Trustee and its assigns in the
Receivables and related other Conveyed Property in respect of such Oak N’ Spruce
Loan by naming the Obligor with respect to the related Oak N’ Spruce Loan as
debtor and by naming the Trustee on behalf of the Noteholder as the secured
party/assignee, which document is authorized and completed; (IV) Title Policies
(except with respect to the Non-Titled Loans, as set forth below in sub-section
(xxvii)); and (V) all other recorded and/or filed documents provided under the
Escrow Agreement.

(xxvi)Prior Secured Parties’ Documents. In accordance with the Escrow Agreement,
the Seller shall deliver or cause the delivery of (I) the Escrow Documents for
each of the respective Prior Secured Parties to the Escrow Agent and (II) the
Oak N’ Spruce Financing Documents for each of the respective Prior Secured
Parties to the Custodian.

(xxvii)Non-Titled Loans. With respect to up to $10,000,000 in Aggregate
Principal Amount of Mortgage Loans, the Seller may deliver or cause the delivery
to the Custodian of Title Commitments within 45 days of the related Funding Date
(such loans, the “Non-Titled Loans”); provided, however, that following such
Funding Date, the Seller shall have delivered or caused the delivery to the
Custodian of Title Policies as follows:

(A) With respect to any Non-Titled Loans relating to a Resort located in the
State of Texas, the Seller shall deliver or cause the delivery to the Custodian
of a Title Policy with respect to each such Non-Titled Loan within 60 days of
delivery of the related Title Commitment; and

(B) With respect to any Non-Titled Loans relating to a Resort in any state other
than the State of Texas, the Seller shall deliver or cause the delivery to the
Custodian of a Title Policy with respect to each such Non-Titled Loan within 90
days of delivery of the related Title Commitment.

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Upon the Custodian’s receipt of the Title Policies, such documents shall be
incorporated and treated as part of the Timeshare Loan Files.

(xxviii)Notice of Non-Titled Loans. On or prior to each Funding Date, the Seller
shall deliver or cause the delivery to the Custodian, the Trustee and the
Noteholder of a notice, substantially in the form of Exhibit L hereto, setting
forth each Non-Titled Loan conveyed to the Purchaser as of such Funding Date.
 
Section 3.2 Repurchases and Substitutions.

(a) Mandatory Repurchases and Substitutions for Breach of Representations and
Warranties.

(i)  The Seller, the Servicer, the Noteholder or the Trustee, as the case may
be, shall inform the other parties to this Agreement (and the Noteholder, if it
is not the notifying party) promptly, in writing, upon the discovery of any
breach of the Seller’s representations, warranties or covenants made pursuant to
Section 3.1 (without regard to any limitations therein as to the Seller’s
knowledge). Except with respect to any breach of Section 3.1(a)(xxvii) above
(which breach shall be treated as set forth in Section 3.2(e) below), unless the
breach shall have been cured by the last day of the next Accrual Period
following the earlier of the discovery thereof by the Seller or receipt by the
Seller of notice of such breach, if the value of such Receivable is materially
and adversely affected by the breach the Seller shall, on or prior to such last
day of the next Accrual Period, either (i) repurchase such Receivable and
related Other Conveyed Property from the Purchaser or its assignee for the
Purchase Amount or (ii) provide one or more Qualified Substitute Timeshare
Receivables and related Other Conveyed Property and pay the related Substitution
Shortfall Amounts, if any. In consideration of the repurchase or substitution of
any such Receivable, the Seller shall remit the Purchase Amount or the
Substitution Shortfall Amount, as applicable, in the manner specified in Section
5.6. The sole remedy of the Purchaser, the Trustee or the Noteholder with
respect to a breach of representations, warranties or covenants pursuant to
Section 3.1 shall be to enforce the Seller’s obligation to purchase or
substitute such Receivables; provided, however, that the Seller shall indemnify
the Trustee, the Backup Servicer, the Purchaser and the Noteholder against all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel, arising out of the events or facts giving rise to
such breach. Upon receipt of the Purchase Amount or a Qualified Substitute
Timeshare Receivable and the related Substitution Shortfall Amount, as
applicable, in respect of any Defective Receivables and written instructions
from the Servicer, the Trustee shall release to the Seller or its designee the
related Timeshare Loan File and shall execute and deliver all reasonable
instruments of transfer or assignment, without recourse, as are prepared by the
Seller and delivered to the Trustee and necessary to vest in the Seller or such
designee title to such Defective Receivables.

(ii) Prior to the related date of substitution (the “Substitution Date”) in
accordance with clause (a) above, the Purchaser hereby directs and the Seller
hereby agrees to deliver or to cause the delivery of the Timeshare Loan Files of
the related Qualified Substitute Timeshare Receivables to the Custodian, in
accordance with the provisions of the Indenture, the Custodial Agreement and the
Escrow Agreement, as applicable. As of such related Substitution Date, the
Seller does hereby sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse (subject to the obligation set forth herein), all
right, title and interest of the Seller, whether then existing or thereafter
arising, in, to and under (i) each Qualified Substitute Timeshare Receivable
conveyed to the Purchaser on such Substitution Date and all amounts due
thereunder after the related Cutoff Date, (ii) the related Qualified Substitute
Timeshare Loans, (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 Other Conveyed Property in respect of such Qualified Substitute Timeshare
Receivables, 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 Receivable and all collections
allocable to principal and interest thereon since the related Cutoff Date and
all other property interests or rights conveyed pursuant to and referenced in
this Section 3.2(a) shall immediately vest in the Purchaser, its successors and
assigns. The Seller shall not take any action inconsistent with such ownership
nor claim any ownership interest in any Qualified Substitute Timeshare
Receivable or related Other Conveyed Property for any purpose whatsoever other
than consolidated financial and federal and state income tax reporting. The
Seller agrees that such Qualified Substitute Timeshare Receivables shall be
subject to the provisions of this Agreement.

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(iii) The Seller shall, on each related Substitution Date, certify in writing to
the Purchaser and the 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 Custodian, and (ii) the Timeshare Loan Servicing Files for such
Qualified Substitute Timeshare Loans have been delivered to the Servicer.

(b) Mandatory Repurchases of Upgraded Timeshare Loans. With respect to Upgraded
Timeshare Loans, on any date, the Seller shall prepay such Upgraded Timeshare
Loan on behalf of the related Obligor by depositing the related Upgrade Purchase
Price in the Collection Account as set forth in Section 5.6 hereof.

(c) Optional Purchases of Defaulted Timeshare Loans. With respect to any
Defaulted Timeshare Loans, on any date, the Seller shall have the option, but
not the obligation, to purchase the Defaulted Timeshare Loan at the Default
Purchase Price for such Defaulted Timeshare Loan; provided, however, that the
option to purchase a Defaulted Timeshare Loan is limited on any date to the
Optional Purchase Limit. If the Seller shall purchase Defaulted Timeshare Loans
as provided herein, the Seller shall deposit the related Default Purchase Price
in the Collection Account as set forth in Section 5.6 hereof. The Seller may
irrevocably waive the Seller’s option to purchase a Defaulted Timeshare Loan by
delivering or causing to be delivered to the Trustee a Waiver Letter in the form
of Exhibit J attached hereto. The Noteholder may at any time direct the Trustee,
in connection with any subsequent purchases of Defaulted Timeshare Loans by the
Seller, to require the Seller to conduct a public auction in respect of any such
Defaulted Timeshare Loan in accordance with the provisions of Section 4.3(d)-(f)
below. Upon receipt of the Default Purchase Price in respect of any Defaulted
Timeshare Loan and written instructions from the Servicer, the Trustee shall
release to the Seller or its designee the related Timeshare Loan File and shall
execute and deliver all reasonable instruments of transfer or assignment,
without recourse, as are prepared by the Seller and delivered to the Trustee and
necessary to vest in the Seller or such designee title to such Defaulted
Timeshare Loan and to release the security interest of the Trustee in such
Defaulted Timeshare Loan and all related collateral.

(d) Optional Sales of Timeshare Loans by Purchaser. In addition to the
provisions providing for repurchase, substitution, and optional purchase
contained in Sections 3.2(a)-(c) above and e below, the Purchaser, acting
through the Servicer, shall have the right at any time to sell any Timeshare
Loans which are neither Defaulted Timeshare Loans nor relate to Delinquent
Receivables to either an unrelated third party or to the Seller, for a cash
purchase price that is no less than the Upgrade Purchase Price; provided,
however, that (x) the Purchaser may not sell any Timeshare Loans to the Seller
if the cash purchase price to be paid for the Timeshare Loans, when added to the
cash purchase price paid for all other Timeshare Loans previously sold by the
Purchaser to the Seller under this Section 3.2(d) exceeds the lesser of 7.5% of
the Maximum Invested Amount or 10% of the average monthly Aggregate Principal
Balance of all Receivables held in the Trust Estate during the twelve month
period immediately preceding the proposed date of sale and (y) the Seller shall
be under no obligation to purchase any Timeshare Loans which the Purchaser
determines to sell under this Section 3.2(d). If the Purchaser sells any
Timeshare Loans as provided herein, the Purchaser shall deposit the related
purchase price in the Collection Account as set forth in Section 5.6 hereof.
Notwithstanding the foregoing, the Issuer may only exercise its right pursuant
to this Section 3.2(d) so long as immediately prior to each such sale and
immediately after such sale, no Event of Default, Servicer Termination Event or
Noteholder Excess Principal Event shall have occurred and be continuing and no
Borrowing Base Deficiency shall exist. Upon receipt of the Upgrade Purchase
Price in respect of any Timeshare Loan sold by the Purchaser, and written
instructions from the Servicer, the Trustee shall release to the purchaser the
related Timeshare Loan File and shall execute and deliver all reasonable
instruments of transfer or assignment, without recourse, as are prepared by the
Servicer and delivered to the Trustee and necessary to vest in such purchaser
title to such Timeshare Loan and to release the security interest of the Trustee
in such Timeshare Loan and all related collateral.

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(e) Mandatory Repurchase of Non-Titled Loans. With respect to any breach of
Section 3.1(a)(xxvii) above in respect of any Non-Titled Loan, including without
limitation any Non-Titled Loan in respect of which: (i) no Title Commitment is
delivered within 45 days of the related Funding Date upon which such Non-Titled
Loan was conveyed to the Purchaser, (ii) no Title Policy is delivered within 60
days of delivery of the related Title Commitment, if such Non-Titled Loan
relates to a Resort located in the State of Texas; or (iii) no Title Policy is
delivered within 90 days of delivery of the related Title Commitment, if such
Non-Titled Loan relates to a Resort located in any state other than the State of
Texas, the Seller shall, within 5 Business Days, repurchase the Receivable and
related Other Conveyed Property relating to such Non-Titled Loan from the
Purchaser or its assignee for the Purchase Amount. In consideration of the
repurchase of any such Receivable, the Seller shall remit the Purchase Amount in
the manner specified in Section 5.6. The sole remedy of the Purchaser, the
Trustee or the Noteholder with respect to a breach of the Seller’s
representations pursuant to Section 3.1(a)(xxvii) shall be to enforce the
Seller’s obligation to purchase such Receivables; provided, however, that the
Seller shall indemnify the Trustee, the Backup Servicer, the Purchaser and the
Noteholder against all costs, expenses, losses, damages, claims and liabilities,
including reasonable fees and expenses of counsel, arising out of the events or
facts giving rise to such breach. Upon receipt of the Purchase Amount in respect
of any Defective Receivables relating to Non-Titled Loans and written
instructions from the Servicer, the Trustee shall release to the Seller or its
designee the related Timeshare Loan File and shall execute and deliver all
reasonable instruments of transfer or assignment, without recourse, as are
prepared by the Seller and delivered to the Trustee and necessary to vest in the
Seller or such designee title to such Defective Receivables.
 
Section 3.3 Custody of Timeshare Loan Files.

(a) In connection with each sale, transfer and assignment of Receivables and
related Other Conveyed Property to the Purchaser pursuant to this Agreement and
each Assignment, and each pledge thereof by the Purchaser to the Trustee
pursuant to the Indenture, the Purchaser shall deliver the related Timeshare
Loan Files to the Custodian before the Closing Date or the related Funding Date
in accordance with the Custodial Agreement.

(b) Upon payment in full of any Receivable, the Servicer will notify the Trustee
and the Custodian pursuant to a certificate of a Servicing Officer and shall
request delivery of the related Timeshare Loan File to the Servicer in
accordance with the Custodial Agreement.
 
Section 3.4 Trustee to Obtain Fidelity Insurance. The Trustee shall maintain a
fidelity bond in the form and amount as is customary for entities acting as a
trustee of funds and documents in respect of consumer contracts on behalf of
institutional investors.

ARTICLE IV

ADMINISTRATION AND SERVICING OF RECEIVABLES
 
Section 4.1 Duties of the Servicer. The Servicer, as agent for the Purchaser and
the Noteholder shall manage, service, administer and make collections on the
Receivables and the Other Conveyed Property in accordance with the Servicing
Standard. In performing such duties, the Servicer shall comply with its current
servicing policies and procedures, as such servicing policies and procedures may
be amended from time to time, so long as such amendments will not materially
adversely affect the interests of the Noteholder, or otherwise with the prior
written consent of the Noteholder (which consent shall not be unreasonably
withheld), and notice of such amendments is given to the Noteholder prior to the
effectiveness thereof. The Servicer’s duties shall include collection and
posting of all payments, responding to inquiries of Obligors on such
Receivables, investigating delinquencies, sending payment statements to
Obligors, reporting tax information to Obligors, accounting for collections,
furnishing monthly and annual statements to the Trustee and the Noteholder with
respect to distributions. Without limiting the generality of the foregoing, and
subject to the servicing standards set forth in this Agreement including,
without limitation, the restrictions set forth in Section 4.6, the Servicer is
authorized and empowered by the Purchaser to execute and deliver, on behalf of
itself, the Purchaser or the Noteholder, any and all instruments of satisfaction
or cancellation, or partial or full release or discharge, and all other
comparable instruments, with respect to such Receivables. If the Servicer shall
commence a legal proceeding to enforce a Receivable, the Purchaser shall
thereupon be deemed to have automatically assigned, solely for the purpose of
collection, such Receivable to the Servicer. If in any enforcement suit or legal
proceeding it shall be held that the Servicer may not enforce a Receivable on
the ground that it shall not be a real party in interest or a holder entitled to
enforce such Receivable, the Purchaser shall, at the Servicer’s expense and
direction, take steps to enforce such Receivable, including bringing suit in its
name or the name of the Noteholder. The Servicer shall prepare and furnish, and
the Trustee shall execute, any powers of attorney and other documents reasonably
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
 
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Section 4.2 Collection of Receivable Payments; Lockbox Agreements; Other Duties
of the Servicer.

(a) Consistent with the Servicing Standard, the Servicer shall collect all
payments called for under the terms and provisions of the Receivables and the
related Other Conveyed Property as and when the same shall become due; provided,
however, that promptly after the Closing Date (or the related Funding Date, as
applicable) the Servicer shall notify and direct each Obligor to make all
payments with respect to the Receivables to the applicable Post-Office Box. The
Servicer shall provide each Obligor with a monthly statement in order to notify
such Obligors to make payments directly to the applicable Post-Office Box.

(b) The Servicer shall establish a Lockbox Account in the name of the Purchaser
for the benefit of the Trustee, acting on behalf of the Noteholder. Pursuant to
a Lockbox Agreement, the Trustee has authorized the Servicer to direct
dispositions of funds on deposit in the Lockbox Account to the Collection
Account (but not to any other account), and no other Person, except the Lockbox
Processor and the Trustee, shall have authority to direct disposition of funds
on deposit in the Lockbox Account. However, the Lockbox Agreement shall provide
that the Lockbox Bank will comply with instructions originated by the Trustee
relating to the disposition of the funds in the Lockbox Account without further
consent by the Seller, the Servicer or the Purchaser. The Trustee shall have no
liability or responsibility with respect to the Lockbox Processor’s directions
or activities as set forth in the preceding sentence. The Lockbox Account shall
be established pursuant to and maintained in accordance with the Lockbox
Agreement and shall be a demand deposit account initially established and
maintained with JPMorgan Chase Bank, N.A., or at the request of the Noteholder
an Eligible Account satisfying clause (i) of the definition thereof; provided,
however, that the Trustee shall give the Servicer prior written notice of any
change made at the request of the Noteholder in the location of the Lockbox
Account. The Trustee shall establish and maintain each Post-Office Box at a
United States Post Office Branch in the name of the Purchaser for the benefit of
the Noteholder.

(c) Notwithstanding the Lockbox Agreement, or any of the provisions of this
Agreement relating to the Lockbox Agreement, the Servicer shall remain obligated
and liable to the Purchaser, the Trustee and the Noteholder for servicing and
administering the Receivables and the Other Conveyed Property in accordance with
the provisions of this Agreement without diminution of such obligation or
liability by virtue thereof.

(d) In the event the Seller shall for any reason no longer be acting as the
Servicer hereunder, the Backup Servicer or a successor Servicer shall thereupon
assume all of the rights and obligations of the outgoing Servicer under the
Lockbox Agreement. In such event, the Backup Servicer or a successor Servicer
shall be deemed to have assumed all of the outgoing Servicer’s interest therein
and to have replaced the outgoing Servicer as a party to the Lockbox Agreement
to the same extent as if the Lockbox Agreement had been assigned to the Backup
Servicer or a successor Servicer, except that the outgoing Servicer shall not
thereby be relieved of any liability or obligations on the part of the outgoing
Servicer to the Lockbox Bank under the Lockbox Agreement. The outgoing Servicer
shall, upon request of the Trustee, but at the expense of the outgoing Servicer,
deliver to the Backup Servicer or a successor Servicer all documents and records
relating to the Lockbox Agreement and an accounting of amounts collected and
held by the Lockbox Bank and otherwise use its best efforts to effect the
orderly and efficient assignment of the Lockbox Agreement to the Backup Servicer
or a successor Servicer. In the event that the Noteholder shall elect to change
the identity of the Lockbox Bank, the Servicer, at its expense, shall cause the
Lockbox Bank to deliver, at the direction of the Noteholder, to the Trustee or a
successor Lockbox Bank, all documents and records relating to the Receivables
and all amounts held (or thereafter received) by the Lockbox Bank (together with
an accounting of such amounts) and shall otherwise use its best efforts to
effect the orderly and efficient transfer of the Lockbox arrangements.

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(e) On each Business Day, pursuant to the Lockbox Agreement, the Lockbox
Processor will transfer any payments from Obligors received in the Post-Office
Box to the Lockbox Account. The Servicer shall cause the Lockbox Bank to
transfer all collections in respect of the Receivables and the Other Conveyed
Property from the Lockbox Account to the Collection Account within two Business
Days after receipt thereof. In addition, the Servicer shall remit all payments
by or on behalf of the Obligors received by the Servicer with respect to the
Receivables (other than Purchased Receivables) and the Other Conveyed Property,
all Net Liquidation Proceeds, Liquidation Expenses as provided in Section 4.3
hereof, any amounts in respect of any insurance policies which are not payable
to the Obligor and any amounts remitted to the Servicer by the Hedge
Counterparty pursuant to the Hedge Agreement no later than two Business Days
following receipt directly (without deposit into any intervening account) into
the Lockbox Account or the Collection Account. The Servicer shall not commingle
its assets and funds with those on deposit in the Lockbox Account.

(f) In addition to any other customary services which the Servicer may perform
or may be required to perform hereunder, the Servicer shall perform or cause to
be performed through sub-servicers, the following servicing and collection
activities in accordance with the Servicing Standard:

(i)perform standard accounting services and general record keeping services with
respect to the Timeshare Loans;

(ii)respond to telephone or written inquiries of Obligors concerning the
Timeshare Loans;

(iii)keep Obligors informed of the proper place and method for making payment
with respect to the Timeshare Loans;

(iv)contact Obligors to effect collections and to discourage delinquencies in
the payment of amounts owed under the Timeshare Loans and doing so by any lawful
means;

(v)report tax information to Obligors and taxing authorities to the extent
required by law;

(vi)take such other action as may be necessary or appropriate in the discretion
of the Servicer for the purpose of collecting and transferring to the Trustee
for deposit into the Collection Account all payments received by the Servicer or
remitted to the Lockbox Account in respect of the Timeshare Loans (except as
otherwise expressly provided herein), and to carry out the duties and
obligations imposed upon the Servicer pursuant to the terms of this Agreement;

(vii)arranging for Liquidations of Timeshare Properties related to Defaulted
Timeshare Loans and the remarketing of such Timeshare Properties as provided in
Section 4.3 below;

(viii)use reasonable best efforts to enforce the purchase and substitution
obligations of the Seller under this Agreement;

(ix)refrain from modifying, waiving or amending the terms of any Timeshare Loan;
provided, however, the Servicer may modify, waive or amend a Timeshare Loan for
which a default on such Timeshare Loan has occurred or is imminent and such
modification, amendment or waiver will not (i) materially alter the interest
rate on or the principal balance of such Timeshare Loan, (ii) shorten the final
maturity of, lengthen the timing of payments of either principal or interest, or
any other terms of, such Timeshare Loan in any manner which would have a
material adverse effect on the Noteholders, (iii) adversely affect the Timeshare
Property underlying such Timeshare Loan or (iv) reduce materially the likelihood
that payments of interest and principal on such Timeshare Loan shall be made
when due; provided, further, the Servicer may grant extensions of the final
maturity of any Timeshare Loan if the Servicer, in its good faith reasonable
discretion, determines that (A) such Timeshare Loan is in default or a default
on such Timeshare Loan is likely to occur in the foreseeable future and (B) the
value of such Timeshare Loan will be enhanced by such extension; provided,
however, that no more than two (2) such extensions may be granted during the
term of such Timeshare Loan and no more than one (1) such extension may be
granted during any twelve (12) month period; and provided, further, the Servicer
shall not be permitted to modify, waive or amend the terms of any Timeshare Loan
if the sum of the Principal Balance of the related Receivable as of the related
Cutoff Date and the Principal Balances of all other Receivables as of their
related Cutoff Dates for which the Servicer has modified, waived or amended the
terms thereof exceeds 10% of the Aggregate Principal Balance as of any date of
determination.

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(x)work with Obligors in connection with any transfer of ownership of a
Timeshare Property by an Obligor to another Person (to the extent permitted),
whereby the Servicer may consent to the assumption by such Person of the
Timeshare Loan related to such Timeshare Property (to the extent permitted);
provided, however, in connection with any such assumption, the rate of interest
borne by, the maturity date of, the principal amount of, the timing of payments
of principal and interest in respect of, and all other material terms of, the
related Timeshare Loan shall not be changed other than as permitted in clause
(ix) above;

(xi)deliver such information and data to the Backup Servicer as is required
pursuant to this Agreement;

(xii)deliver any new or amended ACH Forms executed by an Obligor to the
Custodian to be held as part of the related Timeshare Loan File;

(xiii)(A) to cause each Resort to be insured in the event of fire, earthquake,
or other casualty for the full replacement value thereof and if the Resort is
located in a designated flood plain, to maintain flood insurance in an amount
not less than the maximum level available under the National Flood Insurance Act
of 1968, as amended; (B) in respect of each Resort, to maintain general
liability insurance in such amounts generally acceptable in the industry; (C) to
cause each Resort’s insurance policies to remain in full force and effect with a
generally acceptable insurance carrier; and (D) to monitor the maintenance of
the insurance coverage described in (A), (B), and (C) above with respect to each
Resort and promptly obtain notice and otherwise acquire Knowledge of any lapse,
cessation, decrease or other change in any such insurance coverage; and

(xiv)to the extent it receives any amounts in respect of any insurance policies
which are not payable to the Obligor or any other collections relating to the
Receivables or the Other Conveyed Property, it shall deposit such amounts to the
Collection Account within two (2) Business days of receipt thereof (unless
otherwise expressly provided herein).
 
Section 4.3 Realization Upon Receivables. Upon a Receivable becoming a Defaulted
Receivable, the Servicer shall, in accordance with the Servicing Standard,
promptly institute collection procedures, which may include, but are not limited
to, cancellation, forfeiture, termination or foreclosure proceedings or
obtaining a deed-in-lieu of foreclosure in respect of the related Timeshare
Property (each, a “Foreclosure Property”). Upon the Timeshare Property becoming
a Foreclosure Property, the Servicer shall promptly attempt to liquidate such
Foreclosure Property. The Servicer shall select the liquidation option
reasonably anticipated to produce the highest Net Liquidation Proceeds, giving
effect to the gross price obtainable, broker’s commissions, foreclosure costs,
fees and marketing expenses and other factors. The Servicer shall be entitled to
reimbursement of Liquidation Expenses out of Liquidation Proceeds. Any
Liquidation Expenses later recovered by the Servicer shall be deposited by the
Servicer in the Collection Account in accordance with Section 4.2(e) hereof.

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(a) To the extent that the Seller or an Affiliate thereof is selected to
remarket a Foreclosure Property, the Servicer shall cause the Seller or
Affiliate thereof to agree that it will remarket such Foreclosure Property in
accordance with the Servicing Standard.

(b) The Servicer (if Silverleaf or its Affiliate is acting as Servicer) on
behalf of the Purchaser and the Trustee shall take all necessary steps to have
the record title of the applicable Timeshare Properties subject to the Defaulted
Timeshare Loans relating to such Defaulted Receivables continue to be held by
the Trustee. In such event, the Servicer shall exercise, directly or through its
agents, the remedies provided for in the Oak N’ Spruce Trust Agreement, in the
Mortgage Note or in the other documents with respect to such Defaulted Timeshare
Loans and the Obligors thereunder, and the related Timeshare Property shall be
remarketed with the purpose of obtaining the maximum Net Liquidation Proceeds in
respect of such Defaulted Timeshare Loans.

(c) The Servicer shall reserve its rights under the Oak N’ Spruce Trust
Agreement and/or the applicable Mortgages to obtain, at any time, record title
and all beneficial interests in respect of the Timeshare Properties related to
Defaulted Timeshare Loans. All actions taken by the Servicer in respect of any
Defaulted Timeshare Loans shall, at all times, be carried out in a manner such
that none of the Purchaser, the Trustee or the Noteholder shall, under
applicable law, be deemed to be the developer or declarant of any Resort.

(d) The Servicer may elect to liquidate at a public auction any Defaulted
Timeshare Loans or related Timeshare Properties foreclosed upon or otherwise
reacquired on behalf of the Trustee from the Obligors of the Defaulted Timeshare
Loans. In the event the Servicer elects to so liquidate Defaulted Timeshare
Loans or the related Timeshare Properties securing these Defaulted Timeshare
Loans, the Seller may bid on such Defaulted Timeshare Loans or related Timeshare
Properties so long as the Seller pays an amount at least equal to the net fair
market value of each related Timeshare Property, as determined by the Seller in
its commercially reasonable judgment, which shall in no event be less than
fifteen percent (15%) of the original acquisition price paid for the Timeshare
Property by the Obligor under the Defaulted Timeshare Loan. Publication of
notice of such auction in a newspaper published daily in Dallas, Texas shall be
sufficient notice of such auction.

(e) The Servicer agrees that it shall require that any Liquidation Proceeds be
in the form of cash only.

(f) The Servicer may not sell any of the Defaulted Receivables and the related
Defaulted Timeshare Loans that are included in the Collateral except for or as
specifically permitted by this Agreement.
 
Section 4.4 [RESERVED]

Section 4.5 Maintenance of Security Interests.

(a) Each of the Seller, the Servicer and the Purchaser agrees that, from time to
time, it shall promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or appropriate, or
that the Noteholder may request, in order to perfect, protect or more fully
evidence the security interest in the Receivables and the Other Conveyed
Property or to enable the Trustee to exercise or enforce any of its rights
hereunder. Without limiting the generality of the foregoing, the Purchaser will,
or will cause the Servicer to, without the necessity of a request and upon the
request of the Trustee at the direction of the Noteholder, execute or authorize
and file or record (or cause to be executed or authorized and filed or recorded)
such Assignments of Mortgage, financing or continuation statements, or
amendments hereto or assignments thereof, and such other instruments or notices,
as may be necessary or appropriate to create and maintain in the Trustee a first
priority perfected security interest, at all times, in the Collateral,
including, without limitation, recording and filing UCC-1 financing statements,
amendments or continuation statements prior to the effective date of any change
of the name, identity or structure or relocation of its chief executive office
or any change which could affect the perfection pursuant to any financing
statement or continuation statement or assignment previously filed or make any
UCC-1 or continuation statement previously filed pursuant to this Agreement or
the Indenture seriously misleading within the meaning of applicable provisions
of the UCC (and the Purchaser shall, or shall cause the Servicer to, give the
Trustee at least thirty (30) Business Days prior notice of the expected
occurrence of any such circumstance). The Issuer shall, or shall cause the
Servicer to, deliver promptly to the Trustee file-stamped copies of any such
filings.

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(b) (i) The Purchaser hereby grants to each of the Servicer and the Trustee a
power of attorney to execute all documents including, but not limited to,
Assignments of Mortgage, UCC-l financing statements, amendments or continuation
statements, on behalf of the Issuer as may be necessary or desirable to
effectuate the foregoing and (ii) the Servicer hereby grants to the Trustee a
power of attorney to execute all documents on behalf of the Servicer as may be
necessary or desirable to effectuate the foregoing; provided, however, that such
grant shall not create a duty on the part of the Trustee to file, prepare,
record or monitor, or any responsibility for the contents or adequacy of, any
such documents.

(c) Upon the occurrence of a Servicer Termination Event, the Trustee and the
Servicer, at the direction of the Noteholder, shall take or cause to be taken
such action as may be reasonably necessary or otherwise desirable to perfect or
re-perfect the security interests in the Receivables and the Other Conveyed
Property in the name of the Trustee on behalf of the Noteholder. The Seller
hereby agrees to pay all expenses related to such perfection or re-perfection
and to take all action necessary therefor.
 
Section 4.6 Additional Covenants of Servicer.

(a) The Servicer shall not release the Timeshare Property securing each
Receivable from the security interest granted by such Receivable in whole or in
part except in the event of payment in full by the Obligor thereunder or
liquidation of the Timeshare Property, nor shall the Servicer impair the rights
of the Noteholder in such Receivables or related Other Conveyed Property, nor
shall the Servicer amend or otherwise modify a Receivable or any of the related
Other Conveyed Property, except as permitted in accordance with Section 4.2.

(b) The Servicer shall obtain and/or maintain all necessary licenses, approvals,
authorizations, orders or other actions of any person, corporation or other
organization, or of any court, governmental agency or body or official, required
in connection with the execution, delivery and performance of this Agreement and
the other Basic Documents.

(c) The initial Servicer shall not make any material changes to its Collection
Policy unless the Noteholder expressly consents in writing prior to such changes
(which consent shall not be unreasonably withheld).

(d) The Servicer shall provide written notice to the Noteholder and the Trustee
of any Default, Event of Default or Servicer Termination Event under this
transaction or a similar event under any other warehouse financing facility or
securitization that has occurred and which Default, Event of Default or Servicer
Termination Event (or similar event) shall not have been waived or otherwise
cured within the applicable cure period.

(e) For so long as Silverleaf or any of its Affiliates controls the Resorts, the
Servicer shall use commercially reasonable efforts to maintain or cause the
Resorts to be maintained in good repair, working order and condition (ordinary
wear and tear excepted).

(f) For so long as Silverleaf or any of its Affiliates controls the Association
for a Resort, and Silverleaf or an Affiliate thereof is the manager, the related
management contract may not be amended or modified if such amendment or
modification is reasonably likely to have a material adverse effect on the
interests of the Noteholder, except with the prior written consent of the
Noteholder, which consent shall not be unreasonably withheld or delayed.

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(g) In the event any Lien (other than a Permitted Lien) attaches to any
Receivable or Other Conveyed Property or related collateral from any Person
claiming from or through Silverleaf or one of its Affiliates which materially
adversely affects the Purchaser’s or the Noteholder’s interest in such
Receivable or Other Conveyed Property, Silverleaf shall, within the earlier to
occur of ten (10) Business Days after such attachment or the respective
lienholders’ action to foreclose on such lien, either (a) cause such Lien to be
released of record, (b) provide the Trustee with a bond in accordance with the
applicable laws of the state in which the Timeshare Property is located, issued
by a corporate surety acceptable to the Trustee, in an amount and in form
reasonably acceptable to the Trustee or (c) provide the Trustee with such other
security as the Trustee may reasonably require.

(h) The Servicer shall: (a) promptly notify the Trustee of (i) any claim, action
or proceeding which may be reasonably expected to have a material adverse effect
on the Receivables or any Other Conveyed Property, or any material part thereof,
and (ii) any action, suit, proceeding, order or injunction of which the Servicer
becomes aware after the date hereof pending or threatened against or affecting
the Servicer or any Affiliate which may be reasonably expected to have a
material adverse effect on the Receivables or any Other Conveyed Property or the
Servicer’s ability to service the same; (b) at the request of Trustee with
respect to a claim or action or proceeding which arises from or through the
Servicer or one of its Affiliates, appear in and defend, at Servicer’s expense,
any such claim, petition or proceeding which would have a material adverse
effect on the Receivables or any Other Conveyed Property or the Servicer’s
ability to service the same; and (c) comply in all respects, and shall cause all
Affiliates to comply in all respects, with the terms of any orders imposed on
such Person by any governmental authority the failure to comply with which would
have a material adverse effect on the Receivables or any Other Conveyed Property
or the Servicer’s ability to service the same.

(i) Except as contemplated by the Basic Documents, the Servicer (for so long as
Silverleaf or any Affiliate thereof is the Servicer hereunder, otherwise
Silverleaf in its individual capacity) shall not, and shall not permit the
Managing Entity to, encumber, pledge or otherwise grant a lien or security
interest in and to the Reservation System (including, without limitation, all
hardware, software and data in respect thereof) and furthermore agrees, and
shall cause the Managing Entity, to use commercially reasonable efforts to keep
the Reservation System operational, not to dispose of the same and to allow the
members of each Association the use of, and access to, the Reservation System in
accordance with the terms of the Management Agreement.

(j) For so long as Silverleaf or any Affiliate thereof is the Servicer, it shall
comply in all material respects with the Collection Policy in effect on the
Closing Date (or, as amended from time to time with the consent of the
Noteholder) and with the terms of the Timeshare Loans.

(k) With respect to any Receivable (including but not limited to any Receivable
which becomes a Defaulted Receivable) and its related Timeshare Loan, the
Servicer shall, in accordance with the Servicing Standard, promptly institute
collection procedures, which may include, but are not limited to, cancellation,
forfeiture, termination or foreclosure proceedings or obtaining a deed-in-lieu
of foreclosure in respect of the related Timeshare Property, prior to the
initiation of any proceedings in respect of such Receivable and related
Timeshare Loan by any other Person, including but not limited to the Managing
Entity.
 
Section 4.7 Purchase of Receivables Upon Breach of Covenant. Upon discovery by
any of the Servicer, the Purchaser or the Trustee of a breach of any of the
covenants of the Servicer set forth in Sections 4.2(a), 4.2(f), 4.4, 4.5 or 4.6,
the party discovering such breach shall give prompt written notice to the others
and the Noteholder; provided, however, that the failure to give any such notice
shall not affect any obligation of the Servicer under this Section 4.7. Unless
the breach shall have been cured by the last day of the next Accrual Period
following such discovery, the Servicer shall, on or prior to such last day of
the next Accrual Period, purchase any Receivable materially and adversely
affected by such breach and the related Other Conveyed Property. In
consideration of the purchase of such Receivable, the Servicer shall remit the
Purchase Amount for such Receivable in the manner specified in Section 5.6. The
sole remedy of the Trustee, the Purchaser or the Noteholder with respect to a
breach of Sections 4.2(a), 4.2(f), 4.4, 4.5 or 4.6 shall be to require the
Servicer to repurchase Receivables and the related Other Conveyed Property
pursuant to this Section 4.7; provided, however, that the Servicer shall
indemnify the Trustee, the Backup Servicer, the Purchaser and the Noteholder
against all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, arising out of the events or facts
giving rise to such breach.
 
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Section 4.8 Servicing Fee. The “Servicing Fee” for each Settlement Date shall be
equal to the product of (i) one twelfth, (ii) the Servicing Fee Percentage and
(iii) the daily average of the Net Eligible Receivable Balance during the
related Accrual Period. The Servicing Fee shall also include all late fees,
prepayment charges, and other administrative fees or similar charges allowed by
applicable law with respect to Receivables, collected (from whatever source) on
the Receivables. If the Backup Servicer becomes the successor Servicer, it shall
be entitled to receive the Servicing Fee and not the Backup Servicing Fee.
 
Section 4.9 Servicer’s Certificate. No later than 12:00 noon New York City time
on each Determination Date, the Servicer shall deliver (facsimile delivery being
acceptable) to the Trustee, the Rating Agency, the Noteholder and the Purchaser,
a certificate substantially in the form of Exhibit A hereto (a “Servicer’s
Certificate”) containing among other things, (i) all information necessary to
enable the Trustee to make any withdrawal and deposit required by Section 5.5
and to make the distributions required by Section 5.7, (ii) all information
necessary for the Trustee to send or make available statements to the Noteholder
pursuant to Section 5.8(b) and 5.9, (iii) a listing of all Purchased Receivables
purchased as of the related Accounting Date, identifying the Receivables so
purchased, (iv) the calculation of the Borrowing Base, and (v) all information
necessary to enable the Backup Servicer to verify the information specified in
Section 4.15(e) and to complete the accounting required by Section 5.9. Each
such Servicer’s Certificate shall be accompanied by an Officer’s Certificate of
the Servicer in the form of Exhibit H hereto, certifying the accuracy of the
computations reflected in such Servicer’s Certificate.
 
Section 4.10 Annual Statement as to Compliance, Notice of Servicer Termination
Event.

(a) The Servicer shall deliver to the Purchaser, to the Trustee for delivery to
the Noteholder, the Backup Servicer and each Rating Agency, on or before March
31 of each year beginning March 31, 2007, an Officer’s Certificate, dated as of
December 31 of the preceding year, stating that (i) a review of the activities
of the Servicer during the preceding 12-month period (or, in the case of the
first such certificate, the period from the Cutoff Date with respect to
Receivables transferred to the Purchaser on the initial Funding Date to December
31, 2006) and of its performance under this Agreement has been made under such
officer’s supervision and (ii) to the best of such officer’s knowledge, based on
such review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year (or, in the case of the first such certificate, such
shorter period), or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.

(b) The Servicer shall deliver to the Trustee, the Noteholder, the Backup
Servicer and each Rating Agency, promptly after having obtained Knowledge
thereof, but in no event later than two (2) Business Days thereafter, written
notice in an Officer’s Certificate of any event which with the giving of notice
or lapse of time, or both, would become a Servicer Termination Event under
Section 10.1.
 
Section 4.11 Independent Accountants’ Reports. The Servicer shall cause a firm
of nationally recognized independent certified public accountants (the
“Independent Accountants”), who may also render other services to the Servicer
or to the Purchaser, to deliver to the Trustee, the Backup Servicer, the
Noteholder and each Rating Agency, on or before April 30 of each year beginning
April 30, 2007, a report dated as of December 31 of the preceding year in form
and substance reasonably acceptable to the Noteholder (the “Accountants’
Report”) and reviewing the Servicer’s activities during the preceding 12-month
period (or, in the case of the first such report, the period from the Cutoff
Date with respect to Receivables transferred to the Purchaser on the initial
Funding Date to December 31, 2006), addressed to the Board of Directors of the
Servicer, to the Trustee, the Backup Servicer and to the Noteholder, to the
effect that such firm has examined the financial statements of the Servicer and
issued its report therefor and that such examination (1) was made in accordance
with generally accepted auditing standards, and accordingly included such tests
of the accounting records and such other auditing procedures as such firm
considered necessary in the circumstances; (2) included tests relating to
timeshare loans serviced for others in accordance with the requirements of the
Uniform Single Attestation Program for Mortgage Bankers (the “Program”), to the
extent the procedures in the Program are applicable to the servicing obligations
set forth in this Agreement; (3) included an examination of the delinquency and
loss statistics relating to the Servicer’s portfolio; and (4) except as
described in the report, disclosed no exceptions or errors in the records
relating to timeshare loans serviced for others that, in the firm’s opinion,
paragraph four of the Program requires such firm to report. The accountant’s
report shall further state that (1) such firm has examined and audited the
Servicer’s servicing controls and procedures for the previous calendar year and
that such independent public accountants have examined certain documents and
records (including computer records) and servicing procedures of the Servicer
relating to the Receivables and the Other Conveyed Property, (2) they have
examined the most recent Servicer’s Certificate prepared by the Servicer and
three other Servicer’s Certificates chosen at random by such firm and compared
such Servicer’s Certificates with the information contained in such documents
and records, (3) their examination included such tests and procedures as they
considered necessary in the circumstances, (4) their examinations and
comparisons described under clauses (1) and (2) above disclosed no exceptions
which, in their opinion, were material, relating to such Receivables and Other
Conveyed Property or such Servicer’s Certificates, or, if any such exceptions
were disclosed thereby, setting forth such exceptions which, in their opinion,
were material, (5) on the basis of such examinations and comparison, such firm
is of the opinion that the Servicer has, during the relevant period, serviced
the Receivables and Other Conveyed Property in compliance with this Agreement
and the other Basic Documents in all material respects and that such documents
and records have been maintained in accordance with this Agreement and the other
Basic Documents in all material respects, except in each case for (A) such
exceptions as such firm shall believe to be immaterial and (B) such other
exceptions as shall be set forth in such written report. In the event such firm
requires the Trustee and/or the Backup Servicer to agree to the procedures
performed by such firm, the Servicer shall direct the Trustee and/or the Backup
Servicer, as applicable, in writing to so agree; it being understood and agreed
that the Trustee and/or the Backup Servicer will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and neither
the Trustee nor the Backup Servicer makes any independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency, validity or correctness of such procedures. The Report will
also indicate that the firm is independent of the Servicer within the meaning of
the Code of Professional Ethics of the American Institute of Certified Public
Accountants.
 
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Section 4.12 Independent Accountants’ Review of Receivables File. Commencing on
January 31, 2007 and thereafter each year on or before January 31 (or upon the
date of the closing of Seller’s next occurring term securitization transaction,
provided that such review is not made more than 365 days after the immediately
preceding review) prior to the Final Scheduled Settlement Date, the Seller at
its own expense shall cause Independent Accountants reasonably acceptable to the
Noteholder to conduct a post-funding review of the Seller’s compliance with its
stated underwriting policies and verify certain characteristics of the
Receivables and the Other Conveyed Property as of each Funding Date. If the cost
to the Seller of any such review is greater than $30,000 (other than a review
conducted in connection with a securitization transaction, as described above),
the Noteholder in its sole discretion may elect to pay the amount in excess of
$30,000 or to waive the performance of such review. If such review is performed
in connection with a securitization transaction, the Seller shall pay the entire
cost of the review, including any amount in excess of $30,000. The Independent
Accountants shall within ten Business Days complete such physical inspection and
limited review and execute and deliver to Seller, the Servicer, the Trustee and
the Noteholder a report summarizing the findings, which report shall be
delivered in any case within 365 days of the previous report delivered in
accordance with this Section 4.12. If such review reveals, in the Noteholder’s
reasonable opinion, an unsatisfactory number of exceptions, the Noteholder, in
its reasonable discretion, may require a full review of a larger sample of the
Receivables and the Other Conveyed Property by the Independent Accounts at the
expense of the Seller.
 
Section 4.13 Report on Proceedings and Servicer Termination Event. (i) Promptly
upon a Responsible Officer of the Servicer’s obtaining Knowledge of any proposed
or pending investigation of it by any Governmental Authority or any court or
administrative proceeding which involves or is reasonably likely to involve the
possibility of materially and adversely affecting the properties, business,
prospects, profits or conditions (financial or otherwise) of the Servicer and
its subsidiaries, as a whole, the Servicer shall send written notice specifying
the nature of such investigation or proceeding and what action the Servicer is
taking or proposes to take with respect thereto and evaluating its merits, or
(ii) immediately upon obtaining Knowledge of the existence of any condition or
event which constitutes a Servicer Termination Event, the Servicer shall send
written notice to the Purchaser, the Trustee and the Noteholder describing its
nature and period of existence and what action the Servicer is taking or
proposes to take with respect thereto.
 
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Section 4.14 Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Trustee, the
Backup Servicer and the Noteholder reasonable access to the documentation
regarding the Receivables and the Other Conveyed Property. In each case, such
access shall be afforded without charge but only upon reasonable request and
during normal business hours. Nothing in this Section shall derogate from the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Obligors, and the failure of the Servicer to
provide access as provided in this Section as a result of such obligation shall
not constitute a breach of this Section.
 
Section 4.15 Verification of Servicer’s Certificate. On Friday of each week (or,
if such day is not a Business Day, then on the next Business Day), the Servicer
shall prepare and deliver to the Backup Servicer the following:

(i)a computer file or files stored on diskette, magnetic tape, or provided
electronically to Backup Servicer prepared in accordance with the four-page
“Record Layout” for data conversion attached hereto as Exhibit G and made a part
hereof. Such files shall contain all information with respect to the Receivables
and the Other Conveyed Property as of the close of business on the prior
Business Day of Servicer necessary to store the appropriate data in Backup
Servicer’s system from which Backup Servicer will be capable of preparing a
weekly trial balance relating to the data; and

(ii)together with the file(s) described above, an initial trial balance showing
balances of the Receivables as of the last Business Day corresponding to the
date of the aforesaid initial file.

(b) In the event the Servicer modifies its Record Layout after the initial
conversion, Servicer shall advise Backup Servicer in writing and agrees to pay
Backup Servicer for any additional programming and other work required as a
result of such changes.

(c) The Backup Servicer shall use the aforesaid files and initial trial balance
described above to store the data thereon in its computer system and run a
weekly trial balance report and shall provide such report to the Trustee, the
Servicer and the Noteholder. The Backup Servicer shall receive data on diskette,
tape or other acceptable electronic medium on Friday of each week (or, if such
day is not a Business Day, then on the next Business Day), perform conversion of
data onto its system on a weekly basis to produce a weekly trial balance report
and a summary delinquency report in the form attached hereto as Schedule C, and
shall provide such report to the Trustee, the Servicer and the Noteholder no
later than 3 Business Days after receiving the required data from the Servicer,
provided the data described in the diskettes or tapes is in a form that enables
the Backup Servicer to do so.

(d) Concurrently with the delivery by the Servicer of the Servicer’s Certificate
each month, the Servicer will deliver to the Trustee, the Noteholder and the
Backup Servicer a computer diskette (or other electronic transmission) in a
format acceptable to the Trustee, the Noteholder and the Backup Servicer
containing information with respect to the Receivables and the Other Conveyed
Property as of the close of business on the last day of the preceding Interest
Period which information is necessary for preparation of the Servicer’s
Certificate. The Backup Servicer shall use such computer diskette (or other
electronic transmission) to verify certain information specified in Section
4.15(e) contained in the Servicer’s Certificate delivered by the Servicer, and
the Backup Servicer shall notify the Servicer and the Noteholder of any
discrepancies on or before the second Business Day following the Determination
Date. In the event that the Backup Servicer reports any discrepancies, the
Servicer and the Backup Servicer shall attempt to reconcile such discrepancies
by the related Settlement Date, but in the absence of a reconciliation, the
Servicer’s Certificate shall control for the purpose of calculations and
distributions with respect to the related Settlement Date. In the event that the
Backup Servicer and the Servicer are unable to reconcile discrepancies with
respect to a Servicer’s Certificate by the related Settlement Date, the Backup
Servicer shall notify the Noteholder thereof in writing and the Servicer shall
cause a firm of Independent Accountants, at the Servicer’s expense, to audit the
Servicer’s Certificate and, prior to the fifth day of the following calendar
month, reconcile the discrepancies. The effect, if any, of such reconciliation
shall be reflected in the Servicer’s Certificate for such next succeeding
Determination Date. Other than the duties specifically set forth in this
Agreement, the Backup Servicer shall have no obligations hereunder, including,
without limitation, to supervise, verify, monitor or administer the performance
of the Servicer. The Backup Servicer shall have no liability for any actions
taken or omitted by the Servicer. The duties and obligations of the Backup
Servicer shall be determined solely by the express provisions of this Agreement
and no implied covenants or obligations shall be read into this Agreement
against the Backup Servicer.

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(e) The Backup Servicer shall review each Servicer’s Certificate delivered
pursuant to Section 4.15(d) and shall:

(i)confirm that such Servicer’s Certificate is complete on its face;

(ii)load the computer diskette (which shall be in a format acceptable to the
Backup Servicer) received from the Servicer pursuant to Section 4.15(d) hereof,
confirm that such computer diskette is in a readable form and calculate and
confirm the Aggregate Principal Balance of the Receivables for the most recent
Settlement Date and reconcile (A) the number of accounts currently being
serviced comprising the Receivables and (B) the trial balance and summary
delinquency information with the corresponding information in the Servicer’s
Certificate; and

(iii)confirm that Available Funds, the Noteholder’s Principal Distributable
Amount, the Noteholder’s Interest Distributable Amount, the Servicing Fee, the
Backup Servicing Fee, the Trustee Fee, Leverage Ratio, Delinquency Ratio,
Serviced Receivables Delinquency Ratio, Default Ratio, Serviced Receivables
Default Ratio, the Net Spread, the Three Month Rolling Average of Delinquency
Ratios, the Three Month Rolling Average of Serviced Receivables Delinquency
Ratios, the Three Month Rolling Average of Default Ratios, the Three Month
Rolling Average of Serviced Receivables Default Ratios, the Three Month Rolling
Average of Net Spread, and the percentage of Aggregate Principal Balance of
Eligible Timeshare Loans with a related Obligor having a FICO score of greater
than or equal to 500 and less than 600 as of the date of origination of such
Timeshare Loan in the Servicer’s Certificate are accurate based solely on the
recalculation of the Servicer’s Certificate.

(f) Within 90 days of the Closing Date, the Backup Servicer will data map to its
servicing system all servicing/loan file information, including all relevant
borrower contact information such as address and phone numbers as well as loan
balance and payment information, including comment histories and collection
notes. On or before the fifth calendar day of each month, the Servicer will
provide to the Backup Servicer an electronic transmission of all servicing/loan
information, including all relevant borrower contact information such as address
and phone numbers as well as loan balance and payment information, including
comment histories and collection notes, and the Backup Servicer will review each
file to ensure that it is in readable form and verify that the data balances
conform to the trial balance reports received from the Servicer. Additionally,
the Backup Servicer shall store each such file.
 
Section 4.16 [RESERVED].

Section 4.17 Fidelity Bond and Errors and Omissions Insurance. The Servicer
shall maintain a fidelity bond and errors and omissions insurance in such form
and amount as is customary for entities acting as custodian of funds and
documents in respect of consumer contracts on behalf of institutional investors;
provided that such insurance shall be in a minimum amount of $1,000,000 per
policy and shall name the Trustee as an additional insured. No provision of this
Section 4.17 requiring such fidelity bond or errors and omissions insurance
shall diminish or relieve the Servicer from its duties and obligations as set
forth in this Agreement. Upon a request of the Trustee or the Noteholder, the
Servicer shall deliver to the Trustee, a certification evidencing coverage under
such fidelity bond and the errors and omissions insurance. Any such fidelity
bond or errors and omissions insurance policy shall not be canceled or modified
in a materially adverse manner without ten (10) Business Days’ prior written
notice to the Trustee and the Noteholder.
 
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Section 4.18 Lien Searches; Opinions as to Transfers and Security Interests. The
Servicer shall, as a condition precedent to the extension of the Scheduled
Maturity Date and renewal of the Indenture by the Noteholder pursuant to Section
2.3 thereof, deliver (or cause to be delivered) to the Trustee and the
Noteholder an Opinion of Counsel, in form and substance satisfactory to the
Noteholder, with respect to (a) the “true sale” nature of the transfers of
Receivables and, to the extent applicable, related Other Conveyed Property
hereunder and under each related Assignment, (b) the “backup security interest”
with respect to the transfers of Receivables and, to the extent applicable,
related Other Conveyed Property hereunder and under each related Assignment, (c)
the validity of the security interest in connection with the pledge of
Collateral to the Trustee under the Indenture on each Funding Date and (d) the
perfection and first priority of the transfers and pledges referred to in
clauses (a)-(c) above. To the extent each such Opinion of Counsel is in any
manner reliant on UCC lien searches, each such UCC lien search shall be dated no
earlier than ten Business Days prior to the date of each such related Opinion of
Counsel, and shall be accompanied by officer’s certificates from the appropriate
parties certifying that no filings subsequent to the date of such lien searches
have been made. Such Opinion of Counsel shall state, among other things, that,
in the opinion of such counsel, either (A) all financing statements and
continuation statements have been authorized and filed that are necessary to
perfect the interest of the Purchaser and the Trustee in the Receivables, and
reciting the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (B) no such action shall be necessary to
preserve and protect such interest. The Opinion of Counsel referred to in this
Section 4.18 shall specify any action necessary (as of the date of such opinion)
to be taken to preserve and protect such interest.
 
Section 4.19 Subservicing Arrangements. The Servicer may arrange for the
subservicing of all or any portion of the Receivables and the Other Conveyed
Property by a subservicer; provided, however, that such subservicing arrangement
must provide for the servicing of such Receivables and Other Conveyed Property
in a manner consistent with the servicing arrangements contemplated hereunder;
provided, further, that any such subservicing arrangement with a Person that is
not an Affiliate of Silverleaf shall require the prior written consent of the
Noteholder. Unless the context otherwise requires, references in this Agreement
to actions taken or to be taken by the Servicer in servicing the Receivables
include actions taken or to be taken by a subservicer on behalf of the Servicer.
Notwithstanding the provisions of any subservicing agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and a subservicer or reference to actions taken through a subservicer
or otherwise, the Servicer shall remain obligated and liable to the Purchaser,
the Trustee, the Backup Servicer and the Noteholder for the servicing and
administration of the Receivables and the Other Conveyed Property in accordance
with the provisions of this Agreement without diminution of such obligation or
liability by virtue of such subservicing agreements or arrangements or by virtue
of indemnification from the subservicer and to the same extent and under the
same terms and conditions as if the Servicer alone were servicing and
administering the Receivables and the Other Conveyed Property. All actions of
each subservicer performed pursuant to a subservicing arrangement shall be
performed as an agent of the Servicer with the same force and effect as if
performed directly by the Servicer. The subservicer under each subservicing
arrangement shall be engaged by the Servicer upon terms consistent with the
engagement of the Servicer hereunder. Each subservicer shall be simultaneously
terminated in the event that the Servicer is terminated hereunder. The fees paid
by the Servicer to the related subservicer under each subservicing arrangement
shall not exceed the Servicing Fees paid to the Servicer hereunder.

ARTICLE V

ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO THE NOTEHOLDER
 
Section 5.1 Establishment of Pledged Accounts.

(a) The Trustee, on behalf of the Noteholder, shall establish and maintain in
its own name an Eligible Account (the “Collection Account”), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Trustee on behalf of the Noteholder. The Collection Account shall
initially be established with the Trustee.

(b) The Trustee, on behalf of the Noteholder, shall establish and maintain in
its own name an Eligible Account (the “Note Distribution Account”), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Trustee on behalf of the Noteholder. The Note Distribution
Account shall initially be established with the Trustee.

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(c) The Trustee, on behalf of the Noteholder shall establish and maintain in its
own name an Eligible Account (the “Principal Funding Account”), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Trustee on behalf of the Noteholder. The Principal Funding
Account shall initially be established with the Trustee.

(d) The Trustee, on behalf of the Noteholder shall establish and maintain in its
own name an Eligible Account (the “Reserve Account”), bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Trustee on behalf of the Noteholder. The Reserve Account shall initially be
established with the Trustee.

(e) Funds on deposit in the Collection Account, the Principal Funding Account,
the Reserve Account and the Note Distribution Account (collectively, the
“Pledged Accounts”) shall be invested by the Trustee (or any custodian with
respect to funds on deposit in any such account) in Eligible Investments
selected in writing by the Servicer or, after the resignation or termination of
Silverleaf as Servicer, by the Noteholder (pursuant to standing instructions or
otherwise). All such Eligible Investments shall be held by or on behalf of the
Trustee for the benefit of the Noteholder. Other than as permitted by the Rating
Agency and the Noteholder, funds on deposit in any Pledged Account shall be
invested in Eligible Investments that will mature so that such funds will be
available at the close of business on the Business Day immediately preceding the
following Settlement Date. Funds deposited in a Pledged Account on the day
immediately preceding a Settlement Date upon the maturity of any Eligible
Investments are not required to be invested overnight. All Eligible Investments
will be held to maturity.

(f) All investment earnings of moneys deposited in the Pledged Accounts shall be
deposited (or caused to be deposited) by the Trustee in the Collection Account
for distribution pursuant to Section 5.7(a), and any loss resulting from such
investments shall be charged to such account. The Servicer shall not direct the
Trustee to make any investment of any funds held in any of the Pledged Accounts
unless the security interest granted and perfected in such account will continue
to be perfected in such investment, in either case without any further action by
any Person, and, in connection with any direction to the Trustee to make any
such investment, if requested by the Trustee, the Servicer shall deliver to the
Trustee an Opinion of Counsel, acceptable to the Trustee, to such effect.

(g) The Trustee shall not in any way be held liable by reason of any
insufficiency in any of the Pledged Accounts resulting from any loss on any
Eligible Investment included therein except for losses attributable to the
Trustee’s negligence, bad faith or willful misconduct or its failure to make
payments on such Eligible Investments issued by the Trustee, in its commercial
capacity as principal obligor and not as Trustee, in accordance with their
terms.

(h) If (i) the Servicer or the Noteholder, as applicable, shall have failed to
give investment directions for any funds on deposit in the Pledged Accounts to
the Trustee by 1:00 p.m. Eastern Time (or such other time as may be agreed by
the Purchaser and Trustee) on any Business Day; or (ii) an Event of Default
shall have occurred and be continuing with respect to the Note but the Note
shall not have been declared due and payable, or, if the Note shall have been
declared due and payable following an Event of Default, amounts collected or
receivable from the Receivables and the Other Conveyed Property are being
applied as if there had not been such a declaration; then the Trustee shall, to
the fullest extent practicable, invest and reinvest funds in the Pledged
Accounts in an Eligible Investment described in paragraph (f) of the definition
thereof.

(i) The Trustee shall possess all right, title and interest in all funds on
deposit from time to time in the Pledged Accounts and in all proceeds thereof
(including all Investment Earnings on the Pledged Accounts) and all such funds,
investments, proceeds and income shall be part of the Other Conveyed Property.
Except as otherwise provided herein, the Pledged Accounts shall be under the
sole dominion and control of the Trustee for the benefit of the Noteholder. If
at any time any of the Pledged Accounts ceases to be an Eligible Account, the
Servicer with the consent of the Noteholder shall within five Business Days
establish a new Pledged Account as an Eligible Account and shall transfer any
cash and/or any investments to such new Pledged Account. The Servicer shall
promptly notify the Rating Agency, the Trustee and the Noteholder of any change
in the location of any of the aforementioned accounts. In connection with the
foregoing, the Servicer agrees that, in the event that any of the Pledged
Accounts are not accounts with the Trustee, the Servicer shall notify the
Trustee and the Noteholder in writing promptly upon any of such Pledged Accounts
ceasing to be an Eligible Account.

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(j) The parties agree that each Pledged Account is a “securities account” within
the meaning of Article 8 of the UCC and that all property (including without
limitation all uninvested funds, securities and other investment property) at
any time deposited in or carried in or credited to the Pledged Accounts shall be
treated as “financial assets” within the meaning of Article 8 of the UCC. The
Account Intermediary agrees that (i) it is a “securities intermediary” within
the meaning of Article 8 of the UCC and will at all times act in such capacity
with respect to the Pledged Accounts and (B) the Trustee is the entitlement
holder of the Pledged Accounts. The parties agree that the Account Intermediary
shall follow all “entitlement orders” (as such term is defined in Article 8 of
the UCC) originated by the Trustee with respect to the Pledged Accounts and all
financial assets deposited or carried in or credited to any Pledged Account.
Notwithstanding anything to the contrary herein or in any other document
relating to a Pledged Account, the “securities intermediary’s jurisdiction”
(within the meaning of Section 8-110 of the UCC) with respect to each Pledged
Account and any security entitlements to financial assets credited thereto shall
be the State of New York.

(k) With respect to the Pledged Account Property, the Trustee agrees that:

(i)any Pledged Account Property that is held in deposit accounts shall be held
solely in an Eligible Account; and, except as otherwise provided herein, each
such Eligible Account shall be subject to the exclusive custody and control of
the Trustee and the Trustee shall have sole signature authority with respect
thereto;

(ii)any Pledged Account Property shall be delivered to the Trustee in accordance
with the definition of “Delivery”; and

(iii)the Servicer shall have the power, revocable by the Noteholder to instruct
the Trustee to make withdrawals and payments from the Pledged Accounts for the
purpose of permitting the Servicer and the Trustee to carry out their respective
duties hereunder.
 
Section 5.2 [RESERVED]

Section 5.3 Certain Reimbursements to the Servicer. The Servicer will be
entitled to be reimbursed from amounts on deposit in the Collection Account with
respect to an Accrual Period for amounts previously deposited in the Collection
Account but later determined by the Servicer to have resulted from mistaken
deposits or postings or checks returned for insufficient funds. The amount to be
reimbursed hereunder shall be paid to the Servicer on the related Settlement
Date pursuant to Section 5.7(a)(iv) upon certification by the Servicer of such
amounts and the provision of such information to the Trustee and the Noteholder
as may be necessary in the opinion of the Noteholder to verify the accuracy of
such certification; provided, however, that the Servicer must provide such
certification within three months of it becoming aware of such mistaken deposit,
posting or returned check. In the event that the Noteholder has not received
evidence satisfactory to it of the Servicer’s entitlement to reimbursement
pursuant to this Section, the Noteholder shall give the Trustee notice to such
effect, following receipt of which the Trustee shall not make a distribution to
the Servicer in respect of such amount pursuant to Section 5.7, or if prior
thereto the Servicer has been reimbursed pursuant to Section 5.7, the Trustee
shall withhold such amounts from amounts otherwise distributable to the Servicer
on the next succeeding Settlement Date.
 
Section 5.4 [RESERVED]

Section 5.5 Reserve Account.

(a) The Reserve Account will be held for the benefit of the Noteholder. On or
prior to the Closing Date, the Purchaser shall deposit or cause to be deposited
into the Reserve Account an amount equal to the Required Reserve Account Amount.
On each Funding Date, the Purchaser shall deposit a portion of the related
Advance into the Reserve Account until the amount on deposit in the Reserve
Account equals the Required Reserve Account Amount.

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(b) In the event that the Servicer’s Certificate with respect to any
Determination Date shall state that the Available Funds with respect to the
related Settlement Date are insufficient to make the payments required to be
made on the related Settlement Date pursuant to Sections 5.7(a)(i) through (ix)
(such deficiency being a “Deficiency Claim Amount”), then on the Deficiency
Claim Date, the Trustee shall deliver to the Noteholder and the Servicer, by
hand delivery or facsimile transmission, a written notice (a “Deficiency
Notice”) specifying the Deficiency Claim Amount for such Settlement Date. The
Trustee shall withdraw an amount equal to such Deficiency Claim Amount from the
Reserve Account (to the extent of the funds available on deposit therein) for
deposit in the Collection Account on the related Settlement Date and
distribution pursuant to Sections 5.7(a)(i) through (ix), as applicable.

(c) Any Deficiency Notice shall be delivered by 10:00 a.m., New York City time,
on the Deficiency Claim Date. The amounts distributed to the Trustee pursuant to
a Deficiency Notice shall be deposited by the Trustee into the Collection
Account pursuant to Section 5.6.

(d) Following the Facility Termination Date, all amounts, or any portion
thereof, on deposit in the Reserve Account will be deposited into the Collection
Account for distribution pursuant to Section 5.7.

(e) On any Settlement Date prior to the Facility Termination Date on which,
after all distributions required to be made on such Settlement Date pursuant to
Section 5.7(a) have been made, the amount on deposit in the Reserve Account
exceeds the Required Reserve Account Amount, the Trustee shall withdraw such
excess (as indicated on the Servicer’s Certificate) and distribute the same to
the Purchaser or its designee in accordance with Section 5.7(a)(xiv).
 
Section 5.6 Additional Deposits. The Servicer or the Seller, as the case may be,
shall deposit or cause to be deposited in the Collection Account (i) the
aggregate Purchase Amount with respect to Purchased Receivables, (ii) the
Upgrade Purchase Price with respect to the prepayment of any Upgraded Timeshare
Loan, (iii) the Upgrade Purchase Price with respect to the sale of any Timeshare
Loan pursuant to Section 3.2(d) hereof, (iv) the Default Purchase Price with
respect to the optional purchase of any Defaulted Timeshare Loan, and (v) all
Substitution Shortfall Amounts with respect to substituted Receivables. All such
deposits shall be made, in immediately available funds, on the Business Day
preceding the related Determination Date. On the Deficiency Claim Date, the
Trustee shall remit to the Collection Account any amounts withdrawn from the
Reserve Account pursuant to Section 5.5.
 
Section 5.7 Distributions.

(a) On each Settlement Date, the Trustee (based on the information contained in
the Servicer’s Certificate delivered on the related Determination Date) shall
make the following distributions in the following order of priority from amounts
on deposit in the Collection Account:

(i)to the Noteholder, any payments from the Hedge Counterparty to the extent
they are due and payable in an amount equal to the excess, if any, of the
Noteholder’s Monthly Interest Distributable Amount over Capped Monthly Interest,
in respect of the Noteholder’s Interest Distributable Amount;

(ii)to the Hedge Counterparty, from Available Funds and any amounts deposited in
the Collection Account pursuant to Section 5.5(b) and Section 5.5(d) in respect
of Hedge Counterparty Scheduled Fees;

(iii)to the Trustee, from Available Funds and any amounts deposited in the
Collection Account pursuant to Section 5.5(b) and Section 5.5(d), the Trustee
Fee, any accrued and unpaid Trustee Fees from prior Settlement Dates and all
reasonable out-of-pocket expenses (including reasonable counsel fees and
expenses) from prior Accrual Periods; provided however, that any reasonable
out-of-pocket expenses payable to the Trustee pursuant to this clause (iii) that
are incurred and not reimbursed in connection with the Trustee’s obligations and
duties under the Basic Documents shall be limited to $10,000 per Settlement
Date;

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(iv)to the Servicer, from Available Funds and any amounts deposited in the
Collection Account pursuant to Section 5.5(b) and Section 5.5(d), in respect of
the Servicing Fee and all unpaid Servicing Fees from prior Accrual Periods, all
reimbursements to which the Servicer is entitled pursuant to Section 5.3 and, if
the Servicer is a successor Servicer, to the extent not previously paid by the
predecessor Servicer pursuant to this Agreement, reasonable transition expenses
(up to a maximum of $100,000 in the aggregate over the term of this Agreement)
incurred in becoming the successor Servicer;

(v)to the Backup Servicer, from Available Funds and any amounts deposited in the
Collection Account pursuant to Section 5.5(b) and Section 5.5(d), in respect of
the Backup Servicing Fee (so long as the Backup Servicer is not acting as
successor Servicer), and all reasonable out-of-pocket expenses (other than
expenses incurred in connection with transitioning the servicing to the Backup
Servicer) thereof (including reasonable counsel fees and expenses) and all
accrued and unpaid Backup Servicing Fees (so long as the Backup Servicer is not
acting as successor Servicer) from prior Settlement Dates; provided, however,
that any reasonable out-of-pocket expenses payable to the Backup Servicer
pursuant to this clause (v) that are incurred and not reimbursed in connection
with the Backup Servicer’s obligations and duties under the Basic Documents
shall be limited to a total of $10,000 per annum;

(vi)to the extent not paid by the Servicer, to the Custodian, the Custodian Fee,
plus any accrued and unpaid Custodian Fees with respect to prior Settlement
Dates;

(vii)to the extent not paid by the Servicer, to the Lockbox Bank, the Lockbox
Fee, plus any accrued and unpaid Lockbox Fees from prior Settlement Dates;

(viii)to the Note Distribution Account, from Available Funds and any amounts
deposited in the Collection Account pursuant to Section 5.5(b) and Section
5.5(d), the remaining Noteholder’s Interest Distributable Amount after giving
effect to Section 5.7(a)(i) hereof and the unused facility fee payable pursuant
to Section 3.02(b) of the Note Purchase Agreement;

(ix)to the Note Distribution Account, from Available Funds and any amounts
deposited in the Collection Account pursuant to Section 5.5(b) and Section
5.5(d), the Noteholder’s Principal Distributable Amount for such Accrual Period;

(x)to the Trustee, for deposit in the Reserve Account, from Available Funds, an
amount equal to the excess of (A) the Required Reserve Account Amount for such
Settlement Date over (B) the amount on deposit in the Reserve Account;

(xi)to the Note Distribution Account, from Available Funds, to the Noteholder in
respect of any amounts owed to the Noteholder pursuant to Sections 3.03 and 3.04
of the Note Purchase Agreement;

(xii)to the Hedge Counterparty, from Available Funds and any amounts deposited
in the Collection Account pursuant to Section 5.5(d), in respect of Hedge
Counterparty Termination Fees;

(xiii)to the Trustee and the Backup Servicer from Available Funds and any
amounts deposited in the Collection Account pursuant to Section 5.5(d), in
respect of reasonable out-of-pocket expenses thereof (including reasonable
counsel fees and expenses) and reasonable out-of-pocket expenses (including
reasonable counsel fees and expenses) from prior Accrual Periods to the extent
not paid thereto pursuant to Section 5.7(a)(iii) and (v) above; and

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(xiv)to the Purchaser, the remaining Available Funds, if any, and any amounts
deposited in the Collection Account pursuant to Section 5.5(d) and any amounts
released from the Reserve Account pursuant to Section 5.5(e).

(b) In the event that the Collection Account is maintained with an institution
other than the Trustee, the Servicer shall instruct and cause such institution
to make all deposits and distributions pursuant to Section 5.7(a) on the related
Settlement Date.
 
Section 5.8 Note Distribution Account.

(a) On each Settlement Date (based solely on the information contained in the
Servicer’s Certificate), the Trustee shall distribute all amounts on deposit in
the Note Distribution Account to the Noteholder in respect of the Note to the
extent of amounts due and unpaid on the Note for principal and interest in the
following amounts and in the following order of priority:

(i)to the Noteholder, the Noteholder’s Interest Distributable Amount; provided
that if there are not sufficient funds in the Note Distribution Account to pay
the entire amount then due on the Note, the amount in the Note Distribution
Account shall be applied to the payment of such interest pro rata among the
Holders of the Note;

(ii)to the Noteholder, in reduction of the Invested Amount, the Noteholder’s
Principal Distributable Amount to pay principal on the Note until the
outstanding principal amount of the Note has been reduced to zero; provided that
if there are not sufficient funds in the Note Distribution Account to pay the
entire amount then due on the Note, the amount in the Note Distribution Account
shall be applied to the payment of such principal pro rata among the Holders of
the Note;

(iii)to the Noteholder, any other amounts due the Noteholder pursuant to the
Basic Documents.

(b) On each Settlement Date, the Trustee shall provide or make available
electronically in accordance with Section 5.9(c) (or, upon written request, by
first class mail or facsimile) to the Noteholder the statement or statements
provided to the Trustee by the Servicer pursuant to Section 5.9 hereof on such
Settlement Date; provided however, the Trustee shall have no obligation to
provide such information described in this Section 5.8(b) until it has received
the requisite information from the Servicer.
 
Section 5.9 Statements to the Noteholder.

(a) On each Determination Date (in accordance with Section 4.9), the Servicer
shall provide to the Trustee, the Rating Agency and the Noteholder as of the
related Record Date a copy of the Servicer’s Certificate substantially in the
form attached hereto as Exhibit A.

(b) Within 60 days after the end of each calendar year, commencing February 28,
2007, the Servicer shall deliver to the Trustee, and the Trustee shall, provided
it has received the necessary information from the Servicer, promptly thereafter
furnish to the Noteholder (a) a report (prepared by the Servicer) as to the
aggregate of the amounts reported pursuant to Sections I, IV, V and VII of the
Servicer’s Certificate for such preceding calendar year, and (b) such
information as may be reasonably requested by the Noteholder or required by the
Code and regulations thereunder, to enable the Noteholder to prepare its Federal
and State income tax returns. The obligation of the Trustee set forth in this
paragraph shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Servicer to the
Noteholder pursuant to any requirements of the Code.

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(c) The Trustee may make available to the Noteholder and the Rating Agency via
the Trustee’s Internet Website, all statements described herein and, with the
consent or at the direction of the Seller, such other information regarding the
Note and/or the Receivables as the Trustee may have in its possession, but only
with the use of a password provided by the Trustee. The Trustee will make no
representation or warranties as to the accuracy or completeness of such
documents and will assume no responsibility therefore. The Trustee’s Internet
Website shall be initially located at www.CTSLink.com or at such other address
as shall be specified by the Trustee from time to time in writing to the
Noteholder. In connection with providing access to the Trustee’s Internet
Website, the Trustee may require registration and the acceptance of a
disclaimer. The Trustee shall not be liable for the dissemination of information
in accordance with this Agreement.

ARTICLE VI

[RESERVED]

ARTICLE VII

THE PURCHASER
 
Section 7.1 Representations of Purchaser. The Purchaser makes the following
representations on which the Noteholder shall be deemed to have relied in
purchasing the Note. The representations speak as of the execution and delivery
of this Agreement, as of the Closing Date and as of each Funding Date, and shall
survive the sale of the Receivables and the Other Conveyed Property to the
Purchaser and the pledge thereof by the Purchaser to the Trustee pursuant to the
Indenture.

(a) Organization and Good Standing. The Purchaser has been duly formed and is
validly existing as a limited liability company solely under the laws of the
state of Delaware and is in good standing under the laws of the State of
Delaware, with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is currently
conducted, and had at all relevant times, and now has, power, authority and
legal right to acquire, own and pledge the Receivables and the Other Conveyed
Property pledged to the Trustee.

(b) Due Qualification. The Purchaser is duly qualified to do business as a
foreign limited liability company in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business shall require such
qualifications.

(c) Power and Authority. The Purchaser has the power (corporate and other) and
authority to execute and deliver this Agreement and the other Basic Documents to
which it is a party and to carry out its terms and their terms, respectively;
the Purchaser has full power and authority to pledge the Collateral to be
pledged to the Trustee by it pursuant to the Indenture and has duly authorized
such pledge to the Trustee by all necessary corporate action; and the execution,
delivery and performance of this Agreement and the Basic Documents to which the
Purchaser is a party have been duly authorized by the Purchaser by all necessary
action.

(d) Valid Sale; Binding Obligations. This Agreement effects a valid sale of the
Receivables and the Other Conveyed Property, enforceable against the Seller and
creditors of and purchasers from the Seller, and this Agreement and the other
Basic Documents to which the Purchaser is a party, when duly executed and
delivered, shall constitute legal, valid and binding obligations of the
Purchaser enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors’ rights generally and by
equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at law.

(e) No Violation. The consummation of the transactions contemplated by this
Agreement and the other Basic Documents and the fulfillment of the terms of this
Agreement and the other Basic Documents shall not conflict with, result in any
breach of any of the terms and provisions of or constitute (with or without
notice, lapse of time or both) a default under the Limited Liability Company
Agreement of the Purchaser, or any indenture, agreement, mortgage, deed of trust
or other instrument to which the Purchaser is a party or by which it is bound,
or result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of trust
or other instrument, other than the Basic Documents, or violate any law, order,
rule or regulation applicable to the Purchaser of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Purchaser or any of its properties.

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(f) No Proceedings. There are no proceedings or investigations pending or, to
the Purchaser’s knowledge, threatened against the Purchaser, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Purchaser or its properties (A)
asserting the invalidity of this Agreement, the Note or any of the Basic
Documents, (B) seeking to prevent the issuance of the Note or the consummation
of any of the transactions contemplated by this Agreement or any of the Basic
Documents, (C) seeking any determination or ruling that might materially and
adversely affect the performance by the Purchaser of its obligations under, or
the validity or enforceability of, this Agreement or any of the Basic Documents,
or (D) relating to the Purchaser and which might adversely affect the federal or
state income, excise, franchise or similar tax attributes of the Note.

(g) No Consents. No consent, approval, authorization or order of or declaration
or filing with any governmental authority is required for the issuance or sale
of the Note or the consummation of the other transactions contemplated by this
Agreement, except such as have been duly made or obtained or as may be required
by the Basic Documents.

(h) Tax Returns. The Purchaser has filed all federal and state tax returns which
are required to be filed and paid all taxes, including any assessments received
by it, to the extent that such taxes have become due. Any taxes, fees and other
governmental charges payable by the Purchaser in connection with consummation of
the transactions contemplated by this Agreement and the other Basic Documents to
which the Purchaser is a party and the fulfillment of the terms of this
Agreement and the other Basic Documents to which the Purchaser is a party have
been paid or shall have been paid at or prior to the Closing Date and as of each
Funding Date.

(i) Chief Executive Office. The chief executive office of the Purchaser is at
1221 River Bend Drive, Suite 120, Dallas, Texas 75247.

ARTICLE VIII

THE SELLER
 
Section 8.1 Representations of Seller. The Seller makes the following
representations on which the Purchaser is deemed to have relied in acquiring the
Receivables and the Other Conveyed Property and on which the Noteholder is
deemed to have relied in purchasing the Note. The representations speak as of
the execution and delivery of this Agreement, as of the Closing Date and as of
each Funding Date, and shall survive the sale of the Receivables and the Other
Conveyed Property to the Purchaser and the pledge thereof by the Purchaser to
the Trustee pursuant to the Indenture.

(a) Organization and Good Standing. The Seller has been duly organized and is
validly existing as a corporation solely under the laws of the State of Texas
and is in good standing under the laws of the State of Texas, with power and
authority to own its properties and to conduct its business as such properties
are currently owned and such business is currently conducted, and had at all
relevant times, and now has, power, authority and legal right to acquire, own
and sell the Receivables and the Other Conveyed Property transferred to the
Purchaser and to perform its other obligations under this Agreement and any
other Basic Documents to which it is a party.

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(b) Due Qualification. The Seller is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of property or
the conduct of its business (including the origination, sale and servicing of
the Receivables and the Other Conveyed Property as required by this Agreement)
shall require such qualifications.

(c) Power and Authority. The Seller has the power (corporate and other) and
authority to execute and deliver this Agreement and the other Basic Documents to
which it is a party and to carry out its terms and their terms, respectively;
the Seller has full power and authority to sell and assign the Receivables and
the Other Conveyed Property to be sold and assigned to and deposited with the
Purchaser by it and has duly authorized such sale and assignment to the
Purchaser by all necessary corporate action; and the execution, delivery and
performance of this Agreement and the other Basic Documents to which the Seller
is a party have been duly authorized by the Seller by all necessary corporate
action.

(d) Valid Sale; Binding Obligations. This Agreement effects a valid sale,
transfer and assignment of the Receivables and the Other Conveyed Property to
the Purchaser, is enforceable against the Seller and creditors of and purchasers
from the Seller; and this Agreement and the other Basic Documents to which the
Seller is a party, when duly executed and delivered, shall constitute legal,
valid and binding obligations of the Seller enforceable in accordance with their
respective terms, except as enforceability may be limited, by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors’ rights generally and by equitable limitations on the availability of
specific remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.

(e) No Violation. The consummation of the transactions contemplated by this
Agreement and the other Basic Documents and the fulfillment of the terms of this
Agreement and the other Basic Documents does not and will not conflict with,
result in any breach of any of the terms and provisions of or constitute (with
or without notice, lapse of time or both) a default under the certificate of
incorporation or by-laws of the Seller, or any indenture, agreement, mortgage,
deed of trust or other instrument to which the Seller is a party or by which it
is bound, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, other than the Basic Documents, or violate
any law (including any bulk transfer laws), judgment, decree, writ, injunction,
award, determination, order, rule or regulation applicable to the Seller of any
court or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or any of its
properties.

(f) No Proceedings. There are no proceedings or investigations pending or, to
the Seller’s knowledge, threatened against the Seller, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties (A)
asserting the invalidity of this Agreement, the Note or any of the other Basic
Documents, (B) seeking to prevent the issuance of the Note or the consummation
of any of the transactions contemplated by this Agreement or any of the other
Basic Documents, (C) seeking any determination or ruling that might materially
and adversely affect the performance by the Seller of its obligations under, or
the validity or enforceability of, this Agreement or any of the other Basic
Documents, (D) relating to the Seller and which might adversely affect the
federal or state income, excise, franchise or similar tax attributes of the
Note, or (E) that if decided adversely, would materially and adversely affect
its ability to foreclose or otherwise enforce the Liens of the Timeshare Loans,
or any Timeshare Loan or title of any Obligor to any related Timeshare Property.

(g) No Consents. No consent, approval, authorization or order of or declaration
or filing with any governmental authority is required for the issuance or sale
of the Note or the consummation of the other transactions contemplated by this
Agreement and the other Basic Documents or the execution and delivery thereof,
except such as have been duly made or obtained.

(h) Financial Condition. The Seller has a positive net worth and is able to and
does pay its liabilities as they mature. The Seller is not in default under any
obligation to pay money to any Person except for matters being disputed in good
faith which do not involve an obligation of the Seller on a promissory note. The
Seller will not use the proceeds from the transactions contemplated by the Basic
Documents to give any preference to any creditor or class of creditors, and this
transaction will not render the Seller insolvent and will not leave the Seller
with remaining assets which are unreasonably small compared to its ongoing
operations.

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(i) Fraudulent Conveyance. The Seller is not selling the Receivables and the
Other Conveyed Property to the Purchaser with any intent to hinder, delay or
defraud any of its creditors; the Seller will not be rendered insolvent as a
result of the sale of the Receivables and the Other Conveyed Property to the
Purchaser.

(j) Tax Returns. The Seller has filed all material federal and state tax returns
which are required to be filed and paid all material taxes, including any
assessments received by it, to the extent that such taxes have become due (other
than taxes, the amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the Seller). Any taxes,
fees and other governmental charges payable by the Seller in connection with
consummation of the transactions contemplated by this Agreement and the other
Basic Documents to which the Seller is a party and the fulfillment of the terms
of this Agreement and the other Basic Documents to which the Seller is a party
have been paid or shall have been paid as of each Funding Date.

(k) Chief Executive Office. The Seller has more than one place of business, and
the chief executive office of the Seller is at 1221 River Bend Drive, Suite 120,
Dallas, Texas 75247, and its organizational number is 75-2259890.

(l) Certificate, Statements and Reports. The officer’s certificates, statements,
reports and other documents prepared by Seller and furnished by Seller to the
Purchaser, the Trustee or the Noteholder pursuant to this Agreement or any other
Basic Document to which it is a party, and in connection with the transactions
contemplated hereby or thereby, when taken as a whole, do not and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
There are no facts known to the Seller which, individually or in the aggregate,
materially adversely affect, or which (aside from general economic trends) may
reasonably be expected to materially adversely affect in the future, its
financial condition or assets or business, or which may impair its ability to
perform its obligations under this Agreement or any other Basic Document, which
have not been disclosed herein or therein or in the certificates and other
documents furnished to the Noteholder by or on its behalf specifically for use
in connection with the transactions contemplated hereby or thereby.

(m) Legal Counsel, etc. Seller consulted with its own legal counsel and
independent accountants to the extent it deems necessary regarding the tax,
accounting and regulatory consequences of the transactions contemplated hereby,
Seller is not participating in such transactions in reliance on any
representations of any other party, their affiliates, or their counsel with
respect to tax, accounting and regulatory matters.

(n) No Material Adverse Change. No Material Adverse Change has occurred with
respect to the Seller since the end of the quarter reported on in the Seller’s
Form 10-Q filed with the Commission on November 10, 2005.

(o) No Default. The Seller is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in, and
is not otherwise in default under (i) any law or statute applicable to it,
including, without limitation, any Consumer Law, (ii) any judgment, decree,
writ, injunction, order, award or other action of any court or governmental
authority or arbitrator or any order, rule or regulation of any federal, state,
county, municipal or other governmental or public authority or agency having or
asserting jurisdiction over it or any of its properties or (iii) (x) any
indebtedness or any instrument or agreement under or pursuant to which any such
indebtedness has been, or could be, issued or incurred or (y) any other
instrument or agreement to which it is a party or by which it is bound or any of
its properties is affected, including, without limitation, the Basic Documents,
which either individually or in the aggregate, (A) could reasonably be expected
to result in a Material Adverse Change with respect to the Seller, or in any
impairment of the right or ability of the Seller to carry on its business
substantially as now conducted or (B) could reasonably be expected to materially
and adversely affect the Seller’s performance of its obligations hereunder, or
the validity or enforceability of this Agreement or the other Basic Documents.

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(p) Possession of Licenses, Certificates, Franchises and Permits. The Seller
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 Basic Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Receivables or 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 Basic Document to
which it is a party or under the transactions contemplated hereunder or
thereunder or the validity or enforceability of the Receivables or the Timeshare
Loans.

(q) Foreign Tax Liability. The Seller 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.

(r) No Deficiency Accumulation. The Seller is not aware of any outstanding
“accumulated funding deficiency” (as such term is defined under ERISA and the
Code) with respect to any “employee benefit plan” (as such term is defined under
ERISA) sponsored by it.

(s) Securities Laws. The Seller 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 Purchase Price for each of
the Receivables and the Other Conveyed Property will be used by it to acquire
any security in any transaction which is subject to Section 13 or Section 14 of
the Securities Exchange Act of 1934, as amended.

(t) Transactions in Ordinary Course. The transactions contemplated by this
Agreement are in the ordinary course of business of the Seller.

(u) Name. The legal name of the Seller is as set forth in the signature page of
this Agreement and the Seller does not have any tradenames, fictitious names,
assumed names or “doing business as” names.
 
Section 8.2 Additional Covenants of the Seller.

(a) Sale. The Seller agrees to treat the conveyances hereunder for all purposes
(including without limitation tax and financial accounting purposes) as sales on
all relevant books, records, tax returns, financial statements and other
applicable documents.

(b) Non-Petition. In the event of any breach of a representation and warranty
made by the Purchaser hereunder, the Seller covenants and agrees that it will
not take any action to pursue any remedy that it may have hereunder, in law, in
equity or otherwise, until a year and a day have passed since the date on which
the Note issued by the Purchaser has been paid in full. The Purchaser and the
Seller agree that damages will not be an adequate remedy for breach of this
covenant and that this covenant may be specifically enforced by the Purchaser,
and by the Trustee on behalf of the Noteholder.

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(c) Changes to Credit Policy. The Seller covenants that it will not make, or
permit to be made, any material changes to the Credit Policy unless (i) the
Noteholder expressly consents in writing prior to such changes (such consent not
to be unreasonably withheld) and (ii) after giving effect to any such changes,
the Rating Agency Condition is satisfied.

(d) Compliance with Laws. The Seller 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 Basic Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Receivables and the Other Conveyed Property.

(e) Maintain of Existence. The Seller 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 Basic Document to
which it is a party or under the transactions contemplated hereunder or
thereunder or the validity of enforceability of the Receivables and the Other
Conveyed Property.

(f) Ownership Inquiries. The Seller shall respond to any inquiries with respect
to ownership of a Receivable and the related Other Conveyed Property by stating
that such Receivable and the related Other Conveyed Property has been sold to
the Purchaser and that the Purchaser is the owner of such Receivable and the
related Other Conveyed Property.

(g) Change of Name. Any change in the legal name of the Seller and any use by it
of any tradename, fictitious name, assumed name or “doing business as” name
occurring after the Closing Date shall be promptly disclosed to the Purchaser,
the Trustee and the Noteholder in writing.

(h) Maintain Principal Place of Business. The Seller shall keep its principal
place of business and chief executive office and the office where it keeps its
records concerning the Receivables or the Other Conveyed Property at the address
of the Seller listed herein.

(i) Payment of Taxes. In the event that the Seller or the Purchaser or any
assignee of the Purchaser should receive actual notice of any transfer taxes
arising out of the transfer, assignment and conveyance of a Receivable or
related Other Conveyed Property from the Seller to the Purchaser, on written
demand by the Purchaser or its assignee, or upon the Seller otherwise being
given notice thereof, the Seller shall pay, and otherwise indemnify and hold the
Purchaser, and any subsequent assignee harmless, on an after-tax basis, from and
against any and all such transfer taxes.

(j) Filing Continuation Statements. The Seller authorizes the Purchaser and the
Trustee to file continuation statements, and amendments thereto, relating to the
Receivables and the Other Conveyed Property and all payments made with regard
thereto without the signature of the Seller where permitted by law. A photocopy
or other reproduction of this Agreement shall be sufficient as a financing
statement where permitted by law. The Seller confirms that it is not its present
intention to file a photocopy or other reproduction of this Agreement as a
financing statement.

(k) Accounting for Transfer. The Seller shall not prepare any financial
statements or other statements (including any tax filings) which shall account
for the transactions contemplated by this Agreement in any manner other than as
the sale of, or a capital contribution of, the Receivables and the Other
Conveyed Property by the Seller to the Purchaser.

(l) Effect on Purchaser. The Seller shall not take any action or fail to take
any action if, as a result of such action or failure to act, the Purchaser, in
its capacity as Purchaser hereunder or as the Issuer under the Indenture or any
other Basic Document, will be, or is reasonably likely to be, in breach of any
of its representations, warranties or covenants under any Basic Documents or
otherwise unable to perform any of its obligations thereunder.

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(m) Waiver of Stay or Extension Laws. The Seller covenants (to the extent it may
lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Agreement; and the Seller (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power and any right of the Seller to take such
action shall be suspended.

(n) Substantive Consolidation. The Seller shall not take any action or fail to
take any action if, as a result of such action or failure to act, the Purchaser,
in its capacity as Purchaser hereunder or as the Issuer under the Indenture or
any other Basic Document, will be, or is reasonably likely to be, substantively
consolidated with the Seller.
 
Section 8.3 Liability of Seller; Indemnities. Subject to the limitation of
remedies set forth in Section 3.2 hereof with respect to a breach of any
representations, warranties or covenants contained in Section 3.1 hereof, the
Seller shall indemnify the Purchaser, the Servicer (so long as it is a party
other than Silverleaf) the Backup Servicer, the Trustee, the Custodian, the
Noteholder and their respective officers, directors, agents and employees
(collectively, the “Indemnified Parties”) for any and all costs, expenses,
losses, damages, claims and liabilities (including reasonable legal fees and
related costs), that any of the Indemnified Parties may sustain arising out of
or as a result of the failure of a Receivable or related Timeshare Loan to be
originated in compliance with all requirements of law and for any breach of any
of its representations, warranties, covenants or other agreements contained
herein or in the other Basic Documents to which it is a party.

(a) The Seller shall defend, indemnify, and hold harmless the Indemnified
Parties from and against any and all costs, expenses, losses, damages, claims,
and liabilities (including reasonable legal fees and related costs), arising out
of or resulting from the use, ownership, or operation by the Seller, any
Affiliate thereof or any of their respective agents or subcontractors, of a
Resort or Timeshare Property, or out of non-compliance by the Seller or any
Affiliate thereof with any applicable laws, rules or regulations relating
thereto or relating to origination of Timeshare Loans or the documentation in
connection therewith.

(b) The Seller shall indemnify, defend and hold harmless the Indemnified Parties
from and against any taxes that may at any time be asserted against any such
Person with respect to the transactions contemplated in this Agreement and any
of the other Basic Documents (except any income taxes arising out of fees paid
to the Trustee and the Backup Servicer and except any taxes to which the Trustee
may otherwise be subject), including without limitation any sales, gross
receipts, general corporation, tangible personal property, privilege or license
taxes (but, in the case of the Purchaser, not including any taxes asserted with
respect to federal or other income taxes arising out of distributions on the
Note) and costs and expenses in defending against the same.

(c) The Seller shall indemnify, defend and hold harmless the Indemnified
Parties, from and against any and all costs, expenses, losses, damages and
liabilities (including reasonable legal fees and related costs) incurred by
reason of (i) the Seller’s willful misfeasance, bad faith or negligence in the
performance of its duties under this Agreement or any of the other Basic
Documents, or by reason of reckless disregard of its obligations and duties
under this Agreement and/or (ii) the Seller’s or the Purchaser’s violation of
Federal or state securities laws in connection with the offering and sale of the
Note.

(d) The Seller shall indemnify, defend and hold harmless the Trustee and the
Backup Servicer and its officers, directors, employees and agents from and
against any and all costs, expenses, losses, damages, claims and liabilities
(including reasonable legal fees and related costs), arising out of, or incurred
in connection with the acceptance or performance of the trusts and duties set
forth herein and in the other Basic Documents except to the extent that such
cost, expense, loss, claim, damage or liability shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of the
Trustee or the Backup Servicer.

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Indemnification under this Section shall survive the resignation or removal of
the Servicer or the Trustee and the termination of this Agreement and the other
Basic Documents, as applicable, and shall include reasonable fees and expenses
of counsel and other expenses of litigation. If the Seller shall have made any
indemnity payments pursuant to this Section and the Person to or on behalf of
whom such payments are made thereafter shall collect any of such amounts from
others, such Person shall promptly repay such amounts to the Seller, without
interest.

Notwithstanding any provision of this Section 8.3 or any other provision of this
Agreement, nothing herein shall be construed as to require the Seller to provide
any indemnification hereunder or under any other Basic Document for any costs,
expenses, losses, claims, damages or liabilities arising out of, or incurred in
connection with, credit losses with respect to the Receivables.
 
Section 8.4 Merger or Consolidation of Seller. Seller shall not merge or
consolidate with any other person, convey, transfer or lease substantially all
its assets as an entirety to another Person, or permit any other Person to
become the successor to Seller’s business unless, after the merger,
consolidation, conveyance, transfer, lease or succession, the Seller is the
surviving entity and shall be capable of fulfilling its duties contained in this
Agreement and the other Basic Documents. Nothing contained herein shall be
deemed to release Seller or Servicer from any obligation. Seller shall provide
notice of any merger, consolidation or succession pursuant to this Section to
the Trustee, the Noteholder and each Rating Agency. Notwithstanding the
foregoing, Seller shall not merge or consolidate with any other Person or permit
any other Person to become a successor to Seller’s business, unless (x)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 8.1 shall have been breached (for purposes
hereof, such representations and warranties shall be deemed made as of the date
of the consummation of such transaction) and no event that, after notice or
lapse of time, or both, would become an Event of Default shall have occurred and
be continuing, (y) Seller shall have delivered to the Trustee, the Rating Agency
and the Noteholder an Officer’s Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession comply with this Section
and that all conditions precedent, if any, provided for in this Agreement and
the other Basic Documents relating to such transaction have been complied with,
and (z) Seller shall have delivered to the Trustee, the Rating Agency and the
Noteholder an Opinion of Counsel, stating in the opinion of such counsel, either
(A) all financing statements and continuation statements and amendments thereto
have been authorized and filed that are necessary to preserve and protect the
interest of the Purchaser and the Trustee, respectively, in the Receivables and
the Other Conveyed Property and reciting the details of the filings or (B) no
such action shall be necessary to preserve and protect such interest.
 
Section 8.5 Limitation on Liability of Seller and Others. The Seller and any
director or officer or employee or agent of the Seller may rely in good faith on
the advice of counsel or on any document of any kind, prima facie properly
executed and submitted by any Person respecting any matters arising under any
Basic Document.

ARTICLE IX

THE SERVICER
 
Section 9.1 Representations of Servicer. The initial Servicer makes the
following representations on which the Purchaser is deemed to have relied in
acquiring the Receivables and the Other Conveyed Property and on which the
Noteholder is deemed to have relied in purchasing the Note. The representations
speak as of the execution and delivery of this Agreement, as of the Closing Date
and as of each Funding Date, and shall survive the sale of the Receivables and
the Other Conveyed Property to the Purchaser and the pledge thereof by the
Purchaser to the Trustee pursuant to the Indenture.

(a) Organization and Good Standing. The Servicer has been duly organized and is
validly existing as a corporation and in good standing under the laws of the
State of Texas (or, in the case of a successor Servicer, it is a validly
existing entity in good standing in its jurisdiction of organization), with
power, authority and legal right to own its properties and to conduct its
business as such properties are currently owned and such business is presently
conducted, and had at all relevant times, and shall have, power, authority and
legal right to acquire, own and service the Receivables and the Other Conveyed
Property.

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(b) Due Qualification. The Servicer is duly qualified to do business as a
foreign corporation in good standing and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of property or
the conduct of its business (including the servicing of the Receivables as
required by this Agreement) requires or shall require such qualification except
where the failure to so qualify or obtain such licenses or consents could not
reasonably be expected to result in a material adverse effect with respect to it
or to the Receivables or the Other Conveyed Property.

(c) Power and Authority. The Servicer has the power and authority to execute and
deliver this Agreement and the other Basic Documents to which it is a party and
to carry out its terms and their terms, respectively, and the execution,
delivery and performance of this Agreement and the other Basic Documents to
which it is a party have been duly authorized by the Servicer by all necessary
corporate action.

(d) Binding Obligation. This Agreement and the other Basic Documents to which
the Servicer is a party shall constitute legal, valid and binding obligations of
the Servicer enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar laws affecting the enforcement of creditors’ rights generally and
by equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at law.

(e) No Violation. The consummation of the transactions contemplated by this
Agreement and the other Basic Documents to which to the Servicer is a party, the
execution and delivery thereof and the fulfillment of the terms of this
Agreement and the other Basic Documents to which the Servicer is a party, does
not and will not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time) a default
under, the articles of incorporation or bylaws of the Servicer, or any
indenture, agreement, mortgage, deed of trust or other instrument to which the
Servicer is a party or by which it is bound or any of its properties are
subject, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, other than the Basic Documents, or violate
any law, judgment, decree, writ, injunction, award, determination, order, rule
or regulation applicable to the Servicer of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or any of its properties.

(f) No Proceedings. There are no proceedings or investigations pending or, to
the Servicer’s knowledge, threatened against the Servicer, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Servicer or its properties (A)
asserting the invalidity of this Agreement or any of the other Basic Documents,
(B) seeking to prevent the issuance of the Note or the consummation of any of
the transactions contemplated by this Agreement or any of the other Basic
Documents, or (C) seeking any determination or ruling that might materially and
adversely affect the validity or enforceability of this Agreement, the Note or
any of the other Basic Documents or (D) relating to the Servicer and which might
adversely affect the federal or state income, excise, franchise or similar tax
attributes of the Note.

(g) No Consents. No consent, approval, authorization or order of or declaration
or filing with any governmental authority is required for the issuance or sale
of the Note or the consummation of the other transactions contemplated by this
Agreement or the other Basic Documents or the execution and delivery thereof,
except such as have been duly made or obtained.

(h) Taxes. The Servicer has filed all federal and state tax returns which are
required to be filed and paid all taxes, including any assessments received by
it, to the extent that such taxes have become due (other than taxes, the amount
or validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of the Servicer). Any taxes, fees and other governmental
charges payable by the Servicer in connection with consummation of the
transactions contemplated by this Agreement and the other Basic Documents to
which the Servicer is a party and the fulfillment of the terms of this Agreement
and the other Basic Documents to which the Servicer is a party have been paid or
shall have been paid as of the Closing Date and each Funding Date.

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(i) Chief Executive Office. The Servicer hereby represents and warrants that the
Servicer’s principal place of business and chief executive office is located at
1221 River Bend Drive, Suite 120, Dallas, Texas 75247.

(j) Possession of Licenses, Certificates, Franchises and Permits. The Servicer
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 Basic Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Receivables or 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 Basic Document to
which it is a party or under the transactions contemplated hereunder or
thereunder or the validity or enforceability of the Receivables or the Timeshare
Loans.

(k) No Deficiency Accumulation. The Servicer is not aware of any outstanding
“accumulated funding deficiency” (as such term is defined under ERISA and the
Code) with respect to any “employee benefit plan” (as such term is defined under
ERISA) sponsored by it.

(l) Securities Laws. The Servicer 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 Purchase Price for each of
the Receivables and the Other Conveyed Property will be used by it to acquire
any security in any transaction which is subject to Section 13 or Section 14 of
the Securities Exchange Act of 1934, as amended.

(m) No Default. The Servicer is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in, and
is not otherwise in default under (i) any law or statute applicable to it,
including, without limitation, any Consumer Law, (ii) any judgment, decree,
writ, injunction, order, award or other action of any court or governmental
authority or arbitrator or any order, rule or regulation of any federal, state,
county, municipal or other governmental or public authority or agency having or
asserting jurisdiction over it or any of its properties or (iii) (x) any
indebtedness or any instrument or agreement under or pursuant to which any such
indebtedness has been, or could be, issued or incurred or (y) any other
instrument or agreement to which it is a party or by which it is bound or any of
its properties is affected, including, without limitation, the Basic Documents,
which either individually or in the aggregate, (A) could reasonably be expected
to result in a Material Adverse Change with respect to the Servicer, or in any
impairment of the right or ability of the Servicer to carry on its business
substantially as now conducted or (B) could reasonably be expected to materially
and adversely affect the Servicer’s performance of its obligations hereunder, or
the validity or enforceability of this Agreement or the other Basic Documents.

(n) Financial Condition. The Servicer has a positive net worth and is able to
and does pay its liabilities as they mature. The Servicer is not in default
under any obligation to pay money to any Person except for matters being
disputed in good faith which do not involve an obligation of the Servicer on a
promissory note. The Servicer will not use the proceeds from the transactions
contemplated by the Basic Documents to give any preference to any creditor or
class of creditors, and this transaction will not leave the Servicer with
remaining assets which are unreasonably small compared to its ongoing
operations.

(o) Certificate, Statements and Reports. The officer’s certificates, statements,
reports and other documents prepared by the Servicer and furnished by Servicer
to the Purchaser, the Trustee or the Noteholder pursuant to this Agreement or
any other Basic Document to which it is a party, and in connection with the
transactions contemplated hereby or thereby, when taken as a whole, do not and
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained herein or therein not
misleading. There are no facts known to the Servicer which, individually or in
the aggregate, materially adversely affect, or which (aside from general
economic trends) may reasonably be expected to materially adversely affect in
the future, its financial condition or assets or business, or which may impair
its ability to perform its obligations under this Agreement or any other Basic
Document, which have not been disclosed herein or therein or in the certificates
and other documents furnished to the Noteholder by or on its behalf specifically
for use in connection with the transactions contemplated hereby or thereby.

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(p) ACH Form. The Servicer has delivered a form of the ACH Form attached to this
Agreement to the Backup Servicer for its review.
 
Section 9.2 Liability of Servicer; Indemnities. The Servicer (in its capacity as
such) shall be liable hereunder only to the extent of the obligations in this
Agreement and the other Basic Documents to which it is a party specifically
undertaken by the Servicer and the representations, warranties, covenants and
other agreements made by the Servicer in the Basic Documents to which it is a
party.

(i)The Servicer shall defend, indemnify and hold harmless the Purchaser, the
Trustee, the Backup Servicer, the Noteholder and their respective officers,
directors, agents and employees from and against any and all costs, expenses,
losses, damages, claims and liabilities (including reasonable legal fees and
related costs), arising out of or resulting from the use, ownership,
repossession or operation by the Servicer or any Affiliate or agent or
sub-covenants thereof of any Resort or Timeshare Property;

(ii)The Servicer, so long as Silverleaf is the Servicer, shall indemnify, defend
and hold harmless the Purchaser, the Trustee, the Backup Servicer, the
Noteholder and their respective officers, directors, agents and employees from
and against any taxes that may at any time be asserted against any of such
parties with respect to the transactions contemplated in this Agreement,
including, without limitation, any sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes (but not including any
federal or other income taxes, including franchise taxes asserted with respect
to, and as of the date of, the sale of the Receivables and the Other Conveyed
Property to the Purchaser, the pledge thereof to the Trustee or the issuance and
original sale of the Note) and costs and expenses in defending against the same;

(iii)The Servicer shall indemnify, defend and hold harmless the Purchaser, the
Trustee, the Backup Servicer, the Noteholder and their respective officers,
directors, agents and employees from and against any and all costs, expenses,
losses, damages, claims and liabilities (including reasonable legal fees and
related costs) to the extent that such cost, expense, loss, claim, damage, or
liability arose out of, or was imposed upon the Purchaser, the Trustee, the
Backup Servicer or the Noteholder through the negligence, willful misfeasance or
bad faith of the Servicer in the performance of its duties under this Agreement
or by reason of reckless disregard of its obligations and duties under this
Agreement or as a result of a breach of any representation, warranty, covenant
or other agreement made by the Servicer in this Agreement and the other Basic
Documents to which it is a party; and

(iv)The Servicer shall indemnify, defend, and hold harmless the Trustee and the
Backup Servicer from and against all costs, expenses, losses, damages, claims
and liabilities (including reasonable legal fees and related costs) arising out
of or incurred in connection with the acceptance or performance of the trusts
and duties herein contained, except to the extent that such cost, expense, loss,
claim, damage or liability: (A) shall be due to the willful misfeasance, bad
faith, or negligence (except for errors in judgment) of the Trustee or the
Backup Servicer, as applicable or (B) relates to any tax other than the taxes
with respect to which the Servicer shall be required to indemnify the Trustee or
the Backup Servicer.

(b) Notwithstanding the foregoing, the Servicer shall not be obligated to
defend, indemnify, and hold harmless the Noteholder for any losses, claims,
damages or liabilities incurred by the Noteholder arising out of claims,
complaints, actions and allegations relating to Section 406 of ERISA or Section
4975 of the Code as a result of the purchase or holding of Note by the
Noteholder with the assets of a plan subject to such provisions of ERISA or the
Code.

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(c) For purposes of this Section 9.2, in the event of the termination of the
rights and obligations of the Servicer (or any successor thereto pursuant to
Section 9.3) as Servicer pursuant to Section 10.1, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to Section 10.2.
The provisions of this Section 9.2(c) shall in no way affect the survival
pursuant to Section 9.2(d) of the indemnification by the Servicer provided by
Section 9.2(a).

(d) Indemnification under this Section 9.2 shall survive the termination of this
Agreement and the other Basic Documents and any resignation or removal of the
Servicer or any successor Servicer as Servicer and shall include reasonable fees
and expenses of counsel and expenses of litigation. If the Servicer shall have
made any indemnity payments pursuant to this Section and the recipient
thereafter collects any of such amounts from others, the recipient shall
promptly repay such amounts to the Servicer, without interest.
 
Section 9.3 Merger or Consolidation of the Servicer or Backup Servicer, and
Assumption of the Obligations of the Backup Servicer.

(a) The Servicer shall not merge or consolidate with any other Person, convey,
transfer or lease all or substantially all of its assets as an entirety to
another Person, or permit any other Person to become the successor to the
Servicer’s business unless, after the merger, consolidation, conveyance,
transfer, lease or succession, the Servicer shall be the surviving entity and
shall be capable of fulfilling the duties of the Servicer contained in this
Agreement and the other Basic Documents. Nothing contained herein shall be
deemed to release the Servicer from any obligation. The Servicer shall provide
notice of any merger, consolidation or succession pursuant to this Section to
the Trustee, the Noteholder and each Rating Agency. Notwithstanding the
foregoing, the Servicer shall not merge or consolidate with any other Person or
permit any other Person to become a successor to the Servicer’s business, unless
(x) immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 9.1 shall have been breached (for purposes
hereof, such representations and warranties shall be deemed made as of the date
of the consummation of such transaction) and no event that, after notice or
lapse of time, or both, would become Event of Default shall have occurred and be
continuing, (y) the Servicer shall have delivered to the Trustee, the Rating
Agency and the Noteholder an Officer’s Certificate and an Opinion of Counsel
each stating that such consolidation, merger or succession comply with this
Section and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with, and (z) the
Servicer shall have delivered to the Trustee, the Rating Agency and the
Noteholder an Opinion of Counsel, stating in the opinion of such counsel, either
(A) all financing statements and continuation statements and amendments thereto
have been executed and filed that are necessary to preserve and protect the
interest of the Purchaser and the Trustee, respectively, in the Receivables and
the Other Conveyed Property and reciting the details of the filings or (B) no
such action shall be necessary to preserve and protect such interest.

(b) Any Person (i) into which the Backup Servicer (in its capacity as Backup
Servicer or successor Servicer) may be merged or consolidated, (ii) resulting
from any merger or consolidation to which the Backup Servicer shall be a party,
(iii) which acquires by conveyance, transfer or lease substantially all of the
assets of the Backup Servicer, or (iv) succeeding to the business of the Backup
Servicer, in any of the foregoing cases shall execute an agreement of assumption
to perform every obligation of the Backup Servicer under this Agreement and the
other Basic Documents and, whether or not such assumption agreement is executed,
shall be the successor to the Backup Servicer under this Agreement and the other
Basic Documents without the execution or filing of any paper or any further act
on the part of any of the parties to this Agreement and the other Basic
Documents, anything in this Agreement and the other Basic Documents to the
contrary notwithstanding; provided, however, that nothing contained herein shall
be deemed to release the Backup Servicer from any obligation.
 
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Section 9.4 [RESERVED]

Section 9.5 [RESERVED]

Section 9.6 Servicer and Backup Servicer Not to Resign. Subject to the
provisions of Section 9.3, neither the Servicer nor the Backup Servicer shall
resign from the obligations and duties imposed on it by this Agreement or the
other Basic Documents to which it is a party as Servicer or Backup Servicer
except (i) upon a determination that by reason of a change in legal requirements
the performance of its duties under this Agreement or the other Basic Documents
to which it is a party would cause it to be in violation of such legal
requirements in a manner which would have a material adverse effect on the
Servicer or the Backup Servicer, as the case may be, and the Noteholder does not
elect to waive the obligations of the Servicer or the Backup Servicer, as the
case may be, to perform the duties which render it legally unable to act or to
delegate those duties to another Person or, (ii) in the case of the Backup
Servicer, upon the prior written consent of the Noteholder. Any such
determination permitting the resignation of the Servicer or Backup Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such
effect delivered and acceptable to the Trustee and the Noteholder. No
resignation of the Servicer shall become effective until the Backup Servicer or
an entity acceptable to the Noteholder shall have assumed the responsibilities
and obligations of the Servicer. No resignation of the Backup Servicer shall
become effective until an entity acceptable to the Noteholder shall have assumed
the responsibilities and obligations of the Backup Servicer; provided, however,
that in the event a successor Backup Servicer is not appointed within 60 days
after the Backup Servicer has given notice of its resignation and, if
applicable, has provided the Opinion of Counsel required by this Section 9.6,
the Backup Servicer may petition a court for its removal.
 
Section 9.7 Reporting Requirements. 

(a) The Servicer shall furnish, or cause to be furnished to the Noteholder:

(a) Audit Report. As soon as available and in any event within 90 days after the
end of each fiscal year of the Servicer, a copy of the consolidated balance
sheet of the Servicer and its Affiliates as at the end of such fiscal year,
together with the related statements of earnings, stockholders’ equity and cash
flows for such fiscal year, prepared in reasonable detail and in accordance with
GAAP certified by Independent Accountants of recognized national standing as
shall be selected by the Servicer.

(b) Quarterly Statements. As soon as available, but in any event within 45 days
after the end of each fiscal quarter (except the fourth fiscal quarter) of the
Servicer, copies of the unaudited consolidated balance sheet of the Servicer and
its Affiliates as at the end of such fiscal quarter and the related unaudited
statements of earnings, stockholders’ equity and cash flows for the portion of
the fiscal year through such fiscal quarter (and as to the statements of
earnings for such fiscal quarter) in each case setting forth in comparative form
the figures for the corresponding periods of the previous fiscal year, prepared
in reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein and certified by the chief financial or accounting
officer of the Servicer as presenting fairly the financial condition and results
of operations of the Servicer and its Affiliates (subject to normal year-end
adjustments).

ARTICLE X

DEFAULT
 
Section 10.1 Servicer Termination Events. For purposes of this Agreement, each
of the following shall constitute a “Servicer Termination Event”:

(a) Any failure by the Servicer to deliver any proceeds or payment required to
be so delivered under this Agreement or any other Basic Document that continues
unremedied for a period of two Business Days after notice (whether written or
oral) of such failure is provided to Servicer;

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(b) Failure by the Servicer to deliver to the Trustee and the Noteholder the
Servicer’s Certificate by 12:00 noon New York City time on the second Business
Day after the date such Servicer’s Certificate is required to be delivered;

(c) Failure on the part of the Servicer to duly observe or perform any other
covenants or agreements of the Servicer or the Purchaser, as applicable, set
forth in this Agreement or any other Basic Document to which it is a party,
which failure, except for covenants relating to merger and consolidation or
preservation of ownership or security interests in the Receivables and the Other
Conveyed Property and with respect to the items covered in clause (k) below,
continues unremedied for a period of 30 days (or, if the Servicer shall have
provided evidence satisfactory to the Noteholder that such obligation cannot be
cured in the 30-day period and that it is diligently pursuing a cure, 60 days),
after the earlier of (x) the Servicer first acquiring Knowledge thereof and (y)
the date on which written notice of such failure shall have been given to the
Servicer;

(d) The occurrence of an Insolvency Event with respect to the Servicer;

(e) Any representation, warranty or statement of the Servicer made in this
Agreement or any other Basic Document to which it is a party or any certificate,
report or other writing delivered pursuant hereto or thereto shall prove to be
incorrect in any material respect as of the time when the same shall have been
made (excluding, however, any representation or warranty set forth in this
Agreement relating to the characteristics of the Receivables), and the
incorrectness of such representation, warranty or statement has a material
adverse effect on the Purchaser or the Noteholder and such breach is not
remedied within 30 days (or, if the Servicer shall have provided evidence
satisfactory to the Noteholder that such breach cannot be cured in the 30-day
period and that it is diligently pursuing a cure, 60 days) after the earlier of
(x) the Servicer first acquiring Knowledge thereof and (y) the date on which
written notice of such failure shall have been given to the Servicer;

(f) So long as Silverleaf or an Affiliate thereof is the Servicer, the Leverage
Ratio exceeds 6.0:1;

(g) [Reserved];

(h) An Event of Default shall have occurred;

(i) If Silverleaf is the Servicer, a change occurs of more than 50% of the
executive management of the Servicer as described in Exhibit F hereto, unless
Silverleaf provides written certification to the Trustee (which the Trustee
shall promptly forward to the Noteholder) within 30 days after such change,
certifying that such executive management personnel have been replaced, and
setting forth a description of the replacement personnel’s experience, ability
and reputation, and the Trustee shall not have received an objection to such
replacement personnel from Noteholder within 15 Business Days after sending such
certificate to the Noteholder;

(j) Any failure by the Servicer to duly observe and perform its obligations
under Section 4.2(f) hereof, which failure is not remedied within 30 days (or,
if the Servicer shall have provided evidence satisfactory to the Noteholder that
such obligation cannot be cured in the 30-day period and that it is diligently
pursuing a cure, 60 days), after the earlier of (x) the Servicer first acquiring
Knowledge thereof and (y) the date on which written notice of such failure shall
have been given to the Servicer; provided, however, that with respect to Section
4.2(f)(xiii) hereof, the Servicer shall have 2 days to remedy any failure to
perform its obligations thereunder;

(k) So long as Silverleaf or an Affiliate thereof is the Servicer, as of any
date of determination, the Tangible Net Worth of Silverleaf is less than the sum
of (1) $100,000,000, (2) 50% of the cumulative positive net income of the
Servicer (without deduction for negative income) since June 30, 2005 and (3) 50%
of the net proceeds of any equity issued by Silverleaf since June 30, 2005;

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(l) So long as Silverleaf or an Affiliate thereof is the Servicer, as of any
date of determination, the sum of (1) available cash and (2) borrowing capacity
for working capital, maintained by Silverleaf is less than $5,000,000;

(m) So long as Silverleaf or an Affiliate thereof is the Servicer, Silverleaf
experiences a net loss either in any fiscal year or in any two consecutive
fiscal quarters; or

(n) So long as Silverleaf or an Affiliate thereof is the Servicer, as of any
date of determination, the ratio of Silverleaf’s (1) Earnings Before Interest,
Taxes, Deductions and Amortization (EBITDA) to (2) Interest Expense, is less
than 1.25:1.

In the event that the Servicer, Purchaser or Trustee gains Knowledge of the
occurrence of a Servicer Termination Event, the Servicer, Purchaser or Trustee,
as applicable, shall promptly notify the Noteholder in writing of such
occurrence; provided that the Servicer shall be deemed to satisfy such
obligation upon its delivery of an Officer’s Certificate in accordance with
Section 4.10(b) hereof.
 
Section 10.2 Consequences of a Servicer Termination Event. If a Servicer
Termination Event shall occur and be continuing, the Noteholder by notice given
in writing to the Servicer may terminate all of the rights and obligations of
the Servicer under this Agreement; provided that such rights and obligations
shall be automatically terminated without any further action in the case of a
Servicer Termination Event described in Section 10.1(d). The outgoing Servicer
shall be entitled to its pro rata share of the Servicing Fee for the number of
days in the Accrual Period prior to the effective date of its termination. On or
after the receipt by the Servicer of such written notice or upon termination of
the term of the Servicer, all authority, power, obligations and responsibilities
of the Servicer under this Agreement, whether with respect to the Note or the
Receivables and Other Conveyed Property or otherwise, automatically shall pass
to, be vested in and become obligations and responsibilities of the Backup
Servicer (or such other successor Servicer appointed by the Noteholder under
Section 10.3); provided, however, that the successor Servicer shall have no
liability with respect to any obligation which was required to be performed by
the terminated Servicer prior to the date that the successor Servicer becomes
the Servicer or any claim of a third party based on any alleged action or
inaction of the terminated Servicer. The successor Servicer is authorized and
empowered by this Agreement to execute and deliver, on behalf of the terminated
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and the Other Conveyed
Property and related documents to show the Purchaser as lienholder or secured
party, or otherwise. The terminated Servicer agrees to cooperate with the
successor Servicer in effecting the termination of the responsibilities and
rights of the terminated Servicer under this Agreement, including, without
limitation, the transfer to the successor Servicer for administration by it of
all cash amounts that shall at the time be held by the terminated Servicer for
deposit, or have been deposited by the terminated Servicer, in the Collection
Account or thereafter received with respect to the Receivables and the Other
Conveyed Property and the delivery to the successor Servicer of all Timeshare
Loan Servicing Files that shall at the time be held by the terminated Servicer
and a computer tape in readable form as of the most recent Business Day
containing all information necessary to enable the successor Servicer to service
the Receivables and the Other Conveyed Property. All reasonable costs and
expenses (including reasonable attorneys’ fees) incurred in connection with
transferring any Timeshare Loan Servicing Files to the successor Servicer and
amending this Agreement to reflect such succession as Servicer pursuant to this
Section 10.2 shall be paid by the predecessor Servicer upon presentation of
reasonable documentation of such costs and expenses. In addition, any successor
Servicer shall be entitled to payment from the immediate predecessor Servicer
for reasonable transition expenses incurred in connection with acting as
successor Servicer, and to the extent not so paid, such payment shall be made
pursuant to Section 5.7 hereof. Upon receipt of notice of the occurrence of a
Servicer Termination Event, the Trustee shall give notice thereof to the Rating
Agency and the Noteholder. If requested by the Noteholder, the successor
Servicer shall terminate the Lockbox Agreements and direct the Obligors to make
all payments under the Receivables and the Other Conveyed Property directly to
the successor Servicer (in which event the successor Servicer shall process such
payments in accordance with Section 4.2(e)), or to a lockbox established by the
successor Servicer at the direction of the Noteholder, at the successor
Servicer’s expense. The terminated Servicer shall grant the Trustee, the
successor Servicer and the Noteholder reasonable access to the terminated
Servicer’s premises at the terminated Servicer’s expense.
 
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Section 10.3 Appointment of Successor. 

(a) On and after the time (i) the Servicer receives a notice of termination
pursuant to Section 10.2, (ii) the Servicer resigns pursuant to Section 9.6, or
(iii) the Servicer is automatically terminated upon the occurrence of a Servicer
Termination Event described in Section 10.1(d), the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement as follows:
(A) in the case of termination pursuant to Section 10.2, the predecessor
Servicer shall only perform its functions as Servicer until the date specified
in such termination notice or, if no such date is specified in a notice of
termination, until receipt of such notice; (B) in the case of expiration and
non-renewal of the term of the Servicer upon the expiration of such term, or
resignation of the Servicer, the predecessor Servicer shall only perform its
functions as Servicer until the later of (x) the date 45 days from the delivery
to the Trustee of written notice of such resignation (or written confirmation of
such notice) in accordance with the terms of this Agreement and (y) the date
upon which the predecessor Servicer shall become unable to act as Servicer, as
specified in the notice of resignation and accompanying Opinion of Counsel; and
(C) in the case of automatic termination of the Servicer, the predecessor
Servicer shall only perform its functions as Servicer until a successor Servicer
has assumed such duties, obligations, and liabilities; provided, however, that
in no case shall the Servicer be relieved of its duties, obligations and
liabilities as Servicer until a successor Servicer has assumed such duties,
obligations and liabilities. Notwithstanding the preceding sentence, if the
Backup Servicer or any other successor Servicer shall not have assumed the
duties, obligations and liabilities of Servicer within 45 days of the
termination or resignation described in this Section 10.3, the Servicer may
petition a court of competent jurisdiction to appoint any Eligible Servicer as
the successor to the Servicer. Pending appointment as successor Servicer, Backup
Servicer (or such other Person as shall have been appointed by the Noteholder)
shall act as successor Servicer unless it is legally unable to do so, in which
event the outgoing Servicer shall continue to act as Servicer until a successor
has been appointed and accepted such appointment. In the event of termination of
the Servicer, Wells Fargo Bank, National Association, as the Backup Servicer,
shall assume the obligations of Servicer hereunder on the date specified in such
written notice (the “Assumption Date”) pursuant to an assumption agreement in
form and substance acceptable to the Noteholder or, in the event that the
Noteholder shall have determined that a Person other than the Backup Servicer
shall be the successor Servicer in accordance with Section 10.2, on the date of
the execution of a written assumption agreement by such Person to serve as
successor Servicer. Notwithstanding the Backup Servicer’s assumption of, and its
agreement to perform and observe, all duties, responsibilities and obligations
of the Seller as Servicer, or any successor Servicer, under this Agreement
arising on and after the Assumption Date, the Backup Servicer shall not: (i) be
deemed to have assumed or to become liable for, or otherwise have any liability
for any duties, responsibilities, obligations or liabilities of (A) the Seller
or any other Servicer arising on or before the Assumption Date, whether provided
for by the terms of this Agreement, arising by operation of law or otherwise,
including, without limitation, any liability for any duties, responsibilities,
obligations or liabilities of the Seller or any other Servicer arising on or
before the Assumption Date under Section 4.7 or 9.2 of this Agreement,
regardless of when the liability, duty, responsibility or obligation of the
Seller or any other Servicer therefor arose, whether provided by the terms of
this Agreement, arising by operation of law or otherwise, or (B) under Section
9.2(a)(ii), (iv) or (v); (ii) be obligated to perform any repurchase or
advancing obligations, if any, of the Servicer; (iii) be obligated to pay any
taxes required to be paid by the predecessor Servicer; or (iv) be obligated to
pay any of the fees and expenses of any other party involved in the transaction,
other than any fees or expenses incurred in connection with its own negligence,
willful misfeasance or bad faith. Notwithstanding the above, if the Backup
Servicer shall be legally unable or unwilling to act as Servicer, the Backup
Servicer, the Trustee or the Noteholder may petition a court of competent
jurisdiction to appoint any Eligible Servicer as the successor to the Servicer.
Pending appointment pursuant to the preceding sentence, the Backup Servicer
shall act as successor Servicer unless it is legally unable to do so, in which
event the outgoing Servicer shall continue to act as Servicer until a successor
has been appointed and accepted such appointment. Subject to Section 9.6, no
provision of this Agreement shall be construed as relieving the Backup Servicer
of its obligation to succeed as successor Servicer upon the termination of the
Servicer pursuant to Section 10.2 or the resignation of the Servicer pursuant to
Section 9.6. If upon the termination of the Servicer pursuant to Section 10.2 or
the resignation of the Servicer pursuant to Section 9.6, the Noteholder appoints
a successor Servicer other than the Backup Servicer, the Backup Servicer shall
not be relieved of its duties as Backup Servicer hereunder.

(b) Any successor Servicer shall be entitled to such compensation (whether
payable out of the Collection Account or otherwise) as the Servicer would have
been entitled to under this Agreement if the Servicer had not resigned or been
terminated hereunder.
 
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Section 10.4 Notification of Termination and Appointment. Upon any termination
of, or appointment of a successor to, the Servicer, the Trustee shall give
prompt written notice thereof to the Noteholder and to the Rating Agency.
 
Section 10.5 Waiver of Past Defaults. The Noteholder may waive in writing any
default by the Servicer in the performance of its obligations under this
Agreement and the consequences thereof. Upon any such waiver of a past default,
such default shall cease to exist, and any Servicer Termination Event arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto.
 
Section 10.6 Action Upon Certain Failures of the Servicer. In the event that the
Trustee shall have Knowledge of any failure of the Servicer specified in Section
10.1 which would give rise to a right of termination under such Section upon the
Servicer’s failure to remedy the same after notice, the Trustee shall give
prompt written notice thereof to the Servicer and the Noteholder. For all
purposes of this Agreement (including, without limitation, Section 6.2(b) and
this Section 10.6), the Trustee shall not be deemed to have Knowledge of any
failure of the Servicer as specified in Sections 10.1(c) through (n) unless
notified thereof in writing by the Servicer or the Noteholder. The Trustee shall
be under no duty or obligation to investigate or inquire as to any potential
failure of the Servicer specified in Section 10.1.
 
Section 10.7 Continued Errors. Notwithstanding anything contained herein to the
contrary, if the Backup Servicer becomes successor Servicer it is authorized to
accept and rely on all of the accounting, records (including computer records)
and work of the prior Servicer relating to the Receivables (collectively, the
“Predecessor Servicer Work Product”) without any audit or other examination
thereof, and the Backup Servicer as successor Servicer shall have no duty,
responsibility, obligation or liability for the acts and omissions of the prior
Servicer. If any error, inaccuracy, omission or incorrect or non-standard
practice or procedure (collectively, “Errors”) exist in any Predecessor Servicer
Work Product and such Errors make it materially more difficult to service or
should cause or materially contribute to the Backup Servicer as successor
Servicer making or continuing any Errors (collectively, “Continued Errors”), the
Backup Servicer as successor Servicer shall have no duty or responsibility, for
such Continued Errors; provided, however, that the Backup Servicer as successor
Servicer agrees to use its best efforts to prevent further Continued Errors. In
the event that the Backup Servicer as successor Servicer becomes aware of Errors
or Continued Errors, the Backup Servicer as successor Servicer shall, with the
prior consent of the Noteholder use its best efforts to reconstruct and
reconcile such data as is commercially reasonable to correct such Errors and
Continued Errors and to prevent future Continued Errors. The Backup Servicer as
successor Servicer shall be entitled to recover its costs thereby expended in
accordance with Section 5.7(a)(iv) hereof.

ARTICLE XI

MISCELLANEOUS PROVISIONS
 
Section 11.1 Amendment.

(a) This Agreement may not be waived, amended or otherwise modified except in a
writing signed by the parties hereto and the Noteholder.

(b) Promptly after the execution of any such amendment or waiver, the Trustee
shall furnish written notification of the substance of such amendment or waiver
to the Rating Agency.

(c) Prior to the execution of any amendment, waiver or consent to this Agreement
the Trustee shall be entitled to receive and rely upon (i) an Opinion of Counsel
stating that the execution of such amendment or waiver is authorized or
permitted by this Agreement and (ii) if requested by the Noteholder, the Opinion
of Counsel referred to in Section 11.2(i).

(d) The Trustee may, but shall not be obligated to, enter into any such
amendment or waiver which affects the Trustee’s own rights, duties or immunities
under this Agreement or otherwise.

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(e) Upon the termination of the Seller as Servicer and the appointment of the
Backup Servicer as Servicer hereunder, all amendments to the terms of this
Agreement specified in an assumption agreement shall become a part of this
Agreement, as if this Agreement was amended to reflect such changes in
accordance with this Section 11.1.
 
Section 11.2 Protection of Title to Property. (a) The Seller, the Purchaser or
Servicer or each of them shall authorize, execute (if necessary) and file such
financing statements and cause to be authorized, executed (if necessary) and
filed such continuation statements, all in such manner and in such places as may
be required by law fully to preserve, maintain and protect the interest of the
Purchaser and the interests of the Trustee in the Receivables, the Other
Conveyed Property and in the proceeds thereof. The Seller shall deliver (or
cause to be delivered) to the Noteholder and the Trustee file-stamped copies of,
or filing receipts for, any document filed as provided above, as soon as
available following such filing.

(b) None of the Seller, the Purchaser or the Servicer shall change its name,
identity, jurisdiction of organization, form of organization or corporate
structure in any manner that would, could or might make any financing statement
or continuation statement filed in accordance with paragraph (a) above seriously
misleading within the meaning of Section 9-506(a) of the UCC, unless it shall
have given the Noteholder and the Trustee at least thirty days’ prior written
notice thereof and shall have promptly filed appropriate amendments to all
previously filed financing statements or continuation statements. Promptly upon
such filing, the Purchaser, the Seller or the Servicer, as the case may be,
shall deliver an Opinion of Counsel to the Trustee and the Noteholder, in form
and substance reasonably satisfactory to the Noteholder, stating either (A) all
financing statements and continuation statements have been authorized, executed
and filed that are necessary fully to preserve and protect the interest of the
Purchaser and the Trustee in the Receivables and the Other Conveyed Property,
and reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given, or (B) no such action shall be
necessary to preserve and protect such interest.

(c) Each of the Seller, the Purchaser and the Servicer shall have an obligation
to give the Noteholder and the Trustee at least 60 days’ prior written notice of
any relocation of its chief executive office or a change in its jurisdiction of
organization if, as a result of such relocation or change, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement and shall promptly file any such amendment or new financing statement.
The Servicer shall at all times be organized under the laws of the United States
(or any State thereof), maintain each office from which it shall service
Receivables and Other Conveyed Property, and its chief executive office and
jurisdiction of organization, within the United States of America.
 
(d) The Servicer shall maintain accounts and records as to each Receivable and
Other Conveyed Property accurately and in sufficient detail to permit (i) the
reader thereof to know at any time the status of such Receivable and Other
Conveyed Property, including payments and recoveries made and payments owing
(and the nature of each) and any Liquidation Expenses or other expenses incurred
in respect of any Receivable and Other Conveyed Property (and the nature of
each) and (ii) reconciliation between payments or recoveries on (or with respect
to) each Receivable and Other Conveyed Property and the amounts from time to
time deposited in the Collection Account in respect of such Receivable and Other
Conveyed Property.

(e) The Servicer shall maintain its computer systems so that, from and after the
time of sale under this Agreement of the Receivables and Other Conveyed Property
to the Purchaser, the Servicer’s master computer records (including any backup
archives) that refer to a Receivable or Other Conveyed Property shall indicate
clearly the interest of the Purchaser in such Receivable and Other Conveyed
Property and that such Receivable and Other Conveyed Property is owned by the
Purchaser and pledged to the Trustee. Indication of the Purchaser’s and the
Trustee’s interest in a Receivable and the related Other Conveyed Property shall
be deleted from or modified on the Servicer’s computer systems when, and only
when, such Receivable shall have been paid in full or repurchased.

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(f) If at any time the Seller or the Servicer shall propose to sell, grant a
security interest in or otherwise transfer any interest in Receivables or Other
Conveyed Property to any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective purchaser, lender or other transferee
computer tapes, records or printouts (including any restored from backup
archives) that, if they shall refer in any manner whatsoever to any Receivable
or Other Conveyed Property, shall indicate clearly that such Receivable and the
related Other Conveyed Property has been sold and is owned by the Purchaser and
pledged to the Trustee.

(g) The Servicer shall permit the Trustee, the Backup Servicer and the
Noteholder and their respective agents upon reasonable notice and at any time
during normal business hours to inspect, audit, and make copies of and abstracts
from the Servicer’s records regarding any Receivable and the related Other
Conveyed Property.

(h) Upon request, the Servicer shall furnish to the Noteholder or to the
Trustee, within five Business Days, a list of all Receivables (by contract
number and name of Obligor) then pledged to the Trustee, together with a
reconciliation of such list to the Schedule of Receivables and to each of the
Servicer’s Certificates furnished before such request indicating removal of
Receivables from the lien of the Indenture.

(i) The Servicer shall deliver to the Noteholder and the Trustee:

(1) promptly after the execution and delivery of this Agreement and, if required
pursuant to Section 11.1, of each amendment, waiver, or consent, an Opinion of
Counsel, in form and substance satisfactory to the Noteholder, stating that in
the opinion of such counsel, either (A) all financing statements and
continuation statements have been authorized, executed and filed that are
necessary fully to preserve and protect the interest of the Purchaser and the
Trustee in the Receivables and the Opinion Collateral and reciting the details
of such filings or referring to a prior Opinion of Counsel in which such details
are given, or (B) no such action shall be necessary to preserve and protect such
interest; and

(2) as a condition precedent to the renewal of the Indenture by the Noteholder
pursuant to Section 2.3 thereof, an Opinion of Counsel stating that, in the
opinion of such counsel, either (a) all financing statements and continuation
statements have been authorized, executed and filed that are necessary fully to
preserve and protect the interest of the Purchaser and the Trustee in the
Receivables and the Opinion Collateral, and reciting the details of such filings
or referring to prior Opinions of Counsel in which such details are given, or
(b) no such action shall be necessary to preserve and protect such interest.

Each Opinion of Counsel referred to in clause (1) or (2) above shall specify any
action necessary (as of the date of such opinion) to be taken in the following
year to preserve and protect such interest.

Section 11.3 Notices. All demands, notices and communications upon or to the
Seller, the Backup Servicer, the Servicer, the Trustee or the Rating Agency
under this Agreement shall be in writing, via facsimile (and confirmed by
telephone in the case of facsimiles to Seller, Servicer and Purchaser),
personally delivered, or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt (a) in the case of the
Seller, to Silverleaf Resorts, Inc., 1221 River Bend Drive, Suite 120, Dallas,
Texas 75247, Attention: Robert E. Mead, Chief Executive Officer, Telecopy: (214)
905-0514; Telephone: (214) 631-1166, ext. 2275; (b) in the case of the Servicer,
to Silverleaf Resorts, Inc., 1221 River Bend Drive, Suite 120, Dallas, Texas
75247, Attention: Robert E. Mead, Chief Executive Officer, Telecopy: (214)
905-0514; Telephone: (214) 631-1166, ext. 2275; (c) in the case of the
Purchaser, to Silverleaf Finance IV, LLC, 1221 River Bend Drive, Suite 120,
Dallas, Texas 75247, Attention: Harry J. White, Jr., Chief Financial Officer,
Telecopy: (214) 631-4981; Telephone: (214) 631-1166, ext. 3990; (d) in the case
of the Trustee or the Backup Servicer at the Corporate Trust Office; Telecopy:
(612) 667-3464; (e) in the case of the Noteholder, to UBS Real Estate Securities
Inc., 1285 Avenue of the Americas, 11th Floor, New York, New York 10019,
Attention: Prakash B. Wadhwani, Telecopy: (212)713-7999; Telephone:
(212)713-3983; and (f) in the case of Moody’s, to Moody’s Investors Service,
Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007,
Telecopy: (212) 533-3850. Any notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Noteholder shall receive such notice.
 
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Section 11.4 Assignment. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Notwithstanding anything to the contrary contained herein, except as
provided in Sections 8.4, 9.3 and this Section 11.4 and as provided in the
provisions of this Agreement concerning the resignation of the Servicer, this
Agreement may not be assigned by the Purchaser, the Seller or the Servicer
without the prior written consent of the Trustee, the Backup Servicer and the
Noteholder; provided that the Purchaser will grant all of its right, title and
interest herein to the Trustee for the benefit of the Noteholder.
 
Section 11.5 Limitations on Rights of Others. The provisions of this Agreement
are solely for the benefit of the parties hereto and for the benefit of the
Noteholder or its assignee, as a third-party beneficiary. Nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Collateral or under
or in respect of this Agreement or any covenants, conditions or provisions
contained herein.
 
Section 11.6 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
 
Section 11.7 Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
 
Section 11.8 Headings. The headings of the various Articles and Sections herein
are for convenience of reference only and shall not define or limit any of the
terms or provisions hereof.
 
Section 11.9 Governing Law. HIS AGREEMENT (OTHER THAN SECTIONS 2.1(a) AND 2.2
HEREOF) SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. SECTIONS
2.1(a) AND 2.2 OF THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
UNDER SUCH SECTIONS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
 
Section 11.10 Assignment to Trustee. The Seller hereby acknowledges and consents
to any mortgage, pledge, assignment and grant of a security interest by the
Purchaser to the Trustee pursuant to the Indenture for the benefit of the
Noteholder of all right, title and interest of the Purchaser in, to and under
the Receivables and Other Conveyed Property and/or the assignment of any or all
of the Purchaser’s rights and obligations hereunder to the Trustee.
 
Section 11.11 Nonpetition Covenants. Notwithstanding any prior termination of
this Agreement, the Servicer and the Seller shall not, prior to the date which
is one year and one day after the Final Scheduled Settlement Date, acquiesce,
petition or otherwise invoke or cause the Purchaser to invoke the process of any
court or government authority for the purpose of commencing or sustaining a case
against the Purchaser under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Purchaser or any substantial part
of its property, or ordering the winding up or liquidation of the affairs of the
Purchaser.
 
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Section 11.12 Limitation of Liability of Trustee. Notwithstanding anything
contained herein to the contrary, this Agreement has been executed and delivered
by Wells Fargo Bank, National Association, not in its individual capacity but
solely as Trustee and Backup Servicer and in no event shall Wells Fargo Bank,
National Association, have any liability for the representations, warranties,
covenants, agreements or other obligations of the Purchaser hereunder or in any
of the certificates, notices or agreements delivered pursuant hereto, as to all
of which recourse shall be had solely to the assets of the Purchaser.
 
Section 11.13 Independence of the Servicer. For all purposes of this Agreement,
the Servicer shall be an independent contractor and shall not be subject to the
supervision of the Purchaser, the Trustee and Backup Servicer with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by this Agreement, the Servicer shall
have no authority to act for or represent the Purchaser in any way and shall not
otherwise be deemed an agent of the Purchaser.
 
Section 11.14 No Joint Venture. Nothing contained in this Agreement (i) shall
constitute the Servicer and the Purchaser as members of any partnership, joint
venture, association, syndicate, unincorporated business or other separate
entity, (ii) shall be construed to impose any liability as such on any of them
or (iii) shall be deemed to confer on any of them any express, implied or
apparent authority to incur any obligation or liability on behalf of the others.
 
Section 11.15 Intention of Parties Regarding Delaware Securitization Act. It is
the intention of the Purchaser and the Seller that the transfer and assignment
of the property contemplated by Section 2.1(a) of this Agreement shall
constitute a sale of property from the Seller to the Purchaser, conveying good
title thereto free and clear of any liens, and the beneficial interest in and
title to such assets shall not be part of the Seller’s estate in the event of
the filing of a bankruptcy petition by or against the Seller under any
bankruptcy or similar law. In addition, for purposes of complying with the
requirements of the Asset-Backed Securities Facilitation Act of the State of
Delaware, 6 Del. C. § 2701A, et seq. (the “Securitization Act”), each of the
parties hereto hereby agrees that:

(a) any property, assets or rights purported to be transferred, in whole or in
part, by the Seller to the Purchaser pursuant to this Agreement shall be deemed
to no longer be the property, assets or rights of the Seller;

(b) none of the Seller, its creditors or, in any insolvency proceeding with
respect to the Seller or the Seller’s property, a bankruptcy trustee, receiver,
debtor, debtor in possession or similar person, to the extent the issue is
governed by Delaware law, shall have any rights, legal or equitable, whatsoever
to reacquire (except pursuant to a provision of this Agreement), reclaim,
recover, repudiate, disaffirm, redeem or recharacterize as property of the
Seller any property, assets or rights purported to be transferred, in whole or
in part, by the Seller to the Purchaser pursuant to this Agreement;

(c) in the event of a bankruptcy, receivership or other insolvency proceeding
with respect to the Seller or the Seller’s property, to the extent the issue is
governed by Delaware law, such property, assets and rights shall not be deemed
to be part of the Seller’s property, assets, rights or estate; and

(d) the transaction contemplated by this Agreement shall constitute a
“securitization transaction” as such term is used in the Securitization Act.
 
Section 11.16 Special Supplemental Agreement. If any party to this Agreement is
unable to sign any amendment or supplement due to its dissolution, winding up or
comparable circumstances, then the consent of the Noteholder shall be sufficient
to amend this Agreement without such party’s signature.
 
Section 11.17 Limited Recourse. Notwithstanding anything to the contrary
contained in this Agreement, the obligations of the Purchaser hereunder are
solely the obligations of the Purchaser, and shall be payable by the Purchaser,
solely as provided herein. The Purchaser shall only be required to pay (a) any
fees, expenses, indemnities or other liabilities that it may incur hereunder (i)
from funds available pursuant to, and in accordance with, the payment priorities
set forth in Section 5.7(a) and (ii) only to the extent the Purchaser receives
additional funds for such purposes or to the extent it has additional funds
available (other than funds described in the preceding clause (i)) that would be
in excess of amounts that would be necessary to pay the debt and other
obligations of the Purchaser incurred in accordance with the Purchaser’s limited
liability company agreement and all financing documents to which the Purchaser
is a party. In addition, no amount owing by the Purchaser hereunder in excess of
the liabilities that it is required to pay in accordance with the preceding
sentence shall constitute a “claim” (as defined in Section 101(5) of the
Bankruptcy Code) against it.
 
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Section 11.18 Acknowledgement of Roles. The parties expressly acknowledge and
consent to Wells Fargo Bank, National Association acting in the multiple
capacities of Backup Servicer and Trustee. The parties agree that Wells Fargo
Bank, National Association in such multiple capacities shall not be subject to
any claim, defense or liability arising from its performance in any such
capacity based on conflict of interest principles, duty of loyalty principles or
other breach of fiduciary duties to the extent that any such conflict or breach
arises from the performance by Wells Fargo Bank, National Association of any
other such capacity or capacities in accordance with this Agreement or any other
Basic Documents to which it is a party.
 
Section 11.19 Termination. The respective obligations and responsibilities of
the Seller, the Purchaser, the Servicer, the Backup Servicer, and the Trustee
created hereby shall terminate on the Termination Date; provided, however, in
any case there shall be delivered to the Trustee and the Noteholder an Opinion
of Counsel that all applicable preference periods under federal, state and local
bankruptcy, insolvency and similar laws have expired with respect to the
payments pursuant to this Section 11.19. The Servicer shall promptly notify the
Trustee, the Seller, the Issuer, each Rating Agency and the Noteholder of any
prospective termination pursuant to this Section 11.19. 
 
Section 11.20 Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, OR ANY LEGAL PROCESS WITH RESPECT TO ITSELF OR ANY OF ITS PROPERTY,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING
IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED
HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
NEW YORK LAW.
 
Section 11.21 Waiver of Trial by Jury. THE PARTIES HERETO EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
PARTY AGAINST THE OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS OR OTHERWISE. THE PARTIES HERETO EACH AGREE THAT ANY SUCH CLAIM OR CAUSE
OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT.
 
Section 11.22 Process Agent. Each of Purchaser, Seller, Servicer and Trustee
agrees that the process by which any proceedings in the State of New York are
begun may be served on it by being delivered by certified mail at the chief
executive office or corporate trust office, as applicable, or at its registered
office for the time being. If such person is not or ceases to be effectively
appointed to accept service of process on the Purchaser’s, Seller’s, Servicer’s
or Trustee’s behalf, the Purchaser, Seller, Servicer or Trustee, as applicable,
shall, on the written demand of the process agent, appoint a further person in
the State of New York to accept service of process on its behalf and, failing
such appointment within 15 days, the process agent shall be entitled to appoint
such a person by written notice to the Purchaser, Seller, Servicer or Trustee,
as applicable. Nothing in this sub-clause shall affect the right of the process
agent to serve process in any other manner permitted by law.
 
Section 11.23 No Set-Off. Each of the Seller and Servicer agrees that it shall
have no right of set-off or banker’s lien against, and no right to otherwise
deduct from, any funds held in any account described herein or in the Basic
Documents for any amount owed to it by the Seller, Servicer or Noteholder.
 
Section 11.24 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise hereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privileges provided by law.
 
Section 11.25 Merger and Integration. Except as specifically stated otherwise
herein, this Agreement sets forth the entire understanding of the parties
relating to the subject matter hereof, and all prior understandings, written or
oral, are superseded by this Agreement. This Agreement may not be modified,
amended, waived or supplemented except as provided herein.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
day and the year first above written.
 

        SILVERLEAF FINANCE IV, LLC,   a Delaware limited liability company, as
Purchaser   
   
   
    By:   /S/ HARRY J. WHITE, JR.   Name: Harry J. White, Jr.    Title: Vice
President, Treasurer & Chief Financial Officer 

 

        SILVERLEAF RESORTS, INC.,   a Texas corporation, as Seller   
   
   
    By:   /S/ HARRY J. WHITE, JR.   Name: Harry J. White, Jr.    Title: Chief
Financial Officer 

 

        SILVERLEAF RESORTS, INC.,   a Texas corporation, as Servicer   
   
   
    By:   /S/ HARRY J. WHITE, JR.   Name: Harry J. White, Jr.    Title: Chief
Financial Officer 

 

        WELLS FARGO BANK, NATIONAL ASSOCIATION,   not in its individual
capacity, but solely as Backup Servicer,    Trustee and Account Intermediary   
   
   
    By:   /S/ SUE DIGNAN   Name: Sue Dignan    Title: Assistant Vice President 

 
Agreed and accepted:

UBS REAL ESTATE SECURITIES INC.

By: Mostafiz Shahmohammed  
Title: Executive Director 

By: Reginald Devilliers  
Title: Director 

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List of Schedule and Exhibits to Agreement not Filed Herewith:

Schedule B--Location for Delivery of Timeshare Loan Files
Schedule C--Form of Trial Balance Report/Delinquency Report
Exhibit A--Form of Servicer’s Certificate
Exhibit B--Eligibility Criteria
Exhibit C--Form of Assignment
Exhibit D--Form of Addition Notice
Exhibit E--ACH Form
Exhibit F--List of Silverleaf Executive Management
Exhibit G--Record Layout
Exhibit H--Servicer’s Monthly Representation Certificate
Exhibit I--Escrow Agent Wiring Instructions
Exhibit J--Form of Waiver Letter
Exhibit K--Credit Policy/Collection Policy
Exhibit L--Form of Notice of Non-Titled Loans

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