EX. 10.4
LOAN SALE AGREEMENT
AMONG
SILVERLEAF FINANCE IV, LLC,
as Seller,
SILVERLEAF FINANCE VIII, LLC,
as Purchaser
AND
SILVERLEAF RESORTS, INC., as Servicer
DATED AS OF DECEMBER 1, 2010
 
 
 
 
 
 

 

--------------------------------------------------------------------------------

 

LOAN SALE AGREEMENT
This LOAN SALE AGREEMENT (this “Agreement”), dated as of December 1, 2010, is
among Silverleaf Finance IV, LLC, a Delaware limited liability company (the
“Seller”), Silverleaf Finance VIII, LLC, a Delaware limited liability company
(the “Purchaser”), Silverleaf Resorts, Inc., a Texas corporation, in its
capacity as servicer (the “Servicer”) and their respective permitted successors
and assigns.
W I T N E S S E T H:
WHEREAS, the Purchaser has been established as a bankruptcy-remote entity for
the purpose of acquiring (i) an initial pool of timeshare loans acquired on the
Closing Date (the “Initial Timeshare Loans”) consisting of (a) a pool of
timeshare loans (the “Mortgage Loans”) each evidenced by a promissory note and
secured by a first Mortgage on a fractional fee simple timeshare interest in a
Unit, and (b) a pool of timeshare loans (the “Oak N' Spruce Loans”), each
evidenced by a purchase and finance agreement (a “Finance Agreement”) for the
purchase of a certificate of beneficial interest in the Oak N' Spruce Resort
Trust evidencing the right of the owner thereof to use and occupy a fixed unit
at Oak N' Spruce Resort at a fixed period of time, (ii) any Qualified Substitute
Timeshare Loans and Subsequent Timeshare Loans and (iii) all Related Security in
respect of the Timeshare Loans. A “Timeshare Property” shall consist of (i) in
the case of a Mortgage Loan, a fractional fee simple timeshare interest in a
residential unit (a residential timeshare unit herein referred to as a “Unit”)
in a Resort or (ii) in the case of an Oak N' Spruce Loan, a certificate of
beneficial interest (“Oak N' Spruce Certificate”) in the Oak N' Spruce Resort
Trust. The Initial Timeshare Loans, the Qualified Substitute Timeshare Loans,
Timeshare Properties, Mortgage Note, any Related Security and other conveyed
property related thereto and additional collateral, in each case conveyed
hereunder, collectively, are the “Transferred Assets”;
WHEREAS, on December 27, 2010 (the “Closing Date”) and on each Transfer Date,
the Purchaser intends to pledge such Transferred Assets acquired thereby to
Wells Fargo Bank National Association, as indenture trustee (in such capacity,
the “Securitization Indenture Trustee”), custodian (in such capacity, the
“Securitization Custodian”) and backup servicer, pursuant to an indenture, dated
as of December 1, 2010 (the “Securitization Indenture”), by and among the
Purchaser, the Servicer and the Securitization Indenture Trustee, to secure the
Purchaser's (i) 6.000% Timeshare Loan-Backed Notes, Series 2010-B, Class A Notes
and (ii) 8.475% Timeshare Loan-Backed Notes, Series 2010-B, Class B Notes
(collectively, the “Securitization Notes”);
WHEREAS, proceeds from the sale of the Securitization Notes will be used by the
Purchaser, in part, to (i) pay the Seller the purchase price for the Timeshare
Loans and (ii) pay certain expenses incurred in connection with the issuance of
the Securitization Notes;
WHEREAS, the Seller will derive an economic benefit from the transfer hereunder
of the Timeshare Loans to the Purchaser;
WHEREAS, Silverleaf originated all of the Timeshare Loans, is familiar with the
terms of the Timeshare Loans and is the Servicer of the Timeshare Loans and has
been servicing each of the Timeshare Loans in accordance with the Servicing
Standard;
WHEREAS, in consideration for providing the representations and warranties set
forth in Section 5(b) of this Agreement and having the obligation to cure any
material breaches thereof, or to repurchase or substitute any Defective
Timeshare Loans, and to provide the indemnities set forth hereunder, Silverleaf
desires (i) to act as the Servicer on behalf of the holders of the Notes, for
which the Servicer shall be entitled to receive a Servicing Fee and Additional
Servicing Compensation in accordance with the provisions of the Indenture, (ii)
to have the obligation to repurchase Upgraded Timeshare Loans pursuant to the
terms and conditions set forth in the Transaction Documents, (iii) to have the
option, but not the obligation, to repurchase Force Majeure Loans pursuant to
the terms and conditions set forth in the Transaction Documents and (iv) to have
the option, but not the obligation, to purchase Defaulted Timeshare Loans
pursuant to the terms and conditions set forth in the Transaction Documents; and
WHEREAS, Silverleaf, as the sole member of the Issuer, will derive an economic
benefit from the sale hereunder of the Timeshare Loans to the Issuer.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and
for other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto covenant and agree as follows:
SECTION 1.Definitions; Interpretation. Capitalized terms used herein but not
defined herein shall have the respective meanings specified in “Standard
Definitions” attached hereto as Annex A.
SECTION 2.Acquisition of Timeshare Loans.
(a)Initial Timeshare Loans.
(i)Effective as of the Closing Date, but subject to the terms and conditions of
this Agreement (including, without limitation, subsection (f) below), the Seller
hereby sells (“Sells,” “Sale” or “Sold”) and otherwise transfers, assigns, and
conveys to the Purchaser, without recourse (except for Defective Timeshare Loans
to the extent specifically provided herein), and the Purchaser hereby agrees to
purchase and otherwise acquires, all right, title and interest of the Seller in
and to the Timeshare Loans included on the schedule delivered to the Purchaser
on the Closing Date (as further described in Section 4(i) below), together with
the Timeshare Properties, Related Security and other conveyed property related
thereto. In connection with the initial transfer, Seller shall transfer or cause
the deposit into the Lockbox Account of all amounts received by the Seller on
account of such Timeshare Loans, Timeshare Properties, Related Security and
other conveyed property related thereto and additional collateral hereunder due
on and after the Initial Cut-Off Date within two (2) Business Days of the
receipt thereof.
(ii)The Seller hereby acknowledges that each sale and conveyance to the
Purchaser hereunder is absolute and irrevocable, without reservation or
retention of any interest whatsoever by the Seller.
(b)[Intentionally Omitted].
(c)Delivery of Initial Timeshare Loan Documents. In connection with the sale,
transfer, assignment and conveyance of any Initial Timeshare Loan hereunder, the
Purchaser hereby directs the Seller, and the Seller hereby agrees to deliver or
cause to be delivered to the Securitization Custodian all related Timeshare Loan
Files and to the Servicer all related Timeshare Loan Servicing Files.
(d)Collections. The Seller or Servicer as applicable, shall deposit or cause to
be deposited all collections in respect of the Initial Timeshare Loans and the
Qualified Substitute Timeshare Loans (together, the “Timeshare Loans”) received
by the Seller, the Servicer or any of its Affiliates on and after the related
Cut-Off Date in the Lockbox Account.
(e)Limitation of Liability. Neither the Purchaser nor any subsequent assignee of
the Purchaser shall have any obligation or liability with respect to any
Timeshare Loan nor shall the Purchaser or any subsequent assignee have any
liability to any Obligor in respect of any Timeshare Loan. No such obligation or
liability is intended to be assumed by the Purchaser, the Seller or any
subsequent assignee herewith and any such liability is hereby expressly
disclaimed.
(f)Purchase Price. The price paid for Timeshare Loans, Timeshare Properties,
Related Security and other conveyed property related thereto and additional
collateral which are Sold hereunder shall be the Timeshare Loan Acquisition
Price with respect thereto. Such Timeshare Loan Acquisition Price shall be paid
by means of an immediate cash payment to the Seller by wire transfer on the
applicable conveyance date to an account designated by the Seller on or before
such conveyance date.
SECTION 3.Intended Characterization, Grant of Security Interest. It is the
intention of the parties hereto that the transfers of Timeshare Loans to be made
pursuant to the terms hereof shall constitute a sale and an absolute assignment
by the Seller to the Purchaser and not a loan secured by the Timeshare Loans. In
the event, however, that a court of competent jurisdiction were to hold that any
such transfer constitutes a loan and not a sale, it is the intention of the
parties hereto that the Seller shall be deemed to have granted and does hereby
grant to the Purchaser as of the date hereof a first priority perfected security
interest in all of Seller's right, title and interest in, to and under the
Transferred Assets specified in Section 2 hereof and that with respect to such
conveyance, this Agreement shall constitute a security agreement under
applicable law. In the event of the characterization of any such transfer as a
loan, the amount of interest payable or paid with respect to such loan under the
terms of this Agreement shall be limited to an amount which shall not exceed the
maximum non-usurious rate of interest allowed by the applicable state law or any
applicable law of the United States permitting a higher maximum non-usurious
rate that preempts such applicable state law, which could lawfully be contracted
for, charged or received (the “Highest Lawful Rate”). In the event any payment
of interest on any such loan exceeds the Highest Lawful Rate, the parties hereto
stipulate that (a) to the extent possible given the term of such loan, such
excess amount previously paid or to be paid with respect to such loan be applied
to reduce the principal balance of such loan, and the provisions thereof
immediately be deemed reformed and the amounts thereafter collectible thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the then applicable law, but so as to permit the recovery of the
fullest amount otherwise called for thereunder and (b) to the extent that the
reduction of the principal balance of, and the amounts collectible under, such
loan and the reformation of the provisions thereof described in the immediately
preceding clause (a) is not possible given the term of such loan, such excess
amount will be deemed to have been paid with respect to such loan as a result of
an error and upon discovery of such error or upon notice thereof by any party
hereto such amount shall be refunded by the recipient thereof.
The characterization of the Seller as “debtor” and the Purchaser as “secured
party” in any financing statement required hereunder is solely for protective
purposes and shall in no way be construed as being contrary to the intent of the
parties that this transaction be treated as a sale to the Purchaser of such
Seller's entire right, title and interest in and to the Transferred Assets.
Each of the Seller, the Purchaser and any of their Affiliates hereby agrees to
make the appropriate entries in its general accounting records and to indicate
that the Timeshare Loans have been transferred to the Purchaser.
SECTION 4.Conditions Precedent to Acquisition of Timeshare Loans by the
Purchaser. The obligations of the Purchaser to purchase any Timeshare Loans
hereunder shall be subject to the satisfaction of the following conditions:
(a)All representations and warranties of the Seller and the Servicer contained
in Section 5 and in Schedule I hereof, and all information provided in the
Schedule of Timeshare Loans related thereto shall be true and correct as of the
Closing Date or the Transfer Date, as applicable, and each of the Seller and the
Servicer shall have delivered to the Purchaser, the Securitization Indenture
Trustee and BB&T Capital Markets, a division of Scott & Stringfellow, LLC (the
“Initial Purchaser”) an officer's certificate (the “Officer's Certificate”) to
such effect.
(b)On or prior to the Closing Date or a Transfer Date, as applicable, the Seller
(and, with regard to a Transfer Date, the Servicer) shall have delivered or
shall have caused the delivery of (i) the related Timeshare Loan Files to the
Securitization Custodian and the Securitization Custodian shall have delivered a
receipt therefore pursuant to the Custodial Agreement, (ii) the Timeshare Loan
Servicing Files to the Servicer, and (iii) all documents and certifications
required pursuant to the terms of the Custodial Agreement and the Escrow and
Closing Agreement.
(c)The Seller shall have delivered or shall have caused to be delivered all
other information theretofore required or reasonably requested by the Purchaser
to be delivered by the Seller or performed or caused to be performed all other
obligations required to be performed as of the Closing Date, including all
filings, recordings and/or registrations as may be necessary in the reasonable
opinion of the Purchaser or the Securitization Indenture Trustee to establish
and preserve the right, title and interest of the Purchaser or the
Securitization Indenture Trustee, as the case may be, in the related Timeshare
Loans.
(d)With regard to each Transfer Date, the Servicer shall have delivered or shall
have caused to be delivered all other information theretofore required or
reasonably requested by the Purchaser to be delivered by the Servicer or
performed or caused to be performed all other obligations required to be
performed as of such Transfer Date, including all filings, recordings and/or
registrations as may be necessary in the reasonable opinion of the Purchaser or
the Securitization Indenture Trustee to establish and preserve the right, title
and interest of the Purchaser or the Securitization Indenture Trustee, as the
case may be, in the related Timeshare Loans.
(e)On or before the Closing Date, the Purchaser, the Servicer, the Backup
Servicer and the Securitization Indenture Trustee shall have entered into the
Securitization Indenture.
(f)The Securitization Notes shall be issued and sold on the Closing Date, and
the Purchaser shall receive the full consideration due it upon the issuance of
the Securitization Notes, and the Purchaser shall have applied such
consideration to the extent necessary, to pay the Timeshare Loan Acquisition
Price for each Timeshare Loan.
(g)Each Timeshare Loan conveyed on a Transfer Date in accordance with Section
6(a) hereof shall satisfy each of the criteria specified in the definition of
“Qualified Substitute Timeshare Loan” and each of the conditions herein and in
the Securitization Indenture for substitution of Timeshare Loans shall have been
satisfied.
(h)The Purchaser shall have received such other certificates and opinions as it
shall reasonably request.
(i)On or prior to the Closing Date or a Transfer Date, as applicable, the Seller
(and, with regard to a Transfer Date, the Servicer), shall deliver a Schedule of
Timeshare Loans, which Schedule shall be attached hereto as Schedule III and
made a part hereof. Each Schedule so delivered shall supersede any prior
schedules so delivered.
SECTION 5.Representations and Warranties and Certain Covenants of Seller and
Servicer.
(a)The Seller represents and warrants to the Purchaser and the Securitization
Indenture Trustee for the benefit of the Securitization Noteholders, as of the
Closing Date (with respect to the Timeshare Loans transferred on the Closing
Date) as follows:
(i)Due Formation; Valid Existence; Good Standing. It is a limited liability
company duly organized and validly existing in good standing under the laws of
the jurisdiction of its formation; and is duly qualified to do business as a
foreign entity and in good standing under the laws of each jurisdiction where
the character of its property, the nature of its business or the performance of
its obligations under this Agreement makes such qualification necessary, except
where the failure to be so qualified will not have a material adverse effect on
its business or its ability to perform its obligations under this Agreement or
any other related documents (the “Transaction Documents”) to which it is a party
or under the transactions contemplated hereunder or thereunder or the validity
or enforceability of the Timeshare Loans.
(ii)Possession of Licenses, Certificates, Franchises and Permits. It holds all
licenses, certificates, franchises and permits from all governmental authorities
necessary for the conduct of its business, except where the failure to hold such
licenses, certificates, franchises and permits would not materially and
adversely affect its ability to perform its obligations under this Agreement or
any other Transaction Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Timeshare Loans, and has received no notice of proceedings relating to the
revocation of any such license, certificate, franchise or permit, which singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially and adversely affect its ability to perform its
obligations under this Agreement or any other Transaction Document to which it
is a party or under the transactions contemplated hereunder or thereunder or the
validity or enforceability of the Timeshare Loans.
(iii)Limited Liability Company Authority and Power. It has, and at all times
during the term of this Agreement will have, all requisite limited liability
company power and authority to own its properties, to conduct its business, to
execute and deliver this Agreement and all documents and transactions
contemplated hereunder and to perform all of its obligations under this
Agreement and any other Transaction Document to which it is a party or under the
transactions contemplated hereunder or thereunder.
(iv)Authorization, Execution and Delivery Valid and Binding. This Agreement and
all other Transaction Documents and instruments required or contemplated hereby
to be executed and delivered by it have been duly authorized, executed and
delivered by it and, assuming the due execution and delivery by, the other party
or parties hereto and thereto, constitute legal, valid and binding agreements
enforceable against it in accordance with their respective terms subject, as to
enforceability, to bankruptcy, insolvency, reorganization, liquidation,
dissolution, moratorium and other similar applicable laws affecting the
enforceability of creditors' rights generally applicable in the event of the
bankruptcy, insolvency, reorganization, liquidation or dissolution, as
applicable, of it and to general principles of equity, regardless of whether
such enforceability shall be considered in a proceeding in equity or at law.
(v)No Violation of Law, Rule, Regulation, etc. The execution, delivery and
performance by it of this Agreement and any other Transaction Document to which
it is a party do not and will not (A) violate any of the provisions of its
certificate of formation or limited liability company agreement, (B) violate any
provision of any law, governmental rule or regulation currently in effect
applicable to it or its properties or by which it or its properties may be bound
or affected, including, without limitation, any bulk transfer laws, where such
violation would have a material adverse effect on its ability to perform its
obligations under this Agreement or any other Transaction Document to which it
is a party or under the transactions contemplated hereunder or thereunder or the
validity or enforceability of the Timeshare Loans, (C) violate any judgment,
decree, writ, injunction, award, determination or order currently in effect
applicable to it or its properties or by which it or its properties are bound or
affected, where such violation would have a material adverse effect on its
ability to perform its obligations under this Agreement or any other Transaction
Document to which it is a party or under the transactions contemplated hereunder
or thereunder or the validity or enforceability of the Timeshare Loans, (D)
conflict with, or result in a breach of, or constitute a default under, any of
the provisions of any indenture, mortgage, deed of trust, contract or other
instrument to which it is a party or by which it is bound where such violation
would have a material adverse effect on its ability to perform its obligations
under this Agreement or any other Transaction Document to which it is a party or
under the transactions contemplated hereunder or thereunder or the validity or
enforceability of the Timeshare Loans or (E) result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, mortgage, deed of trust, contract or other instrument.
(vi)Governmental Consent. No consent, approval, order or authorization of, and
no filing with or notice to, any court or other Governmental Authority in
respect of it is required which has not been obtained in connection with the
authorization, execution, delivery or performance by it of this Agreement or any
of the other Transaction Documents to which it is a party or under the
transactions contemplated hereunder or thereunder, including, without
limitation, the transfer of the Timeshare Loans and the creation of the security
interest of the Purchaser therein pursuant to Section 3 hereof.
(vii)Defaults. It is not in default under any material agreement, contract,
instrument or indenture to which it is a party or by which it or its properties
is or are bound, or with respect to any order of any court, administrative
agency, arbitrator or governmental body, in each case, which would have a
material adverse effect on the transactions contemplated hereunder or on its
business, operations, financial condition or assets, and no event has occurred
which with notice or lapse of time or both would constitute such a default with
respect to any such agreement, contract, instrument or indenture, or with
respect to any such order of any court, administrative agency, arbitrator or
governmental body.
(viii)Insolvency. It is solvent and will not be rendered insolvent by the
transfer of Timeshare Loans hereunder. On and after the Closing Date, it will
not engage in any business or transaction the result of which would cause the
property remaining with it to constitute an unreasonably small amount of
capital.
(ix)Pending Litigation or Other Proceedings. There is no pending or, to its
Knowledge, threatened action, suit, proceeding or investigation before any
court, administrative agency, arbitrator or governmental body against or
affecting it which, if decided adversely, would materially and adversely affect
(A) its condition (financial or otherwise), its business or operations, (B) its
ability to perform its obligations under, or the validity or enforceability of,
this Agreement or any other documents or transactions contemplated under this
Agreement including, without limitation, its ability to foreclose or otherwise
enforce the Liens of the Timeshare Loans, or (C) any Timeshare Loan or title of
any Obligor to any related Timeshare Property.
(x)Information. No document, certificate or report furnished or required to be
furnished by or on behalf of it pursuant to this Agreement or any other
Transaction Document, contains or will contain when furnished any untrue
statement of a material fact or fails or will fail to state a material fact
necessary in order to make the statements contained therein not misleading in
light of the circumstances in which it was made. There are no facts known to it
which, individually or in the aggregate, materially adversely affect, or which
(aside from general economic trends) may reasonably be expected to materially
adversely affect in the future, its financial condition or assets or business,
or which may impair its ability to perform its obligations under this Agreement,
which have not been disclosed herein or therein or in the certificates and other
documents furnished to the Purchaser by or on its behalf pursuant hereto or
thereto specifically for use in connection with the transactions contemplated
hereby or thereby.
(xi)No Deficiency Accumulation. To the Seller's Knowledge: (i) with respect to
plan years beginning prior to January 1, 2008, neither the Seller nor any of its
Commonly Controlled Affiliates (as defined below) has any “accumulated funding
deficiency” (as such term is defined under ERISA and the Code), whether or not
waived, with respect to any Employee Pension Benefit Plan (as defined below),
and no event has occurred or circumstance exists that may result in any
accumulated funding deficiency as of the last day of any plan year beginning
before January 1, 2008 of any such plan; (ii) with respect to plan years
beginning after December 31, 2007, neither the Seller nor any of its Commonly
Controlled Affiliates has any unpaid “minimum required contribution” (as such
term is defined under ERISA and the Code) with respect to any Employee Pension
Benefit Plan, whether or not such unpaid minimum required contribution is
waived, and no event has occurred or circumstance exists that may result in any
unpaid minimum required contribution as of the last day of the current plan year
of any such plan; (iii) the Seller and each of its Commonly Controlled
Affiliates has no outstanding liability for any undisputed contribution required
under any Seller Multiemployer Plan (as defined below); and (iv) the Seller and
each of its Commonly Controlled Affiliates has no outstanding liability for any
material disputed contribution required under any Seller Multiemployer Plan. (a)
Neither the Seller nor any of its Commonly Controlled Affiliates has incurred
any Withdrawal Liability (as defined below) and (b) no event has occurred or
circumstance exists that could result in any Withdrawal Liability. Neither the
Seller nor any of its Commonly Controlled Affiliates has received notification
of the reorganization, termination, partition, or insolvency of any Seller
Multiemployer Plan. For purposes of this subsection, “Commonly Controlled
Affiliates” means those direct or indirect affiliates of the Seller that would
be considered a single employer with the Seller under Section 414(b), (c), (m),
or (o) of the Code; “Employee Pension Benefit Plan” means an employee pension
benefit plan, as such term is defined in Section 3(2) of ERISA, that is
sponsored, maintained or contributed to by the Seller or any of its Commonly
Controlled Affiliates (other than a Seller Multiemployer Plan); “Multiemployer
Plan” means a multiemployer plan as such term is defined in Section 3(37) of
ERISA; “Seller Multiemployer Plan” means a Multiemployer Plan to which the
Seller or any of its Commonly Controlled Affiliates contributes or in which the
Seller or any of its Commonly Controlled Affiliates participates; and
“Withdrawal Liability” means liability as determined under ERISA for the
complete or partial withdrawal of the Seller or any of its Commonly Controlled
Affiliates from a Multiemployer Plan.
(xii)Taxes. It has filed all tax returns (federal, state and local) which it
reasonably believes are required to be filed and has paid or made adequate
provision for the payment of all taxes, assessments and other governmental
charges due from it or is contesting any such tax, assessment or other
governmental charge in good faith through appropriate proceedings or except
where the failure to file or pay will not have a material adverse effect on the
rights and interests of the Purchaser or any of its subsequent assignees. It
knows of no basis for any material additional tax assessment for any fiscal year
for which adequate reserves have not been established. It shall pay all such
taxes, assessments and governmental charges when due.
(xiii)Place of Business. The principal place of business and chief executive
office where it keeps its records concerning the Timeshare Loans will be 1221
Riverbend Drive, Suite 274, Dallas, Texas 75247 (or such other place specified
by it by written notice to the Purchaser and the Securitization Indenture
Trustee). It is a limited liability company formed under the laws of the State
of Delaware.
(xiv)Securities Laws. It is not an “investment company” or a company
“controlled” by an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. No portion of the Timeshare Loan Acquisition
Price for each of the Timeshare Loans will be used by it to acquire any security
in any transaction which is subject to Section 13 or Section 14 of the
Securities Exchange Act of 1934, as amended.
(xv)Transactions in Ordinary Course. The transactions contemplated by this
Agreement are in its ordinary course of business.
(xvi)Name. Its legal name is as set forth in the signature page of this
Agreement and it does not have any tradenames, fictitious names, assumed names
or “doing business as” names.
(xvii)Custodial Files. It shall, on or prior to the Closing Date, have delivered
or caused the delivery to the Securitization Custodian a Timeshare Loan File for
each Timeshare Loan, which Timeshare Loan File shall be complete and verified by
the Securitization Custodian in accordance with the Custodial Agreement.
(xviii)No Conveyance. It agrees not to convey and to ensure no party under its
control conveys any interest in a Resort relating to a Timeshare Loan without
obtaining Rating Agency Confirmation if such conveyance is reasonably likely to
have a material adverse affect on the Securitization Noteholders.
(b)The Servicer represents and warrants to the Purchaser and the Securitization
Indenture Trustee for the benefit of the Securitization Noteholders, as of the
Closing Date (with respect to the Timeshare Loans transferred on the Closing
Date) and on each Transfer Date (with respect to Qualified Substitute Timeshare
Loans) as follows:
(i)Due Incorporation; Valid Existence; Good Standing. It is a corporation duly
organized and validly existing in good standing under the laws of the
jurisdiction of its incorporation; and is duly qualified to do business as a
foreign corporation and in good standing under the laws of each jurisdiction
where the character of its property, the nature of its business or the
performance of its obligations under this Agreement makes such qualification
necessary, except where the failure to be so qualified will not have a material
adverse effect on its business or its ability to perform its obligations under
the Transaction Documents to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Timeshare Loans.
(ii)Possession of Licenses, Certificates, Franchises and Permits. It holds all
licenses, certificates, franchises and permits from all governmental authorities
necessary for the conduct of its business, except where the failure to hold such
licenses, certificates, franchises and permits would not materially and
adversely affect its ability to perform its obligations under this Agreement or
any other Transaction Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Timeshare Loans, and has received no notice of proceedings relating to the
revocation of any such license, certificate, franchise or permit, which singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially and adversely affect its ability to perform its
obligations under this Agreement or any other Transaction Document to which it
is a party or under the transactions contemplated hereunder or thereunder or the
validity or enforceability of the Timeshare Loans.
(iii)Corporate Authority and Power. It has, and at all times during the term of
this Agreement will have, all requisite corporate power and authority to own its
properties, to conduct its business, to execute and deliver this Agreement and
all documents and transactions contemplated hereunder and to perform all of its
obligations under this Agreement and any other Transaction Document to which it
is a party or under the transactions contemplated hereunder or thereunder.
(iv)Authorization, Execution and Delivery Valid and Binding. This Agreement and
all other Transaction Documents and instruments required or contemplated hereby
to be executed and delivered by it have been duly authorized, executed and
delivered by it and, assuming the due execution and delivery by, the other party
or parties hereto and thereto, constitute legal, valid and binding agreements
enforceable against it in accordance with their respective terms subject, as to
enforceability, to bankruptcy, insolvency, reorganization, liquidation,
dissolution, moratorium and other similar applicable laws affecting the
enforceability of creditors' rights generally applicable in the event of the
bankruptcy, insolvency, reorganization, liquidation or dissolution, as
applicable, of it and to general principles of equity, regardless of whether
such enforceability shall be considered in a proceeding in equity or at law.
(v)No Violation of Law, Rule, Regulation, etc. The execution, delivery and
performance by it of this Agreement and any other Transaction Document to which
it is a party do not and will not (A) violate any of the provisions of its
articles of incorporation or bylaws, (B) violate any provision of any law,
governmental rule or regulation currently in effect applicable to it or its
properties or by which it or its properties may be bound or affected, including,
without limitation, any bulk transfer laws, where such violation would have a
material adverse effect on its ability to perform its obligations under this
Agreement or any other Transaction Document to which it is a party or under the
transactions contemplated hereunder or thereunder or the validity or
enforceability of the Timeshare Loans, (C) violate any judgment, decree, writ,
injunction, award, determination or order currently in effect applicable to it
or its properties or by which it or its properties are bound or affected, where
such violation would have a material adverse effect on its ability to perform
its obligations under this Agreement or any other Transaction Document to which
it is a party or under the transactions contemplated hereunder or thereunder or
the validity or enforceability of the Timeshare Loans, (D) conflict with, or
result in a breach of, or constitute a default under, any of the provisions of
any indenture, mortgage, deed of trust, contract or other instrument to which it
is a party or by which it is bound where such violation would have a material
adverse effect on its ability to perform its obligations under this Agreement or
any other Transaction Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Timeshare Loans or (E) result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, mortgage, deed of
trust, contract or other instrument.
(vi)Governmental Consent. No consent, approval, order or authorization of, and
no filing with or notice to, any court or other Governmental Authority in
respect of it is required which has not been obtained in connection with the
authorization, execution, delivery or performance by it of this Agreement or any
of the other Transaction Documents to which it is a party or under the
transactions contemplated hereunder or thereunder.
(vii)Defaults. It is not in default under any material agreement, contract,
instrument or indenture to which it is a party or by which it or its properties
is or are bound, or with respect to any order of any court, administrative
agency, arbitrator or governmental body, in each case, which would have a
material adverse effect on the transactions contemplated hereunder or on its
business, operations, financial condition or assets, and no event has occurred
which with notice or lapse of time or both would constitute such a default with
respect to any such agreement, contract, instrument or indenture, or with
respect to any such order of any court, administrative agency, arbitrator or
governmental body.
(viii)Pending Litigation or Other Proceedings. Other than as described in the
Offering Circular, there is no pending or, to its Knowledge, threatened action,
suit, proceeding or investigation before any court, administrative agency,
arbitrator or governmental body against or affecting it which, if decided
adversely, would materially and adversely affect (A) its condition (financial or
otherwise), its business or operations, (B) its ability to perform its
obligations under, or the validity or enforceability of, this Agreement or any
other documents or transactions contemplated under this Agreement including,
without limitation, its ability to foreclose or otherwise enforce the Liens of
the Timeshare Loans, or (C) any Timeshare Loan or title of any Obligor to any
related Timeshare Property.
(ix)Information. No document, certificate or report furnished or required to be
furnished by or on behalf of it pursuant to this Agreement or any other
Transaction Document, contains or will contain when furnished any untrue
statement of a material fact or fails or will fail to state a material fact
necessary in order to make the statements contained therein not misleading in
light of the circumstances in which it was made. There are no facts known to it
which, individually or in the aggregate, materially adversely affect, or which
(aside from general economic trends) may reasonably be expected to materially
adversely affect in the future, its financial condition or assets or business,
or which may impair its ability to perform its obligations under this Agreement,
which have not been disclosed herein or therein or in the certificates and other
documents furnished to the Purchaser by or on its behalf pursuant hereto or
thereto specifically for use in connection with the transactions contemplated
hereby or thereby.
(x)No Deficiency Accumulation. To the Servicer's Knowledge: (i) with respect to
plan years beginning prior to January 1, 2008, neither the Servicer nor any of
its Commonly Controlled Affiliates (as defined below) has any “accumulated
funding deficiency” (as such term is defined under ERISA and the Code), whether
or not waived, with respect to any Employee Pension Benefit Plan (as defined
below), and no event has occurred or circumstance exists that may result in any
accumulated funding deficiency as of the last day of any plan year beginning
before January 1, 2008 of any such plan; (ii) with respect to plan years
beginning after December 31, 2007, neither the Servicer nor any of its Commonly
Controlled Affiliates has any unpaid “minimum required contribution” (as such
term is defined under ERISA and the Code) with respect to any Employee Pension
Benefit Plan, whether or not such unpaid minimum required contribution is
waived, and no event has occurred or circumstance exists that may result in any
unpaid minimum required contribution as of the last day of the current plan year
of any such plan; (iii) the Servicer and each of its Commonly Controlled
Affiliates has no outstanding liability for any undisputed contribution required
under any Servicer Multiemployer Plan (as defined below); and (iv) the Servicer
and each of its Commonly Controlled Affiliates has no outstanding liability for
any material disputed contribution required under any Servicer Multiemployer
Plan that either individually or in the aggregate could cause a material adverse
effect on the Servicer or any of its Commonly Controlled Affiliates. (a) Neither
the Servicer nor any of its Commonly Controlled Affiliates has incurred any
Withdrawal Liability (as defined below) and (b) no event has occurred or
circumstance exists that could result in any Withdrawal Liability. Neither the
Servicer nor any of its Commonly Controlled Affiliates has received notification
of the reorganization, termination, partition, or insolvency of any Servicer
Multiemployer Plan. For purposes of this subsection, “Commonly Controlled
Affiliates” means those direct or indirect affiliates of the Servicer that would
be considered a single employer with the Servicer under Section 414(b), (c),
(m), or (o) of the Code; “Employee Pension Benefit Plan” means an employee
pension benefit plan, as such term is defined in Section 3(2) of ERISA, that is
sponsored, maintained or contributed to by the Servicer or any of its Commonly
Controlled Affiliates (other than a Servicer Multiemployer Plan); “Multiemployer
Plan” means a multiemployer plan as such term is defined in Section 3(37) of
ERISA; “Servicer Multiemployer Plan” means a Multiemployer Plan to which the
Servicer or any of its Commonly Controlled Affiliates contributes or in which
the Servicer or any of its Commonly Controlled Affiliates participates; and
“Withdrawal Liability” means liability as determined under ERISA for the
complete or partial withdrawal of the Servicer or any of its Commonly Controlled
Affiliates from a Multiemployer Plan.
(xi)Taxes. It has filed all tax returns (federal, state and local) which it
reasonably believes are required to be filed and has paid or made adequate
provision for the payment of all taxes, assessments and other governmental
charges due from it or is contesting any such tax, assessment or other
governmental charge in good faith through appropriate proceedings or except
where the failure to file or pay will not have a material adverse effect on the
rights and interests of the Purchaser or any of its subsequent assignees. It
knows of no basis for any material additional tax assessment for any fiscal year
for which adequate reserves have not been established. It shall pay all such
taxes, assessments and governmental charges when due.
(xii)Securities Laws. It is not an “investment company” or a company
“controlled” by an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
(xiii)Transactions in Ordinary Course. The transactions contemplated by this
Agreement are in its ordinary course of business.
(xiv)Foreign Tax Liability. It is not aware of any Obligor under a Timeshare
Loan who has withheld any portion of payments due under such Timeshare Loan
because of the requirements of a foreign taxing authority, and no foreign taxing
authority has contacted it concerning a withholding or other foreign tax
liability.
(xv)Oak N' Spruce Loans. With respect to Timeshare Loans that are Oak N' Spruce
Loans:
(A)The Oak N' Spruce Trust is a trust duly, formed, validly existing, and in
good standing under the laws of the Commonwealth of Massachusetts. The Oak N'
Spruce Trust is authorized to transact business in no other state;
(B)It possesses all requisite franchises, operating rights, licenses, permits,
consents, authorizations, exemptions and orders as are necessary to discharge
its obligations under the Finance Agreement;
(C)It holds all right, title and interest in and to all of the Timeshare
Properties related to the Oak N' Spruce Loans solely for the benefit of the
beneficiaries referred to in, and subject in each case to the provisions of, the
Finance Agreement and the other documents and agreements related thereto;
(D)There are no actions, suits, proceedings, orders or injunctions pending
against the Oak N' Spruce Trust or Oak N' Spruce Trustee, at law or in equity,
or before or by any governmental authority which, if adversely determined, could
reasonably be expect to have a material adverse effect on the Trust Estate or
the Oak N' Spruce Trustee's ability to perform its obligations under the Trust
Documents;
(E)Neither the Oak N' Spruce Trust nor the Oak N' Spruce Trustee has incurred
any indebtedness for borrowed money (directly, by guarantee, or otherwise);
(F)All ad valorem taxes and other taxes and assessments against the Oak N'
Spruce Trust and/or its trust estate have been paid when due and neither it nor
the Oak N' Spruce Trustee knows of any basis for any additional taxes or
assessments against any such property. The Oak N' Spruce Trust has filed all
required tax returns and has paid all taxes shown to be due and payable on such
returns, including all taxes in respect of sales of Owner Beneficiary Rights (as
defined in the Finance Agreement);
(G)The Oak N' Spruce Trust and the Oak N' Spruce Trustee are in compliance with
all applicable laws, statutes, rules and governmental regulations applicable to
it and in compliance with each instrument, agreement or document to which it is
a party or by which it is bound, including, without limitation, the Finance
Agreement except where the failure to comply herein would not materially and
adversely affect its ability to perform its obligations under this Agreement or
any other Transaction Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Timeshare Loans;
(H)It shall continue to control and manage the Oak N' Spruce Trust, and it shall
not take any action to cause the Oak N' Spruce Trustee to control or manage the
Oak N' Spruce Trust;
(I)The Oak N' Spruce Trustee is a wholly-owned subsidiary of it and is
controlled by it. It shall cause Silverleaf Berkshires, Inc. to remain the Oak
N' Spruce Trustee and a wholly-owned subsidiary of it, and it shall maintain the
existence of Silverleaf Berkshires, Inc. as a Texas corporation, with all the
requisite corporate powers and authority as exists on the Closing Date; and
(J)It shall comply, and shall cause the Oak N' Spruce Trustee to comply, with
all the terms and conditions of the Oak N' Spruce Trust Agreement and all other
related documents.
(xvi)Servicing. It is the initial Servicer and has been servicing the Timeshare
Loans in accordance with the Servicing Standard.
(xvii)Certified Copy of Contract for Sale. It represents and warrants that each
Contract for Sale contained in a Timeshare Loan File is a true, correct and
accurate copy of the original Contract for Sale.
(xviii)No Conveyance. It agrees not to convey and to ensure no party under its
control conveys any interest in a Resort relating to a Timeshare Loan without
obtaining Rating Agency Confirmation if such conveyance is reasonably likely to
have a material adverse affect on the Securitization Noteholders.
(xix)Timeshare Loan Documents. It represents and warrants that all of the
documents evidencing each of the Timeshare Loans are identical in all material
respects to the form determined to be valid, binding and enforceable in the
applicable state by the corresponding local counsel opinion issued by (I)
Weinstock & Scavo, P.C., dated December 27, 2010, pertaining to Georgia law
matters, (II) Bulkley, Richardson and Gelinas, LLP, dated December 27, 2010,
pertaining to Massachusetts law matters, (III) Stinson Morrison Hecker LLP,
dated December 27, 2010, pertaining to Missouri law matters, (IV) Mayer Brown
LLP, dated December 27, 2010, pertaining to Illinois law matters, (V) Meadows,
Collier, Reed, Cousins, Crouch & Ungerman, L.L.P., dated December 27, 2010,
pertaining to Texas law matters, and (VI) Holland and Knight LLP, dated December
27, 2010, pertaining to Florida law matters (collectively, the “Local Counsel
Opinions”).
(xx)Timeshare Marketing Materials and Disclosure Statements. It represents and
warrants that it has provided each of the law firms issuing the Local Counsel
Opinions all of the existing marketing materials and disclosure statements in
connection with the respective Resort. Moreover, no other marketing materials
and disclosure statements exist except for those provided to the respective law
firm issuing the Local Counsel Opinion.
(xxi)Local Counsel Opinions. The facts regarding it, the Resorts, the Timeshare
Loans and related matters set forth or assumed in the Local Counsel Opinions are
true and correct in all material respects.
(xxii)Bankruptcy Opinion. The facts regarding it, the Purchaser, the Resorts,
the Timeshare Loans and related matters set forth or assumed in the opinion
issued by Kramer Levin Naftalis & Frankel LLP dated December 27, 2010 pertaining
to bankruptcy law matters are, and shall continue to be so long as the
Securitization Notes are outstanding, true and correct in all material respects.
(xxiii)Custodial Files. It shall, on or prior to each Transfer Date, have
delivered or caused the delivery to the Securitization Custodian a Timeshare
Loan File for each Timeshare Loan, which Timeshare Loan File shall be complete
and verified by the Securitization Custodian in accordance with the Custodial
Agreement.
(xxiv)Escrow Documents. It shall, on or prior to the ninetieth day following the
Closing Date and each Transfer Date, as applicable, deliver or cause the
delivery to the Securitization Custodian of the following: (I) with respect to
each Mortgage Loan and pre-July 2004 Oak N' Spruce Loan listed on the Schedule
of Prior Secured Party's Collateral provided by the Seller, an original recorded
Reassignment of Mortgage (which may be a part of a blanket reassignment of more
than one Mortgage Loan or pre-July 2004 Oak N' Spruce Loan), showing a complete
chain of title from the Prior Secured Party to Seller to the Securitization
Indenture Trustee on behalf of the Securitization Noteholders signed by an
Authorized Officer of the Seller, Purchaser and each intervening party with
evidence of proper recordation or evidence from a third party that submitted
such assignment for recording that such assignment has been submitted for
recordation, (II)(a) with respect to each pre-July 2004 Oak N' Spruce Loan
listed on the Schedule of Prior Secured Party's Collateral provided by the
Seller, a file-stamped Oak N' Spruce Financing Statement Amendment evidencing
the security interest of the Securitization Indenture Trustee and its assigns by
naming the Obligor with respect to the related pre-July 2004 Oak N' Spruce Loan
as debtor, the Securitization Indenture Trustee on behalf of the Securitization
Noteholders as the secured party/assignee, and “Wells Fargo Bank, National
Association as Trustee for UBS Real Estate Securities Inc., as Noteholder,” as
the assignor, and (b) with respect to each post-July 2004 Oak N' Spruce Loan
listed on the Schedule of Prior Secured Party's Oak N' Spruce Loans provided by
the Seller, a file-stamped Oak N' Spruce Financing Statement Amendment
evidencing the security interest of the Securitization Indenture Trustee and its
assigns by naming the Obligor with respect to the related post-July 2004 Oak N'
Spruce Loan as debtor, the Securitization Indenture Trustee on behalf of the
Securitization Noteholders as the secured party/assignee, and “Wells Fargo Bank,
National Association as Trustee for UBS Real Estate Securities Inc., as
Noteholder,” as the assignor (or, in the alternative, such Oak N' Spruce
Financing Statement Amendment may be in the form of an electronic spreadsheet
submitted to the Custodian directly by a third party service company listing the
filing number, date of filing, debtor and secured party and accompanied by a
certification of filing by the third party service company), and (III) all other
recorded and/or filed documents provided under the Escrow Agreement.
(xxv)Prior Secured Parties' Documents. In accordance with the Escrow Agreement,
it shall deliver or cause the delivery to the Escrow Agent of the Paydown
Letters, Direction Letters, Prior Secured Party Allonges and any other documents
required in respect of the Seller.
(xxvi)Title Policies. In accordance with the Escrow Agreement, it shall deliver
or cause the delivery of the Title Policies (as defined in the Escrow Agreement)
within 90 days of the Closing Date and each Transfer Date, as applicable.
(c)The Servicer hereby makes the representations and warranties relating to the
Timeshare Loans contained in Schedule I hereto for the benefit of the Purchaser
and its assignees as of the Closing Date (with respect to each Timeshare Loan
transferred on the Closing Date) and as of each Transfer Date (with respect to
each Qualified Substitute Timeshare Loan transferred on such Transfer Date), as
applicable.
(d)It is understood and agreed that the representations, warranties and
covenants set forth in this Section 5 shall survive the (i) transfer of each
Timeshare Loan to the Purchaser and (ii) the subsequent pledge of such Timeshare
Loans and rights and remedies hereunder to the Securitization Indenture Trustee
on behalf of the Securitization Noteholders and shall continue so long as any
such Timeshare Loans shall remain outstanding or until such time as such
Timeshare Loans are repurchased, purchased or a Qualified Substitute Timeshare
Loan is provided pursuant to Section 6 hereof. Each of the Seller and the
Servicer acknowledges that it has been advised that the Purchaser intends to
pledge, transfer, assign and convey all of its right, title and interest in and
to each Timeshare Loan and its rights and remedies under this Agreement to the
Securitization Indenture Trustee on behalf of the Securitization Noteholders.
The Seller and the Servicer agree that, upon any such assignment, the
Securitization Indenture Trustee may enforce directly, without joinder of the
Purchaser (but subject to any defense that Seller or the Servicer, as
applicable, may have under this Agreement) all rights and remedies hereunder.
(e)With respect to any representations and warranties contained in Section 5
which are made to the Servicer's Knowledge, if it is discovered that any
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of a Timeshare Loan or the interests of the
Purchaser or any subsequent assignee thereof, then notwithstanding such lack of
Knowledge of the accuracy of such representation and warranty at the time such
representation or warranty was made (without regard to any Knowledge
qualifiers), such inaccuracy shall be deemed a breach of such representation or
warranty for purposes of the repurchase or substitution obligations described in
Sections 6(a)(i) or (ii) below.
SECTION 6.Repurchases and Substitutions.
(a)Mandatory Repurchases and Substitutions for Breaches of Representations and
Warranties. Upon the receipt of notice by the Servicer of a breach of any of its
respective representations and warranties (as of the date on which such
representation or warranty was made) or covenants in Section 5 which materially
and adversely affects the value of a Timeshare Loan or the interests of the
Purchaser or any subsequent assignee of the Purchaser therein, the Servicer
shall, within 60 days of receipt of such notice, cure in all material respects
the circumstance or condition which has caused such representation or warranty
to be incorrect or covenant to be breached or either (i) repurchase the
Purchaser's or its assignee's interest in such related defective Timeshare Loan
(the “Defective Timeshare Loan”) from the Purchaser or its assignee at the
Repurchase Price or (ii) provide one or more Qualified Substitute Timeshare
Loans and pay the related Substitution Shortfall Amounts, if any.
(b)Payment of Repurchase Prices and Substitution Shortfall Amounts. The
Purchaser hereby directs and the Servicer hereby agrees to remit or cause to be
remitted all amounts in respect of Repurchase Prices and Substitution Shortfall
Amounts payable during the related Due Period in immediately available funds to
the Securitization Indenture Trustee to be deposited in the Collection Account
on the related Transfer Date in accordance with the provisions of the
Securitization Indenture. In the event that more than one Timeshare Loan is
substituted pursuant to Section 6(a) hereof on any Transfer Date, the
Substitution Shortfall Amounts and the Loan Balances of Qualified Substitute
Timeshare Loans shall be calculated on an aggregate basis for all substitutions
made on such Transfer Date.
(c)Schedule of Timeshare Loans. The Purchaser hereby directs and the Servicer
hereby agrees, on each date on which a Timeshare Loan has been repurchased or
substituted to provide the Purchaser and the Securitization Indenture Trustee
with an electronic supplement to Schedule III hereto and the Schedule of
Timeshare Loans reflecting the removal or substitution of such Timeshare Loans
and subjecting any Qualified Substitute Timeshare Loans to the provisions of
this Agreement.
(d)Qualified Substitute Timeshare Loans. On the related Transfer Date, the
Purchaser hereby directs and the Servicer hereby agrees to deliver or to cause
the delivery of the Timeshare Loan Files of the related Qualified Substitute
Timeshare Loans to the Securitization Indenture Trustee or to the Securitization
Custodian, at the direction of the Securitization Indenture Trustee, on the
related Transfer Date in accordance with the provisions of the Securitization
Indenture. As of such related Transfer Date, the Servicer does hereby transfer,
assign, sell and grant to the Purchaser, without recourse (except as provided in
Section 6 and Section 8 hereof), any and all of the Servicer's right, title and
interest in and to (i) each Qualified Substitute Timeshare Loan conveyed to the
Purchaser on such Transfer Date, (ii) the Receivables in respect of the
Qualified Substitute Timeshare Loans due after the related Cut-Off Date, (iii)
the related Timeshare Loan Documents (excluding any rights as developer or
declarant under the Timeshare Declaration, the Timeshare Program Consumer
Documents or the Timeshare Program Governing Documents), (iv) all Related
Security in respect of such Qualified Substitute Timeshare Loans, and (v) all
income, payments, proceeds and other benefits and rights related to any of the
foregoing. Upon such sale, the ownership of each Qualified Substitute Timeshare
Loan and all collections allocable to principal and interest thereon since the
related Cut-Off Date and all other property interests or rights conveyed
pursuant to and referenced in this Section 6(d) shall immediately vest in the
Purchaser, its successors and assigns. The Servicer shall not take any action
inconsistent with such ownership nor claim any ownership interest in any
Qualified Substitute Timeshare Loan for any purpose whatsoever other than
consolidated financial and federal and state income tax reporting. The Servicer
agrees that such Qualified Substitute Timeshare Loans shall be subject to the
provisions of this Agreement.
(e)Officer's Certificate. The Servicer shall, on each related Transfer Date,
certify in writing to the Purchaser and the Securitization Indenture Trustee
that each new Timeshare Loan meets all the criteria of the definition of
“Qualified Substitute Timeshare Loan” and that (i) the Timeshare Loan Files for
such Qualified Substitute Timeshare Loans have been delivered to the
Securitization Custodian, and (ii) the Timeshare Loan Servicing Files for such
Qualified Substitute Timeshare Loans have been delivered to the Servicer.
(f)Release. In connection with any repurchase or substitution of one or more
Timeshare Loans contemplated by this Section 6, upon satisfaction of the
conditions contained in this Section 6, the Purchaser and the Securitization
Indenture Trustee shall execute and deliver or shall cause the execution and
delivery of such releases and instruments of transfer or assignment presented to
it by the Servicer, in each case, without recourse, as shall be necessary to
vest in the Servicer or its designee (or to evidence the vesting in such Person
of) the legal and beneficial ownership of such released Timeshare Loans. The
Purchaser shall cause the Securitization Indenture Trustee to cause the
Securitization Custodian to release the related Timeshare Loan Files to Servicer
or its designee and the Servicer to release the related Timeshare Loan Servicing
Files to itself or its designee.
(g)Sole Remedy. It is understood and agreed that the obligations of the Servicer
contained in Section 6(a) to cure a material breach, or to repurchase or
substitute related Defective Timeshare Loans and the obligation of the Servicer
to indemnify pursuant to Section 8 shall constitute the sole remedies available
to the Purchaser or its subsequent assignees for the breaches of any of its
representations or warranties of the Servicer contained in Section 5, and such
remedies are not intended to and do not constitute “credit recourse” to the
Servicer.
SECTION 7.Additional Covenants of the Seller and the Servicer.
(a)The Seller hereby covenants and agrees with the Purchaser as follows:
(i)It shall comply with all applicable laws, rules, regulations and orders
applicable to it and its business and properties except where the failure to
comply will not have a material adverse effect on its business or its ability to
perform its obligations under this Agreement or any other Transaction Document
to which it is a party or under the transactions contemplated hereunder or
thereunder or the validity or enforceability of the Timeshare Loans.
(ii)It shall preserve and maintain for itself its existence (limited liability
or otherwise), rights, franchises and privileges in the jurisdiction of its
organization and except where the failure to so preserve and maintain will not
have a material adverse effect on its business or its ability to perform its
obligations under this Agreement or any other Transaction Document to which it
is a party or under the transactions contemplated hereunder or thereunder or the
validity of enforceability of the Timeshare Loans.
(iii)On or prior to the Closing Date, it shall indicate in its and any
applicable Affiliate's computer files and other records that each Timeshare Loan
has been sold to the Purchaser.
(iv)It shall respond to any inquiries with respect to ownership of a Timeshare
Loan by stating that such Timeshare Loan has been sold to the Purchaser and that
the Purchaser is the owner of such Timeshare Loan.
(v)On or prior to the Closing Date, it shall file or cause to be filed, at its
expense, financing statements in favor of the Purchaser and the Securitization
Indenture Trustee on behalf of the Securitization Noteholders, with respect to
the Timeshare Loans transferred hereunder, in the form and manner reasonably
requested by the Purchaser. It shall deliver file-stamped copies of such
financing statements to the Purchaser and the Securitization Indenture Trustee
on behalf of the Securitization Noteholders.
(vi)It agrees from time to time, at its expense, promptly to execute and deliver
all further instruments and documents, and to take all further actions, that may
be necessary, or that the Purchaser or the Securitization Indenture Trustee may
reasonably request, to perfect, protect or more fully evidence the sale of the
Timeshare Loans, or to enable the Purchaser or the Securitization Indenture
Trustee to exercise and enforce its rights and remedies hereunder or under any
Timeshare Loan including, but not limited to, powers of attorney, UCC financing
statements and assignments of mortgage.
(vii)Any change in its legal name and any use by it of any tradename, fictitious
name, assumed name or “doing business as” name occurring after the Closing Date
shall be promptly disclosed to the Purchaser and the Securitization Indenture
Trustee in writing.
(viii)Upon the discovery or receipt of notice by a Responsible Officer of it of
a breach of any of its representations or warranties and covenants contained
herein, it shall promptly disclose to the Purchaser and the Securitization
Indenture Trustee, in reasonable detail, the nature of such breach.
(ix)In the event that it shall receive any payments in respect of a Timeshare
Loan after the Closing Date or Transfer Date, as applicable (including any
insurance proceeds that are not payable to the related Obligor), it shall,
within two (2) Business Days of receipt, transfer or cause to be transferred,
such payments to the Lockbox Account.
(x)It will keep its principal place of business and chief executive office and
the office where it keeps its records concerning the Timeshare Loans at its
address listed herein.
(xi)In the event that it or the Purchaser or any assignee of the Purchaser
should receive actual notice of any transfer taxes arising out of the transfer,
assignment and conveyance of a Timeshare Loan from it to the Purchaser, on
written demand by the Purchaser, or upon it otherwise being given notice
thereof, it shall pay, and otherwise indemnify and hold the Purchaser, and any
subsequent assignee harmless, on an after-tax basis, from and against any and
all such transfer taxes.
(xii)It authorizes the Purchaser and the Securitization Indenture Trustee to
file continuation statements, and amendments thereto, relating to the Timeshare
Loans and all payments made with regard to the related Timeshare Loans without
its signature where permitted by law. A photocopy or other reproduction of this
Agreement shall be sufficient as a financing statement where permitted by law.
The Purchaser confirms that it is not its present intention to file a photocopy
or other reproduction of this Agreement as a financing statement, but reserves
the right to do so if, in its good faith determination, there is at such time no
reasonable alternative remaining to it.
(xiii)It shall not prepare any financial statements or other statements
(including any tax filings) which shall account for the transactions
contemplated by this Agreement in any manner other than as the sale of the
Timeshare Loans, Timeshare Properties, Related Security and other conveyed
property related thereto and additional collateral by the Seller to the
Purchaser.
(b)The Servicer hereby covenants and agrees with the Purchaser as follows:
(i)It shall comply with all applicable laws, rules, regulations and orders
applicable to it and its business and properties except where the failure to
comply will not have a material adverse effect on its business or its ability to
perform its obligations under this Agreement or any other Transaction Document
to which it is a party or under the transactions contemplated hereunder or
thereunder or the validity or enforceability of the Timeshare Loans.
(ii)It shall preserve and maintain for itself its existence (corporate or
otherwise), rights, franchises and privileges in the jurisdiction of its
organization and except where the failure to so preserve and maintain will not
have a material adverse effect on its business or its ability to perform its
obligations under this Agreement or any other Transaction Document to which it
is a party or under the transactions contemplated hereunder or thereunder or the
validity of enforceability of the Timeshare Loans.
(iii)On or prior to the Closing Date or a Transfer Date, as applicable, it shall
indicate in its and any applicable Affiliate's computer files and other records
that each Timeshare Loan has been sold to the Purchaser.
(iv)It shall respond to any inquiries with respect to ownership of a Timeshare
Loan by stating that such Timeshare Loan has been sold to the Purchaser and that
the Purchaser is the owner of such Timeshare Loan.
(v)It agrees from time to time, at its expense, promptly to execute and deliver
all further instruments and documents, and to take all further actions, that may
be necessary, or that the Purchaser or the Securitization Indenture Trustee may
reasonably request, to perfect, protect or more fully evidence the sale of the
Timeshare Loans, or to enable the Purchaser or the Securitization Indenture
Trustee to exercise and enforce its rights and remedies hereunder or under any
Timeshare Loan including, but not limited to, powers of attorney, UCC financing
statements and assignments of mortgage.
(vi)Upon the discovery or receipt of notice by a Responsible Officer of it of a
breach of any of its representations or warranties and covenants contained
herein, it shall promptly disclose to the Purchaser and the Securitization
Indenture Trustee, in reasonable detail, the nature of such breach.
(vii)In the event that it shall receive any payments in respect of a Timeshare
Loan after the Closing Date or Transfer Date, as applicable (including any
insurance proceeds that are not payable to the related Obligor), it shall,
within two (2) Business Days of receipt, transfer or cause to be transferred,
such payments to the Lockbox Account.
(viii)In the event that it or the Purchaser or any assignee of the Purchaser
should receive actual notice of any transfer taxes arising out of the transfer,
assignment and conveyance of a Timeshare Loan from it to the Purchaser, on
written demand by the Purchaser, or upon it otherwise being given notice
thereof, it shall pay, and otherwise indemnify and hold the Purchaser, and any
subsequent assignee harmless, on an after-tax basis, from and against any and
all such transfer taxes.
(ix)It authorizes the Purchaser and the Securitization Indenture Trustee to file
continuation statements, and amendments thereto, relating to the Timeshare Loans
and all payments made with regard to the related Timeshare Loans without its
signature where permitted by law. A photocopy or other reproduction of this
Agreement shall be sufficient as a financing statement where permitted by law.
The Purchaser confirms that it is not its present intention to file a photocopy
or other reproduction of this Agreement as a financing statement, but reserves
the right to do so if, in its good faith determination, there is at such time no
reasonable alternative remaining to it.
(x)It shall not prepare any financial statements or other statements (including
any tax filings) which shall account for the transactions contemplated by this
Agreement in any manner other than as the sale of the Timeshare Loans, Timeshare
Properties, Related Security and other conveyed property related thereto and
additional collateral by the Seller to the Purchaser and the substitution of the
Qualified Substitute Timeshare Loans by it.
SECTION 8.Indemnification.
(a)(i)    The Seller hereby agrees to indemnify the Purchaser, the
Securitization Indenture Trustee, the Securitization Noteholders and the Initial
Purchaser (collectively, the “Indemnified Parties”) against any and all claims,
losses or liabilities (including reasonable legal fees and related costs) that
the Purchaser, the Securitization Indenture Trustee, the Securitization
Noteholders or the Initial Purchaser may sustain directly related to any breach
of the representations and warranties and covenants of the Seller under Section
5 hereof (the “Seller Indemnified Amounts”) excluding, however (A) Seller
Indemnified Amounts to the extent resulting from the gross negligence or willful
misconduct on the part of such Indemnified Party; (B) any recourse for any
uncollectible Timeshare Loan not related to a breach of representation or
warranty; or (C) income or similar taxes by such Indemnified Party arising out
of or as a result of this Agreement or the transfer of the Timeshare Loans.
(i)The Servicer hereby agrees to indemnify the Indemnified Parties against any
and all claims, losses or liabilities (including reasonable legal fees and
related costs) that the Purchaser, the Securitization Indenture Trustee, the
Securitization Noteholders or the Initial Purchaser may sustain directly related
to any breach of the representations and warranties and covenants of the
Servicer under Section 5 hereof (the “Servicer Indemnified Amounts”) excluding,
however (A) Servicer Indemnified Amounts to the extent resulting from the gross
negligence or willful misconduct on the part of such Indemnified Party; (B) any
recourse for any uncollectible Timeshare Loan not related to a breach of
representation or warranty; (C) recourse to the Servicer for a related Defective
Timeshare Loan so long as the same is cured, substituted or repurchased pursuant
to Section 6 hereof; or (D) income or similar taxes by such Indemnified Party
arising out of or as a result of this Agreement or the transfer of the Timeshare
Loans.
(ii)The parties hereto shall (A) promptly notify the other parties hereto, the
Securitization Indenture Trustee, and the Initial Purchaser if a claim is made
by a third party with respect to this Agreement or the Timeshare Loans, and
relating to (1) the failure by the Seller or the Servicer, as applicable, to
perform its duties in accordance with the terms of this Agreement or (2) a
breach of the Seller's or the Servicer's representations, covenants or
warranties contained in this Agreement, (B) assume (with the consent of the
Purchaser, the Securitization Indenture Trustee, the Securitization Noteholders
or the Initial Purchaser, as applicable, which consent shall not be unreasonably
withheld) the defense of any such claim and pay all expenses in connection
therewith, including legal counsel fees and (C) promptly pay, discharge and
satisfy any judgment, order or decree which may be entered against it or the
Purchaser, the Securitization Indenture Trustee, the Securitization Noteholders
or the Initial Purchaser in respect of such claim. If the Seller or the Servicer
shall have made any indemnity payment pursuant to this Section 8 and the
recipient thereafter collects from another Person any amount relating to the
matters covered by the foregoing indemnity, the recipient shall promptly repay
such amount to the Seller or the Servicer, as applicable.
(iii)The obligations of each of the Seller and the Servicer under this Section 8
to indemnify the Purchaser, the Securitization Indenture Trustee, the
Securitization Noteholders and the Initial Purchaser shall survive the
termination of this Agreement and continue until the Notes are paid in full or
otherwise released or discharged.
SECTION 9.No Proceedings. Each of the Seller and Servicer hereby agrees that it
will not, directly or indirectly, institute, or cause to be instituted, or join
any Person in instituting, against the Purchaser or any Association, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law so
long as there shall not have elapsed one year plus one day since the latest
maturing Securitization Notes issued by the Purchaser. The Purchaser hereby
agrees that it will not, directly or indirectly, institute, or cause to be
instituted, or join any Person in instituting, against the Seller any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law so
long as there shall not have elapsed one year plus one day since the latest
maturing Securitization Notes issued by the Purchaser.
SECTION 10.Notices, Etc. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing and mailed or
sent by confirmable electronic means, or delivered as to each party hereto, at
its address set forth below or at such other address as shall be designated by
such party in a written notice to the other parties hereto. All such notices and
communications shall not be effective until received by the party to whom such
notice or communication is addressed.
Seller
Silverleaf Finance IV, LLC
1221 Riverbend Drive, Suite 274
Dallas, Texas 75247
Attention: Harry J. White, Jr., Chief Financial Officer
Facsimile No.: 214-631-4981
Servicer
Silverleaf Resorts, Inc.
1221 Riverbend Drive, Suite 120
Dallas, Texas 75247
Attention: Robert E. Mead, Chief Executive Officer
Facsimile No.: 214-905-0519
Purchaser
Silverleaf Finance VIII, LLC
1221 Riverbend Drive, Suite 262
Dallas, Texas 75247
Attention: Harry J. White, Jr., Chief Financial Officer
Facsimile No.: 214-631-4981
 
SECTION 11.No Waiver; Remedies. No failure on the part of the Purchaser, the
Securitization Indenture Trustee or any assignee thereof to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any other remedies provided
by law.
SECTION 12.Binding Effect; Assignability. This Agreement shall be binding upon
and inure to the benefit of the Seller, the Servicer, the Purchaser and their
respective successors and assigns. Any assignee shall be an express third party
beneficiary of this Agreement, entitled to directly enforce this Agreement. Each
of the Seller and the Servicer may not assign any of its rights and obligations
hereunder or any interest herein without the prior written consent of the
Purchaser and any assignee thereof. The Purchaser may, and intends to, assign
all of its rights to the Securitization Indenture Trustee on behalf of the
Securitization Noteholders, and each of the Seller and the Servicer consents to
any such assignments. This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until its termination; provided, however, that the
rights and remedies with respect to any breach of any representation and
warranty made by the Seller or the Servicer pursuant to Section 5, and the cure,
repurchase or substitution and indemnification obligations shall be continuing
and shall survive any termination of this Agreement and the resignation or
termination of the Servicer pursuant to the Securitization Indenture, but such
rights and remedies may be enforced only by the Purchaser and the Securitization
Indenture Trustee.
SECTION 13.Amendments; Consents and Waivers. No modification, amendment or
waiver of, or with respect to, any provision of this Agreement, and all other
agreements, instruments and documents delivered thereto, nor consent to any
departure by the Seller or the Servicer from any of the terms or conditions
thereof shall be effective unless it shall be in writing and signed by each of
the parties hereto, the written consent of the Securitization Indenture Trustee
on behalf of the Securitization Noteholders is given and confirmation from the
Rating Agency that such action will not result in a downgrade, withdrawal or
qualification of any rating assigned to a Class of Notes is received. The
Purchaser shall provide or cause to be provided to the Securitization Indenture
Trustee and the Rating Agency any such proposed modifications, amendments or
waivers. Any waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No consent to or demand by the Seller or
Servicer in any case shall, in itself, entitle it to any other consent or
further notice or demand in similar or other circumstances. Each of the Seller
and the Servicer acknowledges that in connection with the intended assignment by
the Purchaser of all of its right, title and interest in and to each Timeshare
Loan to the Securitization Indenture Trustee on behalf of the Securitization
Noteholders, the Purchaser intends to issue the Notes, the proceeds of which
will be used by the Purchaser, in part, to purchase the Timeshare Loans
hereunder. The parties hereto agree that all communications, reports, notices
and any other item sent to the Rating Agency pursuant to this Agreement shall
simultaneously be e-mailed to SFVIII@structuredfn.com.
SECTION 14.Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation, shall not in any way be
affected or impaired thereby in any other jurisdiction. Without limiting the
generality of the foregoing, in the event that a Governmental Authority
determines that the Purchaser may not purchase or acquire Timeshare Loans, the
transactions evidenced hereby shall constitute a loan and not a purchase and
sale, notwithstanding the otherwise applicable intent of the parties hereto, and
the Seller shall be deemed to have granted to the Purchaser as of the date
hereof, a first priority perfected security interest in all of the Seller's
right, title and interest in, to and under such Timeshare Loans and the related
property as described in Section 2 hereof.
SECTION 15.GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
(A)THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF
LAW OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK.
(B)THE PARTIES TO THIS AGREEMENT HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT
LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY AND EACH WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH ON THE
SIGNATURE PAGE HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE
DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE
PREPAID. THE PARTIES HERETO EACH WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 15 SHALL AFFECT THE RIGHT OF
THE PARTIES TO THIS AGREEMENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY OF THEM TO BRING ANY ACTION OR
PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(C)THE SELLER, SERVICER AND PURCHASER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY
OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY
FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD
TO THIS AGREEMENT. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY THE SELLER, SERVICER AND PURCHASER AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO TRIAL BY JURY
WOULD OTHERWISE ACCRUE OR EXIST. THE SELLER, SERVICER AND PURCHASER ARE HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY THE SELLER, SERVICER AND PURCHASER.
SECTION 16.Heading. The headings herein are for purposes of reference only and
shall not otherwise affect the meaning or interpretation of any provision
hereof.
SECTION 17.Execution in Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and both of which when taken together shall constitute
one and the same agreement. Delivery of an executed counterpart of this
Agreement by facsimile or other electronic transmission (i.e., “pdf” or “tif”)
shall be effective as delivery of a manually executed counterpart hereof.
[Remainder of Page Intentionally Left Blank]
 
 

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duty authorized, as of the date first above
written.
Very truly yours,
 
SILVERLEAF FINANCE IV, LLC, as Seller
 
By:
/S/ HARRY J. WHITE, JR.
Name:
Harry J. White, Jr.
Title:
Vice President, Treasurer & Chief Financial Officer
 
 
SILVERLEAF FINANCE VIII, LLC, as Purchaser
 
 
By:
/S/ HARRY J. WHITE, JR.
Name:
Harry J. White, Jr.
Title:
Vice President, Treasurer & Chief Financial Officer
 
 
SILVERLEAF RESORTS, INC., as Servicer
 
 
By:
/S/ HARRY J. WHITE, JR.
Name:
Harry J. White, Jr.
Title:
Chief Financial Officer