exv10w3






Exhibit 10.3



 EXECUTION COPY


TRANSFER AGREEMENT




between




SILVERLEAF RESORTS, INC.




AND




SILVERLEAF FINANCE VI, LLC




DATED AS OF JUNE 1, 2008





 









 








TRANSFER AGREEMENT




     This TRANSFER AGREEMENT (this “Agreement”), dated as of June 1, 2008, is between Silverleaf
Resorts, Inc., a Texas corporation (“Originator”) and Silverleaf Finance VI, LLC, a Delaware
limited liability company (the “Issuer”), and their respective permitted successors and assigns.



W I T N E S S E T H:




     WHEREAS, the Issuer has been established as a bankruptcy-remote entity for the purpose of
acquiring (i) a certain 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, (ii) 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 (the Mortgage Loans and Oak N’ Spruce
Loans, together, the “Timeshare Loans”), (iii) any Qualified Substitute Timeshare Loans and (iv)
all Related Security in respect of the Timeshare Loans and Oak N’ Spruce Loans. A “Timeshare
Property” shall consist of (i) in the case of a Timeshare 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 Timeshare Loans, Timeshare Properties,
Mortgage Note, any Related Security and other conveyed property related thereto and additional
collateral, collectively, are the “Transferred Assets.”



     WHEREAS, on June 6, 2008 (the “Closing Date”) and on each Transfer Date, the Issuer intends to
pledge such Transferred Assets acquired thereby to Wells Fargo Bank National Association, as
indenture trustee (in such capacity, the “Securitization Indenture Trustee”), custodian (in such
capacity, the “Securitization Custodian”) and backup servicer, pursuant to an indenture, dated as
of June 1, 2008 (the “Securitization Indenture”), by and among the Issuer, Silverleaf Resorts,
Inc., in its capacity as servicer (the “Securitization Servicer”) and the Securitization Indenture
Trustee, to secure the Issuer’s (i) 6.222% Timeshare Loan-Backed Notes, Series 2008-A, Class A
Notes, (ii) 7.708% Timeshare Loan-Backed Notes, Series 2008-A, Class B Notes, (iii) 8.000%
Timeshare Loan-Backed Notes, Series 2008-A, Class C Notes, (iv) 8.000% Timeshare Loan-Backed Notes,
Series 2008-A, Class D Notes, (v) 8.000% Timeshare Loan-Backed Notes, Series 2008-A, Class E Notes,
(vi) 8.000% Timeshare Loan-Backed Notes, Series 2008-A, Class F Notes, and (vii) 8.000% Timeshare
Loan-Backed Notes, Series 2008-A, Class G Notes (collectively, the “Securitization Notes”);



     WHEREAS, proceeds from the sale of the Securitization Notes will be used by the Issuer, in
part, to (i) pay the Originator the purchase price for the Timeshare Loans and (ii) pay certain
expenses incurred in connection with the issuance of the Securitization Notes.



     WHEREAS, the Originator will derive an economic benefit from the transfer hereunder of the
Timeshare Loans to the Issuer.



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     NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for other
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto covenant and agree as follows:



     SECTION 1. Definitions; Interpretation. Capitalized terms used herein but not defined
herein shall have the respective meanings specified in “Standard Definitions” attached hereto as
Annex A.



     SECTION 2. Acquisition of Timeshare Loans.



          (a) Initial Timeshare Loans.





     (i) Effective as of the Closing Date, but subject to the terms and conditions
of this Agreement (including, without limitation, subsection (f) below), the
Originator hereby sells (“Sells,” “Sale” or “Sold”) or contributes (“Contribute” or
“Contribution”) (in each case to the extent described in subsection (f)
below) and otherwise transfers, assigns, and conveys to the Issuer, without recourse
(except for Defective Timeshare Loans to the extent specifically provided herein),
and the Issuer hereby agrees to purchase or accept a contribution of (in each case
to the extent described in subsection (f) below) and otherwise acquires, all
right, title and interest of the Originator in and to the Timeshare Loans included
on the schedule delivered to the Issuer on the Closing Date (as further described in
subsection (g) below), together with the Timeshare Properties, Related
Security and other conveyed property related thereto. In connection with the
initial transfer, Originator shall transfer, or cause the deposit, into the Lockbox
Account of all amounts received by the Originator on account of such Timeshare
Loans, Timeshare Properties, Related Security and other conveyed property related
thereto and additional collateral hereunder due on and after the Initial Cut-Off
Date within two (2) Business Days of the receipt thereof.




     (ii) The Originator hereby acknowledges that each sale, contribution and
conveyance to the Issuer hereunder is absolute and irrevocable, without reservation
or retention of any interest whatsoever by the Originator.



          (b) Reserved.




          (c) Delivery of Timeshare Loan Documents. In connection with the sale, transfer,
contribution, assignment and conveyance of any Timeshare Loans hereunder, the Issuer hereby directs
the Originator and the Originator hereby agrees to deliver or cause to be delivered to the
Securitization Custodian, all related Timeshare Loan Files and to the Securitization Servicer all
related Timeshare Loan Servicing Files.




          (d) Collections. The Originator shall deposit or cause to be deposited all
collections in respect of the Timeshare Loans received by the Originator or any of its Affiliates
on and after the related Cut-Off Date in the Lockbox Account.




          (e) Limitation of Liability. None of the Issuer or any subsequent assignee of the
Issuer shall have any obligation or liability with respect to any Timeshare Loan nor shall the




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Issuer or any subsequent assignee have any liability to any Obligor in respect of any
Timeshare Loan. No such obligation or liability is intended to be assumed by the Issuer, the
Originator or any subsequent assignee herewith and any such liability is hereby expressly
disclaimed.




          (f) Purchase Price/Capital Contribution. The price paid for Timeshare Loans,
Timeshare Properties, Related Security and other conveyed property related thereto and additional
collateral which are Sold hereunder shall be the Timeshare Loan Acquisition Price with respect
thereto. Such Timeshare Loan Acquisition Price shall be paid by means of an immediate cash payment
to the Originator by wire transfer on the applicable conveyance date to an account designated by
the Originator on or before such conveyance date or by means of proper accounting entries being
entered upon the accounts and records of the Originator and the Issuer on the applicable conveyance
date. To the extent that the cash amount received for any Timeshare Loans, Timeshare Properties,
Related Security and other conveyed property related thereto and additional collateral Sold by the
Originator to the Issuer hereunder is less than the Timeshare Loan Acquisition Price of such
property at the time of the applicable Sale, the shortfall shall be deemed to have been Contributed
by the Originator to the capital of the Issuer on the applicable conveyance date.




          (g) Schedule of Timeshare Loans. Upon the Originator’s Sale or Contribution of the
Timeshare Loans, Timeshare Properties, Related Security and other conveyed property related thereto
and additional collateral to the Issuer, the Originator shall deliver a Schedule of Timeshare
Loans, Timeshare Properties, Related Security and other conveyed property related thereto and
additional collateral, 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 3. Intended Characterization, Grant of Security Interest. It is the intention
of the parties hereto that the transfers of Timeshare Loans to be made pursuant to the terms hereof
shall constitute a sale and/or contribution and an absolute assignment by the Originator to the
Issuer and not a loan secured by the Timeshare Loans. In the event, however, that a court of
competent jurisdiction were to hold that any such transfer constitutes a loan and not a sale and/or
contribution, it is the intention of the parties hereto that the Originator shall be deemed to have
granted and does hereby grant to the Issuer as of the date hereof a first priority perfected
security interest in all of Originator’s right, title and interest in, to and under the Transferred
Assets specified in Section 2 hereof and that with respect to such conveyance, this Agreement shall
constitute a security agreement under applicable law. In the event of the characterization of any
such transfer as a loan, the amount of interest payable or paid with respect to such loan under the
terms of this Agreement shall be limited to an amount which shall not exceed the maximum
non-usurious rate of interest allowed by the applicable state law or any applicable law of the
United States permitting a higher maximum non-usurious rate that preempts such applicable state
law, which could lawfully be contracted for, charged or received (the “Highest Lawful Rate”). In
the event any payment of interest on any such loan exceeds the Highest Lawful Rate, the parties
hereto stipulate that (a) to the extent possible given the term of such loan, such excess amount
previously paid or to be paid with respect to such loan be applied to reduce the principal balance
of such loan, and the provisions thereof immediately be deemed reformed and the amounts thereafter
collectible thereunder reduced, without the necessity of the execution of any new document, so as
to comply with the then applicable law, but so as to permit the recovery of the fullest amount
otherwise called for thereunder and (b) to the extent that the reduction of the



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principal balance of, and the amounts collectible under, such loan and the reformation of the
provisions thereof described in the immediately preceding clause (a) is not possible given the term
of such loan, such excess amount will be deemed to have been paid with respect to such loan as a
result of an error and upon discovery of such error or upon notice thereof by any party hereto such
amount shall be refunded by the recipient thereof.



          The characterization of the Originator as “debtor” and the Issuer as “secured party” in any
financing statement required hereunder is solely for protective purposes and shall in no way be
construed as being contrary to the intent of the parties that this transaction be treated as a sale
and/or contribution to the Issuer of such Originator’s entire right, title and interest in and to
the Transferred Assets.




          Each of the Originator, the Issuer and any of their Affiliates hereby agrees to make the
appropriate entries in its general accounting records and to indicate that the Timeshare Loans have
been transferred to the Issuer.




     SECTION 4. Conditions Precedent to Acquisition of Timeshare Loans by the Issuer. The
obligations of the Issuer to purchase any Timeshare Loans hereunder shall be subject to the
satisfaction of the following conditions:



          (a) All representations and warranties of Originator contained in Section 5 and in
Schedule I hereof, and all information provided in the Schedule of Timeshare Loans related
thereto shall be true and correct as of the Closing Date or the Transfer Date, as applicable, and
Originator shall have delivered to the Issuer, the Securitization Indenture Trustee and UBS
Securities LLC (the “Initial Purchaser”) an officer’s certificate (the “Officer’s Certificate”) to
such effect.




          (b) On or prior to the Closing Date or a Transfer Date, as applicable, the Originator shall
have delivered or shall have caused the delivery of (i) the related Timeshare Loan Files to the
Securitization Custodian and the Securitization Custodian shall have delivered a receipt therefore
pursuant to the Custodial Agreement, (ii) the Timeshare Loan Servicing Files to the Securitization
Servicer, and (iii) all documents and certifications required pursuant to the terms of the
Custodial Agreement and the Escrow and Closing Agreement.




          (c) The Originator shall have delivered or shall have caused to be delivered all other
information theretofore required or reasonably requested by the Issuer to be delivered by the
Originator or performed or caused to be performed all other obligations required to be performed as
of the Closing Date or Transfer Date, as the case may be, including all filings, recordings and/or
registrations as may be necessary in the reasonable opinion of the Issuer or the Securitization
Indenture Trustee to establish and preserve the right, title and interest of the Issuer or the
Securitization Indenture Trustee, as the case may be, in the related Timeshare Loans.




          (d) On or before the Closing Date, the Issuer, the Securitization Servicer, the Backup
Servicer and the Securitization Indenture Trustee shall have entered into the Securitization
Indenture.




          (e) The Securitization Notes shall be issued and sold on the Closing Date, and the Issuer
shall receive the full consideration due it upon the issuance of the Securitization Notes,




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and the Issuer shall have applied such consideration to the extent necessary, to pay that
certain price (the “Timeshare Loan Acquisition Price”) for each Timeshare Loan, except to the
extent that the Originator has made a Contribution to the Issuer pursuant to Section 2(f).




          (f) Each Timeshare Loan conveyed on a Transfer Date in accordance with Section 6(a) hereof
shall satisfy each of the criteria specified in the definition of “Qualified Substitute Timeshare
Loan” and each of the conditions herein and in the Securitization Indenture for substitution of
Timeshare Loans shall have been satisfied.




          (g) Reserved.




          (h) The Issuer shall have received such other certificates and opinions as it shall reasonably
request.




     SECTION 5. Representations and Warranties and Certain Covenants of Originator.



          (a) Originator represents and warrants to the Issuer and the Securitization Indenture Trustee
for the benefit of the Securitization Noteholders, as of the Closing Date (with respect to the
Timeshare Loans transferred on the Closing Date) as follows:





     (i) Due Incorporation; Valid Existence; Good Standing. It is a
corporation duly organized and validly existing in good standing under the laws of
the jurisdiction of its incorporation; and is duly qualified to do business as a
foreign corporation and in good standing under the laws of each jurisdiction where
the character of its property, the nature of its business or the performance of its
obligations under this Agreement makes such qualification necessary, except where
the failure to be so qualified will not have a material adverse effect on its
business or its ability to perform its obligations under this Agreement or any other
related documents (the “Transaction Documents”) to which it is a party or under the
transactions contemplated hereunder or thereunder or the validity or enforceability
of the Timeshare Loans.




     (ii) Possession of Licenses, Certificates, Franchises and Permits. It
holds all licenses, certificates, franchises and permits from all governmental
authorities necessary for the conduct of its business, except where the failure to
hold such licenses, certificates, franchises and permits would not materially and
adversely affect its ability to perform its obligations under this Agreement or any
other Transaction Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of the
Timeshare Loans, and has received no notice of proceedings relating to the
revocation of any such license, certificate, franchise or permit, which singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding, would
materially and adversely affect its ability to perform its obligations under this
Agreement or any other Transaction Document to which it is a party or under the
transactions contemplated hereunder or thereunder or the validity or enforceability
of the Timeshare Loans.



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     (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 Originator have been duly
authorized, executed and delivered by Originator and, assuming the due execution and
delivery by, the other party or parties hereto and thereto, constitute legal, valid
and binding agreements enforceable against Originator 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 Originator 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 Originator 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.



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     (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 Originator is required which has not been obtained in connection with the
authorization, execution, delivery or performance by Originator of this Agreement or
any of the other Transaction Documents to which Originator is a party or under the
transactions contemplated hereunder or thereunder, including, without limitation,
the transfer of the Timeshare Loans and the creation of the security interest of the
Issuer therein pursuant to Section 3 hereof.




     (vii) Defaults. It is not in default under any material agreement,
contract, instrument or indenture to which it is a party or by which it or its
properties is or are bound, or with respect to any order of any court,
administrative agency, arbitrator or governmental body, in each case, which would
have a material adverse effect on the transactions contemplated hereunder or on its
business, operations, financial condition or assets, and no event has occurred which
with notice or lapse of time or both would constitute such a default with respect to
any such agreement, contract, instrument or indenture, or with respect to any such
order of any court, administrative agency, arbitrator or governmental body.




     (viii) Insolvency. It is solvent and will not be rendered insolvent by
the transfer of Timeshare Loans hereunder. On and after the Closing Date, it will
not 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. Other than as described
in the Offering Circular, there is no pending or, to its Knowledge, threatened
action, suit, proceeding or investigation before any court, administrative agency,
arbitrator or governmental body against or affecting it which, if decided adversely,
would materially and adversely affect (A) its condition (financial or otherwise),
its business or operations, (B) its ability to perform its obligations under, or the
validity or enforceability of, this Agreement or any other documents or transactions
contemplated under this Agreement including, without limitation, its ability to
foreclose or otherwise enforce the Liens of the Timeshare Loans, or (C) any
Timeshare Loan or title of any Obligor to any related Timeshare Property.




     (x) Information. No document, certificate or report furnished or
required to be furnished by or on behalf of it pursuant to this Agreement or any
other Transaction Document, contains or will contain when furnished any untrue
statement of a material fact or fails or will fail to state a material fact
necessary in order to make the statements contained therein not misleading in light
of the circumstances in which it was made. There are no facts known to it which,
individually or in the aggregate, materially adversely affect, or which (aside from
general economic trends) may reasonably be expected to materially adversely affect
in the future, its financial condition or assets or business, or which may impair
its or the Originator’s ability to perform its respective obligations under



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this Agreement, which have not been disclosed herein or therein or in the
certificates and other documents furnished to the Issuer by or on its behalf
pursuant hereto or thereto specifically for use in connection with the transactions
contemplated hereby or thereby.




     (xi) Foreign Tax Liability. It is not aware of any Obligor under a
Timeshare Loan who has withheld any portion of payments due under such Timeshare
Loan because of the requirements of a foreign taxing authority, and no foreign
taxing authority has contacted it concerning a withholding or other foreign tax
liability.




     (xii) No Deficiency Accumulation. It 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.




     (xiii) Taxes. It has filed all tax returns (federal, state and local)
which it reasonably believes are required to be filed and has paid or made adequate
provision for the payment of all taxes, assessments and other governmental charges
due from it or is contesting any such tax, assessment or other governmental charge
in good faith through appropriate proceedings or except where the failure to file or
pay will not have a material adverse effect on the rights and interests of the
Issuer or any of its subsequent assignees. It knows of no basis for any material
additional tax assessment for any fiscal year for which adequate reserves have not
been established. It shall pay all such taxes, assessments and governmental charges
when due.




     (xiv) Place of Business. The principal place of business and chief
executive office where it keeps its records concerning the Timeshare Loans will be
1221 Riverbend Drive, Suite 120, Dallas, Texas 75247 (or such other place specified
by it by written notice to the Issuer and the Securitization Indenture Trustee). It
is a corporation formed under the laws of the State of Texas.




     (xv) Securities Laws. It is not an “investment company” or a company
“controlled” by an “investment company” within the meaning of the Investment Company
Act of 1940, as amended. No portion of the Timeshare Loan Acquisition Price for
each of the Timeshare Loans will be used by it or the Originator to acquire any
security in any transaction which is subject to Section 13 or Section 14 of the
Securities Exchange Act of 1934, as amended.




     (xvi) Oak N’ Spruce Loans. With respect to Timeshare Loans that are
Oak N’ Spruce Loans:




     (A) The Oak N’ Spruce Trust is a trust duly, formed, validly existing,
and in good standing under the laws of the Commonwealth of Massachusetts.
The Oak N’ Spruce Trust is authorized to transact business in no other
state;



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     (B) Silverleaf 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) Silverleaf holds all right, title and interest in and to all of the
Timeshare Properties related to the Oak N’ Spruce Loans solely for the
benefit of the beneficiaries referred to in, and subject in each case to the
provisions of, the Finance Agreement and the other documents and agreements
related thereto;




     (D) There are no actions, suits, proceedings, orders or injunctions
pending against the Oak N’ Spruce Trust or Oak N’ Spruce Trustee, at law or
in equity, or before or by any governmental authority which, if adversely
determined, could reasonably be expect to have a material adverse effect on
the Trust Estate or the Oak N’ Spruce Trustee’s ability to perform its
obligations under the Trust Documents;




     (E) Neither the Oak N’ Spruce Trust nor the Oak N’ Spruce Trustee has
incurred any indebtedness for borrowed money (directly, by guarantee, or
otherwise);




     (F) All ad valorem taxes and other taxes and assessments against the
Oak N’ Spruce Trust and/or its trust estate have been paid when due and
neither the Originator nor the Oak N’ Spruce Trustee knows of any basis for
any additional taxes or assessments against any such property. The Oak N’
Spruce Trust has filed all required tax returns and has paid all taxes shown
to be due and payable on such returns, including all taxes in respect of
sales of Owner Beneficiary Rights (as defined in the Finance Agreement);




     (G) The Oak N’ Spruce Trust and the Oak N’ Spruce Trustee are in
compliance with all applicable laws, statutes, rules and governmental
regulations applicable to it and in compliance with each instrument,
agreement or document to which it is a party or by which it is bound,
including, without limitation, the Finance Agreement except where the
failure to comply herein would not materially and adversely affect its
ability to perform its obligations under this Agreement or any other
Transaction Document to which it is a party or under the transactions
contemplated hereunder or thereunder or the validity or enforceability of
the Timeshare Loans;




     (H) The Originator shall continue to control and manage the Oak N’
Spruce Trust, and Originator shall not take any action to cause the Oak N’
Spruce Trustee to control or manage the Oak N’ Spruce Trust;




     (I) The Oak N’ Spruce Trustee is a wholly-owned subsidiary of
Silverleaf and is controlled by Silverleaf. Silverleaf shall cause



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Silverleaf Berkshires, Inc. to remain the Oak N’ Spruce Trustee and a
wholly-owned subsidiary of Silverleaf, and Silverleaf 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) Silverleaf shall comply, and shall cause the Oak N’ Spruce Trustee
to comply, with all the terms and conditions of the Oak N’ Spruce Trust
Agreement and all other related documents.




     (xvii) Servicing. It is the initial Servicer and has been servicing
the Timeshare Loans in accordance with the Servicing Standard.




     (xviii) Certified Copy of Contract for Sale. It represents and
warrants that each Contract for Sale contained in a Timeshare Loan File is a true,
correct and accurate copy of the original Contract for Sale.




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




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




     (xxi) No Conveyance. Silverleaf agrees not to convey and to ensure no
party under its control conveys any interest in a Resort relating to a Timeshare
Loan without obtaining Rating Agency Confirmation if such conveyance is reasonably
likely to have a material adverse affect on the Securitization Noteholders.




     (xxii) Timeshare Loan Documents. Originator 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 as of June 6, 2008, pertaining to Georgia law
matters, (II) Bulkley, Richardson and Gelinas, LLP, dated as of June 6, 2008,
pertaining to Massachusetts law matters, (III) Stinson Morrison Hecker LLP, dated as
of June 6, 2008, pertaining to Missouri law matters, (IV) Mayer Brown LLP, dated as
of June 6, 2008, pertaining to Illinois law matters, (V) Meadows, Collier, Reed,
Cousins & Blau, L.L.P., dated as of June 6, 2008, pertaining to Texas law matters,
and (VI) Holland and Knight LLP, dated as of June 6, 2008, pertaining to Florida law
matters (collectively, the “Local Counsel Opinions”).




     (xxiii) Timeshare Marketing Materials and Disclosure Statements.
Originator 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.



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     (xxiv) Local Counsel Opinions. The facts regarding the Originator, the
Resorts, the Timeshare Loans and related matters set forth or assumed in the Local
Counsel Opinions are true and correct in all material respects.




     (xxv) Bankruptcy Opinion. The facts regarding the Originator, the
Issuer, the Resorts, the Timeshare Loans and related matters set forth or assumed in
the opinion issued by Mayer Brown LLP dated as of June 6, 2008 pertaining to
bankruptcy law matters are, and shall continue to be so long as the Securitization
Notes are outstanding, true and correct in all material respects.




     (xxvi) Custodial Files. Originator shall, on or prior to the Closing
Date and each Transfer Date, have delivered or caused the delivery to the
Securitization Custodian a Timeshare Loan File for each Timeshare Loan, which
Timeshare Loan File shall be complete and verified by the Securitization Custodian
in accordance with the Custodial Agreement.




     (xxvii) Escrow Documents. Originator shall, on or prior to the
ninetieth day following the Closing Date and each Transfer Date, as applicable,
deliver or cause the delivery to the Securitization Custodian of the following: (I)
with respect to each Mortgage Loan and pre-July 2004 Oak N’ Spruce Loan listed on
the related Schedule of Mortgage Loans, an original recorded Assignment of Mortgage
(which may be a part of a blanket assignment of more than one Mortgage Loan or
pre-July 2004 Oak N’ Spruce Loan), showing a complete chain of title from Originator
to the Securitization Indenture Trustee on behalf of the Securitization Noteholders
signed by an Authorized Officer of the Originator and each intervening party with
evidence of proper recordation or evidence from a third party that submitted such
assignment for recording that such assignment has been submitted for recordation;
(II) with respect to each post-July 2004 Oak N’ Spruce Loan listed on the related
Schedule of Oak N’ Spruce Loans, a file-stamped Oak N’ Spruce Financing Statement
evidencing the security interest of the Securitization Indenture Trustee and its
assigns by naming the Obligor with respect to the related post-July 2004 Oak N’
Spruce Loan as debtor, naming the Originator as secured party/assignor, and by
naming the Securitization Indenture Trustee on behalf of the Securitization
Noteholders as the secured party/assignee (or, in the alternative, in the form of an
electronic spreadsheet submitted to the Securitization Custodian directly by a third
party service company listing the filing number, date of filing, debtor and secured
party and accompanied by a certification of filing by the third party service
company); (III) with respect to each Mortgage Loan and pre-July 2004 Oak N’ Spruce
Loan listed on the related Schedule of Prior Secured Party’s Collateral, an original
recorded Reassignment of Mortgage (which may be a part of a blanket reassignment of
more than one Mortgage Loan or pre-July 2004 Oak N’ Spruce Loan), showing a complete
chain of title from the Prior Secured Party to Originator to the Securitization
Indenture Trustee on behalf of the Securitization Noteholders signed by an
Authorized Officer of the Prior Secured Party, Originator, Issuer and each
intervening party with evidence of proper recordation or evidence from a third party
that submitted such assignment for recording that such assignment has been submitted
for



11









 







recordation; (IV)(a) with respect to each pre-July 2004 Oak N’ Spruce Loan
listed on the related Schedule of Prior Secured Party’s Collateral, a file-stamped
Oak N’ Spruce Financing Statement Amendment evidencing the security interest of the
Securitization Indenture Trustee and its assigns by naming the Obligor with respect
to the related pre-July 2004 Oak N’ Spruce Loan as debtor, the Securitization
Indenture Trustee on behalf of the Securitization Noteholders as the secured
party/assignee, and the Prior Secured Party as the assignor, and (b) with respect to
each post-July 2004 Oak N’ Spruce Loan listed on the related Schedule of Prior
Secured Party’s Oak N’ Spruce Loans, a file-stamped Oak N’ Spruce Financing
Statement Amendment evidencing the security interest of the Securitization Indenture
Trustee and its assigns by naming the Obligor with respect to the related post-July
2004 Oak N’ Spruce Loan as debtor, the Securitization Indenture Trustee on behalf of
the Securitization Noteholders as the secured party/assignee, and the Prior Secured
Party as the assignor (or, with respect to clauses (IV)(a) and (b) hereof, such Oak
N’ Spruce Financing Statement Amendment may be delivered in the form of an
electronic spreadsheet submitted to the Securitization Custodian directly by a third
party service company listing the filing number, date of filing, debtor and secured
party and accompanied by a certification of filing by the third party service
company); and (V) all other recorded and/or filed documents provided under the
Escrow Agreement.




     (xxviii)   Prior Secured Parties’ Documents. In accordance with the
Escrow Agreement, Originator shall deliver or cause the delivery to the Escrow Agent
of the Paydown Letters, Direction Letters, Prior Secured Party Allonges and any
other documents required in respect of each of the Prior Secured Parties.




     (xxix) Title Policies. In accordance with the Escrow Agreement, the
Originator 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.



          (b) Originator hereby makes the representations and warranties relating to the Timeshare Loans
contained in Schedule I hereto for the benefit of the Issuer and its assignees as of the Closing
Date (with respect to each Timeshare Loan transferred on the Closing Date).




          (c) It is understood and agreed that the representations, warranties and covenants set forth
in this Section 5 shall survive the (i) transfer of each Timeshare Loan to the Issuer and (ii) the
subsequent pledge of such Timeshare Loans and rights and remedies hereunder to the Securitization
Indenture Trustee on behalf of the Securitization Noteholders and shall continue so long as any
such Timeshare Loans shall remain outstanding or until such time as such Timeshare Loans are
repurchased, purchased or a Qualified Substitute Timeshare Loan is provided pursuant to Section 6
hereof. The Originator acknowledges that it has been advised that the Issuer intends to pledge,
transfer, assign and convey all of its right, title and interest in and to each Timeshare Loan and
its rights and remedies under this Agreement to the Securitization Indenture Trustee on behalf of
the Securitization Noteholders. The Originator agrees that, upon any such assignment, the
Securitization Indenture Trustee may enforce directly,




12









 




without joinder of the Issuer (but subject to any defense that Originator may have under this
Agreement) all rights and remedies hereunder.




          (d) With respect to any representations and warranties contained in Section 5 which are made
to Originator’s Knowledge, if it is discovered that any representation and warranty is inaccurate
and such inaccuracy materially and adversely affects the value of a Timeshare Loan or the interests
of the Issuer or any subsequent assignee thereof, then notwithstanding such lack of Knowledge of
the accuracy of such representation and warranty at the time such representation or warranty was
made (without regard to any Knowledge qualifiers), such inaccuracy shall be deemed a breach of such
representation or warranty for purposes of the repurchase or substitution obligations described in
Sections 6(a)(i) or (ii) below.




     SECTION 6. Repurchases and Substitutions.



          (a) Mandatory Repurchases and Substitutions for Breaches of Representations and
Warranties. Upon the receipt of notice by Originator of a breach of any of its respective
representations and warranties (as of the date on which such representation or warranty was made)
or covenants in Section 5 which materially and adversely affects the value of a Timeshare Loan or
the interests of the Issuer or any subsequent assignee of the Issuer therein, Originator shall
within 60 days of receipt of such notice, cure in all material respects the circumstance or
condition which has caused such representation or warranty to be incorrect or covenant to be
breached or either (i) repurchase the Issuer’s or its assignee’s interest in such related defective
Timeshare Loan (the “Defective Timeshare Loan”) from the Issuer or its assignee at the Repurchase
Price or (ii) provide one or more Qualified Substitute Timeshare Loans and pay the related
Substitution Shortfall Amounts, if any; provided, however, that with respect to a
breach of the representation contained in clause (d)(ii) in Schedule I hereto, the
Originator shall either (i) repurchase the Issuer’s or its assignee’s interest in the related
Defective Timeshare Loan or (ii) provide one or more Qualified Substitute Timeshare Loans and pay
the related Substitution Shortfall Amounts, if any, within 30 days after the Closing Date.




          (b) Repurchase of Upgraded Timeshare Loans. With respect to any Upgraded Timeshare
Loan in the pool of Timeshare Loans that have been conveyed to the Issuer under this Agreement or
the Loan Sale Agreement (the “Timeshare Loan Pool”), on any date, the Originator shall prepay such
Upgraded Timeshare Loan on behalf of the related Obligor by depositing the related Repurchase Price
in the Collection Account as set forth in Section 4.5(e) in the Indenture.




          (c) Optional Purchases or Substitution of Defaulted Timeshare Loans. With respect to
any Defaulted Timeshare Loan in the Timeshare Loan Pool, on any date, the Originator shall have the
option, but not the obligation, to either (i) purchase the Defaulted Timeshare Loan at the Default
Purchase Price for such Defaulted Timeshare Loan or (ii) substitute one or more Qualified
Substitute Timeshare Loans for such Defaulted Timeshare Loan and pay the related Substitution
Shortfall Amount, if any; provided, however, that the option to purchase a
Defaulted Timeshare Loan or to substitute one or more Qualified Substitute Timeshare Loans for such
Defaulted Timeshare Loan is limited on any date to the Optional Purchase Limit; provided,
further, that the Originator’s option to substitute one or more Qualified Substitute
Timeshare Loans for a Defaulted Timeshare Loan is limited on any date to




13









 




the Optional Substitution Limit. If the Originator shall purchase Defaulted Timeshare Loans
or substitute one or more Qualified Substitute Timeshare Loans for Defaulted Timeshare Loans as
provided herein, the Originator shall deposit the related Default Purchase Price or Substitution
Shortfall Amount, as applicable, in the Collection Account as set forth in Section 4.5(e) under the
Indenture. The Originator may irrevocably waive its option to purchase a Defaulted Timeshare Loan
or substitute one or more Qualified Substitute Timeshare Loans for a Defaulted Timeshare Loan by
delivering or causing to be delivered to the Securitization Indenture Trustee a Waiver Letter in
the form of Exhibit G attached to the Indenture. The holder or holders of Notes
representing at least 66-2/3% of the Adjusted Note Balance may at any time direct the
Securitization Indenture Trustee, in connection with any subsequent purchases of Defaulted
Timeshare Loans by the Originator, to require the Originator to conduct a public auction in respect
of any such Defaulted Timeshare Loan. The Originator may bid on any such Defaulted Timeshare Loan
during such auction, provided that no such bid may be lower than fifteen percent (15%) of the
original acquisition price paid for the Timeshare Property by the Obligor under such Defaulted
Timeshare Loan. Publication of notice of such auction in a newspaper published daily in Dallas,
Texas, shall be sufficient notice of such auction.




          (d) Optional Purchase of Force Majeure Loans. If a Force Majeure Event occurs at a
Resort, the Originator shall have the option, but not the obligation, to purchase the related Force
Majeure Loans in the Timeshare Loan Pool, so long as such Timeshare Loans have not become Defaulted
Timeshare Loans. The Originator will have the option to purchase a Force Majeure Loan at the Force
Majeure Purchase Price; provided, however, that (i) the Originator’s
option to purchase a Force Majeure Loan is limited on any date to the Force Majeure Purchase Limit
and (ii) the Originator shall have the right to exercise such purchase option for a Force Majeure
Loan only if the related Force Majeure Purchase Price equals or exceeds the Loan Balance of such
Force Majeure Loan as of the date of such purchase, plus all accrued and unpaid interest thereon.




          (e) Payment of Repurchase Prices and Substitution Shortfall Amounts. The Issuer hereby
directs and Originator hereby agrees to remit or cause to be remitted all amounts in respect of
Repurchase Prices, Default Purchase Prices, Force Majeure Purchase Prices and Substitution
Shortfall Amounts payable during the related Due Period in immediately available funds to the
Securitization Indenture Trustee to be deposited in the Collection Account on the related Transfer
Date in accordance with the provisions of the Indenture. In the event that more than one Timeshare
Loan is substituted pursuant to Sections 6(a) or (b) hereof on any Transfer Date, the Substitution
Shortfall Amounts and the Loan Balances of Qualified Substitute Timeshare Loans shall be calculated
on an aggregate basis for all substitutions made on such Transfer Date.




          (f) Schedule of Timeshare Loans. The Issuer hereby directs and Originator hereby
agrees, on each date on which a Timeshare Loan has been repurchased, purchased or substituted to
provide the Issuer and the Securitization Indenture Trustee with an electronic supplement to
Schedule III hereto and the Schedule of Timeshare Loans reflecting the removal,
substitution and/or other addition of such Timeshare Loans and subjecting any Qualified Substitute
Timeshare Loans to the provisions of this Agreement.




14









 








          (g) Qualified Substitute Timeshare Loans. On the related Transfer Date, the Issuer
hereby directs and Originator hereby agrees to deliver or to cause the delivery of the Timeshare
Loan Files of the related Qualified Substitute Timeshare Loans to the Securitization Indenture
Trustee or to the Securitization Custodian, at the direction of the Securitization Indenture
Trustee, on the related Transfer Date in accordance with the provisions of the Securitization
Indenture. As of such related Transfer Date, Originator does hereby transfer, assign, sell,
contribute and grant to the Issuer, without recourse (except as provided in Section 6 and Section 8
hereof), any and all of Originator’s right, title and interest in and to (i) each Qualified
Substitute Timeshare Loan conveyed to the Issuer on such Transfer Date, (ii) the Receivables in
respect of the Qualified Substitute Timeshare Loans due after the related Cut-Off Date, (iii) the
related Timeshare Loan Documents (excluding any rights as developer or declarant under the
Timeshare Declaration, the Timeshare Program Consumer Documents or the Timeshare Program Governing
Documents), (iv) all Related Security in respect of such Qualified Substitute Timeshare Loans, and
(v) all income, payments, proceeds and other benefits and rights related to any of the foregoing.
Upon such sale and/or contribution, the ownership of each Qualified Substitute Timeshare Loan and
all collections allocable to principal and interest thereon since the related Cut-Off Date and all
other property interests or rights conveyed pursuant to and referenced in this Section 6(g) shall
immediately vest in the Issuer, its successors and assigns. Originator shall not take any action
inconsistent with such ownership nor claim any ownership interest in any Qualified Substitute
Timeshare Loan for any purpose whatsoever other than consolidated financial and federal and state
income tax reporting. Originator agrees that such Qualified Substitute Timeshare Loans shall be
subject to the provisions of this Agreement.




          (h) Officer’s Certificate. Originator shall, on each related Transfer Date, certify
in writing to the Issuer and the Securitization Indenture Trustee that each new Timeshare Loan
meets all the criteria of the definition of “Qualified Substitute Timeshare Loan” and that (i) the
Timeshare Loan Files for such Qualified Substitute Timeshare Loans have been delivered to the
Securitization Custodian, and (ii) the Timeshare Loan Servicing Files for such Qualified Substitute
Timeshare Loans have been delivered to the Securitization Servicer.




          (i) Release. In connection with any repurchase, purchase or substitution of one or
more Timeshare Loans contemplated by this Section 6, upon satisfaction of the conditions contained
in this Section 6, the Issuer and the Securitization Indenture Trustee shall execute and deliver or
shall cause the execution and delivery of such releases and instruments of transfer or assignment
presented to it by Originator, in each case, without recourse, as shall be necessary to vest in
Originator or its designee (or to evidence the vesting in such Person of) the legal and beneficial
ownership of such released Timeshare Loans. The Issuer shall cause the Securitization Indenture
Trustee to cause the Securitization Custodian to release the related Timeshare Loan Files to
Originator or its designee and the Securitization Servicer to release the related Timeshare Loan
Servicing Files to Originator or its designee.




          (j) Sole Remedy. It is understood and agreed that the obligations of Originator
contained in Section 6(a) to cure a material breach, or to repurchase or substitute related
Defective Timeshare Loans and the obligation of Originator to indemnify pursuant to Section 8 shall
constitute the sole remedies available to the Issuer or its subsequent assignees for the breaches
of any of its representations or warranties contained in Section 5, and such remedies are not
intended to and do not constitute “credit recourse” to Originator.




15









 








     SECTION 7. Additional Covenants of the Originator.



          (a) Originator hereby covenants and agrees with the Issuer as follows:





     (i) It shall comply with all applicable laws, rules, regulations and orders
applicable to it and its business and properties except where the failure to comply
will not have a material adverse effect on its business or its ability to perform
its obligations under this Agreement or any other Transaction Document to which it
is a party or under the transactions contemplated hereunder or thereunder or the
validity or enforceability of the Timeshare Loans.




     (ii) It shall preserve and maintain for itself its existence (corporate or
otherwise), rights, franchises and privileges in the jurisdiction of its
organization and except where the failure to so preserve and maintain will not have
a material adverse effect on its business or its ability to perform its obligations
under this Agreement or any other Transaction Document to which it is a party or
under the transactions contemplated hereunder or thereunder or the validity of
enforceability of the Timeshare Loans.




     (iii) On or prior to the Closing Date or a Transfer Date, as applicable, it
shall indicate in its and any applicable Affiliate’s computer files and other
records that each Timeshare Loan has been sold to the Issuer.




     (iv) It shall respond to any inquiries with respect to ownership of a Timeshare
Loan by stating that such Timeshare Loan has been sold to the Issuer and that the
Issuer is the owner of such Timeshare Loan.




     (v) On or prior to the Closing Date, it shall file at its own expense financing
statements with respect to the Transferred Assets transferred hereunder, naming the
Originator as debtor and naming as secured parties the Issuer and the Securitization
Indenture Trustee on behalf of the Securitization Noteholders, in the form and
manner reasonably requested by the Issuer. It shall deliver file-stamped copies of
such financing statements to the Issuer and the Securitization Indenture Trustee on
behalf of the Securitization Noteholders.




     (vi) It agrees from time to time, at its expense, promptly to execute and
deliver all further instruments and documents, and to take all further actions, that
may be necessary, or that the Issuer or the Securitization Indenture Trustee may
reasonably request, to perfect, protect or more fully evidence the sale or
contribution of the Timeshare Loans, or to enable the Issuer or the Securitization
Indenture Trustee to exercise and enforce its rights and remedies hereunder or under
any Timeshare Loan including, but not limited to, powers of attorney, UCC financing
statements and assignments of mortgage.




     (vii) Any change in the legal name of the Originator and any use by it of any
tradename, fictitious name, assumed name or “doing business as” name occurring after
the Closing Date shall be promptly disclosed to the Issuer and the Securitization
Indenture Trustee in writing.



16









 






     (viii) Upon the discovery or receipt of notice by a Responsible Officer of
Originator of a breach of any of its representations or warranties and covenants
contained herein, Originator shall promptly disclose to the Issuer and the
Securitization Indenture Trustee, in reasonable detail, the nature of such breach.




     (ix) In the event that Originator 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) Originator will keep its principal place of business and chief executive
office and the office where it keeps its records concerning the Timeshare Loans at
the address of Originator listed herein.




     (xi) In the event that the Originator or the Issuer or any assignee of the
Issuer should receive actual notice of any transfer taxes arising out of the
transfer, assignment and conveyance of a Timeshare Loan from the Originator to the
Issuer, on written demand by the Issuer, or upon the Originator otherwise being
given notice thereof, Originator shall pay, and otherwise indemnify and hold the
Issuer, and any subsequent assignee harmless, on an after-tax basis, from and
against any and all such transfer taxes.




     (xii) The Originator authorizes the Issuer and the Securitization Indenture
Trustee to file continuation statements, and amendments thereto, relating to the
Timeshare Loans and all payments made with regard to the related Timeshare Loans
without the signature of the Originator where permitted by law. A photocopy or
other reproduction of this Agreement shall be sufficient as a financing statement
where permitted by law. The Issuer confirms that it is not its present intention to
file a photocopy or other reproduction of this Agreement as a financing statement,
but reserves the right to do so if, in its good faith determination, there is at
such time no reasonable alternative remaining to it.




     (xiii) The Originator shall not prepare any financial statements or other
statements (including any tax filings) which shall account for the transactions
contemplated by this Agreement in any manner other than as the sale of, or a capital
contribution of, the Timeshare Loans, Timeshare Properties, Related Security and
other conveyed property related thereto and additional collateral by the Originator
to the Issuer.



     SECTION 8. Indemnification.



          (a) Originator hereby agrees to indemnify the Issuer, the Securitization Indenture Trustee,
the Securitization Noteholders and the Initial Purchaser (collectively, the “Indemnified Parties”)
against any and all claims, losses or liabilities (including reasonable legal fees and related
costs) that the Issuer, the Securitization Indenture Trustee, the Securitization Noteholders or the
Initial Purchaser may sustain directly related to any breach of




17









 




the representations and warranties and covenants of Originator under Section 5 hereof (the
“Indemnified Amounts”) excluding, however (i) Indemnified Amounts to the extent resulting from the
gross negligence or willful misconduct on the part of such Indemnified Party; (ii) any recourse for
any uncollectible Timeshare Loan not related to a breach of representation or warranty; (iii)
recourse to Originator for a related Defective Timeshare Loan so long as the same is cured,
substituted or repurchased pursuant to Section 6 hereof; or (iv) income or similar taxes by such
Indemnified Party arising out of or as a result of this Agreement or the transfer of the Timeshare
Loans. The parties hereto shall (A) promptly notify the other parties hereto, the Securitization
Indenture Trustee, and the Initial Purchaser if a claim is made by a third party with respect to
this Agreement or the Timeshare Loans, and relating to (1) the failure by Originator to perform its
duties in accordance with the terms of this Agreement or (2) a breach of Originator’s
representations, covenants or warranties contained in this Agreement, (B) assume (with the consent
of the Issuer, the Securitization Indenture Trustee, the Securitization Noteholders or the Initial
Purchaser, as applicable, which consent shall not be unreasonably withheld) the defense of any such
claim and pay all expenses in connection therewith, including legal counsel fees and (C) promptly
pay, discharge and satisfy any judgment, order or decree which may be entered against it or the
Issuer, the Securitization Indenture Trustee, the Securitization Noteholders or the Initial
Purchaser in respect of such claim. If Originator shall have made any indemnity payment pursuant
to this Section 8 and the recipient thereafter collects from another Person any amount relating to
the matters covered by the foregoing indemnity, the recipient shall promptly repay such amount to
Originator.




          (b) The obligations of Originator under this Section 8 to indemnify the Issuer, the
Securitization Indenture Trustee, the Securitization Noteholders and the Initial Purchaser shall
survive the termination of this Agreement and continue until the Notes are paid in full or
otherwise released or discharged.




     SECTION 9. No Proceedings. The Originator hereby agrees that it will not, directly or
indirectly, institute, or cause to be instituted, or join any Person in instituting, against the
Issuer or any Association, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state bankruptcy or similar law so long as
there shall not have elapsed one year plus one day since the latest maturing Securitization Notes
issued by the Issuer.



     SECTION 10. Notices, Etc. All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing and mailed or telecommunicated, or delivered
as to each party hereto, at its address set forth below or at such other address as shall be
designated by such party in a written notice to the other parties hereto. All such notices and
communications shall not be effective until received by the party to whom such notice or
communication is addressed.



     Issuer


Silverleaf Finance VI, LLC

1221 Riverbend Drive, Suite 120

Dallas, Texas 75247

Attention: Robert M. Sinnott, Chief Financial Officer




18









 







Telecopier: 214-631-4981




     Originator


Silverleaf Resorts, Inc.

1221 Riverbend Drive, Suite 120

Dallas, Texas 75247

Attention: Robert E. Mead, Chief Executive Officer

Telecopier: 214-905-0519




     SECTION 11. No Waiver; Remedies. No failure on the part of the Issuer, the
Securitization Indenture Trustee or any assignee thereof to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any other remedies
provided by law.



     SECTION 12. Binding Effect; Assignability. This Agreement shall be binding upon and
inure to the benefit of the Originator, the Issuer and their respective successors and assigns.
Any assignee shall be an express third party beneficiary of this Agreement, entitled to directly
enforce this Agreement. The Originator may not assign any of its rights and obligations hereunder
or any interest herein without the prior written consent of the Issuer and any assignee thereof.
The Issuer may, and intends to, assign all of its rights to the Securitization Indenture Trustee on
behalf of the Securitization Noteholders, and the Originator consents to any such assignments.
This Agreement shall create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until its termination;
provided, however, that the rights and remedies with respect to any breach of any representation
and warranty made by Originator pursuant to Section 5, and the cure, repurchase or substitution and
indemnification obligations shall be continuing and shall survive any termination of this
Agreement, but such rights and remedies may be enforced only by the Issuer and the Securitization
Indenture Trustee.



     SECTION 13. Amendments; Consents and Waivers. No modification, amendment or waiver of,
or with respect to, any provision of this Agreement, and all other agreements, instruments and
documents delivered thereto, nor consent to any departure by the Originator from any of the terms
or conditions thereof shall be effective unless it shall be in writing and signed by each of the
parties hereto, the written consent of the Securitization Indenture Trustee on behalf of the
Securitization Noteholders is given and confirmation from the Rating Agencies that such action will
not result in a downgrade, withdrawal or qualification of any rating assigned to a Class of Notes
is received. The Issuer shall provide or cause to be provided to the Securitization Indenture
Trustee and the Rating Agencies any such proposed modifications, amendments or waivers. Any waiver
or consent shall be effective only in the specific instance and for the purpose for which given.
No consent to or demand by the Originator in any case shall, in itself, entitle it to any other
consent or further notice or demand in similar or other circumstances. The Originator acknowledges
that in connection with the intended assignment by the Issuer of all of its right, title and
interest in and to each Timeshare Loan to the Securitization Indenture Trustee on behalf of the
Securitization Noteholders, the Issuer intends to issue the



19









 







Notes, the proceeds of which will be used by the Issuer, in part, to purchase the Timeshare
Loans hereunder.



     SECTION 14. Severability. In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision or obligation,
shall not in any way be affected or impaired thereby in any other jurisdiction. Without limiting
the generality of the foregoing, in the event that a Governmental Authority determines that the
Issuer may not purchase or acquire Timeshare Loans, the transactions evidenced hereby shall
constitute a loan and not a purchase and sale or contribution, notwithstanding the otherwise
applicable intent of the parties hereto, and the Originator shall be deemed to have granted to the
Issuer as of the date hereof, a first priority perfected security interest in all of the
Originator’s right, title and interest in, to and under such Timeshare Loans and the related
property as described in Section 2 hereof.



     SECTION 15. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.



     (A) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.



     (B) THE PARTIES TO THIS AGREEMENT HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF
MANHATTAN IN NEW YORK CITY AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET
FORTH ON THE SIGNATURE PAGE HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS
AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE PARTIES HERETO
EACH WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 15 SHALL AFFECT THE RIGHT OF THE PARTIES TO THIS
AGREEMENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY OF
THEM TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.



     (C) SILVERLEAF AND ISSUER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL
NOW OR HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY THE ORIGINATOR AND ISSUER AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO TRIAL BY JURY



20









 







WOULD OTHERWISE ACCRUE OR EXIST. THE ORIGINATOR AND ISSUER ARE HEREBY AUTHORIZED TO FILE A
COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE ORIGINATOR
AND ISSUER.



     SECTION 16. Heading. The headings herein are for purposes of reference only and shall
not otherwise affect the meaning or interpretation of any provision hereof.



     SECTION 17. Execution in Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed shall be deemed to be an original
and both of which when taken together shall constitute one and the same agreement.



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     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 VI, LLC, as Issuer

 	 
	 	By:  	/S/ ROBERT M. SINNOTT
 	 
	 	 	Name:  	Robert M. Sinnott 	 
	 	 	Title:  	Vice President, Treasurer and Chief Financial
Officer 	 
	 
	 	SILVERLEAF RESORTS, INC.

 	 
	 	By:  	/S/ ROBERT M. SINNOTT
 	 
	 	 	Name:  	Robert M. Sinnott 	 
	 	 	Title:  	Chief Financial Officer 	 
	 



List of Exhibits and Schedules to Agreement Not Filed Herewith:




Schedule 1—Additional Representations and Warranties of Originator

Appendix A—Standard Definitions

Schedule II— Exceptions

Schedule III—Schedule of Timeshare Loans

Exhibit A—ACH Form





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