Ex.
      10.61

     

    CONSOLIDATED,
      AMENDED AND RESTATED

    LOAN
      AND SECURITY AGREEMENT

    


    among

    SILVERLEAF
      RESORTS, INC.

    (as
      Borrower)

    


    and

    TEXTRON
      FINANCIAL CORPORATION

    (as
      Lender)


    


    As
      of
      February 21, 2007

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	
                Section
                  1 -Definition Of Terms

              	 	
                3

              
	
                Section
                  2 -The Loan

              	 	
                19

              
	
                2.1
                  Facility Fee

              	 	
                19

              
	
                2.2
                  Revolving Loan and Lending Limits.

              	 	
                20

              
	
                2.3
                  Interest Rate

              	 	
                21

              
	
                2.4
                  Payments

              	 	
                21

              
	
                2.5
                  Prepayments.

              	 	
                24

              
	
                2.6
                  Loan Component Ratio

              	 	
                27

              
	
                2.7
                  Maximum Obligation of Textron Financial Corporation Under the
                  Loan

              	 	
                27

              
	
                2.8
                  Suspension of Advances.

              	 	
                28

              
	
                2.9
                  Release of Intervals from Inventory

              	 	
                28

              
	
                2.10
                  Intentionally Omitted

              	 	
                28

              
	
                2.11
                  Partial Release of Real Property Mortgages

              	 	
                28

              
	
                Section
                  3 -Collateral

              	 	
                29

              
	
                3.1
                  Grant of Security Interest.

              	 	
                29

              
	
                3.2
                  Financing Statements

              	 	
                29

              
	
                3.3
                  Insurance

              	 	
                29

              
	
                3.4
                  Protection of Collateral; Reimbursement

              	 	
                29

              
	
                3.5
                  Additional Eligible Resorts

              	 	
                30

              
	
                3.6
                  Modification of Eligible Notes Receivable

              	 	
                30

              
	
                3.7
                  Assumption of Obligations under Eligible Notes Receivable

              	 	
                31

              
	
                3.8
                  Purchaser/Criteria

              	 	
                31

              
	
                3.9
                  Substitution of Inventory

              	 	
                31

              
	
                3.10
                  Cross Collateralization

              	 	
                32

              
	
                3.11
                  Security Interest in All Pledged Notes Receivable

              	 	
                32

              
	
                3.12
                  The Modification to Inventory Mortgages

              	 	
                32

              
	
                Section
                  4 -Conditions Precedent To The Closing

              	 	
                32

              
	
                4.1
                  Conditions Precedent

              	 	
                32

              
	
                4.2
                  Expenses

              	 	
                36

              
	
                4.3
                  Proceedings Satisfactory

              	 	
                36

              
	
                4.4
                  Conditions Precedent to Funding of Advances with Respect to Additional
                  Eligible Resorts

              	 	
                36

              
	
                Section
                  5 -Funding Procedure

              	 	
                42

              
	
                5.1
                  The obligation of Lender to make any loan shall be subject to the
                  satisfaction of all of the following conditions precedent:

              	 	
                42

              
	
                Section
                  6 -General Representations And Warranties

              	 	
                52

              
	
                6.1
                  Organization, Standing, Qualification

              	 	
                52

              
	
                6.2
                  Authorization, Enforceability, Etc.

              	 	
                53

              
	
                6.3
                  Financial Statements and Business Condition

              	 	
                54

              
	
                6.4
                  Taxes

              	 	
                54

              
	
                6.5
                  Title to Properties: Prior Liens

              	 	
                55

              
	
                6.6
                  Subsidiaries, Affiliates and Capital Structure

              	 	
                55

              
	
                6.7
                  Litigation, Proceedings, Etc

              	 	
                55

              
	
                6.8
                  Licenses, Permits, Etc

              	 	
                55

              
	
                6.9
                  Environmental Matters

              	 	
                55

              
	
                6.10
                  Full Disclosure

              	 	
                56

              
	
                6.11
                  Use of Proceeds/Margin Stock

              	 	
                56

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                6.12
                  Defaults

              	 	
                56

              
	
                6.13
                  Compliance with Law

              	 	
                56

              
	
                6.14
                  Restrictions of Borrower

              	 	
                57

              
	
                6.15
                  Broker’s Fees

              	 	
                58

              
	
                6.16
                  Deferred Compensation Plans

              	 	
                58

              
	
                6.17
                  Labor Relations

              	 	
                58

              
	
                6.18
                  Resorts.

              	 	
                59

              
	
                6.19
                  Timeshare Regimen Reports

              	 	
                60

              
	
                6.20
                  Operating Contracts

              	 	
                60

              
	
                6.21
                  Architectural and Environmental Control

              	 	
                60

              
	
                6.22
                  Tax Identification/Social Security Numbers

              	 	
                60

              
	
                6.23
                  Inventory Control Procedures.

              	 	
                60

              
	
                6.24
                  Real Property

              	 	
                61

              
	
                6.25
                  Inventory.

              	 	
                61

              
	
                6.26
                  Additional Representations and Warranties

              	 	
                61

              
	
                Section
                  7 -Covenants

              	 	
                62

              
	
                7.1
                  Affirmative Covenants

              	 	
                62

              
	
                7.2
                  Negative Covenants

              	 	
                75

              
	
                Section
                  8 -Events Of Default

              	 	
                78

              
	
                8.1
                  Nature of Events

              	 	
                78

              
	
                Section
                  9 -Remedies

              	 	
                80

              
	
                9.1
                  Remedies Upon Default

              	 	
                80

              
	
                9.2
                  Notice of Sale

              	 	
                82

              
	
                9.3
                  Application of Collateral; Termination of Agreements

              	 	
                82

              
	
                9.4
                  Rights of Lender Regarding Collateral

              	 	
                83

              
	
                9.5
                  Delegation of Duties and Rights

              	 	
                83

              
	
                9.6
                  Lender not in Control

              	 	
                83

              
	
                9.7
                  Waivers

              	 	
                83

              
	
                9.8
                  Cumulative Rights

              	 	
                84

              
	
                9.9
                  Expenditures by Lender

              	 	
                84

              
	
                9.10
                  Diminution in Value of Collateral

              	 	
                84

              
	
                9.11
                  Lender’s Knowledge

              	 	
                84

              
	
                Section
                  10 -Certain Rights Of Lenders

              	 	
                84

              
	
                10.1
                  Protection of Collateral

              	 	
                84

              
	
                10.2
                  Performance by Lender

              	 	
                84

              
	
                10.3
                  No Liability of Lender

              	 	
                85

              
	
                10.4
                  Right to Defend Action Affecting Security

              	 	
                85

              
	
                10.5
                  Expenses

              	 	
                86

              
	
                10.6
                  Lender’s Right of Set-Off

              	 	
                86

              
	
                10.7
                  No Waiver

              	 	
                86

              
	
                10.8
                  Right of Lender to Extend Time of Payment, Substitute, Release
                  Security,
                  Etc

              	 	
                86

              
	
                10.9
                  Assignment of Lender’s Interest

              	 	
                86

              
	
                10.10
                  Notice to Purchaser

              	 	
                86

              
	
                10.11
                  Collection of the Notes

              	 	
                87

              
	
                10.12
                  Power of Attorney

              	 	
                87

              
	
                10.13
                  Relief from Automatic Stay, Etc

              	 	
                88

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                Section
                  11 -Term Of Agreement

              	 	
                88

              
	
                Section
                  12 -Miscellaneous

              	 	
                88

              
	
                12.1
                  Notices

              	 	
                88

              
	
                12.2
                  Survival

              	 	
                89

              
	
                12.3
                  Governing Law

              	 	
                90

              
	
                12.4
                  Limitation on Interest

              	 	
                90

              
	
                12.5
                  Invalid Provisions

              	 	
                90

              
	
                12.6
                  Successors and Assigns

              	 	
                91

              
	
                12.7
                  Amendment

              	 	
                91

              
	
                12.8
                  Counterparts; Effectiveness

              	 	
                91

              
	
                12.9
                  Lender Not Fiduciary

              	 	
                91

              
	
                12.10
                  Return of Notes Receivable.

              	 	
                91

              
	
                12.11
                  Accounting Principles

              	 	
                91

              
	
                12.12
                  Total Agreement

              	 	
                92

              
	
                12.13
                  Litigation

              	 	
                92

              
	
                12.14
                  Incorporation of Exhibits

              	 	
                92

              
	
                12.15
                  Consent to Advertising and Publicity of Timeshare
                  Documents

              	 	
                92

              
	
                12.16
                  Directly or Indirectly

              	 	
                93

              
	
                12.17
                  Headings

              	 	
                93

              
	
                12.18
                  Gender and Number

              	 	
                93

              
	
                Section
                  13 -Special Conditions

              	 	
                93

              
	
                13.1
                  Effective Date

              	 	
                93

              
	
                13.2
                  Release

              	 	
                93

              


      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    CONSOLIDATED,
      AMENDED AND RESTATED

    LOAN
      AND SECURITY AGREEMENT


     

    THIS
      CONSOLIDATED, AMENDED AND RESTATED LOAN AND SECURITY
      AGREEMENT,
      dated
      as of February 21, 2007, entered into by and between SILVERLEAF
      RESORTS, INC.,
      a Texas
      corporation (as “Borrower”)
      and
TEXTRON
      FINANCIAL CORPORATION,
      a
      Delaware corporation (the “Lender”).

     

    WITNESSETH:

     

    WHEREAS,
      Borrower and Lender entered into an Amended and Restated Loan, Security and
      Agency Agreement (Tranche A), dated as of April 30, 2002 (as amended, the
“Tranche
      A Loan Agreement”),
      pursuant to which the Borrower executed an Amended and Restated Secured
      Promissory Note in the original principal amount of $56,894,400.00, dated April
      30, 2002, in favor of Lender (the “Tranche
      A Note”);

     

    WHEREAS,
      Borrower, Lender, Webster Bank and Bank of Scotland entered into an Amended
      and
      Restated Loan, Security and Agency Agreement (Tranche B), dated as of April
      30,
      2002 (as amended, the “Tranche
      B Loan Agreement”),
      pursuant to which Borrower executed: (i) an Amended and Restated Secured
      Promissory Note in the original principal amount of $40,305,200.00, dated April
      30, 2002, in favor of Lender; (ii) an Amended and Restated Secured Promissory
      Note in the original principal amount of $7,899,500.00, dated April 30, 2002,
      in
      favor of Webster Bank; and (iii) a Secured Promissory Note in the original
      principal amount of $7,899,500.00, dated April 30, 2002, in favor of Bank of
      Scotland (singly and collectively the “Tranche
      B Note”);

     

    WHEREAS,
      Borrower and Lender entered into an Amended and Restated Loan and Security
      Agreement (Tranche C), dated as of April 17, 2001 (as amended, the “Tranche
      C Loan Agreement”,
      collectively with the Tranche A Loan Agreement and the Tranche B Loan Agreement,
      the “Original
      Loan Agreement”),
      pursuant to which Borrower executed an Amended and Restated Secured Promissory
      Note in the original principal amount of $8,060,000.00, dated April 30, 2002,
      in
      favor of Lender (the “Tranche
      C Note”,
      collectively with the Tranche A Note and the Tranche B Note, the “Original
      Note”);

     

    WHEREAS,
      the Lender and Borrower entered into a Consolidated, Amended and Restated Loan,
      Security and Agency Agreement, dated as of August 5, 2005 (the “Receivable
      Loan Agreement”)
      to
      consolidate, amend and restate the: (i) Tranche A Loan Agreement; (ii) Tranche
      B
      Loan Agreement; and (iii) Tranche C Loan Agreement;

     

    WHEREAS,
      pursuant to the Receivable Loan Agreement, the Original Note was replaced by
      a
      Consolidated, Amended and Restated Secured Promissory Note, dated as of August
      5, 2005 in the aggregate principal amount of $100,000,000.00 in favor of Lender,
      as agent for each of the lenders under the Receivable Loan Agreement (the
“Current
      Receivable Note”);

     

    WHEREAS,
      Lender and Borrower entered into that certain Loan and Security Agreement,
      dated
      as of December 16, 1999, as amended by that certain First Amendment to Loan
      and
      Security Agreement, dated as of April 17, 2001, as further amended by that
      certain Second Amendment to Loan and Security Agreement, dated as of April
      30,
      2002, as further amended by that certain Letter Amendment, dated as of March
      27,
      2003, and as further amended by that certain Third Amendment to Loan and
      Security Agreement (Inventory Loan), dated as of December 19, 2003
      (collectively, the “Original
      Inventory Loan Agreement”);

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    WHEREAS,
      pursuant to the Original Inventory Loan Agreement, Lender agreed, subject to
      the
      terms and conditions of the Original Inventory Loan Agreement, to provide to
      Borrower, for the purpose of providing liquidity in connection with Borrower’s
      ownership, purchase and warehousing of Intervals (as such term is hereinafter
      defined), a loan in the maximum amount of $10,000,000 (the “Original
      Inventory Loan”),
      which
      loan was evidenced by Borrower’s Amended and Restated Secured Promissory Note,
      dated as of April 30, 2002 (the “Original
      Inventory Note”);

     

    WHEREAS,
      Lender and Borrower amended and restated the Original Inventory Loan Agreement
      in its entirety pursuant to an Amended and Restated Loan, Security and Agency
      Agreement dated as of March 5, 2004, as amended by that certain Letter
      Amendment, dated as of April 16, 2004, and as further amended by that certain
      Letter Amendment, dated as of July 30, 2004
      (together with the First Amendment and the Second Amendment, as such terms
      are
      hereafter defined, the “Restated
      Inventory Loan Agreement”);
      

     

    WHEREAS,
      pursuant to the Restated Inventory Loan Agreement, Lender agreed, subject to
      the
      terms and conditions of the Restated Inventory Loan Agreement, to provide to
      Borrower, for the purpose of providing liquidity in connection with Borrower’s
      ownership, purchase and warehousing of Intervals, to make an additional
      inventory loan to the borrower in the maximum amount of $8,000,000 (the
“Additional
      Inventory Loan”).
      The
      Original Inventory Loan and the Additional Inventory Loan are evidenced,
      respectively, by the Original Inventory Note, in the original principal amount
      of Ten Million Dollars ($10,000,000), and the Borrower’s Secured Promissory
      Note, dated March 5, 2004, in the original principal amount of Eight Million
      Dollars ($8,000,000) (the “Second
      Inventory Note”);

     

    WHEREAS,
      pursuant to that certain First Amendment to Amended and Restated Loan and
      Security Agreement (Inventory Loan) dated as of February 28, 2005 (the
“First
      Amendment”),
      Lender provided Borrower with an additional inventory loan in the maximum amount
      of $5,000,000 (the “Inventory
      Term Loan”)
      for
      the purpose of the repaying certain receivable credit facilities made by Lender
      to Borrower, which Inventory Term Loan increased the Inventory Loan to
      $21,000,000, and which Inventory Term Loan is evidenced by that certain Secured
      Promissory Note (Inventory Term Loan) dated February 28, 2005 in the original
      principal amount of $5,000,000.00 (the “Inventory
      Term Loan Note”);
      the
      Inventory Term Loan together with the Original Inventory Loan and the Additional
      Inventory Loan are collectively, referred to herein as the “Inventory
      Loan”);

     

    WHEREAS,
      pursuant to that certain Second Amendment to Amended and Restated Loan and
      Security Agreement (Inventory Loan) dated as of October 26, 2005 (the
“Second
      Amendment”),
      Lender agreed to extend the period during which Borrower may obtain advances
      pursuant to the Restated Inventory Loan Agreement and to extend the Final
      Maturity Date under the Restated Inventory Loan Agreement;

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    WHEREAS,
      Lender and Borrower have agreed to enter into this Agreement, as such term
      is
      hereafter defined, to: (A) consolidate, amend and restate the: (i) Receivable
      Loan Agreement and (ii) Restated Inventory Loan Agreement and (B) to provide
      to
      Borrower, subject to the terms and conditions of this Agreement, with
      acquisition financing in the maximum aggregate amount of $20,000,000 for the
      purpose of providing liquidity in connection with Borrower’s acquisition and
      ownership of certain improved and unimproved real property (the “Acquisition
      Loan”);
      and

     

    WHEREAS,
      pursuant to this Agreement: (i) the Current Receivable Note will be replaced
      by
      an Amended and Restated Secured Promissory Note (Receivable Component)(the
      “Receivable
      Note”),
      (ii)
      the Original Inventory Note, the Second Inventory Note and the Inventory Term
      Loan Note will be replaced by an Amended and Restated Secured Promissory Note
      (Inventory Component) (the “Inventory
      Note”)
      and
      (iii) Borrower shall issue and deliver to Lender its Secured Promissory Note
      (Acquisition Component) to evidence the Acquisition Loan (the “Acquisition
      Note”).

     

    NOW,
      THEREFORE, in consideration of the mutual covenants and agreements contained
      in
      this Agreement, and for other good and valuable consideration, the receipt
      and
      adequacy of which are acknowledged, the parties to this Agreement, intending
      to
      be legally bound, agree as follows:

     

    Section
      1-Definition Of Terms

     

    Capitalized
      terms used in this Agreement are defined in this Section
      1.
      The
      definitions include the singular and plural forms of the terms
      defined.

     

    Acquisition
      Loan Component Collateral.
      Collectively, all now owned or hereafter acquired right, title and interest
      of
      Borrower, in all of the following:

     

    (i) the
      Real
      Property;

     

    (ii) documents,
      instruments, accounts, chattel paper, and general intangibles relating to the
      Real Property;

     

    (iii) the
      Receivable Loan Component Collateral;

     

    (iv) the
      Inventory Loan Component Collateral;

     

    (v) the
      Silverleaf Finance II Stock;

     

    (vi) the
      Silverleaf Finance II Subordinated Note;

     

    (vii) all
      books, records, reports, computer tapes, discs and software relating to the
      Acquisition Loan Component Collateral; and

     

    (viii) all
      extensions, additions, improvements, betterments, renewals, substitutions and
      replacements of, for or to any of the Acquisition Loan Component Collateral,
      wherever located, together with the products, proceeds, issues, rents and
      profits thereof, and any replacements, additions or accessions thereto or
      substitutions thereof.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Acquisition
      Loan Component.
      The
      Acquisition Loan Component shall be that portion of the Loan that may be used
      by
      Borrower to fund the acquisition of the Real Property in an aggregate amount
      not
      to exceed $20,000,000.00, subject to the terms and provisions of this
      Agreement.

     

    Acquisition
      Note.
      The
      term “Acquisition Note” shall have the meaning given to such term in the
      recitals hereto.

     

    Additional
      Eligible Resorts or Additional Eligible Resort.
      The
      terms “Additional Eligible Resorts” and “Additional Eligible Resort” shall have
      the meanings ascribed to such terms in Section 3.5
      hereof.

     

    Advance.
      A
      portion of the proceeds of the Loan advanced from time to time by Lender to
      Borrower in accordance with the terms of this Agreement.

     

    Affiliate.
      Any
      party controlled by, controlling, or under common control with,
      Borrower.

     

    Agreement.
      This
      Consolidated, Amended and Restated Loan and Security Agreement by and between
      Borrower and Lender, as it may be amended from time to time.

     

    Assignment
      of Notes Receivable and Mortgages.
      The
      term “Assignment of Notes Receivable and Mortgages” shall mean a recordable
      Collateral Assignment of Notes Receivable and Mortgages, in the form attached
      hereto as Exhibit A, made by Borrower in favor of Lender, evidencing the
      assignment to Lender, of all of the Pledged Notes Receivable and
      Mortgages.

     

    Borrowing
      Base.
      With
      respect to each Eligible Note Receivable pledged to Lender hereunder in
      connection with each Advance from and after the Effective Date, an amount equal
      to seventy-five percent (75%) of the remaining principal balance of each such
      Eligible Note Receivable.

     

    Business
      Day.
      Each
      day that is not a Saturday, a Sunday or a legal holiday under the laws of the
      State of Rhode Island, the State of Connecticut or the State of
      Texas.

     

    Collateral.
      The
      term “Collateral” shall mean, singly and collectively, the Acquisition Loan
      Component Collateral, the Inventory Loan Component Collateral and the Receivable
      Loan Component Collateral.

     

    Closing
      Date.
      The
      term “Closing Date” shall mean the date hereof.

     

    Code.
      The
      Uniform Commercial Code in force in the State of Rhode Island as amended from
      time to time.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Commitment.
      The
      term “Commitment” shall refer singly to the obligation of Lender to make a Loan
      or Loans to Borrower and collectively to all Loans to be made by Lender to
      Borrower as provided herein. The maximum aggregate Commitment of Lender
      hereunder shall be $100,000,000.00,
      provided, however, that the maximum Commitment of Lender with respect to the
      Acquisition Loan Component shall be $20,000,000.00, the Maximum Commitment
      of
      the Lender with respect to the Inventory Loan Component shall be $40,000,000.00
      and the Maximum aggregate Commitment of Lender with respect to the Acquisition
      Loan Component and the Inventory Loan Component shall be
      $40,000,000.00.

     

    Common
      Elements.
      All
      common elements, including but not limited to any limited common elements,
      as
      each such common element is defined or provided for in the Declaration or other
      Timeshare Documents.

     

    Custodian.
      Wells
      Fargo Bank, National Association having an address of 751 Kasota Ave, MAC#
      N9328-011, Minneapolis, MN 55414, or such other custodial agent as may be
      approved by Lender in writing from time to time. Custodian shall be Lender's
      agent for the purpose of maintaining possession of all present and future
      Collateral documents described in Section
      3
      hereof.

     

    Custodial
      Agreement.
      The
      Custodial and Collateral Agency Agreement, dated as of January 13, 2005 by
      and
      among Lender, Borrower and Custodian, pursuant to which the Custodian is to
      maintain possession of all present and future Collateral documents described
      in
Section
      3
      hereof,
      or any custodial agreement entered into as a replacement of such
      agreement.

     

    Debtor
      Relief Laws.
      Any
      applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
      insolvency, reorganization or similar law, proceeding or device providing for
      the relief of debtors from time to time in effect and generally affecting the
      rights of creditors.

     

    Declaration
      or Declarations.
      With
      respect to each Resort or Real Property, the applicable Declaration or
      Declarations described on Schedule 1.1(a) attached hereto.

     

    Default.
      An
      event or condition the occurrence of which immediately is or, with a lapse
      of
      time or the giving or notice or both, becomes an Event of Default.

     

    Default
      Rate.
      The
      term “Default Rate” shall have the meaning given to such term in the applicable
      Note.

     

    Division
      or Commission.
      The
      governmental authority of each state in which a Resort or any Real Property
      is
      located, having jurisdiction over the establishment and operation of the Resorts
      in question and the sale of Intervals at such Resort.

     

    EBITDA.
      The
      term EBITDA means, with respect to any Person for any period: (a) the sum of
      (i)
      net income (but excluding any extraordinary gains or losses or any gains or
      losses from the sale or disposition of assets other than in the ordinary course
      of business), (ii) interest expense, (iii) depreciation and amortization and
      other non-cash items properly deducted in determining net income, and (iv)
      federal, state and local income taxes, in each case for such Person for such
      period, computed and calculated in accordance with GAAP minus (b) non-cash
      items
      properly added in determining net income, in each case for the corresponding
      period.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    Effective
      Date.
      The term
“Effective Date” shall have the meaning given in Section 13.1
      hereof.

     

    Eligible
      Notes Receivable.
      Those
      Pledged Notes Receivable which satisfy each of the following
      criteria:

     

    (i) Borrower
      shall be the sole payee;

     

    (ii) it
      arises
      from a bona fide sale by Borrower of one or more Intervals;

     

    (iii) the
      Interval sale from which it arises shall not have been cancelled by Purchaser,
      and any statutory or other applicable cancellation or rescission period shall
      have expired and the Interval sale is otherwise in compliance with this
      Agreement;

     

    (iv) it
      is
      secured by a Mortgage on the purchased Interval;

     

    (v) principal
      and interest payments on it are payable to Borrower in legal tender of the
      United States;

     

    (vi) payments
      of principal and interest on it are payable in equal monthly
      installments;

     

    (vii) it
      shall
      have an original term of no more than one hundred twenty (120)
      months;

     

    (viii) a
      cash
      down payment has been received from Purchaser or the maker in an amount equal
      to
      at least ten percent (10%) of the actual purchase price of each Interval, and
      Purchaser shall have received no cash or other rebates of any kind;

     

    (ix) no
      monthly installment is more than thirty (30) days contractually past due at
      the
      time of an Advance in respect of such Eligible Note Receivable, or more than
      sixty (60) days contractually past due at any time;

     

    (x) the
      rate
      of interest payable on the unpaid balance is at least the rate required so
      that
      when the Advance is made in respect of such Eligible Note Receivable the average
      interest rate on all Eligible Notes Receivable in respect of which Advances
      are
      outstanding shall not be less than thirteen percent (13%) per annum at any
      time,
      provided, however, that up to two percent (2.0%) of the Pledged Notes Receivable
      at any one time may consist of Notes Receivable that bear interest at a reduced
      rate under the Soldiers and Sailors Civil Relief Act, and any such Notes
      Receivable shall not be included in computing whether the average interest
      rate
      satisfies the foregoing requirement;

     

    
      
        
        

      

      
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    (xi) Purchaser
      of the related Interval has immediate access, for the timeshare “unit week”
related to such purchase, to the Interval described in the Mortgage securing
      such Eligible Note Receivable, which Interval has been completed, developed,
      and
      furnished in accordance with the specifications provided in the Purchaser’s
      purchase contract, public offering statement and other Timeshare Documents;
      and
      Purchaser has, subject to the terms of the Declaration, purchase contract,
      public offering statement and other Timeshare Documents, complete and
      unrestricted access to the related Interval and the Resort;

     

    (xii) neither
      Purchaser of the related Interval or any other maker of the Note is an Affiliate
      of, or related to, or employed by Borrower;

     

    (xiii) Purchaser
      or other maker has no claim against Borrower and no defense, set-off or
      counterclaim with respect to the Note Receivable;

     

    (xiv) the
      maximum remaining principal balance of any such Note Receivable shall not exceed
      $35,000 and such Note Receivable shall not be executed by a Purchaser or other
      maker if the total maximum remaining principal balance of the Notes Receivable
      executed by such Purchaser or other maker shall exceed $60,000 in the aggregate
      (or such greater amount as may be approved in writing in advance by Lender);
      provided, however, that up to ten percent (10%) of the outstanding principal
      balances of Pledged Notes Receivable at any one time may consist of a
      combination of “Eligible Larger Notes Receivable” and “Eligible Larger Aggregate
      Notes Receivable”. As used herein, the term “Eligible Larger Notes Receivable”
shall mean Notes Receivable in respect of which: [w] the maximum remaining
      principal balance of any such Note Receivable exceeds $35,000 but does not
      exceed $150,000 (each a “Larger
      Note Receivable”);
      and
      [x] such Note Receivable satisfies all of the other eligibility criteria set
      forth in the Agreement. As used herein, the term “Eligible Larger Aggregate
      Notes Receivable” shall mean Notes Receivable; (y) executed by a Purchaser or
      other maker obligated in connection with a Larger Note Receivable if the
      remaining principal balance of all Notes Receivable executed by such Purchaser
      or other maker does not exceed $250,000; and (z) which satisfy all of the other
      eligibility criteria set forth in this Agreement;

     

    (xv) it
      is
      executed by a U.S. or Canadian resident; provided, however, that no more than
      ten percent (10%) of the outstanding principal balance of all Eligible Notes
      Receivable shall at any time be comprised of Notes Receivable executed by
      Canadian residents, and, to the extent such outstanding principal balance of
      such Notes exceeds ten percent (10%), they shall not be considered Eligible
      Notes Receivable;

     

    
      
        
        

      

      
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    (xvi) the
      original of such Note Receivable has been endorsed to Lender and delivered
      to
      the Custodian as provided in this Agreement, and the terms thereof and all
      instruments related thereto shall comply in all respects with all applicable
      federal and state laws and the regulations promulgated thereunder;

     

    (xvii) the
      Unit
      in which the timeshare Interval being financed or evidenced by such Note
      Receivable is located, shall not be subject to any Lien which is not previously
      consented to in writing by Lender; and

     

    (xviii) if
      the
      loan is a newly originated Eligible Note Receivable which is replacing an
      existing Eligible Note Receivable pledged as Collateral under the Agreement
      and
      the proceeds have been used to finance the purchase of an Interval which is
      being upgraded by the Purchaser to a more expensive Interval: 

     

    (1) the
      principal balance of the existing Eligible Note Receivable which is being
      upgraded may still be included for purposes of calculating the Borrowing Base
      for a period of time expiring on the earlier to occur of (i) the 31st day after
      the consumer documents effecting the upgrade have been executed or (ii) the
      date
      on which any payment on such Eligible Note Receivable becomes thirty (30) or
      more days past due; 

     

    (2) on
      or
      before the second business day after the expiration of the statutory rescission
      period in connection with any consumer documents executed effecting any upgrade
      involving an Eligible Note Receivable and in any event within ten (10) days
      of
      such upgrade, the Borrower shall deliver to the Lender or its designee the
      original of the new promissory note, comparable instrument or installment sale
      contract executed in connection with such upgrade duly endorsed in blank by
      the
      Borrower and the Borrower will cause all payments made with respect to such
      new
      promissory note, comparable instrument or installment sale contract to be
      forwarded to the lockbox; and 

     

    (3) any
      new
      upgraded Note Receivable involving a prior Eligible Note Receivable shall only
      be included as part of the Borrowing Base if the prior Eligible Note Receivable
      has been removed from the Borrowing Base and the new upgraded Note Receivable
      satisfies all conditions for an Eligible Note Receivable.

     

    Encumbered
      Intervals.
      The
      Intervals subject to the Mortgages.

     

    
      
        
        

      

      
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    Environmental
      Laws.
      Comprehensive Environmental Response, Compensation and Liability Act of 1980,
      as
      amended from time to time (“CERCLA”),
      the
      Resource Conservation and Recovery Act of 1976, as amended from time to time
      (“RCRA”),
      the
      Superfund Amendments and Reauthorization Act of 1986, as amended, the federal
      Clean Air Act, the federal Clean Water Act, the federal Safe Drinking Water
      Act,
      the federal Toxic Substances Control Act, the federal Hazardous Materials
      Transportation Act, the federal Emergency Planning and Community Right to Know
      Act of 1986, the federal Endangered Species Act, the federal Occupational Safety
      and Health Act of 1970, the federal Water Pollution Control Act, all state
      and
      local environmental laws, rules and regulations of each state in which a Resort
      is located, as all of the foregoing legislation may be amended from time to
      time, and any regulations promulgated pursuant to the foregoing; together with
      any similar local, state or federal laws, rules, ordinances or regulations
      either in existence as of the date hereof, or enacted or promulgated after
      the
      date of this Agreement, that concern the management, control, storage,
      discharge, treatment, containment, removal and/or transport of Hazardous
      Materials or other substances that are or may become a threat to public health
      or the environment; together with any common law theory involving Hazardous
      Materials or substances which are (or alleged to be) hazardous to human health
      or the environment, based on nuisance, trespass, negligence, strict liability
      or
      other tortious conduct, or any other federal, state or local statute,
      regulation, rule, policy, or determination pertaining to health, hygiene, the
      environment or environmental conditions.

     

    Environmental
      Indemnification Agreement.
      The
      term “Environmental Indemnification Agreement” shall mean the Environmental
      Indemnification Agreement made by Borrower to Lender pursuant to this Original
      Loan Agreement, as the same has been and may be amended from time to
      time.

     

    Exchange
      Company.
      Resort
      Condominiums International, Inc. (“RCI”).

     

    Event
      of Default.
      The
      term “Event of Default” shall have the meaning given to such term in Section
8.1
      of this
      Agreement.

     

    Event
      of Non Funding.
      The
      term “Event of Non Funding” shall have the meaning given to such term in Section
2.6
      of this
      Agreement.

     

    Final
      Maturity Date.
      The
      term “Final Maturity Date” shall mean the applicable maturity date of each Loan
      Component as follows: (i) January 31, 2013 with respect to the Receivable Loan
      Component and (ii) January 31, 2012 with respect to each of the Acquisition
      Loan
      Component and the Inventory Loan Component.

     

    Financial
      Statements.
      The tax
      returns and balance sheets and statements of income and expense of Borrower,
      and
      the related notes and schedules delivered by Borrower to Lender prior to the
      date of this Agreement; as provided for in Section 4.4(c)(xvii)
      of this
      Agreement; and the monthly, quarterly and annual financial statements and
      reports required to be provided to Lender pursuant to Section 7.1(h).

     

    
      
        
        

      

      
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    GAAP.
      Generally accepted accounting principles, applied on a consistent basis, as
      described in Opinions of the Accounting Principles Board of the American
      Institute of Certified Public Accountants and/or in statements of the Financial
      Accounting Standards Board which are applicable in the circumstances as of
      the
      date in question.

     

    Hazardous
      Materials.
      “Hazardous substances,” “hazardous waste” or “hazardous constituents,” “toxic
      substances”, or “solid waste”, as defined in the Environmental Laws, and any
      other contaminant or any material, waste or substance which is petroleum or
      petroleum based, asbestos, polychlorinated biphenyls, flammable explosives,
      or
      radioactive materials.

     

    Interest
      Rate.
      The
      Interest Rate on: (i) the Receivable Note shall be a variable rate, adjusted
      as
      of each Prime Rate Determination Date, equal to the Prime Rate, determined
      as of
      each Prime Rate Determination Date and (ii) each of the Acquisition Note and
      the
      Inventory Note shall be a variable rate, adjusted as of each Prime Rate
      Determination Rate, equal to the Prime Rate, determined as of each Prime Rate
      Determination Date, plus one percent (1%) per annum. 

     

    Interval.
      With
      respect to each Resort the undivided fractional fee interval ownership interest
      as a tenant-in-common (sometimes referred to in the Timeshare Documents as
      a
      vacation ownership interest, condoshare interest, or condoshare week) in a
      Unit
      sold to a Purchaser by delivery of a deed for a time-share period per calendar
      year (or, in the case of a biennial use period, per alternate calendar year)
      of
      one week (as defined in the Declaration), together with all appurtenant rights
      and interests, including, without limitation, appurtenant rights to use Common
      Elements, and easement, license, access and use rights in and to all Resort
      facilities and amenities (as described in the Declaration), all as more
      particularly described in the Declaration or other Timeshare Documents.
      Notwithstanding the foregoing, the term “Interval” shall also include, with
      respect to the Oak N’ Spruce Resort only, the beneficial interest in the entity
      which owns each of the Units at the Oak N’ Spruce Resort, as evidenced by the
      delivery to the Purchaser of any such beneficial interest of a certificate
      of
      beneficial interest for a timeshare period per calendar year (or, in the case
      of
      biennial use period, per alternate calendar year) of one week (as defined in
      the
      Oak N’ Spruce Resort Declaration), together with all pertinent rights and
      interests, including, without limitation, a pertinent right to use Common
      Elements, and easements, license, access and use rights in and to all Oak N’
Spruce Resort facilities and amenities, all as more particularly described
      in
      the Declaration or other Timeshare Documents for the Oak N’ Spruce
      Resort.

     

    Interval
      Release Threshold.
      The
      term “Interval Release Threshold” shall mean 110% of the Required Retail Value
      of the Inventory. By way of example only, if the Required Retail Value of the
      Inventory is $66,666,666.66, the Inventory Release Threshold will be
      $73,333,333.33.

     

    Inventory.
      The
      term “Inventory” shall mean the Intervals from Eligible Resorts, fee title to
      which is held by the Borrower and on which Lender is granted a first mortgage
      lien to secure Advances of the Inventory Loan Component.

     

    
      
        
        

      

      
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    Inventory
      Loan Component.
      The
      term “Inventory Loan Component” shall mean that certain $40,000,000.00 timeshare
      interval inventory loan provided by Lender to Borrower pursuant to this
      Agreement. 

     

    Inventory
      Loan Component Collateral.
      Collectively, all now owned or hereafter acquired right, title and interest
      of
      Borrower, in all of the following:

     

    (i) the
      Inventory;

     

    (ii) documents,
      instruments, accounts, chattel paper, and general intangibles relating to the
      Inventory;

     

    (iii) the
      Acquisition Loan Component Collateral;

     

    (iv) the
      Receivable Loan Component Collateral;

     

    (v) the
      Silverleaf Finance II Stock;

     

    (vi) the
      Silverleaf Finance II Subordinated Note;

     

    (vii) all
      books, records, reports, computer tapes, disks and software relating to the
      Inventory Loan Component Collateral; and 

     

    (viii) all
      extensions, additions, improvements, betterments, renewals, substitutions and
      replacements of, for or to any of the Inventory Loan Component Collateral,
      wherever located, together with the products, proceeds, issues, rents and
      profits thereof, and any replacements, additions or accessions thereto or
      substitutions thereof.

     

    Inventory
      Mortgage or Inventory Mortgages.
      The
      term “Inventory Mortgage” or “Inventory Mortgages” shall mean, singly and
      collectively, a properly recorded, first priority mortgage, deed of trust,
      deed
      to secure debt, assignment of beneficial interest or other security instrument,
      as applicable, executed and delivered by Borrower to Lender encumbering all
      of
      the right, title and interest of the Borrower in the Intervals and related
      Common Elements, and related or appurtenant easement, access and use rights
      and
      benefits, that is collateral for the Inventory Loan Component.

     

    Inventory
      Note.
      The
      term “Inventory Note” shall have the meaning given to such term in the
      Recitals.

     

    Lien.
      Any
      interest in property securing an obligation owed to, or claim by, a Person
      other
      than the owner of such property, whether such interest arises in equity or
      is
      based on the common law, statute, or contract.

     

    Loan
      or Loans.
      The
      terms “Loan” and “Loans” mean, as the context requires, singly each loan and
      collectively all loans made to Borrower prior to the Effective Date pursuant
      to
      the Receivable Loan Agreement and the Restated Inventory Loan Agreement and
      all
      Loans made to Borrower after the Effective Date under this
      Agreement.

     

    
      
        
        

      

      
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    Loan
      Component.
      The
      term “Loan Component” shall mean, singly and collectively, the Acquisition Loan
      Component, the Inventory Loan Component and the Receivable Loan
      Component.

     

    Loan
      Documents.
      Collectively, the following documents and instruments listed below as such
      agreements, documents, instruments or certificates may be amended, renewed,
      extended, restated or supplemented from time to time.

     

    (i) This
      Agreement;

     

    (ii) The
      Receivable Note;

     

    (iii) The
      Inventory Note;

     

    (iv) The
      Acquisition Note;

     

    (v) The
      Environmental Indemnification Agreement;

     

    (vi) The
      Assignment of Notes Receivable and Mortgages;

     

    (vii) The
      Inventory Mortgages;

     

    (viii) The
      Real Property Mortgages;

     

    (ix) The
      Modifications to Inventory Mortgages;

     

    (x) Borrower’s
      Acquisition Certificate and Request for Advance;

     

    (xi) Borrower’s
      Inventory Certificate and Request for Advance;

     

    (xii) Borrower’s
      Receivable Certificate and Request for Advance;

     

    (xiii) The
      Lockbox Agreement;

     

    (xiv) The
      Custodial Agreement;

     

    (xv) The
      Silverleaf II Stock and Subordinated Note Pledge Agreement;

     

    (xvi) Financing
      Statements;
      UCC
      financing statements covering the Collateral, to be filed with the Texas
      Secretary of State and the Secretary of State and/or such other office where
      UCC
      financing statements are required to be filed pursuant to the Code;
      and

     

    (xvii) Other
      Items;
      Such
      other agreements, documents, instruments, certificates and materials as Lender
      may request to evidence the Obligations; to evidence and perfect the rights
      and
      Liens and security interests of Lender, contemplated by the Loan Documents,
      and
      to effectuate the transactions contemplated herein, as such agreements,
      documents, instruments or certificates may be hereafter amended, renewed,
      extended, restated or supplemented from time to time.

     

    
      
        
        

      

      
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    Loan
      to Retail Value Ratio.
      The
term
      “Loan
      to
      Retail Value Ratio” shall mean the ratio of the outstanding principal balance of
      the Inventory Loan Component, from time to time, to the Retail Value of the
      Inventory. The maximum Loan to Retail Value Ratio shall be 15%.

     

    Loan
      Year.
      The
      period commencing on the Closing Date through the last day of the next full
      twelve calendar month period and each successive twelve calendar month period
      thereafter during the Loan Term.

     

    Lockbox
      Agent.
      JP
      Morgan Chase Bank, a New York banking association having a place of business
      at
      2200 Ross Avenue, Dallas, Texas 75201, or such other financial
      institution as may be approved by Lender in writing from time to
      time.

     

    Lockbox
      Agreement.
      The
      Lockbox and Servicing Agreement, dated as of December 16, 1999, by and among
      Borrower, Lender, Servicing Agent and Lockbox Agent, pursuant to which the
      Lockbox Agent is to provide lockbox, reporting and related services and is
      to
      provide for the receipt of payments on the Notes Receivable and the disbursement
      of such payments to Lender.

     

    Management
      Agreements.
      Shall
      mean that certain Management Agreement by and between Silverleaf Club and
      Silverleaf Resorts, Inc., dated as of March 28, 1990, as amended to date and
      any
      other management agreement entered into by Borrower or any Affiliate of Borrower
      with respect to any Resort.

     

    Mandatory
      Prepayment.
      Any
      prepayment required by Section 2.5(a)(ii)
      and
      Section 2.5(c)(ii)
      of this
      Agreement.

     

    Marketing
      and Sales Expenses.
      Shall
      mean all promotion, lead generation, sales commissions and all other marketing
      expenses incurred or paid by Borrower pursuant to any marketing agreements
      or
      otherwise.

     

    Mortgage.
      A
      properly recorded, first priority mortgage, deed of trust, deed to secure debt,
      assignment of beneficial interest or other security instrument, as applicable,
      executed and delivered by each Purchaser to Borrower, securing a Pledged Note
      Receivable and encumbering all of the right, title and interest of such
      Purchaser in the related Encumbered Interval and Common Elements, and related
      or
      appurtenant easement, access and use rights and benefits. Lender acknowledges
      that assignments of beneficial interest executed by Purchasers of Intervals
      at
      Oak N’ Spruce Resort after July 2004 will not be recorded. 

     

    Modification(s)
      to Inventory Mortgages.
      Properly recorded amendment and restatement(s) or modification(s) of any
      existing Inventory Mortgages, in form and substance reasonably acceptable to
      Lender, for the purpose of securing the Loan, including the Acquisition Loan
      Component and the Receivable Loan Component.

     

    
      
        
        

      

      
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    Net
      Securitization Cash Flow.
      The term
“Net Securitization Cash Flow” shall mean all right, title and interest of
      Silverleaf Finance II, Inc., a wholly owned subsidiary of Borrower, in any
      excess cash flow derived from the Notes Receivable sold by Borrower to
      Silverleaf Finance II, Inc. and then sold by Silverleaf Finance II, Inc. to
      Textron Financial Corporation, as Group Two Lender under the Silverleaf Finance
      II Documents.

     

    Note.
      The
      term “Note” shall mean, singly and collectively, the Acquisition Note, in the
      form and substance attached here as Exhibit B-1, the Inventory Note, in the
      form
      and substance attached here as Exhibit B-2, and the Receivable Note, in the
      form
      and substance attached here as Exhibit B-3, as the case may be.

     

    Note
      Receivable.
      A
      promissory note executed in favor of Borrower in connection with a Purchaser’s
      acquisition of an Interval.

     

    Obligations.
      All
      amounts due or becoming due to Lender in respect of the Loan or Loans under
      any
      of the Loan Documents, including principal, interest, prepayment premiums,
      contributions, taxes, insurance, loan charges, custodial fees, attorneys’ and
      paralegals’ fees and expenses and other fees or expenses incurred by Lender or
      advanced to or on behalf of Borrower by Lender pursuant to any of the Loan
      Documents, and the prompt and complete payment and performance by Borrower
      of
      all obligations, indebtedness and liabilities pursuant to this Agreement or
      any
      of the Loan Documents or otherwise

     

    Operating
      Contract or Operating Contracts.
      As
      defined in Section 6.20.

     

    Operating
      Expenses.
      Shall
      mean the total of all expenditures, computed in accordance with Generally
      Accepted Accounting Principles, of whatever kind relating to the ownership,
      operation, maintenance and management of the Resorts that are incurred on a
      regular monthly or other periodic basis, including, without limitation,
      utilities, ordinary and capital repairs and maintenance, insurance premiums,
      license fees, property taxes and assessments, management fees, payroll and
      related taxes, computer processing charges, operational equipment or other
      lease
      payments as approved by Lender, and other similar costs.

     

    Participant.
      Participant shall mean, singly and collectively, any bank or other entity,
      which
      is indirectly or directly funding Lender with respect to the Loan, in whole
      or
      in part, including, without limitation, any direct or indirect assignee of,
      or
      participant in, the Loan.

     

    Payment
      Authorization Agreement.
      Pre-authorized electronic debit agreement by a Purchaser for payment of a Note
      Receivable.

     

    Person.
      An
      individual, partnership, corporation, limited liability company, trust,
      unincorporated organization, other entity, or a government or agency or
      political subdivision thereof.

     

    
      
        
        

      

      
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    Pledged
      Notes Receivable.
      Any
      Note Receivable which at any time has been pledged to Lender by Borrower
      pursuant to this Agreement or any of the Loan Documents.

     

    Prescribed
      Laws.
      The
      term “Prescribed Laws” shall mean, collectively, (a) the Uniting and
      Strengthening America by Providing Appropriate Tools Required to Intercept
      and
      Obstruct Terrorism Act of 2001 (Public Law 107 56) (the USA PATRIOT Act), (b)
      Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001,
      and relating to Blocking Property and Prohibiting Transactions With Persons
      Who
      Commit, Threaten to Commit, or Support Terrorism, (c) the International
      Emergency Economic Power Act, 50 U.S.C. § 1701 et seq., (d) the Trading with the
      Enemy Act, 50 U.S.C. App. 1 et seq., and (d) all other Legal Requirements
      relating to money laundering or terrorism, and, in each case, any Executive
      Orders or regulations promulgated under any such laws.

     

    Prime
      Rate Determination Date.
      The
      term “Prime Rate Determination Date” shall mean the first day of each month,
      provided, however, that if the first day of any month is not a Business Day,
      than the Prime Rate Determination Date for such month shall be the Business
      Day
      immediately preceding the first day of the month in question. Notwithstanding
      the foregoing, the initial Prime Rate Determination Date shall be the Effective
      Date.

     

    Prime
      Rate.
      The
      highest prime rate of interest from time to time announced or published in
      the
      Money Rates column of the Wall Street Journal (Eastern Edition) (the “WSJ”). In
      the event that the prime rate established by the WSJ shall no longer be
      available, due to either the nonexistence of the WSJ or the WSJ’s failure to
      publish a prime rate, then the Prime Rate shall be the highest prime rate
      published by a major money center bank selected by Lender.

     

    Property
      or Properties.
      Any
      interest in any kind of property or asset, whether real, personal or mixed,
      tangible or intangible.

     

    Purchase
      Price.
      The
      total purchase price of a timeshare Interval, as set forth in the Timeshare
      Documents and Note Receivable relating to the purchase of such
      Interval.

     

    Purchaser.
      Any
      Person who purchases one or more Intervals.

     

    Quarterly
      Financial Report.
      Individually and collectively, as applicable, the financial reports delivered
      in
      accordance with Section 7.1(h)(i).

     

    Real
      Property.
      The
      term “Real Property” shall mean real property, both improved and unimproved,
      purchased by the Borrower using proceeds of an Advance of the Acquisition Loan
      Component in accordance with the terms and conditions of this Agreement.
“Unimproved” Real Property shall mean either raw land or Real Property that is
      partially improved. “Improved” Real Property shall mean Real Property that is
      improved with completed infrastructure and other improvements suitable, in
      Lender’s sole discretion, for use as a timeshare resort or for timeshare
      marketing.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    Real
      Property Mortgages.
      The
      term “Real Property Mortgage(s)” shall mean a first priority mortgage, deed of
      trust, deed to secure debt or other similar instrument granted by Borrower
      to
      Lender, to secure each Advance of the Acquisition Loan Component, in the form
      and substance attached here as Exhibit C and containing such changes and
      modifications as are necessary to reflect the law of the state in which the
      Real
      Property in question is located.

     

    Receivable
      Loan Component Collateral.
      Collectively, all now owned or hereafter acquired right, title and interest
      of
      Borrower, in all of the following:

     

    (i) Pledged
      Notes Receivable and all proceeds of or from them;

     

    (ii) Mortgages
      and all proceeds of or from them;

     

    (iii) documents,
      instruments, accounts, chattel paper, and general intangibles relating to the
      Pledged Notes Receivable and the related Mortgages;

     

    (iv) the
      Inventory Loan Component Collateral;

     

    (v) the
      Acquisition Loan Component Collateral; 

     

    (vi) the
      Silverleaf Finance II Stock;

     

    (vii) the
      Silverleaf Finance II Subordinated Note;

     

    (viii) all
      books, records, reports, computer tapes, discs and software relating to the
      Receivable Loan Component Collateral; and

     

    (ix) all
      extensions, additions, improvements, betterments, renewals, substitutions and
      replacements of, for or to any of the Receivable Loan Component Collateral,
      wherever located, together with the products, proceeds, issues, rents and
      profits thereof, and any replacements, additions or accessions thereto or
      substitutions thereof.

     

    Receivable
      Note.
      The term
“Receivable Note” shall have the meaning given to such term in the
      Recitals.

     

    Release
      Price.
      The
      term “Release Price” shall have the meaning ascribed to such term in Section
2.4(b)(ii).

     

    Retail
      Value.
      The
      term “Retail Value” shall mean the fair market value of the Inventory and each
      Interval constituting part of the Inventory, as determined by Lender in its
      sole
      discretion.

     

    Required
      Retail Value.
      The
      term “Required Retail Value” shall mean the aggregate Retail Value of the
      Inventory, such that the ratio of the outstanding balance of the Loan, from
      time
      to time, to the aggregate Retail Value of the Inventory does not exceed the
      Loan
      to Retail Value Ratio. By way of example, if the outstanding principal balance
      of the Inventory Loan Component were $10,000,000, the Required Retail Value
      of
      the Inventory will be $66,666,666.66.

     

    Resort
      or Resorts (also “Eligible Resort” or “Eligible
      Resorts”).
      Individually and collectively, as applicable, each or all of the interval
      ownership and time-share projects consisting of: (i) (A) Holly Lake Ranch,
      Hawkins, Texas; (B) Piney Shores Resort, Conroe, Texas; (C) Lake O’ The Woods,
      Flint, Texas; (D) Hill Country Resort, Canyon Lake, Texas; (E) Ozark Mountain
      Resort, Kimberling City, Missouri; (F) Holiday Hills Resort, Branson, Missouri;
      (G) Fox River Resort, LaSalle County, Illinois; (H) Timber Creek Resort,
      Jefferson County, Missouri (I) Oak N’ Spruce Resort, South Lee, Massachusetts;
      (J) Apple Mountain Resort, Habersham County, Georgia; (K) The Villages, Flint,
      Texas; (L) Silverleaf’s Seaside Resort, Galveston County, Texas; (M) Orlando
      Breeze Resort, Polk County, Florida (also sometimes individually and
      collectively referred to herein as the “Existing Resorts”) and (ii) subject to
      Lender’s prior written approval and satisfaction by Borrower of the conditions
      precedent set forth in Sections 3.5
      and
4.4
      hereof,
      the Additional Eligible Resorts. The term “Resort” or “Resorts” includes, among
      other things, the undivided annual or (biennial) timeshare ownership interests
      (Intervals) in the respective Resorts, and the appurtenant exclusive rights
      to
      use Units in one or more buildings or phases and all appurtenant or related
      properties, amenities, facilities, equipment, appliances, fixtures, easements,
      licenses, rights and interests, including without limitation, the Common
      Elements, as established by and more fully defined and described in the
      respective Declarations, and the other Timeshare Documents.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    Revenues.
      Shall
      mean all proceeds from the sale of Intervals, regardless of whether such
      proceeds are in the form of cash or Notes Receivable.

     

    Revolving
      Loan Term.
      Shall
      mean the period commencing on the Closing Date and ending on January 31,
      2010.

     

    Security.
      Shall
      have the same meaning as in Section 2(1) of the Securities Act of 1933, as
      amended.

     

    Servicing
      Agent.
      Lender’s exclusive agent, which shall be such Person or Persons designated by
      Borrower and approved by Lender in its sole discretion, for the purposes of
      billing and collecting amounts due on account of the Pledged Notes Receivable,
      providing reports pursuant to the Lockbox Agreement and performing other
      servicing functions not performed by the Lockbox Agent. 

     

    Silverleaf
      Club.
      Shall
      mean Silverleaf Club, a Texas non-profit corporation.

     

    Silverleaf
      Finance II Documents.
      Shall
      mean the SPV Loan Agreement, the Developer Transfer Agreement, the Demand Notes
      and all other agreements or documents executed in connection with the TFC
      Conduit Loan, as each may be amended, restated or otherwise modified from time
      to time.

     

    
      
        
        

      

      
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    Silverleaf
      Finance II Stock.
      Shall
      mean all equity interests in Silverleaf Finance II, Inc., all documents,
      certificates or instruments representing any of the foregoing and all cash,
      securities, dividends, rights and other property at any time received or
      receivable in respect of or in exchange for the foregoing, and all proceeds
      of
      the foregoing.

     

    Silverleaf
      Finance II Subordinated Note.
      Shall
      mean the Subordinated Note, dated as of December 19, 2003, payable by SPV to
      the
      order of Silverleaf Resorts, Inc., and any other promissory note issued in
      replacement or restatement thereof, or otherwise issued to evidence SPV’s
      obligation to pay the deferred purchase price of Receivables under the Developer
      Transfer Agreement which is part of the Silverleaf Finance II Documents, in
      each
      case as amended or otherwise modified from time to time, and all proceeds of
      the
      foregoing.

     

    Silverleaf
      Finance II Stock and Subordinated Note Pledge Agreement.
      Shall
      mean the agreement pursuant to which the Silverleaf Finance II Stock and the
      Silverleaf Finance II Subordinated Note is pledged to Lender, as security for
      the Loan.

     

    SPV.
      Shall
      mean Silverleaf Finance II, Inc., a Delaware corporation.

     

    SPV
      Assets.
      Shall
      mean all assets sold or conveyed by Borrower to the SPV pursuant to the
      Silverleaf Finance II Documents.

     

    SPV
      Subordination Agreement.
      Shall
      mean that certain Subordination Agreement relating to Lender’s interest in the
      Silverleaf Finance II Stock and the Silverleaf Finance II Subordinated Note,
      dated as of December 19, 2003 by and among Textron Financial Corporation, in
      its
      capacity as Lender and in its capacity as lender under the Group Two Documents
      (as such term is defined in the SPV Subordination Agreement), as may be amended,
      restated or modified from time to time.

     

    Stock
      and Subordinated Note Pledge Agreement.
      Shall
      mean the agreement pursuant to which all issued and outstanding shares of
      Silverleaf Finance II, Inc.’s capital stock and all right, title and interest in
      such shares, all certificates, instruments or other documents evidencing or
      representing the same and all dividends and distributions therefrom, including
      dividends and distributions paid in stock (the “Silverleaf
      Finance II, Inc. Stock”),
      and
      the subordinated note evidencing Silverleaf Finance II, Inc.’s obligation to pay
      the deferred purchase price of the receivables under the Silverleaf Finance
      II
      Documents are pledged to Lender, as security for the Loan.

     

    Survey.
      A plat
      or survey of the Resorts or the Real Property, as the case may be, prepared
      by a
      licensed surveyor acceptable to Lender and in a form acceptable to
      Lender.

     

    Term.
      The
      period beginning on the Closing Date and ending on the applicable Final Maturity
      Date.

     

    TFC
      Conduit Loan.
      Shall
      mean that certain loan facility provided by Textron Financial Corporation (TFC)
      to SPV in accordance with the terms of the Silverleaf Finance II
      Documents.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    Timeshare
      Act.
      Any
      statute, act, regulation, ordinance, rule or law applicable to the establishment
      and operation of the Resorts and the sales of the Intervals.

     

    Timeshare
      Documents.
      Any
      registration statement required under any Timeshare Act approving the
      establishment and operation of the Resorts and the sales of
      Intervals.

     

    Timeshare
      Owners’ Association.
      With
      respect to each Resort, the applicable not-for-profit corporations described
      on
      Schedule 1.1(b).

     

    Tangible
      Net Worth.
      Tangible Net Worth means, with respect to any Person, the amount calculated
      in
      accordance with GAAP as: (i) the consolidated net worth of such Person and
      its
      consolidated subsidiaries, minus (ii) the consolidated intangibles of such
      Person and its consolidated subsidiaries, including, without limitation,
      goodwill, trademarks, tradenames, copyrights, patents, patent allocations,
      licenses and rights in any of the foregoing and other items treated as
      intangible in accordance with GAAP. Notwithstanding the foregoing, if subsequent
      to the Effective Date deferred sales are no longer considered an asset under
      GAAP, Lender agrees, at the request of Borrower, to determine, in its reasonable
      discretion, whether deferred sales should continue to be considered an asset
      for
      purposes of determining Borrower’s Tangible Net Worth.

     

    Total
      Interest Expense.
      For any
      period, the aggregate amount of interest required to be paid or accrued by
      Borrower and its subsidiaries during such period on all indebtedness of Borrower
      and its subsidiaries outstanding during all or any part of such period, whether
      such interest was or is required to be reflected as an item of expense or
      capitalized, including payments consisting of interest in respect of any
      capitalized lease, or any synthetic lease and including commitment fees, agency
      fees, facility fees, balance deficiency fees and similar fees or expenses in
      connection with the borrowing of money.

     

    UCC
      Financing Statements.
      The
      UCC-1 Financing Statements, naming Borrower as debtor and Lender as secured
      party, heretofore or hereafter filed in connection with the Loans and all
      amendments thereto.

     

    Unit.
      With
      respect to each Resort, one living unit in a building incorporated into the
      Resort pursuant to the Declaration, together with all related or appurtenant
      Common Elements and related or appurtenant interests in services, easements
      and
      other rights or benefits, as described and provided for in the Declaration,
      including but not limited to the right to use the Resort amenities and
      facilities in accordance with the Timeshare Documents.

     

    Section
      2-The Loan

     

    2.1 Facility
      Fee.
      Borrower acknowledges and agrees that the following facility fees shall be
      due
      and payable to Lender: (i) with respect to the Receivable Loan Component, a
      facility fee in the amount of $90,000.00 shall be paid to Lender and (ii) with
      respect to the Inventory Loan Component and the Acquisition Loan Component,
      a
      facility fee of $247,000.00 shall be paid to Lender. Borrower acknowledges,
      agrees and confirms that Lender has earned each such facility fee
      notwithstanding whether the Loan or any portion is funded and further agrees
      that the facility fee shall be payable by Borrower to Lender upon execution
      of
      this Agreement by Borrower.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    2.2 Revolving
      Loan and Lending Limits. 

     

    (a) Receivable
      Loan Component:

     

    (i) Revolving
      Loan.
      Upon
      the terms and subject to the conditions set forth in this Agreement, Lender
      agrees during the Revolving Loan Term to make a loan or loans to Borrower with
      respect to the Receivable Loan Component, and Borrower may borrow, repay and
      reborrow during the Revolving Loan Term with respect to the Receivable Loan
      Component.

     

    (ii) Lending
      Limits.
      Subject
      to Section 2.7
      hereof,
      Borrower acknowledges, agrees and confirms that the obligations of Lender to
      make Loans under this Agreement to Borrower is limited to the lesser of: (i)
      the
      Borrowing Base or (ii) the maximum aggregate Commitment of
      $100,000,000.00. 

     

    (iii) Note
      Evidencing Borrower’s Obligations.
      Borrower’s obligations to pay the principal of and interest on the Loan or Loans
      made by Lender with respect to the Receivable Loan Component shall be evidenced
      by the Receivable Note to Lender, which Receivable Note shall be dated as of
      the
      date hereof and be in the principal amount of $100,000,000.00. The Receivable
      Note will mature on the Final Maturity Date applicable to the Receivable Loan
      Component, bear interest as provided in Section 2.3
      hereof
      and be otherwise entitled to the benefits of this Agreement. Notwithstanding
      the
      stated principal amount of the Receivable Note, the aggregate outstanding
      principal amount of the Loan with respect to the Receivable Loan Component
      at
      any time shall be the aggregate principal amount owing on the Receivable Note
      at
      such time. Lender is hereby authorized to record in its internal books and
      records the date and amount of each Advance made by Lender to Borrower with
      respect to the Receivable Loan Component, the interest rate and interest period
      applicable thereto and each repayment thereof; and such books and records shall,
      as between Borrower and Lender, absent manifest error, constitute prima facie
      evidence of the accuracy of the information contained therein. Failure by Lender
      to so record any Advance made by Lender to Borrower with respect to the
      Receivable Loan Component, (or any error in such recordation) or any payment
      thereon shall not affect the Obligations of Borrower under this Agreement or
      under the Receivable Note and shall not adversely affect Lender’s rights under
      this Agreement with respect to the repayment thereof. 

     

    (iv) Making
      of Advances.
      Upon
      receipt by Lender from Borrower of a written request for Advance with respect
      to
      the Receivable Loan Component in accordance with Section
      5
      hereof
      and Borrower’s satisfaction of the requirements set forth in Section
      5
      hereof,
      Lender shall fund
      such
      Advance to Borrower in accordance with Borrower’s written request as provided in
Section
      5
      hereof.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (b) Inventory
      Loan Component.
      Upon
      the terms and subject to the conditions set forth in this Agreement, including,
      but not limited to, Section 2.7
      hereof,
      during the Revolving Loan Term the Lender shall make Advances with respect
      to
      the Inventory Loan Component to the Borrower, and the Borrower may borrow,
      repay
      and in the aggregate reborrow during the Revolving Loan Term, in an amount
      not
      to exceed at any time in the aggregate the lesser of: (i) the Loan to Retail
      Value Ratio of the Required Retail Value of the Inventory or (ii)
      $40,000,000.00.

     

    (c) Acquisition
      Loan Component.
      Upon
      the terms and subject to the conditions set forth in this Agreement, including
      but not limited to Section 2.7
      hereof,
      the Lender shall, in its sole and absolute discretion, make Advances with
      respect to the Acquisition Loan Component to the Borrower, and the Borrower
      may,
      subject to Lender’s approval, borrow, repay and reborrow from the Acquisition
      Loan Component during the Revolving Loan Term in an amount not to exceed at
      any
      time the lesser of (i)[A] with respect to unimproved Real Property, 70% of
      the
      actual cost paid by Borrower for said Real Property; or [B] with respect to
      the
      improved Real Property, 75% of the actual cost paid by Borrower for such Real
      Property or (ii) $20,000,000.00; provided, however, that the fair market value
      of any such property, as determined by Lender in its sole discretion based
      on an
      acceptable appraisal, shall in each case equal or exceed such actual
      costs.

     

    2.3 Interest
      Rate.
      From
      and after the Effective Date, the aggregate principal amount of all Advances,
      that are outstanding from time to time, shall bear interest at the applicable
      Interest Rate. Each Advance shall bear interest at the applicable Interest
      Rate
      as of the date of Lender’s wiring of funds to Borrower through the date of
      Lender’s receipt of repayment of the applicable Loan Component (if received by
      Lender later than 12 noon, Eastern Standard Time, then interest accrual shall
      be
      through the next Business Day following such receipt). Interest will accrue
      daily, and shall be payable monthly in arrears. Immediately upon the occurrence
      of an Event of Default and after the Final Maturity Date (if a Loan Component
      is
      not paid in full on the applicable Final Maturity Date), at Lender’s election in
      its sole discretion, the entire Loan will bear interest at the Default
      Rate. 

     

    2.4 Payments.
      From
      and after the Effective Date, Borrower agrees punctually to pay or cause to
      be
      paid to Lender all principal and interest due under each Note in respect of
      the
      Loans. Borrower shall make the following payments on the Loan:

     

    (a) Receivable
      Loan Component:

     

    (i) Monthly
      Payments.
      Borrower shall direct or otherwise cause all makers of all Pledged Notes
      Receivable to pay all monies due thereunder to the lockbox established pursuant
      to the Lockbox Agreement, or as otherwise required by Lender. One hundred
      percent (100%) of the cleared funds collected from the Pledged Notes Receivable
      each week will be paid to Lender by the Lockbox Agent pursuant to the Lockbox
      Agreement, and will be applied by Lender first to the payment of costs or
      expenses incurred by Lender pursuant to this Agreement in creating, maintaining,
      protecting or enforcing the Liens in and to the Collateral and in collecting
      any
      amounts due to Lender in connection with the Loan (“Collection
      Costs”).
      After
      payment of Collection Costs, Lender shall apply each such payment in the
      following order: (i) to any interest accrued at the applicable Default
      Rate; (ii) then to interest accrued and payable at the applicable Interest
      Rate; and (iii) then to outstanding principal. In the event that the payments
      received by Lender are insufficient to pay the Collection Costs and the amounts
      described in aforementioned clauses (i)-(ii), then Borrower shall pay the
      difference to Lender on or before the fifth (5th) day of the following month.
      In
      the event Borrower receives any payments on any of the Pledged Notes Receivable
      directly from or on behalf of the maker or makers thereof, Borrower shall
      receive all such payments in trust for the sole and exclusive benefit of Lender;
      and Borrower shall deliver to the Lockbox Agent all such payments (in the form
      so received by Borrower) as and when received by Borrower, unless Lender shall
      have notified Borrower to deliver directly to Lender all payments in respect
      of
      the Pledged Notes Receivable which may be received by Borrower, in which event
      all such payments (in the form received) shall be endorsed by Borrower to Lender
      and delivered to Lender promptly upon Borrower’s receipt thereof.

     

    
      
        
        

      

      
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    (ii) Final
      Payment.
      The
      entire outstanding principal amount of the Receivable Loan Component, together
      with all other Obligations related to the Receivable Loan Component, shall
      be
      due and payable on the applicable Final Maturity Date.

     

    (b) Inventory
      Loan Component.

     

    (i) Monthly
      Payments.
      The
      Borrower shall pay to Lender, on the first day of each month during the Term,
      commencing on February 1, 2007, interest on the outstanding principal balance
      of
      the Inventory Loan Component, from time to time, at the applicable Interest
      Rate. Lender shall apply each such payment in the following order: (i) to
      the payment of all costs or expenses incurred by Lender pursuant to this
      Agreement in creating, maintaining, protecting or enforcing the Liens in and
      to
      the Collateral and in collecting any amount due to Lender in connection with
      the
      Loan; (ii) to any interest accrued at the Default Rate; (iii) to the
      payment of accrued and unpaid interest at the applicable Interest Rate; and
      (iv) to the reduction of the principal balance of the Inventory Loan
      Component. If the payment received by Lender with respect to any month is
      insufficient to pay in full all amounts due from Borrower to Lender under this
      Section 2.4(b)(i),
      Borrower shall pay the difference to Lender on or before the fifth (5th) day
      after notice from Lender to Borrower advising Borrower of such
      insufficiency.

     

    
      
        
        

      

      
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    (ii) Interval
      Release Price Payments.
      Prior
      to the release by Lender of any Interval from the Collateral in accordance
      with
      Section 2.9
      hereof,
      the Borrower shall pay to the Lender an amount equal to the greater of: (i)
      $1,600 for each such Interval, or (ii) an amount necessary to fully repay the
      Loan upon sale of 75% of the Inventory (the “Release
      Price”),
      which
      payment shall be applied by Lender in accordance with Section 2.4(b)(i);
      provided, however, that if the Retail Value of the Inventory, as determined
      by
      the Lender, is equal to or greater than the Interval Release Threshold, the
      Borrower shall not be required to pay a Release Payment with respect to the
      release of any Interval until the expiration of the Revolving Loan
      Term. 

     

    (iii) Final
      Payment.
      The
      entire outstanding principal amount of the Inventory Loan Component, together
      with all other Obligations related to shall be paid in full by not later than
      the applicable Final Maturity Date.

     

    (c) Acquisition
      Loan Component. 

     

    (i) Monthly
      Payments.
      The
      Borrower shall pay to Lender, on the first day of each month during the Term,
      commencing on February 1, 2007, interest on the outstanding principal balance
      of
      the Acquisition Loan Component, from time to time, at the applicable Interest
      Rate. If an Advance of the Acquisition Loan Component is not repaid within
      the
      earlier of (i) two years from the date of such Advance or (ii) the expiration
      of
      the Revolving Loan Term, then the remaining principal balance of such Advance
      will be repaid in equal monthly payments of principal over a three year period,
      together with interest thereon at the applicable Interest Rate, provided
      however, that if such three year period would extend beyond the applicable
      Final
      Maturity Date, such equal monthly payments, together with interest thereon
      at
      the applicable Interest Rate, will be adjusted so that such Advance is paid
      in
      full on or before the applicable Final Maturity Date. Lender shall apply each
      such payment in the following order: (i) to the payment of all costs or
      expenses incurred by Lender pursuant to this Agreement in creating, maintaining,
      protecting or enforcing the Liens in and to the Collateral and in collecting
      any
      amount due to Lender in connection with the Loan; (ii) to any interest accrued
      at the Default Rate; (iii) to the payment of accrued and unpaid interest at
      the applicable Interest Rate; and (iv) to the reduction of the principal
      balance of the Acquisition Loan Component. If the payment received by Lender
      with respect to any month is insufficient to pay in full all amounts due from
      Borrower to Lender under this Section 2.4(c),
      Borrower shall pay the difference to Lender on or before the fifth (5th) day
      after notice from Lender to Borrower advising Borrower of such
      insufficiency.

     

    (ii) Final
      Payment.
      The
      entire outstanding principal amount of the Acquisition Loan Component together
      with all other Obligations shall be paid in full by not later than the
      applicable Final Maturity Date.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    2.5 Prepayments. 

     

    (a) Receivable
      Loan Component. 

     

    (i) Voluntary
      Prepayments.
      Except
      for regular payments of interest and principal as provided hereunder,
      prepayments, (i) shall not be permitted during the Revolving Loan Term, and
      (ii)
      may be made, subject to Section 2.6
      hereof,
      in whole, but not in part, upon five (5) days prior written notice to the Lender
      at any time after the end of the Revolving Loan Term upon payment of the
      applicable Prepayment Premium (whether such prepayment results from voluntary
      payments by Borrower, acceleration, or otherwise); provided, however, that
      (A)
      payments or prepayments of Pledged Notes Receivable made by Purchasers who
      are
      not directly or indirectly solicited by Borrower to make such prepayment shall
      not violate this Section 2.5(a)(i),
      and no
      Prepayment Premium shall be payable as a result of any such payment by
      Purchasers; and (B) if at any time the Borrower wishes to release any Pledged
      Notes Receivable for the purpose of including those Pledged Notes Receivable
      in
      a securitization, pooling or similar conduit transaction, and after 30 days’
prior written notice to Lender, Borrower may prepay the principal balance of
      the
      Loan in whole or in part, to the extent necessary to cause the then current
      outstanding unpaid principal balance of the Loan to be equal to or less than
      the
      Borrowing Base, and, except as provided in Section 2.6
      hereof,
      no Prepayment Premium will be due where such prepayment is the result of a
      securitization closing, as certified by Borrower to Lender. If Borrower
      voluntarily prepays the entire Receivables Loan Component, then Borrower shall
      pay to Lender the fee described in Section 2.6
      hereof,
      shall no longer be entitled to Advances of the Acquisition Loan Component or
      the
      Inventory Loan Component and the outstanding principal balance under the
      Inventory Loan Component and the Acquisition Loan Component shall be repaid
      as
      provided in this Section 2.5(a)(i).

     

    (ii) Mandatory
      Prepayments. 

     

    (1) Overadvances.
      If at any time the outstanding principal balance of the Receivable Loan
      Component exceeds the Borrowing Base or the applicable maximum aggregate
      Commitment, Borrower shall, within five (5) Business Days after notice, either
      (A) prepay the Loan in an amount necessary to reduce the outstanding principal
      balance of the Loan with respect to the Receivable Loan Component to an amount
      within the lending limits set forth in Section 2.2(a)(ii),
      or (B)
      pledge and deliver to Lender such additional or replacement Eligible Notes
      Receivable such that the remaining outstanding principal balance of the Loan
      is
      within the lending limits set forth in Section 2.2(a)(ii).

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    (2) Ineligible
      Pledged Notes Receivable. If at any time after the expiration of the Revolving
      Loan Term, Lender determines that any Pledged Notes Receivable which are
      included in the Borrowing Base, do not qualify as Eligible Notes Receivable
      (“Ineligible
      Notes Receivable”),
      then
      Borrower shall, within five (5) Business Days after notice, either (A) prepay
      the Loan in an amount equal to the balance due under such Pledged Note
      Receivable, or (B) replace the Ineligible Note Receivable with an Eligible
      Note
      Receivable having an outstanding aggregate principal balance equal to or in
      excess of the outstanding principal balance of such Ineligible Note Receivable.
      The pledge and delivery to Lender of additional Eligible Notes Receivable shall
      comply with the document delivery and recordation requirements set forth in
      Section 5.1
      of this
      Agreement.

     

    (3) No
      Prepayment Premium. No Prepayment Premium shall be due in connection with any
      mandatory prepayment made in accordance with Sections 2.5(a)(ii)(1)
      or
2.5(a)(ii)(2)
      above.

     

    (iii) Prepayment
      Premium.
      Except
      as specifically set forth in Section 2.5(a)(i)
      above,
      any prepayment of the Loan pursuant to Section 2.5(a)(i)
      above
      must be accompanied by a prepayment premium (the “Prepayment
      Premium”)
      calculated, as of immediately prior to such prepayment, as follows:

     

    
      	
              Date
                of Prepayment

            	 	
              Premium

            
	 	 	 
	
              During
                the first Loan Year after the expiration of the Revolving Loan
                Term;

            	 	
              three
                percent (3%) of the then outstanding balance of the
                Loan;

            
	 	 	 
	
              During
                the second Loan Year after the expiration of the Revolving Loan
                Term;

            	 	
              two
                percent (2%) of the then outstanding balance of the
                Loan;

            
	 	 	 
	
              During
                the third Loan Year after the expiration of the Revolving Loan
                Term;

            	 	
              one
                percent (1%) of the then outstanding balance of the
                Loan;

            
	
              Thereafter
                

            	 	
              Zero

            


    

     

    (iv) Prepayment
      Premium upon Acceleration.
      If the
      Loan is accelerated based on an Event of Default prior to the expiration of
      the
      Revolving Loan Term, or if Borrower undertakes a voluntary prepayment prior
      to
      expiration of the Revolving Loan Term, at Lender’s sole discretion, payments on
      the Loan must include the Prepayment Premium that would be applicable if
      prepayment occurred in the first Loan Year after the expiration of the Revolving
      Loan Term.

     

    
      
        
        

      

      
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    (b) Acquisition
      Loan Component.
      The
      Acquisition Loan Component may be repaid in full or in part at any time
      including by a payment from an Advance of the Inventory Loan Component or the
      Receivable Loan Component. Borrower acknowledges, confirms and agrees that
      if
      there is sufficient availability under the Inventory Loan Component and the
      Receivable Loan Component, Borrower agrees that repayment of the Acquisition
      Loan Component shall be made first from an Advance of the Inventory Loan
      Component to the extent that there is availability under the Inventory Loan
      Component and then from availability under the Receivable Loan Component.
      Borrower further acknowledges, confirms and agrees that it shall not repay
      the
      Acquisition Loan Component from any other source while Borrower has availability
      to borrow under the Inventory Loan Component and/or the Receivable Loan
      Component. 

     

    (c) Inventory
      Component. 

     

    (i) Voluntary
      Prepayments.
      Borrower may not voluntarily prepay the Inventory Loan Component, in whole
      or in
      part, except that: (i) provided that no Event of Default shall have occurred
      and
      be continuing and (ii) Borrower pays the Release Price in accordance with
      Section 2.4(b)(ii)
      hereof,
      then at any time during the Term of the Loan, the Inventory Loan Component
      may
      be prepaid in part in connection with any prepayment which arises from release
      of any Interval from the Collateral, subject to Section 2.9
      hereof,
      provided, however, that so long as any prepayment is not made with the proceeds
      of a financing provided to Borrower by any other lender or financial institution
      (other than a securitization or bond offering), Borrower may prepay the
      Inventory Component in part so long as the Inventory Loan Component is not
      paid
      in full and this Agreement has not been terminated.

     

    (ii) Mandatory
      Prepayments. If
      at any
      time and for any reason, the outstanding unpaid principal balance of the
      Inventory Loan Component shall exceed the amount which satisfies the Loan to
      Retail Value Ratio, then, within five (5) Business Days following Borrower’s
      receipt of telecopied notice from Lender of the occurrence of such excess or,
      absent such telecopied notice, within fifteen (15) days after the end of the
      calendar month in which such excess occurred, Borrower shall either: (x) prepay
      the principal balance of the Inventory Loan Component in an amount equal to
      the
      difference between the aggregate principal amount of the Inventory Loan
      Component and the amount necessary to comply with the Loan to Retail Value
      Ratio
      of the Inventory or (y) Borrower shall grant to Lender a first mortgage Lien
      on
      additional Intervals from Eligible Resorts so that the Retail Value of the
      Inventory, including such additional Intervals, equals or exceeds the Required
      Retail Value of the Inventory and the Loan to Retail Value Ratio is satisfied.
      In granting to Lender a first mortgage lien on such additional Intervals,
      Borrower shall comply with the document delivery and recordation requirements
      set forth in Section
      4
      of this
      Agreement and Borrower shall deliver to Lender its written certification that
      the Retail Value of the Inventory, including such additional Intervals, is
      equal
      to or greater than the Required Retail Value and satisfies the Loan to Retail
      Value Ratio. If Borrower elects to prepay the excess principal balance of the
      Inventory Loan Component pursuant to this Section (ii) above, no prepayment
      premium shall be payable in connection with such prepayment.

     

    
      
        
        

      

      
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    (iii) Premiums.
      Notwithstanding anything herein contained to the contrary, any prepayment under
      this Section 2.5(c)
      must
      include all accrued but unpaid interest, and accrued but unpaid contributions,
      taxes, insurance, loan charges custodial fees, attorneys’ and paralegals’ fees
      and expenses, and other fees or expenses incurred by Lender or advanced to
      or on
      behalf of Borrower by Lender pursuant to any of the Loan Documents accrued
      but
      unpaid.

     

    2.6 Loan
      Component Ratio.
      Borrower shall maintain, at all times during the term of the Loan, a ratio
      between the outstanding principal balance of the Receivable Loan Component
      and
      the aggregate outstanding principal balances of the Acquisition Loan Component
      and the Inventory Loan Component of 1 to 1 for the trailing 6 month period
      computed monthly. If the 1 to 1 ratio is not maintained for any such six month
      period, and during that same period, the outstanding principal balance of the
      Receivable Loan Component is less than $40,000,000, Borrower shall pay Lender
      a
      fee equal to 1⁄4% of the difference between the outstanding principal balance of
      the Receivable Loan Component and $40,000,000. Furthermore, if either: (i)
      the
      ratio between the outstanding principal balance of the Receivable Loan Component
      and the aggregate outstanding principal balances of the Acquisition Loan
      Component and the Inventory Loan Component shall be less than .5 to 1 or (ii)
      the ratio between the outstanding principal balance of the Receivable Loan
      Component and the outstanding principal balance of the Acquisition Loan
      Component shall be less than 1 to 1 (each an “Event
      of Non Funding”),
      then
      Lender shall not be obligated to loan nor shall Borrower be entitled to borrow
      any Advance of the Inventory Loan Component or the Acquisition Loan
      Component.

     

    2.7 Maximum
      Obligation of Textron Financial Corporation Under the
      Loan.
      Borrower acknowledges, agrees and confirms as follows: (i) notwithstanding
      anything to the contrary in Section 2.2(c)
      hereof
      Lender shall not be obligated to make an Advance of the Acquisition Loan
      Component in excess of $15,000,000.00 with respect to any single Real Property;
      (ii) notwithstanding anything to the contrary in Section 2.2(b)
      and
2.2(c)
      hereof,
      the aggregate principal balance of the Acquisition Loan Component and the
      Inventory Loan Component shall not exceed $40,000,000.00; and (iii)
      notwithstanding anything to the contrary herein, in any other Loan Document
      or
      in any document evidencing or securing the Receivable Loan Component, the
      Inventory Loan Component and/or the Acquisition Loan Component, Lender shall
      not
      be obligated to fund any Advance hereunder, which when taken together with
      the
      loans or advances made by Lender to Borrower under this Agreement, the
      Receivable Loan Agreement and/or the Restated Inventory Loan Agreement would
      cause the aggregate amount of such loans and advances by Lender to Borrower
      to
      exceed a maximum aggregate amount of $100,000,000.00.

     

    
      
        
        

      

      
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    2.8 Suspension
      of Advances. 

     

    (a) Suspension
      of Sales.
      If any
      stay, order, cease and desist order, injunction, temporary restraining order
      or
      similar judicial or nonjudicial sanction shall be issued limiting or otherwise
      materially adversely affecting any Interval sales activities, other business
      operations in respect of the Resorts, or the enforcement of the remedies of
      Lender hereunder, then, in such event, Lender shall have no obligation to make
      any Advances hereunder: (i) in respect of Pledged Notes Receivable from the
      sale
      of Intervals which are the subject of any stay, order, cease and desist order,
      injunction, temporary restraining order or similar judicial or nonjudicial
      sanction has been issued until the stay, order, cease and desist order,
      injunction, temporary restraining order or similar judicial or nonjudicial
      sanction has been lifted or released to the satisfaction of Lender and (ii)
      in
      respect of Pledged Notes Receivable from the sale of Intervals at any Resort
      if:
      (x) the stay, order, cease and desist order, injunction, temporary restraining
      order or similar judicial or nonjudicial sanction in question has not been
      lifted or released to the satisfaction of Lender within sixty (60) days of
      its
      issuance and (y) there is a reduction in the total number of sales of Intervals
      by Borrower in any Loan Year of more than twenty percent (20%) from the total
      number of sales of Intervals in the immediately preceding Loan
      Year.

     

    (b) Change
      in Control.
      If
      there shall occur a change, singly or in the aggregate, of more than fifty
      percent (50%) of the executive management of Borrower as described in Schedule
      2.8(b) hereto, Lender shall have no obligation to make any Advances hereunder,
      unless within thirty (30) days prior thereto Borrower provides Lender with
      written information setting forth the replacement executive management personnel
      of Borrower together with a description of those Persons’ experience, ability
      and reputation, and Lender, acting in good faith, determines that the
      replacement management personnel’s experience, ability and reputation is equal
      to or greater than that of Borrower as set forth on Schedule 2.8(b). Lender
      shall have no obligation to make any Advances hereunder if more than two (2)
      of
      the five (5) Board of Directors’ positions are controlled by the Borrower’s bond
      holders.

     

    2.9 Release
      of Intervals from Inventory.
      Upon
      written request of the Borrower, and provided that no Event of Default shall
      have occurred and be continuing hereunder, Lender shall release from the
      Collateral, one or more Intervals subject to the following conditions: (i)
      payment by Borrower to Lender at the time of such release of the Release Price
      for each such Interval and (ii) the remaining Inventory Loan Component
      Collateral satisfies the Required Retail Value.

     

    2.10 Intentionally
      Omitted

     

    2.11 Partial
      Release of Real Property Mortgages.
      From
      time to time, Lender agrees to consider, at its sole discretion, requests from
      Borrower for a partial release of the lien of any Real Property Mortgage. Such
      release shall be subject to such terms and conditions as Lender may impose
      in
      its sole discretion.

     

    
      
        
        

      

      
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    Section
      3-Collateral

     

    3.1 Grant
      of Security Interest. 

     

    (a) To
      secure
      the payment and performance of the Obligations with respect to each Loan
      Component, for value received, Borrower unconditionally and irrevocably assigns,
      mortgages, conveys, transfers, pledges and grants to Lender:

     

    (i) with
      respect to the Receivable Loan Component, the Receivable Loan Component
      Collateral;

     

    (ii) with
      respect to the Acquisition Loan Component, the Acquisition Loan Component
      Collateral; and

     

    (iii) with
      respect to the Inventory Loan Component, the Inventory Loan Component
      Collateral.

     

    3.2 Financing
      Statements.
      Borrower agrees, at its own expense, to execute the financing statements,
      continuation statements and amendments provided for by the Code together with
      any and all other instruments or documents and take such other action as may
      be
      required to perfect and to continue the perfection of Lender’s security
      interests in the Collateral. Borrower hereby authorizes Lender to execute and/or
      file on Borrower’s behalf any such financing statements, continuation statements
      and amendments.

     

    3.3 Insurance.
      Insurance coverage with respect to the Resort(s) is provided by the Silverleaf
      Club. Borrower shall furnish Lender, upon request, with satisfactory evidence
      that the Units, Buildings and Resorts are adequately insured. Such insurance
      coverage shall insure against such risks, be in such amounts, with such
      companies and on such other terms as Lender may reasonably require. Each such
      policy shall name Lender as an additional insured and loss payee, as its
      interests may appear. Borrower shall also maintain insurance in accordance
      with
      Section 7.1(d)
      hereof.

     

    3.4 Protection
      of Collateral; Reimbursement.
      The
      portion of the Collateral consisting of: (i) the original Pledged Notes
      Receivable, (ii) the original Mortgages, (iii) the original purchase
      contracts (including addendum) related to such Pledged Notes Receivable and
      Mortgages, and (iv) originals or true copies of the related
      truth-in-lending disclosure, loan application, warranty deed, and if required
      by
      Lender, the related Purchaser’s acknowledgement receipt and the Exchange Company
      application and disclosures, shall be delivered at Borrower’s expense to the
      Custodian, and held in Custodian’s possession and control pursuant to the
      Custodial Agreement. All fees and costs arising under the Custodial Agreement
      shall be borne and paid by Borrower; and if Borrower fails to promptly pay
      any
      portion thereof when due, Lender may, at its option, but shall not be required
      to, pay the same and charge Borrower’s account therefor, and Borrower agrees
      promptly to reimburse Lender therefor with interest accruing thereon daily
      at
      the Default Rate. All sums so paid or incurred by Lender for any of the
      foregoing and any and all other sums for which Borrower may become liable
      hereunder and all costs and expenses (including attorneys’ and paralegals’ fees,
      legal expenses and court costs) which Lender may incur in enforcing or
      protecting its Lien on, or rights and interest in, the Collateral or any of
      its
      rights or remedies under this Agreement or any other Loan Document or with
      respect to any of the transactions hereunder or thereunder, until paid by
      Borrower to Lender with interest at the Default Rate, shall be included among
      the Obligations, and, as such, shall be secured by all of the Collateral. Lender
      shall not be liable or responsible in any way for the safekeeping of any of
      the
      Collateral or for any loss or damage thereto or for any diminution in the value
      thereof, or for any act or default of the Custodian, Lockbox Agent, or Servicing
      Agent or any warehouseman, carrier, forwarding agency, or other Person
      whomsoever.

     

    
      
        
        

      

      
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    3.5 Additional
      Eligible Resorts.
      From
      time to time during the Term, Borrower may propose to Lender that one or more
      additional time-share plans and projects owned and operated by Borrower be
      included among the Eligible Resorts in respect of which Advances may be made.
      Any such proposal will be in writing, and will be accompanied or supported
      by
      the due diligence and supporting Borrower, Affiliate, project, financial and
      related information identified in Section 4.4
      hereto,
      and such other information as Lender may require. Borrower will reasonably
      cooperate with Lender’s underwriting and due diligence, and Borrower will be
      responsible for payment upon billing for Lender’s out-of-pocket expenses in
      connection therewith. Subject to Lender’s underwriting and due diligence review,
      including satisfaction of the conditions in Section
      4
      and
Section
      5
      hereof
      as they relate to such additional time-share resorts, Lender may, but shall
      not
      be required to, approve one or more such additional time-share resorts,
      including future phases or condominiums in an Existing Eligible Resort, as
      an
      Eligible Resort qualifying for Advances under and subject to the terms of this
      Agreement and the other Loan Documents.

     

    Subject
      in each instance to Lender’s underwriting and due diligence review, and Lender’s
      prior written approval, any project as may be approved by Lender after the
      Closing Date, if any, is hereinafter referred to as an “Additional Eligible
      Resort”. Any Advances hereunder with respect to any Additional Eligible Resort
      will be subject to all terms and conditions of this Agreement and the other
      Loan
      Documents.

     

    3.6 Modification
      of Eligible Notes Receivable.
      Notwithstanding anything herein to the contrary, Borrower shall have the right
      to modify the interest rate and term only of the Eligible Notes Receivable
      without Lender’s prior consent, provided that: (i) any such change in the rate
      of interest on any one or more Eligible Notes Receivable shall not reduce the
      average interest rate on all Eligible Notes Receivable to less than twelve
      and
      one half percent (12 1⁄2%) per annum at any time; (ii) the term of no Eligible
      Notes Receivable shall be increased to a term longer than one hundred twenty
      (120) months from the date of the first required monthly payment of such
      Eligible Note Receivable, except that with respect to any Eligible Note
      Receivable in respect of which one or more monthly payments have been deferred,
      the term of such Eligible Note Receivable may be extended one month for each
      such deferred payment provided, however, that in no event shall the term of
      such
      Eligible Note Receivable be increased to a term longer than one hundred twenty
      eight (128) months from the date of the first required monthly payment of such
      Eligible Note Receivable; (iii) at no time may Borrower so modify the terms
      of
      Eligible Notes Receivable constituting more than fifteen percent (15%) of the
      outstanding principal balance of all Eligible Notes Receivable at any time.
      Solely for purposes of calculating the foregoing fifteen percent (15%) limit,
      an
      Eligible Note Receivable shall not be considered “to have been modified” if the
      Purchaser in respect of such note: (y) has made at least a ten percent (10%)
      down payment on the Interval and (z) has made at least six (6) monthly payments,
      with at least four (4) payments being made after the date the note was modified;
      (iv) Borrower immediately provides Lender with notice of any such modification
      together with any original documentation evidencing such modification and (v)
      no
      Eligible Note Receivable is modified more than once in any twelve (12) month
      period or more than twice during the term of such Eligible Note
      Receivable.

     

    
      
        
        

      

      
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    3.7 Assumption
      of Obligations under Eligible Notes Receivable.
      Notwithstanding anything herein to the contrary, upon the sale by a Purchaser
      of
      an Interval, the new Purchaser of the Interval may be substituted as obligor
      under the Eligible Note Receivable in question, provided that: (i) said new
      Purchaser assumes in writing all of the obligations of the original obligor
      under the Eligible Note Receivable in question; (ii) the Eligible Note
      Receivable continues to meet all of the criteria for an Eligible Note Receivable
      as set forth herein and (iii) the new Purchaser has made a cash down payment
      equal to at least 10% of the original sales price of the Interval in question,
      which down payment shall be in addition to the cash down payment made by the
      original obligor.

     

    3.8 Purchaser/Criteria.
      All
      Eligible Notes Receivable pledged as Collateral will be underwritten in a manner
      consistent with the Borrower’s general underwriting criteria, as approved in
      writing by Lender, including, without limitation, the requirement for a cash
      down payment of at least 15% of the sales price of the Interval for any
      Purchaser with a FICO indicator less than 600. Borrower shall not materially
      alter its general underwriting criteria without the prior written approval
      of
      Lender, which approval, Lender may withhold in its sole discretion. On a
      semi-annual basis, Borrower shall provide Lender with written certification
      that
      the underwriting criteria as approved by Lender remain in full force and effect
      and have not been revised or altered without Lender’s consent.

     

    3.9 Substitution
      of Inventory.
      Lender
      agrees that Borrower may, from time to time during the Term hereof, replace
      any
      Interval or Intervals by granting to Lender a first mortgage Lien on a new
      Interval or Intervals owned by the Borrower at an Eligible Resort. In granting
      to Lender a first mortgage Lien on any such new Interval or Intervals, Borrower
      shall comply with the document delivery and recordation requirements set forth
      in Section
      4
      of this
      Agreement and Borrower shall deliver to Lender its written certification that
      the Retail Value of the Inventory after any such substitution, is equal to
      or
      greater than the Required Retail Value and satisfies the Loan to Value Ratio.
      In
      connection with any such replacement of Inventory under this Section
3.9
      or
      Section 2.5(c)(i)
      hereof,
      Borrower may propose to Lender that one or more additional time-share plans
      and
      projects owned and operated by Borrower be included among the Eligible Resorts
      .
      Any such proposal will be in writing, and will be accompanied or supported
      by
      the due diligence and supporting Borrower, Affiliate, project, financial and
      related information identified in Section
      4
      hereto,
      and such other information as Lender may require. Borrower will reasonably
      cooperate with Lender’s underwriting and due diligence, and Borrower will be
      responsible for payment upon billing for Lender’s out-of-pocket expenses in
      connection therewith. Subject to Lender’s satisfactory underwriting and due
      diligence review, including satisfaction of the conditions in Section
      4
      and
Section
      5
      hereof
      as they relate to such additional time-share resorts, Lender may, but shall
      not
      be required to, approve one or more such additional time-share resorts,
      including future phases or condominiums in an Existing Eligible Resort, as
      an
      Eligible Resort. Subject in each instance to Lender’s acceptable underwriting
      and due diligence review, and Lender’s prior written approval, any project as
      may be approved by Lender after the Closing Date, if any, is hereinafter
      referred to singly as an “Additional
      Eligible Resort”
and
      collectively as the “Additional
      Eligible Resorts.”

     

    
      
        
        

      

      
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    3.10 Cross
      Collateralization.
      The
      Collateral secures all of the Obligations of Borrower under this Agreement.
      Upon
      repayment of any Loan Component and the satisfaction by Borrower of all of
      the
      Obligations with respect to any Loan Component, the Collateral shall continue
      to
      secure the remaining Loan Components to the extent outstanding as provided
      herein. 

     

    3.11 Security
      Interest in All Pledged Notes Receivable.
      Lender
      shall have a continuing security interest in all of the Pledged Notes
      Receivable, and Lender may collect all payments made under or in respect of
      all
      such Notes Receivable, including, without limitation, Eligible Notes Receivable
      that are or may become ineligible, until any of the same may be released by
      Lender, if at all, pursuant to Section 12.10
      hereof
      or Section 7.2(a)
      hereof.
      Notwithstanding anything heretofore to the contrary, unless and until an Event
      of Default shall occur, Borrower, as agent for and on behalf of Lender, shall
      retain possession of and collect all payments under or in respect of all Notes
      Receivable. By executing this Agreement, Borrower acknowledges and agrees that
      it is holding such Notes Receivable as bailee and agent for Lender. Borrower
      shall hold and designate such Notes Receivable in a manner that clearly
      indicates that they are being held by Borrower as bailee on behalf of
      Lender. 

     

    3.12 The
      Modification to Inventory Mortgages.
      If
      requested by Lender in order to fully secure the Obligations arising under
      this
      Agreement, including, without limitation, the Obligations arising with respect
      to the Acquisition Loan Component, Borrower shall execute and deliver to Lender,
      in form and substance reasonably acceptable to Lender, the Modifications to
      Inventory Mortgages.

     

    Section
      4-Conditions Precedent To The Closing

     

    4.1 Conditions
      Precedent.
      The
      obligation of Lender under this Agreement and the obligation to fund any
      Advance, including the initial Advance, hereunder shall be subject to the
      satisfaction of each of the following conditions precedent, in addition to
      all
      of the conditions precedent set forth elsewhere in the Loan
      Documents:

     

    (a) Representations,
      Warranties, Covenants and Agreements.
      The
      representations and warranties contained in the Loan Documents are and shall
      be
      true and correct in all respects, and all covenants and agreements have been
      complied with and are correct in all respects, and all covenants and agreements
      to have been complied with and performed by Borrower shall have been fully
      complied with and performed to the satisfaction of Lender.

     

    (b) No
      Prohibited Acts.
      Borrower shall not have taken any action or permitted any condition to exist
      which would have been prohibited by any provision of this Agreement or the
      Loan
      Documents.

     

    (c) No
      Changes.
      That
      all information and documents heretofore delivered by Borrower to Lender with
      respect to Borrower or the Existing Resorts, including information and documents
      delivered in connection with the Original Loan and the Inventory Loan, remain
      true and correct in all respects.

     

    (d) Approval
      of Documents Prior to Effective Date.
      Borrower has delivered to Lender (with copies to Lender’s counsel), and Lender
      has reviewed and approved the form and content of all of the items specified
      in
      Subsection 4.1(d)(i)
      through
4.1(d)(v)
      below
      (the “Submissions”).
      Lender shall have the right to review and approve any changes to the form of
      any
      of the Submissions. If Lender disapproves of any changes to any of the
      Submissions, Lender shall have the right to require Borrower either to cure
      or
      correct the defect objected to by Lender or to elect not to fund the Loan or
      any
      Advance. Under no circumstances shall Lender’s failure to approve or disapprove
      a change to any of the Submissions be deemed to be an approval of such
      Submissions. All of the Submissions were and shall be prepared at Borrower’s
      sole cost and expense, unless expressly stated to be an obligation and expense
      of Lender. Lender shall have the right of prior approval of any Person
      responsible for preparing a Submission (“Preparer”)
      and
      may disapprove any Preparer in its sole discretion, for any reason, including
      without limitation, that Lender believes that the experience, skill, reputation
      or other aspect of the Preparer is unsatisfactory in any respect. All
      Submissions required pursuant to this Agreement shall be addressed to Lender
      and
      include the following language: “THE UNDERSIGNED ACKNOWLEDGES THAT TEXTRON
      FINANCIAL CORPORATION IS RELYING ON THE WITHIN INFORMATION IN CONNECTION WITH
      ITS DETERMINATION TO MAKE A LOAN TO SILVERLEAF RESORTS, INC. IN CONNECTION
      WITH
      THE SUBJECT COLLATERAL.”

     

    
      
        
        

      

      
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    (i) a
      certificate to be dated as of the Effective Date and signed by the president,
      vice president, or secretary of Borrower, certifying that the conditions
      specified in Sections 4.1(a),
      4.1(b)
      and
4.1(c)
      above
      are true;

     

    (ii) copies
      of
      any amendments to the articles of incorporation of Borrower not previously
      delivered to Lender, certified to be true and complete by Borrower and the
      Secretary of State of the State of Texas and a current certificate of good
      standing for Borrower, and copies of any amendments to the by-laws of Borrower
      not previously delivered to Lender, certified to be true, correct and complete
      by the secretary or assistant secretary of Borrower;

     

    (iii) a
      certificate of the Secretary of Borrower certifying the adoption by the Board
      of
      Directors of Borrower of a resolution authorizing Borrower to enter into and
      execute this Agreement, the Notes, and the other Loan Documents, to borrow
      the
      Loan from Lender, and to grant to Lender a first priority security interest
      in
      and to the Collateral;

     

    (iv) a
      certificate of the secretary or assistant secretary of Borrower certifying
      the
      incumbency, and verifying the authenticity of the signatures, of the specified
      officers of Borrower authorized to sign this Agreement, the Notes and the other
      Loan Documents; and

     

    (v) copies
      or
      other evidence of all loans to Borrower from any officers, shareholders, or
      Affiliates of Borrower not previously delivered to Lender.

     

    
      
        
        

      

      
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    (e) Execution
      and Delivery of Loan Documents.
      Borrower shall have delivered to Lender, on or before the Closing Date, the
      following Loan Documents, each of which when required, shall be in recordable
      form:

     

    (i) This
      Agreement;

     

    (ii) Closing
      Opinions for Borrower;

     

    (iii) Receivable
      Note;

     

    (iv) Acquisition
      Note;

     

    (v) Inventory
      Note;

     

    (vi) Environmental
      Indemnification Agreement;

     

    (vii) Other
      Items.
      Such
      other agreements, documents, instruments, certificates and materials as Lender
      may request to evidence the Obligations; to evidence and perfect the rights
      and
      Liens and security interests of Lender contemplated by the Loan Documents,
      and
      to effectuate the transactions contemplated herein.

     

    (f) Effective
      Date Conditions.
      On or
      before the Effective Date, the following conditions shall be
      satisfied:

     

    (i) Outstanding
      Balance.
      The
      Lender’s maximum aggregate Commitment shall be greater than the then aggregate
      outstanding balance under the Receivable Loan Agreement and the Restated
      Inventory Loan Agreement.

     

    (ii) UCC
      Search.
      Lender
      shall have obtained, at Borrower’s cost, such searches of the applicable public
      records as it deems necessary under Texas, and other applicable law to verify
      that it has a first and prior perfected Lien and security interest covering
      all
      of the Collateral. Lender shall not be obligated to fund any Advance if Lender
      determines that Lender does not have a first and prior perfected lien and
      security interest covering any portion of the Collateral, except as expressly
      provided herein.

     

    (iii) Litigation
      Search.
      Lender
      shall have obtained, at Borrower’s cost, an independent search to verify that
      there are no bankruptcy, foreclosure actions or other material litigation or
      judgments pending or outstanding against the Resorts, any portion of the
      Collateral, Borrower, or any Affiliates of Borrower (each a “Material
      Party”).
      The
      term “other material litigation” as used herein shall not include matters in
      which (i) a Material Party is plaintiff and no counterclaim is pending or
      (ii) which Lender determines in its sole discretion exercised in good
      faith, are immaterial due to settlement, insurance coverage, frivolity, or
      amount or nature of claim. Lender shall not be obligated to fund any Advance
      if
      Lender determines that any such litigation is pending.

     

    
      
        
        

      

      
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    (iv) Counsel
      Opinion Regarding Title Insurance Policies.
      Borrower shall deliver to Lender, an opinion or opinions of counsel in a form
      acceptable to Lender in Lender’s sole discretion, confirming that: (1) each Lien
      on the Encumbered Intervals from the Resorts in Texas, including: (i) Holly
      Lake
      Ranch, Hawkins, Texas; (ii) Piney Shores Resort, Conroe, Texas; (iii) Lake
      O’
The Woods, Flint, Texas; (iv) Hill Country Resort, Canyon Lake, Texas; (v)
      The
      Villages, Flint, Texas; and (vi) Silverleaf’s Seaside Resort, Galveston County,
      that is perfected by an Inventory Mortgage, will retain the priority interest
      afforded by the original recording of the Inventory Mortgages notwithstanding
      the recording of the modification to the Inventory Mortgage required under
      Section 3.12
      hereof;
      and (2) the modification of the Inventory Mortgages as provided herein will
      not
      impair the coverage afforded by the mortgagee’s title insurance policies
      previously issued in connection with the execution and recordation of the
      Inventory Mortgages, and those policies remain in full force and
      effect.

     

    (v) Insurance.
      Evidence that Borrower is maintaining all policies of insurance required by
      and
      in accordance with Section 7.1(d)
      hereof,
      including copies of the most current paid insurance premium
      invoices;

     

    (vi) Governmental
      Permits.
      To the
      extent not previously delivered to Lender, copies of all applicable government
      permits, approvals, consents, licenses and certificates with respect to the
      use
      and operation of the Resorts;

     

    (vii) Taxes.
      Evidence satisfactory to Lender that all taxes and assessments owed by or for
      which Borrower is responsible for collection had been paid with respect to
      the
      Resorts and the Collateral, including but not limited to sales taxes, room
      occupancy taxes, payroll taxes, personal property taxes, excise taxes,
      intangible taxes, real property taxes and any assessments related to the resorts
      or the Collateral. Copies of the most current tax bills for the Resorts shall
      be
      provided to Lender;

     

    (viii) Title
      Insurance Policies.
      Within
      90 days after the Closing Date the Borrower shall deliver to Lender, with
      respect to each parcel of real property comprising the Inventory from the
      Resorts in Missouri, Florida, Illinois and Georgia, including: (i) Ozark
      Mountain Resort, Kimberling City, Missouri; (ii) Holiday Hills Resort, Branson,
      Missouri; (iii) Timber Creek Resort, Jefferson County, Missouri; (iv) Fox River
      Resort, LaSalle County, Illinois; (v) Orlando Breeze and (vi) Apple Mountain
      Resort, Habersham County, Georgia; a new mortgagee’s title insurance policy (the
“Inventory
      Title Policy”
or
      an
      endorsement to the existing mortgagee’s title insurance policy updating each
      applicable policy previously issued with respect to the Inventory through the
      date that the modifications required under Section 4.1(f)(ix) hereof are duly
      recorded in the applicable land records for each state in which the Inventory
      is
      located (the “Inventory
      Title Endorsement”).
      If an
      Inventory Title Policy is obtained, each such Inventory Title Policy shall:
      (i)
      be in an amount equal to the full amount required for such title insurance
      under
      the Inventory Loan; (ii) insure the Inventory Mortgages as modified in
      accordance with Section 3.12 hereof; and (iii) be issued by companies and in
      form and substance satisfactory to Lender in its sole discretion. If an
      Inventory Title Endorsement is obtained, each such Inventory Title Endorsement
      shall: (i) insure that the modification of the Inventory Mortgages as provided
      herein will not impair the coverage afforded by endorsed title insurance
      policies, and that those policies remain in full force and effect; (ii) insure
      that the modification of the Inventory Mortgages as provided herein will not
      impair the lien of the insured mortgage; and (iii) be issued by companies and
      in
      form and substance satisfactory to Lender in its sole discretion. Borrower
      shall
      be responsible for the payment of all costs and expenses of the foregoing
      Inventory Title Policy and/or Endorsement.

     

    
      
        
        

      

      
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    (ix) Recording
      of Modifications to Inventory Mortgages.
      The
      Modifications to Inventory Mortgages, in the form and substance attached here
      as
      Exhibit D, shall be duly recorded in the applicable land records for each state
      in which the Inventory is located.

     

    4.2 Expenses.
      Borrower shall have paid all fees and expenses required to be paid pursuant
      to
      this Agreement. Lender shall have no obligation to fund any Loan or make any
      Advance unless the amount of the Advance, together with any moneys paid by
      Borrower, is sufficient to satisfy all fees and expenses required to be paid
      pursuant to this Agreement.

     

    4.3 Proceedings
      Satisfactory.
      Except
      as expressly provided herein, Borrower shall execute all of the Loan Documents
      approved by Lender on the Closing Date, and all actions taken in connection
      with
      the execution or delivery of the Loan Documents, and all documents and papers
      relating thereto, shall be satisfactory to Lender and its counsel. Lender and
      its counsel shall have received copies of such documents and papers as Lender
      or
      such counsel may reasonably request in connection therewith, all in form and
      substance satisfactory to Lender and its counsel.

     

    4.4 Conditions
      Precedent to Funding of Advances with Respect to Additional Eligible
      Resorts.
      As
      provided in Section 3.5
      hereof,
      Borrower may propose to Lender that Lender approve one or more additional
      timeshare plans for inclusion hereunder as an Additional Eligible Resort in
      respect of which Advances may be made. The obligation of Lender to fund any
      Advances with respect to an Additional Eligible Resort shall be subject to
      the
      satisfaction of each of the following conditions precedent, in addition to
      all
      of the conditions precedent set forth elsewhere in the Loan
      Documents:

     

    (a) Representations,
      Warranties, Covenants and Agreements.
      The
      representations and warranties contained in the Loan Documents are and shall
      be
      true and correct in all respects, and all covenants and agreements have been
      complied with and shall be correct in all respects, and all covenants and
      agreements to have been complied with and performed by Borrower shall have
      been
      fully complied with and performed to the satisfaction of Lender.

     

    
      
        
        

      

      
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    (b) No
      Prohibited Acts.
      Borrower shall not have taken any action or permitted any condition to exist
      which would have been prohibited by any provision of the Loan
      Documents.

     

    (c) Approval
      of Documents Prior to Advance.
      Borrower has delivered or caused to be delivered to Lender (with copies to
      Lender’s counsel), at least fifteen (15) Business Days prior to the date of each
      Advance, and Lender has reviewed and approved, at least five (5) Business Days
      prior to the date of each Advance, the form and content of all of the items
      specified in each of the Submissions required pursuant to this Section
4.4.
      Lender
      shall have the right to review and approve any changes to the form of any of
      the
      Submissions. If Lender disapproves of any changes to any of the Submissions,
      Lender shall have the right to require Borrower either to cure or correct the
      defect objected to by Lender and to not fund the Loan or any Advance. Under
      no
      circumstances shall Lender’s failure to approve or disapprove a change to any of
      the Submissions be deemed to be an approval of such Submissions. All of the
      Submissions were and shall be prepared at Borrower’s sole cost and expense,
      unless expressly stated to be an obligation and expense of Lender. Lender shall
      have the right of prior approval of any Preparer and may disapprove any Preparer
      in its sole discretion, for any reason, including without limitation, that
      Lender believes that the experience, skill, reputation or other aspect of the
      Preparer is unsatisfactory in any respect. All Submissions required pursuant
      to
      this Agreement shall be addressed to Lender and include the following language:
      “THE UNDERSIGNED ACKNOWLEDGES THAT TEXTRON FINANCIAL CORPORATION IS RELYING
      ON
      THE WITHIN INFORMATION IN CONNECTION WITH ITS DETERMINATION TO MAKE A LOAN
      TO
      SILVERLEAF RESORTS, INC. IN CONNECTION WITH THE SUBJECT
      COLLATERAL.”

     

    (i) a
      certificate in the form attached as Exhibit G, to be dated as of the date of
      each such Advance and signed by the president, chief financial officer, chief
      operating officer, vice president, or secretary of Borrower, certifying that
      the
      conditions specified in Sections 4.4(a)
      and
4.4(b)
      above
      are true;

     

    (ii) copies
      of
      the articles of incorporation of Borrower, together with any amendments thereto
      certified to be true and complete by Borrower and the Secretary of State of
      the
      State of Texas, a current certificate of good standing for Borrower issued
      by
      the Secretary of State of the State of Texas, a current certificate of authority
      to conduct business issued by the secretary of state in each state in which
      Borrower conducts business, and copies of the by-laws of Borrower certified
      to
      be true, correct and complete by the secretary or assistant secretary of
      Borrower;

     

    
      
        
        

      

      
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    (iii) a
      Survey
      for each Additional Eligible Resort for which Eligible Notes Receivable are
      being pledged to Lender in connection with the Advance in question;

     

    (iv) a
      certificate of the secretary or assistant secretary of Borrower certifying
      the
      adoption by the board of directors thereof, respectively, of a resolution
      authorizing the addition of the Resort in question as an Additional Eligible
      Resort and to authorize Borrower to enter into, execute and deliver any
      Documents in connection therewith;

     

    (v) a
      certificate of the secretary or assistant secretary of Borrower certifying
      the
      incumbency, and verifying the authenticity of the signatures, of the specified
      officers of Borrower authorized to sign all documents required in connection
      with such Additional Eligible Resort as required pursuant to this Section
4.4;

     

    (vi) an
      inspection report or reports covering each Additional Eligible Resort for which
      Eligible Notes Receivable are being pledged to Lender in connection with the
      Advance in question, including without limitation all real property and personal
      property subject to the Declaration and all adjacent property,
      confirming:

     

    (1) the
      absence of Hazardous Materials on the personal property and real property
      comprising each such Additional Eligible Resort;

     

    (2) that
      the
      inspection firm has obtained, reviewed and included within its report a CERCLIS
      printout from the Environmental Protection Agency (the “EPA”),
      statements from the EPA and other applicable state and local authorities and
      a
      Phase I Environmental Audit, all of which information shall confirm that there
      are no known or suspected Hazardous Materials located at, used or stored on,
      or
      transported to or from each such Additional Eligible Resort or in such proximity
      thereto as to create a material risk of contamination of each such Additional
      Eligible Resort;

     

    (vii) evidence
      that Borrower is maintaining all policies of insurance required by and in
      accordance with Section 7.1(d)
      hereof,
      including copies of the most current paid insurance premium
      invoices;

     

    (viii) evidence
      that Borrower and the Timeshare Documents for each Additional Eligible Resort
      for which Eligible Notes Receivable are being pledged to Lender in connection
      with the Advance in question are in compliance with all applicable laws in
      connection with its sales of Intervals, including without limitation, the
      Timeshare Acts;

     

    
      
        
        

      

      
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    (ix) a
      current
      preliminary title report or certificate of title for each Additional Eligible
      Resort for which Eligible Notes Receivable are being pledged to Lender in
      connection with the Advance in question, with copies of all title
      exceptions;

     

    (x) copies
      of
      all applicable governmental permits, approvals, consents, licenses, and
      certificates for the establishment of each Additional Eligible Resort for which
      Eligible Notes Receivable are being pledged to Lender in connection with the
      Advance in question as timeshare projects in accordance with the applicable
      Timeshare Act, and for the occupancy and intended use and operation of each
      such
      Additional Eligible Resort, including the Units, including a letter
      certification from Borrower regarding zoning classification and compliance,
      letters or other satisfactory evidence from utility companies, governmental
      entities or other persons confirming that water, sewer (sanitary and storm),
      electricity, solid waste disposal, telephone, police, fire and rescue services
      are being provided to each Resort, and any business licenses necessary for
      operation of each such Additional Eligible Resort;

     

    (xi) certified
      true, correct and complete copies of all of the Timeshare Documents for each
      Additional Eligible Resort for which Eligible Notes Receivable are being pledged
      to Lender in connection with the Advance in question;

     

    (xii) evidence
      satisfactory to Lender that all taxes and assessments owed by or for which
      Borrower is responsible for collection have been paid, including but not limited
      to sales taxes, room occupancy taxes, payroll taxes, personal property taxes,
      excise taxes, intangibles taxes, real property taxes, and income taxes, and
      any
      assessments related to each Additional Eligible Resort for which Eligible Notes
      Receivable are being pledged to Lender in connection with the Advance in
      question and copies of the most current paid tax bills for each such Additional
      Eligible Resort evidencing that each such Additional Eligible Resort have been
      segregated from all other property on the applicable municipal
      taxrolls;

     

    (xiii) written
      confirmation from an architect covering each Additional Eligible Resort, for
      which Eligible Notes Receivable are being pledged to Lender in connection with
      the Advance in question as to the physical condition of the improvements at
      each
      such Additional Eligible Resort, including that soil conditions are sufficient
      to support all existing and any contemplated improvements to the real property;
      which written confirmation shall be in form and substance reasonably acceptable
      to Lender;

     

    (xiv) such
      credit references on Borrower as Lender deems necessary in its sole
      discretion;

     

    
      
        
        

      

      
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    (xv) copies
      or
      other evidence of all loans to Borrower from any officers, shareholders, or
      Affiliates of Borrower, if any;

     

    (xvi) a
      commitment to issue Mortgagee Title Policies from Title Company for each such
      Additional Eligible Resort. Notwithstanding anything heretofore to the contrary,
      Lender agrees that Borrower shall not be required to provide such a commitment
      or a Mortgagee Title Insurance Policy with respect to Oak N’ Spruce Resort and
      any Additional Eligible Resort that is structured in a manner similar to Oak
      N’
Spruce Resort. Notwithstanding anything heretofore to the contrary, if any
      claim, lien, encumbrance, charge or other matter arises with respect to any
      Interval or Intervals for which an Eligible Note Receivable has been pledged
      to
      Lender pursuant to this Agreement, then, in such event:

     

    (a)
      the
      Note Receivable with respect to the Interval in question shall cease to be
      an
      Eligible Note Receivable and Borrower immediately shall either replace the
      Note
      Receivable in question or make a Mandatory Prepayment as provided in Section
      2.5(a)(ii)
      hereof;
      and

    


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

    


    (xvii) the
      Financial Statements;

     

    (xviii) to
      the
      extent not previously delivered hereunder, Borrower will execute, or cause
      to be
      executed with respect to each Additional Eligible Resort, an Assignment of
      Notes
      Receivable and Mortgages, Borrower’s Affidavit with Respect to the Additional
      Eligible Resorts and an Environmental Indemnification Agreement;

     

    (xix) with
      respect to any improvements, including any Units, constructed at a Resort within
      the twenty-four month period prior to any Advance with respect to an Additional
      Eligible Resort, Borrower shall also deliver to Lender, for its approval, such
      documents and instruments as Lender may reasonably request in connection with
      such newly constructed improvements, including, without limitation, copies
      of
      building permits, plans and specifications, construction and architectural
      contracts, title insurance insuring over, among other things, mechanics liens,
      certificates of occupancy and satisfactory evidence of the completion of such
      improvements;

     

    
      
        
        

      

      
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    (xx) such
      other documents, instruments, agreements, tests, reports and inspections as
      Lender may require with respect to Borrower or any applicable Affiliate, the
      Loan or any Resort, including any Additional Eligible Resort; and

     

    (xxi) upon
      request of Lender, Borrower shall deliver to Lender evidence, satisfactory
      to
      Lender, that there is no material litigation, written complaint, suit, action,
      written claim or written charge pending against Borrower or any Affiliate with
      any court or with any governmental authority with respect to the Resorts, the
      Timeshare Documents, any Eligible Notes Receivable, any Interval, or any
      marketing, offer or sale of any Interval.

     

    (d) Physical
      Inspection.
      Lender
      shall be satisfied with its physical inspection of the Additional Eligible
      Resorts.

     

    (e) UCC
      Search.
      Lender
      shall have obtained, at Borrower’s cost, such searches of the applicable public
      records as it deems necessary under all applicable law to verify that it has
      a
      first and prior perfected Lien and security interest covering all of the
      Collateral. Lender shall not be obligated to fund any Advance if Lender
      determines that Lender does not have a first and prior perfected lien and
      security interest covering any portion of the Collateral, except as expressly
      provided herein.

     

    (f) Litigation
      Search.
      Lender
      shall have obtained, at Borrower’s cost, an independent search to verify that
      there are no bankruptcy, foreclosure actions or other material litigation or
      judgments pending or outstanding against the Additional Eligible Resorts, any
      portion of the Collateral, Borrower, or any Affiliate, (each a “Material
      Party”).
      The
      term “other material litigation” as used herein shall not include matters in
      which (i) a Material Party is plaintiff and no counterclaim is pending or (ii)
      which Lender determines, in its sole discretion, exercised in good faith, are
      immaterial due to settlement, insurance coverage, frivolity, or amount or nature
      of claim. Lender shall not be obligated to fund any Advance if it determines
      that any such litigation is pending.

     

    (g) Opinions
      of Borrower’s Counsel.
      Borrower shall deliver to Lender, for the benefit of Lender, at Borrower’s sole
      cost and expense, such opinions of counsel, including counsel admitted in each
      state in which each Additional Eligible Resort is located, as to such matters
      with respect to Borrower and each Additional Eligible Resort as Lender may
      request, and in form and substance acceptable to Lender in its sole
      discretion.

     

    (h) Funding
      Procedure.
      Borrower shall have complied to Lender’s satisfaction with each of the
      conditions precedent to funding of an Advance set forth in Section
      5
      hereof.

     

    (i) Management
      of Resort.
      Borrower shall provide evidence satisfactory to Lender that Borrower, or an
      Affiliate, is the manager or operator of each Resort, pursuant to a written
      management or operating agreement, in form and substance satisfactory to Lender,
      which with respect to all Resorts shall have a term that shall expire no earlier
      than January 31, 2014. Borrower agrees to provide to Lender an estoppel letter,
      in form and substance acceptable to Lender, from the applicable Timeshare
      Owner’s Association.

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    (j) Other
      Items.
      Such
      other agreements, documents, instruments, certificates and materials as Lender
      may request to determine the acceptability of any such Additional Eligible
      Resort, to evidence the Obligations, to evidence and perfect the rights and
      Liens and security interests of Lender contemplated by the Loan Documents,
      and
      to effectuate the transactions contemplated herein, including, without
      limitation, true copies of all Resort Documents for each such Additional
      Eligible Resort, all Timeshare Documents and operating and management contracts
      and agreements, evidence of compliance with the applicable Timeshare Act and
      other applicable laws, evidence of all required governmental licenses and
      permits; title searches; title commitments or policies, including complete
      and
      legible copies of each title exception, engineering, environmental and soil
      reports and evidence of compliance with all applicable zoning and building
      codes; each of which shall be satisfactory to Lender in its sole and absolute
      discretion.

     

    Section
      5-Funding Procedure

     

    5.1 The
      obligation of Lender to make any loan shall be subject to the satisfaction
      of
      all of the following conditions precedent:

     

    (a) Receivable
      Loan Component.

     

    (i) Requests
      for Advances.
      Each
      request for an Advance shall:

     

    (1) be
      in
      writing in form attached hereto as Exhibit E-1 and shall certify the amount
      of
      the then-current Borrowing Base and specify the principal amount of the Advance
      requested and designate the account to which the proceeds of such Advance are
      to
      be transferred;

     

    (2) state
      that the representations and warranties of Borrower contained in the Agreement
      and any closing or funding related certifications are true and correct as of
      the
      date of the request and, after giving effect to the making of such requested
      Advance, will be true and correct as of the date on which the requested Advance
      is to be made;

     

    (3) state
      that a majority of the Eligible Notes Receivable pledged as Collateral for
      the
      Advance in question have been made by Purchasers with a minimum annual income
      as
      follows: $35,000.00 for Purchasers residing in the State of Texas, $40,000.00
      for Purchasers residing in the State of Illinois and $45,000.00 for Purchasers
      residing in the State of Massachusetts; further state that the weighted average
      of the FICO indicators of all Purchasers for the Advance in question with
      respect to which a FICO indicator can be obtained is not less than 640, provided
      that the aggregate outstanding principal of Eligible Notes Receivable pledged
      to
      Lender with respect to which a FICO indicator can not be obtained does not
      exceed 10% of the aggregate outstanding principal balance of all Eligible Notes
      Receivable pledged to Lender;

     

    
      
        
        

      

      
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    (4) state
      that no Default or Event of Default exists as of the date of the request and,
      after giving effect to the making of such requested Advance, no Default or
      Event
      of Default would exist as of the date on which the requested Advance is to
      be
      made;

     

    (5) be
      delivered to the office of Lender at least five (5) Business Days prior to
      the
      date of the requested Advance;

     

    (6) be
      signed
      by a principal financial officer of Borrower;

     

    (7) certify
      that Borrower has no knowledge of any asserted or threatened defense, offset,
      counterclaim, discount or allowance in respect of each Note Receivable to be
      pledged in connection with such requested Advance, or in respect of any of
      the
      Pledged Notes Receivable;

     

    (8) contain
      an aging report of the Pledged Notes Receivable; identifying, among other
      things, which among them are Eligible Notes Receivable; and

     

    (9) contain
      a
      delinquency report which shall be in form and substance satisfactory to Lender
      and shall show which of such Notes Receivable is delinquent and the duration
      of
      such delinquency, and which of such Pledged Notes Receivable is not an Eligible
      Note Receivable.

     

    (ii) Loan
      Documents/Collateral.
      Not
      less than five (5) Business Days prior to the date of any Advance, Borrower
      shall have:

     

    (1) delivered
      to Lender a list of all Eligible Notes Receivable and related Mortgages which
      are to be the subject of such requested Advance, indicating the unpaid principal
      balance owing on each of the Pledged Notes Receivable deemed to be an Eligible
      Note Receivable, together with such additional information as Lender may
      require;

     

    (2) delivered
      to Lender (or, if Lender shall so instruct, a designee appointed by Lender
      in
      writing) (A) the original of each Pledged Note Receivable (duly endorsed
      with the words “Pay to the order of Textron Financial Corporation with
      recourse”), (B) the original of each Mortgage securing such Pledged Notes
      Receivable, (C) the original of each purchase contract (including addenda)
      relating to the Pledged Notes Receivable and Mortgages, (D) originals or
      true copies of the related truth-in-lending disclosures, loan application,
      warranty deed, Payment Authorization Agreement and, if required by Lender,
      the
      related Purchaser’s acknowledgement, receipt and exchange company application,
      disclosures and materials, and (E) with respect to each Eligible Note Receivable
      from the sale of Intervals at Oak N’ Spruce: (i) the original UCC-1 Financing
      Statement, naming the Purchaser of the Interval giving rise to the Eligible
      Note
      Receivable as debtor and Borrower as secured party (the “Purchaser
      Financing Statement”),
      perfecting Borrower’s security interest in the applicable Interval to secure the
      Purchaser’s obligations under the Eligible Note Receivable and (ii) a UCC-3
      Assignment, naming Borrower as assignor and Lender as assignee, assigning to
      Lender, all of Borrower’s right, title and interest under each Purchaser
      Financing Statement;

     

    
      
        
        

      

      
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    (3) delivered
      to Lender a duly executed Assignment of Notes Receivable and Mortgages assigning
      to Lender all of Borrower’s right, title and interest in and to each such
      Pledged Note Receivable and the related Mortgage; and

     

    (4) subject
      to Section 4.4(c)(xvi)
      and
      Section 5.1(a)(vi)
      hereof,
      delivered to Lender, with respect to each Encumbered Interval, a commitment
      for
      a Mortgagee’s Title Policy showing that the Mortgage in respect of such Interval
      has been assigned to Lender and insuring in favor of Borrower the first priority
      Lien of such Mortgage in the amount of the Advance to be made in respect of
      such
      Pledged Note Receivable, with a satisfactory title insurance policy to be issued
      within sixty (60) days from the date of the Advance.

     

    The
      Mortgages and the assignments thereof to Lender shall each have been duly
      recorded in the applicable land records. The Mortgagee’s Title Policies shall be
      in form and substance satisfactory to Lender and shall be issued by a title
      insurance company satisfactory to Lender (the “Title
      Company”),
      and
      name Borrower as the insured party therein. The funding of the requested
      Advance, delivery of the Receivable Loan Component Collateral and issuance
      of
      the title insurance policy, and recording of the assignments or any releases
      may, in Lender’s discretion, be effected by way of an escrow arrangement with
      the Title Company or other fiduciary, the form and substance of which shall
      be
      satisfactory to Lender.

     

    (iii) Other
      Conditions.
      In
      addition to the other conditions set forth in this Agreement, the making of
      the
      initial or any requested Advance shall be subject to the satisfaction of the
      following conditions:

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    (1) no
      Default or Event of Default shall exist immediately prior to the making of
      such
      requested Advance or, after giving effect thereto, immediately after the making
      of such requested Advance;

     

    (2) each
      agreement required to have been executed and delivered in connection with any
      prior Advance shall be consistent with the terms of this Agreement and shall
      be
      in full force and effect;

     

    (3) the
      date
      on which such requested Advance is to be made shall be a Business
      Day;

     

    (4) Borrower
      shall have delivered to Lender a certification showing the dollar amount of
      the
      requested Advance based on the Eligible Notes Receivable pledged to Lender,
      and
      the Notes Receivable being pledged contemporaneously with each requested Advance
      in the form attached hereto as Exhibit D;

     

    (5) not
      more
      than one Advance shall have previously been made in the same calendar month
      in
      which such requested Advance is to be made, unless Lender, in its sole
      discretion, agrees to make an additional Advance during such calendar
      month;

     

    (6) such
      requested Advance shall be in a principal amount of not less than $50,000,
      unless Lender, in its sole discretion, agrees to make an Advance in an amount
      less than $50,000;

     

    (7) Lender
      shall have determined that the requested Advance, when added to the aggregate
      outstanding principal amount of all previous Advances, if any, does not, based
      on the Eligible Notes Receivable that have been duly pledged in favor of Lender
      exceed the lesser of: (i) total amount of the Borrowing Base, or (ii)
      $100,000,000, subject to Section 2.7;
      and

     

    (8) if
      Lender
      shall so require, Lender shall have received an executed closing protection
      letter issued by the Title Company, which shall be reasonably acceptable to
      Lender.

     

    (iv) Expenses.
      Borrower shall have paid all fees and expenses required to be paid by Borrower
      pursuant to this Agreement in connection with such requested Advance or any
      conditions related thereto.

     

    (v) Proceedings
      Satisfactory.
      All
      actions taken in connection with such requested Advance and all documents and
      papers relating thereto shall be satisfactory to Lender and its counsel. Lender
      and its counsel shall have received copies of such documents and papers as
      Lender or such counsel may reasonably request in connection with such requested
      Advance, all in form and substance reasonably satisfactory to Lender and its
      counsel.

     

    
      
        
        

      

      
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    (vi) Partial
      Waiver of Requirement for Title Insurance Policies Upon Satisfactory Maintenance
      of Inventory Control Procedures.
      Anything in Section 5.1(a)(ii)(4)
      hereof
      to the contrary notwithstanding, the delivery of a Mortgagee Title Policy shall
      be required only with respect to twenty-five percent (25%) of the Eligible
      Notes
      Receivable delivered to Lender in respect of each advance, subject to the
      following requirements and limitations: 

     

    (1) Borrower
      shall be in full compliance with the Receivable Inventory Control Procedures
      (as
      defined in Section 6.23
      herein);
      and

     

    (2) Lender
      shall have the right in its sole discretion to determine those Eligible Notes
      Receivable in respect of which the Mortgagee Title Policies shall be
      required.

     

    In
      the
      event that Borrower fails to satisfy the requirements of Subparagraph
5.1(a)(vi)(1),
      then,
      immediately upon such failure, the partial waiver provided under this
      subparagraph shall no longer be effective.

     

    (b) Inventory
      Loan Component.
      

     

    (i) Requests
      for Advances.
      Each
      request for an Advance shall:

     

    (1) be
      in
      writing in form attached hereto as Exhibit E-2 and shall certify the amount
      of
      the then-current Loan to Retail Value Ratio, specify the principal amount of
      the
      Advance requested and designate the account to which the proceeds of such
      Advance are to be disbursed;

     

    (2) state
      that the representations and warranties of the Borrower contained in the
      Agreement and any closing or funding related certifications are true and correct
      as of the date of the request and, after giving effect to the making of such
      requested Advance, will be true and correct as of the date on which the
      requested Advance is to be made;

     

    (3) state
      that no Default or Event of Default exists as of the date of the request and,
      after giving effect to the making of the requested Advance, no Default or Event
      of Default would exist as of the date on which the requested Advance is to
      be
      made;

     

    (4) be
      delivered to the office of Lender at least five (5) Business Days prior to
      the
      date of the requested Advance; and

     

    
      
        
        

      

      
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    (5) be
      signed
      by a principal financial officer of the Borrower.

     

    (ii) Loan
      Documents/Collateral.
      Not
      less than five (5) Business Days prior to the date of any Advance, the Borrower
      shall have:

     

    (1) delivered
      to Lender a list of all Intervals which are to be the subject of such requested
      Advance, together with such additional information as Lender may
      require;

     

    (2) delivered
      to Lender (or, if Lender shall so instruct, a designee appointed by Lender
      in
      writing), to the extent available, (a) the original or certified copies of
      any
      deed or beneficial interest certificate, or other documents evidencing
      conveyance of the Interval in question to the Borrower, (b) a copy of any title
      policy received by the Borrower in connection with its acquisition of the
      Interval in question, and (c) original or true copies of any purchase contract
      (including addenda) or other agreements entered into by the Borrower with any
      person with respect to the sale by the Borrower to any Purchaser of the Interval
      in question;

     

    (3) delivered
      to Lender a duly executed Inventory Mortgage Inventory Mortgages, in the form
      and substance attached here as Exhibit F, or in the case of an existing
      Inventory Mortgage, a modification thereof in the form and substance attached
      here as Exhibit F-1 (each containing such changes and modifications as are
      necessary to reflect the law of the state in which the Resort in question is
      located) granting to Lender a first mortgage lien on the Inventory;

     

    (4) original
      UCC financing statements covering the Inventory Loan Component Collateral,
      filed
      with the Secretary of State of Texas and the Secretary of State of each state
      in
      which the Inventory Loan Component Collateral is located; and

     

    (5) with
      respect to each Interval constituting a part of the Inventory, a commitment
      for
      a mortgagee’s title insurance policy showing that the Mortgage in respect of
      such Interval insuring in favor of Lender the first priority Lien of such
      Inventory Mortgage in the amount of the Advance to be made in respect of such
      Interval (or in case of any Modification(s) to Inventory Mortgage, an
      endorsement to the existing mortgagee’s title insurance policy endorsing said
      policy to reflect such Modification(s) of Inventory Mortgage), with a
      satisfactory title insurance policy to be issued within a reasonable time
      following the requested Advance.

     

    The
      Inventory Mortgages shall each have been duly recorded in the applicable land
      records which are described in Schedule A hereof. The mortgagee’s title
      insurance policies shall be in form and substance satisfactory to Lender and
      shall be issued by Title Company, and name Lender as the insured party therein.
      The funding of the Advance, delivery of the Inventory Loan Component Collateral
      and issuance of the title insurance policy, and recording of the mortgages
      or
      any releases may, in Lender’s discretion, be effected by way of an escrow
      arrangement with the Title Company or other fiduciary, the form and substance
      of
      which shall be satisfactory to Lender.

     

    
      
        
        

      

      
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    (iii) Other
      Conditions.
      In
      addition to the other conditions set forth in this Agreement, the making of
      the
      initial or any subsequent Advance shall be subject to the satisfaction of the
      following conditions:

     

    (1) no
      Default or Event of Default shall exist immediately prior to the making of
      such
      requested Advance or, after giving effect thereto, immediately after the making
      of such requested Advance;

     

    (2) each
      agreement required to have been executed and delivered in connection with any
      prior Advance shall be consistent with the terms of this Agreement and shall
      be
      in full force and effect;

     

    (3) the
      date
      on which such requested Advance is to be made shall be a Business
      Day;

     

    (4) Borrower
      shall have delivered to Lender a certification showing the Retail Value of
      each
      Interval and Lender shall be satisfied with the Retail Value of each Interval
      in
      its sole discretion. The dollar amount of the requested Advance shall be based
      on the Retail Value of the Intervals on which the Lender is being granted a
      Mortgage;

     

    (5) not
      more
      than one Advance shall have previously been made in the same calendar month
      in
      which such requested Advance is to be made, unless Lender, in its sole
      discretion, agrees to make an additional Advance during such calendar
      month;

     

    (6) such
      requested Advance shall be in a principal amount of not less than $50,000.00,
      unless Lender, in its sole discretion, agrees to make an Advance in an amount
      less than $50,000.00;

     

    (7) Lender
      shall have determined that the requested Advance will not result in the Loan
      to
      Retail Value Ratio exceeding 15%, based on the Retail Value of the Inventory
      on
      which Lender has been granted a first mortgage lien; and

     

    (8) if
      Lender
      shall so require, Lender shall have received an executed Closing Protection
      Letter issued by the Title Company, which shall be reasonably acceptable to
      Lender.

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    (iv) Expenses.
      The
      Borrower shall have paid all fees and expenses required to be paid by Borrower
      pursuant to this Agreement in connection with such requested Advance or any
      conditions related thereto.

     

    (v) Proceedings
      Satisfactory.
      All
      actions taken in connection with such requested Advance and all documents and
      papers relating thereto shall be satisfactory to Lender and its counsel. Lender
      and its counsel shall have received copies of such documents and papers as
      the
      Lender or such counsel may reasonably request in connection with such requested
      Advance, all in form and substance reasonably satisfactory to the Lender and
      its
      counsel.

     

    (c) Acquisition
      Loan Component.
      

     

    (i) Request
      for Advances.
      Each
      request for an Advance shall:

     

    (1) be
      in
      writing in the form attached hereto as Exhibit E-3, shall certify the fair
      market value of the Real Property for which such Advance is being requested
      and
      designate the account to which such proceeds are to be disbursed;

     

    (2) state
      that the representations and warranties of the Borrower contained in this
      Agreement and any closing or funding related certifications are true and correct
      as of the date of the request and, after taking into effect the making of such
      requested Advance, will be true and correct as of the date on which such
      requested Advance is to be made;

     

    (3) state
      that no Default or Event of Default exists as of the date of the requested
      Advance and, after taking into effect the making of the requested Advance,
      no
      Default or Event of Default would exist as of the date on which the requested
      Advance is to be made;

     

    (4) be
      delivered to the office of Lender at least 30 business days prior to the date
      of
      the requested Advance; and

     

    (5) be
      signed
      by a principal officer of the Borrower.

     

    (ii) Loan
      Documents/Collateral.
      Not
      less than 30 days prior to the date of any Advance, Borrower shall have
      delivered to the Lender the following items with respect to the Real Property
      in
      question each of which shall be in form and substance acceptable to Lender
      in
      its sole discretion:

     

    (1) a
      copy of
      the purchase agreement, including all exhibits and amendments
      thereto;

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

     

    (2) a
      copy of
      a Phase I environmental report;

     

    (3) a
      copy of
      a zoning report prepared by a zoning firm reasonably acceptable to the
      Lender;

     

    (4) a
      survey;


     

    (5) a
      title
      commitment, including legible copies of all exceptions noted in the Title
      Commitment;

     

    (6) MAI
      appraisal; 

     

    (7) copies
      of
      all contracts, agreements, permits and licenses;

     

    (8) a
      UCC,
      bankruptcy, litigation, judgment, tax and environmental search with respect
      to
      the seller of the Real Property; 

     

    (9) true,
      correct and complete copies of all documents, including closing statements,
      executed and or delivered in connection with the Borrower’s acquisition of title
      to the Real Property; 

     

    (10) if
      applicable, a copy of all ground leases; 

     

    (11) copies
      of
      all permits and consents, including building permits in connection with the
      renovation and or construction of any improvements on the Real Property;


     

    (12) an
      inventory of all personal property, including copies of all equipment
      leases;

     

    (13) if
      applicable, copies of final certificates of occupancy; 

     

    (14) copies
      of
      all business licenses for operation of any resort to be operated on the Real
      Property;

     

    (15) confirmation
      that any and all parking facilities with respect to the Real Property are on
      site and part of the Common Elements for such Real Property;

     

    (16) letters
      confirming the availability of all utility services through Real Property,
      including, without limitation, water, sewer, (sanitary and storm), electric,
      gas, telephone, cable television and internet; 

     

    (17) if
      applicable, a wetlands letter from the U.S. Army Corp of Engineers;

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

     

    (18) a
      detail
      site plan showing the location of all existing improvements and proposed
      improvements to the Real Property, including floor plans for all units;


     

    (19) engineers
      report consistent with Lender provided checklist as to soil conditions,
      mechanical integrity of improvements, structural integrity of improvements
      and
      absence of toxic substances and hazardous materials, including lead based paint
      and asbestos;

     

    (20) evidence
      of insurance with respect to the Real Property in accordance with Section
7.1(h)
      hereof;

     

    (21) if
      applicable, a non disturbance agreement with respect to all amenities, parking
      and access; 

     

    (22) a
      duly
      executed Real Property Mortgage granting to Lender a first mortgage lien on
      the
      Real Property in question;

     

    (23) an
      original UCC financing statement covering the Acquisition Loan Component
      Collateral filed with the Secretary of State of the State of Texas and the
      Secretary of State in which the Real Property in question is located;


     

    (24) with
      respect to each Real Property, a Mortgage Title Insurance Policy, in form and
      substance satisfactory to Lender and issued by a Title Insurance Company
      satisfactory to Lender. The funding of each Advance, and delivery of the
      Acquisition Loan Component Collateral, issuance of the Title Insurance Policy,
      and recording of the Real Estate Mortgage, may in Lender’s sole discretion, be
      effected by way of an escrow agent with the Title Company or other fiduciary,
      in
      the form and substance of which shall be satisfactory to Lender; 

     

    (25) an
      opinion of counsel in form and substance acceptable to Lender, and issued by
      an
      attorney admitted to practice in the state in which the Real Property in
      question is located and otherwise acceptable to Lender; and

     

    (26) such
      other documents and instruments as Lender, in its sole discretion, may request
      in connection with the Real Property in question. 

     

    (iii) Other
      Conditions.
      In
      addition to the other conditions set forth in this Agreement, the making of
      the
      initial or any subsequent Advance shall be subject to the satisfaction of the
      following conditions:

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

     

    (1) no
      Default or Event of Default shall exist immediately prior to the making of
      such
      requested Advance or, after giving effect thereto, immediately after the making
      of such requested Advance;

     

    (2) each
      agreement required to have been executed and delivered in connection with any
      prior Advance shall be consistent with the terms of this Agreement and shall
      be
      in full force and effect;

     

    (3) the
      date
      on which such requested Advance is to be made shall be a Business
      Day;

     

    (4) not
      more
      than one Advance shall have previously been made in the same calendar month
      in
      which such requested Advance is to be made, unless Lender, in its sole
      discretion, agrees to make an additional Advance during such calendar
      month;

     

    (5) such
      requested Advance shall be in a principal amount of not less than $50,000.00,
      unless Lender, in its sole discretion, agrees to make an Advance in an amount
      less than $50,000.00, nor more than $15,000,000.00 for any one Real Property;
      and

     

    (6) if
      Lender
      shall so require, Lender shall have received an executed closing protection
      letter issued by the Title Company, which shall be reasonably acceptable to
      Lender.

     

    (iv) Expenses.
      The
      Borrower shall have paid all fees and expenses required to be paid by Borrower
      pursuant to this Agreement in connection with such requested Advance or any
      conditions related thereto.

     

    (v) Proceedings
      Satisfactory.
      All
      actions taken in connection with such requested Advance and all documents and
      papers relating thereto shall be satisfactory to Lender and its counsel. Lender
      and its counsel shall have received copies of such documents and papers as
      the
      Lender or such counsel may reasonably request in connection with such requested
      Advance, all in form and substance reasonably satisfactory to the Lender and
      its
      counsel.

     

    (vi) Lender’s
      Discretion.
      All
      Advances of the Acquisition Loan Component shall be made at the sole and
      exclusive discretion of Lender without any explanation to Borrower being
      required.

     

    Section
      6-General Representations And Warranties

     

    Borrower
      hereby represents and warrants to Lender as follows:

     

    6.1 Organization,
      Standing, Qualification.
      Borrower: (a) is a duly organized and validly existing Texas corporation duly
      organized, validly existing and in good standing under the laws of the State
      of
      Texas, and (b) has all requisite power, corporate or otherwise, to conduct
      its
      business and to execute and deliver, and to perform its obligations under,
      the
      Loan Documents.

     

    
      
        
        

      

      
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    6.2 Authorization,
      Enforceability, Etc. 

     

    (a) The
      execution, delivery and performance by Borrower of the Loan Documents has been
      duly authorized by all necessary corporate action by Borrower and does not
      and
      will not: (i) violate any provision of the certificate or articles of
      incorporation of Borrower, bylaws of Borrower, or any agreement, law, rule,
      regulation, order, writ, judgment, injunction, decree, determination or award
      presently in effect to which Borrower is a party or is subject; (ii) result
      in,
      or require the creation or imposition of, any Lien upon or with respect to
      any
      asset of Borrower other than Liens in favor of Lender; or (iii) result in a
      breach of, or constitute a default by Borrower under, any indenture, loan or
      credit agreement or any other agreement, document, instrument or certificate
      to
      which Borrower is a party or by which it or any of its assets are bound or
      affected.

     

    (b) No
      approval, authorization, order, license, permit, franchise or consent of, or
      registration, declaration, qualification or filing with, any governmental
      authority or other Person, including without limitation, the Division or the
      Timeshare Owners’ Association is required in connection with the execution,
      delivery and performance by Borrower of any of the Loan Documents.

     

    (c) The
      Loan
      Documents constitute legal, valid and binding obligations of Borrower,
      enforceable against Borrower in accordance with their respective
      terms.

     

    (d) Borrower
      has, or will have, good and marketable title to the Collateral, free and clear
      of any lien, security interest, charge or encumbrance except for the security
      interests created by this Agreement or any Loan Document or otherwise created
      in
      favor of Lender or those specifically consented to in writing by Lender or
      permitted hereunder. No financing statement or other instrument similar in
      effect covering all or any part of the Collateral is on file in any recording
      office, except such as may have been filed in favor of Lender hereunder or
      Lender as permitted hereunder.

     

    (e) The
      execution and delivery of the Loan Documents, the delivery and endorsement
      to
      Lender of the Pledged Notes Receivable, the filing of the UCC-1’s with the
      office of the secretary of state of the state in which Borrower is organized
      and
      the Assignment of Notes Receivable and Mortgages in the official records of
      the
      county in which the applicable Resort is located, create in favor of Lender
      a
      valid and perfected continuing first or second, as applicable, priority security
      interest in the Collateral. The Collateral shall secure the full payment and
      performance of the Obligations.

     

    (f) None
      of
      the Pledged Notes Receivable is forged or has affixed thereto any unauthorized
      signatures or has been entered into by any Person without the required legal
      capacity; and during the term of the Agreement, none will be forged, or will
      have affixed thereto, any unauthorized signatures.

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

     

    (g) Except
      as
      permitted in Sections 3.6
      and
3.7
      hereof,
      there have been no modifications or amendments to the Pledged Notes Receivable
      or Mortgages.

     

    (h) The
      makers of the Eligible Notes Receivable have no defenses, offsets, counterclaims
      or claims relating to the Eligible Notes Receivable or the
      Mortgages.

     

    (i) The
      Pledged Notes Receivable and the Mortgages were executed and delivered by
      Purchasers in favor of Borrower in connection with the purchase of the related
      Encumbered Intervals.

     

    (j) The
      Mortgages constitute and will constitute valid and enforceable first and prior
      liens and security interests on the Encumbered Intervals.

     

    (k) The
      Pledged Notes Receivable and the Mortgages are and shall remain in full force
      and effect, are and will be valid and binding obligations of the respective
      makers in favor of Lender; and Borrower further warrants and guarantees the
      value, quantity, sound condition, grade and quality of the Encumbered Intervals
      and rights, properties, easements and interests appurtenant or related
      thereto.

     

    (l) The
      grant
      of the security interests described herein has not affected and will not affect
      the validity or enforceability of the obligations of the respective makers
      of
      the Pledged Notes Receivable under such Notes Receivable or the respective
      Mortgages.

     

    (m) Lender
      shall not be required to take, and Borrower has taken any and all required
      steps
      to protect Lender’s security interest in the Collateral (other than maintaining
      possession of the portion of the Collateral constituting instruments); and
      Lender is or shall not be required to collect or realize upon the Collateral
      or
      any distribution of interest or principal, nor shall loss of, or damage to,
      the
      Collateral release Borrower from any of the Obligations.

     

    6.3 Financial
      Statements and Business Condition.
      The
      Financial Reports for the first 9 months of the calendar year 2006 are, to
      the
      best of Borrower’s knowledge, accurate and fairly represent the financial
      condition of the Borrower for the periods in question, subject to the written
      qualifications set forth therein. To the best of Borrower’s knowledge, there are
      no material liabilities, direct or indirect, fixed or contingent, of Borrower,
      except as disclosed to Lender in writing.

     

    6.4 Taxes.
      In
      accordance with the requirements set forth in the Declaration, Borrower
      represents and warrants that Borrower, Silverleaf Club, or the applicable
      Timeshare Owners’ Association, as required, has paid or will have paid in full,
      prior to delinquency, all ad valorem taxes and other taxes and assessments
      against the Resorts, the Real Property and the other Collateral; and Borrower
      knows of no basis for any additional taxes or assessments against the Resorts,
      the Real Property or the other Collateral. Borrower, Silverleaf Club, or the
      applicable Timeshare Owners’ Association, as the case may be, has filed all tax
      returns required to have been filed by it and has paid or will pay prior to
      delinquency, all taxes shown to be due and payable on such returns, including
      interest and penalties thereon, and all other taxes which are payable by it
      to
      the extent the same have become due and payable.

     

    
      
        
        

      

      
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    6.5 Title
      to Properties: Prior Liens.
      Borrower has good and marketable title to all of the Collateral and to all
      unsold Units and Intervals at each Resort, and all rights, properties and
      benefits appurtenant to or benefiting them. Borrower is not in default under
      any
      of the documents evidencing or securing any indebtedness which is secured,
      wholly or in part, by any portion of any Resort or any portion or all the
      Collateral and no event has occurred which with the giving of notice, the
      passage of time or both, would constitute a default under any of the documents
      evidencing or securing any such indebtedness. Other than the Liens granted
      in
      favor of Lender and the liens described in Schedule 6.5 attached hereto, there
      are no liens or encumbrances against the Collateral, including to all unsold
      Units, Intervals and Inventory, or against any Resort.

     

    6.6 Subsidiaries,
      Affiliates and Capital Structure.
      Borrower has no subsidiaries or Affiliates which have any involvement or
      interest in any Resort in any way. None of the Affiliates of Borrower are
      parties to any proxies, voting trusts, shareholders agreements or similar
      arrangements pursuant to which voting authority, rights or discretion with
      respect to Borrower is vested in any other Person.

     

    6.7 Litigation,
      Proceedings, Etc.
      Except
      for those matters identified in Schedule 6.7 hereto, there are no actions,
      suits, proceedings, orders or injunctions pending or threatened against or
      affecting Borrower, the Real Property, the Resorts or the Timeshare Owners’
Association at law or in equity, or before or by any governmental authority
      or
      other tribunal, which (a) could have a material adverse effect on Borrower
      or (b) relate to the Loan or which could have a material effect on the
      Collateral or the Resorts. Borrower has received no notice from any court,
      governmental authority or other tribunal alleging that Borrower or the Resorts
      have violated the Timeshare Act, any of the rules or regulations thereunder,
      the
      Declaration or any other applicable laws, agreements or arrangements that could
      have any material effect on the Loan, the Collateral or the
      Resorts.

     

    6.8 Licenses,
      Permits, Etc.
      Borrower, the Resorts, the Timeshare Owners’ Associations or Borrower’s
      Affiliates involved in the operations of the Resorts, and, to the best of
      Borrower’s knowledge after diligent inquiry, other Persons involved in the
      operations of the Resorts, possess all requisite franchises, certificates of
      convenience and necessity, operating rights, approvals, licenses, permits,
      consents, authorizations, exemptions and orders as are necessary to carry on
      its
      or their business as now being conducted, without any known conflict with the
      rights of others and, with respect to Borrower, the Resorts and the Timeshare
      Owners’ Associations, in each case subject to no mortgage, pledge, Lien, lease,
      encumbrance, charge, security interest, title retention agreement or option
      other than as provided for by this Agreement.

     

    6.9 Environmental
      Matters.
      Except
      as otherwise noted on Schedule 6.9: (a) no Resort or Real Property contains
      any
      Hazardous Materials, (b) no Hazardous Materials are used or stored at or
      transported to or from the Resorts or the Real Property, (c) neither Borrower,
      the Real Property, nor the Resorts nor any manager thereof nor to Borrower’s
      knowledge, the Timeshare Owners’ Associations, have received notice from any
      governmental agency, entity or other Person with regard to Hazardous Materials
      on, under or affecting any Resort, and (d) neither Borrower, the Real Property,
      the Resorts, nor any portion thereof, nor to Borrower’s knowledge after diligent
      inquiry, the Timeshare Owners’ Associations, are in violation of any
      Environmental Laws.

     

    
      
        
        

      

      
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    6.10 Full
      Disclosure.
      No
      information, exhibit or written report or the content of any schedule furnished
      by or on behalf of Borrower to Lender in connection with the Loan, the Real
      Property or the Resorts contains any material misstatement of fact or omits
      the
      statement of a material fact necessary to make the statement contained herein
      or
      therein not misleading. Borrower knows of no fact or condition which will
      prevent the sale of Intervals to Purchasers or prevent the operation of the
      Resorts in accordance with the Declarations and related public offering
      statements, and in accordance with applicable law, or prevent Borrower from
      performing its Obligations pursuant to the Loan Documents.

     

    6.11 Use
      of Proceeds/Margin Stock.
      None of
      the proceeds of the Loan will be used to purchase or carry any margin stock
      (as
      defined under Regulation U of the Board of Governors of the Federal Reserve
      System, as in effect from time to time), and no portion of the proceeds of
      the
      Loan will be extended to others for the purpose of purchasing or carrying margin
      stock. None of the transactions contemplated in the Agreement (including,
      without limitation, the use of the proceeds from the Loan) will violate or
      result in the violation of Section
      7
      of the
      Securities Exchange Act of 1934, as amended, or any regulations issued pursuant
      thereto, including, without limitation, Regulations G, T, U and X of the Board
      of Governors of the Federal Reserve System, 12 C.F.R., Chapter 11.

     

    6.12 Defaults.
      Borrower has no knowledge of any Default or Event of Default not disclosed
      to
      Lender in writing. Borrower has no knowledge of any default or event of default
      under any loan facility or with any lender. Borrower has no knowledge of any
      condition or event, which, with the passage of time, notice or both, would
      constitute an Event of Default or an event of default under any loan facility
      or
      with any lender

     

    6.13 Compliance
      with Law.
      Borrower:

     

    (a) is
      not in
      violation, nor is the Real Property or are any of the Resorts, or the business
      operations in respect of any of the Resorts, or to Borrower’s knowledge after
      diligent inquiry, the Timeshare Owners’ Association, in violation, of the
      Timeshare Act, or any laws, ordinances, governmental rules or regulations of
      any
      state in which a Resort is located, any political subdivision of said states
      or
      any other jurisdiction to which Borrower or the Resorts, or the business
      operations conducted in respect of the Resorts, or the Timeshare Owners’
Association, are subject;

     

    (b) has
      not
      failed, nor have the Resorts or, to Borrower’s knowledge, the Timeshare Owners’
Associations failed, to obtain any consents or joinders, or any approvals,
      licenses, permits, franchises or other governmental authorizations, or to make
      or cause to be made any filings, submissions, registrations or declarations
      with
      any government or agency or department thereof, necessary to the establishment,
      ownership or operation of the Resorts or any of Borrower’s Properties, or to the
      conduct of Borrower’s business, including, without limitation, the operation of
      the Resorts and the sale, or offering for sale, of Intervals therein; which
      violation or failure to obtain or register materially adversely affects
      Borrower, the Resorts or the business, prospects, profits, properties or
      condition (financial or otherwise) of Borrower or the Resorts. Borrower has,
      to
      the extent required by its activities and businesses, and the operations of
      the
      Resorts, fully complied with: (1) all of the applicable provisions of (a) the
      Consumer Credit Protection Act; (b) Regulation Z of the Federal Reserve Board;
      (c) the Equal Credit Opportunity Act; (d) Regulation B of the Federal Reserve
      Board; (e) the Federal Trade Commission’s 3-day cooling-off Rule for
      Door-to-Door Sales; (f) Section
      5
      of the
      Federal Trade Commission Act; (g) the Interstate Land Sales Full Disclosure
      Act
      (“ILSA”);
      (h)
      federal postal laws; (i) applicable state and federal securities laws; (j)
      applicable usury laws; (k) applicable trade practices, home and telephone
      solicitation, sweepstakes, anti-lottery and consumer credit and protection
      laws;
      (l) applicable real estate sales licensing, disclosure, reporting and escrow
      laws; (m) the Americans With Disabilities Act and related accessibility
      guidelines (“ADA”);
      (n)
      the Real Estate Settlement Procedures Act (“RESPA”);
      (o)
      all amendments to and rules and regulations promulgated under the foregoing
      acts
      or laws; (p) the Federal Trade Commission’s Privacy of Consumer Financial
      Information Rule and (q) other applicable federal statutes and the rules and
      regulations promulgated thereunder; and (2) all of the applicable provisions
      of
      the Timeshare Acts, any law or laws of any state (and the rules and regulations
      promulgated thereunder) relating to ownership, establishment or operation of
      the
      Resorts, or the sale, offering for sale, or financing of Intervals;

     

    
      
        
        

      

      
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    (c) has
      made
      diligent inquiry, and to the best of Borrower’s knowledge, all persons or
      entities owning an interest in Borrower: (i) are not currently identified on
      United States Office of Foreign Assets Control (“OFAC”)
      List;
      and (ii) are not persons or entities with whom a citizen of the United States
      is
      prohibited to engage in transactions by any trade embargo, economic sanction,
      or
      other prohibition of Untied States law, regulation, or Executive Order of the
      President of the United States. The OFAC List currently is accessible through
      the internet website www.treas.gov/ofac/t11sdn.pdf; and

     

    (d) represents
      and warrants that at all times throughout the term of the Loan, (i) none of
      the
      funds or other assets of Borrower shall constitute property of, or shall be
      beneficially owned, directly or indirectly, by, any Person subject to trade
      restrictions under the Prescribed Laws (each such Person, an “Embargoed
      Person”),
      with
      the result that the investment in Borrower (whether directly or indirectly),
      is
      or would be prohibited by law or the Loan made by Lender is or would be in
      violation of law; (ii) no Embargoed Person shall have any interest of any nature
      whatsoever in Borrower with the result that the investment in Borrower (whether
      directly or indirectly), is or would be prohibited by law or the Loan is or
      would be in violation of law; and (iii) none of the funds of Borrower shall
      be
      derived from any unlawful activity with the result that the investment in
      Borrower (whether directly or indirectly), is or would be prohibited by law
      or
      the Loan is or would be in violation of law.

     

    6.14 Restrictions
      of Borrower.
      Borrower will not be, on or after the date hereof, a party to any contract
      or
      agreement which prohibits Borrower’s execution of or compliance with the terms
      of this Agreement or the other Loan Documents. Borrower has not agreed or
      consented to cause or permit in the future (upon the happening of a contingency
      or otherwise) any of the Collateral, whether now owned or hereafter acquired,
      to
      be subject to a Lien except in favor of Lender as provided herein.

     

    
      
        
        

      

      
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    6.15 Broker’s
      Fees.
      Borrower and Lender represent to each other that none of them has made any
      commitment or taken any action which will result in a claim for any brokers’,
      finders’ or other similar fees or commitments with respect to the transactions
      described in the Agreement. Borrower agrees to indemnify Lender and save and
      hold Lender harmless from all claims of any Person for any broker’s or finder’s
      fee or commission, and this indemnity shall include reasonable attorneys’ fees
      and legal expenses.

     

    6.16 Deferred
      Compensation Plans.
      Borrower has no pension, profit sharing or other compensatory or similar plan
      (herein called a “Plan”)
      providing for a program of deferred compensation for any employee or officer.
      No
      fact or situation, including but not limited to, any “Reportable Event,” as that
      term is defined in Section 4043 of the Employee Retirement Income Security
      Act
      of 1974 as the same may be amended from time to time (“Pension
      Reform Act”),
      exists or will exist in connection with any Plan of Borrower which might
      constitute grounds for termination of any Plan by the Pension Benefit Guaranty
      Corporation or cause the appointment by the appropriate United States District
      Court of a Trustee to administer any such Plan. No “Prohibited Transaction”
within the meaning of Section 406 of the Pension Reform Act exists or will
      exist
      upon the execution and delivery of the Agreement or the performance by the
      parties hereto of their respective duties and obligations hereunder. Borrower
      will (1) at all times make prompt payment of contributions required to meet
      the minimum funding standards set forth in Sections 302 through 305 of the
      Pension Reform Act with respect to each of its Plans; (2) promptly, after
      the filing thereof, furnish to Lender copies of each annual report required
      to
      be filed pursuant to Section 103 of the Pension Reform Act in connection with
      each Plan for each Plan Year, including any certified financial statements
      or
      actuarial statements required pursuant to said Section 103; (3) notify Lender
      immediately of any fact, including, but not limited to, any Reportable Event
      arising in connection with any Plan which might constitute grounds for
      termination thereof by the Pension Benefit Guaranty Corporation or for the
      appointment by the appropriate United States District Court of a Trustee to
      administer the Plan; and (4) notify Lender of any “Prohibited Transaction”
as that term is defined in Section 406 of the Pension Reform Act. Borrower
      will
      not (a) engage in any Prohibited Transaction or (b) terminate any such
      Plan in a manner which could result in the imposition of a Lien on the Property
      of Borrower pursuant to Section 4068 of the Pension Reform Act.

     

    6.17 Labor
      Relations.
      The
      employees of Borrower are not a party to any collective bargaining agreement
      with Borrower, and, to the best knowledge of Borrower and its officers, there
      are no material grievances, disputes or controversies with any union or any
      other organization of Borrower’s employees, or threats of strikes, work
      stoppages or any asserted pending demands for collective bargaining by any
      union
      or organization.

     

    
      
        
        

      

      
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    6.18 Resorts. 

     

    (a) Timeshare
      Plan.
      Each
      Resort has been established and dedicated, and is and will remain, a time-share
      plan and project in full compliance with all applicable laws and regulations,
      including without limitation, the Timeshare Act.

     

    (b) Access.
      Each
      Resort has direct access to a publicly dedicated road and all roadways inside
      each Resort are subject to an access and use easement or other dedication or
      provision that benefits and will continue to benefit all
      Purchasers.

     

    (c) Utilities.
      Electric, sanitary and stormwater sewer, telephone, water facilities and other
      necessary utilities are available in sufficient capacity to service each Resort
      and any easements necessary to the furnishing of such utility services have
      been
      obtained and duly recorded, and inure to the benefit of each Resort and each
      Timeshare Owners’ Association.

     

    (d) Amenities.
      Each
      Purchaser of an Interval has and will have access to and the full use and
      enjoyment of all of the Common Elements and public utilities of the Resort
      in
      which such interval is located, all in accordance with the Declaration and
      Timeshare Documents.

     

    (e) Construction.
      All
      costs arising from the construction or acquisition of any Units and any other
      improvements and the purchase of any fixtures or equipment, inventory,
      furnishings or other personalty located in, at, or on the Resorts have been
      paid
      or will be paid when due.

     

    (f) Sale
      of Intervals.
      The
      marketing, sale, offering of sale, rental, solicitation of Purchasers or, if
      applicable, lessees, and financing of Intervals in the Resort: (1) do not
      constitute the sale, or the offering of sale, of Securities subject to the
      registration requirements of the Securities Act of 1933, as amended, or any
      state securities law; (2) do not violate the Timeshare Act or any land
      sales or consumer protection law, statute or regulation of the state where
      the
      Resort is located or any other state or jurisdiction in which a Purchaser
      resides or in which sales or solicitation activities occur; and (3) do not
      violate any consumer credit or usury statute of state where the Resort is
      located or any other state or jurisdiction in which a Purchaser resides or
      in
      which sales or solicitation activities occur. All marketing and sales activities
      are performed by employees of Borrower, all of whom are and shall be properly
      licensed in accordance with applicable laws.

     

    (g) Tangible
      Property.
      Except
      for specific items which may be owned by independent contractors, the machinery,
      equipment, fixtures, tools and supplies used in connection with the Resort,
      including without limitation, with respect to the operations and maintenance
      of
      the Common Elements, are owned either by Borrower, Silverleaf Club, or the
      applicable Timeshare Owners’ Association.

     

    (h) Operating
      Contracts.
      Borrower, Silverleaf Club, or the applicable Timeshare Owners’ Association has
      entered into the contracts, agreements, and arrangements necessary for the
      operation of the Resorts, including but not limited to those with respect to
      utilities, maintenance, management, services, marketing and sales (hereinbelow
      defined as “Operating Contracts”).

     

    
      
        
        

      

      
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    6.19 Timeshare
      Regimen Reports.
      Borrower has furnished to Lender true and correct copies of the Timeshare
      Documents listed on Schedule 6.19, which consist of all those placed on file
      by
      Borrower with the Divisions or any federal, state or local regulatory or
      recording agencies, offices or departments. All such filings and/or
      recordations, and all joinders and consents, necessary in order to establish
      the
      plan in respect of the Resorts, including without limitation, the Units,
      Intervals, and all appurtenant Common Elements, and all related use and access
      rights, have been done or obtained and all laws, regulations and statutes,
      and
      all agreements or arrangements, in connection therewith have been complied
      with.

     

    6.20 Operating
      Contracts.
      The
      contracts, agreements and arrangements comprising those agreements or
      arrangements relating to the operation of the Resorts, including without
      limitation, with respect to utilities, maintenance, management, services,
      marketing and sales under which the fees to be paid equal or exceed $50,000.00
      (collectively, all such agreements and arrangements are referred to herein
      as
      the “Operating
      Contracts”)
      are
      unmodified and in full force and effect and shall remain free and clear of
      any
      lien.

     

    6.21 Architectural
      and Environmental Control.
      All
      Units, Common Elements and other improvements at, upon or appurtenant to the
      Resorts are and will be in compliance with the design, use, architectural and
      environmental control provisions, if any, set forth in the
      Declaration.

     

    6.22 Tax
      Identification/Social Security Numbers.
      Borrower’s federal taxpayer’s identification number is: 75-2259890.

     

    6.23 Inventory
      Control Procedures. 

     

    (a) Receivables.
      Borrower has provided to Lender a true and complete copy of Borrower's
      Inventory, Sales and Assignments procedures (the "Receivable
      Inventory Control Procedures"),
      a
      copy of which is attached hereto as Schedule 6.23(a). Borrower is and shall
      at
      all times be in full compliance with the Receivable Inventory Control Procedures
      from the date hereof until the Receivable Loan Component is repaid in full.
      Borrower shall permit Lender, its officers, employees, auditors, and other
      agents or designees to review the books and records of Borrower and make such
      other examinations and inspections as Lender in its sole discretion deems
      necessary to determine that Borrower is in full compliance with such Inventory
      Control Procedures.

     

    (b) Interval
      Inventory Control Procedures.
      Borrower has provided to Lender a true and complete copy of the Borrower’s
      Inventory, Sales and Assignments procedures (the “Interval
      Inventory Control Procedures”),
      a
      copy of which is attached hereto as Schedule 6.23(b). Borrower is and shall
      at
      all times be in full compliance with the Interval Inventory Control Procedures
      from the date hereof until the Initial Inventory Loan Component is repaid in
      full. Borrower shall permit Lender, its officers, employees, auditors and other
      agents or designees to review the books and records of Borrower and to make
      such
      other examinations and inspections as Lender in its sole discretion deems
      necessary to determine that Borrower is in full compliance with such Interval
      Inventory Control Procedures. 

     

    
      
        
        

      

      
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    6.24 Real
      Property.
      With
      respect to each parcel of Real Property:

     

    (a) First
      Lien.
      Upon
      execution and recording of the Real Property Mortgage, Lender will have a valid
      first lien on the Real Property.

     

    (b) Access.
      The
      Real Property has adequate legal rights of access to a public way.

     

    (c) Single
      Tax Lot.
      The
      Real Property consists of a single tax lot. No portion of said lot covers
      property other than the Real Property in question and no portion of the Real
      Property in question lies in any other tax lot.

     

    (d) Flood
      Zone.
      Except
      as is disclosed in the surveys of the Real Property that have been or will
      be
      provided to Lender, no portion of the Real Property is located in a flood hazard
      area as defined by the Federal Insurance Administration.

     

    (e) Seismic
      Exposure.
      No
      portion of the Real Property is located in a zone 3 or zone 4 of the “Seismic
      Zone Map of the U.S.”

     

    (f) Improvements.
      No
      improvements, buildings or other structures are located on the Real Property,
      except as disclosed to Lender in writing.

     

    (g) Condemnation.
      No part
      of the Real Property has been taken in condemnation or other like proceedings
      nor is any preceding pending, threatened or known to be contemplated for the
      partial or the total condemnation or taking of any portion of the Real
      Property.

     

    (h) No
      Purchase Options.
      No
      person or entity has an option to purchase the Real Property, or any portion
      thereof, or any interest therein.

     

    6.25 Inventory.

     

    (a) First
      Lien.
      Upon
      execution, delivery and recording of the Inventory Mortgage(s) and/or the
      Modification(s) of Inventory Mortgages, Lender will have a valid, first priority
      mortgage lien on the Inventory, and the Inventory will be subject to no other
      Lien.

     

    (b) No
      Purchase Options.
      No
      person or entity has an option to purchase any portion of the Inventory, or
      any
      portion thereof, or any interest therein.

     

    6.26 Additional
      Representations and Warranties.
      This
      Agreement, the Note and the other Loan Documents constitute the legal, valid
      and
      binding obligation of Borrower, enforceable against Borrower in accordance
      with
      their respective terms. 

     

    
      
        
        

      

      
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    Section
      7-Covenants

     

    7.1 Affirmative
      Covenants.
      So long
      as any portion of the Obligations remains unsatisfied, Borrower hereby covenants
      and agrees with Lender as follows:

     

    (a) Payment
      and Performance of Obligations.
      Borrower shall pay all of the Loan and related expenses when and as the same
      become due and payable, and Borrower shall strictly observe and perform all
      of
      the Obligations, including without limitation, all covenants, agreements, terms,
      conditions and limitations contained in the Loan Documents, and will do all
      things necessary which are not prohibited by law to prevent the occurrence
      of
      any Event of Default hereunder; and Borrower will maintain an office or agency
      in the State of Texas where notices, presentations and demands in respect of
      the
      Loan Documents may be made upon Borrower. Such office or agency and the books
      and records of Borrower shall be maintained at 1221 Riverbend Drive,
      Suite 120, Dallas, Texas 75221 until such time as Borrower shall so notify
      Lender, in writing, of any change of location of such office or
      agency.

     

    (b) Maintenance
      of Existence, Qualification and Assets.
      Borrower shall at all times (i) maintain its legal existence,
      (ii) maintain its qualification to transact business and good standing in
      any state and in any jurisdiction where it conducts business in connection
      with
      the Resorts, and (iii) comply or cause compliance with all governmental
      laws, rules, regulations and ordinances applicable to the Resorts, Borrower
      or
      its business, including, without limitation, the Timeshare Act.

     

    (c) Consolidation
      and Merger.
      Borrower will not consolidate with or merge into any other Person or permit
      any
      other Person to consolidate with or merge into it, unless: (i) Borrower is
      the
      continuing or surviving corporation in any such consolidation or merger and
      (ii)
      prior to and immediately after such consolidation or merger, Borrower shall
      not
      be in default hereunder.

     

    (d) Maintenance
      of Insurance.
      Borrower, or if required pursuant to the Declarations, the Timeshare Owners’
Associations, shall maintain (or Borrower shall cause to be maintained) at
      all
      times during the term of this Agreement, policies of insurance with premiums
      being paid when due, and shall deliver to Lender originals of insurance policies
      issued by insurance companies, in amounts, in form and in substance, and with
      expiration dates, all acceptable to Lender and containing a waiver of
      subrogation rights by the insuring company, a non-contributory standard
      mortgagee benefit clause, or their equivalents, and a mortgagee loss payable
      endorsement in favor of and satisfactory to Lender, and breach of warranty
      coverage, providing the following types of insurance on and with respect to
      Borrower (or, as appropriate, the respective Associations), the Collateral,
      including the Real Property, and the Resorts:

     

    (i) fire
      and
      extended coverage insurance (including lightning, hurricane, tornado, wind
      and
      water damage, vandalism and malicious mischief coverage) covering the
      improvements and any personal property located in or on the Resorts and the
      Real
      Property in an amount not less than the full replacement value of such
      improvements and personal property, and said policy of insurance shall provide
      for a deductible acceptable to Lender, breach of warranty coverage, replacement
      cost endorsements satisfactory to Lender, and shall not permit
      co-insurance;

     

    
      
        
        

      

      
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    (ii) public
      liability and property damage insurance covering the Resorts and the Real
      Property in amounts and on terms satisfactory to Lender; and

     

    (iii) such
      other insurance on the Resorts and the Real Property or any replacements or
      substitutions therefor including, without limitation, flood insurance (if the
      Property or the Real Property is or becomes located in an area which is
      considered a flood risk by the U.S. Emergency Management Agency or pursuant
      to
      the National Flood Insurance program), in such amounts and upon terms as may
      from time to time be reasonably required by Lender.

     

    To
      the
      extent any other timeshare receivable lender has any rights to approve the
      form
      of insurance policies with respect to the Resorts, the amounts of coverage
      thereunder, the insurers under such policies, or the designation of an
      attorney-in-fact for purposes of dealing with damage to any part of the Resorts
      or insurance claims or matters related thereto, or any successor to such
      attorney-in-fact, or any changes with respect to any of the foregoing, Borrower
      shall take all steps as may be necessary (and, after turnover, if any, of
      control of the Resort to the Timeshare Owners’ Association, Borrower shall use
      its best efforts) to ensure that Lender shall at all times have a co-equal
      right, with such other lender (including, without limitation, Borrower or any
      third-party lender), to approve all such matters and any proposed changes in
      respect thereof; and Borrower shall not cause or permit any changes with respect
      to any insurance policies, insurers, coverage, attorney-in-fact, or insurance
      trustee, if any, without Lender’s prior written approval.

     

    In
      the
      event of any insured loss or claim in respect of the Resorts, or the Real
      Property, Borrower shall apply (or cause to be applied), and Borrower covenants
      that the Timeshare Owners’ Association shall apply (or cause to be applied), all
      proceeds of such insurance policies in a manner consistent with the Timeshare
      Documents and the Timeshare Act.

     

    All
      insurance policies required pursuant to this Agreement (or the Timeshare
      Documents or Timeshare Act) shall provide that the coverage afforded thereby
      shall not expire or be amended, canceled, modified or terminated without at
      least thirty (30) days prior written notice to Lender. At least thirty (30)
      days
      prior to the expiration date of each policy maintained pursuant to this Section
      7.1(d),
      a
      renewal or replacement thereof satisfactory to Lender shall be delivered to
      Lender. Borrower shall deliver or cause to be delivered to Lender receipts
      evidencing the payment for all such insurance policies and renewals or
      replacements.

     

    In
      the
      event of any fire or other casualty to or with respect to the improvements
      on or
      at the Resorts, Borrower covenants that Borrower or the Timeshare Owners’
Association, as the case may be, will promptly restore or repair (or cause
      to be
      restored, repaired or replaced) the damaged improvements and repair or replace
      any other personal property to the same condition as immediately prior to such
      fire or other casualty and, with respect to the improvements and personal
      property on the Resorts, in accordance with the terms of the Timeshare Documents
      or Timeshare Act. The insufficiency of any net insurance proceeds shall in
      no
      way relieve Borrower or, as applicable, Borrower and Timeshare Owners’
Association, of its obligation to restore, repair or replace such improvements
      and other personal property in accordance with the terms hereof, of the
      Declaration or other Timeshare Documents or of the Timeshare Act, and Borrower
      covenants that Borrower or, as the case may be, the Timeshare Owners’
Association, shall promptly comply and cause compliance with the provisions
      of
      the Declaration and other Timeshare Documents, or of the Timeshare Act relating
      to such restoration, repair or replacement. Borrower shall, unless an Event
      of
      Default has occurred, apply all insurance proceeds payable to or received by
      it,
      in accordance with the applicable Declaration. If an Event of Default has
      occurred, Lender may, in its sole discretion, apply all insurance proceeds
      in
      accordance with the applicable Declaration or to the repayment of the Loan
      in
      accordance with Section 2.4
      and
2.5
      hereof.

     

    
      
        
        

      

      
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    (e) Maintenance
      of Security.
      Borrower shall execute and deliver (or cause to be executed and delivered)
      to
      Lender all security agreements, financing statements, assignments and such
      other
      agreements, documents, instruments and certificates, and supplements and
      amendments thereto, and take such other actions, as Lender deems necessary
      or
      appropriate in order to maintain as valid, enforceable and perfected first
      or
      second priority liens and security interests, as applicable, all Liens and
      security interests in the Collateral granted Lender to secure the Obligations.
      Borrower shall not grant extensions of time for the payment of, compromise
      for
      less than the full face value or release in whole or in part, any Purchaser
      or
      other Person liable for the payment of, or allow any credit whatsoever except
      for the amount of cash to be paid upon, any Collateral or any instrument,
      chattel paper or document representing the Collateral.

     

    (f) Payment
      of Taxes and Claims.
      Borrower will pay, and, as applicable pursuant to the Declaration, Borrower
      covenants that the Timeshare Owners’ Association will pay, when due, all taxes
      imposed upon the Resorts, the Collateral, Borrower, the Timeshare Owners’
Association, or any of its or their property, or with respect to any of its
      or
      their franchises, businesses, income or profits, or with respect to the Loan
      or
      any of the Loan Documents; and Borrower and the Timeshare Owners’ Association,
      as the case may be, shall pay all other charges and assessments against
      Borrower, the Collateral and the Resorts before any claim (including, without
      limitation, claims for labor, services, materials and supplies) arises for
      sums
      which have become due and payable. Except for the Liens granted pursuant to
      the
      Loan Documents, and except as otherwise specifically provided for herein,
      Borrower covenants that no statutory or other Liens whatsoever (including,
      without limitation, mechanics’, materialmens’, judgment or tax liens) shall
      attach to any of the Collateral or the Resorts except for such Liens as are
      expressly provided for pursuant to the Declaration, which shall, in any event,
      be subordinate to the Lien of Lender. In the event any such Lien attaches to
      any
      of the Collateral or the Resorts, Borrower shall, within thirty (30) days after
      any such Lien attaches, either (i) cause such Lien to be released of record
      or (ii) provide Lender with a bond in accordance with the applicable laws
      of the State, issued by a corporate surety acceptable to Lender, in an amount
      and form acceptable to Lender.

     

    
      
        
        

      

      
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    (g) Inspections.
      Borrower shall, at any time and from time to time and at the expense of
      Borrower, permit Lender or its agents or representatives to inspect the Resorts,
      the Collateral and if necessary, in Lender’s opinion, to ascertain or assure
      Borrower’s compliance with the terms of this Agreement, any of Borrower’s other
      assets or Property, and to examine and make copies of and abstracts from its
      and, to the extent it has access thereto or possession thereof, the Timeshare
      Owners’ Association’s, books, accounts, records, original correspondence,
      computer tapes, disks, software, and other papers as it may desire; and to
      discuss its affairs, finances and accounts with any of its officers, employees,
      Affiliates, contractors or independent public accountants (and by this provision
      Borrower authorizes said accountants to discuss with Lender, its agents or
      representatives, the affairs, finances and accounts of Borrower). Lender agrees
      to use reasonable efforts not to unreasonably interfere with Borrower’s business
      operations in connection with any such inspections. Without limiting the
      foregoing, Lender shall have the right to make such credit investigations as
      Lender may deem appropriate in connection with its review of Notes Receivable,
      and Borrower shall make available to Lender all credit information in Borrower’s
      possession or under its control or to which it may have access, with respect
      to
      Purchasers or other obligors under Notes Receivable as Lender may
      request.

     

    (h) Reporting
      Requirements.
      So long
      as any portion of the Obligations remain unsatisfied, Borrower shall furnish
      (or
      cause to be furnished, as the case may be) to Lender the following:

     

    (i) Monthly
      Financial Reports.
       As
      soon
      as available and in any event within ten (10) business days after the end of
      each calendar month the following reports: (i) the trial balance of the Pledged
      Notes Receivable; (ii) an aging report on the Pledged Notes Receivable; (iii)
      a
      report detailing the collections on each of the Pledged Notes Receivable; (iv)
      a
      Borrowing Base Report; (v) a deposit summary and other monthly reports from
      the
      Lockbox Agent required pursuant to the Lockbox Agreement; (vi) reports relating
      to Eligibility Criteria for Notes Receivable including: (a) modified accounts;
      (b) upgrades; (c) employees of Borrower; (d) non-U.S. or non-Canadian accounts;
      (e) pending cancellations; (f) residents in Canada; (g) terms greater than
      120
      months; (h) less than 10% down payments; (i) principal balances over $60,000;
      and (j) principal balances over $35,000; and (vii) other reports including:
      (a)
      paid-in-full; (b) delinquency; (c) accounts added; (d) accounts subtracted;
      (e)
      summary of accounts added; (f) summary of accounts subtracted; (g) summary
      of
      delinquencies; (h) Borrower's monthly summary; (i) maintenance fee letter;
      (j)
      maintenance fee back-up for prior month(s); (k) copies of checks deposited
      to
      clear up auto debit delay; (l) compact disc of trial balances broken down by
      old
      and new accounts; and (m) reports relating to Purchaser criteria including
      individual and weighted average FICO indicators for all new Purchasers for
      the
      second preceding month. Each such report, other than the reports provided under
      subparagraph (v) above, shall be certified by the Borrower in accordance with
      Exhibit G attached hereto.

     

    
      
        
        

      

      
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    (ii) Quarterly
      Financial Reports.
      As soon
      as available and in any event within forty-five (45) days after the end of
      each
      fiscal quarter, copies of income statements and balance sheets for the
      operations of each Resort and for Borrower, certified by the Chief Financial
      Officer of Borrower;

     

    (iii) Annual
      Financial Reports.
      As soon
      as available and in any event within ninety (90) days after the end of each
      calendar year or other fiscal year as may be applicable with respect to Borrower
      (a “Fiscal
      Year”),
      a
      statement of income and expense of Borrower for the annual period ended as
      of
      the end of such Fiscal Year, and a balance sheet of Borrower as of the end
      of
      such Fiscal Year, all in such detail and scope as may be reasonably required
      by
      Lender and prepared in accordance with GAAP and on a basis consistent with
      prior
      accounting periods. Each annual financial statement of Borrower shall be
      prepared by an independent certified public accountant and certified by Borrower
      to be true, correct and complete, and shall otherwise be in form acceptable
      to
      Lender. In the event that Lender, acting in good faith, is not satisfied with
      any such Financial Statement, and if Borrower fails to provide Lender with
      new
      Financial Statements acceptable to Lender within fifteen (15) days after Lender
      delivers written notice of such dissatisfaction to Borrower, then, at Lender’s
      request, Borrower shall furnish to Lender copies of audited income statements
      and balance sheets certified by an independent certified public accountant
      acceptable to Lender and prepared in accordance with GAAP and on a basis
      consistent with prior accounting periods. Such audited annual statements shall
      also be in form and content satisfactory to Lender. If the figures for net
      and
      total operating income (as such terms are defined in accordance with GAAP)
      in
      the audited annual statements do not vary by more than five percent (5%) from
      the figures in the unaudited annual statements, Lender shall bear the cost
      of
      the certified public accountant’s audit. If, however, such figures vary by more
      than five percent (5%), Borrower shall bear the cost of such certified public
      accountant’s audit;

     

    (iv) Officer’s
      Certificate.
      Each
      set of annual Financial Statements or reports delivered to Lender pursuant
      to
      Sections 7.1(h)(i)
      and
7.1(h)(ii)
      of this
      Agreement will be accompanied by a certificate of the President or the Treasurer
      of Borrower in the form attached as Exhibit H setting forth that the signers
      have reviewed the relevant terms of the Agreement (and all other agreements
      and
      exhibits between the parties) and have made, or caused to be made, under their
      supervision, a review of the transactions and conditions of Borrower from the
      beginning of the period covered by the Financial Statements or reports being
      delivered therewith to the date of the certificate and that such review has
      not
      disclosed the existence during such period of any condition or event which
      constitutes a Default or Event of Default or, if any such condition or event
      existed or exists or will exist, specifying the nature and period of existence
      thereof and what action Borrower has taken or proposes to take with respect
      thereto;

     

    
      
        
        

      

      
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    (v) Sales
      Reports.
      Concurrently with the financial statements required pursuant to Section
7.1(h)(i),
      Borrower shall deliver to Lender, a sales report, detailing the sales of all
      Intervals at the Resorts for the period covered thereby, certified by Borrower
      to be true, correct and complete and otherwise in a form approved by
      Lender;

     

    (vi) Audit
      Reports.
      Promptly upon receipt thereof, one (1) copy of each other report submitted
      to
      Borrower by independent public accountants or other Persons in connection with
      any annual, interim or special audit made by them of the books of
      Borrower;

     

    (vii) Notice
      of Default or Event of Default.
      Immediately upon becoming aware of the existence of any condition or event
      which
      constitutes a Default or an Event of Default, Borrower shall deliver to Lender
      a
      written notice specifying, as applicable, the nature and period of existence
      thereof and what action Borrower is taking or proposes to take with respect
      thereto;

     

    (viii) Notice
      of Claimed Default.
      Immediately upon becoming aware of a claim of Default or Event of Default,
      a
      written notice specifying, as applicable, the nature and period of existence
      thereof and what action Borrower is taking or proposes to take with respect
      thereto; 

     

    (ix) Maintenance
      of Inventory Control.
      Borrower shall maintain and at all times fully comply with the Inventory Control
      Procedures from the date hereof until the Loan is repaid in full. Borrower
      shall
      permit Lender, its officers, employees, auditors, and other agents or designees
      to review the books and records of Borrower and make such other examinations
      and
      inspections as Lender in its sole discretion deems necessary to determine that
      Borrower is in full compliance with such Inventory Control
      Procedures;

     

    (x) Material
      Adverse Developments.
      Immediately upon becoming aware of any claim, action, proceeding, development
      or
      other information which may materially and adversely affect Borrower, the
      Collateral, the Resorts, the business, prospects, profits or condition
      (financial or otherwise) of Borrower, or the ability of Borrower to perform
      its
      Obligations under the Agreement, Borrower shall provide Lender with telephonic
      or telegraphic notice, followed by telefaxed and mailed written confirmation,
      specifying the nature of such development or information and such anticipated
      effect; and

     

    (xi) Other
      Information.
      Borrower shall deliver to Lender: (i) within five (5) days of the filing thereof
      with the United States Securities and Exchange Commission, copies of each Form
      8-K, 10-Q and 10-K filed by Borrower; (ii) at least semi-annually during the
      Term (or more frequently upon request of Lender), current addresses and
      telephone numbers for each obligor under an Eligible Note Receivable pledged
      to
      Lender and (iii) any other information related to the Loan, the Collateral,
      the
      Resorts or Borrower as Lender may in good faith request including, without
      limitation, annually, federal call reports relating to Lockbox
      Agent.

     

    
      
        
        

      

      
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    (i) Records.
      Borrower shall keep adequate records and books of account reflecting all
      financial transactions of Borrower and with respect to the Resorts in which
      complete entries will be made in accordance with GAAP. In addition, Borrower
      shall keep, and shall promptly deliver to Lender upon Lender’s request therefor,
      complete, timely and accurate records of all sales of Intervals and all payments
      in respect of Pledged Notes Receivable.

     

    (j) Management.
      Borrower shall: (i) remain engaged in the active management of the Resorts,
      (ii)
      unless Borrower notifies Lender in writing at least thirty (30) days in advance
      of its new location, retain its executive offices at 1221 Riverbend Drive,
      Suite
      120, Dallas, Texas 75221, and (iii) continue to perform duties substantially
      similar to those presently performed as provided in the management agreement
      relating to each Resort. No management agreement for any Resort shall be
      modified, assigned, extended, terminated or entered into nor shall the current
      method of operation and management of the Resorts be changed in any material
      manner, without the prior written approval of Lender.

     

    (k) FICA.
      Borrower shall furnish to Lender within thirty (30) days after the expiration
      of
      each calendar quarter proof reasonably satisfactory to Lender that Borrower’s
      obligations to make deposits for F.I.C.A., social security and withholding
      taxes
      have been satisfied.

     

    (l) Operating
      Contracts.
      Subject
      to the rights of the Timeshare Owners’ Association as set forth in the Timeshare
      Documents, no Operating Contract shall be modified, extended, terminated or
      entered into, without the prior written approval of Lender, if any such
      modification, extension, termination or new agreement could have a material
      adverse impact on the operation of the Resorts or the Collateral.

     

    (m) Notices.
      Borrower shall notify Lender within five (5) Business Days of the occurrence
      of
      any event (i) as a result of which any representation or warranty of
      Borrower contained in any Loan Documents would be incorrect or materially
      misleading if made at that time, or (ii) as a result of which Borrower is
      not in full compliance with all of its covenants and agreements contained in
      this Agreement or any Loan Document, or (iii) which constitutes or, with
      the passage of time, notice or a determination by Lender would constitute,
      an
      Event of Default.

     

    (n) Maintenance.
      Borrower shall maintain, or shall cause to be maintained, or to the extent
      provided for pursuant to the Declaration, shall use its best efforts to cause
      the Timeshare Owners’ Association to maintain, and the Resorts in good repair,
      working order and condition and shall make all necessary replacements and
      improvements to the Resorts consisting of real property so that the value and
      operating efficiency of the Resorts will be maintained at all times and so
      that
      the Resorts remain in compliance in all respects with the Timeshare Act, the
      Timeshare Documents and other applicable law.

     

    
      
        
        

      

      
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    (o) Claims.
      Borrower shall promptly notify Lender of any claim, action or proceeding
      affecting the Resorts or Collateral, or any part thereof, or Lender, or any
      of
      the security interests or rights granted in favor of Lender hereunder or under
      any of the Loan Documents. At the request of Lender, Borrower shall appear
      in
      and defend in favor of Lender, at Borrower’s sole expense, any such claim,
      action or proceeding.

     

    (p) Registration
      and Regulations.
      

     

    (i) Local
      Legal Compliance.
      Borrower will comply, and will cause the Resorts to comply, with all applicable
      servitudes, restrictive covenants, applicable planning, zoning or land use
      ordinances and building codes, all applicable health and Environmental Laws
      and
      regulations, and all other applicable laws, rules, regulations, agreements
      or
      arrangements.

     

    (ii) Registration
      Compliance.
      Borrower will maintain, or cause to be maintained, all necessary registrations,
      current filings, consents, franchises, approvals, and exemption certificates,
      and Borrower will make or pay, or cause to be made or paid, all registrations,
      declarations or fees with the Division and any other government or any agency
      or
      department thereof, whether in the state or another jurisdiction, required
      in
      connection with the Resorts and the occupancy, use and operation thereof, the
      incorporation of Units into the time-share plan established pursuant to the
      Declaration and the other Timeshare Documents, and the sale, advertising,
      marketing, and offering for sale of Intervals. All such registrations, filings
      and reports will be truthfully completed; and true and complete copies of such
      registrations, applications, consents, licenses, permits, franchises, approvals,
      exemption certificates, filings and reports will be delivered to Lender.
      Borrower shall advise Lender of any changes with respect to its marketing or
      sales programs in any jurisdiction, including jurisdictions other than the
      state, and at Lender’s request from time to time, Borrower shall deliver to
      Lender: (A) written statements by the applicable state authorities, in form
      acceptable to Lender, stating that no registration is necessary for the sale
      of
      Intervals in the particular state, (B) an opinion of counsel in form
      acceptable to Lender and rendered by counsel acceptable to Lender, stating
      that
      no such registration is necessary, or (C) such other evidence of compliance
      with applicable laws as Lender may require; and

     

    (iii) Other
      Compliance.
      Borrower has, in all material respects, complied with and will comply with
      all
      laws and regulations of the United States, the State of Texas, each state in
      which an applicable Resort or Collateral is located, any political subdivision
      of either such state and any other governmental, quasi-governmental or
      administrative jurisdiction in which Intervals have been sold or offered for
      sale, or in which sales, offers of sale or solicitations with respect to the
      Resorts have been or will be conducted, including to the extent applicable,
      but
      not limited to: (1) the Timeshare Act; (2) the Consumer Credit
      Protection Act; (3) Regulation Z of the Federal Reserve Board;
      (4) the Equal Credit Opportunity Act; (5) Regulation B of the
      Federal Reserve Board; (6) the Federal Trade Commission’s 3-day cooling-off
      Rule for Door-to-Door Sales; (7) Section 5 of the Federal Trade Commission
      Act;
      (8) ILSA; (9) federal postal laws; (10) applicable state and
      federal securities laws; (11) applicable usury laws; (12) applicable
      trade practices, home and telephone solicitation, sweepstakes, anti-lottery
      and
      consumer credit and protection laws; (13) applicable real estate sales
      licensing, disclosure, reporting and escrow laws; (14) the ADA;
      (15) RESPA; (16) all amendments to and rules and regulations
      promulgated under the foregoing acts or laws; (17) the Federal Trade
      Commission’s Privacy of Consumer Financial Information Rule; (18) other
      applicable federal statutes and the rules and regulations promulgated
      thereunder; and (19) any state law or law of any state (and the rules and
      regulations promulgated thereunder) relating to ownership, establishment or
      operation of the Resort, or the sale, offering for sale, or financing of
      Intervals.

     

    
      
        
        

      

      
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    (q) Other
      Documents.
      Borrower will maintain to the satisfaction of Lender and make available to
      Lender, accurate and complete files relating to the Resorts, the Pledged Notes
      Receivable and other Collateral, and such files will contain true copies of
      each
      Pledged Note Receivable, as amended from time to time, copies of all relevant
      credit memoranda relating to such Notes Receivable and all collection
      information and correspondence relating thereto. Without limiting the foregoing,
      Borrower shall maintain evidence of its compliance with the requirements of
      Section 3.8.

     

    (r) Further
      Assurances.
      Borrower will execute and deliver, or cause to be executed and delivered, such
      other and further agreements, documents, instruments, certificates and
      assurances as, in the judgment of Lender exercised in good faith may be
      necessary or appropriate to more effectively evidence or secure, and to ensure
      the performance of, the Obligations. In addition, Borrower shall deliver to
      Lender from time to time upon each request by Lender such documents, instruments
      or other matters or items as Lender may require to evidence Borrower’s
      compliance with the covenants set forth in this Section 7.1
      and
      Section 3.8.

     

    (s) Utilities.
      Borrower will cause, or to the extent provided for pursuant to the Declaration,
      covenants to use its best efforts to ensure that the Timeshare Owners’
Association, or the manager of the Resorts, as applicable, will cause, electric,
      sanitary and stormwater sewer, water facilities, drainage facilities, solid
      waste disposal, telephone and other necessary utilities to be available to
      the
      Resorts in sufficient capacity to service the Resorts.

     

    
      
        
        

      

      
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    (t) Amenities.
      Borrower will cause, or to the extent provided for pursuant to the Declarations,
      will use its best efforts to ensure that the Timeshare Owners’ Association, or
      the manager of the Resort, as applicable, will cause, the Resorts to be
      maintained in good condition and repair, and in accordance with the provisions
      of the applicable Timeshare Documents, and Borrower will cause each Purchaser
      of
      an Interval at the Resorts to have continuing access to, and the use of, to
      the
      extent of such Purchaser’s time-share periods, all of the Common Elements and
      related or appurtenant services, rights and benefits, all as provided in the
      Declaration and the Timeshare Documents.

     

    (u) Expenses
      and Closing Fees.
      Whether
      or not the transactions contemplated hereunder are completed, Borrower shall
      pay
      all expenses of Lender and each of Lender’s participants relating to
      negotiating, preparing, documenting, closing and enforcing this Agreement,
      including, but not limited to:

     

    (i) the
      cost
      of preparing, reproducing and binding this Agreement, the other Loan Documents
      and all Exhibits and Schedules thereto;

     

    (ii) the
      reasonable fees and disbursements of Lender’s and each of Lender’s participants’
counsel;

     

    (iii) Lender’s
      and each of Lender’s participants’ reasonable out-of-pocket
      expenses;

     

    (iv) all
      reasonable fees and expenses (including fees and expenses of Lender’s and each
      of Lender’s participants’ counsel) relating to any amendments, waivers, consents
      or subsequent closings pursuant to the provisions hereof;

     

    (v) all
      costs, outlays, legal fees and expenses of every kind and character had or
      incurred in (1) the interpretation or enforcement of any of the provisions
      of,
      or the creation, preservation or exercise of rights and remedies under, any
      of
      the Loan Documents including the costs of appeal (2) the preparation for,
      negotiations regarding, consultations concerning, or the defense or prosecution
      of legal proceedings involving any claim or claims made or threatened against
      Lender arising out of this transaction or the protection of the Collateral
      securing the Loan or Advances made hereunder, expressly including, without
      limitation, the defense by Lender, and each of Lender’s participants of any
      legal proceedings instituted or threatened by any Person to seek to recover
      or
      set aside any payment or setoff theretofore received or applied by Lender and
      each of Lender’s participants with respect to the Obligations, and any and all
      appeals thereof; and (3) the advancement of any expenses provided for under
      any
      of the Loan Documents;

     

    
      
        
        

      

      
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    (vi) all
      expenses relating to the maintenance and administration of the Lockbox and
      Lockbox Account by the Lockbox Agent and Servicing and any escrow by the Title
      Company or any other escrow agent;

     

    (vii) all
      costs
      and expenses incurred by Lender under the Note, and all late charges under
      the
      Note;

     

    (viii) all
      real
      and personal property taxes and assessments, documentary stamp and intangible
      taxes, sales taxes, recording fees, title insurance premiums and other title
      charges, document copying, transmittal and binding costs, appraisal fees, lien
      and judgment search costs, fees of architects, engineers, environmental
      consultants, surveyors and any special consultants, construction inspection
      fees, brokers fees, escrow fees, wire transfer fees, and all travel and
      out-of-pocket expenses of Lender and each of Lender’s participants to conduct
      inspections or audits. Without limitation of the foregoing, Borrower shall
      pay
      the costs of UCC and other searches, UCC and other Loan Document recording
      fees
      and applicable taxes, and premiums on each Mortgagee Title Policy delivered
      to
      Lender pursuant to this Agreement; and

     

    (ix) with
      respect to the fees payable by Borrower under clauses (ii), (iii), and (iv)
      above, provided that no Event of Default or condition, omission or act which,
      with the passage of time, notice or both, would constitute an Event of Default,
      has occurred, Lender and/or Lender’s participants shall provide Borrower in
      advance, as applicable, with good faith estimates of: (1) the reasonable fees
      and disbursements of participant’s counsel; (2) the participant’s reasonable
      out-of-pocket expenses; and (3) the reasonable fees and expenses of participants
      and each participant’s counsel relating to any amendments, waivers, consents or
      subsequent closings pursuant to the provisions hereof, respectively; and such
      fees, disbursements and expenses shall be in accordance with such good faith
      estimates.

     

    
      
        
        

      

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

     

    
      
        
        

      

      
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    (w) Financial
      Covenants. 

     

    (i) Tangible
      Net Worth.
      Borrower
      shall at all times have and maintain Tangible Net Worth in an amount which
      shall
      not be less than an amount equal to the Tangible Net Worth as stated in the
      annual audited financial statements as of December 31, 2004 plus (A) fifty
      percent (50%) of the aggregate amount of proceeds received by Borrower after
      December 31, 2004 in connection with each issuance by Borrower of any class
      or
      classes of capital stock after December 31, 2004, except for stock issued to
      retire existing unsecured subordinated debt, plus (B) fifty percent (50%) of
      the
      aggregate amount of net income (calculated in accordance with GAAP) of Borrower
      after December 31, 2004.

     

    (ii) Marketing
      and Sales Expenses.
      As
      of the
      last day of each fiscal quarter, Borrower will not permit the twelve (12) month
      cumulative ratio of Marketing and Sales Expenses to the Borrower’s net proceeds
      from the sale of Intervals as recorded on the Borrower’s financial statements
      for the immediately preceding twelve (12) consecutive months to equal or exceed
      a ratio of .570 to 1.

     

    (iii) Maximum
      Loan Delinquency.
      Borrower
      will not permit as of the last day of each calendar quarter its over 30-day
      delinquency rate on its entire Notes Receivable portfolio to be greater than
      twenty-five percent (25%). If, as of the last day of each calendar quarter,
      Borrower’s over 30-day delinquency on its entire Notes Receivable portfolio is
      greater than twenty percent (20%), then Lender shall have the right to conduct
      an audit, at Borrower’s sole cost and expense, of all Borrower’s Notes
      Receivable pledged to the Lender hereunder.

     

    (iv) Interest
      Coverage.
      The
      Interest Coverage Ratio for Borrower shall be at least 1.25:1. The term Interest
      Coverage Ratio means with respect to any Person for any calendar quarter, the
      ratio of (a) EBITDA for such period less capital expenditures as determined
      in
      accordance with GAAP, for such period to (b) the interest expense minus all
      non-cash items constituting interest expense for such period.

     

    (v) Profitable
      Operations.
      Borrower
      will not permit Consolidated Net Income (a) for any fiscal year, commencing
      with
      the fiscal year ending December 31, 2004, to be less than $1.00 and (b) for
      any
      two consecutive fiscal quarters (reviewed on an individual rather than on an
      aggregate basis) to be less than $1.00.

     

    (vi) Debt
      to Equity Ratio.
      The
      Debt
      to Equity Ratio for Borrower shall be less than 6:1. The term Debt to Equity
      Ratio means the ratio of (a) debt consisting of all notes payable, capital
      lease
      obligations and senior subordinated debt as reported on the Borrower’s most
      recent consolidated financial statements to (b) equity consisting of the balance
      sheet equity and senior subordinated debt less intangible assets, including,
      without limitation, goodwill, trademarks, tradenames, copyrights, patents,
      patent allocations, licenses and rights in any of the foregoing and other items
      treated as intangible in accordance with GAAP, as reported on the Borrower’s
      most recent consolidated financial statements. In computing Borrower’s Debt to
      Equity Ratio, non-recourse off balance sheet financing will not be included
      as
      part of Borrower’s debt.

     

    
      
        
        

      

      
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    (x) Net
      Securitization Cash Flow.
      If
      a
      Default or Event of Default has occurred, then Borrower shall cause Silverleaf
      Finance II, Inc. to declare, at least quarterly, a cash dividend payable to
      Borrower and/or a payment in respect of the Silverleaf Finance II Subordinated
      Note in an aggregate amount equal to the Net Securitization Cash Flow in respect
      of Silverleaf Finance II, Inc. for such quarter, and all such dividends shall
      be
      paid directly to Lender, and applied by Lender in repayment of the Loan.
      Borrower shall provide Lender with notice of Silverleaf Finance II, Inc.’s
      declaration of a cash dividend or a payment on the Silverleaf Finance II
      Subordinated Note, together with a certification that: (i) states whether a
      Default or Event of Default exists, and (ii) contains a calculation of the
      Net
      Securitization Cash Flow.

     

    (y) The
      maximum Loan to Retail Value Ratio shall at no time exceed 15%.

     

    7.2 Negative
      Covenants.
      So long
      as any portion of the Obligations remain unsatisfied, Borrower hereby covenants
      and agrees with Lender as follows:

     

    (a) Limitation
      on Other Debt, Further Encumbrances.
      Borrower will not obtain financing and grant liens with respect to the
      Collateral. Notwithstanding anything herein to the contrary, Borrower may,
      without first obtaining the written consent of Lender obtain financing and
      grant
      liens with respect to any of its assets or other property except for the
      Collateral and those assets or property restricted by a negative pledge
      provided: (i) Borrower provides ten days prior written notice to Lender setting
      forth the terms and conditions of such financing; (ii) no Event of Default
      or
      condition, omission or act which, with the passage of time, notice or both,
      would constitute an Event of Default, has occurred; (iii) such financing does
      not result in an Event of Default hereunder or under any documents evidencing
      any other indebtedness of Borrower; and (iv) Lender is promptly provided a
      copy
      of the fully executed loan documents relating thereto.

     

    (b) Restrictions
      on Transfers.
      Except
      as hereinafter specifically provided, Borrower shall not, whether voluntarily
      or
      involuntarily, by operation of law or otherwise, (i) without obtaining the
      prior
      written consent of Lender (which consent may be given, withheld or conditioned
      by Lender in Lender’s sole discretion), transfer, sell, pledge, convey,
      hypothecate, factor or assign all or any portion of the Collateral, the
      Encumbered Intervals, the Common Elements relating to the Encumbered Intervals
      or any Resort facilities or amenities, or contract to do any of the foregoing,
      including, without limitation, pursuant to options to purchase, and so-called
      installment sales contracts, land contracts, or contracts for deed, provided
      that the foregoing restriction on transfers shall not apply to the conveyance
      of
      SPV Assets to the SPV in accordance with the Silverleaf Finance II Documents,
      (ii) without obtaining the prior written consent of Lender (which consent may
      be
      given, withheld or conditioned by Lender in Lender’s sole discretion), lease or
      license all or any portion of the Collateral, the Encumbered Intervals, the
      Common Elements relating to the Encumbered Intervals or any Resort facilities
      or
      amenities (except for the license created in favor of SPV under any license
      agreement with Borrower, Silverleaf Club or any timeshare owners association,
      to
      use or access the reservation system or related computer hardware or software
      for any Resort), or change the legal or actual possession or use thereof, (iii)
      permit the assignment, transfer, delegation, change, modification or diminution
      of the duties or responsibilities of Borrower, of any manager of the Resorts
      approved by Lender as manager of the Resorts (except for an assignment of such
      duties to a professional management company or companies reasonably acceptable
      to Lender in advance) without obtaining the prior written consent of Lender
      (which consent shall not be unreasonably withheld), or (iv) without obtaining
      the prior written consent of Lender (which consent may be given, withheld or
      conditioned by Lender in Lender’s sole discretion), cause or permit the
      assignment, pledge or other encumbrance of any of the Operating Contracts or
      all
      or any portion of Borrower’s right, title or interest in the Declaration.
      Without limiting the generality of the preceding sentence, and subject to the
      terms of this Agreement, the prior written consent of Lender (as specified
      above) shall be required for (A) any transfer of the Encumbered Intervals,
      the
      Common Elements relating to the Encumbered Intervals or any Resort facilities
      or
      amenities or any part thereof made to a subsidiary or Affiliate or otherwise,
      (B) any transfer of all or any part of the Encumbered Intervals, the Common
      Elements relating to the Encumbered Intervals or any Resort facilities or
      amenities by Borrower to its stockholders or Affiliates or vice versa, and
      (C)
      any corporate merger or consolidation, disposition or other reorganization,
      except as permitted in Section 7.1(c).
      In the
      event that Lender is willing to consent to a transfer which would otherwise
      be
      prohibited by this Section 7.2(b)
      Lender
      may condition its consent on such terms as it desires, including, without
      limitation, an increase in the Interest Rate and the requirement that Borrower
      pay a transfer fee, together with any expenses incurred by Lender in connection
      with the granting of such consent (including, without limitation, attorneys’
fees and expenses). If Borrower violates the terms of this Section 7.2(b),
      in
      addition to any other rights or remedies which Lender may have herein, in any
      other Loan Document, or at law or in equity, Lender may by written notice to
      Borrower increase, effective immediately as of the date of such violation,
      the
      Interest Rate to the Default Rate.

     

    
      
        
        

      

      
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    (c) Use
      of a Lender’s or Lender’s Name.
      Borrower will not, and will not permit any Affiliate to, without the prior
      written consent of Lender or such Lender’s participant, use the name of Lender
      or any Lender’s participant or the name of any affiliate of Lender, any Lender
      or any Lender’s participant in connection with any of their respective
      businesses or activities, except in connection with internal business matters
      and as required in dealings with governmental agencies.

     

    (d) Transactions
      with Affiliates.
      Except
      as provided in the Silverleaf Finance II Documents, without the prior written
      consent of Lender, which shall not unreasonably be withheld, Borrower will
      not
      enter into any transaction with any Affiliate in connection with the Resorts,
      including, without limitation, relating to the purchase, sale or exchange of
      any
      assets or properties or the rendering of any service, except in the ordinary
      course of, and pursuant to the reasonable requirements of, the operations of
      the
      Resorts and upon fair and reasonable terms.

     

    
      
        
        

      

      
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    (e) Restrictive
      Covenants.
      Borrower will not without Lender’s prior written consent seek, consent to, or
      otherwise acquiesce in, any change in any private restrictive covenant, planning
      or zoning law or other public or private restriction, which would limit or
      alter
      the use of the Resorts.

     

    (f) Subordinated
      Obligations.
      Borrower will not, directly or indirectly, (i) permit any payment to be
      made in respect of any indebtedness, liabilities or obligations, direct or
      contingent, (the “Subordinated
      Debt”)
      to any
      of its shareholders or their affiliates or which are subordinated by the terms
      thereof or by separate instrument to the payment of principal of, and interest
      on, the Note; (ii) permit the amendment, rescission or other modification
      of any such subordination provisions of any of Borrower’s subordinated
      obligations in such a manner as to affect adversely the Lien in and to the
      Collateral or Lender’s senior priority position and entitlement as to payment
      and rights with respect to the Note and the Obligations, or (iii) permit
      the prepayment or redemption, except for mandatory prepayments, of all or any
      part of Borrower’s obligations to its shareholders, or of any subordinated
      obligations of Borrower except in accordance with the terms of such
      subordination. Notwithstanding anything to the contrary in this Section
7.2(f),
      so long
      as Borrower’s Tangible Net Worth remains in compliance with Section 7.1(w)(i)
      Borrower
      may: (i) retire unsecured subordinated debt, and/or (ii) declare dividends,
      buy
      back stock, and perform other equity transactions.

     

    (g) Timeshare
      Regime.
      Without
      Lender’s prior written consent, Borrower shall not amend, modify or terminate
      the Declarations or other Timeshare Documents, or any other restrictive
      covenants, agreements or easements regarding the Resorts (except for routine
      non-substantive modifications which have no impact on the Collateral). Except
      as
      otherwise provided herein, Borrower shall not assign its rights as developer
      under the Declarations without Lender’s prior written consent, or file or permit
      to be filed any additional covenants, conditions, easements or restrictions
      against or affecting the Resorts (or any portion thereof) without Lender’s prior
      written consent, which consent shall not be unreasonably withheld.

     

    (h) Name
      Change.
      Borrower will not change its name or state of organization.

     

    (i) Collateral.
      Borrower shall not take any action (nor permit or consent to the taking of
      any
      action) which might impair the value of the Collateral or any of the rights
      of
      Lender in the Collateral, except with respect to the Silverleaf Finance II
      Stock
      and the Silverleaf Finance II Subordinated Note as provided in the Silverleaf
      Finance II Documents, nor shall Borrower cause or permit any amendment to or
      modification of the form or terms of any of the Pledged Notes Receivable,
      Mortgages or, except as specifically provided herein above, the other Timeshare
      Documents.

     

    (j) Marketing/Sales.
      Borrower shall not market, attempt to sell or sell or permit or justify any
      sales or attempted sales of any Intervals except in compliance with the
      Timeshare Act and applicable laws in state and other jurisdictions where
      marketing, sales or solicitation activities occur.

     

    
      
        
        

      

      
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    (k) Declarant’s
      Rights and Management Agreements.
      Borrower
      covenants, pledges and agrees that until the Loan and all other amounts due
      and
      owing under this Agreement and the other Loan Documents are paid in full
      Borrower will not, voluntarily or involuntarily, directly or indirectly,
      mortgage, pledge, assign, sell, transfer, hypothecate, encumber, convey or
      grant
      a security interest in any: (i) contract or agreement, whether written, oral
      or
      otherwise, whether now or hereafter existing, including any management or
      operating contract and agreement, between Borrower or any Affiliate of the
      Borrower and the governing body of any Resort, with respect to the management
      and operation of the Resort; or (ii) any rights of the Declarant arising under
      the Declaration creating any Resort, or under the Bylaws for the Resort, whether
      now or hereafter existing. 

     

    Section
      8-Events Of Default

     

    8.1 Nature
      of Events.
      An
“Event of Default” shall exist if any of the following shall occur:

     

    (a) Payments.
      If
      Borrower shall fail to make, as and when due, any payment or mandatory
      prepayment of principal, interest, fees or other amounts with respect to the
      Loan and such failure shall continue for five (5) days after notice of such
      failure is provided by Lender.

     

    (b) Covenant
      Defaults.
      If
      Borrower shall fail to perform or observe any covenant, agreement or warranty
      contained in this Agreement or in any of the Loan Documents, (other than with
      respect to: (i) the failure to make timely payments in respect of the Loan
      as
      provided in Section 8.1(a);
      (ii)
      the failure to deliver payments made under the Pledged Notes Receivable directly
      to Lender as required pursuant to Section 2.4
      as
      provided in Section 8.1(h);
      or
      (iii) violation of: (y) the financial covenants in Section 7.1(w);
      any
      negative covenants in Section 7.2)
      and,
      such failure shall continue for fifteen (15) days after notice of such failure
      is provided by Lender, provided however, that if Borrower commences to cure
      such
      failure within such 15 day period, but, because of the nature of such failure,
      cure cannot be completed within 15 days notwithstanding diligent effort to
      do
      so, then, provided Borrower diligently seeks to complete such cure, an Event
      of
      Default shall not result unless such failure continues for a total of thirty
      (30) days.

     

    (c) Warranties
      or Representations.
      If any
      representation or other statement made by or on behalf of Borrower in this
      Agreement, in any of the Loan Documents or in any instrument furnished in
      compliance with or in reference to the Loan Documents, is false, misleading
      or
      incorrect in any material respect as of the date made or
      reaffirmed.

     

    (d) Enforceability
      of Liens.
      If any
      lien or security interest granted by Borrower to Lender in connection with
      the
      Loan is or becomes invalid or unenforceable or is not, or ceases to be, a
      perfected first or second priority lien or security interest, as applicable,
      in
      favor of Lender, encumbering the asset which it is intended to encumber, and
      Borrower fails to cause such lien or security interest to become a valid,
      enforceable, first or second, as applicable, and prior lien or security interest
      in a manner satisfactory to Lender within ten (10) days after Lender delivers
      written notice thereof to Borrower.

     

    
      
        
        

      

      
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    (e) Involuntary
      Proceedings.
      If a
      case is commenced or a petition is filed against Borrower under any Debtor
      Relief Law; a receiver, liquidator or trustee of Borrower or of any material
      asset of Borrower is appointed by court order and such order remains in effect
      for more than forty-five (45) days; or if any material asset of Borrower is
      sequestered by court order and such order remains in effect for more than
      forty-five (45) days.

     

    (f) Proceedings.
      If
      Borrower voluntarily seeks, consents to or acquiesces in the benefit of any
      provision of any Debtor Relief Law, whether now or hereafter in effect; consents
      to the filing of any petition against it under such law; makes an assignment
      for
      the benefit of its creditors; admits in writing its inability to pay its debts
      generally as they become due; or consents or suffers to the appointment of
      a
      receiver, trustee, liquidator or conservator for it, or any part of its,
      assets.

     

    (g) Attachment,
      Judgment, Tax Liens.
      The
      issuance, filing, levy or seizure against the Collateral, or, with respect
      to
      the Resorts or the Obligations, against Borrower of one or more attachments,
      injunctions, executions, tax liens or judgments for the payment of money
      cumulatively in excess of $100,000.00, which is not discharged in full or stayed
      within thirty (30) days after issuance or filing.

     

    (h) Failure
      to Deposit Proceeds.
      If
      Borrower shall fail to deliver payments made under the Pledged Notes Receivable
      directly to Lender as required pursuant to Section 2.4
      above,
      or if Borrower shall take any other act which Lender shall deem to be a
      conversion of the Collateral or fraudulent with respect to Lender.

     

    (i) Timeshare
      Documents.
      If the
      Declaration, any of the other documents creating or governing the Resorts,
      its
      timeshare regime, or the Timeshare Owners’ Association, or the restrictive
      covenants with respect to the Resorts, shall be terminated, amended or modified
      without Lender’s prior written consent (except for routine non-substantive
      modifications which have no impact on the Collateral).

     

    (j) Removal
      of Collateral.
      If
      Borrower conceals, removes, transfers, conveys, assigns or permits to be
      concealed, removed, transferred, conveyed or assigned, any of the Collateral
      in
      violation of the terms of the Loan Documents or with the intent to hinder,
      delay
      or defraud its creditors or any of them including, without limitation,
      Lender.

     

    (k) Other
      Defaults.
      If a
      material default shall occur in any of the covenants or Obligations set forth
      in
      any of the Loan Documents.

     

    (l) Material
      Adverse Change.
      Any
      material adverse change in the financial condition of Borrower or in the
      condition of the Collateral. For purposes of this provision, a decline in the
      net worth of Borrower of $100,000.00 or less shall not be considered a material
      adverse change.

     

    
      
        
        

      

      
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    (m) Default
      by Borrower in Other Agreements.
      Any:
      (1) default, as defined in the applicable loan agreement, by Borrower: (i)
      in
      the payment of any indebtedness to any lender; (ii) in the payment or
      performance of other indebtedness for borrowed money or obligations secured
      by
      any part of the Resorts; or (iii) in the payment or performance of other
      material indebtedness or obligations (material indebtedness or obligations
      being
      defined for purposes of this provision as any indebtedness or obligation in
      excess of $200,000) where such default accelerates or permits the acceleration
      (after the giving of notice or passage of time or both) of the maturity of
      such
      indebtedness, or permits the holders of such indebtedness to elect a majority
      of
      the board of directors of Borrower (whether or not such default[s] have been
      waived by such holder); (2) acceleration by any lender of its respective credit
      facilities; or (3) default under, or acceleration of the TFC Conduit Loan.
      

     

    (n) Use
      of Resorts.
      Any act
      or failure to act by Borrower which materially and adversely limits the rights
      of Purchasers to use Common Elements, and related or appurtenant easement,
      access and use rights and benefits of any of the Resorts, including but not
      limited to a default by Borrower or any Affiliate under any loan document or
      Declaration to which Borrower or any Affiliate is a party.

     

    (o) Violation
      of Negative Covenants.
      Borrower violates any negative covenants set forth in Section 7.2.

     

    (p) Violation
      of Financial Covenants.
      Borrower violates any financial covenants set forth in Section 7.1(w).

     

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

     

    Section
      9-Remedies

     

    9.1 Remedies
      Upon Default.
      Should
      an Event of Default occur, Lender may take any one or more of the actions
      described in this Section
      9,
      all
      without notice to Borrower:

     

    (a) Acceleration.
      Without
      demand or notice of any nature whatsoever, declare the unpaid balance of the
      Loans, or any part thereof, immediately due and payable, whereupon the same
      shall be due and payable.

     

    (b) Termination
      of Obligation to Advance.
      Terminate any obligation of Lender to lend under this Agreement in its entirety,
      or any portion of any such commitment, to the extent Lender shall deem
      appropriate, all without notice to Borrower.

     

    (c) Judgment.
      Reduce
      Lender’s claim to judgment, foreclose or otherwise enforce Lender’s security
      interest in all or any part of the Collateral by any available judicial or
      other
      procedure under law.

     

    
      
        
        

      

      
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    (d) Sale
      of Collateral and Foreclosure of Mortgages. Inventory Mortgages and Real
      Property Mortgages.
      After
      notification, if any, provided for in Section 9.2
      below,
      Lender may sell or otherwise dispose of, at the office of Lender, or elsewhere,
      as chosen by Lender, all or any part of the Collateral, and any such sale or
      other disposition may be as a unit or in parcels, by public or private
      proceedings, and by way of one or more contracts (it being agreed that the
      sale
      of any part of the Collateral shall not exhaust Lender’s power of sale, but
      sales may be made from time to time until all of the Collateral has been sold
      or
      until the Obligations have been paid in full and fully performed), and at any
      such sale it shall not be necessary to exhibit the Collateral, including,
      without limitation, foreclosure of the Inventory Mortgages and the Real Property
      Mortgages. Borrower hereby acknowledges and agrees that a private sale or sales
      of the Collateral, after notification as provided for in Section 9.2,
      shall
      constitute a commercially reasonable disposition of the Collateral sold at
      any
      such sale or sales, and otherwise, commercially reasonable action on the part
      of
      Lender.

     

    (e) Retention
      of Collateral.
      At
      Lender’s discretion, retain such portion of the Collateral as shall aggregate in
      value to an amount equal to the aggregate amount of the Loans, in satisfaction
      of the Obligations, whenever the circumstances are such that Lender elects
      to do
      so under applicable law.

     

    (f) Receiver.
      Apply
      by appropriate judicial proceedings for appointment of a receiver for the
      Collateral, or any part thereof, and Borrower hereby consents to any such
      appointment.

     

    (g) Purchase
      of Collateral.
      Buy the
      Collateral at any public or private sale.

     

    (h) Exercise
      of Other Rights.
      Lender
      shall have all the rights and remedies of a secured party under the Code and
      other legal and equitable rights to which it may be entitled, including, without
      limitation, and without notice to Borrower, the right to continue to collect
      all
      payments made on the Pledged Notes Receivable, and to apply such payments to
      the
      Obligations, and to sue in its own name the maker of any defaulted Pledged
      Notes
      Receivable. Lender may also exercise any and all other rights or remedies
      afforded by any other applicable laws or by the Loan Documents as Lender shall
      deem appropriate, at law, in equity or otherwise, including, but not limited
      to,
      the right to bring suit or other proceeding, either for specific performance
      of
      any covenant or condition contained in the Loan Documents or in aid of the
      exercise of any right or remedy granted to Lender in the Loan Documents. Lender
      shall also have the right to require Borrower to assemble any of the Collateral
      not in Lender’s possession, at Borrower’s expense, and make it available to
      Lender at a place to be determined by Lender which is reasonably convenient
      to
      both parties, and shall have the right to take immediate possession of all
      of
      the Collateral, and may enter the Resorts or any of the premises of Borrower
      or
      wherever the Collateral shall be located, with or without process of law
      wherever the Collateral may be, and, to the extent such premises are not the
      property of Lender, to keep and store the same on said premises until sold
      (and
      if said premises be the property of Borrower, Borrower agrees not to charge
      Lender for use and occupancy, rent, or storage of the Collateral, for a period
      of at least ninety (90) days after sale or disposition of the
      Collateral).

     

    
      
        
        

      

      
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    9.2 Notice
      of Sale.
      Reasonable notification of time and place of any public sale of the Collateral
      or reasonable notification of the time after which any private sale or other
      intended disposition of the Collateral is to be made shall be sent to Borrower
      and to any other person entitled under the Code to notice; provided, however,
      that if the Collateral threatens to decline speedily in value or is of a type
      customarily sold on a recognized market, Lender may sell or otherwise dispose
      of
      the Collateral without notification, advertisement or other notice of any kind.
      It is agreed that notice sent not less than five (5) calendar days prior to
      the
      taking of the action to which such notice relates is reasonable notification
      and
      notice for the purposes of this Section 9.2.
      Lender
      shall have the right to bid at any public or private sale on its own behalf.
      Out
      of money arising from any such sale, Lender shall retain an amount equal to
      all
      of its costs and charges, including attorneys’ fees for advice, counsel or other
      legal services or for pursuing, reclaiming, seeking to reclaim, taking, keeping,
      removing, storing and advertising such Collateral for sale, selling same and
      any
      and all other charges and expenses in connection therewith and in satisfying
      any
      prior Liens thereon. Any balance shall be applied upon the Obligations, and
      in
      the event of deficiency, Borrower shall remain liable to Lender. In the event
      of
      any surplus, such surplus shall be paid to Borrower or to such other Persons
      as
      may be legally entitled to such surplus. If, by reason of any suit or proceeding
      of any kind, nature or description against Borrower, or by Borrower or any
      other
      party against Lender or any Lender, which in such Lender’s sole discretion makes
      it advisable for Lender to seek counsel for the protection and preservation
      of
      Lenders’ security interest, or to defend the interest of Lender, such expenses
      and counsel fees shall be allowed to Lender and the same shall be made a further
      charge and Lien upon the Collateral.

     

    In
      view
      of the fact that federal and state securities laws may impose certain
      restrictions on the methods by which a sale of Collateral comprised of
      Securities may be effected after an Event of Default, Borrower agrees that
      upon
      the occurrence or existence of an Event of Default, Lender may from time to
      time, attempt to sell all or any part of such Collateral by means of a private
      placement restricting the bidding and prospective purchasers to whose who will
      represent and agree that they are purchasing for investment only and not for,
      or
      with a view to, distribution. In so doing, Lender may solicit offers to buy
      such
      Collateral, or any part of it for cash, from a limited number of investors
      deemed by Lender, in its reasonable judgment, to be responsible parties who
      might be interested in purchasing the Collateral, and if Lender solicits such
      offers from not less than two (2) such investors, then the acceptance by Lender
      of the highest offer obtained therefrom shall be deemed to be a commercially
      reasonable method of disposition of such Collateral.

     

    9.3 Application
      of Collateral; Termination of Agreements.
      Upon
      the occurrence of any Event of Default: (i) Lender may, with or without
      proceeding with such sale or foreclosure or demanding payment or performance
      of
      the Obligations, without notice, terminate Lender’s further performance under
      this Agreement or any other agreement or agreements between Lender and Borrower,
      without further liability or obligation by Lender; (ii) Lender may, at any
      time,
      appropriate and apply on any Obligations any and all Collateral in its, the
      Custodian’s, or the Lockbox Agent’s possession and (iii) Lender may apply any
      and all balances, credits, deposits, accounts, reserves, indebtedness or other
      moneys due or owing to Borrower held by Lender hereunder or under any other
      financing agreement or otherwise, whether accrued or not. Neither such
      termination, nor the termination of this Agreement by lapse of time, the giving
      of notice or otherwise, shall absolve, release or otherwise affect the liability
      of Borrower in respect of transactions prior to such termination, or affect
      any
      of the Liens, security interests, rights, powers and remedies of Lender, but
      they shall, in all events, continue until all of the Obligations are
      satisfied.

     

    
      
        
        

      

      
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    9.4 Rights
      of Lender Regarding Collateral.
      In
      addition to all other rights possessed by Lender, Lender, at its option, may
      on
      its own behalf from time to time after there shall have occurred an Event of
      Default, and so long as such Event of Default remains uncured, at its sole
      discretion, take the following actions:

     

    (a) transfer
      all or any part of the Collateral into the name of Lender or its
      nominee;

     

    (b) take
      control of any proceeds of any of the Collateral;

     

    (c) extend
      or
      renew the Loan and grant releases, compromises or indulgences with respect
      to
      the Obligations, any portion thereof, any extension or renewal thereof, or
      any
      security therefor, to any obligor hereunder or thereunder; and

     

    (d) exchange
      certificates or instruments representing or evidencing the Collateral for
      certificates or instruments of smaller or larger denominations for any purpose
      consistent with the terms of this Agreement.

     

    9.5 Delegation
      of Duties and Rights.
      Lender
      may execute any of its duties and/or exercise any of its rights or remedies
      under the Loan Documents by or through its officers, directors, employees,
      attorneys, agents or other representatives.

     

    9.6 Lender
      not in Control.
      Except
      as expressly provided herein or in any Loan Document, none of the covenants
      or
      other provisions contained in this Agreement or in any Loan Document shall
      give
      Lender the right or power to exercise control over the affairs and/or management
      of Borrower.

     

    9.7 Waivers.
      The
      acceptance by Lender at any time and from time to time of partial payments
      of
      the Loan or performance of the Obligations shall not be deemed to be a waiver
      of
      any Event of Default then existing. No waiver by Lender of any Event of Default
      shall be deemed to be a waiver of any other or subsequent Event of Default.
      No
      delay or omission by Lender in exercising any right or remedy under the Loan
      Documents shall impair such right or remedy or be construed as a waiver thereof
      or an acquiescence therein, nor shall any single or partial exercise of any
      such
      right or remedy preclude other or further exercise thereof, or the exercise
      of
      any other right or remedy under the Loan Documents or otherwise. Further, except
      as otherwise expressly provided in this Agreement or by applicable law, Borrower
      and each and every surety, endorser, guarantor and other party liable for the
      payment or performance of all or any portion of the Obligations, severally
      waive
      notice of the occurrence of any Event of Default, presentment and demand for
      payment, protest, and notice of protest, notice of intention to accelerate,
      acceleration and nonpayment, and agree that their liability shall not be
      affected by any renewal or extension in the time of payment of the Loan, or
      by
      any release or change in any security for the payment or performance of the
      Loan, regardless of the number of such renewals, extensions, releases or
      changes.

     

    
      
        
        

      

      
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    9.8 Cumulative
      Rights.
      All
      rights and remedies available to Lender under the Loan Documents shall be
      cumulative of and in addition to all other rights and remedies granted under
      any
      of the Loan Document, at law or in equity, whether or not the Loan is due and
      payable and whether or not Lender shall have instituted any suit for collection
      or other action in connection with the Loan Documents.

     

    9.9 Expenditures
      by Lender.
      Any
      sums expended by or on behalf of Lender pursuant to the exercise of any right
      or
      remedy provided herein shall become part of the Obligations and shall bear
      interest at the Default Rate, from the date of such expenditure until the date
      repaid.

     

    9.10 Diminution
      in Value of Collateral.
      Lender
      shall not have any liability or responsibility whatsoever for any diminution
      or
      loss in value of any of the Collateral, specifically including that which may
      arise from Lender’s negligence or inadvertence, whether such negligence or
      inadvertence is the sole or concurring cause of any damage.

     

    9.11 Lender’s
      Knowledge.
      Lender
      shall not be deemed to have knowledge or notice of the occurrence of any Event
      of Default unless Lender has actual knowledge of the Event of Default or has
      received a notice from Borrower referring to this Agreement and describing
      such
      Event of Default. 

     

    Section
      10-Certain Rights Of Lenders

     

    10.1 Protection
      of Collateral.
      Lender
      may at any time and from time to time take such actions as it deems necessary
      or
      appropriate to protect Lender’s Liens and security interests in and to preserve
      the Collateral, and to establish, maintain and protect the enforceability of
      Lender’s rights with respect thereto, all at the expense of Borrower. Borrower
      agrees to cooperate fully with all of Lender’s efforts to preserve the
      Collateral and Lender’s Liens, security interests and rights and will take such
      actions to preserve the Collateral and Lender’s Liens, security interests and
      rights as Lender may direct, including, without limitation, by promptly paying
      upon Lender’s demand therefor, all documentary stamp taxes or other taxes that
      may be or may become due in respect of any of the Collateral. All of Lender’s
      expenses of preserving the Collateral and Lender’s liens and security interests
      and rights therein shall be added to the Loan.

     

    10.2 Performance
      by Lender.
      If
      Borrower fails to perform any agreement contained herein, Lender may itself
      perform, or cause the performance of, such agreement on behalf of Lenders,
      and
      the expenses of Lender incurred in connection therewith shall be payable by
      Borrower under Section 10.5
      below.
      In no event, however, shall Lender have any obligation or duties whatsoever
      to
      perform any covenant or agreement of Borrower contained herein or in any of
      the
      Loan Documents, Timeshare Documents or Operating Contracts, and any such
      performance by Lender shall be wholly discretionary with Lender. The performance
      by Lender, of any agreement or covenant of Borrower on any occasion shall not
      give rise to any duty on the part of Lender to perform any such agreements
      or
      covenants on any other occasion or at any time. In addition, Borrower
      acknowledges that Lender shall not at any time or under any circumstances
      whatsoever have any duty to Borrower or to any third party to exercise any
      of
      Lender’s rights or remedies hereunder.

     

    
      
        
        

      

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

     

    10.4 Right
      to Defend Action Affecting Security.
      Lender
      may, at Borrower’s expense, appear in and defend any action or proceeding at law
      or in equity which Lender in good faith believes may affect the security
      interests granted under this Agreement, including without limitation, with
      respect to Pledged Notes Receivable, the Real Property, the Inventory, the
      Real
      Property Mortgages, the Inventory Mortgages or Mortgages, the value of the
      Collateral or Lender’s rights under any of the Loan Documents.

     

    
      
        
        

      

      
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    10.5 Expenses.
      All
      expenses payable by Borrower, under any provision of this Agreement shall be
      an
      Obligation of Borrower and shall be paid by Borrower to Lender, upon demand,
      and
      shall bear interest at the Default Rate from the date of expense until repaid
      by
      Borrower.

     

    10.6 Lender’s
      Right of Set-Off.
      Lender
      shall have the right to set-off against any Collateral any Obligations then
      due
      and unpaid by Borrower, provided Borrower is in Default.

     

    10.7 No
      Waiver.
      No
      failure or delay on the part of Lender in exercising any right, remedy or power
      under this Agreement or in giving or insisting upon strict performance by
      Borrower hereunder or in giving notice hereunder shall operate as a waiver
      of
      the same or any other power or right, and no single or partial exercise of
      any
      such power or right shall preclude any other or further exercise thereof or
      the
      exercise of any other such power or right. Lender, notwithstanding any such
      failure, shall have the right thereafter to insist upon the strict performance
      by Borrower of any and all of the terms and provisions of this Agreement to
      be
      performed by Borrower. The collection and application of proceeds, the entering
      and taking possession of the Collateral, and the exercise by Lender of the
      rights of Lender contained in the Loan Documents and this Agreement shall not
      cure or waive any default, or affect any notice of default, or invalidate any
      acts done pursuant to such notice. No waiver by Lender of any breach or default
      of or by any party hereunder shall be deemed to alter or affect Lender’s rights
      hereunder with respect to any prior or subsequent default.

     

    10.8 Right
      of Lender to Extend Time of Payment, Substitute, Release Security,
      Etc.
      Without
      affecting the liability of any Person or entity including without limitation,
      any Purchasers, for the payment of any of the Obligations or without affecting
      or impairing Lender’s Lien on the Collateral, or the remainder thereof, as
      security for the full amount of the Loan unpaid and the Obligations, Lender
      may
      from time to time, without notice: (a) release any Person liable for the payment
      of the Loan, (b) extend the time or otherwise alter the terms of payment of
      the
      Loan, (c) accept additional security for the Obligations of any kind, including
      deeds of trust or mortgages and security agreements, (d) alter, substitute
      or
      release any property securing the Obligations, (e) realize upon any collateral
      for the payment of all or any portion of the Loan in such order and manner
      as it
      may deem fit, or (f) join in any subordination or other agreement affecting
      this
      Agreement or the lien or charge thereof.

     

    10.9 Assignment
      of Lender’s Interest.
      Lender
      shall have the right to assign all or any part of the Loans and all or any
      portion of its rights in or pursuant to this Agreement or any of the Loan
      Documents to any subsequent holder or holders of its Note or the Obligations
      evidenced thereby.

     

    10.10 Notice
      to Purchaser.
      Borrower authorizes any of Lender, Lockbox Agent or Servicing Agent (but none
      of
      Lender, Lockbox Agent nor Servicing Agent shall be obligated) to communicate
      at
      any time and from time to time with any Purchaser or any other Person primarily
      or secondarily liable under a Pledged Note Receivable with regard to the Lien
      of
      Lender thereon and any other matter relating thereto, and by no later than
      the
      Effective Date, Borrower shall deliver to Lender a notification to the
      Purchasers executed in blank by Borrower and in form acceptable to Lender,
      pursuant to which the Purchasers (or other obligors) may be directed to remit
      all payments in respect of the Collateral as Lender may require.

     

    
      
        
        

      

      
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    10.11 Collection
      of the Notes.
      Borrower hereby directs and authorizes each party liable for the payment of
      the
      Pledged Notes Receivable, and by no later than the Effective Date shall direct
      in writing each such party, to pay each installment thereon to Lockbox Agent
      pursuant to the Lockbox Agreement, unless and until directed otherwise by
      written notice from Lender or, at Lender’s direction, from Borrower, after which
      such parties are and shall be directed to make all further payments on the
      Pledged Notes Receivable in accordance with the directions of
      Lender.

     

    Following
      the occurrence of an Event of Default, Lender shall have the right to require
      that all payments becoming due under the Pledged Notes Receivable be paid
      directly to Lender, and Lender is hereby authorized to receive, collect, hold
      and apply the same in accordance with the provisions of this Agreement. In
      the
      event that following the occurrence of an Event of Default, Lender or Lockbox
      Agent does not receive any installment of principal or interest due and payable
      under any of the Pledged Notes Receivable on or prior to the date upon which
      such installment becomes due, Lender may, at its election (but without any
      obligation to do so), give or cause Lockbox Agent to give notice of such default
      to the defaulting party or parties, and Lender shall have the right (but not
      the
      obligation), subject to the terms of such Notes, to accelerate payment of the
      unpaid balance of any of the Pledged Notes Receivable in default and to
      foreclose each of the Mortgages securing the payment thereof, and to enforce
      any
      other remedies available to the holder of such Pledged Notes Receivable with
      respect to such default. Borrower hereby further authorizes, directs and
      empowers Lender (and Lockbox Agent or any other Person as may be designated
      by
      Lender in writing) to collect and receive all checks and drafts evidencing
      such
      payments and to endorse such checks or drafts in the name of Borrower and upon
      such endorsements, to collect and receive the money therefor. The right to
      endorse checks and drafts granted pursuant to the preceding sentence is
      irrevocable by Borrower, and the banks or banks paying such checks or drafts
      upon such endorsements, as well as the signers of the same, shall be as fully
      protected as though the checks or drafts have been endorsed by
      Borrower.

     

    10.12 Power
      of Attorney.
      Borrower does hereby irrevocably constitute and appoint Lender as Borrower’s
      true and lawful agent and attorney-in-fact, with full power of substitution,
      for
      Borrower and in Borrower’s name, place and stead, or otherwise, to
      (a) endorse any checks or drafts payable to Borrower in the name of
      Borrower and in favor of Lender on behalf of each Lender as provided in Section
      10.11
      above,
      (b) to demand and receive from time to time any and all property, rights,
      titles, interests and liens hereby sold, assigned and transferred, or intended
      so to be, and to give receipts for same, (c) from time to time to institute
      and prosecute in Lender’s own name any and all proceedings at law, in equity, or
      otherwise, that Lender may deem proper in order to collect, assert or enforce
      any claim, right or title, of any kind, in and to the property, rights, titles,
      interests and liens hereby sold, assigned or transferred, or intended so to
      be,
      and to defend and compromise any and all actions, suits or proceedings in
      respect of any of the said property, rights, titles, interests and liens,
      (d) upon an Event of Default to change Borrower’s post office mailing
      address, and (e) generally to do all and any such acts and things in
      relation to the Collateral as Lender shall in good faith deem advisable.
      Borrower hereby declares that the appointment made and the powers granted
      pursuant to this Section 10.12
      are
      coupled with an interest and are and shall be irrevocable by Borrower in any
      manner, or for any reason, unless and until a release of the same is executed
      by
      Lender and duly recorded in the appropriate public records of Dallas County,
      Texas.

     

    
      
        
        

      

      
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    10.13 Relief
      from Automatic Stay, Etc.
      To the
      fullest extent permitted by law, in the event Borrower shall make application
      for or seek relief or protection under the federal bankruptcy code
      (“Bankruptcy
      Code”)
      or
      other Debtor Relief Laws, or in the event that any involuntary petition is
      filed
      against Borrower under such Code or other Debtor Relief Laws, and not dismissed
      with prejudice within 45 days, the automatic stay provisions of Section 362
      of
      the Bankruptcy Code are hereby modified as to Lender to the extent necessary
      to
      implement the provisions hereof permitting set-off and the filing of financing
      statements or other instruments or documents; and Lender shall automatically
      and
      without demand or notice (each of which is hereby waived) be entitled to
      immediate relief from any automatic stay imposed by Section 362 of the
      Bankruptcy Code or otherwise, on or against the exercise of the rights and
      remedies otherwise available to Lender as provided in the Loan
      Documents.

     

    Section
      11-Term Of Agreement

     

    This
      Agreement shall continue in full force and effect and the security interests
      granted hereby and the duties, covenants and liabilities of Borrower hereunder
      and all the terms, conditions and provisions hereof relating thereto shall
      continue to be fully operative until all of the Obligations have been satisfied
      in full. Borrower expressly agrees that if Borrower makes a payment to Lender,
      which payment or any part thereof is subsequently invalidated, declared to
      be
      fraudulent or preferential, or otherwise required to be repaid to a trustee,
      receiver or any other party under any Debtor Relief Laws, state or federal
      law,
      common law or equitable cause, then to the extent of such repayment, the
      Obligations or any part thereof intended to be satisfied and the Liens provided
      for hereunder securing the same shall be revived and continued in full force
      and
      effect as if said payment had not been made.

     

    Section
      12-Miscellaneous

     

    12.1 Notices.
      All
      notices, requests and other communications to any party hereunder shall be
      in
      writing and shall be given to such party at its address set forth below or
      at
      such other address as such party may hereafter specify for the purpose of notice
      to Lender or Borrower. Each such notice, request or other communication shall
      be
      effective (a) if given by mail, when such notice is deposited in the United
      States Mail with first class postage prepaid, addressed as aforesaid, provided
      that such mailing is by registered or certified mail, return receipt requested,
      (b) if given by overnight delivery, when deposited with a nationally
      recognized overnight delivery service such as Federal Express or Airborne with
      all fees and charges prepaid, addressed as provided below, or (c) if given
      by any other means, when delivered at the address specified in this Section
      12.1.

     

    
      
        
        

      

      
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              If
                to Borrower:

            	 	
              Silverleaf
                Resorts, Inc.

              1221
                Riverbend Drive, Suite 120

              Dallas,
                TX 75221

              Attn:
                Mr. Robert Mead, CEO

            
	 	 	 
	
              With
                a Copy to:

            	 	
              Meadows,
                Owens, Collier, Reed, Cousins and Blau

              3700
                Nations Bank Plaza

              901
                Main St.

              Dallas,
                TX 75202

              Attn:
                George R. Bedell, Esq.

            
	 	 	 
	
              If
                to Lender:

            	 	
              Textron
                Financial Corporation

              40
                Westminster Street

              Providence,
                Rhode Island 02903

              Attention:
                Accounting Department/Collections

            
	 	 	 
	
              With
                a copy to:

            	 	
              Textron
                Financial Corporation

              P.O.
                Box 6687

              Providence,
                Rhode Island 02940-6687

              Attention:
                Division Counsel (RRD)

            
	 	 	 
	
              And
                to:

            	 	
              Textron
                Financial Corporation

              Resort
                Finance Division

              45
                Glastonbury Blvd.

              Glastonbury,
                CT 06033-4450

              Attn:
                Division President

            


    

     

    Notwithstanding
      the foregoing, copies of the requests or notices from Borrower to Lender which
      are specified in the Sections of this Agreement listed below shall not be
      delivered to Providence, Rhode Island as provided above, but rather shall be
      delivered in accordance with this Section 12.1
      to
      Textron Financial Corporation, Resort Finance Division, 45 Glastonbury Blvd.,
      Glastonbury, CT 06033-4450, Attention: Silverleaf Relationship Manager. The
      applicable Sections of this Agreement are Section 5.1(a)
      Request
      for Advances, and Section 12.10
      Return
      of Notes Receivable. In addition, all documents, instruments and other items
      to
      be delivered to Lender from time to time pursuant to this Agreement shall be
      delivered to Lender’s office at Resort Finance Division, 45 Glastonbury Blvd.,
      Glastonbury, CT 06033-4450.

     

    12.2 Survival.
      All
      representations, warranties, covenants and agreements made by Borrower herein,
      in the other Loan Documents or in any other agreement, document, instrument
      or
      certificate delivered by or on behalf of Borrower under or pursuant to the
      Loan
      Documents shall be considered to have been relied upon by Lender and shall
      survive the delivery to Lender of such Loan Documents (and each part thereof),
      regardless of any investigation made by or on behalf of Lender.

     

    
      
        
        

      

      
        89

        
          

        

      

      
        
        

      

    

     

    12.3 Governing
      Law.
      THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT AS MAY BE EXPRESSLY PROVIDED
      THEREIN TO THE CONTRARY) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
      THE LAWS OF THE STATE OF RHODE ISLAND, EXCLUSIVE OF ITS CHOICE OF LAWS
      PRINCIPLES.

     

    12.4 Limitation
      on Interest.
      Lender
      and Borrower intend to comply at all times with applicable usury laws. All
      agreements between Lender and Borrower, whether now existing or hereafter
      arising and whether written or oral, are hereby limited so that in no
      contingency, whether by reason of demand or acceleration of the maturity of
      the
      Note or otherwise, shall the interest contracted for, charged, received, paid
      or
      agreed to be paid to Lender exceed the highest lawful rate permissible under
      applicable usury laws. If, from any circumstance whatsoever, fulfillment of
      any
      provision hereof, of the Note or of any other Loan Documents shall involve
      transcending the limit of such validity prescribed by any law which a Court
      of
      competent jurisdiction may deem applicable hereto, then ipso facto, the
      obligation to be fulfilled shall be reduced to the limit of such validity;
      and
      if from any circumstance Lender shall ever receive anything of value deemed
      interest by applicable law which would exceed the highest lawful rate, such
      amount which would be excessive interest shall be applied to the reduction
      of
      the principal of Loan and not to the payment of interest, or if such excessive
      interest exceeds the unpaid balance of principal of the Loan, such excess shall
      be refunded to Borrower. All interest paid or agreed to be paid to Lender shall,
      to the extent permitted by applicable law, be amortized, prorated, allocated
      and
      spread throughout the full period until payment in full of the principal so
      that
      the interest on the Loan for such full period shall not exceed the highest
      lawful rate. Borrower agrees that in determining whether or not any interest
      payment under the Loan Documents exceeds the highest lawful rate, any
      non-principal payment (except payments specifically described in the Loan
      Documents as “interest”) including without limitation, prepayment fees and late
      charges, shall to the maximum extent not prohibited by law, be an expense,
      fee,
      premium or penalty rather than interest. Lender hereby expressly disclaims
      any
      intent to contract for, charge or receive interest in an amount which exceeds
      the highest lawful rate. The provisions of the Note, this Agreement, and all
      other Loan Documents are hereby modified to the extent necessary to conform
      with
      the limitations and provisions of this Section, and this Section shall govern
      over all other provisions in any document or agreement now or hereafter
      existing. This Section shall never be superseded or waived unless there is
      a
      written document executed by Lender and Borrower, expressly declaring the usury
      limitation of this Agreement to be null and void, and no other method or
      language shall be effective to supersede or waive this paragraph.

     

    12.5 Invalid
      Provisions.
      If any
      provision of this Agreement or any of the other Loan Documents is held to be
      illegal, invalid or unenforceable under present or future laws effective during
      the term thereof, such provision shall be fully severable, this Agreement and
      the other Loan Documents shall be construed and enforced as if such illegal,
      invalid or unenforceable provision had never comprised a part hereof or thereof,
      and the remaining provisions hereof or thereof shall remain in full force and
      effect and shall not be affected by the illegal, invalid or unenforceable
      provision or by its severance therefrom. Furthermore, in lieu of such illegal,
      invalid or unenforceable provision there shall be added automatically as a
      part
      of this Agreement and/or the Loan Documents (as the case may be) a provision
      as
      similar in terms to such illegal, invalid or unenforceable provision as may
      be
      possible and be legal, valid and enforceable.

     

    
      
        
        

      

      
        90

        
          

        

      

      
        
        

      

    

     

    12.6 Successors
      and Assigns.
      This
      Agreement and the other Loan Documents shall be binding upon and inure to the
      benefit of Borrower and Lender and their respective successors and assigns;
      provided that Borrower may not transfer or assign any of its rights or
      obligations under this Agreement, the Commitment or the other Loan Documents
      without the prior written consent of Lender. This Agreement and the transactions
      provided for or contemplated hereunder or under any of the Loan Documents are
      intended solely for the benefit of the parties hereto. No third party shall
      have
      any rights or derive any benefits under or with respect to this Agreement,
      the
      Commitment or the other Loan Documents except as provided in advance in a
      writing signed on behalf of Lender.

     

    12.7 Amendment.
      This
      Agreement may not be amended or modified, and no term or provision hereof may
      be
      waived, except by written instrument signed by Borrower and Lender.

     

    12.8 Counterparts;
      Effectiveness.
      This
      Agreement may be signed in any number of counterparts, each of which shall
      be an
      original, with the same effect as if the signature thereto and hereto were
      on
      the same instrument. This Agreement shall become effective upon Lender’s receipt
      of one or more counterparts hereof signed by Borrower.

     

    12.9 Lender
      Not Fiduciary.
      The
      relationship between Borrower and Lender is solely that of debtor and creditor,
      and Lender has no fiduciary or other special relationship with Borrower, and
      no
      term or provision of any of the Loan Documents shall be construed so as to
      deem
      the relationship between Borrower and Lender to be other than that of debtor
      and
      creditor.

     

    12.10 Return
      of Notes Receivable. 

     

    (a) In
      the
      event Borrower complies with its Obligations under Section 2.5(a)(ii)
      of this
      Agreement with respect to Pledged Notes Receivable pursuant to which a default
      by the Purchaser thereof has occurred, and Borrower thereafter desires to
      enforce such Note Receivable against the Purchaser thereof, then provided that
      no Event of Default has occurred which has not been cured to Lender’s
      satisfaction (as evidenced by a written acceptance of such cure executed by
      Lender), and no event has occurred which with notice, the passage of time or
      both, would constitute an Event of Default, then within thirty (30) days after
      its receipt of a written request from Borrower, Lender shall deliver such
      ineligible Note Receivable to Borrower, provided that such delivery shall be
      for
      the sole purpose of enforcing Lender’s rights thereunder and Lender,
      notwithstanding such delivery, shall continue to have a first priority security
      interest in any such note.

     

    (b) In
      the
      event that all Obligations hereunder are fully satisfied, then within a
      reasonable time thereafter, Lender shall endorse the Pledged Notes Receivable
      “Pay to the order of Silverleaf Resorts, Inc. without recourse”, and deliver
      such Pledged Notes Receivable, together with any other nonrecourse Collateral
      reassignment documents requested and prepared by Borrower, at Borrower’s sole
      cost and expense.

     

    12.11 Accounting
      Principles.
      Where
      the character or amount of any asset or liability or item of income or expense
      is required to be determined or any consolidation or other accounting
      computation is required to be made for the purposes of this Agreement, the
      same
      shall be determined or made in accordance with GAAP consistently applied at
      the
      time in effect, to the extent applicable, except where such principles are
      inconsistent with the requirements of this Agreement.

     

    
      
        
        

      

      
        91

        
          

        

      

      
        
        

      

    

     

    12.12 Total
      Agreement.
      This
      Agreement and the other Loan Documents, including the Exhibits and Schedules
      to
      them, is the entire agreement between the parties relating to the subject matter
      hereof, incorporates or rescinds all prior agreements and understandings between
      the parties hereto relating to the subject matter hereof, cannot be changed
      or
      terminated orally or by course of conduct, and shall be deemed effective as
      of
      the date it is accepted by Lender at the offices set forth above.

     

    12.13 Litigation.
      TO
      THE FULLEST EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED,
      BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY
      WAIVES ANY AND ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
      ENFORCE OR DEFEND OR CLARIFY ANY RIGHT, POWER, REMEDY OR DEFENSE ARISING OUT
      OF
      OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
      CONTEMPLATED HEREIN OR THEREIN, WHETHER SOUNDING IN TORT OR CONTRACT OR
      OTHERWISE, OR WITH RESPECT TO ANY COURSE OF CONDUCT, COURSE OF DEALING,
      STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY; AND EACH AGREES
      THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A JUDGE AND NOT BEFORE
      A JURY. EACH OF BORROWER AND LENDER FURTHER WAIVES ANY RIGHT TO SEEK TO
      CONSOLIDATE ANY SUCH LITIGATION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH
      ANY
      OTHER LITIGATION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED. FURTHER,
      BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER, NOR
      LENDER’S COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT,
      IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY
      TRIAL PROVISION. BORROWER ACKNOWLEDGES THAT THE PROVISIONS OF THIS SECTION
      ARE A
      MATERIAL INDUCEMENT TO LENDER’S ACCEPTANCE OF THIS AGREEMENT AND THE OTHER LOAN
      DOCUMENTS.

     

    The
      waiver and stipulations of Borrower and Lender in this Section 12.13
      shall
      survive the final payment or performance of all of the Obligations of Borrower
      and the resulting termination of this Agreement.

     

    12.14 Incorporation
      of Exhibits.
      This
      Agreement, together with all Exhibits and Schedules hereto, constitute one
      document and agreement which is referred to herein by the use of the defined
      term “Agreement.” Such Exhibits and Schedules are incorporated herein as to
      fully set out in this Agreement. The definitions contained in any part of this
      Agreement shall apply to all parts of this Agreement.

     

    12.15 Consent
      to Advertising and Publicity of Timeshare Documents.
      Borrower hereby consents that Lender may issue and disseminate to the public
      information describing the credit accommodation entered into pursuant to this
      Agreement, including the names and addresses of Borrower and any subsidiaries
      and Affiliates, the amount and a general description of Borrower’s
      business.

     

    
      
        
        

      

      
        92

        
          

        

      

      
        
        

      

    

     

    12.16 Directly
      or Indirectly.
      Where
      any provision in the Agreement refers to action to be taken by any Person,
      or
      which such Person is prohibited from taking, such provisions shall be applicable
      whether such action is taken directly or indirectly by such Person.

     

    12.17 Headings.
      Section
      headings have been inserted in the Agreement as a matter of convenience of
      reference only; such section headings are not a part of the Agreement and shall
      not be used in the interpretation of this Agreement.

     

    12.18 Gender
      and Number.
      Words
      of any gender in this Agreement shall include each other gender and the singular
      shall mean the plural and vice versa where appropriate.

     

    Section
      13-Special Conditions

     

    13.1 Effective
      Date. BORROWER
      ACKNOWLEDGES, AGREES AND CONFIRMS THAT THE TERMS AND CONDITIONS OF THIS
      AGREEMENT, INCLUDING ANY OBLIGATION OF LENDER TO MAKE ANY ADVANCE HEREUNDER,
      SHALL NOT BECOME EFFECTIVE UNTIL THE EFFECTIVE DATE, AS SUCH TERM IS HEREINAFTER
      DEFINED. FOR PURPOSES OF THIS AGREEMENT, THE TERM “EFFECTIVE DATE” SHALL MEAN
      THE DATE ON WHICH LENDER DETERMINES, IN ITS SOLE AND ABSOLUTE DISCRETION, THAT
      EACH OF THE CONDITIONS SET FORTH IN Section
      4
      HEREOF, HAVE BEEN SATISFIED. IN SUCH EVENT, THE LOAN, AND THE RIGHTS AND
      OBLIGATIONS OF BORROWER WITH RESPECT THERETO, SHALL BE GOVERNED IN ALL RESPECTS
      BY THE TERMS AND CONDITIONS SET FORTH IN THE RECEIVABLE LOAN AGREEMENT AND
      THE
      RESTATED INVENTORY LOAN AGREEMENT, AS THE CASE MAY BE.

     

    13.2 Release.
      IN
      ORDER TO INDUCE AGENT, LENDERS AND PARTICIPANTS TO ENTER INTO THIS AGREEMENT,
      BORROWER ACKNOWLEDGES AND AGREES THAT: (i) BORROWER HAS NO CLAIM OR CAUSE OF
      ACTION AGAINST LENDER OR ANY PARTICIPANT (OR ANY OF THEIR RESPECTIVE DIRECTORS,
      OFFICERS, EMPLOYEES OR AGENTS); (ii) BORROWER HAS NO OFFSET RIGHT, COUNTERCLAIM
      OR DEFENSE OF ANY KIND AGAINST ANY OF ITS OBLIGATIONS, INDEBTEDNESS OR
      LIABILITIES TO LENDER OR ANY PARTICIPANT; AND (iii) EACH OF LENDER AND ITS
      PARTICIPANTS HAS HERETOFORE PROPERLY PERFORMED AND SATISFIED IN A TIMELY MANNER
      ALL OF ITS OBLIGATIONS TO BORROWER. BORROWER WISHES TO ELIMINATE ANY POSSIBILITY
      THAT ANY PAST CONDITIONS, ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS
      WOULD IMPAIR OR OTHERWISE ADVERSELY AFFECT LENDER’S OR ANY OF PARTICIPANTS’
RIGHTS, INTERESTS, CONTRACTS, COLLATERAL SECURITY OR REMEDIES. THEREFORE,
      BORROWER UNCONDITIONALLY RELEASES, WAIVES AND FOREVER DISCHARGES (A) ANY AND
      ALL
      LIABILITIES, OBLIGATIONS, DUTIES, PROMISES OR INDEBTEDNESS OF ANY KIND OF LENDER
      OR ANY PARTICIPANT TO BORROWER, EXCEPT THE OBLIGATIONS TO BE PERFORMED BY LENDER
      OR ANY PARTICIPANT ON OR AFTER THE DATE HEREOF AS EXPRESSLY STATED IN THIS
      AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND (B) ALL CLAIMS, OFFSETS, CAUSES
      OF
      ACTION, SUITS OR DEFENSES OF ANY KIND WHATSOEVER (IF ANY), WHETHER ARISING
      AT
      LAW OR IN EQUITY, WHETHER KNOWN OR UNKNOWN, WHICH BORROWER MIGHT OTHERWISE
      HAVE
      AGAINST LENDER, ANY PARTICIPANT OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS,
      EMPLOYEES OR AGENTS, IN EITHER CASE (A) OR (B), ON ACCOUNT OF ANY PAST OR
      PRESENTLY EXISTING CONDITION, ACT, OMISSION, EVENT, CONTRACT, LIABILITY,
      OBLIGATION, INDEBTEDNESS, CLAIM, CAUSE OF ACTION, DEFENSE, CIRCUMSTANCE OR
      MATTER OF ANY KIND.

     

    
      
        
        

      

      
        93

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF,
      Borrower and Lender have caused this Agreement to be duly executed and delivered
      effective as of the date first above written.

    
      	 	 	 
	 	
              BORROWER:

               

              SILVERLEAF
                RESORTS, INC., a Texas corporation

            
	 
 	 
 	 
 
	
            	By:  	/S/
              HARRY J. WHITE, JR.
	
              

            	
              

              Name:
                Harry J. White, Jr. 
                Title:
                  Chief Financial Officer

              

            


    

     

    
      	 	STATE OF TEXAS	 	)	 	 
	 	 	 	) 	 	ss: 
	 	COUNTY OF  DALLAS	 	)	 	 


    

    


    The
      foregoing instrument was acknowledged before me this 23rd day of February,
      2007
      by Harry J. White, Jr. , CFO of Silverleaf Resorts, Inc., a Texas corporation,
      on behalf of the Corporation.

    
      	 	 	 
	 
 	 
 	 
 
	
            	 	
              /S/
                MARGARETTE BYRD   

            
	 	
              

              Commissioner
                of the Superior Court 
                Notary
                  Public 
                  My
                    Commission Expires: Nov. 22,
                    2007

                

              

            


    

    


    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	
              LENDER:

               

              TEXTRON
                FINANCIAL CORPORATION,

              a
                Delaware corporation

            
	 
 	 
 	 
 
	
              /S/
                LISA TOOMER    

            	By:  	/S/ JOHN D’ANNIBALE
	
              
                

              

              Lisa
                Toomer

            	
              

              Name:
                John D’Annibale 
                Title:
                  V.P. 

              

            


    

    

      
        	 	STATE OF CONNECTICUT	 	)	 	 
	 	 	 	) 	 	ss: 
	 	COUNTY OF HARTFORD	 	)	 	 


      

    

    


    The
      foregoing instrument was acknowledged before me this 26th day of February,
      2007
      by John D’Annibale, Vice President of TEXTRON FINANCIAL CORPORATION, a Delaware
      corporation, on behalf of the corporation.

    
      
        	 	 	 
	 
 	 
 	 

	
              	 	
                
                  /S/
                    LAURA D’ANGELO  

                

              
	 	
                

                
                  Commissioner
                    of the Superior Court

                  
                    Notary
                      Public

                    
                      My
                        Commission Expires: Feb. 28,
                        2009

                    

                  

                

              


      

    

     

    List
      of
      Schedules and Exhibits to Agreement not filed herewith:

    


    EXHIBIT
      A: Form of Collateral Assignment of Notes Receivable and Mortgages

    EXHIBIT
      B-1: Form of Acquisition Note

    EXHIBIT
      B-2: Form of Inventory Note

    EXHIBIT
      B-3: Form of Receivable Note

    EXHIBIT
      C
      : Form of Real Estate Mortgage

    EXHIBIT
      D: Form of Modification of Inventory Mortgage

    EXHIBIT
      E-1: Form of Borrower’s Certificate and Request for Advance
      (Receivable)

    EXHIBIT
      E-2: Form of Borrower’s Certificate and Request for Advance
      (Inventory)

    EXHIBIT
      E-3: Form of Borrower’s Certificate and Request for Advance
      (Acquisition)

    EXHIBIT
      F: Form of Inventory Mortgage 

    EXHIBIT
      F-1: Form of Modification of Inventory Mortgage (Advances)

    EXHIBIT
      G: Form of Certification

    EXHIBIT
      H: Form of Officer’s Certificate

    SCHEDULE
      A: Land Records for Recording Inventory Mortgages

    SCHEDULE
      1.1(a): List of Resort Declarations

    SCHEDULE
      1.1(b): List of Timeshare Owner’s Associations

    SCHEDULE
      2.8(B): Borrower’s Executive Management

    SCHEDULE
      6.5: Liens

    SCHEDULE
      6.7: Litigation

    SCHEDULE
      6.9: Environmental Matters

    SCHEDULE
      6.19: Timeshare Documents

    SCHEDULE
      6.23(a): Receivable Inventory Control Procedures

    SCHEDULE
      6.23(b): Interval Inventory Control Procedures