**TABLE OF CONTENTS**     1. DEFINITIONS AND CONSTRUCTION  2 1.1Definitions  2 1.2Interpretation  13 1.3Schedules and Exhibits  14 1.4Accounting Principles  14 2. RESERVED  14 3. INVENTORY LOAN  14 3.1General  14 3.2General Restrictions  15 3.3Use of Proceeds  15 3.4Amounts in Excess of Inventory Loan Limit  15 3.5No Advances   15 4. LOAN DOCUMENTS AND LOAN ACCOUNT  15 4.1Loan Documents  15 4.2Loan Account  15 5. INTEREST RATE  16 5.1Inventory Loan   16 5.2Default Rate  16 5.3Calculation of Interest  16 5.4Limitation on Interest  16 6. FEES AND LOAN COSTS  17 6.1No Inventory Loan Commitment Fee  17 6.2Late Charge  17 6.3Loan Costs  17 6.4General  17 7. PAYMENTS  18 7.1Inventory Loan  18 7.2Reinstatement of Obligations and Liens  20 8. COLLATERAL  20 8.1Grant of Lien  20 8.2Insurance of Collateral  20 
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     8.3General and Continuing Lien  20 8.4Additional Documents and Future Actions  21 8.5Guaranty  21 8.6Release of Inventory Collateral  21 9. CONDITIONS PRECEDENT TO THE CLOSING  22 9.1Loan Documents  22 9.2Opinions of Counsel  22 9.3Representations, Warranties, Covenants and Agreements  22 9.4No Prohibitions  22 9.5Reserved  22 9.6Governing Documents  22 9.7Good Standing Certificates  23 9.8Resolutions  23 9.9Reserved  23 9.10Environmental Report  23 9.11Reserved  23 9.12Title Insurance Policy  23 9.13Closing Protection Letter  23 9.14Evidence of Insurance  23 9.15Litigation; Litigation Searches  24 9.16Lien/Other Searches/Releases  24 9.17Taxes and Assessments  24 9.18Financial Statements  24 9.19Expenses  24 9.20Exchange Agreements  24 9.21Management Agreement  24 9.22Closing Checklist  24 9.23Material Project Agreements  25 9.24Licenses; Legal Requirements   25 9.25Due Diligence Inspections and Investigations  25 9.26Miscellaneous  25 10. GENERAL CONDITIONS PRECEDENT TO ALL ADVANCES  25 10.1Inventory Loan Advances  25 
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     11. FUNDING PROCEDURES  27 12. GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS  27 12.1Organization; Power; Authorization  27 12.2Affiliates and Capital Structure  28 12.3Names and Addresses  28 12.4Licenses  28 12.5Compliance with Legal Requirements  29 12.6Other Restrictions  29 12.7Inventory Collateral  29 12.8Liens  30 12.9Taxes  30 12.10Litigation Proceedings  30 12.11Pension Plans  31 12.12Financial Statements and Financial Condition  31 12.13Solvency  31 12.14Reserved  32 12.15Investment Company  32 12.16Enforceability  32 12.17No Defaults  32 12.18Use of Proceeds/Margin Stock  32 12.19Labor Relations  32 12.20Broker’s Fees  32 12.21Inspections  33 12.22Reserved  33 12.23Books and Records  33 12.24Reserved  33 12.25No Payment of Dividends   33 12.26Management  34 12.27Full Disclosure  34 12.28Reserved  34 12.29One-to-One Ratio  34 12.30Change of Control   34 
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     13. REPRESENTATIONS, WARRANTIES AND COVENANTS WITH RESPECT TO THE BORROWER PROJECT  34 13.1Declarations  34 13.2Access  35 13.3Utilities  35 13.4Parking  35 13.5Legal Requirements; Zoning; Private Restrictions  35 13.6Units Ready for Use  35 13.7No Defaults  35 13.8Tangible Property  35 13.9Condition of the Borrower Project  36 13.10Material Project Agreements  36 13.11Reserved  36 13.12Certificates of Occupancy  36 13.13Reserved  36 13.14Tests, Etc  36 13.15Taxes  37 13.16Amenities  37 13.17Developer Subsidy  37 13.18Reservation System  37 13.19Reserved  37 13.20Leases  38 13.21Transactions with Affiliates  38 13.22Reserved  38 13.23Maintenance of Insurance   38 14. TIMESHARE REPRESENTATIONS, WARRANTIES AND COVENANTS  40 14.1Licenses  40 14.2Reserved  40 14.3Sales and Marketing Practices  40 14.4Reserved  41 14.5Assessments  41 14.6Reserved  41 14.7Exchange Company  41 
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     14.8Public Offering Statements  41 14.9Reserved  41 14.10Management Agreement  41 14.11State Registrations   41 14.12Cessation of Sales Business   41 14.13Pricing   41 14.14Remarketing of Defaulted Inventory   42 14.15Encumbering Timeshare Interests   42 14.16Voting Rights   42 15. REPORTING REQUIREMENTS  43 15.1Annual Financial Statements  43 15.2Quarterly Financial Statements  44 15.3SEC Reports  44 15.4Covenant Compliance Certificate  44 15.5Sales and Inventory Reports; Project Results  44 15.6Budgets and Assessments  45 15.7Reserved  45 15.8Audit Reports  45 15.9Notice of Default or Event of Default  45 15.10Notice of Claimed Default  45 15.11Material Adverse Developments  45 15.12Other Information  45 16. SUBORDINATED INDEBTEDNESS  46 17. EVENTS OF DEFAULT  46 17.1Payments  46 17.2Covenant Defaults  46 17.3Warranties or Representations  47 17.4Enforceability of Liens  47 17.5Involuntary Proceedings  47 17.6Proceedings  47 17.7Attachment; Judgment; Tax Liens  47 17.8Failure to Deliver Payments and Removal of Inventory Collateral  47 
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     17.9Documents  47 17.10Reserved  47 17.11Material Adverse Change  48 17.12One-to-One Ratio  48 17.13Merger or Dissolution  48 17.14Default by Borrower or Guarantor Under Other Agreements  48 17.15Reserved  48 17.16Loss of License  48 17.17Suspension of Sales  48 17.18Reserved  48 17.19Breach of Other Agreements  48 17.20Fraud  48 17.21Reserved  49 17.22Insolvency   49 17.23Reserved  49 17.24Change of Control   49 17.25Financial Condition   49 17.26Cessation of Sales or Business   49 17.27Observance of Loan Documents   49 17.28Change in Marketing Agent, Manager or Servicer   49 18. TERMINATION OF OBLIGATION TO ADVANCE/REMEDIES  49 18.1Termination of Obligation to Advance  49 18.2Remedies Upon Default  50 18.3Sale of Inventory Collateral  53 18.4Application of Proceeds  54 18.5Delegation of Duties and Rights  54 18.6Lender Not in Control  54 18.7Rights of Lender Regarding Inventory Collateral   54 18.8Waivers  55 18.9Cumulative Rights  56 18.10Diminution in Value of Collateral  57 18.11Discontinuance of Proceedings  57 18.12Indemnification of Lender Parties  57 
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     19. CERTAIN RIGHTS OF LENDER  58 19.1Suits to Protect the Inventory Collateral  58 19.2Protection of Inventory Collateral  58 19.3Performance by Lender  58 19.4No Liability of Lender  58 19.5Right to Defend Action Affecting Security  59 19.6Indemnities, Loan Costs and Expenses  59 19.7Lender’s Right of Set-Off  59 19.8Assignment of Lender’s Interest  59 19.9Lender’s Appointment as Attorney-in-Fact  60 20. MISCELLANEOUS  61 20.1Notices  61 20.2Survival; Continuation and Reliance  62 20.3Governing Law; Consent to Jurisdiction  63 20.4Invalid Provisions  63 20.5Successors and Assigns; Third Party Beneficiaries  63 20.6Counterparts; Effectiveness  64 20.7Lender Not Fiduciary  64 20.8Total Agreement; Amendments  64 20.9Consents, Approvals and Discretion  64 20.10Litigation  64 20.11Consent to Advertising and Publicity of Documents  65 20.12Use of Lender’s Name  65 20.13Control of a Material Party  65 20.14Directly or Indirectly  66 20.15No Duty  66 20.16Reimbursement for Taxes  66 20.17Investigations and Inquiries  66 20.18Sale of Participation Interests in Inventory Loan   66 20.19No Third Party Beneficiaries   66 20.20Non-Public Information; Confidentiality  67 20.21Headings  67 20.22Borrower’s Knowledge  67 
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     20.23Gender  67 20.24Time of the Essence  67 20.25Conflict  67 
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**AMENDED AND RESTATED INVENTORY LOAN AND SECURITY AGREEMENT**     **THIS AMENDED AND RESTATED INVENTORY LOAN AND SECURITY AGREEMENT**is made effective as of June30, 2011 by and between **MYSTIC DUNES MYRTLE BEACH, LLC**, a Delaware limited liability company(“**Borrower**”), **MYSTIC DUNES, LLC,**a Delaware limited liability company (“**MysticDunes**” or “**Guarantor**”) and **TEXTRON FINANCIAL CORPORATION**, a Delaware corporation(“**Lender**”).**RECITALS**     WHEREAS, pursuant to the Joint Plan of Reorganization filed on or about March 22, 2011, andconfirmed by the Bankruptcy Court on May 6, 2011 for Case No. 6:10-bk-20709KSJ (the “**Plan**”)and the order of May 6, 2011 confirming the Plan (“**Bankruptcy Court Order**”), Lender hasagreed to enter into this Agreement with Borrower;     WHEREAS, Backstage Myrtle Beach, LLC, a Florida limited liability company (“**OriginalBorrower**”) and Lender previously entered into that certain Receivables and Inventory Loan andSecurity Agreement dated as of November 5, 2008, as amended from time to time (collectively, the“**Original Loan Agreement**”);     WHEREAS, pursuant to the Plan, and the Bankruptcy Court Order, as of the Plan’s effective date(i) Original Borrower is being reorganized into a new entity, Mystic Dunes, LLC, a Delaware limitedliability company, (ii) Original Borrower shall convey all of its right, title and interest in theInventory Collateral to Mystic Dunes, free and clear of Liens, (iii) all legal and beneficialinterests in the Inventory Collateral are transferred and assigned by Mystic Dunes, LLC to Borroweras of the Closing Date, free and clear of all Liens (other than the liens created in favor ofLender) in consideration of the assumption by Borrower of the rights and obligations of theOriginal Borrower as set forth in this Agreement, and (iv) this Agreement will replace andsupersede in its entirety the Original Loan Agreement;     WHEREAS, the parties hereto desire to be legally bound by the terms and conditions of thisAgreement along with all exhibits attached hereto and related contractual agreements referencedherein, the terms and conditions of which are incorporated herein by this reference;     WHEREAS, the Pledged Inventory along with other Inventory Collateral encumbered by the Lien ofLender’s Mortgage serve to secure Borrower’s repayment of the Inventory Loan to Lender.     NOW, THEREFORE, for an in consideration of the foregoing Recitals, and the covenants andagreements hereinafter set forth and for other good and valuable consideration, the legal adequacyand sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound,hereby agree as follows:**EXECUTION VERSION**

 
     **1. ****Definitions and Construction.**          **1.1****Definitions.** The following words and phrases as used in capitalized form in thisAgreement, whether in the singular or plural, shall have the meanings indicated:     ***Advance***. A portion of the proceeds of the Inventory Loan advanced from time to time by Lenderto Borrower in accordance with the terms of this Agreement.     ***Affiliate***. Any party or entity controlled by, controlling, or under common control with,Borrower or Guarantor.     ***Agreement***. This Amended and Restated Inventory Loan and Security Agreement between Borrower,Guarantor and Lender.     ***Amenities***. The recreational, access and utility facilities to be included as of or to benefitthe Project, as such amenities may be further described in the Timeshare Declaration and/or thePublic Offering Statement.     ***Assessments***. The assessments made against each Timeshare Interest and the Owner thereofpursuant to the terms of the Timeshare Declaration.     ***Association***. Dunes Village Vacation Owners’ Association, a South Carolina non-profitcorporation.     ***Bankruptcy Case*****.**means the case filed by the Original Borrower on November 19, 2010 under theBankruptcy Code; the case is being administered under Case Number 6:10-bk-20709-KSJ in theBankruptcy Court.     ***Bankruptcy Code***means Title II of the United States Code, 11 U.S.C. §§ 101 et. seq.     ***Bankruptcy Court***means the United States Bankruptcy Court for the District of Florida or anyother court having jurisdiction over the Bankruptcy Case from time to time.     ***Base Rate***. For any particular date, the U.S. dollar rate listed as “London Interbank OfferedRate (LIBOR) three months” published on that date in the “Money Rates” section of The Wall StreetJournal (or in a generally recognized substitute financial reporting service which Lender may, inits discretion, determine to use for such reference from time to time) or if not published on thatdate, the rate in effect on the previous Business Day, rounded upward to the nearest one-sixteenthof one percent. The applicable Base Rate will be determined by Lender on the first day of eachcalendar month.     ***Borrower***. Mystic Dunes Myrtle Beach, LLC, a Delaware limited liability company.
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     ***Borrower Project***. That portion of the Project acquired by the Original Borrower andoriginally consisting of 20 Units, otherwise known as the“Fractional Vacation Ownership for the Dunes Village Resort” consisting of a “vacation ownershiptimesharing plan” as that term is defined in the Timeshare Act.     ***Business Day***. Each day which is not a Saturday or Sunday or a legal holiday under the laws ofthe state of Connecticut, the state of Nevada, the state of Rhode Island, the state of SouthCarolina or the United States.     ***Change of Control***If (i) Guarantor ceases to own 100% of Borrower, or (ii) TAC ceases toown 100% of Guarantor.     ***Closing Attorney***. Collectively, the closing attorney and escrow agent (who shall be a dulylicensed South Carolina attorney) selected by Borrower and approved by Lender. The current closingattorney and escrow agent is Clemmons Law Firm, LLC.     ***Closing Date***. June 30, 2011.     ***Collateral Assignment of Management Agreement***. That certain “Collateral Assignment ofManagement Agreement and Contracts” dated as of the Closing Date executed by Borrower in favor ofLender pursuant to which Borrower collaterally assigns to Lender all of the Borrower’s right, titleand interest in and to all Management Agreements and Contracts, as it may be amended, modified orrestated from time to time.     ***Collateral Assignment of Declarant Rights***. That certain recorded “Collateral Assignment ofDeclarant Rights” dated as of the Closing Date executed by Borrower in favor of Lender thatcollaterally assigns all of the Declarant Rights as defined therein to Lender, as it may beamended, modified or restated from time to time.     ***Collateral Assignment of Intellectual Property Rights***. That certain “Collateral Assignment andSecurity Agreement for Intellectual Property Rights” dated as of the Closing Date executed byBorrower in favor of Lender that collaterally assigns all of Borrower’s Intellectual Propertyrights to Lender, as it may be amended, modified or restated from time to time.     ***Collateral Assignments.***Collectively, the Collateral Assignment of Declarant Rights, theCollateral Assignment of Intellectual Property Rights and the Collateral Assignment of ManagementAgreement.     ***Common Area***. The Property and the Improvements located on the Property which are not part ofa Unit and which may be shared in common with other Purchasers, as further described and defined inthe Condominium Declaration.     ***Condominium Act***. S.C. Code Ann. § 27-31-10, et. seq. (1986 Supp.) or any successor thereto orreplacement thereof, as the same may be amended from time to time and any rules and regulationspromulgated thereunder.
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     ***Condominium Association***. Dunes Village Property Owners’ Association, Inc., a South Carolinanon-profit corporation of which Borrower is a member by virtue of its present ownership of certainUnits in the Project.     ***Condominium Declaration***. With respect to the Project, that certain Master Deed for DunesVillage Horizontal Property Regime dated October 10, 2007 and recorded on October 16, 2007, asInstrument No. 2007000146944 in Deed Book 3284, Page 2688, in the Public Records at Horry County,South Carolina, as such document may be amended from time to time.     ***Debtor Relief Laws***. Any applicable liquidation, conservatorship, bankruptcy, moratorium,rearrangement, insolvency, reorganization or similar law, proceeding or device providing for therelief of debtors from time to time in effect and generally affecting the rights of creditors.     ***Declarations***. Collectively, the Condominium Declaration and the Timeshare Declaration.     ***Default***. An event or condition, the occurrence of which immediately is or, with the passageof time or the giving of notice or both, becomes an Event of Default.     ***Default Rate***. The Inventory Loan Interest Rate plus four percent (4%) per annum, providedthat, the Default Rate shall not exceed the highest lawful rate.     **Defaulted Inventory**. As such term is defined in **Section 14.14 (a)** below.     **Defaulted Inventory Financing**. As such term is defined in **Section 14.14(b)** below.     **Defaulted TBS’ Owned Timeshare Loan(s)**. Any timeshare loan in TBS’ receivables portfoliowhich is 120 days or more delinquent at the time of measurement.     ***Division***. The South Carolina Division of Real Estate, the regulatory agency in the state inwhich the Project is located which regulates and supervises timeshare projects and matters relatedthereto.     ***DRC***. Diamond Resorts Corporation, a Maryland corporation, and its successors or assigns.     ***DRFS***. Diamond Resorts Financial Services, Inc., a Nevada corporation, and its successors orassigns.     ***DRC Affiliates***. Manager, Marketing Agent, Servicer and any other entities affiliated with DRCwhich enter into agreements or a Material Project Agreement with the Borrower or Guarantor inconnection with the Borrower Project, the Association, the Condominium Association or thisAgreement.
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     **Dunes Village Points Equivalent Timeshare Interest**. As such term is defined in **Section7.****1(b)(iii)** below.     ***Escrow Agreement***. That certain Escrow Agreement dated as of the Closing Date (or within 45days subsequent to the Closing Date) by and among Borrower, Lender and First American TitleInsurance Company, as it may be amended, modified or restated from time to time.     ***Event of Default***. Each event described in **Section 17** below.     ***Exchange Company***. Resort Condominiums International, Interval International, or such otherinternal exchange program utilized by DRC and/or DRC Affiliates from time to time, approved byLender.     ***Financial Statements***. The monthly, quarterly and annual financial statements and reportsrequired to be provided to Lender under this Agreement.     ***GAAP***. Generally accepted accounting principles, applied on a consistent basis, as describedin Opinions of the Accounting Principles Board of the American Institute of Certified PublicAccountants and/or in statements of the Financial Accounting Standards Board which are applicablein the circumstances as of the date in question.     ***Governing Documents***. The certificate or articles of incorporation or formation, bylaws,partnership agreement, joint venture agreement, trust agreement, operating agreement or otherorganization or governing documents of any Person.     ***Guarantor***. Mystic Dunes, LLC, a Delaware limited liability company.     ***Guaranty***. That certain “Guaranty Agreement” dated as of the Closing Date, and executed anddelivered to Lender in connection with this Agreement by Guarantor, as it may be amended, modifiedor restated from time to time.     ***Improvements***. All site work, site improvements, infrastructure, buildings, structures,recreational facilities and appurtenances now located on the portion of the Property constitutingthe Borrower Project.     ***Indemnified Lender Parties***. Lender and all participants acquiring any interest in theInventory Loan, and all of their parents, subsidiaries, affiliates, officers, directors, agents,employees, representatives, consultants, contractors and attorneys, as well as their respectiveheirs, personal representatives, successors and assigns.     ***Intellectual Property***. All of the trademarks, service marks, copyrights and any otherintellectual property associated with the Borrower Project.     ***Inventory Collateral***. Collectively, all now owned or hereafter existing or acquired right,title and interest of Borrower in and to all of the following:
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          (a) All existing and future Pledged Inventory more fully described in the Lender’s Mortgage asencumbered at any time by the Lien of Lender’s Mortgage, together with all appurtenant rights andinterests directly relating to the Pledged Inventory, including without limitation, appurtenantrights and interests in and to Units for specific use periods, Common Areas, common elements, otherfacilities related to the Borrower Project, Improvements, furniture, fixtures, equipment,easements, servitudes, licenses, rights of way, privileges, access rights, use rights pursuant tothe Declarations, use rights related to the Amenities, rights under Material Project Agreements andrights under any agreement or document directly relating to the Pledged Inventory, and allextensions, betterments, substitutions, Improvements and replacements thereof;          (b) All existing and future leases, subleases, licenses, concessions, entry fees or otheragreements which grant a possessory interest in and to, or the right of use to the PledgedInventory or any portion thereof;          (c) All existing and future rents, revenues, income, proceeds, royalties, profits and otherbenefits payable for using, leasing, licensing, possessing, or otherwise enjoying the PledgedInventory;          (d) All existing and future documents, instruments, accounts, chattel paper, rights to ReleasePayments from sales and general intangibles relating to the Pledged Inventory, but specificallyexcluding, all promissory notes, purchase agreements and other agreements or rights arising out ofor in connection with the sale to DRC or any of the DRC Affiliates of Timeshare Interests;          (e) All existing and future books, records, reports, computer tapes, computer disks andsoftware relating exclusively to the Pledged Inventory or any other Inventory Collateral, andIntellectual Property that relate to but are non-exclusive to the Pledged Inventory and thesoftware, contractual rights and non-exclusive licenses for the Borrower’s Project’s reservationsystem, if any;          (f) All existing and future rights of Borrower as the Owner of the Pledged Inventory,including without limitation all rights under the Declarations;          (g) All existing and future cash, money, deposit accounts collection accounts, clearingaccounts, escrow accounts or reserve account with cash or proceeds for Release Payments, and allrights of setoff, and all benefits, claims, accounts, accounts receivables general intangibles,choses in action, claims, credits, balance and proceeds relating thereto or deriving therefrom andother property of Borrower directly related to the Pledged Inventory;          (h) All existing and future rights of Borrower under the Material Project Agreements;          (i) The Collateral Assignments;
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          (j) All present and future inventory, general intangibles used in connection with, and placedor to be placed on or under the Pledged Inventory and the cash or non-cash proceeds thereof.          (k) Extensions, additions, modifications, improvements, betterments, renewals, substitutionsand replacements of, for or to any of the foregoing wherever located, together with the products,proceeds, revenues, income, issues, rents and profits thereof, including without limitation,proceeds deriving from enforcement of any rights or benefits, and any replacements, additions oraccessions thereto or substitutions thereof, and all rights or claims in or under insurancepolicies and to the proceeds of any insurance policies covering any of the foregoing, all rights tounearned or refunded insurance premiums, and the proceeds of any insurance or condemnation awardsor judgments, tax refunds, or any claims directly relating to the Pledged Inventory; and          (l) All products and proceeds of the foregoing.     ***Inventory Loan***. The non-revolving credit inventory loan facility to be advanced on the termsset forth in this Agreement in an amount not to exceed the Inventory Loan Limit.     ***Inventory Loan Interest Rate***. A variable rate, adjusted as of the first day of each calendarmonth, equal to the sum of the Base Rate as of the first day of the applicable calendar month, plus5.50% per annum, provided that, such Base Rate, when used to calculate the Inventory Loan InterestRate, shall never be less than 2.0% per annum.     ***Inventory Loan Limit***. $4,300,000.     ***Inventory Loan Maturity Date***. Initially June 30, 2016, subject to one two-year extension toJune 30, 2018, upon sixty (60) days prior written notice from Borrower to Lender, provided that noEvent of Default then exists and is continuing, and upon payment of $200,000 by Borrower to Lenderas an extension fee, payable at the time the extension option is exercised.     ***Inventory Loan Note***. That certain “Inventory Loan Promissory Note” dated as of the ClosingDate evidencing Borrower’s obligation to repay the Inventory Loan, executed by Borrower and payableto the order of Lender, as it may be amended, modified or restated from time to time.     **Inventory Recovery Fee**. As such term is defined in **Section 14.14(a)** below.     ***Legal Requirements***. All federal, state and local ordinances, laws, regulations, orders,judgments, decrees, determinations and other legal restrictions governing the Project, the MaterialParties, their businesses or operations, the sale of Timeshare Interests in the Borrower Project,the financing of sales of Timeshare Interests in the Borrower Project, the marketing of TimeshareInterests in the Borrower Project and all matters related thereto, including without limitation:(a) the Condominium Act, (b) the
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Timeshare Act, (c) the Consumer Credit Protection Act; (d) Regulation Z of the Federal ReserveBoard; (e) the Equal Credit Opportunity Act; (f) Regulation B of the Federal Reserve Board; (g) theFederal Trade Commission’s 3-day cooling off rule for Door-to Door Sales (h) Section 5 of theFederal Trade Commission Act; (i) the Interstate Land Sales Full Disclosure Act; U) federal postallaws; (k) all applicable state and federal securities laws; (l) all applicable usury laws; (m) allapplicable trade practices, home and telephone solicitation, sweepstakes, anti-lottery and consumercredit and protection laws; (n) all applicable real estate sales licensing, disclosure, reportingand escrow laws; (o) the Americans with Disability Act; (p) the Real Estate Settlement ProceduresAct; (q) the Gramm-Leach-Bliley Act; (r) the United and Strengthening America by ProvidingAppropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA Patriot Act); (s)all amendments to and rules, regulations and orders promulgated under the foregoing acts or laws;and (t) all zoning, environmental and other land use laws and regulations, subdivision map acts,blue sky laws, real estate syndication acts and usury laws.     ***Lender***. Textron Financial Corporation, a Delaware corporation, its successors and assigns.     ***Lender’s Mortgage***. That certain “Inventory Mortgage, Assignment of Leases and Rents andSecurity Agreement” dated as of the Closing Date from Borrower, as mortgagor to Lender, asmortgagee, encumbering the Pledged Inventory and other Inventory Collateral related thereto, andall amendments, modifications and supplements thereto.     ***Licenses***. All franchises, certificates, operating rights, licenses, permits, consents,authorizations, approvals, registrations, filings, qualifications, exceptions, orders and otheritems required by applicable governmental authorities or applicable Legal Requirements to permit aPerson to take certain actions, engage in certain businesses, own certain assets or otherwiseengage in a particular activity in compliance with all applicable Legal Requirements.     ***Lien***. Any interest in real, personal or intangible property securing an obligation owed to,or claimed by, a Person other than the owner of the real, personal or intangible property, whethersuch interest is based on the common law, statute or contract, and including, but not limited toattachments, judgments or tax liens and the security interest or lien arising from a securityagreement, assignment, mortgage, deed of trust, encumbrance, pledge, conditional sale or trustreceipt of a lease, consignment or bailment for security purposes. The term “Lien” shall includereservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions,restrictions, leases and other title exceptions and encumbrances affecting real property.     ***Loan Accounts***. As such term is defined in **Section 4.2** below     ***Loan Costs***. All costs, expenses and fees incurred by or on behalf of Lender in connectionwith the Inventory Loan, including without limitation, those related to negotiating, preparing,documenting, closing and enforcing this Agreement and all other
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Loan Documents including, but not limited to: (a) the reasonable legal fees, expenses anddisbursements of Lender’s counsel; (b) all costs, fees and expenses relating to any Advances,amendments, waivers or consents; (c) all costs, fees and expenses of every kind and characterincurred in (i) 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 thecosts of appeal, and (ii) the preparation for, negotiations regarding, consultations concerning, orthe defense or prosecution of legal proceedings involving any claim or claims made or threatenedagainst Borrower or Lender arising out of this transaction or the preservation and protection ofthe Inventory Collateral securing the Obligations or Advances made hereunder, or in any way relatedto the Borrower Project or the Borrower, expressly including, without limitation, the defense byLender of any legal proceedings instituted or threatened by any Person to seek to recover or setaside any payment or setoff theretofore received or applied by Lender with respect to theObligations, and any and all appeals thereof, and all responses to subpoenas, requests forproduction of documents, and other discovery matters, regardless of whether Lender is named in thelegal proceedings; (d) all costs, fees and expenses relating to preserving and protecting theInventory Collateral or exercising any rights or remedies with respect to the Inventory Collateral,regardless of whether suit is filed, including without limitation, insurance premiums and expenses,Taxes (including Taxes arising from the sale of any Inventory Collateral), shipping costs, andcosts, fees, and expenses in enforcing, preserving or protecting Lender’s Lien against theInventory Collateral; (e) all indemnification obligations of Borrower and Guarantor under the LoanDocuments; (f) all Taxes payable by Borrower or related to the Borrower Project, recording fees,title insurance premiums and other title charges, document copying, transmittal and binding costs,appraisal fees, lien, judgment and litigation 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 reasonable travel and out-of-pocket expensesof Lender to conduct inspections or audits, including without limitation, the costs of Lien andother searches, recording or filing fees and premiums on the Title Insurance Policy delivered toLender pursuant to this Agreement; and (g) all reasonable costs and expenses of Lender related toany meetings with Borrower, Guarantor or other Persons related to the transactions contemplatedhereunder, audits or inspections of Borrower or the Borrower Project, including without limitation,reasonable travel expenses (subject, in the case of travel expenses, to the provisions of**Section 12.21** hereof.) Notwithstanding the foregoing to the contrary, Lender agrees not toinclude costs incurred in the Original Borrower’s bankruptcy, including Lender’s legal fees, butLender shall include Holland & Knight’s legal fees incurred in documenting the subject InventoryLoan transaction as part of Loan Costs hereunder.     ***Loan Documents***. Collectively, this Agreement, the Inventory Loan Note, the Guaranty, theCollateral Assignments, the Lender’s Mortgage, the Escrow Agreement, financing statements coveringthe Inventory Collateral, to be filed in all offices necessary to perfect Lender’s Liens in theInventory Collateral; and such other agreements, documents, instruments, certificates and materialsas Lender may request to evidence the Obligations, to evidence and perfect the rights and Liens ofLender
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contemplated by the Loan Documents, and to effectuate the transactions contemplated herein.     ***Management Agreement***. Collectively, that certain Management Agreement executed between theAssociation and the Manager dated as of January 16, 2009 for the management of the Borrower Projectand any new management agreement executed in its place, all of which agreements and any amendmentsthereto or renewals thereof must be in form and content approved by Lender in writing and thatcertain Management Subcontract Agreement by and between Manager and Pan American VacationManagement, LLC dated as of June 20, 2008 pursuant to which Manager has subcontracted with PanAmerican Vacation Management, LLC to provide certain of the management services that are requiredof Manager under the above referenced “Management Agreement”.     ***Manager***. Collectively, Mystic Dunes, LLC, a Delaware limited liability company, an Arizonacorporation, its successors or assigns, which successors or assigns are subject to Lender’s priorwritten consent, and Pan American Vacation Management, LLC pursuant to the Management SubcontractAgreement.     ***Marketing Agent***. Diamond Resorts International Marketing, Inc., a California corporation, itssuccessors or assigns, which successors or assigns are subject to Lender’s prior written consent,which company will enter into the Transfer Pricing Agreement with Borrower.     ***Material Adverse Effect.***A material adverse effect on any of the following: (a) the property,business, operations or financial condition of Borrower or Guarantor, (b) the ability of Borrower,Guarantor or a Material Party to perform each of their respective obligations under any of the LoanDocuments or Material Project Agreements, (c) the legality, validity or enforceability of any ofthe Loan Documents, (d) the rights and remedies of the Lender under any of the Loan Documents, or(e) the validity, perfection or priority of a Lien in favor of the Lender on any material part ofthe Inventory Collateral.     ***Material Party***. Borrower, Guarantor, the Association, DRC, the DRC Affiliates, and any otherAffiliate of Borrower or Guarantor directly involved in the operation of the Borrower Project orthe purchase of Timeshare Interests.     ***Material Project Agreements***. (a) The Declarations, (b) the Governing Documents of theAssociation and the Condominium Association, (c) the rules and regulations for the use andoccupancy of the Borrower Project, (d) the Management Agreement, (e) any affiliation or ExchangeCompany agreement, (f) the Transfer Pricing Agreement, and (g) all other contracts, agreements andarrangements relating to the creation, ownership, operation, management, marketing, sale andmaintenance of the Borrower Project involving payments in excess of $200,000 in anyone year period;as such contracts, agreements and arrangements may be amended, restated, extended or supplementedfrom time to time and any new contracts, agreements or arrangements entered into in place of or inaddition thereto, all of which must be in form and content
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reasonably acceptable to Lender. **Schedule 13.10** attached hereto sets forth a list ofthe Material Project Agreements existing as of the date of this Agreement.     ***Negative Covenant***. Any covenant contained in any Loan Document pursuant to which Borrower orany Material Party agrees not to take any particular action or Borrower agrees not to permit orcause any Material Party to take any particular action.     ***Obligations***. All amounts due or becoming due to Lender in respect of the Inventory Loan, andany of the Loan Documents, including principal, interest, late charges, Loan Costs, indemnityobligations, contributions, Taxes, insurance, attorneys’ and paralegals’ fees and expenses andother fees or expenses incurred by Lender or advanced to or on behalf of Borrower by Lenderpursuant to this Agreement or any of the Loan Documents, and the prompt and complete payment andperformance by Borrower of all covenants, obligations, indebtedness and liabilities pursuant tothis Agreement or any of the Loan Documents.     ***One-to-One Ratio***. As such term is defined in **Section 12.29** below.     **Orlando Resort**. As such term is defined in **Section 7.****1(b)(iii)** below.     ***Owner***. Any Person who owns one or more Timeshare Interests and Borrower with respect to allTimeshare Interests that have not been sold or that have been reacquired by an Affiliate ofBorrower.     ***Permitted Exceptions***. Those permitted Liens and exceptions to title to the InventoryCollateral described on **Schedule 12.7** attached hereto.     ***Person***. An individual, a government or any agency or subdivision thereof, a corporation,partnership, trust, unincorporated organization, association, joint stock company, limitedliability company or other legal entity.     ***Pledged Inventory***. Any Timeshare Interest owned by Borrower which at any time is encumberedby the Lien of the Lender’s Mortgage.     **Points Equivalent Timeshare Interest**. As such term is defined in **Section 7.****1(b)(iii)**below.     ***Project***. The Property, all Improvements now or hereafter located thereon and the timeshareproject thereon, known as “Dunes Village” located at 5200 North Ocean Boulevard, Myrtle Beach,Horry County, South Carolina.     ***Property***. The real property described on **Exhibit A** attached hereto located at 5200North Ocean Boulevard, Myrtle Beach, Horry County, South Carolina, together with all easements andother rights appurtenant thereto.     ***Public Offering Statement***. Collectively, the approved public report, permit or publicoffering statement for the Borrower Project in South Carolina, Florida and in each
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other jurisdiction in which sales of Timeshare Interests are made or the Borrower Project isotherwise required to be licensed, approved or registered.     ***Public Records***. The office in Horry County, South Carolina in which deeds, mortgages, deedsof trust and other documents affecting interests in real estate are recorded.     ***Purchaser***. DRC or a DRC Affiliate as a purchaser of a Timeshare Interest or TimeshareInterests.     ***Release Payment***. As such term is defined in **Section 7.****1(b)(iii)** below.     **Sales Center**. As such term is defined in **Section 7.****1(b)(iii)**.     ***SCRA***. The Servicemembers’ Civil Relief Act, formerly known as the Soldiers’ and Sailors’Civil Relief Act.     ***Security***. Defined in **Section ****2(a)(1)** of the Securities Act of 1933, as amended.     **Subordinated Indebtedness**. As such term is defined in **Section 16** below.     ***TAC***. Tempus Acquisition, LLC, a Delaware limited liability company.     ***Taxes***. All real property, personal property, withholding, payroll, business, profits, income,sales, transfer, general intangible, mortgage, documentary, recording, ad valorem and other taxesand assessments.     ***TBS***. Textron Business Services, Inc., a Delaware corporation, the owner of TBS’ OwnedTimeshare Loan Portfolio.     ***TBS’ Owned Timeshare Loan(s)***. One or more timeshare loans which at any time make up TBS’receivables portfolio related to the Borrower Project, title to all of which timeshare loans isowned by TBS’ as of the Closing Date pursuant to the terms of the Plan.     ***Timeshare Act***. SC Code Ann. § 27-32-10, et. seq. (1986 Supp.) or any successor thereto orreplacement thereof, as the same may be amended from time to time and any rules and regulationspromulgated thereunder.     **Timeshare Approvals**. As such term is defined in **Section 14.2** below.     ***Timeshare Declaration***. With respect to the Borrower Project, that certain Declaration ofFractional Vacation Ownership Plan for Dunes Village Resort executed by Borrower and recorded onJanuary 15, 2009 in Deed Book 3382 at Page 1465 and re-recorded on January 21, 2009 in Deed Book3383 at Page 203 in the Public Records of Horry County, South Carolina, as such document may beamended, modified or restated from time to time.
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     ***Timeshare Interest***. A “**Fractional Interest**” as defined in the Timeshare Declaration,consisting of an undivided 1/52 or 1/104 fee title interest in a Unit in the Borrower Project, astenant-in-common, with the Owners of other “Fractional Interests” in such Unit, together with theexclusive right to reserve, use and occupy a Unit of such type and the common furnishings thereinfor a use period for which such right to use have been properly reserved, subject to the provisionsof the Public Offering Statement, the Timeshare Declaration, Association Bylaws and the rules andregulations, and including a non-exclusive right to use any and all easements appurtenant to theProject, and a non-exclusive right to use the Common Area in the Project.     ***Title Company***. An American Land Title Association company selected by Borrower and approvedby Lender which is authorized and duly licensed to carry on a title insurance business in the statein which the Project is located. The Title Company currently used by Borrower is First AmericanTitle Insurance Company.     ***Title Insurance Policy***. A mortgagee’s title policy issued by the Title Company and amortgagee’s title insurance commitment along with the required endorsements is included as part of**Exhibit B** attached hereto, insuring the Lender’s Mortgage in the amount of the InventoryLoan Limit as a first priority Lien (against the Pledged Inventory and related InventoryCollateral) subject only to the exceptions described on **Exhibit B** attached hereto, issuedin the name of Lender and its successors and assigns, as mortgagee.     ***Transfer Pricing Agreement***. Any agreement between Borrower and the Marketing Agent for thepurchase of Timeshare Interests in the Borrower Project by DRC or a DRC Affiliate which will beentered into subsequent to the Closing Date, subject to Lender’s prior written consent.     ***Unit***. One individual air space living unit in a building incorporated into the BorrowerProject pursuant to the Declarations, together with all related or appurtenant Common Areas andrelated or appurtenant interests in services, easements or other rights or benefits, as set forthin the Declarations.          **1.2****Interpretation.** Unless the context of this Agreement clearly requires otherwise,references to the plural include the singular, references to the singular include the plural, theterm “including” is not limiting, and the term “or” has, except where otherwise indicated, theinclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,”“hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to anyparticular provision of this Agreement. An Event of Default shall “continue” or be “continuing”until such Event of Default has been waived in writing by Lender. Section, subsection, clause,schedule, and exhibit references are to sections, subsections, clauses, schedules and exhibits inthis Agreement unless otherwise specified. Any reference in this Agreement or in the LoanDocuments to this Agreement, any of the Loan Documents or any other document or agreement shallinclude all alterations, amendments, changes, extensions, modifications, renewals, replacements,substitutions, supplements, and restatements thereto and thereof, as applicable.
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          **1.3****Schedules and Exhibits.** All of the schedules and exhibits attached to thisAgreement, as they may from time to time be amended or restated, shall be deemed incorporatedherein by reference.          **1.4****Accounting Principles.** Where the character or amount of any asset or liability oritem of income or expense is required to be determined or any consolidation or other accountingcomputation is required to be made for the purposes of this Agreement, the same shall be determinedor made in accordance with GAAP consistently applied at the time in effect, to the extentapplicable, except where such principles are inconsistent with the requirements of this Agreement.     **2. ****Reserved.**     **3. ****Inventory Loan.**          **3.1****General.** Upon and subject to the conditions set forth in this Agreement, Lendershall make the following Advances under the Inventory Loan to Borrower and Borrower shall borrowfrom Lender the amount of such Advances subject to Lender’s Lien pursuant to the terms of thisAgreement and the Loan Documents.          (a) Lender shall make an Advance on the Closing Date to fund 100% of the aggregate dollaramount of all Pledged Inventory as of the Closing Date less $100,000, based on the type of Unit andamounts as set forth below:     Unit Type Amount Per Timeshare InterestStudio $2,800 One Bedroom $3,300 Two Bedroom $3,800 Three Bedroom $5,800 Four Bedroom $6,800           (b) Lender shall make an Advance on the Closing Date and up to three (3) Advances subsequentto the Closing Date to fund the agreed upon closing costs as determined by Borrower and Lender;          (c) Lender will make an Advance on or before the fifteenth (15th) day of eachApril, July, October and January during the term of the Inventory Loan equal to the aggregatepurchase price paid by Borrower to Lender or an affiliate of Lender to purchase all of theDefaulted TBS’ Owned Timeshare Loans as of the last day of the calendar quarter preceding the monthduring which the subject Advance is made under the Inventory Loan. The purchase price paid byBorrower shall be based on the Unit Type of Timeshare Interest associated with each Defaulted TBS’Owned Timeshare Loan as set forth in **Section 3.1(a)** above.          (d) The beginning balance of the Inventory Loan as of the Closing Date is $3,876,217.
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          **3.2****General Restrictions.** Notwithstanding anything herein or elsewhere to thecontrary, Borrower shall not be entitled to, and Lender shall have no obligation to make, anyAdvance under the Inventory Loan which would cause the outstanding principal balance of theInventory Loan to exceed the Inventory Loan Limit; provided however, if Lender does not make therequired Advance under the Inventory Loan, there will be no further purchase by Borrower ofDefaulted Inventory as set forth in **Section 3.1(c)** above.          **3.3****Use of Proceeds.** Borrower agrees to use the proceeds of Advances under theInventory Loan solely (a) to refinance the existing inventory loan with Lender, to pay closingcosts and other Loan Costs and to reacquire Defaulted Inventory from Lender or its Affiliates. IfBorrower uses any proceeds of Advances under the Inventory Loan for purposes not permitted underthis Agreement, as determined by Lender in its sole discretion, Lender shall have no obligation tomake any further Advances under the Inventory Loan.          **3.4****Amounts in Excess of Inventory Loan Limit.** Lender shall have the right, but notthe obligation, to fund amounts in excess of the Inventory Loan Limit from time to time to payaccrued and unpaid interest, to pay fees due under the Loan Documents, to pay Loan Costs orindemnification obligations of Borrower and Guarantor under the Loan Documents, or to correct orcure any Default or Event of Default. Borrower agrees that the correcting or curing by Lender of aDefault or Event of Default shall not cure the Default or Event of Default under this Agreement.Such excess amounts funded by Lender shall be deemed evidenced by the Inventory Loan Note, to thefullest extent possible, and then by this Agreement, shall bear interest at the Default Rate andshall also be secured by the Inventory Collateral, the Guaranty and the other Loan Documents.Borrower hereby agrees to execute additional notes and other additional Loan Documents, andmodifications thereto, promptly upon request by Lender, in favor of Lender, evidencing and securingamounts funded in excess of the Inventory Loan Limit.          **3.5****No Advances**. Other than the Advances described in this **Section 3**, nofurther Advances shall be made under the Inventory Loan.     **4. ****Loan Documents and Loan Account.**          **4.1****Loan Documents.** All Loan Documents shall be satisfactory in form and substance toLender and Lender’s counsel. Borrower’s obligation to repay the Inventory Loan shall be evidencedby the Inventory Loan Note, and the Inventory Loan Note shall be payable with interest as providedherein.          **4.2****Loan Account.** Lender shall open and maintain on its books one or more loanaccounts (each a “**Loan Account**” and collectively, the “**Loan Accounts**”) with respectto Advances made, repayments, the computation and payment of interest and fees and the computationand final payment of all other amounts due and sums paid to Lender under this Agreement, and theInventory Loan. Lender shall deliver monthly statements regarding the Loan Accounts to Borrower.Except in the case of
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manifest error in computation, the Loan Accounts shall be conclusive and binding on Borroweras to the amount at any time due to Lender from Borrower under this Agreement, the Inventory LoanNote as an account stated, except to the extent that Lender receives a written notice from Borrowerof any specific objections of Borrower thereto within thirty (30) days after the date theapplicable Loan Account statement has been mailed by Lender.     **5. ****Interest Rate.**          **5.1****Inventory Loan**. The outstanding principal balance of the Inventory Loan shallbear interest in arrears at a variable rate per annum equal to the Inventory Loan Interest Rate.All of such interest shall be due and payable as set forth in **Sections 5.3 and 7.1(a)**below. The outstanding principal balance of the Inventory Loan shall bear interest as of Lender’swiring of funds of each applicable Advance through Lender’s receipt of repayment of the InventoryLoan. If any payment is received by Lender later than noon, Eastern Time, then interest accrualshall be through the next Business Day following such receipt.          **5.2****Default Rate.** Interest shall accrue on all sums otherwise payable by Borrower toLender under the Loan Documents, upon the occurrence of an Event of Default or at any timethereafter, or after the Inventory Loan Maturity Date, at Lender’s sole election, at the DefaultRate. Borrower acknowledges and agrees that the Default Rate is reasonable in light of theincreased risk of collection after the occurrence of an Event of Default. Any judgment obtained byLender for any Obligations of Borrower with respect to the Inventory Loan shall accrue interest atthe Default Rate until paid.          **5.3****Calculation of Interest.** Interest shall be calculated on the basis of a year ofthree hundred sixty (360) days and charged upon the actual number of days elapsed.          **5.4****Limitation on Interest.** Lender and Borrower intend to comply at all times withapplicable usury laws. All agreements between Lender and Borrower, whether now existing orhereafter 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 Loan or otherwise, shall theinterest contracted for, charged, received, paid or agreed to be paid to Lender exceed the highestlawful rate permissible under applicable usury laws. If, from any circumstance whatsoeverfulfillment of any provision hereof of the Inventory Loan Note or of any other Loan Documents shallinvolve transcending the limit of such validity prescribed by any law which a court of competentjurisdiction may deem applicable hereto, then ipso facto, the obligation to be fulfilled shall bereduced to the limit of such validity; and if from any circumstance Lender shall ever receiveanything 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 ofor the Inventory Loan and not to the payment of interest, or if such excessive interest exceeds theunpaid balance of principal of the Inventory Loan, such excess shall be refunded to Borrower. Allinterest paid or agreed to be paid to Lender shall, to the extent permitted by applicable law, beamortized, prorated,
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allocated and spread throughout the full period until payment in full of the principal so thatthe interest on the Inventory 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 Documentsexceeds the highest lawful rate, any non-principal payment (except payments specifically describedin the Loan Documents as “interest”) including without limitation, prepayment fees and latecharges, shall to the maximum extent not prohibited by law, be an expense, fee, premium or penaltyrather than interest. Lender hereby expressly disclaims any intent to contract for, charge orreceive interest in an amount which exceeds the highest lawful rate. The provisions of thisAgreement, the Inventory Loan Note, and all other Loan Documents are hereby modified to the extentnecessary to conform with the limitations and provisions of this Section, and this Section shallgovern over all other provisions in any document or agreement now or hereafter existing. ThisSection shall never be superseded or waived unless there is a written document executed by Lenderand Borrower, expressly declaring the usury limitation of this Agreement to be null and void, andno other method or language shall be effective to supersede or waive this paragraph.     **6. ****Fees and Loan Costs.**          **6.1****No Inventory Loan Commitment Fee.** There is no commitment fee or advance feepayable by Borrower with respect to the Inventory Loan.          **6.2****Late Charge.** In the event that any payment required hereunder is not received byLender within five (5) days after the due date, Borrower agrees to pay a late charge equal to fivepercent (5%) of such past due payment to defray the expenses incident to handling such delinquentpayments, and to compensate Lender for the harm and damages related to such late payments.Borrower hereby acknowledges and agrees that such late charges are reasonable in light of theanticipated and the actual harm caused by the late payments; the difficulties of proof of loss,harm and damages; and the inconvenience and non-feasibility of Lender otherwise obtaining anadequate remedy. Borrower agrees that such late charges are imposed as reasonable liquidateddamages and not as a penalty.          **6.3****Loan Costs.** Borrower agrees to pay to Lender all Loan Costs upon notice fromLender that any such Loan Costs are due and payable. If Borrower fails to pay any of such LoanCosts, Lender may at its option, but shall not be required to, pay the same and Borrower agrees toreimburse Lender immediately for such amount with interest accruing on such amount at the DefaultRate for the Inventory Loan until paid. All Loan Costs and all other sums which Borrower isrequired to reimburse Lender shall be included as part of the Obligations and shall be secured bythe Inventory Collateral and the Guaranty. The provisions of this Section shall survivetermination of this Agreement.          **6.4****General.** All of the fees described above are not refundable in whole or in part.Lender is irrevocably authorized to advance the sums necessary to pay all or any portion of suchfees and Loan Costs when due and payable to itself from the proceeds of an Advance under theInventory Loan.
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     **7. ****Payments.**          **7.1****Inventory Loan.** Borrower agrees punctually to pay or cause to be paid to Lenderwhen due all principal and interest due in respect of the Inventory Loan and all other Obligationsrelated to the Inventory Loan or provided for under the Loan Documents. Borrower agrees to makethe following payments on the Inventory Loan:          (a) **Interest**. Interest only on the outstanding principal balance of the InventoryLoan shall accrue and is payable monthly on the first (1st) day of each month commencingon the first (1st) day of August, 2011 (interest accrued from the Closing Date throughJuly 31, 2011) and continuing on the first day of each month thereafter during the term of theInventory Loan. Failure by Borrower to make the foregoing payments as required shall result in anEvent of Default hereunder.          (b) **Principal**.               (i) The entire outstanding principal balance of the Inventory Loan, all accrued and unpaidinterest thereon and all other sums due in connection therewith shall be payable in full, if not,earlier paid pursuant to the terms of this Agreement and the other Loan Documents, on the InventoryLoan Maturity Date.               (ii) In addition to all other payments required, upon the sale of each Timeshare Interestcomprising part of the Pledged Inventory, Borrower shall make a principal reduction payment on theInventory Loan in an amount equal to the Release Payment for such Timeshare Interest and amandatory principal paydown of the Inventory Loan as set forth in **Section 7.****1(b)(iv)** below.Each Release Payment shall be made in connection with the sale of the applicable TimeshareInterest as set forth in **Section 7.****1(b)(iii)** below.               (iii) Release Payments: It is Borrower’s intention that “Diamond Club Points” shallbe marketed for sale by Marketing Agent through the sales center currently located at the MysticDunes Resort and Golf Club (the “**Orlando Resort**”) in Orlando, Florida (the “**SalesCenter**”). Within ten (10) days after the end of each calendar month during the term of theInventory Loan, (A) all Diamond Club Points sold through the Sales Center the previous month andwith respect to which any and all rescission rights of the Purchasers have expired, shall beconverted to the equivalent number of Timeshare Interests at the Borrower Project (the “**PointsEquivalent Timeshare Interests**”) based on a conversion formula to be delivered to and approvedby Lender subsequent to the Closing Date, in connection with the execution and delivery of theTransfer Pricing Agreement, (B) DRC or a DRC Affiliate will purchase from Borrower the PointsEquivalent Timeshare Interests at the purchase price set forth therefor in the Transfer PricingAgreement to be finalized by Borrower and DRC or a DRC Affiliate and delivered to and approved byLender subsequent to the Closing Date, and (C) in consideration for the partial release of Lender’sMortgage, Borrower shall pay to Lender an amount equal to the number of Dunes Village PointsEquivalent Timeshare Interests times $4,800 (such amount is the “**Release Payment**”), whichRelease Payment shall be applied by Lender to reduce the outstanding Loan Costs, accrued
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interest and the principal balance of the Inventory Loan. For purposes hereof, “**DunesVillage Points Equivalent Timeshare Interests**” is the number of Points Equivalent TimeshareInterests for such month times 11.18% which percentage is agreed to by Borrower and Lender as ofthe Closing Date and will not be revised thereafter unless Borrower and Lender consent to anyrevision thereof. Upon receipt of the aggregate Release Payments paid to Lender by the tenth(10th) day of each month, Lender shall sign a partial release of Lender’s Mortgage torelease from the Lien thereof the applicable Points Equivalent Timeshare Interests at the BorrowerProject for which the Release Payments have been paid. The payment of the Release Payments and thepartial release of Lender’s Mortgage shall be done in accordance with the Escrow Agreement.               (iv) Mandatory Principal Paydown of Inventory Loan: Notwithstanding the payment ofRelease Payments as set forth in **Section 7.1 (b)(iii)** above, Borrower shall reduce theoutstanding principal balance of the Inventory Loan to the minimum principal balance as set forthbelow by the dates set forth below.     Time Minimum Principal Inventory Loan BalanceJune 30, 2012 $3,267,000 June 30, 2013 $2,746,000 June 30, 2014 $2,210,000 June 30, 2015 $1,658,000 June 30, 2016 $0 Alternatively, if the Inventory Loan Maturity Date is extended to June 30, 2018 pursuant to theterms of this Agreement, the principal reduction schedule above is revised as follows.     Time Minimum Principal Inventory Loan BalanceJune 30, 2016 $1,089,399 June 30, 2017 $503,488 June 30, 2018 $0 If the Borrower has not reduced the principal balance of the Inventory Loan to the amount set forthabove by the dates set forth above, Borrower shall make a cash payment to Lender equal to thedifference between the referenced minimum principal balance of the Inventory Loan set forth abovefor each stated period of time and the actual outstanding principal balance of the Inventory Loanat the corresponding time period. Such payment shall be made within fifteen (15) days after theend of such stated 12-month period as set forth in the above charts.               (c) **Final Payment**. The entire outstanding principal balance of the Inventory Loan,together with all accrued interest thereon and all other Obligations related thereto, if not paidsooner, shall be paid in full on the Inventory Loan Maturity Date.
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               (d) **Voluntary Prepayment of Inventory Loan**. Borrower may prepay the Inventory Loan,in whole or in part, at any time without premium or penalty.               (e) **Application of Payments**. Unless an Event of Default has occurred and continuesuncured, all payments received by Lender with respect to the Inventory Loan shall be applied byLender to the Obligations in the following order: (a) to the payment of Loan Costs, fees, expenses,late charges, reimbursement obligations and indemnity obligations then due and payable or otherwisethen owed to Lender under the Loan Documents, (b) to the payment of any accrued and unpaid intereston the Inventory Loan, and (c) to the reduction of the principal balance of the Inventory Loan.Upon the occurrence of an Event of Default and while such Event of Default continues uncured, suchpayments received by Lender may be applied by Lender to the Obligations in such order of priorityand in such amounts as Lender may elect in its sole discretion.          **7.2****Reinstatement of Obligations and Liens.** Borrower agrees that, to the extent anypayment or payments are made on any Obligations and such payment or payments, or any part thereof,are subsequently invalidated, declared to be fraudulent or preferential, set aside or are requiredto be repaid to a trustee, receiver, or any other Person under any bankruptcy act, state or federallaw, common law or equitable cause, then to the extent of such payment or payments, the Obligationsor any part thereof intended to be satisfied shall be revived and continued in full force andeffect as if said payment or payments had not been made, and the Liens in favor of Lenderencumbering the Collateral shall continue to secure such revived and reinstated Obligations.     **8. ****Collateral.**          **8.1****Grant of Lien.** To secure the payment and performance of the Obligations, forvalue received, Borrower unconditionally and irrevocably assigns, pledges and grants to Lender acontinuing first priority Lien against the Inventory Collateral.          **8.2****Insurance of Collateral.** Borrower agrees to maintain and pay for, or to theextent it is within the control of Borrower, to cause the Association or the CondominiumAssociation to maintain and pay for, insurance upon all Inventory Collateral wherever located(whether in storage or in transit) covering risks in such amounts and with such insurance companiesas Lender may reasonably require.          **8.3****General and Continuing Lien.** All Liens against the Inventory Collateral in favorof Lender shall be first priority Liens. Borrower and Lender hereby agree that this Agreementshall be deemed to be a security agreement under the Uniform Commercial Codes of the state of RhodeIsland and the state of South Carolina. Accordingly, in addition to any other rights and remediesavailable to Lender hereunder, Lender shall have all the rights of a secured party under theUniform Commercial Codes of Rhode Island and the state of South Carolina, all at Lender’s sole
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election. The above-described Liens shall continue in full force and effect until allObligations have been fully and finally paid, performed and satisfied.          **8.4****Additional Documents and Future Actions.** Borrower agrees, at its sole cost, totake such actions and provide Lender from time to time with such agreements, financing statementsand additional instruments, documents (including deeds, assignments and mortgages) or informationas Lender may in its discretion deem necessary or advisable to perfect, protect, maintain orenforce its Lien against the Inventory Collateral, to permit Lender to protect or enforce itsinterest in the Inventory Collateral, or to carry out the terms of the Loan Documents. Borrowerhereby authorizes and appoints Lender and any officer of Lender as its attorney-in-fact, with fullpower of substitution, to take such actions as Lender may deem advisable (i) to protect theInventory Collateral and its interests thereon and its rights hereunder, to file at Borrower’sexpense financing statements, and amendments thereto, in those public offices deemed necessary orappropriate by Lender to establish, maintain and protect a continuously perfected Lien against theInventory Collateral, and (ii) to execute on Borrower’s behalf such other documents and notices asLender may deem advisable to protect the Inventory Collateral and its interests therein and itsrights hereunder.          **8.5****Guaranty.** As further security for the payment and performance of the Obligations,Borrower shall cause to be executed and delivered to Lender the Guaranty.          **8.6****Release of Inventory Collateral.**          (a)**Sold Inventory**. In connection with the sale by Marketing Agent of PledgedInventory, in the event that Borrower pays the required Release Payment for such Pledged Inventory,then subject to **subsection (b)** below, Lender shall release such sold Pledged Inventory fromthe Lien of Lender’s Mortgage.          (b) **General Provisions**. Any obligation of Lender to release any Pledged Inventoryfrom the Lien of Lender’s Mortgage shall be subject to satisfaction of all of the followingconditions:               (i) No Event of Default pursuant to Section 17.1 below shall exist and be continuing;               (ii) The Inventory Loan has not been accelerated so that all Obligations are then due andpayable;               (iii) All costs and expenses of such release shall be paid by Borrower, including all costsrelated to the preparation and recording of release documents and all costs, expenses andreasonable attorneys’ fees of Lender;               (iv) The partial release to be executed by or on behalf of Lender shall be in the formattached hereto as **Exhibit G** or such other form or amended form as may be acceptable toLender;
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               (v) Lender shall have received all documents and information reasonably requested by Lender inconnection with the Pledged Inventory to be released, including without limitation, informationregarding any applicable sales price of such Pledged Inventory; and               (vi) Lender, Borrower and First American Title Insurance Company shall enter the EscrowAgreement setting forth the logistical arrangements for the partial release of any PledgedInventory, including without limitation, procedures regarding the settlement of the sale of anyPledged Inventory.          (c) **Total Release**. In the event that all Obligations are fully satisfied and Lenderand all affiliates of Lender have no further obligation to make any Advances to Borrower or to anywholly-owned Affiliate of Borrower, then Lender shall promptly release all of the Pledged Inventoryfrom the Lien of Lender’s Mortgage.     **9. ****Conditions Precedent to the Closing.** The obligation of Lender to enter into thisAgreement and to fund any Advance hereunder shall be subject to the satisfaction, at Lender’s solediscretion, of each of the following conditions precedent. To the extent that the conditionsinvolve the delivery to Lender of any documents or other due diligence items, such documents anditems shall be in form and content acceptable to Lender. Lender, at its sole discretion, may electto waive any of these conditions or require that they be satisfied after closing hereunder.          **9.1****Loan Documents.** Borrower and Guarantor shall execute and deliver, or cause to beexecuted and delivered, as the case may be, to Lender all of the Loan Documents.          **9.2****Opinions of Counsel.** Lender shall have received from counsel or counselsacceptable to Lender, closing opinions in form and substance satisfactory to Lender dated as of theClosing Date, covering such items as may be required by Lender.          **9.3****Representations, Warranties, Covenants and Agreements.** The representations andwarranties contained in the Loan Documents and in any certificates delivered to Lender inconnection with the closing shall be true and correct in all material respects, and all covenantsand agreements to have been complied with and performed by the Material Parties shall have beenfully complied with and performed to the satisfaction of Lender.          **9.4****No Prohibitions.** The Material Parties shall not have taken any action orpermitted any condition to exist which would have been prohibited by any provision of thisAgreement or the Loan Documents, or which would constitute an Event of Default or a Default.          **9.5****Reserved.**          **9.6****Governing Documents.** Lender shall have received and approved copies of theGoverning Documents of each Material Party and any amendments
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thereto, all certified to be true and complete by the Secretary of State of the state offormation of each Material Party and by an officer, manager, partner or member of each MaterialParty.          **9.7****Good Standing Certificates.** Lender shall have received and approved current goodstanding certificates for each Material Party issued by the Secretary of State of the state offormation of such entities and, with respect to Borrower, issued by the state in which the Projectis located.          **9.8****Resolutions.** Lender shall have received and approved all resolutions and consentsof the partners, directors, shareholders, members, managers, owners and/or other governing Personsof Borrower and the Material Parties, authorizing the execution of all Loan Documents to which eachis a party and authorizing performance of all obligations thereunder.          **9.9****Reserved.**          **9.10****Environmental Report.** Prior to the Closing Date, Lender has received andapproved an acceptable environmental report covering the Project and the Borrower Project.          **9.11****Reserved.**          **9.12****Title Insurance Policy.** Lender shall have received and approved a commitment toissue a Title Insurance Policy underwritten by the Title Company, in form and content acceptable toLender and in an amount at least equal to the principal balance of the Inventory Loan and insuringthat Lender’s Mortgage creates a first priority Lien against the Pledged Inventory, subject only tothe Permitted Exceptions. Such Title Insurance Policy shall contain such affirmative coverage asLender deems necessary, including but not limited to, an affirmative statement or endorsement thatthe Title Insurance Policy insures Lender against all mechanics’ and materialmen’s liens arisingfrom or out of construction of any work and shall contain such other endorsements in form andcontent acceptable to Lender as Lender may require. If Lender agrees to close based upon acommitment to issue the Title Insurance Policy or a letter agreement committing the Title Companyto issuing the Title Insurance Policy with an approved pro forma, Borrower agrees to cause theoriginal Title Insurance Policy to be delivered to Lender as soon as possible after the ClosingDate but not later than thirty (30) days after the Closing Date.          **9.13****Closing Protection Letter.** Lender shall have received and approved an executedclosing protection letter issued by the Title Company with respect to any agent or attorney actingfor or on behalf of the Title Company.          **9.14****Evidence of Insurance.** Lender shall have received a certificate of insurancethat Borrower has obtained and is maintaining all policies of insurance by and in accordance withthe terms hereof, and that all insurance premiums for such policies have been paid in full, andthat Lender has been named as an additional insured.
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          **9.15****Litigation; Litigation Searches.** Other than those particular matters describedin **Schedule 12.10**, no bankruptcy, foreclosure action or other material litigation orjudgments shall be pending, outstanding or threatened against Borrower, Guarantor, the BorrowerProject or any portion of the Inventory Collateral. The term “**other material litigation**” as usedherein shall not include matters in which (a) a Material Party is plaintiff and no counterclaim ispending, or (b) Lender determines, in its sole discretion, that such litigation is immaterial dueto settlement, insurance coverage, frivolity, or amount or nature of claim. Lender shall havereceived an independent search, at Borrower’s expense, confirming that no such bankruptcy,foreclosure action or other material litigation or judgment exists with respect to Borrower orGuarantor.          **9.16****Lien/Other Searches/Releases.** Lender shall have received and approved Lien andother searches against Borrower and Guarantor, as Lender deems advisable, including searches Lenderdeems necessary to verify that it has a first and prior perfected Lien covering all of theInventory Collateral. Lender shall not be obligated to fund any Advance, at any time, if Lenderdetermines that it does not have a first priority, perfected Lien covering any portion of theInventory Collateral. Lender shall have received such releases, satisfactions and terminationsfrom all other Persons holding Liens against any of the Inventory Collateral, as Lender mayrequire.          **9.17****Taxes and Assessments.** Lender shall have received and approved evidence that allTaxes and assessments related to the Inventory Collateral have been paid.          **9.18****Financial Statements.** Borrower and Guarantor are newly formed entities that havenot prepared Financial Statements as of the Closing Date.          **9.19****Expenses.** Borrower shall have paid (or shall be paying out of the first three(3) Advances hereunder or as otherwise agreed to by Lender) all Loan Costs and other fees andexpenses required to be paid prior to or at closing pursuant to this Agreement.          **9.20****Exchange Agreements.** Lender shall have received and approved executed copies ofall agreements for the Borrower Project with the Exchange Company.          **9.21****Management Agreement.** Borrower shall provide Lender with a copy of the executedManagement Agreement (including any sub-management agreement), together with evidence that theManagement Agreement has not been assigned to any Person and that no Person has a Lien against anyinterest in the Management Agreement other than Lender.          **9.22****Closing Checklist.** All of the conditions precedent and all of the documents, asreflected on Lender’s closing checklist delivered in connection with this Agreement, shall havebeen satisfied (or waived by Lender, as applicable) or delivered to Lender in form and contentsatisfactory to Lender.
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          **9.23****Material Project Agreements.** Lender shall have received and approved executedcopies of all Material Project Agreements as listed and described on **Schedule 13.10**.          **9.24****Licenses; Legal Requirements**. Lender shall have received and approved evidencethat: (a) the Borrower Project has been approved by the Division as a timeshare project under theTimeshare Act; (b) a current Public Offering Statement for the Borrower Project has been approvedissued by the Division; and (c) the Material Parties have all licenses to enter into and performtheir obligations under the Loan Documents and the Material Project Agreements.          **9.25****Due Diligence Inspections and Investigations.** Lender shall have conducted a duediligence inspection of the Borrower Project and a due diligence investigation of each MaterialParty and the results of each inspection and investigation shall be acceptable to Lender.          **9.26****Miscellaneous.** All actions taken in connection with the execution or delivery ofthe Loan Documents and all documents and papers related thereto shall be satisfactory to Lender andits counsel. Lender shall have received and approved such other insurance, agreements, documents,instruments, certificates, opinions or other items as Lender shall reasonably require.     By completing the closing hereunder, or by making Advances hereunder, Lender does not therebywaive a breach of any warranty or representation made by Borrower or Guarantor hereunder or anyagreement, document, or instrument delivered to Lender or otherwise referred to herein, and anyclaims and rights of Lender resulting from any breach or misrepresentation by Borrower or Guarantorare specifically reserved by Lender.     **10. ****General Conditions Precedent to All Advances.**          **10.1****Inventory Loan Advances.** The obligation of Lender to make each Advance under theInventory Loan shall be subject to the satisfaction, at Lender’s sole discretion, of all of thefollowing conditions precedent. To the extent that the conditions involve the delivery to Lenderof any documents or other items, such documents and items shall be in form and content acceptableto Lender. Lender, at its sole discretion, may elect to waive any of these conditions.          (a) **Requests for Inventory Loan Advances**. Not less than three (3) Business Days priorto the date of any Advance under the Inventory Loan, Lender shall have received and approved a dulycompleted and executed Request for Inventory Loan Advance in the form attached hereto as**Exhibit C** together with attachments, schedules and supporting materials as specified insuch form, and all representations and warranties set forth therein shall be accurate.          (b) **Reserved**.
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          (c) **Date of Advance**. The date on which such requested Advance is to be made shall bea Business Day.          (d) **Representations and Warranties**. The representations and warranties containedherein, in the Loan Documents and in any certificates delivered to Lender in connection with theInventory shall be true and correct in all material respects as of the date of the requestedAdvance.          (e) **Compliance**. The Borrower Project, the Inventory Collateral and each MaterialParty shall be in compliance with all applicable Legal Requirements.          (f) **Fees and Loan Costs**. Borrower shall have paid (or shall be paying out of therequested Advance) all fees and Loan Costs then due and payable and required to be paid by Borrowerpursuant to this Agreement.          (g) **Litigation**. There shall be no bankruptcy, foreclosure action or other materiallitigation or judgments pending or outstanding against or affecting the Borrower Project or anyportion of the Inventory Collateral.          (h) **Other Documents**. Lender shall have received and approved such other agreements,documents, instruments, certificates and materials as Lender may request to evidence theObligations; to evidence and perfect the rights and Liens of Lender contemplated by the LoanDocuments, and to effectuate the transactions contemplated herein.          (i) **Other**. All actions taken in connection with such requested Advance and alldocuments and papers relating thereto shall be satisfactory to Lender and its counsel. Lender andits counsel shall have received copies of such documents and papers as Lender or such counsel mayrequest in connection with such requested Advance, all in form and substance satisfactory to Lenderand its counsel.          (j) **No Obligation to Fund After Filed Liens**. Lender shall have no obligation toadvance any monies at any time when there is a claim of Lien filed of record against any of theInventory Collateral which has not been paid, transferred to other security or otherwisesatisfactorily discharged, bonded over or contested. Lender’s commitment to make Advanceshereunder shall at no time be subject to or liable to attachment or levy by any creditor ofBorrower or any third party. No such Persons are intended to be third party beneficiaries of thisAgreement or any documents or instrument related to the Inventory Loan or to have any claim orclaims in or to any undisbursed or retained Inventory Loan proceeds.          (k) **Advances Do Not Constitute a Waiver**. No Advance shall constitute a waiver of anycondition of Lender’s obligation to make further Advances.          (l) **General Restrictions**. Notwithstanding anything herein or elsewhere to thecontrary, Borrower shall not be entitled to and Lender shall have no obligation to make any Advancewhich would result in a violation of **Section 3.2** or any other restriction set forth in thisAgreement.
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          (m) **Advances to Pay Loan Costs**. Notwithstanding anything herein or elsewhere to thecontrary, Lender, may make Advances to itself to pay fees due from Borrower under the LoanDocuments, to pay Loan Costs, to pay indemnification obligations of Borrower and Guarantor underthe Loan Documents or to otherwise satisfy any other performance or payment obligations of Borrowerunder the Loan Documents, without any further authorization by Borrower and without requiring anyof the items set forth in this **Section 10.1**. Lender will notify Borrower of such LoanCosts unless and until an Event of Default occurs and is continuing in which case Lender shall notprovide notice to Borrower of such Loan Costs.     **11. ****Funding Procedures.** The funding of Advances shall be in accordance with suchadditional procedures as Lender may reasonably require. In connection with any wire transfers,Borrower agrees to pay Lender’s external costs and expenses for such wire transfers.     **12. ****General Representations, Warranties and Covenants.** As an inducement to Lender toadvance funds to Borrower, Borrower and Guarantor hereby represent and warrant to Lender andcovenant with Lender as follows:          **12.1****Organization; Power; Authorization.**          (a) Each Material Party (i) is duly formed and organized, validly existing and in goodstanding under the laws of the state of its formation, duly licensed, qualified or registered andin good standing under the laws of each other jurisdiction in which the character or location ofits assets or the business transacted by it requires such licensing, qualification or registration;and (ii) has full power and lawful authority and has been duly authorized by all requisite actionsby its owners, officers, partners, directors or other governing Persons, as applicable, to own suchassets, to transact such business (as now being conducted or as proposed to be conducted) and toenter into and perform its obligations under all Loan Documents and Material Project Agreements towhich it is a party and without violation of any Governing Documents of such Material Party.          (b) Borrower shall maintain, and shall cause each Material Party to maintain, its existence,good standing and due licensing, qualification and registration in the state of its currentorganization and in each other jurisdiction in which the character or location of its assets or thebusiness transacted by it requires such licensing, qualification or registration.          (c) Except as provided in **Section 12.2(b)**, Borrower and Guarantor shall not dissolveor consolidate or merge with or into any other Person or agree to have any other Person merge withor into Borrower and/or Guarantor.          (d) The Loan Documents constitute legal, valid and binding obligations of Borrower,enforceable against Borrower in accordance with the respective terms.
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          **12.2****Affiliates and Capital Structure.**          (a) **Schedule 12.2** sets forth: (i) all Affiliates of Borrower and Guarantor involved inthe operation or management of the Borrower Project or the purchase of Timeshare Interests, (ii)the ownership of all interests in Borrower and Guarantor.          (b) Borrower shall not permit the issuance, dilution, transfer, pledge, hypothecation,assignment or encumbrance of any ownership interest in Borrower or Guarantor without the priorwritten consent of Lender unless it is to DRC or a DRC Affiliate in which case no prior writtenconsent of Lender shall be required. Lender acknowledges that TAC’s ownership interest inGuarantor has been collaterally assigned by TAC to Guggenheim Corporate Funding, LLC asadministrative agent for a group of Lenders (“**Guggenheim**”). If Guggenheim exercises itsrights under the Collateral Assignment of TAC’s ownership interest such that Guggenheim or anaffiliate thereof becomes the owner of TAC (which in turn owns Guarantor), an Event of Defaultshall exist hereunder unless at such time Lender consents to Guggenheim or an affiliate as theowner of TAC, which consent shall not be unreasonably withheld. In connection with any request forapproval by Lender of any change in ownership interests, Borrower shall provide Lender with suchinformation as Lender may reasonably require in order to comply with all Legal Requirements.Borrower shall not permit any transfer of voting authority, rights or discretion with respect toBorrower or Guarantor, except to DRC or a DRC Affiliate.          **12.3****Names and Addresses.**          (a) **Schedule 12.3** sets forth all names currently used by Borrower, together with allbusiness addresses currently used by Borrower, at which any of the Inventory Collateral is locatedor at which any books and records of Borrower are located.          (b) Borrower shall not change its name or change any location at which it does business, atwhich any of the Inventory Collateral is located or where any of its books and records are locatedwithout at least forty five (45) days’ prior written notice to Lender and delivery to Lender ofsuch access agreements as Lender may require to maintain Lender’s ability to obtain access to theInventory Collateral and to Borrower’s books and records.          **12.4****Licenses.**          (a) Each Material Party has all Licenses necessary to own its assets, to conduct its business,as now being conducted or as proposed to be conducted and to enter into and perform its obligationsunder all Loan Documents and Material Project Agreements to which it is a party. All of suchLicenses are presently in full force and effect with no action or proceeding pending or threatenedwhich challenges or seeks to revoke, terminate or modify any such License.
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          (b) Borrower shall maintain and shall cause each Material Party to maintain and keep in fullforce and effect all of such Licenses described in **subsection (a)** above.          **12.5****Compliance with Legal Requirements.**          (a) The execution, delivery and performance by Borrower and Guarantor of the Loan Documentsand the Material Project Agreements to which it is a party do not violate any applicable LegalRequirements.          (b) Borrower shall comply with and shall cause the Borrower Project to comply with allapplicable Legal Requirements.          (c) Borrower shall not consent to or otherwise agree to any change in any zoning law or otherland use law or rule which would adversely limit or alter the use of the Borrower Project.          **12.6****Other Restrictions.**          (a) No Material Party has entered into or is bound by any contract, agreement or restriction,which (i) could reasonably be expected to have a Material; Adverse Effect with respect to theInventory Collateral, (ii) prohibits or restricts entering into or performing its obligations underthe Loan Documents or the Material Project Agreements to which it is a party, (iii) as to Borrower,restricts or in any way limits Borrower’s rights to incur indebtedness, or (iv) could result (uponthe happening of a contingency or otherwise) in any of the Inventory Collateral being subject to aLien, other than Liens in favor of Lender.          (b) Borrower shall not enter into and shall not permit or authorize any Material Party toenter into any contract, agreement or restriction described in **subsection (a)** above andrelating to the Inventory Collateral.          **12.7****Inventory Collateral.**          (a) Borrower has good and marketable title to all of the Inventory Collateral subject only toPermitted Exceptions described on **Schedule 12.7**.          (b) Borrower shall maintain good and marketable title to the Inventory Collateral subject toPermitted Exceptions and shall defend such title against all claims of other Persons except Lender.          (c) Borrower shall not transfer, sell, assign, or enter into any options to purchase,installment sales contracts or contracts for deed with respect to all or any portion of theInventory Collateral except to DRC or a DRC Affiliate, subject to Lender’s Mortgage and Liens.Borrower shall not take any action (or permit or consent to the taking of any action) which mightimpair the value of the Inventory Collateral or any of the rights of Lender in the InventoryCollateral.
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          **12.8****Liens.**          (a) The execution, delivery and performance by Borrower of the Loan Documents does not resultin or create any Lien upon any assets of Borrower, except Liens in favor of Lender. There are noLiens encumbering any portion of the Inventory Collateral, except Liens in favor of Lender. Thereare no Liens encumbering any portion of the Borrower Project or any other assets of Borrower infavor of any Person (other than Lender). The execution and delivery of the Loan Documents, thefiling of a financing statement in proper form with the Secretary of State of the state offormation of Borrower naming Lender as secured party and Borrower as debtor and describing theInventory Collateral, and the recording of the Lender’s Mortgage in the Public Records, shallcreate in favor of Lender, a valid, perfected and continuing first priority Lien in the InventoryCollateral.          (b) Borrower shall take all actions required by Lender in order to maintain Lender’s firstpriority Lien in the Inventory Collateral.          (c) Borrower shall not grant or permit any Lien to exist with respect to the InventoryCollateral, except Lender’s first priority Lien and the Permitted Exceptions. Borrower shall notgrant or permit to exist any Lien with respect to the Management Agreement, Timeshare Declaration,any portion of the Borrower Project or any other Inventory Collateral in favor of any Person (otherthan Lender), except for the Collateral Assignments.          **12.9****Taxes.**     With respect to the Borrower Project:          (a) Each Material Party has paid in full all Taxes payable by such Material Party and Borrowerknows of no basis for any additional Taxes to be assessed against or to be payable by such MaterialParty or any tax audit pending or threatened against any Material Party. Each Material Party hasfiled all returns for Taxes required to have been filed by such Material Party.          (b) Borrower shall file and shall cause each Material Party to file all tax returns requiredto be filed by Borrower and each Material Party on a timely basis and Borrower shall pay and shallcause each Material Party to pay when due all Taxes payable by Borrower and such Material Party.          **12.10****Litigation Proceedings.** Except as described on **Schedule 12.10**, thereare no material actions, suits, proceedings, orders or injunctions pending or to the best ofBorrower’s knowledge threatened against or affecting Borrower or Guarantor, the Borrower Project orthe Inventory Collateral at law or in equity, or before or by any governmental authority or othertribunal. Borrower has not received and has no knowledge of any written notice from any court,governmental authority or other tribunal alleging that Borrower, Guarantor or the Borrower Projecthas violated any applicable Legal Requirements. Borrower shall provide to Lender prompt writtennotice of any action commenced against any Material Party to the extent Borrower reasonably
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believes such action could give rise to a Material Adverse Effect or material breach of any ofthe provisions of this Agreement.          **12.11****Pension Plans.** Borrower has no unfunded obligations with respect to anyemployee pension benefit plan (“**Pension Plan**”) (as such term is defined in the EmployeeRetirement Income Security Act of 1974, as amended (“**ERISA**”)). No events, including,without limitation, any “Reportable Event” or “Prohibited Transaction” (as those terms are definedunder ERISA), have occurred in connection with any such Plan which might constitute grounds for thetermination of any such Pension Plan by the Pension Benefit Guaranty Corporation (“**PBGC**”)or for the appointment of any United States District Court of a trustee to administer any suchPension Plan. All such Pension Plans meet with the minimum funding standards of Section 302 ofERISA     The present value of the aggregate benefit liabilities under any of the Pension Plans,determined as of the end of such Pension Plan’s most recently ended plan year on the basis of theactuarial assumptions specified for funding purposes in such Pension Plan’s most recent actuarialvaluation report, did not exceed the aggregate current value of the assets of such Pension Planallocable to such benefit liabilities. The term “**benefits liabilities**” has the meaning specifiedin Section 4001 of ERISA and the terms “**current value**” and “**present value**” have the meaningsspecified in Section 3 of ERISA. No Material Party nor any ERISA Affiliates have incurredwithdrawal liabilities (and are not subject to contingent withdrawal liabilities) under Section4201 or 4204 of ERISA. The term “**ERISA Affiliates**” means any trade or business (whether ornot incorporated) that is treated as a single employer together with any Material Party underSection 414 of the Internal Revenue Code of 1986, as amended.          **12.12****Financial Statements and Financial Condition.** Taken as a whole, all FinancialStatements and other information of the financial condition of Borrower and Guarantor given toLender (i) is complete and correct and does not omit to state any material fact necessary in orderto make the statements herein or therein not misleading, and (ii) accurately presents the financialcondition of Borrower and Guarantor as of the date on which the same have been furnished to Lender.To the extent required by GAAP, all balance sheets disclose all known liabilities, direct andcontingent, as of their respective dates. No Material Adverse Effect has occurred since the dateof the most recent of each such financial statement given to Lender other than changes in theordinary course of business, none of which changes have had or could reasonably be expected to havea Material Adverse Effect.          **12.13****Solvency.** Borrower and Guarantor are currently solvent. No transfer ofproperty is being made by Borrower or Guarantor and no obligation is being incurred by Borrower orGuarantor in connection with the transactions contemplated by this Agreement or the other LoanDocuments with the intent to hinder, delay, or defraud either present or future creditors ofBorrower or Guarantor. Borrower is able to pay all of its debts as they become due. Borrower’sobligations under this Agreement and under the Loan Documents shall not render Borrower unable topay its debts as they become due. The present fair market value of Borrower’s assets is greaterthan the amount required to pay its total liabilities.
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          **12.14****Reserved.**          **12.15****Investment Company.** Borrower is not an “investment company” as defined in theInvestment Company Act of 1940, as amended, and Borrower is not required to register under suchAct.          **12.16****Enforceability.** The Loan Documents constitute legal, valid and bindingobligations of each Material Party who is a party thereto, enforceable in accordance with theirterms.          **12.17****No Defaults.**          (a) No Default or Event of Default with respect to the Loan Documents currently exists. NoMaterial Party is in default in any material respect under any of its Governing Documents, underany obligation for borrowed money or under any other agreement which may materially and adverselyaffect such Material Party or its ability to perform its obligations under the Loan Documents.          (b) Each Material Party shall perform its obligations under the Loan Documents to which it isa party and shall take all actions necessary (which are not prohibited by law) to prevent theoccurrence of an Event of Default.          **12.18****Use of Proceeds/Margin Stock.** None of the proceeds of the Inventory Loan shallbe used to purchase or carry any “margin stock” (as defined under Regulation U of the Board ofGovernors of the Federal Reserve System, as in effect from time to time), and no portion of theproceeds of the Inventory Loan shall be extended to others for the purpose of purchasing orcarrying margin stock. None of the transactions contemplated in this Agreement (including, withoutlimitation, the use of the proceeds from the Inventory Loan) will violate or result in theviolation of Section 7 of the Securities Exchange Act of 1934, as amended, or any regulationsissued pursuant thereto, including, without limitation, Regulations G, T, U and X of the Board ofGovernors of the Federal Reserve System, 12 C.F.R., Chapter 11.          **12.19****Labor Relations.** The employees of Borrower are not a party to any collectivebargaining agreement with Borrower, and, to the best of Borrower’s knowledge, there are no materialgrievances, disputes or controversies with any union or any other organization of Borrower’semployees, or threats of strikes, work stoppages or any asserted pending demands for collectivebargaining by any union or organization.          **12.20****Broker’s Fees.**          (a) Lender and Borrower represent to each other that neither of them has made any commitmentor taken any action which will result in a claim for any brokers, finder’s or other similar feeswith respect to the transactions described in this Agreement.
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          (b) Borrower agrees to pay all of such fees payable to any broker or finder hired by Borrowerand agrees to indemnify and hold Lender harmless from any claims by such finders or brokers or byany other Person claiming such fees as a result of any commitment or action of Borrower.          **12.21****Inspections.** Borrower shall, at any time and from time to time and at thereasonable expense of Borrower and with reasonable notice from Lender, permit Lender or its agentsor representatives to inspect the Borrower Project, the Inventory Collateral and Borrower’s assetsor property, and to audit, examine and make copies of and abstracts from its and, to the extent ithas access thereto or possession thereof, the Association’s, books, accounts, records, originalcorrespondence, computer tapes, disks, software, and other papers as it may desire; and to discussits affairs, finances and accounts with any of its officers, employees, Affiliates or independentpublic accountants (and by this provision Borrower authorizes said accountants to discuss withLender, its agents or representatives, the affairs, finances and accounts of Borrower). All auditsand inspections (including without limitation, those occurring before and after the Closing Date)shall be at Borrower’s reasonable expense, including all reasonable travel expenses of Lender’semployees; provided, however, that unless an Event of Default has occurred, only one audit orinspection per calendar year shall be at the expense of Borrower. Borrower shall have the right toprovide Lender’s employees with accommodations at properties owned by Borrower or its Affiliates,that are within reasonably close proximity to the site of such audits or inspections, as a means toreduce travel expenses incurred in conducting such audits or inspections.          **12.22****Reserved**.          **12.23****Books and Records.** Borrower shall keep, and shall cause the Association tokeep, accurate and complete records and books of account reflecting all financial transactions ofBorrower and the Association, as applicable, in which complete entries will be made in accordancewith GAAP. Borrower shall maintain to the satisfaction of Lender, and shall deliver promptly toLender upon Lender’s request, accurate and complete books, records and files relating to theBorrower Project, the Inventory Collateral, and the sales of Timeshare Interests and all paymentsof Release Payments.          **12.24****Reserved.**          **12.25****No Payment of Dividends**. Unless specifically agreed to in writing by Lender,Borrower may not pay any dividends, fees, expenses or other sums or any distribution in cash orassets or any loans, salary advances or other payments to; (i) any member of Borrower or Guarantor;(ii) DRC or any of the DRC Affiliates or shareholders, partners, members or employees thereof; or(iii) any corporation, partnership or other Person directly or indirectly owned in whole or in partby any member, officer or director of Borrower or any Affiliate of any of the foregoing.Notwithstanding the foregoing, Borrower shall have the right to make the following payments withoutthe consent of Lender: (A) compensation and bonuses (consistent with industry norms) paid todirectors, management and employees of Borrower in the
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ordinary course of business, or (B) loans and advances to employees in the ordinary course ofbusiness not to exceed $50,000 in the aggregate at any time outstanding and (c) payments to DRC orto any of the DRC Affiliates pursuant to the provisions of the Transfer Pricing Agreement,Management Agreement and Servicing Agreement.          **12.26****Management.** Borrower shall cause the Borrower Project to be managed at alltimes by Manager or a DRC Affiliate which has substantial experience, background and demonstratedability to perform, in accordance with a management agreement reasonably satisfactory to Lender,and who are in all other respects reasonably satisfactory to Lender.          **12.27****Full Disclosure.** No information, exhibit or written report or the content ofany schedule furnished by or on behalf of any Material Party to Lender in connection with theInventory Loan, the Inventory Collateral or the Borrower Project, and no representation orstatement made by any Material Party in any Loan Document contains or shall contain any materialmisstatement of fact or omits or shall omit the statement of a material fact necessary to make thestatement contained herein or therein not misleading. Borrower does not know of any fact orcondition which will prevent the sale of Timeshare Interests to Purchasers or prevent the operationof the Borrower Project in accordance with the Declarations and the Public Offering Statement, andin accordance with all applicable Legal Requirements, or prevent Borrower’s performance of itsObligations.          **12.28****Reserved.**          **12.29****One-to-One Ratio.** Borrower shall maintain at least a one-to-one ratio (the“**One-to-One Ratio**”) with respect to each Unit such that the total aggregate number ofTimeshare Interests sold to consumers in the form of the right to occupy a given Unit for theequivalent of one (l) week per calendar year is at all times less than or equal to the total numberof Units in the Borrower Project multiplied by fifty-two (52).          **12.30****Change of Control**. For so long as Borrower’s obligated to Lender under the LoanDocuments , there shall be no Change of Control.     **13. ****Representations, Warranties and Covenants With Respect to the Borrower Project.**As an inducement to Lender to advance funds to Borrower, Borrower represents and warrants to andcovenants with Lender as follows:          **13.1****Declarations.** To the best of Borrower’s knowledge, the Borrower Project has beenestablished and dedicated and is and will remain, a timeshare project and plan in materialcompliance with Legal Requirements, including, without limitation, timeshare registration laws.All Inventory Collateral will continue to be duly submitted to the provisions of the TimeshareDeclaration. Borrower will not vote to amend, supplement, terminate or restate the TimeshareDeclaration without the prior written consent of Lender. Borrower shall not consent to anyamendments, supplements or restatements of the Condominium Declaration without the prior writtenconsent of Lender. Borrower shall not assign its rights as “developer” under the Timeshare
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Declaration or file or permit to be filed any additional covenants, restrictions, declarationsor easements with respect to Borrower Project, without Lender’s prior consent.          **13.2****Access.** To the best of Borrower’s knowledge, the Borrower Project has adequateaccess from a publicly dedicated street and roadways inside the Project are subject to a recordedaccess and use easements or other dedication for the benefit of Owners of Timeshare Interests.          **13.3****Utilities.** The Inventory Collateral is served by adequate utilities. To thebest of Borrower’s knowledge, easements necessary for furnishing such utilities have been dulyobtained, have been recorded in the Public Records and inure to the benefit of the InventoryCollateral and the Owners. Borrower shall use reasonable commercial efforts to cause theCondominium Association to make the necessary utilities available to the Inventory Collateral insufficient capacity to service the Inventory Collateral.          **13.4****Parking.** To the best of Borrower’s knowledge, the Borrower Project currently hassufficient on-site parking to satisfy applicable Legal Requirements.          **13.5****Legal Requirements; Zoning; Private Restrictions.** To the best of Borrower’sknowledge, the use and occupancy of the Units which make up the Inventory Collateral for therespective intended purposes are lawful under applicable Legal Requirements. To the best ofBorrower’s knowledge, the Project is zoned “T A-80”, under which timeshare is an allowed use.Borrower shall comply, and shall cause the Borrower Project to comply, with applicable privatecovenants and restrictions. Without the prior written consent of Lender, Borrower shall notconsent to, or otherwise acquiesce in, any change in any private restrictive covenant, planning orzoning law or other public or private restriction, which would limit or alter the use of theInventory Collateral.          **13.6****Units Ready for Use.** To the best of Borrower’s knowledge, all of the Unitsconstituting the Inventory Collateral are fully furnished and ready for use by Purchasers. To thebest of Borrower’s knowledge, all common furnishings (including appliances) within such Units areand shall be owned by either Borrower or the Association, have been or shall be fully paid for, andare and shall be free and clear of any Liens or other interests of any third party or are subjectto leases which are not in default as of the Closing Date, and the terms of which Borrower shallcontinue to comply with after the Closing Date.          **13.7****No Defaults.** No Default or Event of Default exists and there is no violation inany material respect of any term of any agreement, charter, instrument, operating agreement orother instrument to which Borrower is a party or by which Borrower may be bound.          **13.8****Tangible Property.** The machinery, equipment, fixtures, tools and supplies usedor to be used in connection with the Inventory Collateral, including without
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limitation, with respect to the operation and maintenance of the Common Area, are and shall beowned or leased either by Borrower, the Association, the Manager or its subcontractor. The leasesdescribed in **Schedule 13.8** comprise all leases of tangible personal property that Borrowerhas entered into in connection with the ownership, operation or maintenance of the InventoryCollateral and Borrower is unaware of any additional leases that are needed in order to adequatelyown, operate and maintain the Inventory Collateral.          **13.9****Condition of the Borrower Project.** Borrower shall maintain or shall cause theAssociation or use commercially reasonable efforts to cause the Condominium Association tomaintain, the Borrower Project in good repair, working order and condition and shall make, or causethe Association or use commercially reasonable efforts to cause the Condominium Association to makenecessary replacements and improvements so that the Inventory Collateral remains in compliance inall material respects with the Timeshare Act, the Material Project Agreements and applicable LegalRequirements.          **13.10****Material Project Agreements.** To the best of Borrower’s knowledge, thecontracts, agreements and arrangements listed and described on **Schedule 13.10** comprise allof the Material Project Agreements currently existing. True and complete copies of the MaterialProject Agreements have been delivered to Lender. Except as described on **Schedule 13.10**,none of such Material Project Agreements have been amended, modified or terminated. All of suchMaterial Project Agreements are and shall (unless Lender shall otherwise consent in advance inwriting) remain in full force and effect, unmodified and free and clear of any Lien, except anyLien in favor of Lender. All of such Material Project Agreements constitute the legal, valid andbinding obligations of each party thereto, enforceable in accordance with their terms. To the bestof Borrower’s knowledge, no party is in default under any Material Party Agreements. Borrowershall comply with, and shall cause each Material Party to comply with, all Material ProjectAgreements. Subject to the rights of the Association or the Condominium Association, Lender shallhave the right to review and approve all future Material Project Agreements for the BorrowerProject and all amendments thereto, all of which shall be acceptable to Lender in its reasonablediscretion.          **13.11****Reserved.**          **13.12****Certificates of Occupancy.** To the best of Borrower’s knowledge, a certificateof occupancy has been issued for each Unit in the Borrower Project and remains in full force andeffect.          **13.13****Reserved.**          **13.14****Tests, Etc.** If requested by Lender, Borrower shall furnish to Lender thefollowing, to the extent that Borrower has possession of the same or the reasonable ability toobtain the same, all certificates, plans and specifications, appraisals, title insurance and otherinsurance, reports and agreements related to the Inventory Collateral.
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          **13.15****Taxes.** To the best of Borrower’s knowledge, all Taxes, condominium and similarmaintenance fees, rents, assessments and like charges affecting the Inventory Collateral andcurrently due and payable have been fully paid to date. The Association or the CondominiumAssociation bills each Owner of a Timeshare Interest in such Unit for the Owner’s pro-rata share ofsuch real estate taxes. Borrower shall pay, or shall cause the Association or shall usecommercially reasonable efforts to cause the Condominium Association to pay, all real estate Taxesrelated to the Inventory Collateral.          **13.16****Amenities.** To the best of Borrower’s knowledge, the Amenities have beencompleted and are available for use by the Owners of Timeshare Interests. Borrower shall take noaction to amend, modify or terminate the Declarations with respect to the Amenities without theprior written consent of Lender. Borrower shall have in place and in full force and effect at alltimes agreements which provide that the Amenities shall be available now and in the future for useby Owners in good standing consistent with the terms, conditions and limitations set forth in theDeclarations.     Borrower shall use commercially reasonable efforts to cause the Condominium Association tomaintain the Amenities in good condition and repair, and in accordance with the provisions of theapplicable Material Project Agreements, and Borrower shall cause each Owner of a Timeshare Interestat the Borrower Project to have continuing access to, and the use of to the extent of such Owner’suse periods, all of the Common Area, Amenities and related or appurtenant services, rights andbenefits, all as provided in the Declarations and the Material Project Agreements. Borrower shallnot enter into, amend, modify or terminate any of the Amenities Agreements or any documentscollateral thereto, or assign any of its rights thereunder, without Lender’s prior consent.          **13.17****Developer Subsidy.** There is no obligation on the part of the Borrower tosubsidize any budget deficits of the Association or Condominium Association.          **13.18****Reservation System.** The computer network, hardware and software which enablesan Owner to reserve a use period at the Borrower Project in accordance with the provisions of thePublic Offering Statements and the Material Project Agreements are and shall at all times (a) beowned by, licensed or otherwise contracted for Borrower or the Association, (b) be fully functionaland operational for its intended purpose, and (c) be operated to assure the Owners the use rightsprovided under the Public Offering Statement and Material Project Agreements and (d) be free andclear of all Liens other than Lender’s Lien and those relating to the leasing of equipment orsoftware or licensing of software. Borrower Project will at all times maintain a reservationsystem. Upon the occurrence and continuance of an Event of Default, Borrower will provide Lenderwith all future reservation information in a machine readable (ASCII, CSV, EXCEL) format. Thereservation system shall be owned by, licensed or otherwise contracted by Borrower or an Affiliate.          **13.19****Reserved.**
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          **13.20****Leases.** Except as set forth on **Schedule 13.20**, without the priorwritten consent of Lender, Borrower shall not enter into any lease, license or other occupancyagreement for all or any part of the Inventory Collateral. Notwithstanding the foregoing, Borrowermay enter into short term leases, but in no event for a period in excess of fourteen (14) days, fortransient and prepaid rentals of Units.          **13.21****Transactions with Affiliates.** Without the prior written consent of Lender,Borrower shall not enter into any transaction with any Affiliate in connection with the InventoryCollateral, including, without limitation, relating to the purchase, sale or exchange any assets orproperties or the rendering of any service, except with the DRC Affiliates in accordance with theTransfer Pricing Agreement, Management Agreement and Servicing Agreement, together with such otheragreements as shall be approved by Lender prior to execution or modification thereof.          **13.22****Reserved.**          **13.23****Maintenance of Insurance**. Borrower shall use commercially reasonable efforts tocause each of the Association and the Condominium Association, as required, to maintain, at alltimes during the term of this Inventory Loan, policies of insurance with premiums therefor beingpaid when due, and shall deliver to Lender certificates of insurance issued by insurance companies,in amounts, in form and in substance, and with expiration dates, all acceptable to Lender andcontaining waivers of subrogation rights by the insuring company, additional insured endorsementsin favor of and satisfactory to Lender and breach of warranty coverage, providing the followingtypes of insurance on and with respect to Borrower (or, as appropriate, the Association andCondominium Association) and the Inventory Collateral:               (a) As to all Improvements that are completed as of the date hereof, “All Risk Special Form”insurance coverage (including fire, lightning, hurricane, tornado, wind and water damage,earthquake, vandalism and malicious mischief coverage) covering all real and personal propertywhich comprise the Inventory Collateral, in an amount not less than the full replacement value ofsuch Improvements and personal property, and said policy of insurance shall provide for adeductible acceptable to Lender, breach of warranty coverage, replacement cost endorsementssatisfactory to Lender, and shall not permit co-insurance;               (b) General liability and property damage insurance covering the Inventory Collateral inamounts and on terms satisfactory to Lender;               (c) Such other insurance on the Inventory Collateral or any replacements or substitutionstherefor, including, without limitation, rent loss, business interruption, flood insurance in suchamounts and upon such terms as may from time to time be reasonably required by Lender; and          Lender shall expressly be named an additional insured in each insurance policy described inthis **Section 13.23**. To the extent any “institutional mortgagee,” “institutional lender” or“mortgagee” (as defined or used in the Declarations) other than
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Lender has any rights to approve the form of insurance policies with respect to the InventoryCollateral, the amounts of coverage thereunder, the insurers under such policies or the designationof an attorney-in-fact for purposes of dealing with damage to any part of the Inventory Collateral,or insurance claims or matters related thereto or any successor to such attorney-in-fact or anychanges with respect to any of the foregoing, Borrower shall take all steps as may be necessary toensure that Lender shall at all times have a co-equal right with such other “preferred mortgagee,”“institutional lender” or other “mortgagee” (including, without limitation, Borrower or anythird-party lender), to approve all such matters and any proposed changes in respect thereof; andBorrower shall not cause and shall use commercially reasonable efforts to prohibit any changes withrespect to any insurance policies, insurers, coverage, attorney-in-fact or insurance trustee, ifany, without Lender’s prior written approval.          In the event of any insured loss or claim in respect of all or any portion of the InventoryCollateral, Borrower shall use commercially reasonable efforts to cause the Association or theCondominium Association, as appropriate, to apply all proceeds of such insurance policies in amanner consistent with the Declarations, the Condominium Act, the Timeshare Act and all otherapplicable statutes, ordinances, rules and regulations.          All insurance policies required pursuant to this Agreement (or the Declarations or theCondominium Act or Timeshare Act) shall provide that the coverage afforded thereby shall not expireor be amended, canceled, modified or terminated without at least thirty (30) days prior writtennotice to Lender and contain a provision affirming Lender’s rights and benefits thereunder despiteany violation of the applicable policy terms by Borrower or any other Person. Borrower shall makea good faith inquiry on a regular basis to the Association to determine if the required insurancepremiums covering the Inventory Collateral have been paid. If Borrower determines upon suchinquiry or otherwise that the required insurance premiums have not been paid, Borrower shallimmediately notify Lender of such failure to timely pay the required insurance premium and Borrowershall have thirty (30) days from receipt of a written request from Lender to cause the requiredinsurance premiums to be paid. If the required insurance premiums are not paid within such thirty(30) day period, Lender may, in its sole discretion, without any obligation to do so, choose to paysuch required insurance premiums on behalf of Borrower or the applicable Association, in which caseBorrower shall pay Lender interest at the Default Rate for any amounts so advanced. Lender mayalso, in its sole discretion, in the event the required insurance premiums are not paid when due,establish an insurance escrow account from which Lender may make insurance payments on behalf ofBorrower or the Association or Condominium Association when insurance premiums shall become due.If the required insurance premiums are not paid as required and Lender elects not to pay suchinsurance premiums or establish an escrow account for payment thereof, such failure shallconstitute an Event of Default hereunder.          In the event of any fire or other casualty to or with respect to all or any portion of theInventory Collateral, Borrower covenants that it shall use commercially reasonable efforts to causethe Association or Condominium Association to promptly
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restore, repair or replace the damaged portion(s) of the Inventory Collateral and repair orreplace any other personal property to the same condition as immediately prior to such fire orother casualty and, with respect to the real and personal property comprising the InventoryCollateral, in accordance with the terms of the Declarations, the Condominium Act, the TimeshareAct and all other applicable statutes, ordinances, rules and regulations. The insufficiency of anynet insurance proceeds shall in no way relieve Borrower or each Association of their respectiveobligations as set forth herein. Borrower covenants that it shall use commercially reasonableefforts to cause the Association or Condominium Association to comply promptly and cause compliancewith the provisions of the Declarations, Condominium Act and of the Timeshare Act and all otherapplicable statutes, ordinances, rules and regulations relating to such restoration, repair orreplacement. In Lender’s sole discretion, all insurance proceeds payable to or received by Lenderpursuant to the Declarations or the applicable insurance policies may be applied to the payment ofthe Obligations, whether or not due and in whatever order Lender elects, consistent with the termsof the applicable insurance policy and the Declarations.     Borrower shall in good faith cooperate with Lender in obtaining for Lender the benefits of anyinsurance or other proceeds lawfully or equitably payable to Borrower or Lender in connection withthe transactions contemplated hereby and in paying any Obligation (including the payment byBorrower of the expense of an independent appraisal on behalf of Lender in case of a fire or othercasualty affecting the Inventory Collateral). Notwithstanding anything to the contrary set forthin this **Section 13.23**, the types and amounts (including deductible) of insurance coveragereflected on the insurance certificates delivered by Borrower to Lender on the Closing Date aresatisfactory to Lender.     **14. ****Timeshare Representations, Warranties and Covenants.** As an inducement to Lenderto advance funds to Borrower, Borrower and Guarantor hereby represent and warrant to Lender andcovenant with Lender as follows:          **14.1****Licenses.** Borrower has and shall at all times maintain all Licenses required inconnection with the ownership, management and operation of the Borrower Project, the establishmentof the timeshare regime at the Borrower Project pursuant to the Declarations and the other MaterialProject Agreements, the sale, advertising, marketing and offering for sale of Timeshare Interests.Borrower shall at Lender’s request from time to time, Borrower shall deliver to Lender (a) writtenstatements, in form acceptable to Lender, stating that no registration is necessary for the sale ofTimeshare Interests in the particular state, or (b) such other evidence of compliance withapplicable Legal Requirements as Lender may require.          **14.2****Reserved.**          **14.3****Sales and Marketing Practices.** All sales and marketing activities of theMaterial Parties with respect to the Inventory Collateral currently comply and in the future shallcomply in all material respects with all applicable Legal Requirements. Borrower or the MarketingAgent shall at all times maintain an active sales and
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marketing force and program for the sale of Timeshare Interests at the Sales Center until allObligations are paid in full. Borrower will sell or offer for sale Timeshare Interests only in thestates and jurisdictions where Borrower has first obtained necessary regulatory approvals from timeto time.          **14.4****Reserved.**          **14.5****Assessments.** Borrower (with respect to Inventory Collateral) is and shall be amember of the Association and the Condominium Association, which has authority to levy annualAssessments to cover the costs of maintaining and operating the Inventory Collateral. Any Lien forunpaid Assessments related to Inventory Collateral is and will at all times be subordinate to theLien of the Lender’s Mortgage.          **14.6****Reserved.**          **14.7****Exchange Company.** Borrower shall cause the Borrower Project to be affiliatedwith an Exchange Company.          **14.8****Public Offering Statements.** The Public Offering Statement attached hereto as**Exhibit D** complies with all applicable Legal Requirements and is accurate and complete.With respect to the sale of each Timeshare Interest, there shall be in effect at the time of saleand Borrower has and shall have used an unexpired Public Offering Statement, approved by allapplicable regulatory agencies in South Carolina, Florida and in other jurisdictions in whichTimeshare Interests (or related club memberships) are being offered.          **14.9****Reserved.**          **14.10****Management Agreement.** Borrower shall keep (or cause the Association to keep)the existing Management Agreement (or a substitute Management Agreement with a substitute Manageracceptable to Lender) in full force and effect and shall perform (or cause the Association and anysub-manager to perform) its obligations thereunder.          **14.11****State Registrations**. Borrower agrees to promptly notify Lender if there is achange in any state timeshare registrations (which add or delete states) during the term of theInventory Loan.          **14.12****Cessation of Sales Business**. Borrower shall provide prompt notice to Lender ofany cessation of marketing or sales of the Inventory Collateral at the Sales Center or of amaterial part of Borrower’s business.          **14.13****Pricing**. Borrower shall not, without Lender’s prior written consent which shallnot be unreasonably withheld, adjust the retail pricing schedule for Timeshare Interests such thatthe price adjustment would have a Material Adverse Effect.
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          **14.14****Remarketing of Defaulted Inventory**. Borrower agrees to re-market all TimeshareInterests related to Defaulted TBS’ Owned Timeshare Loans for Lender in an agreed upon time frameand to pay Lender a Release Payment upon the sale of any such reacquired and re-marketed TimeshareInterest.          (a) DRFS will be responsible for recovering the Timeshare Interests associated with allcurrent and future Defaulted TBS’ Owned Timeshare Loans (“**Defaulted Inventory**”) byforeclosure, deed-in-lieu, or other means as necessary. At the time of any Advance to Borrower offunds to purchase TBS’ Owned Timeshare Loans from Lender, Lender shall pay to Borrower a fee in theamount of $750 (“**Inventory Recovery Fee**”), which shall be payable in addition to the amountof the Defaulted Inventory Financing (defined below) to be provided by Lender to Borrower asAdvances under the Inventory Loan in accordance with **Section 3.1(c)**. Other than theInventory Recovery Fee, all expenses associated with recovering Defaulted Inventory shall be theresponsibility of Borrower or its designee.          (b) On or before the fifteenth (15th) day of each April, July, October and Januaryduring the term of the Inventory Loan, Borrower will purchase from Lender all of the Defaulted TBS’Owned Timeshare Loans as of the last day of the preceding calendar quarter. Lender will providepurchase money financing (“**Defaulted Inventory Financing**”) in the form of Advances underthe Inventory Loan to Borrower for the acquisition of all Defaulted TBS’ Owned Timeshare Loanspurchased from Lender or an affiliate thereof as described in this **Section 14.14(b)**. Thepurchase price paid by Borrower for each Defaulted TBS’ Owned Timeshare Loan will be based on theamount set forth in **Section 3.1(a)** above for each type of Timeshare Interest associatedwith a Defaulted TBS’ Owned Timeshare Loan. All Defaulted Inventory will be encumbered by Lender’sMortgage and the parties shall execute a spreader agreement or such other necessary documents toreflect the same, and Lender shall be paid a Release Payment as described in **Section7.1(b)(iii)** above as sales of such Defaulted Inventory occur. Borrower shall be responsiblefor the payment of all maintenance fees and taxes attributable to Defaulted Inventory incurred fromand after the date of purchase of the related Defaulted TBS’ Owned Timeshare Loan.          **14.15****Encumbering Timeshare Interests**. Borrower and Lender agree that lender’sapplicable Mortgage is intended to create a first priority Lien on all Timeshare Interests owned byBorrower as of the Closing Date and in the future by Borrower. Lender may in its sole discretionamend the Mortgage to specifically encumber all Timeshare Interests owned by Borrower or annexedsubsequent to the date hereof but is under no obligation to do so long as the Mortgage contains anafter acquired property provision.          **14.16****Voting Rights**. Borrower hereby appoints and constitutes Lender as itsattorney-in-fact (with full power of substitution) to exercise all of its voting rights pertainingto the Declarations as well as pertaining to any Inventory Collateral in which Borrower has aninterest giving rise to the right to vote. This power of attorney is coupled with an interest andshall be irrevocable for so long as any Obligations are owing by Borrower to Lender. This power ofattorney may be used from time to time in
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the sole discretion of Lender if any Event of Default has occurred and is continuing and inaccordance with the terms of the Declarations. Borrower agrees to execute, from time to time, suchother documents as Lender may request including, without limitation, a proxy in form and substanceapproved by Lender (which proxy shall, at the request of Lender, be periodically renewed) in itsdiscretion and file the same with the Secretary of the Association and the Condominium Associationin accordance with the respective Association’s Bylaws.     Following the occurrence and during the continuation of any Event of Default, if any votingrights pertaining to any Inventory Collateral owned by Borrower or in which Borrower has aninterest giving rise to the right to vote (whether as declarant, as a holder of a mortgage orsecurity interest or otherwise) shall be exercisable pursuant to the attendance by Borrower at ameeting of the members of the Association or Condominium Association in accordance with the termsof the Bylaws of the Association and Condominium. Borrower agrees to exercise its right to vote inrespect of such attendance in accordance with the rights of Lender under the first paragraph ofthis **Section 14.16** as if the proxy referred to therein were directly applicable to suchmeeting (any provision in said Bylaws, to the contrary notwithstanding) and to promptly give Lenderwritten notice of its intention to attend any such meeting if Lender shall then be entitled toexercise the voting rights in respect thereof.     Except with the prior written consent of Lender, Borrower shall not propose or vote for orconsent to any modification of, or amendment to Declarations or Association’s Articles ofIncorporation or Bylaws (after such declaration, Articles of Incorporation or Bylaws have beenrecorded, filed and adopted, respectively) which or could reasonably be expected in the soleopinion of Lender to have a Material Adverse Effect. In each case under the Declarations and/orthe Association’s Articles of Incorporation or Bylaws in which the consent or the vote of a holderof a mortgage or “security interest” in respect of the Inventory Collateral (including any suchcase in which Borrower would be considered to be a holder of a mortgage or lien is provided for oris required, or in which Borrower’s consent is required (as declarant or as an owner of the PledgedInventory or as a vendor or mortgagee or otherwise) for any proposed action, Borrower shall notvote or give such consent without obtaining the prior written consent of Lender if such actioncould reasonably be expected in the opinion of Lender to have a Material Adverse Effect.     **15. ****Reporting Requirements.** So long as any portion of the Obligations remainsunsatisfied or Lender has any obligation or commitment to make Advances hereunder, Borrower shallfurnish (or cause to be furnished, as the case may be) to Lender the following:          **15.1****Annual Financial Statements.** As soon as available and in any event within onehundred twenty (120) days after the end of each fiscal year of Borrower and Guarantor, Borrowershall provide Lender with consolidated audited Financial Statements of TAC. As soon as availableand in any event within one hundred twenty (120) days after the end of each fiscal year of theAssociation, Borrower
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shall provide Lender with the annual Financial Statement of the Association certified by anauthorized officer of the Association to be true, correct and complete.          **15.2****Quarterly Financial Statements.** As soon as available and in any event withinsixty (60) days after the end of each fiscal quarter of Borrower and Guarantor (with the exceptionof the last quarter of each fiscal year) unaudited consolidated balance sheets and incomestatements for TAC and each of its subsidiaries including Borrower and Guarantor, as of the end ofsuch fiscal quarter, all in such detail and scope as may be reasonably required by Lender andprepared in accordance with GAAP and on a basis consistent with prior accounting periods. Eachquarterly unaudited consolidated Financial Statement of TAC and its subsidiaries, includingBorrower and Guarantor, shall be certified by the chief financial officer of TAC to be true,correct and complete in all material respects, and shall otherwise be in form reasonably acceptableto Lender.          **15.3****SEC Reports.** Promptly upon submission, any reports submitted by Borrower orGuarantor to the United States Securities and Exchange Commission.          **15.4****Covenant Compliance Certificate.** Each set of annual Financial Statements andquarterly Financial Statements delivered to Lender pursuant to **Sections 15.2 and 15.3** ofthis Agreement will be accompanied by a certificate of Borrower and Guarantor in the form of**Exhibit E** attached hereto setting forth that the signer has reviewed the relevant terms ofthis Agreement (and all other agreements to which Borrower is a party or by which Borrower isbound) and has made, or caused to be made, under his/her supervision, a review of the transactionsand conditions of Borrower from the beginning of the period covered by the Financial Statements orreports being delivered therewith to the date of the certificate and that such review has notdisclosed the existence during such period of any condition or event which constitutes a Default orEvent of Default or, if any such condition or event existed or exists or will exist, specifying thenature and period of existence thereof and what action Borrower has taken or proposes to take withrespect thereto.          **15.5****Sales and Inventory Reports; Project Results.** As soon as available and in anyevent within thirty (30) days after the end of each month, Borrower shall deliver to Lender, amonthly sales/conversion report for all sales, detailing the sales (past any applicable rescissionperiod) of all Inventory Collateral as represented by converted Points Equivalent TimeshareInterests at the Borrower Project for the period covered thereby, the payment of Release Paymentsto Lender, and the Inventory Collateral then subject to Lender’s Mortgage, together with thequarterly and year-to-date financial results for the Borrower Project, all certified by an officerof Borrower to be true, correct and complete and otherwise in a form acceptable to Lender. Withinninety (90) days after the end of each fiscal year of Borrower, Borrower shall deliver to Lender anannual sales/conversion report for all Inventory Collateral in the Borrower Project setting forth,without limitation, the amount of remaining Inventory Collateral then subject to Lender’s Mortgage,certified by Borrower to be true, correct and complete and in a form acceptable to Lender.
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          **15.6****Budgets and Assessments.** Within one hundred eighty (180) days after each isavailable, proposed annual maintenance and operating budgets of the Association certified to beaccurate by the Manager, proposed annual maintenance and operating budget of the CondominiumAssociation, provided that the same is reasonably available to Borrower and a statement of annualAssessments to be levied upon the Owners of Timeshare Interests. As long as Borrower’s Affiliateis the Manager, Borrower shall deliver to Lender, at Borrower’s expense, within thirty (30) daysafter the end of each fiscal quarter, a report setting forth the annual Assessments collected fromall Owners of Timeshare Interests, the amount contributed by Borrower to fund any operating deficitcompared to the budget of operating expenses for such period and indicating all reserves held forinsurance, taxes and capital repairs and replacement.          **15.7****Reserved.**          **15.8****Audit Reports.** Promptly upon receipt thereof, one copy of each other reportsubmitted to Borrower by independent public accountants or other Persons in connection with anyannual, interim or special audit made by them of the books of Borrower, the Association or theBorrower Project.          **15.9****Notice of Default or Event of Default.** Within five (5) days after becoming awareof the existence of any condition or event which constitutes a Default or an Event of Default, awritten notice specifying the nature and period of existence thereof and what action Borrower istaking or proposes to take with respect thereto.          **15.10****Notice of Claimed Default.** Within five (5) days after becoming aware that theholder of any material obligation or of any evidence of material indebtedness of Borrower has givennotice or taken any other action with respect to a claimed default or event of default thereunder,a written notice specifying the notice given or action taken by such holder and the nature of theclaimed default or event of default and what action such Borrower is taking or proposes to takewith respect thereto.          **15.11****Material Adverse Developments.** Within five (5) days after becoming aware of anylitigation, claim, action, proceeding, development or other information which could reasonably beexpected to have a Material Adverse Effect on Borrower, Guarantor, the Inventory Collateral, theBorrower Project or of the ability of any Material Party to perform its obligations under the LoanDocuments, Borrower shall provide Lender with telephonic notice, followed by telecopied and mailedwritten confirmation, specifying the nature of such litigation, claim, action, proceeding,development, information or dispute and such anticipated effect.          **15.12****Other Information.** Borrower shall promptly deliver to Lender any otherinformation in Borrower’s possession or available to Borrower related to the Inventory Collateral,the Borrower Project, Borrower, Guarantor or the Association or the Condominium Association asLender may in good faith request.
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     **16. ****Subordinated Indebtedness.**     All indebtedness or liabilities, direct or indirect, contingent or non contingent, of Borrowerto Guarantor or any Affiliate thereof or to DRC or any of the DRC Affiliates, or any shareholder,partner, or member of Borrower, Guarantor, any Affiliate thereof, DRC or any of the DRC Affiliates(exclusive of any Management Agreement, Transfer Pricing Agreement and Servicing Agreement enteredinto with one or more of the DRC Affiliates), and all liens therefor, and effective upon theoccurrence and during the continuation of an Event of Default (allowing for notice and cureprovisions as may be applicable hereunder), distributions of profit or withdrawals of capital to orby any of the foregoing Persons (collectively, **“****Subordinated Indebtedness****”**), are hereby andshall be subordinated to the Inventory Loan. Borrower hereby represents and warrants to Lenderthat the Subordinated Indebtedness comprises all of the Borrower’s debts, liabilities andobligations to any shareholders, members, partners, officers, directors or employees of Borrower,Guarantor, any Affiliates thereof, DRC or any DRC Affiliates, except for executive compensation andbonuses (in accordance with industry norms). Upon the occurrence and during the continuation of anEvent of Default, Borrower will not directly or indirectly make or permit any payment (exclusive ofany payment of sales and marketing fees to Marketing Agent, management fees to Manager andservicing fees to Servicer) to be made in respect of any Subordinated Indebtedness.     **17. ****Events of Default.**     An “Event of Default” shall exist if any of the following shall occur:          **17.1****Payments.** Borrower shall fail to make when due, any payment or mandatoryprepayment of principal or interest, any Loan Costs, fees or any other payment Obligations.          **17.2****Covenant Defaults.** Borrower shall fail to perform or observe any nonpaymentObligations or any other covenants, agreements or warranties contained in this Agreement or in anyof the Loan Documents (not listed as an Event of Default under another subsection of **Section17**), and such failure shall continue unremedied for a period of thirty (30) days after theearlier to occur of (a) written notice from Lender to Borrower of the existence of such failure, or(b) any officer, principal or member of Borrower, Guarantor or TAC has actual knowledge of suchfailure, providedthat (i) in the event such failure (A) is incapable of remedy,(B) consists of a default of any obligations to pay principal, interest, Loan Costs, fees or otherpayment Obligations, or (C) was knowingly caused or permitted by Borrower, then Borrower shall notbe entitled to any notice or cure period and (ii) in the event that Borrower is entitled to curesuch failure within such thirty (30) day period, but due to the nature of such failure, the curecannot be completed within the thirty (30) day period notwithstanding Borrower’s diligent effortsto do so, then Borrower shall have an additional thirty (30) days to complete such cure (for atotal of sixty (60) days), provided that Borrower is diligently seeking to cure such default withinthe additional thirty (30) day period.
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          **17.3****Warranties or Representations.** Any representation or other statement made by oron behalf of any Material Party in this Agreement, in any of the Loan Documents or in anyinstrument furnished in compliance with or in reference to the Loan Documents, is or proves to befalse, misleading or incorrect in any material respect as of the date made or reaffirmed.          **17.4****Enforceability of Liens.** Any Lien granted by Borrower to Lender in connectionwith the Obligations is or becomes invalid or unenforceable or is not, or ceases to be, a perfectedfirst priority Lien in favor of Lender encumbering the asset to which it is intended to encumber.          **17.5****Involuntary Proceedings.** A case is commenced or a petition is filed against anyMaterial Party under any Debtor Relief Law, a receiver, liquidator or trustee of any Material Partyor of any material asset of any Material Party is appointed by court order and such order remainsin effect for more than sixty (60) days; or if any material asset of any Material Party issequestered by court order and such order remains in effect for more than sixty (60) days.          **17.6****Proceedings.** Any Material Party voluntarily seeks, consents to or acquiesces inthe benefit of any provision of any Debtor Relief Law, whether now or hereafter in effect, consentsto the filing of any petition against it under such law, makes an assignment for the benefit of itscreditors, admits in writing its inability to pay its debts generally as they become due, orconsents or suffers to the appointment of a receiver, trustee, liquidator or conservator for aMaterial Party or any part of its assets.          **17.7****Attachment; Judgment; Tax Liens.** The issuance, filing, levy or seizure againstthe Inventory Collateral, of one or more attachments, injunctions, executions, tax Liens orjudgments for the payment of money cumulatively in excess of $100,000 in the aggregate, or thefiling of any mechanics’ or materialmen’s Lien against the Inventory Collateral or any asset ofBorrower or claim of Lien which is not discharged in full, bonded or stayed within sixty (60) daysafter Borrower learns of such issuance or filing.          **17.8****Failure to Deliver Payments and Removal of Inventory Collateral.** If Borrower (i)fails to deliver payments made under the Inventory Collateral directly to Lender in accordance withthe terms and provisions of this Agreement and the other Loan Documents, or (ii) inadvertentlyremoves, transfers, conveys or permits any of the Inventory Collateral to be removed, transferredor conveyed, and such failure is not cured within fifteen (15) days.          **17.9****Documents.** Any of the Material Project Agreements shall be terminated, amendedor modified or restated in any material respect, without Lender’s prior written consent whichaction could reasonably be expected to have a Material Adverse Effect on the Inventory Collateral.          **17.10****Reserved.**
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          **17.11****Material Adverse Change.** Any material adverse change, as determined by Lenderin good faith, in the financial condition, business or operations of Borrower, Guarantor or TAC orin the condition of the Inventory Collateral or the Borrower Project, the effect of which is torender uncertain Borrower’s, Guarantor’s or TAC’s ability to materially perform its obligationsunder the Loan Documents.          **17.12****One-to-One Ratio.** Any violation of the One-to-One Ratio.          **17.13****Merger or Dissolution.** Any merger, dissolution, consolidation, reorganization,liquidation or restructure of any Material Party except to the extent permitted under **Section12.2(b)** hereof.          **17.14****Default by Borrower or Guarantor Under Other Agreements.** Any default byBorrower or Guarantor (i) in the payment of any indebtedness in connection with the Inventory Loan;(ii) in the Material Project Agreements; (iii) in the payment or performance of other indebtednessfor borrowed money or obligations in excess of $100,000; or any acceleration of obligations owed byTAC to any lender which default is not cured (return to compliance with existing loan documents)within ten (10) days after the acceleration occurs.          **17.15****Reserved.**          **17.16****Loss of License.** The suspension, loss, revocation or failure to renew or filefor renewal of any License now held or hereafter acquired by a Material Party with respect to themarketing, sale or operation of the Inventory Collateral or Borrower’s business in the same manneras it is being conducted which is not cured in thirty (30) days after issuance; provided, however,if the suspension, loss, revocation or failure to renew or pay is incapable of cure within thirty(30) days and Borrower shall be diligently pursuing a cure, such thirty (30) day period shall beextended by a period not to exceed thirty (30) additional days.          **17.17****Suspension of Sales.** The issuance of any stay order, cease and desist order,Injunction, temporary restraining order or similar judicial or nonjudicial sanction limiting orotherwise materially and adversely affecting any sales activities related to Timeshare Interests,other business operations in respect of the Inventory Collateral, or the enforcement of Lender’sremedies and such order or other court sanction is not terminated or dissolved within thirty (30)days after issuance; provided, however, if the termination or dissolution is incapable of curewithin thirty (30) days and Borrower shall be diligently pursuing a cure, such thirty (30) dayperiod shall be extended by a period not to exceed thirty (30) additional days.          **17.18****Reserved.**          **17.19****Breach of Other Agreements.** Any violation or breach of any agreement, covenantor restriction affecting title to the Inventory Collateral.          **17.20****Fraud.** Any Material Party takes or is in the process of taking any action whichLender in good faith believes is intended to: (a) defraud any creditor,
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including Lender, (b) convert any portion of the Inventory Collateral; or (c) violate orcircumvent in any material manner any applicable Legal Requirements affecting the InventoryCollateral.          **17.21****Reserved.**          **17.22****Insolvency****.**Borrower becomes insolvent because the amount of Borrower’sliabilities to any Person exceeds the amount of Borrower’s assets or otherwise generally unable topay its debts as and when they become due or payable.          **17.23 Reserved**.          **17.24 **Change of Control**.. If any Change of Control shall have occurred.          **17.25****Financial Condition**. A material adverse change in the financial condition ofBorrower, Guarantor, or any of the DRC Affiliates has occurred as determined by Lender in itsreasonable, good faith discretion.          **17.26****Cessation of Sales or Business**. Any cessation without Lender’s prior writtenconsent of (i) marketing or sales of the Inventory Collateral at the Sales Center, or (ii) amaterial part of Borrower’s business shall occur (including, without limitation, operation of theInventory Collateral) and if such marketing, sales or business shall not be resumed within thirty(30) days after such cessation, unless the cessation is due to a force majeure event.          **17.27****Observance of Loan Documents**. Any default by Borrower in the due observance ofany term, covenant or condition in any Loan Document or the revocation or attempted revocation orrepudiation thereof, in whole or in part by Borrower.          **17.28****Change in Marketing Agent, Manager or Servicer**. Any change in the entity thatis the Marketing Agent, the Manager or the Servicer, without the prior written consent of Lender.     **18. ****Termination of Obligation to Advance/Remedies.**          **18.1****Termination of Obligation to Advance.** Should an Event of Default occur, Lendermay, with or without proceeding with any sale or foreclosure or demanding payment or performance ofthe Obligations, without notice, terminate Lender’s further performance under this Agreement or anyother agreement or agreements between Lender and Borrower, including, without limitation, anycommitment of Lender to lend under this Agreement in its entirety, or any portion of any suchcommitment, to the extent Lender shall deem appropriate, without further liability or obligation byLender. Such termination shall not absolve, release or otherwise affect the liability orobligations of Borrower or the Liens, rights, powers and other remedies of Lender. If Lender’sobligation to make Advances under the Inventory Loan is terminated, then Borrower’s obligation topurchase Defaulted Inventory hereunder shall also be terminated.
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          **18.2****Remedies Upon Default.** Should an Event of Default occur, Lender, at its soleoption, may take anyone or more of the actions described in this **Section 18**, all withoutnotice to Borrower or Guarantor:          (a) **Acceleration**. Without demand or notice of any nature whatsoever, declare theObligations, or any part thereof, immediately due and payable, whereupon the same shall be due andpayable, provided that, if an Event of Default occurs under **Sections 17.5 or 17.6**, allObligations shall become immediately due and payable without further action.          (b) **Termination of Lender’s Performance**. Terminate a commitment, if any, of Lender tolend under this Agreement, the Loan Documents in their entirety, or any portion of any suchcommitment, and/or terminate Lender’s further performance under this Agreement, the Loan Documentsin their entirety, without further liability or obligation to Borrower, to the extent Lender shalldeem appropriate, all without notice to Borrower.          (c) **Judgment**. Reduce Lender’s claim to judgment, foreclose or otherwise enforceLender’s Lien against all or any part of the Inventory Collateral by any available judicial orother procedure under law. Lender’s right to sue and recover a judgment either before, after orduring the pendency of any proceeding for the enforcement of any Lien in favor of Lender, and theright of Lender to recover such judgment shall not be affected by any taking, possession orforeclosure sale hereunder or by the exercise of any other right, power or remedy for theenforcement of the terms of any Lien in favor of Lender, or the foreclosure of the Lien thereof.          (d) **Foreclosure**. Whether or not Lender takes possession of the property encumbered bythe Lender’s Mortgage, Lender may proceed to foreclose Lender’s Mortgage and to sell the propertyencumbered by Lender’s Mortgage in its entirety or in separate parcels, under the judgment ordecree of a court or courts of competent jurisdiction and to pursue any other remedy available toit, all as Lender shall deem appropriate. Upon commencement of suit or foreclosure of Lender’sMortgage, all Obligations, if not previously accelerated and declared due, shall be immediately dueand payable. Upon any foreclosure sale pursuant to judicial proceedings, Lender may bid for andpurchase all or any portion of the property encumbered by Lender’s Mortgage and, upon compliancewith the terms of sale, may hold, retain and possess and dispose of such property.     In case of a foreclosure sale under Lender’s Mortgage and of the application of the proceedsof sale to the payment of the Obligations, Lender shall be entitled to enforce payment of and toreceive all Obligations then remaining due and unpaid, and Lender shall be entitled to recoverjudgment for any portion of the Obligations remaining unpaid, with interest.     Borrower agrees, to the full extent that it may lawfully so agree, that no recovery of anysuch judgment by Lender and no attachment or levy of any execution upon any such judgment, upon anyof the Inventory Collateral or upon any other property shall in
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any manner or to any extent affect the Lien of Lender’s Mortgage or any part thereof or anyLien, rights, powers or remedies of Lender hereunder, and such Lien, rights, powers and remediesshall continue unimpaired.          (e) **Lender’s Right to Take Possession, Operate and Apply Income**.               (i) Upon Lender’s demand, Borrower shall forthwith surrender to Lender the actual possessionof the property encumbered by the Lender’s Mortgage and, to the extent permitted by law, Lender mayenter and take possession of all or any portion of the property encumbered by the Lender’s Mortgageand may exclude Borrower and its agents and employees wholly therefrom and may have joint accesswith Borrower to Borrower’s books, papers and accounts. If Borrower fails to surrender or deliverall or any portion of the property encumbered by the Lender’s Mortgage to Lender upon demand,Lender may obtain a judgment or decree conferring on Lender the right to immediate possession orrequiring Borrower to deliver immediate possession of all or part of the property encumbered by theLender’s Mortgage to Lender, and Borrower hereby specifically consents to the entry of such ajudgment or decree.               (ii) Upon every such entering upon or taking of possession, Lender may hold, store, use,operate, manage and control the property encumbered by the Lender’s Mortgage and conduct Borrower’sbusiness thereon and, from time to time do any of the following things as Lender may from time totime deem necessary, appropriate or desirable:                    (A) make all maintenance, repairs, renewals, replacements, additions and improvementsnecessary and proper to the property encumbered by the Lender’s Mortgage and purchase or otherwiseacquire additional fixtures, personalty and other property;                    (B) insure, manage and operate the property encumbered by the Lender’s Mortgage and exerciseall of the rights and powers of Borrower (in Lender’s name or otherwise) with respect to theinsurance, management and operation of the property encumbered by the Lender’s Mortgage;                    (C) enter into any and all agreements with respect to the exercise by others of any of thepowers herein granted to Lender; and                    (D) perform or cause to be performed any and all work and labor necessary to maintain theproperty encumbered by the Lender’s Mortgage.               (iii) Lender may collect and receive all the income, revenues, rents, issues and profits ofthe property encumbered by the Lender’s Mortgage, including those past due as well as thoseaccruing thereafter. Lender shall apply such sums received by Lender, to the Obligations, in suchorder as Lender may elect, after deducting therefrom: (A) all expenses of taking, holding, managingand operating the property encumbered by the Lender’s Mortgage (including compensation for the
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services of all Persons employed for such purposes); (B) the cost of all such maintenance,repairs, renewals, replacements, additions, betterments, improvements, purchases and acquisitions;Lender may determine to pay; (C) the cost of insurance; (D) such taxes, assessments and othercharges, as Lender may determine to pay; (E) other proper charges upon the property encumbered bythe Lender’s Mortgage or any part thereof; and (F) the compensation, expenses and disbursements ofthe attorneys and agents of Lender, including attorneys’ fees and costs for any appeal.               (iv) If an Event of Default giving rise to pursuit of the foregoing remedy shall have beencured, Lender shall surrender possession of the property encumbered by the Lender’s Mortgage toBorrower, its successors or assigns; provided however, that Lender’s right to take possession andto pursue any other remedies hereunder or under any of the Loan Documents shall exist if anysubsequent Event of Default shall occur and further provided that such surrender shall not have theeffect of releasing Lender’s lien on the property so surrendered.          (f) **Sale of Inventory Collateral**. After notification, if any, provided for in**Section 18.3**, sell or otherwise dispose of, at the office of Lender, or elsewhere, aschosen by Lender, all or any part of the Inventory Collateral, and any such sale or otherdisposition may be as a unit or in parcels, by public or private proceedings, and by way of one ormore contracts (it being agreed that the sale of any part of the Inventory Collateral shall notexhaust Lender’s power of sale, but sales may be made from time to time until all of the InventoryCollateral has been sold or until the Obligations, have been paid in full and fully performed), andat any such sale it shall not be necessary to exhibit the Inventory Collateral. Borrower herebyacknowledges and agrees that a private sale or sales of the Inventory Collateral, afternotification as provided for in **Section 18.3**, shall constitute a commercially reasonabledisposition of the Inventory Collateral sold at any such sale or sales, and otherwise, commerciallyreasonable action on the part of Lender.          (g) **Retention of Collateral/Purchase of Inventory Collateral**. At its discretion,retain such portion of the Inventory Collateral as shall aggregate in value to an amount equal toall or part of the outstanding Obligations, in full or partial satisfaction of the Obligations,whenever the circumstances are such that Lender is entitled and elects to do so under applicablelaw. Lender may also buy the Inventory Collateral or any part thereof at any public or privatesale.          (h) **Receiver**. As a matter of strict right and without regard to the value or occupancyof the Inventory Collateral, apply by appropriate procedures for the appointment of a receiver whowill enter upon and take possession of the Borrower Project, collect the rents and profitstherefrom and apply the same as the court may direct. The receiver shall have all the rights andpowers permitted under the laws of the state in which the Inventory Collateral is located. Allcosts and expenses (including receiver’s fees, attorney’s fees and costs, including attorneys’ feesand costs incurred as a result of any appeal, and agents compensation) incurred in connection withthe appointment of a receiver shall be secured by the Inventory Collateral. The right to enter andtake possession of the Inventory Collateral, to manage and operate the same
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and to collect the rents, issues and profits thereof (whether by a receiver or otherwise)shall be cumulative to any other right or remedy hereunder or afforded by law and may be exercisedby Lender concurrently therewith or independently thereof. Lender shall be liable to account onlyfor such rents, issues and profit actually received by Lender. Notwithstanding the appointment ofany receiver, trustee or other custodian, Lender shall be entitled, as pledgee, to the possessionor control of any cash or other instruments, at the time held by or payable or deliverable underthe terms of this Agreement or any other Loan Document to Lender. Borrower hereby consents to anysuch appointment. Lender may also apply by appropriate judicial proceedings for appointment of areceiver for the Inventory Collateral, or any part thereof, and Borrower hereby consents to anysuch appointment.          (i) **Exercise of Uniform Commercial Code and Other Rights**. Lender shall have all therights and remedies of a secured party under the Uniform Commercial Code and other legal andequitable rights to which it may be entitled, and may exercise any and all other rights or remediesafforded 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 specificperformance of any covenant or condition contained in the Loan Documents or in aid of the exerciseof any right or remedy granted to Lender in the Loan Documents. Lender shall also have the right torequire Borrower to assemble any of the Inventory Collateral not in Lender’s possession, atBorrower’s expense, and make it available to Lender at a place to be determined by Lender which isreasonably convenient to both parties, and Lender shall have the right to take immediate possessionof all of the Inventory Collateral, and may enter the Borrower Project or any of the premises ofBorrower or wherever the Inventory Collateral shall be located, with or without process of lawwherever the Inventory Collateral may be, and, to the extent such premises are not the property ofLender, to keep and store the same on said premises until sold (and if said premises shall be theproperty of Borrower, Borrower agrees not to charge Lender for use and occupancy, rent, or storageof the Inventory Collateral).          (j) **Exercise of Rights Under the Collateral Assignments**. Exercise any and all rightsand remedies granted to Lender under the Collateral Assignments.          (k) **Power of Attorney**. Exercise Lender’s rights under powers of attorney granted to itincluding the power of attorney referenced in **Section 19.9** below.          **18.3****Sale of Inventory Collateral.** Reasonable notification of time and place of anypublic sale of the Inventory Collateral or reasonable notification of the time after which anyprivate sale or other intended disposition of the Inventory Collateral is to be made shall be sentto Borrower and to any other person entitled under the Uniform Commercial Code to notice; provided,however, that if the Inventory Collateral threatens to decline speedily in value or is of a typecustomarily sold on a recognized market, Lender may sell or otherwise dispose of the InventoryCollateral without notification, advertisement or other notice of any kind. It is agreed thatnotice sent not less than ten (10) calendar days prior to the taking of the action to which suchnotice relates is reasonable notification and notice for the purposes of this **Section 18.3**.Lender shall
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have the right to bid at any public or private sale on its own behalf. Out of money arisingfrom any such sale, Lender shall retain an amount equal to all costs and charges, includingattorneys’ fees for advice, counsel or other legal services or for pursuing, reclaiming, seeking toreclaim, taking, keeping, removing, storing and advertising such Inventory Collateral for sale,selling same and any and all other charges and expenses in connection therewith and in satisfyingany prior Liens thereon. Any balance shall be applied to the Obligations, and in the event ofdeficiency, Borrower shall remain liable to Lender. In the event of any surplus, such surplus shallbe paid to Borrower or to such other Persons as may be legally entitled to such surplus.     In connection with the disposition of any Inventory Collateral by or on behalf of Lender,Borrower agrees that Lender may disclaim any warranties and dispose of such Inventory Collateralwithout any warranties whatsoever and that Lender shall not be deemed to have acted in acommercially unreasonable manner as a result thereof. If Lender sells any of the InventoryCollateral upon credit, Borrower shall only be credited with payments actually received by Lenderwith respect to such sale. If the buyer at such sale fails to pay in full for any of the InventoryCollateral, Lender may resell such Inventory Collateral. Lender is hereby granted a license andright to use, after an Event of Default and without charge, all of the Borrower’s labels, generalintangibles, intellectual property, equipment, trade secrets, tradenames, trademarks, servicemarks, and advertising materials for selling and advertising for sale of any of the InventoryCollateral together with all Borrower’s rights under all Licenses, to the extent assignable.          **18.4****Application of Proceeds.** All proceeds from any sale or realization upon any ofthe Inventory Collateral after an Event of Default shall be applied or paid over as follows: (a)first, to the payment of all costs and expenses incurred in connection with such sale orrealization, (b) second, to payment of the Obligations in such order as Lender may elect inits sole discretion with Borrower and Guarantor remaining liable for any deficiency, and (c)third, the balance (if any), subject to any duty or requirement of any applicable LegalRequirements, to whomsoever is legally entitled thereto.          **18.5****Delegation of Duties and Rights.** Lender may execute any of its duties and/orexercise any of its rights or remedies under the Loan Documents by or through its officers,directors, employees, attorneys, agents or other representatives.          **18.6****Lender Not in Control.** None of the covenants or other provisions contained inthis Agreement or in any Loan Document shall give Lender the right or power to exercise controlover the affairs and/or management of Borrower.          **18.7****Rights of Lender Regarding Inventory Collateral**. In addition to all other rightspossessed by Lender, Lender, at its option, may from time to time after there shall have occurredan 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 Inventory Collateral into the name of Lender or itsnominee;
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          (b) Take control of any proceeds of any of the Inventory Collateral;          (c) Extend or renew the Inventory Loan and grant releases, compromises or indulgences withrespect to the Obligations, any portion thereof, any extension or renewal thereof, or any securitytherefor, to any obligor hereunder or thereunder; and          (d) Exchange certificates or instruments representing or evidencing the Inventory Collateralfor certificates or instruments of smaller or larger denominations for any purpose consistent withthe terms of this Agreement.          **18.8****Waivers.**          (a) Borrower irrevocably waives: (i) all notices of Default and Events of Default except tothe extent expressly required in this Agreement; (ii) all procedural errors, defects andimperfections in any legal proceedings under the Loan Documents or in connection with any of thetransactions contemplated thereunder; (iii) demand; presentment and protest; notice of demand,presentment, protest, acceleration and non-payment; and (iv) the benefit of any valuation,appraisal or exemption laws.          (b) If Lender: (i) grants any forbearance or an extension of time for the payment of any sumssecured by the Inventory Collateral; (ii) takes other, additional or substitute InventoryCollateral or security for the Obligations; (iii) waives or does not exercise any right granted inthis Agreement or any Loan Documents; (iv) alters, substitutes or releases any part of theInventory Collateral from the Lien in favor of Lender or otherwise changes any of the terms of thisAgreement or any Loan Documents; (v) releases any Person liable for the payment of any part of theObligations, (vi) extends the time for payment or otherwise alters the payment terms of theObligations, (vii) consents to the filing of any map, plat or replat of the Property; (viii)consents to the granting of any easement on the Property; or (ix) makes or consents to anyagreement subordinating Lender’s Lien against any of the Inventory Collateral, any such act oromission by Lender shall not release, discharge, modify, change or affect Borrower’s originalliability under this Agreement or any of the Loan Documents or otherwise, or the original liabilityof any maker, general partner, co-signer, endorser, surety or guarantor nor shall any such act oromission preclude Lender from exercising any right, power or privilege granted in this Agreement orany Loan Document in the event of any other concurrent or subsequent default, nor (except asotherwise expressly provided in an instrument or instruments executed by Lender) shall Lender’sLien against any of the Inventory Collateral be altered thereby.          (c) Upon the sale or transfer by operation of law or otherwise of all or any part of theInventory Collateral, Lender, without further notice, is authorized and empowered to deal with anysuch transferee as fully and to the same extent as it might deal with Borrower, without in any waywaiving, releasing or discharging any of Borrower’s liabilities or obligations hereunder.
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          (d) No failure or delay on the part of Lender in exercising any right, remedy or power underthis Agreement or any other Loan Document or in giving or insisting upon strict performance by anyMaterial Party or in giving notice hereunder shall operate as a waiver of the same or any otherpower or right, and no single or partial exercise of any such power or right shall preclude anyother 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 strictperformance of any and all of the terms and provisions of this Agreement or any other Loan Documentto be performed by Borrower or any Material Party. The collection and application of proceeds, thetaking possession of the Inventory Collateral, and the exercise of the rights of Lender containedin the Loan Documents and this Agreement shall not cure or waive any default, or affect any noticeof default, or invalidate any acts done pursuant to such notice. No waiver by Lender of any breachor default of or by any party hereunder shall be deemed to alter or affect Lender’s rightshereunder with respect to any prior or subsequent Default or Event of Default.          (e) **BORROWER HEREBY WAIVES ALL NOTICES (EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREUNDER) WITHRESPECT TO ANY LOSSES, DAMAGES, LIABILITIES, SUITS, COSTS AND EXPENSES, AND ALL OTHER DEMANDSWHATSOEVER HEREBY INDEMNIFIED, AND AGREES THAT ITS OBLIGATIONS UNDER THIS AGREEMENT SHALL NOT BEAFFECTED BY ANY CIRCUMSTANCES, WHETHER OR NOT REFERRED TO ABOVE, WHICH MIGHT OTHERWISE CONSTITUTELEGAL OR EQUITABLE DISCHARGES OF ITS OBLIGATIONS HEREUNDER**.          (f) **IF A COURT OF COMPETENT JURISDICTION SHOULD DETERMINE THAT BORROWER IS ENTITLED TO RECOVERDAMAGES FROM LENDER FOR ANY REASON OR UPON ANY CAUSE, CLAIM OR COUNTERCLAIM, IN CONNECTION WITH THEINVENTORY LOAN OR THE TRANSACTIONS PROVIDED FOR OR CONTEMPLATED PURSUANT TO THIS AGREEMENT OR THEOTHER LOAN DOCUMENTS, BORROWER STIPULATES AND AGREES THAT ANY SUCH DAMAGES SHALL NOT INCLUDECONSEQUENTIAL, PUNITIVE, OR SPECIAL DAMAGES. IN THE EVENT THE FOREGOING PROVISION IS NOT ENFORCEDBY THE COURTS, THEN BORROWER AGREES THAT BORROWER’S SOLE REMEDY FOR ANY CAUSE, CLAIM ORCOUNTERCLAIM WILL BE TO RECOVER DAMAGES IN AN AMOUNT EQUAL TO ITS REASONABLE OUT OF POCKET EXPENSESIN CONNECTION WITH THE INVENTORY LOAN AND SHALL NOT INCLUDE PUNITIVE, SPECIAL, OR CONSEQUENTIALDAMAGES**.          **18.9****Cumulative Rights.** All rights and remedies available to Lender under the LoanDocuments shall be cumulative of and in addition to all other rights and remedies granted to Lenderunder any of the Loan Documents, at law or in equity, whether or not the Inventory Loan is due andpayable and whether or not Lender shall have instituted any suit for collection or other action inconnection with the Loan Documents.
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          **18.10****Diminution in Value of Collateral.** Lender shall not have any liability orresponsibility whatsoever for any diminution or loss in value of any of the Inventory Collateral,specifically including that which may arise from Lender’s negligence or inadvertence, whether suchnegligence or inadvertence is the sole or concurring cause of any damage.          **18.11****Discontinuance of Proceedings.** If Lender proceeds to enforce any right orremedy under the Loan Documents by foreclosure, entry or otherwise and such proceedings shall havebeen discontinued or abandoned for any reason or shall have been determined adversely to Lender,then Borrower and Lender shall be restored to their former positions and rights hereunder and allrights, powers and remedies of Lender shall continue as if no such proceeding occurred.          **18.12****Indemnification of Lender Parties.** In addition to (and not in lieu of) anyother provisions of any Loan Document providing for indemnification in favor of Lender, Borroweragrees to defend, indemnify and hold harmless the Indemnified Lender Parties, from and against, andpromptly 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 naturewhatsoever asserted against or incurred by any of them by reason of or arising out of or in any wayrelated or attributable to: (a) any failure or alleged failure of Borrower to perform any of itscovenants or obligations with respect to the Borrower Project or to the Purchasers of any of theInventory Collateral or any incorrectness or inaccuracy of any representation or warranties to anyPurchaser; (b) the construction, development or operation of the Borrower Project; (c) thedebtor-creditor relationships between Borrower on the one hand, and the Purchasers or Lender or itsparticipants, as the case may be, on the other; (d) the sale of Timeshare Interests; (e) Borrower’sperformance under or related to this Agreement, the Loan Documents or the Inventory Collateral; (f)the transactions contemplated under any of the Loan Documents or any of the Material ProjectAgreements, including without limitation, those in any way relating to or arising out of theviolation of any applicable Legal Requirements; (g) any breach of any covenant or agreement or theincorrectness or inaccuracy of any representation and warranty contained in this Agreement or anyof the Loan Documents (including without limitation any certification delivered to Lender); and (h)any and all Taxes, and any and all fees or charges to be paid by Borrower including, withoutlimitation 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; Such indemnification shall not give Borrowerany right to participate in the selection of counsel for Lender or the conduct or settlement of anydispute or proceeding for which indemnification may be claimed.     The obligations of Borrower to indemnify, protect, defend and hold Lender harmless as providedin this Agreement are absolute, unconditional, present and continuing, and shall not be dependentupon or affected by the genuineness, validity, regularity or enforceability of any claim, demand orsuit from which Lender is indemnified, except to the extent any such assessments, claims, demands,causes of action, losses, damages, liabilities, suits, costs and expenses arise as a result of the
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gross negligence or willful misconduct of Lender. The indemnity provisions in this**Section 18.12** shall survive for one hundred and eighty (180) days after the satisfaction ofthe Obligations and termination of this Agreement, and remain binding and enforceable againstBorrower, together with its successors and assigns, for such one hundred and eighty (180) dayperiod.     **19. ****Certain Rights of Lender**          **19.1****Suits to Protect the Inventory Collateral.** Lender shall have power at any timeand from time to time, to: (a) institute and maintain such suits and proceedings as it may deemexpedient to prevent any impairment of the Inventory Collateral by any acts which may be unlawfulor which violate this Agreement or any of the Loan Documents; (b) preserve or protect the InventoryCollateral; and (c) restrain the enforcement of or compliance with any Legal Requirements that maybe unconstitutional or otherwise invalid, if the enforcement of or compliance with such enactment,rule or order would impair Lender’s security.          **19.2****Protection of Inventory Collateral.** Lender shall have the power at any time andfrom time to time to take such actions as Lender deems necessary or appropriate to protect Lender’sLiens in and to preserve the Inventory Collateral, and to establish, maintain and protect theenforceability of Lender’s rights with respect thereto, all at the expense of Borrower. Borroweragrees to cooperate fully with all of Lender’s efforts to preserve the Inventory Collateral andLender’s Liens and rights and will take such actions to preserve the Inventory Collateral andLender’s Liens and rights as Lender may direct, including, without limitation, by promptly payingupon Lender’s demand therefor, all Taxes that may be or may become due in respect of any of theInventory Collateral.          **19.3****Performance by Lender.** If Borrower fails to perform any covenant or agreementcontained herein or in any Loan Document, Lender may itself perform, or cause the performance of,such covenant or agreement, and the sums expended by Lender and the expenses of Lender incurred inconnection therewith shall be payable by Borrower and be included as part of the Obligations. In noevent, however, shall Lender have any obligation or duties whatsoever to perform any covenant oragreement of Borrower contained herein or in any of the Loan Documents, Material ProjectAgreements, and any such performance by Lender shall be wholly discretionary with Lender. Theperformance by Lender, of any agreement or covenant of Borrower on any occasion shall not give riseto any duty on the part of Lender to perform any such agreements or covenants on any other occasionor at any time. In addition, Borrower acknowledges that Lender shall not at any time or under anycircumstances whatsoever have any duty to Borrower or to any third party to exercise any ofLender’s rights or remedies hereunder.          **19.4****No Liability of Lender.** Neither the acceptance of this Agreement by Lender, northe exercise of any rights hereunder by Lender, shall be construed in any way as an assumption byLender of any obligations, responsibilities or duties of Borrower arising in connection with theInventory Collateral, under the Timeshare Act,
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or under any of the Material Project Agreements, or in connection with any other business ofBorrower or any Material Party, or the Inventory Collateral, or otherwise bind Lender to theperformance of any obligations with respect to the Borrower Project or the Inventory Collateral; itbeing expressly understood that Lender shall not be obligated to perform, observe or discharge anyobligation, responsibility, duty, or liability of Borrower or any Material Party with respect toany of the Inventory Collateral, under the Timeshare Act or under any of the Material ProjectAgreements, including, but not limited to, appearing in or defending any action, expending anymoney 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, shallconstitute an assumption by Lender of any obligations of Borrower with respect to the InventoryCollateral, or any documents or instruments executed in connection therewith, and Borrower shallcontinue to be liable for all of its obligations thereunder or with respect thereto.          **19.5****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 faithbelieves may affect the value of the Inventory Collateral, the Project, the Liens granted underthis Agreement, including without limitation the Liens of Lender’s Mortgage or Lender’s rightsunder any of the Loan Documents. Lender may engage counsel of its own choice in any such action orproceeding without the consent of Borrower and Borrower shall pay all reasonable fees and expensesof such counsel.          **19.6****Indemnities, Loan Costs and Expenses.** All indemnities, Loan Costs and otherexpenses payable by Borrower under any provision of this Agreement shall be part of the Obligationsof Borrower and shall be paid by Borrower to Lender, upon demand, and shall bear interest at theDefault Rate for the Inventory Loan from the date of demand until repaid by Borrower.          **19.7****Lender’s Right of Set-Off.** Lender shall have the right to set-off any InventoryCollateral against any Obligations then due and unpaid by Borrower.          **19.8****Assignment of Lender’s Interest.** Subject to the provisions of Section 20.18below, Lender shall have the right to assign, participate or transfer all or any part of theInventory Loan and all or any part of its rights in or pursuant to this Agreement or any of theLoan Documents including, without limitation, to an affiliate of Lender or as part of asecuritization or conduit financing. All assignees, participants and transferees shall be entitledto the benefits of this Agreement and the Loan Documents. The consent of Borrower shall not berequired for any such assignment, participation or transfer and failure to give notice of anyassignment, participation or transfer shall not affect the validity or enforceability of thisAgreement, any Loan Document, or subject Lender to any liability. Borrower consents to thedissemination of information regarding the Obligations, the Inventory Loan, Borrower, Borrower’sbusiness, and all matters related hereto in connection with any assignment, participation or sale.
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          **19.9****Lender’s Appointment as Attorney-in-Fact.**          (a) Borrower does hereby irrevocably constitute and appoint Lender and any officer or agentthereof, with full power of substitution, as its true and lawful attorney-in-fact with fullirrevocable power and authority in the place and stead of Borrower and in the name of Borrower, orin its own name to do the following from and after the occurrence and continuance of an Event ofDefault from time to time in the Lender’s discretion, for the purpose of carrying out the terms ofthis Loan Agreement or the Loan Documents, to take any and all appropriate action and to executeany and all documents and instruments which may be necessary or desirable to accomplish thepurposes of this Loan Agreement, and, without limiting the generality of the foregoing, Borrowerhereby gives the Lender the power and right, on behalf of Borrower, in Lender’s name or inBorrower’s name, and at Borrower’s expense to do the following from and after the occurrence andcontinuance of an Event of Default:               (i) in the name of the Borrower or its own name, or otherwise, to take possession of andendorse and collect any checks, drafts, notes, other Inventory Collateral and to file any claim orto take any other action or proceeding in any court of law or equity or otherwise deemedappropriate by the Lender for the purpose of collecting any and all such moneys due with respect toany other Inventory Collateral whenever payable;               (ii) to pay or discharge Taxes and Liens levied or placed on or threatened against theInventory Collateral or the Borrower Project;               (iii) (A) to direct any party liable for any payment under any Inventory Collateral to makepayment of any and all moneys due or to become due thereunder directly to the Lender or as theLender shall direct; (B) to ask or demand for, collect, receive payment of and receipt for, any andall moneys, claims and other amounts due or to become due at any time in respect of or arising outof any Inventory Collateral; (C) to sign and endorse any invoices, assignments, verifications,notices and other documents in connection with any of the Inventory Collateral; (D) to commence andprosecute any suits, actions or proceedings at law or in equity in any court of competentjurisdiction to collect the Inventory Collateral or any part thereof and to enforce any other rightin respect of any Inventory Collateral; (E) to defend any suit, action or proceeding broughtagainst Borrower with respect to any Inventory Collateral; (F) to settle, compromise or adjust anysuit, action or proceeding described in clause (D) above and, in connection therewith, to give suchdischarges or releases as the Lender may deem appropriate; and (G) generally, to sell, transfer,pledge and make any agreement with respect to or otherwise deal with any of the InventoryCollateral as fully and completely as though the Lender were the absolute owner thereof for allpurposes, and to do, at the Lender’s option and Borrower’s expense, at any time, or from time totime, all acts and things which the Lender deems necessary to protect, preserve or realize upon theInventory Collateral and the Lender’s Liens thereon and to effect the intent of this LoanAgreement, all as fully and effectively as the Borrower might do;
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               (iv) 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 give receipts for same;               (v) to collect all rent, revenues, and income, pursuant to Lender’s Mortgage; and               (vi) generally to do all and any such acts and things in relation to the Inventory Collateralas Lender shall in good faith deem advisable.     Borrower hereby ratifies all that said attorneys shall lawfully do or cause to be done byvirtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable.          (b) Borrower also authorizes the Lender, at any time and from time to time, to execute, inconnection with the sale provided for herein, any endorsements, assignments or other instruments ofconveyance or transfer with respect to the Inventory Collateral.          (c) The powers conferred on the Lender are solely to protect the Lender’s interests in theInventory Collateral and shall not impose any duty upon the Lender to exercise any such powers. TheLender shall be accountable only for amounts that it actually receives as a result of the exerciseof such powers, and neither the Lender nor any of its officers, directors, or employees shall beresponsible to Borrower for any act or failure to act hereunder, except for its own grossnegligence or willful misconduct.     **20. ****Miscellaneous.**          **20.1****Notices.** Except as otherwise specifically set forth in this Agreement or anyother Loan Document, all notices, requests and other communications to either party hereunder shallbe in writing and shall be given to such party at its address set forth below or at such otheraddress as such party may hereafter specify for the purpose of notice to Lender or Borrower. Eachsuch notice, request or other communication shall be effective: (a) if given by mail, when suchnotice is deposited in the United States Mail with first class postage prepaid, addressed asaforesaid, 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 deliveryservice such as Federal Express 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 **Section20.1**.      If to Borrower: Mystic Dunes Myrtle Beach, LLC10615 Park Run DriveLas Vegas, Nevada 89144Attention: General Counsel
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      If to Guarantor: Mystic Dunes, LLC10615 Park Run DriveLas Vegas, Nevada 89144Attention: General Counsel      With a Copy to: Katten Muchin Rosenman LLP525 West Monroe StreetChicago, Illinois 60661Attention: Ann Marie SinkFacsimile: 312-902-1061      If to Lender: Textron Financial Corporation45 Glastonbury BoulevardGlastonbury, CT 06033Attn: Kyle ShonakFacsimile: 860-659-6300      With a Copy to: Textron Financial Corporation45 Glastonbury BoulevardGlastonbury, CT 06033Attn: Division PresidentFacsimile: 860-659-6300      With a Copy to: Textron Financial Corporation40 Westminster StreetProvidence, Rhode Island 02903Attn: Legal DepartmentFacsimile: 401-621-5040     Notwithstanding the foregoing, Requests for Advances and documents collateral thereto may bedelivered by Borrower to Lender by e-mail or fax in accordance with Lender’s instructions from timeto time.          **20.2****Survival; Continuation and Reliance.** All representations, warranties, covenantsand agreements made by Borrower and Guarantor herein, in any other Loan Documents or in any otheragreement, document, instrument or certificate delivered by or on behalf of Borrower or Guarantorunder or pursuant to the Loan Documents shall be considered to have been relied upon by Lender andshall survive the delivery to Lender of such Loan Document (and each part thereof), regardless ofany investigation made by or on behalf of Lender. The warranties and representations containedherein shall be and remain true and correct so long as any of the Obligations have not beensatisfied, or so long as part of the Obligations shall remain outstanding, and each request byBorrower for an Advance shall constitute an affirmation that the foregoing representations andwarranties remain true and correct as of the date thereof.
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All indemnities made by Borrower are in favor of Lender shall survive payment of allObligations and termination of this Agreement as set forth in **Section 18.12** above.          **20.3****Governing Law; Consent to Jurisdiction.**THIS AGREEMENT AND THE OTHER LOANDOCUMENTS (EXCEPT AS MAY BE EXPRESSLY PROVIDED THEREIN TO THE CONTRARY) SHALL BE GOVERNED BY ANDCONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF RHODE ISLAND, EXCLUSIVE OF ITS CHOICE OF LAWSPRINCIPLES. BORROWER CONSENTS TO PERSONAL JURISDICTION BEFORE THE SUPERIOR COURT IN AND FORPROVIDENCE COUNTY, RHODE ISLAND AND THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODEISLAND. BORROWER WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO VENUE IN PROVIDENCECOUNTY, RHODE ISLAND OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THISAGREEMENT, THE OBLIGATIONS CREATED HEREUNDER OR ANY OF THE LOAN DOCUMENTS AND FURTHER WAIVES ANYCLAIM THAT PROVIDENCE COUNTY, RHODE ISLAND IS NOT A CONVENIENT FORUM FOR ANY SUCH SUIT, ACTION ORPROCEEDING. SERVICE OF PROCESS ON BORROWER IN ANY ACTION ARISING OUT OF OR RELATING TO ANY OF THELOAN DOCUMENTS SHALL BE EFFECTIVE IF MAILED TO BORROWER AT THE ADDRESS LISTED FOR BORROWER IN**SECTION 20.1**.          **20.4****Invalid Provisions.** If any provision of this Agreement or any of the other LoanDocuments is held to be illegal, invalid or unenforceable under present or future laws effectiveduring the term thereof, such provision shall be fully severable, this Agreement and the other LoanDocuments shall be construed and enforced as if such illegal, invalid or unenforceable provisionhad never comprised a part hereof or thereof, and the remaining provisions hereof or thereof shallremain in full force and effect and shall not be affected by the illegal, invalid or unenforceableprovision or by its severance therefrom. Furthermore, in lieu of such illegal, invalid orunenforceable provision there shall be added automatically as a part of this Agreement and/or theLoan Documents (as the case may be) a provision as similar in terms to such illegal, invalid orunenforceable provision as may be possible and be legal, valid and enforceable.          **20.5****Successors and Assigns; Third Party Beneficiaries.** This Agreement and the otherLoan Documents shall be binding upon and inure to the benefit of Borrower and Lender and theirrespective successors and assigns; provided that Borrower may not transfer or assign any of itsrights or obligations under this Agreement or the other Loan Documents without the prior writtenconsent of Lender. This Agreement and the transactions provided for or contemplated hereunder orunder any of the Loan Documents are intended solely for the benefit of the parties hereto and anyof Lender’s participants in the Obligations. No third party shall have any rights or derive anybenefits under or with respect to this Agreement, or the other Loan Documents except forparticipants in the Obligations or as provided in advance in a writing signed on behalf of Lender.No Person other than Borrower, shall have standing to require satisfaction of such conditions inaccordance with their terms or be entitled to
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assume that Lender will refuse to make advances in the absence of strict compliance with anyor all thereof, and no other Person, other than Borrower, under any circumstance, shall be deemedto be a beneficiary of such conditions, any and all of which Lender freely may waive in whole or inpart at any time it, in its sole discretion.          **20.6****Counterparts; Effectiveness.** This Agreement may be signed in any number ofcounterparts, each of which shall be an original, with the same effect as if the signature theretoand hereto were on the same instrument. This Agreement shall become effective upon Lender’s receiptof one or more counterparts hereof signed by Borrower and Lender. Any signature on any LoanDocument or any document collateral thereto, delivered by Borrower or Guarantor by e-mail ortelecopy transmission shall be deemed to be an original signature thereto. The parties hereto agreethat any copy of this Agreement or any of the Loan Documents signed by any parties thereto andtransmitted by e-mail, telecopy or otherwise for delivery to Lender, shall be admissible inevidence as the original itself in any judicial, bankruptcy or administrative proceeding, whetheror not the original is in existence.          **20.7****Lender Not Fiduciary.** The relationship between Borrower and Lender is solelythat of debtor and creditor, and Lender has no fiduciary or other special relationship withBorrower or Guarantor, and no term or provision of any of the Loan Documents shall be construed soas to deem the relationship between Borrower and Lender to be other than that of debtor andcreditor. Nothing herein contained shall be construed to create a partnership or joint venturebetween Borrower and Lender, and the parties hereby acknowledge that no such relationship existsbetween them.          **20.8****Total Agreement; Amendments.** This Agreement, and the other Loan Documents,including the Exhibits and Schedules thereto, contain the entire agreement between the partiesrelating to the subject matter hereof, supersedes all prior agreements and understandings betweenthe parties hereto whether written or oral relating to the subject matter hereof, cannot becontradicted, changed or terminated orally or by course of conduct. This Agreement may not beamended or modified, except by written instrument signed by Borrower and Lender. No provision ofthis Agreement shall be deemed to be waived by Lender, except for those waived in a writing signedby Lender.          **20.9****Consents, Approvals and Discretion.** Whenever Lender’s consent or approval isrequired or permitted, or any documents or other items are required to be acceptable to Lender,such consent, approval or determination of acceptability must be in writing and shall be at thesole and absolute discretion of Lender and may be subject to such conditions as Lender may requireat its sole and absolute discretion, unless otherwise expressly provided hereunder or under theother Loan Documents. Whenever any determination or act is at Lender’s discretion, suchdetermination or act shall be at Lender’s sole and absolute discretion.          **20.10****Litigation.**TO THE FULLEST EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOTBE WAIVED, BORROWER, GUARANTOR AND LENDER HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
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**IRREVOCABLY WAIVE ANY AND ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCEOR DEFEND OR CLARIFY ANY RIGHT, POWER, REMEDY OR DEFENSE ARISING OUT OF OR RELATED TO THISAGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, WHETHERSOUNDING IN TORT OR CONTRACT OR OTHERWISE, OR WITH RESPECT TO ANY COURSE OF CONDUCT, COURSE OFDEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY; AND AGREE THAT ANY SUCHACTION OR PROCEEDING SHALL BE TRIED BEFORE A JUDGE AND NOT BEFORE A JURY. BORROWER, GUARANTOR ANDLENDER FURTHER WAIVE ANY RIGHT TO SEEK TO CONSOLIDATE ANY SUCH LITIGATION IN WHICH A JURY TRIAL HASBEEN 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, HASREPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEKTO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. BORROWER AND GUARANTOR ACKNOWLEDGE THATTHE PROVISIONS OF THIS SECTION ARE A MATERIAL INDUCEMENT TO LENDER’S ACCEPTANCE OF THIS AGREEMENTAND THE OTHER LOAN DOCUMENTS**.     The waiver and stipulations of Borrower and Lender in this **Section 20.10** shall survivethe final payment or performance of all of the Obligations of Borrower and all other obligationssecured by the Inventory Collateral and the resulting termination of this Agreement.          **20.11****Consent to Advertising and Publicity of Documents.** Borrower agrees that Lenderand its participants (with Lender’s prior written approval) may issue and disseminate to the publicinformation describing the credit accommodation entered into pursuant to this Agreement, includingthe names and addresses of Borrower and any subsidiaries, the amount, maturity, collateral, and ageneral description of Borrower’s business.          **20.12****Use of Lender’s Name.** Without the prior written consent of Lender, Borrowershall not, and shall not permit any Affiliate of any Borrower to use the name of Lender or the nameof any affiliate of Lender in connection with its businesses or activities, except in connectionwith internal business matters and as required in dealings with governmental agencies or indisclosures required by governmental agencies.          **20.13****Control of a Material Party.** Lender agrees that Borrower shall only beobligated to act on behalf of a Material Party or to cause a Material Party to take any action,refrain from taking any action or comply with any provision or covenant set forth in this Agreementor any other Loan Document at such time as such Material Party is an Affiliate of Borrower orGuarantor, or such Material Party is directly or indirectly under the control of Borrower orGuarantor.
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          **20.14****Directly or Indirectly.** Where any provision in this Agreement refers to actionto be taken by any Person, or which such Person is prohibited from taking, such provisions shall beapplicable whether such action is taken directly or indirectly by such Person.          **20.15****No Duty.** All attorneys, accountants, appraisers, consultants, custodians andother professionals retained by Lender shall have the right to act exclusively in the interest ofLender and shall have no duty of disclosure, duty of loyalty, duty of care or other duty orobligation of any type of nature whatsoever to Borrower, Guarantor or any other Person.          **20.16****Reimbursement for Taxes.** Borrower will promptly, upon written demand of Lender,reimburse Lender for any Taxes assessed against Lender by the state in which the InventoryCollateral is located or any subdivision thereof (with the exception of income taxes payable byLender) which is on account of or measured by the interest income received by Lender or in any wayimposed upon Lender in connection with the transactions contemplated hereunder, including, withoutlimitation, any general intangible tax or documentary tax.          **20.17****Investigations and Inquiries.** Borrower hereby authorizes Lender to conduct allsuch investigations and inquiries as to credit, operations, Borrower, any Affiliate of Borrower,the Borrower Project and the Inventory Collateral as shall be necessary or desirable, in Lender’ssole discretion, in connection with its monitoring of the Inventory Loan. By this authorization,individuals of whom Lender may make any such inquiry are empowered to cooperate with and supply allrequested information and documentation to Lender.          **20.18****Sale of Participation Interests in Inventory Loan**. Borrower acknowledges thatLender may seek to sell participation interests in the Inventory Loan to one or more participantsand Borrower agrees to cooperate fully with Lender in facilitating such process and hereby consentsto any dissemination of information and providing documentation in connection therewith. Borrowershall be required to transact business solely with Lender and shall not be required to deal withparticipants directly.          **20.19****No Third Party Beneficiaries**. Lender’s inspection, review or approval ofmatters pertaining to the Borrower Project and Inventory Collateral has no purpose other than todetermine investment quality from Lender’s point of view and is not done for the benefit of anyoneother than Lender. Any “approval” by Lender or any of its agents with respect to any plan orspecification or any resulting structure or improvement means only that Lender find the sameunobjectionable for investment purposes, and no such approval or consent by Lender or authorizationto proceed shall imply or be construed as any representation that any such plans or specificationsare suitable for any particular purpose, or that the resulting structure or improvement or anymaterials incorporated therein are safe or suitable for any particular purpose or have anyparticular value or actually cost the amount reputedly paid therefor. Under no circumstances shallany Person whomsoever (other than the parties to this Agreement and their respective permittedsuccessors and assigns) be deemed a beneficiary of the
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terms, conditions, covenants and agreements contained in this Agreement or any other LoanDocuments.          **20.20****Non-Public Information; Confidentiality.**          (a) Lender acknowledges and agrees that it may receive material non-public informationhereunder and under the other Loan Documents concerning the Borrower and its Affiliates and agreesto use such information in compliance with all applicable requirements of law (including UnitedStates Federal and state securities laws and regulation).          (b) Lender agrees to use all reasonable efforts to maintain the confidentiality of informationobtained by it pursuant to any Loan Document and designated in writing by Borrower or any of itsAffiliate(s), as the case may be, as confidential, except that such information may be disclosed(i) with such Person’s consent, (ii) to the extent such information presently is or hereafterbecomes (A) publicly available other than as a result of a breach of this **Section****20.20** or(B) available to Lender from a source (other than Borrower or any of its Affiliates) not known bythem to be subject to disclosure restrictions, (iii) to the extent disclosure is required byapplicable requirements of law or other legal process or requested or demanded by any governmentalauthority, and (iv) to current or prospective assignees or participants, in each case to the extentsuch assignees or participants agree to be bound by provisions substantially similar to theprovisions of this **Section****20.20**.          **20.21****Headings.** Section headings have been inserted in this Agreement as a matter ofconvenience of reference only; such Section headings are not a part of this Agreement and shall notbe used in the interpretation of this Agreement.          **20.22****Borrower’s Knowledge.** As used herein the term “to Borrower’s actual knowledge”or “to Borrower’s knowledge” is intended to mean to the actual knowledge of employees, officers,contractors or in-house attorneys of Borrower, Guarantor or of DRC or any subsidiaries or DRCAffiliates and its outside law firms and attorneys who have been involved with or undertaken duediligence in connection with the Bankruptcy Case or Plan.          **20.23****Gender.** Words of any gender in this Agreement shall include each other genderwhere appropriate.          **20.24****Time of the Essence.** Time is of the essence of all obligations and agreementsof Borrower and Guarantor.          **20.25****Conflict.** The provisions of this Agreement shall control in the event of anyconflict among it, and any other Loan Document.**[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]**
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     **IN WITNESS WHEREOF**, Borrower, Guarantor and Lender have caused this Agreement to be dulyexecuted and delivered effective as of the date first above written.      **LENDER:************