Ex10.1


    EXHIBIT
      10.1

     

    
      

      

    

    


     

    LOAN
      AND SECURITY AGREEMENT-INVENTORY

     

    


    


    among

    SILVERLEAF
      RESORTS, INC.

    (as
      Borrower)

    


    and

    


     

    THE
      PARTIES WHICH HEREAFTER EXECUTE THIS AGREEMENT OR A JOINDER
      AGREEMENT

    (as
      Lenders)

    


    and

     

    WELLS
      FARGO FOOTHILL, INC.

    (as
      Lender and Facility and Collateral Agent)

    


     

    


     

    As
      of
      December 16 , 2005

     

     

     

    
      
        
        

      

      
        
        

        
        

        
          

          

        

      

      
        
        

      

    

     

    LOAN
      AND SECURITY AGREEMENT-INVENTORY

    


    THIS
      LOAN AND SECURITY AGREEMENT-INVENTORY,
      dated
      as of December 16, 2005, entered into by and among SILVERLEAF
      RESORTS, INC.,
      a Texas
      corporation, having an address of 1221 River Bend Drive, Suite 120, Dallas,
      Texas 75247 (as “Borrower”), the parties, including WELLS
      FARGO FOOTHILL, INC.,
      a
      corporation established under the laws of the State of California, having an
      office and place of business at 13727 Noel Road, Suite 1020, Dallas, Texas
      75240
      which execute and deliver this Agreement or a joinder agreement to this
      Agreement in their respective capacities as Lenders hereunder (collectively,
      the
“Lenders” and each individually a “Lender”) and WELLS
      FARGO FOOTHILL, INC. as
      facility agent and collateral agent (“Agent”).

     

    W 
      I  T  N  E  S 
S  E  T  H:

     

    WHEREAS,
      Borrower is engaged in the business of acquiring, constructing, developing,
      owning, managing, selling and otherwise dealing with Intervals at the Resorts
      (as each such term is hereafter defined); and

     

    WHEREAS,
      in connection with the Loans to be made by Lenders pursuant to this Agreement,
      Agent has agreed to act as facility agent and collateral agent for the other
      Lenders and to perform such duties with respect to the Loans as are expressly
      set forth herein; 

     

    WHEREAS,
      Lenders, subject to the terms and conditions of this Loan and Security
      Agreement-Inventory, have agreed to provide to Borrower, for the purpose of
      providing liquidity in connection with Borrower’s ownership and sale of
      Intervals, a loan in the amount of the Commitment.

     

    


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

     

    SECTION
      1 --
      DEFINITION OF TERMS

     

    1.1    Capitalized
      terms used in this Agreement are defined in this Section 1.1.
      The
      definitions include the singular and plural forms of the terms
      defined.

     

    Account.
      Shall
      mean an “account,” as that term is defined in the Code, and any and all
      supporting obligations in respect thereof.

     

    ACH
      Transactions.
      Any
      cash management or related services (including the Automated Clearing House
      processing of electronic funds transfers through the direct Federal Reserve
      Fedline system) provided by a Bank Product Provider for the account of Borrower
      or its Subsidiaries.

     

    Additional
      Credit Facility.
      The
      term “Additional Credit Facility” shall mean that certain $50,000,000 credit
      facility provided by WFF to Borrower pursuant to that certain Loan and Security
      Agreement-Receivables dated December 16, 2005 by and between Borrower and WFF
      and as may hereafter be further amended from time to time (the “Additional
      Credit Loan Agreement”).”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Additional
      Eligible Resorts or
      Additional
      Eligible Resort.
      The
      terms “Additional Eligible Resorts” and “Additional Eligible Resort” shall have
      the meanings ascribed to such terms in Section 3.4
      hereof.

     

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

     

    Affiliate.
      Shall
      mean, with respect to Borrower or any other Person, any Person who, directly
      or
      indirectly through one or more intermediaries, controls, is controlled by,
      or is
      under common control with, such Person. For purposes of this definition,
“control” means the possession, directly or indirectly, of the power to direct
      the management and policies of a Person, whether through the ownership of stock,
      by contract, or otherwise; provided,
      however,
      that,
      in any event: (a) any Person which owns directly or indirectly 10% or more
      of
      the securities having ordinary voting power for the election of directors or
      other members of the governing body of a Person or 10% or more of the
      partnership or other ownership interests of a Person (other than as a limited
      partner of such Person) shall be deemed to control such Person, (b) each
      director (or comparable manager) of a Person shall be deemed to be an Affiliate
      of such Person, and (c) each partnership or joint venture in which a Person
      is a
      partner or joint venturer shall be deemed to be an Affiliate of such Person.
      

    


    Agreement.
      This
      Loan and Security Agreement-Inventory by and among Borrower, Agent and each
      Lender which executes this Agreement (including the Exhibits and Schedules
      to
      it) or a joinder agreement hereto, as it may be amended from time to
      time.

    


    Annual
      Operating Plan.
      Borrower’s financial and business projections for its operations for the
      upcoming fiscal twelve (12) month period inclusive of a budget and which shall
      represent Borrower’s good faith best estimate of its future performance for the
      period covered thereby.

     

    


    Applicable
      Laws.
      Shall
      mean all applicable laws, rules, regulations and orders of any Governmental
      Authority, including without limitation Credit Protection Laws, the Fair Labor
      Standards Act and the Americans With Disabilities Act.

    


    Availability.
      Shall
      mean, as of any date of determination, if such date is a Business Day, and
      determined at the close of business on the immediately preceding Business Day,
      if such date of determination is not a Business Day, the amount that Borrower
      is
      entitled to borrow as Advances under Section
      2.1
      (after
      giving effect to all then outstanding Obligations and Bank Product Reserves
      to
      the extent applicable hereunder).

    


    Bank
      Product.
      Shall
      mean any financial accommodation extended to Borrower or its Subsidiaries by
      any
      Bank Product Provider (other than pursuant to this Agreement) including: (a)
      credit cards, (b) credit card processing services, (c) debit cards, (d) purchase
      cards, (e) ACH Transactions, (f) cash management, including controlled
      disbursement, accounts or services, or (g) transactions under Hedging
      Agreements.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    Bank
      Product Agreements.
      Shall
      mean those certain agreements entered into from time to time by Borrower or
      its
      Subsidiaries with a Bank Product Provider in connection with the obtaining
      of
      any of the Bank Products.

    


    Bank
      Product Obligations.
      Shall
      mean all obligations, liabilities, contingent reimbursement obligations, fees,
      and expenses owing by Borrower or its Subsidiaries to any Bank Product Provider
      pursuant to or evidenced by the Bank Product Agreements and irrespective of
      whether for the payment of money, whether direct or indirect, absolute or
      contingent, due or to become due, now existing or hereafter
      arising.

    


    Bank
      Product Provider.
      Shall
      mean Wells Fargo or any of its affiliated entities.

    


    Bank
      Product Reserves.
      Shall
      mean, as of any date of determination, the amount of reserves that Agent has
      established (based upon the relevant Bank Product Providers’ reasonable
      determination of the credit exposure in respect of then extant Bank Products)
      for Bank Products then provided or outstanding.

    


    Borrowing
      Base Report.
      Shall
      mean the periodic report prepared for and delivered to Agent showing the
      detailed calculations showing the Loan to Retail Value Ratio in the form of
      Exhibit A, attached hereto which report, from time to time shall be signed
      by
      Harry J. White or Lois Hileman or such other Person designated in writing by
      Borrower to Agent.

     

    Business
      Day.
      Each
      day that is not a Saturday, a Sunday or a legal holiday under the laws of the
      States of Texas or California.

     

    Capital
      Lease.
      Shall
      mean a lease that is required to be capitalized for financial reporting purposes
      in accordance with GAAP.

     

     CapitalSource
      Finance Facility.
      The
      term “CapitalSource Finance Facility” shall mean that certain credit facility
      provided by CapitalSource Finance, LLC to Borrower pursuant to the documents
      listed on Schedule 1.1 (d)(i) hereto (the “CSF
      Documents).

     

    Closing
      Date.
      The
      date of this Agreement.

     

    Code.
      Shall
      mean the Uniform Commercial Code (or any successor statute), as in effect from
      time to time, of the State of California or of any other state the laws of
      which
      are required as a result thereof to be applied in connection with the issue
      of
      perfection or the effect of perfection of security interests; provided
      that to
      the extent that the Code is used to define any term herein or in any other
      Loan
      Documents and such term is defined differently in different Articles or
      divisions of the Code, the definition of such term contained in Article 9 shall
      govern.

    


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

     

    (i)  the
      Inventory;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (ii)  Documents,
      instruments, Accounts, chattel paper, and general intangibles relating to the
      Inventory;

     

    (iii)  Pledged
      Notes Receivable and all proceeds of or from them under the Additional Credit
      Facility;

     

    (iv)  the
      mortgages securing such Pledged Notes Receivable and all proceeds of or from
      them under the Additional Credit Facility;

     

    (v)  Documents,
      instruments, Accounts, chattel paper, and general intangibles relating to the
      Pledged Notes Receivable, (including any relating to the Ineligible Note
      Portfolio) and the mortgages securing such Pledged Notes Receivable under the
      Additional Credit Facility;

     

    (vi)  all
      other
      collateral not referenced above under the Additional Credit
      Facility;

     

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

     

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

     

    Commitment.
      The
      term “Commitment” shall refer singly to the obligation of each Lender to make a
      Loan or Loans to Borrower in an aggregate amount not to exceed the Pro Rata
      Percentage for each Lender of each Advance and collectively to all Loans to
      be
      made by all Lenders as provided herein. The Commitment as of the Closing Date
      is
      $15,000,000 in the aggregate outstanding at any time during the Term of this
      Agreement, and may from time to time be increased or decreased by Agent and
      Lenders upon written a written agreement setting forth the terms and conditions
      of any increase or decrease by and between Agent, Lenders and Borrower.


     

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

     

    Daily
      Balance. Shall
      mean, with respect to each day during the term of this Agreement, the amount
      of
      an Obligation owed at the end of such day.

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Declarant
      Rights.
      Shall
      mean the rights of the declarant in the Declaration for each
      Resort.

     

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

     

    Default
      Rate.
      Upon
      the occurrence and during the continuation of an Event of Default (and at the
      election of Agent), all Obligations (except for Bank Product Obligations) that
      are due under the Loan shall bear interest on the Daily Balance thereof at
      a per
      annum rate equal to the Interest Rate plus four percent (4%) per
      annum;
      provided, however,
      that the
      Default Rate shall in no event exceed the highest interest rate permitted to
      be
      charged under applicable usury laws.

     

    Designated
      Account.
      Shall
      mean account number 32900165597 of Borrower maintained with Borrower’s
      Designated Account Bank, or such other deposit account of Borrower (located
      within the United States) that has been designated as such, in writing, by
      Borrower to Agent.

     

    Designated
      Account Bank.
      Shall
      mean JP Morgan Chase Bank, ABA Number113000609.

     

    Disbursement
      Letter.
      Shall
      mean an instructional letter executed and delivered by Borrower to Agent
      regarding the extensions of credit to be made on the Closing Date, the form
      and
      substance of which is satisfactory to Agent.

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    Event
      of Default.
      Defined
      in Section 8.1 of this Agreement.

     

    Fee
      Letter. 
      Shall
      mean that certain fee letter, dated as of even date herewith, between Borrower
      and Agent, in form and substance satisfactory to Agent.

     

    Final
      Maturity Date.
      The
      term Final Maturity Date shall mean December 31, 2010.

     

    Financial
      Statements.
      The tax
      returns and balance sheets and statements of income and expense of the Borrower,
      and the related notes and schedules delivered by Borrower to Agent prior to
      the
      Closing Date and provided for in Section 4.5(c)(xvii)
      of this
      Agreement; and the quarterly, annual and other periodic financial statements
      and
      reports required to be provided to Agent pursuant to Section 7.1(h).

     

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

     

    Governmental
      Authority.
      Shall
      mean any federal, state, local, or other governmental or administrative body,
      instrumentality, department, or agency or any court, tribunal, administrative
      hearing body, arbitration panel, commission, or other similar dispute-resolving
      panel or body.

     

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

     

    Hedging
      Agreement.
      Any and
      all transactions, agreements, or documents now existing or hereafter entered
      into between Borrower or its Subsidiaries and a Bank Product Provider, which
      provide for an interest rate, credit, commodity or equity swap, cap, floor,
      collar, forward foreign exchange transaction, currency swap, cross currency
      rate
      swap, currency option, or any combination of, or option with respect to, these
      or similar transactions, for the purpose of hedging Borrower’s or its
      Subsidiaries’ exposure to fluctuations in interest or exchange rates, loan,
      credit exchange, security or currency valuations or commodity
      prices.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IRC.
      Shall
      mean the Internal Revenue Code of 1986, as in effect from time to
      time.

     

    IRS.
      Shall
      mean the Internal Revenue Service of the United States of America.

    


    Indebtedness. (a)
      all
      obligations for borrowed money, (b) all obligations evidenced by bonds,
      debentures, notes, or other similar instruments and all reimbursement or other
      obligations in respect of letters of credit, bankers acceptances, interest
      rate
      swaps, or other financial products, (c) all obligations under Capital Leases,
      (d) all obligations or liabilities of others secured by a Lien on any asset
      a
      Person or its Subsidiaries, irrespective of whether such obligation or liability
      is assumed, (e) all obligations for the deferred purchase price of assets (other
      than trade debt incurred in the ordinary course of business and repayable in
      accordance with customary trade practices), (f) all obligations owing under
      Hedging Agreements, and (g) any obligation of Borrower or its Subsidiaries
      guaranteeing or intended to guarantee (whether directly or indirectly
      guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation
      of any other Person that constitutes Indebtedness under any of clauses
      (a)
      through
(f)
      above.

    


    Interest
      Rate.
      The
      Interest Rate on the Inventory Loan Note a variable rate, adjusted as of each
      day of each calendar month, equal to the sum of the Lender Reference Rate plus
      two percent (2.00%) per annum, with interest being computed in arrears on the
      basis of actual days elapsed over a year of 360 days, but in no event shall
      the
      rate of interest at any time during the Term be less than six (6.00%) percent.
      

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Interval
      Release Threshold.
      The
      term “Interval Release Threshold” shall mean 1.11 times the Required Retail
      Value of the Inventory. By way of example only, if the Required Retail Value
      of
      the Inventory is $100,000,000, the Inventory Release Threshold will be
      $111,000,000.

     

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

     

    Lender.
      Shall
      have the meaning set forth in the preamble to this Agreement, and shall include
      any other Person made a party to this Agreement in accordance with the
      provisions of Section
      10.9.

     

    Lender
      Expenses.
      All (a)
      costs or expenses (including taxes, and insurance premiums) required to be
      paid
      by Borrower or its Subsidiaries under any of the Loan Documents that are paid
      or
      incurred by Agent or any Lender, (b) fees or charges paid or incurred by Agent
      or any Lender in connection with the Borrower and its Subsidiaries, including,
      fees or charges for photocopying, notarization, couriers and messengers,
      telecommunication, public record searches (including tax lien, litigation,
      bankruptcy and UCC searches), filing, recording, publication, appraisal
      (including periodic Collateral appraisals or business valuations to the extent
      of the fees and charges (and up to the amount of any limitation) contained
      in
      this Agreement), (c) costs and expenses incurred by Agent or any Lender in
      the
      disbursement of funds to Borrower (by wire transfer or otherwise), (d) charges
      paid or incurred by Agent or any Lender resulting from the dishonor of checks
      relating to the Borrower or associated with the Collateral, (e) reasonable
      costs
      and expenses paid or incurred by the Agent or any Lender to correct any default
      or enforce any provision of the Loan Documents, or in gaining possession of,
      maintaining, handling, preserving, storing, shipping, selling, preparing for
      sale, or advertising to sell the Collateral, or any portion thereof,
      irrespective of whether a sale is consummated, (f) audit fees and expenses
      of
      Agent or any Lender related to audit examinations of the Books to the extent
      of
      the fees and charges (and up to the amount of any limitation) contained in
      this
      Agreement, (g) reasonable costs and expenses of third party claims or any other
      suit paid or incurred by the Agent or any Lender in enforcing or defending
      the
      Loan Documents or in connection with the transactions contemplated by the Loan
      Documents or the Agent or any Lender’s relationship with Borrower, (h) Agent and
      each Lender’s and Participant’s reasonable fees and expenses (including
      attorneys fees) incurred in advising, structuring, drafting, reviewing,
      administering, or amending the Loan Documents, (i) Agent and each Lender’s and
      Participant’s reasonable fees and expenses (including attorneys fees) incurred
      in terminating, enforcing (including attorneys fees and expenses incurred in
      connection with a “workout,” a “restructuring,” or an Insolvency Proceeding
      concerning Borrower or its Subsidiaries or in exercising rights or remedies
      under the Loan Documents), or defending the Loan Documents, irrespective of
      whether suit is brought, or in taking any Remedial Action concerning the
      Collateral and (j) a
      $1,500
      fee to WFF to cover WFF’s marketing and advertising costs with respect to this
      Agreement and the Loan Documents.

     

    Lender
      Reference Rate.
      The
      rate of interest announced, from time to time, within Wells Fargo at its
      principal office in San Francisco as its “prime rate”, with the understanding
      that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the
      lowest of such rates) and serves as the basis upon which effective rates of
      interest are calculated for those loans making reference thereto and is
      evidenced by the recording thereof after its announcement in such internal
      publication or publications as Wells Fargo may designate. The Lender Reference
      Rate on the Closing Date is 7.25%.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Lender-Related
      Person.
      Shall
      mean any Lender affiliated entity, and the officers, directors, employees,
      and
      agents of a Lender.

     

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

     

    Loan
      or Inventory Loan.
      The
      term “Loan” or “Inventory Loan” means, as the context requires, singly each
      Advance and collectively all Advances made by Lenders to Borrower under or
      pursuant to this Agreement. 

     

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

     

    This
      Agreement

    The
      Inventory Loan Note

    The
      Fee
      Letter

    The
      Environmental Indemnification Agreement

    Borrower’s
      Certificate and Request for Advance

    


    Loan
      Year.
      The
      period from the Closing Date through the last day of the next full twelve (12)
      calendar month period and each twelve (12) calendar month period
      thereafter.

     

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

     

    Mandatory
      Prepayment.
      Any
      prepayment required by Section 2.4(b) of this Agreement.

     

    Material
      Adverse Change.
      Shall
      mean (a) a material adverse change in the business, prospects, operations,
      results of operations, assets, liabilities or condition (financial or otherwise)
      of Borrower, taken as a whole, (b) a material impairment of the ability of
      Borrower to perform its obligations under the Loan Documents or of the Agent’s
      ability to enforce the Obligations or realize upon the Collateral, or
      (c) any impairment of the enforceability or priority of the Agent’s Liens
      with respect to the Collateral.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Mortgage
      or Mortgages.
      A
      properly recorded, first priority mortgage, deed of trust, deed to secure debt,
      assignment of beneficial interest or other security instrument, as applicable,
      in the forms attached hereto as Exhibit B (with such changes as may be necessary
      to comply with the law of the state in which the Inventory in question is
      located) executed and delivered by Borrower to Agent encumbering all of the
      right, title and interest of the Borrower in the Inventory and related or
      appurtenant easement, access and use rights and benefits.

     

    Note.
      The
      Inventory Loan Note.

     

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

     

    Obligations.
      All
      Indebtedness due Agent, any Lender or any Affiliate of a Lender, all Bank
      Product Obligations (including any amounts due and payable to any Bank Product
      Provider in respect of Bank Products), all amounts due or becoming due to Agent
      or any Lender in respect of the Loan under any of the Loan Documents, including
      principal, interest, prepayment premiums, contributions, taxes, insurance,
      loan
      charges, custodial fees, attorneys’ and paralegals’ fees and expenses and other
      fees (including the fees provided for in the Fee Letter) or expenses incurred
      by
      Agent or any Lender or advanced to or on behalf of Borrower by Agent or any
      Lender pursuant to any of the Loan Documents, and the prompt and complete
      payment and performance by the Borrower of all obligations, indebtedness and
      liabilities pursuant to this Agreement or any of the Loan Documents or
      otherwise.

     

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

     

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

     

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

     

    Permitted
      Discretion.
      A
      determination made in the exercise of reasonable (from the perspective of a
      secured asset-based lender in the same or similar circumstances) business
      judgment.

     

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

     

    Pledged
      Note Receivable.
      Any
      Note Receivable which at any time has been pledged to Agent on behalf of Lenders
      by Borrower pursuant to the Additional Credit Facility or any of the Loan
      Documents, including any ineligible Note Receivable under the Additional Credit
      Facility.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    Pro
      Rata Percentage.
      The
      applicable percentage of the Loan that each Lender has agreed to make to
      Borrower pursuant to this Agreement as set forth in Schedule 1.0 hereto, as
      such
      percentage may from time to time be amended by Agent and the applicable
      Lender.

     

    Purchase
      Price.
      The
      total purchase price of a timeshare Interval relating to the sale by the
      Borrower to a Purchaser of an Interval comprising a part of the
      Inventory.

     

    Purchaser.
      Any
      Person who purchases one or more Intervals.

     

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

     

    Required
      Retail Value.
      The
      term “Required Retail Value” shall mean the aggregate Retail Value of the
      Inventory, such that the ratio of the outstanding balance of the Loan, from
      time
      to time, to the aggregate Retail Value of the Inventory does not exceed the
      Loan
      to Retail Value Ratio. By way of example, if the outstanding principal balance
      of the Loan is $15,000,000, the Required Retail Value of the Inventory will
      be
      $100,000,000.00.

     

    Resort
      or Resorts (also “Eligible Resort” or “Eligible
      Resorts”).
      Individually and collectively, as applicable, each or all of the interval
      ownership and time-share projects consisting of: (i) (A) Holly Lake Ranch,
      Hawkins, Texas; (B) Piney Shores Resort, Conroe, Texas; (C) Lake O’ The Woods,
      Flint, Texas; (D) Hill Country Resort, Canyon Lake, Texas; (E) Ozark Mountain
      Resort, Kimberling City, Missouri; (F) Holiday Hills Resort, Branson, Missouri;
      (G) Fox River Resort, LaSalle County, Illinois; (H) Timber Creek Resort,
      Jefferson County, Missouri; (I) Oak N’ Spruce Resort, South Lee, Massachusetts;
      (J) Apple Mountain Resort, Habersham County, Georgia; (K) The Villages, Flint,
      Texas; (L) Silverleaf’s
      Seaside Resort, Galveston County, Texas and (M) Orlando Breeze Resort,
      Davenport, Polk County, Florida (also sometimes individually and collectively
      referred to herein as the “Existing Resorts”) and (ii) subject to Agent’s prior
      written approval and satisfaction by the Borrower of the conditions precedent
      set forth in Sections 3.4
      and
4.5
      hereof,
      the Additional Eligible Resorts. The term “Resort” or “Resorts” includes, among
      other things, the undivided annual or (biennial) timeshare ownership interests
      (Intervals) in the respective Resorts, and the appurtenant exclusive rights
      to
      use Units in one or more buildings or phases and all appurtenant or related
      properties, amenities, facilities, equipment, appliances, fixtures, easements,
      licenses, rights and interests, including without limitation, the Common
      Elements, as established by and more fully defined and described in the
      respective Declarations, and the other Timeshare Documents.

     

    Resort
      Finance Facility.
      The
      term “Resort Finance Facility” shall mean that certain credit facility provided
      by Resort Funding, LLC to Borrower pursuant to the documents listed on Schedule
      1.1 (d)(ii) hereto (the “RFC
      Documents).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    Revolving
      Loan Period.
      The
      period during the Term in which the Borrower may borrow, repay and re-borrow
      Advances and shall terminate on December 31, 2008. 

     

    Revolving
      Loan Term.
      Shall
      mean the period commencing on the Closing Date and ending on December 31,
      2008.

     

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

     

    Silverleaf
      Finance II Documents.
      Shall
      mean the loan agreement, the developer transfer agreement, the demand notes
      and
      all other agreements or documents executed in connection with the TFC Conduit
      Loan, as each may be amended, restated or otherwise modified from time to
      time.

     

    SPV.
      Shall
      mean any special purpose entity created for the purpose of effecting a
      securitization of certain of the assets of Borrower.

     

    SPV
      Assets.
      Shall
      mean those assets sold or conveyed by Borrower to the SPV pursuant to the
      documents created for the securitization transaction.

     

    Subsidiary.
      Of a
      Person means a corporation, partnership, limited liability company, or other
      entity in which that Person directly or indirectly owns or controls the shares
      of Stock having ordinary voting power to elect a majority of the board of
      directors (or appoint other comparable managers) of such corporation,
      partnership, limited liability company, or other entity.

     

    Survey.
      A plat
      or survey of the Resort prepared by a licensed surveyor acceptable to Agent
      and
      in a form acceptable to Agent.

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Textron
      Financial Facility.
      The
      term “Textron Financial Facility” shall mean that certain credit facility
      provided by Textron Financial Corporation to Borrower pursuant to the documents
      listed on Schedule 1.1 (d)(iii) hereto (the “TFC
      Documents).

     

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

     

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

     

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

     

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

     

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

     

    Transfer
      Account.
      The
      account established by Agent to which all Loans by Lenders will be
      made.

     

    UCC
      Financing Statements.
      The
      UCC-1 Financing Statements, naming the Borrower as debtor and the Agent as
      secured party on behalf of Lenders, heretofore or hereafter filed in connection
      with the Loan and all amendments thereto.

     

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

     

    Wells
      Fargo.
      Wells
      Fargo Bank, National Association, a national banking association.

     

    WFF.
      Wells
      Fargo Foothill, Inc.

     

    SECTION
      2 --
      THE LOAN

     

    2.1    Revolving
      Loan, Lending Limits and Making of Loans.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (a)    Revolving
      Loans. Upon
      the
      terms and subject to the conditions set forth in Section 2.1(c) hereof and
      other
      provisions of this Agreement, including but not limited to Section 2.7 hereof,
      each Lender agrees severally to make Advances to the Borrower and the Borrower
      may borrow, repay and re-borrow during the Revolving Loan Period, in an
      aggregate amount not to exceed at any time the lesser of Lenders Pro Rata
      Percentage of: (i) the Loan to Retail Value of the Inventory, (ii) the
      Availability or (iii) the Commitment. The Revolving Loan Period shall be the
      period during the Term in which the Borrower may borrow, repay and reborrow
      Advances and shall terminate in all respects on December 31, 2008. 

     

    Borrower
      acknowledges, agrees and confirms that the obligations of all Lenders to make
      Loans under this Agreement to Borrower is limited to the lesser of: (i) the
      Borrowing Base, (ii) the Availability or (iii) the Commitment. Borrower further
      acknowledges, agrees and confirms that the obligation of each Lender to make
      loans hereunder to Borrower is limited to: (i) with respect to each Advance
      hereunder, each Lender’s Pro Rata Percentage of any such Advance hereunder and
      (ii) with respect to all Advances made hereunder, such Lender’s obligation
      hereunder shall be limited to its commitment as set forth on Schedule
      1.0.

     

    Each
      Loan
      by a Lender shall be made ratably in accordance with each Lender’s respective
      Pro Rata Percentage, provided, however, that the failure of any Lender to make
      any required Loan shall not in itself relieve any other Lender of its obligation
      to make any required Loan hereunder. Likewise, no Lender shall be responsible
      or
      liable for the failure of any other Lender to make any Loan required to be
      made
      by such other Lender, nor shall any Lender be obligated to make any Loan or
      Loans in excess of its respective Pro Rata Percentage, but not in excess of
      its
      Commitment, in the event that any other Lender fails or refuses to make a Loan
      or Loans as provided hereunder. As and when additional Lenders execute and
      deliver this Agreement, then (A) such additional Lenders shall be deemed to
      have
      simultaneously purchased from each of the other Lenders who have previously
      executed and delivered this Agreement, a share in such other Lenders’ Loans so
      that the amount of the Loans of all Lenders shall be pro rata as otherwise
      set
      forth above and (B) such other adjustments shall be made from time to time
      as
      shall be equitable to insure that the Advances to Borrower are made ratably
      by
      each Lender in accordance with its respective Pro Rata Percentage.

     

    (b)    Reserves.
      Anything
      to the contrary in this Section
      2.1
      notwithstanding, Agent shall have the right to establish reserves in such
      amounts, and with respect to such matters, as Agent in its Permitted Discretion
      shall deem necessary or appropriate, against the Loan to Retail Value of the
      Inventory. 

    


    (c)    Maximum
      Amount of Advances.
      Notwithstanding anything to the contrary contained herein, no Lender shall
      have
      an obligation to make an Advance or its Pro Rata Percentage thereof hereunder
      to
      the extent that the aggregate of Advances outstanding would cause the Loan
      to
      exceed the lesser of (i) Borrowing Base, (ii) the Availability or (iii) the
      Commitment.

    


    (d)    Note
      Evidencing Borrower’s Obligations.
      Borrower’s obligations to pay the principal of and interest on the Loan or Loans
      made by each Lender shall be evidenced by the Note to the Agent, as Agent for
      each Lender, which Note shall be dated as of the date hereof and be in the
      principal amount of $15,000,000.00. The Note will mature on the Final Maturity
      Date, bear interest as provided in Section 2.2 hereof and be otherwise entitled
      to the benefits of this Agreement. Notwithstanding the stated principal amount
      of the Note, the aggregate outstanding principal amount of the Loan at any
      time
      shall be the aggregate principal amount owing on the Note at such time. Agent
      shall and is hereby authorized to record in its internal books and records
      the
      date and amount of each Advance made by Lenders, the Applicable Interest Rate
      and interest period applicable thereto and each repayment thereof; and such
      books and records shall, as between Borrower and each Lender, absent manifest
      error, constitute prima facie evidence of the accuracy of the information
      contained therein. Failure by Agent to so record any Advance made by Lenders
      (or
      any error in such recordation) or any payment thereon shall not affect the
      Obligations of Borrower under this Agreement or under the Note and shall not
      adversely affect Lender’s rights under this Agreement with respect to the
      repayment thereof. At the election of any Lender, Borrower shall execute and
      deliver to such Lender a note in a stated principal amount equal to such
      Lender’s Pro Rata Percentage of the Loan, which such note or notes shall be on
      the same terms and conditions as provided above and which note or notes shall
      be
      included within the definition of “Note” as such term is used
      herein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (e)    Notice
      of Advances. Upon
      receipt by Agent from Borrower of a written request for Advance in accordance
      with Section 5 hereof and Borrower’s satisfaction of the requirements set forth
      in Section 5 hereof, Agent shall give a written notice (a “Notice
      of Borrowing”)
      to
      each Lender, (which Notice of Borrowing shall be given to each Lender not less
      than two (2) Business Days prior to the date of the proposed
      Advance), setting forth: (i) the total amount of the Advance requested by
      Borrower; (ii) the Borrowing Base Report received from Borrower supporting
      such
      requested Advance; (iii) the amount of all Loans remaining outstanding by each
      respective Lender; (iv) the outstanding principal balance of the Loan; (v)
      each
      such Lender’s Pro Rata Percentage of the requested Advance and (vi) the date on
      which such Advance is to be made; or at its option, the Agent shall provide
      to
      each Lender: (A) each month by the close of business on the fifth (5th) Business
      Day following receipt by Agent from Borrower, but in no event later than the
      30th day of the month: (i) a reconciled Borrowing Base Report; and (ii) an
      updated report showing all remaining unsold Inventory (a “Collateral
      Data Report”);
      and
      (B) by the close of business on the tenth (10th) Business Day following receipt
      by Agent from Borrower of the Borrowing Base Report and the Collateral Data
      Report: (i) a summary of all Advances made by Agent during the immediately
      preceding month (a “Summary
      of Weekly Advances”),
      and
      (ii) a summary report of Advances for the immediately preceding month and a
      calculation of the net Lender’s Advance required of such Lender with respect to
      all Advances made during the immediately preceding month (a “Lender
      Advance Report”).

     

    (f)    Disbursement
      of Funds.
      If
      Notice
      of Borrowing is provided in accordance with Section 2.1(e) above, then after
      receiving a Notice of Borrowing from Agent, each Lender shall, not later than
      11:00 a.m., Central Standard Time, on the date specified in such Notice of
      Borrowing on which the proposed Advance is to be made, wire transfer to Agent
      at
      the Transfer Account, in immediately available funds, an amount equal to each
      such Lender’s Pro Rata Percentage of the proposed Advance as set forth in the
      Notice of Borrowing. Upon Agent’s receipt of funds from each Lender equal to the
      amount of the requested Advance, and subject to Borrower’s compliance with the
      terms and conditions of this Agreement, Agent shall disburse the Advance to
      Borrower by wire transfer of funds as directed in writing by Borrower. If Agent
      shall not receive funds from any Lender as set forth above, then the amount
      of
      the Advance in question shall be automatically reduced by an amount equal to
      the
      missing Lender’s Pro Rata Percentage of the Advance in question, and Agent
      shall, subject to Borrower’s compliance with the terms and conditions of this
      Agreement, disburse the Advance in the reduced amount to Borrower by wire
      transfer of funds as directed in writing by Borrower. Agent, in its sole and
      absolute discretion, may (but shall not be obligated to) make the full amount
      of
      the requested Advance available to Borrower prior to the receipt by Agent from
      one or more Lenders of funds representing such Lender’s or Lenders’ Pro Rata
      Percentage of the Advance in question. If the funds representing such Lender’s
      or Lenders’ Pro Rata Percentage of the Advance in question are not received by
      Agent within two (2) Business Days of the date of such Advance, Borrower shall
      immediately, upon demand of Agent, repay such amount to Agent. Nothing herein
      shall be deemed to relieve any Lender from its obligations hereunder or to
      prejudice any rights Agent may have against any Lender as a result of any
      Lender’s failure to make any Loan or Loans as provided herein; or if notice of
      Advances is provided in accordance with Section 2.1(e) above, then by the close
      of business on the third (3rd) Business Day following such Lender’s receipt of
      the Lender Advance Report, such Lender shall wire transfer to Agent at the
      Transfer Account, in immediately available funds, the net amount due from such
      Lender as set forth in the Lender Advance Report. If the funds representing
      such
      Lender’s amount of the Advance or Advances in question are not received by Agent
      within five (5) Business Days of the date of such Lender’s receipt of the Lender
      Advance Report, Borrower shall immediately, upon demand of Agent, repay such
      amount to Agent. Nothing herein shall be deemed to relieve Agent or any Lender
      from its obligations hereunder or to prejudice any rights Agent may have against
      any Lender as a result of any Lender’s failure to make any Loan or Loans as
      provided herein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (g)    Monthly
      Collateral and Borrowing Base Reporting.
      Within
      ten (10) days following the end of any calendar month, Borrower shall provide
      to
Agent:
      (i) an updated Borrowing Base Report in the form attached as Exhibit A and
      (ii)
      by the close of business on the tenth (10th) Business Day following receipt
      by
      Agent from Borrower of the Borrowing Base Report a Summary of Weekly Advances
      made by Agent during the immediately preceding month.

     

    2.2    Interest
      Rate.
      

     

    (a)    Interest
      Rate.
      Except
      as provided in clause
      (b)
      below,
      all Obligations (except for Bank Product Obligations not charged to the Loan)
      that have been charged to the Loan pursuant to the terms hereof shall bear
      interest on the Daily Balance thereof at a per annum rate equal to the Interest
      Rate from the date of Agent’s wiring of funds to Borrower through the date of
      Agent’s receipt of repayment of the Loan (if received by Agent later than noon,
      Central Standard Time, then interest accrual shall be through the next Business
      Day following such receipt). The foregoing notwithstanding, at no time shall
      any
      portion of the Obligations (other than Bank Product Obligations) bear interest
      on the Daily Balance thereof at a per annum rate less than the rate stated
      in
      the Applicable Interest Rate. To the extent that interest accrued hereunder
      at
      the rate set forth herein would be less than the foregoing minimum daily rate,
      the Interest Rate chargeable hereunder for such day automatically shall be
      deemed increased to the minimum rate. 

     

    (b)    Default
      Rate.
      Upon
      the occurrence and during the continuation of an Event of Default (and at the
      election of Agent), all Obligations (except for Bank Product Obligations) that
      have been charged to the Loan pursuant to the terms hereof shall bear interest
      on the Daily Balance thereof at a per annum rate equal to the Default Rate.
      Each
      Lender’s Loan shall bear interest at the Interest Rate or the Default Rate as
      applicable as of the date funds are received by Agent as provided in Section
      2.1(f) through the date of Agent’s wiring of repayment funds to each Lender in
      accordance with Sections 2.1(f) and 2.3(c).

     

    2.3    Payments.
      The
      From and after the Closing Date, Borrower agrees punctually to pay or cause
      to
      be paid to Agent, as Agent for each Lender, all principal and interest due
      under
      the Note in respect of the Loans. Interest and all other fees payable hereunder
      shall be due and payable, in arrears, on the first day of each month at any
      time
      that Obligations are outstanding:

     

    (a)    Monthly
      Payments.
      The
      Borrower shall pay to the Agent, on the first day of each month during the
      Term,
      commencing on January 1, 2006, interest on the outstanding principal balance
      of
      the Loan, from time to time, at the Interest Rate together with such additional
      sums as may be due for costs and expenses. Agent shall apply each such payment
      in the following order: (i) to the payment of all costs or expenses
      (including any amounts due and payable to any Bank Product Provider in respect
      of Bank Products) incurred by the Agent pursuant to this Agreement in creating,
      maintaining, protecting or enforcing the Liens in and to the Collateral and
      in
      collecting any amount due to Agent in connection with the Loan; (ii) to any
      interest accrued at the Default Rate; (iii) to the payment of accrued and
      unpaid interest at the Interest Rate; and (iv) to the reduction of the
      principal balance of the Inventory Loan. If the amount of the funds received
      by
      Agent with respect to any month is insufficient to pay in full all amounts
      due
      from Borrower to Agent under this Agreement, Borrower shall pay the difference
      to Agent on or before the fifth (5th) day after notice from Agent to Borrower
      advising Borrower of such insufficiency.

     

    (b)    Interval
      Release Price Payments.
      Prior
      to the release by Agent of any Interval from the Collateral in accordance with
      Section 2.9 hereof, the Borrower shall pay to the Agent an amount equal to
      the
      greater of: (i) twenty (20%) percent of the greater of the Retail Value of
      such
      Interval as set forth on the last Retail Value of Inventory Certificate
      delivered to Agent or the actual sales price of such Interval, or (ii) an amount
      necessary to fully repay the Loan upon sale of 75% of the Inventory (the
“Release
      Price”);
      provided, however, that if the Retail Value of the Inventory, as determined
      by
      the Agent, is equal to or greater than the Interval Release Threshold, the
      Borrower shall not be required to pay a Release Payment with respect to the
      release of any Interval for so long as the Retail Value of the Inventory equals
      or exceeds the Interval Release Threshold. 

     

    Subsequent
      to the end of the Revolving Loan Period, so long as Borrower maintains the
      Required Retail Value of the Inventory, the outstanding principal balance of
      the
      Loan on the last day of the Revolving Loan Period shall be amortized on a
      quarterly basis over the remaining Term by the payment from Borrower of 12.50%
      of the Loan balance on the last day of the Revolving Loan Period. In the event
      that Borrower fails to maintain the Required Retail Value of the Inventory,
      Borrower shall immediately prepay in cash such amount as is necessary so that
      the Loan to Retail Value is at all times 15% or less.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    (d)    Payments
      to Lender.
      Agent
      may at its sole and absolute discretion either: (i) promptly upon receipt wire
      transfer to any Lender its Pro Rata Percentage of any payment received from
      Borrower in accordance with this Section 2.3 or Section 2.4; or (ii) include
      any
      Lender’s Pro Rata Percentage of any payment received from Borrower in accordance
      with this Section 2.3 or Section 2.4 in the Lender Advance Report pursuant
      to
      Section 2.1(g), for transfer to Lender pursuant to 2.1(f).

     

    2.4    Prepayments.

     

    (a)    Voluntary
      Prepayments.
      Subject
      to the terms of this Agreement and the payment of the applicable prepayment
      premium set forth below, Borrower may voluntarily prepay the entire principal
      amount of the Loan, in whole but not in part, at any time, upon ten (10) days'
      prior written notice to Agent. Any such prepayment must include all outstanding
      principal, accrued but unpaid interest, and all other Obligations, including
      the
      applicable prepayment premium provided below. Any voluntary prepayment of the
      Loan in full, whether before or after the occurrence of an Event of Default,
      must be accompanied by a prepayment premium (the “Applicable Prepayment
      Premium”) calculated, as of immediately prior to such prepayment, as
      follows:

    

      
        	
                Date
                  of Prepayment

              	
                Premium

              
	 	 
	
                Loan
                  Year One

              	
                No
                  voluntary prepayment allowed

              
	
                Loan
                  Year Two

              	
                Three
                  percent (3%) of the then outstanding bal-ance of the
                  Loan

              
	
                Loan
                  Year Three

              	
                Two
                  percent (2%) of the then outstanding balance of the
                  Loan

              
	
                Loan
                  Year Four and thereafter

              	
                One
                  percent (1%) of the then outstanding balance of the
                  Loan

              


      

    

     

    If
      the
      Loan is accelerated based on an Event of Default prior to the expiration of
      the
      first Loan Year, or if Borrower undertakes a voluntary prepayment of the full
      amount owed on the Loan prior to expiration of the first Loan Year, at Agent’s
      sole discretion, payments on the Loan must include the Prepayment Premium that
      would be applicable if prepayment occurred in the second Loan Year.

     

    Notwithstanding
      the foregoing, no prepayment premium shall be payable, and there shall be no
      prepayment prohibition at any time, in connection with (i) any release of an
      Interval and the payment of the applicable Release Price, if any such payment
      is
      required, as set forth in Section 2.3(b) above or (ii) any prepayment of the
      principal balance of the Loan which occurs in accordance with Section
      2.4(b)
      or (iii)
      if such prepayment is from the issuance of subordinated debt, sale of stock
      or
      from other forms of equity contributions to the capital of Borrower or (iv)
      if
      such prepayment is from internally generated cashflow. In
      addition to the above, Borrower may also prepay the entire Inventory Loan
      without penalty, but within ninety (90) days of giving Agent prior written
      notice of its intent to do so, in the event that Agent (i) modifies the reserves
      referenced in Section
      2.1(b),
      or (ii)
      reduces the Loan To Retail Value Ratio or (iii) changes in a material way,
      adverse to Borrower, the definition of Eligible Inventory if the result of
      such
      change or modification would result in a reduction in Availability of more
      than
      15% over a continuous 60 day period, as measured against Availability
      immediately preceding the actions in Subsections (i), (ii) or (iii) above
      implemented by Agent. If Borrower voluntarily prepays the entire Inventory
      Loan,
      such prepayment must be accompanied by full payment of the outstanding balance
      under the Additional Credit Facility.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)    Mandatory
      Prepayments. If
      at any
      time and for any reason, the outstanding unpaid principal balance of the Loan
      shall exceed the amount which satisfies the Loan to Retail Value Ratio, then,
      within five (5) Business Days following Borrower’s receipt of telecopied notice
      from Agent of the occurrence of such excess or, absent such telecopied notice,
      within fifteen (15) days after the end of the calendar month in which such
      excess occurred, Borrower shall either: (x) prepay the principal balance of
      the
      Loan in an amount equal to the difference between the aggregate principal amount
      of the Loan and the amount necessary to comply with the Loan to Retail Value
      Ratio of the Inventory or (y) Borrower shall grant to Agent a first mortgage
      Lien on additional Intervals from Eligible Resorts so that the Retail Value
      of
      the Inventory, including such additional Intervals, equals or exceeds the
      Required Retail Value of the Inventory and the Loan to Retail Value Ratio is
      satisfied. In granting to Agent a first mortgage lien on such additional
      Intervals, Borrower shall comply with the document delivery and recordation
      requirements set forth in Section 4 of this Agreement and Borrower shall deliver
      to Agent its written certification that the Retail Value of the Inventory,
      including such additional Intervals, is equal to or greater than the Required
      Retail Value and satisfies the Loan to Retail Value Ratio. If Borrower elects
      to
      prepay the excess principal balance of the Loan pursuant to this Section 2.4(b)
      above, no prepayment premium shall be payable in connection with such
      prepayment.

     

    (c)    Premiums.
      Notwithstanding anything herein contained to the contrary, any prepayment under
      this Section 2.4
      must
      include all accrued but unpaid interest, and accrued but unpaid contributions,
      taxes, insurance, loan charges, custodial fees, attorneys’ and paralegals’ fees
      and expenses and other fees or expenses incurred by any Lender or advanced
      to or
      on behalf of Borrower by any Lender pursuant to any of the Loan Documents
      accrued but unpaid.

     

    2.5    Capital
      Adequacy Event. If,
      after
      the
      date hereof, a Lender determines that (i) the adoption of or change in any
      law,
      rule, regulation or guideline regarding capital requirements for banks or bank
      holding companies, or any change in the interpretation or application thereof
      by
      any Governmental Authority charged with the administration thereof, or (ii)
      compliance by Lender or its parent bank holding company with any guideline,
      request, or directive of any such entity regarding capital adequacy (whether
      or
      not having the force of law), has the effect of reducing the return on Lender’s
      or such holding company’s capital as a consequence of such Lender’s agreements
      hereunder to a level below that which such Lender or such holding company could
      have achieved but for such adoption, change, or compliance (taking into
      consideration Lender’s or such holding company’s then existing policies with
      respect to capital adequacy and assuming the full utilization of such entity’s
      capital) by any amount deemed by Lender to be material, then Agent may notify
      Borrower thereof. Following receipt of such notice, Borrower agrees to pay
      Agent
      on demand the amount of such reduction of return of capital as and when such
      reduction is determined, payable within 90 days after presentation by Lender
      of
      a statement in the amount and setting forth in reasonable detail Lender’s
      calculation thereof and the assumptions upon which such calculation was based
      (which statement shall be deemed true and correct absent manifest error). In
      determining such amount, Lender may use any reasonable averaging and attribution
      methods.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.6    Fee
      Letter Fees.
      As and
      when due and payable under the terms of the Fee Letter, Borrower shall pay
      to
      Agent the fees set forth in the Fee Letter.

     

    2.7    Suspension
      of Advances. 

     

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

     

    (b)    Change
      in Control.
      If
      there shall occur a change, singly or in the aggregate, of more than fifty
      percent (50%) of the executive management of Borrower as described in Schedule
      2.7(b) hereto, Agent shall have no obligation to make any Advances hereunder,
      unless within thirty (30) days prior thereto Borrower provides Agent with
      written information setting forth the replacement executive management personnel
      of Borrower together with a description of those Persons’ experience, ability
      and reputation, and Agent, acting in good faith, determines that the replacement
      management personnel’s experience, ability and reputation is equal to or greater
      than that of Borrower’s executive management as set forth on Schedule 2.7(b).
      Agent shall have no obligation to make any Advances hereunder if more than
      two
      (2) of the five (5) Board of Directors’ positions are controlled by the
      Borrower’s bond holders.

     

    (c)    Default
      or Event of Default.
      No
      Lender shall be obligated to fund any Advance hereunder if a Default or Event
      of
      Default shall have occurred and be continuing.

     

    2.8    Pro
      Rata Treatment.
      Each
      repayment of principal and interest shall be allocated among Lenders in
      accordance with their respective Pro Rata Payment Percentage. Each Lender agrees
      that in computing such Lender’s portion of any Advance to be made hereunder,
      Agent may, in its discretion, round each Lender’s such Advance to the next
      higher or lower whole dollar amount. If any Lender shall, through the exercise
      of a right of banker’s lien, set-off, counterclaim or otherwise, obtain payment
      with respect to its Loans which results in its receiving more than its Pro
      Rata
      Payment Percentage of any payments described above, then (A) such Lender shall
      be deemed to have simultaneously purchased from each of the other Lenders a
      share in such other Lender’s Loans so that the amount of the Loans of all
      Lenders shall be pro rata as otherwise set forth above, (B) such Lender shall
      immediately pay to the other Lenders their Pro Rata Payment Percentage of the
      payments otherwise received as consideration for such purchase and (C) such
      other adjustments shall be made from time to time as shall be equitable to
      insure that all Lenders share such payments ratably. If all or any portion
      of
      any such excess payment is thereafter recovered from Lender which received
      the
      same, the purchase provided in this Section 2.8 shall be deemed to have been
      rescinded to the extent of such recovery, without interest. Borrower expressly
      consents to the foregoing arrangements and agrees that each Lender so purchasing
      a portion of another Lender’s loans may exercise all rights of payment
      (including all rights of set-off, banker’s lien or counterclaim) with respect to
      such portion as fully as if such Lender were the direct holder of such
      portion.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.9    Release
      of Intervals from Inventory.
      Upon
      written request of the Borrower, and provided that no Event of Default shall
      have occurred and be continuing hereunder, Agent shall release from the
      Collateral, one or more Intervals subject to the following conditions: (i)
      if
      required, payment by Borrower to Agent at the time of such release of the
      Release Price for each such Interval and the remaining Collateral satisfies
      the
      Required Retail Value or (ii) the application of Section 2.4(b) does not require
      a Release Price Payment and the remaining Collateral satisfies the Required
      Retail Value and equals or exceeds the Interval Release Threshold.

     

    SECTION
      3 --
      COLLATERAL GRANT OF SECURITY INTEREST

     

    3.1    Grant
      of Security Interest.
      To
      secure the payment and performance of the Obligations, for value received,
      Borrower unconditionally and irrevocably assigns, pledges and grants to Agent,
      as Agent for each Lender and the Bank Product Providers a continuing first
      priority security interest in and to the Collateral (other than as set forth
      below). Notwithstanding anything herein to the contrary, Borrower acknowledges
      and agrees as follows:

     

    The
      Loan
      shall be secured by:

     

    
      	 	
              (i)

            	
              a
                first priority security interest in the Inventory;
                and

            


    

     

    
      	 	
              (ii)

            	
              a
                second priority security interest in the Collateral granted by Borrower
                to
                Agent under the Additional Credit Facility.


            


    

     

    For
      convenience of administration, Agent is acting as agent for Lenders under the
      Agreement. Agent, as such agent, may execute any of its duties hereunder by
      or
      through its agents, officers or employees and shall be entitled to rely upon
      the
      advice of counsel as to its duties. Agent, as such agent, shall not be liable
      to
      any Lender for any action taken or omitted to be taken by it in good faith
      and
      shall neither be responsible to Lenders for the consequences of any oversight
      or
      error of judgment nor be answerable to Lenders for any loss unless the same
      shall happen through Agent’s gross negligence or willful misconduct. To the
      extent that Agent, as such agent, shall not be reimbursed by Borrower for any
      costs, liabilities or expenses incurred in such capacity, Lenders shall
      reimburse Agent therefor pro rata in accordance with their respective Pro Rata
      Percentages (including Agent as a Lender for this purpose). Each Lender agrees
      that Agent shall be entitled to take and shall only be required to take, any
      action which it is permitted to take under this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.2    Financing
      Statements; Priority of Liens.
      Borrower agrees, at its own expense, to authorize the filing of financing
      statements, continuation statements and amendments provided for by the Code
      and
      to execute and deliver any and all other instruments or documents and take
      such
      other action as may be required to perfect and to continue the perfection of
      Agent’s security interest in the Collateral. Borrower hereby authorizes Agent to
      execute and/or file on Borrower’s behalf any such financing statements,
      continuation statements and amendments. Each Lender shall have an equal security
      interest in the Collateral based upon its Pro Rata Percentage and no Lender’s
      security interest in the Collateral shall have priority over any other Lender’s
      security interest in the Collateral.

     

    3.3    Insurance.
      The
      Borrower or the Silverleaf Club shall maintain insurance coverage on the Resorts
      and the Collateral in accordance with Section 7.1(d) hereof. Such insurance
      coverage shall insure against such risks, be in such amounts, with such
      companies and on such other terms as Agent may reasonably require. Each such
      policy shall name Agent as an additional insured and loss payee as agent for
      Lenders, as their respective interests may appear.

     

    3.4    Substitution
      of Inventory.
      Agent
      agrees that Borrower may, from time to time during the Term hereof, and without
      the payment of any prepayment penalty, replace any Interval or Intervals by
      granting to Agent a first mortgage Lien on a new Interval or Intervals owned
      by
      the Borrower at an Eligible Resort. In granting to Agent a first mortgage Lien
      on any such new Interval or Intervals, Borrower shall comply with the document
      delivery and recordation requirements set forth in Section 4 of this Agreement
      and Borrower shall deliver to Agent its written certification that the Retail
      Value of the Inventory after any such substitution, is equal to or greater
      than
      the Required Retail Value and satisfies the Loan to Value Ratio. In connection
      with any such replacement of Inventory under this Section 3.4,
      Borrower may propose to Agent that one or more additional time-share plans
      and
      projects owned and operated by Borrower be included among the Eligible Resorts.
      Any such proposal will be in writing, and will be accompanied or supported
      by
      the due diligence and supporting Borrower, Affiliate, project, financial and
      related information identified in Section 4 hereto, and such other information
      as Agent may require. Borrower will reasonably cooperate with Agent’s
      underwriting and due diligence, and Borrower will be responsible for payment
      upon billing for Agent and each Lender’s out-of-pocket expenses in connection
      therewith. Subject to Agent’s satisfactory underwriting and due diligence
      review, including satisfaction of the conditions in Section 4 hereof as they
      relate to such additional time-share resorts, Agent may, but shall not be
      required to, approve one or more such additional time-share resorts, including
      future phases or condominiums in an Existing Eligible Resort, as an Eligible
      Resort. Subject in each instance to Agent’s acceptable underwriting and due
      diligence review, and Agent’s prior written approval, any project as may be
      approved by Agent after the Closing Date, if any, is hereinafter referred to
      singly as an “Additional
      Eligible Resort”
and
      collectively as the “Additional
      Eligible Resorts.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.5    Cross
      Collateralization.
      The
      Collateral also secures the Obligations of Borrower under the Additional Credit
      Facility. Upon repayment of this Loan and the satisfaction by Borrower of all
      of
      the Obligations, the Collateral shall continue to secure the Additional Credit
      Facility, as provided in the documents evidencing and securing the Additional
      Credit Facility. 

     

    3.6    Security
      Interest in All Pledged Notes Receivable.
      Agent,
      on behalf of each Lender, shall have a continuing security interest in all
      of
      the Pledged Notes Receivable under the Additional Credit Facility and Agent
      may
      collect all payments made under or in respect of the Pledged Notes Receivable
      under the Additional Credit Facility, subject to the prior application of such
      funds to the obligations under the Additional Credit Facility, for application
      to the Obligations hereunder. Notwithstanding anything heretofore to the
      contrary, unless and until an Event of Default shall occur, Borrower, as agent
      for and on behalf of Agent, may retain possession of and collect payments under
      or in respect of all Pledged Notes Receivable. By executing this Agreement,
      Borrower acknowledges and agrees that it is holding such payments as bailee
      for
      Agent, subject to the rights of the Agent and Lenders under the Additional
      Credit Facility. Such payments shall be promptly delivered to Agent upon the
      occurrence of an Event of Default for application, subject to the prior rights
      of Agent and Lenders under the Additional Credit Facility.

     

    SECTION
      4 --
      CONDITIONS PRECEDENT TO THE CLOSING

     

    4.1    Conditions
      Precedent.
      The
      obligation of Agent and Lenders to enter into this Agreement and to fund the
      initial Advance shall be subject to the satisfaction of each of the following
      conditions precedent, in addition to all of the conditions precedent set forth
      elsewhere in the Loan Documents:

     

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

     

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

     

    (c)    No
      Changes.
      That
      all information and documents heretofore delivered by Borrower to Agent with
      respect to Borrower or the Resorts, including information and documents
      delivered in connection with the Additional Credit Facility, remain true and
      correct in all respects.

     

    (d)    Approval
      of Documents Prior to Closing Date.
      Borrower has delivered to Agent (with copies to Agent’s counsel), at least
      fifteen (15) Business Days prior to the Closing Date, and Agent has reviewed
      and
      approved, at least five (5) Business Days prior to the Closing Date, the form
      and content of all of the items specified in Section 4.1(d)(i)
      through
(vi)
      below
      (the “Submissions”).
      Agent
      shall have the right to review and approve any changes to the form of any of
      the
      Submissions. If Agent disapproves of any changes to any of the Submissions,
      Agent shall have the right to require Borrower either to cure or correct the
      defect objected to by Agent or to elect not to fund the Loan or any Advance.
      Under no circumstances shall Agent’s failure to approve or disapprove a change
      to any of the Submissions be deemed to be an approval of such Submissions.
      All
      of the Submissions were and shall be prepared at Borrower’s sole cost and
      expense, unless expressly stated to be an obligation and expense of Agent.
      Agent
      shall have the right of prior approval of any Person responsible for preparing
      a
      Submission (“Preparer”)
      and
      may disapprove any Preparer in its sole discretion, for any reason, including
      without limitation, that Agent believes that the experience, skill, reputation
      or other aspect of the Preparer is unsatisfactory in any respect. All
      Submissions required pursuant to this Agreement shall be addressed to Agent
      and
      include the following language: “THE UNDERSIGNED ACKNOWLEDGES THAT WELLS FARGO
      FOOTHILL, INC., AS AGENT FOR EACH LENDER, IS RELYING ON THE WITHIN INFORMATION
      IN CONNECTION WITH ITS DETERMINATION TO MAKE A LOAN TO SILVERLEAF RESORTS,
      INC.
      IN CONNECTION WITH THE SUBJECT COLLATERAL.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (i)  A
      certificate in the form attached as Exhibit C, to be dated as of the Closing
      Date and signed by the president, vice president, or secretary of the Borrower,
      certifying that the conditions specified in Sections (a),
      (b)
      and
(c)
      above
      are true and requesting an Advance under this Agreement;

     

    (ii)  Copies
      of
      the articles of incorporation of Borrower and all amendments thereto, certified
      to be true and complete by Borrower and the Secretary of State of the State
      of
      Texas and a current certificate of good standing for Borrower, and copies of
      the
      by-laws of Borrower and all amendments thereto, certified to be true, correct
      and complete by the secretary or assistant secretary of Borrower;

     

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

     

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

     

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

     

    (vi)  Commitment
      to issue Mortgagee Title Policies (as defined below) from the Title
      Company.

     

    (e)    Execution
      and Delivery of Loan Documents.
      Borrower shall have executed and/or delivered to Agent, on or before the Closing
      Date, to the extent not previously executed and delivered, the following Loan
      Documents:

     

    (i)  This
      Agreement.

     

    (ii)  The
      Note.

     

    (iii)  Environmental
      Indemnification Agreement.
      

     

    (iv)  Mortgages.
      In the
      form attached hereto as Exhibit A.

     

    (v)  Borrower’s
      Certificate and Request for Advance. In
      the
      form attached hereto as Exhibit C.

     

    (vi)  The
      Disbursement Letter.

     

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

    


    (f)    Physical
      Inspection.
      Agent
      shall be satisfied with its physical inspection of the Resorts.

     

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

     

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

     

    (i)    Opinion
      of Counsel.
      An
      opinion or opinions of Borrower’s Counsel in form and substance acceptable to
      Agent.

     

    (j)    Recording
      of Mortgages.
      The
      Mortgages shall have been duly recorded in the applicable land records for
      each
      state in which the Mortgages are to be recorded to provide Agent with a Lien
      on
      the Collateral.

     

    (k)    Title
      Insurance Commitment.
      Subject
      to Section 4.5(c) (xvi) and Section 5.2(e), a commitment to issue Mortgagee
      Title Policies from the Title Company for each Interval constituting part of
      the
      Inventory.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.2    Closing
      Date Advance.
      In the
      event that Borrower desires Agent or any Lender to make an Advance on the
      Closing Date, then, in addition to all of the conditions precedent set forth
      in
      this Section 4, Borrower shall have complied with all of the requirements of
      Section 5 below at least five (5) Business Days prior to the Closing
      Date.

     

    4.3    Expenses.
      Borrower shall have paid all Lender Expenses (including any amounts due and
      payable to any Bank Product Provider in respect of Bank Products) required
      to be
      paid pursuant to this Agreement. Lenders shall have no obligation to fund the
      Loan or make the initial Advance or any subsequent Advance unless the amount
      of
      the Loan together with any moneys paid by Borrower is sufficient to satisfy
      all
      fees and expenses required to be paid pursuant to this Agreement.

     

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

     

    4.5    Conditions
      Precedent to Funding of Advances with Respect to Additional Eligible
      Resorts.
      As
      provided in Section 3.4
      hereof,
      Borrower may propose to Agent that Agent approve one or more additional
      timeshare plans for inclusion hereunder as an Additional Eligible Resort in
      respect of which Intervals may be accepted as part of the Inventory and Advances
      may be made. The obligation of Lenders to fund any Advance with respect to
      any
      Interval from an Additional Resort shall be subject to the satisfaction of
      each
      of the following conditions precedent, in addition to all of the conditions
      precedent set forth elsewhere in the Loan Documents:

     

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

     

    (b)    No
      Prohibited Acts or Changes.
      Borrower shall not have taken any action or permitted any condition to exist
      which would have been prohibited by any provision of the Loan Documents and
      all
      information and documents heretofore delivered by Borrower to Agent with respect
      to Borrower or the Resorts, including information and documents delivered in
      connection with the Additional Credit Facility, remain true and correct in
      all
      respects.

     

    (c)    Approval
      of Documents Prior to Advance.
      Borrower has delivered or caused to be delivered to Agent (with copies to
      Agent’s counsel), at least fifteen (15) Business Days prior to the date of such
      Advance), and Agent has reviewed and approved, at least five (5) Business Days
      prior to such date, the form and content of all of the items specified in each
      of the Submissions required pursuant to this Section 4.5.
      Agent
      shall have the right to review and approve any changes to the form of any of
      the
      Submissions. If Agent disapproves of any changes to any of the Submissions,
      Agent shall have the right to require Borrower either to cure or correct the
      defect objected to by Agent or to elect not to fund the Loan or any Advance
      with
      respect to any such Interval. Under no circumstances shall Agent’s failure to
      approve or disapprove a change to any of the Submissions be deemed to be an
      approval of such Submissions. All of the Submissions were and shall be prepared
      at Borrower’s sole cost and expense, unless expressly stated to be an obligation
      and expense of Agent. Agent shall have the right of prior approval of any
      Preparer and may disapprove any Preparer in its sole discretion, for any reason,
      including without limitation, that Agent believes that the experience, skill,
      reputation or other aspect of the Preparer is unsatisfactory in any respect.
      All
      Submissions required pursuant to this Agreement shall be addressed to Agent
      and
      include the following language: “THE UNDERSIGNED ACKNOWLEDGES THAT WELLS FARGO
      FOOTHILL, INC., AS AGENT FOR EACH LENDER, IS RELYING ON THE WITHIN INFORMATION
      IN CONNECTION WITH ITS DETERMINATION TO MAKE A LOAN TO SILVERLEAF RESORTS,
      INC.
      IN CONNECTION WITH THE SUBJECT COLLATERAL.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	(i)  	
              a
                certificate in the form attached as Exhibit C, to be dated as of
                the date
                of each such Advance and signed by the president, vice president,
                or
                secretary of the Borrower, certifying that the conditions specified
                in
                Sections (a)
                and (b)
                above are true and requesting an Advance under this
                Agreement;

            


    

     

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

            


    

     

    
      	(iii)  	
              a
                Survey for each Additional Eligible Resort for which a mortgage lien
                is
                being granted to the Agent on Intervals in connection with the Advance
                in
                question; 

            


    

     

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

            


    

     

    
      	(v)  	
              a
                certificate of the secretary or assistant secretary of Borrower certifying
                the incumbency, and verifying the authenticity of the signatures,
                of the
                specified officers of Borrower authorized to sign all documents required
                in connection with such Additional Eligible Resort as required pursuant
                to
                this Section 4.5;

            


    

     

    
      	(vi)  	
              an
                inspection report or reports covering each Additional Eligible Resort
                for
                which a mortgage lien is being granted to the Agent on Intervals
                in
                connection with the Advance in question, including without limitation
                all
                real property and personal property subject to the Declaration and
                all
                adjacent property, confirming:

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

            


    

     

    
      	(viii)  	
              evidence
                that Borrower and the Timeshare Documents for each Additional Eligible
                Resort for which a mortgage lien is being granted to the Agent on
                Intervals in connection with the Advance in question are in compliance
                with all Applicable Laws in connection with its sales of Intervals,
                including without limitation, the Timeshare
                Acts;

            


    

     

    
      	(ix)  	
              a
                current preliminary title report or certificate of title for each
                Additional Eligible Resort for which a mortgage lien is being granted
                to
                the Agent on Intervals in connection with the Advance in question,
                with
                copies of all title exceptions;

            


    

     

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

            


    

     

    
      	(xi)  	
              certified
                true, correct and complete copies of all of the Timeshare Documents
                for
                each Additional Eligible Resort for which a mortgage lien is being
                granted
                to Agent on Intervals in connection with the Advance in
                question;

            


    

     

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

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	(xiii)  	
              written
                confirmation from an architect covering each Additional Eligible
                Resort
                for which a mortgage lien is being granted to Agent on Intervals
                in
                connection with the Advance in question as to the physical condition
                of
                the improvements at each such Additional Eligible Resort, including
                that
                soil conditions are sufficient to support all existing and any
                contemplated improvements to the real property; which written confirmation
                shall be in form and substance reasonably acceptable to the Agent.
                Each
                architect rendering such written confirmation shall be licensed as
                an
                architect in the state of Texas;

            


    

     

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

            


    

     

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

            


    

     

    
      	(xvi)  	
              a
                commitment to issue Mortgagee Title Policies from the Title Company
                for
                each Interval constituting part of the Inventory. Notwithstanding
                anything
                heretofore to the contrary, if any claim, lien, encumbrance, charge
                or
                other matter arises with respect to any Interval or Intervals which
                constitutes part of the Collateral pursuant to this Agreement and
                for
                which Borrower has not provided a Mortgagee Title Policy, then, in
                such
                event:

            


    

     

    
      	 	 	
              (a)

            	
              The
                Interval in question shall cease to constitute Inventory and the
                Borrower
                immediately shall either replace the Mortgage with respect to the
                Interval
                in question with a Mortgage on an Interval acceptable to Agent in
                its sole
                discretion or make a Mandatory Prepayment, if necessary, as provided
                in
                Section 2.40
                of
                this Agreement; and

            


    

     

    
      	 	 	
              (b)

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

            


    

     

    
      	(xvii)  	
              the
                Financial Statements;

            


    

     

    
      	(xviii)  	
              Borrower
                will execute, or cause to be executed with respect to each Additional
                Eligible Resort, an Environmental Indemnification
                Agreement;

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

            


    

     

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

            


    

     

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

            


    

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    (i)    Management
      of Resort.
      Borrower shall provide evidence satisfactory to Agent that Borrower, or an
      Affiliate, is the manager or operator of each Resort, pursuant to a written
      management or operating agreement, in form and substance satisfactory to Agent,
      which with respect to all Resorts shall have a term of at least three
      years.

     

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

     

    SECTION
      5 --
      FUNDING PROCEDURE

     

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

     

    5.1    Requests
      for Advances.
      Each
      request for an Advance shall:

     

    (a)    be
      in
      writing in form attached hereto as Exhibit C shall certify the amount of the
      then-current Loan to Retail Value of the Inventory, shall be accompanied by
      all
      supporting reports and documentation, shall specify the principal amount of
      the
      Advance requested and designate the account to which the proceeds of such
      Advance are to be transferred;

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (b)    delivered
      to Agent a duly executed Mortgage or Mortgages granting to Agent a first
      mortgage lien on the Inventory;

     

    (c)    subject
      to Section 4.5(c)(xvi)
      hereof,
      delivered to Agent, with respect to each Interval constituting a part of the
      Inventory, a commitment for a mortgagee’s title insurance policy showing that
      the Mortgage in respect of such Interval will create in favor of Agent a first
      priority Lien on the Intervals covered thereby (or in case of any
      Modification(s) to Mortgage, an endorsement to the existing mortgagee’s title
      insurance policy endorsing said policy to reflect such Modification(s) of
      Mortgage), with a satisfactory title insurance policy to be issued within a
      reasonable time following the requested Advance. The amount of each title policy
      will be equal to the amount advanced to Borrower with respect to the Inventory
      covered thereby. Notwithstanding anything heretofore to the contrary, until
      such
      time as deeded Intervals are permitted under local law governing the Oak N’
Spruce Resort, Agent agrees that Borrower shall not be required to provide
      such
      a commitment or a Mortgagee Title Insurance Policy with respect to the Oak
      N’
Spruce Resort in order to qualify any such Resort as an Eligible Resort,
provided,
      however,
      that
      until such time as Agent and Borrower have agreed to the contrary, under no
      circumstances shall any portion of Loan be secured by Intervals from the Oak
      N’
Spruce Resort. 

     

    The
      Mortgages to Agent shall each have been duly recorded in the applicable land
      records which are described in Schedule 5.2 hereof. The mortgagee’s title
      insurance policies shall be in form and substance satisfactory to Agent and
      shall be issued by a title insurance company satisfactory to Agent (the
“Title
      Company”),
      and
      name Agent, as agent for Lenders, as the insured party therein. The funding
      of
      the Advance, delivery of the Collateral and issuance of the title insurance
      policy, and recording of the mortgages or any releases may, in Agent’s
      discretion, be effected by way of an escrow arrangement with the Title Company
      or other fiduciary, the form and substance of which shall be satisfactory to
      Agent.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    (g)    Agent
      shall have determined that the requested Advance does not exceed the total
      amount of the Loan to Retail Value Ratio, based on the Retail Value of the
      Inventory on which Agent has been granted a first mortgage lien; 

     

    (h)    If
      Agent
      shall so require, Agent shall have received an executed Closing Protection
      Letter issued by the Title Company, which shall be reasonably acceptable to
      Agent; and

     

    (i)    each
      Lender shall have agreed to make and does make an Advance in an amount equal
      to
      its respective Pro Rata Percentage.

     

    5.4    Expenses.
      The
      Borrower shall have paid all Lender Expenses (including any amounts due and
      payable to any Bank Product Provider in respect of Bank Products) required
      to be
      paid by Borrower pursuant to this Agreement in connection with such requested
      Advance or any conditions related thereto.

     

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

     

    SECTION
      6 --
      GENERAL REPRESENTATIONS AND WARRANTIES

     

    Borrower
      hereby represents and warrants to Agent and each Lender as follows:

     

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

     

    6.2    Authorization,
      Enforceability, Etc.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    (e)    The
      execution and delivery of the Loan Documents, the filing of the Mortgages in
      the
      official records of the county in which the applicable Resort is located, create
      in favor of Agent and each Lender a valid and perfected continuing first
      priority security interest in the Collateral. The Collateral shall secure the
      full payment and performance of the Obligations.

     

    (f)    The
      Mortgages constitute and will constitute valid and enforceable first and
prior
      liens and security interests on the Inventory.

     

    (g)    The
      Loan
      documents are in full force and effect, are and will be valid and binding
      obligations of the respective makers in favor of Agent and each Lender, and
      the
      Borrower further warrants and guarantees the value, quantity, sound condition,
      grade and quality of the Inventory and rights, properties, easements and
      interests appurtenant or related thereto.

     

    
      	·      	
              Neither
                Agent nor any Lender shall be required to take, and the Borrower
                has taken
                any and all required steps to protect Agent and each Lenders security
                interest in the Collateral (other than maintaining possession of
                the
                portion of the Collateral constituting instruments); and neither
                Agent nor
                any Lender is or shall be required to collect or realize upon the
                Collateral or any distribution of interest or principal, nor shall
                loss
                of, or damage to, the Collateral release the Borrower from any of
                the
                Obligations.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6.3    Financial
      Statements and Business Condition.
      The
      Financial Statements for the first nine (9) months of the calendar year 2005,
      are, to the best of Borrower’s knowledge, accurate and fairly represent the
      financial condition of the Borrower for the periods in question, subject to
      the
      written qualifications set forth therein. To the best of Borrower’s knowledge,
      there are no material liabilities, direct or indirect, fixed or contingent,
      of
      Borrower, except as disclosed to Agent in writing.

     

    6.4    Taxes.
      

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    6.12    Compliance
      with Law.
      The
      Borrower

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    6.14    Restrictions
      of Borrower.
      Except
      as set forth on Schedule 6.14, the Borrower will not be, on or after the date
      hereof, a party to any contract or agreement which restricts its right or
      ability to incur indebtedness or prohibits Borrower’s execution of or compliance
      with the terms of this Agreement and the Loan Documents. The Borrower has not
      agreed or consented to cause or permit in the future (upon the happening of
      a
      contingency or otherwise) any of the Collateral, to be subject to a Lien except
      in favor of Agent as provided herein.

     

    6.15    Broker’s
      Fees.
      Borrower, Agent and each Lender represent to each other that neither of them
      has
      made any commitment or taken any action which will result in a claim for any
      brokers’, finders’ or other similar fees or commitments with respect to the
      transactions described in the Agreement. The Borrower agrees to indemnify Agent
      and each Lender and save and hold Agent and each Lender harmless from all claims
      of any Person for any broker’s or finder’s fee or commission, and this indemnity
      shall include reasonable attorneys’ fees and legal expenses.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    6.18    Resort.

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    6.22    Tax
      Identification Number.
      The
      Borrower’s federal taxpayer’s identification number is: 75-2259890.

     

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

     

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

     

    6.25    No
      Adverse Selection Criteria.
      In
      selecting the Inventory to be pledged to Agent hereunder, Borrower warrants
      and
      represents that there shall be no adverse selection criteria regarding the
      quality and performance of such Inventory and that all Inventory pledged shall
      be capable of being pledged to Textron Financial Corporation, CapitalSource
      Finance, LLC or Resort Funding, LLC as eligible inventory under each such
      facility, to the extent that such parties have extended to Borrower an inventory
      line of credit.

     

    SECTION
      7 --
      COVENANTS

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    (ii)    Public
      liability and property damage insurance covering the Units and the Resorts
      in
      amounts and on terms satisfactory to Agent; and

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    (e)    Maintenance
      of Security.
      Borrower shall execute and deliver (or cause to be executed and delivered)
      to
      Agent all security agreements, financing statement filing authorizations,
      assignments and such other agreements, documents, instruments and certificates,
      and supplements and amendments thereto, and take such other actions, as Agent
      deems necessary or appropriate in order to maintain as valid, enforceable and
      perfected first priority lien and security interest, as applicable, all Liens
      and security interests in the Collateral granted to Agent as agent for Lenders
      to secure the Obligations.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (f)    Payment
      of Taxes and Claims.
      Borrower will pay, and, as applicable pursuant to the Declaration, Borrower
      covenants that the Timeshare Owners’ Association will pay, when due, all taxes
      imposed upon the Resort, the Collateral, the Borrower, the Timeshare Owners’
Association, or any of its or their property, or with respect to any of its
      or
      their franchises, businesses, income or profits, or with respect to the Loan
      or
      any of the Loan Documents; and Borrower and the Timeshare Owners’ Association,
      as the case may be, shall pay all other charges and assessments against
      Borrower, the Collateral and the Resort before any claim (including, without
      limitation, claims for labor, services, materials and supplies) arises for
      sums
      which have become due and payable. Except for the Liens in connection with
      the
      Additional Credit Facility, Liens set forth on Schedule 6.5 and the Liens in
      favor of Agent on behalf of Lenders granted pursuant to the Loan Documents,
      and
      except as otherwise specifically provided for herein, Borrower covenants that
      no
      statutory or other Liens whatsoever (including, without limitation, mechanics’,
      materialmens’, judgment or tax liens) shall attach to any of the Collateral or
      the Resorts except for such Liens as are expressly provided for pursuant to
      the
      Declaration. In the event any such Lien attaches to any of the Collateral or
      the
      Resort Borrower shall, within thirty (30) days after any such Lien attaches,
      either (i) cause
      such Lien to be released of record or (ii) provide
      Agent with a bond in accordance with the Applicable Laws of the State, issued
      by
      a corporate surety acceptable to Agent, in an amount and form acceptable to
      Agent.

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (i)    The
      Following Collateral Reports:

     

    
      	
              Within
                1 Business Day of occurrence or receipt

            	
              (a)    Upon
                becoming aware of the existence of any condition or event which
                constitutes a Default or an Event of Default, Borrower shall deliver
                to
                Agent a written notice specifying the nature and period of existence
                thereof and what action Borrower is taking or proposes to take with
                respect thereto.

               

              (b)    Upon
                becoming aware that the holder of any material obligation or of any
                evidence of material indebtedness of the Borrower has given notice
                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 the claimed default or event
                of
                default and what action the Borrower is taking or proposes to take
                with
                respect thereto;

               

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

            
	
              Weekly

            	
              (d)    None
                At This Time

            
	
              Monthly
                (not later than the 10th Business Day of each month) 

            	
              (e)    a
                Borrowing Base Report and all supporting reports and documentation
                with a
                Certificate of the Loan to Retail Value of the Inventory which includes
                (i) a detailed calculation of the Availability as of the end of the
                month,
                and (ii) detail regarding Inventory,

               

              (f)    a
                reconciliation to the detailed calculation of the Availability previously
                provided to Agent, 

               

              (g)    a
                detailed calculation of Borrower’s obligations, if any, with respect to
                Bank Product Agreements,

               

              (h)    monthly
                aging Reports on all Notes Receivable

            
	
              Quarterly

            	
              (i)    a
                sales report, detailing the sales of all Intervals at the Resorts
                for the
                period covered thereby, certified by Borrower to be true, correct
                and
                complete and otherwise in a form approved by Agent, provided however,
                upon
                30 days prior written notice Lender may require this report to be
                furnished on a monthly basis,

               

              (j)    such
                additional information as Agent may request with respect to the
                Collateral, or the financial condition of Borrower,

            
	
              Annually

            	
              (k)    a
                sales report, detailing the sales of all Intervals at the Resorts
                for the
                period covered thereby, certified by Borrower to be true, correct
                and
                complete and otherwise in a form approved by Agent, and

            
	
              Upon
                request by Agent 

            	
              (l)    such
                other reports as to the Collateral, or the financial condition of
                Borrower, as Agent may request.

            


    

    


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    In
      addition, (i) to the extent required by Agent, in Agent’s Permitted Discretion,
      Borrower agrees to facilitate the establishment of electronic collateral
      reporting systems, which will be administered and maintained by Agent, and
      to
      cooperate with Agent to facilitate and implement a system of electronic
      collateral reporting in order to provide electronic reporting of each of the
      items set forth above, provided however the cost to Borrower for such set up
      of
      the electronic collateral reporting systems shall not exceed $5,000, and (ii)
      a
      senior member of the management of Borrower or other representative acceptable
      to Agent will meet with Agent, telephonically at least once in each calendar
      quarter and in person once each six (6) months, to review and discuss matters
      relating to Borrower’s business, prospects, projections and affairs as is
      determined to be reasonable and appropriate by Agent.

     

    (ii)    Quarterly
      and Annual Financial Reports.
      As soon
      as available and in any event upon Borrower’s filing of its Securities and
      Exchange Commission Form 10-Q, a statement of income and expense and a balance
      sheet of Borrower for the calendar or fiscal period then ended, and in the
      case
      of the second, and third calendar or fiscal quarters ended a statement showing
      the period then ended and cumulative numbers for the portion of the year then
      ended, all in such detail and scope as may be reasonably required by Agent
      and
      prepared by management on a basis consistent with prior accounting periods
      and
      accompanied by an Officer’s Certificate in the form of Exhibit D. In addition to
      the above, as soon as available but in any event upon Borrower’s filing of its
      Securities and Exchange Commission Form 10-K reflecting Borrowers financial
      results for each calendar year or other fiscal year as may be applicable (a
      “Fiscal
      Year”),
      an
      audited statement of income and expense of Borrower for the annual period ended
      as of the end of such Fiscal Year, and a balance sheet of Borrower as of the
      end
      of such Fiscal Year, all in such detail and scope as may be reasonably required
      by Agent and prepared in accordance with GAAP and on a basis consistent with
      prior accounting periods. Each annual financial statement of Borrower shall
      be
      prepared by an independent certified public accountant, acceptable to Agent,
      in
      its sole discretion. Such audited annual statements shall also be in form and
      content satisfactory to Agent. 

     

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

     

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

     

    (v)    Other
      Information.
      Borrower shall deliver to Agent: within five (5) days of the filing thereof
      with
      the United States Securities and Exchange Commission, copies of each Form 8-K,
      10-Q and 10-K filed by and any other information related to the Loan, the
      Collateral, the Resorts or Borrower as Agent may in good faith request
      including, without limitation, annually, federal call reports relating to
      Lockbox Agent. 

     

    (vi)    Annual
      Operating Plan.
      On or
      before December 31 of each calendar year, Borrower shall deliver to Agent its
      Annual Operating Plan.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (p)    Registration
      and Regulations.

     

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

     

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

     

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

     

    (q)    Other
      Documents.
      The
      Borrower will maintain to the satisfaction of the Agent, and make available
      to
      Agent and other Lenders, accurate and complete files relating to the Resort,
      the
      Pledged Notes Receivable and other Collateral, and such files will contain
      true
      copies of each Pledged Note Receivable, as amended from time to time, copies
      of
      all relevant credit memoranda relating to such Notes Receivable and all
      collection information and correspondence relating thereto.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (u)    Expenses
      and Closing Fees.
      Whether
      or not the transactions contemplated hereunder are completed, the Borrower
      shall
      pay all expenses of the Agent, each Lender and any Participant, whether at
      the
      Closing Date or subsequent thereto, relating to negotiating, preparing,
      documenting, closing and enforcing this Agreement, including, but not limited
      to:

     

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

     

    (ii)    the
      fees
      and disbursements of Agent, each Lender’s and each Participants’
counsel;

     

    (iii)    Agent,
      each Lender’s and each Participants’ reasonable out-of-pocket
      expenses;

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (vi)    all
      expenses relating to the maintenance and administration of any other escrow
      agent;

     

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

     

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

     

    (ix)    audit,
      appraisal, and valuation fees and charges as follows: (i) a fee of $950 per
      day,
      per auditor, plus out-of-pocket expenses for each financial audit of Borrower
      performed by personnel employed or contracted by Agent, which audits shall
      be
      conducted at Borrower’s expense as frequently as Agent shall determine and (ii)
      if implemented, a fee of $950 per day, per applicable individual, plus
      out-of-pocket expenses for the establishment of electronic collateral reporting
      systems, provided the aggregate fee to be paid by Borrower for this service
      shall not exceed $5,000. 

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (w)    Additional
      Loan Facility Documents and TFC Conduit Loan Documents.
      Borrower will comply with the terms and conditions of the CapitalSource Finance
      Facility, the Resort Finance Facility, the Textron Facility and the TFC Conduit
      Loan. Nothing contained herein shall prohibit or limit Borrower’s ability to
      amend or modify any of the CSF Documents or any of the RFC Documents or any
      of
      the TFC Documents or any document in connection with the TFC Conduit Loan or
      documents evidencing any other indebtedness of Borrower, provided Borrower
      provides Agent with a copy of the fully executed loan documents promptly within
      ten (10) days after execution.

     

    (x)    Financial
      Covenants.

     

    (i)    Tangible
      Net Worth.
      Borrower shall, on and after the Closing Date, at all times have and maintain
      a
      Tangible Net Worth of $108,000,000.

     

    (ii)    Marketing
      and Sales Expenses.
      As of
      the last day of each fiscal quarter, commencing with the fiscal quarter ending
      December 31, 2005, Borrower will not permit the four quarter cumulative ratio
      of
      Marketing and Sales Expenses to the Borrower’s net proceeds from the sale of
      Intervals as recorded on the Borrower’s financial statements for the immediately
      preceding four (4) consecutive fiscal quarters of the Borrower to equal or
      exceed a ratio of .570 to 1.

     

    (iii)    Maximum
      Loan Delinquency.
      Borrower will not permit as of the last day of each calendar quarter its over
      30-day delinquency rate on its entire Notes Receivable portfolio to be greater
      than ten percent (10%). 

     

    (iv)    Interest
      Coverage.
      For the
      calendar quarter of Borrower ending December 31, 2005 and for each calendar
      quarter thereafter, the average of the Interest Coverage Ratio for Borrower
      for
      such calendar quarter and the Interest Coverage Ratios for each of the three
      immediately preceding calendar quarters shall be at least 1.25:1. The term
      Interest Coverage Ratio means with respect to any Person for any calendar
      quarter, the ratio of (a) EBITDA for such period less capital expenditures
      as
      determined in accordance with GAAP, for such period to (b) the Total Interest
      Expense minus all non-cash items constituting interest expense for such
      period.

     

    (v)    Profitable
      Operations.
      Borrower will not permit Consolidated Net Income (a) for any fiscal year,
      commencing with the fiscal year ending December 31, 2005, to be less than $1.00
      and (b) for any two consecutive fiscal quarters (reviewed on an individual
      rather than on an aggregate basis) to be less than $1.00.

     

    (i)    Maximum
      Debt to Tangible Net Worth.
      Borrower shall maintain a ratio of (i) the outstanding amount of Indebtedness
      of
      Borrower (excluding Subordinated Debt), to (ii) Tangible Net Worth, each as
      measured on a fiscal quarter-end basis commencing the calendar quarter ending
      December 31, 2005 and for each fiscal quarter thereafter, which is less than
      or
      equal to 6.00 to 1.00.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (i)    Collateral.
      Borrower shall not take any action (nor permit or consent to the taking of
      any
      action) which might impair the value of the Collateral or any of the rights
      of
      the Agent or any Lender in the Collateral, nor shall Borrower cause or permit
      any amendment to or modification of the Timeshare Documents.

     

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

     

    (k)    Modifications
      of Additional Loan Facility Documents, Silverleaf Finance II Documents and
      Other
      Debt Instruments.
      Nothing
      contained herein shall prohibit or limit Borrower’s ability to amend or modify
      any of the CSF Documents or any of the RFC Documents or any of the TFC Documents
      or any document in connection with the TFC Conduit Loan or documents evidencing
      any other indebtedness of Borrower, provided Borrower provides Agent with a
      copy
      of the fully executed loan documents promptly within ten (10) days after
      execution.

     

    SECTION
      8 --
      EVENTS OF DEFAULT

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    (k)    Material
      Adverse Change.
      Any
      material adverse change in the financial condition of Borrower or in the
      condition of the Collateral. For purposes of this provision, a decline in the
      net worth of Borrower of $500,000.00 or less shall not be considered a material
      adverse change.

     

    (l)    Default
      by Borrower in Other Agreements.
      Any
      default as defined in the applicable loan agreement, by Borrower (i) in the
      payment of any indebtedness to any lender, including any indebtedness owed
      under
      the Capital Source Finance Facility, the Resort Finance Facility, the Textron
      Financial Facility or the Additional Credit Facility; (ii) in the payment or
      performance of other indebtedness for borrowed money or obligations secured
      by
      any part of the Resort; (iii) in the payment or performance of other material
      indebtedness or obligations (material indebtedness or obligations being defined
      for purposes of this provision as any indebtedness or obligation in excess
      of
      $200,000) where such default accelerates or permits the acceleration (after
      the
      giving of notice or passage of time or both) of the maturity of such
      indebtedness, or permits the holders of such indebtedness to elect a majority
      of
      the board of directors of Borrower (whether or not such default[s] have been
      waived by such holder) or (iv) the acceleration by CapitalSource Finance, LLC
      under the CSF Documents, Resort Funding, LLC under the RFC Documents, Textron
      Financial Corporation under the TFC Documents or the bondholders of their
      respective credit facilities.

     

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

     

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

     

    SECTION
      9 --
      REMEDIES

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    (d)    Sale
      of Collateral and Foreclosure of Mortgages.
      After
      notification, if any, provided for in Section 9.2
      below,
      Agent may sell or otherwise dispose of, at the office of Agent, or elsewhere,
      as
      chosen by Agent, all or any part of the Collateral, and any such sale or other
      disposition may be as a unit or in parcels, by public or private proceedings,
      and by way of one or more contracts (it being agreed that the sale of any part
      of the Collateral shall not exhaust Agent’s power of sale, but sales may be made
      from time to time until all of the Collateral has been sold or until the
      Obligations have been paid in full and fully performed), and at any such sale
      it
      shall not be necessary to exhibit the Collateral. Borrower hereby acknowledges
      and agrees that a private sale or sales of the Collateral, after notification
      as
      provided for in Section 9.2,
      shall
      constitute a commercially reasonable disposition of the Collateral sold at
      any
      such sale or sales, and otherwise, commercially reasonable action on the part
      of
      Agent. 

     

    (e)    Retention
      of Collateral.
      At its
      discretion, retain such portion of the Collateral as shall aggregate in value
      to
      an amount equal to the aggregate amount of the Loans, in satisfaction of the
      Obligations, whenever the circumstances are such that Agent is entitled on
      behalf of Lenders and elects to do so under applicable law.

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (i)    Replacement
      of Manager and Servicer.
      Without
      demand or notice of any nature whatsoever, upon an Event of Default, Agent
      may
      terminate any then existing servicing agreement and replace any then existing
      Servicer with the Standby Servicer or such other servicer as Agent may select
      in
      its Permitted Discretion. Agent shall also have the right to assume management
      of the Resorts. 

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    (a)    Transfer
      all or any part of the Collateral into the name of Agent or its
      nominee;

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    9.10    Diminution
      in Value of Collateral.
      Neither
      Agent nor any Lender shall have any liability or responsibility whatsoever
      for
      any diminution or loss in value of any of the Collateral, specifically including
      that which may arise from Agent or any Lender’s negligence or inadvertence,
      whether such negligence or inadvertence is the sole or concurring cause of
      any
      damage.

     

    9.11    Agent’s
      Knowledge.
      Agent
      shall not be deemed to have knowledge or notice of the occurrence of any Event
      of Default unless Agent has actual knowledge of the Event of Default or has
      received a notice from a Lender or Borrower referring to this Agreement and
      describing such Event of Default. Each Lender agrees that upon learning of
      the
      existence of an Event of Default, it will promptly notify Agent thereof in
      writing. Any such notice by a Lender, shall be in writing sufficient to identify
      the nature of the Event of Default.

     

    9.12    Lender’s
      Enforcement Rights.
      Each
      Lender has assigned to Agent its absolute and unconditional right to enforce
      the
      payment of its Note. No Lender may unilaterally enforce any Lien or security
      interest in the Collateral, or bring suit against Borrower to enforce such
      Lender’s rights hereunder or under its Note.

     

    SECTION
      10 --
      CERTAIN RIGHTS OF LENDER

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10.2    Performance
      by Agent.
      If
      Borrower fails to perform any agreement contained herein, Agent may itself
      perform, or cause the performance of, such agreement, and the expenses
      (including any amounts due and payable to any Bank Product Provider in respect
      of Bank Products) of Agent or WFF incurred in connection therewith shall be
      payable by Borrower under Section 10.5 below. In no event, however, shall Agent
      or any Lender have any obligation or duties whatsoever to perform any covenant
      or agreement of Borrower contained herein or in any of the Loan Documents,
      Timeshare Documents or Operating Contracts, and any such performance by Agent
      shall be wholly discretionary with Agent. The performance by Agent, of any
      agreement or covenant of Borrower on any occasion shall not give rise to any
      duty on the part of Agent to perform any such agreements or covenants on any
      other occasion or at any time. In addition, Borrower acknowledges that neither
      Agent nor any Lender shall at any time or under any circumstances whatsoever
      have any duty to Borrower or to any third party to exercise any of Lender’s
      rights or remedies hereunder.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    10.5    Expenses.
      All
      expenses (including any amounts due and payable to any Bank Product Provider
      in
      respect of Bank Products) payable by Borrower, under any provision of this
      Agreement shall be an Obligation of the Borrower and shall be paid by Borrower
      to Agent, upon demand, and shall bear interest at the Default Rate from the
      date
      of expense until repaid by Borrower.

     

    10.6    Lender’s
      Right of Set-Off.
      Each
      Lender shall have the right to set-off against any Collateral any Obligations
      then due and unpaid by Borrower provided that Lender remits to Agent all such
      sums received as a result of such set-off so that Agent may insure the
      distribution thereof in accordance with each Lenders Pro Rata Payment
      Percentage.

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10.9    Assignments
      and Participations

     

     

    (a)    Any
      Lender may assign and participate and delegate to one or more assignees or
      participants (each an “Assignee”)
      all,
      or any ratable part of all, of the Obligations and the other rights and
      obligations of Lender hereunder and under the other Loan Documents; provided,
      however,
      that
      each Lender so doing shall give Agent concurrent written notice of each such
      assignment and provided further that Agent shall continue to deal solely and
      directly only with each Lender in connection with the interest so assigned
      to an
      Assignee.

     

    (b)    In
      connection with any such assignment or participation or proposed assignment
      or
      participation, any Lender may disclose all documents and information which
      it
      now or hereafter may have relating to Borrower and its businesses.

     

    (c)    Any
      other
      provision in this Agreement notwithstanding, any Lender which is a banking
      institution may at any time create a security interest in, or pledge, all or
      any
      portion of its rights under and interest in this Agreement in favor of any
      Federal Reserve Bank in accordance with Regulation A of the Federal Reserve
      Bank
      or U.S. Treasury Regulation 31 CFR §203.24, and such Federal Reserve Bank may
      enforce sole through Agent such pledge or security interest in any manner
      permitted under Applicable Laws but at all times subject to the rights and
      limitations contained herein.

     

    (d)    Agent
      acknowledges that as of the date hereof, WFF is the only Lender. Subsequent
      to
      the date hereof, in the event that Agent desires to allow another party to
      executed a joinder agreement or become a Lender under the provisions of this
      Agreement, Borrower shall have a right of prior approval of such action,
      provided that Borrower shall not unreasonably withhold its approval of any
      additional Lender and provided further that Borrower’s non response for a period
      of ten (10) Business Days after being notified by Agent of such action shall
      be
      deemed to be approval of Borrower to such action of Agent.

     

    10.10    Power
      of Attorney.
      Borrower does hereby irrevocably constitute and appoint Agent as Borrower’s true
      and lawful Agent and attorney-in-fact, with full power of substitution, for
      Borrower and in Borrower’s name, place and stead, or otherwise, to (a) endorse
      any checks or drafts payable to Borrower in the name of Borrower and in favor
      of
      Agent on behalf of each Lender, (b) to
      demand and receive from time to time any and all property, rights, titles,
      interests and liens hereby sold, assigned and transferred, or intended so to
      be,
      and to give receipts for same, (c) from
      time to time to institute and prosecute in Agent’s own name any and all
      proceedings at law, in equity, or otherwise, that Agent may deem proper in
      order
      to collect, assert or enforce any claim, right or title, of any kind, in and
      to
      the property, rights, titles, interests and liens hereby sold, assigned or
      transferred, or intended so to be, and to defend and compromise any and all
      actions, suits or proceedings in respect of any of the said property, rights,
      titles, interests and liens, (d) upon
      an Event of Default to change the Borrower’s post office mailing address, and
(e) generally
      to do all and any such acts and things in relation to the Collateral as Agent
      shall in good faith deem advisable. Borrower hereby declares that the
      appointment made and the powers granted pursuant to this Section 10.10 are
      coupled with an interest and are and shall be irrevocable by Borrower in any
      manner, or for any reason, unless and until a release of the same is executed
      by
      Agent and duly recorded in the appropriate public records of Dallas County,
      Texas.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    SECTION
      11 --
      TERM OF AGREEMENT

     

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

     

    SECTION
      12 --
      MISCELLANEOUS

     

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

     

    
      
        	
              	If
                to Borrower:	
                Silverleaf
                  Resorts, Inc.

              


      

      
        	 	 	1221
                Riverbend Drive, Suite 120


      

      
        	 	 	Dallas,
                TX 75221


      

      
        	 	 	Attn:
                Mr. Robert Mead, CEO


      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	 	 


      

      
        	 	With
                a Copy
                to: 	Meadows, Owens, Collier, Reed, Cousins
                and
                Blau


      

      
        	 	 	3700 Nations Bank
                Plaza


      

      
        	 	 	901
                Main St.


      

      
        	 	 	Dallas,
                TX 75202


      

      
        	 	 	Attn:
                George R. Bedell, Esq.


      

      
        	 	 	 


      

      
        	 	If to
                Lender:	Wells
                Fargo Foothill, Inc.


      

      
        	 	 	13727 Noel
                Road


      

      
        	 	 	Suite
                1020


      

      
        	 	 	Dallas,
                Texas 75240


      

      
        	 	 	Attn: Loan Portfolio
                Manager


      

      
        	 	 	Fax
                No. 972-387-5775


      

      
        	 	 	 


      

      
        	 	With
                a Copy
                to:	Polivy
                & Taschner, LLC


      

      
        	 	 	Six
                Central Row, 2nd Floor


      

      
        	 	 	P.O.
                Box 230294


      

      
        	 	 	Hartford,
                CT 06123-0294


      

      
        	 	 	Richard
                B. Polivy, Esq.


      

      
        	 	 	Dale
                M. Clayton, Esq.


      

      
        	 	 	Phone:
                (860) 560-1180


      

      
        	 	 	Fax:
                (860) 560-1354


      

      
        	 	 	RPolivy@aol.com


      

      
        	 	 	dmclaytonesq@sbcglobal.net


      

    

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    12.7    Amendment.
      This
      Agreement may not be amended or modified, and no term or provision hereof may
      be
      waived, except by written instrument signed by the Borrower and Agent on behalf
      of itself and Lenders.

     

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

     

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

     

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

     

    Total
      Agreement.
      This
      Agreement and the other Loan Documents, including the Exhibits and Schedules
      to
      them, is the entire agreement between the parties relating to the subject matter
      hereof, incorporates or rescinds all prior agreements and understandings between
      the parties hereto relating to the subject matter hereof, cannot be changed
      or
      terminated orally or by course of conduct, and shall be deemed effective as
      of
      the date it is accepted by Agent at the offices set forth above. The documents
      evidencing the Additional Credit Facility shall remain in full force and
      effect.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
      waiver and stipulations of the Borrower, Agent and each Lender in this
      Section 12.11
      shall
      survive the final payment or performance of all of the Obligations of the
      Borrower and the resulting termination of this Agreement.

     

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

     

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

     

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

     

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

     

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

     

    12.17    Revival
      and Reinstatement of Obligations.
      If
      the
      incurrence or payment of the Obligations by Borrower or the transfer to Agent
      or
      any Lender of any property should for any reason subsequently be declared to
      be
      void or voidable under any state or federal law relating to creditors’ rights,
      including provisions of the Bankruptcy Code relating to fraudulent conveyances,
      preferences, or other voidable or recoverable payments of money or transfers
      of
      property (collectively, a “Voidable
      Transfer”),
      and
      if any Lender is required to repay or restore, in whole or in part, any such
      Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
      then, as to any such Voidable Transfer, or the amount thereof that any Lender
      is
      required or elects to repay or restore, and as to all reasonable costs,
      expenses, and attorneys fees of such Lender related thereto, the liability
      of
      Borrower automatically shall be revived, reinstated, and restored and shall
      exist as though such Voidable Transfer had never been made.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    12.18    Confidentiality. Agent
      and
      each Lender for itself and an Assignee of such lender, agrees that material,
      non-public information regarding Borrower, its operations, assets, and existing
      and contemplated Annual Operating Plans shall be treated by Agent and each
      Lender in a confidential manner, and shall not be disclosed by Agent or any
      Lender to Persons who are not parties to this Agreement, except: (a) to
      attorneys for and other advisors, accountants, auditors, and consultants to
      any
      Lender, (b) to Subsidiaries of Agent or any Lender and Agent or Lender
      affiliated entities (including the Bank Product Providers), provided that any
      such Subsidiary or affiliated entity shall have agreed to receive such
      information hereunder subject to the terms of this Section
      12.19,
      (c) as
      may be required by statute, decision, or judicial or administrative order,
      rule,
      or regulation, (d) as may be agreed to in advance by Borrower or as requested
      or
      required by any Governmental Authority pursuant to any subpoena or other legal
      process, (e) as to any such information that is or becomes generally available
      to the public (other than as a result of prohibited disclosure by Agent or
      any
      Lender), (f) in connection with any assignment, prospective assignment, sale,
      prospective sale, participation or prospective participations, or pledge or
      prospective pledge of any Lender’s interest under this Agreement, provided that
      any such assignee, prospective assignee, purchaser, prospective purchaser,
      Participant, prospective participant, pledgee, or prospective pledgee shall
      have
      agreed in writing to receive such information hereunder subject to the terms
      of
      this Section, and (g) in connection with any litigation or other adversary
      proceeding involving parties hereto which such litigation or adversary
      proceeding involves claims related to the rights or duties of such parties
      under
      this Agreement or the other Loan Documents. The provisions of this Section
      12.19
      shall
      survive for 2 years after the payment in full of the Obligations. Anything
      contained herein or in any other Loan Document to the contrary notwithstanding,
      the obligations of confidentiality contained herein and therein, as they relate
      to the transactions contemplated hereby, shall not apply to the federal tax
      structure or federal tax treatment of such transactions, and each party hereto
      (and any employee, representative, of Agent or of any Lender or of any other
      party hereto) may disclose to any and all Persons, without limitation of any
      kind, the federal tax structure and federal tax treatment of such transactions
      (including all written materials related to such tax structure and tax
      treatment). The preceding sentence is intended to cause the transactions
      contemplated hereby to not be treated as having been offered under conditions
      of
      confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor
      provision) of the Treasury Regulations promulgated under Section 6011 of the
      IRC, and shall be construed in a manner consistent with such purpose. In
      addition, each party hereto acknowledges that it has no proprietary or exclusive
      rights to the tax structure of the transactions contemplated hereby or any
      tax
      matter or tax idea related thereto. 

     

    Section
      13-Agent

     

    13.1    Authorization
      and Action.
      Each
      Lender hereby accepts the appointment of and irrevocably (but subject to Section
      13.8) authorizes Agent to take such action as Agent on its behalf and to
      exercise such powers as are expressly delegated to Agent by the terms hereof,
      together with such powers as are reasonably incidental thereto. Agent shall
      not
      be required to take any action which exposes Agent to personal liability or
      which is contrary to this Agreement or applicable law. Agent agrees to give
      to
      each Lender prompt notice of each notice given to it by Borrower pursuant to
      the
      terms of this Agreement. The appointment and authority of Agent hereunder shall
      terminate upon the payment of the Obligations in full.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    13.2    Nature
      of Agent’s Duties.
      Agent
      shall have no duties or responsibilities except those expressly set forth in
      this Agreement or in the other Loan Documents. The duties of Agent shall be
      mechanical and administrative in nature. Agent shall not have by reason of
      this
      Agreement a fiduciary relationship in respect of any Lender. Nothing in this
      Agreement or any of the Loan Documents, express or implied, is intended to
      or
      shall be construed to impose upon Agent any obligations in respect of this
      Agreement or any of the Loan Documents except as expressly set forth herein
      or
      therein. Agent shall not have any duty or responsibility, either initially
      or on
      a continuing basis, to provide any Lender with any credit or other information
      with respect to Borrower, whether coming into its possession before the date
      hereof or at any time or times thereafter (except as expressly set forth in
      this
      Agreement). If Agent seeks the consent or approval of Lenders, to the taking
      or
      refraining from taking any action hereunder, Agent shall send notice thereof
      to
      each Lender.

     

    13.3    UCC
      Filings.
      Each of
      Borrower, Agent and Lender expressly recognizes and agrees that Agent shall
      be
      listed as the assignee or secured party of record on the various UCC filings
      required to be made hereunder in order to perfect the grant of a security
      interest in the Collateral herein for the benefit of Lenders, that such listing
      shall be for administrative convenience only in creating a single secured party
      to take certain actions hereunder on behalf of the holders of the Obligations,
      and that such listing will not affect in any way the status of such holders
      as
      the beneficial holders of such security interest. In addition, such listing
      shall impose no duties on Agent other than those expressly and specifically
      undertaken in accordance with this 0.

     

    13.4    Agent’s
      Reliance, Etc.
      Neither
      Agent nor any of its directors, officers, agents or employees shall be liable
      for any action taken or omitted to be taken by it or them as Agent under or
      in
      connection with this Agreement (including Agent’s servicing, administering or
      collecting Receivables) except for its or their own gross negligence or willful
      misconduct. Without limiting the foregoing, Agent: (i) may consult with legal
      counsel (including counsel for Borrower), independent public accountants and
      other experts selected by it and shall not be liable for any action taken or
      omitted to be taken in good faith by it in accordance with the advice of such
      counsel, accountants or experts; (ii) makes no warranty or representation to
      Lender and shall not be responsible to any Lender for any statements, warranties
      or representations made in or in connection with this Agreement; (iii) shall
      not
      have any duty to ascertain or to inquire as to the performance or observance
      of
      any of the terms, covenants or conditions of this Agreement on the part of
      Borrower or to inspect the property (including the books and records) of
      Borrower (except as otherwise expressly set forth in this Agreement); (iv)
      shall
      not be responsible to any Lender for the due execution, legality, validity,
      enforceability, genuineness, sufficiency, or value of this Agreement, or any
      other instrument or document furnished pursuant hereto, or any certificate,
      report, statement or other document referred to or provided for in, or received
      by Agent under or in connection with, the Loan Documents, or for any failure
      of
      Borrower or any of its Affiliates to perform its obligation under the Loan
      Documents; and (v) shall incur no liability under or in respect of this
      Agreement by acting upon any notice (including notice by telephone), consent,
      certificate or other instrument or writing (which may be by telex or telecopier)
      believed by it to be genuine and to be or to have been signed or sent by the
      proper party or parties. Agent may, but shall not be required to, at any time
      request instructions from Lenders with respect to any actions or approvals
      which
      by the terms of this Agreement or of any of the other Loan Documents Agent
      is
      permitted or required to take or to grant, and Agent shall be absolutely
      entitled to refrain from taking any action or to withhold any approval and
      shall
      not be under any liability whatsoever to any Person for refraining from any
      action or withholding any approval under any of the Loan Documents until it
      shall have received such instructions from the requisite Lender, as applicable
      in accordance with this Agreement. Without limiting the foregoing, Lender shall
      not have any right of action whatsoever against Agent as a result of Agent
      acting or refraining from acting under this Agreement or any of the other Loan
      Documents in accordance with the instructions of the requisite Lender as
      applicable in accordance with this Agreement. Agent shall be entitled to rely,
      and shall be fully protected in relying, upon any note, writing, resolution,
      notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
      telex or teletype message, statement, order or other document or conversation
      reasonably believed by it or them to be genuine and correct and to have been
      signed, sent or made by the proper Person or Persons and upon advice and
      statements of legal counsel (including counsel to Borrower), independent
      accountants and other experts selected by Agent.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    13.5    Agent
      and Affiliates.
      To the
      extent that Agent or any of its Affiliates are or shall become Lenders
      hereunder, Agent or such Affiliate, in such capacity, shall have each and every
      right and power under this Agreement as would any other Lender hereunder
      (including the right to vote upon any matter upon which any of Lenders are
      entitled to vote) and, without exception, may exercise the same as though it
      were not an Agent. Agent and its Affiliates may engage in any kind of business
      with Borrower, any of its Affiliates and any Person who may do business with
      or
      own securities of Borrower or any of its Affiliates, all as if it were not
      an
      Agent hereunder and without any duty to account therefor to
      Lenders.

     

    13.6    Credit
      Decision.
      Independently, and without reliance upon Agent, each Lender has, to the extent
      it deems appropriate, made and shall continue to make (a) its own independent
      investigation of the financial affairs and business affairs of Borrower in
      connection with any action or inaction with respect to the transactions
      contemplated herein, and (b) its own evaluation of the creditworthiness of
      Borrower and of the value of the Collateral, and, except as expressly provided
      in this Agreement, Agent has had and shall have no duty or responsibility to
      provide any Lender with any credit or other information with respect thereto.
      Agent shall not be responsible to any Lender for any recitals, statements,
      representation or warranties herein or in any document, certificate or other
      writing delivered in connection herewith (unless made by Agent) or for the
      execution, effectiveness, genuineness, validity, enforceability, collectibility,
      priority or sufficiency of this Agreement (except with respect to Agent’s
      obligations hereunder) or the Loan Documents or the financial condition of
      Borrower or the value of the Collateral. Except as expressly herein provided
      with respect to its duties as agent, Agent shall not be required to make any
      inquiry concerning either the performance or observance of any of the terms,
      provisions or conditions of this Agreement or the Loan Documents, the financial
      condition of Borrower, or the existence or possible existence of any Event
      of
      Default.

     

    13.7    Indemnification.
      Each
      Lender agrees to indemnify Agent (to the extent not reimbursed by Borrower),
      ratably in accordance with each Lender’s Pro Rata Payment Percentage, from and
      against any and all liabilities, obligations, losses, damages, penalties,
      actions, judgments, suits, costs, expenses, or disbursements of any kind or
      nature whatsoever which may be imposed on, incurred by, or asserted against
      Agent in any way relating to or arising out of this Agreement or any action
      taken or omitted by Agent under this Agreement; provided, however, that no
      Lender shall be liable for any portion of such liabilities, obligations, losses,
      damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
      resulting from Agent’s gross negligence or willful misconduct. Without limiting
      the generality of the foregoing, each Lender agrees to reimburse Agent (to
      the
      extent not reimbursed by Borrower) ratably in accordance with Lender’s Pro Rata
      Payment Percentage, promptly upon demand, for any out-of-pocket expenses
      (including reasonable counsel fees) incurred by Agent in connection with the
      administration, modification, amendment or enforcement (whether through
      negotiations, legal proceedings or otherwise) of, or legal advice in respect
      of
      its rights or responsibilities under, this Agreement. The rights of Agent under
      this Section 13.7 shall survive the termination of this Agreement. For purposes
      of this paragraph, the term “Agent” shall include Agent, its affiliates and
      their respective officers, directors, employees and agents.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    13.8    Successor
      Agent.
      Agent
      may resign at any time by giving thirty days notice thereof to Lenders and
      Borrower. Upon any such resignation Lenders, including WFF, shall have the
      right
      to appoint a successor Agent, and such resignation shall not be effective until
      such successor Agent is appointed and has accepted such appointment. If no
      successor Agent shall have been so appointed and accepted such appointment
      within seventy-five (75) days after Agent’s giving of notice of resignation,
      then Agent may, on behalf of Lenders, appoint a successor Agent, which successor
      Agent shall be experienced in the types of transactions contemplated by this
      Agreement. Upon the acceptance of any appointment as Agent hereunder by a
      successor Agent, such successor Agent shall thereupon succeed to and become
      vested with all of the rights, powers, privileges and duties of the retiring
      Agent, and the retiring Agent shall be discharged from all further duties and
      obligations under this Agreement. After any retiring Agent’s resignation
      hereunder as Agent, the provisions of this 0
      shall
      inure to its benefit as to any actions taken or omitted to be taken by it while
      it was Agent under this Agreement.

     

    13.9    Duty
      of Care.
      Agent
      shall endeavor to exercise the same care in its administration of the Loan
      Documents as it exercises with respect to similar transactions in which it
      is
      involved and where no other co-lenders are involved; provided that the liability
      of Agent for failing to do so shall be limited as provided in the preceding
      paragraphs of this Section 13.

     

    13.10    Delegation
      of Agency. 

     

    If
      at any
      time or times it shall be necessary or prudent in connection with the exercise
      or protection of Agent’s rights hereunder in order to conform to any law of any
      jurisdiction in which any of the Collateral shall be located, or Agent shall
      be
      advised by counsel that it is so necessary or prudent in the interest of
      Lenders, or Agent shall deem it necessary for its own protection in the
      performance of its duties hereunder Agent and, to the extent required by Agent,
      Borrower shall execute and deliver all instruments and agreements reasonably
      necessary or proper to constitute another bank or trust company, or one or
      more
      individuals approved by Agent (each an “Approved Delegate”), either to act as
      co-agent or co-agents or trustee of all or any of the Collateral, jointly with
      Agent originally named herein or any successor, or to act as separate agent
      or
      agents or trustee of any such Collateral. Every separate agent and every
      co-agent and every trustee, other than any agent which may be appointed as
      successor to Agent, shall, to the extent permitted by applicable law, be
      appointed to act and be such, subject to the following provisions and
      conditions, namely:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (i)    except
      as
      otherwise provided herein, all rights, remedies, powers, duties and obligations
      conferred upon, reserved or imposed upon Agent in respect of the custody,
      control and management of moneys, paper or securities shall be exercised solely
      by Agent hereunder;

     

    (ii)    all
      rights, remedies, powers, duties and obligations conferred upon, reserved to
      or
      imposed upon Agent hereunder shall be conferred, reserved or imposed and
      exercised or performed by Agent except to the extent that the instrument
      appointing such separate agent or separate agents or co-agent or co-agents
      or
      trustee shall otherwise provide, and except to the extent that under any law
      of
      any jurisdiction in which any particular act or acts are to be performed, Agent
      shall be incompetent or unqualified to perform such act or acts, in which event
      such rights, remedies, powers, duties and obligations shall be exercised and
      performed by such separate agents or co-agent or co-agents to the extent
      specifically directed in writing by Agent;

     

    (iii)    no
      power
      given thereby to, or which it is provided hereby may be exercised by, any such
      separate agent or separate agents or co-agent or co-agents or trustee shall
      be
      exercised hereunder by such separate agent or separate agents or co-agent or
      co-agents or trustee except jointly with, or with the consent in writing of,
      anything herein contained to the contrary notwithstanding;

     

    (iv)    no
      separate agent or co-agent or trustee constituted under this Section 13.10
      shall
      be personally liable by reason of any act or omission of any other agent,
      separate agent, co-agent or trustee hereunder; and

     

    (v)    Agent,
      at
      any time by an instrument in writing, executed by it, may accept the resignation
      of or remove any such separate agent or co-agent or trustee of Agent, and in
      that case, by an instrument in writing executed by Agent and Borrower (to the
      extent necessary or requested by Agent) jointly may appoint a successor to
      such
      separate agent or co-agent or trustee, as the case may be, anything therein
      contained to the contrary notwithstanding. In the event that Borrower shall
      not
      have joined in the execution of any such instrument with a Person or entity
      within ten (10) days after the receipt of a written request from Agent to do
      so,
      Agent, acting alone, may appoint a successor and may execute any instrument
      in
      connection therewith, and Borrower hereby irrevocably appoints Agent its agent
      and attorney to act for it in such connection in either of such
      contingencies.

     

    In
      the
      event that Borrower shall not have joined in the execution of such instruments
      or agreements with any Approved Delegate within thirty (30) Business Days after
      the receipt of a written request from Agent to do so, Borrower hereby
      irrevocably appoints Agent as its agent and attorney to act for it under the
      foregoing provisions of this Section 13.10 in such contingency, it being
      understood that the power of attorney granted hereunder is coupled with an
      interest.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)    Agent
      may
      execute any of its duties under the Loan Documents by or through agents or
      attorneys-in-fact and shall be entitled to advice of counsel, and other
      specialists and advisors (including affiliates of such Agent) selected by it,
      concerning all matters pertaining to such duties. Agent shall not be responsible
      for the negligence or misconduct of any such agents, attorneys-in-fact, counsel
      and other specialists and advisors selected by it with reasonable
      care.

     

    13.11    Agent’s
      Responsibilities. 

     

    (a)    Each
      subsequent holder of any Note by its acceptance thereof irrevocably joins in
      the
      designation of WFF as agent for Lenders as provided herein with the same force
      and effect as if it were an original Lender hereunder and signatory hereto.
      WFF
      hereby accepts such designation and appointment as agent. Agent, acting as
      such
      under the provisions of this Agreement, or under any other instrument or
      document delivered pursuant hereto, shall not be liable or responsible, directly
      or indirectly, for any action taken, or omitted to be taken, by it in good
      faith, nor shall Agent be liable or responsible for the consequences of any
      oversight or error of judgment on its part, but Agent shall only be liable
      or
      responsible for any loss suffered by any of Lenders hereunder provided such
      loss
      was caused by Agent’s gross negligence or willful misconduct. Agent shall not,
      by any action or inaction hereunder, be deemed to make any representation or
      warranty regarding the legality, legal effect or sufficiency of any act of
      Borrower in connection with, or under any of the provisions of, this Agreement,
      or any instrument or document delivered pursuant thereto, or the validity or
      enforceability of any instrument or document furnished to Agent pursuant to
      this
      Agreement. Agent shall have no liability or responsibility in connection with
      the collection or payment of any sums due to Lenders by Borrower, the sole
      responsibility of Agent being to account to Lenders only for monies actually
      received by it. Agent shall have no obligation to make any application of any
      funds received by it until such funds are immediately available at Agent’s
      office. Any monies received by Agent need not be segregated from other funds
      except to the extent required by law, and Agent shall not be liable for interest
      on any funds received by it. Agent shall not be charged with knowledge of any
      facts which would prohibit the making of any payment of monies in accordance
      with the provisions of this Agreement unless and until Agent shall have received
      written notice thereof at its office from Borrower or any Lender. The duties
      of
      Agent shall be mechanical and administrative in nature, Agent shall not, by
      reason of this Agreement, be deemed a fiduciary in respect of Lenders, and
      nothing in this Agreement shall impose upon Agent any obligations in respect
      of
      this Agreement except as expressly herein set forth.

     

    (b)    Agent
      shall have the right to exercise all the rights granted to, and exercisable
      by,
      it under this Agreement and any instrument or document delivered pursuant to
      this Agreement, in such manner from time to time, as Agent in its sole
      discretion, shall deem proper.

     

    (c)    Agent
      agrees to provide each Lender with notice (and copies of documents, as
      appropriate) of the any amendment waiver or modification of the terms of this
      Agreement entered in accordance with Section 0;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d)    Except
      as
      otherwise provided in this Agreement, Agent shall be entitled, at its option,
      from time to time and at any time, to enter into any amendment of, or waive
      compliance with the terms of this Agreement without obtaining prior approval
      from any Lender, provided that, without the prior approval of each Lender in
      each instance, Agent may not take any of the following actions with respect
      to
      the Loan: (i) reduce the principal amount of any Loans; (ii) expressly change
      the advance rate; (iii) change the definition of Eligible Notes Receivable;
      (iv)
      decrease the Applicable Interest Rate; (v) extend the Final Maturity Date of
      the
      Loan; or (vi) release any material Collateral or any material third party
      obligor (except as expressly authorized by this Agreement in the normal course
      of Borrower’s business); Notwithstanding the foregoing, Agent may take any such
      actions referred to in such preceding sentences and each Lender shall be bound
      thereby with the consent of such Lenders (including Agent as a Lender for this
      purpose) whose total Pro Rata Payment Percentage is equal to or exceeds
      sixty-six and two-thirds percent (66 2/3%) of the outstanding principal balance
      of the Loan.

     

    Notwithstanding
      the foregoing, in the event that a Lender does not consent to any of the
      amendments or waivers requiring sixty-six and two-thirds percent (66 2/3%)
      consent under the previous paragraph, then such Lender shall not be obligated
      to
      fund any additional Advances hereunder but it shall continue to receive its
      Pro
      Rata Payment Percentage of each repayment of principal and interest on the
      Loan
      in accordance with the terms of this Agreement and shall be repaid in full
      over
      a period not to exceed the then existing Final Maturity Date under the Loan.
      Furthermore, in the event a Lender does not consent to any amendment or waivers
      regarding: (i) reduction of the principal amount of any Loans; (ii) reduction
      of
      the Interest Rate; or (iii) any subordination or release of any material
      Collateral, except as set forth in this Agreement or the Loan Documents, then
      in
      any of such events any such modification shall be applicable only to new money
      advanced by Agent and such changes shall not be applicable in any way to the
      existing balance due under the Loan as of the date of such change.
      Notwithstanding anything to the contrary contained in this Section13.11(d),
      Agent may, in its sole and absolute discretion, require that the Lenders
      (including WFF) unanimously consent to the approval of any such action(s)
      referred to in this Section 13.11(d) before any such action(s) is taken.
      Borrower acknowledges and agrees that in the event that a Lender does not
      consent to any of the amendments or waivers requiring sixty-six and two-thirds
      percent (66 2/3%) consent under the previous paragraph and such Lender is not
      obligated to fund any additional Advances hereunder, the Commitment will be
      reduced by an amount equal to the amount of any unused portion of such Lender’s
      Commitment.

     

    13.12    Power
      of Attorney.
      Each
      Lender does hereby irrevocably constitute and appoint Agent as its true and
      lawful agent and attorney-in-fact, with full power of substitution, for and
      in
      its name, place and stead, or otherwise, to (a) demand and receive from time
      to
      time any and all property, rights, titles, interests and liens hereby sold,
      assigned and transferred, or intended so to be, and to give receipts for same,
      (b) from time to time to institute and prosecute in Agent’s own name any
      and all proceedings at law, in equity, or otherwise, that Agent may deem proper
      in order to collect, assert or enforce any claim, right or title, of any kind,
      in and to the property, rights, titles, interests and liens hereby sold,
      assigned or transferred, or intended so to be, and to defend and compromise
      any
      and all actions, suits or proceedings in respect of any of the said property,
      rights, titles, interests and liens, and (c) generally to do all and any
      such acts and things in relation to the Loans, the Collateral and this Agreement
      as Agent shall in good faith deem advisable. Each Lender hereby declares that
      the appointment made and the powers granted pursuant to this Section 13.12
      are
      coupled with an interest and are and shall be irrevocable by it in any manner,
      or for any reason, unless and until the repayment in full of the
      Obligation.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    13.13    Ratification
      and Confirmation.
      Borrower hereby ratifies, confirms, assumes and agrees to be bound by all
      statements, covenants and agreements set forth in the this Agreement and the
      other Loan Documents. Borrower reaffirms, restates and incorporates by reference
      all of the covenants and agreements made in the Loan Documents as if the same
      were made as of this date. Borrower agrees to pay the Loan and all related
      expenses, as and when due and payable in accordance with this Agreement and
      the
      other Loan Documents, and to observe and perform the Obligations, and do all
      things necessary which are not prohibited by law to prevent the occurrence
      of
      any Event of Default. In addition, to further secure, and to evidence and
      confirm the securing of, the prompt and complete payment and performance by
      Borrower of the Loan and all of the Obligations, for value received, Borrower
      unconditionally and irrevocably assigns, pledges and grants to Agent, and hereby
      confirms or reaffirm the prior granting to Agent of, a continuing first priority
      Lien, mortgage and security interest in and to all of the Collateral, whether
      now existing or hereafter acquired. Also, as provided in the Loan Documents,
      the
      Loan is and shall be further secured by the Liens and security interests in
      favor of Agent in the properties and interests relating to Additional Eligible
      Resorts, which now or hereafter serve as collateral security for any
      Obligations. On the date hereof and thereafter upon satisfaction of the
      requirements for approval by Agent of Additional Eligible Resorts, Borrower
      shall record, or cause to be recorded, such mortgages, deeds of trust, deeds
      to
      secure debt, assignments, pledges, security agreements and UCC Financing
      Statements in the appropriate public records of the state in which each Resort
      is located to further evidence and perfect Agent’s Lien on the Collateral.
      Borrower agrees to deliver or cause to be delivered by its Affiliates, such
      mortgages, deeds of trust, deeds to secure debt, assignments, pledges, security
      agreements and UCC Financing Statements as Agent may deem necessary to further
      evidence and perfect Agent’s Lien on the Collateral.

     

    13.14    Estoppel.
      The
      Loan
      constitutes valuable consideration to Borrower. This Agreement and the other
      Loan Documents and the Loan modifications and transactions provided for or
      contemplated hereunder or thereunder, shall in no way adversely affect the
      Lien
      or perfection or priority of any Lien of Agent as of the date hereof in and
      to
      any Collateral, and are not intended to constitute, and do not constitute or
      give rise to, any novation, cancellation or extinguishment of any of Borrower’s
      Obligations existing as of the Closing Date to Agent, or of any interests owned
      or held by Agent (and not previously released) in and to any of the Collateral;
      it being the intention of the parties that the transactions provided for or
      contemplated herein shall be effectuated without any interruption in the
      continuity of the value and consideration received by Borrower, and of the
      attachment, perfection, priority and continuation in favor of Agent in and
      to
      all Collateral and proceeds.

     

    13.15    Participation
      Agreement.
      Nothing
      in this Section 13.15 shall affect or limit any Participant’s rights or any of
      the Agent’s obligations under each Participant’s respective participation
      agreement with the Agent.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    13.16    Withholding
      Taxes. 

     

    (a)    If
      any
      Lender is a “foreign person” within the meaning of the IRC and such Lender
      claims exemption from, or a reduction of, U.S. withholding tax under Sections
      1441 or 1442 of the IRC, such Lender agrees with and in favor of Agent and
      Borrower, to deliver to Agent and Borrower:

     

    (i)    if
      such
      Lender claims an exemption from withholding tax pursuant to its portfolio
      interest exception, (A) a statement of the Lender, signed under penalty of
      perjury, that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of
      the IRC, (II) a 10% shareholder of Borrower (within the meaning of
      Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation
      related to Borrower within the meaning of Section 864(d)(4) of the IRC, and
      (B)
      a properly completed and executed IRS Form W-8BEN, before the first payment
      of
      any interest under this Agreement and at any other time reasonably requested
      by
      Agent or Borrower;

     

    (ii)    if
      such
      Lender claims an exemption from, or a reduction of, withholding tax under a
      United States tax treaty, properly completed and executed IRS Form W-8BEN before
      the first payment of any interest under this Agreement and at any other time
      reasonably requested by Agent or Borrower;

     

    (iii)    if
      such
      Lender claims that interest paid under this Agreement is exempt from United
      States withholding tax because it is effectively connected with a United States
      trade or business of such Lender, two properly completed and executed copies
      of
      IRS Form W-8ECI before the first payment of any interest is due under this
      Agreement and at any other time reasonably requested by Agent or Borrower;
      and

     

    (iv)    such
      other form or forms as may be required under the IRC or other laws of the United
      States as a condition to exemption from, or reduction of, United States
      withholding tax.

     

    Such
      Lender agrees promptly to notify Agent and Borrower of any change in
      circumstances which would modify or render invalid any claimed exemption or
      reduction.

     

    (b)    If
      any
      Lender claims exemption from, or reduction of, withholding tax under a United
      States tax treaty by providing IRS Form W-8BEN and such Lender sells, assigns,
      grants a participation in, or otherwise transfers all or part of the Obligations
      of Borrower to such Lender, such Lender agrees to notify Agent of the percentage
      amount in which it is no longer the beneficial owner of Obligations of Borrower
      to such Lender. To the extent of such percentage amount, Agent will treat such
      Lender’s IRS Form W-8BEN as no longer valid.

     

    (c)    If
      any
      Lender is entitled to a reduction in the applicable withholding tax, Agent
      may
      withhold from any interest payment to such Lender an amount equivalent to the
      applicable withholding tax after taking into account such reduction. If the
      forms or other documentation required by subsection (a) of this Section are
      not
      delivered to Agent, then Agent may withhold from any interest payment to such
      Lender not providing such forms or other documentation an amount equivalent
      to
      the applicable withholding tax.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d)    If
      the
      IRS or any other Governmental Authority of the United States or other
      jurisdiction asserts a claim that Agent did not properly withhold tax from
      amounts paid to or for the account of any Lender (because the appropriate form
      was not delivered, was not properly executed, or because such Lender failed
      to
      notify Agent of a change in circumstances which rendered the exemption from,
      or
      reduction of, withholding tax ineffective, or for any other reason) such Lender
      shall indemnify and hold Agent harmless for all amounts paid, directly or
      indirectly, by Agent as tax or otherwise, including penalties and interest,
      and
      including any taxes imposed by any jurisdiction on the amounts payable to Agent
      under this Section, together with all costs and expenses (including attorneys
      fees and expenses). The obligation of the Lenders under this subsection shall
      survive the payment of all Obligations and the resignation or replacement of
      Agent.

     

    (e)    All
      payments made by Borrower hereunder or under any note will be made without
      setoff, counterclaim, or other defense, except as required by Applicable Laws
      other than for Taxes (as defined below). All such payments will be made free
      and
      clear of, and without deduction or withholding for, any present or future taxes,
      levies, imposts, duties, fees, assessments or other charges of whatever nature
      now or hereafter imposed by any jurisdiction (other than the United States)
      or
      by any political subdivision or taxing authority thereof or therein (other
      than
      of the United States) with respect to such payments (but excluding, any tax
      imposed by any jurisdiction or by any political subdivision or taxing authority
      thereof or therein (i) measured by or based on the net income or net profits
      of
      a Lender, or (ii) to the extent that such tax results from a change in the
      circumstances of the Lender, including a change in the residence, place of
      organization, or principal place of business of the Lender, or a change in
      the
      branch or lending office of the Lender participating in the transactions set
      forth herein) and all interest, penalties or similar liabilities with respect
      thereto (all such non-excluded taxes, levies, imposts, duties, fees, assessments
      or other charges being referred to collectively as “Taxes”).
      If
      any Taxes are so levied or imposed, Borrower agrees to pay the full amount
      of
      such Taxes, and such additional amounts as may be necessary so that every
      pay-ment of all amounts due under this Agreement or under any note, including
      any amount paid pursuant to this Section 13.16(e)
      after
      withholding or deduction for or on account of any Taxes, will not be less than
      the amount provided for herein; provided,
      however,
      that
      Borrower shall not be required to increase any such amounts payable to Agent
      or
      any Lender (i) that is not organized under the laws of the United States, if
      such Person fails to comply with the other requirements of this Section
      13.16,
      or (ii)
      if the increase in such amount payable results from Agent’s or such Lender’s own
      willful mis-conduct or gross negligence. Borrower will furnish to Agent as
      promptly as possible after the date the payment of any Taxes is due pursuant
      to
      Applicable Laws certified copies of tax receipts evidencing such payment by
      Borrower.

     

    13.17    Agent
      in Individual Capacity.
      WFF
      and
      its Affiliates may make loans to, issue letters of credit for the account of,
      accept deposits from, acquire equity interests in, and generally engage in
      any
      kind of banking, trust, financial advisory, underwriting, or other business
      with
      Borrower and its Subsidiaries and Affiliates and any other Person party to
      any
      Loan Documents as though WFF were not Agent hereunder, and, in each case,
      without notice to or consent of the other Lenders. The other Lenders acknowledge
      that, pursuant to such activities, WFF or its Affiliates may receive information
      regarding Borrower or its Affiliates and any other Person party to any Loan
      Documents that is subject to confidentiality obligations in favor of Borrower
      or
      such other Person and that prohibit the disclosure of such information to the
      Lenders, and the Lenders acknowledge that, in such circumstances (and in the
      absence
      of a waiver of such confidentiality obligations, which waiver Agent will use
      its reasonable
      best efforts to obtain), Agent shall not be under any obligation to provide
      such
      information to them. The terms “Lender” and “Lenders” include WFF in its
      individual capacity.

     

    [THE
      REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    
       

      
        	 	BORROWER:
	 	 	 
	 	
                SILVERLEAF
                  RESORTS, INC., 

                a
                  Texas
                  corporation

              
	 
 	 
 	 
 
	/s/
                PATRICIA K. DOREY	By:  	/s/ HARRY
                J.
                WHITE, JR.
	
                

              	
                

              
	 	
                Name:  
                  Harry J. White, Jr.

                Title:    
                  Chief Financial Officer

              


      

    

     

    
      	
              STATE
                OF TEXAS

            	
              )

            	 
	 	
              )

            	
              ss:
                

            
	
              COUNTY
                OF DALLAS

            	
              )

            	 


    

    


    The
      foregoing instrument was acknowledged before me this 16th
      day of
      December, 2005 by Harry J. White, Jr., Chief Financial Officer of
      Silverleaf Resorts, Inc., a Texas corporation, on behalf of the
      Corporation.

    
       

      
        	 	 	 
	 	By:  	/s/ KIM
                W.
                MURDOCK
	 	
                

              
	 	
                Notary
                  Public

                My Commission
                  Expires:

              


      



    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	 	LENDER:
	 	 	 
	 	
                WELLS
                  FARGO FOOTHILL, INC., 

                a
                  California corporation

              
	 
 	 
 	 
 
	/s/
                	By:  	/s/ RUSSELL
                BONDER
	
                

              	
                

              
	 	
                Name:  
                  Russell Bonder

                Title:    
                  Senior Vice President

              


      

       

      
        	
                STATE
                  OF GEORGIA

              	
                )

              	 
	 	
                )

              	
                ss:
                  

              
	
                COUNTY
                  OF FULTON

              	
                )

              	 


      

       

    

    The
      foregoing instrument was acknowledged before me this 16th day of
      December, 2005 by _Russell
      Bonder_____________,
      ___SVP_________________
      of WELLS FARGO FOOTHILL, INC., a California corporation, on behalf of the
      corporation.

    


    
      
        	 	 	 
	 	By:  	/s/ PRECIOUS
                E. ATKINSON
	 	
                

              
	 	
                Commissioner
                  of
                  the Superior Court

                Notary Public

                My Commission Expires:  April 13,
                  2006

              


      

    

     

    
      
        
          	 	AGENT:
	 	 	 
	 	
                  WELLS
                    FARGO FOOTHILL, INC., 

                  a
                    California corporation, as Agent

                
	 
 	 
 	 
 
	/s/
                  	By:  	/s/ RUSSELL
                  BONDER
	
                  

                	
                  

                
	 	
                  Name:  
                    Russell Bonder

                  Title:    
                    Senior Vice President

                


        

         

        
          	
                  STATE
                    OF GEORGIA

                	
                  )

                	 
	 	
                  )

                	
                  ss:
                    

                
	
                  COUNTY
                    OF FULTON

                	
                  )

                	 


        

         

      

    

    The
      foregoing instrument was acknowledged before me this 16th day of
      December, 2005 by __Russell
      Bonder_____________________,
      ____SVP________________
      of WELLS FARGO FOOTHILL, INC., a California corporation, on behalf of the
      corporation.

     

    
      
        
          	 	 	 
	 	By:  	/s/ PRECIOUS
                  E. ATKINSON
	 	
                  

                
	 	
                  Commissioner
                    of
                    the Superior Court

                  Notary Public

                  My Commission Expires:  April 13,
                    2006

                


        

      

       

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    List
      of
      Schedules and Exhibits Attached to Agreement and Not Filed
      Herewith:

    


    SCHEDULES:

    Schedule
      1.0-Identification of Lenders and Their Respective Pro Rata
      Percentage

    Schedule
      1.1(c)-List of Resort Declarations

    Schedule
      1.1(d)(i)- List of CapitalSource Finance, LLC Documents

    Schedule
      1.1(d)(ii)- List of Resort Funding, LLC Documents

    Schedule
      1.1(d)(iii)- List of Textron Financial Corporation Documents

    Schedule
      1.1 (e)-List of Timeshare Owner Associations

    Schedule
      2.7(b)-List of Borrower’s Executive Management

    Schedule
      5.2-List of Interval Recording Offices

    Schedule
      6.5-Liens

    Schedule
      6.7-Pending Material Litigation

    Schedule
      6.9-List of Environmental Matters

    Schedule
      6.14-Restrictions on Borrower Re Indebtedness or Compliance

    Schedule
      6.19-List of Time Share Documents

    Schedule
      6.23-Inventory Control Procedures

    


    EXHIBITS

    Exhibit
      A-Borrowing Base Report

    Exhibit
      B-Mortgage, Deed of Trust, Deed to Secure Debt, Assignment of Beneficial
      Interest or other Security Instrument 

    Exhibit
      C-Borrower’s Certificate and Request for Advance

    Exhibit
      D-Officer’s Certificate