Document:

Amendment No. 2 to Loan Agreement

 Exhibit 10.4 
 

 
  
 EXECUTION
AMENDMENT NO. 2 
 TO 
 LOAN AGREEMENT 
 AMENDMENT NO. 2, dated as of February 13, 2004 (this “Amendment”), to
that certain Loan Agreement, dated as of July 29,2002, as amended by Amendment No. 1, dated as of December 20, 2002 (as amended by Amendment No. 1, the “Existing Loan Agreement”), among Sunterra Corporation, a Maryland corporation
(“Parent”), Borrowers (as defined therein), the Lenders (as defined therein), and Merrill Lynch Mortgage Capital Inc., as administrative agent and collateral agent for the Lenders (in such capacity, “Agent”). 
 WITNESSETH: 
 WHEREAS, capitalized terms not otherwise defined herein shall have the same meanings as specified in the Existing Loan Agreement; 
 WHEREAS, Borrowers have requested that Agent and Lenders agree to amend the Existing Loan Agreement as more specifically set forth herein; and 
 WHEREAS, Agent and Lenders have indicated their willingness to agree to such amendment of the Existing Loan Agreement on the terms and subject to the satisfaction of the conditions set forth herein.

 NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties
hereto hereby agree as follows: 
 SECTION 1. Amendment. As of the Effective Date (as defined in Section 3 hereof):

 (a) Clause (i) of the definition of “Applicable Margin” in Section 1.1 of the Existing Loan Agreement is hereby
amended by deleting it in its entirety and inserting, in lieu thereof, the following: 
 “with respect to interest
payable on Tranche A Loans, 2.25%”. 
 (b) Clause (ii) of the definition of “Applicable Margin” in Section 1.1
of the Existing Loan Agreement is hereby amended by deleting it in its entirety and inserting, in lieu thereof, the following: 
 “with respect to interest payable on Tranche B Loans, 4.00%”. 
 (c) The definition of
“Contract File” in Section 1.1 of the Loan Agreement is hereby amended by adding at the very end of such definition the following sentence: 
 “In addition, notwithstanding any term or provision of this Agreement or any other Loan Document to the contrary, with respect to a Points Based Time Share Interest, “Contract File”
means: (i) the original or a copy of the sales contract, 

 

 
  
 however,
denominated, pursuant to which the applicable Points Based Time Share Interest was originally sold by the seller thereof, whether or not a Borrower (provided that if the seller of such Points Based Time Share Interest is not a Borrower, such sales
contract has been assigned to a Borrower), including any addenda thereto, (ii) an original or a copy of any assumption or modification thereof (if applicable), and (iii) if and only if a purchase money promissory note was executed by the purchaser
of such Points Based Time Share Interest, the documents required by Subsections (i) and (v) of this definition, to the extent applicable.” 
 (d) The definition of “Eligible Mortgage Receivables” in Section 1.1 of the Existing Loan Agreement is hereby amended by deleting in its entirety the sentence immediately succeeding Subsection (xii) and preceding
Subsection (a) thereof and inserting, in lieu thereof, the following: 
 “And, with respect to Mortgage Receivables
(except for Epic Receivables) originated on or after February 1, 2001, and with respect to Epic Receivables originated on or after October 30, 2003, in addition to the foregoing criteria:” 
 (e) The definition of “Eligible Resorts” in Section 1.1 of the Existing Loan Agreement is hereby amended by adding at the end
thereof the following: 
 ““Eligible Resorts” also means Club Sunterra Vacations, Club Sunterra Vacations I1
(formerly known as Epic Vacation Club), Club Sunterra Vacations California and Club Sunterra Vacations St. Maarten, together with all resorts from time to time affiliated therewith, including, without limitation, the Epic Resorts.” 

(0 The date “July 29, 2004” in the definition of “Final Maturity Date” in Section 1.1 of the Existing Loan
Agreement is hereby amended by deleting it in its entirety and inserting, in lieu thereof, “February 28,2006”. 
 (g) The definition of “Maximum Aggregate Amount” is hereby amended by deleting it in its entirety and inserting, in lieu thereof, the following: 
 “$300,000,000, plus an amount equal to the aggregate amount of the Indebtedness secured by the Prudential Receivables, but not in excess of $50,000,000, which Indebtedness may be repaid with the
proceeds of the Tranche A Loans; provided, any such Tranche A Loans shall be repaid in full in accordance with the last sentence of Section 2.7.” 
 (h) The definition of “Time Share Interest” in Section 1.1 of the Existing Loan Agreement is hereby amended by deleting in its entirety the last sentence thereof and inserting, in lieu
thereof, the following: 
 “Time Share Interest shall include, without limitation, any Vacation Time Share Interest and
any Points Based Time Share Interest.” 
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 (i) The
definition of “Time Share Inventory” in Section 1.1 of the Existing Loan Agreement is hereby amended by deleting it in its entirety and inserting, in lieu thereof,            ,the
following: 
 ““Time Share Inventory” means the unsold (including previously sold and subsequently reacquired)
(x) Time Share Interests at the Eligible Resorts and (y) Points Based Time Share Interests owned by the Loan Parties that conform to the each of the terms and conditions of Section 9.17.” 
 (i) The definition of “Time Share Mortgage” in Section 1.1 of the Existing Loan Agreement is hereby amended by deleting it in
its entirety and inserting, in lieu thereof, the following: 
 ““Time Share Mortgage” means a mortgage, deed of
trust or other security interest on or with respect to a Timeshare Interest, including, without limitation, any financing instruments for Time Share Interests in St. Maarten and for Points Based Time Share Interests.” 
 (k) The definition of “Total Tranche A Loan Commitment” in Section 1.1 of the Existing Loan Agreement is hereby amended by
deleting the phrase “$225,000,000 at any time” set forth therein in its entirety and inserting, in lieu thereof, the following: 
 “the sum of $225,000,000, plus an amount equal to the aggregate amount of the Indebtedness secured by the Prudential Receivables, but not in excess of $50,000,000, which Indebtedness may be repaid with the proceeds of the
Tranche A Loans; provided, any such Tranche A Loans shall be repaid in full in accordance with the last sentence of Section 2.7.” 
 (1) The definition of “Total Tranche B Loan Commitment” in Section 1.1 of the Existing Loan Agreement is hereby amended by deleting it in its entirety and inserting, in lieu thereof, the following: 
 ““Total Tranche B Loan Commitment” means the sum of the amounts of the Lenders’ Tranche B Loan Commitments, as such
amounts may be terminated or reduced from time to time in accordance with the terms of this Agreement, provided that the Total Tranche B Loan Commitment shall not exceed, as of any date of determination, an amount equal to (i) the sum of (1)
$100,000,000, plus (2) the Inventory Collateral Value of all Epic Inventory as of February 13, 2004, 
 &(3) at any time
Epic Inventory comprises any portion of the Tranche B Borrowing Base, $5,000,000, (ii) the aggregate amount of the Inventory Collateral Value of all Epic Inventory, determined as of the date of the sale thereof, sold by Borrowers to third parties
during the period of February 13,2004 to such date.” 
 (m) The percentage “80.0%” set forth in the definition
of “Tranche A Advance Rate” in Section 1.1 of the Existing Loan Agreement is hereby amended by deleting it in its entirety and inserting, in lieu thereof, “85.0%”. 
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 (n) Appendix
A-1 to the Existing Loan Agreement, as referred to in the definition of “Tranche A Loan Commitment” in Section 1.1 of the Existing Loan Agreement, is hereby amended by deleting it in its entirety and inserting, in lieu thereof, Appendix
A-1 hereto. 
 (o) Appendix A-2 to the Existing Loan Agreement, as referred to in the definition of “Tranche B Loan
Commitment” in Section 1.1 of the Existing Loan Agreement, is hereby amended by deleting it in its entirety and inserting, in lieu thereof, Appendix A-2 hereto. 
 (p) The following definitions are added to Section 1.1 of the Loan Agreement: ““Conversion” has the meaning specified therefor in Section 9.17(a).” ““Conversion
Conditions” has the meaning specified therefor in Section 9.17(a).” ““Conversion Date” has the meaning specified therefor in Section 9.17(a)(i).” ““Declaration” has the meaning specified therefor in
Section 9.17(a)(iii).” 
 ““Epic Inventory” means Time Share Inventory with respect to Club Sunterra
Vacations II.” 
 ““Epic Receivable” means a Mortgage Receivable generated from the sale of a membership
in Club Sunterra Vacations 11, formerly known as Epic Vacation Club.” 
 ““Epic Resorts” means each of the
following Resorts: 
 Resort Location 
 London Bridge Resort Timeshare Condominium Lake Havasu City, AZ Desert Paradise Resort Las Vegas, NV Daytona Beach Regency Daytona Beach, FL Scottsdale Links Condominium Scottsdale, AZ Palm Springs
Marquis Villas Palm Springs, CA Island Links Resort Hilton Head, SC 
 ““Opinion” has the meaning specified
therefor in Section 9.17(a)(v).” 
 ““Points Based Documents” has the meaning specified therefor in
Section 9.17(a)(iii). 
 ““Points Based Governmental Authorities” has the meaning specified therefor in Section
9.17(a)(iii).” 
 ““Points Based Legal Requirements has the meaning specified therefor in Section
9.17(a)(iii).” 
 ““Points Based Time Share Interest” means a Time Share Interest (including a club
membership) that is denominated in points, SunOptions, or a similar form of 
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 currency, the
redemption of which entitles the holder thereof to reserve the use and occupancy of a residential accommodation at an Eligible Resort. Any Borrower that is the seller of Points Based Time Share Interests shall be deemed the owner of a Points Based
Time Share Interest to the extent of its unsold points from time to time.” 
 ““Prudential Receivables”
means the Epic Receivables of Epic Master Funding Corporation securing the Indebtedness of such Borrower to Prudential Securities Credit Corp., LLC.” 
 ““Release” has the meaning specified therefor in Section 9.17(b).” 
 ““Release Conditions” has the meaning specified therefor in Section 9.17(b).” 
 ““Release Date” has the meaning specified therefor in Section 9.17(b)(i).” 
 ““Release Request” has the meaning specified therefor in Section 9.17(b)(i).” 
 ““U.S. Operating Expenses” means Parent’s and its Subsidiaries’ actual consolidated results in the United States of America and St. Maarten for the trailing twelve month period as of any date of determination
of (i) cost of sales, (ii) advertising, sales and marketing, and (iii) general and administrative expenses, expressly excluding maintenance and subsidy expense, portfolio loan expense, loan provision, club operating expenses, resort management
expenses, impairment and extraordinary expenses, in each case as determined in accordance with GAAP.” 
 (9) Section 2.7
of the Existing Loan Agreement is hereby amended by adding the following sentence immediately prior to the end thereof: 
 “Notwithstanding anything herein or in any other Loan Document to the contrary, upon receipt of any net proceeds from the securitization, other disposition or refinancing of any of the Prudential Receivables, Borrower

 shall repay the Tranche A Loans in an aggregate principal amount equal to such net proceeds.” 
 (r) Section 6.l(p) of the Existing Loan Agreement is hereby amended by adding the following sentence immediately prior to the end thereof:

 “Notwithstanding anything herein or in any other Loan Document to the contrary, the proceeds of the Tranche A Loans,
not in excess of $50,000,000, may be used to purchase the Prudential Receivables by repaying the Indebtedness secured by the Prudential Receivables on terms and conditions satisfactory to Agent, including, without limitation, that upon giving effect
to any such repayment, the Prudential Receivables shall conform to the definition of the term Eligible Mortgage Receivables; provided, any such Tranche A Loans shall be repaid in fill in accordance with the last sentence of Section 2.7.”

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 (s) Schedule
6.3(a) to the Existing Loan Agreement, as referred to in Section 6.3(a) of the Existing Loan Agreement, is hereby amended by deleting it in its entirety and inserting, in lieu thereof, Schedule 6.3(a) hereto. 
 (t) Section 6.3 of the Existing Loan Agreement is hereby amended by adding the following subsection 6.3(e) immediately prior to the end
thereof: 
 “(e) Efficiency Ratio. Beginning January 1, 2004 and measured cumulatively each quarter through December 31,
2004 and on a twelve month trailing basis each quarter thereafter, permit the ratio of (x) U.S. Operating Expenses to (y) U.S. Sales Revenue (i) to exceed 1.50:1.00 for the quarter ended March 31, 2004, to exceed 1.20:1.00 for the quarter ended June
30, 2004, to exceed 1.10:1.00 for the quarters ended September 30, 2004 and December 31, 2004, and (ii) to exceed 1.05:1.00 for the quarters ended March 31,2005 and June 30,2005.” 
 (u) The Existing Loan Agreement is hereby amended by adding the following Section 9.17 immediately after Section 9.16 thereof: 

“9.17 Conversion of Time Share Interests to Points Based Time Share Interests. (a) Borrowers may convert (a
“Conversion”) Time Share Interests at Eligible Resorts to Points Based Time Share Interests, and Agent hereby consent to such Conversion, provided that each of the following terms and conditions (the “Conversion Conditions”) has
been satisfied in connection only with the first such Conversion with respect to each Eligible Resort: 
 (i) The applicable
Borrower has provided Agent notice with notice of the proposed Conversion at least fifteen (15) days prior to the date thereof (the “Conversion Date”). 
 (ii) Immediately prior to, and after giving effect to, the proposed 
 Conversion, no Default or Event of Default shall have occurred and be continuing at the time that the applicable Borrower gives Agent notice of the Conversion and on the date of the Conversion. 
 (iii) All documents reasonably required to implement the Conversion, to market and sell Points Based Time Share Interests and to operate,
manage and administer the related Eligible Resort, including, without limitation, (x) all documents required to be submitted to Governmental Authorities in each state in which the applicable Points Based Time Share Interests will be marketed or sold
(the “Points Based Governmental Authorities”) in accordance with all Requirements of Law of such states applicable to Points Based Time Share Interests (“Points Based Legal Requirements) and (y) the Declaration, bylaws and rules and
regulations of the applicable Eligible Resort, the member’s association, the management agreement, the form of contract of sale, promissory note, and other sale and financing documents to be used in connection with the sale of the Points Based
Time Share Interests (to the extent applicable) (collectively, the “Points Based Documents”) shall be submitted to Agent for review and approval, 
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 which approval
shall not be unreasonably withheld. No material substantive changes or modifications to any of the Points Based Documents previously approved by Agent shall be made without Agent’s prior approval, which approval shall not be unreasonably
withheld. For purposes of this Agreement, “Declaration” shall mean the declaration or comparable document which establishes the applicable Points Based Time Share Interests and contains various covenants, restrictions, easements, charges
and liens related thereto. 
 (iv) The applicable Borrower has filed with the Points Based Governmental Authorities such
documents as are necessary to comply in all material respects with the Points Based Legal Requirements and has obtained from the applicable Points Based Governmental Authorities all consents and approvals required under the Points Based Legal
Requirements to implement the Conversion and to market and sell the applicable Points Based Times Share Interests in the applicable jurisdiction. 
 (v) The applicable Borrower has delivered to Agent an opinion or written confirmation of outside or in-house counsel that (A) the applicable Points Based Documents satisfy in all material respects all Points Based Legal
Requirements and have been duly executed and, where necessary, have been duly recorded pursuant to the applicable Points Based Legal Requirements and (B) all filings with Points Based Governmental Authorities necessary for the marketing and sale of
the applicable Points Based Times Share Interests have been made, all required consents and approvals of all applicable Points Based Governmental Authorities have been obtained, and all Points Based Legal Requirements have been satisfied in all
material respects and no further filing, registration or other compliance with any federal or state securities law or other Legal Requirement is currently required in connection with the marketing and sale of the applicable Points Based Time

 Share Interests (the “Opinion”). 
 (vi) The applicable Borrower has delivered to Agent an Officer’s Certificate setting forth (x) the retail sales value of the Time Share Interests to be converted, (y) the retail sales value of the
related Points Based Time Share Interests, and (z) that the retail sales value of such related Points Based Time Share Interests is equal to or greater than the retail sales value of such Time Share Interests. 
 (vii) The applicable Borrower has delivered to Agent an Officer’s Certificate confirming that (x) such Borrower has complied with all
of the Conversion requirements and (y) there are no Defaults or Events of Default continuing. 
 (viii) The applicable
Borrower has paid all costs and expenses, including, without limitation, reasonable attorneys’ fees and disbursements incurred by Agent and/or Lenders in connection with the Conversion. 
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 (ix) Unless
required by Points Based Legal Requirements, the Declaration shall not be recorded against the Property and the Times Share Interests shall not be transferred to the applicable trustee or club entity until (A) all consents and approvals of all
Points Based Governmental Authorities have been obtained and delivered to Agent, (B) the applicable Borrower delivers to Agent the Opinion and (C) all other Conversion Conditions have been satisfied. 
 (x) After Time Share Interests have been transferred and dedicated to the applicable trustee or club entity, the applicable Borrower shall
not abandon the Conversion without the prior written approval of Agent. 
 (b) If the Conversion Conditions have been
satisfied, Agent shall, from time to time, within fifteen (15) days of written request from Borrower (the “Release Request”), execute, acknowledge and deliver to the applicable Borrower such releases in form and substance satisfactory to
such Borrower and its title insurance company (without recourse) (each, a “Release”) from the Lien of the Mortgage(s) encumbering the applicable Time Share Interests as the applicable Borrower shall request, provided that such Borrower
satisfies each of the following terms and conditions with respect to each Release Request (the “Release Conditions”): 
 (i) No Default or Event of Default has occurred and is continuing at the time the applicable Borrower makes the Request and on the date upon which Agent delivers the Release (the “Release Date”). 
 (ii) The applicable Borrower has delivered to Agent a title report on the Time Share Interests to be released and a UCC search report with
respect to such Borrower that will be transferring Time Share Interests to the applicable trustee or club entity covering the time period since the last applicable title and UCC search reports delivered to Agent, all of which must show that such
Times Share Interests 
 are being transferred free and clear of all Liens and encumbrances other than the Lien of the
applicable Mortgage(s) and the Permitted Liens, and shall in all other respects be satisfactory to Agent, in its reasonable discretion. 
 (iii) The applicable Borrower has delivered to Agent (A) on the Release Date, an Officer’s Certificate dated the Release Date confirming that (x) all of the Release Conditions have been satisfied and (y) no Defaults or Events of
Default are continuing. 
 (iv) The applicable Borrower, at its sole expense, and subject to Agent’s approval, has
delivered to Agent any and all documents and instruments necessary to effect the Release of the applicable Time Share Interest(s) from the Lien of the applicable Mortgage(s). 
 (v) The applicable Borrower has paid to Agent, upon its delivery of a Release, all costs reasonably incurred by Agent (including, but not
limited to, recording charges, taxes and fees and reasonable attorneys’ fees and 
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 disbursements)
in connection with the review, execution and delivery of such Release and all related documents and instruments. 
 (c) It is
expressly understood and agreed that the rights granted hereunder to Agent to review, approve and comment upon any of the Points Based Documents are not intended to, nor shall they be deemed to, constitute Agent or Lenders as a sponsor with respect
to any Conversion, but is intended merely to afford Agent the ability (i) to ensure correct disclosure of Agent’s involvement with the Points Based Time Share Interests, and (ii) to protect and preserve the security intended to be granted to
Agent and Lenders under this Agreement and the other Loan Documents. Any approval by Agent of any Points Based Document shall be evidence solely of Agent’s determination that such document properly discloses such involvement and that the terms
thereof, if implemented, would not have an adverse effect on such security, and not evidence of Agent’s (A) determination that such document is in compliance with any laws, rules or regulations applicable to the Conversion or (B) approval of
the terms of such documents, except as to the specific aspects referred to in clauses (i) and (ii) above. 
 SECTION 2.
Certain Covenants and Limitations. In consideration of the execution and delivery of this Amendment by Agent and the Lenders, Borrowers hereby agree as follows: 
 (a) Renewal Fee. The failure to pay each of the following fees on or before the applicable date set forth herein (x) shall be an Event of Default and (y) shall render each of the amendments set forth
herein to be no longer of any force or effect: 
 (i) Borrowers shall pay to Agent a non-refundable renewal fee in the amount
of $2,250,000 on or before July 31,2004, and 
 (ii) Borrowers shall pay to Agent a non-refundable renewal fee in the

 amount of $1,312,500 on or before July 31,2005. 
 (b) Sales Fee. At any time Epic Inventory comprises any portion of the Tranche B Borrowing Base or the Tranche C Borrowing Base, or Agent
or an Affiliate thereof is currently lending to one or more Borrowers secured by such Epic Inventory, Borrower shall pay to Agent a non-refundable fee in the amount of 1.50% of the aggregate amount of the net sales price of all items of Epic
Inventory sold in the most recent three months then ended but excluding any items of Epic Inventory sold to a joint venture in which Agent or an Affiliate thereof is a participant, which fee shall be payable in arrears on the fifteenth (15th) day of
each April, July, October and January, beginning April 15, 2004, and the failure to pay any such fee on or before such date shall be an Event of Default. 
 (c) First Opportunity. Borrowers shall offer to Agent and its Affiliates the first opportunity to enter into any financing of the Epic Inventory (other than the Loans), including without limitation,
any joint venture with respect thereto, and Agent shall notify Parent of its, or its Affiliate’s, intention to enter into such facility within a reasonable period of time thereafter. 
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 (d) Costs and
Expenses. Borrowers shall pay all costs and expenses of Agent incurred in connection herewith or otherwise due and owing as of the date hereof pursuant to Section 9.4 of the Loan Agreement. 
 (e) Joinder. By executing and delivering this Amendment, each of the Points Based Time Share Developers and Epic Resorts Parties (as each
such term is defined in Section 3(a) hereof) agrees to become (i) a Borrower under, and to be bound by, and to comply with, the terms and conditions of the Loan Agreement; (ii) an Additional Pledgor (as defined in the Pledge Agreement) under, and to
be bound by, and to comply with, the terms and conditions of the Pledge Agreement and this Amendment shall be deemed to be “Counterpart Agreement” for all purposes thereof. In addition, the information contained in the schedules attached
as Schedule I1 hereto shall be deemed to be a part of Schedule I1 to the Pledge Agreement; and (iii) an Additional Grantor (as defined in the Security Agreement) under, and to be bound by, and to comply with, the terms and conditions of the Security
Agreement and this Amendment shall be deemed to be a “Counterpart Agreement” for all purposes thereof. 
 (f)
Prudential Receivables. Notwithstanding anything herein or in any other Loan Document to the contrary, the parties hereto acknowledge and agree that, in addition to the satisfaction of the other terms and conditions of the Loan Agreement and the
other Loan Documents, no Lender shall have any obligation to make any Loan the proceeds of which would be used to purchase the Prudential Receivables by repaying the Indebtedness secured by the Prudential Receivables unless and until each of the
following conditions precedent shall have been satisfied: 
 (i) Agent shall have received a custodial agreement with respect
to the Contract Files for the Prudential Receivables in form and substance 
 satisfactory to Agent, executed by the parties
thereto; 
 (ii) Agent shall have received a servicing agreement with respect to the Prudential Receivables in form and
substance satisfactory to Agent, executed by the parties thereto; 
 (iii) Agent shall have received a purchase agreement with
respect to the Prudential Receivables in form and substance satisfactory to Agent, executed by the parties thereto, together with any applicable settlement orders or related decrees; and 
 (iv) Agent shall have completed its due diligence with respect to the Prudential Receivables and the transactions related thereto and
shall be satisfied with the results thereof; provided, m,(x) the Indebtedness secured by the Prudential Receivables shall be deemed to be “Permitted Indebtedness” for all purposes of the Loan Documents and (y) the Liens securing such
Indebtedness shall be deemed to be “Permitted Liens” for all purposes of the Loan Documents, provided, further, that such Liens are terminated within thirty (30) days of the repayment of the Indebtedness secured by the Prudential
Receivables. 
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 (g) Custodial
Agreement. Within thirty (30) days of the date hereof, Agent shall receive an amendment to the Custodial Agreement in form and substance satisfactory to Agent, executed by the parties thereto. 
 SECTION 3. Conditions Precedent to the Effectiveness of this Amendment. This Amendment shall become effective as of the date hereof (the
“Effective Date”) provided that each of the following conditions precedent shall have been satisfied on or before such date: 
 (a) Amendment. Agent has received counterparts of this Amendment executed by Borrowers and Agent on behalf of Lenders, and by executing and delivering such a counterpart, each of Club Sunterra Development, LLC, a Delaware limited
liability company, and Club Sunterra Development California, LLC, a Delaware limited liability company (individually, a “Points Based Time Share Developer,” and collectively, the “Points Based Time Share Developers”) and Club
Sunterra Development 11, LLC, a Delaware limited liability company, Sunterra Hilton Head Development, LLC, a Delaware limited liability company, Sunterra Daytona Development, LLC, a Delaware limited liability company, Sunterra Las Vegas Development,
LLC, a Delaware limited liability company, Sunterra Scottsdale Development, LLC, a Delaware limited liability company, Sunterra Palm Springs Development, LLC, a Delaware limited liability company, Sunterra Epic Mortgage Holdings, LLC, a Delaware
limited liability company, Epic Declarant, Inc., a Delaware corporation, Epic Residual Assets, Inc., a Delaware corporation and Epic Master Funding Corporation, a Delaware corporation, (individually, an “Epic Resorts Party,” and
collectively, the “Epic Resorts Parties”). Each Points Based Time Share Developer and Epic Resorts Party shall be deemed a 
 “Borrower” under the Loan Documents. 
 (b) Notes. Agent, on behalf of each Lender, shall have
received an amendment and restatement of each Note then outstanding reflecting the applicable amendments to the Loan Agreement set forth herein, in each case in form and substance satisfactory to such Lender, executed by Borrowers. 
 (c) Warrants. Agent shall have received an amendment to the Warrant Agreement and Warrants, in each case in form and substance
satisfactory to Agent, executed by the parties thereto. 
 (d) Other Documents, Etc. Agent shall have received from each of
the Points Based Time Share Developers and Epic Resorts Parties: 
 (i) copies of the Organizational Documents of such Person,
certified by the Secretary of State of its jurisdiction of organization or, if such document is of a type that may not be so certified, certified by the secretary or similar officer or manager of such Person, together with a good standing
certificate from the Secretary of State of its jurisdiction of organization and each other jurisdiction in the United States in which such Person is qualified to do business and, to the extent generally available, a certificate or other evidence of
good standing as to payment of any applicable franchise or similar taxes from the appropriate taxing authority of each jurisdiction of organization, each dated a recent date prior to the Closing Date; 
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 (ii)
resolutions of the Governing Body of such Person approving and authorizing the execution, delivery and performance by such Person of the Loan Documents to which it is a party, certified as of the date hereof by the secretary or similar officer or
manager of such Person as being in full force and effect without modification or amendment; 
 (iii) signature and incumbency
certificates of the officers or managers of such Person executing the Loan Documents to which it is a party: 
 (iv) evidence
satisfactory to Agent of the compliance by each such Person and the owner of all the membership interests thereof of its obligations under the Collateral Documents (including, without limitation, their obligations to execute and deliver UCC
financing statements, originals of securities, instruments and chattel paper and any agreements governing deposit and/or securities accounts as provided therein); 
 (v) (A) a completed Collateral Certificate dated as of the date hereof and executed by an Authorized Officer of each such Person, (B) the results of a search (including a recent update thereof), by a
Person satisfactory to Agent, of all effective UCC financing statements (or equivalent filings) made with respect to any personal or mixed property of 
 each such Person, together with copies of all such filings disclosed by such search, and (C) UCC termination statements (or similar documents) duly executed by all applicable Persons for filing in all
applicable jurisdictions as may be necessary to terminate any effective UCC financing statements (or equivalent filings) disclosed in such search (other than any such financing statements in respect of Permitted Liens); and 
 (vi) evidence that each such Person and the applicable Loan Party that owns all of the membership interests of each such Person shall have
taken or caused to be taken any other action, executed and delivered or caused to be executed and delivered any other agreement, document and instrument and made or caused to be made any other filing and recording (other than as set forth herein)
reasonably required by Agent. 
 (e) Opinions of Counsel. Agent shall have received legal opinions from counsel to each of the
Points Based Time Share Developers and Epic Resorts Parties, which counsel shall be acceptable to Agent, covering such matters as Agent may request and in form and substance satisfactory to Agent. 
 (f) Representations and Warranties. The representations and warranties contained in Section 4 of this Amendment and each of the Loan
Documents shall be true and correct in all material respects on and as of the Effective Date, before and after giving effect to this Amendment, as though made on and as of such date (except for any such representation and warranty that by its terms
refers to a specific date other than the date first above written, in which case it shall be true and correct in all material respects as of such earlier date). 
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 (g) No Default
or Event of Default. No Default or Event of Default shall have occurred and be continuing or shall occur after giving effect to this Amendment. 
 SECTION 4. Representations and Warranties. To induce Agent and the Lenders to enter into this Amendment, each Borrower hereby represents and warrants to Agent and the Lenders: 
 (a) Representations and Warranties. The representations and warranties contained in this Section 4 and in each of the Loan Documents are
true and correct in all material respects on and as of the Effective Date, before and after giving effect to this Amendment, as though made on and as of such date (except for any such representation and warranty that by its terms refers to a
specific date other than the date first above written, in which case it shall be true and correct in all material respects as of such earlier date. 
 (b) No Default or Event of Default. No Default or Event of Default has occurred and is continuing or will occur after giving effect to this Amendment. 
 SECTION 5. Reference to and Effect on the Loan Documents; Prior Amendment. 
 (a) Reference to and Effect on the Loan Documents. As of the Effective Date, any reference in any Financing Document to the Existing Loan
Agreement shall be to the Existing Loan Agreement, as amended hereby. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Agent or any of the Lenders under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan Documents. 
 (b) Prior Amendment. As of the Effective
Date, the parties hereto agree that Section 2(b) of Amendment No. 1, dated as of December 20, 2002, to the Existing Loan Agreement shall no longer be of any force or effect, and none of the parties hereto shall have any rights or obligations with
respect to such provision. 
 SECTION 6 . Integration; Amendment. This Amendment sets forth in full the terms of agreement
between the parties with respect to the amendment described herein and is intended as the full, complete and exclusive agreement governing the relationship between the parties with respect to such amendment. This Amendment supersedes all
discussions, promises, representations, warranties, agreements and understandings between the parties with respect to the amendment described herein. 
 SECTION 7. No Third Party Beneficiaries. This Amendment shall be binding upon and inure to the benefit of Borrowers, Agent and the Lenders and their respective successors and assigns. No Person other
than the parties hereto shall have any rights hereunder or be entitled to rely on this Amendment, and all third-party beneficiary rights are hereby expressly disclaimed. 
 SECTION 8. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall 
 13 

 

 
  
 constitute one
and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment. 
 SECTION 9. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

 [remainder of page intentionally left blank] 
 14 

 

 
  
 IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. 
 [signature pages in separate document] 
 15 

 

 
  
 APPENDIX A-1
TO LOAN AGREEMENT 
 Tranche A Loan Commitments 
 Merrill Lynch Mortgage Lending, Inc. As of any date of determination, an amount equal to the sum of $225,000,000, but not in excess of $50,000,000, plus an amount equal to the aggregate amount of the
Indebtedness secured by the Prudential Receivables, which Indebtedness may be repaid with 
 the proceeds of the Tranche A
Loans; provided, any such Tranche A Loans shall be repaid in full in 
 accordance with the last sentence of Section 2.7.

 

 
  
 APPENDIX A-2
TO LOAN AGREEMENT 
 Tranche B Loan Commitments 
 Merrill Lynch Mortgage Lending, Inc. As of any date of determination, an 
 amount equal to (i) the sum of (1) 
 $100,000,000, (2) the 
 Inventory Collateral Value of all 
 Epic Inventory as of February 13, 
 2004, plus (3) at any time Epic 
 Inventory comprises any portion of 
 the Tranche B Borrowing Base, 
 $5,000,000, (ii) the aggregate 
 amount of the Inventory Collateral 
 Value of all Epic Inventory, 
 determined as of the date of the 
 sale thereof, sold to third parties 
 during the period of February 13, 
 2004 to such date. 

 

 
  
 Schedule
6.3(a) 
 U.S. Sales Revenues 
 DATE QUARTERLY SALES REQUIREMENT” 
 (For each Quarter ended until the

 Final Maturity Date) 
 Quarter ended March 31 U S . Sales Revenue Must Exceed $ 24,000,000 
 Quarter ended June 30 U.S.
Sales Revenue Must Exceed $ 35,800,000 
 Quarter ended September 30 U.S. Sales Revenue Must Exceed $ 39,600,000 

Quarter ended December 31 U.S. Sales Revenue Must Exceed $ 34,100,000 
 *excludes any Epic Resorts related Sales Revenue 

 

 
  
 Schedule I1

 SCHEDULE I1 TO PLEDGE AGREEMENT 

 

 
  
 SCHEDULE I1

 TO PLEDGE AGREEMENT DATED FEBRUARY \ 3 , 2 0 0 4 
 PLEDGOR: Sunterra Corporation 
 PLEDGE STOCK: All shares of capital stock of the following corporations owned by Pledgor: 
 Entity
Incorp. 
 Epic Residual Assets, Inc. . DE 

 

 
  
 SCHEDULE I1 TO
PLEDGE AGREEMENT 
 DATED FEBRUARY 13, 2004 PLEDGOR: Epic Residual Assets, Inc. 
 PLEDGE STOCK: All shares of capital stock of the following corporations owned by Pledgor: 
 Entity Incorp. 
 Epic Declarant, Inc. DE 

 

 
  
 SCHEDULE I1 TO
PLEDGE AGREEMENT 
 DATED FEBRUARY I a            ,2004

 PLEDGOR: Epic Residual Assets, Inc. 
 PLEDGE STOCK: All shares of capital stock of the following corporations owned by Pledgor: 
 Entity Incorp. 
 Epic Master Funding Corporation DE 

 

 
  
 IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. 
 BORROWERS: 
 SUNTERRA CORPORATION 
 By: 
 hame:
Frederick C. Bauman 
 Title: Vice President 
 AKGI LAKE TAHOE INVESTMENTS, INC. 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 AKGI ST. MAARTEN, NV 
 By: 
 hame:
Frederick C. Bauman 
 Title: Vice President 
 ARGOSF GRAND BEACH, INC, 
 By: 
 hame: Frederick C. Bauman 
 Title: Vice President 
 ARGOW PARTNERS. INC. n 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 Signature Page to i\mendmenl No 2 
 10 I oilti Agrrcment 

 

 
  
 ARGOSYKGI
GRAND BEACH INVESTMENT PARTNERSHIP 
 By: Argosy Grand Beach, Inc., Its General Partner 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 By: Argosy Partners, Inc., Its General Partner 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 By: KGI Grand Beach Investments Inc., its Managing General Partner 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 CLUB SUNTERRA, INC. 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 GEORGE ACQUISITION SUBSIDIARY, INC. 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 Signature Page to Amendment No. 2 to Loan Agreement 

 

 
  
 GRAND BEACH
PARTNERS, L.P. 
 By: ArgosyKGI Grand Beach Investment Partnership, its General Partner 
 By: Argosy partners, Inc., its Genyal partner 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 By: Argosy Grand Beach, Inc., its General Partner 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 Signature Page to Amendment No. 2 to Loan Agreement 

 

 
  
 GRAND BEACH
RESORT, LIMITED PARTNERSHIP 
 By: Grand Beach Partners, LP, its General Partner 
 By: Argosy/KGI Grand Beach Investment Partnership, its General Partner 
 By: KGI Grand Beach Investments, Inc., its Managing General Partner n 
 Name: Frederick C. Bauman Title: Vice President 
 By: Argosy Partners, Inc., A 
 Name: Frederick C. Bauman Title: Vice
President 
 By: Argosy Grand Beach, Inc., its Gengral partners 
 Name: Frederick C. Bauman Title: Vice President 
 Signature Page to Amendment No. 2 to Loan Agreement 

 

 
  
 KABUSHIKI
GAISHA KEI, LLC 
 By: Sunterra Finance Holding Company, its Member, 
 Name: Frederick C. Bauman Vice President 
 Name: Frederick C. Bauman Title: Vice President 
 KGK L&E TAHOE
DEVELOPMENT,n INC. 
 By: 
 Name: Frederick C. Bauman Title: Vice President 
 LAKE TAHOE RESORT PARTNERS, LLC 
 By: AKGI Lake Tahoe Investments, Inc., its finaging Member ~ 
 Name: Frederick C. Bauman Title: Vice President 
 By: KGK Lake Tahoe
Development, Inc., its M3mber 
 Name: Frederick C. Bauman Title: Vice President 
 Signature Page to Amendment No. 2 to Loan Agreement 

 

 
  
 MMG
QEVELOPMENT C O W .A 
 Name: Frederick C. Bauman Title: Vice President 
 PREWER VACATIONS, INC. A 
 Name: Frederick C.-Baurnan Title: Vice President 
 RESORJ MARKETING INTEIUVHIONAL, INC. 
 Name: Frederick C. Bauman Title: Vice President 
 R E S O B S DEVELOPMENT INTERNATIONAL, 
 Name: Frederick C. Bauman Title:
Vice President 
 RPM MANGEMENT,-r7 INC. 
 q a m e : Frederick C. Bauman Title: Vice President 
 SUNTERRADEVELOPERANDSALES HOLDING COMPANY (flWa AVCOM 
 Name: Frederick C. Bauman Title: Vice President

 Signature Page to Amendment No. 2 to Loan Agreement 

 

 
  
 SUNTERRA
FINANCIAL SERVICES, INC. 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA PACIFIC, INC. 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA ST. CROIX, INC. 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA TRAVEL, INC. 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA FINANCIAL HOLDING COMPANY 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA CENTRALIZED SERVICES COMPANY 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 Signature Page to Amendment No. 2 to Loan Agreement 

 

 
  
 SUNTERRA
MANAGEMENT AND EXCHANGE 
 HOLDING COMPANY 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 CLUB SUNTERRA DEVELOPMENT, LLC (f/k/a Club Sunterra, LLC) 
 By: Sunterra Developer and Sales Holding Company,
its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 INTERNATIONAL TIMESHARES MARKETING, LLC 
 By: Sunterra Developer and Sales Holding Company, its Manager 
 By:

 Name: Frederick C. Bauman 
 Title: Vice President 
 RPM MANAGEMENT, LLC 
 By: Sunterra Management and Exchange Holding 
 Company, its Manager 
 By: 
 Name: Frederick C. Bauman 
 Name: Frederick C. Bauman Title: Vice President 
 Signature Page to Amendment No. 2 to Loan Agreement

 

 
  
 SUNTERRA
DAYTONA DEVELOPMENT, LLC (f/k/a Sunterra Bent Creek Golf Course Development, LLC) By: Sunterra Developer and Sales Holding Company, its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA HILTON HEAD DEVELOPMENT, 
 LLC (f/k/a Sunterra Bent Creek Village Development, LLC 
 By: Sunterra Developer and Sales Holding Company its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA COMMUNICATIONS, LLC 
 By: Sunterra Management and Exchange Holding Company, its Manager 

By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA CORAL SANDS DEVELOPMENT LLC 
 By: Sunterra Developer and Sales
Holding Company, its Manager 
 By: 
 Name: Frederick C. Bauman 
 li Name: Frederick C. Bauman Title: Vice
President 
 Signature Page to Amendment No. 2 to Loan Agreement 

 

 
  
 SUNTERRA
CYPRESS POINTE I DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales Holding Company, its Manager 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA CYPRESS POINTE I1 DEVELOPMENT, LLC 
 By: Sunterra Developer and
Sales Holding Company, its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA CYPRESS POINTE I11 DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales Holding Cornpany, its Manager 
 By:

 Name: Frederick C. Bauman 
 Title: Vice President 
 CLUB SUNTERRA DEVELOPMENT CALIFORNIA, LLC (f/k/a
Sunterra East Marketing, LLC) 
 By: Sunterra Developer and Sales Holding Company, its Manager 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 Signature Page to Amendment No. 2 to Loan Agreement 

 

 
  
 SUNTERRA FALL
CREEK DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales Holding Company, its Manager 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA GRAND BEACH I DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales
Holding Company, its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA GRAND BEACH I1 DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales Holding Company, its Manager A 
 By:

 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA GREENSPRINGS DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales Holding Company, its Manager 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 Signature Page to Amendment No. 2 to Loan Agreement 

 

 
  
 SUNTERRA EPIC
MORTGAGE HOLDINGS, LLC (f/Ma Sunterra KGK Partners Finance, LLC) 
 By: Sunterra Finance Holding Company, its 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA KALLOF PLACE DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales
Holding Company., its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA LAKE TAHOE DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales Holding Company, its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA PALM SPRINGS DEVELOPMENT, LLC (f/k/a Sunterra North Marketing, LLC)

 By: Sunterra Developer and Sales Holding Company, its Manager 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 

 

 
  
 SUNTERRA POCO
DIABLO DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales Holding Company, its Manager 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA SCOTTSDALE DEVELOPMENT, LLC (f/k/a Sunterra Poipu GP Development, LLC) By: Sunterra Developer and Sales Holding Company, its Manager 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA LAS VEGAS DEVELOPMENT, LLC (f/k/a Sunterra Polynesian Isles Development, LLC) By: Sunterra Developer and Sales Holding Company, its Manager ,q 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA PORT ROYAL DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales
Holding Company, its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 Signature Page to Amendment No. 2 to Loan Agreement 

 

 
  
 SUNTERRA
POWHATAN DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales Holding Company, its Manager 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA RESIDUAL ASSETS DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales
Holding Company, its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 Name: Frederick C. Bauman Title: Vice President 
 SUNTERRA RIDGE ON SEDONA DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales
Holding Company, its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA RIDGE POINTE DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales Holding Company, its Manager 
 By:

 Name: Frederick C. Bauman 
 Title: Vice President 
 Signature Page to Amendment No. 2 to Loan Agreement

 

 
  
 SUNTERRA SAN
LUIS BAY DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales Holding Company, its Manager 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA SANTA FE DEVELOPMENT, LLC By: Sunterra Developer and Sales Holding 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA SEDONA SPRINGS DEVELOPMENT, LLC 

By: Sunterra Developer and Sales Holding Company its Manager 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA SEDONA SUMMIT DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales
Holding Company, its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 Signature Page to Amendment No. 2 to Loan Agreement 

 

 
  
 SUNTERRA
CITRUS SHARE HOLDING, LLC (f/Ma Sunterra South Marketing, LLC) 
 By: Sunterra Corporation, its Manager 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA ST. CROIX DEVELOPMENT, LLC By: Sunterra Developer and Sales Holding Company, its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA STEAMBOAT DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales Holding Company, its Manager

 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA TAHOE BEACH & SKI DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales Holding Codny,its Manager 
 By: 

Name: Frederick C. Bauman 
 Title: Vice President 

 

 
  
 SUNTERRA VILLA
MIRAGE DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales Holding Company, its Manager 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA VILLAS OF SEDONA DEVELOPMENT, LLC 
 By: Sunterra Developer and Sales
Holding Company, its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA WEST MARKETING, LLC By: Sunterra Developer and Sales Holding Company, its Manager 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA RESIDUAL ASSETS FINANCE, LLC 
 By: Sunterra Finance Holding Company,
its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 Signature Page to Amendment No. 2 to Loan Agreement 

 

 
  
 SUNTERRA
RESIDUAL ASSETS M&E, LLC By: Sunterra Management and Exchange Holding Company, its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 CLUB SUNTERRA DEVELOPMENT 11, LLC (f/k/a Sunterra Texas Development, LLC) By:
Sunterra Developer and Sales Holding Company, its Manager 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA MORTGAGE HOLDINGS, LLC By: Sunterra Finance Holding Company, its Manager

 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA CENTRALIZED SERVICES GLOBAL, LLC 
 By: Sunterra Centralized Services Company 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 Signature Page to Amendment N o. 2 to Loan Agreement 

 

 
  
 SUNTERRA
CENTRALIZED SERVICES NEVADA, LLC 
 By: Sunterra Centralized Services Company 
 By: 
 Name:
Frederick C. Bauman 
 Title: Vice President 
 SUNTERRA CENTRALIZED SERVICES USA, LLC 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 EPIC DECLARANT, INC. 
 By: 
 Name:
Michael S. Westfall 
 Title: President 
 EPIC RESIDUAL ASSETS, INC. 
 By: 
 Name: Frederick C. Bauman 
 Title: Vice President 
 Signature Page to Amendment No. 2 to Loan Agreement 

 

 
  
 EPIC MASTER
FUNDING CORPORATION 
 By: 
 Name: Michael S. Westfall 
 Title: Vice President 
 Signature Page to Amendment No. 2 to Loan Agreement 

 

 
  
 AGENT:

 MERRILL LYNCH MORTGAGE CAPITAL INC. 
 By: 
 Name: 
 Title: 
 LENDER: 
 MERRILL LYNCH MORTGAGE LENDING, INC. 
 By: 
 Name:

 Title: 
 Signature Page to Amendment No. 2 to Loan AgreementAmendment No. 1 to Warrant Agreement

 Exhibit 10.6 
 

 
  
 EXECUTION
AMENDMENT NO. 1 TO 
 WARRANT AGREEMENT 
 AMENDMENT NO. 1, dated as of February 13, 2004 (this “Amendment”), to that certain Warrant Agreement, dated as of July 29, 2002 (the “Warrant Agreement”), by and between Sunterra
Corporation, a Maryland corporation (the “Company”), and Merrill Lynch Mortgage Capital Inc., a Delaware Corporation, the administrative agent and collateral agent (in such capacity, “Agent”) for the Lenders under that certain
Loan Agreement (the “Loan Agreement”), dated as of July 29, 2002, as amended by Amendment No. 1, dated as of December 20, 2002, among the Company, Borrowers (as defined therein), the Lenders (as defined therein) and the Agent. 

WITNESSETH: 
 WHEREAS, capitalized terms not otherwise defined herein shall have the same meanings as specified in the Warrant Agreement; 
 WHEREAS, the Company has requested that Agent agree to amend the Warrant Agreement as more specifically set forth herein; 
 WHEREAS, Borrowers, Agent and Lenders have agreed to simultaneously amend the Loan Agreement; and 
 WHEREAS,
Agent has indicated its willingness to agree to such amendment of the Warrant Agreement on the terms and subject to the satisfaction of the conditions set forth herein. 
 NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows: 
 SECTION 1. Amendment. As of the Effective Date (as defined in Section 2 hereof): 
 (a) The Exercise Price is hereby amended by deleting in its entirety the amount 
 “$ 15.25” in Section 1 of the Warrant Agreement and by inserting, in lieu thereof, “$14”: 
 (b) The Form of Warrant attached as Exhibit A to the Warrant Agreement is hereby amended by deleting in its entirety, and inserting, in
lieu thereof, Exhibit A hereto. 
 SECTION 2. Conditions Precedent to the Effectiveness of this Amendment. This Amendment
shall become effective as of the date hereof (the “Effective Date”) provided that each of the following conditions precedent shall have been satisfied on or before such date: 
 (a) Amendment. Agent has received counterparts of this Amendment executed by Company and Agent on behalf of Lenders. 

 

 
  
 (b) Warrant.
Agent shall have received an amendment to that certain Warrant, dated as of July 29,2002, to subscribe for and purchase common stock of the Company, in form and substance satisfactory to Agent, executed by the Company. 
 (c) Loan Agreement. Agent shall have received counterparts of Amendment No. 2 to the Loan Agreement (“Loan Agreement Amendment”)
executed by the Borrowers and Agent on behalf of Lenders and all of the conditions in Section 3 of the Loan Agreement Amendment shall have been satisfied. 
 (d) Representations and Warranties. The representations and warranties contained in Section 3 of this Amendment, Section 5 of the Warrant Agreement and each of the other Loan Documents shall be true
and correct in all material respects on and as of the Effective Date, before and after giving effect to this Amendment, as though made on and as of such date (except for any such representation and warranty that by its terms refers to a specific
date other than the date first above written, in which case it shall be true and correct in all material respects as of such earlier date). 
 (e) No Default or Event of Default. No Default or Event of Default (as defined in the Loan Agreement) shall have occurred and be continuing or shall occur after giving effect to this Amendment. 
 SECTION 3. Representations and Warranties. To induce Agent and the Lenders to enter into this Amendment, each Borrower hereby represents
and warrants to Agent and the Lenders: 
 (a) Representations and Warranties. The representations and warranties contained in
this Section 4, Section 5 of the Warrant Agreement and in each of the other Loan Documents are true and correct in all material respects on and as of the Effective Date, before and after giving effect to this Amendment, as though made on and as of
such date (except for any such representation and warranty that by its terms refers to a specific date other than the date first above written, in which case it shall be true and correct in all material respects as of such earlier date). 

(b) No Default or Event of Default. No Default or Event of Default has occurred and is continuing or will occur after giving effect to
this Amendment. 
 SECTION 4. Reference to and Effect on the Loan Documents. As of the Effective Date, any reference in any
Financing Document (as defined in the Loan Agreement) to the Warrant Agreement shall be to the Warrant Agreement, as amended hereby. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or
remedy of Agent or any of the Lenders under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents. 
 SECTION 5. Integration; Amendment. This Amendment sets forth in full the terms of agreement between the parties with respect to the amendment described herein and is intended as the full, complete and exclusive agreement
governing the relationship between the parties with respect to such amendment. This Amendment supersedes all discussions, promises, 

 

 
  
 representations, warranties, agreements and understandings between the parties with respect to the amendment described herein. 
 SECTION 6. No Third Party Beneficiaries. This Amendment shall be binding upon and inure to the benefit of Agent and the Company and their respective successors and assigns. No Person other than the parties hereto shall have
any rights hereunder or be entitled to rely on this Amendment, and all third-party beneficiary rights are hereby expressly disclaimed. 
 SECTION 7. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

 SECTION 8. Governing Law. 
 (a) Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Maryland, without regard to conflict of law principles. 
 (b) Jurisdiction. Each of the Company and Agent hereby irrevocably submits to the non exclusive jurisdiction of any New York State or
Federal court sitting in New York City in any action or proceeding arising out of or relating to this Amendment or the Warrant Agreement or the Warrant, and each of the Company and Agent hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New York State court or in such Federal court. Each of the Company and Agent hereby irrevocably waives, to the fullest extent permitted under applicable law, the defense of an inconvenient
forum to the maintenance of such action or proceeding. Each of the Company and Agent irrevocably consents, to the fullest extent permitted under applicable law, to the service of any summons and complaint and any other process by the mailing of
copies of such process to them at their respective address specified in Section 12 of the Warrant Agreement. Each of the Company and the Agent hereby agrees, to the fullest extent permitted under applicable law, that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. 
 (c) Waiver of July Trial. TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, EACH OF THE COMPANY AND AGENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AMENDMENT, THE WARRANT AGREEMENT OR ANY WARRANT ISSUED THEREUNDER. 
 [remainder of page intentionally left
blank] 

 

 
  
 IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. 
 SUNTERRA CORPORATION 
 By: 
 Name: 
 Title:

 MERRILL LYNCH MORTGAGE CAPITAL INC . 
 By: 
 Name: 
 Title: 

 

 
  
 Form of
Warrant 
 Amended and Restated Warrant 
 THIS WARRANT AMENDS AND RESTATES IN ITS ENTIRETY THAT CERTAIN WARRANT NO. 1, DATED AS OF JULY 29, 2002 ISSUED BY SUNTERRA CORPORATION TO MERRILL LYNCH MORTGAGE CAPITAL INC. AND IS GIVEN IN SUBSTITUTION
THEREOF. 
 THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE REGISTRATION PROVISIONS OF SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS HAVE BEEN COMPLIED WITH OR UNLESS THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. 
 Exercisable on or before the Warrant Termination Date (as defined below) 
 COMMON STOCK PURCHASE WARRANT

 To Subscribe for and Purchase Common Stock of SUNTERRA CORPORATION 
 WARRANT NO. 1 
 This certifies that, for value received, Merrill Lynch Mortgage Capital Inc., a Delaware corporation (“Merrill”) or its registered assigns is entitled to purchase from Sunterra Corporation, a Maryland corporation (the
“Company”), at any time after the date hereof until the Warrant Termination Date, 1,190,148 fully paid, non-assessable shares (the “Warrant Shares”) of Common Stock, par value $.01 per share, of the Company (the “Common
Stock”), subject to adjustment as provided in that certain Warrant Agreement, dated as of July 29,2002, as amended by that certain Amendment No. 1 to the Warrant Agreement, dated as of February 13, 2004, by and between the Company and Merrill
(the “Warrant Agreement”), at an exercise price of $14 per share. 

 

 
  
 No Warrant may
be exercised after 5:00 p.m., New York City Time on July 29, 2007. To the extent not exercised by such time such Warrant shall become void. 
 This Common Stock Purchase Warrant and all Common Stock Purchase Warrants issued in substitution or exchange therefor are herein individually called a “Warrant” and collectively called “Warrants.” 
 This Warrant is issued pursuant to and, subject to the terms and conditions of, the Warrant Agreement, which Warrant Agreement is
incorporated by reference in and made a part of this instrument. Capitalized terms not otherwise defined herein shall have the meanings given them in the Warrant Agreement. Any conflict between the terms of this Warrant and the Warrant Agreement
shall be resolved in favor of the terms of the Warrant Agreement. 
 This Warrant is further subject to the following
provisions, terms and conditions: 
 1. (a) In order to exercise this Warrant, in whole or in part, the Holder 
 (as such term is defined in the Warrant Agreement) shall deliver to the Company, at the office the Company designated for such purpose in
Section 12 of the Warrant Agreement, (i) the form of election to purchase set forth herein properly completed and signed, (ii) payment of the Warrant Price pursuant to Section l(b), and (iii) this Warrant. Upon receipt of the items referred to in
clauses (i), (ii) and (iii) above, the Company shall, as promptly as practicable, and in any event within ten (10) days thereafter, execute or cause to be executed and deliver or cause to be delivered to the Holder a certificate or certificates, in
such name or names as the Holder may designate, representing the aggregate number of full shares of Common Stock issuable upon such exercise, together with cash in lieu of any fraction of a share, as hereinafter provided in Section 3. If this
Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased
shares of Common Stock called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. 
 (b) Payment to the Company of the purchase price for the Warrant Shares so purchased (the “Warrant Price”) may be made, at the option of the Holder, (i) by payment of the Warrant Price in cash or by wire transfer or
cashier’s check drawn on a United States bank, (ii) by tendering that portion of the Warrant having a value equal to the Warrant Price, based on the Fair Market Value (as such term is defined below) per Warrant Share, or (iii) by any
combination of (i) and (ii). For purpose of clause (ii) above, the Fair Market Value of the Warrant shall be determined as follows: the “Market Price” as that term is defined in Section 4(d) of the Warrant Agreement, but determined as of
the trading day immediately preceding the date of receipt by the Company of the applicable form of election to purchase provided pursuant to Section l(a), over (2) the Exercise Price. 
 2. Notwithstanding the forgoing, however, the Company shall not be required to deliver any certificate for shares of stock upon exercise
of this Warrant except in accordance with the provisions, and subject to the limitations of, Section 3 hereof and the restrictive legend on the first page hereof. 

 

 
  
 3. No
fractional shares of Common Stock shall be issued upon the exercise of this Warrant, but, instead of any fraction of a share which would otherwise be issuable, the Company shall pay a cash adjustment in respect of such fraction in an amount equal to
the same fraction of the Fair Market Value per share of Common Stock as of the close of business on the date of the notice required by Section 1 above. 
 4. (a) Subject to the provisions of Section 10 of the Warrant Agreement, this Warrant and all rights hereunder are assignable. 
 (b) Any transfer shall be made at the principal office of the Company by the Holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant properly endorsed. Each taker and Holder of this Warrant, by taking or holding the same, consents and agrees that the bearer of this Warrant, when endorsed, may be treated by the Company and all other persons dealing with
this Warrant as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented by this Warrant, or to the transfer hereof on the books of the Company, any notice to the contrary notwithstanding; but until
such transfer on such books, the Company may treat the registered Holder hereof as the owner for all purposes. 
 5. (a) This
Warrant shall be governed by, and construed in accordance with, the laws of the State of Maryland, without regard to conflict of law principles. 
 (b) Each of the Company and the Holder hereby irrevocably submits to the non-exclusive jurisdiction of any New York State or Federal court sitting in New York City in any action or proceeding arising out of or relating to
this Warrant or the Warrant Agreement, and each of the Company and the Holder hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court or in such Federal court. Each
of the Company and the Holder hereby irrevocably waives, to the fullest extent permitted under applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding. Each 
 of the Company and the Holder irrevocably consents, to the fullest extent permitted under applicable law, to the service of any summons
and complaint and any other process by the mailing of copies of such process to them at their respective address specified in Section 12 of the Warrant Agreement. Each of the Company and the Holder hereby agrees, to the fullest extent permitted
under applicable law, that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. 
 (c) TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS WARRANT OR THE WARRANT AGREEMENT. 
 [SIGNATURE PAGE FOLLOWS] 

 

 
  
 IN WITNESS
WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer and this Warrant to be dated as of February -, 2004. 
 SUNTERRA CORPORATION 
 By: 
 Name: 
 Title:

 

 
  
 Form of
Election to Purchase 
 (To Be Executed Upon Exercise Of Warrant) 
 The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant, to receive shares of Common Stock and
herewith tenders payment for such shares [by payment to the order of SUNTERRA CORPORATION in the amount of $ pursuant to the terms of Section l(b)(i) of the Warrant]/[by tendering Warrant Shares represented by this Warrant pursuant to Section
l(b)(ii) of the Warrant]/[by payment to the order of SUNTERRA CORPORATION in the amount of $ and by tendering warrant Shares represented by this Warrant pursuant to Section 1(b)(iii) of the Warrant]. The undersigned requests that a certificate for
such shares be registered in the name of whose address is and that such shares be delivered to whose address is . If said number of shares is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new
Warrant representing the remaining balance of such shares be registered in the name of whose address is and that such shares be delivered to whose address is 
 Signature: 
 Date: 

 

 
  
 Form of
Assignment 
 (To be executed upon assignment of Warrant) 
 FOR VALUE RECEIVED, , hereby sells, assigns and transfers unto the within Warrant, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint attorney, to transfer said Warrant on the books of the within-named Company, with full power of substitution in the premises. 
 Date: 

 

 
  
 IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. 
 SUNTERRA CORPORATION 
 Name: Frederick C. Bauman 
 Title: Vice President 
 MERRILL LYNCH MORTGAGE CAPITAL 
 INC. 
 By: 
 Name:

 Title: 
 Amendment No. 1 to 
 Warrant Agreement

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