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EXHIBIT 10.2
AMENDED AND RESTATED
INVENTORY LOAN AND SECURITY AGREEMENT
by and between
SILVERLEAF RESORTS, INC.,
("Borrower")
and
▇▇▇▇▇▇ FINANCIAL, INC.,
("Lender")
as of September 1, 1999
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TABLE OF CONTENTS
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SECTION 1 THE LOAN................................................................................................1
1.1 Loan............................................................................................1
1.2 Term............................................................................................2
1.3 Interest Rate...................................................................................2
1.4 Payments........................................................................................2
1.5 Prepayments.....................................................................................2
1.6 Releases of Timeshare Interests.................................................................2
SECTION 2 COLLATERAL..............................................................................................3
2.1 Grant of Security Interest......................................................................3
SECTION 3 CONDITIONS PRECEDENT TO ADVANCES........................................................................4
3.1 Request for Advance.............................................................................4
3.2 Conditions Precedent to Initial Advance.........................................................4
3.3 Conditions Precedent to Additional Advances.....................................................4
3.4 Security Interests..............................................................................4
3.5 Representations and Warranties..................................................................4
3.6 No Default......................................................................................4
3.7 Performance of Agreements.......................................................................5
3.8 Fees and Expenses...............................................................................5
SECTION 4 GENERAL REPRESENTATIONS AND WARRANTIES..................................................................5
4.1 Organization, Standing, Qualification, Borrower Existence.......................................5
4.2 Authorization and Enforceability................................................................5
4.3 Title to Properties: Prior Liens................................................................6
4.4 Litigation and Proceedings......................................................................6
4.5 Licenses and Permits............................................................................6
4.6 Environmental Matters...........................................................................6
4.7 Full Disclosure.................................................................................6
4.8 Margin Regulations..............................................................................6
4.9 No Defaults.....................................................................................6
4.10 Compliance with Law.............................................................................7
4.11 Employer Benefit Plans..........................................................................7
4.12 Representations as to the Resorts...............................................................7
4.13 Collateral......................................................................................8
SECTION 5 AFFIRMATIVE COVENANTS...................................................................................8
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5.1 Payment and Performance of Indebtedness.........................................................8
5.2 Insurance.......................................................................................9
5.3 Condemnation....................................................................................9
5.4 Reporting Requirements..........................................................................9
5.5 Claims..........................................................................................9
5.6 Title...........................................................................................9
5.7 Subordinated Obligations........................................................................9
5.8 Further Assurances..............................................................................9
5.9 Affirmative Covenants in Other Documents.......................................................10
5.10 Suspension of Sales............................................................................10
SECTION 6 NEGATIVE COVENANTS.....................................................................................10
6.1 Negative Covenants in Other Documents..........................................................10
6.2 Use of Lender Name.............................................................................10
6.3 Material Adverse Change........................................................................10
SECTION 7 EVENTS OF DEFAULT......................................................................................11
7.1 Payments.......................................................................................11
7.2 Covenant Defaults..............................................................................11
7.3 Warranties or Representations..................................................................11
7.4 Involuntary Proceedings........................................................................11
7.5 Proceedings....................................................................................11
7.6 Attachment, Judgment, Tax liens................................................................11
7.7 Insolvency.....................................................................................12
7.8 Default by Borrower in Other Agreements........................................................12
7.9 Default under Deed of Trust....................................................................12
7.10 Default Under Other Loans......................................................................12
7.11 Cross Default, Cross Collateralization.........................................................12
SECTION 8 REMEDIES...............................................................................................13
8.1 Remedies Upon Default..........................................................................13
8.2 Application of Collateral: Termination of Agreements...........................................13
8.3 Waivers........................................................................................13
8.4 Cumulative Rights..............................................................................14
8.5 Expenditures by Lender.........................................................................14
SECTION 9 CERTAIN RIGHTS OF LENDER...............................................................................14
9.1 Protection of Collateral.......................................................................14
9.2 Performance by Lender..........................................................................14
9.3 Fees and Expenses..............................................................................14
9.4 Lender's Right of Set-Off......................................................................15
9.5 Assignment of Lender's Interest................................................................15
9.6 Power of Attorney..............................................................................15
9.7 Indemnification of Lender......................................................................15
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SECTION 10 MISCELLANEOUS.........................................................................................16
10.1 Notice.........................................................................................16
10.2 Survival.......................................................................................17
10.3 GOVERNING LAW..................................................................................17
10.4 Limitation on Interest.........................................................................17
10.5 Invalid Provisions.............................................................................17
10.6 Counterparts; Effectiveness....................................................................17
10.7 No Duty........................................................................................17
10.8 Lender Not Fiduciary...........................................................................18
10.9 Entire Agreement...............................................................................18
10.10 Venue..........................................................................................18
10.11 Jury Trial Waiver..............................................................................18
10.12 Directly or Indirectly.........................................................................19
10.13 Headings.......................................................................................19
10.14 Broker's Fees..................................................................................19
SCHEDULES
APPENDIX 1 - Definition of Terms
SCHEDULE 3.2 - Closing Deliveries
SCHEDULE 4.4 - List of Litigation Matters
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EXHIBITS
EXHIBIT A - Permitted Exceptions
EXHIBIT B - Legal Description for the Resorts
EXHIBIT C - Request for Advance
EXHIBIT D - Form of Assignment of Beneficial Interest/Form of Deed of Trust
Or Mortgage
EXHIBIT E - Approved Resorts, Appraisals and Pending Receipt of Opinion
Letters for All States Except Texas
EXHIBIT F - Silverleaf Resorts, Inc.
Ownership and Management of Resorts
EXHIBIT 5.7 - Borrower's Debts, Liabilities and Obligations to Any Affiliates
Of Borrower
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AMENDED AND RESTATED INVENTORY LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED INVENTORY LOAN AND SECURITY AGREEMENT
("Agreement") dated September 1, 1999, is made by and between SILVERLEAF
RESORTS, INC., a Texas corporation f/k/a SILVERLEAF VACATION CLUB, INC., f/k/a
ASCENSION RESORTS, LTD. d/b/a/ SILVERLEAF RESORTS, LTD., a Texas limited
partnership, ("BORROWER") whose address is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇ Financial, Inc., a Delaware corporation whose address is
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("LENDER").
RECITALS:
WHEREAS, on December 27, 1995 Borrower and Lender entered into this
certain Loan and Security Agreement (the "Original Inventory Loan") as amended
on February 28, 1996 and December 27, 1996; and
Borrower desires Lender to make Borrower a revolving inventory loan to
finance its existing unsold timeshare interval inventory at certain resorts, and
to provide funds for new timeshare intervals at such resorts; and
The parties desire to amend and restate the terms of the Original
Inventory Loan as set forth herein.
Borrower's obligations under the revolving loan will be evidenced and
secured by the loan documents as hereinafter provided.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower and Lender agree as follows:
SECTION 1
THE LOAN
1.1 LOAN. During the Availability Period the proceeds of the Loan
subject to Availability shall be advanced and readvanced from time to time by
Lender to Borrower as a single continuous revolving loan that allows Borrower to
borrow, repay, reborrow and repay without penalty or premium, subject to the
provisions contained in this Agreement and the other Loan Documents. Each
Advance: (a) shall be in minimum amounts of $200,000 plus the applicable Advance
Fee which Borrower acknowledges shall be advanced by Lender for its own account
at the time of each Advance; and (b) shall be made no more frequently than
monthly. Requests for Advances shall be made at least ten (10) business days
prior to the date of disbursement and shall be in the form of EXHIBIT C. In no
event shall Lender make Advances in excess of $1,600 per each Eligible Unsold
Timeshare Interval and then only on a one-time basis per each such Interval;
provided, however that if an Interval previously released (in accordance with
Section 2.6 hereof) is returned to inventory, Lender may, subject to the terms
and conditions of this Agreement, make additional advances against such returned
Interval. Lender shall have no obligation to make Advances hereunder to the
extent any requested Advance would cause the
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outstanding principal balance of the Loan, at any time, to exceed $10,000,000 in
the aggregate nor $5,000,000 for Eligible Unsold Timeshare Intervals at any one
Resort. In addition, at no time shall Lender be required to advance outstanding
loans in excess of $50,000,000 in the aggregate under this Loan and the
Receivables Loan (the Receivables Loan also includes a $20,000,000 commitment by
UnionBank of California) nor shall the aggregate amount of Advances outstanding
at any time hereunder and under the Receivables Loan secured by Assignments of
Beneficial Interests in the Oak N' Spruce Resort Trust exceed $5,000,000 (the
"Oak N' Spruce Limitation").
1.2 TERM. The Loan shall be for a term of thirty-six (36) months plus
the number of days from the Closing Date to the end of the month in which the
Closing Date occurs.
1.3 INTEREST RATE. The average monthly balance of all outstanding
Advances together with all other outstanding obligations of Borrower shall bear
interest at the Interest Rate. After the occurrence of an Event of Default and
after the Maturity Date, the Loan will bear interest at the Default Rate.
1.4 PAYMENTS.
(a) MONTHLY PAYMENTS. Commencing on October 1, 1999, Borrower shall
pay interest computed at the Interest Rate in arrears on the first day
of each month. Interest shall be calculated based on a 360 day year
and charged for the actual number of days elapsed.
(b) FINAL PAYMENT. The entire outstanding principal amount of the
Loan, together with all accrued but unpaid interest, fees, and
charges, shall be payable on the Maturity Date.
1.5 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. Borrower may prepay the Loan in whole or
in part without premium upon five (5) days' prior written notice to
Lender only pursuant to the release provisions set forth in Section
2.6 hereof.
(b) MANDATORY PREPAYMENTS. If Borrower receives any payment with
respect to the condemnation or lease of the property encumbered by the
Deed of Trust (other than rental payments and expense reimbursements)
including, without limitation, lease termination, cancellation or
similar fees, Borrower shall immediately prepay the principal balance
of the Loan in an amount equal to such payment. No prepayment premium
will be due with respect to any such prepayments. Any mandatory
prepayment shall be accompanied by an amount equal to the interest
accrued thereon to the date of receipt of such prepayment in collected
funds.
1.6 RELEASES OF TIMESHARE INTERESTS. Provided that no Event of Default
shall have occurred and be continuing, Lender agrees to release individual
Intervals and their appurtenant interests in the common elements from the lien
of the Deed of Trust, or Assignment of Beneficial Interests in accordance with
and subject to all of the following terms, provisions and conditions:
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(a) Borrower shall request releases in writing not less than five
(5) business days prior to the date the release is needed. Each
request for release shall be for a minimum of ten (10) Intervals at a
time and shall be submitted no more frequently than one (1) time per
week.
(b) Lender shall have received, with respect to each Interval to be
sold: (i) a partial release document prepared by Borrower at
Borrower's expense in form and content satisfactory to Lender; (ii) a
schedule containing a list of those Intervals previously released by
Lender and those Intervals, remaining to be released; and (iii) all
other data reasonably necessary to support the Borrower's entitlement
to the release, including, without limitation, such other documents,
certificates, opinions and assurances as Lender may request, together
with the legal fees and disbursement of Lender's counsel incurred in
connection with the issuance of each such release.
(c) At the time of release, Borrower shall pay to Lender, in cash
or immediately available funds, a release price of $1,600 for each
Interval to be released. Said payment shall be applied in reduction of
the unpaid principal balance of the Note. The payment of the aforesaid
release price in accordance with these terms and provisions shall not
preclude the payment of additional monies (at the option of the
Borrower) in connection with any release.
(d) Releases of Intervals shall not affect or impair the lien or
security interest of the Deed of Trust or the Mortgage and Assignment
of Beneficial Interests (or Lender's liens and security interests
created by the other Loan Documents) as to other Property (as defined
in the Deed of Trust) not theretofore released, and said liens and
security interest shall continue in full force and effect as to the
unreleased Intervals and such other Property.
SECTION 2
COLLATERAL
2.1 GRANT OF SECURITY INTEREST. To secure the payment and performance
of the Indebtedness, Borrower does hereby unconditionally and irrevocably
assign, pledge and grant to Lender a first priority continuing security interest
and lien in and to the right, title and interest of Borrower in the following
property of Borrower, whether now owned or existing or hereafter acquired
regardless of where located (collectively, the "COLLATERAL"):
(a) All unsold Timeshare Intervals encumbered by the Deed of Trust
or Assignment of Beneficial Interests which are part of a Timeshare
Program offered at a Resort, together with all security deposits,
accounts, receivables, profits and proceeds contract rights, general
intangibles, chattel paper, documents, instruments and all books and
records relating to the foregoing, from time to time arising from the
sale of such Intervals;
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(b) All cash and other monies and property of Borrower in the
possession or under the control of Lender;
(c) All other "Property", as said term is defined in the Deed of
Trust;
(d) All collateral now or hereafter securing the Revolving
Receivables Loan; and
(e) All proceeds, profits, extensions, additions, improvements,
betterments, renewals, substitutions and replacements of the
foregoing.
SECTION 3
CONDITIONS PRECEDENT TO ADVANCES
The obligation of Lender to make Advances is subject to satisfaction of
all of the conditions set forth below.
3.1 REQUEST FOR ADVANCE. Lender shall have received, prior to each
Advance, a completed and executed "Request for Advance" in the form attached
hereto as EXHIBIT C.
3.2 CONDITIONS PRECEDENT TO INITIAL ADVANCE. Lender shall have
received, as conditions precedent to the making of the initial Advance
hereunder, in form and substance satisfactory to Lender, all documents,
instruments and information identified on SCHEDULE 3.2 and all other agreements,
notes, certificates, orders, authorizations, financing statements, and other
documents which Lender may at any time reasonably request.
3.3 CONDITIONS PRECEDENT TO ADDITIONAL ADVANCES. As conditions
precedent to the making of each additional Advance hereunder, Borrower shall
have satisfied all of the conditions precedent for the making of the Initial
Advance, and all other conditions precedent for making Advances set forth in
this Agreement and in any other Loan Document.
3.4 SECURITY INTERESTS. Lender shall have received satisfactory
evidence that all security interests and liens granted to Lender pursuant to
this Agreement or the other Loan Documents have been duly perfected and
constitute first priority liens on the Collateral.
3.5 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained herein and in the other Loan Documents shall be true, correct and
complete in all material respects on and as of the date of funding of the
Advance except for any representation or warranty limited by its terms to a
specific date and taking into account any amendments to the SCHEDULES or
EXHIBITS as a result of any disclosures made by Borrower to Lender after the
Closing Date and approved by Lender.
3.6 NO DEFAULT. No Event of Default shall have occurred and no
condition shall exist which, but for notice or the passage of time, or both, may
result in an Event of Default.
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3.7 PERFORMANCE OF AGREEMENTS. Borrower shall have performed in all
material respects all agreements and satisfied all conditions which any Loan
Document provides shall be performed by it.
3.8 FEES AND EXPENSES. Borrower shall have paid all fees and expenses
required to be paid by Borrower pursuant to this Agreement.
SECTION 4
GENERAL REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender as follows, which
representations and warranties shall remain true throughout the term of this
Agreement:
4.1 ORGANIZATION, STANDING, QUALIFICATION, BORROWER EXISTENCE. Borrower
is, and will remain at all times, a corporation duly formed, validly existing
and in good standing under the laws of the State of Texas, with its principal
place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. Borrower is
in good standing under the laws of the State of Missouri and is authorized to
transact business in the State of Missouri.
4.2 AUTHORIZATION AND ENFORCEABILITY.
(a) EXECUTION AND DELIVERY. The execution, delivery and performance
by Borrower of the Loan Documents has been duly authorized by all
necessary corporate action of Borrower, and does not and will not (i)
violate any provision of the Borrower's articles of incorporation or
bylaws 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 and security interests in favor of
Lender; or (iii) result in a breach of, or constitute a default by
Borrower under, any indenture, loan or credit agreement or any other
agreement, document, instrument or certificate to which Borrower is a
party or by which it or any of its assets are bound or affected.
(b) NO OTHER APPROVALS. No approval, authorization, order, license,
permit, franchise or consent of, or registration, declaration,
qualification or filing with, any governmental authority is required
in connection with the execution, delivery and performance by Borrower
of any of the Loan Documents, except for such filings as are
contemplated by the Loan Documents.
(c) VALIDITY OF DOCUMENTS. The Loan Documents have been duly
authorized and, when duly executed and delivered by Borrower, will
constitute legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other similar
laws now or hereafter in effect which relate to or affect the
enforceability of creditors' rights generally and by general
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principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
4.3 TITLE TO PROPERTIES: PRIOR LIENS. Borrower has good and marketable
title to each of the Eligible Unsold Timeshare Intervals. Borrower is not in
default under any of the documents evidencing or securing any indebtedness which
is secured, wholly or in part, by any Resort, 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.
There are no liens or encumbrances against any of the Resorts other than the
Permitted Exceptions.
4.4 LITIGATION AND PROCEEDINGS. Except as disclosed on SCHEDULE 4.4
hereto, there are no actions, suits, proceedings, orders or injunctions pending
or, to the best of Borrower's knowledge, threatened against or affecting
Borrower any Resort or the Intervals, at law or in equity, or before or by any
governmental authority, in any case individually in which the claim exceeds or
would reasonably be expected to exceed $50,000 or all cases for which claims in
the aggregate exceed or could reasonably be expected to exceed $250,000.
Borrower has received no notice from any court or governmental authority
alleging that Borrower has violated any applicable timeshare act, any of the
rules or regulations thereunder, or any other applicable laws.
4.5 LICENSES AND PERMITS. Borrower possesses all requisite franchises,
certificates of convenience and necessity, operating rights, licenses, permits,
consents, authorizations, exemptions and orders as are necessary to carry on its
business as now being conducted and to sell the Interests.
4.6 ENVIRONMENTAL MATTERS. No Resort contains any Hazardous Materials.
Neither Borrower nor any of the Resorts have received notice from any
governmental agency, entity or other person with regard to Hazardous Materials
on or affecting any Resort; neither Borrower nor any Resort, or any portion
thereof, are in violation of any applicable federal, state, or local
environmental or health laws relating to or affecting such Resort or Borrower.
No Unit contains asbestos.
4.7 FULL DISCLOSURE. No information, exhibit or written report
furnished by or on behalf of Borrower to Lender in connection with the Loan
contains any material misstatement of fact or omits any material fact necessary
to make the statement contained herein or therein not misleading. Borrower knows
of no legal or contractual restriction which will prevent it from offering or
selling Intervals to Purchasers in any state where it is selling Intervals.
4.8 MARGIN REGULATIONS. The proceeds from the Loan to be evidenced by
the Note will be used to finance Borrower's existing unsold Timeshare Interval
Inventory at certain Resorts and to provide funds for new Timeshare Intervals at
such Resorts. None of the transactions contemplated in this Agreement
(including, without limitation, the use of the proceeds from the Loan) will
violate or result in the violation of Section 7 of the Securities Exchange Act
of 1934, as amended, or any regulations issued pursuant thereto, including,
without limitation, Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R., Chapter 11.
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4.9 NO DEFAULTS. No default exists, and there is no violation in any
material respect of any term of any agreement, partnership agreement, charter
instrument, bylaw or other instrument to which Borrower is a party or by which
either may be bound.
4.10 COMPLIANCE WITH LAW.
(a) Neither Borrower nor any Resort or Timeshare Association is in
violation of any laws, ordinances, governmental rules or regulations
to which it is subject; and
(b) Borrower has not failed to make or cause to be made any
registrations or declarations with any government or agency or
department thereof, necessary to the ownership of any of the Intervals
or to the conduct of its 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 business, prospects, profits,
properties or condition (financial or otherwise) of Borrower. Borrower
has, to the extent required by its activities and businesses, fully
complied with (i) all of the applicable provisions of (A) the Consumer
Credit Protection Act, as amended; (B) the Federal Trade Commission
Act, as amended; (C) the Federal Interstate Land Sales Full Disclosure
Act, as amended; (D) any applicable timeshare act; (E) all other
applicable federal statutes; and (F) all rules and regulations
promulgated under any of the foregoing; and (ii) all of the applicable
provisions of any law of any state in which Borrower is selling
Intervals (and the rules and regulations promulgated thereunder)
relating to the sale, offering for sale or financing of Intervals.
4.11 EMPLOYER BENEFIT PLANS. Borrower is in compliance in all material
respects with all applicable provisions of ERISA, the IRC and all other
applicable laws and the regulations and interpretations thereof with respect to
all Employee Benefit Plans. No material liability has been incurred by Borrower
which remains unsatisfied for any funding obligation, taxes or penalties with
respect to any Employee Benefit Plan.
4.12 REPRESENTATIONS AS TO THE RESORTS.
(a) ACCESS. Each of the Resorts has direct access to a publicly
dedicated road over a recorded easement and all roadways, if any,
inside the Resorts are common areas under the Declaration.
(b) UTILITIES. Electric, gas, sewer, water facilities and other
necessary utilities are lawfully available in sufficient capacity to
service each of the Resorts and any easements necessary to the
furnishing of such utility service have been obtained and duly
recorded.
(c) AMENITIES. All amenities described in the sales prospectus and
the Public Reports for each of the Resorts are completed, or a bond
insuring their completion has been posted. Each Purchaser of an
Interval will have access to and the use of all of the amenities and
public utilities of the respective Resort as and to the extent
provided in the Declaration and the Public Reports.
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(d) CONSTRUCTION. All costs arising from the construction of any
improvements and the purchase of any equipment, inventory, or
furnishings located in or on each of the Resorts have been paid.
(e) SALE OF INTERVALS. The sale, offering of sale, and financing of
Intervals in the Resorts (i) 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; and (ii) do not violate any applicable law, statute or
regulation including, without limitation, any applicable timesharing
law, statute, or regulation.
4.13 COLLATERAL.
(a) TITLE. Borrower has good and marketable title to the
Collateral, free and clear of any lien, security interest, charge or
encumbrance except for the security interest created by the Deed of
Trust, this Agreement, or otherwise created in favor of Lender. No
financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any recording office,
except such as may have been filed in favor of Lender.
(b) POWER. Borrower has the lawful right, power and authority to
grant a security interest in the Collateral. The Deed of Trust, the
Certificates of Beneficial Interest, the Mortgage and Assignment of
Beneficial Interest, this Agreement and all filings and other actions
necessary or desirable to perfect and protect such security interest,
create a valid and perfected first priority security interest in the
Collateral securing the payment and performance of the Indebtedness.
(c) TAXES AND LIENS. Borrower has paid all taxes, levies and other
charges upon the Collateral. Borrower shall defend Lender against and
save it harmless from all claims of any Persons other than Lender with
respect to the Collateral, and this indemnity shall include all
attorneys' fees and legal expenses.
(d) DEED OF TRUST; ASSIGNMENT OF BENEFICIAL INTEREST. The Deed of
Trust constitutes a valid and enforceable first and prior lien and
security interest on the properties and interests covered thereby and
the Mortgage and Assignment of Beneficial Interest a valid and
enforceable first and prior lien and security interest in the
property, interests and rights covered thereby.
SECTION 5
AFFIRMATIVE COVENANTS
So long as any portion of the Indebtedness remains unpaid, Borrower
hereby agrees with Lender as follows:
5.1 PAYMENT AND PERFORMANCE OF INDEBTEDNESS. Borrower shall pay and
promptly perform all of the obligations hereunder and under the Loan Documents.
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5.2 INSURANCE. Borrower shall duly and promptly comply with all of the
insurance provisions set forth in the Deed of Trust.
5.3 CONDEMNATION. Borrower shall duly and promptly comply with all of
the condemnation provisions set forth in the Deed of Trust.
5.4 REPORTING REQUIREMENTS. So long as the Indebtedness remains unpaid,
Borrower shall duly and promptly furnish to Lender all reports, financial
statements, compliance certificates, and other related information required by
any document or instrument evidencing, securing, or executed in connection with
the Receivables Loan, or as may otherwise be requested by Lender from time to
time.
5.5 CLAIMS. The Collateral is and shall remain free of all liens and
encumbrances whatsoever (including, without limitation, claims for labor,
services, materials and supplies) except for the Permitted Exceptions. In the
event any lien attaches to any Collateral, Borrower shall, within ten (10) days
after such attachment, either (a) cause such lien to be released of record or
(b) provide Lender with a bond in accordance with the applicable laws of the
state where the subject Collateral is located, issued by a corporate surety
acceptable to Lender, in an amount acceptable to Lender and in form acceptable
to Lender.
5.6 TITLE. Borrower shall promptly notify Lender of any claim, action
or proceeding affecting title to the Collateral, or any part thereof, or any of
the security interests granted hereunder, and, at the request of Lender, appear
in and defend, at Borrower's expense, any such claim, action or proceeding.
5.7 SUBORDINATED OBLIGATIONS. Borrower represents and warrants as of
the date hereof that Borrower is not indebted to any affiliated entity of
Borrower and during the term hereof will not become indebted to any affiliated
entity of Borrower without Lender's prior written consent. In the event of any
such consent and upon the creation of such indebtedness, such indebtedness shall
be subordinate to the debt of this Loan and Borrower shall obtain the execution
of all parties and deliver to Lender a Subordination Agreement in the form of
EXHIBIT 5.7 hereto. Borrower will not, directly or indirectly, (a) permit any
payment to be made in respect of any indebtedness, liabilities or obligations,
direct or contingent, which are subordinated by the terms thereof or by separate
instrument to the payment of principal of, and interest on, the Note except in
accordance with the terms of such subordination, (b) 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
Lender's lien or the prior position of the Note, or (c) permit the prepayment or
redemption, except for mandatory prepayments, of all or any part of any
subordinated obligations of Borrower except in accordance with the terms any
intercreditor agreement.
5.8 FURTHER ASSURANCES. Borrower will execute and deliver, or cause to
be executed and delivered, such other and further agreements, documents,
instruments, certificates and assurances as, in the judgment of Lender exercised
in good faith may be necessary or appropriate to more effectively evidence or
secure the Indebtedness and to ensure the performance of the terms and
provisions of the Loan Documents. In addition, Borrower shall deliver to Lender
from
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time to time upon each request by Lender such documents, instruments or other
matters or items as Lender may require to evidence Borrower's compliance with
its representations, warranties and covenants.
5.9 AFFIRMATIVE COVENANTS IN OTHER DOCUMENTS. Borrower shall duly and
promptly comply with and perform, or cause to be complied with and performed,
all of the affirmative covenants set forth (a) in the Deed of Trust, the
Assignment of Beneficial Interest or in any other Loan Document, (b) in any
document or instrument evidencing, securing, or executed in connection with the
Receivables Loan, or (c) in any other document or instrument evidencing,
securing, or executed in connection with any other Indebtedness.
5.10 SUSPENSION OF SALES. Upon the issuance of any stay order, cease
and desist order or similar judicial or nonjudicial sanction (collectively a
"Suspension of Sales") that materially adversely limits or otherwise affects any
Interval sales activities, and, such Suspension of Sales is not lifted or
dismissed within fifteen (15) days of issuance or imposition, Lender shall be
entitled to cease Advances secured by Intervals only with respect to the state
in which such Suspension of Sales has been imposed. If such Suspension of Sales
has not been lifted or dismissed within sixty (60) days, Lender shall thereafter
be entitled to cease all Advances hereunder if at any time during the pendency
of such Suspension of Sales, total sales by Borrower have declined by twenty
percent (20%) or more during any sixty (60) day period compared to the same
sixty (60) day time period in the prior year and Lender shall have no obligation
to make further Advances hereunder until such Suspension of Sales is lifted or
dismissed..
SECTION 6
NEGATIVE COVENANTS
So long as any portion of the Indebtedness remains unpaid or Lender's
committed to lend hereunder, unless Lender otherwise consents in writing,
Borrower hereby covenants and agrees with Lender as follows:
6.1 NEGATIVE COVENANTS IN OTHER DOCUMENTS. Borrower shall not violate
or permit to be violated any of the negative covenants set forth (a) in the Deed
of Trust, the Assignment of Beneficial Interest or in any other Loan Document,
(b) in any document or instrument evidencing, securing, or executed in
connection with the Receivables Loan, or (c) in any other document or instrument
evidencing, securing, or executed in connection with any other Indebtedness.
6.2 USE OF LENDER NAME. Borrower shall not, and shall not permit any
Affiliate to, without the prior written consent of Lender, use the name of
Lender or the name of any affiliates of Lender in connection with any of their
respective businesses or activities, except in connection with internal business
matters, administration of the Loan and as required in dealings with
governmental agencies.
6.3 MATERIAL ADVERSE CHANGE. In the event of a Material Adverse Change,
Lender shall be entitled to immediately suspend any further Advances to Borrower
until such Material
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Adverse Change is cured. Borrower shall immediately notify Lender upon the
occurrence of a Material Adverse Change.
SECTION 7
EVENTS OF DEFAULT
An "Event of Default" shall exist if any of the following shall occur:
7.1 PAYMENTS. Failure of Lender to receive from Borrower, within five
(5) days of the date written notice has been sent to Borrower after the due
date: (a) any amount payable under the Note, or (b) any other payment due under
the Loan Documents, except for the Note payment due at the Maturity Date for
which no grace period is allowed.
7.2 COVENANT DEFAULTS. Borrower shall fall to perform or observe any
covenant, agreement, obligation, representation or warranty contained in this
Agreement or in any of the Loan Documents (other than any covenant or agreement
obligating Borrower to pay the Indebtedness), and such failure shall continue
for thirty (30) days after Lender delivers written notice thereof to Borrower,
provided, however, if the failure is incapable of cure within such thirty (30)
day period and Borrower shall be diligently pursuing a cure, such thirty (30)
day cure period shall be extended by an additional period not to exceed sixty
(60) days.
7.3 WARRANTIES OR REPRESENTATIONS. 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, shall be false, misleading or incorrect in any material
respect as of the date made.
7.4 INVOLUNTARY PROCEEDINGS. If a case is commenced or a petition is
filed and not dismissed within sixty (60) days against Borrower under any
applicable liquidation, conservatorship, bankruptcy, moratorium, insolvency,
reorganization or similar law providing for the relief of debtors and generally
affecting the rights of creditors; 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 sixty (60) days; or if any material asset of
Borrower is sequestered by court order and such order remains in effect for more
than sixty (60) days.
7.5 PROCEEDINGS. Borrower voluntarily seeks, consents to or acquiesces
in the benefit of any provision of any applicable liquidation, conservatorship,
bankruptcy, moratorium, insolvency, reorganization or similar law providing for
the relief of debtors and generally affecting the rights of creditors, 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
to the appointment of a receiver, trustee, liquidator or conservator for it or
any part of its assets.
7.6 ATTACHMENT, JUDGMENT, TAX LIENS. The issuance, filing or levy
against Borrower of one or more attachments, injunctions, executions, tax liens
or judgments for the payment of
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money cumulatively in excess of $100,000 which is not discharged in full or
stayed within thirty (30) days after issuance or filing.
7.7 INSOLVENCY. Borrower shall become insolvent or otherwise generally
be unable to pay its debts when due.
7.8 DEFAULT BY BORROWER IN OTHER AGREEMENTS. Any default by Borrower in
the payment of Indebtedness for borrowed money after the expiration of any
applicable grace or cure period; any other default under such Indebtedness which
accelerates or permits the acceleration (after the giving of notice or passage
of time, or both) of the maturity of such Indebtedness; or any default which
permits the holders of such Indebtedness to control Borrower.
7.9 DEFAULT UNDER DEED OF TRUST. If a default or Event of Default
occurs under the Deed of Trust or any other Loan Document and such default or
Event of Default is not cured within the applicable grace period (if any),
provided therein.
7.10 DEFAULT UNDER OTHER LOANS. If a default or Event of Default occurs
under (a) any document or instrument evidencing, securing or executed in
connection with the Receivables Loan, or (b) any document or instrument
evidencing, securing, or executed in connection with any other Indebtedness, and
any such default or event of default (as described in (a) or (b) above) is not
cured within the applicable grace period (if any) provided therein.
7.11 CROSS DEFAULT, CROSS COLLATERALIZATION. This Loan is given in
connection with one or more loans which Lender, either individually or as Agent
on behalf of itself and other Lenders, has made or will make to Borrower. Upon
the occurrence of an Event of Default under this Agreement or any of the other
Loan Documents relating hereto or the occurrence of an Event of Default under
the Amended and Restated Receivables Loan Agreement (Receivables Loan
Agreement") regarding the Receivables Loan or the Construction Loan, then in any
such event, the Lender may declare all of the principal, interest and other sums
which may be outstanding under this Loan and under the Receivables and
Construction Loans (collectively the "Indebtedness") to be immediately due and
payable and the Lender may exercise any and all rights and remedies provided in
the Loan Documents or any Loan Document in connection with this Agreement, the
Receivables Loan or the Construction Loan.
Any and all Collateral, as defined in each Loan Agreement, and granted
as security for any Loan shall secure to Lender the payment of the total
Indebtedness in the performance of the covenants and agreements set forth in
this Loan Agreement, the Receivables Loan Agreement or the Construction Loan
Agreement (collectively the "Obligations"), all of which are secured to Lender
without apportionment or allocation of any part or portion of said Collateral.
Upon such an Event of Default Lender shall be entitled to enforce the
payment of the Indebtedness and performance of all Obligations and to exercise
all of its rights, remedies and powers provided hereunder or under any other
Loan Agreement in one or more proceedings, whether contemporaneous, consecutive
or both to be determined by Lender in its sole and absolute discretion. The
enforcement of any such rights or remedies by Lender shall not constitute an
election of remedies and shall not prejudice in any way, limit or preclude the
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enforcement of any other right or remedy under any of the Loan Documents through
one or more additional proceedings. No judgment obtained by Lender in any one or
more enforcement proceeding shall merge the debt secured hereby into such
judgment and any portion of the Indebtedness which shall remain unpaid shall be
a continuing obligation of Borrower not merged with such judgment. Lender may
bring any action or proceeding including without limitation foreclosure through
judicial proceedings, power of sale or otherwise in any state or federal court
and such proceeding may relate to all or any part of the total Collateral
without regard to the fact that any one or more prior or contemporaneous
proceedings have been commenced elsewhere with respect to the same or any other
part of the total Collateral.
The proceeds of any such enforcement or foreclosure shall be applied to
the payment of the Indebtedness in such order as Lender may determine in its
sole discretion.
The documents and instruments evidencing and securing this Loan shall
also secure the Receivables Loan of even date herewith between Agent and
Borrower and any Construction Loan which may be entered into hereafter between
Borrower and Agent as Lender pursuant to that certain Standby Commitment dated
September 1, 1999 and vise-versa.
SECTION 8
REMEDIES
8.1 REMEDIES UPON DEFAULT. Upon the occurrence of an Event of Default,
Lender may take any one or more of the following actions, all without notice to
Borrower
(a) ACCELERATION. Declare the unpaid balance of the Indebtedness,
or any part thereof, immediately due and payable, whereupon the same
shall be due and payable.
(b) TERMINATION OF OBLIGATION TO ADVANCE. Terminate any commitment
of Lender to lend under this Agreement in its entirety, or any portion
of any such commitment, to the extent Lender shall deem appropriate.
(c) EXERCISE OF OTHER RIGHTS. Exercise any and all other rights or
remedies afforded by any applicable laws or by the Loan Documents as
Lender shall deem appropriate, at law, in equity or otherwise,
including, but not limited to, the right to bring suit or other
proceeding, either for specific performance of any covenant or
condition contained in the Loan Documents or in aid of the exercise of
any right or remedy granted to Lender in the Loan Documents.
8.2 APPLICATION OF COLLATERAL: TERMINATION OF AGREEMENTS. Upon the
occurrence of an Event of Default, Lender may apply against the Indebtedness any
and all Collateral in its possession, 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.
8.3 WAIVERS. No waiver by Lender of any Event of Default shall be
deemed to be a waiver of any other or subsequent Event of Default. No delay or
omission by Lender in
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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, Borrower and each and every surety,
endorser, guarantor and other party liable for the payment or performance of all
or any portion of the Indebtedness, 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 Indebtedness, or by any release or change in any
security for the payment or performance of the Indebtedness, regardless of the
number of such renewals, extensions, releases or changes.
8.4 CUMULATIVE RIGHTS. All rights and remedies available to Lender
under the Loan Document shall be cumulative and in addition to all other rights
and remedies granted to Lender at law or in equity, whether or not the
Indebtedness is due and payable and whether or not Lender shall have Instituted
any suit for collection or other action in connection with the Loan Documents.
8.5 EXPENDITURES BY LENDER. Any sums expended by or on behalf of Lender
pursuant to the exercise of any right or remedy provided herein shall become
part of the Indebtedness and shall bear interest at the Default Rate, from the
date of such expenditure until the date repaid.
SECTION 9
CERTAIN RIGHTS OF LENDER
9.1 PROTECTION OF COLLATERAL. Lender may at any time, and from time to
time, take such actions as Lender deems necessary or appropriate to protect
Lender's liens and security interests in and to preserve the Collateral.
Borrower agrees to cooperate fully with all of Lender's efforts to preserve the
Collateral and Lenders liens and security interests therein and will take such
actions to preserve the Collateral and Lender's liens and security interests
therein.
9.2 PERFORMANCE BY LENDER. If Borrower fails to perform any agreement
contained herein, Lender may, but shall not be obligated to, cause the
performance of such agreement, and the expenses of Lender incurred in connection
therewith shall be payable by Borrower pursuant to Section 10.3 below.
9.3 FEES AND EXPENSES. Borrower agrees to promptly pay all reasonable
Costs (defined below) incurred by Lender in connection with the documentation,
modification, workout, collection or enforcement of the Loan or any of the Loan
Documents (as applicable) and all such Costs shall be included as additional
Indebtedness bearing interest at the Default Rate set forth in the Note until
paid. For the purposes hereof "COSTS" shall mean all expenditures and expenses
which may be paid or incurred by or on behalf of Lender including payments to
remove or protect against liens, attorneys' fees (including fees of Lenders
inside counsel), receivers' fees, engineers' fees, accountants' fees,
independent consultants' fees (including environmental consultants), all
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costs and expenses incurred in connection with any of the foregoing, Lender's
out-of-pocket costs and expenses related to any audit or inspection of any of
the Resorts or the Collateral (subject to the annual limits thereon set forth in
the Receivables Loan Agreement), outlays for documentary and expert evidence,
stenographers' charges, stamp taxes, publication costs, and costs (which may be
estimates as to items to be expended after entry of an order or judgment) for
procuring all such abstracts of title, title and UCC searches, and examination,
title insurance policies and similar data and assurances with respect to title
as Lender may deem reasonably necessary either to prosecute any action or to
evidence to bidder's at any foreclosure sale a true condition of the tide to, or
the value of, the Collateral.
9.4 LENDER'S RIGHT OF SET-OFF. Upon the occurrence of an Event of
Default, or if Lender shall be served with garnishment process in which Borrower
shall be named as defendant, whether or not any Event of Default shall have
occurred, Lender may, but shall not be required to, set-off any indebtedness
owing by Lender to Borrower against any of the Indebtedness without first
resorting to the security hereunder and without prejudice to any other rights or
remedies of Lender or its security interest herein.
9.5 ASSIGNMENT OF LENDER'S INTEREST. Lender shall have the right to
assign all or any portion of its rights in this Agreement to any subsequent
holder or holders of the Indebtedness.
9.6 POWER OF ATTORNEY. Borrower does hereby irrevocably constitute and
appoint Lender as Borrower's true and lawful agent and attorney-in-fact, with
full power of substitution, for Borrower and in Borrower's name, place and
stead, or otherwise, (a) from time to time to institute and prosecute in the
name of Borrower or otherwise, but for the benefit of Lender, any and all
proceedings at law, in equity, or otherwise, that Lender may deem proper in
order to collect, assert or enforce any claim, right or title, of any kind, in
and to the property, rights, titles, interests and liens hereby sold, assigned
or transferred, or intended so to be, and to defend and compromise any and all
actions, suits or proceedings in respect of any of the said property, rights,
titles, Interests and liens; and (b) generally to do all and any such acts and
things in relation to the Collateral as Lender shall in good ▇▇▇▇▇ ▇▇▇▇
advisable. Borrower hereby declares that the appointment made and the powers
granted pursuant to this Section are coupled with an interest and are and shall
be irrevocable by Borrower in any manner, or for any reason, unless and until
all obligations of Borrower to Lender have been satisfied.
9.7 INDEMNIFICATION OF LENDER. Borrower hereby agrees to indemnify
Lender and hold Lender harmless from and against any and all liabilities,
indebtedness, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses, and disbursements of any kind or nature what so ever which may
be imposed on, incurred by or asserted against Lender, in any way relating to or
arising out of (a) this Agreement and the Loan Documents and/or (b) any of the
transactions contemplated therein or thereby (including, without limitation,
those in any way relating to or arising out of the violation by Borrower of any
federal or state laws including the Interstate Land Sales Act or the Timeshare
Act). Upon receiving knowledge of any suit, claim or demand asserted by a third
party that Lender believes is covered by this indemnity, and subject to the
condition that no Event of Default under this Agreement shall then exist, Lender
shall give Borrower notice of the matter and an opportunity to defend it, at
Borrowers sole cost and expense, with legal counsel satisfactory to Lender.
Notwithstanding any defense by Borrower of
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any such suit, claim or demand, Lender shall have the right to participate in
any material decision affecting the conduct or settlement of any dispute or
proceeding for which indemnification may be claimed. It is the express intention
of the parties hereto that the indemnity provided for herein is intended to and
shall protect and indemnify Lender from the consequences of Lenders own
negligence (but not gross negligence or willful misconduct), 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.
SECTION 10
MISCELLANEOUS
10.1 NOTICE. Any notice or other communication required or permitted to
be given shall be in writing addressed to the respective party as set forth
below and may be personally served, telecopied or sent by overnight courier or
U.S. Mail and shall be deemed given: (a) if served in person, when served; (b)
if telecopied, on the date of transmission if before 3:00 p.m. (Chicago time) on
a business day; provided that a hard copy of such notice is also sent pursuant
to (c) or (d) below; (c) if by overnight courier, on the first business day
after delivery to the courier, or (d) if by U.S. Mail, certified or registered
mail, return receipt requested on the fourth (4th) day after deposit in the mail
postage prepaid.
Notices to Borrower: Silverleaf Resorts, Inc.
Attn: ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Meadows, Owens, Collier, Reed,
Cousins & Blau., L.L.P.
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
3700 Nations Bank Plaza
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Notices to Lender: ▇▇▇▇▇▇ Financial, Inc. R
Attn: Portfolio Manager, Vacation Ownership
Finance
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ Financial, Inc.
Vacation Ownership
Attn: Legal Representation
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▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
10.2 SURVIVAL. All representations, warranties, covenants and
agreements made by Borrower herein, in the other Loan Documents or in any other
agreement, document, instrument or certificate delivered by or on behalf of
Borrower under or pursuant to the Loan Documents shall be considered to have
been relied upon by Lender and shall survive the delivery to Lender of such Loan
Documents and the extension of the Indebtedness (and each part thereof),
regardless of any investigation made by or on behalf of Lender.
10.3 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 ILLINOIS AND APPLICABLE
LAWS OF THE UNITED STATES.
10.4 LIMITATION ON INTEREST. In no event whatsoever shall the amount of
interest paid or agreed to be paid to Lender pursuant to this Agreement, the
Note or any of the Loan Documents exceed the highest lawful rate of interest
permissible under applicable law. If, from any circumstances whatsoever,
fulfillment of any provision of this Agreement, the Note and the other Loan
Documents shall involve exceeding the lawful rate of interest which a court of
competent jurisdiction may deem applicable hereto ("EXCESS INTEREST"), then ipso
facto, the obligation to be fulfilled shall be reduced to the highest lawful
rate of interest permissible under such law and if, for any reason whatsoever,
Lender shall receive, as interest, an amount which would be deemed unlawful
under such applicable law, such interest shall be applied to the Loan (whether
or not due and payable), and not to the payment of interest, or refunded to
Borrower if such Loan(s) have been paid in full. Neither Borrower nor any
guarantor or endorser shall have any action against Lender for any damages
whatsoever arising out of the payment or collection of any such Excess Interest.
10.5 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 and 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.
10.6 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 Lenders receipt of one or more
counterparts hereof signed by Borrower and Lender.
10.7 NO DUTY. All attorneys, accountants, appraisers, consultants,
custodians and other professional persons retained by Lender shall have the
right to act exclusively in the interests of Lender and shall have no duty of
disclosure, duty of loyalty, duty of care or other duty or
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obligation of any type or nature whatsoever to Borrower or any of its partners,
or any of its shareholders, or to any other person or entity.
10.8 LENDER NOT FIDUCIARY. The relationship between Borrower and Lender
is solely that of debtor and creditor, and Lender has no fiduciary or other
special relationship with Borrower, and no term or provision of any of the Loan
Documents shall be construed so as to deem the relationship between Borrower and
Lender to be other than that of debtor and creditor.
10.9 ENTIRE AGREEMENT. This Agreement, including the Exhibits and other
Loan Documents and agreements referred to herein embody the entire agreement
between the parties hereto, supersedes all prior agreements and understandings
between the parties whether written or oral relating to the subject matter
hereof and may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties. There are no oral agreements among
Lender, Borrower or between any two or more of them. This Agreement may be
modified or changed only in a writing executed by both Lender and Borrower
and/or the other affected parties.
10.10 VENUE. BORROWER AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING
DIRECTLY, INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR FROM
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED, AT LENDER'S SOLE
DISCRETION AND ELECTION, ONLY IN COURTS HAVING A SITUS WITHIN THE COUNTY OF
▇▇▇▇, STATE OF ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND
STATE. BORROWER HEREBY IRREVOCABLY APPOINTS AND DESIGNATES ▇▇▇▇ ▇. ▇▇▇▇▇▇, WHOSE
ADDRESS IS ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, AS ITS DULY
AUTHORIZED AGENT FOR SERVICE OF LEGAL PROCESS AND AGREES THAT SERVICE OF SUCH
PROCESS UPON SUCH PARTY PROVIDED THAT A COPY OF SUCH PROCESS IS DELIVERED TO
BORROWER PURSUANT TO SECTION 10.1 ABOVE SHALL CONSTITUTE PERSONAL SERVICE OF
PROCESS UPON SUCH PARTY. IN THE EVENT SERVICE IS UNDELIVERABLE BECAUSE SUCH
AGENT MOVES OR CEASES TO DO BUSINESS IN CHICAGO, ILLINOIS, BORROWER SHALL,
WITHIN TEN (10) DAYS AFTER LENDER'S REQUEST, APPOINT A SUBSTITUTE AGENT (IN
CHICAGO, ILLINOIS) ON ITS BEHALF AND WITHIN SUCH PERIOD NOTIFY LENDER OF SUCH
APPOINTMENT. IF SUCH SUBSTITUTE AGENT IS NOT TIMELY APPOINTED, LENDER SHALL, IN
ITS SOLE DISCRETION, HAVE THE RIGHT TO DESIGNATE A SUBSTITUTE AGENT UPON FIVE
(5) DAYS NOTICE TO BORROWER. LENDER SHALL SEND A COPY OF SUCH SERVICE TO
BORROWER IN ACCORDANCE WITH PARAGRAPH 10.1 ABOVE BUT THE FAILURE OF LENDER TO DO
SO SHALL NOT INVALIDATE SERVICE OF PROCESS AS PROVIDED HEREIN. BORROWER HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION
BROUGHT AGAINST IT BY LENDER ON THE LOAN DOCUMENTS IN ACCORDANCE WITH THIS
PARAGRAPH.
10.11 JURY TRIAL WAIVER. BORROWER AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
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BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS
WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY BORROWER AND LENDER,
AND BORROWER ACKNOWLEDGES THAT NEITHER LENDER NOR ANY PERSON ACTING ON BEHALF OF
LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER OF TRIAL BY
JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.
BORROWER AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH OF THEM HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT
EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS. BORROWER AND LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL.
10.12 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.
10.13 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.
10.14 BROKER'S FEES. There are no brokers, finders' or other similar
fees or commitments due with respect to the transactions described in the
Agreement. Borrower shall defend Lender and save and hold it harmless from all
claims of any Persons for any such fees which indemnity shall include reasonable
attorneys' fees and legal expenses.
19
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APPENDIX 1
DEFINITION OF TERMS
TERMS DEFINED. The following terms used in this Agreement shall have the
following meanings:
ADVANCE. Proceeds of the Loan advanced from time to time by Lender to
Borrower in accordance with this Agreement.
ADVANCE FEE. A fee payable by Borrower to Lender at the time of each
Advance in the amount of 1% of such Advance.
AFFILIATE. (a) Any person or entity which has a financial interest in
Borrower; (b) any person or entity under common ownership with Borrower; (c) any
person or entity in which Borrower has a financial interest (any of (a), (b) or
(c) are referred to as a "Related Party"); (d) any person or entity which has a
financial interest in any Related Party; (e) any trust for the benefit of
Borrower or any Related Party; or (f) any person or entity In which any Related
Party has a financial interest.
ASSIGNMENTS OF BENEFICIAL INTERESTS. The Assignment of Borrower's
Beneficial Interests in the Oak N' Spruce Resort Trust to Lender in the form
attached as EXHIBIT D.
AVAILABILITY. The amount of the Loan ($10,000,000) less Advances by
Lender outstanding hereunder and under the Receivables Loan in excess of
$40,000,000 provided that no more than $5,000,000 in advances outstanding
hereunder and under the Receivables Loan in the aggregate shall be secured by
Assignments of Beneficial Interests in the Oak N' Spruce Resort Trust.
AVAILABILITY PERIOD. The period commencing on the Closing Date and
ending August 31, 2002.
BUSINESS DAY. Any day which is not a Saturday or Sunday or a legal
holiday under the laws of the State of Illinois or the United States.
CERTIFICATES OF BENEFICIAL INTERESTS. The Certificates of Beneficial
Interest in the Oak N' Spruce Resort Trust evidencing the use rights of
Purchasers.
CLOSING DATE. The date this Agreement is executed and delivered.
CODE. The Uniform Commercial Code as adopted and in force in the State
of Illinois as the same may be amended from time to time.
COLLATERAL. Has the meaning assigned in Section 3.
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CONSTRUCTION LOAN. That certain Construction Loan which may be entered
into hereafter between Borrower and Lender pursuant to that certain Standby
Commitment dated __________, 1999.
COSTS. Shall have the meaning set forth in Section 9.3.
DECLARATION OR TIMESHARE DECLARATION. The Declaration recorded or to be
recorded in the real estate records where each Timeshare Project is located for
the purpose of adding ownership of Timeshare Intervals to the Timeshare Program,
as it may be in effect from time to time.
DECLARATION OF TRUST. The Amended and Restated Declaration of Trust of
Oak N' Spruce Resort Trust and all amendments and supplements thereto.
DEED OF TRUST. Those certain Deeds of Trust and Security Agreement or
Mortgages and Security Agreement dated of even date herewith or granted
hereafter from time to time from Borrower, as grantor, to Lender or the Trustee
named therein, in trust, for the benefit of Lender, as it may from time to time
be extended, renewed, restated or replaced, substantially in the form of EXHIBIT
D attached hereto and made a part hereof, as same may from time to time be
renewed, amended, restated or replaced encumbering Eligible Unsold Timeshare
Intervals.
DEFAULT RATE. A per annum rate of interest equal to the Interest Rate
plus four percent (4%).
ELIGIBLE UNSOLD TIMESHARE INTERVAL. Each Interval at the Resorts listed
on EXHIBIT E satisfying all of the following criteria:
(a) An existing unsold Interval in an applicable Resort with respect
to a Unit that has been completed and developed in accordance
with all applicable building codes and furnished in a manner
substantially similar to the model unit, and for which a
certificate of occupancy or similar permit for occupancy has been
obtained;
(b) All amenities and facilities (including, without limitation, all
utilities) for the applicable Resort have been completed, and all
prospective Purchasers of such unsold Intervals would have
uninterrupted use of all such amenities and facilities;
(c) All furnishings in the unsold Units and all furnishings to the
common areas of each of the Resorts are owned by Silverleaf Club,
a non-profit Texas corporation, free of charges, liens and
security interests; and
(d) The unsold Interval is encumbered by the applicable Deed of Trust
or Assignment of Beneficial Interest and is not subject to any
lien not previously consented to by Lender;
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ENVIRONMENTAL CERTIFICATE. An environmental certificate executed by
Borrower, and such other persons or parties as required by Lender, in form and
substance satisfactory to Lender, as it may be from time to time renewed,
amended, restated or replaced.
EVENT OF DEFAULT. Has the meaning set forth in Section 8 of this
Agreement.
FINANCED INTERVAL. Any Eligible Unsold Timeshare Interval as to which
an Advance has been made and which is encumbered by the Deed of Trust and
secures the Loan.
HAZARDOUS MATERIALS. Any hazardous, dangerous or toxic substance or
material within the meaning of any federal, state or local law, regulation or
ordinance.
INDEBTEDNESS. Collectively, all payment obligations of Borrower to
Lender: (i) under the Note and other Loan Documents; (ii) in connection with the
Amended and Restated Receivables Loan and Security Agreement from Lender to
Borrower, and (iii) any Construction Loan Agreement entered into between Lender
to Borrower pursuant to that certain Standby Commitment dated September 1, 1999
together with any and all other indebtedness of Borrower to Lender whether now
existing or hereafter arising.
INTEREST RATE. The outstanding principal balance of the Loan shall bear
interest at a floating rate per annum equal to the Base Rate plus three and one
half percent (3.5%) (the "Interest Rate"). Base Rate shall mean the rate
published each business day in the Wall Street Journal for deposits maturing
ninety (90) days after issuance under the caption "Money Rates, London Interbank
Offered Rates" (LIBOR); provided, however, that after the occurrence of an Event
of Default the Loan will bear interest at the Default Rate. The Interests Rate
for each calendar month shall be fixed based upon the Interest Rate published
prior to and in effect on the first business day of such month. Interest shall
be calculated based on a 360-day year and charged for the actual number of days
elapsed.
INTERVAL OR TIMESHARE INTERVAL. An undivided fee simple ownership
interest as tenants in common with all other Purchasers with respect to any Unit
with a right to use such Unit for one week annually, together with all
appurtenant rights and interests as more particularly described in the Timeshare
Documents or the use rights and other rights and interest of a purchase under a
Certificate of Beneficial Interest in the Oak N' Spruce Resort Trust.
LOAN. This Ten Million and 00/100 Dollar ($10,000,000.00) revolving
Inventory Loan described in this Agreement.
LOAN DOCUMENTS. Collectively, this Agreement, the Note, the Deed of
Trust and any and all other agreements, documents, instruments and certificates
delivered or contemplated to be delivered in connection with this Agreement, as
such may be amended, renewed, extended, restated or supplemented from time to
time.
MANDATORY PREPAYMENT. Any prepayment required by Section 2.5(b) of this
Agreement.
MASTER DEED(S). The Master Deeds whereby the Resorts were conveyed to
Borrower including but not limited to:
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(a) Warranty Deed dated May 31, 1989, and recorded in Volume 2915,
Page 215 of the Real Property Records of ▇▇▇▇▇ County, Texas, and
an Assignment of Development and Contract Rights, dated May 31,
1989, and recorded in Volume 2915, Page 274 of the Real Property
Records of ▇▇▇▇▇ County, Texas;
(b) Warranty deed Dated May 31, 1989, and recorded in Book 194, Page
854 of the Deed Records of Stone County, Missouri, and an
Assignment of Development Rights, Warranties, Service Contracts,
and Trade Name dated May 31, 1989, and recorded in Book 135, Page
360 of the Deed Records of Stone County, Missouri;
(c) Warranty Deed dated May 31, 1989, and recorded in Volume 1162,
Page 519 of the Real Property Records of Wood County, Texas, and
an Assignment of Development Rights, Warranties, Service
Contracts, and Trade Name dated May 31, 1989, and recorded in
Volume 1162, Page 526 of the Real Property Records of Wood
County, Texas;
(d) Warranty Deed dated May 31, 1989, and recorded under Clerk's File
No. 8922886 of the Real Property Records of ▇▇▇▇▇▇▇▇▇▇ County,
Texas, and an Assignment of Development Rights, Warranties,
Service Contracts, and Trade Name dated May 31, 1989, and
recorded under Clerk's File No. 8922887 of the Real Property
Records of ▇▇▇▇▇▇▇▇▇▇ County, Texas.
(e) Warranty Deed dated May 31, 1989, and recorded in Book 300, Page
650 of the Recorder of Deeds of Taney County, Missouri, and an
Assignment of Development Rights, Warranties, Service Contracts,
and Trade Name dated May 31, 1989, and recorded in Book 301, Page
331 of the Recorder of Deeds of Taney County, Missouri;
(f) Warranty Deed dated May 31, 1989 and recorded in Volume 679, Page
29 of the Real Property Records of Comal County, Texas, and an
Assignment of Development Rights, Warranties, Service Contracts
and Trade Name dated May 31, 1989, and recorded in Volume 679,
Page 36 of the Real Property Records of Comal County, Texas.
(g) Special Warranty Deed dated August 1, 1997 and recorded under
Clerk's File No. 97-12710 of the Real Property Records of LaSalle
County, Illinois.
(h) Special Warranty Deed dated August 1, 1997 and recorded in Book
784, Page 1189 of the Real Property Records of Jefferson County,
Missouri.
(i) Assignment of Beneficial Interest dated December 24, 1997 but
effective December 31, 1997 and recorded with the Berkshire
Middle District
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Registry of Deeds in Berkshire County, Massachusetts in Book
1586, Page 644.
(j) Limited Warranty Deed dated September 24, 1998 and recorded in
Book 414, Page 348; Limited Warranty Deed dated October 13, 1998
and recorded in Book 416, Page 714; Limited Warranty Deed dated
November 24, 1998 and recorded in Book 420, Page 587; and Limited
Warranty Deed dated December 9, 1998 and recorded Book 421, Page
563, all of the Real Property Records of Habersham County,
Georgia.
(k) Special Warranty deed dated February 11, 1998 and recorded under
Clerk's File No. ###-##-####, and Special Warranty deed dated
November 24, 1997 and recorded under Clerk's File No.
###-##-####, both of the Real Property Records of Galveston
County, Texas.
MATERIAL ADVERSE CHANGE. Shall mean an adverse change in Borrower's
revenue, total assets or net worth of more than five percent (5%) from those
represented to Lender as of the Closing Date.
MATURITY DATE. August 31, 2002 or any earlier date on which the Loan
shall be required to be paid in full, whether by acceleration or otherwise.
NOTE. The revolving promissory note evidencing the Loan in the original
principal amount of $10,000,000 executed and delivered by Borrower to Lender
concurrently herewith as same may from time to time be renewed, amended,
restated, or replaced.
PERMITTED EXCEPTIONS. The exceptions to title listed on EXHIBIT A.
PERSON. Natural persons, corporations, limited partnerships, general
partnerships, joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
PUBLIC REPORTS. Any public reports now or hereafter filed with and
approved by any jurisdiction having control over the sale of Intervals for a
Resort.
PURCHASE DOCUMENTS. Any purchase agreement and related sale and escrow
documents executed and delivered by a Purchaser to Borrower with respect to the
purchase of an Interval.
PURCHASER. Any Person who purchases one or more Intervals.
RESORTS. The timeshare vacation resorts legally described on EXHIBIT F
hereto.
RECEIVABLES LOAN. The $70,000,000 loan from Lender to Borrower.
TIMESHARE DOCUMENTS. Any and all documents evidencing or relating to
the sale of Intervals by Borrower.
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TIMESHARE INTEREST. An Interval.
TIMESHARE PROGRAM. The program in which Purchasers have purchased
Timeshare Interests; owners of Timeshare Interests have the right to use and
enjoy their respective Timeshare Interests on a recurring basis; and owners of
Timeshare Interests share the expenses associated with the operation and
management of such program.
TIMESHARE PROJECT. The part of the Resorts which Lender currently has
approved, and may from time to time hereafter approve in writing, as being
subject to a Timeshare Program.
TITLE INSURER. Any title insurance company previously approved in
writing by Lender.
TITLE INSURANCE POLICY. A title insurance mortgage policy issued by a
Title Insurer in the amount of each Advance covering the Financed Intervals
(except for the Certificates of Beneficial Interest in the Oak N' Spruce Resort
Trust) and subject only to the Permitted Exceptions insuring that the Deed of
Trust is a first lien upon the "Property" (as said term is defined in the Deed
of Trust) subject only to the Permitted Exceptions. Said policy shall contain a
Variable Rate Endorsement and be in form and substance otherwise acceptable to
Lender.
UNIT. One individual air space dwelling unit, together with all
furniture, fixtures and furnishings therein, and together with any and all
interest in common elements appurtenant thereto, as provided in the Declaration.
31
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to
be executed and delivered by their duly authorized officers effective as of the
date first above written.
BORROWER:
SILVERLEAF RESORTS, INC.,
a Texas corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇,
Chief Executive Officer
LENDER:
▇▇▇▇▇▇ FINANCIAL, INC.
By: /s/ ▇▇▇▇▇▇▇ Ploutt
-----------------------------------------
Name: ▇▇▇▇▇▇▇ Ploutt
---------------------------------------
Its: Vice President
---------------------------------------
Exhibits and Attachments:
Appendix 1 - Definition of Terms
Schedule 3.2 - Closing Deliveries
Schedule 4.4 - List of Litigation Matters
Exhibit A - Permitted Exceptions
Exhibit B - Legal Description For The Resorts
Exhibit C - Request For Advance
Exhibit D - Form Of Assignment Of Beneficial Interest/Form Of Deed
Of Trust Or Mortgage
Exhibit E - Approved Resorts, Appraisals And Pending Receipt Of
Opinion Letters For All States Except Texas
Exhibit F - Silverleaf Resorts, Inc.
Ownership And Management Of Resorts
Exhibit 5.7 - Borrower's Debts, Liabilities And Obligations To Any
Affiliates Of Borrower
