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EXHIBIT 10.3
LOAN AND SECURITY AGREEMENT
LOAN AND SECURITY AGREEMENT dated September 30, 1999, between
BANKBOSTON, N.A., a national banking association with its head office at 000
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, as agent (the "Agent"), BANKBOSTON,
N.A. and various financial institutions as are or may become parties hereto
(collectively, the "Lenders"), and SILVERLEAF RESORTS, INC., a Texas corporation
with a principal place of business in Dallas, Texas (the "Borrower").
This Loan and Security Agreement, the $15,000,000 BankBoston Note, the
$15,000,000 Liberty Note, the Servicing Agreement, the Lock-Box Agreement, the
Subordination Agreements, the Financing Statements, all as defined herein, and
all other documents and instruments executed in connection with this Agreement,
are collectively referred to as the "Loan Documents".
The Lenders as of the date of this Agreement are BankBoston, N.A. and
other institutions listed on Schedule 1 attached hereto.
PRELIMINARY STATEMENT
This Loan and Security Agreement sets forth the terms on which the
Lenders will loan to the Borrower from time to time up to $30,000,000 (the
"Loans") for the purpose of financing timeshare receivables at the Borrower's
time share projects described herein.
AGREEMENT
IT IS THEREFORE AGREED AS FOLLOWS:
1. DEFINED TERMS. In addition to terms defined elsewhere in this
Agreement, the following terms shall have the meanings indicated in this Section
1. The singular shall include the plural and the masculine gender shall include
the feminine and neuter and vice-versa as the context requires. Accounting terms
used herein shall be given their customary meaning in accordance with generally
accepted accounting principles, unless such terms are otherwise defined herein.
Terms defined in the Uniform Commercial Code as in effect in the Commonwealth of
Massachusetts (the "UCC") shall be used herein as defined therein, unless such
terms are otherwise defined herein.
1.1 "Assignee Lender" shall have the meaning provided in
Section 12.7.1. herein.
1.2 "Association" shall mean with respect to each Eligible
Project, the corporation or other organization of owners of Timeshare Interests
which has responsibility for managing and administering the Eligible Project's
facilities, time share program and reservation systems.
1.3 "Authorized Officer" shall mean an officer of the Borrower
who has been duly authorized by Borrower to execute and deliver to the Agent
Borrowing Base Certificates and other certificates, each of whom is listed on
Schedule 1.3 attached hereto, as such schedule may be amended by the Borrower
from time to time.
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1.4 "Availability Fee" shall have the meaning provided in
Section 2.12 herein.
1.5 "Borrower's Account" shall have the meaning provided in
Section 2.2 herein.
1.6 "Borrowing Base Certificate" shall mean a certificate
substantially in the form of Exhibit 1.6 attached hereto or in such form as
shall be acceptable to the Agent and certifying (a) the Receivables Loan
Borrowing Base, (b) that all loans constituting Consumer Loan Collateral are not
in default; and (c) that the Borrower knows of no defenses assertable against
any loans constituting Consumer Loan Collateral.
1.7 "Borrowing Period" shall have the meaning provided in
Section 2.8 herein.
1.8 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.9 "Collateral" shall mean the Personal Collateral and any
other collateral pledged by the Borrower hereunder from time to time.
1.10 "Commitment Fee" shall have the meaning provided in
Section 2.11 herein.
1.11 "Consolidated Interest Expense" shall mean, with
reference to any period, all interest charges (excluding amortization of debt
discount and expense and imputed interest on capitalized lease obligations) for
such period, determined on a consolidated basis for the Borrower and its
Subsidiaries, if any, in accordance with generally accepted accounting
principles consistently applied.
1.12 "Consolidated Net Income" for any period shall mean the
net income of the Borrower and its Subsidiaries, if any, for such period as
computed on a consolidated basis in accordance with generally accepted
accounting principles consistently applied, and, without limiting the foregoing,
after deduction from gross income of all expenses and reserves, including
reserves for taxes on or measured by income, but excluding any extraordinary
profits or losses and also excluding any taxes on such extraordinary profit or
loss.
1.13 "Consumer Loan Collateral" shall have the meaning
provided in Section 4.1.1 herein.
1.14 "Consumer Loan Cover Sheet" shall mean a document
prepared by the Borrower and executed by an Authorized Officer of the Borrower
indicating the outstanding principal amount of such consumer loan and certifying
that (a) attached to such cover sheet are the Required Consumer Loan Documents,
(b) all submitted documents are consistent as to borrower name, property
address, loan amount, interest rate and loan term, (c) the note evidencing such
loan bears an original signature or signatures which appear to be those of the
maker or makers, (d) except for endorsements to the Borrower or the Agent or in
blank, none of the documents contain any irregular writings which appear to
affect the validity thereof, and (e) the loan has all of the characteristics of
an Eligible Consumer Loan. The Borrower shall be entitled to deliver a Consumer
Loan Cover Sheet or Sheets relating to multiple consumer loans.
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1.15 "Delinquent Lender" shall have the meaning provided in
Section 11.12 herein.
1.16 "EBITDA" shall mean, with reference to any period,
Consolidated Net Income for such period plus all amounts deducted in arriving at
such Consolidated Net Income in respect of (i) Consolidated Interest Expense for
such period, plus (ii) federal, state and local income taxes for such period,
plus (iii) all charges for depreciation of fixed assets and amortization or
organizational and financing costs for such period, determined in each case on a
consolidated basis for the Borrower and its Subsidiaries, if any, in accordance
with generally accepted accounting principles consistently applied.
1.17 "Eligible Consumer Loan Amount" shall mean the aggregate
principal amount outstanding from time to time of all Eligible Consumer Loans
pledged as Collateral.
1.18 "Eligible Consumer Loan" shall mean a loan to a consumer
borrower with all of the following characteristics:
1.18.1 The loan shall be made to a resident of the United
States (or a resident of Canada; provided that the outstanding principal amount
of all of the Eligible Consumer Loans pledged as Collateral made to residents of
Canada shall not at any one time exceed 5% of the outstanding principal amount
of all Eligible Consumer Loans pledged as Collateral) who is the occupant or
owner of the collateral securing such loan and who was competent to contract at
the time they executed the documents in connection with such loans, shall be
payable in U.S. dollars, and shall be in accordance with the Borrower's general
underwriting criteria;
1.18.2 The loan shall have the following terms:
1.18.2.1 An original term not to exceed 96 months;
provided that at any one time up to 10% of the outstanding principal amount of
the Eligible Consumer Loans pledged as Collateral may have an original term in
excess of 96 months but not more than 120 months.
1.18.2.2 A downpayment of not less than 10% of the
sales price (not including closing costs, broker's commission, and prior to any
discounts), which sales price shall be payable in equal monthly installments of
principal and interest, with the first installment due and payable not more than
45 days after the date of the promissory note.
1.18.2.3 An interest rate no less than 12.5% per
annum; provided that at any one time up to 20% of the outstanding principal
amount of Eligible Consumer Loans pledged as Collateral shall have an interest
rate of no less than 10% per annum.
1.18.3 All applicable recision or cancellation periods
relating to such consumer loan shall have expired;
1.18.4 The collateral securing such loan shall be
interests in Units (a) acceptable to the Agent, (b) constructed in compliance
with all applicable laws and regulations, served by utilities necessary for
their intended use, furnished and ready for occupancy, (c) for
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which a valid certificate of occupancy or equivalent has been issued by
appropriate Governmental Authorities or for which no certificate of occupancy or
equivalent is required by appropriate Governmental Authorities, and (d) duly
admitted to the provisions of the applicable Timeshare Instruments;
1.18.5 The loan shall be secured by a valid perfected
first priority mortgage or deed of trust on a Timeshare Interest (or in the case
of an Oak N' Spruce Beneficial Interest, a valid perfected first priority
security interest), subject only to (a) liens for taxes not yet due and payable,
and (b) Permitted Encumbrances and other easements, restrictions and
encumbrances acceptable to the Agent which do not represent liens securing
monies owed or claimed and which do not materially affect the value of the
collateral for such loan;
1.18.6 If pledged to the Agent as Consumer Loan
Collateral, the pledge by the Borrower to the Agent of such loan and related
rights is effective to grant to the Agent a first priority security interest in
such loan and related rights free and clear of any liens or claims of any other
person;
1.18.7 All agreements in connection with such loan are
the legal, valid and binding obligations of the consumer borrower, in full force
and effect and enforceable in accordance with their terms, with no claim of
defense, setoff or counterclaim asserted by the consumer borrower;
1.18.8 The loan complies in all respects with all
requirements of all applicable state and federal law, including, without
limitation, state laws and regulations governing sales of time shares,
applicable usury limitations, real estate settlement procedures, the Securities
Act of 1933, the Securities Exchange Act of 1934, the Interstate Land Sales Full
Disclosure Act, the Federal Trade Commission Act, the Consumer Credit Protection
Act of 1968, the Telephone Consumer Protection Act, the Telemarketing and
Consumer Fraud and Abuse Prevention Act, the Fair Housing Act, the Consumer
Leasing Act of 1976, the Equal Credit Opportunity Act, the Truth in Lending Act,
the Flood Disaster Prevention Act of 1973, the applicable Timeshare Act, and
Regulation Z of the Board of Governors of the Federal Reserve System;
1.18.9 (a) No payments shall be more than 29 days late
and no other defaults shall have occurred with respect to such loan and the
documents related thereto or (b) (i) defaults shall have occurred, (ii) the
consumer borrower has entered into a payment plan accepted by the payee of the
note, (iii) the first payment under such payment plan shall have been timely
made and no other payments under the payment plan shall be more than 29 days
late and no other defaults shall have occurred with respect to such loan since
the payment plan, and (iv) there shall have been no more than two revised
payment plans during the term of the loan or (c) (i) a default shall have
occurred, (ii) a replacement consumer borrower shall have agreed to assume the
obligations under the loan, (iii) the replacement borrower shall have paid at
least 10% of the sales price of the Timeshare Interest, (iv) the first payment
by such replacement borrower shall have been timely made and no other payments
shall be more than 29 days late and no other defaults shall have occurred with
respect to such loan after the assumption of such loan by the replacement
borrower, and (v) there shall have been no more than two replacement borrowers
during the term of the Loan.
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1.18.10 The loan represents the balance of the sales
price of a Timeshare Interest and the purchaser of such Timeshare Interest is
not, and no payment of a sum due under the loan has been made by, an officer,
director, agent, employee, principal, broker, creditor (or relative thereof) of
any other entity or person related to or an affiliate of the Borrower.
1.18.11 The Borrower has no knowledge or notice of any of
the following conditions existing or in connection with the collateral securing
such loan: hazardous wastes or hazardous substances prohibited by applicable law
or regulation, asbestos or urea formaldehyde insulation, or any release of any
of the foregoing prohibited by any Environmental Regulations or any applicable
law or regulation;
1.18.12 Any prior mortgages or deeds of trust or security
interests on the collateral securing such loan shall be released of record and
the loan or any rights thereto shall not be affected by or subject to any escrow
for presales or otherwise;
1.18.13 The consumer borrower is a member of the
applicable Association;
1.18.14 In connection with each such loan pledged as
Consumer Loan Collateral, the Borrower shall have delivered the Required
Consumer Loan Documents;
1.18.15 In connection with any consumer loan for which
the most recent six consecutive monthly payments have not been timely made, no
consumer borrower obligated as payor shall have (i) a bankruptcy filing or
equivalent within two years prior to the pledge of such consumer loan, (ii)
unpaid judgments and/or liens; and
1.18.16 Such other characteristics as the Agent may
require from time to time.
1.19 "Eligible Projects" shall mean those timeshare resorts
owned by the Borrower listed on Schedule 1.19 attached hereto, as such schedule
may be amended from time to time by the Borrower and the Agent.
1.20 "Employee Benefit Plan" shall mean any employee benefit
plan within the meaning of Section 3(d) of ERISA maintained or contributed to by
any of the Borrower or any ERISA Affiliate, other than a Multiemployer Plan.
1.21 "Environmental Regulations" shall have the meaning
provided in Section 5.17 herein.
1.22 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974.
1.23 "ERISA Affiliate" shall mean any person which is treated
as a single employer with the Borrower under Section 414(c) of the Code.
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1.24 "ERISA Reportable Event" shall mean a reportable event
with respect to a Guaranteed Pension Plan within the meaning of Section 4043 of
ERISA and the regulations promulgated thereunder as to which the requirement of
notice has not been waived.
1.25 "Event of Default" shall have the meaning provided in
Section 9 herein.
1.26 "$15,000,000 BankBoston Note" shall have the meaning
provided in Section 2.1 herein.
1.27 "$15,000,000 Liberty Note" shall have the meaning provided
in Section 2.1 herein.
1.28 "Financial Statements" shall have the meaning provided in
Section 6.1.8 herein.
1.29 "Financing Statements" shall have the meaning provided in
Section 4.5 herein.
1.30 "Governmental Authority" shall mean the United States of
America, the State where the Eligible Project is located, any political
subdivision thereof, the County of and the City or Town where the Eligible
Project is located, and any agency, authority, department, commission, board,
bureau, or instrumentality of any of them.
1.31 "Guaranteed Pension Plan" shall mean any employee pension
benefit plan within the meaning of Section 3(2) of ERISA maintained or
contributed to by any of the Borrower or any ERISA Affiliate, the benefits of
which are guaranteed on termination in full or in part by the PBGC pursuant to
Title IV of ERISA, other than a Multiemployer Plan.
1.32 "Indebtedness" shall have the meaning provided in Section
4.1 herein.
1.33 "Individual Commitment" shall mean the amount of the Loans
each Lender shall commit to lend to the Borrower pursuant to this Agreement, as
provided in Schedule 1, as amended from time to time.
1.34 "Interest Coverage Ratio" shall have the meaning provided
in Section 6.17 herein.
1.35 "Lender's Percentage" shall mean the ratio of each
Lender's Individual Commitment to the Total Commitment from time to time.
1.36 "Lock Box Agent" shall have the meaning provided in
Section 4.3.2 herein.
1.37 "Lock Box Agreement" shall have the meaning provided in
Section 4.3.2 herein, as such agreement may be amended from time to time.
1.38 "Management Agreement" shall mean (1), with respect to the
following Eligible Projects: Xxxxx Lake Resort, Piney Shores Resort, The
Villages (including Lake O' The
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Xxxxx), Hill County Resort, Seaside Resort, Ozark Mountain Resort, Holiday Hills
Resort, Timber Creek Resort, Fox River Resort, Oak N' Spruce Resort, Apple
Mountain Resort and Beech Mountain Resort, that certain Management Agreement by
and between Silverleaf Club (f/k/a Master Club, f/k/a Master Endless Escape
Club) and Borrower dated May 28, 1990, as amended through Eighth Amendment dated
March 9, 1999, as such agreement may be amended from time to time, and (2), with
respect to the following resorts managed by the Borrower: Alpine Bay (including
Capricorn Complex, Dogwood Hills and The Pines), Hickory Hills Resort, Quail
Hollow Village at Beech Mountain Lakes, Treasure Lake Resort (including
Silverwoods and Wolf Run Manor), Foxwood Hills Resort (including Kinston Manor
and Villas at Foxwood Hills), Tansi Resort (including Hiawatha Manor, Hiawatha
Manor I, and Hiawatha Manor West) and Westwind Manor Resort, each of the
management agreements between the Association for the resort and the developer
of the resort in each case, assigned to Borrower pursuant to a Xxxx of Sale and
Blanket Assignment dated May 28, 1998.
1.39 "Marketing Ratio" shall have the meaning provided in
Section 6.18 herein.
1.40 "Maturity Date" shall mean September 30, 2006.
1.41 "Multiemployer Plan" shall mean any Multiemployer Plan
within the meaning of Section 3(37) of ERISA maintained or contributed to by any
of the Borrower or any ERISA Affiliate.
1.42 "Notes" shall mean the $15,000,000 BankBoston Note, the
$15,000,000 Liberty Note, and any replacement note issued in exchange for the
$15,000,000 BankBoston Note or the $15,000,000 Liberty Note from time to time.
1.43 "Notice to Maker" shall have the meaning provided in
Section 1.54.6 herein.
1.44 "Oak N' Spruce Resort" shall mean the Borrower's project
in Lee, Massachusetts.
1.45 "Oak N' Spruce Beneficial Interest" shall mean use rights
and interests of a purchaser under a Certificate as defined in the Oak N' Spruce
Resort Declaration of Trust.
1.46 "Oak N' Spruce Resort Declaration of Trust" shall mean
that certain Amended and Restated Declaration of Trust of Oak N' Spruce Resort
dated January 6, 1998, and recorded inn Book 1587, Page 179, in the Berkshire
Middle District Registry of Deeds, as amended by Amendment to the Amended and
Restated Declaration of Oak N' Spruce Resort Trust dated July 9, 1998 and
recorded with the Berkshire Middle District Registry of Deeds in Book 1612, Page
588, by Second Amendment to the Amended and Restated Declaration of Trust of Oak
N' Spruce Resort Trust dated November 13, 1998 and recorded with the Berkshire
Middle District Registry of Deeds in Book 1631, Page 831 and by Third Amendment
to the Amended and Restated Declaration of Oak N' Spruce Resort Trust dated
April 15, 1999 and recorded with the Berkshire Middle District Registry of Deeds
in Book 1658, Page 506.
1.47 "PBGC" shall mean the Pension Benefit Guaranty Corporation
created by Section 4002 of ERISA or any successor entity or entities having
similar responsibilities.
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1.48 "Permitted Encumbrances" shall mean with respect to each
Eligible Project those easements, restrictions and encumbrances identified on
Schedule 1.48 attached hereto.
1.49 "Personal Collateral" shall have the meaning provided in
Section 4.1 herein.
1.50 "Receivables Loan Advance" shall mean an advance on the
Loans.
1.51 "Receivables Loan Amount" shall mean the aggregate amount
of Receivables Loan Advances outstanding from time to time.
1.52 "Receivables Loan Borrowing Base" shall mean at any time
85% of the Eligible Consumer Loan Amount.
1.53 "Related Rights" shall have the meaning provided in
Section 4.1.2 herein.
1.54 "Repurchase Obligation" shall have the meaning provided in
Section 2.7 herein.
1.55 "Requirements" shall mean any law, ordinance, code, order,
rule or regulation of any Governmental Authority relating in any way to the
acquisition and ownership of any Eligible Project, the construction of any
Eligible Project, or the use, occupancy and operation of the Eligible Project
following the completion of construction, including the Timeshare Act, and laws,
ordinances, rules or regulations relating to time-shares, subdivision control,
zoning, building, use and occupancy, fire prevention, health, safety,
sanitation, handicapped access, historic preservation and protection, tidelands,
wetlands, flood control, access and earth removal, and all Environmental
Regulations.
1.56 "Required Consumer Loan Documents" shall mean with respect
to each loan included within Consumer Loan Collateral, the following:
1.56.1 Original promissory note payable to the Borrower
or endorsed to the order of the Borrower, and endorsed in blank by an Authorized
Officer of the Borrower;
1.56.2 (a) The original or copy time-stamped by the
appropriate recording office of the recorded mortgage or deed of trust securing
the note referred to in Section 1.56.1, and original or copy time-stamped by
appropriate recording office of all amendments and assignments of such mortgage
or deed of trust showing an unbroken chain of title from the originator to the
Borrower or (b), in the case of a loan secured by an assignment of an Oak N'
Spruce Beneficial Interest, (i) original or copy time stamped by the appropriate
recording office of an assignment of beneficial interest securing the note
referred to in Section 1.56.1, and original or copy time stamped by the
appropriate recording office of all amendments and assignments of such
assignment of beneficial interest showing an unbroken chain of title from the
originator to the Borrower, and (ii) evidence satisfactory to the Agent of the
perfection of the Borrower's security interest in the Oak N' Spruce Beneficial
Interest.
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1.56.3 (a) Original or copy time stamped by the
appropriate recording office of the recorded assignment to the Agent of the
mortgage or deed of trust referred to in Section 1.56.2 or (b), in the case of a
loan secured by an assignment of an Oak N' Spruce Beneficial Interest, (i)
original or copy time stamped by the appropriate recording office of an
assignment to the Agent of the assignment of beneficial interest referred to in
Section 1.56.2(b) and (ii) evidence satisfactory to the Agent of the perfection
of the Agent's security interest in the assignment of beneficial interest.
1.56.4 Original credit application and right of recision
notices, if applicable, credit report, purchase contract containing truth in
lending disclosure statement, good faith estimate of settlement costs (if any),
and HUD-1 settlement statement.
1.56.5 (a) Copy of deed to consumer borrower with
evidence of recording in the appropriate recording office or (b), in the case of
a loan secured by an assignment of an Oak N' Spruce Beneficial Interest, a
certificate of beneficial interest in favor of the consumer borrower with
evidence of recording in the appropriate recording office.
1.56.6 Copy of notice to consumer borrower that payments
shall be made to the Servicer;
1.56.7 Original notice to consumer borrower signed by
payee of note that payments shall be made to the Agent or its designee ("Notice
to Maker");
1.56.8 Receipt for timeshare documents, servicing
disclosure statement and acknowledgement of representations.
1.56.9 All guaranties, if any, for the payment of such
consumer loan, and if the borrower shall be a corporate, partnership or limited
liability company entity, all resolutions and authorizations to evidence
authority to enter into the transaction.
1.56.10 If requested by the Agent in connection with each
such loan which has at any time been subject to any security interest, pledge or
hypothecation for the benefit of any person, a certification or release by the
former secured party in form acceptable to the Agent that such security interest
has been released;
1.56.11 Consumer Loan Cover Sheet; and
1.56.12 Other documents required by the Agent from time
to time.
1.57 "Required Lenders" shall mean at any time (a) Lenders
holding at least 66 2/3% of the then outstanding principal amount of the Notes,
and (b) at any time when there are two or more Lenders, at least two Lenders.
1.58 "Servicer" shall have the meaning provided in Section
4.3.1 herein.
1.59 "Servicing Agreement" shall have the meaning provided in
Section 4.3.1 herein, as such agreement may be amended from time to time.
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1.60 "Silverleaf Club" shall mean Silverleaf Club, a Texas
non-profit corporation, a master association to which each Association belongs.
1.61 "Subordinated Debt" shall mean all indebtedness from the
Borrower identified on Schedule 1.61 attached hereto, in each case subordinated
to the Loans in a manner satisfactory to the Agent.
1.62 "Subordinated Shareholder Debt" shall mean all
indebtedness identified on Schedule 1.62 attached hereto and any indebtedness
from the Borrower to any shareholder or member of the Borrower from time to
time.
1.63 "Subordination Agreements" shall have the meaning provided
in Section 6.19 herein.
1.64 "Subsidiary" shall mean any corporation or other entity of
which more than fifty percent (50%) of the outstanding voting stock or
comparable equity interests (including interests as a limited partner in a
limited partnership) is at the time directly or indirectly owned by the
Borrower, by one or more of its Subsidiaries, or by the Borrower and one or more
of its Subsidiaries.
1.65 "Tangible Capital Funds" shall mean at any time the sum of
(a) Tangible Net worth plus (b) the principal amount outstanding of Subordinated
Debt.
1.66 "Tangible Net Worth" shall mean net worth as reflected on
the Borrower's Financial Statements, excluding goodwill and all intangibles.
1.67 "Timeshare Act" shall mean with respect to each Eligible
Project, the statutes and regulations related to timeshare development and sales
of the jurisdiction where such Eligible Project is located, as they may be
amended from time to time.
1.68 "Timeshare Interest" shall be (a) as defined in the
Timeshare Instruments for each Eligible Project, consisting of an undivided
interest in a Unit at the Eligible Project as tenant-in-common, together with
the right to make use of any and all easements appurtenant thereto, the
non-exclusive right to use the common areas and amenities, and the exclusive
right to use and occupy any Unit and the common furnishings therein for a use
period for which such rights to use have been properly reserved or (b) with
respect to Oak N' Spruce Resort, an Oak N' Spruce Beneficial Interest.
1.69 "Timeshare Instruments" shall mean with respect to each
Eligible Project the documents pursuant to which the Project shall be submitted
to a timeshare form of ownership and registered with appropriate Governmental
Authorities.
1.70 "Title Policy" shall have the meaning provided in Section
6.4.7 herein.
1.71 "Total Commitment" shall mean the aggregate of each
Lender's Individual Commitments, which shall equal $30,000,000.
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1.72 "Unit" shall mean each of the units at one of the Eligible
Projects designated for timeshare interval ownership in the respective Timeshare
Instruments.
1.73 "Year 2000 Compliant" shall have the meaning provided in
Section 12.18 herein.
2. TERMS OF THE LOANS.
2.1 The Notes. Simultaneously with the execution of this
Agreement, the Borrower is executing a Revolving Line of Credit Promissory Note
payable to BankBoston, N.A. in the original principal amount of up to
$15,000,000 (the "$15,000,000 BankBoston Note"). Simultaneously with the
execution of this Agreement, the Borrower is executing a Revolving Line of
Credit Promissory Note payable to Liberty Bank in the original principal amount
of up to $15,000,000 (the "$15,000,000 Liberty Note").
2.2 Borrower's Account. The Borrower shall establish a
collection account with the Agent, Account No. 00000000 (the "Borrower's
Account"). The Borrower shall ensure that all payments and proceeds from the
Consumer Loan Collateral from time to time shall be paid into the Borrower's
Account. All payments into the Borrower's Account shall be applied first to the
payment of any fees, expenses, or past due amounts owing by the Borrower to the
Agent or the Lenders in connection with the Loans, second to interest accrued on
the unpaid principal balance of the Loans through the last day of the calendar
month last ended, third to the principal balance of the Loans, and fourth to all
other Indebtedness then outstanding. For any Loans for which the Borrower has
selected the Adjusted Eurodollar Rate (as defined in the Note), any principal
payments shall be retained in the Collection Account, and shall be applied to
reduce the Loans only at the end of an Interest Period (as defined in the
Notes).
2.3 Advances. The Borrower shall request advances from time to
time in a manner acceptable to the Borrower and the Agent (with a copy to each
Lender), and the Agent shall credit advances by depositing such sums in
Borrower's Account at the Agent. The Borrower shall make each request for an
advance at least 48 hours prior to the date of the requested advance. The
Borrower shall not request an advance more than once each week. Prior to 1 p.m.
Eastern Standard Time on the business day on which an advance is to be made,
each Lender shall deliver to the Agent an amount equal to the total advance
times such Lender's Percentage. The Agent shall have no obligation to credit any
advance to the Borrower's Account until the Agent has received each Lender's
proportionate share of such advance. Immediately upon notice from the Agent of
an advance, each Lender shall reimburse the Agent in an amount equal to the
total advances times such Lender's Percentage. Advances on the Loans shall be
limited in an amount to no more than the Receivables Loan Borrowing Base as
reported in a Borrowing Base Certificate delivered to the Agent and each Lender
simultaneously with each request for an advance. By requesting an advance, the
Borrower shall be deemed to represent and warrant that the information in the
most recent Borrowing Base Certificate remains true and accurate as of the time
of such request, and that after giving effect to the requested advance, the
outstanding principal amount of the Loans shall not exceed the Receivables Loan
Borrowing Base. In the event that the outstanding principal amount of the Loans
shall at any time exceed the Receivables Loan Borrowing Base as determined by
the Agent, the Borrower shall immediately and without
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notice or demand (a) pay to the Agent on behalf of the Lenders the amount of
such excess or (b) pledge sufficient Eligible Consumer Loans to increase the
Receivables Loan Borrowing Base to equal or exceed the outstanding principal
amount of the Loans.
2.4 Nonreceipt of Funds by the Agent from Lenders. Unless the
Agent shall have received notice from any Lender prior to the date on which such
Lender is to provide funds to the Agent for an advance to the Borrower that such
Lender shall have demanded the amounts due under its Notes, the Agent may assume
that all Lenders shall make such funds available to the Agent on the date of
such advance, and the Agent in reliance upon such assumption in its sole
discretion may, but shall not be obligated to, make available to the Borrower on
such date a corresponding amount. If and to the extent that the Agent shall make
an advance to the Borrower and any Lender shall not immediately reimburse the
Agent, such Lender shall repay to the Agent forthwith on demand such Lender's
Percentage of such advance together with interest thereon, for each day from the
date such amount is made available to the Borrower until the date such amount is
repaid to the Agent, at the overnight Federal Funds rate for three business
days, and thereafter at the Agent's base rate as announced from time to time. If
any Lender shall not pay such Lender's Percentage of any advance forthwith upon
the Agent's demand therefor, the Agent shall promptly notify the Borrower, and
the Borrower shall immediately repay to the Agent such amount with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent, at the rate of
interest provided in the Notes. If the Agent shall have received notice from any
Lender that such Lender (a) shall have demanded the amounts due under its Notes
or (b) shall not make any further advances hereunder, the Agent shall thereafter
make no further advances hereunder until such time as the Agent shall have
received assurances acceptable to it that all Lenders shall make available to
the Agent their pro-rate share of each advance.
2.5 Nonreceipt of Funds by the Agent from Borrower. Unless the
Agent shall have received notice from the Borrower prior to the date on which
any payment is due to the Agent or Lenders hereunder that the Borrower will not
make such payment in full, the Agent may assume that the Borrower has made such
payment in full to the Agent on such date and the Agent in its sole discretion
may, but shall not be obligated to, in reliance upon such assumption, cause to
be distributed to each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent the Borrower shall not have made such
payment in full to the Agent, each Lender shall repay to the Agent forthwith on
demand such amount distributed to such Lender together with interest thereon,
for each day from the date such amount is distributed to such Lender until the
date such Lender repays such amount to the Agent, at the overnight Federal Funds
rate for three business days, and thereafter at the Agent's base rate as
announced from time to time.
2.6 Borrowing Base Certificates. The Borrower shall submit to
the Agent and each Lender a Borrowing Base Certificate (a) from time to time as
requested by the Agent; (b) simultaneously with each request for an advance on
the Loans, (c) simultaneously with any request for a release of Collateral, and
(d) monthly (on the first day of the month) while any amounts are outstanding on
the Loans. Any Borrowing Base Certificate delivered on the first day of a month
shall be accompanied by a trial balance of the Consumer Loan Collateral
acceptable to the Agent.
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2.7 Repurchase Obligation. If any consumer loan pledged as
Consumer Loan Collateral shall subsequent to the pledge hereunder no longer
qualify as an Eligible Consumer Loan, such consumer loan shall be excluded from
the Receivables Loan Borrowing Base, and the Borrower shall either (a) replace
such consumer loan with an Eligible Consumer Loan or (b) reduce the amount
outstanding on the Loans (if necessary) so that the total amount outstanding
shall not exceed the Receivables Loan Borrowing Base. Upon the request of the
Borrower and in the absence of any Event of Default or event which with the
giving of notice or passage of time would constitute an Event of Default, the
Bank shall release to the Borrower any such consumer loan which shall not
constitute an Eligible Consumer Loan and which shall be excluded from the
Receivables Loan Borrowing Base. Upon the request of the Agent at any time that
the Receivables Loan Amount shall exceed the Borrowing Base, the Borrower shall
(a) reduce the amount outstanding on the Loans or pledge additional Eligible
Consumer Loans so that the total amount outstanding shall not exceed the
Receivables Loan Borrowing Base, or (b) be obligated to repurchase (a
"Repurchase Obligation") for a price equal to the principal balance thereof any
consumer loan pledged as Consumer Loan Collateral which shall subsequent to the
pledge hereunder no longer qualify as an Eligible Consumer Loan.
2.8 Borrowing Term. The initial borrowing period for
Receivables Loan Advances for the Loans shall commence on the date hereof and
shall continue through September 30, 2001 (the "Borrowing Period"). Not later
than July 31, 2001, the Borrower shall be entitled to request in writing to the
Agent and the Lenders that the Borrowing Period be extended for one additional
year. Upon such request, the Agent with the consent of all of the Lenders may in
their sole discretion extend the Borrowing Period. Unless the Agent notifies the
Borrower that the Agent and the Lenders shall extend the Borrowing Period, the
Loans shall commence amortizing as provided in Section 2.9.
2.9 Term Out. Absent a default or Event of Default hereunder,
at the expiration of the Borrowing Period, the Lenders shall make no further
advances on the Loans, all payments of principal and interest on the Consumer
Loan Collateral shall continue to be paid to the Agent for the pro-rata benefit
of the Lenders, and the Agent shall apply all such payments as provided in
Section 2.2. All amounts outstanding under the Notes shall be due and payable at
the earlier of (a) the Maturity Date or (b) the average remaining maturity of
the Eligible Consumer Loans pledged as Collateral, as determined by the Agent at
the expiration of the Borrowing Period.
2.10 Prepayments. Except as provided in the Notes, the Borrower
shall be entitled to prepay amounts outstanding on the Loans from time to time,
without penalty.
2.11 Commitment Fees. The Borrower shall pay to the Agent for
the pro-rata benefit of the Lenders on behalf of the Lenders a commitment fee
(the "Commitment Fee") in the amount of $300,000 at the closing of the Loans.
The Commitment Fee is non-refundable and is deemed to be earned in full by the
Agent and the Lenders as of the date hereof, even if the full amount of the
Loans shall not be advanced.
2.12 Availability Fee. If at any time after April 1, 2000
through the end of the Borrowing Period, the Receivables Loan Amount shall be
less than $10,000,000, then the Borrower shall pay to the Agent for the pro-rata
benefit of the Lenders an availability fee (the "Availability Fee") in the
amount of (a) (i) $10,000,000, less (ii) the Receivables Loan Amount,
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but in any event no less than zero, times (b) one percent (1.0%) per annum. The
Agent shall calculate the Availability Fee semi-annually as of the end of each
six month period based on the average Receivables Loan Amount for the six months
then ended, and the Borrower shall pay the Availability Fee upon delivery of
such calculation by the Agent.
3. RECEIVABLES LOAN.
3.1 Requests for Receivables Loan Advance. Prior to or with
each request for a Receivables Loan Advance, the Borrower shall deliver to the
Agent the Required Consumer Loan Documents for each of the Eligible Consumer
Loans which the Borrower proposes to assign to the Agent and upon which the
Borrower is basing the requested Receivables Loan Advance.
3.2 Eligible Projects. All Eligible Consumer Loans shall be
secured by Timeshare Interests at an Eligible Project.
3.2.1 Proposed Additional Projects. The Borrower may
propose additional projects to be included as Eligible Projects. The Agent shall
conduct such review of such projects as the Agent shall deem appropriate,
including, without limitation, review of all timeshare instruments, consumer
loan documents, real estate documents, amenities agreements, management
contracts, marketing contracts, and other documentation related to such project.
The Agent, with the consent of the Required Lenders, shall be entitled to
approve or not approve such proposed project as an Eligible Project.
3.2.2 Acceptance of Additional Projects. Upon the
acceptance by the Agent of a proposed project as an Eligible Project, Schedule
1.19 shall be deemed amended to include such project. The Borrower shall take
such other action as the Agent shall require in connection with such project,
including, without limitation, the subordination of any applicable management
and marketing fees, the filing of any required financing statements, or any
other action as the Agent shall require. Upon the inclusion of an additional
project as an Eligible Project, all representations, warranties and covenants of
the Borrower with regard to the Eligible Projects shall be deemed amended to
refer to the additional Eligible Project.
4. SECURITY INTERESTS; COLLATERAL
4.1 Grants of Security Interest. In order to secure payment of
the Notes and the payment and performance of the obligations of the Borrower
under this Agreement and all other Loan Documents and all liability to the Agent
and the Lenders, now existing or which may hereafter be incurred or arise by
future advances or otherwise, direct or indirect, absolute or contingent
(collectively, the "Indebtedness"), simultaneously with the execution of this
Agreement, the Borrower is granting to the Agent for the pro-rata benefit of
Lenders security interests in the following (collectively, the "Personal
Collateral"):
4.1.1 Consumer Loans. From time to time the Borrower shall
deliver to the Agent the Required Consumer Loan Documents for consumer loans by
the Borrower, and the Borrower hereby pledges to the Agent and grants to the
Agent for the benefit of the Lenders a security interest in all of the
Borrower's right, title and interest in each such consumer loan, now existing or
hereafter arising, (a) for which the original promissory note, comparable
instrument or
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installment sales contract shall from time to time be in the possession of the
Agent or its agents or (b) which shall be identified by the Borrower as being
pledged hereunder by Borrowing Base Certificate or otherwise (collectively,
"Consumer Loan Collateral"). The failure of a loan to satisfy the criteria of an
Eligible Consumer Loan, or the failure of the Borrower to deliver all Required
Consumer Loan Documents shall not in any manner limit the Agent's security
interest in any pledged Consumer Loan Collateral.
4.1.2 Related Rights. The Borrower hereby grants to the
Agent for the pro-rata benefit of the Lenders a security interest in the
following rights now existing or hereafter arising related to Consumer Loan
Collateral (collectively, the "Related Rights"):
4.1.2.1 Rights Under Related Documents. All of the
Borrower's right, title and interest in and under any documents related to each
such consumer loan, including, without limitation, all promissory notes or other
agreements for payment (and specifically including the right to collect all
payments due pursuant to such notes or agreements), loan agreements, mortgages,
or other security documents, guaranties, insurance policies (and specifically
including the right to assert and collect any claims thereunder), title
insurance policies, subordinations, custodial agreements, agency agreements,
servicing agreements, interval ownership agreements, corporate documents,
opinions, instruments, drafts, acceptances, and chattel paper;
4.1.2.2 Rights in Collateral Securing Consumer Loans.
All of the Borrower's right, title and interest in any collateral pledged the
Borrower or in which the Borrower has any lien, mortgage or security interest in
connection with each such consumer loan.
4.1.2.3 Take-Out Commitments. To the extent that such
rights are assignable, all of the Borrower's rights (but not obligations) under
any agreements related to each such consumer loan under which any party agrees
to purchase such loan or any underwriting agreements related to such loan and
all rights to deliver such loan to investors and purchasers pursuant thereto and
all proceeds resulting therefrom;
4.1.2.4 Servicing Rights. All of the Borrower's
rights to administer, service and collect each such consumer loan and all rights
to payment therefor;
4.1.2.5 Escrow Funds. All of the Borrower's rights in
funds paid in connection with such loan escrowed pursuant to any escrow
agreements.
4.1.2.6 Records and Cabinets. All of the Borrower's
related documentation and other supporting evidence related to each such
consumer loan or other Collateral, including, without limitation, computer
programs, disks, tapes and related electronic data processing media,
applications, account cards, payment records, correspondence, insurance
certificates, books of account, ledgers, and cabinets in which the same are
reflected or maintained; and
4.1.2.7 Other Related Rights and Receivables. All of
the Borrower's right, title and interest in any other rights related to each
such consumer loan,
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including, without limitation, accounts, accounts receivable, contract rights,
pre-authorized account debit agreements, rights in reservation systems, and
general intangibles.
4.1.3 Proceeds, Etc. With respect to each of the
Consumer Loan Collateral and Related Rights, all accessions thereto,
substitutions and replacements therefor, additions, renewals and replacements
thereof, all proceeds and products from the sale, exchange, collection,
foreclosure, liquidation or other disposition of any of the foregoing and from
any such proceeds or products, and any proceeds of insurance related thereto.
4.2 Collateral Procedures.
4.2.1 Delivery of Consumer Loan Collateral. The
Borrower shall deliver to the Agent Required Consumer Loan Documents from time
to time to such locations and in such manner acceptable to the Agent as the
Borrower and the Agent shall determine. The Borrower shall take any actions
required by the Agent to obtain the release of any lien or security interest in
favor of any party other than the Agent in any Consumer Loan Collateral. The
Borrower shall pay to the Agent all custodial costs incurred, as determined by
the Agent. With the prior consent of the Agent in each instance, in its sole
discretion, the Borrower shall be entitled to effect delivery to the Agent by
delivery to a custodian approved by the Agent acting on the Agent's behalf at
the Borrower's expense. All consumer loans delivered by the Borrower to the
Agent shall be accompanied by the Required Consumer Loan Documents, and the
Borrower shall be deemed to represent and warrant in connection with all such
loans delivered to the Agent that the certifications required to be included in
the Consumer Loan Cover Sheet are true even if no such cover sheet shall be
delivered by the Borrower. The Borrower shall promptly deliver to the Agent any
additional documents related to any Consumer Loan Collateral which the Borrower
acquires after delivery to the Agent of the Required Consumer Loan Documents.
4.2.2 The Agent's Obligations. The Agent shall be
under no obligation to review or in any manner approve any Consumer Loan
Collateral delivered to the Agent from time to time, although nothing herein
shall preclude the Agent from conducting whatever review it deems appropriate.
The Agent may in its discretion require Consumer Loan Collateral to be delivered
three business days prior to any advance for which such Consumer Loan Collateral
shall be part of the Receivables Loan Borrowing Base. The Agent shall have no
responsibility for taking any steps necessary to preserve rights against other
parties or any other rights pertaining to Collateral. The Agent shall not be
required to perfect or maintain the perfection of its security interests. No
loss of or damage to any Collateral shall release the Borrower from the
Indebtedness. The Agent may, but shall not be obligated to, take such action as
it deems fit and at the Borrower's expense to collect or enforce any loan
pledged to the Agent hereunder which shall be in default and the Agent shall not
be liable to the Borrower for any act or omission taken by it in the collection
or enforcement of such loans. The Agent shall not be liable or responsible in
any way for any loss or damage to the Collateral or any diminution in the value
thereof, except if caused by the Agent's gross negligence or willful misconduct.
The Agent shall not be liable or responsible in any way for any act of any
custodian, carrier, servicer, lock box agent or any other person whatsoever, and
all of the same shall be at the Borrower's sole risk. The Agent and the Lenders
shall not be responsible for any excise, property or other taxes related to the
Collateral or the sale thereof and all such taxes shall be the responsibility of
the Borrower. The grants of security interest herein shall not obligate or be
construed to obligate the Agent to perform any of
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the terms contained in the agreements constituting Consumer Loan Collateral or
otherwise to impose any duty upon the Agent with respect to the same. The
provisions of this Section 4.2.2 shall not in any manner limit the rights of the
Lenders as provided in Section 11 herein.
4.2.3 Release of Collateral. At the Borrower's
request and in the absence of a default or Event of Default, the Agent shall
release Consumer Loan Collateral in the Agent's possession from time to time in
the manner instructed by the Borrower, but only if after such release the
outstanding principal balance of the Loans shall not exceed the Receivables Loan
Borrowing Base, as shown on a Borrowing Base Certificate delivered
simultaneously with a request for release.
4.3 Servicing Agreement and Lock-Box Agreement.
4.3.1 Servicing Agreement. Pursuant to a servicing
agreement (the "Servicing Agreement") among the Borrower and the Agent and the
Borrower as servicer or a replacement servicing agent acceptable to the Agent
(the "Servicer"), the Servicer shall service and administer loans constituting
Consumer Loan Collateral in the ordinary course of business. The Servicer shall
administer all amounts due to the Borrower with respect to the Consumer Loan
Collateral and shall direct payment to Borrower's Account of all amounts
collected with respect to the Consumer Loan Collateral in accordance with a
schedule established by the Agent. All amounts directed by the Servicer to
Borrower's Account shall be applied by the Agent to interest, principal and
other amounts due under the Loans, in the Agent's sole discretion. It is the
intention of the Borrower and the Agent to create an absolute assignment of all
such payments. The Servicer shall provide to the Agent such reports and perform
such other functions as the Agent shall require. Upon a default or Event of
Default, the Agent shall be entitled (but not obligated) to assume the
administration and servicing of all loans constituting Collateral at any time
(after giving required notices to consumer borrowers). For good cause, the Agent
shall be entitled to establish a substitute servicing arrangement with a
servicer acceptable to the Required Lenders at any time.
4.3.2 Lock Box Agreement. Pursuant to a lock box
agreement (the "Lock Box Agreement") among the Borrower, the Agent and Chase
Bank of Texas, N.A. or a replacement lock box agent acceptable to the Agent
("the "Lock Box Agent"), the Lock Box Agent shall collect payments on loans
constituting Collateral in the ordinary course of business. The Lock Box Agent
shall pay to Borrower's Account all payments collected with respect to the
Consumer Loan Collateral in accordance with a schedule established by the Agent.
All amounts paid by the Lock Box Agent to Borrower's Account shall be applied by
the Agent as provided in Section 2.2. It is the intention of the Borrower and
the Agent to create an absolute assignment of all such payments. Upon a default
or Event of Default, the Agent shall be entitled (but not obligated) to assume
the administration of the lock box and collect payments on loans constituting
Collateral at any time. For good cause, the Agent shall be entitled to establish
a substitute lock box arrangement with a substitute lock box agent acceptable to
the Agent at any time.
4.3.3 Indemnification. The Borrower hereby
indemnifies and holds the Agent and the Lenders harmless from and against all
liability, loss, damage or expense (including reasonable attorney's fees) in any
way related to the Servicing Agreement or the Lock Box Agreement, including,
without limitation, any alleged obligation or undertaking on the Agent's
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part to perform or discharge any of the terms, covenants and conditions
contained in the Servicing Agreement or the Lock Box Agreement.
4.3.4 Borrower's Covenants. Borrower shall (a)
exercise all reasonable efforts to force or secure the performance of each and
every obligation, covenant, condition and agreement to be performed by the
Servicer under the Servicing Agreement and the Lock Box Agent under the Lock Box
Agreement; and (b) in a timely manner perform, and not suffer or permit any
default in, any of Borrower's obligations under the Servicing Agreement or the
Lock Box Agreement.
4.4 Further Security. The Borrower hereby grants to the
Agent and the Lenders a first lien security interest in any and all property
which is or may hereafter be in the Agent's or any Lenders' possession in any
capacity, including, without limitation, all moneys owed, or to be owed, by the
Agent or any Lender to the Borrower. Without limiting any other right of the
Agent or any Lender, and without requiring the Agent or any Lender to first
proceed against any other security interest, whenever the Agent or the Lenders
have the right to declare the Notes to be immediately due and payable (whether
or not they have so declared), the Agent and each Lender, at its option, may set
off against the Indebtedness any and all moneys then owed by the Agent or any
Lender to the Borrower in any capacity, whether or not due; and the Agent or any
Lender shall be deemed to have exercised such right of set off immediately at
the time of such election even though any charge therefor is made or entered on
the Agent's or the Lender's records subsequent thereto.
4.5 Filing and Recording. The Borrower shall, at its cost
and expense, cause all instruments and documents evidencing the security
interests given pursuant to this Agreement, including, without limitation, UCC-1
financing statements (the "Financing Statements") to be duly recorded and/or
filed in all places necessary, in the opinion of the Agent, to perfect and
protect the lien or security interest of the Agent. At the Agent's request at
any time, the Borrower shall, at its expense, cause all assignments of deeds of
trust included in the Required Consumer Loan Documents to be recorded,
re-recorded or filed in all places necessary in the opinion of the Agent to
perfect the interests of the Agent. The Borrower hereby irrevocably designates
the Agent, its agents, representatives and designees as agents and
attorneys-in-fact for the Borrower to sign on behalf of the Borrower and file
any assignment of mortgage or financing statement or extension of financing
statement in respect of any mortgage, deed of trust or security interest created
pursuant to this Agreement which may at any time be required or which, in the
opinion of the Agent, may at any time be desirable. In the event that any
re-recording or refiling thereof (or the filing of any statement) is required to
protect or preserve such lien or security interest hereunder, the Borrower shall
at its cost and expense, cause the same to be re-recorded or refiled at the time
and in the manner requested by the Agent. The Borrower shall pay on demand all
reasonable costs and expenses of the Agent in connection with any such filing
and recording.
5. REPRESENTATIONS AND WARRANTIES
In connection with the execution of this Agreement and the Loan
Documents and to induce the Agent and the Lenders to make the Loans, the
Borrower represents and warrants (and, so long as any Indebtedness shall remain
outstanding shall be deemed to represent and warrant continuously) to the Agent
and the Lenders as follows:
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5.1 Authority; No Violation of Agreements. The Borrower is a
corporation, duly organized, validly existing and in good standing under the
laws of the State of Texas and under the laws of every state in which the
conduct of its business requires it to so qualify or be licensed. The Borrower
has filed all documents and registrations, including tradename registrations,
required by the laws of the State of Texas and any other states in which the
conduct of its business requires it to so qualify or be licensed. The Borrower
has the power and authority to (a) own and operate its property and conduct its
business and (b) execute and deliver the Loan Documents and perform the
transactions contemplated thereby. The execution and delivery of the Loan
Documents and the performance of the transactions contemplated thereby by the
Borrower (i) have been duly authorized by all necessary corporate action and
(ii) do not and will not constitute a breach or violation of (a) any mortgage,
deed of trust, lease, loan or credit agreement, trust agreement, by-laws,
shareholders agreement or other instrument or contract to which the Borrower is
a party or by which it may be bound or affected or (b) any law, administrative
regulation or court decree or any obligation by which the Borrower is bound. The
consent or approval of any Governmental Authority is not required for the
Borrower to execute and deliver the Loan Documents and perform the transactions
contemplated thereby. The Borrower is not in default under any indenture,
mortgage, deed of trust, agreement or other instrument to which it is a party or
by which it may be bound or affected. No consent, approval, order or
authorization of, or registration with, any governmental authority, trustee, or
any other person is required in connection with the valid execution and delivery
of this Agreement or any other Loan Documents by the Borrower, or any other
party thereto, or the performance by the Borrower or any other party thereto of
the transactions contemplated hereby or thereby.
5.2 Associations. Each Association is a corporation or
unincorporated association duly organized, validly existing and in good standing
under the laws of the jurisdiction where the respective Eligible Project is
located. Each Association at the following Eligible Projects: Xxxxx Lake Resort,
Piney Shores Resort, The Villages (including Lake O' The Xxxxx), Hill Country
Resort, Seaside Resort, Ozark Mountain Resort, Holiday Hills Resort, Timber
Creek Resort, Fox River Resort, Oak N' Spruce Resort, Apple Mountain Resort and
Beech Mountain Resort, is a Member of Silverleaf Club. Each of the Associations
and Silverleaf Club has the power and authority to own and operate its property,
perform its obligations under the Timeshare Documents, and conduct its business
as it is now being conducted or as proposed to be conducted. Each Association
has the authority to levy annual assessments to cover the costs of maintaining
and operating the respective Eligible Project. Any lien for unpaid assessments
in favor of any Association or Silverleaf Club shall at all times be subordinate
to any lien securing an Eligible Consumer Loan and to any lien in favor of the
Agent or any Lender.
5.3 Shareholders; Subsidiaries. Schedule 5.3 attached hereto
and incorporated herein contains a list of all of the Borrower's Subsidiaries
and the percentage of issued and outstanding shares of each class of capital
stock or equivalent issued by or owned by the Borrower. Each Subsidiary is duly
organized, validly existing and in good standing under the laws of its state of
incorporation and in every state in which the conduct of its business requires
it to so qualify or be licensed, except where the failure to be so qualified and
in good standing does not have a material adverse affect on the Borrower's
financial condition or on the Borrower's ability to exercise its rights in any
Consumer Loan Collateral. No such Subsidiary has any ownership or security
interest in the Collateral.
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5.4 Validity of Loan Documents. This Agreement and all other
Loan Documents contemplated hereby are valid, binding and enforceable in
accordance with their terms.
5.5 Absence of Actions. There is no pending or threatened
action or proceeding against or affecting the Borrower before any court,
governmental agency, arbitrator, or otherwise which may, in one case or in the
aggregate, materially adversely affect the validity or enforceability of this
Agreement, or the priority of the lien thereof, or the financial condition,
operations, properties, or business of the Borrower or, which would prevent or
impair the Borrower from complying with or performing any of the provisions of
this Agreement or the other Loan Documents. The Borrower is not in default with
respect to any statute, rule, judgment, decision, order, writ, injunction,
decree, or demand of any court or any governmental authority.
5.6 Good Title to Borrower's Property. The Borrower has good
and marketable title to the Collateral free and clear of all liens, mortgages,
pledges, security interests, encumbrances and charges of any kind except for
Permitted Encumbrances, and the Borrower shall defend the Collateral against all
claims and demands of all persons at any time claiming the same or any interest
therein adverse to any Agent or any Lender. This Agreement, the Financing
Statements and the delivery to the Agent from time to time of Required Consumer
Loan Documents create valid, perfected first priority security interests in the
Collateral and in all collateral securing the loans pledged as Consumer Loan
Collateral. The Borrower has not pledged or granted a security interest in any
part of the Collateral to any other lender, and no part of the Collateral is
identified on any uniform commercial code financing statement filed in favor of
any other lender.
5.7 Assignability. Each Required Consumer Loan Document
delivered and/or assigned to the Agent in connection with each loan pledged as
Consumer Loan Collateral contains no prohibitions on assignment (other than
prohibitions which have been waived with all necessary consents obtained), and
upon the exercise of the Agent's or the Lender's rights as secured party, the
Agent or the Lenders shall be entitled to the same benefits pursuant to each
such document as the Borrower is entitled.
5.8 Taxes. The Borrower has filed or caused to be filed all
federal, state, and local tax returns required to be filed and has paid or
caused to be paid all taxes, assessments, and governmental charges and levies
thereon, including any interest and penalties, to the extent the same have been
due. The Borrower has set up reserves which are believed by the Borrower to be
adequate for the payment of such taxes for the years that have not been audited
by the respective tax authorities. Nothing contained in this subsection shall
prevent the Borrower from contesting in good faith any tax assessment assessed
against the Borrower so long as adequate reserves for payment of the same have
been made and verified to the Agent.
5.9 Financial Condition. The balance sheets, statements of
income and retained earnings, federal tax returns, and other financial
statements and financial data of the Borrower furnished to the Agent to induce
the Agent and the Lenders to enter into this Agreement are complete and correct
and fairly present the financial condition of Borrower, as of the dates thereof
and the results of the operations of Borrower, for the periods covered by such
statements,
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all in accordance with generally accepted accounting principles consistently
applied. There are no liabilities of Borrower, fixed or contingent, which are
material but are not reflected in the financial statements and notes thereto
supplied to the Agent. The Borrower has paid no dividends and has made no
distributions (of cash or property) to its shareholders or partners or members
since the date of such financial statements, which distributions are not
reflected in the financial statements. There has been no material adverse change
in the business, operations or condition, financial or otherwise, of the
Borrower since the date of the most recent financial statements delivered to the
Agent.
5.10 No Untrue or Omitted Statements. No part of the Loan
Documents or any certificate or statement furnished by or on behalf of the
Borrower to the Agent or the Lenders contains or shall contain any material
misstatement of fact or omits to state a material fact or any fact necessary in
order to make the statements contained herein or therein not misleading. To the
best knowledge of the Borrower there is no fact (other than facts relating to
general economic conditions) which materially adversely affects the business,
operations, affairs, conditions, properties or assets of the Borrower which has
not been set forth in a document, certificate or statement furnished to the
Agent prior to or on the date of delivery hereof.
5.11 Location of Borrower's Offices and Records. The chief
place of business of the Borrower and the office where the Borrower keeps its
records concerning any of the Collateral is located at 0000 Xxxxxxxxx, Xxxxx
000, Xxxxxx, Xxxxx.
5.12 Operation of Business. The Borrower possesses all
licenses, permits, franchises, patents, copyrights, trademarks, and tradenames,
or rights thereto, necessary to conduct the Borrower's business substantially as
now conducted and as presently proposed to be conducted, and is not in violation
of any valid rights of others with respect to any of the foregoing. The
Borrower's buildings and the operation of the Borrower's business and each
Eligible Project comply with all zoning, environmental, public health and
safety, banking, securities, lending and other similar laws and regulations.
5.13 The Projects. Each Eligible Project has and will have
adequate access from a publicly dedicated street, and is and will be constructed
and operated in compliance with all applicable laws and regulations, served by
utilities necessary for its intended use, and prior to any occupancy furnished
and equipped and ready for occupancy. All amenities for each Eligible Project
which have been offered to purchasers of Timeshare Interests or referred to in
any offering materials are or prior to any occupancy will be available to
consumer borrowers. Each Timeshare Instrument for each Eligible Project has been
recorded in the real property records where such project is located and
otherwise filed in accordance with all applicable laws and regulations.
5.14 Sale of Timeshare Interests. The marketing, sale,
offering for sale, rental solicitation of purchasers and financing of Timeshare
Interests: (a) will not constitute the sale, or the offering for sale, of
securities subject to the registration requirements of the Securities Act of
1933, as amended, or any state securities law applicable to such sale or offer
for sale; (b) will not violate any Timeshare Act, or any land sales or consumer
protection law, statute or regulation of state or any other state or
jurisdiction in which sales or solicitation activities occur; and (c) will not
violate any consumer credit or usury statute of the State of Texas or any other
state or
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jurisdiction in which sales or solicitation activities occur. All marketing and
sales activities will be performed by Borrower's employees or by independent
contractors or agents of the Borrower, all of whom are and will be properly
licensed in accordance with applicable laws. There shall be no
misinterpretations by the Borrower or any of its employees or selling agents
with respect to any matter relating to any Eligible Project or the sale or
financing of Timeshare Interests.
5.15 Tangible Property. The machinery, equipment, fixtures,
tools and supplies used or to be used in connection with each Eligible Project,
including without limitation, with respect to the operations and maintenance of
the common areas, are or will be owned or leased either by the Borrower,
Silverleaf Club or the respective Association. The Borrower will obtain such
non-disturbance and estoppel agreements as the Agent may reasonably require for
any tangible property necessary to the ownership, operation or maintenance of
each Eligible Project which is not owned by the Borrower, Silverleaf Club or the
respective Association.
5.16 Subordination. There is no indebtedness of the Borrower
presently owing to any affiliate or shareholder of the Borrower except as
described on Schedule 1.62 attached hereto. All indebtedness at any time owing
by the Borrower to any affiliate or shareholder of the Borrower shall be
unsecured and shall be absolutely subordinated to the Indebtedness, which
subordination shall be evidence by a Subordination Agreement acceptable to the
Lenders.
5.17 Financing Statement Filing Locations. Schedule 5.17
attached hereto and incorporated herein lists the locations where the Financing
Statements have been or will be filed. Those locations are the only locations
necessary for filing the Financing Statements in order to perfect the security
interests in the Collateral described therein capable of being perfected by the
filing of financing statements.
5.18 Environmental Compliance. The Borrower and each Eligible
Project are in full compliance with any and all environmental, hazardous waste,
or hazardous substance rules or regulations arising out of any federal, state,
or local law (collectively, "Environmental Regulations"). There has been no use
of any Eligible Project, and there are no materials present at the Eligible
Project, that would give rise to liability under any Environmental Regulations.
The Borrower's business and use of each Eligible Project, as presently conducted
and as conducted in the future, and the Eligible Project, will not give rise to
any liability under any Environmental Regulations, and Borrower shall keep its
business and each Eligible Project in full compliance therewith. The Borrower
shall indemnify and hold harmless the Agent and the Lenders from any and all
costs, expenses, and liability relating to the Borrower or any Eligible Project
arising out of any Environmental Regulations.
5.19 Employee Benefit Plans. Each Employee Benefit Plan has
been maintained and operated in compliance in all material respects with the
provisions of ERISA and, to the extent applicable, the Code, including but not
limited to the provisions thereunder respecting prohibited transactions. The
Borrower has heretofore delivered to the Agent its most recently completed
annual report on Form 5500, with all required attachments, and actuarial
statements required to be submitted under Section 103(d) of ERISA, with respect
to each Guaranteed Pension Plan. Each contribution required to be made to a
Guaranteed Pension Plan, whether required to be made to avoid the incurrence of
an accumulated funding deficiency, the notice or
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lien provisions of Section 302(f) of ERISA, or otherwise, has been timely made.
No waiver of an accumulated funding deficiency or extension of amortization
periods has been received with respect to any Guaranteed Pension Plan. No
liability to the PBGC (other than required insurance premiums, all of which have
been paid) has been incurred by the Borrower or any ERISA Affiliate with respect
to any Guaranteed Pension Plan and there has not been any ERISA Reportable
Event, or any other event or condition which presents a material risk of
termination of any Guaranteed Pension Plan by the PBGC. Based on the latest
valuation of each Guaranteed Pension Plan (which in each case occurred within
twelve months of the date of this representation), and on the actuarial methods
and assumptions employed for that valuation, the aggregate benefit liabilities
of all such Guaranteed Pension Plans within the meaning of Section 4001 of ERISA
did not exceed the aggregate value of the assets of all such Guaranteed Pension
Plans, disregarding for this purpose the benefit liabilities and assets of any
Guaranteed Pension Plan with assets in excess of benefits liabilities.
5.20 Use of Proceeds/Margin Stock. None of the proceeds of the
Loans will be used to purchase or carry any "margin stock"(as defined by
Regulation U of the Board of Governors of the Federal Reserve System, as in
effect from time to time), and no portion of the proceeds of the Loans will be
extended to others for the purpose of purchasing or carrying margin stock. None
of the transactions contemplated in this Agreement (including, without
limitation, the use of the proceeds from the Loans) 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. The Borrower is not an investment company as defined by the Investment
Company Act of 1940, as amended, and is not required to register under said Act.
5.21 Real Property Taxes; Special Assessments. There are no
unpaid or outstanding real estate or other taxes or assessments on or against
any Eligible Project or any part thereof which are payable by the Borrower
(except only real estate taxes not yet due and payable). The Borrower has
delivered to the Agent true and correct copies of real estate tax bills for each
Eligible Project for the past fiscal tax year. No abatement proceedings are
pending with reference to any real estate taxes assessed against the Real
Property. There are no betterment assessments or other special assessments
presently pending with respect to any part of any Eligible Project, and the
Borrower has received no notice of any such special assessment being
contemplated.
5.22 Violations. The Borrower has received no notices of, and
has no knowledge of, any violations of any applicable Requirements.
5.23 Broker. No broker, agent, finder or intermediary has
acted on the Borrower's behalf in connection with the negotiation of this
Agreement or the consummation of the transactions contemplated hereby.
5.24 Survival. The Borrower understands and agrees that the
Agent and the Lenders are relying upon the above representations and warranties
in extending the Loans to the Borrower. The foregoing representations and
warranties shall be continuing in nature and shall remain in full force and
effect until such time as the Indebtedness shall be paid in full, or until this
Agreement shall be terminated, whichever is the last to occur.
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6. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that, except with the prior written
consent of the Agent, so long as the Notes or any Indebtedness shall remain
outstanding, in whole or in part, or the Agent or the Lenders shall have any
commitment under this Loan Agreement, the Borrower shall comply with each of the
following covenants:
6.1 Financial Statements and Other Information. The Borrower
shall furnish to the Agent:
6.1.1 Audited Annual Statement of Borrower. Within
120 days after the close of each fiscal year, audited consolidated and
consolidating financial statements relating to the Borrower, including a balance
sheet, statement of income and retained earnings as of the end of that fiscal
year setting forth corresponding figures for the previous fiscal year in
comparative form, all such statements to be prepared in accordance with
generally accepted accounting principles consistently applied by an independent
certified public accountant acceptable to the Agent, and accompanied by copies
of all management letters from such accountant to the Borrower or their
directors or members.
6.1.2 10-K. Within 120 days after the close of each
fiscal year, a copy of the Borrower's Form 10-K as filed with the Securities and
Exchange Commission.
6.1.3 Quarterly Statement of Borrower. Within 45 days
after the close of each fiscal quarter, unaudited financial statements in the
form described in Section 6.1.1.
6.1.4 10-Q. Within 45 days after the close of each
fiscal quarter, a copy of the Borrower's Form 10-Q as filed with the Securities
and Exchange Commission.
6.1.5 Tax Returns. Within 30 days after filing, a
copy of the federal income tax return for the Borrower and the Association, with
all schedules.
6.1.6 Annual Statement of Associations. Within 120
days after the close of each fiscal year, annual reports required by each
relevant Timeshare Act, or such other management prepared financial statements
of Silverleaf Club containing information concerning each Eligible Project
satisfactory to the Agent.
6.1.7 Budgets. No later than 60 days prior to the
start of any fiscal year, the Borrower shall submit to the Agent detailed
operating budgets (broken down by month) for the Borrower for the upcoming
fiscal year in form acceptable to the Agent. Each such budget shall be subject
to the Agent's approval. The financial statements and reports referred to in
Sections 6.1.1, 6.1.2, 6.1.3, 6.1.4, 6.1.5, 6.1.6, and 6.1.7 are collectively
referred to herein as "Financial Statements".
6.1.8 Monthly Consumer Loan Reports. No later than
the tenth (10th) day of each month, the Borrower shall furnish to the Agent or
cause the Servicer to furnish to Agent, three copies of a report in form and
content acceptable to the Agent prepared by the Borrower or the Servicer,
certified by an Authorized Officer, and showing, with respect to each
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of the loans constituting Consumer Loan Collateral as of the close of business
on the last day of the calendar month last ended:
6.1.8.1 The account number;
6.1.8.2 Name(s) of consumer borrowers;
6.1.8.3 Original principal amount of such
consumer loan;
6.1.8.4 Any payment, including any prepayment,
received on account of such consumer loan during the period covered by the
statement;
6.1.8.5 A cash receipts journal;
6.1.8.6 The opening and closing principal
balance;
6.1.8.7 Any consumer loans constituting
Consumer Loan Collateral cancelled during the period covered by such statement;
6.1.8.8 Any delinquency of principal and
interest payments on a 30-60-90 day basis;
6.1.8.9 Any delinquency of principal, interest
or assessments in excess of 90 days;
6.1.8.10 The average consumer interest rate
for such consumer loan;
6.1.8.11 Any extensions, refinances or other
adjustments to such consumer loan; and
6.1.8.12 Such other information as the Agent
or Lenders may request.
6.1.9 Monthly Sales Reports. No later than the tenth
day of each month, the Borrower shall deliver to the Agent a sales and
cancellation report indicating the sales and cancellation activity with respect
to each Eligible Project for the preceding calendar month showing such detailed
information as the Agent may request.
6.1.10 Monthly Inventory Report. No later than the
tenth day of each month, the Borrower shall deliver to the Agent an inventory
report in form satisfactory to the Agent indicating the number of Timeshare
Interests sold and unsold at each Eligible Project, identified by Unit and type
or color of Timeshare Interest.
6.1.11 Amended Consumer Loans. Not later than the
tenth day of each month, the Borrower shall deliver to the Agent a report in
form satisfactory to the Agent indicating the performance of each Eligible
Consumer Loan pledged as collateral described in Section 1.18.9(b) and
1.18.9(c).
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6.1.12 Additional Information. With reasonable
promptness, such other information relating to the Collateral, each Eligible
Project, and the business, operations and financial condition of the Borrower as
the Agent and the Lenders may reasonably request from time to time. The Agent
and the Lenders, pursuant to an authorized request and after prior notification
to the Borrower, are hereby authorized to deliver a copy of any financial
statement or any other information relating to the business, operations or
financial condition of the Borrower which may be furnished to it or come to its
attention pursuant to this Agreement or otherwise, to any regulatory body or
agency having jurisdiction over the Agent or the Lenders or to any person which
has, or shall have any right or obligation to succeed to all or any part of the
Agent's or the Lender's interest in this Agreement.
6.2 Statements as to Defaults and Computations. With each of
the statements referred to in Sections 6.1.1 and 6.1.3 hereof, an Authorized
Officer of the Borrower shall certify to the Agent (a) the Interest Coverage
Ratio, Tangible Capital Funds, and the Marketing Ratio, and (b) (1) that as of
the date of the statements, no event has occurred and is continuing to occur and
no condition exists which constitutes or, after notice or lapse of time or both,
would constitute a default or event of default under any of the Loan Documents
or (2), if any such event has occurred and is continuing or such condition
exists, such statement shall specify the nature and period of existence thereof
and the action proposed to be taken with respect thereto. The Borrower shall
immediately give notice to the Agent upon the occurrence of an Event of Default.
6.3 Taxes and Claims. The Borrower shall duly pay and
discharge (a) all taxes, assessments and governmental charges upon or against it
or its properties or assets prior to the date on which penalties attach thereto,
unless and to the extent that such taxes are being diligently contested in good
faith by appropriate proceedings, and appropriate reserves therefor have been
established with the consent of the Agent, and (b) all lawful claims, whether
for labor, materials, supplies, services or anything else which could, if
unpaid, become a lien or charge upon the Collateral, unless and to the extent
that the same are being diligently contested in good faith and by appropriate
proceedings and appropriate reserves therefor have been established with the
consent of the Agent.
6.4 Insurance. During the following times the Borrower shall
maintain the following insurance coverage:
6.4.1 Fire and Extended Coverage. At all times during
the term of this Agreement, the Borrower shall maintain insurance of each
Eligible Project against loss by fire, windstorm and other hazards, with minimum
coverage equal to the replacement cost of each Eligible Project.
6.4.2 Public Liability Insurance; Etc. At all times
during the term of this Agreement, the Borrower shall maintain broad form
coverage public liability insurance with minimum coverage of Five Million
Dollars. The amount of such coverage shall be reviewed annually by the Agent and
may, in the Agent's sole discretion and at the Borrower's expense, be increased
or decreased during the term of this Agreement. The Borrower shall obtain a new
or
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revised policy within 20 days of receipt of notice from the Agent of a revision
in the amount of public liability insurance required.
6.4.3 Flood Insurance. If any of the improvements now
or hereafter construed on the real property at any Eligible Project are within
an area designated by the Director of the Federal Emergency Management Agency,
pursuant to the Flood Disaster Protection Act of 1973, as amended, as one having
special flood hazards, the Borrower shall maintain flood insurance to the
maximum limit of coverage available.
6.4.4 Workers' Compensation Insurance. The Borrower
shall maintain workers' compensation insurance and such other insurance as shall
be necessary or prudent for the operation of the Borrower's business, all with
minimum coverage at least equal to that in effect on the date of this Agreement.
6.4.5 Evidence of Insurance. The Borrower shall pay
all premiums for and take all other actions to maintain in full force the effect
the insurance required by this Section 6.4. The Borrower shall ensure that no
such policies shall be cancelled except after 30 days' prior notice by the
insurance carrier to the Agent, and that the Agent for the pro-rata benefit of
the Lenders shall be named as additional insured, mortgagee and loss payee on
such policies. The Borrower shall, from time to time upon the Agent's request,
promptly furnish or cause to be furnished to the Agent and the Lenders, evidence
of the maintenance of the insurance required by this Section 6.4, including,
without limitation, such originals or copies as the Agent may request of
policies, certificates of insurance, riders and endorsements relating to such
insurance and proof of premium payments.
6.4.6 Consumer Borrower's Title Insurance. In
connection with twenty percent of the principal amount of the loans pledged
under this Agreement in connection with each Eligible Project (other than Oak N'
Spruce Resort),the Borrower shall provide a mortgagee title insurance policy in
favor of the Agent for the pro-rata benefit of the Lenders on a current ALTA
Loan Policy Form issued by a title insurance company qualified to do business in
Texas or the jurisdiction of the respective Eligible Project and acceptable to
the Agent issued in the full amount of the loans covered by such policy and
insuring that the mortgage or deed of trust referred to in Section 1.56.2 is not
subject to any prior lien or encumbrance, other than Permitted Encumbrances,
substantially in the form of the specimen policy for each Eligible Project
attached as Schedule 6.4.6 attached hereto (each a "Title Policy" and
collectively, the "Title Policies"). The title Policies shall contain only those
exceptions approved by the Agent, in writing, and shall contain affirmative
insurance for real estate taxes, matters of survey and against mechanics liens.
Any material deviation from such specimen policy shall require the Agent's
consent. If the Agent or the Lenders at any time shall determine that title to
any Consumer Loan Collateral or the assignment to the Agent of the Borrower's
rights in such Consumer Loan Collateral shall be defective in any respect, the
Borrower shall within 60 days after a request by the Agent provide to the Agent
and the Lenders title insurance in favor of the Agent for the pro-rata benefit
of the Lenders acceptable to the Agent for 100% of the principal amount of
Consumer Loan Collateral pledged hereunder.
6.5 Books and Reserves. The Borrower shall (a) maintain at all
times true and complete books, records and accounts in which true and correct
entries shall be made of all
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business transactions in accordance with generally accepted accounting
principles; and (b), by means of appropriate entries, reflect in its accounts
and in all Financial Statements, prior liabilities and reserves for all taxes
from which the Borrower is not otherwise exempt and proper reserves for
depreciation, renewals and replacements, obsolescence and amortization of its
properties and bad debts, all in accordance with generally accepted accounting
principles consistently applied.
6.6 Inspection of Books and Records. The Borrower shall permit
the Agent, each of the Lenders, or their authorized attorneys, accountants, and
representatives to examine the books, accounts, records, ledgers and assets of
every kind and description of the Borrower at all reasonable times upon oral or
written request of the Agent or the Lenders, such examination to include the
making of copies and abstracts of such materials at the Borrower's expense.
Until a default or Event of Default shall occur, the Agent shall make no more
than one such examination per year, in addition to audits as provided in Section
8.2 herein. The Agent shall offer to each of the Lenders the opportunity to
participate in any such examination.
6.7 Preserve Collateral. The Borrower shall: (a) keep the
Collateral in good repair, working order and condition; (b) operate its business
in compliance with all applicable laws, statutes, ordinances, rules and
regulations; (c) not waste or destroy the Collateral; (d) defend the Collateral
against the claims and demands of all other parties; (e) permit the Agent or the
Lenders or their representatives or designee to inspect the Collateral at all
times upon prior notice to the Borrower; and (f) prevent the Collateral or any
part thereof from being or becoming an accession to other goods not covered by a
security interest in favor of the Agent created by the Loan Documents or from
being or becoming a fixture.
6.8 Notice of Loss. If any Collateral shall be materially
damaged or destroyed, the Borrower shall immediately notify the Agent and the
Lenders.
6.9 Notification of Litigation. The Borrower shall promptly
inform the Agent and the Lenders of the commencement of any material (which in a
situation involving monetary claims shall have in excess of $50,000 in dispute)
action, suit, proceeding or investigation against it or the making of any
counterclaim against it in any action, suit or proceeding.
6.10 Preserve Existence. The Borrower shall preserve and
maintain its name, existence and good standing in the jurisdiction of its
organization and qualify and remain qualified as a foreign corporation in each
jurisdiction in which such qualification is required.
6.11 Permits. Borrower, its employees, servants and agents
have and will have all licenses, registrations, approvals and other authority as
may be necessary to enable them to own and operate their business, to perform
all services which they have agreed to perform in any state, municipality or
other jurisdiction, to sell Timeshare Interests, to finance the sale of
Timeshare Interests and operate the Projects.
6.12 Underwriting Criteria. All Eligible Consumer Loans
pledged to the Agent pursuant to this Loan Agreement will be consistent with
the Borrower's general underwriting criteria as of the date of this Agreement.
The Borrower shall not materially alter its general underwriting criteria
without prior approval of the Agent.
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6.13 Agreements Constituting Collateral. The Borrower shall
comply with all terms of any agreements related to any Consumer Loan Collateral,
and the Borrower shall immediately notify the Agent and the Lenders of any
defaults or events of defaults under any such agreements. Except for prepayments
in the ordinary course of business and except for revised payment plans as
provided for in Section 1.18.9 (b), the Borrower shall not modify, compromise,
extend, rescind or cancel any agreements related to Consumer Loan Collateral
without the prior consent of the Agent, which shall not be unreasonably
withheld.
6.14 Additional Costs, Etc. If any present or future
applicable law, which expression, as used herein, includes statutes, rules and
regulations thereunder and interpretations thereof by any competent court or by
any governmental or other regulatory body or official charged with the
administration or the interpretation thereof and policies, requests, directives,
instructions, guidelines and notices at any time or from time to time thereafter
made upon or otherwise issued to the Agent or any Lender by any central bank or
other fiscal, monetary or other authority (whether or not having the force of
law), shall:
(a) subject the Agent or the Lenders to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to
this Agreement, the other Loan Documents or the Loans (other than taxes
based upon or measured by the income or profits of the Agent or the
Lenders); or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to the Agent or the Lenders of
the principal of or the interest on the Loans or any other amounts
payable to the Agent or the Lenders under this Agreement or the other
Loan Documents; or
(c) impose or increase or render applicable (other than to the extent
specifically provided for elsewhere in this Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other
similar requirements (whether or not having the force of law) against
assets held by, or deposits in or for the account of, or loans by, or
commitments of an office of the Agent or the Lenders; or
(d) impose on the Agent or the Lenders any other conditions or
requirements with respect to this Agreement, the other Loan Documents,
or the Loans; and the result of any of the foregoing is:
(i) to increase the cost to the Agent or the Lenders of making,
funding, issuing, renewing, extending or maintaining the Loans; or
(ii) to reduce the amount of principal, interest or other amount
payable to the Agent or the Lenders hereunder on account of the Loans; or
(iii) to require the Agent or the Lenders to make any payment or to
forego any interest or other sum payable hereunder, the amount of which payment
or foregone interest or other sum is calculated by reference to the gross amount
of any sum receivable or deemed received by the Agent or the Lenders from the
Borrower hereunder, then, and in each such case, the Borrower shall, upon demand
made by the Agent or the Lenders at any time and from time to time and as
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often as the occasion therefor may arise, pay to the Agent for the pro-rata
benefit of the Lenders such additional amounts as will be sufficient to
compensate the Agent and the Lenders for such additional cost, reduction,
payment or foregone interest or other sum.
6.15 Capital Adequacy. If any present or future law affects
the amount of capital required or expected to be maintained by the Agent or the
Lenders or any corporation controlling the Agent or the Lenders and the Agent or
any Lender shall determine that the amount of capital required to be maintained
by it is increased by or based upon the existence of the Loans made or deemed to
be made pursuant hereto, then the Agent or the Lenders may notify the Borrower
of such fact, and the Borrower shall pay to the Agent or the Lenders from time
to time on demand, as an additional fee payable hereunder, such amount as the
Agent or the Lenders shall determine in good faith and certify in a notice to
the Borrower to be an amount that will adequately compensate the Agent and the
Lenders in light of these circumstances for the Agent's or the Lender's
increased costs of maintaining such capital. The Agent and the Lenders shall
allocate such cost increases among their customers in good faith and on an
equitable basis.
6.16 Tangible Capital Funds. At all times, the Borrower shall
maintain Tangible Capital Funds equal to or greater than (a) $200,000,000 plus
(b) (i) 75% times (ii) the sum of Net Income for each fiscal quarter commencing
with the fiscal quarter next ending after the date of this Agreement through the
fiscal quarter most recently ended.
6.17 Interest Coverage. As of the end of each fiscal quarter
for the four fiscal quarters then ended, the Borrower shall maintain a ratio
(the "Interest Coverage Ratio") of (1) EBITDA divided by (2) Consolidated
Interest Expense of no less than 2.0 to 1.
6.18 Marketing Expense. As of the end of each fiscal quarter
for the four fiscal quarters then ended, the Borrower shall maintain for each
Eligible Project and for the Borrower a ratio (the "Marketing Ratio") of (1)
promotion, lead generation, sales, commission and all marketing expenses
pursuant to the Marketing Agreement or any other marketing contract, divided by
(2) the aggregate of the purchase prices for each Unit during such period, of no
more than .55.
6.19 Subordination. All indebtedness to officers or
shareholders of the Borrower now existing or hereafter arising, including
Subordinated Shareholder Debt and fees payable to affiliated entities, if any,
shall be subordinated to the Indebtedness pursuant to subordination agreements
acceptable to the Agent (the "Subordination Agreements"). The Indebtedness
constitutes "Designated Senior Debt" as defined in the Indenture dated as of
April 1, 1998 among the Borrower, Borrower's Subsidiaries and Norwest Bank
Minnesota, National Association.
6.20 Sales of Timeshare Interests. The Borrower will sell or
offer for sale Timeshare Interests only in Texas and such other jurisdictions
listed on Schedule 6.20 where the Borrower has completed all registrations
consistent with applicable requirements. All sales will be made in compliance
with all Requirements and utilizing then current disclosure materials approved
as required by all Governmental Authorities. Before it sells or offers for sale
Timeshare Interests in any other jurisdictions, the Borrower will notify the
Agent and provide the Agent with evidence satisfactory to the Agent that the
Borrower has complied with all laws of such jurisdiction governing its proposed
conduct.
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6.21 Consumer Documents. The Borrower represents to and agrees
with Agent that the consumer loan documents in the forms previously delivered to
the Agent are the only documents which have been or will be used in connection
with the credit sale of Timeshare Interests and that the Borrower shall not
materially modify or amend, or permit the modification or amendment of, any such
consumer loan documents or use or permit the use by others of any other or
additional documents in connection with the credit sale of Timeshare Interests,
except with the consent of the Agent, or as reasonably requested by the Agent in
order to meet any of the Requirements or to protect the Agent's security
interest therein. If any such consumer loan document shall be modified or
amended or if any additional document shall be used in connection with the
credit sale of Timeshare Interests, the Borrower shall immediately provide to
the Agent an accurate and complete copy of such consumer loan document as so
modified or amended and of any such additional document.
6.22 Collection. The Borrower will undertake the diligent and
timely collection of all amounts due under each consumer loan in connection with
the credit sale of a Timeshare Interests, including the Consumer Loan
Collateral, and will bear the entire expense of such collection.
7. NEGATIVE COVENANTS. From the date hereof until the Indebtedness
shall have been paid in full, without the prior written consent of the Agent
(which shall not be unreasonably withheld):
7.1 Liens. The Borrower shall not in any way create, incur,
assume, or suffer to exist any security interest, mortgage, pledge, lien,
restriction or other encumbrance upon the Collateral or the Timeshare Interests
mortgaged as security for any Consumer Loan Collateral, other than those created
by or referred to in this Agreement.
7.2 Covenant Against Alienation. The Borrower shall not in any
way (a) sell, convey, lease or transfer any of (i) the Collateral or (ii) any
material assets other than at fair market value or otherwise in the ordinary
course of its business; (b) notify any consumer borrower for any Consumer Loan
Collateral that payments should be made other than to the Lock Box Agent; (c)
change its name; (d) enter into any transaction of merger, consolidation or
reorganization; or (e) take or permit any action to dissolve of liquidate.
7.3 Transfers of Cash and Investments. The Borrower shall not
sell, lease, donate, lend, exchange or otherwise dispose of any of its
intangible assets, including cash and investments, except in exchange for goods,
property or services at fair market value.
7.4 Association Liens. The Borrower shall not in any way
create, incur, assume or suffer to exist any security interest, mortgage,
pledge, lien, restriction or other encumbrance on any of the Associations or
Silverleaf Club or their assets, other than in the ordinary course of business
of such Association or Silverleaf Club.
7.5 Time Share Instruments. The Borrower shall not materially
amend, modify or terminate any Timeshare Instruments or assign any of its rights
thereunder.
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7.6 Management. The Borrower shall not (a) make any change in
the following management personnel: Xxxxxx X Xxxx, Chairman; Xxxxxx X.
Xxxxxxxxx, President, Xxxxx X. X'Xxxxxx, Executive Vice President Sales; Xxxxxx
X. Xxxxxx, Vice President - Investor Relations; Xxxxx X. Xxxxx, Xx., Chief
Financial Officer; Xxxxx X. Xxxxx, Vice President - Marketing, or successors in
their current positions, without notice to the Agent or (b) make any change in
the Management Agreement for any Eligible Project.
7.7 Subordinated Debt. The Borrower shall not amend any
provision regarding subordination in the Indenture dated as of April 1, 1998
among the Borrower, Borrower's Subsidiaries and Norwest Bank Minnesota, National
Association.
8. CONDITIONS PRECEDENT TO ADVANCE.
8.1 Advances. The Agent and the Lenders shall have no
obligation to make any advance under the Loans unless:
8.1.1 Representations and Warranties True. All of the
representations, warranties, covenants, terms and conditions contained in this
Agreement and the other Loan Documents are true and correct as of the date of
making such advance, with the same effect as if such representations and
warranties were made on and as of the date of such advance.
8.1.2 No Default. No default or event of default under any
Loan Documents or any other agreements between the Agent or the Lenders and the
Borrower or affecting or related to any Eligible Project shall exist on the date
of such advance, and no condition, omission, or act shall have occurred or come
into existence which, upon the giving of notice or the passage of time, would
ripen into a default or Event of Default.
8.1.3 No Adverse Change. No material adverse change shall
have occurred in the financial condition of the Borrower, in the business
operations of the Borrower, or in the condition of the Collateral or the
Borrower's business from the date of the most recent financial statements
delivered to the Agent.
8.1.4 Acceptance of Advances. Each acceptance by the
Borrower of an advance under the Loan shall constitute a representation by the
Borrower that the foregoing conditions in Sections 8.1.1, 8.1.2, and 8.1.3 have
been satisfied.
8.2 Audits. The Agent shall have the right to audit the
Borrower's operations and the Collateral from time to time at the Borrower's
expense and the Agent shall be entitled to condition advances on the Loans on
the satisfactory results of such audits. Until a default or Event of Default
shall occur, the Agent shall conduct such audits no more frequently than twice
each year.
8.3 Fair Lending Review. At the direction of the Agent, the
Agent's counsel shall be entitled to conduct a fair lending review of the
Collateral at the Borrower's expense at least once each year.
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9. EVENTS OF DEFAULT.
Each of the following events shall constitute an "Event of Default"
hereunder:
9.1 Payment Default. The Borrower shall default in making any
payment of principal, interest or other charges when the same shall become due
under the Notes or the Loan Documents; provided that with respect to regularly
scheduled payments of principal and interest on the Notes (and not with respect
to any payments after demand by the Agent or the Lenders or any payments due on
the Maturity Date) (a) upon nonpayment caused by matters out of Borrower's
control, such as the failure to act by a third party or the failure to complete
a wire transfer of funds, the Borrower shall make such payment within two
business days after telephone notice from the Agent of such nonpayment, (b)
interest shall continue to accrue on all outstanding amounts until such payment
shall be received by the Agent and (c) if, upon receiving notice of such
nonpayment from Agent, Borrower shall fail to provide evidence satisfactory to
Agent in Agent's sole discretion that such nonpayment is caused by matters out
of Borrower's control, the Agent and the Lenders shall be entitled to proceed
immediately to exercise their rights and remedies upon nonpayment without
waiting for two business days.
9.2 Other Default. The Borrower shall default in the
performance of any covenant, agreement, term or condition of this Agreement or
any other Loan Document, other than as set forth in Section 9.1 above, or in any
other subsection of this Section 9 other than this subsection 9.2, within any
applicable grace period provided therefor or, if no grace period is provided,
and provided (a) the Borrower has not intentionally concealed or negligently
failed to report such default to the Agent, and (b) such default is capable of
cure by the Borrower, such default shall continue for ten (10) days after the
Agent shall give written notice of such default to the Borrower.
9.3 Default in Other Obligations. The Borrower shall default
in making any payments for borrowed money or in respect of any extension of
credit or accommodations under any loan, in each case in connection with
indebtedness in excess of $100,000.
9.4 Insolvency; Suspension of Business. Commencement of
proceedings under any bankruptcy or insolvency law by or against the Borrower or
the admission by the Borrower of Borrower's inability to pay its debts as they
mature or become due; or the general failure by the Borrower to pay its debts as
they mature or become due; or the making of a general assignment for the benefit
of creditors by the Borrower; or the suspension of business of the Borrower; or
the appointment of a trustee, trust mortgagee, custodian or receiver of all or
any portion of the property of the Borrower.
9.5 Representations. Any representation or warranty, statement
or information under any instrument or agreement constituting or relating to any
Collateral or made by the Borrower herein, in the Loan Documents or in any other
certificate, statement, information or document delivered to the Agent by, on
behalf of or at the request of the Borrower or relating to the Loans shall fail
to be true and correct in any material respect when made or furnished.
9.6 Adverse Change. Any material adverse change in the
business, operations, properties or condition (financial or otherwise) of the
Borrower or the Collateral, which, in the
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opinion of the Agent or the Required Lenders, impairs its security or increases
its risk, including, without limitation, if any financial information furnished
to the Agent shall indicate any operating loss or total liabilities in excess of
total assets, as determined in accordance with generally accepted accounting
principles. In the absence of any operating loss or total liabilities in excess
of total assets, any adverse change which has less than a 5% one time or annual
adverse impact on any of the Borrower's revenues, net profit, net worth or
assets shall not be deemed material.
9.7 Levy. Commencement of any levy, seizure, attachment or
sale upon execution against any Collateral or other proceedings of any nature
whereby the Borrower shall or may be deprived of title or right of possession to
the Collateral or any part thereof.
9.8 Dissolution; Termination. The dissolution or termination
of existence of the Borrower.
9.9 Failure of Servicer, Lock Box Agent. The Borrower, the
Lock Box Agent, or the Servicer shall fail to remit to the Agent any proceeds of
any pledged Consumer Loan Collateral or shall fail to perform any of the
obligations under the Lock Box Agreement or the Servicing Agreement.
9.10 Failure of Association. Any failure by the Borrower,
Silverleaf Club or any Association to fund maintenance fees, taxes, reserve, or
other payments required for the proper and efficient operation of any Eligible
Project or any default by Silverleaf Club or any Association in the observance
or performance of Silverleaf Club's or such Association's duties in connection
with an Eligible Project.
9.11 Uninsured Loss. Any material loss, theft, or damage to
the Collateral or any Eligible Project which is not fully covered by insurance
and which, in the opinion of the Agent, impairs its security or increases its
risk.
9.12 Conveyance of Collateral. The conveyance, assignment,
sale, pledge, transfer, hypothecation or other disposition (which shall include
execution of a contract for sale) of legal or equitable ownership of any part of
the Collateral.
10. REMEDIES UPON DEFAULT.
10.1 Remedies Upon Default. If an Event of Default shall
occur, the Agent and the Lenders shall not have any obligation to permit any
further borrowing hereunder and may declare the Indebtedness, including the
Notes, immediately due and payable, without presentment, protest, demand or
notice of any kind, all of which are hereby expressly waived by the Borrower;
and shall have all rights and remedies of a secured party under the UCC and any
other applicable law then in effect; and may pursue any and all remedies
provided for hereunder and in any one or more of the Loan Documents or at law or
in equity, including, without limitation, the following:
10.1.1 Exercise Rights as Secured Party. Exercise all
rights of a secured party pursuant to the UCC, or otherwise, with respect to the
Collateral.
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10.1.2 Notices to Maker. Deliver Notices to Maker (which
Notices to Maker shall not be delivered in the absence of an Event of Default)
and other notices to account debtors and servicers that payments should be made
directly to the Agent, record or file assignments of mortgages, complete blank
endorsements and take such other actions as the Agent shall deem necessary to
exercise rights in the Collateral or assign the Collateral.
10.1.3 Pay to Agent. Require the Borrower and the Servicer and
the Lock Box Agent to pay over to the Agent all sums collected with respect to
the Collateral, to be applied in the Agent's sole discretion to such costs and
expenses as the Agent shall determine.
10.1.4 Notices. Require the Borrower to give notice to account
debtors and servicers that payment should be made directly to the Agent.
10.1.5 Assemble Collateral. Require the Borrower to assemble
Collateral and make it available to the Agent at a place designated by the Agent
which is reasonably convenient.
10.1.6 Deficiency; Notice. If in the event of the sale or
other disposition of the Collateral, the proceeds thereof are insufficient to
pay all amounts to which the Agent is legally entitled, the Borrower shall be
liable for the deficiency and the reasonable fees of any agents and attorneys
employed by the Agent to collect such deficiency. The Borrower agrees that if
any notification of intended disposition of any of the Collateral is required by
law, such notification shall be deemed reasonably and properly given if
deposited in the mails, first class postage prepaid, addressed as provided in
Section 12.9 of this Agreement and at least ten (10) days before such intended
disposition.
10.1.7 Set Off. Set off and apply against any Indebtedness any
indebtedness owing from the Agent or the Lenders to the Borrower at any time and
from time to time either before or after maturity and without demand upon or
notice to anyone.
10.1.8 Actions with Respect to Timeshare Loans. The Agent may
take any of the following actions, in its name or the name of the Borrower, as
the Agent may determine, without notice to the Borrower and at the Borrower's
expense:
10.1.8.1 Verify the validity and amount of or any
other matter relating to the Consumer Loan Collateral, by mail, telephone,
telegraph or otherwise.
10.1.8.2 Direct all consumer borrowers to make payment
directly to the Agent or a person designated by the Agent and forward invoices
directly to such borrowers;
10.1.8.3 Take control in any manner of any cash or
non-cash items of payment or proceeds of the Consumer Loan Collateral;
10.1.8.4 Enforce payment of and collect any of the
Consumer Loan Collateral, by legal proceedings or otherwise, and for such
purpose, the Agent may:
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(i) Demand payment of any such loans or
direct any borrower to make payment directly to the Agent;
(ii) Receive and collect all monies due or to
become due with respect to such loans;
(iii) Settle, adjust, compromise, extend,
renew, discharge or release any of such loans;
(iv) Sell or assign any of such loans on such
terms, for such amount and at such times as the Agent deems advisable;
(v) Prepare, file and sign the Borrower's
name on any proof of claim or similar document in any proceeding filed under
federal or state bankruptcy, insolvency, reorganization or other similar law as
to any of such loans;
(vi) Endorse the name of the Borrower upon
any documents, instruments or similar documents or agreements relating to such
loans or upon any checks or other media of payment that may come into the
Agent's possession; or
(viii) Take all other actions necessary or
desirable to protect the Agent's interest in such loans.
No remedy conferred upon or reserved to the Agent or the Lenders in the
Loan Documents is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be in
addition to any other remedy given hereunder or in any other Loan Document or
now or hereafter existing at law or in equity or by statute and the exercise of
any remedy or remedies shall not be an election of the remedies. The remedies
and rights of the Agent and the Lenders may be exercised concurrently, alone or
in any combination. The inclusion of Events of Default in this Agreement and the
occurrence or non-occurrence of an Event of Default shall in no manner restrict
the Agent's or the Lender's ability to demand amounts due pursuant to any demand
obligation. The proceeds from any Collateral shall be applied to repay the Loans
and all obligations pursuant to this Agreement and then to any other
Indebtedness.
10.2 Cooperation of Borrower. The Borrower shall cooperate
with the Agent and the Lenders in effectuating the purposes hereof
notwithstanding any unanticipated inability of the Borrower to pay the Notes or
otherwise perform the obligations of this Agreement or any other Loan Document.
10.3 Payment of Costs. The Borrower shall pay all of the costs
and expenses incurred by the Agent and the Lenders (including reasonable
attorney's fees) in (1) enforcing the Loan Documents, (2) resorting to the
Collateral, (3) the care, processing and preservation of the Collateral, and (4)
collecting the outstanding balance of principal, interest and delinquent charges
under the Notes. All such costs and expenses shall be deemed additional
principal due under the Notes and may be deducted from the proceeds of
disposition of the Collateral, or any other security interests held by the Agent
or the Lenders. The Agent and the Lenders may apply any or
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all of the proceeds of disposition of the Collateral to the payment or reduction
of the Notes in such amounts as the Agent and the Lenders may, in their sole
discretion, determine even if that portion of the Notes shall be contingent and
unmatured; and in the case of any deficiency the Borrower shall remain liable
therefor.
10.4 Preservation; Notice. The Agent shall have no obligation
to take, and Borrower shall have the responsibility for taking, any and all
steps to preserve rights against any and all prior parties to any instrument of
chattel paper whether in the Borrower's possession or in the Agent's possession.
The Borrower waives protest of any instrument constituting Collateral at any
time held by the Agent on which the Borrower is in any way liable and waives
notice of any other action taken by the Agent. The Borrower shall have the
responsibility for notifying the Agent in writing that it wishes to take
advantage of any redemption, conversion or other similar right with respect to
any Collateral held by the Agent.
10.5 Right to Possession. After an Event of Default, the Agent
shall have the right at all times to the immediate possession of all Collateral
and its products and proceeds, and in its sole discretion may operate and use
the Collateral, complete work in process, or sell the Collateral without being
liable to the Borrower on account of any losses, damage, or depreciation that
may occur as a result thereof. Unless otherwise provided by law, the Agent may
at all times, at the expense of the Borrower, enter upon any premises on which
Collateral may be situated and remove any Collateral to such other places as the
Agent determines. Unless otherwise provided by law, the Agent and the Lenders
may at any time transfer any Collateral into their own name or that of their
nominee and receive the income thereon and hold the same, as security for
liabilities or apply it to principal or interest due on the Indebtedness.
11. THE AGENT.
11.1 Appointment. Each Lender hereby irrevocably appoints
BankBoston, N.A. as its agent under and for the purposes of this Agreement, the
Notes and each other Loan Document, and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers under this Agreement and the
Loan Documents as are delegated to the Agent by the terms thereof, together with
such powers as are reasonably incidental thereto. The grant of particular powers
and authority to the Agent in some circumstances and to the Agent and Lenders in
others in this Agreement and in other Loan Documents shall not be deemed to
limit the power and authority of the Agent or any Lender in any instance.
11.2 Collateral. Each Lender hereby authorizes the Agent to
hold and exercise control of the Collateral and to exercise discretion with
regard to the acceptance of Collateral and inclusion of Collateral in the
Receivables Loan Borrowing Base from time to time. As an independent contractor
empowered by the Lenders to exercise certain rights and perform certain duties
and responsibilities hereunder and under the other Loan Documents, the Agent
shall be a "representative" of the Lenders, as that term is defined in Article 1
of the UCC, for purposes of actions for the benefit of the Lenders and the Agent
with respect to all collateral security and guaranties contemplated by the Loan
Documents. Each Lender hereby authorizes the Agent to be designated as "secured
party", "mortgagee" or the like on all financing statements, mortgages and other
documents and instruments, whether recorded or otherwise, relating to the
attachment, perfection, priority or enforcement of any security interests,
mortgages or deeds of trust intended
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to secure the payment or performance of any of the Indebtedness, all for the
pro-rata benefit of the Lenders and the Agent. Notwithstanding the delegation to
the Agent of control over the Collateral, each Lender shall be entitled to
review Collateral and the Agent's files with respect to Collateral from time to
time upon reasonable prior notice to the Agent, and the Agent shall cooperate
with each Lender in each such review.
11.3 Independent Contractor. The relationship between the
Agent and each of the Lenders is that of an independent contractor. The duties
of the Agent shall be mechanical and administrative in nature and the Agent
shall have no duties or responsibilities except those expressly set forth
herein. As to any matters not expressly provided for by the Loan and Security
Agreement or other Loan Documents, the Agent shall not be required to exercise
any discretion or take any action. The use of the term "Agent" is for
convenience only and is used to describe, as a form of convention, the
independent contractual relationship between the Agent and each of the Lenders.
Nothing contained in this Agreement nor the other Loan Documents shall be
construed to create a trust or other fiduciary relationship between the Agent
and any of the Lenders. The Agent may exercise its powers and execute its duties
by or through employees or agents and shall be entitled to take, and to rely on,
advice of counsel concerning all matters pertaining to its rights and duties
under the Loan and Security Agreement and the other Loan Documents. The Agent
may utilize the services of such persons as the Agent in its sole discretion may
reasonably determine, and all reasonable fees and expenses of any such persons
shall be paid by the Borrowers.
11.4 Consent of Lenders. The Agent shall take such actions as
it shall deem necessary from time to time without instructions or consent of the
Lenders.
11.4.1 Actions Requiring Consent. Notwithstanding any
grant of authority to the Agent hereunder, the following actions by the Agent
shall require the consent of the Required Lenders:
11.4.1.1 A waiver of any of the covenants set
forth in Section 7 herein;
11.4.1.2 A declaration of an Event of Default
hereunder;
11.4.1.3 A demand for payment of all Indebtedness;
or
11.4.1.4 The commencement of any actions to
exercise rights to sell Collateral (except for any rights to set-off, which each
Lender shall be entitled to exercise independently).
11.4.2 Instructions of Lenders. Except for actions
described in Section 12.12 herein, the Agent shall be required to act or to
refrain from acting upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Agent shall not be required to take any action which
exposes the Agent to personal liability or which is contrary to this Agreement
or applicable law.
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11.5 Liability of Agent. In the administration of the Loans
and the custody of the Collateral, the Agent shall exercise the same standard of
care as it exercises in connection with loans where it is the sole lender.
Except as provided in the previous sentence of this Section, neither the Agent
nor any of its directors, officers, agents, or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement or any other Loan Document in the absence of its or their own
gross negligence or willful misconduct. Without limiting the foregoing, the
Agent: (1) may treat the payee of any Note as the holder thereof until the Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to the Agent; (2) may consult with legal counsel
(including counsel for the Borrower), independent public accountants, and other
experts selected by the Agent and shall not be liable for any action taken or
omitted to be taken in good faith by the Agent in accordance with the advice of
such counsel, accountants, or experts; (3) makes no warranty or representation
to any Lender and shall not be responsible to any Lender for any statements,
warranties, or representations made in or in connection with this Agreement; (4)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants, or conditions of this Agreement on
the part of the Borrower, or to inspect the property (including the books and
records) of the Borrower, and any such inquiry or inspection shall not obligate
the Agent to make any further inquiry or inspection; (5) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, perfection, sufficiency, or value of this Agreement
or any other instrument or document furnished pursuant thereto; (6) shall incur
no liability under or in respect of this Agreement by acting upon any notice,
consent, certificate, or other instrument or writing (which may be by telegram,
telex, or facsimile transmission) believed by the Agent in good faith to be
genuine and signed or sent by the proper party or parties and (7) shall be
liable only for Lender's actual and consequential damages, and shall not be
liable for any punitive, special or other damages. Each Lender hereby
indemnifies (which indemnity shall survive any termination of this Agreement)
and holds harmless the Agent, pro rata according to such Lender's Percentage,
from and against any and all liabilities, obligations, losses, damages, claims,
costs or expenses of any kind or nature whatsoever which may at any time be
imposed on, incurred by, or asserted against, the Agent in any way relating to
or arising out of this Agreement, the Notes and any other Loan Document,
including reasonable attorneys' fees and expenses, and as to which the Agent is
not reimbursed by the Borrower; provided that (1) no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
claims, costs or expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted solely from the Agent's
failure to exercise the same standard of care as it exercises in connection with
loans where it is the sole lender, gross negligence or willful misconduct, and
(2) any liability of a Lender to the Agent shall be only for actual or
consequential damages, and shall exclude punitive, special or other damages. The
Agent shall not be required to take any action hereunder, under the Notes or
under any other Loan Document or to prosecute or defend any suit in respect of
this Agreement, the Notes or any other Loan Document, unless the Agent is
indemnified hereunder to its satisfaction. If any indemnity in favor of the
Agent shall be or become, in the Agent's determination, inadequate, the Agent
may call for additional indemnification from Lenders and cease to do the acts
indemnified against hereunder until such additional indemnity is given. Without
limitation of the foregoing, each Lender shall reimburse the Agent (to the
extent not reimbursed by Borrower) promptly upon demand for its ratable share of
any out-of-pocket expenses (including reasonable counsel fees) incurred by the
Agent in
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connection with the preparation, administration, or enforcement of, or legal
advice in respect of rights or responsibilities under this Agreement or any Loan
Documents.
11.6 Successor.
11.6.1 The Agent may resign as such at any time upon at
least 30 days' prior notice to Borrower and all Lenders. If the Agent at any
time shall resign, the Required Lenders may appoint another Lender as a
successor Agent which shall thereupon become the Agent hereunder. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be one of the Lenders or a commercial
banking institution organized under the laws of the U.S. (or any State thereof)
or a U.S. branch or agency of a commercial banking institution, and having a
combined capital and surplus of at least $5,000,000,000.
11.6.2 Upon 30 days prior notice to the Agent, the
Required Lenders shall be entitled to appoint a replacement Agent, which shall
be one of the Lenders or a commercial banking institution organized under the
laws of the United States (or any state thereof) or a United States branch or
agency of a commercial banking institution, and having a combined capital and
surplus of at least $5,000,000,000.
11.6.3 Any Lender shall be entitled to remove the Agent
as agent and appoint a replacement Agent, which shall be one of the Lenders or a
commercial banking institution organized under the laws of the United States (or
any state thereof) or a United States branch or agency of a commercial banking
institution, and having a combined capital and surplus of at least
$5,000,000,000, upon 30 days' prior notice to the Agent after the occurrence of
one of the following (unless cured within the 30 day period):
11.6.3.1 A material uncured default by the Agent
in the performance of its duties;
11.6.3.2 The failure of the Agent, as Lender, to
advance its pro-rate share of the Loans; or
11.6.3.3 the appointment of a receiver for the
Agent or the assumption of the Agent's operations by any federal regulatory
agency with jurisdiction over the Agent.
11.6.4 Upon the acceptance of any appointment as the
Agent hereunder by a successor Agent, such successor Agent shall be entitled to
receive from the retiring Agent and Borrower shall deliver to such Successor
Agent such documents of transfer and assignment as such successor Agent may
reasonably request, and shall thereupon succeed to and become vested with all
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation or replacement hereunder as the Agent,
the provisions of this Section shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Agent under this Agreement.
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11.7 Loans by BankBoston and Lenders. BankBoston, N.A. shall
have the same rights and powers with respect to (x) the Loans made by it, and
(y) the Notes held by it as any other Lender and may exercise the same as if it
were not the Agent. BankBoston, N.A. may accept deposits from, lend money to,
and generally engage in any kind of business with Borrower or any subsidiary or
affiliate of the Borrower as if BankBoston, N.A, were not the Agent hereunder.
Each Lender other than BankBoston, N.A. shall not be entitled to accept deposits
from, lend money to, or generally engage in any banking business with Borrower
or any Subsidiary or affiliate of Borrower independently of the Loans unless
such banking or lending services shall not be offered by BankBoston, N.A. to its
commercial clients.
11.8 Credit Decisions. Each Lender acknowledges that it has,
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of Borrower, this Agreement, the other Loan
Documents (the terms and provisions of which being satisfactory to such Lender)
and such other documents, information and investigation as such Lender has
deemed appropriate, made its own credit decision to make the Loans. Each Lender
also acknowledges that it will, independently of the Agent and each other
Lender, and based on such other documents, information and investigations as it
shall deem appropriate at any time, continue to make its own credit decisions as
to exercising or not exercising from time to time any rights and privileges
available to it under this Agreement or any other Loan Document.
11.9 Copies, etc. The Agent has forwarded each Lender copies
of material provided by the Borrower prior to the date hereof. The Agent shall
give prompt notice to each Lender of each notice or request required or
permitted to be given to the Agent by Borrower pursuant to the terms of this
Agreement (unless concurrently delivered to the Lenders by the Borrower), and
the Agent shall deliver to each Lender within 10 days of receipt copies of audit
reports, Financial Statements reports delivered pursuant to Sections 6.1.8,
6.1.9, 6.1.10, and 6.1.11, and other documents (excluding the Collateral)
provided by the Borrower. The Agent will distribute to each Lender from time to
time as requested by each Lender each document or instrument received for its
account and copies of all other communications received by the Agent from the
Borrower for distribution to Lenders by the Agent in accordance with the terms
of this Agreement. Except for notices, reports, and other documents and
information expressly required to be furnished to Lenders by the Agent
hereunder, the Agent shall have no duty or responsibility to provide any Lender
with any credit or other information concerning the affairs, financial condition
or business of the Borrower which may come into the possession of the Agent or
any of its affiliates.
11.10 Payments. A payment by the Borrower to the Agent
hereunder or under any of the other Loan Documents for the account of any Lender
shall constitute a payment to such Lender. The Agent shall distribute to each
Lender on a schedule to be determined by the Agent and the Lenders from time to
time such Lender's pro rata share of payments received by the Agent for the
account of the Lenders, after payment of all fees and expenses of the Agent
(including, without limitation, any fees in connection with the Borrower's
Account or relating to custody of the Collateral)and except as otherwise
expressly provided herein or in any of the other Loan Documents. If in the
opinion of the Agent the distribution of any amount received by it in such
capacity hereunder, under the Notes or under any of the other Loan Documents
might involve the Agent in liability, the Agent may refrain from making
distribution until the Agent's right to make
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distribution shall have been adjudicated by a court of competent jurisdiction.
If a court of competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay over the
same in such manner and to such persons as shall be determined by such court.
11.11 Sharing of Payments. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
setoff, or otherwise) on account of the Notes held by it in excess of its
Lender's Percentage of payment on account of all of the Notes, such Lender shall
distribute the excess payment ratably to each of the other Lenders, provided,
however, that if all or any portion of such excess payment is thereafter
recovered by the Borrower from the Lender making such a distribution, such
distribution to each other Lender shall be rescinded and each such other Lender
shall repay to the distributing Lender its ratable share of the distribution.
11.12 Delinquent Lenders. Notwithstanding anything to the
contrary contained in this Agreement or any of the other Loan Documents, any
Lender that fails (i) to make available to the Agent its pro rata share of any
Loan or (ii) to comply with the provisions of Section 11.11 with respect to
making dispositions and arrangements with the other Lenders where such Lender's
share of any payment received, whether by setoff or otherwise, is in excess of
its pro rata share of such payments due and payable to all of the Lenders, in
each case as, when and to the full extent required by the provisions of this
Agreement, shall be deemed delinquent (a "Delinquent Lender") and shall be
deemed a Delinquent Lender until such time as such delinquency is satisfied. A
Delinquent Lender shall be deemed to have assigned any and all payments due to
it from the Borrower, whether on account of outstanding Loans, interest, fees or
otherwise, to the remaining nondelinquent Lenders for application to, and
reduction of their respective pro rata shares of all outstanding Loans. Each
Delinquent Lender hereby authorizes the Agent to distribute such payments to the
nondelinquent Lenders in proportion to their respective pro rata shares of all
outstanding Loans. A Delinquent Lender shall be deemed to have satisfied in full
a delinquency when and if, as a result of application of the assignment payments
to all outstanding Loans of the nondelinquent Lenders, the Lender's respective
pro rata shares of all outstanding Loans to have returned to those in effect
immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
11.13 Notification of Defaults and Events of Default. Each
Lender hereby agrees that, upon learning of the existence of a default or Event
of Default, it shall promptly notify the Agent thereof. The Agent hereby agrees
that upon receipt of any notice under this Section 11.13 it shall promptly
notify the other Lenders of the existence of such default or Event of Default.
11.14 Sharing of Expenses. If and to the extent that the
Borrower shall not have paid to the Agent any of the Agent's reasonable costs
and expenses (including reasonable attorneys' fees and costs) in connection with
the Loan, each Lender shall pay to the Agent its pro-rata share of such costs
and expenses.
11.15 Responses to Requests for Consent. Each Lender shall
respond promptly to any request by the Agent for any consent hereunder, and any
request for consent for which the Agent shall not receive a response within ten
business days shall be deemed consented to.
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12. MISCELLANEOUS.
12.1 Power of Attorney. The Borrower hereby appoints and
irrevocably designates the Agent, its agents, representatives and designees as
agents and attorneys-in-fact for the Borrower, granting unto said attorneys full
power to do all things and acts necessary to implement and fully execute any
power or rights granted to the Agent under this Agreement, including the right
to give written notice, at any time, to such office and officials at the United
States Post Office to effect such change of address so that all mail addressed
to such Borrower may be delivered directly to the Agent, and the right to
execute trust receipts, conditional sale contracts or other title retention or
security instruments. Absent a default or Event of Default, the Agent shall not
give any notice to effect a change of address.
12.2 Indemnity. The Borrower hereby indemnifies and holds the
Agent and the Lenders and all participants, their successors, assigns,
shareholders, officers, directors and agents harmless from and against all
liability, loss, damage and expense (including reasonable attorney's fees) which
the Agent or the Lenders may or shall incur related in any way to (a) this
Agreement or any of the Loan Documents (including, without limitation, any claim
for a commission or fee in connection with any Loan Documents), or any actions
taken in good faith hereunder or thereunder, or (b) any act or omission of the
Borrower or any of its respective employees, contractors or agents, (c) any
violation of or noncompliance by the Borrower with any Requirements, (d) the
breach by the Borrower of any covenant, warranty, term or provision of this
Agreement or any Loan Document, (e) any misrepresentation by the Borrower in
respect of any aspect of the transactions contemplated by this Agreement or (f)
each Eligible Project and the operator of the Borrower's business. Borrower's
obligations under this Section shall survive termination of this Agreement and
repayment of the Loans.
12.3 Expenses. The Borrower shall pay all costs and expenses
incurred by the Agent and the Lenders in connection with the preparation,
execution, delivery, filing and administration of the Loans and any Loan
Documents including, but not limited to, reasonable fees of Agent's counsel and
any local counsel retained by them, with respect to the Loans and with respect
to advising the Agent and the Lenders as to their rights and responsibilities
under the Loan Documents, all reasonable costs and expenses in connection with
protecting, storing, warehousing, insuring, handling, maintaining and shipping
the Collateral, in connection with enforcement of the Loan Documents, title
insurance premiums, survey and site assessment costs, appraisal fees, brokerage
fees or commissions, mortgage and financing statements recording and filing fees
and any other expenses whether incurred before or after the closing of the
Loans. The Borrower shall hold the Agent and the Lenders harmless from any
liabilities with respect to or resulting from any delay in paying or omission to
pay such fees and expenses.
If the Borrower shall fail to maintain the insurance required by
Section 6.4, or pay the taxes, assessments, charges or claims referred to in
Section 6.3 hereof, or fail to perform any of its obligations hereunder, the
Agent, at its option, may maintain such insurance or pay such taxes,
assessments, charges or claims or perform any or all such obligations and the
Borrower shall pay on demand any premiums, taxes, assessments, charges or claims
so paid by the Agent or expenses incurred by the Agent or such amounts shall be
deemed additional indebtedness due under the Notes, in the Agent's sole
discretion.
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The Agent shall be entitled, at the Borrower's sole cost and expense,
to obtain appraisals of the Collateral, from time to time. Prior to a default or
Event of Default, the Agent shall not perform such appraisals at the Borrower's
expense more frequently than twice during the original term of the Loans.
All references to attorneys in the Loan Documents shall include,
without limitation, the Agent's in-house counsel. The Borrower shall not incur
any expenses for the Agent's in-house counsel in connection with the initial
preparation of Loan Documents and closing of the Loans.
12.4 Further Assurances. The Borrower shall, at the Borrower's
cost and expense, upon request of the Agent or the Lenders, duly execute and
deliver, or cause to be duly executed and delivered, to the Agent or the Lenders
such further instruments and do and cause to be done such further acts as may be
reasonably necessary or proper in the opinion of the Agent or the Lenders to
carry out more effectually the provisions and purposes of the Loan Documents.
12.5 Severability. If any provision of any Loan Document is
deemed by any court having jurisdiction thereon invalid or unenforceable, the
balance of that Loan Document shall remain in effect; if any provision of that
Loan Document is deemed by any such court to be unenforceable because such
provision is too broad in scope such provisions thereafter shall be read to be
consistent with such Court's decision to make it enforceable; and if any
provision is deemed inapplicable by any such Court to any person or circumstance
it shall nevertheless be construed to apply to all other persons and
circumstance.
12.6 Governing Law; Effect. This Agreement and the other Loan
Documents shall be governed by and construed in accordance with the substantive
law of the Commonwealth of Massachusetts, without giving effect to the conflicts
or choice of law provisions of Massachusetts or any other jurisdiction, and
shall have the effect of a sealed instrument. In any interpretation of the
provisions of this Agreement or any Loan Document, any principle of construction
which interprets agreements against the draftsmen shall be disregarded.
12.7 Sale and Transfer of Loans and Note; Participations in
Loans and Note. Each Lender may assign, or sell participations in, its Loans to
one or more other persons in accordance with this Section 12.7.
12.7.1 Assignments. Any Lender, (a) with the written
consent of (i) the Agent and (ii), in the absence of an Event of Default, the
Borrower (which consents shall not be unreasonably withheld) may at any time
assign and delegate to one or more commercial banks or other financial
institutions, and (b) with notice to the Borrower and the Agent, but without the
consent of the Borrower or the Agent, may assign and delegate to any of its
affiliates or to any other Lender (each person described in either of the
foregoing clauses as being the person to whom such assignment and delegation is
to be made, being hereinafter referred to as an "Assignee Lender"), all or any
fraction of such Lender's Individual Commitment and outstanding Loans (which
assignment and delegation shall be of a constant, and not a varying, percentage
of all the assigning Lender's Loans) in a minimum aggregate amount of
$5,000,000; provided, that any such Assignee Lender will comply, if applicable,
with the provisions of this Agreement and all other Loan Documents. The
Borrower, each other Lender and the Agent shall be entitled to continue
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to deal solely and directly with the assigning Lender in connection with the
interests so assigned and delegated to a Assignee Lender until (c) written
notice of such assignment and delegation, together with payment instructions,
addresses and related information with respect to the Assignee Lender, shall
have been given to the Borrower and the Agent by the assigning Lender and the
Assignee Lender, and (d) the Assignee Lender shall have executed and delivered
to the Borrower and the Agent such documents as the Agent shall reasonably
request to confirm the Assignee Lender's agreement to comply with the terms of
the Loan Documents.
From and after the date that the Agent accepts such Lender as Assignee
Lender, (x) the Assignee Lender thereafter shall be deemed automatically to have
become a party hereto and to the extent that rights and obligations hereunder
have been assigned and delegated to such Assignee Lender, shall have the rights
and obligations of a Lender hereunder and under the other Loan Documents, and
(y) the assignor Lender, to the extent that rights and obligations hereunder
have been assigned and delegated by it in connection with such assignment, shall
be released from its obligations hereunder and under the other Loan Documents.
Within five business days after its receipt of notice from the Agent of a new
Assignee Lender, the Borrower shall, upon delivery to the Borrower of the
predecessor Note marked "exchanged", execute and delivered to the Agent (for
delivery to the relevant Assignee Lender) a new Note evidencing such Assignee
Lender's assigned Loans and, if the assignor Lender has retained an Individual
Commitment hereunder, a replacement Note in the principal amount of the Loans
retained by the assignor Lender hereunder (such Note to be in exchange for, but
not in payment of, that Note then held by such assignor Lender). Each such Note
shall be dated the date of the predecessor Note. Any attempted assignment and
delegation not made in accordance with this Section 12.7 shall be null and void.
12.7.2 Participations. Any Lender may at any time sell to
one or more commercial banks or other persons participating interests in any of
the Loans, or other interests of such Lender hereunder; provided, that (a) no
participation contemplated in this Section 12.7 shall relieve such Lender from
its Individual Commitment or its other obligations hereunder or under any other
Loan Documents, (b) such Lender shall remain solely responsible for the
performance of its obligations hereunder, and (c) the Borrower and the Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Loan and Security Agreement and
each of the other Loan Documents.
12.7.3 Federal Reserve Bank. Notwithstanding the
foregoing provisions of this Section 12.7, any Lender may at any time pledge or
assign all or any portion of such Lender's rights under this Agreement and the
other Loan Documents to a Federal Reserve Bank; provided, however, that no such
pledge or assignment shall release such Lender from such Lender's obligations
hereunder or under any other Loan Document.
12.8 Assignment of Loan Agreement by Borrower. Neither this
Loan Agreement nor the proceeds of the Loans shall be assignable by the Borrower
without the prior written consent of all Lenders, and any attempted assignment
without the Lenders' prior written consent shall, after closing, create a
default in the Loans.
12.9 Notices. Any demand upon or notice to the Borrower
hereunder shall be effective when delivered by hand or when properly deposited
in the mails postage prepaid, or sent by telex, answerback received, or
electronic facsimile transmission, receipt acknowledged, or
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delivered to a telegraph company or overnight courier, in each case addressed to
the Borrower at the address shown below or as it appears on the books and
records of the Agent. Demands or notices addressed to any other address at which
the Agent customarily communicates with the Borrower also shall be effective.
Any notice by the Borrower to the Agent shall be given as aforesaid, addressed
to the Agent at the address shown below or such other address as the Agent may
advise the Borrower in writing.
The Agent or BankBoston, N.A.:
BankBoston, N.A.
00 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 0000000
Attention: Xxxxxx Xxxxxx
Telecopier: 000-000-0000
Copy to: Xxxxxx Xxxxxx Xxxxx, Esquire
Cain, Hibbard, Xxxxx & Xxxx
00 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telecopier: 000-000-0000
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Liberty Bank: 000 Xxxx Xxxxxx
Xxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Telecopier:000-000-0000
With a copy to:
Xxxxxxx X. Xxxx, Esquire
Klett, Lieber, Rooney & Xxxxxxxxx
00xx Xxxxx - Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Telecopier: 215-567-2737
Borrower: Silverleaf Resorts, Inc.
0000 Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx Xxxx
Telecopier: 000-000-0000
Copy to: Xxxxxx X. Xxxxxx, Esquire
Meadows, Owens, Collier, Reed,
Cousins & Blau, LLP
0000 Xxxxxxxxxxx Xxxxx
000 Xxxx Xxxxxx
Xxxxxx, XX 00000-0000
Telecopier: 000-000-0000
12.10 Successors. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their successors and assigns and all
other subsequent holders of the Notes.
12.11 Entire Agreement. The Agreement and the other documents
referred to herein contain a complete statement of the undertakings between the
parties with respect to its subject matter, and supersedes all prior agreements
and undertakings. There are no representations not set forth in this Loan and
Security Agreement (including the Exhibits and Schedules attached hereto) or the
other Loan Documents which have been relied upon by the parties.
12.12 Modification. No modification, rescission, waiver,
release or amendment of any provision of the Loan Documents, shall be effective
unless made in writing and signed by a duly authorized officer of the Agent and
the Required Lenders and the same shall then be effective only for the period
and on the conditions and for the specific purposes specified in such writing,
it being expressly understood by the parties hereto that no such amendment,
modification or waiver which would:
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12.12.1 modify any requirement hereunder that any
particular action be taken by all the Lenders or by the Required Lenders shall
be effective unless consented to by each Lender;
12.12.2 modify this Section 12.12, change the definition
of "Required Lenders", reduce any fees, or release any substantial amount of
collateral security, except as otherwise specifically provided in any Loan
Document, shall be made without the consent of each Lender;
12.12.3 increase the amount of the Total Commitment or
any Individual Commitment, or extend the Maturity Date of, or extend the due
date for or reduce the amount of any scheduled repayment or prepayment of
principal of or interest on the Loans (or reduce the principal amount of or rate
of interest on the Loans) shall be made without the consent of the holder of
that Note evidencing such Loan; or
12.12.4 affect adversely the interests, rights or
obligations of the Agent shall be made without the consent of the Agent and each
Lender.
12.13 Captions. The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purpose of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.
12.14 Counterparts. This Agreement may be executed by the
parties hereto individually or in any combination, in one or more counterparts,
each of which shall be an original and all of which shall together constitute
one and the same agreement.
12.15 Waiver of Rights of the Agent. Neither the failure of the
Agent to exercise, nor the delay of the Agent in exercising any right, power, or
privilege under this Agreement or any Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise or any right, power or
privilege preclude any other or further exercise of any other right, power or
privilege.
12.16 Agreement not Intended as Partnership or Agency. The
parties expressly disclaim any intention to create a partnership or joint
venture pertaining to the subject matter of this Agreement. The parties intend
that their relationship shall be solely that of borrower and lender, whether
that relationship is relevant for purposes of the parties' dealings between
themselves or with third persons. Neither the Borrower nor the Agent shall be
deemed an agent of the other for any purpose.
12.17 Survival. This Loan Agreement shall survive the closing
of the Loans and each and every one of the obligations and undertakings of the
Borrower set forth in this Agreement shall be continuing obligations and
undertakings and shall not cease or terminate until the entire outstanding
principal amount of the Loans, together with all interest and fees due thereon
and any other amounts which may be due pursuant to this Loan Agreement, shall
have been paid in full, and until the obligations and undertakings of the
Borrower shall have been fully completed and discharged.
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12.18 Year 2000 Compliance. The Borrower has (i) reviewed the
areas within its business and operations which could be adversely affected by
failure to become "Year 2000 Compliant": (that is that computer application,
imbedded microchips and other systems used by the Borrower will be able to
properly recognize and perform date sensitive functions involving certain dates
prior to and any date after December 31, 1999); (ii) developed a detailed plan
and timetable to become Year 2000 Compliant in a timely manner; and (iii)
committed adequate resources to support their Year 2000 plan. Based on such
review and plan the Borrower reasonably believes that it will become Year 2000
Compliant on a timely basis except to the extent that a failure to do so will
not have a material adverse effect on the Borrower or its operations.
12.19 Method of Payment. All payments and prepayments of
principal and all payments of interest, fees and other amounts payable hereunder
shall be made by the Borrower to the Agent at its head office OR SUCH OTHER
PLACE AS THE AGENT MAY FROM TIME TO TIME SPECIFY IN WRITING in immediately
available LAWFUL CURRENCY OF THE UNITED STATES OF AMERICA, on or before 11:00
a.m. (Boston, Massachusetts time) on the due date thereof, WITHOUT COUNTERCLAIM
OR SETOFF AND FREE AND CLEAR OF, AND WITHOUT ANY DEDUCTION OR WITHHOLDING FOR,
ANY TAXES OR OTHER PAYMENTS.
12.20 Limitation On Damages. The Borrower agrees that, in any
action, suit or proceeding, in respect of or arising out of this Agreement, the
Loan Documents or the transactions contemplated hereunder, whether sounding in
contract or in tort, each waives to the fullest extent permitted by law, any
claim they may have against the Agent or the Lenders for consequential, punitive
or special damages.
12.21 WAIVER OF JURY TRIAL. THE BORROWER AND THE AGENT AND THE
LENDERS HEREBY WAIVE TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT
TO, IN CONNECTION WITH, OR ARISING OUT OF: (A) THIS LOAN AND SECURITY AGREEMENT,
THE NOTES, THE OTHER LOAN DOCUMENTS, OR ANY OTHER INSTRUMENT OR DOCUMENT
DELIVERED IN CONNECTION WITH THE LOANS; (B) THE VALIDITY, INTERPRETATION,
COLLECTION OR ENFORCEMENT THEREOF; OR (C) ANY OTHER CLAIM OR DISPUTE HOWEVER
ARISING AMONG THE BORROWER, THE LENDERS AND THE AGENT. NONE OF THE BORROWER OR
THE LENDERS OR THE AGENT NOR ANY ASSIGNEE OR SUCCESSOR SHALL (1) SEEK A JURY
TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED UPON OR
ARISING OUT OF THE FOREGOING OR (2) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED. THE PROVISIONS
OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE BORROWER, THE LENDERS AND THE
AGENT, AND THESE PROVISIONS SHALL BE
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SUBJECT TO NO EXCEPTIONS. NEITHER THE AGENT, THE LENDERS, NOR THE BORROWER HAS
AGREED WITH OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH
WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
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Signed and sealed on the date first above written.
WITNESS: SILVERLEAF RESORTS, INC.
By: /s/ Xxxxxx X. Xxxx
----------------------------- ---------------------------------
Its: Chief Executive Officer
BANKBOSTON, N.A., as Agent
By:
----------------------------- ---------------------------------
Xxxxxx X. Xxxxxx, Director
BANKBOSTON, N.A., as Lender
By:
----------------------------- ---------------------------------
Xxxxxx X. Xxxxxx, Director
LIBERTY BANK, as Lender
By:
----------------------------- ---------------------------------
Its:
Schedules and Exhibits:
Schedule 1 Name of Lender and Commitment
Schedule 1.3 Authorized Officers
Exhibit 1.6 Form of Borrowing Base Certificate
Schedule 1.19 Eligible Projects
Schedule 1.48 Permitted Encumbrances
Schedule 1.61 Subordinated Debt
Schedule 1.62 Subordinated Shareholder Debt
Schedule 5.3 Subsidiaries
Schedule 5.17 Financing Statements--Filing Locations
Schedule 6.4.6 Specimen Title Insurance Policy of Each Eligible Project
Schedule 6.20 Locations Where Borrower Sells Timeshare Interests
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