ASSET PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement” ) is made and effective as of the Execution Date and is by and between SILVERLEAF RESORTS, INC., a Texas corporation ( “Purchaser” ) and THE FITZPATRICK FAMILY LIMITED PARTNERSHIP, a Florida limited partnership ( “Seller” ).

This Agreement is made on the basis of the following facts:

Seller is the owner of the Assets commonly known as the Pinnacle Lodge located in the Town of Fraser, Grand County, Colorado. Subject to the terms and conditions hereinafter set forth, Seller desires to sell and Purchaser desires to purchase the Pinnacle Lodge.

On the basis of the foregoing facts, Seller and Purchaser agree as follows:

For the purposes of this Agreement, the following words and terms shall have the meanings set forth below:

1.1   "Assets" - collectively, the Real Property and the Personal Property.

1.2   “Closing” - as defined in Section 8.1 .

1.3   “Closing Date” - as defined in Section 8.1 .

1.4   “Cut-Off Time” - as defined in Section 8.3 .

1.5   “Deposit” - as defined in subsection 2.2(a) .

1.6   “Execution Date” - the latest date of execution of this Agreement by both Purchaser and Seller.

1.7   "Improvements" - any existing buildings, improvements, structures, parking facilities or fixtures placed, constructed, installed or located on or as part of the Land, and all plants, trees, and other appurtenances located upon, over or under the Land.

1.8   “Inspection Period” - as defined in subsection 3.4(b) .

1.9   “Land” - The real property described as Tract B-1, CLAYTON SUBDIVISION, according to the plat thereof filed October 24, 1986, at Reception No. 249237, EXCEPT that portion conveyed to the Town of Fraser in Deed recorded January 17, 1992, in Book 491 at Page 659, County of Grand, State of Colorado, together with all reversions, remainders, easements, rights-of-way, appurtenances, leases, subleases, tenements and hereditaments appertaining to or otherwise benefitting or used in connection therewith.

1.10   “Parties” - collectively, Purchaser and Seller. Purchaser or Seller may be referred to individually or singularly as a “Party.”

1.11   “Permitted Exceptions” - as defined in subsection 3.4(a) .

1.12   “Personal Property” - Any and all personal property located on or in or used in connection with the Land and Improvements, including, without limitation, all furniture, fixtures, and equipment, case-goods, soft-goods (drapes, window coverings, carpeting), sheets, pillows, blankets, bedspreads, towels and other linens, kitchen instruments, televisions, radios, phone, facsimile machines, telecommunication equipment, computers, appliances, refrigerators, air-conditioners, heaters, ice-makers, boilers, furnaces, radiators and piping, sprinkler systems, tools, and other personal property to the extent owned by Seller and located on the Land and Improvements and all paper goods, office supplies, food, beverages, chinaware, glassware, soap, and other guest and operational supplies, goodwill, customer lists, trade names (including the name “Pinnacle Lodge”), phone numbers, email addresses, web site, logo and signs, and all tangible and intangible personal property and fixtures of any kind, including, but not limited to, the Vehicle, and any other apparatuses owned by Seller and attached to or used exclusively in connection with the ownership, maintenance, or operation of the Pinnacle Lodge as operated on the Real Property. The foregoing notwithstanding, the “Personal Property” shall not include the following items on the Real Property as of the Execution Date: (a) the Cat tractor with plow, forklift and bucket attachments; (b) two Dell notebook computers and HP laser printer; (c) personal pictures and certificates in office; (d) personal possessions in manager residence rooms 323 and 324; (e) 16-foot black, enclosed storage trailer; (f) 15-foot motorcycle trailer; and (g)all Direct TV equipment and other equipment related to the satellite television system (owned by SVI).

1.13   “Purchase Price” - as defined in Section 2.2 .

1.14   “Purchaser” - as defined in the Preamble to this Agreement.

1.15   “Real Property” - The Land and the Improvements.

1.16   “Seller” - as defined in the Preamble to this Agreement.

1.17   “Surviving Obligations” - as defined in Sections 3.4(b), 10.1, and 10.16 .

1.18   “Title Commitment” - as defined in Section 3.1 .

1.19   “Title Company” - Chicago Title Insurance Company, 4032 McDermott Road, Suite 100-A, Plano, Texas, 75024, attn: Lois McGrew.

1.20   “Title Policy” - as defined in Section 4.2 .

1.21   “Vehicle” - the Pinnacle Lodge Ford E-350 shuttle van, VIN: 1FBSS31L31HA8712.

2.1   Purchase . For the consideration hereinafter set forth, but subject to the terms, provisions, covenants and conditions contained herein, Seller shall sell and convey the Assets to Purchaser and Purchaser shall purchase the Assets from Seller.

2.2   Purchase Price . The purchase price (the “Purchase Price” ) for the Assets shall be Three Million Six Hundred Fifty Thousand and No/100 Dollars ($3,650,000.00), plus the sums described in Article VI , which shall be paid as set forth below.

(a)   Deposit . On the Execution Date, Purchaser shall deliver to the Title Company’s escrow account good funds in the amount of Fifty Thousand and No/100 Dollars ($50,000.00). On the 14 ^th day following the Execution Date, if Purchaser has not elected to terminate this Agreement pursuant to Section 3.5 , the Title Company shall immediately pay to Seller from such escrowed funds Ten Thousand and No/100 Dollars ($10,000.00), which shall not be refundable to Purchaser, except as set forth in Article VII and Section 9.1 . On the 30 ^th day following the Execution Date, if Purchaser has not elected to terminate this Agreement pursuant to Section 3.5 , the Title Company shall immediately pay to Seller from such escrowed funds an additional Ten Thousand and No/100 Dollars ($10,000.00), which shall not be refundable to Purchaser, except as set forth in Article VII and Section 9.1 . Upon expiration of the Inspection Period, if Purchaser has not elected to terminate this Agreement pursuant to Section 3.5 , the Title Company shall immediately pay to Seller from such escrowed funds the remaining Thirty Thousand and No/100 Dollars ($30,000.00), plus all accrued interest, which shall not be refundable to Purchaser, except as set forth in Article VII and Section 9.1 . Title Company shall hold such sums in escrow for the benefit of Purchaser and Seller pursuant to the terms of this Agreement in an FDIC-insured interest-bearing account. Failure by Purchaser to timely pay such sum to the Title Company or any action by Purchaser to prevent or delay release of such funds from the Title Company to Seller shall constitute a default of this Agreement by Purchaser without further action or notice and this Agreement shall terminate, except for the Surviving Obligations, which shall survive in any event. All sums paid to the Title Company and/or released by the Title Company to Seller pursuant to this subsection 2.2(a) , together with all interest earned thereon, shall be referred to as the “Deposit.”  

(b)   Cash . The Purchase Price, subject to prorations and adjustments in accordance with Section 8.3 , shall be paid at Closing in cash, by certified or cashier's check, wire transfer, or other immediately available funds. The Deposit shall be credited against the Purchase Price at Closing.

2.3   Allocation . Prior to expiration of the Inspection Period, Seller and Purchaser shall, in accordance with the provisions of Internal Revenue Code Sec. 1060 and the Regulations thereto, allocate the Purchase Price in order to establish separate purchase prices for the various components of the Assets. In the event that Seller and Purchaser are unable to agree upon said allocation of the Purchase Price during the Inspection Period, then each Party (at its sole cost and expense) shall immediately retain a qualified appraiser to perform separate valuations of each such component of the Assets and the average of the valuations of each such component of the Assets, as determined by each appraiser shall be used to determine such allocations.

3.1   Title Commitment . Within 10 days following the Execution Date, Seller shall obtain and deliver to Purchaser, at Seller’s expense, a current title insurance commitment issued by the Title Company, including legible copies of all recorded exceptions to title referred to therein (collectively, the “Title Commitment” ), committing to insure title to the Real Property in Purchaser by the issuance of an ALTA policy of owner's title insurance, in the amount of the Purchase Price. Purchaser may, during the Inspection Period, at its expense, request such additional endorsements to the Title Policy as Purchaser deems reasonably necessary, including an endorsement for deletion of the standard printed exceptions.

3.2   Survey . Within 10 days following the Execution Date, Seller shall provide Purchaser with a copy of its existing ALTA Survey of the Real Property (the “Survey” ).

3.3   Other Documents and Materials . Seller shall provide copies to, or make available for inspection by, Purchaser such non-proprietary, non-privileged, documents and materials relating to the Assets as Purchaser may reasonably request, to the extent the same are in Seller's possession or control or are in the possession or control of Seller’s agents.

3.4   Inspection .

(a)   Title Commitment . Purchaser shall have five days following its receipt of the Title Commitment and the Survey within which to give Seller written notice ( “Purchaser’s Disapproval Notice” ) of Purchaser’s disapproval of any exceptions to title shown in the Title Commitment or Survey or any other matters effecting title to the Real Property ( “Title Exceptions” ). The failure of Purchaser to give Purchaser’s Title Disapproval Notice within such period shall be deemed to constitute Purchaser’s approval of all of the Title Exceptions. In the event of Purchaser’s disapproval of any of the Title Exceptions as set forth above, Seller shall have five days after Seller’s receipt of Purchaser’s Disapproval Notice during which to determine and give Purchaser written notice ( “Seller’s Cure Notice” ) of any disapproved Title Exceptions which Seller elects, in its sole discretion, to eliminate as exceptions to title to the Real Property. The failure of Seller to give Seller’s Cure Notice within the period described above shall be deemed to constitute Seller’s election not to cure any of the matters described in the Purchaser’s Disapproval Notice. Prior to the Closing, Seller shall eliminate, at its sole cost and expense, all Title Exceptions set forth in Seller’s Cure Notice from the Title Policy and as exceptions to title to the Real Property. If acceptable to Purchaser, Seller’s elimination of such title matters may be accomplished by Seller’s obtaining, at its expense, title insurance protection for Purchaser against such exception, the form of which shall be reasonably satisfactory to Purchaser. If Seller’s Cure Notice does not include all Title Exceptions disapproved by Purchaser in Purchaser’s Disapproval Notice, or if Seller fails to deliver Seller’s Cure Notice, Purchaser shall have the right to terminate this Agreement in accordance with the terms of Section 3.5 or acquire the Real Property subject to the disapproved Title Exceptions not included within Seller’s Cure Notice. If Purchaser elects to proceed with the purchase of the Real Property pursuant to Section 3.5 , then the Title Exceptions and the matters described in Article VI and Permitted Subsequent Exceptions (defined below), but excluding (i) those Title Exceptions to be deleted pursuant to the Seller’s Cure Notice, (ii) any delinquent taxes or assessments, and (iii) any liens, encumbrances or security interests securing payment of any monetary lien created by or against Seller or the Real Property, shall be the “Permitted Exceptions” hereunder. A “Permitted Subsequent Exception” shall mean any encumbrance, encroachment, defect in title, or other matter which does not adversely interfere with the operation of a hotel on the Real Property (as determined in Purchaser’s reasonable discretion) and which is not otherwise a Permitted Exception, and (A) of which Purchaser and Seller are notified by the Title Company prior to the Closing (by endorsement to the Title Commitment or otherwise); or (B) which is discovered by Purchaser, and of which Purchaser notifies Seller, prior to the Closing.

(b)   Inspection . Purchaser shall have until 5:00 p.m. (Denver, Colorado time) the 45 ^th day following the Execution Date (the “Inspection Period” ) to investigate and evaluate all aspects of the Assets. During the Inspection Period, Purchaser and its representatives may investigate and evaluate all physical aspects of the Assets, including, without limitation, the right to have made, at Purchaser's expense, any studies or inspections of the Real Property as Purchaser may deem necessary or appropriate. Seller shall reasonably cooperate (at Purchaser’s expense) with any such investigations, inspections, or studies made by or at Purchaser's direction. Seller shall grant Purchaser access to the Real Property and the right to make all such engineering studies, environmental and other investigations of all physical aspects of the Assets as Purchaser may determine. The foregoing notwithstanding, Purchaser’s right to access to the Assets shall be subject to uninterrupted privacy by guests at Pinnacle Lodge, which shall limit access to rooms and other facilities on the Real Property. Purchaser shall repair any damage to the Assets caused by its inspections and testing. Such entry shall be at the sole risk of Purchaser and Purchaser's representatives. Purchaser shall pay all costs associated with such investigation, inspection and testing, and shall keep the Assets and Seller's property free and clear of any claims of lien connected therewith. Purchaser shall indemnify, hold harmless and protect Seller, and defend Seller with counsel reasonably acceptable to Seller, for, from and against all liability, claims, demands, damages, expenses, obligations, causes of action, judgments, losses, costs and expenses (including, without limitation, reasonable attorneys’ fees, all fines, charges, penalties and consultants’ fees, and all cleanup, repair, detoxification, removal, remedial, response and abatement costs), (collectively, “Inspection Claims” ) of any kind whatsoever arising from or connected with such site investigation, inspection and testing. Notwithstanding any provision of this Agreement which may indicate to the contrary, the obligations of Purchaser pursuant to this subsection 3.4(b) shall survive Closing or termination of this Agreement for any reason, and shall be deemed a “Surviving Obligation” for all purposes of this Agreement.

3.5   Termination; Deposit . If, on or before the expiration of the Inspection Period, (i) Purchaser determines, in its sole and absolute discretion, that the Assets are not suitable for Purchaser's intended use and notifies Seller in writing of Purchaser's election to terminate this Agreement, or (ii) Purchaser   fails to timely pay the Deposit into the Title Company escrow or causes the delay of the payment of the Deposit to Seller from the escrow pursuant to subsection 2.2(a) , then this Agreement shall terminate, the Title Company shall return those portions of the Deposit which were not paid to Seller (or required by subsection 2.2(a) to be paid to Seller) to Purchaser, and Purchaser and Seller shall be relieved from any further liability hereunder, except for the Surviving Obligations, which shall survive in any event. If neither of the occurrences set forth in clauses (i) or (ii) occur, then this Agreement shall remain in full force and effect and Purchaser shall be deemed to have approved the results of all of its inspections.

4.1   Status of Title . At Closing hereunder, Seller shall convey to Purchaser fee simple title to the Real Property, subject only to the Permitted Exceptions, and title to the Personal Property. Seller shall not, after the Execution Date, sell, convey, mortgage, deed in trust, lease, grant easements affecting or otherwise encumber or convey the Assets other than in the ordinary course of business, excepting, however, (a) the Permitted Exceptions, and (b) such other title exceptions as are specifically permitted under this Agreement and/or those which have been specifically approved in writing by Purchaser, which approval shall not be unreasonably withheld or delayed.

4.2   Issuance of Title Policy . At each Closing, Seller shall pay the premium for and cause the Title Company to issue to Purchaser, or unconditionally commit to issue to Purchaser after Closing, an ALTA owner's policy of title insurance consistent with the Title Commitment, insuring fee simple title to the Real Property in Purchaser in the amount of the Purchase Price, subject only to the Permitted Exceptions (the “Title Policy” ). Purchaser shall pay any title insurance premium for endorsements to the Title Policy requested by Purchaser.

5.1   Seller's Representations and Warranties . Seller represents and warrants to Purchaser as follows. For purposes of this Article V , the phrase   “to Seller's knowledge” or like terms shall mean to the best actual knowledge of Mr. Brian Fitzpatrick, the general manager of the Pinnacle Lodge, without investigation or inquiry or any duty to investigate or inquire. The representations and warranties made by Seller in this Article V shall be true and correct on and as of the Closing Date with the same force and effect as though such representations and warranties had been made on and as of the Closing Date.

(a)   Authority . Seller is a limited partnership duly organized and validly existing under the laws of the State of Florida and has the full right, power and authority to enter into this Agreement and consummate the transactions contemplated by this Agreement. The person signing this Agreement and all other instruments to which Seller is a party on behalf of Seller is authorized to do so.

(b)   No Actions . To the best of Seller’s knowledge, Seller has received no written notice of any actions, suits or proceedings, pending or threatened, before any judicial body or any governmental or quasi-governmental authority, against or affecting the Assets that adversely affect the Seller’s ability to consummate the transactions contemplated by this Agreement.

(c)   No Violations of Contracts or Agreements; No Approval . Seller’s execution, delivery and performance under this Agreement will not violate any provision of any contract or agreement to which Seller is a party or by which Seller is bound. No approval or consent not previously obtained by any person or entity is necessary in connection with the execution of this Agreement by Seller or the performance of Seller’s obligations under this Agreement.

(d)   No Violation of Court Orders . To Seller’s knowledge, the execution and delivery of this Agreement will not violate any order or demand of any court, regulatory agency or other tribunal or any certificate, license, law or regulation to which Seller is subject.

(e)   Title to Assets . Seller has title to all of the Assets, free and clear of all claims and encumbrances arising by, through or under Seller, other than (A) any liens for taxes not yet due and payable or being contested in good faith by appropriate proceedings, and (B) such imperfections of title, easements, liens, pledges, charges and encumbrances, if any, as do not materially detract from the value or interfere with the present use of any of the Assets.

(f)   Physical Condition of Improvements . To the best of Seller’s knowledge, there are no material defects in the construction of the Improvements that have caused Seller to fail to operate the hotel building in a commercially reasonable manner. For purposes of this subsection 5.1(f) , a “material defect” shall mean a defect that would cost more than $100,000.00 to correct, and shall not include the aesthetic or other subjective quality of the design of the hotel building or any system, element or component thereof.

(g)   All Assets Covered . The Assets to be conveyed to Purchaser by Seller pursuant to this Agreement comprise all of the assets and properties of Seller that are used in the operation of Pinnacle Lodge in the ordinary course of business and consistent with Seller’s current practice, except for any cash utilized in said business or the items described in the last sentence of Section 1.12 . In the event that either Seller or Purchaser discovers after Closing any material item theretofore used in connection with the operation of Pinnacle Lodge has not been conveyed to Purchaser at Closing, the Seller shall, immediately upon demand by Purchaser, convey such item to Purchaser for no additional consideration.

5.2   As Is; No Other Representations or Warranties by Seller . Purchaser represents that it is sophisticated and experienced in the acquisition of property similar to the Assets, and Purchaser will have an adequate opportunity to inspect, examine and evaluate the Assets. In purchasing the Assets, Purchaser shall rely solely on the results of its inspections, examinations and evaluations and not on any representation or warranty made by Seller, except as set forth in Section 5.1 . Purchaser shall acquire the Assets in an “as is” and “where is” condition, with all faults, whether known or unknown. Purchaser acknowledges that any information of any type which Purchaser has received or may receive from Seller or Seller’s agents, including