CONSOLIDATED, AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS CONSOLIDATED, AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT , dated as of February 21, 2007, entered into by and between SILVERLEAF RESORTS, INC. , a Texas corporation (as “ Borrower ”) and TEXTRON FINANCIAL CORPORATION , a Delaware corporation (the “ Lender ”).

WHEREAS, Borrower and Lender entered into an Amended and Restated Loan, Security and Agency Agreement (Tranche A), dated as of April 30, 2002 (as amended, the “ Tranche A Loan Agreement ”), pursuant to which the Borrower executed an Amended and Restated Secured Promissory Note in the original principal amount of $56,894,400.00, dated April 30, 2002, in favor of Lender (the “ Tranche A Note ”);

WHEREAS, Borrower, Lender, Webster Bank and Bank of Scotland entered into an Amended and Restated Loan, Security and Agency Agreement (Tranche B), dated as of April 30, 2002 (as amended, the “ Tranche B Loan Agreement ”), pursuant to which Borrower executed: (i) an Amended and Restated Secured Promissory Note in the original principal amount of $40,305,200.00, dated April 30, 2002, in favor of Lender; (ii) an Amended and Restated Secured Promissory Note in the original principal amount of $7,899,500.00, dated April 30, 2002, in favor of Webster Bank; and (iii) a Secured Promissory Note in the original principal amount of $7,899,500.00, dated April 30, 2002, in favor of Bank of Scotland (singly and collectively the “ Tranche B Note ”);

WHEREAS, Borrower and Lender entered into an Amended and Restated Loan and Security Agreement (Tranche C), dated as of April 17, 2001 (as amended, the “ Tranche C Loan Agreement ”, collectively with the Tranche A Loan Agreement and the Tranche B Loan Agreement, the “ Original Loan Agreement ”), pursuant to which Borrower executed an Amended and Restated Secured Promissory Note in the original principal amount of $8,060,000.00, dated April 30, 2002, in favor of Lender (the “ Tranche C Note ”, collectively with the Tranche A Note and the Tranche B Note, the “ Original Note ”);

WHEREAS, the Lender and Borrower entered into a Consolidated, Amended and Restated Loan, Security and Agency Agreement, dated as of August 5, 2005 (the “ Receivable Loan Agreement ”) to consolidate, amend and restate the: (i) Tranche A Loan Agreement; (ii) Tranche B Loan Agreement; and (iii) Tranche C Loan Agreement;

WHEREAS, pursuant to the Receivable Loan Agreement, the Original Note was replaced by a Consolidated, Amended and Restated Secured Promissory Note, dated as of August 5, 2005 in the aggregate principal amount of $100,000,000.00 in favor of Lender, as agent for each of the lenders under the Receivable Loan Agreement (the “ Current Receivable Note ”);

WHEREAS, Lender and Borrower entered into that certain Loan and Security Agreement, dated as of December 16, 1999, as amended by that certain First Amendment to Loan and Security Agreement, dated as of April 17, 2001, as further amended by that certain Second Amendment to Loan and Security Agreement, dated as of April 30, 2002, as further amended by that certain Letter Amendment, dated as of March 27, 2003, and as further amended by that certain Third Amendment to Loan and Security Agreement (Inventory Loan), dated as of December 19, 2003 (collectively, the “ Original Inventory Loan Agreement ”);

WHEREAS, pursuant to the Original Inventory Loan Agreement, Lender agreed, subject to the terms and conditions of the Original Inventory Loan Agreement, to provide to Borrower, for the purpose of providing liquidity in connection with Borrower’s ownership, purchase and warehousing of Intervals (as such term is hereinafter defined), a loan in the maximum amount of $10,000,000 (the “ Original Inventory Loan ”), which loan was evidenced by Borrower’s Amended and Restated Secured Promissory Note, dated as of April 30, 2002 (the “ Original Inventory Note ”);

WHEREAS, Lender and Borrower amended and restated the Original Inventory Loan Agreement in its entirety pursuant to an Amended and Restated Loan, Security and Agency Agreement dated as of March 5, 2004, as amended by that certain Letter Amendment, dated as of April 16, 2004, and as further amended by that certain Letter Amendment, dated as of July 30, 2004 (together with the First Amendment and the Second Amendment, as such terms are hereafter defined, the “ Restated Inventory Loan Agreement ”);

WHEREAS, pursuant to the Restated Inventory Loan Agreement, Lender agreed, subject to the terms and conditions of the Restated Inventory Loan Agreement, to provide to Borrower, for the purpose of providing liquidity in connection with Borrower’s ownership, purchase and warehousing of Intervals, to make an additional inventory loan to the borrower in the maximum amount of $8,000,000 (the “ Additional Inventory Loan ”). The Original Inventory Loan and the Additional Inventory Loan are evidenced, respectively, by the Original Inventory Note, in the original principal amount of Ten Million Dollars ($10,000,000), and the Borrower’s Secured Promissory Note, dated March 5, 2004, in the original principal amount of Eight Million Dollars ($8,000,000) (the “ Second Inventory Note ” );

WHEREAS, pursuant to that certain First Amendment to Amended and Restated Loan and Security Agreement (Inventory Loan) dated as of February 28, 2005 (the “ First Amendment ”), Lender provided Borrower with an additional inventory loan in the maximum amount of $5,000,000 (the “ Inventory Term Loan ”) for the purpose of the repaying certain receivable credit facilities made by Lender to Borrower, which Inventory Term Loan increased the Inventory Loan to $21,000,000, and which Inventory Term Loan is evidenced by that certain Secured Promissory Note (Inventory Term Loan) dated February 28, 2005 in the original principal amount of $5,000,000.00 (the “ Inventory Term Loan Note ”); the Inventory Term Loan together with the Original Inventory Loan and the Additional Inventory Loan are collectively, referred to herein as the “ Inventory Loan ”);

WHEREAS, pursuant to that certain Second Amendment to Amended and Restated Loan and Security Agreement (Inventory Loan) dated as of October 26, 2005 (the “ Second Amendment ”), Lender agreed to extend the period during which Borrower may obtain advances pursuant to the Restated Inventory Loan Agreement and to extend the Final Maturity Date under the Restated Inventory Loan Agreement;

WHEREAS, Lender and Borrower have agreed to enter into this Agreement, as such term is hereafter defined, to: (A) consolidate, amend and restate the: (i) Receivable Loan Agreement and (ii) Restated Inventory Loan Agreement and (B) to provide to Borrower, subject to the terms and conditions of this Agreement, with acquisition financing in the maximum aggregate amount of $20,000,000 for the purpose of providing liquidity in connection with Borrower’s acquisition and ownership of certain improved and unimproved real property (the “ Acquisition Loan ”); and

WHEREAS, pursuant to this Agreement: (i) the Current Receivable Note will be replaced by an Amended and Restated Secured Promissory Note (Receivable Component)(the “ Receivable Note ”), (ii) the Original Inventory Note, the Second Inventory Note and the Inventory Term Loan Note will be replaced by an Amended and Restated Secured Promissory Note (Inventory Component) (the “ Inventory Note ”) and (iii) Borrower shall issue and deliver to Lender its Secured Promissory Note (Acquisition Component) to evidence the Acquisition Loan (the “ Acquisition Note ”).

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

Capitalized terms used in this Agreement are defined in this Section 1. The definitions include the singular and plural forms of the terms defined.

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

(i)   the Real Property;

(ii)   documents, instruments, accounts, chattel paper, and general intangibles relating to the Real Property;

(iii)   the Receivable Loan Component Collateral;

(iv)   the Inventory Loan Component Collateral;

(v)   the Silverleaf Finance II Stock;

(vi)   the Silverleaf Finance II Subordinated Note;

(vii)   all books, records, reports, computer tapes, discs and software relating to the Acquisition Loan Component Collateral; and

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

Acquisition Loan Component . The Acquisition Loan Component shall be that portion of the Loan that may be used by Borrower to fund the acquisition of the Real Property in an aggregate amount not to exceed $20,000,000.00, subject to the terms and provisions of this Agreement.

Acquisition Note . The term “Acquisition Note” shall have the meaning given to such term in the recitals hereto.

Additional Eligible Resorts or Additional Eligible Resort . The terms “Additional Eligible Resorts” and “Additional Eligible Resort” shall have the meanings ascribed to such terms in Section 3.5 hereof.

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

Affiliate . Any party controlled by, controlling, or under common control with, Borrower.

Agreement . This Consolidated, Amended and Restated Loan and Security Agreement by and between Borrower and Lender, as it may be amended from time to time.

Assignment of Notes Receivable and Mortgages . The term “Assignment of Notes Receivable and Mortgages” shall mean a recordable Collateral Assignment of Notes Receivable and Mortgages, in the form attached hereto as Exhibit A, made by Borrower in favor of Lender, evidencing the assignment to Lender, of all of the Pledged Notes Receivable and Mortgages.

Borrowing Base . With respect to each Eligible Note Receivable pledged to Lender hereunder in connection with each Advance from and after the Effective Date, an amount equal to seventy-five percent (75%) of the remaining principal balance of each such Eligible Note Receivable.

Business Day . Each day that is not a Saturday, a Sunday or a legal holiday under the laws of the State of Rhode Island, the State of Connecticut or the State of Texas.

Collateral . The term “Collateral” shall mean, singly and collectively, the Acquisition Loan Component Collateral, the Inventory Loan Component Collateral and the Receivable Loan Component Collateral.

Closing Date . The term “Closing Date” shall mean the date hereof.

Code . The Uniform Commercial Code in force in the State of Rhode Island as amended from time to time.

Commitment . The term “Commitment” shall refer singly to the obligation of Lender to make a Loan or Loans to Borrower and collectively to all Loans to be made by Lender to Borrower as provided herein. The maximum aggregate Commitment of Lender hereunder shall be $100,000,000.00, provided, however, that the maximum Commitment of Lender with respect to the Acquisition Loan Component shall be $20,000,000.00, the Maximum Commitment of the Lender with respect to the Inventory Loan Component shall be $40,000,000.00 and the Maximum aggregate Commitment of Lender with respect to the Acquisition Loan Component and the Inventory Loan Component shall be $40,000,000.00.

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

Custodian . Wells Fargo Bank, National Association having an address of 751 Kasota Ave, MAC# N9328-011, Minneapolis, MN 55414, or such other custodial agent as may be approved by Lender in writing from time to time. Custodian shall be Lender's agent for the purpose of maintaining possession of all present and future Collateral documents described in Section 3 hereof.

Custodial Agreement . The Custodial and Collateral Agency Agreement, dated as of January 13, 2005 by and among Lender, Borrower and Custodian, pursuant to which the Custodian is to maintain possession of all present and future Collateral documents described in Section 3 hereof, or any custodial agreement entered into as a replacement of such agreement.

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

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

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

Default Rate . The term “Default Rate” shall have the meaning given to such term in the applicable Note.

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

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

Effective Date . The term “Effective Date” shall have the meaning given in Section 13.1 hereof.

Eligible Notes Receivable . Those Pledged Notes Receivable which satisfy each of the following criteria:

(i)   Borrower shall be the sole payee;

(ii)   it arises from a bona fide sale by Borrower of one or more Intervals;

(iii)   the Interval sale from which it arises shall not have been cancelled by Purchaser, and any statutory or other applicable cancellation or rescission period shall have expired and the Interval sale is otherwise in compliance with this Agreement;

(iv)   it is secured by a Mortgage on the purchased Interval;

(v)   principal and interest payments on it are payable to Borrower in legal tender of the United States;

(vi)   payments of principal and interest on it are payable in equal monthly installments;

(vii)   it shall have an original term of no more than one hundred twenty (120) months;

(viii)   a cash down payment has been received from Purchaser or the maker in an amount equal to at least ten percent (10%) of the actual purchase price of each Interval, and Purchaser shall have received no cash or other rebates of any kind;

(ix)   no monthly installment is more than thirty (30) days contractually past due at the time of an Advance in respect of such Eligible Note Receivable, or more than sixty (60) days contractually past due at any time;

(x)   the rate of interest payable on the unpaid balance is at least the rate required so that when the Advance is made in respect of such Eligible Note Receivable the average interest rate on all Eligible Notes Receivable in respect of which Advances are outstanding shall not be less than thirteen percent (13%) per annum at any time, provided, however, that up to two percent (2.0%) of the Pledged Notes Receivable at any one time may consist of Notes Receivable that bear interest at a reduced rate under the Soldiers and Sailors Civil Relief Act, and any such Notes Receivable shall not be included in computing whether the average interest rate satisfies the foregoing requirement;

(xi)   Purchaser of the related Interval has immediate access, for the timeshare “unit week” related to such purchase, to the Interval described in the Mortgage securing such Eligible Note Receivable, which Interval has been completed, developed, and furnished in accordance with the specifications provided in the Purchaser’s purchase contract, public offering statement and other Timeshare Documents; and Purchaser has, subject to the terms of the Declaration, purchase contract, public offering statement and other Timeshare Documents, complete and unrestricted access to the related Interval and the Resort;

(xii)   neither Purchaser of the related Interval or any other maker of the Note is an Affiliate of, or related to, or employed by Borrower;

(xiii)   Purchaser or other maker has no claim against Borrower and no defense, set-off or counterclaim with respect to the Note Receivable;

(xiv)   the maximum remaining principal balance of any such Note Receivable shall not exceed $35,000 and such Note Receivable shall not be executed by a Purchaser or other maker if the total maximum remaining principal balance of the Notes Receivable executed by such Purchaser or other maker shall exceed $60,000 in the aggregate (or such greater amount as may be approved in writing in advance by Lender); provided, however, that up to ten percent (10%) of the outstanding principal balances of Pledged Notes Receivable at any one time may consist of a combination of “Eligible Larger Notes Receivable” and “Eligible Larger Aggregate Notes Receivable”. As used herein, the term “Eligible Larger Notes Receivable” shall mean Notes Receivable in respect of which: [w] the maximum remaining principal balance of any such Note Receivable exceeds $35,000 but does not exceed $150,000 (each a “ Larger Note Receivable ”); and [x] such Note Receivable satisfies all of the other eligibility criteria set forth in the Agreement. As used herein, the term “Eligible Larger Aggregate Notes Receivable” shall mean Notes Receivable; (y) executed by a Purchaser or other maker obligated in connection with a Larger Note Receivable if the remaining principal balance of all Notes Receivable executed by such Purchaser or other maker does not exceed $250,000; and (z) which satisfy all of the other eligibility criteria set forth in this Agreement;

(xv)   it is executed by a U.S. or Canadian resident; provided, however, that no more than ten percent (10%) of the outstanding principal balance of all Eligible Notes Receivable shall at any time be comprised of Notes Receivable executed by Canadian residents, and, to the extent such outstanding principal balance of such Notes exceeds ten percent (10%), they shall not be considered Eligible Notes Receivable;

(xvi)   the original of such Note Receivable has been endorsed to Lender and delivered to the Custodian as provided in this Agreement, and the terms thereof and all instruments related thereto shall comply in all respects with all applicable federal and state laws and the regulations promulgated thereunder;

(xvii)   the Unit in which the timeshare Interval being financed or evidenced by such Note Receivable is located, shall not be subject to any Lien which is not previously consented to in writing by Lender; and

(xviii)   if the loan is a newly originated Eligible Note Receivable which is replacing an existing Eligible Note Receivable pledged as Collateral under the Agreement and the proceeds have been used to finance the purchase of an Interval which is being upgraded by the Purchaser to a more expensive Interval:

(1)   the principal balance of the existing Eligible Note Receivable which is being upgraded may still be included for purposes of calculating the Borrowing Base for a period of time expiring on the earlier to occur of (i) the 31st day after the consumer documents effecting the upgrade have been executed or (ii) the date on which any payment on such Eligible Note Receivable becomes thirty (30) or more days past due;

(2)   on or before the second business day after the expiration of the statutory rescission period in connection with any consumer documents executed effecting any upgrade involving an Eligible Note Receivable and in any event within ten (10) days of such upgrade, the Borrower shall deliver to the Lender or its designee the original of the new promissory note, comparable instrument or installment sale contract executed in connection with such upgrade duly endorsed in blank by the Borrower and the Borrower will cause all payments made with respect to such new promissory note, comparable instrument or installment sale contract to be forwarded to the lockbox; and

(3)   any new upgraded Note Receivable involving a prior Eligible Note Receivable shall only be included as part of the Borrowing Base if the prior Eligible Note Receivable has been removed from the Borrowing Base and the new upgraded Note Receivable satisfies all conditions for an Eligible Note Receivable.

Encumbered Intervals . The Intervals subject to the Mortgages.

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

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

Exchange Company . Resort Condominiums International, Inc. (“RCI”).

Event of Default . The term “Event of Default” shall have the meaning given to such term in Section 8.1 of this Agreement.

Event of Non Funding . The term “Event of Non Funding” shall have the meaning given to such term in Section 2.6 of this Agreement.

Final Maturity Date . The term “Final Maturity Date” shall mean the applicable maturity date of each Loan Component as follows: (i) January 31, 2013 with respect to the Receivable Loan Component and (ii) January 31, 2012 with respect to each of the Acquisition Loan Component and the Inventory Loan Component.

Financial Statements . The tax returns and balance sheets and statements of income and expense of Borrower, and the related notes and schedules delivered by Borrower to Lender prior to the date of this Agreement; as provided for in Section 4.4(c)(xvii) of this Agreement; and the monthly, quarterly and annual financial statements and reports required to be provided to Lender pursuant to Section 7.1(h).

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

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

Interest Rate . The Interest Rate on: (i) the Receivable Note shall be a variable rate, adjusted as of each Prime Rate Determination Date, equal to the Prime Rate, determined as of each Prime Rate Determination Date and (ii) each of the Acquisition Note and the Inventory Note shall be a variable rate, adjusted as of each Prime Rate Determination Rate, equal to the Prime Rate, determined as of each Prime Rate Determination Date, plus one percent (1%) per annum.

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

Interval Release Threshold . The term “Interval Release Threshold” shall mean 110% of the Required Retail Value of the Inventory. By way of example only, if the Required Retail Value of the Inventory is $66,666,666.66, the Inventory Release Threshold will be $73,333,333.33.

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

Inventory Loan Component . The term “Inventory Loan Component” shall mean that certain $40,000,000.00 timeshare interval inventory loan provided by Lender to Borrower pursuant to this Agreement.

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

(i)   the Inventory;

(ii)   documents, instruments, accounts, chattel paper, and general intangibles relating to the Inventory;

(iii)   the Acquisition Loan Component Collateral;

(iv)   the Receivable Loan Component Collateral;

(v)   the Silverleaf Finance II Stock;

(vi)   the Silverleaf Finance II Subordinated Note;

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

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

Inventory Mortgage or Inventory Mortgages . The term “Inventory Mortgage” or “Inventory Mortgages” shall mean, singly and collectively, a properly recorded, first priority mortgage, deed of trust, deed to secure debt, assignment of beneficial interest or other security instrument, as applicable, executed and delivered by Borrower to Lender encumbering all of the right, title and interest of the Borrower in the Intervals and related Common Elements, and related or appurtenant easement, access and use rights and benefits, that is collateral for the Inventory Loan Component.

Inventory Note . The term “Inventory Note” shall have the meaning given to such term in the Recitals.

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

Loan or Loans . The terms “Loan” and “Loans” mean, as the context requires, singly each loan and collectively all loans made to Borrower prior to the Effective Date pursuant to the Receivable Loan Agreement and the Restated Inventory Loan Agreement and all Loans made to Borrower after the Effective Date under this Agreement.

Loan Component . The term “Loan Component” shall mean, singly and collectively, the Acquisition Loan Component, the Inventory Loan Component and the Receivable Loan Component.

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

(i)   This Agreement ;

(ii)   The Receivable Note ;

(iii)   The Inventory Note ;

(iv)   The Acquisition Note ;

(v)   The Environmental Indemnification Agreement ;

(vi)   The Assignment of Notes Receivable and Mortgages;

(vii)   The Inventory Mortgages ;

(viii)   The Real Property Mortgages ;

(ix)   The Modifications to Inventory Mortgages ;

(x)   Borrower’s Acquisition Certificate and Request for Advance;

(xi)   Borrower’s Inventory Certificate and Request for Advance ;

(xii)   Borrower’s Receivable Certificate and Request for Advance ;

(xiii)   The Lockbox Agreement;

(xiv)   The Custodial Agreement;

(xv)   The Silverleaf II Stock and Subordinated Note Pledge Agreement;

(xvi)   Financing Statements ; UCC financing statements covering the Collateral, to be filed with the Texas Secretary of State and the Secretary of State and/or such other office where UCC financing statements are required to be filed pursuant to the Code; and

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

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

Loan Year . The period commencing on the Closing Date through the last day of the next full twelve calendar month period and each successive twelve calendar month period thereafter during the Loan Term.

Lockbox Agent . JP Morgan Chase Bank, a New York banking association having a place of business at 2200 Ross Avenue, Dallas, Texas 75201, or such other financial institution as may be approved by Lender in writing from time to time.

Lockbox Agreement . The Lockbox and Servicing Agreement, dated as of December 16, 1999, by and among Borrower, Lender, Servicing Agent and Lockbox Agent, pursuant to which the Lockbox Agent is to provide lockbox, reporting and related services and is to provide for the receipt of payments on the Notes Receivable and the disbursement of such payments to Lender.

Management Agreements . Shall mean that certain Management Agreement by and between Silverleaf Club and Silverleaf Resorts, Inc., dated as of March 28, 1990, as amended to date and any other management agreement entered into by Borrower or any Affiliate of Borrower with respect to any Resort.

Mandatory Prepayment . Any prepayment required by Section 2.5(a)(ii) and Section 2.5(c)(ii) of this Agreement.

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

Mortgage . A properly recorded, first priority mortgage, deed of trust, deed to secure debt, assignment of beneficial interest or other security instrument, as applicable, executed and delivered by each Purchaser to Borrower, securing a Pledged Note Receivable and encumbering all of the right, title and interest of such Purchaser in the related Encumbered Interval and Common Elements, and related or appurtenant easement, access and use rights and benefits. Lender acknowledges that assignments of beneficial interest executed by Purchasers of Intervals at Oak N’ Spruce Resort after July 2004 will not be recorded.

Modification(s) to Inventory Mortgages . Properly recorded amendment and restatement(s) or modification(s) of any existing Inventory Mortgages, in form and substance reasonably acceptable to Lender, for the purpose of securing the Loan, including the Acquisition Loan Component and the Receivable Loan Component.

Net Securitization Cash Flow . The term “Net Securitization Cash Flow” shall mean all right, title and interest of Silverleaf Finance II, Inc., a wholly owned subsidiary of Borrower, in any excess cash flow derived from the Notes Receivable sold by Borrower to Silverleaf Finance II, Inc. and then sold by Silverleaf Finance II, Inc. to Textron Financial Corporation, as Group Two Lender under the Silverleaf Finance II Documents.

Note . The term “Note” shall mean, singly and collectively, the Acquisition Note, in the form and substance attached here as Exhibit B-1, the Inventory Note, in the form and substance attached here as Exhibit B-2, and the Receivable Note, in the form and substance attached here as Exhibit B-3, as the case may be.

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

Obligations . All amounts due or becoming due to Lender in respect of the Loan or Loans under any of the Loan Documents, including principal, interest, prepayment premiums, contributions, taxes, insurance, loan charges, custodial fees, attorneys’ and paralegals’ fees and expenses and other fees or expenses incurred by Lender or advanced to or on behalf of Borrower by Lender pursuant to any of the Loan Documents, and the prompt and complete payment and performance by Borrower of all obligations, indebtedness and liabilities pursuant to this Agreement or any of the Loan Documents or otherwise

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

Operating Expenses . Shall mean the total of all expenditures, computed in accordance with Generally Accepted Accounting Principles, of whatever kind relating to the ownership, operation, maintenance and management of the Resorts that are incurred on a regular monthly or other periodic basis, including, without limitation, utilities, ordinary and capital repairs and maintenance, insurance premiums, license fees, property taxes and assessments, management fees, payroll and related taxes, computer processing charges, operational equipment or other lease payments as approved by Lender, and other similar costs.

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

Payment Authorization Agreement . Pre-authorized electronic debit agreement by a Purchaser for payment of a Note Receivable.

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

Pledged Notes Receivable . Any Note Receivable which at any time has been pledged to Lender by Borrower pursuant to this Agreement or any of the Loan Documents.

Prescribed Laws . The term “Prescribed Laws” shall mean, collectively, (a) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107 56) (the USA PATRIOT Act), (b) Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism, (c) the International Emergency Economic Power Act, 50 U.S.C. § 1701 et seq., (d) the Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and (d) all other Legal Requirements relating to money laundering or terrorism, and, in each case, any Executive Orders or regulations promulgated under any such laws.

Prime Rate Determination Date . The term “Prime Rate Determination Date” shall mean the first day of each month, provided, however, that if the first day of any month is not a Business Day, than the Prime Rate Determination Date for such month shall be the Business Day immediately preceding the first day of the month in question. Notwithstanding the foregoing, the initial Prime Rate Determination Date shall be the Effective Date.

Prime Rate . The highest prime rate of interest from time to time announced or published in the Money Rates column of the Wall Street Journal (Eastern Edition) (the “WSJ”). In the event that the prime rate established by the WSJ shall no longer be available, due to either the nonexistence of the WSJ or the WSJ’s failure to publish a prime rate, then the Prime Rate shall be the highest prime rate published by a major money center bank selected by Lender.

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

Purchase Price . The total purchase price of a timeshare Interval, as set forth in the Timeshare Documents and Note Receivable relating to the purchase of such Interval.

Purchaser . Any Person who purchases one or more Intervals.

Quarterly Financial Report . Individually and collectively, as applicable, the financial reports delivered in accordance with Section 7.1(h)(i).

Real Property . The term “Real Property” shall mean real property, both improved and unimproved, purchased by the Borrower using proceeds of an Advance of the Acquisition Loan Component in accordance with the terms and conditions of this Agreement. “Unimproved” Real Property shall mean either raw land or Real Property that is partially improved. “Improved” Real Property shall mean Real Property that is improved with completed infrastructure and other improvements suitable, in Lender’s sole discretion, for use as a timeshare resort or for timeshare marketing.

Real Property Mortgages . The term “Real Property Mortgage(s)” shall mean a first priority mortgage, deed of trust, deed to secure debt or other similar instrument granted by Borrower to Lender, to secure each Advance of the Acquisition Loan Component, in the form and substance attached here as Exhibit C and containing such changes and modifications as are necessary to reflect the law of the state in which the Real Property in question is located.

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

(i)   Pledged Notes Receivable and all proceeds of or from them;

(ii)   Mortgages and all proceeds of or from them;

(iii)   documents, instruments, accounts, chattel paper, and general intangibles relating to the Pledged Notes Receivable and the related Mortgages;

(iv)   the Inventory Loan Component Collateral;

(v)   the Acquisition Loan Component Collateral;

(vi)   the Silverleaf Finance II Stock;

(vii)   the Silverleaf Finance II Subordinated Note;

(viii)   all books, records, reports, computer tapes, discs and software relating to the Receivable Loan Component Collateral; and

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

Receivable Note . The term “Receivable Note” shall have the meaning given to such term in the Recitals.

Release Price . The term “Release Price” shall have the meaning ascribed to such term in Section 2.4(b)(ii).

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

Required Retail Value . The term “Required Retail Value” shall mean the aggregate Retail Value of the Inventory, such that the ratio of the outstanding balance of the Loan, from time to time, to the aggregate Retail Value of the Inventory does not exceed the Loan to Retail Value Ratio. By way of example, if the outstanding principal balance of the Inventory Loan Component were $10,000,000, the Required Retail Value of the Inventory will be $66,666,666.66.

Resort or Resorts (also “Eligible Resort” or “Eligible Resorts”) . Individually and collectively, as applicable, each or all of the interval ownership and time-share projects consisting of: (i) (A) Holly Lake Ranch, Hawkins, Texas; (B) Piney Shores Resort, Conroe, Texas; (C) Lake O’ The Woods, Flint, Texas; (D) Hill Country Resort, Canyon Lake, Texas; (E) Ozark Mountain Resort, Kimberling City, Missouri; (F) Holiday Hills Resort, Branson, Missouri; (G) Fox River Resort, LaSalle County, Illinois; (H) Timber Creek Resort, Jefferson County, Missouri (I) Oak N’ Spruce Resort, South Lee, Massachusetts; (J) Apple Mountain Resort, Habersham County, Georgia; (K) The Villages, Flint, Texas; (L) Silverleaf’s Seaside Resort, Galveston County, Texas; (M) Orlando Breeze Resort, Polk County, Florida (also sometimes individually and collectively referred to herein as the “Existing Resorts”) and (ii) subject to Lender’s prior written approval and satisfaction by Borrower of the conditions precedent set forth in Sections 3.5 and 4.4 hereof, the Additional Eligible Resorts. The term “Resort” or “Resorts” includes, among other things, the undivided annual or (biennial) timeshare ownership interests (Intervals) in the respective Resorts, and the appurtenant exclusive rights to use Units in one or more buildings or phases and all appurtenant or related properties, amenities, facilities, equipment, appliances, fixtures, easements, licenses, rights and interests, including without limitation, the Common Elements, as established by and more fully defined and described in the respective Declarations, and the other Timeshare Documents.

Revenues . Shall mean all proceeds from the sale of Intervals, regardless of whether such proceeds are in the form of cash or Notes Receivable.

Revolving Loan Term . Shall mean the period commencing on the Closing Date and ending on January 31, 2010.

Security . Shall have the same meaning as in Section 2(1) of the Securities Act of 1933, as amended.

Servicing Agent . Lender’s exclusive agent, which shall be such Person or Persons designated by Borrower and approved by Lender in its sole discretion, for the purposes of billing and collecting amounts due on account of the Pledged Notes Receivable, providing reports pursuant to the Lockbox Agreement and performing other servicing functions not performed by the Lockbox Agent.

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

Silverleaf Finance II Documents . Shall mean the SPV Loan Agreement, the Developer Transfer Agreement, the Demand Notes and all other agreements or documents executed in connection with the TFC Conduit Loan, as each may be amended, restated or otherwise modified from time to time.

Silverleaf Finance II Stock . Shall mean all equity interests in Silverleaf Finance II, Inc., all documents, certificates or instruments representing any of the foregoing and all cash, securities, dividends, rights and other property at any time received or receivable in respect of or in exchange for the foregoing, and all proceeds of the foregoing.

Silverleaf Finance II Subordinated Note . Shall mean the Subordinated Note, dated as of December 19, 2003, payable by SPV to the order of Silverleaf Resorts, Inc., and any other promissory note issued in replacement or restatement thereof, or otherwise issued to evidence SPV’s obligation to pay the deferred purchase price of Receivables under the Developer Transfer Agreement which is part of the Silverleaf Finance II Documents, in each case as amended or otherwise modified from time to time, and all proceeds of the foregoing.

Silverleaf Finance II Stock and Subordinated Note Pledge Agreement . Shall mean the agreement pursuant to which the Silverleaf Finance II Stock and the Silverleaf Finance II Subordinated Note is pledged to Lender, as security for the Loan.

SPV . Shall mean Silverleaf Finance II, Inc., a Delaware corporation.

SPV Assets . Shall mean all assets sold or conveyed by Borrower to the SPV pursuant to the Silverleaf Finance II Documents.

SPV Subordination Agreement . Shall mean that certain Subordination Agreement relating to Lender’s interest in the Silverleaf Finance II Stock and the Silverleaf Finance II Subordinated Note, dated as of December 19, 2003 by and among Textron Financial Corporation, in its capacity as Lender and in its capacity as lender under the Group Two Documents (as such term is defined in the SPV Subordination Agreement), as may be amended, restated or modified from time to time.

Stock and Subordinated Note Pledge Agreement . Shall mean the agreement pursuant to which all issued and outstanding shares of Silverleaf Finance II, Inc.’s capital stock and all right, title and interest in such shares, all certificates, instruments or other documents evidencing or representing the same and all dividends and distributions therefrom, including dividends and distributions paid in stock (the “ Silverleaf Finance II, Inc. Stock ”), and the subordinated note evidencing Silverleaf Finance II, Inc.’s obligation to pay the deferred purchase price of the receivables under the Silverleaf Finance II Documents are pledged to Lender, as security for the Loan.

Survey . A plat or survey of the Resorts or the Real Property, as the case may be, prepared by a licensed surveyor acceptable to Lender and in a form acceptable to Lender.

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

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

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

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

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

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

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

UCC Financing Statements . The UCC-1 Financing Statements, naming Borrower as debtor and Lender as secured party, heretofore or hereafter filed in connection with the Loans and all amendments thereto.

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

2.1   Facility Fee . Borrower acknowledges and agrees that the following facility fees shall be due and payable to Lender: (i) with respect to the Receivable Loan Component, a facility fee in the amount of $90,000.00 shall be paid to Lender and (ii) with respect to the Inventory Loan Component and the Acquisition Loan Component, a facility fee of $247,000.00 shall be paid to Lender. Borrower acknowledges, agrees and confirms that Lender has earned each such facility fee notwithstanding whether the Loan or any portion is funded and further agrees that the facility fee shall be payable by Borrower to Lender upon execution of this Agreement by Borrower.

2.2   Revolving Loan and Lending Limits . 

(a)   Receivable Loan Component :

(i)   Revolving Loan . Upon the terms and subject to the conditions set forth in this Agreement, Lender agrees during the Revolving Loan Term to make a loan or loans to Borrower with respect to the Receivable Loan Component, and Borrower may borrow, repay and reborrow during the Revolving Loan Term with respect to the Receivable Loan Component.

(ii)   Lending Limits . Subject to Section 2.7 hereof, Borrower acknowledges, agrees and confirms that the obligations of Lender to make Loans under this Agreement to Borrower is limited to the lesser of: (i) the Borrowing Base or (ii) the maximum aggregate Commitment of $100,000,000.00. 

(iii)   Note Evidencing Borrower’s Obligations . Borrower’s obligations to pay the principal of and interest on the Loan or Loans made by Lender with respect to the Receivable Loan Component shall be evidenced by the Receivable Note to Lender, which Receivable Note shall be dated as of the date hereof and be in the principal amount of $100,000,000.00. The Receivable Note will mature on the Final Maturity Date applicable to the Receivable Loan Component, bear interest as provided in Section 2.3 hereof and be otherwise entitled to the benefits of this Agreement. Notwithstanding the stated principal amount of the Receivable Note, the aggregate outstanding principal amount of the Loan with respect to the Receivable Loan Component at any time shall be the aggregate principal amount owing on the Receivable Note at such time. Lender is hereby authorized to record in its internal books and records the date and amount of each Advance made by Lender to Borrower with respect to the Receivable Loan Component, the interest rate and interest period applicable thereto and each repayment thereof; and such books and records shall, as between Borrower and Lender, absent manifest error, constitute prima facie evidence of the accuracy of the information contained therein. Failure by Lender to so record any Advance made by Lender to Borrower with respect to the Receivable Loan Component, (or any error in such recordation) or any payment thereon shall not affect the Obligations of Borrower under this Agreement or under the Receivable Note and shall not adversely affect Lender’s rights under this Agreement with respect to the repayment thereof.

(iv)   Making of Advances . Upon receipt by Lender from Borrower of a written request for Advance with respect to the Receivable Loan Component in accordance with Section 5 hereof and Borrower’s satisfaction of the requirements set forth in Section 5 hereof, Lender shall fund such Advance to Borrower in accordance with Borrower’s written request as provided in Section 5 hereof.

(b)   Inventory Loan Component . Upon the terms and subject to the conditions set forth in this Agreement, including, but not limited to, Section 2.7 hereof, during the Revolving Loan Term the Lender shall make Advances with respect to the Inventory Loan Component to the Borrower, and the Borrower may borrow, repay and in the aggregate reborrow during the Revolving Loan Term, in an amount not to exceed at any time in the aggregate the lesser of: (i) the Loan to Retail Value Ratio of the Required Retail Value of the Inventory or (ii) $40,000,000.00.

(c)   Acquisition Loan Component . Upon the terms and subject to the conditions set forth in this Agreement, including but not limited to Section 2.7 hereof, the Lender shall, in its sole and absolute discretion, make Advances with respect to the Acquisition Loan Component to the Borrower, and the Borrower may, subject to Lender’s approval, borrow, repay and reborrow from the Acquisition Loan Component during the Revolving Loan Term in an amount not to exceed at any time the lesser of (i)[A] with respect to unimproved Real Property, 70% of the actual cost paid by Borrower for said Real Property; or [B] with respect to the improved Real Property, 75% of the actual cost paid by Borrower for such Real Property or (ii) $20,000,000.00; provided, however, that the fair market value of any such property, as determined by Lender in its sole discretion based on an acceptable appraisal, shall in each case equal or exceed such actual costs.

2.3   Interest Rate . From and after the Effective Date, the aggregate principal amount of all Advances, that are outstanding from time to time, shall bear interest at the applicable Interest Rate. Each Advance shall bear interest at the applicable Interest Rate as of the date of Lender’s wiring of funds to Borrower through the date of Lender’s receipt of repayment of the applicable Loan Component (if received by Lender later than 12 noon, Eastern Standard Time, then interest accrual shall be through the next Business Day following such receipt). Interest will accrue daily, and shall be payable monthly in arrears. Immediately upon the occurrence of an Event of Default and after the Final Maturity Date (if a Loan Component is not paid in full on the applicable Final Maturity Date), at Lender’s election in its sole discretion, the entire Loan will bear interest at the Default Rate. 

2.4   Payments . From and after the Effective Date, Borrower agrees punctually to pay or cause to be paid to Lender all principal and interest due under each Note in respect of the Loans. Borrower shall make the following payments on the Loan:

(a)   Receivable Loan Component:

(i)   Monthly Payments . Borrower shall direct or otherwise cause all makers of all Pledged Notes Receivable to pay all monies due thereunder to the lockbox established pursuant to the Lockbox Agreement, or as otherwise required by Lender. One hundred percent (100%) of the cleared funds collected from the Pledged Notes Receivable each week will be paid to Lender by the Lockbox Agent pursuant to the Lockbox Agreement, and will be applied by Lender first to the payment of costs or expenses incurred by Lender pursuant to this Agreement in creating, maintaining, protecting or enforcing the Liens in and to the Collateral and in collecting any amounts due to Lender in connection with the Loan (“ Collection Costs ”). After payment of Collection Costs, Lender shall apply each such payment in the following order: (i) to any interest accrued at the applicable Default Rate; (ii) then to interest accrued and payable at the applicable Interest Rate; and (iii) then to outstanding principal. In the event that the payments received by Lender are insufficient to pay the Collection Costs and the amounts described in aforementioned clauses (i)-(ii), then Borrower shall pay the difference to Lender on or before the fifth (5th) day of the following month. In the event Borrower receives any payments on any of the Pledged Notes Receivable directly from or on behalf of the maker or makers thereof, Borrower shall receive all such payments in trust for the sole and exclusive benefit of Lender; and Borrower shall deliver to the Lockbox Agent all such payments (in the form so received by Borrower) as and when received by Borrower, unless Lender shall have notified Borrower to deliver directly to Lender all payments in respect of the Pledged Notes Receivable which may be received by Borrower, in which event all such payments (in the form received) shall be endorsed by Borrower to Lender and delivered to Lender promptly upon Borrower’s receipt thereof.

(ii)   Final Payment . The entire outstanding principal amount of the Receivable Loan Component, together with all other Obligations related to the Receivable Loan Component, shall be due and payable on the applicable Final Maturity Date.

(b)   Inventory Loan Component .

(i)   Monthly Payments . The Borrower shall pay to Lender, on the first day of each month during the Term, commencing on February 1, 2007, interest on the outstanding principal balance of the Inventory Loan Component, from time to time, at the applicable Interest Rate. Lender shall apply each such payment in the following order: (i) to the payment of all costs or expenses incurred by Lender pursuant to this Agreement in creating, maintaining, protecting or enforcing the Liens in and to the Collateral and in collecting any amount due to Lender in connection with the Loan; (ii) to any interest accrued at the Default Rate; (iii) to the payment of accrued and unpaid interest at the applicable Interest Rate; and (iv) to the reduction of the principal balance of the Inventory Loan Component. If the payment received by Lender with respect to any month is insufficient to pay in full all amounts due from Borrower to Lender under this Section 2.4(b)(i), Borrower shall pay the difference to Lender on or before the fifth (5th) day after notice from Lender to Borrower advising Borrower of such insufficiency.

(ii)   Interval Release Price Payments . Prior to the release by Lender of any Interval from the Collateral in accordance with Section 2.9 hereof, the Borrower shall pay to the Lender an amount equal to the greater of: (i) $1,600 for each such Interval, or (ii) an amount necessary to fully repay the Loan upon sale of 75% of the Inventory (the “ Release Price ”), which payment shall be applied by Lender in accordance with Section 2.4(b)(i); provided, however, that if the Retail Value of the Inventory, as determined by the Lender, is equal to or greater than the Interval Release Threshold, the Borrower shall not be required to pay a Release Payment with respect to the release of any Interval until the expiration of the Revolving Loan Term. 

(iii)   Final Payment . The entire outstanding principal amount of the Inventory Loan Component, together with all other Obligations related to shall be paid in full by not later than the applicable Final Maturity Date.

(c)   Acquisition Loan Component . 

(i)   Monthly Payments . The Borrower shall pay to Lender, on the first day of each month during the Term, commencing on February 1, 2007, interest on the outstanding principal balance of the Acquisition Loan Component, from time to time, at the applicable Interest Rate. If an Advance of the Acquisition Loan Component is not repaid within the earlier of (i) two years from the date of such Advance or (ii) the expiration of the Revolving Loan Term, then the remaining principal balance of such Advance will be repaid in equal monthly payments of principal over a three year period, together with interest thereon at the applicable Interest Rate, provided however, that if such three year period would extend beyond the applicable Final Maturity Date, such equal monthly payments, together with interest thereon at the applicable Interest Rate, will be adjusted so that such Advance is paid in full on or before the applicable Final Maturity Date. Lender shall apply each such payment in the following order: (i) to the payment of all costs or expenses incurred by Lender pursuant to this Agreement in creating, maintaining, protecting or enforcing the Liens in and to the Collateral and in collecting any amount due to Lender in connection with the Loan; (ii) to any interest accrued at the Default Rate; (iii) to the payment of accrued and unpaid interest at the applicable Interest Rate; and (iv) to the reduction of the principal balance of the Acquisition Loan Component. If the payment received by Lender with respect to any month is insufficient to pay in full all amounts due from Borrower to Lender under this Section 2.4(c), Borrower shall pay the difference to Lender on or before the fifth (5th) day after notice from Lender to Borrower advising Borrower of such insufficiency.

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

2.5   Prepayments . 

(a)   Receivable Loan Component .  

(i)   Voluntary Prepayments . Except for regular payments of interest and principal as provided hereunder, prepayments, (i) shall not be permitted during the Revolving Loan Term, and (ii) may be made, subject to Section 2.6 hereof, in whole, but not in part, upon five (5) days prior written notice to the Lender at any time after the end of the Revolving Loan Term upon payment of the applicable Prepayment Premium (whether such prepayment results from voluntary payments by Borrower, acceleration, or otherwise); provided, however, that (A) payments or prepayments of Pledged Notes Receivable made by Purchasers who are not directly or indirectly solicited by Borrower to make such prepayment shall not violate this Section 2.5(a)(i), and no Prepayment Premium shall be payable as a result of any such payment by Purchasers; and (B) if at any time the Borrower wishes to release any Pledged Notes Receivable for the purpose of including those Pledged Notes Receivable in a securitization, pooling or similar conduit transaction, and after 30 days’ prior written notice to Lender, Borrower may prepay the principal balance of the Loan in whole or in part, to the extent necessary to cause the then current outstanding unpaid principal balance of the Loan to be equal to or less than the Borrowing Base, and, except as provided in Section 2.6 hereof, no Prepayment Premium will be due where such prepayment is the result of a securitization closing, as certified by Borrower to Lender. If Borrower voluntarily prepays the entire Receivables Loan Component, then Borrower shall pay to Lender the fee described in Section 2.6 hereof, shall no longer be entitled to Advances of the Acquisition Loan Component or the Inventory Loan Component and the outstanding principal balance under the Inventory Loan Component and the Acquisition Loan Component shall be repaid as provided in this Section 2.5(a)(i).

(ii)   Mandatory Prepayments . 

(1)   Overadvances. If at any time the outstanding principal balance of the Receivable Loan Component exceeds the Borrowing Base or the applicable maximum aggregate Commitment, Borrower shall, within five (5) Business Days after notice, either (A) prepay the Loan in an amount necessary to reduce the outstanding principal balance of the Loan with respect to the Receivable Loan Component to an amount within the lending limits set forth in Section 2.2(a)(ii), or (B) pledge and deliver to Lender such additional or replacement Eligible Notes Receivable such that the remaining outstanding principal balance of the Loan is within the lending limits set forth in Section 2.2(a)(ii).

(2)   Ineligible Pledged Notes Receivable. If at any time after the expiration of the Revolving Loan Term, Lender determines that any Pledged Notes Receivable which are included in the Borrowing Base, do not qualify as Eligible Notes Receivable (“ Ineligible Notes Receivable ”), then Borrower shall, within five (5) Business Days after notice, either (A) prepay the Loan in an amount equal to the balance due under such Pledged Note Receivable, or (B) replace the Ineligible Note Receivable with an Eligible Note Receivable having an outstanding aggregate principal balance equal to or in excess of the outstanding principal balance of such Ineligible Note Receivable. The pledge and delivery to Lender of additional Eligible Notes Receivable shall comply with the document delivery and recordation requirements set forth in Section 5.1 of this Agreement.

(3)   No Prepayment Premium. No Prepayment Premium shall be due in connection with any mandatory prepayment made in accordance with Sections 2.5(a)(ii)(1) or 2.5(a)(ii)(2) above.

(iii)   Prepayment Premium . Except as specifically set forth in Section 2.5(a)(i) above, any prepayment of the Loan pursuant to Section 2.5(a)(i) above must be accompanied by a prepayment premium (the “ Prepayment Premium ”) calculated, as of immediately prior to such prepayment, as follows:

(iv)   Prepayment Premium upon Acceleration . If the Loan is accelerated based on an Event of Default prior to the expiration of the Revolving Loan Term, or if Borrower undertakes a voluntary prepayment prior to expiration of the Revolving Loan Term, at Lender’s sole discretion, payments on the Loan must include the Prepayment Premium that would be applicable if prepayment occurred in the first Loan Year after the expiration of the Revolving Loan Term.

(b)   Acquisition Loan Component . The Acquisition Loan Component may be repaid in full or in part at any time including by a payment from an Advance of the Inventory Loan Component or the Receivable Loan Component. Borrower acknowledges, confirms and agrees that if there is sufficient availability under the Inventory Loan Component and the Receivable Loan Component, Borrower agrees that repayment of the Acquisition Loan Component shall be made first from an Advance of the Inventory Loan Component to the extent that there is availability under the Inventory Loan Component and then from availability under the Receivable Loan Component. Borrower further acknowledges, confirms and agrees that it shall not repay the Acquisition Loan Component from any other source while Borrower has availability to borrow under the Inventory Loan Component and/or the Receivable Loan Component.

(c)   Inventory Component .  

(i)   Voluntary Prepayments . Borrower may not voluntarily prepay the Inventory Loan Component, in whole or in part, except that: (i) provided that no Event of Default shall have occurred and be continuing and (ii) Borrower pays the Release Price in accordance with Section 2.4(b)(ii) hereof, then at any time during the Term of the Loan, the Inventory Loan Component may be prepaid in part in connection with any prepayment which arises from release of any Interval from the Collateral, subject to Section 2.9 hereof, provided, however, that so long as any prepayment is not made with the proceeds of a financing provided to Borrower by any other lender or financial institution (other than a securitization or bond offering), Borrower may prepay the Inventory Component in part so long as the Inventory Loan Component is not paid in full and this Agreement has not been terminated.

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

(iii)   Premiums . Notwithstanding anything herein contained to the contrary, any prepayment under this Section 2.5(c) must include all accrued but unpaid interest, and accrued but unpaid contributions, taxes, insurance, loan charges custodial fees, attorneys’ and paralegals’ fees and expenses, and other fees or expenses incurred by Lender or advanced to or on behalf of Borrower by Lender pursuant to any of the Loan Documents accrued but unpaid.

2.6   Loan Component Ratio . Borrower shall maintain, at all times during the term of the Loan, a ratio between the outstanding principal balance of the Receivable Loan Component and the aggregate outstanding principal balances of the Acquisition Loan Component and the Inventory Loan Component of 1 to 1 for the trailing 6 month period computed monthly. If the 1 to 1 ratio is not maintained for any such six month period, and during that same period, the outstanding principal balance of the Receivable Loan Component is less than $40,000,000, Borrower shall pay Lender a fee equal to ¼% of the difference between the outstanding principal balance of the Receivable Loan Component and $40,000,000. Furthermore, if either: (i) the ratio between the outstanding principal balance of the Receivable Loan Component and the aggregate outstanding principal balances of the Acquisition Loan Component and the Inventory Loan Component shall be less than .5 to 1 or (ii) the ratio between the outstanding principal balance of the Receivable Loan Component and the outstanding principal balance of the Acquisition Loan Component shall be less than 1 to 1 (each an “ Event of Non Funding ”), then Lender shall not be obligated to loan nor shall Borrower be entitled to borrow any Advance of the Inventory Loan Component or the Acquisition Loan Component.

2.7   Maximum Obligation of Textron Financial Corporation Under the Loan . Borrower acknowledges, agrees and confirms as follows: (i) notwithstanding anything to the contrary in Section 2.2(c) hereof Lender shall not be obligated to make an Advance of the Acquisition Loan Component in excess of $15,000,000.00 with respect to any single Real Property; (ii) notwithstanding anything to the contrary in Section 2.2(b) and 2.2(c) hereof, the aggregate principal balance of the Acquisition Loan Component and the Inventory Loan Component shall not exceed $40,000,000.00; and (iii) notwithstanding anything to the contrary herein, in any other Loan Document or in any document evidencing or securing the Receivable Loan Component, the Inventory Loan Component and/or the Acquisition Loan Component, Lender shall not be obligated to fund any Advance hereunder, which when taken together with the loans or advances made by Lender to Borrower under this Agreement, the Receivable Loan Agreement and/or the Restated Inventory Loan Agreement would cause the aggregate amount of such loans and advances by Lender to Borrower to exceed a maximum aggregate amount of $100,000,000.00.

2.8   Suspension of Advances . 

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

(b)   Change in Control . If there shall occur a change, singly or in the aggregate, of more than fifty percent (50%) of the executive management of Borrower as described in Schedule 2.8(b) hereto, Lender shall have no obligation to make any Advances hereunder, unless within thirty (30) days prior thereto Borrower provides Lender with written information setting forth the replacement executive management personnel of Borrower together with a description of those Persons’ experience, ability and reputation, and Lender, acting in good faith, determines that the replacement management personnel’s experience, ability and reputation is equal to or greater than that of Borrower as set forth on Schedule 2.8(b). Lender shall have no obligation to make any Advances hereunder if more than two (2) of the five (5) Board of Directors’ positions are controlled by the Borrower’s bond holders.

2.9   Release of Intervals from Inventory . Upon written request of the Borrower, and provided that no Event of Default shall have occurred and be continuing hereunder, Lender shall release from the Collateral, one or more Intervals subject to the following conditions: (i) payment by Borrower to Lender at the time of such release of the Release Price for each such Interval and (ii) the remaining Inventory Loan Component Collateral satisfies the Required Retail Value.

2.10   Intentionally Omitted

2.11   Partial Release of Real Property Mortgages . From time to time, Lender agrees to consider, at its sole discretion, requests from Borrower for a partial release of the lien of any Real Property Mortgage. Such release shall be subject to such terms and conditions as Lender may impose in its sole discretion.

3.1   Grant of Security Interest . 

(a)   To secure the payment and performance of the Obligations with respect to each Loan Component, for value received, Borrower unconditionally and irrevocably assigns, mortgages, conveys, transfers, pledges and grants to Lender:

(i)   with respect to the Receivable Loan Component, the Receivable Loan Component Collateral;

(ii)   with respect to the Acquisition Loan Component, the Acquisition Loan Component Collateral; and

(iii)   with respect to the Inventory Loan Component, the Inventory Loan Component Collateral.

3.2   Financing Statements . Borrower agrees, at its own expense, to execute the financing statements, continuation statements and amendments provided for by the Code together with any and all other instruments or documents and take such other action as may be required to perfect and to continue the perfection of Lender’s security interests in the Collateral. Borrower hereby authorizes Lender to execute and/or file on Borrower’s behalf any such financing statements, continuation statements and amendments.

3.3   Insurance . Insurance coverage with respect to the Resort(s) is provided by the Silverleaf Club. Borrower shall furnish Lender, upon request, with satisfactory evidence that the Units, Buildings and Resorts are adequately insured. Such insurance coverage shall insure against such risks, be in such amounts, with such companies and on such other terms as Lender may reasonably require. Each such policy shall name Lender as an additional insured and loss payee, as its interests may appear. Borrower shall also maintain insurance in accordance with Section 7.1(d) hereof.

3.4   Protection of Collateral; Reimbursement . The portion of the Collateral consisting of: (i) the original Pledged Notes Receivable, (ii) the original Mortgages, (iii) the original purchase contracts (including addendum) related to such Pledged Notes Receivable and Mortgages, and (iv) originals or true copies of the related truth-in-lending disclosure, loan application, warranty deed, and if required by Lender, the related Purchaser’s acknowledgement receipt and the Exchange Company application and disclosures, shall be delivered at Borrower’s expense to the Custodian, and held in Custodian’s possession and control pursuant to the Custodial Agreement. All fees and costs arising under the Custodial Agreement shall be borne and paid by Borrower; and if Borrower fails to promptly pay any portion thereof when due, Lender may, at its option, but shall not be required to, pay the same and charge Borrower’s account therefor, and Borrower agrees promptly to reimburse Lender therefor with interest accruing thereon daily at the Default Rate. All sums so paid or incurred by Lender for any of the foregoing and any and all other sums for which Borrower may become liable hereunder and all costs and expenses (including attorneys’ and paralegals’ fees, legal expenses and court costs) which Lender may incur in enforcing or protecting its Lien on, or rights and interest in, the Collateral or any of its rights or remedies under this Agreement or any other Loan Document or with respect to any of the transactions hereunder or thereunder, until paid by Borrower to Lender with interest at the Default Rate, shall be included among the Obligations, and, as such, shall be secured by all of the Collateral. Lender shall not be liable or responsible in any way for the safekeeping of any of the Collateral or for any loss or damage thereto or for any diminution in the value thereof, or for any act or default of the Custodian, Lockbox Agent, or Servicing Agent or any warehouseman, carrier, forwarding agency, or other Person whomsoever.

3.5   Additional Eligible Resorts . From time to time during the Term, Borrower may propose to Lender that one or more additional time-share plans and projects owned and operated by Borrower be included among the Eligible Resorts in respect of which Advances may be made. Any such proposal will be in writing, and will be accompanied or supported by the due diligence and supporting Borrower, Affiliate, project, financial and related information identified in Section 4.4 hereto, and such other information as Lender may require. Borrower will reasonably cooperate with Lender’s underwriting and due diligence, and Borrower will be responsible for payment upon billing for Lender’s out-of-pocket expenses in connection therewith. Subject to Lender’s underwriting and due diligence review, including satisfaction of the conditions in Section 4 and Section 5 hereof as they relate to such additional time-share resorts, Lender may, but shall not be required to, approve one or more such additional time-share resorts, including future phases or condominiums in an Existing Eligible Resort, as an Eligible Resort qualifying for Advances under and subject to the terms of this Agreement and the other Loan Documents.

Subject in each instance to Lender’s underwriting and due diligence review, and Lender’s prior written approval, any project as may be approved by Lender after the Closing Date, if any, is hereinafter referred to as an “Additional Eligible Resort”. Any Advances hereunder with respect to any Additional Eligible Resort will be subject to all terms and conditions of this Agreement and the other Loan Documents.

3.6   Modification of Eligible Notes Receivable . Notwithstanding anything herein to the contrary, Borrower shall have the right to modify the interest rate and term only of the Eligible Notes Receivable without Lender’s prior consent, provided that: (i) any such change in the rate of interest on any one or more Eligible Notes Receivable shall not reduce the average interest rate on all Eligible Notes Receivable to less than twelve and one half percent (12 ½%) per annum at any time; (ii) the term of no Eligible Notes Receivable shall be increased to a term longer than one hundred twenty (120) months from the date of the first required monthly payment of such Eligible Note Receivable, except that with respect to any Eligible Note Receivable in respect of which one or more monthly payments have been deferred, the term of such Eligible Note Receivable may be extended one month for each such deferred payment provided, however, that in no event shall the term of such Eligible Note Receivable be increased to a term longer than one hundred twenty eight (128) months from the date of the first required monthly payment of such Eligible Note Receivable; (iii) at no time may Borrower so modify the terms of Eligible Notes Receivable constituting more than fifteen percent (15%) of the outstanding principal balance of all Eligible Notes Receivable at any time. Solely for purposes of calculating the foregoing fifteen percent (15%) limit, an Eligible Note Receivable shall not be considered “to have been modified” if the Purchaser in respect of such note: (y) has made at least a ten percent (10%) down payment on the Interval and (z) has made at least six (6) monthly payments, with at least four (4) payments being made after the date the note was modified; (iv) Borrower immediately provides Lender with notice of any such modification together with any original documentation evidencing such modification and (v) no Eligible Note Receivable is modified more than once in any twelve (12) month period or more than twice during the term of such Eligible Note Receivable.

3.7   Assumption of Obligations under Eligible Notes Receivable . Notwithstanding anything herein to the contrary, upon the sale by a Purchaser of an Interval, the new Purchaser of the Interval may be substituted as obligor under the Eligible Note Receivable in question, provided that: (i) said new Purchaser assumes in writing all of the obligations of the original obligor under the Eligible Note Receivable in question; (ii) the Eligible Note Receivable continues to meet all of the criteria for an Eligible Note Receivable as set forth herein and (iii) the new Purchaser has made a cash down payment equal to at least 10% of the original sales price of the Interval in question, which down payment shall be in addition to the cash down payment made by the original obligor.

3.8   Purchaser/Criteria . All Eligible Notes Receivable pledged as Collateral will be underwritten in a manner consistent with the Borrower’s general underwriting criteria, as approved in writing by Lender, including, without limitation, the requirement for a cash down payment of at least 15% of the sales price of the Interval for any Purchaser with a FICO indicator less than 600. Borrower shall not materially alter its general underwriting criteria without the prior written approval of Lender, which approval, Lender may withhold in its sole discretion. On a semi-annual basis, Borrower shall provide Lender with written certification that the underwriting criteria as approved by Lender remain in full force and effect and have not been revised or altered without Lender’s consent.

3.9   Substitution of Inventory . Lender agrees that Borrower may, from time to time during the Term hereof, replace any Interval or Intervals by granting to Lender a first mortgage Lien on a new Interval or Intervals owned by the Borrower at an Eligible Resort. In granting to Lender a first mortgage Lien on any such new Interval or Intervals, Borrower shall comply with the document delivery and recordation requirements set forth in Section 4 of this Agreement and Borrower shall deliver to Lender its written certification that the Retail Value of the Inventory after any such substitution, is equal to or greater than the Required Retail Value and satisfies the Loan to Value Ratio. In connection with any such replacement of Inventory under this Section 3.9 or Section 2.5(c)(i) hereof, Borrower may propose to Lender that one or more additional time-share plans and projects owned and operated by Borrower be included among the Eligible Resorts . Any such proposal will be in writing, and will be accompanied or supported by the due diligence and supporting Borrower, Affiliate, project, financial and related information identified in Section 4 hereto, and such other information as Lender may require. Borrower will reasonably cooperate with Lender’s underwriting and due diligence, and Borrower will be responsible for payment upon billing for Lender’s out-of-pocket expenses in connection therewith. Subject to Lender’s satisfactory underwriting and due diligence review, including satisfaction of the conditions in Section 4 and Section 5 hereof as they relate to such additional time-share resorts, Lender may, but shall not be required to, approve one or more such additional time-share resorts, including future phases or condominiums in an Existing Eligible Resort, as an Eligible Resort. Subject in each instance to Lender’s acceptable underwriting and due diligence review, and Lender’s prior written approval, any project as may be approved by Lender after the Closing Date, if any, is hereinafter referred to singly as an “ Additional Eligible Resort ” and collectively as the “ Additional Eligible Resorts .”

3.10   Cross Collateralization . The Collateral secures all of the Obligations of Borrower under this Agreement. Upon repayment of any Loan Component and the satisfaction by Borrower of all of the Obligations with respect to any Loan Component, the Collateral shall continue to secure the remaining Loan Components to the extent outstanding as provided herein. 

3.11   Security Interest in All Pledged Notes Receivable . Lender shall have a continuing security interest in all of the Pledged Notes Receivable, and Lender may collect all payments made under or in respect of all such Notes Receivable, including, without limitation, Eligible Notes Receivable that are or may become ineligible, until any of the same may be released by Lender, if at all, pursuant to Section 12.10 hereof or Section 7.2(a) hereof. Notwithstanding anything heretofore to the contrary, unless and until an Event of Default shall occur, Borrower, as agent for and on behalf of Lender, shall retain possession of and collect all payments under or in respect of all Notes Receivable. By executing this Agreement, Borrower acknowledges and agrees that it is holding such Notes Receivable as bailee and agent for Lender. Borrower shall hold and designate such Notes Receivable in a manner that clearly indicates that they are being held by Borrower as bailee on behalf of Lender. 

3.12   The Modification to Inventory Mortgages . If requested by Lender in order to fully secure the Obligations arising under this Agreement, including, without limitation, the Obligations arising with respect to the Acquisition Loan Component, Borrower shall execute and deliver to Lender, in form and substance reasonably acceptable to Lender, the Modifications to Inventory Mortgages.

4.1   Conditions Precedent . The obligation of Lender under this Agreement and the obligation to fund any Advance, including the initial Advance, hereunder shall be subject to the satisfaction of each of the following conditions precedent, in addition to all of the conditions precedent set forth elsewhere in the Loan Documents:

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

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

(c)   No Changes . That all information and documents heretofore delivered by Borrower to Lender with respect to Borrower or the Existing Resorts, including information and documents delivered in connection with the Original Loan and the Inventory Loan, remain true and correct in all respects.

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

(i)   a certificate to be dated as of the Effective Date and signed by the president, vice president, or secretary of Borrower, certifying that the conditions specified in Sections 4.1(a), 4.1(b) and 4.1(c) above are true;

(ii)   copies of any amendments to the articles of incorporation of Borrower not previously delivered to Lender, certified to be true and complete by Borrower and the Secretary of State of the State of Texas and a current certificate of good standing for Borrower, and copies of any amendments to the by-laws of Borrower not previously delivered to Lender, certified to be true, correct and complete by the secretary or assistant secretary of Borrower;

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

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

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

(e)   Execution and Delivery of Loan Documents . Borrower shall have delivered to Lender, on or before the Closing Date, the following Loan Documents, each of which when required, shall be in recordable form:

(i)   This Agreement;

(ii)   Closing Opinions for Borrower;

(iii)   Receivable Note;

(iv)   Acquisition Note;

(v)   Inventory Note;

(vi)   Environmental Indemnification Agreement;

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

(f)   Effective Date Conditions . On or before the Effective Date, the following conditions shall be satisfied:

(i)   Outstanding Balance . The Lender’s maximum aggregate Commitment shall be greater than the then aggregate outstanding balance under the Receivable Loan Agreement and the Restated Inventory Loan Agreement.

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

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

(iv)   Counsel Opinion Regarding Title Insurance Policies . Borrower shall deliver to Lender, an opinion or opinions of counsel in a form acceptable to Lender in Lender’s sole discretion, confirming that: (1) each Lien on the Encumbered Intervals from the Resorts in Texas, including: (i) Holly Lake Ranch, Hawkins, Texas; (ii) Piney Shores Resort, Conroe, Texas; (iii) Lake O’ The Woods, Flint, Texas; (iv) Hill Country Resort, Canyon Lake, Texas; (v) The Villages, Flint, Texas; and (vi) Silverleaf’s Seaside Resort, Galveston County, that is perfected by an Inventory Mortgage, will retain the priority interest afforded by the original recording of the Inventory Mortgages notwithstanding the recording of the modification to the Inventory Mortgage required under Section 3.12 hereof; and (2) the modification of the Inventory Mortgages as provided herein will not impair the coverage afforded by the mortgagee’s title insurance policies previously issued in connection with the execution and recordation of the Inventory Mortgages, and those policies remain in full force and effect.

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

(vi)   Governmental Permits . To the extent not previously delivered to Lender, copies of all applicable government permits, approvals, consents, licenses and certificates with respect to the use and operation of the Resorts;

(vii)   Taxes . Evidence satisfactory to Lender that all taxes and assessments owed by or for which Borrower is responsible for collection had been paid with respect to the Resorts and the Collateral, including but not limited to sales taxes, room occupancy taxes, payroll taxes, personal property taxes, excise taxes, intangible taxes, real property taxes and any assessments related to the resorts or the Collateral. Copies of the most current tax bills for the Resorts shall be provided to Lender;

(viii)   Title Insurance Policies . Within 90 days after the Closing Date the Borrower shall deliver to Lender, with respect to each parcel of real property comprising the Inventory from the Resorts in Missouri, Florida, Illinois and Georgia, including: (i) Ozark Mountain Resort, Kimberling City, Missouri; (ii) Holiday Hills Resort, Branson, Missouri; (iii) Timber Creek Resort, Jefferson County, Missouri; (iv) Fox River Resort, LaSalle County, Illinois; (v) Orlando Breeze and (vi) Apple Mountain Resort, Habersham County, Georgia; a new mortgagee’s title insurance policy (the “ Inventory Title Policy ” or an endorsement to the existing mortgagee’s title insurance policy updating each applicable policy previously issued with respect to the Inventory through the date that the modifications required under Section 4.1(f)(ix) hereof are duly recorded in the applicable land records for each state in which the Inventory is located (the “ Inventory Title Endorsement ”). If an Inventory Title Policy is obtained, each such Inventory Title Policy shall: (i) be in an amount equal to the full amount required for such title insurance under the Inventory Loan; (ii) insure the Inventory Mortgages as modified in accordance with Section 3.12 hereof; and (iii) be issued by companies and in form and substance satisfactory to Lender in its sole discretion. If an Inventory Title Endorsement is obtained, each such Inventory Title Endorsement shall: (i) insure that the modification of the Inventory Mortgages as provided herein will not impair the coverage afforded by endorsed title insurance policies, and that those policies remain in full force and effect; (ii) insure that the modification of the Inventory Mortgages as provided herein will not impair the lien of the insured mortgage; and (iii) be issued by companies and in form and substance satisfactory to Lender in its sole discretion. Borrower shall be responsible for the payment of all costs and expenses of the foregoing Inventory Title Policy and/or Endorsement.

(ix)   Recording of Modifications to Inventory Mortgages . The Modifications to Inventory Mortgages, in the form and substance attached here as Exhibit D, shall be duly recorded in the applicable land records for each state in which the Inventory is located.

4.2   Expenses . Borrower shall have paid all fees and expenses required to be paid pursuant to this Agreement. Lender shall have no obligation to fund any Loan or make any Advance unless the amount of the Advance, together with any moneys paid by Borrower, is sufficient to satisfy all fees and expenses required to be paid pursuant to this Agreement.

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

4.4   Conditions Precedent to Funding of Advances with Respect to Additional Eligible Resorts . As provided in Section 3.5 hereof, Borrower may propose to Lender that Lender approve one or more additional timeshare plans for inclusion hereunder as an Additional Eligible Resort in respect of which Advances may be made. The obligation of Lender to fund any Advances with respect to an Additional Eligible Resort shall be subject to the satisfaction of each of the following conditions precedent, in addition to all of the conditions precedent set forth elsewhere in the Loan Documents:

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

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

(c)   Approval of Documents Prior to Advance . Borrower has delivered or caused to be delivered to Lender (with copies to Lender’s counsel), at least fifteen (15) Business Days prior to the date of each Advance, and Lender has reviewed and approved, at least five (5) Business Days prior to the date of each Advance, the form and content of all of the items specified in each of the Submissions required pursuant to this Section 4.4. Lender shall have the right to review and approve any changes to the form of any of the Submissions. If Lender disapproves of any changes to any of the Submissions, Lender shall have the right to require Borrower either to cure or correct the defect objected to by Lender and to not fund the Loan or any Advance. Under no circumstances shall Lender’s failure to approve or disapprove a change to any of the Submissions be deemed to be an approval of such Submissions. All of the Submissions were and shall be prepared at Borrower’s sole cost and expense, unless expressly stated to be an obligation and expense of Lender. Lender shall have the right of prior approval of any Preparer and may disapprove any Preparer in its sole discretion, for any reason, including without limitation, that Lender believes that the experience, skill, reputation or other aspect of the Preparer is unsatisfactory in any respect. All Submissions required pursuant to this Agreement shall be addressed to Lender and include the following language: “THE UNDERSIGNED ACKNOWLEDGES THAT TEXTRON FINANCIAL CORPORATION IS RELYING ON THE WITHIN INFORMATION IN CONNECTION WITH ITS DETERMINATION TO MAKE A LOAN TO SILVERLEAF RESORTS, INC. IN CONNECTION WITH THE SUBJECT COLLATERAL.”

(i)   a certificate in the form attached as Exhibit G, to be dated as of the date of each such Advance and signed by the president, chief financial officer, chief operating officer, vice president, or secretary of Borrower, certifying that the conditions specified in Sections 4.4(a) and 4.4(b) above are true;

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

(iii)   a Survey for each Additional Eligible Resort for which Eligible Notes Receivable are being pledged to Lender in connection with the Advance in question;

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

(v)   a certificate of the secretary or assistant secretary of Borrower certifying the incumbency, and verifying the authenticity of the signatures, of the specified officers of Borrower authorized to sign all documents required in connection with such Additional Eligible Resort as required pursuant to this Section 4.4;

(vi)   an inspection report or reports covering each Additional Eligible Resort for which Eligible Notes Receivable are being pledged to Lender in connection with the Advance in question, including without limitation all real property and personal property subject to the Declaration and all adjacent property, confirming:

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

(2)   that the inspection firm has obtained, reviewed and included within its report a CERCLIS printout from the Environmental Protection Agency (the “ EPA ”), statements from the EPA and other applicable state and local authorities and a Phase I Environmental Audit, all of which information shall confirm that there are no known or suspected Hazardous Materials located at, used or stored on, or transported