Exhibit 10.3
SECOND AMENDMENT TO AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
This SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT (this "AMENDMENT") is dated as of October 1, 2003 by and among (i)
Silverleaf Resorts, Inc., a Texas corporation (the "BORROWER"), (ii) Sovereign
Bank, a federally chartered savings bank ("SOVEREIGN"), and Liberty Bank, as the
Lenders (the "LENDERS"), and (iii) Sovereign Bank, a federally chartered savings
bank, as agent for the Lenders (the "AGENT").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, and the Agent have entered into
that certain Amended and Restated Revolving Credit Agreement, dated as of April
30, 2002, as amended by the First Amendment to Amended and Restated Revolving
Credit Agreement, dated as of September 30, 2002 (as so amended, the "CREDIT
AGREEMENT"), pursuant to which the Lenders have extended credit to the Borrower
on the terms set forth therein;
WHEREAS, the Borrower has requested that the Lenders and the Agent
agree to amend the financial covenant in the Credit Agreement concerning the
Borrower's Marketing Expenses;
WHEREAS, the Borrower has requested that the Lenders and the Agent
agree to amend the definition of the Consolidated Net Income with respect to the
$28,711,000 increase in the Borrower's loan loss reserve reflected in the
Borrower's quarterly report for the period ended March 31, 2003;
WHEREAS, the Borrower has requested that the Lenders and the Agent
consent to the repayment of $7,620,000 of the Borrower's subordinated debt;
WHEREAS, the Agent has delivered notice to the Collateral Custodian (as
defined in the Credit Agreement) that the Collateral Custodian is relieved of
its duties; and
WHEREAS, the Agent, Borrower and Wells Fargo Bank Minnesota, N.A.
intend to enter into a Custodial Agreement, dated on or about October 1, 2003
(the "NEW CUSTODIAL AGREEMENT"), replacing (i) the current Collateral Custodian
of US Bank, formerly known as State Street Bank and Trust Company, with Well
Fargo Bank Minnesota, N.A. and (ii) the Collateral Custodial Agreement.
WHEREAS, the Lenders, the Agent and the Borrower have agreed to make
such amendments and grant such consent subject to and on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. All capitalized terms used herein and not
expressly defined herein shall have the same respective meanings given to such
terms in the Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT.
(a) The definition of "Collateral Custodian" in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety as set forth
below:
"Collateral Custodian. Wells Fargo Bank Minnesota, N. A."
(b) The definition of "Consolidated Net Income" in Section 1.1 of
the Credit Agreement is hereby amended and restated in its entirety as set forth
below:
"Consolidated Net Income. The consolidated net income of the
Borrower and its Subsidiaries, after deduction of all expenses, taxes,
and other proper charges (but excluding any extraordinary profits or
losses), determined in accordance with generally accepted accounting
principles. For purposes of calculating Consolidated Net Income the
$28,711,000 increase in the Borrower's loan loss reserve for the fiscal
quarter ended March 31, 2003 shall not be taken into consideration. For
the avoidance of any doubt, any and all other increases in the
Borrower's loan loss reserve shall be taken into consideration in
calculating Consolidated Net Income."
(c) Section 5.3 of the Credit Agreement is hereby amended and
restated in its entirety as set forth below:
"5.3 COLLATERAL CUSTODIAN. Pursuant to the Custodial
Agreement, dated as of October 1, 2003, among the Agent, the Borrower
and the Collateral Custodian (as the same maybe further amended,
modified or restated, the "COLLATERAL CUSTODIAL AGREEMENT"), the
Collateral Custodian shall hold, as collateral agent for the Agent, all
of the Consumer Loan Collateral (including the Required Consumer Loan
Documents)."
(d) Section 9.2 of the Credit Agreement is hereby amended and
restated in its entirety as set forth below:
"9.2 MARKETING EXPENSES. As of the last day of each fiscal
quarter, commencing with the fiscal quarter ending March 31, 2003, the
Borrower will not permit the ratio of the Marketing Expenses to the
Borrower's net sales of Timeshare Interests as recorded on the
Borrower's financial statements for the Reference Period then ending to
equal or exceed .550 to 1."
3. CONSENT TO REPAYMENT OF SUBORDINATED DEBT. The Agent and the
Lenders hereby consent to the Borrower's payment of $2,384,057.00 (together with
a separate payment in the amount of $75,000 in reimbursement for legal fees and
expenses) to certain holders of the 10 1/2% Senior Subordinated Notes of the
Borrower due in 2008 (the "SUBORDINATED NOTES") in connection with the recession
of the Subordinated Notes held by such holders, which notes were issued by the
Borrower in the aggregate principal amount of $7,620,000.
4. CONSENT TO NEW CUSTODIAL AGREEMENT AND AMENDMENT TO OTHER DEBT
FACILITIES. THE Lenders hereby consent to the New Custodial Agreement. The Agent
and the Lenders hereby consent to (a) the amendments to the DZ Bank Documents in
the forms attached hereto as EXHIBIT A, (b) the amendments to the Textron
Documents in the forms attached hereto as EXHIBIT B, and (c) the amendments to
the Heller Documents in the forms attached hereto as EXHIBIT C.
5. WAIVER. The Agent and Lenders hereby agree to waive the
following Events of Default under the Credit Agreement:
(a) the Borrower's failure to satisfy the marketing
expenses covenant in Section 9.2 of the Credit Agreement for the fiscal
quarters ended March 31, 2003, June 30, 2003 and September 30, 2003;
(b) the Borrower's failure to satisfy the interest
coverage ratio covenant in Section 9.4 of the Credit Agreement for the
fiscal quarters ended March 31, 2003, June 30, 2003, and September 30,
2003; and
(c) the Borrower's failure to satisfy the profitability
covenant in Section 9.5 of the Credit Agreement for the fiscal quarters
ended March 31, 2003, June 30, 2003, and September 30, 2003.
No Events of Default under the Credit Agreement, unless specifically enumerated
above, are waived by the Lenders or the Agent.
6. AMENDMENT Fee. In consideration of the amendments, consent and
the waivers set forth herein, the Borrower hereby agrees to pay to the Agent,
for the benefit of the Lenders, $50,000 (the "AMENDMENT FEE").
7. CONDITIONS TO EFFECTIVENESS. This Amendment shall not become
effective unless on or prior to November 30, 2003:
(a) the Agent shall have received this Amendment duly
executed and delivered by the Borrower, the Agent, and the Lenders;
(b) the Agent shall have received copies of the documents
attached hereto as EXHIBITS A, B AND C duly executed and delivered by
the parties thereto;
(c) the Agent shall have received evidence, in form and
substance satisfactory to the Agent, that the consent of each party
entitled to consent to this Amendment pursuant to the terms of the
Textron Documents, the Heller Documents, and any other document
evidencing any other Indebtedness of the Borrower shall have been
obtained;
(d) the Agent shall have received the New Custodial
Agreement duly executed and delivered by the Borrower, the Agent and
Wells Fargo Bank Minnesota, N.A.;
(e) the Borrower shall have paid the Amendment Fee to the
Agent in
immediately available funds; and
(f) the Borrower shall have reimbursed the Agent for, or
paid directly, all reasonable fees, costs, and expenses incurred by
legal counsel to the Agent for which the Borrower has received an
invoice.
8. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The Borrower
hereby represents and warrants to the Lenders and the Agent as follows:
(a) Representations and Warranties in Credit Agreement.
Each of the representations and warranties of the Borrower contained in
the Credit Agreement or in any document or instrument delivered
pursuant to or in connection with the Credit Agreement (including,
without limitation, this Amendment) are true as of the date hereof and
no Default or Event of Default has occurred and is continuing after
taking into consideration this Amendment and the documents referenced
in Section 7(b) hereof.
(b) Authority, No Conflicts, Etc. The execution, delivery
and performance of this Amendment (i) are within the corporate
authority of the Borrower, (ii) have been duly authorized by all
necessary corporate proceedings on behalf of the Borrower, (iii) do not
conflict with or result in any breach or contravention of any provision
of law, statute, rule, or regulation to which the Borrower is subject
or any judgment, order, writ, injunction, license, or permit applicable
to the Borrower, and (iv) do not conflict with any provision of the
corporate charter or bylaws of the Borrower or any agreement or other
instrument binding upon the Borrower. The execution, delivery, and
performance of this Amendment will result in a valid and legally
binding obligation of the Borrower enforceable against it in accordance
with the terms and provisions hereof.
9. EFFECT OF AMENDMENT. Except as expressly set forth herein,
this Amendment does not constitute an amendment or waiver of any term or
condition of the Credit Agreement or any other Loan Document, and all such terms
and conditions shall remain in full force and effect and are hereby ratified and
confirmed in all respects. Nothing contained in this Amendment shall be
construed to imply a willingness on the part of the Agent or any Lender to grant
any similar or other future amendments of any of the provisions of the Credit
Agreement or the other Loan Documents. Nothing contained herein shall in any way
prejudice, impair or otherwise adversely affect any rights or remedies of the
Agent and the Lenders under the Credit Agreement or any other Loan Document.
10. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which taken together shall constitute one agreement.
11. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon
and inure to the benefit of the successors and permitted assigns of the parties
hereto.
12. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Massachusetts,
without regard to principles of conflicts of law.
13. RELEASE. In order to induce the Agent and the Lenders to enter
into this Amendment, the Borrower acknowledges and agrees that: (i) the Borrower
has no claims or causes of action against either the Agent or any Lender (or any
of their respective directors, officers, employees or agents); (ii) the Borrower
has no offset right, counterclaim or defense of any kind against any of its
obligations, indebtedness or liabilities to either the Agent or any Lender; and
(iii) each of the Agent and the Lenders has heretofore properly performed and
satisfied in a timely manner all of its obligations to the Borrower. The
Borrower wishes to eliminate any possibility that any past conditions, acts,
omissions, events, circumstances or matters would impair or otherwise adversely
affect either of the Agent's or the Lenders' rights, interests, contracts,
collateral security or remedies. Therefore, the Borrower unconditionally
releases, waives and forever discharges (A) any and all liabilities,
obligations, duties, promises or indebtedness of any kind of the Agent or any
Lender to the Borrower, except the obligations to be performed by the Agent or
any Lender on or after the date hereof as expressly stated in the Credit
Agreement and the other Loan Documents, and (B) all claims, offsets, causes of
action, suits or defenses of any kind whatsoever (if any), whether arising at
law or in equity, whether known or unknown, which the Borrower might otherwise
have against the Agent, any Lender or any of their respective directors,
officers, employees or agents, in either case (A) or (B), on account of any past
or presently existing condition, act, omission, event, contract, liability,
obligation, indebtedness, claim, cause of action, defense, circumstance or
matter of any kind.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
an instrument under seal to be effective as of the date first above written.
BORROWER:
SILVERLEAF RESORTS, INC.
By: /S/ HARRY J. WHITE, JR.
----------------------------
Name: Harry J. White, Jr.
Title: CFO
AGENT AND LENDER:
SOVEREIGN BANK
By: /S/ JOHN BAER
----------------------------
Name: John Baer
Title: Vice President
LENDER:
LIBERTY BANK
By: /S/ JASON M. GORDON
----------------------------
Name: Jason M. Gordon
Its: Vice President
Exhibits:
Exhibit A: Amendments to the DZ Bank Documents
Exhibit B: Amendments to Textron Documents
Exhibit C: Amendments to Heller Documents