Exhibit 10.6
SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT (TRANCHE C)
THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (TRANCHE C) dated
as of December 19, 2003 (the "SECOND AMENDMENT"), is entered into by and between
SILVERLEAF RESORTS, INC., a Texas corporation (the "BORROWER"), and TEXTRON
FINANCIAL CORPORATION, a Delaware corporation, ("TFC" or the "LENDER").
W I T N E S S E T H:
WHEREAS, Borrower is engaged in the business of acquiring,
constructing, developing, owning, managing, selling and otherwise dealing with
Intervals at the Resorts (as each such term is hereafter defined);
WHEREAS, Borrower and Lender are parties to that certain Loan and
Security Agreement dated as of April 17, 2001, (the "ORIGINAL AGREEMENT"),
pursuant to which the Borrower executed its Secured Promissory Note in favor of
the Lender in the amount of $10,200,000.00, (the "ORIGINAL NOTE");
WHEREAS, Lender and Borrower amended the Original Agreement with the
First Amendment to Loan and Security Agreement dated as of April 30, 2002, (the
"FIRST AMENDMENT"), to, among other things: (i) restructure and modify the Loan,
including separating the Loan into two separate components - the Revolving Loan
Component in the amount of up to $8,060,00.00 and the Term Loan Component in the
amount of up to $2,140,000.00; (ii) reduce the amount of the Commitment; and
(iii) replace the Original Note with a Revolving Loan Component Note and a Term
Loan Component Note;
WHEREAS, TFC and Borrower amended the Loan Agreement pursuant to a
Letter Amendment dated March 27, 2003 to reinstate the maximum allowable ratio
of Marketing and Sales Expenses to the Borrower's net proceeds from the sale of
Intervals to a ratio of .550 to 1;
WHEREAS, TFC and Borrower amended the Loan Agreement pursuant to a
Letter Agreement dated September 25, 2003 to exclude the $28,711,000 increase in
Borrower's allowance for doubtful accounts during the quarter ended March 31,
2003 from the calculations of EBITDA, the Interest Coverage Ratio and
Consolidated Net Income under the Loan Agreement and to approve the retirement
of certain subordinated notes with a face value of $7,620,000;
WHEREAS, Borrower entered into: (i) a Letter Agreement with TFC dated
November 17, 2003 (the "November Letter Agreement"); (ii) an amendment to the
Heller Documents dated November 21, 2003; and (iii) an amendment to the
Sovereign Documents dated October 1, 2003; each for the purpose of, among other
things, waiving certain Events of Default that may have arisen under the Loan
Agreement, the Heller Documents and the Sovereign Documents described therein,
respectively;
WHEREAS, TFC and Borrower have agreed to enter into this Second
Amendment to Loan and Security Agreement to amend and modify the Loan Agreement
as set forth below;
WHEREAS, Borrower intends to convey and transfer certain assets to the
SPV, including the SPV Assets, in accordance with the terms of the Silverleaf
Finance II Documents, as such terms are hereafter defined and whereas in
connection with such transfer, the Commitment, as such term is hereafter
defined, shall be reduced as described herein;
WHEREAS, in connection with the Loans to be made by Lenders pursuant to
the Loan Agreement, Textron Financial Corporation has agreed to act as facility
agent and collateral agent for the other Lenders and to perform such duties with
respect to the Loans as are expressly set forth herein; and
WHEREAS, all capitalized terms not otherwise defined herein shall have
the meaning ascribed to such term in the Loan Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. ADDITIONAL RESORT COLLATERAL. Section 1.1(gggg) is hereby deleted in its
entirety and in its place instead is substituted the following:
"(gggg) ADDITIONAL RESORT COLLATERAL. The term "Additional
Resort Collateral" shall mean singly and collectively, the
development rights, real property, fixtures and other personal
property, including all management agreements for the Resorts,
now owned or hereafter acquired by Borrower and described on
Schedule 1.1.(gggg) attached hereto. "Additional Resort
Collateral" shall not include the promissory notes and other
property of Silverleaf Finance I, Inc., that constitute
"Pledged Assets" under the DZ Documents OR THE PROMISSORY
NOTES AND OTHER PROPERTY OF SILVERLEAF FINANCE II, INC. THAT
CONSTITUTE "CONVEYED ASSETS" OR COLLATERAL UNDER THE
SILVERLEAF FINANCE II DOCUMENTS."
2. BUSINESS PLAN. Section 1.1(i) is hereby deleted in its entirety and in its
place instead is substituted the following:
"(i) BUSINESS PLAN. The term "Business Plan" shall mean
the five (5) year "Stand Alone" business plan, more
particularly described as document
"BS.IS.02-08.Lender.9-03.NS.1a2," prepared by Borrower and
attached TO THE SECOND AMENDMENT as Exhibit F-1. THE BUSINESS
PLAN INCLUDES THE "IMPACT ON LENDERS WORKSHEET" SETTING FORTH
THE AMOUNTS TO BE ADVANCED BY EACH OF THE LENDERS, HELLER AND
SOVEREIGN PURSUANT TO THEIR RESPECTIVE CREDIT FACILITIES (THE
"SENIOR LENDER ADVANCE SCHEDULE")."
3. COLLATERAL. Section 1.1(l) is hereby amended in part to add the following new
paragraphs:
"(xiii) THE SILVERLEAF FINANCE II STOCK."
"(xiv) THE SILVERLEAF FINANCE II SUBORDINATED NOTE."
4. COMMITMENT. Section 1.1(m) is hereby deleted in its entirety and in its place
instead is substituted the following:
"(m) COMMITMENT. The term "Commitment" shall refer singly
to the obligation of Lender to make a Loan or Loans to
Borrower hereunder. AFTER GIVING EFFECT TO THE DECEMBER 2003
LOAN PAYDOWN PROVIDED FOR IN SECTION 2.4(a) BELOW, the maximum
aggregate Commitment of the Lender hereunder shall not exceed
(i) $6,245,400.00 for the Revolving Loan Component; and (ii)
$1,680,000.00 for the Term Loan Component, for a total
Commitment under this Agreement of $7,925,400.00. The
Commitment and the Maximum Available Amount shall be subject
to reduction as provided in Section 2.1(a). AFTER GIVING
EFFECT TO THE DECEMBER 2003 LOAN PAYDOWN PROVIDED FOR IN
SECTION 2.4(a) BELOW, the maximum aggregate Commitment under
this Agreement, the Tranche A Credit Facility and the Tranche
B Credit Facility shall be $95,000,000.00 for the Revolving
Loan Component and $24,000,000.00 for the Term Loan Component,
which Commitment shall be reduced as provided in Section
2.1(a)."
5. DZ FACILITY. Section 1.1(mmmm) is hereby deleted in its entirety and in its
place instead is substituted the following:
"(mmmm) DZ FACILITY. The term "DZ Facility" shall mean that
certain note purchase facility to be provided by DZ Bank AG
Deutsche Zentral - Genossenschaftsbank, as agent for Autobahn
Funding Company, LLC ("DZ") to Borrower, on the terms outlined
in the DZ Letter Agreement, dated December 12, 2001, as
supplemented by that certain letter agreement by and between
Borrower and DZ dated February 7, 2002, and attached hereto as
Exhibit G AS MAY BE HEREAFTER AMENDED FROM TIME TO TIME
(collectively, the "DZ LETTER AGREEMENT") and evidenced by the
documents listed on Schedule 1.1(mmmm) hereto (the "DZ
DOCUMENTS")."
6. EFFECTIVE ADVANCE RATE. Section 1.1(pppp) is hereby deleted in its entirety
and in its place instead is substituted the following:
"(pppp) EFFECTIVE ADVANCE RATE. The term "Effective Advance
Rate" shall mean the aggregate outstanding principal balance
of the Revolving Loan Component and the Term Loan Component
divided by the aggregate outstanding principal balance of all
Eligible Notes Receivable pledged to Lender hereunder. The
Effective Advance Rate shall at no time exceed the "MAXIMUM
EFFECTIVE ADVANCE RATE", DETERMINED AS FOLLOWS: (i) 95%; or
(ii) SUCH HIGHER RATE AS MAY BE AGREED TO BY TFC IN WRITING IN
ITS SOLE AND ABSOLUTE DISCRETION PROVIDED, HOWEVER, THAT THE
AGGREGATE OUTSTANDING PRINCIPAL BALANCE OF THE REVOLVING LOAN
COMPONENT DIVIDED BY THE AGGREGATE OUTSTANDING PRINCIPAL
BALANCE OF ALL ELIGIBLE NOTES RECEIVABLE PLEDGED TO TFC
HEREUNDER WILL NOT EXCEED 75%. In addition, the Effective
Advance Rate determined with respect to the aggregate of
the Loan, the Tranche A Credit Facility and the Tranche B
Credit Facility (collectively "TFC's Facilities") shall at no
time exceed: (i) 95% of the aggregate outstanding principal
balance of all Eligible Notes Receivable pledged to TFC, as
agent or lender as applicable, under TFC's Facilities; or (ii)
SUCH HIGHER RATE AS MAY BE AGREED TO BY TFC IN WRITING IN ITS
SOLE AND ABSOLUTE DISCRETION PROVIDED, HOWEVER, THAT THE
AGGREGATE OUTSTANDING PRINCIPAL BALANCE OF THE REVOLVING LOAN
COMPONENTS OF TFC'S FACILITIES DIVIDED BY THE AGGREGATE
OUTSTANDING PRINCIPAL BALANCE OF ALL ELIGIBLE NOTES RECEIVABLE
PLEDGED TO TFC UNDER TFC'S FACILITIES WILL NOT EXCEED 75%."
7. ELIGIBLE NOTES RECEIVABLE. Section 1.1(t)(xv) is hereby deleted in its
entirety and in its place instead is substituted the following:
"(xv) the maximum remaining principal balance of any such
Note Receivable shall not exceed $30,000 and the total maximum
remaining principal balance of the Notes Receivable executed
by any one Purchaser or other maker shall not exceed $50,000
in the aggregate (or such greater amount as may be approved in
writing in advance by Lender);"
8. FACILITY FEE. Section 1.1(aa) is hereby deleted in its entirety and in its
place instead is substituted the following:
"(aa) FACILITY FEE. Shall mean the facility fee set forth
in the Fee Letter, which shall be payable in accordance with
Section 2.6. IN ADDITION TO THE FEES SET FORTH IN THE FEE
LETTER, THE FACILITY FEE SHALL INCLUDE A FEE IN THE AMOUNT OF
ONE-HALF OF ONE PERCENT (1/2%) OF THE TOTAL AMOUNT OF THE
MAXIMUM AGGREGATE COMMITMENT FOR BOTH THE REVOLVING LOAN
COMPONENT AND THE TERM LOAN COMPONENT UNDER THIS AGREEMENT,
THE TRANCHE A CREDIT FACILITY, THE TRANCHE B CREDIT FACILITY
AND THE INVENTORY LOAN."
9. REVOLVING LOAN COMPONENT. Section 1.1(yyyy) is hereby deleted in its entirety
and in its place instead is substituted the following:
"(yyyy) REVOLVING LOAN COMPONENT. Shall mean that portion of
the Loan in the amount of $6,245,400.00, AS OF THE SECOND
AMENDMENT EFFECTIVE DATE, on the terms and conditions
described in Sections 2.1, 2.3, 2.4 and 2.5 hereof, which
amount shall be repaid as provided in Section 2.4 and Section
2.5(b) hereof."
10. REVOLVING LOAN TERM. Section 1.1(aaaaa) is hereby deleted in its entirety
and in its place instead is substituted the following:
"(aaaaa) REVOLVING LOAN TERM. Shall mean the period commencing
on the Effective Date and ending on March 31, 2006."
11. TERM LOAN COMPONENT. Section 1.1(ooooo) is hereby deleted in its entirety
and in its place instead is substituted the following:
"(ooooo) TERM LOAN COMPONENT. Shall mean that portion of the
Loan in the amount of $1,680,000.00, AS OF THE SECOND
AMENDMENT EFFECTIVE DATE, on the terms and conditions set
forth in Sections 2.2, 2.3, 2.4 and 2.5 hereof, which amount
shall be repaid as provided in Section 2.4 and Section 2.5(b)
hereof."
12. DEFINITIONS. Section 1.1 is hereby amended in part to add the following new
paragraphs:
"(rrrrr) DECEMBER 2003 LOAN PAYDOWN. SHALL MEAN THE PAYMENT ON
THE TERM LOAN COMPONENT AND THE REVOLVING LOAN COMPONENT FROM
THE PROCEEDS OF THE TFC CONDUIT LOAN IN ACCORDANCE WITH
SECTION 2.4(a)(i)."
"(sssss) SECOND AMENDMENT. SHALL MEAN THAT CERTAIN SECOND
AMENDMENT TO LOAN AND SECURITY AGREEMENT (TRANCHE C) DATED AS
OF DECEMBER 19, 2003 BY AND AMONG SILVERLEAF RESORTS, INC., A
TEXAS CORPORATION, AS BORROWER, AND TEXTRON FINANCIAL
CORPORATION, A DELAWARE CORPORATION, AS LENDER.
"(ttttt) SECOND AMENDMENT EFFECTIVE DATE. SHALL MEAN THE DATE
ON WHICH: (I) THE CLOSING OF THE TFC CONDUIT LOAN OCCURS; AND
(II) TFC DETERMINES, IN ITS SOLE AND ABSOLUTE DISCRETION, THAT
EACH OF THE CONDITIONS SET FORTH IN SECTION 33 OF THE SECOND
AMENDMENT HAVE BEEN SATISFIED."
"(uuuuu) 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."
"(vvvvv) 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."
"(wwwww) 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."
"(xxxxx) SILVERLEAF FINANCE II STOCK AND SUBORDINATED NOTE
PLEDGE AGREEMENT. SHALL MEAN THE AGREEMENT IN THE FORM
ATTACHED TO THE SECOND AMENDMENT AS EXHIBIT A-1, PURSUANT TO
WHICH THE SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF
FINANCE II SUBORDINATED NOTE IS PLEDGED TO TFC."
"(yyyyy) SPV. SHALL MEAN SILVERLEAF FINANCE II, INC., A
DELAWARE CORPORATION."
"(zzzzz) SPV ASSETS. SHALL MEAN ALL ASSETS SOLD OR CONVEYED BY
BORROWER TO THE SPV PURSUANT TO THE SILVERLEAF FINANCE II
DOCUMENTS."
"(aaaaaa) SPV SUBORDINATION AGREEMENT. SHALL MEAN THAT CERTAIN
SUBORDINATION AGREEMENT RELATING TO TFC'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 UNDER
THE LOAN DOCUMENTS AND TEXTRON FINANCIAL CORPORATION, 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."
"(bbbbbb) TFC CONDUIT LOAN. SHALL MEAN THAT CERTAIN LOAN
FACILITY TO BE PROVIDED BY TEXTRON FINANCIAL CORPORATION
("TFC") TO SPV IN ACCORDANCE WITH THE TERMS OF THE SILVERLEAF
FINANCE II DOCUMENTS."
13. REVOLVING LOAN COMPONENT. Section 2.1(a) is hereby deleted in its entirety
and in its place instead is substituted the following:
"(a) REVOLVING LOAN COMPONENT. Upon the terms and subject
to the conditions set forth in this Agreement, Lender agrees
at any time and from time to time during the Revolving Loan
Term, to make a loan or loans to Borrower, and Borrower may
borrow, repay and reborrow during the Revolving Loan Term,
with respect to the Revolving Loan Component only, in an
aggregate amount not to exceed at any time the lesser of: (i)
the amount of the Borrowing Base or (ii) the lending limits
set forth in Section 2.1(b) hereof. Notwithstanding anything
herein to the contrary, as of the Second Amendment Effective
Date, the aggregate balance of all Advances, shall not exceed
$6,245,400.00 (the "Maximum Available Amount"). Borrower's
right to receive Advances hereunder shall also be subject to
the terms and conditions set forth in that certain
Intercreditor Agreement between Lender, Borrower, Heller and
Sovereign dated of even date herewith. Borrower acknowledges,
confirms and agrees that Lender shall have the right to
allocate any request for an Advance hereunder to this Loan,
the Tranche A Credit Facility and/or the Tranche B Credit
Facility in such manner as Lender may elect in its sole and
absolute discretion. Notwithstanding anything herein to the
contrary, Borrower acknowledges, confirms and agrees that it
shall not be entitled to receive, nor shall Lender be required
to make, any Advance if and to the extent that: (i) Borrower
has failed to substantially adhere to the Business Plan,
including the Senior Lender Advance Schedule, as determined by
Lender in its sole and absolute discretion; or (ii) the most
recent weekly flash report delivered in accordance with
Section 7.1(h)(i) hereof (a "Weekly Flash Report"), indicates
that Borrower has in excess of five million dollars
($5,000,000) in available unrestricted cash.
Borrower acknowledges, agrees and confirms that as
provided in the Business Plan, the Commitment for the
Revolving Loan Component and the
Maximum Available Amount shall be reduced to $5,587,900.00 ON
MARCH 31, 2006.
On or before the SECOND AMENDMENT EFFECTIVE DATE, the
aggregate amount of the Commitment for the Revolving Loan
Component provided hereunder, under the Additional Credit
Facility and the Tranche C Facility shall be equal to
$95,000,000.00. Borrower further acknowledges, confirms and
agrees that the aggregate Commitment for the Revolving Loan
Component under this Agreement, the Additional Credit Facility
and the Tranche C Facility shall be reduced to $85,000,000.00
ON MARCH 31, 2006."
14. LOAN PAYDOWN. Section 2.4(a) is hereby deleted in its entirety and in its
place instead is substituted the following:
"(a)(i) INITIAL LOAN PAYDOWN. On or before May 31, 2002,
Borrower shall make, from the proceeds of the DZ Facility, a
payment on the Revolving Loan Component in the amount of
approximately $1,764,000. (ii) DECEMBER 2003 LOAN PAYDOWN. ON
OR BEFORE THE SECOND AMENDMENT EFFECTIVE DATE, BORROWER SHALL
MAKE, FROM THE PROCEEDS OF THE TFC CONDUIT LOAN, A PAYMENT ON
THE REVOLVING LOAN COMPONENT IN THE AMOUNT OF APPROXIMATELY
$2,987,930.13. ON OR BEFORE THE SECOND AMENDMENT EFFECTIVE
DATE, BORROWER SHALL MAKE, FROM THE PROCEEDS OF THE TFC
CONDUIT LOAN, A PAYMENT ON THE TERM LOAN COMPONENT IN THE
AMOUNT OF APPROXIMATELY $375,046.42."
15. MONTHLY PAYMENTS, TERM LOAN COMPONENT. That portion of Section 2.4(b)
beginning "(2) Term Loan Component..." and ending "...as provided immediately
above.", describing monthly payments under the Term Loan Component, is hereby
deleted in its entirety and in its place instead is substituted the following:
"(2) TERM LOAN COMPONENT. Borrower shall pay to Lender on
or before the tenth day of each month an amount equal to: (i)
all interest accrued at the applicable Default Rate on the
Term Loan Component; plus (ii) all interest due and payable as
of the last day of the immediately preceding month; plus (iii)
a principal payment sufficient to amortize the Term Loan
Component in full on the basis of a FIFTEEN (15) year
amortization schedule. In the event that Borrower fails to
make the payment in question, Lender may, at its option, on or
before the tenth day of each month, make an Advance with
respect to the Revolving Loan Component and apply such Advance
to the payment of amounts due in respect of the Term Loan
Component as provided immediately above, PROVIDED THAT: (i) NO
DEFAULT OR EVENT OF DEFAULT SHALL EXIST IMMEDIATELY PRIOR TO
THE MAKING OF SUCH REQUESTED ADVANCE OR, AFTER GIVING EFFECT
THERETO, IMMEDIATELY AFTER THE MAKING OF SUCH REQUESTED
ADVANCE, EXCEPT FOR ANY DEFAULT OR EVENT OF DEFAULT THAT MAY
HAVE ARISEN AS A RESULT OF NON-PAYMENT OF THE TERM LOAN
COMPONENT; AND (ii) TFC SHALL HAVE DETERMINED THAT THE
REQUESTED ADVANCE, WHEN ADDED TO THE AGGREGATE OUTSTANDING
PRINCIPAL AMOUNT OF ALL PREVIOUS ADVANCES, IF ANY, DOES NOT,
BASED ON THE ELIGIBLE NOTES RECEIVABLE THAT HAVE BEEN DULY
PLEDGED IN
FAVOR OF TFC: (x) EXCEED THE TOTAL AMOUNT OF THE BORROWING
BASE, OR (y) CAUSE THE EFFECTIVE ADVANCE RATE, DETERMINED WITH
RESPECT TO THE AGGREGATE OF THE LOAN, THE TRANCHE A CREDIT
FACILITY AND THE TRANCHE B CREDIT FACILITY, TO EXCEED THE
MAXIMUM EFFECTIVE ADVANCE RATE."
16. MANDATORY TERM LOAN COMPONENT FUND UP PREPAYMENT. Section 2.4(c), Mandatory
Term Loan Component Fund Up Prepayment, is hereby deleted in its entirety and in
its place instead is substituted the following:
"(c) MANDATORY TERM LOAN COMPONENT FUND UP PREPAYMENT. If
and to the extent that: (i) at the end of each calendar
quarter during the first two (2) years of the Term following
the Effective Date, commencing the calendar quarter ending
June 30, 2002 (x) the outstanding principal balance of all
Loans made with respect to the Revolving Loan Component is
less than seventy percent (70%) of the then outstanding
principal balance of the Eligible Notes Receivable pledged to
Lender with respect to such Loans (such difference being
hereinafter referred to as an "AVAILABLE FUND-UP AMOUNT") and
(y) provided Borrower has available unrestricted cash of five
million dollars ($5,000,000.00) or more as indicated in the
most recent Weekly Flash Report or (ii) at the end of each
calendar quarter commencing the calendar quarter ending June
30, 2004 (x) the outstanding principal balance of all Loans
made with respect to the Revolving Loan Component is less than
seventy-five percent (75%) of the then outstanding principal
balance of the Eligible Notes Receivable pledged to Lender
with respect to such Loans (such difference also being
referred to as an "AVAILABLE FUND-UP AMOUNT") and (y) provided
Borrower has available unrestricted cash of five million
dollars ($5,000,000.00) or more as indicated in the most
recent Weekly Flash Report, then Borrower agrees that Lender
may, on the last Business Day of each such calendar quarter,
make an Advance with respect to the Revolving Loan Component
in an amount NOT TO EXCEED such Available Fund Up Amount and
apply any such Advance to the repayment of the Term Loan
Component as follows: (i) first to interest at the applicable
Default Rate; (ii) then to interest at the applicable Interest
Rate and (iii) then to reduction of principal of the Term Loan
Component until such time as the Term Loan Component is paid
in full.
17. USE OF PROGRAM RESERVE ACCOUNT WITHDRAWALS AND SURPLUS UNDER THE TFC CONDUIT
LOAN. Section 2.4 is hereby amended in part to add the following new paragraph:
"(h) USE OF PROGRAM RESERVE ACCOUNT WITHDRAWALS AND
SURPLUS UNDER THE TFC CONDUIT LOAN. TO THE EXTENT THAT FUNDS
ARE MADE AVAILABLE TO SPV FROM THE PROGRAM RESERVE ACCOUNT IN
ACCORDANCE WITH SECTION 5.1(e) OF THE LOAN AND SECURITY
AGREEMENT WHICH IS PART OF THE SILVERLEAF FINANCE II
DOCUMENTS, TO THE EXTENT PERMITTED BY LAWS AND THE SILVERLEAF
FINANCE II DOCUMENTS, BORROWER SHALL CAUSE SPV TO DISTRIBUTE
SUCH FUNDS TO BORROWER AND BORROWER SHALL MAKE PAYMENT IN THE
AMOUNT OF SUCH DISTRIBUTION TO TFC AND SOVEREIGN TO BE APPLIED
IN THE ORDER SET FORTH IN THAT CERTAIN INTERCREDITOR AGREEMENT
BETWEEN TFC, BORROWER, HELLER AND SOVEREIGN DATED OF EVEN DATE
HEREWITH, AS
AMENDED. TO THE EXTENT THAT BORROWER RECEIVES ANY
DISTRIBUTIONS FROM THE SPV IN RESPECT OF ANY SURPLUS PAYMENTS,
AS SUCH TERM IS DEFINED IN THE SILVERLEAF FINANCE II
DOCUMENTS, SUCH FUNDS SHALL BE USED BY BORROWER STRICTLY TO
FUND OPERATING EXPENSES IN ACCORDANCE WITH THE BUSINESS PLAN
AND FOR NO OTHER REASON, WITHOUT TFC'S PRIOR WRITTEN CONSENT."
18. FACILITY FEE. Section 2.6 is hereby deleted in its entirety and in its place
instead is substituted the following:
"2.6 FACILITY FEE. Borrower acknowledges and agrees that a
Facility Fee in the amount set forth in the Fee Letter is due
and payable exclusively to the Lender. Borrower acknowledges,
agrees and confirms that Lender has earned the Facility Fee
notwithstanding whether the Loan or any portion is funded and
further agrees that the Facility Fee shall be payable BY
BORROWER AT THE CLOSING OF THE TFC CONDUIT LOAN."
19. GRANT OF SECURITY INTEREST. Section 3.1 is hereby deleted in its entirety
and in its place instead is substituted the following:
"3.1 GRANT OF SECURITY INTEREST. To secure the payment and
performance of the Obligations, for value received, Borrower
unconditionally and irrevocably assigns, pledges and grants to
Lender a continuing first priority security interest in and to
the Collateral (OTHER THAN THE SILVERLEAF FINANCE II STOCK AND
THE SILVERLEAF FINANCE II SUBORDINATED NOTE, AS TO WHICH
LENDER IS GRANTED A JUNIOR SECURITY INTEREST AS HEREINAFTER
PROVIDED) to further secure the payment and performance of the
Obligations. To further secure the payment and performance of
the Obligations, Borrower shall also execute and deliver
Lender: (i) the modifications to the Land Mortgages in the
applicable form attached hereto as Exhibit A, granting Lender
a first priority mortgage lien on the Land and (ii) the
Additional Resort Collateral Mortgages, in the applicable form
attached hereto as Exhibit A, granting Lender, a first
priority mortgage lien on that portion of the Additional
Resort Collateral consisting of real property. To further
secure the payment and performance of the Obligations,
Borrower shall further execute and deliver to Lender: (1) the
Additional Resort Collateral Assignment, in the applicable
form attached hereto as Exhibit A, granting Lender a first
priority security interest on that portion of the Additional
Resort Collateral consisting of personal property; (2) the
Stock Pledge Agreement, in the applicable form attached hereto
as Exhibit A, granting Lender, a first priority security
interest in the Silverleaf Finance I, Inc. Stock; (3) the
Amended Standby Management Agreement Assignment, in the
applicable form attached hereto as Exhibit A, assigning to
Lender, all of Borrower's right, title and interest in the
Standby Management Agreement; and (4) the Standby Servicing
Agreement Assignment, in the applicable form attached hereto
as Exhibit A, assigning to Lender all of Borrower's right,
title and interest in the Standby Servicing Agreement; and (5)
THE SILVERLEAF FINANCE II STOCK AND SUBORDINATED NOTE PLEDGE
AGREEMENT, IN THE APPLICABLE FORM ATTACHED TO THE SECOND
AMENDMENT AS EXHIBIT A-1, GRANTING LENDER A JUNIOR AND
SUBORDINATE SECURITY INTEREST IN
THE SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF FINANCE II
SUBORDINATED NOTE, SUBJECT TO THE TERMS AND CONDITIONS SET
FORTH IN THE SPV SUBORDINATION AGREEMENT.
Notwithstanding anything herein to the contrary, Borrower
acknowledges and agrees as follows:
(a) The Revolving Loan Component shall be secured by:
(i) a first priority security interest in the
Eligible Notes Receivable pledged to Lender as
provided herein, the Mortgages with respect thereto
and that portion of the other Collateral related
thereto;
(ii) a first priority security interest in the
Ineligible Note Portfolio, the Mortgages with respect
thereto and that portion of the other Collateral
related thereto;
(iii) a second priority security interest, subject
only to the security interest securing the Term Loan
Component and the Inventory Loan, in the Silverleaf
Finance I, Inc. Stock and the Additional Resort
Collateral AND A SUBORDINATE SECURITY INTEREST IN THE
SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF
FINANCE II SUBORDINATED NOTE SUBJECT TO THE SECURITY
INTEREST SECURING THE TERM LOAN COMPONENT AND SUBJECT
TO THE TERMS AND CONDITIONS SET FORTH IN THE SPV
SUBORDINATION AGREEMENT.
(b) The Term Loan Component shall be secured by:
(i) a first priority security interest in the
Additional Resort Collateral;
(ii) a first priority security interest in the
Silverleaf Finance I, Inc. Stock.
(iii) a second priority security interest, subject
only to the security interest securing the Revolving
Loan Component, in the Eligible Notes Receivable
pledged to Lender as provided herein, the Mortgages
with respect thereto and that portion of the other
Collateral related thereto; and
(iv) second priority security interest, subject
only to the security interest securing the Revolving
Loan Component, in the Ineligible Note Portfolio, the
Mortgages with respect thereto and the other
Collateral related thereto; and
(vi) A SUBORDINATE SECURITY INTEREST IN THE
SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF
FINANCE II SUBORDINATED NOTE SUBJECT TO THE TERMS AND
CONDITIONS SET FORTH IN THE SPV SUBORDINATION
AGREEMENT.
In addition to the foregoing, Borrower acknowledges, agrees
and confirms that the security interest granted to Lender, in
all other Collateral to secure the Loan, including the Land,
the Standby Management Agreement, the Standby Servicing
Agreement and the other collateral securing the Heller
Facility, the Sovereign Facility and the Existing Credit
Facilities shall be equal in priority as between the Revolving
Loan Component and the Term Loan Component and, with respect
to the collateral securing the Heller Facility, the Sovereign
Facility and the Existing Credit Facilities, subject only to
the security interests securing such facilities. For purposes
hereof, the reference to "collateral securing the Heller
Facility" and "collateral securing the Sovereign Facility"
shall mean the Notes Receivable and related Mortgages
exclusively assigned to Heller or Sovereign in connection with
an advance under their respective loan documents."
20. PURCHASER/ CRITERIA. Section 3.9 is hereby deleted in its entirety and in
its place instead is substituted the following:
"3.9 PURCHASER/CRITERIA. All Eligible Notes Receivable
pledged as Collateral to Lender subsequent to the Effective
Date will be underwritten in a manner consistent with the
Borrower's general underwriting criteria, as approved in
writing by Lender, including, without limitation: (i) the
requirement that a majority of sales shall be made to
Purchasers with minimum annual income as follows: $35,000 for
purchasers residing in the state of Texas, $40,000 for
purchasers residing in the state of Illinois, and $45,000 for
purchasers residing in the state of Massachusetts, (ii) the
requirement that each Purchaser shall have a major credit card
issued in his or her name, with a copy of such credit card
maintained in Borrower's file for such Purchaser, and (iii)
the requirement that the weighted average FICO Credit Bureau
Scores of all Purchasers with respect to which a FICO score
can be obtained be not less than 640, provided that the
aggregate outstanding principal balance of Eligible Notes
Receivable pledged to Lender with respect to which a FICO
score can not be obtained, does not exceed ten percent (10%)
of the aggregate outstanding principal amount of all Eligible
Notes Receivable pledged to Lender. 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."
21. CROSS COLLATERALIZATION. Section 3.11 is hereby deleted in its entirety and
in its place instead is substituted the following:
"3.11 CROSS COLLATERALIZATION. The Collateral also secures
the Obligations of Borrower under the Existing Credit
Facilities. Upon repayment of this Loan and the satisfaction
by Borrower of all of the Obligations under this Loan, the
Collateral shall continue to secure the Existing Credit
Facilities, as provided in the documents evidencing and
securing the Existing Credit Facilities. If this Loan is
paid in full, any Collateral remaining thereafter shall remain
Collateral for the other Existing Credit Facilities. Borrower
further acknowledges and agrees that upon repayment in full of
the Heller Facility and/or the Sovereign Facility, Lender's
security interest in the collateral securing such facilities
shall automatically become a first priority security interest
securing the Borrower's Obligations hereunder and under the
Existing Credit Facilities and Borrower shall take such steps
as Lender may request to deliver such collateral to Lender and
to confirm Lender's first priority security interest therein.
Notwithstanding the foregoing: (a) when the Term Loan
Component and the Inventory Loan are paid in full, the
Additional Resort Collateral shall be released from the Lien
of the security interest granted to Lender hereunder provided:
(i) an Event of Default has not occurred; and (ii) the
Additional Resort Collateral is also released from any lien
granted to Sovereign pursuant to the Sovereign Documents; and
(b) when both the Term Loan Component and the Inventory Loan
are paid in full, the Silverleaf Finance I, Inc., Stock shall
be released from the Lien of the security interest granted to
Lender hereunder provided: (i) an Event of Default has not
occurred; and (ii) the Silverleaf Finance I, Inc., Stock is
also released from any lien granted to Sovereign pursuant to
the Sovereign Documents; (c) WHEN THE TERM LOAN COMPONENT, THE
REVOLVING LOAN COMPONENT AND THE INVENTORY LOAN ARE PAID IN
FULL, THE SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF
FINANCE II SUBORDINATED NOTE SHALL BE RELEASED FROM THE LIEN
OF THE SECURITY INTEREST GRANTED TO TFC HEREUNDER PROVIDED:
(I) AN EVENT OF DEFAULT HAS NOT OCCURRED; AND (II) THE
SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF FINANCE II
SUBORDINATED NOTE ARE ALSO RELEASED FROM ANY LIEN GRANTED TO
SOVEREIGN PURSUANT TO THE SOVEREIGN DOCUMENTS."
22. USE OF PROCEEDS/MARGIN STOCK. Section 6.11 is hereby deleted in its entirety
and in its place instead is substituted the following:
"6.11 USE OF PROCEEDS/MARGIN STOCK. (a) The proceeds of the
Loan, the Existing Credit Facilities, the Heller Facility, The
Sovereign Facility, the DZ Facility, the Tax Refund and any
cash dividend or other cash distribution Borrower receives
from Silverleaf Finance I, Inc. OR SILVERLEAF FINANCE II, INC.
will be used strictly in accordance with the Business Plan and
for no other purpose and (b) none of the proceeds of the Loan
will be used to purchase or carry any "margin stock" (as
defined under Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time), and
no portion of the proceeds of the Loan will be extended to
others for the purpose of purchasing or carrying margin stock.
None of the transactions contemplated in the Agreement
(including, without limitation, the use of the proceeds from
the Loan) will violate or result in the violation of Section 7
of the Securities Exchange Act of 1934, as amended, or any
regulations issued pursuant thereto, including, without
limitation, Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter
11."
23. RESTRICTIONS OF BORROWER. Section 6.14 is hereby deleted in its entirety and
in its place instead is substituted the following:
"6.14 RESTRICTIONS OF BORROWER. Except for this Agreement
and the Loan Documents, the Inventory Loan Documents, the
Tranche A Loan Documents, the Tranche B Loan Documents, the
Heller Documents and the Sovereign Documents, THE DZ DOCUMENTS
OR THE SILVERLEAF FINANCE II DOCUMENTS, the Borrower will not
be, on or after the date hereof, a party to any contract or
agreement which restricts its right or ability to incur
indebtedness or prohibits Borrower's execution of or
compliance with the terms of this Agreement, the other Loan
Documents, the Inventory Loan Documents, the Tranche A Loan
Documents, the Tranche B Loan Documents, the Heller Documents,
the Bond Holder Exchange Documents, the Sovereign Documents,
the DZ Documents, or THE SILVERLEAF FINANCE II DOCUMENTS. The
Borrower has not agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any
of the Collateral, whether now owned or hereafter acquired, to
be subject to a Lien except in favor of Lender as provided
herein, and, with respect to the Land, the Additional Resort
Collateral, the Silverleaf Finance I. Inc., Stock and the
Ineligible Notes Receivable, THE SILVERLEAF FINANCE II
SUBORDINATED NOTE AND THE SILVERLEAF FINANCE II STOCK, in
favor of Heller, Sovereign AND TFC, as applicable."
24. STANDBY MANAGER, RESORT CONSULTANT AND STANDBY SERVICER. Section 7.1(w) is
hereby deleted in its entirety and in its place instead is substituted the
following:
"(w) STANDBY MANAGER, RESORT CONSULTANT AND STANDBY
SERVICER. Borrower will enter into agreements for the Standby
Manager and the Resort Consultant on or before the Effective
Date and will maintain such agreements in full force and
effect. IN THE EVENT THAT SUCH AGREEMENTS FOR THE STANDBY
MANAGER AND THE RESORT CONSULTANT EXPIRE BEFORE THE FINAL
MATURITY DATE, SUCH AGREEMENTS SHALL BE EXTENDED OR SHALL BE
REPLACED, BEFORE THEIR EXPIRATION, WITH AGREEMENTS FOR A
STANDBY MANAGER AND A RESORT CONSULTANT THAT EXPIRE NO SOONER
THAN THE FINAL MATURITY DATE. Borrower will maintain the
agreement for the Standby Servicer in full force and effect.
Borrower agrees that upon the occurrence of a Default or Event
of Default hereunder: (1) Lender may, with the approval of a
majority of the Borrower's Board of Directors, which approval
shall not be unreasonably withheld or delayed, terminate any
then existing management agreements and replace any existing
manager with such manager as Lender may select provided
however, if: (x) the obligations have become immediately due
and payable in accordance with Section 9.1 (a) hereof, or (y)
Lender elects to have J & J Limited, Inc. act as Standby
Manager, then no such approval of Borrower's Board of
Directors shall be required; and (2) The Standby Servicer will
assume full control over the servicing of all Pledged Notes
Receivable, reporting solely to Lender, as provided in Section
10.14 hereof."
25. HELLER FACILITY, SOVEREIGN FACILITY, DZ FACILITY AND BOND HOLDER EXCHANGE
TRANSACTION. Section 7.1(z) is hereby deleted in its entirety and in its place
instead is substituted the following:
"(z) HELLER FACILITY, SOVEREIGN FACILITY, DZ FACILITY, TFC
CONDUIT LOAN AND BOND HOLDER EXCHANGE TRANSACTION. Borrower
will comply with each of the terms and conditions of the
Heller Facility, the Sovereign Facility, the DZ Facility, THE
TFC CONDUIT LOAN and the Bond Holder Exchange Documents and
will promptly deliver to Lender, upon receipt by Borrower,
copies of any notices received by Borrower in connection with
any of the forgoing credit facilities."
26. PROFITABLE OPERATIONS. Section 7.1(aa)(v) is hereby deleted in its entirety
and in its place instead is substituted the following:
"(v) PROFITABLE OPERATIONS. Borrower will not permit
Consolidated Net Income (a) for any fiscal year, commencing
with the fiscal year ending December 31, 2002, to be less than
$1.00 and (b) for any two consecutive fiscal quarters
(reviewed on an individual rather than on an aggregate basis)
to be less than $1.00."
27. RESTRICTIONS ON TRANSFERS. Section 7.4(b) is hereby deleted in its entirety
and in its place instead is substituted the following:
"(b) RESTRICTIONS ON TRANSFERS. Except as hereinafter
specifically provided, Borrower shall not, whether voluntarily
or involuntarily, by operation of law or otherwise, (I)
without obtaining the prior written consent of Lender (which
consent may be given, withheld or conditioned by Lender in
Lender's sole discretion), transfer, sell, pledge, convey,
hypothecate, factor or assign all or any portion of the
Collateral, the Encumbered Intervals, the Common Elements
relating to the Encumbered Intervals or any Resort facilities
or amenities, or contract to do any of the foregoing,
including, without limitation, pursuant to options to
purchase, and so-called "installment sales contracts", "land
contracts", or "contracts for deed", PROVIDED THAT THE
FOREGOING RESTRICTION ON TRANSFERS SHALL NOT APPLY TO THE
CONVEYANCE OF SPV ASSETS TO THE SPV IN ACCORDANCE WITH THE
SILVERLEAF FINANCE II DOCUMENTS, (ii) without obtaining the
prior written consent of Lender (which consent may be given,
withheld or conditioned by Lender in Lender's sole
discretion), lease or license all or any portion of the
Collateral, the Encumbered Intervals, the Common Elements
relating to the Encumbered Intervals or any Resort facilities
or amenities (EXCEPT FOR THE LICENSE CREATED IN FAVOR OF SPV
UNDER ANY LICENSE AGREEMENT WITH BORROWER, SILVERLEAF CLUB OR
ANY TIMESHARE OWNERS ASSOCIATION, TO USE OR ACCESS THE
RESERVATION SYSTEM OR RELATED COMPUTER HARDWARE OR SOFTWARE
FOR ANY RESORT), or change the legal or actual possession or
use thereof, (iii) permit the assignment, transfer,
delegation, change, modification or diminution of the duties
or responsibilities of Borrower, of any manager of any Resort
approved by Lender as manager of any Resort (except for an
assignment of such duties to a professional management company
or companies reasonably acceptable to Lender in advance)
without obtaining the prior written consent of Lender (which
consent shall not be unreasonably withheld), or (iv) without
obtaining the prior written consent of Lender (which consent
may be given, withheld or conditioned by Lender in Lender's
sole
discretion), cause or permit the assignment, pledge or other
encumbrance of any of the Operating Contracts or all or any
portion of Borrower's right, title or interest in the
Declaration. Without limiting the generality of the preceding
sentence, and subject to the terms of this Agreement, the
prior written consent of Lender (as specified above) shall be
required for (A) any transfer of the Encumbered Intervals, the
Common Elements relating to the Encumbered Intervals or any
Resort facilities or amenities or any part thereof made to a
subsidiary or Affiliate or otherwise, (B) any transfer of all
or any part of the Encumbered Intervals, the Common Elements
relating to the Encumbered Intervals or any Resort facilities
or amenities by Borrower to its stockholders or Affiliates or
vice versa, and (C) any corporate merger or consolidation,
disposition or other reorganization, except as permitted in
Section 7.1(c). In the event that Lender is willing to consent
to a transfer which would otherwise be prohibited by this
Section 7.2(b) Lender may condition its consent on such terms
as it desires, including, without limitation, an increase in
the Interest Rate and the requirement that Borrower pay a
transfer fee, together with any expenses incurred by Lender in
connection with the granting of such consent (including,
without limitation, attorneys' fees and expenses). If Borrower
violates the terms of this Section 7.2(b), in addition to any
other rights or remedies which Lender may have herein, in any
other Loan Document, or at law or in equity, Lender may by
written notice to Borrower increase, effective immediately as
of the date of such violation, the Interest Rate to the
Default Rate."
28. TRANSACTIONS WITH AFFILIATES. Section 7.4(d) is hereby deleted in its
entirety and in its place instead is substituted the following:
"(d) TRANSACTIONS WITH AFFILIATES. EXCEPT AS PROVIDED IN
THE SILVERLEAF FINANCE II DOCUMENTS, without the prior written
consent of Lender, which shall not unreasonably be withheld,
Borrower will not enter into any transaction with any
Affiliate in connection with the Resorts, including, without
limitation, relating to the purchase, sale or exchange any
assets or properties or the rendering of any service, except
in the ordinary course of, and pursuant to the reasonable
requirements of, the operations of the Resorts and upon fair
and reasonable terms."
29. TIMESHARE REGIME. Section 7.4(g) is hereby deleted in its entirety and in
its place instead is substituted the following:
"(g) TIMESHARE REGIME. Without Lender's prior written
consent, which consent shall not be unreasonably withheld as
to changes necessary to implement the Business Plan, Borrower
shall not amend, modify or terminate the Declarations or other
Timeshare Documents, or any other restrictive covenants,
agreements or easements regarding the Resorts (except for
routine non-substantive modifications which have no impact on
the Collateral AND EXCEPT FOR AMENDMENTS OR MODIFICATIONS OF
THE TIMESHARE DOCUMENTS AND/OR DECLARATIONS, A LIST OF WHICH
IS ATTACHED TO THE SECOND AMENDMENT AS EXHIBIT
B-1). Except as otherwise provided herein or in the Sovereign
Documents, Borrower shall not assign its rights as "developer"
under the Declarations without Lender's prior written consent,
or file or permit to be filed any additional covenants,
conditions, easements or restrictions against or affecting the
Resorts (or any portion thereof) without Lender's prior
written consent, which consent shall not be unreasonably
withheld."
30. COLLATERAL. Section 7.4(i) is hereby deleted in its entirety and in its
place instead is substituted the following:
"(i) COLLATERAL. Borrower shall not take any action (nor
permit or consent to the taking of any action) which might
impair the value of the Collateral or any of the rights of
Lender in the Collateral, EXCEPT WITH RESPECT TO THE
SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF FINANCE II
SUBORDINATED NOTE AS PROVIDED IN THE SILVERLEAF FINANCE II
DOCUMENTS, nor shall Borrower cause or permit any amendment to
or modification of the form or terms of any of the Pledged
Notes Receivable, Mortgages or, except as specifically
provided hereinabove, the other Timeshare Documents"
31. MODIFICATIONS OF HELLER DOCUMENTS, DZ DOCUMENTS, BOND HOLDER EXCHANGE
DOCUMENTS, SOVEREIGN DOCUMENTS, SILVERLEAF FINANCE II DOCUMENTS AND OTHER DEBT
INSTRUMENTS. Section 7.4(k) is hereby deleted in its entirety and in its place
instead is substituted the following:
"(k) MODIFICATIONS OF HELLER DOCUMENTS, DZ DOCUMENTS, BOND
HOLDER EXCHANGE DOCUMENTS, SOVEREIGN DOCUMENTS, SILVERLEAF
FINANCE II DOCUMENTS AND OTHER DEBT INSTRUMENTS. Borrower
shall not amend or modify the Heller Documents, the Sovereign
Documents, DZ Documents, Bondholder Exchange Documents, THE
SILVERLEAF FINANCE II DOCUMENTS or the documents evidencing
any other indebtedness of Borrower, nor shall Borrower extend,
modify, increase or terminate the Heller Facility, DZ
Facility, the Bond Holder Exchange Transaction, the Sovereign
Facility, the TFC CONDUIT LOAN or any other credit facility or
loan, without the prior written consent of Lender, which
consent shall not be unreasonably withheld."
32. DEFAULT BY BORROWER IN OTHER AGREEMENTS. Section 8.1(m) is hereby deleted in
its entirety and in its place instead is substituted the following:
"(m) DEFAULT BY BORROWER IN OTHER AGREEMENTS. Except for
any Specified Event of Default (as provided in the Forbearance
Agreement), which Specified Events of Default shall include a
prior existing default under the Heller Facility or the
Sovereign Facility and for any "Waived Defaults" under the
November Letter Agreement, which Waived Defaults include prior
existing defaults under the Heller Facility or the Sovereign
Facility, any default, AS DEFINED IN THE APPLICABLE LOAN
AGREEMENT, by the Borrower (i) in the payment of any
indebtedness to any Lender, including any indebtedness owed to
Lender under the Heller Facility, DZ
Facility, Sovereign Facility, Bond Holder Exchange
Transaction, or the Existing Credit Facilities, OR THE TFC
CONDUIT LOAN, (ii) in the payment or performance of other
indebtedness for borrowed money or obligations secured by any
part of the Resort; (iii) in the payment or performance of
other material indebtedness or obligations (material
indebtedness or obligations being defined for purposes of this
provision as any indebtedness or obligation in excess of
$200,000) where such default accelerates or permits the
acceleration (after the giving of notice or passage of time or
both) of the maturity of such indebtedness, or permits the
holders of such indebtedness to elect a majority of the board
of directors of Borrower (whether or not such default[s] have
been waived by such holder) or (iv) the acceleration by
Heller, Sovereign, DZ or the bondholders of their respective
credit facilities OR THE ACCELERATION OF THE TFC CONDUIT
LOAN."
33. CONDITIONS PRECEDENT. This Second Amendment shall not be effective until all
of the following conditions have been satisfied:
(a) APPROVAL OF DOCUMENTS. Borrower has delivered to TFC
(with copies to TFC's counsel), and TFC has reviewed and
approved in its sole discretion, the form and content of all
of the items specified in Subsections (i) through (iv) below
(the "SUBMISSIONS"). TFC shall have the right to review and
approve any changes to the form of any of the Submissions. If
TFC disapproves of any changes to any of the Submissions, TFC
shall have the right to require Borrower either to cure or
correct the defect objected to by TFC or to elect not to fund
any Advance. Under no circumstances shall TFC'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.
(i) A certificate in the form attached to THE
SECOND AMENDMENT as Exhibit C-1 to be signed by the
president, vice president or secretary of the
Borrower;
(ii) Copies of any amendments to the articles of
incorporation/charter and bylaws of Borrower not
previously delivered to TFC, certified to be true,
correct and complete by Borrower and the Secretary of
State of the State of Texas and current certificates
of good standing for Borrower for the State of Texas
and states where the Resorts are located, a current
certificate of authority to conduct business by the
Secretary of State in each state in which Borrower
conducts business;
(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 the SECOND Amendment and all
such documents requested by TFC in the form attached
to THE SECOND AMENDMENT as Exhibit D-1; and
(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 SECOND
Amendment and all such documents requested by Lender
in the form attached to THE SECOND AMENDMENT as
Exhibit E-1.
(b) EXECUTION AND DELIVERY OF DOCUMENTS. Borrower shall
have delivered to TFC the following:
(i) The Silverleaf Finance II Documents;
(ii) Closing Opinions of Counsels for Borrower;
(iii) The Silverleaf Finance II Stock and
Subordinated Note Pledge Agreement;
(iv) Amended and Restated Term Loan Component
Note;
(v) Revised Form of Borrower's Certificate and
Request for Advance;
(vi) Bailee Agreement; and
(vii) Such other agreements, documents,
instruments, certificates and materials as TFC may
request to evidence the Indebtedness, to evidence and
perfect the rights and Liens and security interests
of TFC contemplated by the Loan Documents, and to
effectuate the transactions contemplated herein.
(c) EXECUTION OF AMENDMENTS BY SOVEREIGN AND DZ BANK. TFC
shall have received evidence, in form and substance
satisfactory to TFC, that Sovereign and DZ have executed
amendments to the Sovereign Documents and DZ Documents,
respectively, in connection with the TFC Conduit Loan and TFC
shall have consented to such amendments.
(d) NECESSARY CONSENTS OBTAINED. TFC shall have received
evidence, in form and substance satisfactory to TFC, that the
consent of each party entitled to consent to this SECOND
Amendment has been obtained.
(e) FEES. Borrower shall have paid all fees of all
Lenders in connection with the TFC Conduit Loan and this
SECOND Amendment.
34. FURTHER DOCUMENTATION. Borrower agrees to execute and deliver to Lender any
and all additional documentation as Lender may now or hereafter require in order
to effectuate the terms and conditions of this Second Amendment.
35. EFFECT OF AMENDMENT. The Loan Agreement, as herein amended, shall remain in
full force and effect.
36. RATIFICATION AND CONFIRMATION. Except as herein expressly amended, Borrower
hereby ratifies, confirms, assumes and agrees to be bound by all of
representations, warranties, statements, covenants and agreements set forth in
the Loan Agreement and the other Loan Documents, as previously amended. The
Borrower reaffirms, restates and incorporates by reference all of the
representations, warranties, covenants and agreements made in the Loan Documents
as if the same were made as of this date. The Borrower agrees to pay the Loan
and all related expenses, as and when due and payable in accordance with the
Loan Agreement and the other Loan Documents, and to observe and perform the
Obligations, and do all things necessary which are not prohibited by law to
prevent the occurrence of any Event of Default. In
addition, to further secure, and to evidence and confirm the securing of, the
prompt and complete payment and performance by the Borrower of the Loan and all
of the Obligations, for value received, Borrower unconditionally and irrevocably
assigns, pledges and grants to TFC, and hereby confirms or reaffirms the prior
granting to TFC and each Lender of, a continuing first priority Lien, mortgage
and security interest in and to all of the Collateral, except as otherwise set
forth herein, whether now existing or hereafter acquired. Also, as provided in
the Loan Documents, the Loan is and shall be further secured by the Liens and
security interests in favor of TFC in the properties and interests relating to
Additional Eligible Resorts, which now or hereafter serve as collateral security
for any Obligations. Upon satisfaction of the requirements for approval by TFC
of Additional Resorts, Borrower shall record, or cause to be recorded, such
mortgages, deeds of trust, deeds to secure debt, assignments, pledges, security
agreements and UCC Financing Statements in the appropriate public records of the
state in which each Resort is located to further evidence and perfect TFC's Lien
on the Collateral. Borrower agrees to deliver or cause to be delivered by its
Affiliates, such mortgages, deeds of trust, deeds to secure debt, assignments,
pledges, security agreements and UCC Financing Statements as TFC may deem
necessary to further evidence and perfect TFC's Lien on the Collateral.
37. ESTOPPEL. Borrower acknowledges, agrees and confirms that: (a) Advances
under the Loan Agreement have been made prior to the date hereof; (b) all such
Advances made prior to the Closing Date were made in favor of the Original
Borrower and the Borrower in respect of the Existing Eligible Resorts; (c)
Advances made prior to the date of the Second Amendment are deemed as having
been made for the benefit of the Borrower and Borrower acknowledges and agrees
that Borrower received a direct and substantial financial benefit from such
Advances and (d) immediately prior to the date of the Second Amendment, and
without giving effect to any Advances that may be made pursuant to the Second
Amendment, the status of the Loan, including the outstanding principal balance
thereof is as reflected in the Loan Funding Report delivered to and approved by
Lender in connection with the closing of the Second Amendment.
The Loan constitutes valuable consideration to the Borrower, which
consideration is uninterrupted and continuous since the dates on which the Loan
was first made. This Second Amendment and the other Loan Documents and the Loan
modifications and transactions provided for or contemplated hereunder or
thereunder, shall in no way adversely affect the Lien or perfection or priority
of any Lien of Lender as of the date hereof in and to any Collateral, and are
not intended to constitute, and do not constitute or give rise to, any novation,
cancellation or extinguishment of any of Borrower's Obligations existing as of
the Closing Date to Lender, or of any interests owned or held by Lender (and not
previously released) in and to any of the Collateral; it being the intention of
the parties that the transactions provided for or contemplated herein shall be
effectuated without any interruption in the continuity of the value and
consideration received by Borrower, and of the attachment, perfection, priority
and continuation in favor of Lender in and to all Collateral and proceeds.
38. EFFECTIVE DATE. Upon satisfaction of the conditions precedent set forth in
Section 33 hereof, this Second Amendment shall be effective as of the Second
Amendment Effective Date, as defined in the Loan Agreement as amended hereby.
39. MAXIMUM OBLIGATION OF LENDER UNDER THE LOAN, THE ADDITIONAL CREDIT FACILITY
AND THE INVENTORY LOAN. Borrower acknowledges, agrees and confirms that
notwithstanding anything to the contrary herein, in any other Loan Document or
in any document evidencing or securing the Tranche A Credit Facility, the
Tranche B Credit Facility or the Inventory Loan, Lender shall not be obligated
to fund any Advance hereunder, which when taken together with the loans or
advances made by the Lender to the Borrower under this Agreement, the Additional
Credit Facility or the Inventory Loan, would cause the aggregate amount of such
loans and advances by the Lender to Borrower to exceed the maximum aggregate
amount as set forth in the Loan Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be executed on their behalf as of the day and year first written
above.
Witnessed By: TEXTRON FINANCIAL CORPORATION
[illegible]
- -------------------
By /S/ JOHN T. D'ANNIBALE
---------------------------
/S/ JESSICA CONCORD Name: John T. D'Annibale
- ------------------- Its: Vice President
SILVERLEAF RESORTS, INC.
/S/ GEORGE BEDELL
- ------------------
By: /S/ HARRY J. WHITE, JR.
---------------------------
/S/ LAINE CLOSE Name: Harry J. White, Jr.
- ---------------- Its: CFO
STATE OF CONNECTICUT )
) ss: East Hartford
COUNTY OF HARTFORD )
At East Hartford in said County and State on this 19th day of December,
2003, personally appeared John T. D'Annibale, duly authorized Vice President of
Textron Financial Corporation, and he acknowledged the foregoing instrument by
him signed and sealed to be his free act and deed and the free act and deed of
Textron Financial Corporation.
Before me: /S/ MATTHEW CARRANO
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Notary Public in and for said State
My Commission Expires: _____________
Commissioner of the Superior Court
STATE OF Texas )
) ss:
COUNTY OF Dallas )
At Dallas in said County and State on this 19th day of December,
2003, personally appeared Harry J. White, Jr., duly authorized officer of
SILVERLEAF RESORTS, INC., and he/she acknowledged the foregoing instrument by
him/her signed and sealed to be his/her free act and deed and the free act and
deed of Silverleaf Resorts, Inc., a Texas corporation, on behalf of the
corporation.
Before me: /S/ R. Laine Close
-----------------------------------
Notary Public in and for said State
My Commission Expires:
List of Exhibits:
Exhibit A-1 Stock and Subordinate Note Pledge Agreement
Exhibit B-1 Timeshare Document Amendments
Exhibit C-1 Borrower's Certificate
Exhibit D-1 Borrower's Resolution
Exhibit E-1 Incumbency Certificate
Exhibit F-1 Business Plan