Execution Copy
Exhibit 10.8
THIRD AMENDMENT TO AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
This THIRD AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
(this "AMENDMENT") is dated as of December 19, 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, a Connecticut
non-stock mutual savings bank, as the Banks (the "BANKS"), and (iii) Sovereign
Bank, a federally chartered savings bank, as agent for the Banks (the "AGENT").
W I T N E S S E T H:
WHEREAS, the Borrower, the Banks, 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, and as amended by the Second
Amendment to Amended and Restated Revolving Credit Agreement, dated as of
October 1, 2003 (as so amended, the "CREDIT AGREEMENT"), pursuant to which the
Banks have extended credit to the Borrower on the terms set forth therein;
WHEREAS, the Borrower has requested that the Banks and the Agent agree
to extend the Tranche A Conversion Date, amend the Tranche A Total Commitment
and the Tranche B Total Commitment and make certain other changes and amendments
to the Credit Agreement; and
WHEREAS, the Banks, the Agent and the Borrower have agreed to make such
amendments 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. As of the Effective Date (as
defined in Section 7) the Credit Agreement is hereby amended as follows:
(a) AMENDMENTS TO Section 1.1. Section 1.1 of the Credit
Agreement is hereby amended as follows:
(1) The definitions below appearing in Section 1.1
of the Credit Agreement are hereby amended and
restated in their entirety as follows:
"Additional Resort Collateral. Collectively, the
development rights, the real property, the fixtures
and the personal property, including all management
agreements for the Eligible Projects, now or
hereafter acquired by the Borrower, and described on
EXHIBIT I attached hereto. For the avoidance of any
doubt, "Additional Resort Collateral" shall not
include the promissory notes and other property of
Silverleaf Finance I, Inc. that constitute "Pledged
Assets" under the DZ Bank Documents or the promissory
notes and other property of SFII that constitute
"Conveyed Assets" or "Collateral" under the Textron
Securitization Documents."
"Eligible Consumer Loan Amount. The sum of (a) the
aggregate principal amount outstanding from time to
time of all Eligible Consumer Loans pledged to the
Agent as Collateral less (b) the amount by which the
aggregate principal amount of Eligible Consumer Loans
in respect of the Oak N' Spruce Resort pledged to the
Agent exceeds twenty percent (20%) of the aggregate
principal amount outstanding of all Eligible Consumer
Loans pledged to the Agent, less (c) the greater of
(i) the amount by which the
aggregate principal amount of Modified
Consumer Loans exceeds (A) from the Closing
Date to June 30, 2004, twenty-two percent
(22%) of the aggregate principal amount
outstanding of all Eligible Consumers Loans
pledged to the Agent, (B) from July 1, 2004
to December 31, 2004, twenty and one-half
percent (20.5%) of the aggregate principal
amount outstanding of all Eligible Consumer
Loans pledged to the Agent, (C) from January
1, 2005 to June 30, 2005, eighteen and
one-half percent (18.5%) of the aggregate
principal amount outstanding of all Eligible
Consumer Loans pledged to the Agent, and (D)
from and after July 1, 2005, fifteen percent
(15%) of the aggregate principal amount
outstanding of all Eligible Consumer Loans
pledged to the Agent; and
(ii) the amount by which the
aggregate principal amount of the Modified
Consumer Loans exceeds $4,852,042."
"Intercreditor Agreement. The Intercreditor
Agreement, dated as of April 30, 2002, among the
Agent, Textron and Heller, as amended by the
Intercreditor Amendment."
"Net Securitization Cash Flow. All of Silverleaf
Finance I, Inc.'s right, title and interest in and to
any excess cash flow derived from the consumer loans
sold by the Borrower to Silverleaf Finance I, Inc.
and then sold by Silverleaf Finance I, Inc. to DZ
Bank pursuant to the DZ Bank Documents, all of SFII's
right, title and interest in and to any excess cash
flow derived
2
from the consumer loans sold by the Borrower to SFII
and then sold by SFII to Textron pursuant to the
Textron Securitization Documents, and all of the
Borrower's right to payments (including principal and
interest) under and in respect of the Subordinated
Note."
"Silverleaf Finance I, Inc. Stock. All issued and
outstanding shares of capital stock of Silverleaf
Finance I, Inc., a Delaware corporation, and SFII,
all certificates, instruments or other documents
evidencing or representing the same and all dividends
and distributions therefrom, including dividends and
distributions paid in stock."
"Security Agreement. The Amended and Restated
Security Agreement dated as of April 30, 2002 between
the Borrower and the Agent, as amended the First
Amendment to Amended and Restated Security Agreement,
dated of December 19, 2003."
"Stock Pledge Agreement. Collectively, the Stock
Pledge Agreement, dated as of April 30, 2002, made by
the Borrower in favor of the Agent, for the benefit
of the Banks, with respect to the stock of Silverleaf
Finance I, Inc., as amended by First Amendment to
Stock Pledge Agreement, dated as of December 19,
2003, and the Stock Pledge Agreement, dated as of
December 19, 2003, made by the Borrower in favor of
the Agent, for the benefit of the Banks, with respect
to the stock of Silverleaf Finance II, Inc."
"Subordinated Note. As defined in the Security
Agreement."
"Tranche A Commitment. With respect to each Tranche A
Bank, the amount set forth on SCHEDULE 1 hereto as
the amount of such Tranche A Bank's commitment to
make Tranche A Loans, as the same may or shall be
reduced in accordance with Section 2.2 hereof; or if
such commitment is terminated pursuant to the
provisions hereof, zero."
"Tranche A Conversion Date. March 31, 2006 or such
later date as the Tranche A Banks may determine as
set forth in Section 3.2(a)."
"Tranche A Maturity Date. The earliest of (a) March
30, 2007, (b) five (5) years from the Closing Date
and (c) the weighted average maturity date of the
Eligible Consumer Loans pledged as Collateral as of
the Tranche A Conversion Date, as determined by the
Agent in its reasonable discretion; provided,
however, that, notwithstanding the foregoing, the
Tranche A Maturity Date shall be the earlier of (a)
March 30, 2009 or (b) the weighted average maturity
date of the Eligible Consumer Loans pledged as
Collateral as of the Tranche A Conversion Date, as
determined by the Agent in its reasonable discretion,
if all of the following conditions have been
satisfied (i) the final maturity date of each of the
loans comprising the
3
Textron Facility has been extended to March 30, 2009,
(ii) the holders of not less than sixty-six and two
thirds percent (66 2/3%) in principal amount of the
Borrower's 6% Senior Subordinated Notes due in 2007
agree to exchange their notes for new Senior
Subordinated Notes due in 2010 with an interest rate
not to exceed 8% and otherwise on the same terms and
conditions as the existing notes, and (iii) no
Default or Event of Default has occurred."
"Tranche A Total Commitment. The sum of the Tranche A
Commitments of the Tranche A Banks, as in effect from
time to time, which shall not exceed the amount of
$35,000,000."
"Tranche B Maturity Date. The earlier of (a) March
30, 2007 and (b) five (5) years from the Closing
Date; provided, however, that, notwithstanding the
foregoing, the Tranche B Maturity Date shall be March
30, 2009, if all of the following conditions have
been satisfied (i) the final maturity date of each of
the loans comprising the Textron Facility has been
extended to March 30, 2009, (ii) the holders of not
less than sixty-six and two-thirds percent (66 2/3%)
in principal amount of the Borrower's 6% Senior
Subordinated Notes due in 2007 agree to exchange
their notes for new Senior Subordinated Notes due in
2010 with an interest rate not to exceed 8% and
otherwise on the same terms and conditions as the
existing notes, and (iii) no Default or Event of
Default has occurred; provided further, however, that
in no event shall the Tranche B Maturity Date be
later than the Tranche A Maturity Date."
"Tranche B Total Commitment. The sum of the Tranche B
Commitments of the Tranche B Banks, as in effect from
time to time, which shall not exceed $5,411,718."
(2) The following definitions are hereby inserted
into Section 1.1 of the Credit Agreement in the
appropriate alphabetical order:
"Executive Order. See Section 6.36."
"Foreign Assets Control Regulations. See Section
6.36."
"Intercreditor Amendment. The First Amendment to the
Intercreditor Agreement, dated as of December 19,
2003, among the Agent, Textron and Heller."
"Modified Consumer Loan. An Eligible Consumer Loan
pledged to the Agent for which a modified payment
plan has been implemented (in accordance with clause
(b) of paragraph (9) of the definition of "Eligible
Consumer Loan")."
"SFII. Silverleaf Finance II, Inc., a Delaware
corporation."
4
"SFII Subordination Agreement. The Subordination
Agreement relating to the Agent's security interest
in the stock of SFII, dated as of December 19, 2003
by and among Textron, as agent under the Textron
Securitization Documents, Textron, as agent under the
Textron Facility, and the Agent."
"Textron Securitization. The receivables credit
facility to be provided by Textron to SFII pursuant
the Loan and Security Agreement dated as of December
19, 2003 and the other Textron Securitization
Documents."
"Textron Securitization Term Sheet. The summary of
proposed standard terms for the Textron
Securitization, dated as of August 27, 2003, by and
between the Borrower and Textron, attached hereto as
EXHIBIT O."
"Textron Securitization Documents. The documents
listed on SCHEDULE 1.1(e), as such documents may be
amended, amended and restated or otherwise modified
from time to time, solely to the extent that the
Agent has provided its prior written consent
thereto."
"Timeshare Documents. Any registration statement
approving the establishment and operation of the
Eligible Projects and the sales of Timeshare
Interests required under any statute, act,
regulation, ordinance, rule or law applicable to the
establishment and operation of the Eligible Projects
and the sales of the Timeshare Interests."
"Trading With the Enemy Act. See Section 6.36."
(b) AMENDMENT AND RESTATEMENT OF Section 2.2. Section 2.2
is hereby amended and restated in its entirety as
follows:
"2.2. MANDATORY AUTOMATIC REDUCTION OF TOTAL
COMMITMENTS.
(a) Mandatory Automatic Reduction of
Tranche A Total Commitment. The Tranche A Total
Commitment shall be reduced automatically by an
amount equal to $3,500,000 on March 31, 2006. Upon
such reduction, the Tranche A Commitments of each of
the Tranche A Banks shall be reduced pro rata in
accordance with its Tranche A Commitment Percentage
and the Borrower shall make any prepayments required
by Section 3.2(b) hereof. No reduction of the Tranche
A Total Commitment may be reinstated.
(b) Mandatory Automatic Reduction of
Tranche B Total Commitment. The Tranche B Total
Commitment shall be reduced automatically on a
monthly basis as of the first day of each calendar
month based on a fifteen (15) year amortization
schedule to an amount equal to or less than the
amount set forth on SCHEDULE 2.2. Upon each such
reduction,
5
the Tranche B Commitments of each of the Tranche B
Banks shall be reduced pro rata in accordance with
its Tranche A Commitment Percentage and the Borrower
shall make any prepayments required by Section 3.2(b)
hereof. No reduction of the Tranche B Commitments may
be reinstated."
(c) AMENDMENT TO Section 3.2(c). Section 3.2(c) is hereby
amended by deleting the words "in an amount equal to"
and replacing such words with "in an amount not to
exceed".
(d) ADDITION OF Section 3.2. Section 3.2 is hereby
amended by addition the clause (e) set forth below
thereto:
"(e) Use of Program Reserve Account
Withdrawals and Surplus Under the Textron
Securitization. To the extent that funds are made
available to Silverleaf Finance II, Inc. from the
Program Reserve Account in accordance with Section
5.1(e) of the Loan and Security Agreement, dated as
of December 19, 2003, between Silverleaf Finance II,
Inc. and Textron, to the extent permitted by law and
the Textron Securitization Documents, the Borrower
shall cause Silverleaf Finance II, Inc. to distribute
such funds to the Borrower and the Borrower shall
make payment in the amount of such distribution to
Textron and the Agent, for the benefit of the Banks,
to be applied to payment of the Textron Facilities
and the Loans in the order set forth in the
Intercreditor Agreement and, in the case of the
Banks, to be applied to the Tranche B Loans of the
Banks pro rata based upon the respective Tranche A
Commitment Percentages of the Banks and, upon
repayment in full of the Tranche B Loans, to the
Tranche A Loans of the Banks pro rata based on upon
the respective Tranche A Commitment Percentages of
the Banks. To the extent that the Borrower receives
any distributions from Silverleaf Finance II, Inc. in
respect of any Surplus payments, as such term is
defined in the Textron Securitization Documents, such
funds shall be used by the Borrower strictly to fund
the Operating Expenses in accordance with the
Business Plan and for no other reason, without the
Agent's prior written consent."
(e) AMENDMENT Section 3.3. Section 3.3 is hereby amended
by adding thereto the following sentence after the
last sentence thereof:
"The $2,000,000 prepayment of the Tranche B Loans on
December 19, 2003 shall be applied to reduce the
Tranche B Loans of the Tranche B Banks as follows:
(i) $500,000 to reduce the Tranche B Loan of Liberty
Bank and (ii) $1,500,000 to reduce all of the Tranche
B Loans pro rata based upon the respective Tranche A
Commitment Percentages of the Banks."
6
(f) AMENDMENT TO Section 4.7. Section 4.7 is hereby
amended by replacing "the Base Rate" in the first
sentence thereof with "the rate of interest otherwise
applicable pursuant to Section 2.4".
(g) AMENDMENT TO Section 5.8. Section 5.8 is hereby
amended and restated in its entirety as follows:
"Section 5.8. RELEASE OF COLLATERAL. Upon
the Borrower's repayment in full of all Obligations
under and in respect of the Tranche B Loans, the
Agent shall release its security interest in and
mortgage on the Existing Mortgaged Property, the
Additional Resort Collateral, and the stock of
Silverleaf Finance I, Inc.; provided that (i) no
Default or Event of Default shall exist and (ii)
Heller and Textron shall be releasing simultaneously
their interest, if any, in such Collateral."
(h) AMENDMENT TO Section 6.12. Section 6.12 is hereby
amended by the insertion of the following sentence
after the last sentence thereof:
"The Borrower does not intend to treat the Loans or
related transactions hereunder as a "reportable
transaction" (within the meaning of Treasury
Regulation Section 1.6011-4)."
(i) AMENDMENT TO Section 6.34. Section 6.34 is hereby
amended and restated in its entirety as follows:
"6.34. DZ FACILITY. The DZ Facility is in
full force and effect and has not been amended,
modified or otherwise rescinded, except as otherwise
consented to in writing by the Banks."
(j) ADDITION OF Section 6.35. Article 6 is hereby amended
by the insertion of Section 6.35 after Section 6.34
as follows:
"6.35. TEXTRON SECURITIZATION. The Textron
Securitization is in full force and effect and has
not been amended, modified or otherwise rescinded,
except as otherwise consented to in writing by the
Banks."
(k) ADDITION OF Section 6.36. Article 6 is hereby amended
by the insertion of Section 6.36 after Section 6.35
as follows:
"6.36. FOREIGN ASSETS CONTROL REGULATIONS,
ETC. None of the requesting or borrowing of the Loans
or the use of the proceeds of the Loans will violate
the Trading With the Enemy Act (50 U.S.C. Section 1
et seq., as amended) (the "TRADING WITH THE ENEMY
ACT") or any of the foreign assets control
regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) (the
"FOREIGN ASSETS CONTROL REGULATIONS") or any enabling
legislation or executive order relating
7
thereto (which for the avoidance of doubt shall
include, but shall not be limited to (a) Executive
Order 13224 of September 21, 2001 Blocking Property
and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed.
Reg. 49079 (2001)) (the "EXECUTIVE ORDER") and (b)
the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (Public Law 107-56)).
Furthermore, neither the Borrower nor any of its
Subsidiaries or other Affiliates (a) is or will
become a "blocked person" as described in the
Executive Order, the Trading With the Enemy Act or
the Foreign Assets Control Regulations or (b) engages
or will engage in any dealings or transactions, or be
otherwise associated, with any such "blocked
person.""
(l) AMENDMENT TO Section 7.5. Section 7.5 is hereby
amended by the insertion of Section 7.5.6 after
Section 7.5.5 as follows:
"7.5.6. NOTICES CONCERNING TAX TREATMENT. In
the event the Borrower determines to take any action
inconsistent with its intention to not treat the
Loans and/or related transactions hereunder as a
"reportable transaction" (within the meaning of
Treasury Regulation Section 1.6011-4), it will
promptly notify the Agent in writing thereof and will
provide the Agent with a duly completed copy of IRS
Form 8886 or any successor form. The Borrower
acknowledges that one or more of the Banks may treat
its Loans as part of a transaction that is subject to
Treasury Regulation Section 1.6011-4 or Section
301.6112-1, and the Agent and such Bank or Banks, as
applicable, will file such IRS forms and maintain
such lists and other records as they may determine is
required by such Treasury Regulations."
(m) AMENDMENT TO Section 7.11. Section 7.11 is hereby
amended by adding the following sentence after the
last senteNce thereof:
"On an annual basis, the Borrower shall provide the
Agent with written certification that the
underwriting criteria as approved by the Agent
remains in full force and effect and has not been
revised or altered without the Agent's consent."
(n) AMENDMENT TO Section 7.20. Section 7.20 is hereby
amended by amending and restating the first sentence
thereof as follows:
"The Borrower will enter into the Standby Management
Agreement on or before the Closing Date and will
maintain such agreement in full force and effect
until the Tranche A Maturity Date. In the event that
such agreement for the Standby Manager expires before
the Tranche A Maturity Date, such agreement shall be
extended or shall be replaced,
8
before its expiration, with an agreement for a
Standby Manager that expires no sooner than the
Tranche A Maturity Date."
(o) AMENDMENT TO Section 7.25. Section 7.25 is hereby
amended and restated in its entirety as follows:
"7.25 NET SECURITIZATION CASH FLOW. The Borrower will
cause Silverleaf Finance I, Inc. to declare, at least
quarterly, a cash dividend payable to the Borrower in
an amount equal to the Net Securitization Cash Flow
in respect of Silverleaf Finance I, Inc. for such
quarter. If no Default or Event of Default has
occurred, the Borrower agrees to use such dividends
for payment of Operating Expenses as provided in the
Business Plan and for no other purpose. If a Default
or Event of Default has occurred, then all such
dividends shall be paid directly to the Agent, as
agent for the Banks, and applied by the Agent to
repayment of the Tranche B Loans of the Banks pro
rata based upon the respective Tranche A Commitment
Percentages of the Banks and, upon repayment in full
of the Tranche B Loans, to the Tranche A Loans of the
Banks pro rata based on upon the respective Tranche A
Commitment Percentages of the Banks.
The Borrower will cause Silverleaf Finance
II, Inc. to declare, at least quarterly, a cash
dividend payable to the Borrower and/or the Borrower
shall collect a payment in respect of the
Subordinated Note in an aggregate amount equal to the
Net Securitization Cash Flow in respect of Silverleaf
Finance II, Inc. for such quarter. If no Default or
Event of Default has occurred, the Borrower agrees to
use such dividends or payments for payment of
Operating Expenses as provided in the Business Plan
and for no other purpose. If a Default or Event of
Default has occurred, then all such dividends or
payments shall be paid directly to the Agent, as
agent for the Banks, and applied by the Agent to
repayment of the Tranche B Loans of the Banks pro
rata based upon the respective Tranche A Commitment
Percentages of the Banks and, upon repayment in full
of the Tranche B Loans, to the Tranche A Loans of the
Banks pro rata based on upon the respective Tranche A
Commitment Percentages of the Banks.
The Borrower shall provide the Agent with
notice if either Silverleaf Finance I, Inc. or
Silverleaf Finance II, Inc. declares a dividend or
the Borrower collects any amounts in respect of the
Subordinated Note, together with a certification
that: (i) states whether a Default or an Event of
Default exists and (ii) contains a calculation of the
Net Securitization Cash Flow."
(p) AMENDMENT TO Section 7.27. Section 7.27 is hereby
amended by the insertion of ", Textron
Securitization," after The words "DZ Bank
Securitization" in
9
the title thereof, and further amended by the
insertion of ", Textron Securitization Documents"
after the words "DZ Bank Documents."
(q) AMENDMENT TO Section 8.3(e). Section 8.3(e) is hereby
amended by the insertion of "and the Textron
SecuritizatioN," after the words "DZ Bank
Securitization."
(r) AMENDMENT TO Section 8.5.2. Section 8.5.2 is hereby
amended by the insertion of ", the Textron
Securitization" afTer each occurrence of the words
"DZ Bank Securitization" therein.
(s) AMENDMENT TO Section 8.12. Section 8.12 is hereby
amended and restated in its entirety as follows:
"8.12. TRANSACTIONS WITH AFFILIATES. Except
as provided in the Textron Securitization Documents,
the Borrower will not, and will not permit any of its
Subsidiaries to, engage in any transaction with any
Affiliate (other than for services as employees,
officers and directors), including any contract,
agreement or other arrangement providing for the
furnishing of services to or by, providing for rental
of real or personal property to or from, or otherwise
requiring payments to or from any such Affiliate or,
to the knowledge of the Borrower, any corporation,
partnership, trust or other entity in which any such
Affiliate has a substantial interest or is an
officer, director, trustee or partner, on terms more
favorable to such Person than would have been
obtainable on an arm's-length basis in the ordinary
course of business."
(t) AMENDMENT TO Section 8.16. Section 8.16 is hereby
amended and restated in its entirety as follows:
"8.16 TIME SHARE INSTRUMENTS; REQUIRED
CONSUMER LOAN DOCUMENTATION; MANAGEMENT AGREEMENTS.
Without the Agent's prior written consent, which
consent shall not be unreasonably withheld as to
changes necessary to implement the Business Plan, the
Borrower shall not amend, modify or terminate any of
the Timeshare Declarations or the Timeshare
Documents, or any other restrictive covenants,
agreements or easements regarding the Eligible
Projects (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 listed and
described on EXHIBIT P). Other than pursuant to the
Security Documents, the Borrower shall not assign any
of its rights under any Timeshare Instrument or
Management Agreement, including, without limitation,
the Borrower shall not assign its rights as
"developer" under the Timeshare Declarations. The
Borrower shall not file or permit to be filed any
additional covenants, conditions, easements or
restrictions against or affecting the Eligible
Projects (or any portion thereof). The
10
Borrower shall not cause or permit any amendment to
or modification of the form or terms of the Required
Consumer Loan Documentation, except as otherwise
permitted by this Credit Agreement."
(u) AMENDMENT TO Section 8.19. Section 8.19 is hereby
amended by the insertion of "the Textron
Securitization DocumentS," after the words "DZ Bank
Documents," and further amended by the insertion of
the words "the Textron Securitization," after the
words "DZ Bank Securitization,".
(v) ADDITION OF Section 8.22. Article 8 is hereby amended
by the insertion of Section 8.22 after Section 8.21
as follows:
"8.22. LOAN RISK RATIO. As of the last day
of each fiscal quarter, the Borrower will not permit
for any Reference Period the ratio, expressed as a
percentage, of (a) the outstanding principal amount
of all loans made by the Borrower to consumer
borrowers with FICO Credit Bureau Scores of less than
600 during the applicable Reference Period to (b) the
aggregate principal amount of all consumer loans made
by the Borrower to consumer borrowers during the
applicable Reference Period to be greater than thirty
percent (30%). For the purposes hereof, any consumer
borrower that does not have a FICO Credit Bureau
Score shall be treated as a consumer borrower with a
FICO Credit Bureau Score of less than 600. In the
event that, as of the last day of any fiscal quarter,
such ratio is greater than twenty-five percent (25%),
the Borrower hereby agrees that, at the Agent's
request and at the Borrower's expense, the Banks may
conduct an audit of the Borrower in accordance with
Section 7.9.1 hereof (and such audit shall not count
against the annual audit limit set forth in
Section 7.9.1)."
(w) ADDITION OF Section 8.23. Article 8 is hereby amended
by the insertion of Section 8.23 after Section 8.22
as follows:
"8.23. MODIFIED PAYMENT PLANS. In the event
that, at any time, the aggregate principal amount of
the Modified Consumer Loans exceeds either the
applicable percentage set forth in clause (c)(i) of
the definition of "Eligible Consumer Loan Amount" or
the dollar amount set forth in clause (c)(ii) of the
definition of "Eligible Consumer Loan Amount", then
no Eligible Consumer Loans pledged to the Agent may
be modified in any respect until such time as the
aggregate principal amount of the Modified Consumer
Loans does not exceed either the applicable
percentage in clause (c)(i) or the dollar amount in
clause (c)(ii) of the definition of "Eligible
Consumer Loan Amount"."
(x) AMENDMENT TO Section 9.5. Section 9.5 is hereby
amended and restated as follows:
11
"9.5. PROFITABLE OPERATIONS. The 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."
(y) AMENDMENT TO Section 10.2.2. Section 10.2.2 is hereby
amended by deleting the words "(the "INTERCREDITOR
AGREEMENT)" therefrom.
(z) AMENDMENT AND RESTATEMENT OF Section 12.1(g). Section
12.1(g) is hereby amended and restated in its
entirety as follows:
"(g) an event of default shall occur under
the DZ Bank Securitization, the Textron
Securitization, the Heller Facility, the Textron
Facility or the New Notes."
(aa) AMENDMENT AND RESTATEMENT OF Section 12.1(z). Section
12.1(z) is hereby amended and restated in its
entirety as follows:
"(z) DZ Bank and Textron do not purchase
loans in substantially the amounts and during the
periods specified in the Business Plan or if the
proceeds of such purchases are insufficient to make
the principal payments described in Section 3.2
hereof or if the Borrower fails to apply such
proceeds to repayment of the Loans as provided in
Section 3.2 hereof."
(bb) AMENDMENT TO Section 14.1(d). Section 14.1(d) is
hereby amended and restated in its entirety as
follows:
"(d) Each of the Banks and the Borrower
hereby acknowledges the terms of each of the
Intercreditor Agreement and the SFII Subordination
Agreement and further acknowledges that certain
rights and remedies hereunder (including those set
forth in Sections 3.2(c) and, in the case of the
Intercreditor Agreement only, 12.4 hereof) are
subjEct to the terms of the Intercreditor Agreement
and the SFII Subordination Agreement. Each of the
Banks hereby authorizes the Agent to execute, deliver
and perform the Intercreditor Agreement, the
Intercreditor Amendment and the SFII Subordination
Agreement in its capacity as Agent for the Banks. The
Agent and the Banks hereby agree that Agent shall
act, or refrain from acting, as a "Lender" under the
Intercreditor Agreement or as "Second Group One
Agent" under the SFII Subordination Agreement at the
direction of the Required Banks (except that the
Agent may act, or refrain from acting, with respect
to the Existing Mortgaged Property solely at the
direction of Sovereign), and that all amounts
received by the Agent under the Intercreditor
Agreement and the SFII Subordination Agreement shall
12
be applied to the Obligations in accordance with the
terms of this Credit Agreement."
(cc) ADDITION OF Section 14.11. Article 14 is hereby
amended by the insertion of Section 14.11 after
Section 14.10 as follows:
"14.11. AGENT MAY FILE PROOFS OF CLAIM.
(a) In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition
or other judicial, administrative or like proceeding
or any assignment for the benefit of creditors
relative to the Borrower or any of its Subsidiaries,
the Agent (irrespective of whether the principal of
any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and
irrespective of whether the Agent shall have made any
demand on the Borrower) shall be entitled and
empowered, by intervention in such proceeding, under
any such assignment or otherwise:
(i) to file and prove a claim for the
whole amount of the principal and interest owing and
unpaid in respect of the Loans and all other
Obligations that are owing and unpaid and to file
such other documents as may be necessary or advisable
in order to have the claims of the Banks and the
Agent (including any claim for the compensation,
expenses, disbursements and advances of the Banks and
the Agent and their respective agents and counsel and
all other amounts due the Banks and the Agent under
Section 15.1) allowed in such proceeding or under any
such assignment; and
(ii) to collect and receive any monies
or other property payable or deliverable on any such
claims and to distribute the same.
(b) Any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in
any such proceeding or under such assignment is hereby
authorized by each Bank to make such payments to the Agent
and, in the event that the Agent shall consent to the making
of such payments directly to the Banks, nevertheless to pay to
the Agent any amount due for the compensation, expenses,
disbursements and advances of the Agent and its agents and
counsel, and any other amounts due the Agent under Section
15.1.
(c) Nothing contained herein shall
authorize the Agent to consent to or accept or adopt on behalf
of any Bank any plan of reorganization, arrangement,
adjustment or composition affecting the Obligations owed to
such Bank or the rights of any Bank or to authorize the Agent
to vote in respect of the claim of any Bank in any such
proceeding or under any such assignment."
13
(dd) AMENDMENT TO ARTICLE 23. Article 23 is hereby amended
by the amendment and restatement of the first
sentence thereof as follows:
"The Borrower hereby knowingly, voluntarily
and intentionally waives the right to a trial by jury
in respect of any claim based hereon, arising out of,
under or in connection with this Credit Agreement,
the Notes or any of the other Loan Documents, or any
course of conduct, course of dealing, statements
(whether verbal or written) or actions of any party.
This waiver constitutes a material inducement for the
Banks to make the Loans."
(ee) ADDITION OF ARTICLE 30. The Credit Agreement is
hereby amended by the insertion of Article 30 after
Article 29 as follows:
"30. REPLACEMENT DOCUMENTS
Upon receipt of an affidavit of an officer
of a Bank as to the loss, theft, destruction or
mutilation of a Note or any other security document
which is not of public record, the Borrower will
issue, in lieu thereof, a replacement Note or other
document in the same principal amount thereof and
otherwise of like tenor."
(ff) AMENDMENT TO THE SCHEDULES AND EXHIBITS.
(1) Exhibit A to the Credit Agreement is hereby
deleted in its entirety and replaced with
Exhibit A hereto.
(2) Exhibit L to the Credit Agreement is hereby
deleted in its entirety and replaced with
Exhibit L hereto.
(3) Exhibit O attached hereto is hereby inserted
into the Credit Agreement after Exhibit N.
(4) Exhibit P attached hereto is hereby inserted
into the Credit Agreement after Exhibit O.
(5) Schedule 1 of the Credit Agreement is hereby
deleted in its entirety and replaced with
Schedule 1 hereto.
(6) Schedule 1.1(a) of the Credit Agreement is
hereby amended by adding thereto the items and
language set forth on Schedule 1.1(a)(A) hereto.
(7) Schedule 1.1(b) of the Credit Agreement is
hereby amended by adding thereto the items and
language set forth on Schedule 1.1(b)(B).
14
(8) Schedule 1.1(c) of the Credit Agreement is
hereby amended by adding thereto the items and
language set forth on Schedule 1.1(c)(C).
(9) Schedule 1.1(e) attached hereto is hereby
inserted into the Credit Agreement after
Schedule 1.1(d).
(10) Schedule 2.2 of the Credit Agreement is hereby
deleted in its entirety and replaced with
Schedule 2.2 hereto.
(11) Schedules 6.21(a) and 6.21(b) of the Credit
Agreement are hereby deleted in their entirety
and replaced with Schedules 6.21(a) and 6.21(b)
hereto.
4. CONSENT TO AMENDMENT OF OTHER DEBT FACILITIES AND TEXTRON
SECURITIZATION. The Agent and the Banks hereby consent to (a) the amendments to
the Textron Documents in the forms attached hereto as EXHIBIT B, (b) the entry
by the Borrower into the Textron Securitization Documents in the forms attached
hereto as EXHIBIT C, (c) the amendment of the Intercreditor Agreement in the
form attached hereto as EXHIBIT D, and (d) the amendment to the DZ Bank Facility
in the form attached hereto as EXHIBIT E.
6. CLOSING 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 Banks and to be shared between the Banks as agreed, on or
prior to the closing date a closing fee in amount equal to 0.50% of the Total
Commitment on the date hereof (the "CLOSING FEE"). The Closing Fee will be
fully-earned on the Effective Date and will be non-refundable.
7. CONDITIONS TO EFFECTIVENESS. This Amendment shall not become
effective unless on or prior to December 31, 2003 the following conditions
precedent have been satisfied:
(a) the Agent shall have received this Amendment duly executed
and delivered by the Borrower, the Agent, and the Banks;
(b) the Agent shall have received copies of the documents
attached hereto as EXHIBITS B, C, D AND E duly executed and delivered
by the parties thereto and in form and substance satisfactory to the
Agent, and each of the Textron Facility, the Heller Facility, the DZ
Bank Securitization and the Textron Securitization shall be in full
force and effect and available to the Borrower;
(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;
15
(d) the Agent shall have received from the Borrower and
Silverleaf Finance II, Inc. (i) a copy, certified by a duly authorized
officer of such Person to be true and complete on the Effective Date,
of each of (A) its charter or other incorporation documents as in
effect on such date of certification and (B) its by-laws or other
governing documents as in effect on such date, and (ii) good standing
certificates for the Borrower from its jurisdiction of incorporation
and each jurisdiction in which an Eligible Project is located and a
good standing certificate for Silverleaf Finance II, Inc. from the
Secretary of State of the State of Delaware;
(e) the Agent shall have received satisfactory evidence that
all corporate action necessary for the valid execution, delivery and
performance by the Borrower of this Amendment and any other documents
delivered in connection herewith has been duly and effectively taken;
(f) the Agent shall have received an incumbency certificate
from the Borrower, dated as of the Effective Date, signed by a duly
authorized officer of the Borrower and giving the name and bearing a
specimen signature of each individual who shall be authorized: to sign,
in the name and on behalf of the Borrower, this Amendment and each of
the other documents to which the Borrower is or is to become a party;
(g) the Agent shall have received from the Borrower a
Borrowing Base Certificate dated as of the Effective Date;
(h) the Agent shall have received a favorable opinion of
counsel addressed to the Banks and the Agent, dated as of the Effective
Date, in form and substance satisfactory to the Banks and the Agent,
from Meadow, Owens, Collier, Reed, Cousins & Blau, L.L.P., counsel to
the Borrower and its Subsidiaries;
(i) all interest and fees due and owing to the Banks shall be
paid in full prior to the Effective Date;
(j) the Borrower shall have repaid principal amounts under the
Tranche A Loans and the Tranche B Loans in an aggregate amount to
enable the outstandings under such Loans to be below $35,000,000 and
$5,411,718, respectively;
(k) Sovereign shall have received from Textron, as agent under
the Textron Facility, a $1,812,465.85 payment to Sovereign's term loan
component of the Textron Facility, such that all of Sovereign's
commitments under the term loan component of the Textron Facility shall
have been paid in full and terminated;
(l) all information and documents heretofore delivered by the
Borrower to the Banks, shall remain true and correct in all respects
and except as disclosed by the Borrower in writing prior to the date
hereof, and no material change shall have occurred in the properties,
assets, liabilities, financial condition or business of the
16
Borrower or any of its Subsidiaries since September 30, 2003, other
than as expressly provided in Section 8(c) hereof;
(m) the Agent shall have received (i) a stock pledge agreement
with respect to the stock of Silverleaf Finance II, Inc. in form and
substance satisfactory to the Agent and duly executed and delivered by
the Borrower and Textron with respect to the stock of Silverleaf
Finance II, Inc., (ii) an amendment to the Stock Pledge Agreement,
dated as of April 30, 2002, between the Borrower and the Agent, in form
and substance satisfactory to the Agent and duly executed and delivered
by the Borrower, (iii) an amendment to the Security Agreement in form
and substance satisfactory to the Agent and duly executed and delivered
by the Borrower, and (iv) any amendments to the UCC financing
statements filed pursuant to the Security Documents deemed necessary or
advisable by the Agent;
(n) the Security Documents shall be effective to create in
favor of the Agent a legal, valid and enforceable first priority or
second priority security interest in the Collateral, as required by the
applicable Security Document (except for Permitted Liens entitled to
priority under applicable law);
(o) the Agent shall have received from the Borrower a
statement of all material litigation pending or threatened against the
Borrower or its Subsidiaries which has not been previously disclosed to
the Agent;
(p) the Agent and the Banks shall have received evidence
satisfactory to the Agent and the Banks that the Textron Securitization
has closed on terms and conditions both set forth in the Textron
Securitization Term Sheet and satisfactory to the Agent and the Banks,
that the Textron Securitization has been documented in form and
substance satisfactory to the Agent and the Banks, and that the Textron
Securitization has resulted in the removal and prepayment of
approximately $23,000,000 of Eligible Consumer Loans under the Credit
Agreement. The Borrower shall have delivered to the Banks copies of all
executed documents related to the Textron Securitization certified by
the Borrower to be true, correct and complete as of the Effective Date;
(q) the Agent shall have received an updated Business Plan
from the Borrower, in form and substance satisfactory to the Agent and
the Banks, which Business Plan shall be in effect in all material
respects as of the Effective Date and shall cover the period of
business of the Borrower through the date that is five (5) years from
the Effective Date and which Business Plan shall have been approved by
the Board of Directors of the Borrower;
(r) the maturity date of the DZ Bank Facility shall have been
extended pursuant to documentation in form and substance satisfactory
to the Agent and the Banks;
17
(s) the Agent shall have received the Closing Fee from the
Borrower in immediately available funds; and
(t) the Borrower shall have reimbursed the Agent for, or paid
directly, all reasonable fees, costs, and expenses incurred by legal
counsel to the Agent and legal counsel to Liberty Bank for which the
Borrower has received an invoice.
The date on which all such conditions shall have been met, as determined by the
Agent, shall be the effective date of this Amendment (the "EFFECTIVE DATE").
8. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The Borrower
hereby represents and warrants to the Banks 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, correct and complete as
of the date hereof and no Default or Event of Default has occurred and
is continuing.
(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.
(c) No Material Adverse Change; No Distributions. Except
as otherwise disclosed by the Borrower to the Banks in writing and
except for any adverse effects caused by the $28,711,000 increase in
the Borrower's loan loss reserve for the fiscal quarter ended March 31,
2003, and subject to the qualifications set forth in Section 6.6.2 of
the Credit Agreement, since December 31, 2002, there has occurreD no
materially adverse change in the financial condition or business of the
Borrower and its Subsidiaries as shown on or reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries as at
December 31, 2002, or the consolidated statement of income as of such
date, other than changes in the ordinary course of business that have
not had any materially adverse effect either individually or in the
aggregate on the business or financial condition of the Borrower or any
of its Subsidiaries. Since September 30, 2001, the Borrower has not
made any Distribution.
18
(d) Litigation. Except as set forth Schedule 8(d) hereto,
there are no actions, suits, proceedings or investigations of any kind
pending or threatened against the Borrower or any of its Subsidiaries
before any court, tribunal or administrative agency or board that, if
adversely determined, might, either in any case or in the aggregate,
materially adversely affect the properties, assets, financial condition
or business of the Borrower or any of its Subsidiaries or materially
impair the right of the Borrower or any of its Subsidiaries, to carry
on business substantially as now conducted by them, or result in any
substantial liability not adequately covered by insurance, or for which
adequate reserves are not maintained on the consolidated balance sheet
of the Borrower, or which question the validity of the Credit Agreement
or any of the other Loan Documents, or any action taken or to be taken
pursuant hereto or thereto.
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 Bank 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 Banks 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 Banks 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 Bank (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 Bank; and
(iii) each of the Agent and the Banks 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 any Bank's 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
Bank to the Borrower, except the obligations to be performed by the Agent or any
Bank on or after the
19
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 Bank
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.
[Remainder of page intentionally left blank.]
20
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 BANK:
SOVEREIGN BANK
By: /S/ JOHN BAER
----------------------------
Name: John Baer
Title: Vice President
BANK:
LIBERTY BANK
By: /S/ JASON GORDON
----------------------------
Name: Jason Gordon
Title: Vice President
List of Exhibits and Schedules:
Schedule 1 Commitments
Schedule 1.1(a)(A) Update to Heller Documents
Schedule 1.1(b)(B) Update to Textron Documents
Schedule 1.1(c)(C) Update to DZ Bank Documents
Schedule 1.1(e) Textron Securitization Documents
Schedule 2.2 Tranche B Amortization Table
Schedule 6.21(a) Subsidiaries
Schedule 6.21(b) Joint Ventures
Schedule 8(d) Schedule of Pending Material Litigation
Exhibit A Form of Borrowing Base Certificate
Exhibit B Amendments to Textron Documents
Exhibit C Textron Securitization Documents
Exhibit D Amendment to Intercreditor Agreement
Exhibit E Amendment to DZ Bank Facility
Exhibit L Business Plan
Exhibit O Textron Securitization Term Sheet
Exhibit P Timeshare Documents and Declarations