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EXHIBIT 10.2
THIRD AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT dated as of March
31, 1999 (the "THIRD AMENDMENT"), is by and between TEXTRON FINANCIAL
CORPORATION, a Delaware corporation (the "LENDER"), and SILVERLEAF RESORTS, INC.
(formerly known as SILVERLEAF VACATION CLUB, INC.), a Texas corporation (the
"BORROWER")
W I T N E S S E T H:
WHEREAS, Borrower was formerly known as ASCENSION CAPITAL CORPORATION
(the "GUARANTOR"), the successor to ASCENSION RESORTS, LTD., a Texas limited
partnership (the "ORIGINAL BORROWER"), by merger of EQUAL INVESTMENT COMPANY, a
Texas corporation, ASCENSION RESORTS, LTD. and ASCENSION CAPITAL CORPORATION;
WHEREAS, Lender, Original Borrower and Guarantor were parties to that
certain Loan and Security Agreement dated as of August 15, 1995, pursuant to
which the Original Borrower executed its Secured Promissory Note in favor of the
Lender in the amount of $5,000,000.00, as amended to date (the "NOTE");
WHEREAS, on December 28, 1995 Ascension Resorts, Ltd. was merged into
the Guarantor and Guarantor was thereafter renamed Silverleaf Vacation Club,
Inc.;
WHEREAS, on December 28, 1995, Lender, Borrower and Guarantor amended
the Agreement, as such term is hereafter defined, pursuant to a First Amendment
to Loan and Security Agreement dated as of December 28, 1995 (the "FIRST
AMENDMENT") to, among other things, evidence Lender's approval of the merger of
Ascension Resorts, Ltd. into Ascension Capital Corporation and to reflect the
above-mentioned merger and name change;
WHEREAS, on October 31, 1996, Lender and Borrower further amended the
Agreement pursuant to a Second Amendment to Loan and Security Agreement dated as
of October 31, 1996 (the "SECOND AMENDMENT") to, among other things, increase
the amount of the Loan, decrease the interest rate, and extend the maturity date
of the Loan;
WHEREAS, pursuant to a commitment letter dated January 26, 1999, Lender
and Borrower agreed, among other things, to further modify the terms of the
Agreement to, among other things, increase the amount of the Loan, decrease the
interest rate, extend the maturity date of the Loan and to reflect the change in
Borrower's name to Silverleaf Resorts, Inc.; and
WHEREAS, Lender and Borrower have agreed to enter into this Third
Amendment to Loan and Security Agreement dated as of March 31, 1999 (the "THIRD
AMENDMENT") to amend the Agreement as provided in the January 26, 1999
commitment letter.
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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 ELIGIBLE RESORTS. Section 1.1 (Definitions) is hereby amended in
part to add the following new paragraph:
"(a) ADDITIONAL ELIGIBLE RESORTS or "ADDITIONAL ELIGIBLE RESORT.
The terms "Additional Eligible Resorts" and "Additional Eligible
Resort" shall have the meanings ascribed to such terms in Section
2.8 hereof."
2. AGREEMENT. Section 1.1(c) (Agreement) is hereby amended to read as follows:
"(d) AGREEMENT. This Loan and Security Agreement by and among the
Borrower and the Lender (including the Exhibits and Schedules
attached hereto), as amended by the First Amendment, the Second
Amendment and the Third Amendment, as it may be further amended
from time to time."
3. BORROWING BASE. Section 1.1(e) (Borrowing Base) is hereby amended to read as
follows:
"(f)BORROWING BASE. With respect to Eligible Notes Receivable
pledged to the Lender in connection with each Advance, including
any Advance made prior to the date of the Third Amendment, an
amount equal to eighty-five percent (85%) of the remaining
principal balance of each such Eligible Note Receivable for each
Advance."
4. BUSINESS DAY. Section 1.1(f) (Business Day) is hereby amended to read as
follows:
"(g) BUSINESS DAY. Each day which is not a Saturday, a Sunday or a
legal holiday under the laws of the State of Rhode Island, the
State of Connecticut or the State of Texas."
5. COMMITMENT. Section 1.1(j) (Commitment) is hereby amended to read as follows:
"(k) COMMITMENT. Collectively, (i) the Loan Commitment issued by
Lender to Borrower dated May 11, 1995 and accepted on May 26, 1995
(the "ORIGINAL COMMITMENT"); (ii) the Loan Commitment issued by
Lender to Borrower dated October 29, 1996 and accepted on December
27, 1996 (the "1996 COMMITMENT") and (iii) the Loan Commitment
issued by Lender to Borrower dated January 26, 1999 and accepted
on January 28, 1999 (the "1999 COMMITMENT")."
6. COMMITMENT FEE. Section 1.1(k) (Commitment Fee) is hereby amended to read as
follows:
"(l) COMMITMENT FEE. With respect to the Original Commitment, the
commitment fee in the amount of $50,000.00 described in the
Original
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Commitment, which was paid in accordance with the terms of the
Original Commitment. With respect to the 1996 Commitment, the
commitment fee in the amount of $100,000.00 described in the 1996
Commitment, which was paid in accordance with the terms of the
1996 Commitment. With respect to the 1999 Commitment, the
commitment fee in the amount of $750,000 described in the 1999
Commitment, which is to be paid in accordance with the terms of
Section 2.7 hereof."
7. DIVISION. Section 1.1(q) (Division or Commission) is hereby amended to read
as follows:
"(r) DIVISION. The governmental authority of each state in which a
Resort is located, having jurisdiction over the establishment and
operation of the Resort in question and the sale of Intervals at
such Resort."
8. ELIGIBLE NOTES RECEIVABLE. Section 1.1(r) (Eligible Notes Receivable) is
hereby amended in part as follows:
(a) Section 1.1(s)(vii) is hereby amended to read as follows:
"(vii) which shall have an original term of no more than
eighty-four (84) months, provided, however, that up to but
not more than ten percent (10%) of all Eligible Notes
Receivable may at any time be comprised of Eligible Notes
Receivable having an original term of no more than one
hundred twenty (120) months;"
(b) Section 1.1(s)(xi) is hereby amended to read as follows:
"(xi) The rate of interest payable on the unpaid balance
is at least the rate required so that when the Advance is
made in respect of such Eligible Note Receivable the
average interest rate on all Eligible Notes Receivable in
respect of which Advances are outstanding shall not be
less than thirteen percent (13%) per annum at any time;"
(c) Section 1.1(r) is hereby amended in part to add the
following sentence:
Notwithstanding anything herein to the contrary, Lender
shall be under no obligation to accept Notes Receivable
from more than 681 intervals of the Crown Resorts, as
described in Schedule 4.6(c)(iii), other than the Quail
Hollow Resort and any other Crown Resort for which
Borrower delivers to Lender acceptable Mortgagee Title
Insurance Policy with respect to each Mortgage securing
such Notes Receivable.
9. ENVIRONMENTAL LAWS. Section 1.1(t) (Environmental Laws) is hereby amended to
read as follows:
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"(u) ENVIRONMENTAL LAWS. Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as
amended from time to time ("CERCLA"), the Resource
Conservation and Recovery Act of 1976, as amended from
time to time ("RCRA"), the Superfund Amendments and
Reauthorization Act of 1986, as amended, the federal Clean
Air Act, the federal Clean Water Act, the federal Safe
Drinking Water Act, the federal Toxic Substances Control
Act, the federal Hazardous Materials Transportation Act,
the federal Emergency Planning and Community Right to Know
Act of 1986, the federal Endangered Species Act, the
federal Occupational Safety and Health Act of 1970, the
federal Water Pollution Control Act, all state and local
environmental laws, rules and regulations of each state in
which a Resort is located, as all of the foregoing
legislation may be amended from time to time, and any
regulations promulgated pursuant to the foregoing;
together with any similar local, state or federal laws,
rules, ordinances or regulations either in existence as of
the date hereof, or enacted or promulgated after the date
of this Agreement, that concern the management, control,
storage, discharge, treatment, containment, removal and/or
transport of Hazardous Materials or other substances that
are or may become a threat to public health or the
environment; together with any common law theory involving
Hazardous Materials or substances which are (or alleged to
be) hazardous to human health or the environment, based on
nuisance, trespass, negligence, strict liability or other
tortious conduct, or any other federal, state or local
statute, regulation, rule, policy, or determination
pertaining to health, hygiene, the environment or
environmental conditions."
10. ENVIRONMENTAL INDEMNIFICATION AGREEMENT. Section 1.1 (Definitions) is hereby
amended in part to add the following new paragraph:
"(v) ENVIRONMENTAL INDEMNIFICATION AGREEMENT shall mean
the Environmental Indemnification Agreement, in the form
attached as Exhibit C, to be made by the Borrower to the
Lender pursuant to this agreement, as the same may be
amended from time to time."
11. EURODOLLAR BUSINESS DAY. Section 1.1 (Definitions) is hereby amended in part
to add the following new paragraph:
"(w) Eurodollar Business Day shall mean any day on which
commercial banks are open for international business
(including dealings in dollar deposits) in London,
England."
12. FINAL MATURITY DATE. Section 1.1(w) (Final Maturity Date) is hereby amended
to read as follows:
"(z) Final Maturity Date. April 1, 2005.
13. INTEREST RATE. Section 1.1(cc) (Interest Rate) is hereby amended to read as
follows:
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"(ff) INTEREST RATE. The variable rate, adjusted as of
each LIBOR Determination Date, equal to the sum of LIBOR,
determined as of each LIBOR Determination Date, plus three
percent (3.0%) per annum."
14. INTERVAL. Section 1.1 (dd) (Interval) is hereby amended to read as follows:
"(gg) INTERVAL. With respect to each Resort the undivided
fractional fee interval ownership interest as a
tenant-in-common ((sometime referred to in the Timeshare
Documents as a Condoshare Interest or Condoshare Week) in
a Unit sold to a Purchaser by delivery of a deed for a
time-share period per calendar year (or, in the case of a
biennial use period, per alternate calendar year) of one
week (as defined in the Declaration), together with all
appurtenant rights and interests, including, without
limitation, appurtenant rights in and to Common Elements,
and easement, license, access and use rights in and to all
Resort facilities and amenities (as described in the
Declaration), all as more particularly described in the
Declaration or other Timeshare Documents. Notwithstanding
the foregoing, the term "Interval" shall also include,
with respect to the Oak `N Spruce Resort only, the
beneficial interest in the entity which owns each of the
Units at the Oak `N Spruce Resort, as evidenced by the
delivery to the Purchaser of any such beneficial interest
of a certificate of beneficial interest for a timeshare
period per calendar year (or, in the case of biennial use
period, per alternate calendar year) of one week (as
defined in the Oak N' Spruce Resort Declaration), together
with all pertinent rights and interests, including,
without limitation, a pertinent right in and to Common
Elements, and easements, license, access and use rights in
and to all Oak `N Spruce Resort facilities and amenities,
all as more particularly described in the Declaration or
other Timeshare Documents for the Oak `N Spruce Resort."
15. LIBOR. Section 1.1 (Definitions). is hereby amended in part to add the
following new paragraph:
"(hh) LIBOR shall mean, with respect to any LIBOR Rate
Period, the rate per annum (rounded upwards, if necessary,
to the nearest one-sixteenth (1/16th) of one percent (1%))
reported at 11:00 a.m. London time on the first day of
each LIBOR Rate Period (or if such date is not a
Eurodollar Business Day, the immediately preceding
Eurodollar Business Day) (such date, the "LIBOR
DETERMINATION DATE"), on Dow Jones Telerate Service Page
3750 (British Bankers Association Settlement Rate) as the
non-reserve adjusted London Interbank Offered Rate for
U.S. dollar deposits having a ninety (90) day term (or on
such other page as may replace said Page 3750 on that
service or such other service or services as may be
nominated by the British Bankers Association for the
purpose of displaying such rate, all as determined by
Lender in its sole but good faith discretion). In the
event that (i) more than one such LIBOR is provided, the
average of such rates shall apply, or (ii) no such LIBOR
is published, then LIBOR shall be determined from such
comparable financial
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reporting company as Lender in its sole but good faith
discretion shall determine. LIBOR for any LIBOR Rate
Period shall be adjusted from time to time by increasing
the rate thereof to compensate Lender and any Participant
for any aggregate reserve requirements (including, without
limitation, all basic, supplemental, marginal and other
reserve requirements and taking into account any
transitional adjustments or other scheduled changes in
reserve requirements during any LIBOR Rate Period) which
are required to be maintained by Lender or such
Participant with respect to "Eurocurrency Liabilities" (as
presently defined in Regulation D of the Board of
Governors of the Federal Reserve System) of the same term
under Regulation D, or any other regulations of a
Governmental Authority having jurisdiction over Lender or
such Participant of similar effect."
16. LIBOR RATE PERIOD. Section 1.1 (Definitions). is hereby amended in part to
add the following new paragraph:
"(ii) LIBOR RATE PERIOD. shall mean each successive ninety
(90) period during the Term. The initial LIBOR Rate Period
shall commence on the date of the Third Amendment (or if
such day is not a Eurodollar Business Day, the immediately
preceding Eurodollar Business Day) and shall terminate on
a date which is ninety days thereafter (or if such day is
not a Eurodollar Business Day, the immediately preceding
Eurodollar Business Day). Each LIBOR Rate Period after the
initial LIBOR Rate Period shall commence on the first
Eurodollar Business Day immediately following the
expiration of the immediately preceding LIBOR Rate Period
and shall terminate ninety days thereafter (or if such day
is not a Eurodollar Business Day, the immediately
preceding Eurodollar Business Day)."
17. LOAN. Section 1.1 (ff) (Loan) is hereby amended to read as follows:
"(kk) LOAN. The $75,000,000.00 revolving term facility
described in this Agreement, subject to the limitations
set forth in Section 2.1 hereof. All references to
"$5,000,000.00" on the cover page, in Section 1.1(ff), and
in Section 2.1 in the Agreement and the First Amendment
and all references in the Second Amendment to
"$15,000,000.00" are hereby changed to "$75,000,000.00"."
18. LOAN DOCUMENTS. Section 1.1 (gg) (Loan Documents) is hereby amended to read
as follows:
"(ll) LOAN DOCUMENTS. Collectively, this Agreement, as
amended by the First Amendment, the Second Amendment and
the Third Amendment, the Note, the Guaranty, the
Environmental Indemnification Agreement, the Negative
Pledge Agreement, the Assignment of Notes Receivable and
Mortgages, the Lock Box Agreement, the UCC Financing
Statements and such other agreements, documents,
instruments, certificates and materials as Lender may
request to evidence the Obligations, to evidence and
perfect the rights and Liens and
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security interests of Lender contemplated by the Loan
Documents and to effectuate the transactions contemplated
herein, as such agreements, documents, instruments or
certificates may be hereafter amended, renewed, extended,
restated or supplemented from time to time."
19. LOAN YEAR. Section 1.1 (hh) (Loan Year) is hereby amended to read as
follows:
"(mm) Loan Year. Effective commencing March 31, 1999, the
period from the date of the Third Amendment through the
last day of the next full twelve (12) calendar month
period and each twelve (12) calendar month period
thereafter."
20. LOCKBOX AGREEMENT. Section 1.1(jj) (Lockbox Agreement) is hereby amended to
read as follows: "
(oo) Lockbox Agreement. The Lockbox and Servicing
Agreement, dated as of August 15, 1995 between Borrower,
Lender, Servicing Agent and Lockbox Agent, as amended by
the First Amendment to Lock Box Agreement, dated as of
October 31, 1996, and the Second Amendment to Lock Box
Agreement, dated as of March 31, 1999, pursuant to which
Lockbox Agent is to provide lockbox, reporting and related
services and is to provide for the receipt of payments on
the Notes Receivable and disbursement of such payments to
Lender."
21. MORTGAGE. Section 1.1 (ll) (Mortgage) is hereby amended to read as follows:
"(qq) MORTGAGE A properly recorded, first priority
mortgage, deed of trust, deed to secure debt, assignment
of beneficial interest or other security instrument, as
applicable, executed and delivered by each Purchaser to
Borrower, securing a Pledged Note Receivable and
encumbering all of the right, title and interest of such
Purchaser in the related Encumbered Interval and Common
Elements, and related or appurtenant easement, access and
use rights and benefits."
22. NEGATIVE PLEDGE AGREEMENT. Section 1.1 (Definitions). is hereby amended in
part to add the following new paragraph:
"(rr) NEGATIVE PLEDGE AGREEMENT shall mean the Negative
Pledge Agreement, in the form attached as Exhibit C, made
by the Borrower and each applicable Affiliate to the
Lender pursuant to this Agreement, as the same may be
amended from time to time."
23. NOTE. Section 1.1(mm) (Note) is hereby amended to read as follows:
"(ss) NOTE. The Secured Promissory Note evidencing the
Loan dated the Closing Date executed and delivered by
Borrower to Lender concurrently with the Agreement, as
amended and restated by an Amended and Restated Secured
Promissory Note dated as of October 31, 1996 and as
further amended and restated by an Amended and Restated
Secured Promissory Note dated
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March 31, 1999 executed and delivered by Borrower to
Lender concurrently with the Third Amendment, a copy of
which is attached hereto as Exhibit C."
24. PARTICIPANT. Section 1.1 (Definitions) is hereby amended in part to add the
following new paragraph:
"(ww) PARTICIPANT shall mean, singly and collectively, any
bank or other entity, which is indirectly or directly
funding Lender with respect to the Loan, in whole or in
part, including, without limitation, any direct or
indirect assignee of, or participant in, the Loan."
25. RESORT OR RESORTS. Section 1.1(xx) (Resort or Resorts) is hereby amended to
read as follows:
"(eee) RESORT OR RESORTS (ALSO "ELIGIBLE RESORT" OR
"ELIGIBLE RESORTS") . Individually and collectively, as
applicable, each or all of the interval ownership and
time-share projects consisting of: (i) (A) Holly Lake
Ranch, Hawkins, Texas; (B) Piney Shores Resort, Conroe,
Texas; (C) Lake O' The Woods, Flint, Texas; (D) Hill
Country Resort, Canyon Lake, Texas; (E) Ozark Mountain
Resort, Kimberling City, Missouri; and (F) Holiday Hills
Resort, Branson, Missouri (also sometime individually and
collectively referred to herein as the "EXISTING RESORTS")
and (ii) subject to Lender's prior written approval and
satisfaction by the Borrower of the conditions precedent
set forth in Sections 2.8 and 4.6 hereof, the Additional
Eligible Resorts. The term "Resort" or "Resorts" includes,
among other things, the undivided annual or (biennial)
timeshare ownership interests (Intervals) in the
respective Resorts, and the appurtenant exclusive rights
to use Units in one or more buildings or phases and all
appurtenant or related properties, amenities, facilities,
equipment, appliances, fixtures, easements, licenses,
rights and interests, including without limitation, the
Common Elements, as established by and more fully defined
and described in the respective Declarations, and the
other Timeshare Documents."
26. TERM. Section 1.1(bbb) (Term) is hereby amended to read as follows:
"(iii) TERM. A period of twenty four (24) months from the
date of the Third Amendment, plus the number of days from
the date of the Third Amendment to the end of the month in
which the Third Amendment is executed and delivered by the
Borrower and the Lender."
27. TIMESHARE ACT. Section 1.1(ccc) (Timeshare Act) is hereby amended to read as
follows:
"(jjj) TIMESHARE ACT. Any statute, act, regulation,
ordinance, rule or law applicable to the establishment and
operation of the Resorts and the sales of the Intervals."
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28. TIMESHARE DOCUMENTS. Subparagraph (1) of Section 1.1(ddd) (Timeshare
Documents) is hereby amended to read as follows:
"(kkk) (1) Any registration statement required under any
Timeshare Act approving the establishment and operation of
the Resorts and the sales of Intervals."
29. UCC FINANCING STATEMENT. Section 1.1 (Definitions) is hereby amended in part
to add the following new paragraph:
"(nnn) UCC FINANCING STATEMENTS. The UCC-1 Financing
Statements, naming the Borrower or the Original Borrower
as debtor and the Lender as secured party, heretofore or
hereafter filed in connection with the Loans and all
amendments thereto."
30. REVOLVING LOAN. Section 2.1 (Revolving Loan) is hereby amended to read as
follows:
"Section 2.1 REVOLVING LOAN; LOAN PARTICIPATIONS;
PARTICIPANTS AND LENDING LIMITS;.
(a) REVOLVING LOAN. Upon the terms and subject to
the conditions set forth in this Agreement,
including, without limitation, the lending limits
set forth in section 2.1(c) hereof, Lender shall
advance to Borrower, and Borrower may borrow,
repay and reborrow during the Revolving Loan
Period, as such term is hereafter defined,
principal under the Loan in an amount not to
exceed at any time the lesser of: (i) the amount
of the Borrowing Base, or (ii) $75,000,000.00.
The Revolving Loan Period is shall mean the
period beginning on the date of the Third
Amendment and ending on March 31, 2001."
(b) LOAN PARTICIPATIONS AND PARTICIPANTS. Lender
shall have the right, without prior notice to
Borrower or Borrower's approval, to designate one
or more Participants and to sell or grant to such
Participants participation interests in the Loan,
and in the respective Loan Documents, and in the
Collateral, on terms and conditions satisfactory,
in its sole and absolute discretion, to Lender.
In the event that Lender so designates a
Participant and sells or grants such Participant
a participation interest in the Loan, such
Participant shall communicate and deal only with
Lender in respect to such Participant's interest
in the Loan, the Loan Documents and the
Collateral, and Borrower shall communicate and
deal only with Lender and not with any
Participant. Borrower agrees to, diligently and
in good faith, cooperate with Lender in
connection with Lender's consummation and
administration of a written participation
agreement or agreements with one or more
Participants or their successors and assigns, and
in complying with the terms of any such
participation agreement, including with respect
to
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periodic deliveries of accountings and reports
with respect to the Loan, the Loan Documents and
the Collateral.
(c) LENDING LIMITS. Borrower acknowledges, agrees
and confirms that Lender's obligation to fund
Advances under the Loan is limited to a maximum
aggregate principal amount at any time of
$50,000,000 (the "INITIAL FUNDING COMMITMENT)".
Lender and Borrower acknowledge that Lender has
entered or will enter into written participation
agreements which provide for Participant's
fundings in respect of up to $25,000,000 of the
Initial Funding Commitment. With respect to
Advances under the Loan that would cause the
aggregate outstanding principal balance of the
Loan to exceed $50,000,000, Lender's obligation
to make any such Advances is subject to and
conditioned upon a Participant's providing
funding to Lender in support of such Advances;
and therefore, Advances in excess of $50,000,000
at any time shall be subject to and conditioned
upon a Participant providing incremental funds
over $50,000,000 to Lender pursuant to a written
participation agreement acceptable to Lender in
its sole and absolute discretion. Advances in
excess of the Initial Funding Commitment are
hereinafter referred to as the "ADDITIONAL
FUNDING COMMITMENT". The maximum amount of the
Additional Funding Commitment shall, subject to
Section 2.1(a) hereof, be $25,000,000.
Lender agrees to use reasonable efforts to
procure one or more Participants to provide
funding for the Additional Funding Commitment,
and to use reasonable efforts to enter into and
maintain in good standing additional written
participation agreements satisfactory to Lender
in its sole and absolute discretion to the extent
necessary to provide for Advances up to the
maximum amount of the Additional Funding
Commitment, but in no event shall the total
outstanding principal balance of the Loan exceed
the amount determined in accordance with Section
2.1(a) hereof. If for any reason Lender does not
procure Participants for the Additional Funding
Commitment, or does procure such Participants but
does not enter into a written participation
agreement or agreements, acceptable to Lender in
its sole and absolute discretion, with any such
Participant for the Additional Funding
Commitment, or if such a participation agreement
is terminated, or if such a Participant fails to
fund to Lender its participation share of the
Loan as provided under its respective
participation agreement, then, notwithstanding
any provision in this Agreement, in the 1999
Commitment or in any Loan Document to the
contrary, Lender shall have no obligation to make
advances of principal under the Loans in excess
of $50,000,000 in the aggregate."
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31. VOLUNTARY PREPAYMENT. Section 2.4(a) (Voluntary Prepayment) of the Agreement
is hereby amended to read as follows:
"(a) VOLUNTARY PREPAYMENT. Borrower may not voluntarily
prepay the Loan, in whole or in part, except that: (i)
provided that no Event of Default shall have occurred and
be continuing and subject to Section 2.5 and Section 2.6
hereof, Borrower may, during the period from the date of
the Third Amendment to March 31, 2001 (the "REVOLVING LOAN
PERIOD"), upon thirty (30) days' prior written notice to
the Lender, prepay the Loan in whole or in part solely in
connection with the bulk sale, refinancing or
securitization in bulk, in minimum increments of
$5,000,000.00 or more, of Eligible Notes Receivable
relating to the Resorts, provided that any such bulk sale,
refinancing or securitization is not made to or with a
Warehouse Lender (For purposes hereof, a "Warehouse Lender"
means a Lender who agrees to refinance notes receivable for
a period of two (2) years or less); (ii) provided that no
Event of Default shall have occurred and be continuing and
subject to Section 2.6 hereof, Borrower may, on and after
April 1, 2001, upon thirty (30) days' prior written notice
to the Lender prepay the Loan in whole or in part and (iii)
at any time during the Term of the Loan, the Loan may be
prepaid in part in connection with any prepayment which
arises from the prepayment of one or more Eligible Notes
Receivable by its maker or makers.
32. PREPAYMENT PREMIUMS. Section 2.4(c) (Premiums) of the Agreement is hereby
amended to read as follows:
"(c) PREMIUMS. Subject to Sections 2.4(c)(ii), 2.5 and 2.6
hereof, no prepayment premium shall be required in
connection with: (x) any voluntary prepayment made in
accordance with Section 2.4(a)(i), (y) in connection with
any prepayment of the principal balance of the Loan which
arises from the prepayment of one or more Eligible Notes
Receivable by its maker or makers or (z) in connection with
any prepayment made in accordance with Section 2.4(b)(i).
Except as heretofore set forth, Borrower shall, in
connection with a prepayment, pay to the Lender:
(i) Any prepayment of the Loan pursuant to
Section 2.4(a)(ii) above must be accompanied
by a prepayment premium, calculated as of
the date immediately prior to such
prepayment, equal to one half percent (0.5%)
of the then outstanding principal balance of
the Loan.
(ii) Notwithstanding anything herein contained to
the contrary, any prepayment under this
Section 2.4 must include all accrued but
unpaid interest, and accrued but unpaid
contributions, taxes, insurance, loan
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charges (including Minimum Loan Usage Fees,
if any), custodial fees, attorneys' and
paralegals' fees and expenses, amounts due
pursuant to Section 2.6 hereof as a result
of a Funding Loss and other fees or expenses
incurred by Lender or advanced to or on
behalf of Borrower by Lender pursuant to any
of the Loan Documents accrued but unpaid."
33. MINIMUM LOAN USAGE FEE. Section 2.5 (Minimum Loan Usage Fee) is hereby
amended to read as follows:
"2.5 MINIMUM LOAN USAGE FEE. In addition to the interest
payable pursuant to this Agreement, during the Revolving
Loan period Borrower shall pay to Lender with respect to
the six month period commencing on April 1, 1999 and
ending on September 30, 1999 and with respect to each six
month period thereafter during the Revolving Loan Period,
on the fifth day after every such six month period, IN
ARREARS, a fee (the "MINIMUM LOAN USAGE FEE") equal to the
product of: (a) the excess, if any of (i) $20,000,000.00
over (ii) the average daily outstanding principal balance
of the Note for such six month period; times (b) two
percent (2.00%)."
34. PAYMENT OF FUNDING LOSSES AND OTHER AMOUNTS RELATING TO LIBOR CONTRACT.
Section 2 (The Loan) of the Agreement is hereby amended in part to add the
following new Section 2.6 as follows:
"2.6 PAYMENT OF FUNDING LOSSES AND OTHER AMOUNTS RELATING
TO LIBOR CONTRACT, ETC.
(a) Funding Losses: Breaking of LIBOR
contract, Change in Law, Etc. Borrower hereby agrees to
pay to Lender any amount necessary to compensate Lender
and any Participant for any losses or costs (including,
without limitation, the costs of breaking any "LIBOR"
contract, if applicable, or funding losses determined on
the basis of Lender's or such Participant's reinvestment
rate and the interest rate thereon) (collectively,
"FUNDING LOSSES") sustained by Lender or any Participant:
(i) if the Loan, or any portion hereof, is prepaid for any
reason whatsoever on any date other than the Final
Maturity Date (including, without limitation, from
condemnation or insurance proceeds); (ii) upon the
conversion of the interest rate on the Loan to an interest
rate based on the Prime Rate in accordance with Section
2.6(b) hereof; (iii) as a consequence of the reduction of
any amounts received or receivable from Borrower, in
either case, due to the introduction of, or any change in,
law or applicable regulation or treaty (including the
administration or interpretation thereof), whether or not
having the force of law, or due to the compliance by
Lender or the Participant, as the case may be, with any
directive, whether or not having the force of law, or
request from any central bank or domestic or foreign
governmental authority, agency or instrumentality having
jurisdiction; (iv) as a consequence of the
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breaking of any TLIBOR contract and/or (v) any other set
of circumstances not attributable to Lender's or a
Participant's acts. Payment of Funding Losses hereunder
shall be in addition to any obligation to pay any other
amounts due and owing under this Agreement or any other
Loan Documents.
(b) Conversion to Interest Rate Based on Prime Rate.
If Lender determines (which determination shall be
conclusive and binding upon Borrower, absent manifest
error) (i) that dollar deposits in an amount approximately
equal to the then outstanding principal balance of the
Loan are not generally available at such time in the
London Interbank Market for deposits in Eurodollars, (ii)
that the rate at which such deposits are being offered
will not adequately and fairly reflect the cost to Lender
or a Participant of maintaining the Interest Rate based on
LIBOR (or the portion of the Loan being funded by such
Participant), or of funding the same in such market for
such Interest Accrual Period, due to circumstances
affecting the London Interbank Market generally, (iii)
that reasonable means do not exist for ascertaining LIBOR,
(iv) that the Interest Rate based on LIBOR would be in
excess of the maximum interest rate which Borrower may by
law pay, then, in any such event, or (v) any LIBOR
contract is broken as a result of the sale, pledge,
refinancing or securitization in bulk of Eligible Notes
Receivable relating to the Resorts by Borrower, Lender
shall so notify Borrower and, as of the date of such
notification with respect to an event described in clauses
(ii), (iv) or (v) above, or as of the expiration of the
applicable LIBOR Rate Period with respect to an event
described in clause (i) or (iii) above, interest shall
accrue at a rate equal to the Prime Rate plus a sufficient
spread so that the resulting per annum interest rate is
approximately equal to what the rate would have been based
on LIBOR plus three percent (3.0%) per annum, which new
rate shall apply until such time as the situations
described above are no longer in effect, or as otherwise
provided herein; provided, however, if the situation
described in clause (ii) above occurs, (x) Borrower shall
have the option, to be exercised by written notice to
Lender, to pay Lender (in the manner reasonably required
by Lender) for such increased cost of maintaining the
Interest Rate based on LIBOR, and (y) if the same only
affects a portion of the Loan, then only such portion
shall have interest accrue at a rate equal to the Prime
Rate plus a sufficient spread so that the resulting per
annum interest rate is approximately equal to what the
rate would have been based on LIBOR plus three percent
(3.0%) per annum, and interest shall continue to accrue on
the remaining portion at the Interest Rate based on LIBOR.
(c) Back-Up Interest Rate Based on Prime Rate. If the
introduction of, or any change in, any law, regulation or
treaty, or in the interpretation thereof by any
governmental authority charged with the administration or
interpretation thereof, shall make it unlawful for Lender
or any Participant to maintain the Interest Rate based on
LIBOR with respect to the Loan, or any portion thereof, or
to fund the Loan, or any portion thereof, in Eurodollars
in the London Interbank Market, then, (i) the Loan (or
such portion of the Loan) shall
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thereafter bear interest shall accrue at a rate equal to
the Prime Rate plus a sufficient spread so that the
resulting per annum interest rate is approximately equal
to what the rate would have been based on LIBOR plus three
percent (3.0%) per annum (unless the Default Rate shall be
applicable), and (ii) Borrower shall pay to Lender the
amount of Funding Losses (if any) incurred in connection
with such conversion. The accrual of interest shall accrue
at a rate equal to the Prime Rate plus a sufficient spread
so that the resulting per annum interest rate is
approximately equal to what the rate would have been based
on LIBOR plus three percent (3.0%) per annum, which new
rate shall continue until such date, if any, as the
situation described in this Section 2.6(c) is no longer in
effect.
(d) Capital Adequacy Events, Etc. If Lender or a
Participant, as the case may be, shall have determined
that the applicability of any law, rule, regulation or
guideline adopted pursuant to or arising out of the July
1988 report of the Basle Committee on Banking Regulations
and Supervisory Practices entitled "International
Convergence of Capital Measurement and Capital Standards",
or the adoption of any other law, rule, regulation or
guideline (including, but not limited to, any United
States law, rule, regulation or guideline) regarding
capital adequacy, or any change becoming effective in any
of the foregoing or in the enforcement or interpretation
or administration of any of the foregoing by any court or
any domestic or foreign governmental authority, central
bank or comparable agency charged with the enforcement or
interpretation or administration thereof, or compliance by
Lender or its holding company or such Participant or its
holding company, as the case may be, with any request or
directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of
reducing the rate of return on the capital of Lender,
Lender's holding company, such Participant or such
Participant's holding company, as the case may be, to a
level below that which Lender or its holding company or
the Participant or its holding company, as the case may
be, could have achieved but for such applicability,
adoption, change or compliance (taking into consideration
Lender's or its holding company's or such Participant's or
its holding company's, as the case may be, policies with
respect to capital adequacy) (the foregoing being
hereinafter referred to as "CAPITAL ADEQUACY EVENTS"),
then, upon demand by Lender, Borrower shall pay to Lender,
from time to time, such additional amount or amounts as
will compensate Lender or such Participant for any such
reduction suffered.
(e) Payment of Amounts Due under Section 2.6. Any
amount payable by Borrower under Section 2.6(a) or 2.6(d)
hereof shall be paid to Lender within five (5) days of
receipt by Borrower of a certificate signed by an officer
of Lender setting forth the amount due and the basis for
the determination of such amount, which statement shall be
conclusive and binding upon Borrower, absent manifest
error. Failure on the part of Lender to demand payment
from Borrower for any such amount attributable to any
particular period shall not constitute a
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waiver of Lender's right to demand payment of such amount
for any subsequent or prior period. Lender shall use
reasonable efforts to deliver to Borrower prompt notice of
any event described in Sections 2.6(a) or 2.6(d) hereof
and of the amount to be paid under this Section 2.6(e) as
a result thereof; provided, however, any failure by Lender
to so notify Borrower shall not affect Borrower's
obligation to make the payments to be made under this
Section 2.6(e) as a result thereof. All amounts which may
become due and payable by Borrower in accordance with the
provisions of this Section 2.6(e) shall constitute
additional interest hereunder and shall be secured by this
Agreement and the other Loan Documents."
35. COMMITMENT FEE. Section 2 (The Loan) of the Agreement is hereby amended in
part to add the following new Section 2.7 as follows:
"2.7 COMMITMENT FEE. Borrower and Lender acknowledge and
agree that the Commitment Fees due and owing by the
Borrower to the Lender with respect to the Original
Commitment, the 1995 Commitment and the 1996 Commitment
have been paid by the Borrower. Borrower has paid to
Lender the sum of $20,000, constituting a portion of 1999
Commitment Fee of $750,000. Borrower shall pay an
additional $480,000 of the 1999 Commitment on the date of
the Third Amendment. As agreed by Lender and Borrower,
payment of the remaining $250,000 of the Commitment Fee or
pro rata portion thereof (the "ADDITIONAL FUNDING
COMMITMENT FEE"), is deferred until such time as Lender
enters into written participation agreements, in form and
substance acceptable to Lender in its sole and absolute
discretion, with Participants providing for Participant's
funding commitments in respect of the Additional Funding
Commitment. Subject only to the foregoing condition
regarding $250,000 of the Commitment Fee, Borrower agrees
that, in addition to other commitment fees earned by
Lender, Lender has earned the entire Commitment Fee with
respect to the 1999 Commitment, notwithstanding whether a
closing occurs under this Agreement with respect to the
1999 Commitment or whether the Loan or any portion thereof
is funded."
36. ADDITIONAL ELIGIBLE RESORT. Section 2 (The Loan) of the Agreement is hereby
amended in part to add the following new Section 2.8 as follows:
"2.8 ADDITIONAL ELIGIBLE RESORT. From time to time during
the Term, Borrower may propose to Lender that one or more
additional time-share plans and projects owned and
operated by Borrower be included among the Eligible
Resorts in respect of which Advances may be made. Any such
proposal will be in writing, and will be accompanied or
supported by the due diligence and supporting Borrower,
Affiliate, project, financial and related information
identified in Section 4.6 hereto, and such other
information as Lender may require. Borrower will
reasonably cooperate with Lender's underwriting and due
diligence, and Borrower will be responsible for payment
upon billing for
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Lender's out-of-pocket expenses in connection therewith.
Subject to Lender's and any Participant's satisfactory
underwriting and due diligence review, including
satisfaction of the conditions in Sections 4 and 5 hereof
as they relate to such additional time-share resorts,
Lender may, but shall not be required to, approve one or
more such additional time-share resorts, including future
phases or condominiums in an Existing Eligible Resort, as
an Eligible Resort qualifying for Advances under and
subject to the terms of this Agreement and the other Loan
Documents.
Subject in each instance to Lender's and each
Participant's acceptable underwriting and due diligence
review, and Lender's prior written approval, any project
as may be approved by Lender after the Closing Date, if
any, is hereinafter referred to as an "ADDITIONAL ELIGIBLE
RESORT". Any Advances hereunder with respect to any
Additional Eligible Resort will be subject to all terms an
conditions of this Agreement and the other Loan
Documents."
37. CONDITIONS PRECEDENT TO CLOSING OF THIRD AMENDMENT: Section 4 (Conditions
Precedent To The Closing) of the Agreement is hereby amended in part to add the
following new Section 4.5 as follows:
"Section 4.5 CONDITIONS PRECEDENT TO CLOSING OF THIRD
AMENDMENT. The obligation of Lender to enter into the
Third Amendment, and, in addition to all of the other
conditions precedent set forth in the Loan Agreements or
the other Loan Documents, to fund any further Advance
pursuant to the terms of the Loan Agreement, shall be
subject to the satisfaction of each of the following
conditions precedent:
(a) Representations, Warranties, Covenants and
Agreements. The representations and warranties
contained in the Loan Documents are and shall be true
and correct in all respects, and all covenants and
agreements have been complied with and correct in all
respects, and all covenants and agreements to have
been complied with and performed by Borrower shall
have been fully complied with and performed to the
satisfaction of Lender.
(b) No Prohibited Acts. Borrower shall not have taken
any action or permitted any condition to exist which
would have been prohibited by any provision of the
Loan Documents if such provision had been binding and
effective at all times during the period from May 11,
1995 to and including the date of the Third
Amendment.
(c) Execution by Borrower of the Third Amendment;
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(d) Execution by Borrower of the Amended and Restated
Secured Promissory Note;
(e) Execution by Borrower of the Negative Pledge
Agreement;
(f) Execution by Borrower of the Amended and Restated
Escrow Instructions;
(g) Execution by Borrower of the Environmental
Indemnification Agreement;
(h) Execution by Borrower of the Second Amendment to
Lockbox Agreement;
(i) Execution by Borrower of the Borrowing Base
Certificate;
(j) Execution by Borrower of: the Borrower's
Affidavit with Respect to the Existing Resorts in the
form attached as Exhibit C;
(k) Execution by Borrower of the UCC Financing
Statements;
(l) Payment of the Commitment Fee in accordance with
Section 2.7 hereof;
(m) Delivery and/or satisfaction by the Borrower of
the conditions precedent set forth in Schedule 4.6
hereof;
(n) Execution, delivery and or satisfaction by
Borrower and its Affiliates of such other documents,
instruments, agreements, tests, reports, inspections
and conditions as Lender or any Participant may
request.
38. CONDITIONS PRECEDENT TO FUNDING OF ADVANCES WITH RESPECT TO ADDITIONAL
ELIGIBLE RESORTS. Section 4 (Conditions Precedent To The Closing) of the
Agreement is hereby amended in part to add the following new Section 4.6 as
follows:
"4.6 CONDITIONS PRECEDENT TO FUNDING OF ADVANCES WITH
RESPECT TO ADDITIONAL ELIGIBLE RESORTS. As provided in the
Section 2.8 hereof, Borrower may propose to Lender that
Lender approve one or more additional timeshare plans for
inclusion hereunder as an Additional Eligible Resort in
respect of which Advances may be made. The obligation of
Lender to fund any Advances on or after the date of the
Third Amendment with respect to an Additional Eligible
Resort shall be subject to
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the satisfaction of each of the following conditions
precedent, in addition to all of the conditions precedent
set forth elsewhere in the Loan Documents:
(a) Representations, Warranties, Covenants and
Agreements. The representations and warranties
contained in the Loan Documents are and shall be true
and correct in all respects, and all covenants and
agreements have been complied with and correct in all
respects, and all covenants and agreements to have
been complied with and performed by Borrower shall
have been fully complied with and performed to the
satisfaction of Lender.
(b) No Prohibited Acts. Borrower shall not have taken
any action or permitted any condition to exist which
would have been prohibited by any provision of the
Loan Documents if such provision had been binding and
effective at all times during the period from May 11,
1995 to and including the date of the Third
Amendment.
(c) Approval of Documents Prior to Advance. Borrower
has delivered or caused to be delivered to Lender
(with copies to Lender's counsel), at least fifteen
(15) Business Days prior to the date of each Advance,
and Lender has reviewed and approved, at least five
(5) Business Days prior to the date of each Advance,
the form and content of all of the items specified in
each of the Submissions required pursuant to this
Section 4.6. Lender shall have the right to review
and approve any changes to the form of any of the
Submissions. If Lender disapproves of any changes to
any of the Submissions, Lender shall have the right
to require Borrower either to cure or correct the
defect objected to by Lender or to elect not to fund
the Loan or any Advance. Under no circumstances shall
Lender's failure to approve or disapprove a change to
any of the Submissions be deemed to be an approval of
such Submissions. All of the Submissions were and
shall be prepared at Borrower's sole cost and
expense, unless expressly stated to be an obligation
and expense of Lender. Lender shall have the right of
prior approval of any Preparer and may disapprove any
Preparer in its sole discretion, for any reason,
including without limitation, that Lender believes
that the experience, skill, reputation or other
aspect of the Preparer is unsatisfactory in any
respect. All Submissions required pursuant to this
Agreement shall be addressed to Lender and include
the following language: "THE UNDERSIGNED ACKNOWLEDGES
THAT TEXTRON FINANCIAL CORPORATION IS RELYING ON THE
WITHIN INFORMATION IN CONNECTION WITH ITS
DETERMINATION TO MAKE A LOAN TO SILVERLEAF RESORTS,
INC. IN CONNECTION WITH THE SUBJECT COLLATERAL."
(i) a certificate, to be dated as of the date of
each such Advance and signed by the president,
vice president, or secretary of the Borrower,
certifying that the conditions specified in
Sections 4.6(a) and (b) above are true;
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(ii) copies of the articles of incorporation of
Borrower, together with any amendments thereto
certified to be true and complete by Borrower and
the Secretary of State of the State of Texas, a
current certificate of good standing for Borrower
issued by the Secretary of State of the State of
Texas, a current certificate of authority to
conduct business issued by the secretary of state
in each state in which the Borrower conducts
business, and copies of the by-laws of Borrower
certified to be true, correct and complete by the
secretary or assistant secretary of Borrower;
(iii) except for the Resorts listed on Schedule
4.6(c)(iii) (the "Crown Resorts"), a Survey for
each Additional Eligible Resort for which
Eligible Notes Receivable are being pledged to
the Lender in connection with the Advance in
question; and with respect to each Crown Resort,
a legible, full size copy of the recorded plat
for each such Resort;
(iv) a certificate of the secretary or assistant
secretary of Borrower certifying the adoption by
the board of directors thereof, respectively, of
a resolution authorizing the addition of the
Resort in question as an Additional Eligible
Resort and to authorize Borrower to enter into,
execute and deliver any Documents in connection
therewith;
(v) a certificate of the secretary or assistant
secretary of Borrower certifying the incumbency,
and verifying the authenticity of the signatures,
of the specified officers of Borrower authorized
to sign all documents required in connection with
such Additional Eligible Resort as required
pursuant to this Section 4.6;
(vi) an inspection report or reports covering
each Additional Eligible Resort for which
Eligible Notes Receivable are being pledged to
the Lender in connection with the Advance in
question, including without limitation all real
property and personal property subject to the
Declaration and all adjacent property,
confirming:
(1) the absence of Hazardous Materials on
the personal property and real property
comprising each such Additional Eligible
Resort;
(2) that the inspection firm has obtained,
reviewed and included within its report a
CERCLIS printout from the Environmental
Protection Agency (the "EPA"), statements
from the EPA and other applicable state and
local authorities and a Phase I
Environmental Audit, all of which
information shall confirm that there are no
known or suspected Hazardous Materials
located at, used or stored on, or
transported to or from each such Additional
Eligible Resort or in such proximity thereto
as to create a material risk of
contamination of each such Additional
Eligible Resort;
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(vii) evidence that Borrower is maintaining all
policies of insurance required by and in
accordance with Section 7.1(d) hereof, including
copies of the most current paid insurance premium
invoices;
(viii) evidence that Borrower and the Timeshare
Documents for each Additional Eligible Resort for
which Eligible Notes Receivable are being pledged
to the Lender in connection with the Advance in
question are in compliance with all applicable
laws in connection with its sales of Intervals,
including without limitation, the Timeshare Acts;
(ix) a current preliminary title report or
certificate of title for each Additional Eligible
Resort for which Eligible Notes Receivable are
being pledged to the Lender in connection with
the Advance in question, with copies of all title
exceptions;
(x) copies of all applicable governmental
permits, approvals, consents, licenses, and
certificates for the establishment of each
Additional Eligible Resort for which Eligible
Notes Receivable are being pledged to the Lender
in connection with the Advance in question as
timeshare projects in accordance with the
applicable Timeshare Act, and for the occupancy
and intended use and operation of each such
Additional Eligible Resort, including the Units,
including a letter certification from Borrower
regarding zoning classification and compliance,
letters or other satisfactory evidence from
utility companies, governmental entities or other
persons confirming that water, sewer (sanitary
and storm), electricity, solid waste disposal,
telephone, police, fire and rescue services are
being provided to each Resort, and any business
licenses necessary for operation of each such
Additional Eligible Resort;
(xi) certified true, correct and complete copies
of all of the Timeshare Documents for each
Additional Eligible Resort for which Eligible
Notes Receivable are being pledged to the Lender
in connection with the Advance in question;
(xii) evidence satisfactory to Lender that all
taxes and assessments owed by or for which
Borrower is responsible for collection have been
paid, including but not limited to sales taxes,
room occupancy taxes, payroll taxes, personal
property taxes, excise taxes, intangibles taxes,
real property taxes, and income taxes, and any
assessments related to each Additional Eligible
Resort for which Eligible Notes Receivable are
being pledged to the Lender in connection with
the Advance in question and copies of the most
current paid tax bills for each such Additional
Eligible Resort evidencing that each such
Additional Eligible Resort have been segregated
from all other property on the applicable
municipal taxrolls;
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(xiii) written confirmation from an architect
covering each Additional Eligible Resort, other
than a Crown Resort, for which Eligible Notes
Receivable are being pledged to the Lender in
connection with the Advance in question as to the
physical condition of the improvements at each
such Additional Eligible Resort, including that
soil conditions are sufficient to support all
existing and any contemplated improvements to the
real property; which written confirmation shall
be in form and substance reasonably acceptable to
the Lender. Each architect rendering such written
confirmation shall be licensed as an architect in
the state of Texas;
(xiv) such credit references on Borrower as
Lender deems necessary in its sole discretion;
(xv) copies or other evidence of all loans to
Borrower from any officers, shareholders, or
Affiliates of Borrower, if any.
(xvi) a commitment to issue Mortgagee Title
Policies (as defined below) from Title Insurer
for each such Additional Eligible Resort.
Notwithstanding anything heretofore to the
contrary, Lender agrees that Borrower shall not
be required to provide such a commitment or a
Mortgagee Title Insurance Policy with respect to
any Crown Resort (other than the Quail Hollow
Resort), or, until such time as deeded Intervals
are permitted under local law governing the Oak
`N Spruce Resort, the Oak `N Spruce Resort in
order to qualify any such Resort as an Additional
Eligible Resort. With respect to the Oak `N
Spruce Resort only, Borrower shall deliver to
Lender, an opinion of counsel, in form and
substance acceptable to Lender, as to, among
other things, the creation and ownership of the
beneficial interests in the entity which owns
each of the Units at the Oak N' Spruce Resort
(the "Beneficial Interest"), the state of title
of each such Beneficial Interest and the creation
and perfection of the Lender's security interest
in each Beneficial Interest from which an
Eligible Note Receivable arises. Notwithstanding
anything heretofore to the contrary, if any
claim, lien, encumbrance, charge or other matter
arises with respect to any Interval or Intervals
for which an Eligible Note Receivable has been
pledged to the Lender pursuant to this Agreement,
then, in such event:
(a) The Note Receivable with respect to the
Interval in question shall cease to be an
Eligible Note Receivable and the Borrower
immediately shall either replace the Note
Receivable in question or make a Mandatory
Prepayment as provided in Section 2.4(b)
hereof; and
(b) The Resort at which the Interval in
question is located shall cease to be an
Additional Eligible Resort, unless and until
the Borrower shall cure any such claim,
lien, encumbrance, charge or other matter to
the satisfaction of the Lender. Furthermore,
any and
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all further requests for Advances in respect
of such Resort must be accompanied by
satisfactory Mortgagee Title Policies for
all Intervals with respect to which such
Advances are requested.
(xvii) the Financial Statements.
(xviii) to the extent not previously delivered,
Borrower will execute, or cause to be executed
with respect to each Additional Eligible Resort,
a Negative Pledge, a Collateral Assignment of
Notes Receivable and Interval Mortgages,
Borrower's Affidavit with Respect to the
Additional Eligible Resorts and an Environmental
Indemnification Agreement, each in the form
attached hereto as Exhibit C;
(xix) with respect to any improvements, including
any Units, constructed at a Resort within the
twenty-four month period prior to any Advance
with respect to an Additional Eligible Resort,
Borrower shall also deliver to Lender, for its
approval, such documents and instruments as
Lender may reasonably request in connection with
such newly constructed improvements, including,
without limitation, copies of building permits,
plans and specifications construction and
architectural contracts, title insurance insuring
over, among other things, mechanics liens,
certificates of occupancy and satisfactory
evidence of the completion of such improvements;
and
(xx) such other documents, instruments,
agreements, tests, reports and inspections as the
Lender may require with respect to the Borrower
or any applicable Affiliate, the Loan or any
Resort, including any Additional Eligible Resort.
(xxi) Upon request of the Lender, Borrower shall
deliver to the Lender evidence, satisfactory to
the Lender, that there is no material litigation,
written complaint, suit, action, written claim or
written charge pending against the Borrower or
any Affiliate with any court or with any
governmental authority with respect to the
Resort, the Timeshare Documents, any Eligible
Notes Receivable, any Interval, or any marketing,
offer or sale of any Interval.
(d) Physical Inspection. Lender shall be satisfied
with its physical inspection of the Additional
Eligible Resorts.
(e) UCC Search. Lender shall have obtained, at
Borrower's cost, such searches of the applicable
public records as it deems necessary under all
applicable law to verify that it has a first and
prior perfected Lien and security interest covering
all of the Collateral. Lender shall not be obligated
to fund any Advance if Lender determines that it does
not have a first and prior perfected lien and
security interest covering any portion of the
Collateral.
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(f) Litigation Search. Lender shall have obtained, at
Borrower's cost, an independent search to verify that
there are no bankruptcy, foreclosure actions or other
material litigation or judgments pending or
outstanding against the Additional Eligible Resorts,
any portion of the Collateral, Borrower, or any
Affiliate, (each a "MATERIAL PARTY"). The term "other
material litigation" as used herein shall not include
matters in which (i) a Material Party is plaintiff
and no counterclaim is pending or (ii) which Lender
determines, in its sole discretion exercised in good
faith, are immaterial due to settlement, insurance
coverage, frivolity, or amount or nature of claim.
Lender shall not be obligated to fund any Advance if
it determines that any such litigation is pending.
(g) Opinions of Borrower's Counsel. Borrower shall
deliver to Lender, at Borrower's sole cost and
expense, such opinions of counsel, including counsel
admitted in each state in which each Additional
Eligible Resort is located, as to such matters with
respect to the Borrower and each Additional Eligible
Resort as Lender may request, and in form and
substance acceptable to Lender in its sole
discretion.
(h) Funding Procedure. Borrower shall have complied
to Lender's satisfaction with each of the conditions
precedent to funding of an Advance set forth in
Section 5 hereof.
(i) Management of Resort. Borrower shall provide
evidence satisfactory to Lender that Borrower, or an
Affiliate, is the manager or operator of each Resort,
pursuant to a written management or operating
agreement, in form and substance satisfactory to
Lender, which with respect to all Resorts (other than
the Crown Resorts) shall have a term which shall
expire no earlier April 1, 2009. With respect to each
Crown Resort only, each such Resort may qualify as an
Additional Eligible Resort (subject to satisfaction
by Borrower of the conditions set forth in this
Section 4.6), so long the Borrower, or an Affiliate,
is the manager or operator of each such Resort,
pursuant to a written management or operating
agreement, in form and substance satisfactory to
Lender. Borrower agrees to provide an estoppel
letter, in form and substance acceptable to Lender,
from the applicable Timeshare Owner's Association.
(j) Other Items. Such other agreements, documents,
instruments, certificates and materials as Lender may
request to determine the acceptability of any such
Additional Eligible Resort, to evidence the
Obligations; to evidence and perfect the rights and
Liens and security interests of Lender contemplated
by the Loan Documents, and to effectuate the
transactions contemplated herein, including, without
limitation, true copies of all Resort Documents for
each such Additional Eligible Resort, all Timeshare
Documents and operating and management contracts and
agreements, evidence of with the applicable Timeshare
Act and other applicable laws, evidence of all
required governmental licenses and permits; title
searches; title commitments or policies, including.
Complete and legible copies of each title exception,
engineering, environmental and soil reports, evidence
of compliance with all applicable zoning and building
codes; each of which shall be satisfactory to Lender
in its sole and absolute discretion.
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39. GENERAL REPRESENTATIONS AND WARRANTIES.
a. Sections 6.1 (Organization, Standing, Qualification), Subparagraphs
(a) and (e) of Section 6.2 (Authorization, Enforceability, etc.) and
Subparagraph (a) of Section 6.13 (Compliance with Law) are hereby
amended to read as follows:
"6.1 ORGANIZATION, STANDING, QUALIFICATION. Borrower
(a) is a duly organized and validly existing Texas
corporation duly organized, validly existing and in
good standing under the laws of the State of Texas,
and (b) as all requisite power, corporate or
otherwise, to conduct its business and to execute and
deliver, and to perform its obligations under, the
Loan Documents."
6.2 AUTHORIZATION, ENFORCEABILITY, ETC.
"(a) The execution, delivery and performance by
Borrower of the Loan Documents has been duly
authorized by all necessary corporate action by
Borrower and does not and will not (i) violate any
provision of the certificate or articles of
incorporation of Borrower, bylaws of Borrower, or any
agreement, law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award
presently in effect to which Borrower is a party or
is subject; (ii) result in, or require the creation
or imposition of, any Lien upon or with respect to
any asset of Borrower other than Liens in favor of
Lender; or (iii) result in a breach of, or constitute
a default by Borrower under, any indenture, loan or
credit agreement or any other agreement, document,
instrument or certificate to which Borrower is a
party or by which it or any of its assets are bound
or affected."
"(e) The execution and delivery of the Loan
Documents, the delivery and endorsement to Lender of
the Pledged Notes Receivable, the filing of the
UCC-1's with the with the office of the secretary of
state of the state in which the applicable Resort is
located and the Assignment of Notes Receivable and
Mortgages in the official records of the county in
which the applicable Resort is located, create in
favor of Lender a valid and perfected continuing
first priority security interest in the Collateral.
The Collateral shall secure the full payment and
performance of the Obligations."
6.13 Compliance with Law.
"(a) is not in violation, nor are any of its Resorts,
or the business operations in respect of any of the
Resorts, or to the Borrower's knowledge after
diligent inquiry, the Timeshare Owners' Association,
in violation, of the Timeshare Act, or any laws,
ordinances, governmental rules or regulations of any
state in which a Resort is located, any political
subdivision of said states or any other jurisdiction
to which the Borrower or
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the Resorts, or the business operations conducted in
respect of the Resorts, or the Timeshare Owners'
Association, are subject."
b. Borrower hereby makes the following additional representations and
warranties as of the date of the Third Amendment:
"(i) The Agreement, as amended by the First
Amendment, the Second Amendment and the Third
Amendment, the Note and the other Loan Documents
constitute the legal, valid and binding obligation of
the Borrower, enforceable against the Borrower in
accordance with their respective terms."
"(ii) Borrower acknowledges and agrees that it has
assumed all of the Obligations of the Original
Borrower under the Agreement and the Loan Documents
each as amended, and Borrower ratifies and confirms
that of as of the each warranty, representation,
covenant and agreement: (i) made by the Original
Borrower under the Agreement and the other Loan
Documents on August 15, 1995, (ii) made by the
Borrower under the First Amendment and the other Loan
Documents on December 28, 1995 and (iii) made by the
Borrower under the Second Amendment and the other
Loan Documents on October 31, 1996.
40. REPORTING REQUIREMENT. Section 7.1(h)(xi) (Other Information) of the
Agreement is hereby amended in part to add the following sentence as the
beginning of said section:
"Borrower shall deliver to Lender, within five (5) days of the
filing thereof with the United States Securities and Exchange
Commission, copies of each Form 8-K, 10-Q and 10-K filed by
Borrower.
41. MANAGEMENT. Section 7.1(j) (Management) of the Agreement is hereby deleted
in its entirety and substituting the following sentence in its place and stead:
"(j) MANAGEMENT. Borrower shall: (i) remain engaged in the active
management of the Resorts, (ii) unless Borrower notifies Lender in
writing at least thirty (30) days in advance of its new location,
it will retain its executive offices at 1221 Riverbend Drive,
Suite 120, Dallas, Texas 75221, and (iii) will continue to perform
duties substantially similar to those presently performed as
provided in the Management Agreement relating to each Resort."
42. GUARANTOR. Section 7.1(m) (Guarantor) is hereby deleted in its entirety.
43. OTHER COMPLIANCE. Section 7.1 (q)(iii) (Other Compliance) is hereby amended
in part to delete the phrase `the state of Missouri" in the third line of the
first sentence and substitute the following phrase in its place and stead:
"each state in which an applicable Resort is located,"
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44. MODIFICATION OF ELIGIBLE NOTES RECEIVABLE. Notwithstanding anything herein
to the contrary, Borrower shall have the right to modify the interest rate and
term only of the Eligible Notes Receivable without the Lender's prior consent,
provided that: (i) any such change in the rate of interest on any one or more
Eligible Notes Receivable shall not reduce the average interest rate on all
Eligible Notes Receivable to less than thirteen percent (13%) per annum at any
time; (ii) the term of no Eligible Notes Receivable shall be increased to a term
longer than one hundred twenty (120) months from its original date; (iii) at no
time may the Borrower so modify the terms of more than ten percent (10%) of the
outstanding principal balance of all Eligible Notes Receivable at any time and
(iv) provided that Borrower immediately provide Lender with notice of any such
modification together with any original documentation evidencing such
modification.
45. NOTICES. The notice address for the Borrower is changed to reflect the
change in name of the Borrower and the notice address for the Borrower set forth
in Section 12.1 is hereby changed to:
Silverleaf Resorts, Inc.
1221 Riverbend Drive, Suite 120
Dallas, TX 75221
Attn: Mr. Robert E. Mead, CEO
46. EXHIBITS AND SCHEDULE. Exhibits A, C and D and Schedules 1.1(n), 1.1(xx),
1.1(eee), 5, 6.9 and 6.19 are hereby deleted in their entirety and in their
place and stead is substituted Exhibits A, C, D, and E and Schedules 1.1(o),
1.1(eee), 1.1(lll), 4.6(c)(iii), 5, 6.9, 6.19 as attached to the Third
Amendment.
47. DEFINITIONS. Sections 1.1 (a), (b), (d), (g), (h), (i), (l), (m), (n), (o),
(p), (r), (s), (u), (v), (x), (y), (z), (aa), (bb), (ee), (ii), (kk), (nn),
(oo), (pp), (qq), (rr), (ss), (tt), (uu), (vv), (ww), (yy), (zz), (aaa), (eee),
(fff), and (ggg) are hereby redesignated as Sections 1.1 (b), (c), (e), (h),
(i), (j), (m), (n), (o), (p), (q), (s), (t), (x), (y), (aa), (bb), (cc), (dd),
(ee), (jj), (nn), (pp), (tt), (uu), (vv), (xx), (yy), (zz), (aaa), (bbb), (ccc),
(ddd), (fff), (ggg), (hhh), (lll), (mmm) and (ooo), respectively. All
capitalized terms used herein but not otherwise defined herein shall have the
meanings ascribed to such terms in the Agreement.
48. 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 Third Amendment.
49. EFFECT OF AMENDMENT. Except as herein expressly amended, the Agreement shall
remain in full force and effect.
50. 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 Agreement and the other Loan Documents, as previously amended by the First
Amendment and the Second Amendment. 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.
Without limiting the
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generality of the foregoing, all representations, warranties, covenants and
agreements relating to the Resorts are made applicable to each Additional
Eligible Resorts listed on Schedule 1.1(eee), and all are true and correct, and
being complied with and performed with respect to each Resort, including
Additional Eligible Resorts listed on Schedule 1.1(eee). 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 Lender, and hereby confirms or reaffirm the prior granting to Lender of, a
continuing first priority Lien, mortgage and security interest in and to all of
the Collateral, 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 Lender in the properties and interests relating
to Additional Eligible Resorts, which now or hereafter serve as collateral
security for any Obligations. On the date of the Third Amendment and thereafter
upon satisfaction of the requirements for approval by Lender 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 the Lender'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 Lender may deem
necessary to further evidence and perfect the Lender's Lien on the Collateral.
51. ESTOPPEL. Borrower acknowledges, agrees and confirms that: (a) Advances
under the Loan Agreement have been made prior to the date of the Third
Amendment; (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 First Amendment
under the Loan Agreement 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 Third Amendment, and without giving effect to any Advances
that may be made pursuant to the Third 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 Third Amendment, a copy of which is attached as Exhibit E .
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 Third 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.
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52. EFFECTIVE DATE. This Third Amendment shall be effective commencing as of the
later of: (1) March 31, 1999, or (2) the satisfaction of the terms of the 1999
Commitment and Section 4 of the Agreement, as amended (which satisfaction shall
be evidenced by notice from Lender or Lender's counsel to the Borrower or the
Borrower's counsel, respectively).
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to be executed on their behalf as of the day and year first written above.
Witnessed By:
TEXTRON FINANCIAL CORPORATION
/s/ Ana Marie Castt Bray
- -----------------------------------
By /s/ JOHN T. DANNASALE
Norman H. Roos ---------------------------
- ----------------------------------- Name: John T. Dannasale
Its: AVP
SILVERLEAF RESORTS, INC.
/s/ SANDRA Cearley
- -----------------------------------
By /s/ ROBERT E. MEAD
/s/ PATRICIA PENNER ---------------------------
- ----------------------------------- Name: Robert E. Mead
Its: Chief Executive Officer
STATE OF CONNECTICUT)
) ss: East Hartford
COUNTY OF HARTFORD )
At East Hartford in said County and State on this 6th day of April,
1999, personally appeared John T. D'Haribale, duly authorized Asst. 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/ NORMAN H. ROOS
---------------------------------------
Notary Public in and for said State, Norman H. Roos
My Commission Expires: 10/31/99
STATE OF Texas)
) ss:
COUNTY OF Dallas )
At 1221 Riverbend in said County and State on this 2nd day of April,
1999, personally appeared Robert E. Mead, 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/ CANDY SPEAKMAN
-----------------------------------------
Notary Public in and for said State
My Commission Expires: 4-2-2002
[SEAL]
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