EXHIBIT
      10.1

     

    SECURITIES
      PURCHASE AGREEMENT

     

    THIS
      SECURITIES PURCHASE AGREEMENT
      (the
“Agreement”),
      is
      made and entered into as of May 24, 2006, by and among Silverleaf Resorts,
      Inc.,
      a Texas corporation (the “Company”),
      Robert E. Mead in his capacity as Trustee under the voting Trust Agreement
      dated
      as of November 1, 1999 (the “Selling Principal Officer”), the undersigned
      shareholders (together with the Selling Principal Officer, the “Selling
      Shareholders”)
      and
      the undersigned prospective investor (the “Investor”)
      who is
      purchasing shares of the Company’s Common Stock, par value $0.01 per share (the
“Common
      Stock”).
      For
      the purposes of this Agreement, the term “Sellers”
shall
      mean the Selling Shareholders and the term “Share”
or
      “Shares”
shall
      mean the Common Stock to be sold to Investors in the Offering (as defined
      below).

     

     

    ARTICLE
      I

     

    PURCHASE
      AND SALE OF SHARES; CLOSING

     

    1.1 Purchase
      and Sale of the Shares.
      

     

    (a) Subject
      to the terms and conditions of this Agreement, the Investor and the Sellers
      agree that the Investor will purchase from the Sellers the number of Shares
      indicated on Schedule
      A
      hereto
      (the “Subscription
      Amount”)
      at a
      purchase price of $3.50 per Share (the “Share
      Price”)
      for an
      aggregate purchase price indicated on Schedule
      A
      hereto
      (the “Aggregate
      Purchase Price”).
      Each
      of the Sellers and the Company reserves the right in its sole discretion to
      accept or reject the Subscription (as defined below) in whole or in part or
      to
      allot to the Investor less than the Subscription Amount. The actual Subscription
      Amount, if any, accepted by the Sellers and the Company is referred to in this
      Agreement as the “Actual
      Subscription Amount.”
      Subject to the terms and conditions of this Agreement, the Sellers shall sell
      to
      the Investor the number of Shares equal to the Actual Subscription
      Amount.

     

    (b) Within
      two (2) business days of the date of this Agreement, the Investor shall deliver
      the Aggregate Purchase Price by wire transfer to The Bank of New York, as escrow
      agent (the “Escrow
      Agent”),
      in
      accordance with the wire transfer instructions attached hereto as Exhibit
      A.
      

     

    1.2 Aggregate
      Number of Shares Offered.
      The
      Sellers have entered and intend to enter into this same form of Securities
      Purchase Agreement, with identical terms and conditions (the “Other
      Agreements”)
      with
      certain other investors (the “Other
      Investors”) and
      desire to offer and sell (the “Offering”)
      up to
      8,000,000 Shares (the “Offering
      Amount”).
      The
      Investor hereby acknowledges receipt of a copy of the Confidential Private
      Placement Memorandum of the Company dated May 3, 2006 (the “Memorandum”),
      relating to the Offering. The Investor is aware that the Sellers are not
      required to sell a minimum number of Shares in the Offering in order to enter
      into this Agreement.

     

    
      
        
        

      

      
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    1.3 Aggregate
      Purchase Price Escrow Account.
      All
      payments for Shares made by the Investor as contemplated by Section
      1.1
      above
      will be held by the Bank of New York, as escrow agent (the “Escrow
      Agent”),
      for
      the Investor’s benefit in an interest bearing escrow account. Such payment will
      be returned promptly, without interest or deduction, if the Investor’s
      Subscription is rejected or the Offering is terminated by the Sellers or the
      Company for any reason.

     

    1.4 Binding
      Effect of this Agreement.
      Each of
      the Investor, the Company and the Sellers acknowledge and agree that this
      Agreement shall not become binding upon any of the Investors, the Company or
      the
      Sellers until each of the Investor, the Company and the Sellers shall deliver
      an
      executed counterpart of this Agreement (the “Subscription”)
      to
      each of the other parties hereto or to Oppenheimer & Co. Inc. as the
      Company’s placement agent (the “Placement
      Agent”),
      at
      which time this Agreement shall become binding upon and enforceable against
      the
      Investor, the Company and each of the Sellers; provided
      that,
      in the
      event the Closing Date (as defined below) shall not have occurred on or prior
      to
      June 15, 2006 (the “Termination
      Date”)
      this
      Agreement may be terminated by the Investor and shall in such case be of no
      force and effect.
      Until
      the Termination Date, the Investor is not entitled to cancel, terminate or
      revoke this Agreement or any of the agreements of the Investor hereunder. The
      Sellers or the Company may terminate the Offering at any time prior to the
      Closing Date. The execution of this Agreement by the Investor or solicitation
      of
      the investment contemplated hereby shall create no obligation on the part of
      the
      Sellers or the Placement Agent to accept any Subscription, in part or in full,
      or complete the Offering.

     

    1.5 Delivery
      of Shares at Closing. 

     

    (a) The
      completion of the purchase and sale of the Shares (the “Closing”)
      shall
      occur, subject to the satisfaction or waiver of the conditions set forth in
      Sections
      1.6
      and
1.7
      (other
      than those intended to be satisfied at the Closing), on a date to be mutually
      agreed upon by the Company and the Sellers within five (5) business days from
      the date of execution hereof at the offices of Meadows Owens Collier Reed
      Cousins & Blau LLP, 3700 Bank of America Plaza, 901 Main Street, Dallas,
      Texas 75202, or such other time, date or place as agreed upon by such parties.
      The date upon which the Closing actually occurs is herein referred to as the
      “Closing
      Date.”
The
      date upon which this Agreement is executed by the Investor and accepted by
      the
      Sellers is herein referred to as the “Pricing
      Date.”

     

    (b) At
      the
      Closing, (i) the Sellers shall authorize the Company’s transfer agent to
      transfer, and the transfer agent shall transfer to the Investor one or more
      stock certificates registered in the name of the Investor, or in such name
      of
      nominee(s) designated by the Investor in writing, representing the number of
      Shares equal to the Actual Subscription Amount against payment of the Actual
      Purchase Price as set forth in Section
      1.1.
      The
“Actual
      Purchase Price”
shall
      mean an amount equal to the product of (A) the Actual Subscription Amount
      multiplied by (B) the Share Price.

     

    
      
        
        

      

      
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    1.6 Conditions
      to the Seller’s Obligation to Complete Purchase and Sale.
      Upon
      acceptance of the Subscription, the Sellers’ obligation to transfer and sell the
      Shares to the Investor at Closing is subject to the satisfaction, on or before
      the Closing Date, of each of the following conditions, provided
      that
      these
      conditions are for the Sellers’ sole benefit and may be waived by the Sellers at
      any time, in their sole discretion, by providing the Investor with prior written
      notice thereof: 

     

    (a) Payment
      of Purchase Price.
      The
      Investor shall have delivered to the Escrow Agent the Actual Purchase Price;
      and

     

    (b) Representations
      and Warranties; Covenants.
      The
      representations and warranties of the Investor set forth in Article
      IV
      hereof
      shall be true and correct as of the date hereof and as of the Closing Date
      as
      though made at that time (except for representations and warranties that speak
      as of a specific date, which shall be true and correct as of such date), and
      the
      Investor shall have performed, satisfied and complied with in all material
      respects the covenants, agreements and conditions required by this Agreement
      to
      be performed, satisfied or complied with by the Investor on or prior to the
      Closing Date. 

     

    1.7 Conditions
      to the Investor’s Obligation to Complete Purchase and Sale.
      The
      obligation of the Investor hereunder to purchase the Shares from the Sellers
      at
      the Closing is subject to the satisfaction, on or before the Closing Date,
      of
      each of the following conditions, provided
      that
      these
      conditions are for the Investor’s sole benefit and may be waived by the Investor
      at any time, in its sole discretion, by providing the Sellers with prior written
      notice thereof: 

     

    (a) Opinion
      of Counsel.
      Receipt
      by the
      Investor of
      an
      opinion letter, addressed to such Investor, of Meadows Owens Collier Reed
      Cousins & Blau LLP, counsel to the Company, dated as of the Closing Date, in
      substantially the form attached hereto as Exhibit
      B;

     

    (b) Representations
      and Warranties; Covenants.
      The
      representations and warranties of the Company set forth in Article
      II
      hereof
      and of each Selling Shareholder set forth in Article
      III
      hereof
      shall be true and correct in all material respects as of the date hereof and
      as
      of the Closing Date as though made at that time (except for representations
      and
      warranties that speak as of a specific date, which shall be true and correct
      in
      all material respects as of such date), and the Sellers shall have performed,
      satisfied and complied with in all material respects the covenants, agreements
      and conditions required by this Agreement to be performed, satisfied or complied
      with by the Sellers on or prior to the Closing Date;

     

    (c) Officer’s
      Certificate.
      The
      Company shall have delivered to the Investor a certificate, dated as of the
      Closing Date, duly executed on behalf of the Company by its President or Chief
      Financial Officer to the effect set forth in clause (b) above;

     

    (d) Secretary’s
      Certificate.
      The
      Company shall have delivered to the Investor a certificate, dated as of the
      Closing Date, duly executed by its Secretary or Assistant
      Secretary,

     

    
      
        
        

      

      
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    certifying
      that the attached copies of the Company’s articles of incorporation, by-laws and
      the resolutions of the Board of Directors of the Company approving this
      Agreement and the transactions contemplated hereby, are all true, complete
      and
      correct and remain unamended and in full force and effect; 

     

    (e) Transfer
      Agent Instructions.
      The
      Company shall have issued and delivered or caused to be delivered, instructions
      executed by the Company and addressed to the Company’s transfer agent (the
“Transfer
      Agent Instructions”)
      in the
      form of Exhibit
      C
      attached
      hereto, and the Company’s transfer agent shall not have objected in writing to
      such instructions or indicated in writing that it is unable as a matter of
      law
      or regulation to effect such instructions in accordance with the terms and
      conditions specified therein.

     

    (f) No
      Litigation.
      On the
      Closing Date, no legal action, suit or proceeding shall be pending or overtly
      threatened against the Company or the Sellers which seeks to restrain or
      prohibit the transactions contemplated by this Agreement;

     

    (g) No
      Suspension, Etc.
      Trading
      in the Common Stock shall not have been suspended by the American Stock Exchange
      (“AMEX”)
      or any
      other stock exchange or market on which the Common Stock is then listed or
      admitted for trading or quotation, as applicable, or the Securities and Exchange
      Commission (the “SEC”),
      except for any suspension of trading of limited duration agreed to by the
      Company, which suspension shall be terminated prior to the Closing, and, at
      any
      time prior to the Closing Date, trading in securities generally as reported
      by
      Bloomberg Financial Markets ("Bloomberg")
      shall
      not have been suspended or limited, or minimum prices shall not have been
      established on securities whose trades are reported by Bloomberg, or on AMEX
      or
      Nasdaq, nor shall a banking moratorium have been declared either by the United
      States or New York State authorities;

     

    (h) No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction which prohibits the consummation of any
      of
      the transactions contemplated by this Agreement; and

     

    (i) Material
      Adverse Effect.
      No
      material adverse effect on the business, assets, financial condition, prospects
      or results of operations of the Company and its Subsidiaries (as defined below)
      taken as a whole and no event that would prohibit or otherwise materially
      interfere with the ability of the Company to perform any of its obligations
      under this Agreement in any material respect shall have occurred at or before
      the Closing Date (any such effect or event being a “Material
      Adverse Effect”).

     

    ARTICLE
      II

     

    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY

     

    Except
      as
      set forth on the schedule of exceptions attached hereto as Schedule
      B
      (the
“Schedule
      of Exceptions”),
      the
      Company hereby represents and warrants to the Investor, as of the date hereof
      and as of the Closing Date, as follows:

     

    
      
        
        

      

      
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    2.1 Subsidiaries;
      Organization.
      The
      Company has no subsidiaries as defined by Rule 405 under the Securities Act
      of
      1933, as amended (the “Securities
      Act”)
      except
      as set forth on the Schedule of Exceptions (the “Subsidiaries”).
      Each
      of
      the Company and
      the
      Subsidiaries is duly organized and validly existing and is in good standing
      under the laws of the jurisdiction of its incorporation or organization.
      Each of the Company and
      the
      Subsidiaries has full corporate power and authority to own, operate and occupy
      its properties and to conduct its business as presently conducted and is
      registered or qualified to do business and in good standing in each jurisdiction
      in which it owns or leases property or transacts business and where the failure
      to be so registered or qualified would have a material adverse effect upon
      the
      business, assets, financial condition, prospects or results of operations of
      the
      Company
      and its
      Subsidiaries taken as a whole, and to the Company’s knowledge, no proceeding has
      been instituted in any such jurisdiction revoking, limiting or curtailing,
      or
      seeking to revoke, limit or curtail, such power and authority or registration
      or
      qualification.

     

    2.2 Due
      Authorization.
      The
      Company has all requisite corporate power and authority to execute, deliver
      and
      perform its obligations under this Agreement. This Agreement has been duly
      authorized and validly executed and delivered by the Company and, assuming
      due
      authorization, execution and delivery by the other parties hereto, constitutes
      a
      valid and legally binding obligation of the Company enforceable against the
      Company in accordance with its terms, except (i) to the extent rights to
      indemnity and contribution may be limited by state or federal securities laws
      or
      the public policy underlying such laws, (ii) enforceability may be limited
      by
      applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
      moratorium or similar laws affecting creditors’ and contracting parties’ rights
      generally and (iii) enforceability may be limited by general principles of
      equity (regardless of whether such enforceability is considered in a proceeding
      in equity or at law), including good faith and fair dealing.

     

    2.3 Non-Contravention.
      The
      execution and delivery of this Agreement, the sale of the Shares to be sold
      by
      the Sellers under this Agreement, the performance by the Company of its
      obligations under this Agreement and the consummation of the transactions
      contemplated hereby will not (A) conflict with or constitute a violation
      of, or default (with or without the giving of notice or the passage of time
      or
      both) under, (i) any material bond, debenture, note or other evidence of
      indebtedness, or under any material lease, indenture, mortgage, deed of trust,
      loan agreement, joint venture or other agreement or instrument to which the
      Company is a party or by which it or its properties are bound, (ii) the
      charter, bylaws or other organizational documents of the Company or any of
      its
      Subsidiaries, or (iii) any law, administrative regulation, ordinance or
      order of any court or governmental agency, arbitration panel or authority
      applicable to the Company, any of its Subsidiaries or their respective
      properties, or (B) result in the creation or imposition of any lien,
      encumbrance, claim, security interest or restriction whatsoever upon any of
      the
      material properties or assets of the Company or any of its Subsidiaries or
      an
      acceleration

     

    
      
        
        

      

      
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    of
      indebtedness pursuant to any obligation, agreement or condition contained in
      any
      material bond, debenture, note or any other evidence of indebtedness or any
      material indenture, mortgage, deed of trust or any other agreement or instrument
      to which the Company or any of its Subsidiaries is a party or by which the
      Company or any of its Subsidiaries is bound or to which any of the property
      or
      assets of the Company or any of its Subsidiaries is subject. No consent,
      approval, authorization or other order of, or registration, qualification or
      filing with, any regulatory body, administrative agency, self-regulatory
      organization, stock exchange or market, or other governmental body in the United
      States is required for the execution and delivery of this Agreement and the
      valid issuance and sale of the Shares to be sold pursuant to this Agreement,
      other than such as have been made or obtained, and except for any securities
      filings required to be made under federal or state securities laws.

     

    2.4 Reporting
      Status.
      Except
      as set forth on the Schedule of Exceptions, the Company has filed in a timely
      manner all documents that the Company was required to file under the Securities
      Exchange Act of 1934, as amended (the “Exchange
      Act”),
      during the 12-month period preceding the date of this Agreement. As of the
      date
      hereof, the Company is not aware of any event occurring on or prior to the
      Closing Date (other than the transactions contemplated by this Agreement or
      any
      agreement relating hereto) that requires the filing of a Form 8-K after the
      Closing. The following documents complied as to form in all material respects
      with the SEC’s requirements as of their respective filing dates, and the
      information contained therein as of the date thereof did not contain an untrue
      statement of a material fact or omit to state a material fact required to be
      stated therein or necessary to make the statements therein, in light of the
      circumstances under which they were made, not misleading, except to the extent
      that information contained in any such document has been revised or superseded
      by a later filed SEC Document (as defined below):

     

    (a) The
      Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
      2005 (the “Form
      10-K”);
      and

     

    (b) all
      other
      documents, including the exhibits thereto, filed by the Company with the SEC
      since March 17, 2006 pursuant to the reporting requirements of the Exchange
      Act
      (together with the Form 10-K, the “SEC
      Documents”).

     

    2.5 Capitalization.
      As of
      the date hereof, the authorized capital stock of the Company consists of
      110,000,000 shares of capital stock, of which 100,000,000 shares are designated
      Common Stock and 10,000,000 shares are designated Preferred Stock. As of April
      28, 2006, there were approximately 37,494,304 shares of Common Stock issued
      and
      outstanding, and no shares of Preferred Stock issued and outstanding. As of
      April 28, 2006, 3,142,216 shares of Common Stock were reserved for issuance
      upon
      exercise of outstanding stock options issued by the Company to certain former
      and current employees, consultants and directors of the Company. As of April
      28,
      2006, no shares of Common Stock were reserved for issuance upon exercise of
      warrants issued by the Company. All outstanding shares of Common Stock are
      duly
      authorized, validly issued, fully paid and nonassessable and were issued in
      compliance with federal and U.S. state securities laws. Other than as disclosed
      in the SEC Documents, and except

     

    
      
        
        

      

      
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    as
      set
      forth above, there are no outstanding rights, options, warrants, preemptive
      rights, rights of first refusal, agreements, commitments or similar rights
      for
      the purchase or acquisition from the Company, the Sellers, or any of its
      Subsidiaries of any securities of the Company or any of its Subsidiaries. The
      Shares to be sold pursuant to this Agreement are and will be validly issued,
      fully paid and nonassessable and free and clear of all pledges, liens and
      encumbrances. No preemptive right, co-sale right, right of first refusal or
      other similar right exists with respect to the Shares or the transfer and sale
      thereof. No further approval or authorization of any shareholder (other than
      the
      Selling Shareholders) or the Board of Directors of the Company is required
      for
      the sale of the Shares. Except as set forth in the SEC Documents, no holder
      of
      any of the securities of the Company has any rights (“demand,” “piggyback” or
      otherwise) to have such securities registered by reason of the intention to
      file, filing or effectiveness of a Registration Statement (as defined in
Section
      6.1
      hereof).

     

    2.6 Legal
      Proceedings.
      Except
      as disclosed in the SEC Documents, there is no action, suit or proceeding before
      any court, governmental agency or body, domestic or foreign, now pending or,
      to
      the knowledge of the Company or any of its Subsidiaries, overtly threatened
      against the Company or its Subsidiaries wherein an unfavorable decision, ruling
      or finding would reasonably be expected to adversely affect the validity or
      enforceability of, or the authority or ability of the Company to perform its
      obligations under this Agreement.

     

    2.7 No
      Violations.
      Neither
      the Company nor any of its Subsidiaries: (i) is in violation of its charter,
      bylaws, or other organizational document, or in violation of any law,
      administrative regulation, ordinance or order of any court or governmental
      agency, arbitration panel or authority applicable to the Company or any of
      its
      Subsidiaries, which violation, individually or in the aggregate, would be
      reasonably likely to have a Material Adverse Effect, (ii) is in default (and
      there exists no condition which, with or without the passage of time or giving
      of notice or both, would constitute a default) in any material respect in the
      performance of any bond, debenture, note or any other evidence of indebtedness
      in any indenture, mortgage, deed of trust or any other material agreement or
      instrument to which the Company or any of its Subsidiaries is a party or by
      which the Company or any of its Subsidiaries is bound or by which the properties
      of the Company are bound, which would be reasonably likely to have a Material
      Adverse Effect or would prohibit or otherwise materially interfere with the
      ability of the Company to perform any of its obligations under this Agreement
      in
      any material respect.

     

    2.8 Governmental
      Permits, Etc.
      The
      Company and its Subsidiaries possess all necessary franchises, licenses,
      certificates and other authorizations from any foreign, federal, state or local
      government or governmental agency, department or body that are currently
      necessary for the operation of their respective businesses as currently
      conducted, except where such failure to possess could not reasonably be expected
      to have a Material Adverse Effect or would not prohibit or otherwise materially
      interfere with the ability of the Company to perform any of its obligations
      under this Agreement in any material respect.

     

    2.9 Intellectual
      Property.
      The
      Company and its Subsidiaries, to the Company’s knowledge, own or possess
      sufficient rights to use all patents, patent rights, trademarks,

     

    
      
        
        

      

      
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    copyrights,
      licenses, inventions, trade secrets, trade names and know-how that are necessary
      for the conduct of their respective businesses as now conducted except where
      the
      failure to own or possess would not have a Material Adverse Effect (the
“Company
      Intellectual Property”).
      Except as set forth in the SEC Documents, (i) neither the Company nor any of
      its
      Subsidiaries has received any written notice of, or has any knowledge of, any
      infringement by the Company of intellectual property rights of any third party
      that, individually or in the aggregate, would have a Material Adverse Effect
      and
      (ii) neither the Company nor any of its Subsidiaries has received any
      written notice of any infringement by a third party of any Company Intellectual
      Property that, individually or in the aggregate, would have a Material Adverse
      Effect.

     

    2.10 Financial
      Statements.
      The
      consolidated financial statements of the Company and its Subsidiaries and the
      related notes thereto included in the SEC Documents, as the same may be amended,
      present fairly, in all material respects, the financial position of the Company
      as of the dates indicated and the results of its operations and cash flows
      for
      the periods therein specified. Except as set forth in the SEC Documents, such
      financial statements (including the related notes) have been prepared in
      accordance with United States generally accepted accounting principles applied
      on a consistent basis throughout the periods therein specified.

     

    2.11 No
      Material Adverse Change.
      Except
      as publicly disclosed in the SEC Documents, press releases or in other “public
      disclosures” as such term is defined in Section 101(e) of Regulation FD of the
      Exchange Act, since December 31, 2005, there has not been (i) any material
      adverse change in the business, assets, financial condition, prospects or
      results of operations of the Company, (ii) any obligation, direct or
      contingent, that is material to the Company, incurred by the Company, except
      obligations incurred in the ordinary course of business, (iii) any dividend
      or distribution of any kind declared, paid or made on the capital stock of
      the
      Company, or (iv) any loss or damage (whether or not insured) to the
      physical property of the Company which has been sustained which has had a
      Material Adverse Effect.

     

    2.12 Disclosure
      Controls and Procedures; Internal Controls.
      At all
      times since first required by all applicable Exchange Act rules, the Company
      has
      established disclosure controls and procedures (as defined in Exchange Act
      Rules
      13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls
      and procedures to ensure that material information relating to the Company,
      including its Subsidiaries, is made known to the certifying officers by others
      within those entities, particularly during the period in which the Form 10-K
      is
      being prepared. The Company’s certifying officers have evaluated the
      effectiveness of the Company’s disclosure controls and procedures as of the end
      of the period covered by each Form 10-K for which such evaluation was required
      by applicable Exchange Act rules, as the case may be (each such date, the
“Evaluation
      Date”).
      The
      Company presented in each such Form 10-K the conclusions of the certifying
      officers about the effectiveness of the disclosure controls and procedures
      based
      on their evaluations as of the Evaluation Date. Since the most recent Evaluation
      Date, there have been no significant changes in the Company’s disclosure
      controls and procedures (as such terms are used in Item 307 of Regulation S-K
      under the Exchange Act) or, to the Company’s

     

    
      
        
        

      

      
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    knowledge,
      in other factors that could significantly affect the Company’s internal controls
      over financial reporting (as such term is used in Item 308 of Regulation S-K
      under the Exchange Act). 

     

    2.13 Accountants.
      To the
      Company’s knowledge, BDO Seidman, LLP, who the Company expects will consent to
      the incorporation by reference of its report with respect to the consolidated
      financial statements of the Company to be included in the Company's Annual
      Report on Form 10-K for the year ended December 31, 2005 into the Registration
      Statement (as defined below) and the prospectus which forms a part thereof,
      is
      an independent registered public accounting firm with respect to the Company
      within the meaning of Rule 101 of the Code of Professional Conduct of the
      American Institute of Certified Public Accountants and its interpretations
      and
      rulings thereunder.

     

    2.14 Listing.
      The
      Company’s Common Stock is registered pursuant to Section 12(b) of the
      Exchange Act and is listed on AMEX, and the Company has taken no action designed
      to, or likely to have the effect of, terminating the registration of the Common
      Stock under the Exchange Act or the de-listing of the Common Stock from AMEX,
      nor to the Company’s knowledge is AMEX currently contemplating terminating such
      listing. The Company has not received notice (written or oral) from AMEX to
      the
      effect that the Company is not in compliance with the listing or maintenance
      requirements of AMEX.

     

    2.15 No
      Manipulation of Stock.
      Neither
      the Company nor, to the Company’s knowledge, any of its affiliates has taken or
      will take directly or indirectly, any action in violation of applicable law
      or
      any action designed to or that might reasonably be expected to cause or result
      in stabilization or manipulation of the price of the Common Stock to facilitate
      the sale or resale of the Shares.

     

    2.16 Insurance.
      The
      Company and each of its Subsidiaries maintain and will continue to maintain
      insurance against loss or damage by fire or other casualty and such other
      insurance, including, but not limited to, product liability insurance, in such
      amounts and covering such risks as is reasonably adequate consistent with
      industry practice for the conduct of their respective businesses and the value
      of their respective properties.

     

    2.17 Tax
      Matters.
      The
      Company and each of its Subsidiaries have timely filed all material federal,
      state, local and foreign income and franchise and other tax returns required
      to
      be filed by any jurisdiction to which it is subject and has paid all taxes
      due
      in accordance therewith, and no tax deficiency has been determined adversely
      to
      the Company or any of its Subsidiaries which has had (nor does the Company
      have
      any knowledge of any tax deficiency which, if determined adversely to the
      Company or any of its Subsidiaries, would reasonably be expected to have) a
      Material Adverse Effect and the Company has set aside on its books provision
      reasonably adequate for the payment of all taxes for periods subsequent to
      the
      periods to which such returns, reports or declarations apply. There are no
      unpaid taxes in any material amount claimed to be due by the taxing authority
      of
      any jurisdiction, and the officers of the Company know of no basis for such
      claim. The Company has not waived or extended any statute

     

    
      
        
        

      

      
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    of
      limitations at the request of any taxing authority. Except for a tax sharing
      agreement between the Company and its wholly owned non-consolidated subsidiary,
      Silverleaf Finance III, LLC, there are no outstanding tax sharing agreements
      or
      other such arrangements between the Company and any other corporation or entity,
      and the Company is not presently undergoing any audit by a taxing
      authority.

     

    2.18 Environmental
      Matters.
      To the
      Company’s knowledge, the Company (i) is not in violation of any statute, rule,
      regulation, decision or order of any governmental agency or body or any court,
      domestic or foreign, relating to the use, disposal or release of hazardous
      or
      toxic substances or relating to the protection or restoration of the environment
      or human exposure to hazardous or toxic substances (collectively, “Environmental
      Laws”),
      (ii)
      does not own or operate any real property contaminated with any substance in
      violation of any Environmental Laws, (iii) is not liable for any off-site
      disposal or contamination pursuant to any Environmental Laws, and (iv) is not
      subject to any claim relating to any Environmental Laws; which violation,
      contamination, liability or claim has had or could reasonably be expected to
      have a Material Adverse Effect, individually or in the aggregate; and there
      is
      no pending or, to the Company’s Knowledge, threatened investigation that might
      lead to such a claim.

     

    2.19 Employment
      Matters.
      To the
      Company’s Knowledge, the Company is in compliance with all federal, state, local
      and foreign laws and regulations respecting labor, employment and employment
      practices and benefits, terms and conditions of employment and wages and hours,
      except where the failure to be in compliance would not, either individually
      or
      in the aggregate, reasonably be expected to result in a Material Adverse Effect.
      The Company is not a party to any collective bargaining agreement. The Company
      believes that its overall relations with its employees are satisfactory. No
      executive officer of the Company has notified the Company that such officer
      intends to leave the Company or otherwise terminate such officer’s employment
      with the Company.

     

    2.20 Title
      to Assets.
      The
      Company has good and marketable title in all personal property owned by them
      that is material to the business of the Company, in each case free and clear
      of
      all liens, except that would not, individually or in the aggregate, have or
      result in a Material Adverse Effect. Any real property and facilities held
      under
      lease by the Company is held by it under valid, subsisting and enforceable
      leases of which the Company is in material compliance except as would not have
      a
      Material Adverse Effect.

     

    2.21 Contracts.
      Neither
      the Company nor, to the Company's knowledge, any other party to any contract
      material to the Company is in breach of or default under any of such contracts
      which would have a Material Adverse Effect.

     

    2.22 Investment
      Company.
      The
      Company is not an “investment company” within the meaning of such term under the
      Investment Company Act of 1940 and the rules and regulations of the SEC
      thereunder.

     

    
      
        
        

      

      
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    2.23 No
      Registration.
      Assuming the accuracy of the representations and warranties made by, and
      compliance with the covenants of, the Investors in Article
      IV
      hereof,
      no registration of the Shares under the Securities Act is required in connection
      with the offer and sale of the Shares by the Sellers to the Investors as
      contemplated by this Agreement.

     

    2.24 No
      Integrated Offering; No General Solicitation.
      Neither
      the Company nor any of its affiliates, nor any person acting on its behalf
      or
      their behalf, directly or indirectly has (i) sold, offered for sale, solicited
      offers to buy or otherwise negotiated in respect of, any security (as defined
      in
      the Securities Act) which is or will be integrated with the sale of the
      Securities in a manner that would require the registration under the Securities
      Act of the sale of the Shares pursuant to this Agreement and the other
      Agreements; or (ii) offered, solicited offers to buy or sold the Shares by
      any
      form of general solicitation or general advertising (as those terms are used
      in
      Regulation D under the Securities Act) or in any manner involving a public
      offering within the meaning of Section 4(2) of the Securities Act. The Company
      does not have any registration statement pending before the SEC or currently
      under the SEC’s review.

     

    2.25 Compliance
      with Law.
      The
      business of the Company and the Subsidiaries has been and is presently being
      conducted in accordance with all applicable federal, state and local
      governmental laws, rules, regulations and ordinances, except as set forth in
      the
      SEC Documents or such that, individually or in the aggregate, the noncompliance
      therewith would not reasonably be expected to have a Material Adverse Effect
      or
      would prohibit or otherwise materially interfere with the ability of the Company
      to perform any of its obligations under this Agreement in any material respect.
      The Company and its Subsidiaries have all franchises, permits, licenses,
      consents and other governmental or regulatory authorizations and approvals
      necessary for the conduct of its business as now being conducted by it unless
      the failure to possess such franchises, permits, licenses, consents and other
      governmental or regulatory authorizations and approvals, individually or in
      the
      aggregate, would not reasonably be expected to have a Material Adverse Effect
      or
      would prohibit or otherwise materially interfere with the ability of the Company
      to perform any of its obligations under this Agreement in any material
      respect.

     

    2.26 Exchange
      Act and Sarbanes-Oxley Act.
      The
      Company is in compliance with the applicable provisions of the Exchange Act
      and
      the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley
      Act"),
      and
      the rules and regulations promulgated thereunder, that are currently effective
      and intends to comply with other applicable provisions of the Sarbanes-Oxley
      Act, and the rules and regulations promulgated thereunder, immediately upon
      the
      effectiveness of such provisions.

     

    2.27 Accounting
      Controls.
      The
      Company maintains a system of internal accounting controls sufficient to provide
      reasonable assurance that (i) transactions are executed in accordance with
      management's general or specific authorizations, (ii) transactions are recorded
      as necessary to permit preparation of financial statements in conformity with
      generally accepted accounting principles and to maintain asset accountability,
      (iii) access to assets is permitted only in accordance with management's general
      or specific authorization, and (iv) the recorded accountability for assets
      is
      compared with the existing assets at reasonable intervals and appropriate action
      is taken with respect to any differences.

     

    
      
        
        

      

      
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    2.28 Transactions
      With Affiliates.
      Except
      as disclosed in the SEC Documents, none of the officers or directors of the
      Company is presently a party to any transaction with the Company or any
      Subsidiary (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 officer
      or
      director or, to the knowledge of the Company, any entity in which any officer
      or
      director has a substantial interest or is an officer, director, trustee or
      partner.

     

    2.29 No
      Broker.
      The
      Company has not incurred any liability for any finder's or broker's fee, or
      agent's commission in connection with the execution and delivery of this
      Agreement or the consummation of the transactions contemplated
      hereby.

     

    2.30 Forward-Looking
      Statements.
      The
      information contained in the SEC Documents regarding the Company’s expectations,
      plans and intentions, and any other information that constitutes
“forward-looking” information within the meaning of the Securities Act and the
      Exchange Act were made by the Company on a reasonable basis and reflected the
      Company’s good faith belief and/or estimate of the matters described therein, in
      each case as of the date of the SEC Document containing such
      information.

     

    2.31 Non-Public
      Information.
      The
      Company confirms that neither it nor any person acting on its behalf has
      provided Investor with any information that the Company believes constitutes
      material non-public information, except with respect to the existence, terms
      and
      conditions of this offering or as otherwise is disclosed in the Current Report
      on Form 8-K to be filed by the Company, and the exhibits thereto, in conjunction
      with the press release referred to in Section
      5.2
      hereto.

     

    2.32 Application
      of Takeover Protections.
      Except
      as described in the SEC Documents, there is no control share acquisition,
      business combination, poison pill (including any distribution under a rights
      agreement) or other similar anti-takeover provision under the Company’s charter
      documents or the laws of its state of incorporation that is or could reasonably
      be expected to become applicable to any of the Investors as a result of the
      Investors and the Company fulfilling their obligations or exercising their
      rights under this Agreement or any other agreement relating hereto, including
      without limitation the Selling Shareholders’ transfer of the Shares and the
      Investors’ ownership of the Shares.

     

    2.33 Disclosure.
      None of
      the representations and warranties of the Company appearing in this Agreement
      or
      information provided in the Memorandum and any supplement thereto and neither
      this Agreement or the Schedule of Exceptions hereto nor any other documents,
      certificates or instruments furnished to the Investor by or on behalf of the
      Company in connection with the transactions contemplated by this Agreement,
      when
      considered together as a whole, contains, or on the Closing Date will contain,
      any untrue statement of a material fact or omits, or on the Closing Date will
      omit, to state any material fact required to be stated herein in order for
      the
      statements herein, in light of the circumstances under which they were made,
      not
      to be misleading. 

     

    
      
        
        

      

      
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    2.34 Lock-Up
      Agreements.
      All
      executive officers and directors of the Company listed in the Schedule of
      Exceptions have executed lock-up agreements and delivered them to the Placement
      Agent in which, without prior approval of the Placement Agent, they have agreed
      to not sell shares of Common Stock held by them (including shares which may
      be
      issued to them pursuant to the exercise of outstanding options or warrants)
      beginning on the date hereof and ending upon the later of 90 days after the
      effective date of the Registration Statement and 120 days after the Closing
      Date. 

     

    ARTICLE
      III

     

    REPRESENTATIONS,
      WARRANTIES AND COVENANTS OF THE SELLING SHAREHOLDERS

     

    Each
      Selling Shareholder severally and not jointly represents and warrants to the
      Investor, as of the date hereof and as of the Closing Date, as
      follows:

     

    3.1 Due
      Authorization.
      This
      Agreement has been validly executed and delivered by the Selling Shareholder
      and, assuming due authorization, execution and delivery by the other parties
      hereto, constitutes a valid and legally binding obligation of the Selling
      Shareholder enforceable against the Selling Shareholder in accordance with
      its
      terms, except (i) to the extent rights to indemnity and contribution may be
      limited by state or federal securities laws or the public policy underlying
      such
      laws, (ii) enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, fraudulent conveyance, moratorium or similar laws affecting
      creditors’ and contracting parties’ rights generally and (iii) enforceability
      may be limited by general principles of equity (regardless of whether such
      enforceability is considered in a proceeding in equity or at law), including
      principles of good faith and fair dealing.

     

    3.2 Non-Contravention.
      The
      execution and delivery of this Agreement, the transfer and sale of the Shares
      to
      be sold by the Selling Shareholder under this Agreement, the performance by
      the
      Selling Shareholder of its obligations under this Agreement and the consummation
      of the transactions contemplated hereby will not conflict with or constitute
      a
      violation of, or default (with or without the giving of notice or the passage
      of
      time or both) under, (i) any material bond, debenture, note or other
      evidence of indebtedness, or under any material lease, indenture, mortgage,
      deed
      of trust, loan agreement, joint venture or other agreement or instrument to
      which the Selling Shareholder is a party or by which it or its properties are
      bound, (ii) any law, administrative regulation, ordinance or order of any
      court or governmental agency, arbitration panel or authority applicable to
      the
      Selling Shareholder or Selling Shareholder’s properties. No consent, approval,
      authorization or other order of, or registration, qualification or filing with,
      any regulatory body, administrative agency, self-regulatory organization, stock
      exchange or market, or other governmental body in the United States is required
      for the execution and delivery of this Agreement and the valid sale of the
      Shares to be sold pursuant to this Agreement by the Selling Shareholder, other
      than such as have been made or obtained, and except for any securities filings
      required to be made under federal or state securities laws.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    3.3 Title.
      The
      Selling Shareholder holds good and marketable title to all of the Shares to
      be
      sold by the Selling Shareholder under this Agreement, free and clear of any
      liens, encumbrances, claims, security interests or other restrictions. The
      Selling Shareholder possesses full authority and legal right to sell, transfer
      and assign to the Investor the Shares sold by the Selling Shareholder under
      this
      Agreement. At the time of transfer to Investor by the Selling Shareholder of
      such Shares, the Investor will own such shares of Common Stock free and clear
      of
      any liens, encumbrances, claims, security interests or other restrictions.
      There
      are no claims pending or, to the Selling Shareholder’s knowledge, threatened
      against the Company or the Selling Shareholder that concern or affect title
      to
      any of the shares of Common Stock to be sold by the Selling Shareholder under
      this Agreement, or that seek to compel the transfer or issuance of such
      Shares.

     

    3.4 Legal
      Proceedings.
      There
      is no action, suit or proceeding before any court, governmental agency or body,
      domestic or foreign, now pending or, to the knowledge of the Selling
      Shareholder, overtly threatened against the Selling Shareholder wherein an
      unfavorable decision, ruling or finding would reasonably be expected to
      adversely affect the validity or enforceability of, or the authority or ability
      of the Selling Shareholder to perform its obligations under this
      Agreement

     

    3.5 No
      Broker.
      Other
      than the fee to be paid by the Selling Shareholders to the Placement Agent,
      the
      Selling Shareholder has not incurred any liability for any finder's or broker's
      fee, or agent's commission in connection with the execution and delivery of
      this
      Agreement or the consummation of the transactions contemplated
      hereby.

     

    3.6 Negative
      Assurance.
      Although each Selling Shareholder (other than the Selling Principal Officer)
      has
      not independently verified the accuracy, completeness or fairness of the
      statements contained in or incorporated by reference in, the Memorandum or
      Article
      II
      of this
      Agreement and has not participated in conferences and telephone conversations
      with representatives of the Company in which the foregoing document and related
      matters were discussed, no facts have come to the attention of such Selling
      Shareholder (other than the Selling Principal Officer) which leads it to believe
      that the foregoing documents contained an untrue statement of a material fact
      or
      omitted to state a material fact necessary to make the statements therein,
      in
      light of the circumstances under which they were made, not misleading. No facts
      have come to the attention of the Selling Principal Officer (including in his
      capacity as Chief Executive Officer of the Company) which lead him to believe
      that either the Memorandum, the SEC Documents, or the representations in Article
      II of this Agreement contain an untrue statement of material fact or omitted
      to
      state a material fact.

     

    3.7 Placement
      Agent.
      Each
      Selling Shareholder shall be responsible for the payment of the Placement
      Agent’s fees, in proportion to the Common Stock such Selling Shareholder
      proposes to sell under this Agreement, relating to or arising out of the
      transactions contemplated by the Agreements. 

     

    
      
        
        

      

      
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    3.8 Lock-Up
      Agreement.
      The
      Selling Shareholder has executed a lock-up agreement and delivered it to the
      Placement Agent in which, without prior approval of the Placement Agent, it
      has
      agreed to not sell shares of Common Stock held by it (including shares which
      may
      be issued to it pursuant to the exercise of outstanding options or warrants)
      (the “Lock-Up
      Agreement”)
      beginning on the date hereof and ending upon the later of 90 days after the
      effective date of the Registration Statement and 120 days after the Closing
      Date
      of the Offering (the “Lock-Up
      Period”),
      (provided, however, that if such Selling Shareholder or affiliate thereof is
      not
      an officer or director of the Company, the Lock-Up Period will in no event
      exceed 120 days after the Closing Date of the Offering). During the Lock-Up
      Period, the Selling Shareholder shall cause each of its permitted transferees,
      if any, to execute a lock-up agreement, substantially in the same form and
      containing the same terms as in the Lock-Up Agreement, and deliver it to the
      Placement Agent.

     

    3.9 Transfer
      Taxes.
      On the
      Closing Date, all stock transfer or other taxes (other than income taxes) which
      are required to be paid in connection with the sale and transfer of the Shares
      will be, or will have been, fully paid or provided for by each Selling
      Shareholder, in proportion to the Common Stock such Selling Shareholder proposes
      to sell under this Agreement, and all laws imposing such taxes will be or will
      have been fully complied with. 

     

    ARTICLE
      IV

     

    REPRESENTATIONS,
      WARRANTIES AND COVENANTS OF THE INVESTOR

     

    The
      Investor represents, warrants and covenants to the Sellers and the Company,
      as
      of the date hereof and as of the Closing Date, as follows:

     

    4.1 Securities
      Law Representations and Warranties.
      

     

    (a) The
      Investor is an “accredited investor” as defined in Regulation D under the
      Securities Act and the Investor has the knowledge, sophistication and experience
      necessary to make, and is qualified to make decisions with respect to,
      investments in shares presenting an investment decision like that involved
      in
      the purchase of the Shares, including investments in securities issued by the
      Company and investments in comparable companies, can bear the economic risk
      of a
      total loss of its investment in the Shares and has requested, received, reviewed
      and considered all information it deemed relevant in making an informed decision
      to purchase the Shares. Such Investor is not required to be registered as a
      broker-dealer under Section 15 of the Exchange Act and such Investor is not
      a
      broker-dealer; 

     

    (b) The
      Investor is acquiring the Securities for its own account for investment only
      and
      not with a view towards, or for resale in connection with, the public sale
      or
      distribution thereof in violation of the Securities Act;

     

    (c) The
      Investor was not organized for the specific purpose of acquiring the
      Securities;

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (d) The
      Investor will not, directly or indirectly, offer, sell, pledge, transfer or
      otherwise dispose of (or solicit any offers to buy, purchase or otherwise
      acquire or take a pledge of) any of the Shares except in compliance with the
      Securities Act, applicable state securities laws and the respective rules and
      regulations promulgated thereunder;

     

    (e) The
      Investor understands that the Shares are being offered and sold to it in
      reliance on specific exemptions from the registration requirements of the United
      States federal and state securities laws and that the Sellers are relying upon
      the truth and accuracy of, and the Investor’s compliance with, representations,
      warranties, agreements, acknowledgements and understandings of the Investor
      set
      forth herein in order to determine the availability of such exemptions and
      the
      eligibility of the Investor to acquire the Shares;

     

    (f) The
      Investor understands that no United States federal or state agency or any other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Shares or the fairness or suitability of an investment in
      the
      Shares nor have such authorities passed upon or endorsed the merits of the
      offering of the Shares; and

     

    (g) The
      Investor acknowledges that the Sellers have represented that no action has
      been
      or will be taken in any jurisdiction outside the United States by the Sellers
      that would permit an offering of the Shares, or possession or distribution
      of
      offering materials in connection with the issue of the Shares, in any
      jurisdiction outside the United States where action for that purpose is
      required. If the Investor is located or domiciled outside the United States
      it
      agrees to comply with all applicable laws and regulations in each foreign
      jurisdiction in which it purchases, offers, sells or delivers Shares or has
      in
      its possession or distributes any offering material, in all cases at its own
      expense.

     

    4.2 Legends.
      

     

    (a) It
      is
      understood that certificates evidencing the Securities shall bear the following
      legend:

     

    “THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
      AND
      EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
      AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD UNLESS (I) SUCH SECURITIES HAVE
      BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED,
      OR
      (II) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
      REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH TRANSFER MAY LAWFULLY BE
      MADE
      WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
      QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.” 

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     


    (b) If
      required by the authorities of any state in connection with the issuance or
      sale
      of the Securities, the legend required by such state
      authority.

     

    4.3 Restricted
      Securities.
      The
      Investor understands that the Shares are characterized as “restricted
      securities” under the U.S. federal securities laws inasmuch as they are being
      acquired from an affiliate of the Company in a transaction not involving a
      public offering and that under such laws and applicable regulations such
      Securities may not be resold unless the Shares are registered pursuant to the
      Securities Act, or an exemption from registration is available therefrom. In
      connection with any transfer of the Securities, other than pursuant to an
      effective registration statement or pursuant to Rule 144(k), the Company may
      require the transferor thereof to provide to the Company an opinion of counsel
      selected by the transferor, the form and substance of which opinion shall be
      reasonably satisfactory to the Company, to the effect that such transfer does
      not require registration of such transferred Shares under the Securities
      Act.

     

    4.4 Authorization;
      Enforcement; Validity.
      The
      Investor has full right, power, authority and capacity to enter into this
      Agreement and to consummate the transactions contemplated hereby and has taken
      all necessary action to authorize the execution, delivery and performance of
      this Agreement.  This Agreement constitutes a valid and binding obligation
      of the Investor enforceable against the Investor in accordance with its terms,
      except (i) to the extent rights to indemnity and contribution may be limited
      by
      state or federal securities laws or the public policy underlying such laws,
      (ii)
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, fraudulent conveyance, moratorium or similar laws affecting
      creditors’ and contracting parties’ rights generally and (iii) enforceability
      may be limited by general principles of equity (regardless of whether such
      enforceability is considered in a proceeding in equity or at law).

     

    4.5 Certain
      Trading Limitations.
      The
      Investor (i) represents that on and from the date the Investor first became
      aware of the Offering until the date hereof he, she or it has not and (ii)
      covenants that for the period commencing on the date hereof and ending on the
      earlier of (x) the day the Company publicly announces the Offering or (y) the
      Termination Date, he, she or it will not, engage in any hedging or other
      transaction which is designed to or could reasonably be expected to lead to
      or
      result in, or be characterized as, a sale, an offer to sell, a solicitation
      of
      offers to buy, disposition of, loan, pledge or grant of any right with respect
      to (collectively, a “Disposition”)
      Common
      Stock of the Company by the Investor or any other person or entity in violation
      of the Securities Act. Such prohibited hedging or other transactions would
      include without limitation effecting any short sale or having in effect any
      short position (whether or not such sale or position is against the box and
      regardless of when such position was entered into) or any purchase, sale or
      grant of any right (including without limitation any put or call option) with
      respect to the Common Stock of the Company or with respect to any security
      (other than a broad-based market basket or index) that includes, relates to
      or
      derives any significant part of its value from the Common Stock of the
      Company.

     

    4.6 No
      Sale of Shares.
      The
      Investor hereby covenants with the Sellers and the Company not to make any
      sale
      of the Shares without (i) complying with the provisions of this
      Agreement,

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    


    including
      Section
      6.3
      hereof
      or (ii) without satisfying the requirements of the Securities Act and the rules
      and regulations promulgated thereunder, including, without limitation, causing
      the prospectus delivery requirement under the Securities Act to be satisfied,
      if
      applicable. The Investor acknowledges that there may occasionally be times
      when
      the Company, based on the advice of its counsel, determines that, subject to
      the
      limitations of Section
      6.3,
      it must
      suspend the use of the prospectus forming a part of the Registration Statement
      until such time as an amendment to the Registration Statement has been filed
      by
      the Company and declared effective by the SEC or until the Company has amended
      or supplemented such prospectus.

     

    4.7 Registration
      Statement Questionnaire.
      The
      Investor has completed or caused to be completed the Registration Statement
      Questionnaire attached hereto as Exhibit
      D and
      on
      the signature page for use in preparation of the Registration Statement and
      the
      answers to such Questionnaire and on such signature page are true and correct
      in
      all material respects as of the date of this Agreement and will be true and
      correct as of the effective date of the Registration Statement; provided
      that
      the
      Investor shall be entitled to update such information by providing written
      notice thereof to the Company prior to the effective date of the Registration
      Statement.

     

    4.8 Investor
      Suitability Questionnaire.
      The
      information contained in the Investor Suitability Questionnaire in the form
      attached as Exhibit
      E
      delivered by the Investor in connection with this Agreement is complete and
      accurate in all respects.

     

    4.9 No
      Advice.
      The
      Investor understands that nothing in this Agreement or any other materials
      presented to the Investor in connection with the purchase and sale of the Shares
      constitutes legal, tax or investment advice. The Investor has consulted such
      legal, tax and investment advisors as it, in its sole discretion, has deemed
      necessary or appropriate in connection with its purchase of the
      Shares.

     

    4.10 Independent
      Investment.
      Except
      for Pequot Scout Fund, L.P. (Paul Farrell), Pequot Mariner Master Fund, L.P.,
      Pequot Navigator Offshore Fund, Inc., Pequot Diversified Master Fund, Ltd and
      Premium Series PCC Limited - Cell 33, no Investor has agreed to act with any
      other Investor for the purpose of acquiring, holding, voting or disposing of
      the
      Securities purchased hereunder for purposes of Section 13(d) under the Exchange
      Act, and each Investor is acting independently with respect to its investment
      in
      the Securities. 

     

    4.11 Disclosure
      of Information.
      The
      Investor’s decision to tender this offer and purchase the Shares has not been
      made as a result of any verbal or written representation as to factual or other
      matters made by or on behalf of the Company or any other Person (except for
      the
      representations and warranties set forth in Articles II and III hereof) and
      is
      based entirely upon this Agreement, the representations, warranties, covenants
      and agreements contained herein and currently available public information
      concerning the Company. The Investor has had a opportunity to receive and review
      all additional information related to the Company requested by it and to ask
      questions of and receive answers from the Company regarding the Company and
      its
      business, to the extent such information is not material nonpublic information,
      and the terms and conditions of the offering of the Shares. The Investor
      acknowledges that it has been provided

     

    
      
        
        

      

      
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    with
      copies of and has had a meaningful opportunity to review the SEC Filings. The
      Investor acknowledges that it has been afforded the opportunity to obtain such
      additional information, other than material nonpublic information, that the
      Company possesses or can acquire without unreasonable effort or expense that
      is
      necessary to make an informed investment decision with respect to the
      investment.

     

    4.12 No
      General Solicitation.
      In
      connection with the Offering, the Investor did not learn of the investment
      in
      the Securities through, and is not aware of any “general advertising” or
“general solicitation” as those terms are contemplated in Regulation D, as
      amended, under the Securities Act.

     

    4.13 Brokers
      and Finders.
      Other
      than the fee to be paid by the Selling Shareholders to the Placement Agent,
      no
      person will have, as a result of the transactions contemplated by this
      Agreement, any valid right, interest or claim against or upon the Company,
      the
      Sellers or any Investor for any commission, fee or other compensation pursuant
      to any agreement, arrangement or understanding entered into by or on behalf
      of
      the Investor.

     

    4.14 Limited
      Ownership.
      The
      Investor does not presently intend to, alone or together with others, make
      a
      public filing with the SEC to disclose that it has (or that it together with
      such other Person(s) have) acquired, or obtained the right to acquire, as a
      result of the Closing (when added to any other securities of the Company that
      it
      or they then own or have the right to acquire), in excess of 19.999% of the
      outstanding Common Stock or the voting power of the Company on a post
      transaction basis that assumes that the Closing at issue shall have
      occurred.

     

    ARTICLE
      V 

     

    COVENANTS
      OF THE COMPANY

     

    5.1 
      Reserved.

     

    5.2 Form
      8-K; Press Release.
      The
      Company agrees, as soon as practicable after the Pricing Date, but in no event
      later than one business day after the Closing Date, to issue a press release
      and
      to file with the SEC a Current Report on Form 8-K disclosing the sale of the
      Shares to Investors under this Agreement and the Other Agreements, which press
      release and Current Report shall be subject to prior review and comment by
      the
      Placement Agent. Upon the issuance of such press release and filing of such
      Current Report, to the knowledge of the Company, the Investor will not be in
      possession of any material, nonpublic information regarding the Company or
      its
      Common Stock. The Company agrees that, after the issuance of such press release
      and filing of such Current Report, none of the Company's communications to
      the
      Investor will include material, nonpublic information, unless otherwise agreed
      by the
      Company and the Investor in accordance with law. Notwithstanding anything set
      forth herein to the contrary, except as otherwise required by law and in
      connection with the filing of the Registration Statement, the Company will
      not
      identify the Investor by name in any press release, any filing with the SEC
      or
      in any other public disclosure without the prior written consent of the
      Investor.

     

    
      
        
        

      

      
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    5.3 Certain
      Future Financings and Related Actions.
      Commencing on the Closing Date and for a period of ninety (90) days following
      the effective date of the Registration Statement (as defined in Section
      6.1(a)
      hereof),
      the Company shall not, without the prior consent of the Placement Agent, offer,
      sell, contract to sell or issue (or engage any person to assist the Company
      in
      taking any such action) any equity securities or securities convertible into,
      exchangeable for or otherwise entitling the holder to acquire, any Common Stock;
      provided,
      however,
      that
      nothing in this Section
      5.3
      shall
      prohibit the Company from issuing securities (1) to employees, directors,
      officers, advisors or consultants of the Company or any of its Subsidiaries;
      or
      (2) upon exercise of conversion, exchange, purchase or similar rights issued,
      granted or given by the Company and outstanding as of the date of this
      Agreement.

     

    5.4  Removal
      of Legends.
      Upon
      the earlier of (i) registration for resale pursuant to Article VI and receipt
      by
      the Company of the Investor’s written confirmation that the Securities will not
      be disposed of except in compliance with the prospectus delivery requirements
      of
      the Securities Act, (ii) delivery to the Company of a representation letter
      in
      customary form that Rule 144(k) has become available or (iii) delivery to the
      Company of a representation letter in customary form, to the effect that one
      year has elapsed since the Closing Date and the Investor proposes to effect
      sales in compliance with the volume, manner of sale and notice of proposed
      sale
      requirements of Rule 144, accompanied by a legal opinion, in form and substance
      reasonably satisfactory to the Company, the Company shall, upon an Investor’s
      written request, promptly cause certificates evidencing the Investor’s
      Securities (but not in excess of the amounts which may be sold in any 3-month
      period under Rule 144 in the case of a representation letter and legal opinion
      delivered in accordance with clause (iii) above) to be replaced with
      certificates which do not bear such restrictive legends. When the Company is
      required to cause unlegended certificates to replace previously issued legended
      certificates, if unlegended certificates are not delivered to an Investor within
      three (3) Business Days of submission by that Investor of legended
      certificate(s) to the Company’s transfer agent together with a representation
      letter in customary form, the Company shall be liable to the Investor for
      liquidated damages in an amount equal to 1.0% of the Aggregate Purchase Price
      of
      the Securities evidenced by such certificate(s) for each thirty (30) day period
      (or portion thereof) beyond such three (3) Business Days that the unlegended
      certificates have not been so delivered, which amount shall be payable in cash,
      monthly on the last day of the month. Not withstanding the availability of
      the
      liquidated damages set forth above, the Investor shall be entitled to (a)
      specific performance in connection with the removal of legends and the issuance
      of unlegended certificates so long as the requirements of (i) and (ii) above
      are
      met and (b) exercise any as against the Company’s transfer agent as a third
      party beneficiary to the Transfer Agent Instructions letter, a form of which
      is
      attached hereto as Exhibit
      C.

     

    5.5  Equal
      Treatment of Investors.
      No
      consideration shall be offered or paid to any person to amend or consent to
      a
      waiver or modification of any provision of this Agreement unless the same
      consideration is also offered to all of the parties to this Agreement.
 

     

    
      
        
        

      

      
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    ARTICLE
      VI

     

    REGISTRATION
      OF SHARES; COMPLIANCE WITH THE SECURITIES ACT;
      INDEMNIFICATION

    


     

    6.1 Registration
      Procedures and Expenses.
      The
      Company shall:

     

    (a) Subject
      to receipt of the Registration Statement Questionnaire from the Investors,
      use
      best efforts to prepare and file with the SEC, within 30 days after the Pricing
      Date, a shelf registration statement pursuant to Rule 415 of the Securities
      Act
      (the “Registration
      Statement”) to
      enable
      the resale of the Registrable Shares by the Investors. “Registrable
      Shares”
means
      shares of Common Stock purchased by Investors in the Offering until the earliest
      of: (1) the date on which such Common Stock has been resold or otherwise
      transferred pursuant to the Registration Statement; (2) the date on which such
      Common Stock is transferred in compliance with Rule 144 under the Securities
      Act
      or may be sold or transferred by a person who is not an affiliate of the Company
      pursuant to Rule 144 under the Securities Act (or any other similar provisions
      then in force) without any volume or manner of sale restrictions thereunder;
      or
      (3) the date on which such Common Stock ceases to be outstanding (whether as
      a
      result of redemption, repurchase and cancellation or otherwise).

     

    (b) use
      commercially reasonable best efforts, subject to receipt of necessary
      information from the Investors, including the Registration Statement
      Questionnaire, to cause the Registration Statement to become effective
within
      90
      days
      of the
      Pricing Date, or if reviewed by the SEC, then not later than 120 days after
      the
      Pricing Date;

     

    (c) use
      commercially reasonable best efforts to prepare and file with the SEC such
      amendments and supplements to the Registration Statement and the Prospectus
      (as
      defined in Section
      6.4
      below)
      used in connection therewith and take all such other actions as may be necessary
      to keep the Registration Statement current and effective for a period (the
      “Registration
      Period”)
      not
      exceeding, with respect to the Investor’s Registrable Shares, the earliest of
      (i) the second anniversary of the Closing Date and (ii) the date on
      which all Registrable Shares then held by the Investor may be sold or
      transferred in compliance with Rule 144 under the Securities Act or may be
      sold
      or transferred in any three-month period by a person who is not an affiliate
      of
      the Company pursuant to Rule 144(k) of the Securities Act (or any other similar
      provisions then in force) without any volume or manner of sale restrictions
      thereunder, and (iii) such time as all Registrable Shares held by the
      Investor have been sold (A) pursuant to a registration statement, (B) to or
      through a broker or dealer or underwriter in a public distribution or a public
      securities transaction, or (C) in a transaction exempt from the registration
      and
      prospectus delivery requirements of the Securities Act under Section 4(1)
      thereof so that all transfer restrictions and restrictive legends with respect
      thereto, if any, are removed upon the consummation of such sale;

     

    
      
        
        

      

      
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    (d) promptly
      furnish to the Investor with respect to the Registrable Shares registered under
      the Registration Statement such reasonable number of copies of the Registration
      Statement and Prospectus, including any supplements to or amendments of the
      Prospectus or Registration Statement, in order to facilitate the public sale
      or
      other disposition of all or any of the Registrable Shares by the
      Investor;

     

    (e) promptly
      take such action as may be necessary to qualify, or obtain, an exemption for
      the
      Registrable Shares under such of the state securities laws of United States
      jurisdictions as shall be necessary to qualify, or obtain an exemption for,
      the
      sale of the Registrable Shares in states specified in writing by the Investor;
      provided,
      however,
      that
      the Company shall not be required to qualify to do business or consent to
      service of process in any jurisdiction in which it is not now so qualified
      or
      has not so consented;

     

    (f) bear
      all
      expenses in connection with the procedures described in Sections
      6.1
      and
6.3
      and the
      registration of the Registrable Shares pursuant to the Registration Statement,
      regardless of whether a Registration Statement becomes effective, including
      without limitation: (i) all registration and filing fees and expenses (including
      filings made with AMEX or any other applicable stock exchange); (ii) fees and
      expenses of compliance with federal securities and state “blue sky” or
      securities laws; (iii) expenses of printing (including printing certificates
      for
      the Registrable Shares and Prospectuses); (iv) all application and filing fees
      in connection with listing the Registrable Shares on AMEX; and (v) all fees
      and
      disbursements of counsel of the Company and independent certified public
      accountants of the Company;
      provided, however,
      that
      the Investor shall be responsible for paying the underwriters’ commissions or
      brokerage fees, and taxes of any kind (including, without limitation, transfer
      taxes) applicable to any disposition, sale or transfer of the Investor’s
      Registrable Shares. The Company shall, in any event, bear its internal expenses
      (including, without limitation, all salaries and expenses of its officers and
      employees performing legal or accounting duties); and

     

    (g) advise
      the Investors, within two business days by e-mail, fax or other type of
      communication, and, if requested by such person, confirm such advice in writing:
      (i) after it shall receive notice or obtain knowledge of the issuance of any
      stop order by the SEC delaying or suspending the effectiveness of the
      Registration Statement or of the initiation or threat of any proceeding for
      that
      purpose, or any other order issued by any state securities commission or other
      regulatory authority suspending the qualification or exemption from
      qualification of such Registrable Shares under state securities or “blue sky”
laws; and it will promptly use its commercially reasonable best efforts to
      prevent the issuance of any stop order or other order or to obtain its
      withdrawal at the earliest possible moment if such stop order or other order
      should be issued; and (ii) when the Prospectus or any supplements to or
      amendments of the Prospectus have been filed, and, with respect to the
      Registration Statement or any post-effective amendment thereto, when the same
      has become effective.

     

    6.2 Delay
      in Effectiveness of Registration Statement.
      The
      Company further agrees that: (i) in the event the Registration Statement
      has not been filed with the SEC within 30 days after the Pricing Date, (ii)
      unless the failure to become effective is due to the fault of the Investor
      or

     

    
      
        
        

      

      
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    one
      or
      more of the Other Investors, in the event the Registration Statement has not
      been declared effective by the SEC within 90 days after the Pricing Date (120
      days after the Pricing Date if reviewed by the SEC) or (iii) if during the
      365
      day period after the effective date of the Registration Statement, the
      Registration Statement ceases to remain continuously effective as to the
      Registrable Shares and such Suspension (as hereinafter defined) exceeds 30
      consecutive days or a total of 60 days in such 365 day period, the Company
      shall
      pay to the Investor liquidated damages in the amount of 1.0% of the Actual
      Purchase Price and an additional liquidated damages payment of 1.0% of the
      Actual Purchase Price for each 30-day period thereafter until the Registration
      Statement has been filed, declared effective or cured, as applicable;
provided,
      that,
      in no
      event shall the aggregate penalty under this Section
      6.2
      in any
      30-day period exceed 1.0% of the Actual Purchase Price; and, provided
      further,
      that in
      no event shall the Company be obligated to pay liquidated damages (a) to more
      than one purchaser in respect of the same Shares for the same period of time,
      or
      (b) in an aggregate amount that exceeds 12% of the Aggregate Purchase Price
      paid
      for the Shares. The Company shall deliver the cash payments described in clauses
      (i), (ii) and (iii) to the Investor by the fifth business day after the
      occurrence of the event described in (i), (ii) or (iii), as applicable, and
      any
      30-day anniversary thereof, as applicable. Notwithstanding anything to the
      contrary in Section
      6.2 or
      any
      other provision of this Agreement, payment of cash as provided in this
Section
      6.2
      shall be
      the Investor’s sole and exclusive damage remedy (but shall not limit the
      Investor’s right to seek specific performance under this Agreement) in the event
      of the occurrence of an event described in (i), (ii) or (iii).

     

    6.3 Transfer
      of Shares; Suspension.

     

    (a) The
      Investor agrees that it will not effect any Disposition of the Shares that
      would
      constitute a sale within the meaning of the Securities Act, except as
      contemplated in the Registration Statement referred to in Section
      6.1
      or in
      accordance with the Securities Act, and that it will promptly notify the Company
      of any changes in the information set forth in the Registration Statement
      regarding the Investor or its plan of distribution.

     

    (b) Except
      in
      the event that paragraph (c) below applies, the Company shall, at all times
      during the Registration Period, promptly (i) prepare and file from time to
      time with the SEC a post-effective amendment to the Registration Statement
      or a
      supplement to the related Prospectus or a supplement or amendment to any
      document incorporated therein by reference or file any other required document
      so that such Registration Statement will not contain an untrue statement of
      a
      material fact or omit to state a material fact necessary to make the statements
      therein not misleading, and so that, as thereafter delivered to purchasers
      of
      the Registrable Securities being sold thereunder, such Prospectus will not
      contain an untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein or necessary to make the statements therein,
      in
      light of the circumstances under which they were made, not misleading;
      (ii) provide the Investor copies of any documents filed pursuant to
Section
      6.3(b)(i);
      and
      (iii) inform the Investor that the Company has complied with its
      obligations in Section
      6.3(b)(i)
      (or
      that, if the Company has filed a post-effective amendment to the Registration
      Statement which has not yet been declared effective, the Company will notify
      the
      Investor to that effect, will use its commercially reasonable efforts to secure
      the effectiveness of such post-effective

     

    
      
        
        

      

      
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    amendment
      as promptly as possible and will promptly notify the Investor when the amendment
      has become effective).

     

    (c) Subject
      to paragraph (d) below, in the event of (i) any request by the SEC or any
      other federal or state governmental authority during the period of effectiveness
      of the Registration Statement for amendments or supplements to a Registration
      Statement or related Prospectus or for additional information; (ii) the
      issuance by the SEC or any other federal or state governmental authority of
      any
      stop order suspending the effectiveness of a Registration Statement or the
      initiation of any proceedings for that purpose; (iii) the receipt by the
      Company of any notification with respect to the suspension of the qualification
      or exemption from qualification of any of the Registrable Shares for sale in
      any
      jurisdiction or the initiation or threatening of any proceeding for such
      purpose; (iv) the good faith determination by the Board of Directors of the
      Company that the delay of disclosure of material, non-public information
      concerning a material corporate event is in the best interests of the Company,
      so long as the Company has implemented prohibitions on securities transactions
      by its officers and directors during the resulting Suspension period; or (v)
      any
      event or circumstance which necessitates the making of any changes in the
      Registration Statement or Prospectus, or any document incorporated or deemed
      to
      be incorporated therein by reference, so that, in the case of the Registration
      Statement, it will not contain any untrue statement of a material fact or omit
      to state a material fact required to be stated therein or necessary to make
      the
      statements therein not misleading, and that in the case of the Prospectus,
      it
      will not contain any untrue statement of a material fact or omit to state a
      material fact necessary to make the statements therein, in the light of the
      circumstances under which they were made, not misleading, then the Company
      shall
      deliver a notice in writing to the Investor (the “Suspension
      Notice”)
      to the
      effect of the foregoing and, upon receipt of such Suspension Notice, the
      Investor will refrain from selling any Registrable Shares pursuant to the
      Registration Statement (a “Suspension”)
      until
      the Investor’s receipt of copies of a supplemented or amended Prospectus
      prepared and filed by the Company, or until it is advised in writing by the
      Company that the current Prospectus may be used. In the event of any Suspension,
      the Company will use its commercially reasonable best efforts, to cause the
      use
      of the Prospectus so suspended to be resumed as soon as reasonably practicable
      after the delivery of a Suspension Notice to the Investor.

     

    (d) Notwithstanding
      the foregoing paragraphs of this Section
      6.3,
      the
      Investor shall not be prohibited from selling Registrable Shares under the
      Registration Statement as a result of Suspensions for more than 30 consecutive
      days or for a total of 60 days in any twelve-month period. 

     

    (e) In
      the
      event of a sale of Registrable Shares by the Investor under the Registration
      Statement, the Investor must also deliver to the Company’s transfer agent, with
      a copy to the Company, a Certificate of Subsequent Sale substantially in the
      form attached hereto as Exhibit
      F,
      so that
      the Registrable Shares may be properly transferred.

     

    6.4 Indemnification.
      For the
      purpose of this Section
      6.4,
      the
      term “Registration
      Statement”
shall
      include any preliminary or final prospectus, exhibit, supplement or
      amendment

     

    
      
        
        

      

      
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    included
      in or relating to the Registration Statement referred to in Section
      6.1
      and the
      term “Rules
      and Regulations”
means
      the rules and regulations promulgated under the Securities Act.

     

    (a) Indemnification
      by the Company.
      The
      Company agrees to indemnify and hold harmless the Investor, each of its
      directors, officers, agents and employees and each person, if any, who controls
      the Investor within the meaning of the Securities Act, against any losses,
      claims, damages, liabilities or expenses to which the Investor, such director,
      officer, agent or employee or such controlling person may become subject, under
      the Securities Act, the Exchange Act, or any other federal or state statutory
      law or regulation insofar as such losses, claims, damages, liabilities or
      expenses (or actions in respect thereof as contemplated below) arise out of
      or
      are based upon (i) any inaccuracy in the representations and warranties of
      the
      Company contained in this Agreement, or any failure of the Company to perform
      its obligations under this Agreement or (ii) any untrue statement or alleged
      untrue statement of any material fact contained in the Registration Statement,
      including the Prospectus, financial statements and schedules, and all other
      documents filed as a part thereof, as amended at the time of effectiveness
      of
      the Registration Statement, including any information deemed to be a part
      thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A,
      or pursuant to Rule 434 of the Rules and Regulations, or the Prospectus, in
      the
      form first filed with the SEC pursuant to Rule 424(b) of the Regulations, or
      filed as part of the Registration Statement at the time of effectiveness if
      no
      Rule 424(b) filing is required (the “Prospectus”),
      or
      any amendment or supplement thereto or the omission or alleged omission to
      state
      in any of them a material fact required to be stated therein or necessary to
      make the statements in any of them, in light of the circumstances under which
      they were made, not misleading, and will reimburse the Investor and each such
      controlling person for any legal and other expenses as such expenses are
      reasonably incurred by the Investor or such controlling person in connection
      with investigating, defending, settling, compromising or paying any such loss,
      claim, damage, liability, expense or action; provided, however, that the Company
      will not be liable in any such case to the extent that any such loss, claim,
      damage, liability or expense arises out of or is based upon (A) an untrue
      statement or alleged untrue statement or omission or alleged omission made
      in
      the Registration Statement, the Prospectus or any amendment or supplement of
      the
      Registration Statement or Prospectus in reliance upon and in conformity with
      written information furnished to the Company by or on behalf of the Investor
      expressly for use in the Registration Statement or the Prospectus, or (B) the
      failure of the Investor to comply with the covenants and agreements contained
      in
      this Agreement respecting resale of the Shares, or (C) the inaccuracy of any
      representations made by the Investor in this Agreement or (D) with respect
      to
      clause (ii) above only, any untrue statement or omission of a material fact
      in
      any Prospectus that is corrected in any subsequent Prospectus that was delivered
      to the Investor before the pertinent sale or sales by the Investor.

     

    (b) Indemnification
      by the Selling Shareholders.
      Each
      Selling Shareholder agrees to indemnify and hold harmless the Investor, each
      of
      its directors, officers, agents and employees and each person, if any, who
      controls the Investor within the meaning of the Securities Act,

     

    
      
        
        

      

      
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    against
      any losses, claims, damages, liabilities or expenses to which the Investor,
      such
      director, officers, agent or employee or such controlling person may become
      subject, under the Securities Act, the Exchange Act, or any other federal or
      state statutory law or regulation insofar as such losses, claims, damages,
      liabilities or expenses (or actions in respect thereof as contemplated below)
      arise out of or are based upon (i) any
      inaccuracy in the representations and warranties of the Selling Shareholder
      contained in this Agreement, or any failure of the Selling Shareholder to
      perform its obligations under this Agreement or (ii)
      any
      untrue statement or alleged untrue statement of any material fact contained
      in
      the Registration Statement, including the Prospectus, financial statements
      and
      schedules, and all other documents filed as a part thereof, as amended at the
      time of effectiveness of the Registration Statement, including any information
      deemed to be a part thereof as of the time of effectiveness pursuant to
      paragraph (b) of Rule 430A, or pursuant to Rule 434 of the Rules and
      Regulations, or the Prospectus, or any amendment or supplement thereto or the
      omission or alleged omission to state in any of them a material fact required
      to
      be stated therein or necessary to make the statements in any of them, in light
      of the circumstances under which they were made, not misleading, in each case
      to
      the extent, but only to the extent that such untrue statement or alleged untrue
      statement or omission or alleged omission was made in the Registration
      Statement, the Prospectus, or any amendment or supplement thereto, in reliance
      upon and in conformity with written information furnished to the Company by
      or
      on behalf of the Selling Shareholder expressly for use therein; provided,
      however, that the Selling Shareholder shall not be liable for any such untrue
      or
      alleged untrue statement or omission or alleged omission of which the Selling
      Shareholder has delivered to the Company in writing a correction at least five
      business days before the occurrence of the transaction from which such loss
      was
      incurred. The Selling Shareholder will reimburse the Company, each of their
      respective directors, each of its officers who signed the Registration Statement
      or controlling person for any legal and other expense reasonably incurred by
      the
      Company, each of its directors, each of its officers who signed the Registration
      Statement or controlling person in connection with investigating, defending,
      settling, compromising or paying any such loss, claim, damage, liability,
      expense or action for which such person is entitled to be indemnified in
      accordance with this Agreement. Notwithstanding anything to the contrary
      contained herein, the Selling Shareholder shall be liable under this Section
      for
      only that amount as does not exceed the net proceeds to the Selling Shareholder
      as a result of the sale of Shares pursuant to this Agreement.

     

    (c) Indemnification
      by the Investor.
      The
      Investor will, severally and not jointly with any other Investor, indemnify
      and
      hold harmless the Company, each of its directors, each of its officers who
      sign
      the Registration Statement and each person, if any, who controls the Company
      within the meaning of the Securities Act, against any losses, claims, damages,
      liabilities or expenses to which the Company, each of its directors, each of
      its
      officers who sign the Registration Statement or controlling person may become
      subject, under the Securities Act, the Exchange Act, or any other federal or
      state statutory law or regulation insofar as such losses, claims, damages,
      liabilities or expenses (or actions in respect thereof as contemplated below)
      arise out of or are based upon (i) any failure on the part of the Investor
      to
      comply with the covenants and agreements contained in this Agreement respecting
      the sale of the Registrable

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    


    Shares
      or
      (ii) the inaccuracy of any representation or warranty made by the Investor
      in
      this Agreement or (iii) any untrue or alleged untrue statement of any material
      fact contained in the Registration Statement, the Prospectus, or any amendment
      or supplement to the Registration Statement or Prospectus, or the omission
      or
      alleged omission to state therein a material fact required to be stated therein
      or necessary to make the statements therein not misleading, in each case to
      the
      extent, but only to the extent, that such untrue statement or alleged untrue
      statement or omission or alleged omission was made in the Registration
      Statement, the Prospectus, or any amendment or supplement thereto, in reliance
      upon and in conformity with written information furnished to the Company by
      or
      on behalf of the Investor expressly for use therein; provided,
      however,
      that
      the Investor shall not be liable for any such untrue or alleged untrue statement
      or omission or alleged omission of which the Investor has delivered to the
      Company in writing a correction at least five business days before the
      occurrence of the transaction from which such loss was incurred. The Investor
      will reimburse the Selling Shareholders and the Company, each of its directors,
      each of its officers who signed the Registration Statement or controlling person
      for any legal and other expense reasonably incurred by the Company, each of
      its
      directors, each of its officers who signed the Registration Statement or
      controlling person in connection with investigating, defending, settling,
      compromising or paying any such loss, claim, damage, liability, expense or
      action for which such person is entitled to be indemnified in accordance with
      this Section
      6.4(c).
      Notwithstanding anything to the contrary contained herein, the Investor shall
      be
      liable under this Section
      6.4(c)
      for only
      that amount as does not exceed the net proceeds to the Investor as a result
      of
      the sale of Registrable Shares pursuant to the Registration
      Statement.

     

    (d) Indemnification
      Procedure.

     

    (i) Promptly
      after receipt by an indemnified party under this Section
      6.4
      of
      notice of the threat or commencement of any action, such indemnified party
      will,
      if a claim in respect thereof is to be made against an indemnifying party under
      this Section
      6.4,
      promptly notify the indemnifying party in writing of the claim; but the omission
      so to notify the indemnifying party will not relieve it from any liability
      which
      it may have to any indemnified party for contribution or otherwise under the
      indemnity agreement contained in this Section
      6.4
      or to
      the extent it is not prejudiced as a result of such failure.

     

    (ii) In
      case
      any such action is brought against any indemnified party and such indemnified
      party seeks or intends to seek indemnity from an indemnifying party, the
      indemnifying party will be entitled to participate in, and, to the extent that
      it may wish, jointly with all other indemnifying parties similarly notified,
      to
      assume the defense thereof; provided,
      however,
      if the
      defendants in any such action include both the indemnified party and the
      indemnifying party and the indemnified party shall have reasonably concluded
      that there may be a conflict between the positions of the indemnifying party
      and
      the indemnified party in conducting the defense of any such action or that
      there
      may be legal defenses available to it or other indemnified parties that are
      different from or additional to those available to the indemnifying party,
      the
      indemnified party or parties shall have the right to select separate counsel
      to
      assume such legal defenses and to otherwise participate in the defense of such
      action

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    


    on
      behalf
      of such indemnified party or parties. Upon receipt of notice from the
      indemnifying party to such indemnified party of its election so to assume the
      defense of such action, the indemnifying party will not be liable to such
      indemnified party under this Section
      6.4
      for any
      legal or other expenses subsequently incurred by such indemnified party in
      connection with the defense thereof unless: 

     

    (1) the
      indemnified party shall have employed such counsel in connection with the
      assumption of legal defenses in accordance with the proviso to the preceding
      sentence (it being understood, however, that the indemnifying party shall not
      be
      liable for the expenses of more than one separate counsel, approved by such
      indemnifying party representing all of the indemnified parties who are parties
      to such action), or 

     

    (2) the
      indemnifying party shall not have counsel reasonably satisfactory to the
      indemnified party to represent the indemnified party within a reasonable time
      after notice of commencement of action, in each of which cases the reasonable
      fees and expenses of counsel shall be at the expense of the indemnifying party.
      Notwithstanding the provisions of this Section 6.4, the Investor shall not
      be
      liable for any indemnification obligation under this Agreement in excess of
      the
      amount of net proceeds received by the Investor from the sale of the Registrable
      Shares, unless such obligation has resulted from the gross negligence or willful
      misconduct of the Investor. 

     

    (e) Contribution.
      If a
      claim for indemnification under this Section
      6.4
      is
      unavailable to an indemnified party (by reason of public policy or otherwise),
      then each indemnifying party, in lieu of indemnifying such indemnified party,
      shall contribute to the amount paid or payable by such indemnified party as
      a
      result of any losses, claims, damages, liabilities or expenses referred to
      in
      this Agreement, in such proportion as is appropriate to reflect the relative
      fault of the indemnifying party and indemnified party in connection with the
      actions, statements or omissions that resulted in such losses, claims, damages,
      liabilities or expenses as well as any other relevant equitable considerations.
      The relative fault of such indemnifying party and indemnified party shall be
      determined by reference to, among other things, whether any action in question,
      including any untrue or alleged untrue statement of a material fact or omission
      or alleged omission of a material fact, has been taken or made by, or relates
      to
      information supplied by, such indemnifying party or indemnified party, and
      the
      parties’ relative intent, knowledge, access to information and opportunity to
      correct or prevent such action, statement or omission. The amount paid or
      payable by a party as a result of any losses, claims, damages, liabilities
      or
      expenses shall be deemed to include, subject to the limitations set forth in
      this Section
      6.4,
      any
      reasonable attorneys’ or other reasonable fees or expenses incurred by such
      party in connection with any proceeding to the extent such party would have
      been
      indemnified for such fees or expenses if the indemnification provided for in
      this Section was available to such party in accordance with its
      terms.

     

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section
      6.4
      were
      determined by pro rata allocation or by any other method of allocation that
      does
      not take into account the equitable considerations referred to in the
      immediately preceding

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    


    paragraph.
      Notwithstanding the provisions of this Section
      6.4,
      no
      Investor shall be required to contribute, in the aggregate, any amount in excess
      of the amount by which the net proceeds from the sale of Registrable Shares
      by
      the Investor exceeds the amount of any damages that the Investor has otherwise
      been required to pay by reason of such untrue or alleged untrue statement or
      omission or alleged omission. No party to this Agreement guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the Securities Act)
      shall be entitled to contribution from any other party to this Agreement who
      was
      not guilty of such fraudulent misrepresentation.

     

    6.5 Termination
      of Conditions and Obligations.
      The
      restrictions imposed by Article
      4
      or
Article
      6
      upon the
      transferability of the Registrable Shares shall cease and terminate as to any
      particular number of the Registrable Shares upon the passage of two years from
      the Closing Date or at such time as an opinion of counsel satisfactory in form
      and substance to the Company shall have been rendered to the effect that such
      conditions are not necessary in order to comply with the Securities Act.


     

    6.6 Rule
      144.
      For a
      period of two years following the date hereof, the Company agrees with each
      holder of Registrable Shares to:

     

    (a) comply
      with the requirements of Rule 144(c) under the Securities Act with respect
      to
      current public information about the Company; and

     

    (b) file
      with
      the SEC in a timely manner all reports and other documents required of the
      Company under the Securities Act and the Exchange Act (at any time it is subject
      to such reporting requirements).

     

    ARTICLE
      VII

     

    7.1 Notices.
      Except
      as specifically permitted by Section 6.1(g), all notices, requests, consents
      and
      other communications hereunder shall be in writing, shall be mailed (A) if
      within United States by first-class registered or certified airmail, or
      nationally recognized overnight express courier, postage prepaid, or by
      facsimile, or (B) if delivered from outside the United States, by
      International Federal Express or facsimile, and shall be deemed given
      (i) if delivered by first-class registered or certified mail domestic,
      three business days after so mailed, (ii) if delivered by nationally
      recognized overnight carrier, one business day after so mailed, (iii) if
      delivered by International Federal Express, two business days after so mailed,
      and (iv) if delivered by facsimile, upon electric confirmation of receipt,
      and shall be delivered as addressed as follows:

     

    if
      to the
      Company, to:

    


    Silverleaf
      Resorts, Inc.

    1221
      River Bend Drive, Suite 120

    Dallas,
      Texas 75247


    Facsimile:
      214-631-4981

    Attn:
      Harry J. White, Jr.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    


    with
      a
      copy to:

    


    Meadows,
      Owens, Collier, Reed, Cousins & Blau LLP

    3700
      Bank
      of America Plaza

    901
      Main
      Street

    Dallas,
      Texas 75202

    Facsimile:
      214-747-3732

    Attn:
      David N. Reed, Esq.

     

    if
      to
      Robert E. Mead, to:

    


    Robert
      E.
      Mead

    1221
      River Bend Drive, Suite 120

    Dallas,
      Texas 75247

    Facsimile:
      214-905-0514       

    


    with
      a
      copy to:

    


    Andrews
      Kurth, LLP

    1717
      Main
      Street, Suite 3700

    Dallas,
      Texas 75201

    Facsimile:
      214-659-4891

    Attn:
      David Washburn, Esq.

     

    if
      to
      Grace Brothers, Ltd.:

     

    Bradford
      T. Whitmore

    1560
      Sherman Avenue, Suite 900

    Evanston,
      Illinois 60201

    


    with
      a
      copy to:

    


    Sachnoff
      & Weaver, Ltd.

    10
      S.
      Wacker Drive

    Chicago,
      Illinois 60606-7507

    Facsimile:
      312-207-6400

    Attn:
      Evelyn C. Arkebauer

     

    7.2 Changes.
      No
      provision of this Agreement may be modified, supplemented or amended except
      pursuant to an instrument in writing signed by the Company, the Sellers and
      the
      Investor; provided,
      however
      that the
      Company and the Investors may modify, supplement or

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    


    amend
      this Agreement in writing so long as such modification, supplement or amendment
      does not adversely effect any Seller. Any waiver with respect to this Agreement
      shall be in writing and executed by the parties thereto.

     

    7.3 Headings.
      The
      headings of the various sections of this Agreement have been inserted for
      convenience of reference only and shall not be deemed to be part of this
      Agreement.

     

    7.4 Severability.
      In case
      any provision contained in this Agreement should be invalid, illegal or
      unenforceable in any respect, the validity, legality and enforceability of
      the
      remaining provisions contained herein shall not in any way be affected or
      impaired thereby.

     

    7.5 Survival
      of Representations, Warranties and Agreements.
      Notwithstanding any investigation made by any party to this Agreement, all
      covenants, agreements, representations and warranties made by the Company,
      each
      of the Selling Shareholders and the Investor herein shall survive the execution
      of this Agreement, the delivery to the Investor of the Shares being purchased
      and the payment therefor.

     

    7.6 Governing
      Law.
      This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of New York, without giving effect to any of the conflicts of law
      principles which would result in the application of the substantive law of
      another jurisdiction.

     

    7.7 Entire
      Agreement.
      This
      Agreement and the documents referenced herein and therein constitute the entire
      agreement among the parties hereto with respect to the subject matter hereof
      and
      thereof. There are no restrictions, promises, warranties or undertakings, other
      than those set forth or referred to herein and therein. This Agreement
      supersedes all prior agreements and understandings. 

     

    7.8 Finders
      Fees.
      Neither
      the Sellers nor the Investor nor any affiliate thereof has incurred any
      obligation which will result in the obligation of the other party to pay any
      finder’s fee or commission in connection with this transaction, except for fees
      payable by the Sellers to the Placement Agent.

     

    7.9 Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      constitute an original, but all of which, when taken together, shall constitute
      but one instrument, and shall become effective when one or more counterparts
      have been signed by each party hereto and delivered to the other
      party.

     

    7.10 Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors,
      heirs, executors and administrators and permitted assigns of the parties hereto.
      With respect to transfers that are not made pursuant to the Registration
      Statement, but are otherwise made in accordance with all applicable laws and
      the
      terms of this Agreement, the rights and obligations of the Investor under this
      Agreement shall be automatically assigned by the Investor to any transferee
      of
      all or any portion of the Investor’s Securities who is a Permitted Transferee
      (as defined below); provided,
      however,
      that
      within two business days prior

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    


    to
      the
      transfer, (i) the Company is provided written notice of the transfer including
      the name and address of the transferee and the number of Securities transferred;
      and (ii) that such transferee agrees in writing to be bound by the terms of
      this
      Agreement as if such transferee was the Investor. For purposes of this
      Agreement, a “Permitted
      Transferee”
shall
      mean any Person who (a)
      is an
“accredited investor,” as that term is defined in Rule 501(a) of Regulation D
      under the Securities Act and (b) is a transferee of at least 100,000 shares
      of
      Common Stock.
      Upon any
      transfer permitted by this Section
      7.10,
      the
      Company shall be obligated to such transferee to perform all of its covenants
      under this Agreement as if such transferee was the Investor.

     

    7.11 Expenses.
      Each
      party hereto shall bear its own expenses in connection with the preparation
      and
      negotiation of the Agreement.

     

    7.12 Exculpation.
      Each
      party to this Agreement acknowledges that Brown Raysman Millstein Felder &
Steiner LLP represented only Oppenheimer & Co. Inc. in the Offering
      contemplated by this Agreement and has not represented either the Sellers or
      the
      Investor or any other investor who purchases Shares in the Offering pursuant
      to
      a Securities Purchase Agreement in substantially the form hereof.

     

    7.13 Obligations
      Several.
      The
      obligations of each Investor hereunder are several and not joint with the
      obligations of any other Investor and no provision of this Agreement is intended
      to confer any obligation on any Investor in relation to any other Investor.
      Nothing contained herein, and no action taken by any Investor hereto, shall
      be
      deemed to constitute the Investors as a partnership, an association, a joint
      venture or any other kind of entity or group, or create a presumption that
      the
      Investors are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated herein. The Investors shall be
      entitled to independently protect and enforce their rights, including without
      limitation, the rights arising out of this Agreement or out of the other
      transaction documents, and it shall not be necessary for any other Investor
      to
      be joined as an additional party in any proceeding for such
      purpose.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      parties have caused this Securities Purchase Agreement to be duly executed
      as of
      the date first written above.

     

    


     

    SILVERLEAF
      RESORTS, INC.

     

    By: ______________________________

    Name:
      Harry J. White, Jr.

    Title:
      Chief Financial Officer

     

     

     

    ______________________________

    Robert
      E. Mead,
      as
      Trustee under the 

    Voting
      Trust Agreement dated 

    November
      1, 1999

     

     

     

    GRACE
      BROTHERS, LTD.

     

    By: ______________________________

    Name:
      Bradford T. Whitmore

    Title:
      General Partner

     

    


     

    


     

    


    [Signatures
      of Investors on Following Page]

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    


    “INVESTOR”

     

    ________________________________________

    (print
      full legal name of Investor)

     

    By:______________________________________

    (signature
      of authorized representative)

     

    Name:____________________________________

     

    Its:______________________________________

     

    Address:__________________________________

     

    Telephone:_________________________________

     

    Fax:______________________________________

     

    Email:_____________________________________

     

    Tax
      I.D.
      or SSN:______________________________

     

     

    Address
      where Shares should be sent (if different from above)

     

    __________________________________________

    __________________________________________

    __________________________________________

     

     

    [signature
      page to Securities Purchase Agreement]

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    Schedule
      A

     

    Shares
      Purchased

     

    


    
      	
              TOTAL
                NUMBER OF SHARES: ____________

            
	 
	
              Purchaser

            	
              Shares
                of Common Stock

            	
              Aggregate
                Purchase Price

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 
	
              TOTAL
                : $___________

            


    

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Schedule
      B

     

    Schedule
      of Exceptions

     

    


     

    Section
      2.1 Subsidiaries;
      Organization

     

    Awards
      Verification Center, Inc., a Texas corporation

    Silverleaf
      Travel, Inc., a Texas corporation

    Silverleaf
      Berkshires, Inc., a Texas corporation

    People
      Really Win Sweepstakes, Inc., a Texas corporation 

    SLR
      Research, Inc., a Texas corporation

    Silverleaf
      Finance II, Inc., a Delaware corporation

    Silverleaf
      Finance III, LLC, a Delaware limited liability company

    Silverleaf
      Finance IV, LLC, a Delaware limited liability company

    


     

    Section
      2.4 Reporting
      Status

     

    None.

     

    Section
      2.34 Lock-up
      Agreements

    


    Robert
      E.
      Mead

    J.
      Richard Budd, III

    James
      B.
      Francis, Jr.

    Herbert
      B. Hirsch

    Rebecca
      Janet Whitmore

    Sharon
      K.
      Brayfield

    Harry
      J.
      White, Jr.

    Edward
      L.
      Lahart

    Joe
      W.
      Conner

    David
      T.
      O'Connor

    Thomas
      J.
      Morris

    Sandra
      G.
      Cearley

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Exhibit
      A

     

    ESCROW
      AGENT WIRE TRANSFER INSTRUCTIONS

     

    


    Bank:

     

     

     

    ABA
      No.

     

    F/A/O

     

    Account
      #:

     

    F/C/C
      Customer Account #:

     

    Account
      Name:

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
      B

     

    FORM
      OF OPINION OF COUNSEL TO THE COMPANY

     

    Capitalized
      terms not defined herein shall have the meaning given them in the
      Agreement.

     

    
      	
              1.

            	
              The
                Company is duly organized, validly existing and in good standing
                under the
                laws of its jurisdiction of organization and has all requisite power
                and
                authority to own, lease and operate its properties and to carry on
                its
                business as now being conducted. 

            


    

     

    
      	
              2.

            	
              The
                Company has all requisite power and authority to execute, deliver,
                and
                perform its obligations under the Agreement. The execution and delivery
                of
                the Agreement by the Company and the performance of each of its
                obligations thereunder have been duly and validly authorized by all
                necessary corporate action and no further consent or authorization
                of the
                Company, its Board of Directors or its shareholders is
                required.

            


    

     

    
      	
              3.

            	
              Neither
                the execution, delivery or performance of the Agreement by the Company
                or
                any Seller nor the consummation of the transactions contemplated
                thereby
                will (i) conflict with or violate the Company’s Articles of Incorporation
                or bylaws, (ii) conflict with or violate any law applicable to the
                Company, or by which any property or asset of any of the Company
                is bound
                or affected or (iii) result in a default under the terms of any agreement
                to which the Company is a party and which the Company has attached
                as an
                exhibit to its reports filed with the SEC under the Exchange
                Act.

            


    

     

    
      	
              4.

            	
              No
                approvals or authorizations by, or filings or qualifications with,
                any
                governmental authority or body are required in connection with the
                execution, delivery and performance of the Agreement, or any other
                agreements or documents executed and delivered pursuant thereto by
                the
                Company or a Seller of the Shares, except such as have been duly
                obtained
                or made.

            


    

     

    
      	
              5.

            	
              The
                Shares transferred by the Sellers under the Agreement are, and when
                transferred pursuant to the terms and conditions specified in the
                Agreement, will be duly authorized, validly issued, fully paid and
                non-assessable shares of Common Stock.


            


    

     

    
      	
              6.

            	
              The
                Agreement has been duly executed and delivered by the Company and
                constitutes a legal, valid and binding agreement of the Company
                enforceable against the Company in accordance with its terms, except
                as
                the enforceability thereof may be limited by bankruptcy, insolvency,
                reorganization, moratorium, or other similar laws affecting the
                enforcement of creditors’ rights generally and other general principles of
                equity and subject to other standard exceptions and qualifications.
                The
                shares of Common Stock transferred by the Company under the Agreement
                are
                not subject to any preemptive rights under the Company’s Articles of
                Incorporation or bylaws.

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              7.

            	
              To
                our knowledge, except as set forth in the SEC documents, there is
                no
                action, suit, claim, investigation or proceeding pending or threatened
                against the Company (i) wherein an unfavorable decision, ruling or
                finding
                would reasonable be expected to have a Material Adverse Effect or
                (ii)
                which questions the validity of the Agreement or the transactions
                contemplated thereby or any action taken or to be taken pursuant
                thereto.

            


    

     

    
      	
              8.

            	
              Subject
                to the accuracy of the representations and warranties of the parties
                to
                this Agreement and each of the Other Investors in the Offering and
                assuming that there has been no general solicitation or advertising
                of the
                shares of Common Stock to be sold under the Agreement, and in reliance
                upon opinions from counsel to each of the Selling Shareholders as
                to the
                availability of an exemption for each Selling Shareholder from the
                registration requirements of Section 5 of the Securities Act, the
                offer
                and sale of the shares of Common Stock in conformity with the terms
                of
                this Agreement are exempt from the registration requirements of Section
                5
                of the Securities Act.

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
      C

     

    FORM
      OF TRANSFER AGENT INSTRUCTIONS

     

    SILVERLEAF
      RESORTS, INC.

     

    as
      of May
      __, 2006

    


    Mellon
      Investor Services, LLC

    [
      address
      ]

    [
      address
      ]

    Attn:
      

    


     

    Ladies
      and Gentlemen:

     

    Reference
      is made to that certain Securities Purchase Agreement, dated as of May ___,
      2006 (the “Agreement”),
      by
      and among Silverleaf Resorts, Inc., a Texas corporation (the “Company”),
      the
      Sellers, and the purchasers named on the signature pages thereto (collectively,
      the “Holders”),
      pursuant to which the Sellers are selling to the Holders shares (the
“Shares”)
      of
      Common Stock of the Company, par value $0.01 per share (the “Common
      Stock”).

     

    This
      letter shall serve as our irrevocable authorization and direction to you
      (provided that you are the transfer agent of the Company at such time) to issue
      such shares of Common Stock upon transfer or resale of the Shares;
      and

     

    You
      are
      hereby instructed that so long as you have previously received (a) written
      confirmation from the Company’s legal counsel that either (i) a
      registration statement covering resales of the Shares has been declared
      effective by the Securities and Exchange Commission (the “Commission”)
      under
      the Securities Act of 1933, as amended (the “Securities
      Act”),
      or
      (ii) sales of the Shares may be made in conformity with Rule 144 under
      the Securities Act (“Rule 144”)
      and
      (b) if applicable, a copy of such registration statement, then, unless
      otherwise required by law, within three (3) business days of your receipt
      of the notice referred to in (ii above), you shall issue the certificates
      representing the Shares so sold to the transferees registered in the names
      of
      such transferees, and such certificates shall not bear any legend restricting
      transfer of the Shares thereby and should not be subject to any stop-transfer
      restriction.

     

    A
      form of
      written confirmation (to be used in connection with any sale) from the Company’s
      outside legal counsel that a registration statement covering resales of the
      Shares has been declared effective by the Commission under the Securities Act
      is
      attached hereto as
      Exhibit I.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Please
      be
      advised that the Holders are relying upon this letter as an inducement to enter
      into the Agreement and, accordingly, each Holder is a third party beneficiary
      to
      these instructions.

     

    Very
      truly yours,

     

    


     

    SILVERLEAF
      RESORTS, INC.

     

    


     

    By: 
      ______________________

     

    Name: 
      ______________________

     

    Title: 
      ______________________

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
      I

     

    FORM
      OF
      NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT

     

    


    [Company
      Transfer Agent]

    [
      address
      ]

    [
      address
      ]

    


    Re:
      Silverleaf
      Resorts, Inc.

    


    Ladies
      and Gentlemen:

     

    We
      are
      counsel to Silverleaf Resorts, Inc., a Texas corporation (the “Company”),
      and
      have represented the Company in connection with the Securities Purchase
      Agreement (the “Purchase
      Agreement”),
      dated
      as of May ___, 2006, entered into by and among the Company, the Sellers and
      the
      buyers named therein (collectively, the “Purchasers”)
      pursuant to which the Sellers sold to the Purchasers shares of the Company’s
      Common Stock, par value $0.01 per share (the “Common
      Stock”).
      Pursuant to the Purchase Agreement, the Company agreed to register the resale
      of
      the Common Stock (the “Registrable
      Securities”)
      under
      the Securities Act of 1933, as amended (the “Securities
      Act”).
      In
      connection with the Company’s obligations under the Purchase Agreement, on
      _________ ___, 2006, the Company filed a Registration Statement on Form S-__
      (File No. 333-_________ ) (the “Registration
      Statement”)
      with
      the Securities and Exchange Commission (the “Commission”)
      relating to the Registrable Securities which names each of the Purchasers as
      a
      selling stockholder thereunder.

     

    In
      connection with the foregoing, we advise you that a member of the Commission’s
      staff has advised us by telephone that the Commission has entered an order
      declaring the Registration Statement effective under the Securities Act
      at
      [time of effectiveness]
      on
      [date of effectiveness]
      and we
      have no knowledge, after telephonic inquiry of a member of the staff, that
      any
      stop order suspending its effectiveness has been issued or that any proceedings
      for that purpose are pending before, or threatened by, the Commission and the
      Registrable Securities are available for resale under the Securities Act
      pursuant to the Registration Statement.

     

    This
      letter shall serve as our standing notice to you that the Common Stock may
      be
      freely transferred by the Purchasers pursuant to the Registration Statement
      so
      long as the Purchasers certify they have complied with the prospectus delivery
      requirements of the Securities Act. You need not require further letters from
      us
      to effect any future legend-free issuance or reissuance of shares of Common
      Stock to the transferees of the Purchasers as contemplated by the Company’s
      Transfer Agent Instructions dated March      ,
      2006.
      This letter shall serve as our standing instructions with regard to this
      matter.

     

    Very
      truly yours,

     

    /s/
      Meadows Owens Collier Reed Cousins & Blau LLP

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
      D

     

    REGISTRATION
      STATEMENT QUESTIONNAIRE

     

     

    In
      connection with the preparation of the Registration Statement, please provide
      us
      with the following information:

     

    
      	
              1.

            	
              For
                use in the "Selling Shareholder" section of the Registration Statement,
                please state your or your organization’s name exactly as it should appear
                in the Registration Statement (the
“Holder”):

            


    

     

    ________________________________________________________________________

     

    
      	
              2.

            	
              Please
                provide the type and amount of securities of the Company that the
                Holder
                will own immediately after Closing, including those securities purchased
                by the Holder pursuant to the Securities Purchase Agreement and those
                Securities purchased by the Holder through other transactions:
                

            


    

    


    Securities
      purchased pursuant to the Securities Purchase Agreement:
      ________________

     

    ________________________________________________________________________

    


    Other
      securities beneficially owned through other
      transactions:_____________________

     

    _______________________________________________________________________

     

    
      	
              3.

            	
              Has
                the Holder had any position, office or other material relationship
                within
                the past three years with the Company or its affiliates?
                

            


    

     

    _____
      Yes
      _____ No 

     

     

    If
      yes,
      please indicate the nature of any such relationships below: 

     

    _________________________________________________________

     

    _________________________________________________________

     

    _________________________________________________________

     

    _________________________________________________________

     

    
      	
              4.

            	
              If
                the Holder is an entity, identify the individual or individuals who
                have
                sole or shared voting or investment power over the Company’s securities
                owned by such entity: 

            


    

     

    _________________________________________________________

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              5.

            	
              Is
                the Holder a broker-dealer? (indicate “Yes” or “No”)
                ____________

            


    

     

    Is
      the
      Holder an affiliate of a broker-dealer? (indicate “Yes” or “No”)  ____________

     

    If
      the
      answer is yes, except as set forth below, the Holder purchased the shares in
      the
 ordinary
      course of business, and at the time of the purchase of the securities to be
      resold,  the
      seller had no agreements or understandings, directly or indirectly, with any
      person to  distribute
      them. 

     

    State
      any
      exceptions here: 

     

    ________________________________________________________________________

     

    ________________________________________________________________________

     

    


    The
      undersigned has reviewed the answers to the above questions and affirms that
      the
      same are true, complete and accurate. The undersigned agrees to notify the
      Company of any changes in the foregoing information. 

     

    
      	
              Dated:
                ______________, 2006

               

            	
              _________________________________

               

              _________________________________

               

              _________________________________

              (Please
                sign your name in exactly the same manner as the certificate(s) for
                the
                shares being registered)

               

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
      E

     

    INVESTOR
      SUITABILITY QUESTIONNAIRE

    Before
      any sale of Common Stock by Silverleaf Resorts, Inc can be made to you, this
      Questionnaire must be completed and returned to Oppenheimer & Co. Inc. Attn:
      Investment Banking Department, 125 Broad Street, 16th
      Floor., New York, NY 10004.

     

     

    
      	 	
              1.

            	
              IF
                YOU ARE AN INDIVIDUAL PLEASE FILL IN THE IDENTIFICATION QUESTIONS
                IN (A)
                IF YOU ARE AN ENTITY PLEASE FILL IN THE IDENTIFICATION QUESTIONS
                IN
                (B)

            


    

     

    A.
      INDIVIDUAL IDENTIFICATION QUESTIONS

     

    Name_________________________________________________________

    (Exact
      name as it should appear on stock certificate)

     

    Residence
      Address_________________________________________________________

     

    Home
      Telephone
      Number_________________________________________________________

     

    Fax
      Number_________________________________________________________

     

    Date of Birth_________________________________________________________

     

    Social Security Number_________________________________________________________

     

    B.
      IDENTIFICATION QUESTIONS FOR ENTITIES

     

    Name_________________________________________________________

    (Exact
      name as it will appear on stock certificate)

     

    Address
      of Principal

    Place
      of
      Business_________________________________________________________

     

    State
      (or
      Country) of Formation

    or
      Incorporation_________________________________________________________     

     

    Contact
      Person_________________________________________________________

     

    Telephone
      Number _(__)____________________________________________________

     

    Type
      of
      Entity

    (corporation,
      partnership, 

    trust,
      etc.)_________________________________________________________

          

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Was
      entity formed for the purpose of this investment?

     

    Yes
           
      No
     

     

    2. DESCRIPTION
      OF INVESTOR

    


    The
      following information is required to ascertain whether you would be deemed
      an
“accredited investor” as defined in Rule 501 of Regulation D under the
      Securities Act. Please check whether you are any of the following:

     

    
      	 	o	
              a
                corporation or partnership with total assets in excess of $5,000,000,
                not
                organized for the purpose of this particular
                investment

            


    

     

    
      	 	o	
              private
                business development company as defined in Sec-tion 202(a)(22) of
                the
                Investment Advisers Act of 1940 [a U.S. venture capital fund which
                invests
                primarily through private placements in non-publicly traded secu-rities
                and makes available (either directly or through co-investors) to
                the
                portfolio companies significant guidance concerning management, operations
                or business objectives

            


    

     

    
      	 	o	
              a
                Small Business Investment Company licensed by the U.S. Small Business
                Administration under Section 301(c) or (d) of the Small Business
                Investment Act of 1958

            


    

     

    
      	 	o	
              an
                investment company registered under the Investment Company Act of
                1940 or
                a business development company as defined in Section 2(a)(48) of
                that
                Act

            


    

     

    
      	 	o	
              a
                trust not organized to make this particular investment, with total
                assets
                in excess of $5,000,000 whose purchase is directed by a sophisticated
                person as des-cribed in Rule 506(b)(2)(ii) of the Securities Act of
                1933 and who completed item 4 below of this
                questionnaire

            


    

     

    
      	 	o	
              a
                bank as defined in Section 3(a)(2) or a savings and loan association
                or other institution defined in Section 3(a)(5)(A) of the Securities
                Act of 1933 acting in either an individual or fiduciary
                capacity

            


    

     

    
      	 	o	
              an
                insurance company as defined in Section 2(13) of the Securities Act
                of 1933

            


    

     

    
      	 	o	
              an
                employee benefit plan within the meaning of Title I of the Employee
                Retirement Income Security Act of 1974 (i) whose investment decision
                is made by a fiduciary which is either a bank, savings and loan
                association, insurance company, or registered investment advisor,
                or
                (ii) whose total assets exceed $5,000,000, or (iii) if a
                self-directed plan, whose investment decisions are made solely by
                a person
                who is an accredited investor and who completed Part I of this
                questionnaire;

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	o	
              a
                charitable, religious, educational or other organiza-tion described
                in
                Section 501(c)(3) of the Internal Revenue Code, not formed for the
                purpose of this invest-ment, with total assets in excess of
                $5,000,000

            


    

     

    
      	 	o	
              an
                entity not located in the U.S. none of whose equity owners are U.S.
                citizens or U.S. residents

            


    

     

    
      	 	o	
              a
                broker or dealer registered under Section 15 of the Securities
                Exchange Act of 1934

            


    

     

    
      	 	o	
              a
                plan having assets exceeding $5,000,000 established and maintained
                by a
                government agency for its employees

            


    

     

    
      	 	o	
              an
                individual who had individual income from all sources during each
                of the
                last two years in excess of $200,000 or
                the joint income of you and your spouse (if married) from all sources
                during each of such years in excess of
                $300,000

            


    

     

    
      	 	o	
              an
                individual who reasonably expects that either
                your own income from all sources during the current year to exceed
                $200,000 or
                the joint income of you and your spouse (if married) from all sources
                during the current year to exceed
                $300,000

            


    

     

    
      	 	o	
              an
                individual whose net worth as of the date you purchase the securi-ties
                offered, together with the net worth of your spouse, be in excess
                of
                $1,000,000

            


    

     

    
      	 	o	
              an
                entity in which all of the equity owners are accredited
                investors

            


    

     

    3. BUSINESS,
      INVESTMENT AND EDUCATIONAL EXPERIENCE 

     

    Occupation_________________________________________________________

     

    Number of Years_________________________________________________________

     

    Present Employer_________________________________________________________

     

    Position/Title_________________________________________________________

     

    Educational
      Background_________________________________________________________

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Frequency
      of prior investment (check one in each column):

    


    
      	
            	
              Stocks
                & Bonds

            	
              Venture
                Capital Investments

            
	
              Frequently

            	 	 
	
              Occasionally

            	 	 
	
              Never

            	 	 


    

     

    4. SIGNATURE

     

    The
      above
      information is true and correct. The undersigned recognizes that the Company,
      its counsel, and the Selling Shareholders are relying on the truth and accuracy
      of such information in reliance on the exemption contained in
      Subsection 4(2) of the Securities Act of 1933, as amended, and
      Regula-tion D prom-ulgated thereunder. The undersigned agrees to notify the
      Company promptly of any changes in the fore-going information which may occur
      prior to the investment.

     

    Executed  at ___________________, on  [_________
      ___], 2006

     

    


     

    _________________________________________________________

    (Signature)

     

    _________________________________________________________

    (Title
      if
      for Entity)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Exhibit
      F

     

    CERTIFICATE
      OF SUBSEQUENT SALE

    


    [Company
      Transfer Agent]

    [address
      and contact]

     

    RE: Sale
      of
      Shares of Common Stock of Silverleaf Resorts, Inc. (the “Company”) pursuant to
      the Company’s Prospectus dated _____________ (the “Prospectus”)

     

    Ladies
      and Gentlemen:

     

    The
      undersigned hereby certifies, in connection with the sale of shares of Common
      Stock of the Company included in the table of Selling Shareholders in the
      Prospectus, that the undersigned has sold the shares pursuant to the Prospectus
      and in a manner described under the caption “Plan of Distribution” in the
      Prospectus and that such sale complies with all applicable securities laws,
      including, without limitation, the Prospectus delivery requirements of the
      Securities Act of 1933, as amended.

     

    Selling
      Shareholder (the beneficial
      owner):__________________________________________

     

    Record
      Holder (e.g., if held in name of
      nominee):______________________________________

     

    Restricted
      Stock Certificate
      No.(s):_________________________________________________

     

    Number
      of
      Shares
      Sold:__________________________________________________________

     

    Date
      of
      Sale:__________________________________________________________________

     

    In
      the
      event that you receive a stock certificate(s) representing more shares of Common
      Stock than have been sold by the undersigned, then you should return to the
      undersigned a newly issued certificate for such excess shares in the name of
      the
      Record Holder and BEARING
      A RESTRICTIVE LEGEND.
      

     

    Very
      truly yours,

     

    Dated:____________________

     

    By:_________________________________________________________

     

    Print
      Name:___________________________________________________

     

    Title:________________________________________________________