EX 10.1
**AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED****REVOLVING CREDIT AGREEMENT**
     This AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this“Amendment”) is dated as of July 1, 2005 by and among (i) Silverleaf Resorts, Inc., a Texascorporation (the “Borrower”), (ii) Sovereign Bank, a federally chartered savings bank(“Sovereign”), and any other lending institutions from time to time party thereto (collectively,the “Banks”), and (iii) Sovereign Bank, a federally chartered savings bank, as agent for itself andthe other Banks (the “Agent”).
**W****I****T****N****E****S****S****E****T****H****:**
     WHEREAS, the Borrower, the Banks, and the Agent have entered into that certain Second Amendedand Restated Revolving Credit Agreement, dated as of July 30, 2004 (the “Credit Agreement”),pursuant to which the Banks have extended credit to the Borrower on the terms set forth therein;
     WHEREAS, the Borrower has requested that the Banks and the Agent agree to delete the covenantin the Credit Agreement concerning the Standby Management Agreement and amend certain otherprovisions; and
     WHEREAS, the Banks, the Agent and the Borrower have agreed to such deletion and amendments,subject to and on the terms and conditions set forth herein.
     NOW, THEREFORE, in consideration of the foregoing, and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, the parties heretohereby agree as follows:
     **1. ****Definitions**. All capitalized terms used herein and not expressly defined hereinshall have the same respective meanings given to such terms in the Credit Agreement.
     **2. ****Amendments to Credit Agreement**.
     **2.1.**Amendments to Section 1.1 of the Credit Agreement.
     2.1.1. The definition of the term “Collateral” is hereby amended and restated in itsentirety as follows:
 

 

     “Collateral. All the property, rights and interests of the Borrower and itsSubsidiaries that are or are intended to be subject to the security interests and mortgagescreated by the Security Documents, including, without limitation, the Consumer LoanCollateral, the Standby Servicing Agreement, and all the Inventory Collateral and ConsumerLoan Collateral under and as defined in the Inventory and Receivables Facility.”
     2.1.2. The definition of the term “Loan Documents” is hereby amended by adding thewords “the Negative Pledges,” immediately after the words “the Servicing Agreement,”.
     2.1.3. Section 1.1 of the Credit Agreement is hereby amended by inserting thefollowing definitions in proper alphabetical order:
     “CapitalSource. CapitalSource Finance LLC, a Delaware limited liabilitycompany.”
     “CapitalSource Documents. The documents listed on ***Schedule 1.******1(g)*** hereto.”
     “CapitalSource Facility. Those certain credit facilities provided byCapitalSource to the Borrower pursuant to the CapitalSource Documents.”
     “Intercreditor Agreement. The Amended and Restated Intercreditor Agreement,dated as of May 26, 2005, among the Agent, Textron, CapitalSource and Resort Funding.”
     “Negative Pledges. The documents listed in ***Schedule 1.******1(f)*** hereto.”
     “Resort Funding. Resort Funding LLC, a Delaware limited liability company.”
     “Resort Funding Documents. The documents listed on Schedule 1.1(h) hereto.”
     “Resort Funding Facility. That certain credit facility provided by ResortFunding to the Borrower pursuant to the Resort Funding Documents.”
     2.1.4. The definition of the “Required Consumer Loan Documents” is hereby amended byadding to the end of clause (1) thereof the following:
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“In the case of any promissory note or comparable instrument of indebtedness signed by aconsumer borrower in respect of an Interval at the Oak ‘N Spruce Resort, such promissorynote or comparable instrument shall include the language required by 16 C.F.R. § 433.”
     2.1.5. The definition of “Security Documents” is hereby amended by deleting the words“the Standby Management Agreement Assignment,”, “the Assignments of Developments Rights”and “the Assignment of Management Agreement,”.
     2.1.6. Section 1.1 of the Credit Agreement is hereby amended by deleting each of thefollowing defined terms in their entirety:
     “Standby Management Agreement Assignment. The Assignment of StandbyManagement Agreement, dated as of April 30, 3002, among the Borrower, the Standby Manager,and the Agent, as amended by Amendment No. 1 of even date herewith, pursuant to which theBorrower assigns all of its rights under the Standby Management Agreement to the Agent.
     Standby Management Agreement. The Consulting Agreement, executed by theparties on April 27, 2002 and April 29, 2002, between the Standby Manager and the Borrower,as amended by the letter agreement, dated March 22, 2004, pursuant to which the StandbyManager (1) monitors the operations of the Borrower and the Silverleaf Club and theBorrower’s compliance with the Business Plan, (2) assists the Borrower with the preparationof the reports deliverable to the Banks by the Borrower pursuant to this Credit Agreement,and (3) assumes the management of the Eligible Projects upon the occurrence of an Event ofDefault in accordance with the terms of this Credit Agreement.
     Standby Manager. J&J Limited, Inc., or such other Person selected by theBorrower and acceptable to the Agent, in its sole discretion, to act as standby manager inaccordance with the Standby Management Agreement.”
     **2.2. Amendment to Section 5.8 of the Credit Agreement**. Section 5.8 of the Credit Agreement ishereby amended and restated in its entirety as set forth below:
     “**5.8.****Cross Collateralization**. The Collateral also secures the obligationsof the Borrower under the Inventory and Receivables Facility. Upon repayment of the Loanand the satisfaction by the Borrower of all of the Obligations, the Collateral shallcontinue to secure the Inventory and Receivables Facility, as provided in the
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documents evidencing and securing the Inventory and Receivables Facility. TheBorrower further acknowledges and agrees that upon repayment in full of the Inventory andReceivables Facility, the Agent’s security interest in the collateral securing suchfacility shall automatically become a first priority security interest securing theBorrower’s Obligations hereunder and the Borrower shall take such steps as the Agent mayrequest to deliver such collateral to the Agent and to confirm the Agent’s first prioritysecurity interest therein. The Agent hereby acknowledges and agrees that it will releaseand terminate its interest in and rights under the Standby Servicing Agreement uponTextron’s release and termination (in form and substance satisfactory to the Agent) ofTextron’s rights under and interests in the servicing agreement between Textron and theStandby Servicer.”
     **2.3. Amendment to Section 6.10 of the Credit Agreement**. The penultimate sentence of Section6.10 of the Credit Agreement is hereby amended and restated in its entirety as follows:
“The Borrower has no knowledge of any default or event of default under any of the TextronDocuments, the CapitalSource Documents, the Resort Funding Documents, or any otherdocuments evidencing any other material Indebtedness of the Borrower or any of itsSubsidiaries, except as disclosed to the Banks in writing, and none of Textron,CapitalSource, Resort Funding or any other lender has accelerated any loan obligation ofthe Borrower or any of its Subsidiaries on account of any such specified default or eventof default.”
     **2.4. Amendment to Section 6.29 of the Credit Agreement**. Section 6.29 of the Credit Agreementis hereby amended and restated in its entirety as set forth below:
     “**6.29.****Standby Servicer**. The Standby Servicing Agreement is in full forceand effect and has not been modified, amended, or terminated, other than the FirstAmendment to Backup Servicing Agreement dated as of April 19, 2002 and the Amendment No. 2to Backup Servicing Agreement dated May 4, 2005.”
     **2.5. Amendment to Section 6.32**. The first sentence of Section 6.32 is hereby amended andrestated in its entirety as follows:
     **“6.32.****Other Facilities**. There is no event of default or event which, withthe passage of time, notice or both, would constitute an event of default under any of theTextron Facility, the CapitalSource
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Facility, the Resort Funding Facility or any other facility representing materialIndebtedness of the Borrower or any of its Subsidiaries and each of the Borrower and itsSubsidiaries is in good standing under all of such facilities.”
     **2.6. Amendment to Section 7.2 of the Credit Agreement**. Section 7.2 of the Credit Agreement ishereby amended and restated in its entirety as set forth below:
     **“7.2.****Maintenance of Office; Management**. The Borrower will maintain itschief executive office at 1221 Riverbend, Suite 120, Dallas, Texas or at such other placein the United States of America as the Borrower shall designate upon written notice to theAgent, where notices, presentations and demands to or upon the Borrower in respect of theLoan Documents may be given or made. Unless replaced by another manager in accordance withthe terms of the Loan Documents, the Borrower shall remain engaged in the active managementof the Eligible Projects and shall continue to perform duties substantially similar tothose presently performed as provided in the management agreement relating to each EligibleProject.”
     **2.7. Amendment to Section 7.18.1**. Section 7.18.1 of the Credit Agreement is hereby amended bydeleting the words “, subject to the Intercreditor Agreement”.
     **2.8. Amendment to Section 7.20 of the Credit Agreement**. Section 7.20 of the Credit Agreementis hereby amended and restated in its entirety as set forth below:
     “**7.20.****Standby Servicing Agreement**. The Borrower will maintain the StandbyServicing Agreement in full force and effect.”
     **2.9. Amendment to Section 7.24 of the Credit Agreement**. Section 7.24 of the Credit Agreementis hereby amended and restated in its entirety as follows:
     **“7.24.****Textron Facility, CapitalSource Facility, Resort Funding Facility, DZBank Securitization, Textron Securitization, Bond Holder Exchange Transaction and OtherIndebtedness****.**The Borrower and its Subsidiaries will comply with each of theterms and conditions of the Textron Documents, the CapitalSource Documents, the ResortFunding Documents, the DZ Bank Documents, the Textron Securitization Documents, the BondHolder Exchange Documents, and the documents evidencing any other material Indebtedness ofthe Borrower or any of it Subsidiaries and will promptly deliver to the Banks, upon receiptby Borrower or any of its Subsidiaries, copies of
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any notices received by Borrower or any of its Subsidiaries in connection with any ofthe foregoing credit facilities**.”**
     **2.10. Amendment to Section 8.21 of the Credit Agreement**. Section 8.21 of the Credit Agreementis hereby amended by deleting the words “the Standby Management Agreement,”.
     **2.11. Amendment to Section 9.3 of the Credit Agreement**. Section 9.3 of the Credit Agreementis hereby amended by inserting the following words after the reference to the “Heller Facility” inthe first sentence thereof: “, the CapitalSource Facility, the Resort Funding Facility”.
     **2.12. Amendment to Section 10.17 of the Credit Agreement**. Section 10.17 of the CreditAgreement is hereby amended and restated in its entirety as set forth below:
     “**10.17.****Servicing Agreements**. Each of the Servicing Agreement and theStandby Servicing Agreement shall be in full force and effect.”
     **2.13. Amendment to Section 10.20 of the Credit Agreement**. Section 10.20 of the CreditAgreement is hereby amended and restated in its entirety as set forth below:
     **“10.20. [****Intentionally Omitted****].”**
     **2.14. Amendment to Section 12.1**. Clauses (f) and (g) of Section 12.1 of the Credit Agreementare hereby amended and restated in their entirety as follows:
     “(f) the Borrower or any of its Subsidiaries shall fail to pay when due, or within anyapplicable period of grace, any obligation for borrowed money (including, withoutlimitation, any obligation under the Textron Facility, the CapitalSource Facility, theResort Funding Facility, the New Notes, the Inventory and Receivables Facility, the DZ BankSecuritization, or the Textron Securitization), or credit received in respect of anyCapitalized Leases in excess of $100,000, or fail to observe or perform any material term,covenant or agreement contained in any agreement by which it is bound, evidencing orsecuring borrowed money or credit received (including, without limitation, the New Notesand the agreements and instruments entered into by the Borrower in connection with theCapitalSource Facility, the Resort Funding Facility, the Textron Facility, the Inventoryand Receivables Facility, the DZ Bank Securitization, the Textron Securitization, or theNew Notes), or in respect of any Capitalized Leases in excess of $100,000 for such period of time as
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would permit (assuming the giving of appropriate notice if required) the holder or holders thereof or ofany obligations issued thereunder to accelerate the maturity thereof, or any such holder orholders shall rescind or shall have a right to rescind the purchase of any suchobligations;
     (g) an event of default shall occur under the DZ Bank Securitization, the TextronSecuritization, the Textron Facility, the CapitalSource Facility, the Resort FundingFacility, the New Notes or the Inventory and Receivables Facility;”
     **2.15. Amendment to Section 12.4 of the Credit Agreement**. Section 12.4 of the Credit Agreementis hereby amended and restated in its entirety as set forth below:
     “**12.4.****Standby Servicer****.**Upon an Event of Default, the Agent may, withoutdemand or notice of any nature whatsoever, terminate any then existing servicing agreementand replace any then existing servicer with the Standby Servicer or such other servicer asthe Agent may select in its sole and absolute discretion. Upon an Event of Default, at theelection of the Agent, the Borrower agrees that the Standby Servicer or such other serviceras the Agent may select in its sole and absolute discretion may assume control over theservicing of the Consumer Loan Collateral or any other consumer loans pledged to the Agent,reporting to the Banks.”
     **2.16. Amendment to Schedules to the Credit Agreement**. Exhibits A, B and C to this Amendmentshall be attached to the Credit Agreement as Schedule 1.1(f), Schedule 1.1(g) and Schedule 1.1(h),respectively.
     **3. ****Representations and Warranties; No Default**. The Borrower hereby represents andwarrants to the Banks and the Agent as follows:
     (a) Representations and Warranties in Credit Agreement. Each of therepresentations and warranties of the Borrower contained in the Credit Agreement, asamended by this Amendment, or in any document or instrument delivered pursuant to or inconnection with the Credit Agreement (including, without limitation, this Amendment) aretrue as of the date hereof and no Default or Event of Default has occurred and iscontinuing.
     (b) Authority, No Conflicts, Etc. The execution, delivery and performance ofthis Amendment (i) are within the corporate authority
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of the Borrower, (ii) have been dulyauthorized by all necessary corporate proceedings on behalf of the Borrower, (iii) do notconflict with or result in any material breach or contravention of any provision of law,statute, rule, or regulation to which the Borrower is subject or any judgment, order, writ,injunction, license, or permit applicable to the Borrower so as to materially adverselyaffect the assets, business, or any activity of the Borrower, and (iv) do not conflict withany provision of the corporate charter or bylaws of the Borrower or any agreement or otherinstrument binding upon the Borrower. The execution, delivery, and performance of thisAmendment will result in a valid and legally binding obligation of the Borrower enforceableagainst it in accordance with the terms and provisions hereof.
     **4. ****Effect of Amendment**. Except as expressly set forth herein, this Amendment does notconstitute an amendment or waiver of any term or condition of the Credit Agreement or any otherLoan Document, and all such terms and conditions shall remain in full force and effect and arehereby ratified and confirmed in all respects. Nothing contained in this Amendment shall beconstrued to imply a willingness on the part of the Agent or any Bank to grant any similar or otherfuture amendments of any of the provisions of the Credit Agreement or the other Loan Documents.Nothing contained herein shall in any way prejudice, impair or otherwise adversely affect anyrights or remedies of the Agent and the Banks under the Credit Agreement or any other LoanDocument.
     **5. ****Counterparts**. This Amendment may be executed in any number of counterparts, eachof which taken together shall constitute one agreement.
     **6. ****Successors and Assigns**. This Amendment shall be binding upon and inure to thebenefit of the successors and permitted assigns of the parties hereto.
     **7. ****Governing Law****. THIS AMENDMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT ASOTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF NEW YORK ANDSHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID STATE OFNEW YORK. THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AMENDMENT OR ANY OF THEOTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURTSITTING THEREIN AND CONSENT TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUITBEING**
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**MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN §18 OF THE CREDIT AGREEMENT. THEBORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCHSUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.**
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     **IN WITNESS WHEREOF**, the parties hereto have executed this Amendment effective as of the datefirst above written.       BORROWER:       SILVERLEAF RESORTS, INC.       By: /S/ HARRY J. WHITE, JR.       Name: Harry J. White, Jr.  Title: CFO       AGENT AND BANK:       SOVEREIGN BANK       By: /S/ JOHN BAER       Name: John Baer  Title: Vice President
Exhibits attached to Agreement and not filed herewith:
Exhibit A: Schedule 1.1(f) Negative Pledges