Document:

exv10w2

 

Ex. 10.2

EXECUTION COPY 

AMENDMENT NO. 1

Dated as of March 28, 2005

to

LOAN AND SECURITY AGREEMENT

Dated as of December 19, 2003

     THIS AMENDMENT NO. 1 to LOAN AND SECURITY AGREEMENT is entered into as of March 28, 2005
between SILVERLEAF FINANCE II, INC., a Delaware corporation (“SPV”), and TEXTRON FINANCIAL
CORPORATION, a Delaware corporation (“TFC”). Capitalized terms used herein and not defined
herein having the meaning ascribed thereto in Schedule I to the Loan and Security Agreement, dated
as of December 19, 2003 (as may be amended, restated, supplemented or otherwise modified from time
to time, the “SPV Loan Agreement”), between SPV and TFC.

PRELIMINARY STATEMENTS

A. SPV and TFC desire to amend certain provisions of the SPV Loan Agreement in order to extend an
additional advance in the principal amount of $26,333,737.55 to SPV to be secured, in part, with
additional Receivables pledged under the SPV Loan Agreement, all in accordance with the terms of
the SPV Loan Agreement, as amended hereby.

B. In consideration of the foregoing, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

SECTION 1. Amendments to the SPV Loan Agreement. Effective as of the date hereof, subject
to the satisfaction of the conditions precedent set forth in Section 2 below, the SPV Loan
Agreement is hereby amended as follows:

     1.1 Section 2.1 is hereby amended and restated as follows:

     “2.1 Loan. Upon the terms and subject to the conditions set forth in this Loan
Agreement, including satisfaction of the conditions precedent in Section 4, TFC shall make an
advance (the “First Advance”) to SPV on December 19, 2003 in a principal amount equal to
the lesser of (x) $66,380,808.54 or (y) the Advance Amount then in effect. On March 28, 2005 (the
“Second Advance Funding Date”) TFC shall make a second advance in a principal amount equal
to $26,333,737.55 (the “Second Advance” and together with the First Advance, the
“Loan”); provided, however, the sum of the First Advance and the Second Advance shall not
exceed the Advance Amount then in effect. At the request of SPV, on the Closing Date, proceeds of
the First Advance will be disbursed by TFC to pay the purchase price of the Receivables acquired by
SPV from Developer and to pay dividends to Developer. At the request of SPV, on the Second Advance
Funding Date, proceeds of the Second Advance will be disbursed by TFC to pay the purchase price of
the Receivables acquired by SPV from Developer and to pay dividends to Developer. Amounts repaid
in respect of the Loan may not be reborrowed.”

 

 

     1.2 Section 2.2 is hereby amended and restated as follows:

     “2.2 Interest Payment. The aggregate principal amount of the First Advance which is
outstanding from time to time shall bear interest at a rate equal to the First Advance Interest
Rate or, at TFC’s election and sole discretion after the occurrence of an Event of Default or the
First Advance Maturity Date, at the First Advance Default Interest Rate. The aggregate principal
amount of the Second Advance which is outstanding from time to time shall bear interest at a rate
equal to the Second Advance Interest Rate or, at TFC’s election and sole discretion after the
occurrence of an Event of Default or the Second Advance Maturity Date, at the Second Advance
Default Interest Rate. Interest, in each case, shall be payable in arrears on each Payment Date in
respect of the immediately preceding Settlement Period or, after the occurrence of an Event of
Default, the First Advance Maturity Date with respect to interest due on the First Advance or the
Second Advance Maturity Date with respect to interest due on the Second Advance, upon demand. Any
payment received by TFC later than 12 noon E.S.T. on any Business Day shall be deemed to have been
received on the next Business Day.”

     1.3 Section 2.5(a) is hereby amended and restated as follows:

     “(a) Final Payments. SPV agrees to pay (i) the entire outstanding principal balance
of the First Advance in full on or before the First Advance Maturity Date and (ii) the entire
outstanding principal balance of the Second Advance, together with all other Obligations, in full
on or before the Second Advance Maturity Date.”

     1.4 The first sentence of Section 2.5(c) is hereby replaced with the following two sentences:

     “On each Payment Date, SPV shall prepay (i) the principal amount of the First Advance by an
amount equal to 85% of the First Advance Principal Distributable Amount and (ii) the principal
amount of the Second Advance by an amount equal to 85% of the Second Advance Principal
Distributable Amount, in each case, for the immediately preceding Settlement Period. If at any
time it is determined, absent manifest error, that the aggregate Outstanding Balance of PPM
Receivables in Pool II determined as of the Second Advance Funding Date related to the Second
Advance is greater than zero, SPV shall (within one Business Day of such determination) repay such
amount to TFC.”

     1.5 Section 2.5(d) is hereby amended and restated as follows:

     “(d) Timeshare Upgrades. With respect to the Pledged Receivables that become Upgrade
Receivables during a Settlement Period, and without duplication of principal payments in respect of
such Pledged Receivables actually received with respect to such Pledged Receivables, SPV shall be
deemed to have received a principal payment in an amount equal to the Outstanding Balance of such
Pledged Receivables, and the Subservicer shall remit to the Collection Account, prior to the
immediately succeeding Payment Date, the excess of (x) such amount over (y) the amount, if any,
deducted from the First Advance Principal Distributable Amount or the Second Advance Principal
Distributable Amount, as the case may be, for such Settlement Period pursuant to clause (iv) of the
definition of the First Advance Principal Distributable Amount or the Second Advance Principal
Distributable Amount.

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     1.6 Clause (ii) of Section 3.2(a) is hereby amended and restated as follows:

     “(ii) the aggregate Outstanding Balance of any Exchange Receivable attributable to Pool I
shall not cause the aggregate Outstanding Balance of all Exchange Receivables attributable to Pool
I for such Settlement Period and each preceding Settlement Period to exceed 20% of the Initial
Advance Amount; the aggregate Outstanding Balance of any Exchange Receivable attributable to Pool
II shall not cause the aggregate Outstanding Balance of all Exchange Receivables attributable to
Pool II for such Settlement Period and each preceding Settlement Period to exceed 20% of the
principal amount of the Second Advance on the Second Advance Funding Date; the aggregate
Outstanding Balance of any Replacement Receivables attributable to Pool I shall not cause the
aggregate Outstanding Balance of all Replacement Receivables attributable to Pool I for such
Settlement Period and each preceding Settlement Period to exceed 20% of the Initial Advance Amount;
and the aggregate Outstanding Balance of any Replacement Receivables attributable to Pool II shall
not cause the aggregate Outstanding Balance of all Replacement Receivables attributable to Pool II
for such Settlement Period and each preceding Settlement Period to exceed 20% of the principal
amount of the Second Advance on the Second Advance Funding Date;”

     1.7 Clause (vi) of Section 3.2(a) is hereby amended and restated in its entirety to read:

     “(vi) each of the following shall be true:

          (A) (1) with respect to all Exchange Receivables to be added into Pool I and all
Deleted Receivables to be removed from Pool I for such Substitution Date, the aggregate
Outstanding Balance of all such Exchange Receivables shall equal or exceed (but only to the
extent necessary to allow whole Receivable exchanges) the aggregate Outstanding Balance of
all such Deleted Receivables as of such Substitution Date;

               (2) with respect to all Exchange Receivables to be added into Pool II and all Deleted
Receivables to be removed from Pool II for such Substitution Date, the aggregate Outstanding
Balance of all such Exchange Receivables shall equal or exceed (but only to the extent
necessary to allow whole Receivable exchanges) the aggregate Outstanding Balance of all such
Deleted Receivables as of such Substitution Date;

          (B) (1) with respect to all Replacement Receivables to be added into Pool I and Upgrade
Receivables to be removed from Pool I for such Substitution Date, the aggregate Outstanding
Balance of all such Replacement Receivables shall equal or exceed (but only to the extent
necessary to allow whole Receivable replacements) the aggregate Outstanding Balance of all
such Upgrade Receivables as of such Substitution Date;

               (2) with respect to all Replacement Receivables to be added into Pool II and Upgrade
Receivables to be removed from Pool II for such Substitution Date, the aggregate Outstanding
Balance of all such Replacement Receivables shall equal or exceed (but only to the extent
necessary to allow whole Receivable replacements) the aggregate Outstanding Balance of all
such Upgrade Receivables as of such Substitution Date;

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          (C) (1) with respect to all Substitute Receivables to be added into Pool I for such
Substitution Date that constitute ONS Receivables, the aggregate Outstanding Balance of all
such ONS Receivables shall not exceed the aggregate Outstanding Balance of all Deleted
Receivables and Upgrade Receivables to be removed from Pool I for such Substitution Date
that constitute ONS Receivables;

               (2) with respect to all Substitute Receivables to be added into Pool II for such
Substitution Date that constitute ONS Receivables, the aggregate Outstanding Balance of all
such ONS Receivables shall not exceed the aggregate Outstanding Balance of all Deleted
Receivables and Upgrade Receivables to be removed from Pool II for such Substitution Date
that constitute ONS Receivables;

          (D) (1) with respect to all Substitute Receivables to be added into Pool I for such
Substitution Date that constitute PPM Receivables, the aggregate Outstanding Balance of all
such PPM Receivables shall not exceed the aggregate Outstanding Balance of all Deleted
Receivables and Upgrade Receivables to be removed from Pool I for such Substitution Date
that constitute PPM Receivables;

               (2) no Substitute Receivable to be added into Pool II is a PPM Receivables;

          (E) with respect to all Substitute Receivables to be added into Pool I, the aggregate
Outstanding Balance of all such Substitute Receivables shall equal or exceed the aggregate
Outstanding Balance of all Deleted Receivables and Upgrade Receivables for such Substitution
Date that were included in Pool I; and

          (F) with respect to all Substitute Receivables to be added into Pool II, the aggregate
Outstanding Balance of all such Substitute Receivables shall equal or exceed the aggregate
Outstanding Balance of all Deleted Receivables and Upgrade Receivables for such Substitution
Date that were included in Pool II.”

     1.8 Each instance of the term “Maturity Date” in Section 5.6 is hereby replaced with the term
“Second Advance Final Maturity Date.”

     1.9 Clauses (vi) and (vii) of Section 6.1 are hereby amended and restated in their entirety as
follows:

     “(vi) the aggregate Outstanding Balance of PPM Receivables in Pool I determined as of the
Cut-off Date does not exceed 5% of the aggregate Outstanding Balance of the Sold Receivables and
the Contributed Receivables determined as of the Cut-off Date, and, as of the Second Advance
Funding Date, no Pledged Receivable in Pool II is a PPM Receivable; and (vii) as of each
Substitution Date, the aggregate Outstanding Balance of Exchange Receivables and Replacement
Receivables to be added into Pool I for that Substitution Date that constitute PPM Receivables does
not exceed the aggregate Outstanding Balance of the Deleted Receivables and Upgrade Receivables for
that Substitution Date that constitute PPM Receivables, and no Substitute Receivable to be added
into Pool II is a PPM Receivable.”

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     1.10 Section 7.6(i) is hereby amended and restated as follows:

     “(i) Monthly Reports. As soon as available and in any event within nine (9) days
after the end of each calendar month, a report showing (A)(I) the trial balance of the Pledged
Receivables in Pool I and (II) the trial balance of the Pledged Receivables in Pool II; (B)(I) a
current aging and delinquency report with respect to the Pledged Receivables in Pool I and (II) a
current aging and delinquency report with respect to the Pledged Receivables in Pool II; (C)(I) a
report detailing the collections on each of the Pledged Receivables in Pool I and (II) a report
detailing the collections on each of the Pledged Receivables in Pool II; (D)(I) an Advance Amount
report with respect to the First Advance and, (II) an Advance Amount report with respect to the
Second Advance; (E) monthly reports from the Account Agent and Blocked Account Agreement; and (F)
other monthly reports required pursuant to the Subservicing Agreement.”

     1.11 Section 7.32 is hereby amended and restated as follows:

     “7.32 Breakage Costs. In the event (i) the First Advance is paid or the Confirmation
to the ISDA Master Agreement, dated the Closing Date, is terminated prior to July 1, 2010 or (ii)
the Second Advance is paid or the Confirmation to the ISDA Master Agreement, dated as of March 28,
2005, is terminated prior to September 1, 2011, any related breakage costs or early termination
payment will be paid by SPV to TFC upon demand therefor.”

     1.12 Schedule I to the SPV Loan Agreement is hereby amended by adding the following new terms,
each in the correct alphabetical position:

     First Advance. Defined in Section 2.1 of the SPV Loan Agreement.

     First Advance Default Interest Rate. 9.035% per annum; provided, however that the
First Advance Default Interest Rate shall in no event exceed the highest interest rate permitted to
be charged under applicable usury laws.

     First Advance Interest Rate. 7.035% per annum.

     First Advance Maturity Date. The earlier of (i) the Payment Date occurring on March,
2014 any (ii) the date on which the First Advance becomes due under Section 9.1 of the SPV Loan
Agreement.

     First Advance Principal Distributable Amount. With respect to any Settlement Period,
the sum of (i) Principal Collections received during such Settlement Period or deemed to have been
received during such Settlement Period pursuant to Section 2.5(d) of the SPV Loan Agreement
with respect to Receivables in Pool I, plus (ii) the aggregate Outstanding Balance of all
Receivables in Pool I which were actually charged off during such Settlement Period and which were
charged off prior to becoming ninety days past due, plus (iii) the aggregate Outstanding
Balance of all Receivables in Pool I which are past due 91 to 120 days, minus (iv) the
aggregate Outstanding Balance of Replacement Receivables contributed by Developer to SPV on or
prior to the Payment Date immediately following such Settlement Period, but only to the extent that
(A) such Replacement Receivables relate to Permitted Timeshare Upgrades of Receivables during such
Settlement Period, (B) such aggregate Outstanding Balance does not

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exceed the aggregate Outstanding Balance of Receivables that became Upgrade Receivables during
such Settlement Period, (C) the conditions to such Replacement Receivables becoming Substitute
Receivables pursuant to Section 3.2 of the SPV Loan Agreement are satisfied on or prior to such
Payment Date, and (D) such Receivables are included in Pool I.

     Pool I. The pool of Receivables sold or contributed by Developer to SPV and pledged
to TFC on the Closing Date and each Substitute Receivable added to Pool I on a Substitution Date.

     Pool II. The pool of Receivables sold or contributed by Developer to SPV and pledged
to TFC on the Second Advance Funding Date and each Substitute Receivable added to Pool II on a
Substitution Date.

     Second Advance. Defined in Section 2.1 of the SPV Loan Agreement.

     Second Advance Default Interest Rate. 11.90% per annum; provided, however that the
Second Advance Default Interest Rate shall in no event exceed the highest interest rate permitted
to be charged under applicable usury laws.”

     Second Advance Funding Date. Defined in Section 2.1 of the SPV Loan
Agreement.

     Second Advance Interest Rate. 7.90% per annum.

     Second Advance Maturity Date. The earlier of (i) the Payment Date occurring in
September, 2011 and (ii) the date on which the Second Advance becomes due under Section 9.1
of the SPV Loan Agreement.

     Second Advance Principal Distributable Amount. With respect to any Settlement Period,
the sum of (i) Principal Collections received during such Settlement Period or deemed to have been
received during such Settlement Period pursuant to Section 2.5(d) of the SPV Loan Agreement
with respect to Receivables in Pool II, plus (ii) the aggregate Outstanding Balance of all
Receivables in Pool II which were actually charged off during such Settlement Period and which were
charged off prior to becoming ninety days past due, plus (iii) the aggregate Outstanding
Balance of all Receivables in Pool II which are past due 91 to 120 days, minus (iv) the
aggregate Outstanding Balance of Replacement Receivables contributed by Developer to SPV on or
prior to the Payment Date immediately following such Settlement Period, but only to the extent that
(A) such Replacement Receivables relate to Permitted Timeshare Upgrades of Receivables during such
Settlement Period, (B) such aggregate Outstanding Balance does not exceed the aggregate Outstanding
Balance of Receivables that became Upgrade Receivables during such Settlement Period, (C) the
conditions to such Replacement Receivables becoming Substitute Receivables pursuant to Section 3.2
of the SPV Loan Agreement are satisfied on or prior to such Payment Date, and (D) such Receivables
are included in Pool II.

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     1.13 Schedule I to the SPV Loan Agreement is hereby amended by amending and restating
the following definitions:

     Applicable Default Rate. When used with reference to the First Advance, the First
Advance Default Interest Rate; when used with reference to Second Advance, the Second Advance
Default Interest Rate; and when used otherwise, the higher of the First Advance Default Interest
Rate and the Second Advance Default Interest Rate. 

     Applicable Interest Rate. When used with reference to the First Advance, the First
Advance Default Interest Rate; when used with reference to Second Advance, the Second Advance
Interest Rate; and when used otherwise, the higher of the First Advance Interest Rate and the
Second Advance Default Interest.

     Cut-off Date. With respect to the Receivables pledged to TFC pursuant to the SPV Loan
Agreement on the Closing Date, November 30, 2003, and with respect to the Receivables pledged to
TFC pursuant to the SPV Loan Agreement on the Second Advance Funding Date, February 28, 2005.

     Developer Address. 1221 Riverbend Drive, Suite 120, Dallas, Texas 75247, Attention:
Mr. Robert Mead, CEO, Telephone: 214-631-1166, Facsimile: 214-905-0514.

     Maturity Date. The First Advance Maturity Date or the Second Advance Maturity Date,
as applicable.

     SPV Address. 1221 Riverbend Drive, Suite 120, Dallas, Texas 75247, Attention: Mr.
Robert Mead, CEO, Telephone: 214-631-1166, Facsimile: 214-905-0514.

     SPV Hedge Agreement. The ISDA Master Agreement, Schedule and Confirmation, each dated
as of December 22, 2003 and the Confirmation, dated as of March 28, 2005, between SPV and TFC, as
amended or modified with the prior written consent of TFC and the Administrative Agent.

     SPV Note. Collectively, (i) the Amended and Restated SPV Note, dated the Second
Advance Funding Date, in the principal amount of $66,380,808.54 evidencing the First Advance and
(ii) the SPV Note, dated the Second Advance Funding Date, in the principal amount of $26,333,737.55
evidencing the Second Advance, in each case, executed and delivered by SPV to the Administrative
Agent concurrently with the funding of the Second Advance.

     1.14 Exhibits A, B, E, H and K to the SPV Loan Agreement are hereby amended and restated in
their entirety to read as set forth on Exhibit B attached hereto.

     SECTION 2. Conditions Precedent. The obligation of TFC to enter into this Amendment and to
fund the Second Advance shall be subject to the satisfaction of the conditions precedent set forth
below on or before the Second Advance Funding Date:

     (a) Developer, SPV and the Subject Person shall have executed and delivered (or cause to be
executed and delivered, as the case may be, by all parties thereto), to TFC fully executed copies
of the following (the “Second Advance Documents”):

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          (i) this Amendment,

          (ii) an Amended and Restated SPV Note, dated as of the Second Advance Funding Date, in
the principal amount of $66,380,808.54,

          (iii) a second SPV Note, dated as of the Second Advance Funding Date, in the principal
amount of $26,333,737.55,

          (iv) a Sale Assignment, dated as of the Second Advance Funding Date, between Developer
and SPV,

          (v) a recordable bill of sale made by Developer evidencing the sale or contribution by
Developer to SPV of all Receivables and related Timeshare Mortgages related to the Second
Advance and a recordable collateral assignment by SPV to TFC of all Receivables and related
Timeshare Mortgages related to the Second Advance,

          (vi) Amendment No. 1 to the Developer Transfer Agreement, dated as of the Second
Advance Funding Date, between Developer and SPV,

          (vii) Amendment No. 1 to the Subservicing Agreement, dated as of the Second Advance
Funding Date, among TFC, Developer and Textron Business Services Inc.,

          (viii) Amendment No. 1 to the Back-Up Servicing Agreement, dated as of the Second
Advance Funding Date, between Developer, TFC and Back-Up Servicer,

          (ix) a Confirmation, dated as of March 28, 2005, to the Master ISDA Agreement, dated as
of December 19, 2003, between SPV and TFC, and

          (x) such other instruments and documents as TFC shall require.

     (b) TFC and the Administrative Agent shall have completed, and been satisfied with, its legal
and business due diligence regarding the Pledged Receivables related to the Second Advance.

     (c) TFC shall have received from counsel to SPV and Developer, opinions satisfactory to TFC
and the Administrative Agent (including as to the addresses thereof), which opinion shall include
such matters as were covered by the opinions delivered on the Closing Date, taking into account the
matters contemplated by the Second Advance Documents and such other matters as TFC or the
Administrative Agent may reasonably request.

     (d) TFC shall have received a Contract Schedule setting forth the Receivables securing the
Second Advance.

     (e) All of the following shall be true:

          (i) TFC shall have obtained such searches of the applicable public records as it deems
necessary under applicable laws to verify that SPV has a valid ownership

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interest, and TFC has a first and prior perfected Lien and security interest, covering
the Collateral, subject only to Permitted Liens and Encumbrances;

          (ii) TFC and Heller Financial Inc. shall have entered into such escrow and pay-off
arrangements as TFC shall require, and the conditions to the release of such escrow shall
have been satisfied or waived;

          (iii) SPV shall have delivered to TFC Uniform Commercial Code termination statements
from prior lenders and financing statements from Developer and SPV covering its portion of
the Collateral, recorded in the public records of all Lien Filing Offices in which the
Resorts, Developer or SPV are located (as defined by the Code) and filed with each
applicable Secretary of State; and

          (iv) the Pledged Receivables shall be endorsed by Developer in favor of SPV and by SPV
in favor of TFC.

     (f) All Timeshare Mortgages and Pledged Receivables endorsed and assigned to TFC must have
evidence thereon of payment of all required documentary stamps and intangible taxes, if any are
required.

     (g) The mortgagee’s title insurance policies shall be in form and substance satisfactory to
TFC, shall be issued by the Title Insurance Company, name TFC as the insured party therein, contain
such exceptions and conditions to title as TFC shall approve in writing, which approval shall not
be unreasonably withheld, shall contain such affirmative coverage as TFC deems reasonably necessary
and shall have been delivered to TFC.

     (h) The Subservicer and the Master Servicer shall have agreed upon a revised form of Monthly
Report, which revised report will separately report the trial balance, aging and delinquency for,
and collections on, Receivables in Pool I and Receivables in Pool II and otherwise reflect the
transactions contemplated by the Second Advance Documents.

     (i) The other conditions precedent set forth in Section 4.1 of the SPV Loan Agreement
that are not listed above, to the extent applicable to the matters contemplated by the Second
Advance Documents, shall have been satisfied.

SECTION 3. Consent. The parties hereto hereby consent to Amendment No. 1 to Developer
Transfer Agreement, dated as of the date hereof, between Developer and SPV and attached hereto as
Exhibit A.

SECTION 4. Representations, Warranties and Covenants.

     4.1 Upon the effectiveness of this Amendment, SPV hereby reaffirms all covenants,
representations and warranties made by it, to the extent the same are not amended hereby, in the
Loan Documents, as amended, and agrees that all such covenants, representations and warranties
shall be deemed to have been re-made as of the effective date of this Amendment, except to the
extent that any such covenants, representations and warranties expressly relate solely to an
earlier date (in which case such covenants, representations and warranties shall have been true and
accurate on and as of such earlier date). SPV hereby represents, warrants and certifies that,

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as of the date hereof, the outstanding principal amount of the Loan, including the Second
Advance as provided for hereunder, does not exceed the Advance Amount.

     4.2 SPV hereby represents and warrants (i) that the Second Advance Documents to which it is a
party constitute the legal, valid and binding obligation of SPV enforceable against SPV in
accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally
and general principles of equity which may limit the availability of equitable remedies and (ii)
upon the effectiveness of this Amendment, no Developer Event of Termination, Event of Default,
Subservicer Event of Default or event which would constitute a Developer Event of Termination, an
Event of Default or a Subservicer Event of Default but for the requirement that notice be given or
time elapse or both shall have occurred or be continuing.

     4.3 With respect to the Receivables related to the Second Advance, SPV, promptly after the
Second Advance Funding Date, shall direct in writing each Person liable for the payment of any
Pledged Receivable, to pay each installment thereon to the applicable Account Agent, pursuant to
the Lockbox Agreement, unless and until directed otherwise by written notice from the
Administrative Agent or, at the Administrative Agent’s direction, from SPV, after which such
parties are and shall be directed to make all further payments on the Pledged Receivables in
accordance with the directions of the Administrative Agent.

     4.4 A UCC Financing Statement number 040052121681 was filed and recorded on December 29, 2003
in the office of the Secretary of State of Texas naming the Company as Debtor/Seller, SPV as
Secured Party/Buyer/First Assignor, TFC as Secured Party/2nd Assignor and Citicorp North
America, Inc., as Administrative Agent (the “Administrative Agent”) as Assignee of Secured
Party/2nd Assignor (the “Texas Filing”). A UCC Financing Statement Amendment
was filed and recorded on April 7, 2004 (the “Texas UCC Amendment”). The Company and SPV
agree and confirm that the Texas UCC Amendment did not release, terminate, or modify the
Administrative Agent’s security interest in any Receivables, Conveyed Assets, Collections or other
assets constituting Collateral under the SPV Loan Agreement.

     In addition to the existing indemnities under the SPV Loan Agreement, SPV agrees and confirms
that any loss, cost or expense incurred by an “Indemnified TFC Party” thereunder that results in
connection with the filing and recordation of the Texas UCC Amendment and the purported release
contemplated thereby, shall benefit from the indemnification provisions of and shall be repaid by
SPV in accordance with Section 7.12 of the SPV Loan Agreement.

SECTION 5. Reference to and Effect on the SPV Loan Agreement.

     5.1 Upon the effectiveness of this Amendment, each reference in the SPV Loan Agreement to
“this Agreement,” “hereunder,” “hereof,” “herein,” “hereby” or words of like import shall mean and
be a reference to the SPV Loan Agreement as amended hereby, and each reference to the SPV Loan
Agreement in any other document, instrument or agreement executed and/or delivered in connection
with the SPV Loan Agreement shall mean and be a reference to the SPV Loan Agreement as amended
hereby.

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     5.2 Except as specifically amended hereby, the SPV Loan Agreement (including without
limitation the grant of security interests in the Collateral pursuant to Section 3.1
thereof) and the other documents, instruments and agreements executed and/or delivered in
connection therewith shall remain in full force and effect and are hereby ratified and confirmed.

     5.3 The execution, delivery and effectiveness of this Amendment shall not operate as a waiver
of any right, power or remedy of TFC or the Administrative Agent under any Loan Document, nor
constitute a waiver of any provision contained therein or a release of any Collateral described
therein, except as specifically set forth herein.

SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, EXCLUSIVE OF ITS CHOICE OF LAWS PRINCIPLES. SPV HEREBY
AGREES TO ACCEPT THE STATE COURTS LOCATED IN NEW YORK, NEW YORK AS HAVING PROPER JURISDICTION AND
BEING THE PROPER VENUE FOR ANY LEGAL PROCEEDINGS ARISING OUT OF THIS AMENDMENT AND ANY LOAN
DOCUMENTS.

     SECTION 7. Execution in Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument.

     SECTION 8. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment for any purpose.

* * * * *

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     IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective
officers thereunto duly authorized, as of the date first above written.

	 	 	 	 	 
	 	 	TEXTRON FINANCIAL CORPORATION
	 
	 	 	 	 
	

	 	By:
	 	/S/ NICHOLAS L. MECCA
	 	 	 	 	 
	

	 	 	 	Name: Nicholas L. Mecca
	

	 	 	 	Title: Managing Director
	 
	 	 	 	 
	 	 	SILVERLEAF FINANCE II, INC.
	 
	 	 	 	 
	

	 	By:
	 	/S/ HARRY J. WHITE, JR.
	 	 	 	 	 
	

	 	 	 	Name: Harry J. White, Jr.
	

	 	 	 	Title: CFO

ACKNOWLEDGED AND AGREED TO BY:

CITICORP NORTH AMERICA, INC.,

as Administrative Agent

	 	 	 	 	 
	By:

	 	/S/ LAIN GUTIERREZ	 	 
	 	 	 	 	 
	

	 	Name: Lain Gutierrez	 	 
	

	 	Title: Vice President	 	 
	 
	 	 	 	 
	SILVERLEAF RESORTS, INC.	 	 
	 
	 	 	 	 
	By:

	 	/S/ HARRY J. WHITE, JR.	 	 
	 	 	 	 	 
	

	 	Name: Harry J. White, Jr.	 	 
	

	 	Title: CFO	 	 

List of Exhibits and Schedules Attached to Agreement and not filed herewith:

Ex. A: Developer Transfer Agreement Amendment

Ex. B: Exhibits to SPV Loan Agreementexv10w3

 

Ex. 10.3

SECOND AMENDMENT TO AMENDED AND RESTATED

LOAN, SECURITY AND AGENCY AGREEMENT (TRANCHE A)

     THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN, SECURITY AND AGENCY AGREEMENT (TRANCHE A)
dated as of February 28, 2005 (the “Second Amendment”), is entered into by and among
SILVERLEAF RESORTS, INC., a Texas corporation (the “Borrower”), the parties, including
TEXTRON FINANCIAL CORPORATION (“TFC”), a Delaware corporation, which execute and deliver this
Agreement in their respective capacities as lenders hereunder (collectively, the “Lenders”
and each, individually, a “Lender”), and TEXTRON FINANCIAL CORPORATION as facility agent
and collateral agent (the “Agent”).

W I T N E S S E T H:

     WHEREAS, Borrower was formerly known as ASCENSION CAPITAL CORPORATION (the
“Guarantor”), the successor to ASCENSION RESORTS, LTD., a Texas limited partnership (the “Original
Borrower”), by merger of EQUAL INVESTMENT COMPANY, a Texas corporation, ASCENSION RESORTS, LTD. and
ASCENSION CAPITAL CORPORATION;

     WHEREAS, TFC, Original Borrower and Guarantor were parties to that certain Loan and Security
Agreement dated as of August 15, 1995 (the “Original Agreement”), pursuant to which the Original
Borrower executed its Secured Promissory Note in favor of Lender in the amount of $5,000,000.00, as
amended to date (the “Original Note”);

     WHEREAS, on December 28, 1995 Ascension Resorts, Ltd. was merged into the Guarantor and
Guarantor was thereafter renamed Silverleaf Vacation Club, Inc.;

     WHEREAS, on December 28, 1995, TFC, Borrower and Guarantor amended the Original Agreement
pursuant to a First Amendment to Loan and Security Agreement dated as of December 28, 1995 (the
“First Amendment to Original Agreement”) to, among other things, evidence TFC’s approval of the
merger of Ascension Resorts, Ltd. into Ascension Capital Corporation and to reflect the
above-mentioned merger and name change;

     WHEREAS, on October 31, 1996, TFC and Borrower further amended the Original Agreement pursuant
to a Second Amendment to Loan and Security Agreement dated as of October 31, 1996 (the “Second
Amendment to Original Agreement”) to, among other things, increase the amount of the Loan, decrease
the interest rate, and extend the maturity date of the Loan;

     WHEREAS, pursuant to a commitment letter dated January 26, 1999, TFC and Borrower agreed to
further modify the terms of the Original Agreement to, among other things, increase the amount of
the Loan, decrease the interest rate, extend the maturity date of the Loan and to reflect the
change in Borrower’s name to Silverleaf Resorts, Inc.;

 

 

     WHEREAS, TFC and Borrower further amended the Original Agreement pursuant to a Third Amendment
to Loan and Security Agreement dated as of March 31, 1999 (the “Third Amendment”) to amend the
Agreement as provided in the January 26, 1999 commitment letter;

     WHEREAS, TFC and Borrower further amended the Original Agreement pursuant to a Fourth
Amendment to Loan and Security Agreement dated as of December 16, 1999 (the “Fourth Amendment”) to,
among other things, modify the definitions of Borrowing Base and Eligible Notes Receivable;

     WHEREAS, TFC and Borrower, as a result of certain Events of Default under the Original
Agreement, entered into that certain Forbearance Agreement dated as of April 6, 2001 (the
“Forbearance Agreement”);

     WHEREAS, TFC and Borrower further amended the Original Agreement pursuant to a Fifth Amendment
to Loan and Security Agreement dated as of April 17, 2001 (the “Fifth Amendment”) to, among other
things, extend the Revolving Credit Period and to incorporate the terms of the Forbearance
Agreement;

     WHEREAS, TFC and Borrower further amended and restated the Original Agreement in its entirety
pursuant to an Amended and Restated Loan, Security and Agency Agreement (Tranche A) (as amended and
as amended hereby, the “Loan Agreement”) to, among other things, restructure and modify the Loan,
including separating the Loan into two separate components – the Revolving Loan Component in the
original principal amount of up to $56,894,400.00 and the Term Loan Component in the original
principal amount of up to $15,105,600.00; to reduce the Commitment, as defined in the Loan
Agreement, to $63,920,000.00 less the outstanding principal balance of the Term Loan Component from
time to time and to reduce the aggregate Commitment hereunder, under the Additional Credit Facility
and the Tranche C Facility, as such terms are defined in the Loan Agreement, to $136,000,000.00
less the outstanding principal balance of the Term Loan Component and the aggregate term loan
component of the Additional Credit Facility and the Tranche C Facility from time to time; and to
replace the Amended Note with: (i) an Amended and Restated Secured Promissory Note or Notes in the
aggregate original principal amount of $56,894,400.00 in favor of Agent, as agent for each of the
Lenders (singly and collectively the “Revolving Loan Component Note”) and (ii) a Secured Promissory
Note or Notes in the aggregate original principal amount of $15,105,600.00 in favor of Agent, as
agent for each of the Lenders (singly and collectively the “Term Loan Component Note”, and together
with the Revolving Loan Component Note, sometimes referred to herein singly and collectively as the
“Amended Note”);

     WHEREAS, TFC and Borrower amended the Loan Agreement pursuant to a Letter Amendment dated
June 12, 2002 to establish a definition for “modified Eligible Note Receivable”;

     WHEREAS, TFC and Borrower amended the Loan Agreement pursuant to a Letter Amendment dated
March 27, 2003 to reinstate the maximum allowable ratio of Marketing and Sales Expenses to the
Borrower’s net proceeds from the sale of Intervals to a ratio of .550 to 1;

     WHEREAS, TFC and Borrower amended the Loan Agreement pursuant to a Letter Agreement dated
September 25, 2003 to exclude the $28,711,000 increase in Borrower’s allowance

2

 

for doubtful accounts during the quarter ended March 31, 2003 from the calculations of EBITDA, the
Interest Coverage Ratio and Consolidated Net Income under the Loan Agreement and to approve the
retirement of certain subordinated notes with a face value of $7,620,000;

     WHEREAS, Borrower entered into: (i) a Letter Agreement with TFC dated November 17, 2003 (the
“November Letter Agreement”); (ii) an amendment to the Heller Documents dated November 21, 2003;
and (iii) an amendment to the Sovereign Documents dated October 1, 2003; each for the purpose of,
among other things, waiving certain Events of Default that may have arisen under the Loan
Agreement, the Heller Documents and the Sovereign Documents described therein, respectively;

     WHEREAS, Agent and Borrower entered into a First Amendment to the Amended and Restated Loan,
Security and Agency Agreement dated as of December 19, 2003 (the “First Amendment”) to, among other
things, restructure and modify the Loan, including reducing the Commitment, as defined in the First
Amendment, to (i) $44,650,000.00 for the Revolving Loan Component; and (ii) $11,280,000.00 for the
Term Loan Component, for a total Commitment under this Agreement of $55,930,000.00 and to reduce
the aggregate Commitment under the Loan Agreement, the Additional Credit Facility and the Tranche C
Facility, as such terms are defined in the First Amendment, to $95,000,000.00 for the Revolving
Loan Component and $24,000,000.00 for the Term Loan Component;

     WHEREAS, TFC and Borrower amended the Loan Agreement pursuant to a Letter Amendment dated
March 5, 2004 to clarify the definition of “Inventory Loan” and the Maximum Obligation of TFC under
the Loan Agreement, the Additional Credit Facility, the Tranche C Credit Facility and the Inventory
Loan;

     WHEREAS, TFC and Borrower amended the Loan Agreement pursuant to a Letter Amendment dated July
30, 2004 to modify the definition of Collateral in connection with the amendments to the Sovereign
Facility dated as of July 30, 2004; and

     WHEREAS, in connection with the Loans to be made by Lenders pursuant to the Loan Agreement,
Textron Financial Corporation has agreed to act as facility agent and collateral agent for the
other Lenders and to perform such duties with respect to the Loans as are expressly set forth
herein;

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:

1. Terms. All capitalized terms not otherwise defined herein shall have the meaning
ascribed to such term in the Loan Agreement.

2. Elimination of Requirement for Business Plan. The Loan Agreement is modified in part to
add the following provision:

“Elimination of Requirement for Business Plan. Provided no Event of Default
or condition, omission or act which, with the passage of time, notice or both, would
constitute an Event of Default, has occurred, the requirement for Borrower to

3

 

maintain and adhere to the Business Plan is eliminated in all respects from and
after the date that: (i) the Term Loan Component has been paid in full; and (ii)
Borrower has achieved the net income projection for the six months ending December
31, 2004 and exceeded by 10% the net income projection for the fiscal year ending
December 31, 2004, as those net income projections appear in the Business Model
dated November 13, 2003, such net income results to be evidenced by audited
Financial Statements delivered by Borrower to Lender.”

3. Definitions. Section 1.1 is hereby amended in part to add the following new paragraphs:

“(sssss) Backup Servicing Agreement. Shall mean that certain Backup
Servicing Agreement dated as of April 10, 2001, as amended by the First Amendment to
the Backup Servicing Agreement dated as of April 30, 2002.”

“(ttttt) Declarant Rights. Shall mean the rights of the declarant
described on Schedule 1.1(c) attached hereto.”

“(uuuuu) Management Agreement. Shall mean that certain Management
Agreement by and between Silverleaf Club and Silverleaf Resorts, Inc. dated as of
March 28, 1990 as amended to date.”

“(vvvvv) Utility Purchase Agreement. Shall mean that certain Asset
Purchase Agreement between Silverleaf Resorts, Inc. and Algonquin Water Resources of
Texas, Inc. and Algonquin Water Resources of Missouri, Inc. and Algonquin Water
Resources of Illinois, Inc. and Algonquin Water Resources of America, Inc. and
Algonquin Power Income Fund dated as of August 29, 2004.”

“(wwwww) Utility Rights. Shall mean the Facilities, Real Property and
Utilities, as those terms are defined in the Utility Purchase Agreement, that are
part of the Additional Resort Collateral.”

4. Release of Utility Rights, Additional Resort Collateral and Sovereign Collateral.
Section 3 is hereby amended in part to add the following new Section 3.15:

“3.15 Release of Liens. Notwithstanding anything contrary in the Loan
Agreement, and provided no Event of Default or condition, omission or act which,
with the passage of time, notice or both, would constitute an Event of Default, has
occurred:

(a) the Utility Rights shall be released from the Lien of the security interest
granted to Lender hereunder on the date that: (i) the sale of the Utility Rights is
closed pursuant to the Utility Purchase Agreement; and (ii) the net proceeds of such
sale in an amount not less than thirteen million dollars ($13,000,000) is paid to
Lender;

(b) the Additional Resort Collateral, except for the Declarant Rights and the
Management Agreement, shall be released from the Lien of the security interest

4

 

granted to Lender hereunder on the date that the Term Loan Component has been paid
in full;

(c) all collateral securing the Sovereign Facility, which shall mean the Notes
Receivable and related Mortgages exclusively assigned to Sovereign in connection
with an advance under its loan documents, shall be released from the Lien of the
security interest granted to Lender hereunder on the date that: (i) the Term Loan
Component has been paid in full; (ii) Borrower has achieved the net income
projection for the six months ending December 31, 2004 and exceeded by 10% the net
income projection for the fiscal year ending December 31, 2004, as those net income
projections appear in the Business Model dated November 13, 2003, such net income
results to be evidenced by audited Financial Statements delivered by Borrower to
Lender; and (iii) all Collateral is released from any lien granted to Sovereign
pursuant to the Sovereign Documents; and

(d) the Declarant Rights and the Management Agreement shall be released from the
Liens of the security interest granted to Lender hereunder on the date that: (i) the
Term Loan Component has been paid in full; (ii) Borrower has achieved the net income
projection for the six months ending December 31, 2004 and exceeded by 10% the net
income projection for the fiscal year ending December 31, 2004, as those net income
projections appear in the Business Model dated November 13, 2003, such net income
results to be evidenced by audited Financial Statements delivered by Borrower to
Lender; (iii) Borrower files a negative pledge in a form acceptable to Lender in the
land records for each Resort that neither Declarant Rights nor the Management
Agreement will be assigned, transferred, or encumbered; and (iv) the Declarant
Rights and the Management Agreement are also released from any lien granted to
Sovereign pursuant to the Sovereign Documents. Notwithstanding anything herein to
the contrary, to the extent that the Declarant Rights or Management Agreement have
not already been released from any lien granted to Lender hereunder, on the date
that the maximum aggregate Commitment under this Agreement, the Additional Credit
Facility and the Tranche C Facility has been reduced to $82,000,000.00 for the
Revolving Loan Component, the Declarant Rights and Management Agreement shall be
released from the Lien of the security interest granted to Lender hereunder,
provided that: (1) Borrower files a negative pledge in a form acceptable to Lender
in the land records for each Resort that neither the Declarant Rights nor the
Management Agreement will be assigned, transferred, or encumbered and (2) the
Declarant Rights and Management Agreement are also released from any lien granted to
Sovereign pursuant to the Sovereign Documents.

5. Tangible Net Worth. Provided that: (i) no Event of Default or condition, omission or
act which, with the passage of time, notice or both, would constitute an Event of Default, has
occurred; and (ii) Tangible Net Worth as of December 31, 2004 meets or exceeds the requirement of
the existing Section 7.1(cc)(i) Tangible Net Worth Covenant, Section 7.1(cc)(i) will be deleted in
its entirety and replaced with the following new Section 7.1(cc)(i), on the date that: (1) the Term
Loan Component has been paid in full; and (2) Borrower has achieved the net

5

 

income projection for the six months ending December 31, 2004 and exceeded by 10% the net income
projection for the fiscal year ending December 31, 2004, as those net income projections appear in
the Business Model dated November 13, 2003, such net income results to be evidenced by audited
Financial Statements delivered by Borrower to Lender:

“(i) Tangible Net Worth. Borrower shall at all times have and maintain
Tangible Net Worth in an amount which shall not be less than an amount equal to the
Tangible Net Worth as stated in the annual audited financial statements as of
December 31, 2004 plus (A) fifty percent (50%) of the aggregate amount of proceeds
received by Borrower after December 31, 2004 in connection with (1) each issuance by
Borrower of any class or classes of capital stock after December 31, 2004, except
for stock issued to retire existing unsecured subordinated debt, and (2) each
incurrence of unsecured subordinated debt after December 31, 2004, except for
unsecured debt issued to retire existing unsecured subordinated debt, plus (B) fifty
percent (50%) of the aggregate amount of net income (calculated in accordance with
GAAP) of Borrower after December 31, 2004.”

6. Elimination of Requirement for Standby Manager, Resort Consultant and Standby Servicer.
Section 7.1 is hereby amended in part to add the following new paragraph:

“7.1 (ff) Elimination of Requirement for Standby Manager, Resort Consultant and
Standby Servicer. Provided no Event of Default or condition, omission or act
which, with the passage of time, notice or both, would constitute an Event of
Default, has occurred, the Standby Management Agreement shall be released from the
security interest granted to Lender hereunder and Borrower may terminate the
agreement with the Standby Manager and Resort Consultant required under Section
7.1(y), and may amend the agreement with the Standby Servicer required under Section
7.1(y) to allow for Warm Backup, as that term is described in Exhibit B to that
certain Backup Servicing Agreement among Standby Servicer, Borrower, and Agent dated
as of April 10, 2001, as amended to date and, provided that: (i) the Term Loan
Component has been paid in full; (ii) Borrower has achieved the net income
projection for the six months ending December 31, 2004 and exceeded by 10% the net
income projection for the fiscal year ending December 31, 2004, as those net income
projections appear in the Business Model dated November 13, 2003, such net income
results to be evidenced by audited Financial Statements delivered by Borrower to
Lender; (iii) any requirement for the Standby Manager or Resort Consultant is
eliminated from the Sovereign Documents; and (iv) the Standby Management Agreement
is also released from any security interest granted to Sovereign pursuant to the
Sovereign Documents.”

7. Limitation on Other Debt, Further Encumbrances. Provided no Event of Default or
condition, omission or act which, with the passage of time, notice or both, would constitute an
Event of Default, has occurred, Section 7.2(a) will be deleted in its entirety and replaced with
the following paragraph on the date that: (i) the Term Loan Component has been paid in full; and
(ii) Borrower has achieved the net income projection for the six months ending December 31, 2004
and exceeded by 10% the net income projection for the fiscal year ending December 31, 2004, as

6

 

those net income projections appear in the Business Model dated November 13, 2003, such net income
results to be evidenced by audited Financial Statements delivered by Borrower to Lender:

“7.2(a) Limitation on Other Debt, Further Encumbrances. Borrower will not
obtain financing and grant liens with respect to the Collateral, except as hereafter
provided. Notwithstanding anything herein to the contrary, Borrower may, without
first obtaining the written consent of Lender obtain financing and grant liens with
respect to any of its assets or other property except for the Collateral and those
assets or property restricted by a negative pledge provided: (i) Borrower provides
ten days prior written notice to Lender setting forth the terms and conditions of
such financing; (ii) no Event of Default or condition, omission or act which, with
the passage of time, notice or both, would constitute an Event of Default, has
occurred; (iii) such financing does not result in an Event of Default hereunder or
under or under Heller Documents, the Sovereign Documents, DZ Documents, Bond Holder
Exchange Documents or the documents evidencing any other indebtedness of Borrower;
(iv) Lender is promptly provided a copy of the fully executed loan documents
relating thereto.”

8. Subordinated Obligations. Provided no Event of Default or condition, omission or act
which, with the passage of time, notice or both, would constitute an Event of Default, has
occurred, Section 7.2(f) will be amended by adding the following sentence to the end of such
section on the date that: (i) the Term Loan Component has been paid in full; and (ii) Borrower has
achieved the net income projection for the six months ending December 31, 2004 and exceeded by 10%
the net income projection for the fiscal year ending December 31, 2004, as those net income
projections appear in the Business Model dated November 13, 2003, such net income results to be
evidenced by audited Financial Statements delivered by Borrower to Lender.

“Notwithstanding anything to the contrary in this Section 7.2(f), so long as
Borrower’s Tangible Net Worth remains in compliance with Section 7.1(cc)(i) Borrower
may: (i) retire unsecured subordinated debt with the proceeds from the issuance of
stock or the incurrence of unsecured debt, and/or (ii) declare dividends, buy back
stock, and perform other equity transactions.”

9. Modifications of Heller Documents, DZ Documents, Bond Holder Exchange Documents, Sovereign
Documents, Silverleaf Finance II Documents and Other Debt Instruments. Provided no Event of
Default or condition, omission or act which, with the passage of time, notice or both, would
constitute an Event of Default, has occurred, Section 7.2(k) will be deleted in its entirety and
replaced with the following new Section 7.2(k), on the date that: (i) the Term Loan Component has
been paid in full; and (ii) Borrower has achieved the net income projection for the six months
ending December 31, 2004 and exceeded by 10% the net income projection for the fiscal year ending
December 31, 2004, as those net income projections appear in the Business Model dated November 13,
2003, such net income results to be evidenced by audited Financial Statements delivered by Borrower
to Lender:

“(k) Modifications of Heller Documents, DZ Documents, Bond Holder Exchange
Documents, Sovereign Documents, Silverleaf Finance II Documents and Other Debt
Instruments. Borrower may amend or modify the

7

 

Sovereign Documents, the DZ Documents, the Bond Holder Exchange Documents, the
Silverleaf Finance II Documents or the documents evidencing any other indebtedness
of Borrower, and Borrower may extend, modify, increase or terminate the DZ Facility,
the Bond Holder Exchange Transaction, the Sovereign Facility, the TFC Conduit Loan
or any other credit facility or loan, without the prior written consent of Lender,
provided Borrower provides Lender with (i) ten days prior written notice setting
forth the terms and conditions thereof and (ii) a copy of the fully executed loan
documents thereof promptly after execution.”

10. Conditions Precedent. This Amendment shall not be effective until all of the following
conditions have been satisfied:

(a) Approval of Documents. Borrower has delivered to Lender (with copies to
Lender’s counsel), and Lender has reviewed and approved in its sole discretion, the
form and content of all of the items specified in Subsections (i) through (vii)
below (the “Submissions”). Lender shall have the right to review and approve any
changes to the form of any of the Submissions. If Lender disapproves of any changes
to any of the Submissions, Lender shall have the right to require Borrower either to
cure or correct the defect objected to by Lender or to elect not to fund any
Advance. Under no circumstances shall Lender’s failure to approve or disapprove a
change to any of the Submissions be deemed to be an approval of such Submissions.
All of the Submissions shall be prepared at Borrower’s sole cost and expense.

(i) A certificate in the form attached to the Amendment as Exhibit A-1 to be
signed by the president, vice president or secretary of the Borrower;

(ii) Copies of any amendments to the articles of incorporation/charter and
bylaws of Borrower not previously delivered to Lender, certified to be true,
correct and complete by Borrower and the Secretary of State of the State of
Texas and current certificates of good standing for Borrower for the State
of Texas and states where the Resorts are located, a current certificate of
authority to conduct business by the Secretary of State in each state in
which Borrower conducts business;

(iii) A certificate of the Secretary of Borrower certifying the adoption by
the Board of Directors of Borrower of a resolution authorizing Borrower to
enter into and execute the Amendment and all such documents requested by
Lender in the form attached to the Amendment as Exhibit B-1;

(iv) A certificate of the secretary or assistant secretary of Borrower
certifying the incumbency, and verifying the authenticity of the signatures
of the specified officers of Borrower authorized to sign this Amendment and
all such documents requested by Lender in the form attached to the Amendment
as Exhibit C-1;

8

 

(v) Fully executed closing documents from the sale of the utility rights
which comprise part of the Additional Resort Collateral pursuant to the
Asset Purchase Agreement between Silverleaf Resorts, Inc. and Algonquin
Water Resources of Texas, Inc. and Algonquin Water Resources of Missouri,
Inc. and Algonquin Water Resources of Illinois, Inc. and Algonquin Water
Resources of America, Inc. and Algonquin Power Income Fund dated as of
August 29, 2004. Such sale will provide not less than thirteen million
dollars ($13,000,000) of net proceeds. Lender hereby authorizes Borrower to
consummate the sale of the utility rights subject to the terms and
conditions of this Amendment;

(vi) Closing Opinions of Counsels for Borrower;

(vii) Such other agreements, documents, instruments, certificates and
materials as Lender may request to evidence the Indebtedness, to evidence
and perfect the rights and Liens and security interests of Lender
contemplated by the Loan Documents as amended hereby, and to effectuate the
transactions contemplated in this Amendment.

(b) Conditions to Closing.

(i) Execution of this Amendment;

(ii) Execution of the amendments to the Additional Credit Facility, the
Tranche C Facility and the Inventory Loan dated of even date herewith;

(iii) Borrower shall have delivered to Lender the Inventory Term Loan
Note;

(iv) Lender shall have received evidence, in form and substance
satisfactory to Lender, that the consent of each party entitled to consent
to this Amendment has been obtained;

(v) Borrower shall have paid all fees of all Lenders in connection with this
Amendment; and

(vi) Lender shall have delivered originals of all releases of Liens
contemplated by this Amendment to Lender’s counsel to be held in escrow
until such time as Lender notifies Lender’s counsel that Borrower has
satisfied all conditions and is entitled to such releases.

11. Further Documentation. Borrower agrees to execute and deliver to Lender any and all
additional documentation as Lender may now or hereafter require in order to effectuate the terms
and conditions of this Amendment.

12. Effect of Amendment. The Loan Agreement, as herein amended, shall remain in full force
and effect.

9

 

13. Ratification and Confirmation. Except as herein expressly amended, Borrower hereby
ratifies, confirms, assumes and agrees to be bound by all of representations, warranties,
statements, covenants and agreements set forth in the Loan Agreement and the other Loan Documents,
as previously amended. The Borrower reaffirms, restates and incorporates by reference all of the
representations, warranties, covenants and agreements made in the Loan Documents as if the same
were made as of this date. The Borrower agrees to pay the Loan and all related expenses, as and
when due and payable in accordance with the Loan Agreement and the other Loan Documents, and to
observe and perform the Obligations, and do all things necessary which are not prohibited by law to
prevent the occurrence of any Event of Default. In addition, to further secure, and to evidence and
confirm the securing of, the prompt and complete payment and performance by the Borrower of the
Loan and all of the Obligations, for value received, Borrower unconditionally and irrevocably
assigns, pledges and grants to Lender, and hereby confirms or reaffirms the prior granting to
Lender of, a continuing First priority Lien, mortgage and security interest in and to all of the
Collateral, except as otherwise set forth herein, whether now existing or hereafter acquired. Also,
as provided in the Loan Documents, the Loan is and shall be further secured by the Liens and
security interests in favor of Lender in the properties and interests relating to Additional
Eligible Resorts, which now or hereafter serve as collateral security for any Obligations. Upon
satisfaction of the requirements for approval by Lender of Additional Resorts, Borrower shall
record, or cause to be recorded, such mortgages, deeds of trust, deeds to secure debt, assignments,
pledges, security agreements and UCC Financing Statements in the appropriate public records of the
state in which each Resort is located to further evidence and perfect Lender’s Lien on the
Collateral. Borrower agrees to deliver or cause to be delivered by its Affiliates, such mortgages,
deeds of trust, deeds to secure debt, assignments, pledges, security agreements and UCC Financing
Statements as Lender may deem necessary to further evidence and perfect the Lender’s Lien on the
Collateral.

14. GOVERNING LAW. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT AS MAY BE EXPRESSLY
PROVIDED THEREIN TO THE CONTRARY) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF RHODE ISLAND, EXCLUSIVE OF ITS CHOICE OF LAWS PRINCIPLES.

15. General Representations and Warranties. Borrower hereby represents and warrants to
Lender as follows:

(a) Organization, Standing, Qualification. Borrower: (a) is a duly
organized and validly existing Texas corporation duly organized, validly existing
and in good standing under the laws of the State of Texas, and (b) has all requisite
power, corporate or otherwise, to conduct its business and to execute and deliver,
and to perform its obligations under, the Loan Documents.

(b) Authorization, Enforceability, Etc

(i) The execution, delivery and performance by Borrower of the Loan
Documents has been duly authorized by all necessary corporate action by
Borrower and does not and will not: (1) violate any provision of the
certificate or articles of incorporation of Borrower, bylaws of Borrower, or

10

 

any agreement, law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect to which Borrower is a
party or is subject; (2) result in, or require the creation or imposition
of, any Lien upon or with respect to any asset of Borrower other than Liens
in favor of Lenders; or (3) result in a breach of, or constitute a default
by Borrower under, any indenture, loan or credit agreement or any other
agreement, document, instrument or certificate to which Borrower is a party
or by which it or any of its assets are bound or affected.

(ii) No approval, authorization, order, license, permit, franchise or
consent of, or registration, declaration, qualification or filing with, any
governmental authority or other Person, including without limitation, the
Division or the Timeshare Owners’ Association is required in connection with
the execution, delivery and performance by Borrower of any of the Loan
Documents.

(iii) The Loan Documents constitute legal, valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms.

(c) No Event of Default. No Event of Default or condition, omission or act
which, with the passage of time, notice or both, would constitute an Event of
Default, has occurred under the Loan Agreement as amended to date, the Additional
Credit Facility, Tranche C Facility, the Inventory Loan, the Heller Facility, the
Sovereign Facility, DZ Facility, Bond Holder Exchange Facility or any other
indebtedness of Borrower.

THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.

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     IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be executed on
their behalf as of the day and year first written above.

	 	 	 	 	 	 	 
	Witnessed By:	 	 	 	TEXTRON FINANCIAL CORPORATION
	 
	 	 	 	 	 	 
	/S/
SEBASTIAN GROMOUDIN
	 	 	 	By:	 	/S/ JOHN D’ANNIBALE
	 	 	 	 	 	 	 
	/S/ GINGER HAYES

	 	 	 	Name:
	 	John D’Annibale
	 	 	 	 	 	 	 
	

	 	 	 	Its:	 	V.P.
	 
	 	 	 	 	 	 
	

	 	 	 	SILVERLEAF RESORTS, INC.
	 
	 	 	 	 	 	 
	/S/ PATRICIA K. DOREY
	 	 	 	By:
	 	/S/ HARRY J. WHITE, JR.
	 	 	 	 	 	 	 
	/S/ PENNY J. PELHAM

	 	 	 	Name:
	 	Harry J. White, Jr.
	 	 	 	 	 	 	 
	

	 	 	 	Its:	 	CFO

 

 

	 	 	 	 	 	 	 
	STATE OF CONNECTICUT

	 	 	)	 	 	 
	

	 	 	)	 	 	ss: East Hartford
	COUNTY OF HARTFORD

	 	 	)	 	 	 

     At
East Hartford in said County and State on this 24 day of February, 2005, personally
appeared John D’Annibale, duly authorized  Vice President of Textron Financial
Corporation, and he acknowledged the foregoing instrument by him signed and sealed to be his free
act and deed and the free act and deed of Textron Financial Corporation.

	 	 	 	 	 
	Before me:

	 	/S/ LAURA D'ANGELO	 	 
	 	 	 	 	 
	
	 	Notary Public in and for said State
	 	 
	

	 	My Commission Expires: FEB. 28,
2009	 	 
	

	 	Commissioner of the Superior Court

	 	 	 	 	 	 	 
	STATE OF TEXAS
	 	 	)	 	 	 
	

	 	 	)	 	 	ss:
	COUNTY OF DALLAS

	 	 	)	 	 	 

     At _Dallas, Texas___in said County and State on this ___1st___day of
___March___, 2005, personally appeared ___Harry J. White, Jr. duly authorized
officer of SILVERLEAF RESORTS, INC., and he/she acknowledged the foregoing instrument by him/her
signed and sealed to be his/her free act and deed and the free act and deed of Silverleaf Resorts,
Inc., a Texas corporation, on behalf of the corporation.

	 	 	 	 	 
	Before me:

	 	/S/ TAMMY J. MARTIN	 	 
	 	 	 	 	 
	
	 	Notary Public in and for said State
	 	 
	

	 	My Commission Expires: 1-6-2009	 	 

13

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