Document:

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                                                                    Exhibit 10.6

                               SECOND AMENDMENT TO
                     LOAN AND SECURITY AGREEMENT (TRANCHE C)

         THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (TRANCHE C) dated
as of December 19, 2003 (the "SECOND AMENDMENT"), is entered into by and between
SILVERLEAF RESORTS, INC., a Texas corporation (the "BORROWER"), and TEXTRON
FINANCIAL CORPORATION, a Delaware corporation, ("TFC" or the "LENDER").

                              W I T N E S S E T H:

         WHEREAS, Borrower is engaged in the business of acquiring,
constructing, developing, owning, managing, selling and otherwise dealing with
Intervals at the Resorts (as each such term is hereafter defined);

         WHEREAS, Borrower and Lender are parties to that certain Loan and
Security Agreement dated as of April 17, 2001, (the "ORIGINAL AGREEMENT"),
pursuant to which the Borrower executed its Secured Promissory Note in favor of
the Lender in the amount of $10,200,000.00, (the "ORIGINAL NOTE");

         WHEREAS, Lender and Borrower amended the Original Agreement with the
First Amendment to Loan and Security Agreement dated as of April 30, 2002, (the
"FIRST AMENDMENT"), to, among other things: (i) restructure and modify the Loan,
including separating the Loan into two separate components - the Revolving Loan
Component in the amount of up to $8,060,00.00 and the Term Loan Component in the
amount of up to $2,140,000.00; (ii) reduce the amount of the Commitment; and
(iii) replace the Original Note with a Revolving Loan Component Note and a Term
Loan Component Note;

         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 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;

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         WHEREAS, TFC and Borrower have agreed to enter into this Second
Amendment to Loan and Security Agreement to amend and modify the Loan Agreement
as set forth below;

         WHEREAS, Borrower intends to convey and transfer certain assets to the
SPV, including the SPV Assets, in accordance with the terms of the Silverleaf
Finance II Documents, as such terms are hereafter defined and whereas in
connection with such transfer, the Commitment, as such term is hereafter
defined, shall be reduced as described herein;

         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; and

         WHEREAS, all capitalized terms not otherwise defined herein shall have
the meaning ascribed to such term in the Loan Agreement.

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

1. ADDITIONAL RESORT COLLATERAL. Section 1.1(gggg) is hereby deleted in its
entirety and in its place instead is substituted the following:

                  "(gggg) ADDITIONAL RESORT COLLATERAL. The term "Additional
                  Resort Collateral" shall mean singly and collectively, the
                  development rights, real property, fixtures and other personal
                  property, including all management agreements for the Resorts,
                  now owned or hereafter acquired by Borrower and described on
                  Schedule 1.1.(gggg) attached hereto. "Additional Resort
                  Collateral" shall not include the promissory notes and other
                  property of Silverleaf Finance I, Inc., that constitute
                  "Pledged Assets" under the DZ Documents OR THE PROMISSORY
                  NOTES AND OTHER PROPERTY OF SILVERLEAF FINANCE II, INC. THAT
                  CONSTITUTE "CONVEYED ASSETS" OR COLLATERAL UNDER THE
                  SILVERLEAF FINANCE II DOCUMENTS."

2. BUSINESS PLAN. Section 1.1(i) is hereby deleted in its entirety and in its
place instead is substituted the following:

                  "(i)     BUSINESS PLAN. The term "Business Plan" shall mean
                  the five (5) year "Stand Alone" business plan, more
                  particularly described as document
                  "BS.IS.02-08.Lender.9-03.NS.1a2," prepared by Borrower and
                  attached TO THE SECOND AMENDMENT as Exhibit F-1. THE BUSINESS
                  PLAN INCLUDES THE "IMPACT ON LENDERS WORKSHEET" SETTING FORTH
                  THE AMOUNTS TO BE ADVANCED BY EACH OF THE LENDERS, HELLER AND
                  SOVEREIGN PURSUANT TO THEIR RESPECTIVE CREDIT FACILITIES (THE
                  "SENIOR LENDER ADVANCE SCHEDULE")."

3. COLLATERAL. Section 1.1(l) is hereby amended in part to add the following new
paragraphs:

                  "(xiii) THE SILVERLEAF FINANCE II STOCK."

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                  "(xiv)   THE SILVERLEAF FINANCE II SUBORDINATED NOTE."

4. COMMITMENT. Section 1.1(m) is hereby deleted in its entirety and in its place
instead is substituted the following:

                  "(m)     COMMITMENT. The term "Commitment" shall refer singly
                  to the obligation of Lender to make a Loan or Loans to
                  Borrower hereunder. AFTER GIVING EFFECT TO THE DECEMBER 2003
                  LOAN PAYDOWN PROVIDED FOR IN SECTION 2.4(a) BELOW, the maximum
                  aggregate Commitment of the Lender hereunder shall not exceed
                  (i) $6,245,400.00 for the Revolving Loan Component; and (ii)
                  $1,680,000.00 for the Term Loan Component, for a total
                  Commitment under this Agreement of $7,925,400.00. The
                  Commitment and the Maximum Available Amount shall be subject
                  to reduction as provided in Section 2.1(a). AFTER GIVING
                  EFFECT TO THE DECEMBER 2003 LOAN PAYDOWN PROVIDED FOR IN
                  SECTION 2.4(a) BELOW, the maximum aggregate Commitment under
                  this Agreement, the Tranche A Credit Facility and the Tranche
                  B Credit Facility shall be $95,000,000.00 for the Revolving
                  Loan Component and $24,000,000.00 for the Term Loan Component,
                  which Commitment shall be reduced as provided in Section
                  2.1(a)."

5. DZ FACILITY. Section 1.1(mmmm) is hereby deleted in its entirety and in its
place instead is substituted the following:

                  "(mmmm)  DZ FACILITY. The term "DZ Facility" shall mean that
                  certain note purchase facility to be provided by DZ Bank AG
                  Deutsche Zentral - Genossenschaftsbank, as agent for Autobahn
                  Funding Company, LLC ("DZ") to Borrower, on the terms outlined
                  in the DZ Letter Agreement, dated December 12, 2001, as
                  supplemented by that certain letter agreement by and between
                  Borrower and DZ dated February 7, 2002, and attached hereto as
                  Exhibit G AS MAY BE HEREAFTER AMENDED FROM TIME TO TIME
                  (collectively, the "DZ LETTER AGREEMENT") and evidenced by the
                  documents listed on Schedule 1.1(mmmm) hereto (the "DZ
                  DOCUMENTS")."

6. EFFECTIVE ADVANCE RATE. Section 1.1(pppp) is hereby deleted in its entirety
and in its place instead is substituted the following:

                  "(pppp)  EFFECTIVE ADVANCE RATE. The term "Effective Advance
                  Rate" shall mean the aggregate outstanding principal balance
                  of the Revolving Loan Component and the Term Loan Component
                  divided by the aggregate outstanding principal balance of all
                  Eligible Notes Receivable pledged to Lender hereunder. The
                  Effective Advance Rate shall at no time exceed the "MAXIMUM
                  EFFECTIVE ADVANCE RATE", DETERMINED AS FOLLOWS: (i) 95%; or
                  (ii) SUCH HIGHER RATE AS MAY BE AGREED TO BY TFC IN WRITING IN
                  ITS SOLE AND ABSOLUTE DISCRETION PROVIDED, HOWEVER, THAT THE
                  AGGREGATE OUTSTANDING PRINCIPAL BALANCE OF THE REVOLVING LOAN
                  COMPONENT DIVIDED BY THE AGGREGATE OUTSTANDING PRINCIPAL
                  BALANCE OF ALL ELIGIBLE NOTES RECEIVABLE PLEDGED TO TFC
                  HEREUNDER WILL NOT EXCEED 75%. In addition, the Effective
                  Advance Rate determined with respect to the aggregate of

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                  the Loan, the Tranche A Credit Facility and the Tranche B
                  Credit Facility (collectively "TFC's Facilities") shall at no
                  time exceed: (i) 95% of the aggregate outstanding principal
                  balance of all Eligible Notes Receivable pledged to TFC, as
                  agent or lender as applicable, under TFC's Facilities; or (ii)
                  SUCH HIGHER RATE AS MAY BE AGREED TO BY TFC IN WRITING IN ITS
                  SOLE AND ABSOLUTE DISCRETION PROVIDED, HOWEVER, THAT THE
                  AGGREGATE OUTSTANDING PRINCIPAL BALANCE OF THE REVOLVING LOAN
                  COMPONENTS OF TFC'S FACILITIES DIVIDED BY THE AGGREGATE
                  OUTSTANDING PRINCIPAL BALANCE OF ALL ELIGIBLE NOTES RECEIVABLE
                  PLEDGED TO TFC UNDER TFC'S FACILITIES WILL NOT EXCEED 75%."

7. ELIGIBLE NOTES RECEIVABLE. Section 1.1(t)(xv) is hereby deleted in its
entirety and in its place instead is substituted the following:

                  "(xv)    the maximum remaining principal balance of any such
                  Note Receivable shall not exceed $30,000 and the total maximum
                  remaining principal balance of the Notes Receivable executed
                  by any one Purchaser or other maker shall not exceed $50,000
                  in the aggregate (or such greater amount as may be approved in
                  writing in advance by Lender);"

8. FACILITY FEE. Section 1.1(aa) is hereby deleted in its entirety and in its
place instead is substituted the following:

                  "(aa)    FACILITY FEE. Shall mean the facility fee set forth
                  in the Fee Letter, which shall be payable in accordance with
                  Section 2.6. IN ADDITION TO THE FEES SET FORTH IN THE FEE
                  LETTER, THE FACILITY FEE SHALL INCLUDE A FEE IN THE AMOUNT OF
                  ONE-HALF OF ONE PERCENT (1/2%) OF THE TOTAL AMOUNT OF THE
                  MAXIMUM AGGREGATE COMMITMENT FOR BOTH THE REVOLVING LOAN
                  COMPONENT AND THE TERM LOAN COMPONENT UNDER THIS AGREEMENT,
                  THE TRANCHE A CREDIT FACILITY, THE TRANCHE B CREDIT FACILITY
                  AND THE INVENTORY LOAN."

9. REVOLVING LOAN COMPONENT. Section 1.1(yyyy) is hereby deleted in its entirety
and in its place instead is substituted the following:

                  "(yyyy)  REVOLVING LOAN COMPONENT. Shall mean that portion of
                  the Loan in the amount of $6,245,400.00, AS OF THE SECOND
                  AMENDMENT EFFECTIVE DATE, on the terms and conditions
                  described in Sections 2.1, 2.3, 2.4 and 2.5 hereof, which
                  amount shall be repaid as provided in Section 2.4 and Section
                  2.5(b) hereof."

10. REVOLVING LOAN TERM. Section 1.1(aaaaa) is hereby deleted in its entirety
and in its place instead is substituted the following:

                  "(aaaaa) REVOLVING LOAN TERM. Shall mean the period commencing
                  on the Effective Date and ending on March 31, 2006."

11. TERM LOAN COMPONENT. Section 1.1(ooooo) is hereby deleted in its entirety
and in its place instead is substituted the following:

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                  "(ooooo) TERM LOAN COMPONENT. Shall mean that portion of the
                  Loan in the amount of $1,680,000.00, AS OF THE SECOND
                  AMENDMENT EFFECTIVE DATE, on the terms and conditions set
                  forth in Sections 2.2, 2.3, 2.4 and 2.5 hereof, which amount
                  shall be repaid as provided in Section 2.4 and Section 2.5(b)
                  hereof."

12. DEFINITIONS. Section 1.1 is hereby amended in part to add the following new
paragraphs:

                  "(rrrrr) DECEMBER 2003 LOAN PAYDOWN. SHALL MEAN THE PAYMENT ON
                  THE TERM LOAN COMPONENT AND THE REVOLVING LOAN COMPONENT FROM
                  THE PROCEEDS OF THE TFC CONDUIT LOAN IN ACCORDANCE WITH
                  SECTION 2.4(a)(i)."

                  "(sssss) SECOND AMENDMENT. SHALL MEAN THAT CERTAIN SECOND
                  AMENDMENT TO LOAN AND SECURITY AGREEMENT (TRANCHE C) DATED AS
                  OF DECEMBER 19, 2003 BY AND AMONG SILVERLEAF RESORTS, INC., A
                  TEXAS CORPORATION, AS BORROWER, AND TEXTRON FINANCIAL
                  CORPORATION, A DELAWARE CORPORATION, AS LENDER.

                  "(ttttt) SECOND AMENDMENT EFFECTIVE DATE. SHALL MEAN THE DATE
                  ON WHICH: (I) THE CLOSING OF THE TFC CONDUIT LOAN OCCURS; AND
                  (II) TFC DETERMINES, IN ITS SOLE AND ABSOLUTE DISCRETION, THAT
                  EACH OF THE CONDITIONS SET FORTH IN SECTION 33 OF THE SECOND
                  AMENDMENT HAVE BEEN SATISFIED."

                  "(uuuuu) SILVERLEAF FINANCE II DOCUMENTS. SHALL MEAN THE SPV
                  LOAN AGREEMENT, THE DEVELOPER TRANSFER AGREEMENT, THE DEMAND
                  NOTES AND ALL OTHER AGREEMENTS OR DOCUMENTS EXECUTED IN
                  CONNECTION WITH THE TFC CONDUIT LOAN, AS EACH MAY BE AMENDED,
                  RESTATED OR OTHERWISE MODIFIED FROM TIME TO TIME."

                  "(vvvvv) SILVERLEAF FINANCE II SUBORDINATED NOTE. SHALL MEAN
                  THE SUBORDINATED NOTE, DATED AS OF DECEMBER 19, 2003, PAYABLE
                  BY SPV TO THE ORDER OF SILVERLEAF RESORTS, INC., AND ANY OTHER
                  PROMISSORY NOTE ISSUED IN REPLACEMENT OR RESTATEMENT THEREOF,
                  OR OTHERWISE ISSUED TO EVIDENCE SPV'S OBLIGATION TO PAY THE
                  DEFERRED PURCHASE PRICE OF RECEIVABLES UNDER THE DEVELOPER
                  TRANSFER AGREEMENT WHICH IS PART OF THE SILVERLEAF FINANCE II
                  DOCUMENTS, IN EACH CASE AS AMENDED OR OTHERWISE MODIFIED FROM
                  TIME TO TIME, AND ALL PROCEEDS OF THE FOREGOING."

                  "(wwwww) SILVERLEAF FINANCE II STOCK. SHALL MEAN ALL EQUITY
                  INTERESTS IN SILVERLEAF FINANCE II, INC., ALL DOCUMENTS,
                  CERTIFICATES OR INSTRUMENTS REPRESENTING ANY OF THE FOREGOING
                  AND ALL CASH, SECURITIES, DIVIDENDS, RIGHTS AND OTHER PROPERTY
                  AT ANY TIME RECEIVED OR RECEIVABLE IN RESPECT OF OR IN
                  EXCHANGE FOR THE FOREGOING, AND ALL PROCEEDS OF THE
                  FOREGOING."

                  "(xxxxx) SILVERLEAF FINANCE II STOCK AND SUBORDINATED NOTE
                  PLEDGE AGREEMENT. SHALL MEAN THE AGREEMENT IN THE FORM
                  ATTACHED TO THE SECOND AMENDMENT AS EXHIBIT A-1, PURSUANT TO
                  WHICH THE SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF
                  FINANCE II SUBORDINATED NOTE IS PLEDGED TO TFC."

                  "(yyyyy) SPV. SHALL MEAN SILVERLEAF FINANCE II, INC., A
                  DELAWARE CORPORATION."

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                  "(zzzzz) SPV ASSETS. SHALL MEAN ALL ASSETS SOLD OR CONVEYED BY
                  BORROWER TO THE SPV PURSUANT TO THE SILVERLEAF FINANCE II
                  DOCUMENTS."

                  "(aaaaaa) SPV SUBORDINATION AGREEMENT. SHALL MEAN THAT CERTAIN
                  SUBORDINATION AGREEMENT RELATING TO TFC'S INTEREST IN THE
                  SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF FINANCE II
                  SUBORDINATED NOTE, DATED AS OF DECEMBER 19, 2003 BY AND AMONG
                  TEXTRON FINANCIAL CORPORATION, IN ITS CAPACITY AS LENDER UNDER
                  THE LOAN DOCUMENTS AND TEXTRON FINANCIAL CORPORATION, IN ITS
                  CAPACITY AS LENDER UNDER THE GROUP TWO DOCUMENTS (AS SUCH TERM
                  IS DEFINED IN THE SPV SUBORDINATION AGREEMENT), AS MAY BE
                  AMENDED, RESTATED OR MODIFIED FROM TIME TO TIME."

                  "(bbbbbb) TFC CONDUIT LOAN. SHALL MEAN THAT CERTAIN LOAN
                  FACILITY TO BE PROVIDED BY TEXTRON FINANCIAL CORPORATION
                  ("TFC") TO SPV IN ACCORDANCE WITH THE TERMS OF THE SILVERLEAF
                  FINANCE II DOCUMENTS."

13. REVOLVING LOAN COMPONENT. Section 2.1(a) is hereby deleted in its entirety
and in its place instead is substituted the following:

                  "(a)     REVOLVING LOAN COMPONENT. Upon the terms and subject
                  to the conditions set forth in this Agreement, Lender agrees
                  at any time and from time to time during the Revolving Loan
                  Term, to make a loan or loans to Borrower, and Borrower may
                  borrow, repay and reborrow during the Revolving Loan Term,
                  with respect to the Revolving Loan Component only, in an
                  aggregate amount not to exceed at any time the lesser of: (i)
                  the amount of the Borrowing Base or (ii) the lending limits
                  set forth in Section 2.1(b) hereof. Notwithstanding anything
                  herein to the contrary, as of the Second Amendment Effective
                  Date, the aggregate balance of all Advances, shall not exceed
                  $6,245,400.00 (the "Maximum Available Amount"). Borrower's
                  right to receive Advances hereunder shall also be subject to
                  the terms and conditions set forth in that certain
                  Intercreditor Agreement between Lender, Borrower, Heller and
                  Sovereign dated of even date herewith. Borrower acknowledges,
                  confirms and agrees that Lender shall have the right to
                  allocate any request for an Advance hereunder to this Loan,
                  the Tranche A Credit Facility and/or the Tranche B Credit
                  Facility in such manner as Lender may elect in its sole and
                  absolute discretion. Notwithstanding anything herein to the
                  contrary, Borrower acknowledges, confirms and agrees that it
                  shall not be entitled to receive, nor shall Lender be required
                  to make, any Advance if and to the extent that: (i) Borrower
                  has failed to substantially adhere to the Business Plan,
                  including the Senior Lender Advance Schedule, as determined by
                  Lender in its sole and absolute discretion; or (ii) the most
                  recent weekly flash report delivered in accordance with
                  Section 7.1(h)(i) hereof (a "Weekly Flash Report"), indicates
                  that Borrower has in excess of five million dollars
                  ($5,000,000) in available unrestricted cash.

                           Borrower acknowledges, agrees and confirms that as
                  provided in the Business Plan, the Commitment for the
                  Revolving Loan Component and the

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                  Maximum Available Amount shall be reduced to $5,587,900.00 ON
                  MARCH 31, 2006.

                           On or before the SECOND AMENDMENT EFFECTIVE DATE, the
                  aggregate amount of the Commitment for the Revolving Loan
                  Component provided hereunder, under the Additional Credit
                  Facility and the Tranche C Facility shall be equal to
                  $95,000,000.00. Borrower further acknowledges, confirms and
                  agrees that the aggregate Commitment for the Revolving Loan
                  Component under this Agreement, the Additional Credit Facility
                  and the Tranche C Facility shall be reduced to $85,000,000.00
                  ON MARCH 31, 2006."

14. LOAN PAYDOWN. Section 2.4(a) is hereby deleted in its entirety and in its
place instead is substituted the following:

                  "(a)(i) INITIAL LOAN PAYDOWN. On or before May 31, 2002,
                  Borrower shall make, from the proceeds of the DZ Facility, a
                  payment on the Revolving Loan Component in the amount of
                  approximately $1,764,000. (ii) DECEMBER 2003 LOAN PAYDOWN. ON
                  OR BEFORE THE SECOND AMENDMENT EFFECTIVE DATE, BORROWER SHALL
                  MAKE, FROM THE PROCEEDS OF THE TFC CONDUIT LOAN, A PAYMENT ON
                  THE REVOLVING LOAN COMPONENT IN THE AMOUNT OF APPROXIMATELY
                  $2,987,930.13. ON OR BEFORE THE SECOND AMENDMENT EFFECTIVE
                  DATE, BORROWER SHALL MAKE, FROM THE PROCEEDS OF THE TFC
                  CONDUIT LOAN, A PAYMENT ON THE TERM LOAN COMPONENT IN THE
                  AMOUNT OF APPROXIMATELY $375,046.42."

15. MONTHLY PAYMENTS, TERM LOAN COMPONENT. That portion of Section 2.4(b)
beginning "(2) Term Loan Component..." and ending "...as provided immediately
above.", describing monthly payments under the Term Loan Component, is hereby
deleted in its entirety and in its place instead is substituted the following:

                  "(2)     TERM LOAN COMPONENT. Borrower shall pay to Lender on
                  or before the tenth day of each month an amount equal to: (i)
                  all interest accrued at the applicable Default Rate on the
                  Term Loan Component; plus (ii) all interest due and payable as
                  of the last day of the immediately preceding month; plus (iii)
                  a principal payment sufficient to amortize the Term Loan
                  Component in full on the basis of a FIFTEEN (15) year
                  amortization schedule. In the event that Borrower fails to
                  make the payment in question, Lender may, at its option, on or
                  before the tenth day of each month, make an Advance with
                  respect to the Revolving Loan Component and apply such Advance
                  to the payment of amounts due in respect of the Term Loan
                  Component as provided immediately above, PROVIDED THAT: (i) NO
                  DEFAULT OR EVENT OF DEFAULT SHALL EXIST IMMEDIATELY PRIOR TO
                  THE MAKING OF SUCH REQUESTED ADVANCE OR, AFTER GIVING EFFECT
                  THERETO, IMMEDIATELY AFTER THE MAKING OF SUCH REQUESTED
                  ADVANCE, EXCEPT FOR ANY DEFAULT OR EVENT OF DEFAULT THAT MAY
                  HAVE ARISEN AS A RESULT OF NON-PAYMENT OF THE TERM LOAN
                  COMPONENT; AND (ii) TFC SHALL HAVE DETERMINED THAT THE
                  REQUESTED ADVANCE, WHEN ADDED TO THE AGGREGATE OUTSTANDING
                  PRINCIPAL AMOUNT OF ALL PREVIOUS ADVANCES, IF ANY, DOES NOT,
                  BASED ON THE ELIGIBLE NOTES RECEIVABLE THAT HAVE BEEN DULY
                  PLEDGED IN

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                  FAVOR OF TFC: (x) EXCEED THE TOTAL AMOUNT OF THE BORROWING
                  BASE, OR (y) CAUSE THE EFFECTIVE ADVANCE RATE, DETERMINED WITH
                  RESPECT TO THE AGGREGATE OF THE LOAN, THE TRANCHE A CREDIT
                  FACILITY AND THE TRANCHE B CREDIT FACILITY, TO EXCEED THE
                  MAXIMUM EFFECTIVE ADVANCE RATE."

16. MANDATORY TERM LOAN COMPONENT FUND UP PREPAYMENT. Section 2.4(c), Mandatory
Term Loan Component Fund Up Prepayment, is hereby deleted in its entirety and in
its place instead is substituted the following:

                  "(c)     MANDATORY TERM LOAN COMPONENT FUND UP PREPAYMENT. If
                  and to the extent that: (i) at the end of each calendar
                  quarter during the first two (2) years of the Term following
                  the Effective Date, commencing the calendar quarter ending
                  June 30, 2002 (x) the outstanding principal balance of all
                  Loans made with respect to the Revolving Loan Component is
                  less than seventy percent (70%) of the then outstanding
                  principal balance of the Eligible Notes Receivable pledged to
                  Lender with respect to such Loans (such difference being
                  hereinafter referred to as an "AVAILABLE FUND-UP AMOUNT") and
                  (y) provided Borrower has available unrestricted cash of five
                  million dollars ($5,000,000.00) or more as indicated in the
                  most recent Weekly Flash Report or (ii) at the end of each
                  calendar quarter commencing the calendar quarter ending June
                  30, 2004 (x) the outstanding principal balance of all Loans
                  made with respect to the Revolving Loan Component is less than
                  seventy-five percent (75%) of the then outstanding principal
                  balance of the Eligible Notes Receivable pledged to Lender
                  with respect to such Loans (such difference also being
                  referred to as an "AVAILABLE FUND-UP AMOUNT") and (y) provided
                  Borrower has available unrestricted cash of five million
                  dollars ($5,000,000.00) or more as indicated in the most
                  recent Weekly Flash Report, then Borrower agrees that Lender
                  may, on the last Business Day of each such calendar quarter,
                  make an Advance with respect to the Revolving Loan Component
                  in an amount NOT TO EXCEED such Available Fund Up Amount and
                  apply any such Advance to the repayment of the Term Loan
                  Component as follows: (i) first to interest at the applicable
                  Default Rate; (ii) then to interest at the applicable Interest
                  Rate and (iii) then to reduction of principal of the Term Loan
                  Component until such time as the Term Loan Component is paid
                  in full.

17. USE OF PROGRAM RESERVE ACCOUNT WITHDRAWALS AND SURPLUS UNDER THE TFC CONDUIT
LOAN. Section 2.4 is hereby amended in part to add the following new paragraph:

                  "(h)     USE OF PROGRAM RESERVE ACCOUNT WITHDRAWALS AND
                  SURPLUS UNDER THE TFC CONDUIT LOAN. TO THE EXTENT THAT FUNDS
                  ARE MADE AVAILABLE TO SPV FROM THE PROGRAM RESERVE ACCOUNT IN
                  ACCORDANCE WITH SECTION 5.1(e) OF THE LOAN AND SECURITY
                  AGREEMENT WHICH IS PART OF THE SILVERLEAF FINANCE II
                  DOCUMENTS, TO THE EXTENT PERMITTED BY LAWS AND THE SILVERLEAF
                  FINANCE II DOCUMENTS, BORROWER SHALL CAUSE SPV TO DISTRIBUTE
                  SUCH FUNDS TO BORROWER AND BORROWER SHALL MAKE PAYMENT IN THE
                  AMOUNT OF SUCH DISTRIBUTION TO TFC AND SOVEREIGN TO BE APPLIED
                  IN THE ORDER SET FORTH IN THAT CERTAIN INTERCREDITOR AGREEMENT
                  BETWEEN TFC, BORROWER, HELLER AND SOVEREIGN DATED OF EVEN DATE
                  HEREWITH, AS

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                  AMENDED. TO THE EXTENT THAT BORROWER RECEIVES ANY
                  DISTRIBUTIONS FROM THE SPV IN RESPECT OF ANY SURPLUS PAYMENTS,
                  AS SUCH TERM IS DEFINED IN THE SILVERLEAF FINANCE II
                  DOCUMENTS, SUCH FUNDS SHALL BE USED BY BORROWER STRICTLY TO
                  FUND OPERATING EXPENSES IN ACCORDANCE WITH THE BUSINESS PLAN
                  AND FOR NO OTHER REASON, WITHOUT TFC'S PRIOR WRITTEN CONSENT."

18. FACILITY FEE. Section 2.6 is hereby deleted in its entirety and in its place
instead is substituted the following:

                  "2.6     FACILITY FEE. Borrower acknowledges and agrees that a
                  Facility Fee in the amount set forth in the Fee Letter is due
                  and payable exclusively to the Lender. Borrower acknowledges,
                  agrees and confirms that Lender has earned the Facility Fee
                  notwithstanding whether the Loan or any portion is funded and
                  further agrees that the Facility Fee shall be payable BY
                  BORROWER AT THE CLOSING OF THE TFC CONDUIT LOAN."

19. GRANT OF SECURITY INTEREST. Section 3.1 is hereby deleted in its entirety
and in its place instead is substituted the following:

                  "3.1     GRANT OF SECURITY INTEREST. To secure the payment and
                  performance of the Obligations, for value received, Borrower
                  unconditionally and irrevocably assigns, pledges and grants to
                  Lender a continuing first priority security interest in and to
                  the Collateral (OTHER THAN THE SILVERLEAF FINANCE II STOCK AND
                  THE SILVERLEAF FINANCE II SUBORDINATED NOTE, AS TO WHICH
                  LENDER IS GRANTED A JUNIOR SECURITY INTEREST AS HEREINAFTER
                  PROVIDED) to further secure the payment and performance of the
                  Obligations. To further secure the payment and performance of
                  the Obligations, Borrower shall also execute and deliver
                  Lender: (i) the modifications to the Land Mortgages in the
                  applicable form attached hereto as Exhibit A, granting Lender
                  a first priority mortgage lien on the Land and (ii) the
                  Additional Resort Collateral Mortgages, in the applicable form
                  attached hereto as Exhibit A, granting Lender, a first
                  priority mortgage lien on that portion of the Additional
                  Resort Collateral consisting of real property. To further
                  secure the payment and performance of the Obligations,
                  Borrower shall further execute and deliver to Lender: (1) the
                  Additional Resort Collateral Assignment, in the applicable
                  form attached hereto as Exhibit A, granting Lender a first
                  priority security interest on that portion of the Additional
                  Resort Collateral consisting of personal property; (2) the
                  Stock Pledge Agreement, in the applicable form attached hereto
                  as Exhibit A, granting Lender, a first priority security
                  interest in the Silverleaf Finance I, Inc. Stock; (3) the
                  Amended Standby Management Agreement Assignment, in the
                  applicable form attached hereto as Exhibit A, assigning to
                  Lender, all of Borrower's right, title and interest in the
                  Standby Management Agreement; and (4) the Standby Servicing
                  Agreement Assignment, in the applicable form attached hereto
                  as Exhibit A, assigning to Lender all of Borrower's right,
                  title and interest in the Standby Servicing Agreement; and (5)
                  THE SILVERLEAF FINANCE II STOCK AND SUBORDINATED NOTE PLEDGE
                  AGREEMENT, IN THE APPLICABLE FORM ATTACHED TO THE SECOND
                  AMENDMENT AS EXHIBIT A-1, GRANTING LENDER A JUNIOR AND
                  SUBORDINATE SECURITY INTEREST IN

<PAGE>

                  THE SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF FINANCE II
                  SUBORDINATED NOTE, SUBJECT TO THE TERMS AND CONDITIONS SET
                  FORTH IN THE SPV SUBORDINATION AGREEMENT.

                  Notwithstanding anything herein to the contrary, Borrower
                  acknowledges and agrees as follows:

                  (a)      The Revolving Loan Component shall be secured by:

                           (i)      a first priority security interest in the
                           Eligible Notes Receivable pledged to Lender as
                           provided herein, the Mortgages with respect thereto
                           and that portion of the other Collateral related
                           thereto;

                           (ii)     a first priority security interest in the
                           Ineligible Note Portfolio, the Mortgages with respect
                           thereto and that portion of the other Collateral
                           related thereto;

                           (iii)    a second priority security interest, subject
                           only to the security interest securing the Term Loan
                           Component and the Inventory Loan, in the Silverleaf
                           Finance I, Inc. Stock and the Additional Resort
                           Collateral AND A SUBORDINATE SECURITY INTEREST IN THE
                           SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF
                           FINANCE II SUBORDINATED NOTE SUBJECT TO THE SECURITY
                           INTEREST SECURING THE TERM LOAN COMPONENT AND SUBJECT
                           TO THE TERMS AND CONDITIONS SET FORTH IN THE SPV
                           SUBORDINATION AGREEMENT.

                  (b)      The Term Loan Component shall be secured by:

                           (i)      a first priority security interest in the
                           Additional Resort Collateral;

                           (ii)     a first priority security interest in the
                           Silverleaf Finance I, Inc. Stock.

                           (iii)    a second priority security interest, subject
                           only to the security interest securing the Revolving
                           Loan Component, in the Eligible Notes Receivable
                           pledged to Lender as provided herein, the Mortgages
                           with respect thereto and that portion of the other
                           Collateral related thereto; and

                           (iv)     second priority security interest, subject
                           only to the security interest securing the Revolving
                           Loan Component, in the Ineligible Note Portfolio, the
                           Mortgages with respect thereto and the other
                           Collateral related thereto; and

                           (vi)     A SUBORDINATE SECURITY INTEREST IN THE
                           SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF
                           FINANCE II SUBORDINATED NOTE SUBJECT TO THE TERMS AND
                           CONDITIONS SET FORTH IN THE SPV SUBORDINATION
                           AGREEMENT.

<PAGE>

                  In addition to the foregoing, Borrower acknowledges, agrees
                  and confirms that the security interest granted to Lender, in
                  all other Collateral to secure the Loan, including the Land,
                  the Standby Management Agreement, the Standby Servicing
                  Agreement and the other collateral securing the Heller
                  Facility, the Sovereign Facility and the Existing Credit
                  Facilities shall be equal in priority as between the Revolving
                  Loan Component and the Term Loan Component and, with respect
                  to the collateral securing the Heller Facility, the Sovereign
                  Facility and the Existing Credit Facilities, subject only to
                  the security interests securing such facilities. For purposes
                  hereof, the reference to "collateral securing the Heller
                  Facility" and "collateral securing the Sovereign Facility"
                  shall mean the Notes Receivable and related Mortgages
                  exclusively assigned to Heller or Sovereign in connection with
                  an advance under their respective loan documents."

20. PURCHASER/ CRITERIA. Section 3.9 is hereby deleted in its entirety and in
its place instead is substituted the following:

                  "3.9     PURCHASER/CRITERIA. All Eligible Notes Receivable
                  pledged as Collateral to Lender subsequent to the Effective
                  Date will be underwritten in a manner consistent with the
                  Borrower's general underwriting criteria, as approved in
                  writing by Lender, including, without limitation: (i) the
                  requirement that a majority of sales shall be made to
                  Purchasers with minimum annual income as follows: $35,000 for
                  purchasers residing in the state of Texas, $40,000 for
                  purchasers residing in the state of Illinois, and $45,000 for
                  purchasers residing in the state of Massachusetts, (ii) the
                  requirement that each Purchaser shall have a major credit card
                  issued in his or her name, with a copy of such credit card
                  maintained in Borrower's file for such Purchaser, and (iii)
                  the requirement that the weighted average FICO Credit Bureau
                  Scores of all Purchasers with respect to which a FICO score
                  can be obtained be not less than 640, provided that the
                  aggregate outstanding principal balance of Eligible Notes
                  Receivable pledged to Lender with respect to which a FICO
                  score can not be obtained, does not exceed ten percent (10%)
                  of the aggregate outstanding principal amount of all Eligible
                  Notes Receivable pledged to Lender. Borrower shall not
                  materially alter its general underwriting criteria without the
                  prior written approval of Lender, which approval Lender may
                  withhold in its sole discretion. ON A SEMI-ANNUAL BASIS,
                  BORROWER SHALL PROVIDE LENDER WITH WRITTEN CERTIFICATION THAT
                  THE UNDERWRITING CRITERIA AS APPROVED BY LENDER REMAIN IN FULL
                  FORCE AND EFFECT AND HAVE NOT BEEN REVISED OR ALTERED WITHOUT
                  LENDER'S CONSENT."

21. CROSS COLLATERALIZATION. Section 3.11 is hereby deleted in its entirety and
in its place instead is substituted the following:

                  "3.11    CROSS COLLATERALIZATION. The Collateral also secures
                  the Obligations of Borrower under the Existing Credit
                  Facilities. Upon repayment of this Loan and the satisfaction
                  by Borrower of all of the Obligations under this Loan, the
                  Collateral shall continue to secure the Existing Credit
                  Facilities, as provided in the documents evidencing and
                  securing the Existing Credit Facilities. If this Loan is

<PAGE>

                  paid in full, any Collateral remaining thereafter shall remain
                  Collateral for the other Existing Credit Facilities. Borrower
                  further acknowledges and agrees that upon repayment in full of
                  the Heller Facility and/or the Sovereign Facility, Lender's
                  security interest in the collateral securing such facilities
                  shall automatically become a first priority security interest
                  securing the Borrower's Obligations hereunder and under the
                  Existing Credit Facilities and Borrower shall take such steps
                  as Lender may request to deliver such collateral to Lender and
                  to confirm Lender's first priority security interest therein.
                  Notwithstanding the foregoing: (a) when the Term Loan
                  Component and the Inventory Loan are paid in full, the
                  Additional Resort Collateral shall be released from the Lien
                  of the security interest granted to Lender hereunder provided:
                  (i) an Event of Default has not occurred; and (ii) the
                  Additional Resort Collateral is also released from any lien
                  granted to Sovereign pursuant to the Sovereign Documents; and
                  (b) when both the Term Loan Component and the Inventory Loan
                  are paid in full, the Silverleaf Finance I, Inc., Stock shall
                  be released from the Lien of the security interest granted to
                  Lender hereunder provided: (i) an Event of Default has not
                  occurred; and (ii) the Silverleaf Finance I, Inc., Stock is
                  also released from any lien granted to Sovereign pursuant to
                  the Sovereign Documents; (c) WHEN THE TERM LOAN COMPONENT, THE
                  REVOLVING LOAN COMPONENT AND THE INVENTORY LOAN ARE PAID IN
                  FULL, THE SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF
                  FINANCE II SUBORDINATED NOTE SHALL BE RELEASED FROM THE LIEN
                  OF THE SECURITY INTEREST GRANTED TO TFC HEREUNDER PROVIDED:
                  (I) AN EVENT OF DEFAULT HAS NOT OCCURRED; AND (II) THE
                  SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF FINANCE II
                  SUBORDINATED NOTE ARE ALSO RELEASED FROM ANY LIEN GRANTED TO
                  SOVEREIGN PURSUANT TO THE SOVEREIGN DOCUMENTS."

22. USE OF PROCEEDS/MARGIN STOCK. Section 6.11 is hereby deleted in its entirety
and in its place instead is substituted the following:

                  "6.11    USE OF PROCEEDS/MARGIN STOCK. (a) The proceeds of the
                  Loan, the Existing Credit Facilities, the Heller Facility, The
                  Sovereign Facility, the DZ Facility, the Tax Refund and any
                  cash dividend or other cash distribution Borrower receives
                  from Silverleaf Finance I, Inc. OR SILVERLEAF FINANCE II, INC.
                  will be used strictly in accordance with the Business Plan and
                  for no other purpose and (b) none of the proceeds of the Loan
                  will be used to purchase or carry any "margin stock" (as
                  defined under Regulation U of the Board of Governors of the
                  Federal Reserve System, as in effect from time to time), and
                  no portion of the proceeds of the Loan will be extended to
                  others for the purpose of purchasing or carrying margin stock.
                  None of the transactions contemplated in the Agreement
                  (including, without limitation, the use of the proceeds from
                  the Loan) will violate or result in the violation of Section 7
                  of the Securities Exchange Act of 1934, as amended, or any
                  regulations issued pursuant thereto, including, without
                  limitation, Regulations G, T, U and X of the Board of
                  Governors of the Federal Reserve System, 12 C.F.R., Chapter
                  11."

<PAGE>

23. RESTRICTIONS OF BORROWER. Section 6.14 is hereby deleted in its entirety and
in its place instead is substituted the following:

                  "6.14    RESTRICTIONS OF BORROWER. Except for this Agreement
                  and the Loan Documents, the Inventory Loan Documents, the
                  Tranche A Loan Documents, the Tranche B Loan Documents, the
                  Heller Documents and the Sovereign Documents, THE DZ DOCUMENTS
                  OR THE SILVERLEAF FINANCE II DOCUMENTS, the Borrower will not
                  be, on or after the date hereof, a party to any contract or
                  agreement which restricts its right or ability to incur
                  indebtedness or prohibits Borrower's execution of or
                  compliance with the terms of this Agreement, the other Loan
                  Documents, the Inventory Loan Documents, the Tranche A Loan
                  Documents, the Tranche B Loan Documents, the Heller Documents,
                  the Bond Holder Exchange Documents, the Sovereign Documents,
                  the DZ Documents, or THE SILVERLEAF FINANCE II DOCUMENTS. The
                  Borrower has not agreed or consented to cause or permit in the
                  future (upon the happening of a contingency or otherwise) any
                  of the Collateral, whether now owned or hereafter acquired, to
                  be subject to a Lien except in favor of Lender as provided
                  herein, and, with respect to the Land, the Additional Resort
                  Collateral, the Silverleaf Finance I. Inc., Stock and the
                  Ineligible Notes Receivable, THE SILVERLEAF FINANCE II
                  SUBORDINATED NOTE AND THE SILVERLEAF FINANCE II STOCK, in
                  favor of Heller, Sovereign AND TFC, as applicable."

24. STANDBY MANAGER, RESORT CONSULTANT AND STANDBY SERVICER. Section 7.1(w) is
hereby deleted in its entirety and in its place instead is substituted the
following:

                  "(w)     STANDBY MANAGER, RESORT CONSULTANT AND STANDBY
                  SERVICER. Borrower will enter into agreements for the Standby
                  Manager and the Resort Consultant on or before the Effective
                  Date and will maintain such agreements in full force and
                  effect. IN THE EVENT THAT SUCH AGREEMENTS FOR THE STANDBY
                  MANAGER AND THE RESORT CONSULTANT EXPIRE BEFORE THE FINAL
                  MATURITY DATE, SUCH AGREEMENTS SHALL BE EXTENDED OR SHALL BE
                  REPLACED, BEFORE THEIR EXPIRATION, WITH AGREEMENTS FOR A
                  STANDBY MANAGER AND A RESORT CONSULTANT THAT EXPIRE NO SOONER
                  THAN THE FINAL MATURITY DATE. Borrower will maintain the
                  agreement for the Standby Servicer in full force and effect.
                  Borrower agrees that upon the occurrence of a Default or Event
                  of Default hereunder: (1) Lender may, with the approval of a
                  majority of the Borrower's Board of Directors, which approval
                  shall not be unreasonably withheld or delayed, terminate any
                  then existing management agreements and replace any existing
                  manager with such manager as Lender may select provided
                  however, if: (x) the obligations have become immediately due
                  and payable in accordance with Section 9.1 (a) hereof, or (y)
                  Lender elects to have J & J Limited, Inc. act as Standby
                  Manager, then no such approval of Borrower's Board of
                  Directors shall be required; and (2) The Standby Servicer will
                  assume full control over the servicing of all Pledged Notes
                  Receivable, reporting solely to Lender, as provided in Section
                  10.14 hereof."

25. HELLER FACILITY, SOVEREIGN FACILITY, DZ FACILITY AND BOND HOLDER EXCHANGE
TRANSACTION. Section 7.1(z) is hereby deleted in its entirety and in its place
instead is substituted the following:

<PAGE>

                  "(z)     HELLER FACILITY, SOVEREIGN FACILITY, DZ FACILITY, TFC
                  CONDUIT LOAN AND BOND HOLDER EXCHANGE TRANSACTION. Borrower
                  will comply with each of the terms and conditions of the
                  Heller Facility, the Sovereign Facility, the DZ Facility, THE
                  TFC CONDUIT LOAN and the Bond Holder Exchange Documents and
                  will promptly deliver to Lender, upon receipt by Borrower,
                  copies of any notices received by Borrower in connection with
                  any of the forgoing credit facilities."

26. PROFITABLE OPERATIONS. Section 7.1(aa)(v) is hereby deleted in its entirety
and in its place instead is substituted the following:

                  "(v)     PROFITABLE OPERATIONS. Borrower will not permit
                  Consolidated Net Income (a) for any fiscal year, commencing
                  with the fiscal year ending December 31, 2002, to be less than
                  $1.00 and (b) for any two consecutive fiscal quarters
                  (reviewed on an individual rather than on an aggregate basis)
                  to be less than $1.00."

27. RESTRICTIONS ON TRANSFERS. Section 7.4(b) is hereby deleted in its entirety
and in its place instead is substituted the following:

                  "(b)     RESTRICTIONS ON TRANSFERS. Except as hereinafter
                  specifically provided, Borrower shall not, whether voluntarily
                  or involuntarily, by operation of law or otherwise, (I)
                  without obtaining the prior written consent of Lender (which
                  consent may be given, withheld or conditioned by Lender in
                  Lender's sole discretion), transfer, sell, pledge, convey,
                  hypothecate, factor or assign all or any portion of the
                  Collateral, the Encumbered Intervals, the Common Elements
                  relating to the Encumbered Intervals or any Resort facilities
                  or amenities, or contract to do any of the foregoing,
                  including, without limitation, pursuant to options to
                  purchase, and so-called "installment sales contracts", "land
                  contracts", or "contracts for deed", PROVIDED THAT THE
                  FOREGOING RESTRICTION ON TRANSFERS SHALL NOT APPLY TO THE
                  CONVEYANCE OF SPV ASSETS TO THE SPV IN ACCORDANCE WITH THE
                  SILVERLEAF FINANCE II DOCUMENTS, (ii) without obtaining the
                  prior written consent of Lender (which consent may be given,
                  withheld or conditioned by Lender in Lender's sole
                  discretion), lease or license all or any portion of the
                  Collateral, the Encumbered Intervals, the Common Elements
                  relating to the Encumbered Intervals or any Resort facilities
                  or amenities (EXCEPT FOR THE LICENSE CREATED IN FAVOR OF SPV
                  UNDER ANY LICENSE AGREEMENT WITH BORROWER, SILVERLEAF CLUB OR
                  ANY TIMESHARE OWNERS ASSOCIATION, TO USE OR ACCESS THE
                  RESERVATION SYSTEM OR RELATED COMPUTER HARDWARE OR SOFTWARE
                  FOR ANY RESORT), or change the legal or actual possession or
                  use thereof, (iii) permit the assignment, transfer,
                  delegation, change, modification or diminution of the duties
                  or responsibilities of Borrower, of any manager of any Resort
                  approved by Lender as manager of any Resort (except for an
                  assignment of such duties to a professional management company
                  or companies reasonably acceptable to Lender in advance)
                  without obtaining the prior written consent of Lender (which
                  consent shall not be unreasonably withheld), or (iv) without
                  obtaining the prior written consent of Lender (which consent
                  may be given, withheld or conditioned by Lender in Lender's
                  sole

<PAGE>

                  discretion), cause or permit the assignment, pledge or other
                  encumbrance of any of the Operating Contracts or all or any
                  portion of Borrower's right, title or interest in the
                  Declaration. Without limiting the generality of the preceding
                  sentence, and subject to the terms of this Agreement, the
                  prior written consent of Lender (as specified above) shall be
                  required for (A) any transfer of the Encumbered Intervals, the
                  Common Elements relating to the Encumbered Intervals or any
                  Resort facilities or amenities or any part thereof made to a
                  subsidiary or Affiliate or otherwise, (B) any transfer of all
                  or any part of the Encumbered Intervals, the Common Elements
                  relating to the Encumbered Intervals or any Resort facilities
                  or amenities by Borrower to its stockholders or Affiliates or
                  vice versa, and (C) any corporate merger or consolidation,
                  disposition or other reorganization, except as permitted in
                  Section 7.1(c). In the event that Lender is willing to consent
                  to a transfer which would otherwise be prohibited by this
                  Section 7.2(b) Lender may condition its consent on such terms
                  as it desires, including, without limitation, an increase in
                  the Interest Rate and the requirement that Borrower pay a
                  transfer fee, together with any expenses incurred by Lender in
                  connection with the granting of such consent (including,
                  without limitation, attorneys' fees and expenses). If Borrower
                  violates the terms of this Section 7.2(b), in addition to any
                  other rights or remedies which Lender may have herein, in any
                  other Loan Document, or at law or in equity, Lender may by
                  written notice to Borrower increase, effective immediately as
                  of the date of such violation, the Interest Rate to the
                  Default Rate."

28. TRANSACTIONS WITH AFFILIATES. Section 7.4(d) is hereby deleted in its
entirety and in its place instead is substituted the following:

                  "(d)     TRANSACTIONS WITH AFFILIATES. EXCEPT AS PROVIDED IN
                  THE SILVERLEAF FINANCE II DOCUMENTS, without the prior written
                  consent of Lender, which shall not unreasonably be withheld,
                  Borrower will not enter into any transaction with any
                  Affiliate in connection with the Resorts, including, without
                  limitation, relating to the purchase, sale or exchange any
                  assets or properties or the rendering of any service, except
                  in the ordinary course of, and pursuant to the reasonable
                  requirements of, the operations of the Resorts and upon fair
                  and reasonable terms."

29. TIMESHARE REGIME. Section 7.4(g) is hereby deleted in its entirety and in
its place instead is substituted the following:

                  "(g)     TIMESHARE REGIME. Without Lender's prior written
                  consent, which consent shall not be unreasonably withheld as
                  to changes necessary to implement the Business Plan, Borrower
                  shall not amend, modify or terminate the Declarations or other
                  Timeshare Documents, or any other restrictive covenants,
                  agreements or easements regarding the Resorts (except for
                  routine non-substantive modifications which have no impact on
                  the Collateral AND EXCEPT FOR AMENDMENTS OR MODIFICATIONS OF
                  THE TIMESHARE DOCUMENTS AND/OR DECLARATIONS, A LIST OF WHICH
                  IS ATTACHED TO THE SECOND AMENDMENT AS EXHIBIT

<PAGE>

                  B-1). Except as otherwise provided herein or in the Sovereign
                  Documents, Borrower shall not assign its rights as "developer"
                  under the Declarations without Lender's prior written consent,
                  or file or permit to be filed any additional covenants,
                  conditions, easements or restrictions against or affecting the
                  Resorts (or any portion thereof) without Lender's prior
                  written consent, which consent shall not be unreasonably
                  withheld."

30. COLLATERAL. Section 7.4(i) is hereby deleted in its entirety and in its
place instead is substituted the following:

                  "(i)     COLLATERAL. Borrower shall not take any action (nor
                  permit or consent to the taking of any action) which might
                  impair the value of the Collateral or any of the rights of
                  Lender in the Collateral, EXCEPT WITH RESPECT TO THE
                  SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF FINANCE II
                  SUBORDINATED NOTE AS PROVIDED IN THE SILVERLEAF FINANCE II
                  DOCUMENTS, nor shall Borrower cause or permit any amendment to
                  or modification of the form or terms of any of the Pledged
                  Notes Receivable, Mortgages or, except as specifically
                  provided hereinabove, the other Timeshare Documents"

31. MODIFICATIONS OF HELLER DOCUMENTS, DZ DOCUMENTS, BOND HOLDER EXCHANGE
DOCUMENTS, SOVEREIGN DOCUMENTS, SILVERLEAF FINANCE II DOCUMENTS AND OTHER DEBT
INSTRUMENTS. Section 7.4(k) is hereby deleted in its entirety and in its place
instead is substituted the following:

                  "(k)     MODIFICATIONS OF HELLER DOCUMENTS, DZ DOCUMENTS, BOND
                  HOLDER EXCHANGE DOCUMENTS, SOVEREIGN DOCUMENTS, SILVERLEAF
                  FINANCE II DOCUMENTS AND OTHER DEBT INSTRUMENTS. Borrower
                  shall not amend or modify the Heller Documents, the Sovereign
                  Documents, DZ Documents, Bondholder Exchange Documents, THE
                  SILVERLEAF FINANCE II DOCUMENTS or the documents evidencing
                  any other indebtedness of Borrower, nor shall Borrower extend,
                  modify, increase or terminate the Heller Facility, 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, which
                  consent shall not be unreasonably withheld."

32. DEFAULT BY BORROWER IN OTHER AGREEMENTS. Section 8.1(m) is hereby deleted in
its entirety and in its place instead is substituted the following:

                  "(m)     DEFAULT BY BORROWER IN OTHER AGREEMENTS. Except for
                  any Specified Event of Default (as provided in the Forbearance
                  Agreement), which Specified Events of Default shall include a
                  prior existing default under the Heller Facility or the
                  Sovereign Facility and for any "Waived Defaults" under the
                  November Letter Agreement, which Waived Defaults include prior
                  existing defaults under the Heller Facility or the Sovereign
                  Facility, any default, AS DEFINED IN THE APPLICABLE LOAN
                  AGREEMENT, by the Borrower (i) in the payment of any
                  indebtedness to any Lender, including any indebtedness owed to
                  Lender under the Heller Facility, DZ

<PAGE>

                  Facility, Sovereign Facility, Bond Holder Exchange
                  Transaction, or the Existing Credit Facilities, OR THE TFC
                  CONDUIT LOAN, (ii) in the payment or performance of other
                  indebtedness for borrowed money or obligations secured by any
                  part of the Resort; (iii) in the payment or performance of
                  other material indebtedness or obligations (material
                  indebtedness or obligations being defined for purposes of this
                  provision as any indebtedness or obligation in excess of
                  $200,000) where such default accelerates or permits the
                  acceleration (after the giving of notice or passage of time or
                  both) of the maturity of such indebtedness, or permits the
                  holders of such indebtedness to elect a majority of the board
                  of directors of Borrower (whether or not such default[s] have
                  been waived by such holder) or (iv) the acceleration by
                  Heller, Sovereign, DZ or the bondholders of their respective
                  credit facilities OR THE ACCELERATION OF THE TFC CONDUIT
                  LOAN."

33. CONDITIONS PRECEDENT. This Second Amendment shall not be effective until all
of the following conditions have been satisfied:

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

                           (i)      A certificate in the form attached to THE
                           SECOND AMENDMENT as Exhibit C-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 TFC, 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 SECOND Amendment and all
                           such documents requested by TFC in the form attached
                           to THE SECOND AMENDMENT as Exhibit D-1; and

                           (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 SECOND

<PAGE>

                           Amendment and all such documents requested by Lender
                           in the form attached to THE SECOND AMENDMENT as
                           Exhibit E-1.

                  (b)      EXECUTION AND DELIVERY OF DOCUMENTS. Borrower shall
                  have delivered to TFC the following:

                           (i)      The Silverleaf Finance II Documents;

                           (ii)     Closing Opinions of Counsels for Borrower;

                           (iii)    The Silverleaf Finance II Stock and
                           Subordinated Note Pledge Agreement;

                           (iv)     Amended and Restated Term Loan Component
                           Note;

                           (v)      Revised Form of Borrower's Certificate and
                           Request for Advance;

                           (vi)     Bailee Agreement; and

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

                  (c)      EXECUTION OF AMENDMENTS BY SOVEREIGN AND DZ BANK. TFC
                  shall have received evidence, in form and substance
                  satisfactory to TFC, that Sovereign and DZ have executed
                  amendments to the Sovereign Documents and DZ Documents,
                  respectively, in connection with the TFC Conduit Loan and TFC
                  shall have consented to such amendments.

                  (d)      NECESSARY CONSENTS OBTAINED. TFC shall have received
                  evidence, in form and substance satisfactory to TFC, that the
                  consent of each party entitled to consent to this SECOND
                  Amendment has been obtained.

                  (e)      FEES. Borrower shall have paid all fees of all
                  Lenders in connection with the TFC Conduit Loan and this
                  SECOND Amendment.

34. 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 Second Amendment.

35. EFFECT OF AMENDMENT. The Loan Agreement, as herein amended, shall remain in
full force and effect.

36. 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

<PAGE>

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 TFC, and hereby confirms or reaffirms the prior
granting to TFC and each 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 TFC 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 TFC
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 TFC'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 TFC may deem
necessary to further evidence and perfect TFC's Lien on the Collateral.

37. ESTOPPEL. Borrower acknowledges, agrees and confirms that: (a) Advances
under the Loan Agreement have been made prior to the date hereof; (b) all such
Advances made prior to the Closing Date were made in favor of the Original
Borrower and the Borrower in respect of the Existing Eligible Resorts; (c)
Advances made prior to the date of the Second Amendment are deemed as having
been made for the benefit of the Borrower and Borrower acknowledges and agrees
that Borrower received a direct and substantial financial benefit from such
Advances and (d) immediately prior to the date of the Second Amendment, and
without giving effect to any Advances that may be made pursuant to the Second
Amendment, the status of the Loan, including the outstanding principal balance
thereof is as reflected in the Loan Funding Report delivered to and approved by
Lender in connection with the closing of the Second Amendment.

         The Loan constitutes valuable consideration to the Borrower, which
consideration is uninterrupted and continuous since the dates on which the Loan
was first made. This Second Amendment and the other Loan Documents and the Loan
modifications and transactions provided for or contemplated hereunder or
thereunder, shall in no way adversely affect the Lien or perfection or priority
of any Lien of Lender as of the date hereof in and to any Collateral, and are
not intended to constitute, and do not constitute or give rise to, any novation,
cancellation or extinguishment of any of Borrower's Obligations existing as of
the Closing Date to Lender, or of any interests owned or held by Lender (and not
previously released) in and to any of the Collateral; it being the intention of
the parties that the transactions provided for or contemplated herein shall be
effectuated without any interruption in the continuity of the value and
consideration received by Borrower, and of the attachment, perfection, priority
and continuation in favor of Lender in and to all Collateral and proceeds.

38. EFFECTIVE DATE. Upon satisfaction of the conditions precedent set forth in
Section 33 hereof, this Second Amendment shall be effective as of the Second
Amendment Effective Date, as defined in the Loan Agreement as amended hereby.

<PAGE>

39. MAXIMUM OBLIGATION OF LENDER UNDER THE LOAN, THE ADDITIONAL CREDIT FACILITY
AND THE INVENTORY LOAN. Borrower acknowledges, agrees and confirms that
notwithstanding anything to the contrary herein, in any other Loan Document or
in any document evidencing or securing the Tranche A Credit Facility, the
Tranche B Credit Facility or the Inventory Loan, Lender shall not be obligated
to fund any Advance hereunder, which when taken together with the loans or
advances made by the Lender to the Borrower under this Agreement, the Additional
Credit Facility or the Inventory Loan, would cause the aggregate amount of such
loans and advances by the Lender to Borrower to exceed the maximum aggregate
amount as set forth in the Loan Agreement.

         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
  [illegible]
-------------------
                                              By     /S/ JOHN T. D'ANNIBALE
                                                     ---------------------------
/S/ JESSICA CONCORD                           Name: John T. D'Annibale
-------------------                           Its:  Vice President

                                              SILVERLEAF RESORTS, INC.
 /S/ GEORGE BEDELL
------------------
                                              By:    /S/ HARRY J. WHITE, JR.
                                                     ---------------------------
 /S/ LAINE CLOSE                              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 19th day of December,
2003, personally appeared John T. 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/ MATTHEW CARRANO
                           ------------------------------------
                           Notary Public in and for said State
                           My Commission Expires: _____________
                           Commissioner of the Superior Court

<PAGE>

STATE OF Texas                              )
                                            )        ss:
COUNTY OF Dallas                            )

         At Dallas in said County and State on this  19th day of  December,
2003, 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/ R. Laine Close
                      -----------------------------------
                      Notary Public in and for said State
                      My Commission Expires:

List of Exhibits:

Exhibit A-1       Stock and Subordinate Note Pledge Agreement
Exhibit B-1       Timeshare Document Amendments
Exhibit C-1       Borrower's Certificate
Exhibit D-1       Borrower's Resolution
Exhibit E-1       Incumbency Certificate
Exhibit F-1       Business Plan<PAGE>

                                                                    Exhibit 10.7

                               THIRD AMENDMENT TO
                  LOAN AND SECURITY AGREEMENT (INVENTORY LOAN)

         THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (Inventory Loan)
dated as of December 19, 2003 (the "Third Amendment"), is entered into by and
between SILVERLEAF RESORTS, INC., a Texas corporation (the "BORROWER"), and
TEXTRON FINANCIAL CORPORATION, a Delaware corporation, ("TFC" or the "LENDER").

                              W I T N E S S E T H:

         WHEREAS, Lender and Borrower are parties to that certain Loan and
Security Agreement dated as of December 16, 1999 (the "ORIGINAL LOAN
AGREEMENT"), pursuant to which the Borrower executed its Secured Promissory Note
in favor of the Lender in the amount of $10,000,000.00, (the "NOTE");

         WHEREAS, Lender 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, Lender and Borrower are parties to that certain First
Amendment to Loan and Security Agreement dated as of April 17, 2001 (the "FIRST
AMENDMENT", and together with the Original Agreement) which, among other things,
incorporated the terms of that certain Forbearance Agreement dated as of April
6, 2001;

         WHEREAS, Lender and Borrower are parties to that certain Second
Amendment to Loan and Security Agreement dated as of April 30, 2002 (the "SECOND
AMENDMENT, and together with the First Amendment and the Original Loan
Agreement) which modified and restructured the Loan;

         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 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) four Letter Agreements 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

<PAGE>

the Loan Agreement, the Heller Documents and the Sovereign Documents described
therein, respectively;

         WHEREAS, TFC and Borrower have agreed to enter into this Third
Amendment to Loan and Security Agreement (the "THIRD Amendment") to amend and
modify the Loan Agreement as set forth below;

         WHEREAS, Borrower intends to convey and transfer certain assets to the
SPV, including the SPV Assets, in accordance with the terms of the Silverleaf
Finance II Documents, as such terms are hereafter defined and whereas in
connection with such transfer, the Commitment, as such term is hereafter
defined, shall be reduced as described herein; and

         WHEREAS, all capitalized terms not otherwise defined herein shall have
the meaning ascribed to such term in the Loan Agreement.

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

1. ADDITIONAL RESORT COLLATERAL. Section 1.1(uuu) is hereby deleted in its
entirety and in its place instead is substituted the following:

                  "(uuu) ADDITIONAL RESORT COLLATERAL. The term "Additional
                  Resort Collateral" shall mean singly and collectively, the
                  development rights, real property, fixtures and other personal
                  property, including all management agreements for the Resorts,
                  now owned or hereafter acquired by Borrower and described on
                  Schedule 1.1(uuu). "Additional Resort Collateral" shall not
                  include the promissory notes and other property of Silverleaf
                  Finance I, Inc., that constitutes "Pledged Assets" under the
                  DZ Documents OR THE PROMISSORY NOTES AND OTHER PROPERTY OF
                  SILVERLEAF FINANCE II, INC. THAT CONSTITUTE "CONVEYED ASSETS"
                  OR COLLATERAL UNDER THE SILVERLEAF FINANCE II DOCUMENTS."

2. BUSINESS PLAN. Section 1.1(iii) is hereby deleted in its entirety and in its
place instead is substituted the following:

                  "(iii) BUSINESS PLAN. The term "Business Plan" shall mean the
                  five (5) year "Stand Alone" business plan, more particularly
                  described as document "BS.IS.02-08.Lender.9-03.NS.1a2,"
                  prepared by Borrower and attached TO THE THIRD AMENDMENT as
                  Exhibit F-1. THE BUSINESS PLAN INCLUDES THE "IMPACT ON LENDERS
                  WORKSHEET" SETTING FORTH THE AMOUNTS TO BE ADVANCED BY EACH OF
                  THE LENDERS, HELLER AND SOVEREIGN PURSUANT TO THEIR RESPECTIVE
                  CREDIT FACILITIES (THE "SENIOR LENDER ADVANCE SCHEDULE")."

3. COLLATERAL. Section 1.1(i) is hereby amended in part to add the following new
paragraphs:

                  "(xiv) THE SILVERLEAF FINANCE II STOCK."

<PAGE>

                  "(xv) THE SILVERLEAF FINANCE II SUBORDINATED NOTE."

4. DZ FACILITY. Section 1.1(aaaa) is hereby deleted in its entirety and in its
place instead is substituted the following:

                  "(aaaa) DZ FACILITY. The term "DZ Facility" shall mean that
                  certain note purchase facility to be provided by DZ Bank AG
                  Deutsche Zentral Genossenschaftsbank, as agent for Autobahn
                  Funding Company, LLC ("DZ") to Borrower, on the terms outlined
                  in the DZ Letter Agreement, dated December 12, 2001 as
                  supplemented by that certain letter agreement by and between
                  Borrower and DZ dated February 7, 2002, and attached hereto as
                  Exhibit G AS MAY BE HEREAFTER AMENDED FROM TIME TO TIME
                  (collectively, the "DZ LETTER AGREEMENT") and evidenced by the
                  documents listed on Schedule 1.1(aaaa) hereto (the "DZ
                  DOCUMENTS")"

5. FACILITY FEE. Section 1.1(jjj) is hereby deleted in its entirety and in its
place instead is substituted the following:

                  "(jjj) FACILITY FEE. Shall mean the facility fee set forth in
                  the Fee Letter, which shall be payable in accordance with
                  Section 2.6(c). IN ADDITION TO THE FEES SET FORTH IN THE FEE
                  LETTER, THE FACILITY FEE SHALL INCLUDE A FEE IN THE AMOUNT OF
                  ONE-HALF OF ONE PERCENT (1/2%) OF THE TOTAL AMOUNT OF THE
                  MAXIMUM AGGREGATE COMMITMENT FOR BOTH THE REVOLVING LOAN
                  COMPONENT AND THE TERM LOAN COMPONENT UNDER THIS AGREEMENT,
                  THE TRANCHE A CREDIT FACILITY, THE TRANCHE B CREDIT FACILITY
                  AND THE TRANCHE C CREDIT FACILITY."

6. DEFINITIONS. Section 1.1 is hereby amended in part to add the following new
paragraphs:

                  "(ssss) THIRD AMENDMENT. SHALL MEAN THAT CERTAIN THIRD
                  AMENDMENT TO LOAN AND SECURITY AGREEMENT (INVENTORY LOAN )
                  DATED AS OF DECEMBER 19, 2003 BY AND AMONG SILVERLEAF RESORTS,
                  INC., A TEXAS CORPORATION, AS BORROWER, AND TEXTRON FINANCIAL
                  CORPORATION, A DELAWARE CORPORATION, AS LENDER."

                  "(tttt) THIRD AMENDMENT EFFECTIVE DATE. SHALL MEAN THE DATE ON
                  WHICH: (i) THE CLOSING OF THE TFC CONDUIT LOAN OCCURS; AND
                  (ii) LENDER DETERMINES, IN ITS SOLE AND ABSOLUTE DISCRETION,
                  THAT EACH OF THE CONDITIONS SET FORTH IN SECTION 21 OF THE
                  THIRD AMENDMENT HAVE BEEN SATISFIED."

                  "(uuuu) SILVERLEAF FINANCE II DOCUMENTS. SHALL MEAN THE SPV
                  LOAN AGREEMENT, THE DEVELOPER TRANSFER AGREEMENT, THE DEMAND
                  NOTES AND ALL OTHER AGREEMENTS OR DOCUMENTS EXECUTED IN
                  CONNECTION WITH THE TFC CONDUIT LOAN, AS EACH MAY BE AMENDED,
                  RESTATED OR OTHERWISE MODIFIED FROM TIME TO TIME."

                  "(vvvv) SILVERLEAF FINANCE II STOCK. SHALL MEAN ALL EQUITY
                  INTERESTS IN SILVERLEAF FINANCE II, INC., ALL DOCUMENTS,
                  CERTIFICATES OR INSTRUMENTS REPRESENTING ANY OF THE FOREGOING
                  AND ALL CASH, SECURITIES, DIVIDENDS, RIGHTS AND OTHER PROPERTY
                  AT ANY TIME

<PAGE>

                  RECEIVED OR RECEIVABLE IN RESPECT OF OR IN EXCHANGE FOR THE
                  FOREGOING, AND ALL PROCEEDS OF THE FOREGOING."

                  "(wwww) "SILVERLEAF FINANCE II SUBORDINATED NOTE. SHALL MEAN
                  THE SUBORDINATED NOTE, DATED AS OF DECEMBER 19, 2003, PAYABLE
                  BY SPV TO THE ORDER OF SILVERLEAF RESORTS, INC., AND ANY OTHER
                  PROMISSORY NOTE ISSUED IN REPLACEMENT OR RESTATEMENT THEREOF,
                  OR OTHERWISE ISSUED TO EVIDENCE SPV'S OBLIGATION TO PAY THE
                  DEFERRED PURCHASE PRICE OF RECEIVABLES UNDER THE DEVELOPER
                  TRANSFER AGREEMENT WHICH IS PART OF THE SILVERLEAF FINANCE II
                  DOCUMENTS, IN EACH CASE AS AMENDED OR OTHERWISE MODIFIED FROM
                  TIME TO TIME, AND ALL PROCEEDS OF THE FOREGOING."

                  "(xxxx) SILVERLEAF FINANCE II STOCK AND SUBORDINATED NOTE
                  PLEDGE AGREEMENT. SHALL MEAN THE AGREEMENT IN THE FORM
                  ATTACHED TO THE THIRD AMENDMENT AS EXHIBIT A-1, PURSUANT TO
                  WHICH THE SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF
                  FINANCE II SUBORDINATED NOTE IS PLEDGED TO LENDER, AS SECURITY
                  FOR THE LOAN."

                  "(yyyy) SPV. SHALL MEAN SILVERLEAF FINANCE II, INC., A
                  DELAWARE CORPORATION."

                  "(zzzz) SPV ASSETS. SHALL MEAN ALL ASSETS SOLD OR CONVEYED BY
                  BORROWER TO THE SPV PURSUANT TO THE SILVERLEAF FINANCE II
                  DOCUMENTS."

                  "(aaaaa) SPV SUBORDINATION AGREEMENT. SHALL MEAN THAT CERTAIN
                  SUBORDINATION AGREEMENT RELATING TO TFC'S INTEREST IN THE
                  SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF FINANCE II
                  SUBORDINATED NOTE, DATED AS OF DECEMBER 19, 2003 BY AND AMONG
                  TEXTRON FINANCIAL CORPORATION, IN ITS CAPACITY AS LENDER AND
                  IN ITS CAPACITY AS LENDER UNDER THE GROUP TWO DOCUMENTS (AS
                  SUCH TERM IS DEFINED IN THE SPV SUBORDINATION AGREEMENT), AS
                  MAY BE AMENDED, RESTATED OR MODIFIED FROM TIME TO TIME."

                  "(bbbbb) TFC CONDUIT LOAN. SHALL MEAN THAT CERTAIN LOAN
                  FACILITY TO BE PROVIDED BY TEXTRON FINANCIAL CORPORATION
                  ("TFC") TO SPV IN ACCORDANCE WITH THE TERMS OF THE SILVERLEAF
                  FINANCE II DOCUMENTS."

7. REVOLVING LOAN AND LENDING LIMITS. Section 2.1 is hereby deleted in its
entirety and in its place instead is substituted the following:

                  "2.1 REVOLVING LOAN AND LENDING LIMITS. Upon the terms and
                  subject to the conditions set forth in this Agreement,
                  including but not limited to Section 2.8 hereof, the Lender
                  shall make Advances to the Borrower, and the Borrower may
                  borrow, repay and reborrow during the Revolving Loan Period,
                  as such term is hereafter defined, principal under the Loan in
                  an amount not to exceed at any time the lesser of: (i) the
                  Loan to Retail Value Ratio of the Required Retail Value of the
                  Inventory or (ii) $10,000,000.00. The Revolving Loan period
                  shall terminate in all respects on MARCH 31, 2006. Borrower's
                  right to receive Advances hereunder shall also be subject to
                  the terms and conditions set forth in that certain
                  Intercreditor Agreement between Lender, Borrower, Heller and
                  Sovereign dated

<PAGE>

                  of even date herewith, as amended hereafter. Notwithstanding
                  anything herein to the contrary, Borrower acknowledges,
                  confirms and agrees that it shall not be entitled to receive,
                  nor shall any Lender be required to make, any Advance if and
                  to the extent that: (i) Borrower has failed to substantially
                  adhere to the Business Plan, including the Senior Lender
                  Advance Schedule, as determined by Agent in its sole and
                  absolute discretion; or (ii) the most recent weekly flash
                  report delivered in accordance with Section 7.1(h)(vii) hereof
                  (a "WEEKLY FLASH REPORT"), indicates that Borrower has in
                  excess of five million dollars ($5,000,000) in available
                  unrestricted cash.

                  8. Notwithstanding anything herein to the contrary, the
                  obligation of Lender to make any Advance under this Agreement
                  shall be subject to and conditioned upon Heller making
                  advances to Borrower substantially in accordance with the
                  Business Plan, including the Senior Lender Advance Schedule,
                  which Lender agrees will be determined on a quarterly basis
                  commencing March 31, 2002. Lender shall have no obligation to
                  make any Advance hereunder to the extent that Heller
                  terminates its facility PRIOR TO MARCH 31, 2004 or fails to
                  make advances as provided in the Business Plan, including the
                  Senior Lender Advance Schedule, which Lender agrees will be
                  determined on a quarterly basis commencing March 31, 2002."

9. USE OF PROGRAM RESERVE ACCOUNT WITHDRAWALS AND SURPLUS UNDER THE TFC CONDUIT
LOAN. Section 2.4 is hereby amended in part to add the following new paragraph:

                  "(d)     USE OF PROGRAM RESERVE ACCOUNT WITHDRAWALS AND
                  SURPLUS UNDER THE TFC CONDUIT LOAN. TO THE EXTENT THAT FUNDS
                  ARE MADE AVAILABLE TO SPV FROM THE PROGRAM RESERVE ACCOUNT IN
                  ACCORDANCE WITH SECTION 5.1(e) OF THE LOAN AND SECURITY
                  AGREEMENT WHICH IS PART OF THE SILVERLEAF FINANCE II
                  DOCUMENTS, TO THE EXTENT PERMITTED BY LAWS AND THE SILVERLEAF
                  FINANCE II DOCUMENTS, BORROWER SHALL CAUSE SPV TO DISTRIBUTE
                  SUCH FUNDS TO BORROWER AND BORROWER SHALL MAKE PAYMENT IN THE
                  AMOUNT OF SUCH DISTRIBUTION TO TFC AND SOVEREIGN TO BE APPLIED
                  IN THE ORDER SET FORTH IN THAT CERTAIN INTERCREDITOR AGREEMENT
                  BETWEEN TFC, BORROWER, HELLER AND SOVEREIGN DATED OF EVEN DATE
                  HEREWITH, AS AMENDED. TO THE EXTENT THAT BORROWER RECEIVES ANY
                  DISTRIBUTIONS FROM THE SPV IN RESPECT OF ANY SURPLUS PAYMENTS,
                  AS SUCH TERM IS DEFINED IN THE SILVERLEAF FINANCE II
                  DOCUMENTS, SUCH FUNDS SHALL BE USED BY BORROWER STRICTLY TO
                  FUND OPERATING EXPENSES IN ACCORDANCE WITH THE BUSINESS PLAN
                  AND FOR NO OTHER REASON, WITHOUT LENDER'S PRIOR WRITTEN
                  CONSENT."

10. GRANT OF SECURITY INTEREST. Section 3.1 is hereby deleted in its entirety
and in its place instead is substituted the following:

         "3.1     GRANT OF SECURITY INTEREST. To secure the payment and
         performance of the Obligations, for value received, Borrower
         unconditionally and irrevocably assigns, pledges and grants to Lender a
         continuing first priority security interest in and to the Collateral
         (OTHER THAN THE SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF FINANCE
         II

<PAGE>

         SUBORDINATED NOTE, AS TO WHICH LENDER IS GRANTED A JUNIOR SECURITY
         INTEREST AS HEREINAFTER PROVIDED) to further secure the payment and
         performance of the Obligations. To further secure the payment and
         performance of the Obligations, Borrower shall also execute and deliver
         Lender: (i) the modifications to the Land Mortgages in the applicable
         form attached hereto as Exhibit A, granting Lender a first priority
         mortgage lien on the Land and (ii) the Additional Resort Collateral
         Mortgages, in the applicable form attached hereto as Exhibit A,
         granting Lender, a first priority mortgage lien on that portion of the
         Additional Resort Collateral consisting of real property. To further
         secure the payment and performance of the Obligations, Borrower shall
         further execute and deliver to Lender: (1) the Additional Resort
         Collateral Assignment, in the applicable form attached hereto as
         Exhibit A, granting Lender a first priority security interest on that
         portion of the Additional Resort Collateral consisting of personal
         property; (2) the Stock Pledge Agreement, in the applicable form
         attached hereto as Exhibit A, granting Lender, and a first priority
         security interest in the Silverleaf Finance I, Inc. Stock; and (3) the
         Amended Standby Management Agreement Assignment, in the applicable form
         attached hereto as Exhibit A, assigning to Lender, all of Borrower's
         right, title and interest in the Amended Standby Management Agreement;
         (4) THE SILVERLEAF FINANCE II STOCK AND SUBORDINATED NOTE PLEDGE
         AGREEMENT, IN THE APPLICABLE FORM ATTACHED TO THE THIRD AMENDMENT AS
         EXHIBIT A-1, GRANTING LENDER A JUNIOR AND SUBORDINATE SECURITY INTEREST
         IN THE SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF FINANCE II
         SUBORDINATED NOTE, SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE
         SPV SUBORDINATION AGREEMENT.

                  Notwithstanding anything herein to the contrary, Borrower
acknowledges and agrees as follows:

                  10.1 The Loan shall be secured by:

                           (i) a first priority security interest in the
                           Inventory;

                           (ii) a second priority security interest in the
                           Silverleaf Finance I, Inc. Stock and the Additional
                           Resort Collateral, subject only to the first priority
                           security interest securing the Term Loan Component of
                           the Additional Credit Facility and the Existing
                           Credit Facilities AND A SUBORDINATE SECURITY INTEREST
                           IN THE SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF
                           FINANCE II SUBORDINATED NOTE SUBJECT TO THE SECURITY
                           INTEREST SECURING THE TERM LOAN COMPONENT OF THE
                           ADDITIONAL CREDIT FACILITY AND THE EXISTING CREDIT
                           FACILITIES AND SUBJECT TO THE TERMS AND CONDITIONS
                           SET FORTH IN THE SPV SUBORDINATION AGREEMENT; and

                           (iii) a second priority security interest in the
                           Pledged Notes Receivable and the Ineligible Note
                           Portfolio and the mortgages securing the same,
                           subject only to the first priority security interest
                           securing the revolving loan component of the
                           Additional Credit Facility and the Existing Credit
                           Facilities.

<PAGE>

                  In addition to the foregoing, Borrower acknowledges, agrees
                  and confirms that the security interest granted to Lender, in
                  all other Collateral to secure the Loan, including the Land,
                  the Standby Management Agreement and the other collateral
                  securing the Heller Facility, the Sovereign Facility, the
                  Additional Credit Facility and the Existing Credit Facilities
                  shall be equal in priority as between the Loan, the Additional
                  Credit Facility and the Existing Credit Facilities and, with
                  respect to the collateral securing the Heller Facility, the
                  Sovereign Facility, the Additional Credit Facility and the
                  Existing Credit Facilities, subject only to the security
                  interests securing such facilities. For purposes hereof, the
                  reference to "collateral securing the Heller Facility" and
                  "collateral securing the Sovereign Facility" shall mean the
                  Notes Receivable and related mortgages exclusively assigned to
                  Heller or Sovereign in connection with an advance under their
                  respective loan documents."

11. CROSS COLLATERALIZATION. Section 3.5 is hereby deleted in its entirety and
in its place instead is substituted the following:

                  "3.5     CROSS COLLATERALIZATION. The Collateral also secures
                  the Obligations of Borrower under the Additional Credit
                  Facility and the Existing Credit Facilities. Upon repayment of
                  this Loan and the satisfaction by Borrower of all of the
                  Obligations, the Collateral shall continue to secure the
                  Additional Credit Facility and the Existing Credit Facilities,
                  as provided in the documents evidencing and securing the
                  Additional Credit Facility and the Existing Credit Facilities.
                  Borrower further acknowledges and agrees that upon repayment
                  in full of the Heller Facility and/or the Sovereign Facility,
                  Lender's security interest in the collateral securing such
                  facilities shall automatically become a first priority
                  security interest for securing the Borrower's Obligations
                  hereunder and under the Additional Credit Facility and the
                  Existing Credit Facilities and Borrower shall take such steps
                  as Lender may request to deliver such collateral to Lender and
                  to confirm Lender's first priority security interest therein.
                  Notwithstanding the foregoing: (a) when the term loan
                  component of the Additional Credit Facility and the Existing
                  Credit Facilities and the Loan are paid in full, the
                  Additional Resort Collateral shall be released from the Lien
                  of the security interest granted to Lender hereunder provided:
                  (i) an Event of Default has not occurred; and (ii) the
                  Additional Resort Collateral is also released from any lien
                  granted to Sovereign pursuant to the Sovereign Documents; and
                  (b) when both the term loan component of the Additional Credit
                  Facility and the Existing Credit Facilities and the Loan are
                  paid in full, the Silverleaf Finance I, Inc., Stock shall be
                  released from the Lien of the security interest granted to
                  Lender hereunder provided: (i) an Event of Default has not
                  occurred; and (ii) the Silverleaf Finance I, Inc., Stock is
                  also released from any lien granted to Sovereign pursuant to
                  Sovereign Documents; (c) WHEN THE TERM LOAN COMPONENT, THE
                  REVOLVING LOAN COMPONENT AND THE INVENTORY LOAN ARE PAID IN
                  FULL, THE SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF
                  FINANCE II SUBORDINATED NOTE SHALL BE RELEASED FROM THE LIEN
                  OF THE SECURITY INTEREST GRANTED TO LENDER HEREUNDER PROVIDED:
                  (I) AN EVENT OF DEFAULT HAS NOT OCCURRED; AND (ii) THE
                  SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF

<PAGE>

                  FINANCE II SUBORDINATED NOTE ARE ALSO RELEASED FROM ANY LIEN
                  GRANTED TO SOVEREIGN PURSUANT TO THE SOVEREIGN DOCUMENTS."

12. USE OF PROCEEDS/MARGIN STOCK. Section 6.11 is hereby deleted in its entirety
and in its place instead is substituted the following:

                  "6.11    USE OF PROCEEDS/MARGIN STOCK. (a) The proceeds of the
                  Loan, the Heller Loan, the Tax Refund, the Sovereign Loan, the
                  DZ Facility and any cash dividend or other cash distribution
                  Borrower receives from Silverleaf Finance I, Inc. OR
                  SILVERLEAF FINANCE II, INC. will be used strictly in
                  accordance with the Business Plan and for no other purpose and
                  (b) none of the proceeds of the Loan will be used to purchase
                  or carry any "margin stock" (as defined under Regulation U of
                  the Board of Governors of the Federal Reserve System, as in
                  effect from time to time), and no portion of the proceeds of
                  the Loan will be extended to others for the purpose of
                  purchasing or carrying margin stock. None of the transactions
                  contemplated in the Agreement (including, without limitation,
                  the use of the proceeds from the Loan) will violate or result
                  in the violation of Section 7 of the Securities Exchange Act
                  of 1934, as amended, or any regulations issued pursuant
                  thereto, including, without limitation, Regulations G, T, U
                  and X of the Board of Governors of the Federal Reserve System,
                  12 C.F.R., Chapter 11."

13. RESTRICTIONS OF BORROWER. Section 6.14 is hereby deleted in its entirety and
in its place instead is substituted the following:

                  "6.14    RESTRICTIONS OF BORROWER. Except for this Agreement
                  and the Loan Documents, the Tranche A Loan Documents, the
                  Tranche B Loan Documents, the Tranche C Loan Documents, the
                  Heller Documents and the Sovereign Documents, THE DZ DOCUMENTS
                  OR THE SILVERLEAF FINANCE II DOCUMENTS, the Borrower will not
                  be, on or after the date hereof, a party to any contract or
                  agreement which restricts its right or ability to incur
                  indebtedness or prohibits Borrower's execution of or
                  compliance with the terms of this Agreement, the other Loan
                  Documents, the Tranche A Loan Documents, the Tranche B Loan
                  Documents, the Tranche C Loan Documents, the Heller Documents,
                  the Bond Holder Exchange Documents, the Sovereign Documents
                  the DZ Facility Documents or THE SILVERLEAF FINANCE II
                  DOCUMENTS. The Borrower has not agreed or consented to cause
                  or permit in the future (upon the happening of a contingency
                  or otherwise) any of the Collateral, whether now owned or
                  hereafter acquired, to be subject to a Lien except in favor of
                  Lender as provided herein, and, with respect to the Land, the
                  Additional Resort Collateral, the Silverleaf Finance I. Inc.,
                  Stock and the Ineligible Notes Receivable, THE SILVERLEAF
                  FINANCE II SUBORDINATED NOTE AND THE SILVERLEAF FINANCE II
                  STOCK, in favor of Heller, Sovereign AND TFC, as applicable."

14. STANDBY MANAGER, RESORT CONSULTANT AND STANDBY SERVICER. Section 7.1(x) is
hereby deleted in its entirety and in its place instead is substituted the
following:

<PAGE>

                  "(x)     STANDBY MANAGER AND RESORT CONSULTANT. Borrower will
                  enter into agreements for the Standby Manager and the Resort
                  Consultant on or before the Effective Date and will maintain
                  such agreements in full force and effect. IN THE EVENT THAT
                  SUCH AGREEMENTS FOR THE STANDBY MANAGER AND THE RESORT
                  CONSULTANT EXPIRE BEFORE THE FINAL MATURITY DATE, SUCH
                  AGREEMENTS SHALL BE EXTENDED OR SHALL BE REPLACED, BEFORE
                  THEIR EXPIRATION, WITH AGREEMENTS FOR A STANDBY MANAGER AND A
                  RESORT CONSULTANT THAT EXPIRE NO SOONER THAN THE FINAL
                  MATURITY DATE. Borrower will maintain the agreement for the
                  Standby Servicer in full force and effect. Borrower agrees
                  that upon the occurrence of a Default or Event of Default
                  hereunder: (1) Lender may, with the approval of a majority of
                  the Borrower's Board of Directors, which approval shall not be
                  unreasonably withheld or delayed, terminate any then existing
                  management agreements and replace any existing manager with
                  such manager as Lender may select, provided however, if: (x)
                  the obligations have become immediately due and payable in
                  accordance with Section 9.1 (a) hereof, or (y) Lender elects
                  to have J & J Limited, Inc. act as Standby Manager, then no
                  such approval of Borrower's Board of Directors shall be
                  required; and (2) The Standby Servicer will assume full
                  control over the servicing of all Pledged Notes Receivable,
                  reporting solely to Lender, as provided in Section 10.14
                  hereof."

15. HELLER FACILITY, SOVEREIGN FACILITY, DZ FACILITY AND BOND HOLDER EXCHANGE
TRANSACTION. Section 7.1(aa) is hereby deleted in its entirety and in its place
instead is substituted the following:

                  "(aa)    HELLER FACILITY, SOVEREIGN FACILITY, DZ FACILITY, TFC
                  CONDUIT LOAN AND BOND HOLDER EXCHANGE TRANSACTION. Borrower
                  will comply with each of the terms and conditions of the
                  Heller Facility, the Sovereign Facility, the DZ Facility, THE
                  TFC CONDUIT LOAN and the Bond Holder Exchange Documents and
                  will promptly deliver to Lender, upon receipt by Borrower,
                  copies of any notices received by Borrower in connection with
                  any of the forgoing credit facilities."

16. PROFITABLE OPERATIONS. Section 7.1(bb)(v) is hereby deleted in its entirety
and in its place instead is substituted the following:

                  "(v)     PROFITABLE OPERATIONS. Borrower will not permit
                  Consolidated Net Income (a) for any fiscal year, commencing
                  with the fiscal year ending December 31, 2002, to be less than
                  $1.00 and (b) for any two consecutive fiscal quarters
                  (reviewed on an individual rather than on an aggregate basis)
                  to be less than $1.00."

17. RESTRICTIONS ON TRANSFERS. Section 7.2(b) is hereby deleted in its entirety
and in its place instead is substituted the following:

                  "(b)     RESTRICTIONS ON TRANSFERS. Except as hereinafter
                  specifically provided, Borrower shall not, whether voluntarily
                  or involuntarily, by operation of law or otherwise, (I)
                  without obtaining the prior written consent of Lender (which
                  consent may be given, withheld or conditioned by Lender in
                  Lender's sole discretion), transfer, sell, pledge, convey,
                  hypothecate, factor or assign all or any portion of the

<PAGE>

                  Collateral, the Encumbered Intervals, the Common Elements
                  relating to the Inventory or any Resort facilities or
                  amenities, or contract to do any of the foregoing, including,
                  without limitation, pursuant to options to purchase, and
                  so-called "installment sales contracts", "land contracts", or
                  "contracts for deed", PROVIDED THAT THE FOREGOING RESTRICTION
                  ON TRANSFERS SHALL NOT APPLY TO THE CONVEYANCE OF SPV ASSETS
                  TO THE SPV IN ACCORDANCE WITH THE SILVERLEAF FINANCE II
                  DOCUMENTS, (ii) without obtaining the prior written consent of
                  Lender (which consent may be given, withheld or conditioned by
                  Lender in Lender's sole discretion), lease or license all or
                  any portion of the Collateral, the Inventory, the Common
                  Elements relating to the Inventory or any Resort facilities or
                  amenities (EXCEPT FOR THE LICENSE CREATED IN FAVOR OF SPV
                  UNDER ANY LICENSE AGREEMENT WITH BORROWER, SILVERLEAF CLUB OR
                  ANY TIMESHARE OWNERS ASSOCIATION, TO USE OR ACCESS THE
                  RESERVATION SYSTEM OR RELATED COMPUTER HARDWARE OR SOFTWARE
                  FOR ANY RESORT), or change the legal or actual possession or
                  use thereof, (iii) permit the assignment, transfer,
                  delegation, change, modification or diminution of the duties
                  or responsibilities of Borrower, of any manager of the Resort
                  approved by Lender as manager of the Resort (except for an
                  assignment of such duties to a professional management company
                  or companies reasonably acceptable to Lender in advance)
                  without obtaining the prior written consent of Lender (which
                  consent shall not be unreasonably withheld), or (iv) without
                  obtaining the prior written consent of Lender (which consent
                  may be given, withheld or conditioned by Lender in Lender's
                  sole discretion), cause or permit the assignment, pledge or
                  other encumbrance of any of the Operating Contracts or all or
                  any portion of Borrower's right, title or interest in the
                  Declaration. Without limiting the generality of the preceding
                  sentence, and subject to the terms of this Agreement, the
                  prior written consent of Lender (as specified above) shall be
                  required for (A) any transfer of the Inventory, the Common
                  Elements relating to the Inventory or any Resort facilities or
                  amenities or any part thereof made to a subsidiary or
                  Affiliate or otherwise, (B) any transfer of all or any part of
                  the Inventory, the Common Elements relating to the Inventory
                  or any Resort facilities or amenities by Borrower to its
                  stockholders or Affiliates or vice versa, and (C) any
                  corporate merger or consolidation, disposition or other
                  reorganization, except as permitted in Section 7.1(c) hereof.
                  In the event that Lender is willing to consent to a transfer
                  which would otherwise be prohibited by this Section 7.2(b)
                  Lender may condition its consent on such terms as it desires,
                  including, without limitation, an increase in the Interest
                  Rate and the requirement that Borrower pay a transfer fee,
                  together with any expenses incurred by Lender in connection
                  with the granting of such consent (including, without
                  limitation, attorneys' fees and expenses). If Borrower
                  violates the terms of this Section 7.2(b), in addition to any
                  other rights or remedies which Lender may have herein, in any
                  other Loan Document, or at law or in equity, Lender may by
                  written notice to Borrower increase, effective immediately as
                  of the date of such violation, the Interest Rate to the
                  Default Rate

18. TRANSACTIONS WITH AFFILIATES. Section 7.2(d) is hereby deleted in its
entirety and in its place instead is substituted the following:

<PAGE>

                  "(d)     TRANSACTIONS WITH AFFILIATES. EXCEPT AS PROVIDED IN
                  THE SILVERLEAF FINANCE II DOCUMENTS, without the prior written
                  consent of Lender, which shall not unreasonably be withheld,
                  Borrower will not enter into any transaction with any
                  Affiliate in connection with the Resorts, including, without
                  limitation, relating to the purchase, sale or exchange any
                  assets or properties or the rendering of any service, except
                  in the ordinary course of, and pursuant to the reasonable
                  requirements of, the operations of the Resorts and upon fair
                  and reasonable terms."

19. TIMESHARE REGIME. Section 7.2(g) is hereby deleted in its entirety and in
its place instead is substituted the following:

                  "(g)     TIMESHARE REGIME. Without Lender's prior written
                  consent, which consent shall not be unreasonably withheld as
                  to changes necessary to implement the Business Plan, Borrower
                  shall not amend, modify or terminate the Declarations or other
                  Timeshare Documents, or any other restrictive covenants,
                  agreements or easements regarding the Resorts (except for
                  routine non-substantive modifications which have no impact on
                  the Collateral AND EXCEPT FOR AMENDMENTS OR MODIFICATIONS OF
                  THE TIMESHARE DOCUMENTS AND/OR DECLARATIONS, A LIST OF WHICH
                  IS ATTACHED TO THE THIRD AMENDMENT AS EXHIBIT B-1). Except as
                  otherwise provided herein or in the Sovereign Documents,
                  Borrower shall not assign its rights as "developer" under the
                  Declarations without Lender's prior written consent, or file
                  or permit to be filed any additional covenants, conditions,
                  easements or restrictions against or affecting the Resorts (or
                  any portion thereof) without Lender's prior written consent,
                  which consent shall not be unreasonably withheld."

20. COLLATERAL. Section 7.2(i) is hereby deleted in its entirety and in its
place instead is substituted the following:

                  "(i)     COLLATERAL. Borrower shall not take any action (nor
                  permit or consent to the taking of any action) which might
                  impair the value of the Collateral or any of the rights of the
                  Lenders in the Collateral, EXCEPT WITH RESPECT TO THE
                  SILVERLEAF FINANCE II STOCK AND THE SILVERLEAF FINANCE II
                  SUBORDINATED NOTE AS PROVIDED IN THE SILVERLEAF FINANCE II
                  DOCUMENTS, nor shall Borrower cause or permit any amendment to
                  or modification of the Timeshare Documents."

21. MODIFICATIONS OF HELLER DOCUMENTS, DZ DOCUMENTS, BOND HOLDER EXCHANGE
DOCUMENTS, SOVEREIGN DOCUMENTS, SILVERLEAF FINANCE II DOCUMENTS AND OTHER DEBT
INSTRUMENTS. Section 7.2(k) is hereby deleted in its entirety and in its place
instead is substituted the following:

                  "(k)     MODIFICATIONS OF HELLER DOCUMENTS, DZ DOCUMENTS, BOND
                  HOLDER EXCHANGE DOCUMENTS, SOVEREIGN DOCUMENTS, SILVERLEAF
                  FINANCE II DOCUMENTS AND OTHER DEBT INSTRUMENTS. Borrower
                  shall not amend or modify the Heller Documents, the Sovereign
                  Documents, DZ Documents, Bondholder Exchange Documents, THE
                  SILVERLEAF FINANCE II DOCUMENTS or the documents evidencing
                  any

<PAGE>

                  other indebtedness of Borrower, nor shall Borrower extend,
                  modify, increase or terminate the Heller Facility, 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, which
                  consent shall not be unreasonably withheld."

22. DEFAULT BY BORROWER IN OTHER AGREEMENTS. Section 8.1(l) is hereby deleted in
its entirety and in its place instead is substituted the following:

                  "(l)     DEFAULT BY BORROWER IN OTHER AGREEMENTS. Except for
                  any Specified Event of Default (as provided in the Forbearance
                  Agreement), which Specified Events of Default shall include a
                  prior existing default under the Heller Facility or the
                  Sovereign Facility and for any "Waived Defaults" under the
                  November Letter Agreement, which Waived Defaults include prior
                  existing defaults under the Heller Facility or the Sovereign
                  Facility, any default AS DEFINED IN THE APPLICABLE LOAN
                  AGREEMENT, by Borrower (I) in the payment of any indebtedness
                  to any Lender, including any indebtedness owed to Lender under
                  the Heller Facility, DZ Facility, Sovereign Facility, Bond
                  Holder Exchange Transaction, Additional Credit Facility or the
                  Existing Credit Facilities, OR THE TFC CONDUIT LOAN; (ii) in
                  the payment or performance of other indebtedness for borrowed
                  money or obligations secured by any part of the Resort; (iii)
                  in the payment or performance of other material indebtedness
                  or obligations (material indebtedness or obligations being
                  defined for purposes of this provision as any indebtedness or
                  obligation in excess of $200,000) where such default
                  accelerates or permits the acceleration (after the giving of
                  notice or passage of time or both) of the maturity of such
                  indebtedness, or permits the holders of such indebtedness to
                  elect a majority of the board of directors of Borrower
                  (whether or not such default[s] have been waived by such
                  holder) or (iv) the acceleration by Heller, Sovereign, DZ or
                  the bondholders of their respective credit facilities OR THE
                  ACCELERATION OF THE TFC CONDUIT LOAN."

23. CONDITIONS PRECEDENT. This Third 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 (iv) 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 were and shall be
                  prepared at Borrower's sole cost and expense.

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

<PAGE>

                           (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 THIRD Amendment and all
                           such documents requested by Lender in the form
                           attached to THE THIRD AMENDMENT as Exhibit D-1; and

                           (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 THIRD Amendment and all such documents requested
                           by Lender in the form attached to THE THIRD AMENDMENT
                           as Exhibit E-1.

                  (b)      EXECUTION AND DELIVERY OF DOCUMENTS. Borrower shall
                  have delivered to Lender the following:

                           (i)      The Silverleaf Finance II Documents;

                           (ii)     Closing Opinions of Counsels for Borrower;

                           (iii)    The Silverleaf Finance II Stock and
                                    Subordinated Note Pledge Agreement;

                           (iv)     Amended and Restated Term Loan Component
                                    Note;

                           (v)      Revised Form of Borrower's Certificate and
                                    Request for Advance;

                           (vi)     Bailee Agreement; and

                           (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, and to
                           effectuate the transactions contemplated herein.

                  (c)      EXECUTION OF AMENDMENTS BY SOVEREIGN AND DZ BANK.
                  Lender shall have received evidence, in form and substance
                  satisfactory to Lender, that Sovereign and DZ have executed
                  amendments to the Sovereign Documents and DZ Documents,
                  respectively, in connection with the TFC Conduit Loan and
                  Lender shall have consented to such amendments.

                  (d)      NECESSARY CONSENTS OBTAINED. Lender shall have
                  received evidence, in form and substance satisfactory to
                  Lender, that the consent of each party entitled to consent to
                  this THIRD Amendment has been obtained.

                  (e)      FEES. Borrower shall have paid all fees of all
                  Lenders in connection with the TFC Conduit Loan and this THIRD
                  Amendment.

<PAGE>

24. FURTHER DOCUMENTATION. Borrower agrees to execute and deliver to Lender any
and all additional documentation as Lender may now or hereafter require in order
to effectuate the terms and conditions of this Third Amendment.

25. EFFECT OF AMENDMENT. The Loan Agreement, as herein amended, shall remain in
full force and effect.

26. 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.

27. ESTOPPEL. Borrower acknowledges, agrees and confirms that: (a) Advances
under the Loan Agreement have been made prior to the date hereof; (b) all such
Advances made prior to the Closing Date were made in favor of the Original
Borrower and the Borrower in respect of the Existing Eligible Resorts; (c)
Advances made prior to the date of the Third Amendment are deemed as having been
made for the benefit of the Borrower and Borrower acknowledges and agrees that
Borrower received a direct and substantial financial benefit from such Advances
and (d) immediately prior to the date of the Third Amendment, and without giving
effect to any Advances that may be made pursuant to the Third Amendment, the
status of the Loan, including the outstanding principal balance thereof is as
reflected in the Loan Funding Report delivered to and approved by Lender in
connection with the closing of the Third Amendment.

         The Loan constitutes valuable consideration to the Borrower, which
consideration is uninterrupted and continuous since the dates on which the Loan
was first made. This Third

<PAGE>

Amendment and the other Loan Documents and the Loan modifications and
transactions provided for or contemplated hereunder or thereunder, shall in no
way adversely affect the Lien or perfection or priority of any Lien of Lender as
of the date hereof in and to any Collateral, and are not intended to constitute,
and do not constitute or give rise to, any novation, cancellation or
extinguishment of any of Borrower's Obligations existing as of the Closing Date
to Lender, or of any interests owned or held by Lender (and not previously
released) in and to any of the Collateral; it being the intention of the parties
that the transactions provided for or contemplated herein shall be effectuated
without any interruption in the continuity of the value and consideration
received by Borrower, and of the attachment, perfection, priority and
continuation in favor of Lender in and to all Collateral and proceeds.

28. EFFECTIVE DATE. Upon satisfaction of the conditions precedent set forth in
Section 21 hereof, this Third Amendment shall be effective as of the Third
Amendment Effective Date, as defined in the Loan Agreement as amended hereby.

29. MAXIMUM OBLIGATION OF LENDER UNDER THE LOAN, THE ADDITIONAL CREDIT FACILITY
AND THE INVENTORY LOAN. Borrower acknowledges, agrees and confirms that
notwithstanding anything to the contrary herein, in any other Loan Document or
in any document evidencing or securing the Additional Credit Facility or the
Inventory Loan, Lender shall not be obligated to fund any Advance hereunder,
which when taken together with the loans or advances made by the Lender to the
Borrower under this Agreement, the Additional Credit Facility or the Inventory
Loan, would cause the aggregate amount of such loans and advances by the Lender
to Borrower to exceed the maximum aggregate amount as set forth in the Loan
Agreement.

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

Witnessed By:                                   TEXTRON FINANCIAL CORPORATION

     [illegible]
-----------------------------
                                                By    /S/ JOHN T. D'ANNIBALE
                                                    ----------------------------
     /S/ JESSICA CONCORD                        Name: John T. D'Annibale
-----------------------------                   Its:  Vice President

                                                SILVERLEAF RESORTS, INC.
     /S/ GEORGE BEDELL
-----------------------------
                                                By:   /S/ HARRY J. WHITE, JR.
                                                    ----------------------------
     /S/ LAINE CLOSE                                  Name: Harry J. White, Jr.
-----------------------------                   Its:  CFO

STATE OF CONNECTICUT       )
                           )        ss: East Hartford
COUNTY OF HARTFORD         )

<PAGE>

         At East Hartford in said County and State on this 19th day of December
,2003, personally appeared John T. 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/ MATTHEW CARRANO
                           ---------------------------------------
                           Notary Public in and for said State
                           My Commission Expires: ___________
                           Commissioner of the Superior Court

STATE OF Texas             )
                           )        ss:
COUNTY OF Dallas           )

         At Dallas in said County and State on this 19th day of December 2003,
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/ R. LAINE CLOSE
                           ---------------------------------------
                           Notary Public in and for said State
                           My Commission Expires: ___________

List of Exhibits and Schedules:

Exhibit A-1       Stock and Subordinated Note Pledge Agreement
Exhibit B-1       Timeshare Document Amendments
Exhibit C-1       Borrower's Certificate
Exhibit D-1       Borrower's Resolution
Exhibit E-1       Incumbency Certificate
Exhibit F-1       Business Plan

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