SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (Inventory Loan)
Ex.
10.2
SECOND
AMENDMENT TO AMENDED AND RESTATED
(Inventory
Loan)
THIS
SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT,
dated
as of October 26, 2005, (the “Second Amendment”) entered into by SILVERLEAF
RESORTS, INC.,
a Texas
corporation, (as “Borrower”), and TEXTRON
FINANCIAL CORPORATION,
a
Delaware corporation (as “Lender”).
WITNESSETH:
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,
Lender and Borrower are parties to that certain Loan and Security Agreement,
dated as of December 16, 1999, as amended by that certain First Amendment
to
Loan and Security Agreement, dated as of April 17, 2001, as further amended
by
that certain Second Amendment to Loan and Security Agreement, dated as of
April
30, 2002, as further amended by that certain Letter Amendment, dated as of
March
27, 2003, and as further amended by that certain Third Amendment to Loan
and
Security Agreement (Inventory Loan), dated as of December 19, 2003
(collectively, the “Original
Loan Agreement”);
WHEREAS,
pursuant to the Original Loan Agreement, Lender agreed, subject to the terms
and
conditions of the Original Loan Agreement, to provide to Borrower, for the
purpose of providing liquidity in connection with Borrower’s ownership, purchase
and warehousing of Intervals (as such term is hereinafter defined), a loan
in
the maximum amount of $10,000,000 (the “Existing
Inventory Loan”),
which
loan is evidenced by Borrower’s Amended and Restated Secured Promissory Note,
dated as of April 30, 2002 (the “Existing
Note”);
WHEREAS,
Lender and Borrower further amended and restated the Original Loan Agreement
in
its entirety pursuant to an Amended and Restated Loan, Security and Agency
Agreement dated as of March 5, 2004, as amended by that certain Letter
Amendment, dated as of April 16, 2004, and as further amended by that certain
Letter Amendment, dated as of July 30, 2004
(the
“Restated
Loan Agreement”);
WHEREAS,
pursuant to the Restated Loan Agreement, Lender agreed, subject to the terms
and
conditions of the Restated Loan Agreement, to provide to Borrower, for the
purpose of providing liquidity in connection with Borrower’s ownership, purchase
and warehousing of Intervals, to make an additional inventory loan to the
borrower in the maximum amount of $8,000,000 (the “New
Inventory Loan”).
The
Existing Inventory Loan and the New Inventory Loan are evidenced by the Existing
Note, in the original principal amount of Ten Million Dollars ($10,000,000)
and
the Borrower’s Secured Promissory Note, dated March 5, 2004, in the original
principal amount of Eight Million Dollars ($8,000,000);
WHEREAS,
Borrower requested and Lender agreed, that Lender provide an additional
inventory loan to Borrower in the maximum amount of $5,000,000 (the
“Inventory
Term Loan,”
which
Inventory Term Loan together with the Existing Inventory Loan and the New
Inventory Loan are collectively, the “Loan”)
for
the purpose of repaying the Term Loan Components of the Additional Credit
Facility and Existing Credit Facilities;
WHEREAS,
pursuant to that certain First Amendment to Amended and Restated Loan and
Security Agreement (Inventory Loan) dated as of February 28, 2005 (the
“First
Amendment”)
Lender
and Borrower agreed to, among other things, increase the Inventory Loan to
$21,000,000, (the Restated Loan Agreement as amended by the First Amendment
and
as may be amended from time to time, the “Inventory
Loan Agreement”),
and
such increase in the Inventory Loan is evidenced by that certain Secured
Promissory Note (Inventory Term Loan) dated February 28, 2005 in the original
principal amount of $5,000,000.00 (the “Inventory
Term Loan Note”);
and
WHEREAS,
Borrower has requested and Lender has agreed, subject to the terms and
conditions herein, to extend the period during which borrower may obtain
advances pursuant to the Restated Loan Agreement as amended by the First
Amendment and as further amended by this Second Amendment (collectively,
the
“Loan
Agreement”)
and to
extend the Final Maturity Date under 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. Terms.
All
capitalized terms not otherwise defined herein shall have the meaning ascribed
to such terms in the Loan Agreement.
2. Definitions.
Provided that no Event of Default or condition, omission or act which, with
the
passage of time, notice or both, would constitute an Event of Default, has
occurred, Section 1.1(ll) is amended in its entirety and replaced with the
following new Section 1.1(ll):
“(ll)
Final
Maturity Date.
August
31, 2010 with respect to the Existing Inventory Loan and the New Inventory
Loan,
and March 31, 2007 with respect to the Inventory Term Loan.”
3. Definitions.
Provided that no Event of Default or condition, omission or act which, with
the
passage of time, notice or both, would constitute an Event of Default, has
occurred, Section 1.1(fff) is amended in its entirety and replaced with the
following new Section 1.1(fff):
“(fff) Loan
to Retail Value Ratio.
The
term“Loan
to
Retail Value Ratio” shall mean the ratio of the outstanding principal balance of
the Loan, from time to time, to the Retail Value of the Inventory. The Loan
to
Retail Value Ratio shall be: (i) 15% for the Existing Inventory Loan; (ii)
11%
for the Inventory Term Loan; and (iii) 15% for the New Inventory
Loan.”
2
4. Definitions.
Provided that no Event of Default or condition, omission or act which, with
the
passage of time, notice or both, would constitute an Event of Default, has
occurred, Section 1.1(uuu) is amended in its entirety and replaced with the
following new Section 1.1(uuu):
“(uuuu)
Term.
The
term for the Existing Inventory Loan and New Inventory Loan, shall be the
period
ending August 31, 2010, and for the Inventory Term Loan shall be the period
ending March 31, 2007.”
5. Definitions.
Provided that no Event of Default or condition, omission or act which, with
the
passage of time, notice or both, would constitute an Event of Default, has
occurred, Section 1.1(cccc) is amended in its entirety and replaced with
the
following new Section 1.1(cccc):
“(cccc)
Required
Retail Value.
The
term “Required Retail Value” shall mean the aggregate Retail Value of the
Inventory, such that the ratio of the outstanding balance of the Loan, from
time
to time, to the aggregate Retail Value of the Inventory does not exceed the
Loan
to Retail Value Ratio. By way of example, if the outstanding principal balance
of the Existing Inventory Loan were $10,000,000, the outstanding principal
balance of the Inventory Term Loan were $4,000,000, and the outstanding
principal balance of the New Inventory Loan were $6,000,000, the Required
Retail
Value of the Inventory would be $143,030,303.03 (being the sum of $66,666,666.67
with respect to the Existing Inventory Loan, $36,363,636.36 with respect
to the
Inventory Term Loan, and $40,000,000.00 with respect to the New Inventory
Loan).”
6. Revolving
Loan and Lending Limits.
Provided that no Event of Default or condition, omission or act which, with
the
passage of time, notice or both, would constitute an Event of Default, has
occurred, Section 2.1 is amended in its entirety and replaced with the following
new Section 2.1:
“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, of up to $16,000,000 million under the Existing Inventory Loan
and the
New Inventory Loan and on the Closing Date up to $5,000,0000 under the Inventory
Term Loan. Borrower may borrow, repay and reborrow during the Revolving Loan
Period, as such term is hereafter defined, principal under the Existing
Inventory Loan and the New Inventory Loan in an amount not to exceed at any
time
in the aggregate the lesser of: (i) the Loan to Retail Value Ratio of the
Required Retail Value of the Inventory or (ii) $16,000,000.00 (such amount
being
the aggregate principal amount of the Existing Inventory Loan and the New
Inventory Loan), as reduced as set forth in Section 2.4(b)(ii) hereof. Under
no
conditions may the Borrower repay and reborrow principal under the Inventory
Term Loan. Borrower acknowledges and agrees that Lender may make Advances
from
the Existing Inventory Loan, the New Inventory Loan and/or the Inventory
Term
Loan in such manner and amount as Lender may determine in its sole discretion.
The Revolving Loan Period shall be the period during the Term in which the
Borrower may borrow, repay and reborrow Advances and shall terminate in all
respects on August 31, 2008.”
3
7. Section
2.4(d), Use of Program Reserve Account Withdrawals and Surplus Under the
TFC
Conduit Loan.
Section
2.4(d) is hereby deleted in its entirety.
8. Loan
Term.
Provided that no Event of Default or condition, omission or act which, with
the
passage of time, notice or both, would constitute an Event of Default, has
occurred, Section 2.7 is amended in its entirety and replaced with the following
new Section 2.7:
“2.7
Loan
Term.
The
term of the Loan shall terminate on August 31, 2010, except for the Inventory
Term Loan, which shall terminate on March 31, 2007.”
9. Section
3.7, Security Interest in All Pledged Notes Receivable.
Section
3.7 is amended in its entirety and replaced with the following new Section
3.7:
“3.7
Security
Interest in All Pledged Notes Receivable.
Lender shall have a continuing security interest in all of the Pledged Notes
Receivable, and Lender may collect all payments made under or in respect
of all
such Notes Receivable, including, without limitation, Eligible Notes Receivable
that are or may become ineligible, until any of the same may be released
by
Lender, if at all, pursuant to Section 12.10 of the Consolidated, Amended
and
Restated Loan, Security And Agency Agreement dated as of August 5, 2005,
as may
be amended from time to time by and between Borrower and Lender (the
“Consolidated Loan Agreement”) or Section 7.2(a) below. Notwithstanding anything
heretofore to the contrary, unless and until an Event of Default shall occur,
Borrower, as agent for and on behalf of Lender, shall retain possession of
and
collect all payments under or in respect of all Notes Receivable. By executing
this Agreement, Borrower acknowledges and agrees that it is holding such
Notes
Receivable as bailee and agent for Lender. Borrower shall hold and designate
such Notes Receivable in a manner that clearly indicates that they are being
held by Borrower as bailee on behalf of Lender. Upon the occurrence of an
Event
of Default, Borrower shall promptly deliver to Lender, to the extent not
previously delivered to Lender, the documents listed in Section 5.1(b) of
the
Consolidated Loan Agreement and with respect thereto and after such Event
of
Default Lender shall have the right to collect all proceeds therefrom and
apply
the same to payment of the Obligations as set forth in Section 2.3(a)
hereof.”
10. Section
4.1(e)(ix), Intercreditor Agreement.
Section
4.1(e)(ix) is hereby deleted in its entirety.
4
11. Conditions
Precedent to Funding of Advances with Respect to Additional Eligible
Resorts.
Section
4.5(i) is hereby amended in its entirety and replaced with the following
new
Section 4.5(i):
“(i) Management
of Resort.
Borrower shall provide evidence satisfactory to Lender that Borrower, or
an
Affiliate, is the manager or operator of each Resort, pursuant to a written
management or operating agreement, in form and substance satisfactory to
Lender,
which with respect to all Resorts shall have a term which shall expire no
earlier than March 27, 2010. Borrower agrees to provide an estoppel letter,
in
form and substance acceptable to Lender, from the applicable Timeshare Owner’s
Association.”
12. Section
6.24(a), First Lien.
Section
6.24(a) is hereby deleted in its entirety.
13. Section
6.26(a), First Lien.
Section
6.26(a) is hereby deleted in its entirety.
14. Affirmative
Covenants.
(a)
Subsection 7.1(z)(ii) is hereby amended in its entirety and replaced with
the
following new Subsection 7.1(z)(ii):
“(ii) Marketing
and Sales Expenses.
As of
the last day of each fiscal quarter, Borrower will not permit the twelve
(12)
month cumulative ratio of Marketing and Sales Expenses to the Borrower’s net
proceeds from the sale of Intervals as recorded on the Borrower’s financial
statements for the immediately preceding twelve consecutive months to equal
or
exceed a ratio of .570 to 1.”
(b)
Section 7.1 is hereby amended in part to add the following new
paragraph:
“(dd) Debt
to Equity Ratio.
The
Debt to Equity Ratio for Borrower shall be less than 6:1. The term Debt to
Equity Ratio means the ratio of (a) debt consisting of all notes payable,
capital lease obligations and senior subordinated debt as reported on the
Borrower’s most recent consolidated financial statements to (b) equity
consisting of the balance sheet equity and senior subordinated debt less
intangible assets, including, without limitation, goodwill, trademarks,
tradenames, copyrights, patents, patent allocations, licenses and rights
in any
of the foregoing and other items treated as intangible in accordance with
GAAP,
as reported on the Borrower’s most recent consolidated financial statements. In
computing Borrower’s Debt to Equity Ratio, non-recourse off balance sheet
financing will not be included as part of Borrower’s debt.”
15. Section
7.1(bb), Net Securitization Cash Flow.
Section
7.1(bb) is amended in its entirety and replaced with the following new Section
7.1(bb):
“(bb)
Net
Securitization Cash Flow.
If a Default or Event of Default has occurred, then Borrower shall cause
Silverleaf Finance II, Inc. to declare, at least quarterly, a cash dividend
payable to Borrower and/or a payment in respect of the Silverleaf Finance
II
Subordinated Note, in an aggregate amount equal to the Net Securitization
Cash
Flow in respect of Silverleaf Finance II, Inc. for such quarter, and all
such
dividends shall be paid directly to Lender and applied by Lender in repayment
of
the Loan. Borrower shall provide Lender with notice of Silverleaf Finance
II,
Inc.’s declaration of a cash dividend or a payment on the Silverleaf Finance II,
Subordinated Note, together with a certification that: (i) states whether
a
Default or Event of Default exists, and (ii) contains a calculation of the
Net
Securitization Cash Flow.”
5
16. Exhibit
B, Borrower’s Certificate and Request for Advance.
Exhibit
B
is amended in its entirety and replaced with the Exhibit B attached hereto.
17. 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 Lender (with copies to Lender’s counsel), and Lender
has reviewed and approved in its sole discretion, the form and content of
all of
the items specified in Subsections (i) through (vii) below (the "Submissions").
Lender shall have the right to review and approve any changes to the form
of any
of the Submissions. If Lender disapproves of any changes to any of the
Submissions, Lender shall have the right to require Borrower either to cure
or
correct the defect objected to by Lender or to elect not to fund any Advance.
Under no circumstances shall Lender’s failure to approve or disapprove a change
to any of the Submissions be deemed to be an approval of such Submissions.
All
of the Submissions shall be prepared at Borrower's sole cost and
expense.
(i) A
certificate in the form attached to the Second Amendment as Exhibit A-1 to
be
signed by the president, vice president or secretary of the Borrower;
(ii) Copies
of
any amendments to the articles of incorporation/charter and bylaws of Borrower
not previously delivered to Lender, certified to be true, correct and complete
by Borrower and the Secretary of State of the State of Texas and current
certificates of good standing for Borrower for the State of Texas and states
where the Resorts are located, a current certificate of authority to conduct
business by the Secretary of State in each state in which Borrower conducts
business;
(iii) A
certificate of the Secretary of Borrower certifying the adoption by the Board
of
Directors of Borrower of a resolution authorizing Borrower to enter into
and
execute the Second Amendment and all such documents requested by Lender in
the
form attached to the Second Amendment as Exhibit B-1;
(iv) A
certificate of the secretary or assistant secretary of Borrower certifying
the
incumbency, and verifying the authenticity of the signatures of the specified
officers of Borrower authorized to sign this Second Amendment and all such
documents requested by Lender in the form attached to the Second Amendment
as
Exhibit C-1;
6
(v) Title
policies or endorsements to title policies previously issued to Lender insuring
the lien of the Mortgages granted by Borrower to Lender to secure the loan
but
only with respect to the Mortgages covering Intervals in Resorts located
in
states other than Texas;
(vi) Closing
opinions of counsels for Borrower, including opinions for the Resorts in
Texas
stating that this Second Amendment and the Amendments to the Inventory Mortgages
do not impair the title insurance coverage under the existing title policies
for
the Resorts in the State of Texas; 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
as
amended hereby, and to effectuate the transactions contemplated in this Second
Amendment.
(b) Conditions
to Closing.
(i) Execution
of this Second Amendment;
(ii) Lender
shall have received evidence, in form and substance satisfactory to Lender,
that
the consent of each party entitled to consent to this Second Amendment has
been
obtained;
(iii) Borrower
shall have paid a commitment fee of $160,000 to Lender in consideration of
this
Second Amendment and shall have paid all other fees of all Lenders in connection
with this Second Amendment; and
(iv) Borrower
shall execute and deliver to Lender, in recordable form and otherwise acceptable
to Lender in its sole discretion, Amendments to the Inventory Mortgages to
reflect the continued securing of the Loan, as hereby modified and shall
cause
such Amendments to be recorded in the applicable recording offices.
18. 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.
19. Effect
of Amendment.
The
Loan
Agreement, as herein amended, shall remain in full force and effect.
7
20. 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. 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.
21. GOVERNING
LAW.
THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT AS MAY BE EXPRESSLY PROVIDED
THEREIN TO THE CONTRARY) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH
THE LAWS OF THE STATE OF RHODE ISLAND, EXCLUSIVE OF ITS CHOICE OF LAWS
PRINCIPLES.
22. General
Representations and Warranties.Borrower
hereby represents and warrants to Lender as follows:
(a) Organization,
Standing, Qualification.
Borrower: (a) is a duly organized and validly existing Texas corporation
duly
organized, validly existing and in good standing under the laws of the State
of
Texas, and (b) has
all
requisite power, corporate or otherwise, to conduct its business and to execute
and deliver, and to perform its obligations under, the Loan
Documents.
(b) Authorization,
Enforceability, Etc
(i) The
execution, delivery and performance by Borrower of the Loan Documents has
been
duly authorized by all necessary corporate action by Borrower and does not
and
will not: (1) violate any provision of the certificate or articles of
incorporation of Borrower, bylaws of Borrower, or any agreement, law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect to which Borrower is a party or is subject; (2) result
in,
or require the creation or imposition of, any Lien upon or with respect to
any
asset of Borrower other than Liens in favor of Lenders; or (3) result in
a
breach of, or constitute a default by Borrower under, any indenture, loan
or
credit agreement or any other agreement, document, instrument or certificate
to
which Borrower is a party or by which it or any of its assets are bound or
affected.
(ii) No
approval, authorization, order, license, permit, franchise or consent of,
or
registration, declaration, qualification or filing with, any governmental
authority or other Person, including without limitation, the Division or
the
Timeshare Owners' Association is required in connection with the execution,
delivery and performance by Borrower of any of the Loan Documents.
(iii) The
Loan
Documents constitute legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective
terms.
(c) No
Event of Default.
No
Event of Default or condition, omission or act which, with the passage of
time,
notice or both, would constitute an Event of Default, has occurred under
the
Loan Agreement as amended to date, the Additional Credit Facility and Existing
Credit Facilities, the Sovereign Facility or any other indebtedness of
Borrower.
THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
8
IN
WITNESS WHEREOF, the parties hereto have caused this Second
Amendment
to be executed on their behalf as of the day and year first written
above.
| Witnessed By: | TEXTRON FINANCIAL CORPORATION | ||
| /S/ KATIE | By: /S/ ▇▇▇▇ ▇'▇▇▇▇▇▇▇▇ | ||
|
|
|
||
| /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ |
Name: ▇▇▇▇
▇'▇▇▇▇▇▇▇▇
|
||
|
|
Its: VP
|
| STATE OF CONNECTICUT | ) | |
| ) | ss: Glastonbury | |
| COUNTY OF HARTFORD | ) |
At
Glastonbury in said County and State on this 26TH
day of
October, 2005, personally appeared ▇▇▇▇
▇'▇▇▇▇▇▇▇▇,
duly
authorized VP 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/
JL
LABIANCA_________________
Notary
Public in and for said State
My
Commission Expires: ___________
Commissioner
of the Superior Court
|
SILVERLEAF
RESORTS, INC.
|
|||
| /S/▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | By: /S/▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. | ||
|
|
|
||
| /S/▇▇▇▇ ▇▇▇▇▇▇ |
Name: ▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇.
|
||
|
|
Its:
CFO
|
| STATE OF TEXAS | ) | |
| ) | ss: Dallas | |
| COUNTY OF DALLAS | ) |
At
River
Bend in said County and State on this 26th day
of
October, 2005, personally appeared ▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇.
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/
▇▇▇▇▇ POSIVAL_______________
Notary
Public in and for said State
My
Commission Expires: ___________
List
of
Exhibits to Agreement not filed herewith:
Exhibit
A-1: Officers'
Certificate
Exhibit
B: Borrower's Certificate and Request for Advance
Exhibit
B-1: Secretary's
Certificate
Exhibit
C-1: Incumbency
Certificate