TRANSFER AGREEMENT

Ex. 10.3

TRANSFER AGREEMENT

BETWEEN

SILVERLEAF RESORTS, INC.

AND

SILVERLEAF FINANCE III, LLC

DATED AS OF JULY 1, 2005

TRANSFER AGREEMENT

          This TRANSFER AGREEMENT (this “ Agreement ”), dated as of July 1, 2005, is between Silverleaf Resorts, Inc., a Texas corporation (“ Originator ”) and Silverleaf Finance III, LLC, a Delaware limited liability company (the “ Issuer ”), and their respective permitted successors and assigns.

W I T N E S S E T H :

          WHEREAS, the Issuer has been established as a bankruptcy-remote entity owned by Originator for the purpose of acquiring (i) a certain pool of timeshare loans (the “ Mortgage Loans ”) each evidenced by a promissory note and secured by a first Mortgage on a fractional fee simple timeshare interest in a Unit, (ii) a pool of timeshare loans (the “ Oak N’ Spruce Loans ”), each evidenced by a purchase and finance agreement (a “ Finance Agreement ”) for the purchase of a certificate of beneficial interest in the Oak N’ Spruce Resort Trust evidencing the right of the owner thereof to use and occupy a fixed unit at Oak n’ Spruce Resort at a fixed period of time (the Mortgage Loans and Oak N’Spruce Loans, together, the “ Timeshare Loans ”), (iii) any Qualified Substitute Timeshare Loans and (iv) all Related Security in respect of the Timeshare Loans and Oak N’ Spruce Loans. A “ Timeshare Property ” shall consist of (i) in the case of a Timeshare Loan, a fractional fee simple timeshare interest in a residential unit (a residential timeshare unit herein referred to as a “ Unit ”) in a Resort or (ii) in the case of an Oak N’ Spruce Loan, a certificate of beneficial interest (“ Oak N’ Spruce Certificate ”) in the Oak N’ Spruce Resort Trust. The Timeshare Loans, Timeshare Properties, Mortgage Note, any Related Security and other conveyed property related thereto and additional collateral, collectively, are the “ Transferred Assets .”

          WHEREAS, on July 1, 2005 (the “ Closing Date ”), the Issuer intends to pledge such Transferred Assets acquired thereby to Wells Fargo Bank National Association, as indenture trustee (in such capacity, the “ Securitization Indenture Trustee ”), custodian (in such capacity, the “ Securitization Custodian ”) and backup servicer, pursuant to an indenture, dated as of July 1, 2005 (the “ Securitization Indenture ”), by and among the Issuer, Silverleaf Resorts, Inc., in its capacity as servicer (the “ Securitization Servicer ”) and the Securitization Indenture Trustee, to secure the Issuer’s (i) 4.857% Timeshare Loan-Backed Notes, Series 2005-A, Class A Notes, (ii) 5.158% Timeshare Loan-Backed Notes, Series 2005-A, Class B Notes, (iii) 5.758% Timeshare Loan-Backed Notes, Series 2005-A, Class C Notes and (iv) 6.756% Timeshare Loan-Backed Notes, Series 2005-A, Class D Notes (collectively, the “ Securitization Notes ”);

          WHEREAS, proceeds from the sale of the Securitization Notes will be used by the Issuer, in part, to (i) pay the Originator the purchase price for the Timeshare Loans and (ii) pay certain expenses incurred in connection with the issuance of the Securitization Notes.

          WHEREAS, the Originator will derive an economic benefit from the transfer hereunder of the Timeshare Loans to the Issuer.

          NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:

          SECTION 1. Definitions; Interpretation . Capitalized terms used herein but not defined herein shall have the respective meanings specified in “Standard Definitions” attached hereto as Annex A.

          SECTION 2. Acquisition of Timeshare Loans .

          (a) Timeshare Loans .

(i) Effective as of the Closing Date, but subject to the terms and conditions of this Agreement (including, without limitation, subsection (e) below), the Originator hereby sells (“ Sale ” or “ Sold ”) or contributes (“ Contribute ” or “ Contribution ”) (in each case to the extent described in subsection (e) below) and otherwise transfers, assigns, and conveys to the Issuer, without recourse (except to the extent specifically provided herein), and the Issuer hereby agrees to purchase or accept a contribution of (in each case to the extent described in subsection (e) below) and otherwise acquires, all right, title and interest of the Originator in and to the Timeshare Loans included on the schedule delivered to the Issuer on the Closing Date (as further described in subsection (f) below), together with the Timeshare Properties, Related Security and other conveyed property related thereto. In connection with the initial transfer, Originator shall transfer, or cause the deposit, into the Lockbox Account of all amounts received by the Originator on account of such Timeshare Loans, Timeshare Properties, Related Security and other conveyed property related thereto and additional collateral hereunder due on and after the Initial Cut-Off Date within two (2) Business Days of the receipt thereof.

(ii) The Originator hereby acknowledges that each sale, contribution and conveyance to the Issuer hereunder is absolute and irrevocable, without reservation or retention of any interest whatsoever by the Originator.

          (b) Delivery of Timeshare Loan Documents . In connection with the sale, transfer, contribution, assignment and conveyance of any Timeshare Loans hereunder, the Issuer hereby directs the Originator and the Originator hereby agrees to deliver or cause to be delivered to the Securitization Custodian, all related Timeshare Loan Files and to the Securitization Servicer all related Timeshare Loan Servicing Files.

          (c) Collections . The Originator shall deposit or cause to be deposited all collections in respect of the Timeshare Loans received by the Originator or any of its Affiliates on and after the related Cut-Off Date in the Lockbox Account.

          (d) Limitation of Liability . None of the Issuer or any subsequent assignee of the Issuer shall have any obligation or liability with respect to any Timeshare Loan nor shall the Issuer or any subsequent assignee have any liability to any Obligor in respect of any Timeshare Loan. No such obligation or liability is intended to be assumed by the Issuer, the Originator or any subsequent assignee herewith and any such liability is hereby expressly disclaimed.

          (e) Purchase Price/Capital Contribution . The price paid for Timeshare Loans, Timeshare Properties, Related Security and other conveyed property related thereto and

additional collateral which are Sold hereunder shall be the Purchase Price with respect thereto. Such Purchase Price shall be paid by means of an immediate cash payment to the Originator by wire transfer on the applicable conveyance date to an account designated by the Originator on or before such conveyance date or by means of proper accounting entries being entered upon the accounts and records of the Originator and the Issuer on the applicable conveyance date. To the extent that the cash amount received for any Timeshare Loans, Timeshare Properties, Related Security and other conveyed property related thereto and additional collateral Sold by the Originator to the Issuer hereunder is less than the Purchase Price of such property at the time of the applicable Sale, the shortfall shall be deemed to have been Contributed by the Originator to the capital of the Issuer on the applicable conveyance date.

          (f) Schedule of Timeshare Loans . Upon the Originator’s Sale or Contribution of the Timeshare Loans, Timeshare Properties, Related Security and other conveyed property related thereto and additional collateral to the Issuer, the Originator shall deliver a schedule of Timeshare Loans, Timeshare Properties, Related Security and other conveyed property related thereto and additional collateral, which schedule shall be attached hereto as Schedule III and made a part hereof. Each schedule so delivered shall supersede any prior schedules so delivered.

          SECTION 3. Intended Characterization, Grant of Security Interest . It is the intention of the parties hereto that the transfer of Timeshare Loans to be made pursuant to the terms hereof shall constitute a sale and/or contribution by the Originator to the Issuer and not a loan secured by the Timeshare Loans. In the event, however, that a court of competent jurisdiction were to hold that any such transfer constitutes a loan and not a sale and/or contribution, it is the intention of the parties hereto that the Originator shall be deemed to have granted to the Issuer as of the date hereof a first priority perfected security interest in all of Originator’s right, title and interest in, to and under the Transferred Assets specified in Section 2 hereof and that with respect to such conveyance, this Agreement shall constitute a security agreement under applicable law. In the event of the characterization of any such transfer as a loan, the amount of interest payable or paid with respect to such loan under the terms of this Agreement shall be limited to an amount which shall not exceed the maximum non-usurious rate of interest allowed by the applicable state law or any applicable law of the United States permitting a higher maximum non-usurious rate that preempts such applicable state law, which could lawfully be contracted for, charged or received (the “ Highest Lawful Rate ”). In the event any payment of interest on any such loan exceeds the Highest Lawful Rate, the parties hereto stipulate that (a) to the extent possible given the term of such loan, such excess amount previously paid or to be paid with respect to such loan be applied to reduce the principal balance of such loan, and the provisions thereof immediately be deemed reformed and the amounts thereafter collectible thereunder reduced, without the necessity of the execution of any new document, so as to comply with the then applicable law, but so as to permit the recovery of the fullest amount otherwise called for thereunder and (b) to the extent that the reduction of the principal balance of, and the amounts collectible under, such loan and the reformation of the provisions thereof described in the immediately preceding clause (a) is not possible given the term of such loan, such excess amount will be deemed to have been paid with respect to such loan as a result of an error and upon discovery of such error or upon notice thereof by any party hereto such amount shall be refunded by the recipient thereof.

          The characterization of the Originator as “debtor” and the Issuer as “secured

party” in any such financing statement required hereunder is solely for protective purposes and shall in no way be construed as being contrary to the intent of the parties that this transaction be treated as a sale and/or contribution to the Issuer of such Originator’s entire right, title and interest in and to the Transferred Assets.

          Each of the Originator, the Issuer and any of their Affiliates hereby agrees to make the appropriate entries in its general accounting records and to indicate that the Timeshare Loans have been transferred to the Issuer.

          SECTION 4. Conditions Precedent to Acquisition of Timeshare Loans by the Issuer . The obligations of the Issuer to purchase any Timeshare Loans hereunder shall be subject to the satisfaction of the following conditions:

          (a) All representations and warranties of Originator contained in Section 5 and in Schedule I hereof, and all information provided in the Schedule of Timeshare Loans related thereto shall be true and correct as of the Closing Date or the Transfer Date, as applicable, and Originator shall have delivered to the Issuer, the Securitization Indenture Trustee and the UBS Securities LLC (the “ Initial Purchaser ”) an officer’s certificate (the “ Officer’s Certificate ”) to such effect.

          (b) On or prior to the Closing Date or a Transfer Date, as applicable, the Originator shall have delivered or shall have caused the delivery of (i) the related Timeshare Loan Files to the Securitization Custodian and the Securitization Custodian shall have delivered a receipt therefore pursuant to the Custodial Agreement and (ii) the Timeshare Loan Servicing Files to the Securitization Servicer.

          (c) The Originator shall have delivered or shall have caused to be delivered all other information theretofore required or reasonably requested by the Issuer to be delivered by the Originator or performed or caused to be performed all other obligations required to be performed as of the Closing Date or Transfer Date, as the case may be, including all filings, recordings and/or registrations as may be necessary in the reasonable opinion of the Issuer or the Securitization Indenture Trustee to establish and preserve the right, title and interest of the Issuer or the Securitization Indenture Trustee, as the case may be, in the related Timeshare Loans.

          (d) On or before the Closing Date, the Issuer, the Securitization Servicer, the Backup Servicer and the Indenture Trustee shall have entered into the Securitization Indenture.

          (e) The Securitization Notes shall be issued and sold on the Closing Date, and the Issuer shall receive the full consideration due it upon the issuance of the Securitization Notes, and the Issuer shall have applied such consideration to the extent necessary, to pay that certain price (the “ Timeshare Loan Acquisition Price ”) for each Timeshare Loan, except to the extent that the Originator has made a Contribution to the Issuer pursuant to Section 2(e).

          (f) Each Timeshare Loan conveyed on a Transfer Date shall satisfy each of the criteria specified in the definition of (the “ Qualified Substitute Timeshare Loan ”) and each of the conditions herein and in the Securitization Indenture for substitution of Timeshare Loans shall have been satisfied.

          (g) The Issuer shall have received such other certificates and opinions as it shall reasonably request.

          SECTION 5. Representations and Warranties and Certain Covenants of Originator .

          (a) Originator represents and warrants to the Issuer and the Securitization Indenture Trustee for the benefit of the Securitization Noteholders, as of the Closing Date (with respect to the Timeshare Loans transferred on the Closing Date) and on each Transfer Date (with respect to Qualified Substitute Timeshare Loans transferred on such Transfer Date) as follows:

          (i) Due Incorporation; Valid Existence; Good Standing . It is a corporation duly organized and validly existing in good standing under the laws of the jurisdiction of its incorporation; and is duly qualified to do business as a foreign corporation and in good standing under the laws of each jurisdiction where the character of its property, the nature of its business or the performance of its obligations under this Agreement makes such qualification necessary, except where the failure to be so qualified will not have a material adverse effect on its business or its ability to perform its obligations under this Agreement or any other related documents (the “ Transaction Document ”) to which it is a party or under the transactions contemplated hereunder or thereunder or the validity or enforceability of the Timeshare Loans.

          (ii) Possession of Licenses, Certificates, Franchises and Permits . It holds all licenses, certificates, franchises and permits from all governmental authorities necessary for the conduct of its business, except where the failure to hold such licenses, certificates, franchises and permits would not materially and adversely affect its ability to perform its obligations under this Agreement or any other Transaction Document to which it is a party or under the transactions contemplated hereunder or thereunder or the validity or enforceability of the Timeshare Loans, and has received no notice of proceedings relating to the revocation of any such license, certificate, franchise or permit, which singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would materially and adversely affect its ability to perform its obligations under this Agreement or any other Transaction Document to which it is a party or under the transactions contemplated hereunder or thereunder or the validity or enforceability of the Timeshare Loans.

          (iii) Corporate Authority and Power . It has, and at all times during the term of this Agreement will have, all requisite corporate power and authority to own its properties, to conduct its business, to execute and deliver this Agreement and all documents and transactions contemplated hereunder and to perform all of its obligations under this Agreement and any other Transaction Document to which it is a party or under the transactions contemplated hereunder or thereunder.

          (iv) Authorization, Execution and Delivery Valid and Binding . This Agreement and all other Transaction Documents and instruments required or contemplated hereby to be executed and delivered by Originator have been duly authorized, executed and delivered by Originator and, assuming the due execution and delivery by, the other party or parties hereto and thereto, constitute legal, valid and binding agreements enforceable against Originator in accordance with their respective terms subject, as to enforceability, to bankruptcy, insolvency, reorganization, liquidation, dissolution, moratorium and other similar applicable laws affecting the enforceability of creditors’ rights generally applicable in the event of the bankruptcy, insolvency, reorganization, liquidation or dissolution, as applicable, of Originator and to general principles of equity, regardless of whether such enforceability shall be considered in a proceeding in equity or at law.

          (v) No Violation of Law, Rule, Regulation, etc . The execution, delivery and performance by Originator of this Agreement and any other Transaction Document to which it is a party do not and will not (A) violate any of the provisions of its articles of incorporation or bylaws, (B) violate any provision of any law, governmental rule or regulation currently in effect applicable to it or its properties or by which it or its properties may be bound or affected, including, without limitation, any bulk transfer laws, where such violation would have a material adverse effect on its ability to perform its obligations under this Agreement or any other Transaction Document to which it is a party or under the transactions contemplated hereunder or thereunder or the validity or enforceability of the Timeshare Loans, (C) violate any judgment, decree, writ, injunction, award, determination or order currently in effect applicable to it or its properties or by which it or its properties are bound or affected, where such violation would have a material adverse effect on its ability to perform its obligations under this Agreement or any other Transaction Document to which it is a party or under the transactions contemplated hereunder or thereunder or the validity or enforceability of the Timeshare Loans, (D) conflict with, or result in a breach of, or constitute a default under, any of the provisions of any indenture, mortgage, deed of trust, contract or other instrument to which it is a party or by which it is bound where such violation would have a material adverse effect on its ability to perform its obligations under this Agreement or any other Transaction Document to which it is a party or under the transactions contemplated hereunder or thereunder or the validity or enforceability of the Timeshare Loans or (E) result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, mortgage, deed of trust, contract or other instrument.

          (vi) Governmental Consent . No consent, approval, order or authorization of, and no filing with or notice to, any court or other Governmental Authority in respect of Originator is required which has not been obtained in connection with the authorization, execution, delivery or performance by Originator of this Agreement or any of the other Transaction Documents to which Originator is a party or under the transactions contemplated hereunder or thereunder, including, without limitation, the transfer of the Timeshare Loans and the creation of the security interest of the Issuer therein pursuant to Section 3 hereof.

          (vii) Defaults . It is not in default under any material agreement, contract, instrument or indenture to which it is a party or by which it or its properties is or are bound, or with respect to any order of any court, administrative agency, arbitrator or governmental body, in each case, which would have a material adverse effect on the transactions contemplated hereunder or on its business, operations, financial condition or assets, and no event has occurred which with notice or lapse of time or both would constitute such a default with respect to any such agreement, contract, instrument or indenture, or with respect to any such order of any court, administrative agency, arbitrator or governmental body.

          (viii) Insolvency . It is solvent and will not be rendered insolvent by the transfer of Timeshare Loans hereunder. On and after the Closing Date, it will not engage in any business or transaction the result of which would cause the property remaining with it to constitute an unreasonably small amount of capital.

          (ix) Pending Litigation or Other Proceedings . Other than as described in the Offering Circular, there is no pending or, to its Knowledge, threatened action, suit, proceeding or investigation before any court, administrative agency, arbitrator or governmental body against or affecting it which, if decided adversely, would materially and adversely affect (A) its condition (financial or otherwise), its business or operations, (B) its ability to perform its obligations under, or the validity or enforceability of, this Agreement or any other documents or transactions contemplated under this Agreement including, without limitation, its ability to foreclose or otherwise enforce the Liens of the Timeshare Loans, or (C) any Timeshare Loan or title of any Obligor to any related Timeshare Property.

          (x) Information . No document, certificate or report furnished or required to be furnished by or on behalf of it pursuant to this Agreement, contains or will contain when furnished any untrue statement of a material fact or fails or will fail to state a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances in which it was made. There are no facts known to it which, individually or in the aggregate, materially adversely affect, or which (aside from general economic trends) may reasonably be expected to materially adversely affect in the future, its financial condition or assets or business, or which may impair its or the Originator’s ability to perform its respective obligations under this Agreement, which have not been disclosed herein or therein or in the certificates and other documents furnished to the Issuer by or on its behalf pursuant hereto or thereto specifically for use in connection with the transactions contemplated hereby or thereby.

          (xi) Foreign Tax Liability . It is not aware of any Obligor under a Timeshare Loan who has withheld any portion of payments due under such Timeshare Loan because of the requirements of a foreign taxing authority, and no foreign taxing authority has contacted it concerning a withholding or other foreign tax liability.

          (xii) No Deficiency Accumulation . It is not aware of any outstanding

“accumulated funding deficiency” (as such term is defined under ERISA and the Code) with respect to any “employee benefit plan” (as such term is defined under ERISA) sponsored by it.

          (xiii) Taxes . It has filed all tax returns (federal, state and local) which it reasonably believes are required to be filed and has paid or made adequ