Ex. 10.6
FIRST AMENDMENT TO
AMENDED AND RESTATED
LOAN AND SECURITY
AGREEMENT
(Inventory Loan)
THIS FIRST AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT , dated as of
February 28, 2005, (the “First 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
” and as amended hereby the “ 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
(as such term is hereinafter defined), 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 has
requested and Lender has agreed, subject to the terms and
conditions herein, that Lender provide an additional inventory loan
to Borrower to the maximum amount of $5,000,000 (the “
Inventory Term Loan ”) for the purpose of
repaying the Term Loan Components of the Additional Credit Facility
and Existing Credit Facilities.
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1.
Terms . All capitalized terms not otherwise defined
herein shall have the meaning ascribed to such term in the Loan
Agreement.
2. Elimination
of Requirement for Business Plan . The Loan Agreement is
modified in part to add the following provision:
“
Elimination of Requirement for Business Plan .
Provided no Event of Default or condition, omission or act which,
with the passage of time, notice or both, would constitute an Event
of Default, has occurred, the requirement for Borrower to maintain
and adhere to the Business Plan is eliminated in all respects from
and after the date that: (i) the Term Loan Component has been
paid in full; and (ii) Borrower has achieved the net income
projection for the six months ending December 31, 2004 and exceeded
by 10% the net income projection for the fiscal year ending
December 31, 2004, as those net income projections appear in
the Business Model dated November 13, 2003, such net income
results to be evidenced by audited Financial Statements delivered
by Borrower to Lender.”
3.
Definitions . 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) will be amended in its entirety and replaced
with the following new Section 1.1(ll), on the date that the Term
Loan Component has been paid in full:
“(ll) Final Maturity Date .
March 31, 2009 with respect to the Existing Inventory Loan and
the New Inventory Loan, and March 31, 2007 with respect to the
Inventory Term Loan.”
4.
Definitions . Section 1.1(tt) is hereby amended
in its entirety and replaced with the following new
Section 1.1(tt):
“(tt) Interest Rate . The Interest Rate
on: (i) the Existing Inventory Loan Note shall be a variable
rate, adjusted as of each LIBOR Determination Date, equal to the
sum of LIBOR, determined as of each LIBOR Determination Date, plus
three and one-quarter percent (3.25%) per annum and (ii) the New
Inventory Loan Note and the Inventory Term Loan Note shall be a
variable rate, adjusted as of each Prime Rate Determination Date,
equal to the sum of the Prime Rate, determined
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as of each
Prime Rate Determination Date, plus three percent (3.0%) per annum,
provided, however, that at no time shall the Interest Rate on the
New Inventory Loan Note or the Inventory Term Loan Note be less
than six percent (6.0%) per annum.”
5.
Definitions . Section 1.1(ccc) is hereby amended
in its entirety and replaced with the following new paragraph:
“(ccc) Loan or Loans . The terms
“Loan” and “Loans” mean the Existing
Inventory Loan, the New Inventory Loan, and the Inventory Term
Loan, singly and collectively, as the context requires.”
6.
Definitions . Section 1.1(fff) is hereby 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 15% for the Existing Inventory Loan and the
Inventory Term Loan and 11% for the New Inventory Loan.”
7.
Definitions . Section 1.1(ooo) is hereby amended
in its entirety and replaced with the following new
Section 1.1(ooo):
“(ooo) Note . Singly and collectively,
the Existing Inventory Loan Note, the New Inventory Loan Note, and
the Inventory Term Loan Note.”
8.
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) will be amended in its entirety and replaced
with the following new Section 1.1(uuu), on the date that the Term
Loan Component has been paid in full:
“(uuuu) Term . The term for the Existing
Inventory Loan and New Inventory Loan, shall be the period ending
March 31, 2009, and for the Inventory Term Loan shall be the
period ending March 31, 2007.”
9.
Definitions . Section 1.1 is hereby amended in
part to add the following new paragraphs:
“(ddddd) Backup Servicing Agreement .
Shall mean that certain Backup Servicing Agreement dated as of
April 10, 2001, as amended by the First Amendment to the
Backup Servicing Agreement dated as of April 30,
2002.”
“(eeeee) Declarant Rights . Shall mean
the rights of the declarant described on Schedule 1.1(c)
attached hereto.”
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“
(fffff) Inventory Term Loan . The term
“Inventory Term Loan” shall mean that certain
$5,000,000.00 credit facility provided by Lender to Borrower
pursuant to Borrower pursuant to this Agreement and evidenced by
the Inventory Term Loan Note.”
“
(ggggg) Inventory Term Loan Note . The term
“Inventory Term Loan Note” shall mean that certain
Secured Promissory Note in the form attached as Exhibit A
dated as of February 28, 2005, made by Borrower to Lender to
evidence the Inventory Term Loan in the maximum principal amount of
$5,000,000.00, as it may hereafter be amended from time to
time.”
“(hhhhh) Management Agreement . Shall
mean that certain Management Agreement by and between Silverleaf
Club and Silverleaf Resorts, Inc. dated as of March 28, 1990
as amended to date.”
“(iiiii) Utility Purchase Agreement .
Shall mean that certain Asset Purchase Agreement between Silverleaf
Resorts, Inc. and Algonquin Water Resources of Texas, Inc. and
Algonquin Water Resources of Missouri, Inc. and Algonquin Water
Resources of Illinois, Inc. and Algonquin Water Resources of
America, Inc. and Algonquin Power Income Fund dated as of
August 29, 2004.”
“(jjjjj) Utility Rights . Shall mean the
Facilities, Real Property and Utilities, as those terms are defined
in the Utility Purchase Agreement, that are part of the Additional
Resort Collateral.”
10. 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 will be amended in its entirety and replaced with
the following new Section 2.1, on the date that the Term Loan
Component has been paid in full:
“(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
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Revolving
Loan Period shall be the period during the Term in which the
Borrower may borrower, repay and reborrow Advances and shall
terminate in all respects on March 31, 2007. Borrower’s right
to receive Advances hereunder shall also be subject to the terms
and conditions set forth in that certain Second Amended and
Restated Intercreditor Agreement between Lender, Heller, Borrower
and Sovereign dated of even date herewith, as may be amended
hereafter (the “ Intercreditor Agreement
”), but only so long as the Intercreditor Agreement remains
in full force and effect. 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 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, so long as Borrower is required to maintain
and adhere to the Business Plan under this Agreement. ”
11. Monthly
Payments . Section 2.3(a) is hereby amended in its
entirety and replaced with the following new
Section 2.3(a):
“(a) Monthly Payments . The Borrower
shall pay to the Lender, on the first day of each month and until
the respective Loan is paid in full: (1) commencing on
March 1, 2005, interest on the outstanding principal balance
of the Existing Inventory Loan and New Inventory Loan, from time to
time, at the applicable Interest Rate; and (2) commencing on
May 1, 2005, an amount equal to $185,000 plus interest on the
outstanding principal balance of the Inventory Term Loan, from time
to time, at the applicable Interest Rate. Lender shall apply each
such payment in the following order: (i) to the payment of all
costs or expenses incurred by the Lender pursuant to this Agreement
in creating, maintaining, protecting or enforcing the Liens in and
to the Collateral and in collecting any amount due to Lender in
connection with the Loan; (ii) to any interest accrued at the
Default Rate; (iii) to the payment of accrued and unpaid
interest at the applicable Interest Rate; (iv) to the
reduction of principal of the Inventory Term Loan in an amount up
to $185,000; and (v) to the reduction of the principal balance
of the Existing Inventory Loan, the New Inventory Loan, and the
Inventory Term Loan in such order and manner as Lender may
determine in its sole discretion. If the amount of the funds
received by Lender with respect to any month is insufficient to pay
in full all amounts due from Borrower to Lender under this
Agreement, Borrower shall pay the difference to Lender on or before
the fifth (5th) day after notice from Lender to Borrower advising
Borrower of such insufficiency. ”
12.
Payments . Section 2.3 is hereby amended in part
by adding the following new Section 2.3(d):
“(d) Final Term Payment . The entire
outstanding principal amount of the Inventory Term Loan together
with all accrued interest shall be due and payable, without notice
or demand, on March 31, 2007. ”
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13. 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 will be amended in its entirety and replaced with
the following new Section 2.7, on the date that the Term Loan
Component has been paid in full:
“2.7 Loan Term . The term of the Loan
shall terminate on March 31, 2009, except for the Inventory Term
Loan, which shall terminate on March 31, 2007. ”
14. Release of
Utility Rights, Additional Resort Collateral and Sovereign
Collateral . Section 3 is hereby amended in part to
add the following new Section 3.15:
“
3.15 Release of Liens . Notwithstanding
anything contrary in the Loan Agreement, and provided no Event of
Default or condition, omission or act which, with the passage of
time, notice or both, would constitute an Event of Default, has
occurred:
(a) the Utility Rights shall be released from the Lien of the
security interest granted to Lender hereunder on the date that:
(i) the sale of the Utility Rights is closed pursuant to the
Utility Purchase Agreement; and (ii) the net proceeds of such
sale in an amount not less than thirteen million dollars
($13,000,000) is transferred to Lender to be held in escrow until
March 31, 2005, on which date Lender shall apply such proceeds
to the
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