AMENDED/RESTATED LOAN & SECURITY AGREEMENT

Security Agreement

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SILVERLEAF RESORTS INC | TEXTRON FINANCIAL CORPORATION

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Title: AMENDED/RESTATED LOAN & SECURITY AGREEMENT
Governing Law: Rhode Island Date: 3/29/2004
Industry: Hotels and Motels Sector: Services

AMENDED/RESTATED LOAN & SECURITY AGREEMENT, Parties: silverleaf resorts inc , textron financial corporation

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Ex. 10.50

AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

(Inventory Loan)

between

SILVERLEAF RESORTS, INC.

(as Borrower)

and

TEXTRON FINANCIAL CORPORATION

(as Lender)

As of March 5, 2004

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AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

(INVENTORY LOAN)

THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of March 5,

2004, 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 December 16, 1999 (the "EXISTING NOTE");

WHEREAS, Borrower has requested and Lender has agreed, subject to the terms and

conditions herein, that Lender make an additional inventory loan to Borrower in

the maximum amount of $8,000,000 (the "NEW INVENTORY LOAN") for the purpose of

repaying in full the Heller Inventory Loan and providing additional liquidity to

Borrower for the Inventory; and

WHEREAS, Borrower and Lender have agreed to enter into this Agreement amending

and restating the Original Loan Agreement to provide for, among other things,

the New Inventory Loan.

NOW, THEREFORE, in consideration of the mutual covenants and agreements

contained in this Agreement, and for other good and valuable consideration, the

receipt and adequacy of which are acknowledged, the parties hereto, intending to

be legally bound, agree to amend and restate the Original Loan Agreement in its

entirety as follows:

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SECTION 1 -- DEFINITION OF TERMS

1.1 Capitalized terms used in this Agreement are defined in this

Section 1.1. The definitions include the singular and plural forms of the terms

defined.

(a) ADDITIONAL CREDIT FACILITY. The term "Additional

Credit Facility" shall mean that certain $10,200,000 credit facility provided by

Lender to Borrower pursuant to that certain Loan and Security Agreement dated

April 17, 2001 by and between Borrower and Lender, as amended by the First

Amendment to Loan and Security Agreement dated April 30, 2002, as further

amended by Letter Amendment dated as of March 27, 2003, as further amended by

Second Amendment to Loan and Security Agreement dated as of December 19, 2003,

as further amended by Letter Amendment dated of even date herewith and as may

hereafter be further amended from time to time (the "ADDITIONAL CREDIT LOAN

AGREEMENT")."

(b) ADDITIONAL ELIGIBLE RESORTS or ADDITIONAL ELIGIBLE

RESORT. The terms "Additional Eligible Resorts" and "Additional Eligible Resort"

shall have the meanings ascribed to such terms in Section 3.4 hereof.

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(c). "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.

(d) ADDITIONAL RESORT COLLATERAL MORTGAGES. A properly

recorded, first priority mortgage, deed of trust, deed to secure debt or other

security instrument, as applicable, executed and delivered by the Borrower to

Lender, encumbering all of the right, title and interest of Borrower in that

portion of the Additional Resort Collateral constituting real property.

(e) ADDITIONAL RESORT COLLATERAL ASSIGNMENTS. The term

"Additional Resort Collateral Assignments" shall mean singly and collectively:

(i) a first priority security agreement executed and delivered by Borrower to

Lender granting to Lender, a first priority security interest in that portion of

the Additional Resort Collateral constituting personal property, and (ii) a

first priority security agreement executed and delivered by Borrower to Lender,

granting to Lender, a first priority security interest in that portion of the

Additional Resort Collateral constituting development rights.

(f) ADVANCE. A portion of the proceeds of the Loan

advanced by the Lender to the Borrower in accordance with the terms of this

Agreement.

(g) AFFILIATE. Any party controlled by, controlling, or

under common control with, the Borrower.

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(h) AGREEMENT. This Amended and Restated Loan and

Security Agreement (including the Exhibits and Schedules to it), as may

hereafter be amended from time to time, by and between Borrower and Lender.

(i) ASSIGNMENT OF MANAGEMENT AGREEMENTS. The term

"Assignment of Management Agreements" shall mean the assignment, in the form

attached hereto as Exhibit A, by Borrower to Lender, as may hereafter be amended

from time to time, assigning all of Borrower's rights under each management

agreement for the Resorts.

(j) BOND HOLDER EXCHANGE TRANSACTION. The term "Bond

Holder Exchange Transaction" shall mean that certain senior subordinate note

holder exchange transaction on the terms and conditions outlined in that certain

term sheet dated October 19, 2001 (the "BOND HOLDER EXCHANGE TRANSACTION

LETTER"), a copy of which is attached hereto as Exhibit E, and which is

evidenced by the documents listed on Schedule 1.1(j) hereto, as may hereafter be

amended from time to time, (the "BOND HOLDER EXCHANGE DOCUMENTS").

(k) BUSINESS DAY. Each day that is not a Saturday, a

Sunday or a legal holiday under the laws of the State of Rhode Island, the State

of Connecticut or the State of Texas.

(l) BUSINESS PLAN. The term "Business Plan" shall mean

the five (5) year "Stand Alone" business plan prepared by Borrower and attached

hereto as Exhibit F. The Business Plan includes the "Impact on Lenders

Worksheet" setting forth the amounts to be advanced by the Lender, Heller and

Sovereign pursuant to their respective credit facilities (the "SENIOR LENDER

ADVANCE SCHEDULE")."

(m) CASH AND CASH EQUIVALENTS. Unrestricted (i) cash;

(ii) marketable direct obligations issued or unconditionally guaranteed by the

United States government and backed by the full faith and credit of the United

States government; and (iii) domestic and Eurodollar certificates of deposit and

time deposits, bankers' acceptances and floating rate certificates of deposit

issued by any commercial bank organized under the laws of the United States, any

state thereof, the District of Columbia, any foreign bank, or its branches or

agencies (fully protected against currency fluctuations), which, at the time of

acquisition, are rated A-1 (or better) by Standard & Poor's Rating Group or P-1

(or better) by Moody's Investor Service, Inc. provided that the maturities of

such Cash and Cash Equivalents shall not exceed one year.

(n) CLOSING DATE. The date of this Agreement.

(o) CODE. The Uniform Commercial Code in force in the

State of Rhode Island as amended from time to time.

(p) COLLATERAL. Collectively, all now owned or hereafter

acquired right, title and interest of Borrower, in all of the following:

(i) the Inventory;

(ii) Documents, instruments, accounts, chattel

paper, and general intangibles relating to the Inventory;

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(iii) Pledged Notes Receivable (including all

Notes Receivable comprising the Ineligible Notes Portfolio)

and all proceeds of or from them;

(iv) the mortgages securing such Pledged Notes

Receivable and all proceeds of or from them;

(v) Documents, instruments, accounts, chattel

paper, and general intangibles relating to the Pledged Notes

Receivable, (including any relating to the Ineligible Note

Portfolio) and the mortgages securing such Pledged Notes

Receivable;

(vi) the Land;

(vii) the Additional Resort Collateral;

(viii) the Silverleaf Finance I, Inc. Stock;

(ix) the Standby Servicing Agreement;

(x) the Standby Management Agreement;

(xi) all collateral under the Additional Credit

Facility, the Sovereign Facility and the Existing Credit

Facilities, as each such term is herein defined;

(xii) the Silverleaf Finance II Stock;

(xiii) the Silverleaf Finance II Subordinated Note;

(xiv) all books, records, reports, computer tapes,

disks and software relating to the Collateral; and

(xv) all extensions, additions, improvements,

betterments, renewals, substitutions and replacements of, for

or to any of the Collateral, wherever located, together with

the products, proceeds, issues, rents and profits thereof, and

any replacements, additions or accessions thereto or

substitutions thereof."

(q) COMMITMENT FEE. Collectively: (a) The commitment fee

for the Existing Inventory Loan in the amount of $100,000, that has been paid by

Borrower in accordance with the terms of Section 2.6(a) hereof; and (b) the

commitment fee for the New Inventory Loan in the amount of $80,000, that is to

be paid in accordance with the terms of Section 2.6(b) hereof.

(r) COMMON ELEMENTS. All common elements, including but

not limited to any limited common elements, as each such common element is

defined or provided for in the Declaration or other Timeshare Documents.

(s) DEBTOR RELIEF LAWS. Any applicable liquidation,

conservatorship, bankruptcy, moratorium, rearrangement, insolvency,

reorganization or similar law, proceeding or

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device providing for the relief of debtors from time to time in effect and

generally affecting the rights of creditors.

(t) DECLARATION OR DECLARATIONS. With respect to each

Resort, the applicable Declaration or Declarations described on Schedule 1.1(t)

attached hereto.

(u) DEFAULT. An event or condition the occurrence of

which immediately is or, with a lapse of time, the giving of notice or both,

becomes an Event of Default.

(v) DEFAULT RATE. The term "Default Rate" shall have the

meaning ascribed to such term in the Note.

(w) DIVISION OR COMMISSION. The governmental authority of

each state in which a Resort is located, having jurisdiction over the

establishment and operation of the Resort in question and the sale of Intervals

at such Resort.

(x) 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, attached hereto as Exhibit G (collectively, the

"DZ LETTER AGREEMENT") and evidenced by the documents listed on Schedule 1.1(x)

hereto, as may hereafter be amended from time to time (the "DZ DOCUMENTS")."

(y) EBITDA. The term EBITDA means, with respect to any

Person for any period, (a) the sum of (i) net income (but excluding any

extraordinary gains or losses or any gains or losses from the sale or

disposition of assets other than in the ordinary course of business), (ii)

interest expense, (iii) depreciation and amortization and other non-cash items

properly deducted in determining net income, and (iv) federal, state and local

income taxes, in each case for such Person for such period, computed and

calculated in accordance with GAAP minus (b) non-cash items properly added in

determining net income, in each case for the corresponding period.

(z) ENVIRONMENTAL LAWS. Comprehensive Environmental

Response, Compensation and Liability Act of 1980, as amended from time to time

("CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended from

time to time ("RCRA"), the Superfund Amendments and Reauthorization Act of 1986,

as amended, the federal Clean Air Act, the federal Clean Water Act, the federal

Safe Drinking Water Act, the federal Toxic Substances Control Act, the federal

Hazardous Materials Transportation Act, the federal Emergency Planning and

Community Right to Know Act of 1986, the federal Endangered Species Act, the

federal Occupational Safety and Health Act of 1970, the federal Water Pollution

Control Act, all state and local environmental laws, rules and regulations of

each state in which a Resort or any of the Land is located, as all of the

foregoing legislation may be amended from time to time, and any regulations

promulgated pursuant to the foregoing; together with any similar local, state or

federal laws, rules, ordinances or regulations either in existence as of the

date hereof, or enacted or promulgated after the date of this Agreement, that

concern the management, control, storage, discharge, treatment, containment,

removal and/or transport of

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Hazardous Materials or other substances that are or may become a threat to

public health or the environment; together with any common law theory involving

Hazardous Materials or substances which are (or alleged to be) hazardous to

human health or the environment, based on nuisance, trespass, negligence, strict

liability or other tortious conduct, or any other federal, state or local

statute, regulation, rule, policy, or determination pertaining to health,

hygiene, the environment or environmental conditions.

(aa) ENVIRONMENTAL INDEMNIFICATION AGREEMENT. The term

"Environmental Indemnification Agreement" shall mean the Environmental

Indemnification Agreement, in the form attached as Exhibit A, to be made by the

Borrower to the Lender pursuant to this Agreement, as the same may hereafter be

amended from time to time.

(bb) EURODOLLAR BUSINESS DAY. Eurodollar Business Day

shall mean any day on which commercial banks are open for international business

(including dealings in dollar deposits) in London, England.

(cc) EVENT OF DEFAULT. The term "Event of Default" shall

have the meaning given to such term in Section 8.1 of this Agreement.

(dd) EXISTING CREDIT FACILITIES. The term "Existing Credit

Facilities" shall mean singly and collectively: (i) that certain $75,000,000

credit facility provided by Lender to Borrower pursuant to that certain Amended

and Restated Loan, Security and Agency Agreement dated as of April 30, 2002, as

amended by Letter Amendment dated as of March 27, 2003, as further amended by

First Amendment to Amended and Restated Loan, Security and Agency Agreement

dated as of December 19, 2003, as further amended by Letter Amendment dated of

even date herewith and as may hereafter be further amended from time to time

(collectively the "TRANCHE A LOAN AGREEMENT") and (ii) that certain $71,000,000

credit facility provided by Lender to Borrower pursuant to that certain Amended

and Restated Loan, Security and Agency Agreement dated as of April 30, 2002, as

amended by Letter Amendment dated as of March 27, 2003, as further amended by

First Amendment to Amended and Restated Loan, Security and Agency Agreement

dated as of December 19, 2003, as further amended by Letter Amendment dated of

even date herewith and as may hereafter be further amended from time to time

(collectively the "TRANCHE B LOAN AGREEMENT").

(ee) EXISTING INVENTORY LOAN. The "Existing Inventory

Loan" means that certain $10,000,000 credit facility provided by Lender to

Borrower pursuant to the Original Loan Agreement and this Agreement and

evidenced by the Existing Inventory Loan Note.

(ff) EXISTING INVENTORY LOAN NOTE. The term "Existing

Inventory Loan Note" shall mean that certain Amended and Restated Secured

Promissory Note dated April 30, 2003 made by Borrower to lender to evidence the

Existing Inventory Loan in the maximum principal amount of $10,000,000, as may

hereafter be amended from time to time.

(gg) INTENTIONALLY OMITTED.

(hh) INTENTIONALLY OMITTED.

(ii) INTENTIONALLY OMITTED.

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(jj) INTENTIONALLY OMITTED.

(kk) INTENTIONALLY OMITTED.

(ll) FINAL MATURITY DATE. March 31, 2007.

(mm) FINANCIAL STATEMENTS. The tax returns and balance

sheets and statements of income and expense of the Borrower, and the related

notes and schedules delivered by Borrower to Lender prior to the Closing Date

and provided for in Section 4.5(c)(xvii) of this Agreement; and the monthly,

quarterly and annual financial statements and reports required to be provided to

Lender pursuant to Section 7.1(h)

(nn) INTENTIONALLY OMITTED.

(oo) INTENTIONALLY OMITTED.

(pp) GAAP. Generally accepted accounting principles,

applied on a consistent basis, as described in Opinions of the Accounting

Principles Board of the American Institute of Certified Public Accountants

and/or in statements of the Financial Accounting Standards Board which are

applicable in the circumstances as of the date in question

(qq) HAZARDOUS MATERIALS. "Hazardous substances,"

"hazardous waste" or "hazardous constituents," "toxic substances", or "solid

waste", as defined in the Environmental Laws, and any other contaminant or any

material, waste or substance which is petroleum or petroleum based, asbestos,

polychlorinated biphenyls, flammable explosives, or radioactive materials.

(rr) HELLER FACILITY. The term "Heller Facility" shall

mean that certain credit facility provided by Heller Financial Corporation

("HELLER") to Borrower pursuant to the documents listed on Schedule 1.1 (rr)

hereto, as may hereafter be amended from time to time, (the "HELLER DOCUMENTS").

(ss) INELIGIBLE NOTE PORTFOLIO. The term "Ineligible Note

Portfolio" shall mean certain of Borrower's Notes Receivable and mortgages

securing such Notes Receivable that are not currently pledged to any other

Person, that are listed in Exhibit D attached hereto and that shall be held by

Borrower, as agent for and on behalf of Lender, unless and until an Event of

Default shall occur, in which case the Ineligible Note Portfolio shall be

delivered to Lender in accordance with Section 3.7 hereof.

(tt) INTEREST RATE. The Interest Rate on 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. The

Interest Rate on the New Inventory Loan Note shall be a variable rate, adjusted

as of each Prime Rate Determination Date, equal to the sum of the Prime Rate,

determined 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 be less than six percent (6.0%) per annum.

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(uu) INTERVAL. With respect to each Resort the undivided

fractional fee interval ownership interest as a tenant-in-common ((sometime

referred to in the Timeshare Documents as a condoshare interest or condoshare

week) in a Unit to be sold to a Purchaser by delivery of a deed for a time-share

period per calendar year (or, in the case of a biennial use period, per

alternate calendar year) of one week (as defined in the Declaration), together

with all appurtenant rights and interests, including, without limitation,

appurtenant rights in and to Common Elements, and easement, license, access and

use rights in and to all Resort facilities and amenities (as described in the

Declaration), all as more particularly described in the Declaration or other

Timeshare Documents. Notwithstanding the foregoing, the term "Interval" shall

also include, with respect to the Oak `N Spruce Resort only, the beneficial

interest in the entity which owns each of the Units at the Oak `N Spruce Resort,

as evidenced by the delivery to the Purchaser of any such beneficial interest of

a certificate of beneficial interest for a timeshare period per calendar year

(or, in the case of biennial use period, per alternate calendar year) of one

week (as defined in the Oak N' Spruce Resort Declaration), together with all

pertinent rights and interests, including, without limitation, a pertinent right

in and to Common Elements, and easements, license, access and use rights in and

to all Oak `N Spruce Resort facilities and amenities, all as more particularly

described in the Declaration or other Timeshare Documents for the Oak `N Spruce

Resort.

(vv) INTERVAL RELEASE THRESHOLD. The term "Interval

Release Threshold" shall mean 110% of the Required Retail Value of the

Inventory. By way of example only, if the Required Retail Value of the Inventory

is $66,666,666.66, the Inventory Release Threshold will be $73,333,333.33.

(ww) INVENTORY. The term "Inventory" shall mean the

Intervals from Eligible Resorts, fee title to which is held by the Borrower and

on which Lender is granted a first mortgage lien to secure the Loan.

(xx) LAND. The term "Land" shall mean the real property

described in Schedule 1.1 (xx) hereof.

(yy) LAND MORTGAGE OR LAND MORTGAGES. The term "Land

Mortgage" or "Land Mortgages" shall mean singly and collectively, a properly

recorded, first priority mortgage, deed of trust, deed to secure debt,

assignment of beneficial interest or other security instrument encumbering all

of the right, title and interest of Borrower in the Land and securing the Loan.

(zz) LIEN. Any interest in property securing an obligation

owed to, or claim by, a Person other than the owner of such property, whether

such interest arises in equity or is based on the common law, statute, or

contract.

(aaa) LIBOR. The term "LIBOR" shall mean, with respect to

any LIBOR Rate Period, the rate per annum (rounded upwards, if necessary, to the

nearest one-sixteenth (1/16th) of one percent (1%)) reported at 11:00 a.m.

London time on the first day of each LIBOR Rate Period (or if such date is not a

Eurodollar Business Day, the immediately preceding Eurodollar Business Day)

(such date, the "LIBOR DETERMINATION DATE"), on Dow Jones Telerate Service Page

3750 (British Bankers Association Settlement Rate) as the non-reserve adjusted

London

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Interbank Offered Rate for U.S. dollar deposits having a ninety (90) day term

(or on such other page as may replace said Page 3750 on that service or such

other service or services as may be nominated by the British Bankers Association

for the purpose of displaying such rate, all as determined by Lender in its sole

but good faith discretion). In the event that (i) more than one such LIBOR is

provided, the average of such rates shall apply, or (ii) no such LIBOR is

published, then LIBOR shall be determined from such comparable financial

reporting company as Lender in its sole but good faith discretion shall

determine. LIBOR for any LIBOR Rate Period shall be adjusted from time to time

by increasing the rate thereof to compensate Lender for any aggregate reserve

requirements (including, without limitation, all basic, supplemental, marginal

and other reserve requirements and taking into account any transitional

adjustments or other scheduled changes in reserve requirements during any LIBOR

Rate Period) which are required to be maintained by Lender with respect to

"Eurocurrency Liabilities" (as presently defined in Regulation D of the Board of

Governors of the Federal Reserve System) of the same term under Regulation D, or

any other regulations of a Governmental Authority having jurisdiction over

Lender of similar effect.

(bbb) LIBOR RATE PERIOD. The term "LIBOR Rate period" shall

mean each successive ninety (90) day period during the Term. The initial LIBOR

Rate Period shall commence on the date of this Agreement (or if such day is not

a Eurodollar Business Day, the immediately preceding Eurodollar Business Day)

and shall terminate on a date which is thirty days thereafter (or if such day is

not a Eurodollar Business Day, the immediately preceding Eurodollar Business

Day). Each LIBOR Rate Period after the initial LIBOR Rate Period shall commence

on the first Eurodollar Business Day immediately following the expiration of the

immediately preceding LIBOR Rate Period and shall terminate ninety days

thereafter (or if such day is not a Eurodollar Business Day, the immediately

preceding Eurodollar Business Day).

(ccc) LOAN OR LOANS. The terms "Loan" and "Loans" mean, as

the context requires, singly each loan and collectively all loans made by Lender

to Borrower prior to the date hereof pursuant to the Original Loan Agreement.

The term "Loan" shall also mean, as the context requires, collectively all Loans

made by Lender to Borrower under this Agreement. From and after the date hereof,

the Loan shall consist of the Existing Inventory Loan in the maximum amount of

$10,000,000.00 and the New Inventory Loan in the maximum amount of

$8,000,000.00, which amounts shall be repaid as provided in Sections 2.3 and 2.4

hereof.

(ddd) LOAN DOCUMENTS. Collectively, this Agreement and the

following documents and instruments listed below as such agreements, documents,

instruments or certificates may be amended, renewed, extended, restated or

supplemented from time to time.

(i) THIS AGREEMENT;

(ii) THE ORIGINAL LOAN AGREEMENT;

(iii) THE EXISTING INVENTORY LOAN NOTE;

(iv) THE NEW INVENTORY LOAN NOTE;

(v) THE ENVIRONMENTAL INDEMNIFICATION AGREEMENT;

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(vi) THE MORTGAGES;

(vii) BORROWER'S CERTIFICATE AND REQUEST FOR

ADVANCE;

(viii) THE MODIFICATION(S) OF MORTGAGES;

(ix) THE LAND MORTGAGES;

(x) THE ADDITIONAL RESORT COLLATERAL MORTGAGES;

(xi) THE ADDITIONAL RESORT COLLATERAL

ASSIGNMENTS;

(xii) THE STOCK PLEDGE AGREEMENT;

(xiii) THE STANDBY MANAGEMENT AGREEMENT ASSIGNMENT;

(xiv) THE ASSIGNMENT OF MANAGEMENT AGREEMENTS;

(xv) THE ASSIGNMENT OF MORTGAGES;

(xvi) SILVERLEAF FINANCE II STOCK AND SUBORDINATED

NOTE PLEDGE AGREEMENT;

(xvii) INTERCREDITOR AGREEMENT;

(xviii) FINANCING STATEMENTS; UCC financing

statements covering the Collateral, to be filed with the Texas

Secretary of State and the Secretary of State and/or such

other office where UCC financing statements are filed in each

state in which the Collateral is located; and

(xix) OTHER ITEMS; Such other agreements,

documents, instruments, certificates and materials as Lender

may request to evidence the Obligations; to evidence and

perfect the rights and Liens and security interests of the

Lender contemplated by the Loan Documents, and to effectuate

the transactions contemplated herein, as such agreements,

documents, instruments or certificates may be hereafter

amended, renewed, extended, restated or supplemented from time

to time.

(eee) LOAN YEAR. The period from the Closing Date through

the last day of the next full twelve (12) calendar month period and each twelve

(12) calendar month period thereafter.

(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%; provided, however, that from and after the

reduction in the principal balance of the New Inventory Loan as provided in

Section 2.4(b)(ii), the Loan to Retail Value Ratio for the New Inventory Loan

only shall be 11% (the Loan to Retail Value Ratio for the Existing Loan shall

remain at 15%).

<PAGE>

(ggg) MANDATORY PREPAYMENT. Any prepayment required by

Section 2.4(b) of this Agreement.

(hhh) MARKETING AND SALES EXPENSES. Shall mean all

promotion, lead generation, sales commissions and all other marketing expenses

incurred or paid by Borrower pursuant to any marketing agreements or otherwise.

(iii) MORTGAGE OR MORTGAGES. A properly recorded, first

priority mortgage, deed of trust, deed to secure debt, assignment of beneficial

interest or other security instrument, as applicable, in the form attached

hereto as Exhibit A (with such changes as may be necessary to comply with the

law of the state in which the Inventory in question is located) executed and

delivered by Borrower to Lender encumbering all of the right, title and interest

of the Borrower in the Inventory and Common Elements, and related or appurtenant

easement, access and use rights and benefits.

(jjj) MODIFICATION(S) OF MORTGAGES. Properly recorded

amendment and restatement(s) or modification(s) of any existing Mortgages, in

form and substance reasonably acceptable to Lender, for the purpose of securing

the Loan, including the New Inventory Loan.

(kkk) NEGATIVE PLEDGE AGREEMENT The Negative Pledge

Agreement, in the form attached as Exhibit A, made by the Borrower and each

applicable Affiliate to the Lender pursuant to this Agreement, as the same may

be amended from time to time.

(lll) NET SECURITIZATION CASH FLOW. The term "Net

Securitization Cash Flow" shall mean: (i) all right, title and interest of

Silverleaf Finance I, Inc., a wholly owned subsidiary of Borrower in any excess

cash flow derived from the Notes Receivable sold by Silverleaf Finance I, Inc.

to DZ pursuant to the DZ Documents and (ii) all right, title and interest of

Silverleaf Finance II, Inc., a wholly owned subsidiary of Borrower, in any

excess cash flow derived from the Notes Receivable sold by Borrower to

Silverleaf Finance II, Inc. and then sold by Silverleaf Finance II, Inc. to

Textron Financial Corporation, as Group Two Lender under the Silverleaf Finance

II Documents.

(mmm) NEW INVENTORY LOAN. The term "New Inventory Loan"

shall mean that certain $8,000,000.00 credit facility provided by Lender to

Borrower pursuant to this Agreement and evidenced by the New Inventory Loan

Note.

(nnn) NEW INVENTORY LOAN NOTE. The term "New Inventory Loan

Note" shall mean that certain Secured Promissory Note in the form attached as

Exhibit A dated as of the date hereof made by Borrower to Lender to evidence the

New Inventory Loan in the maximum principal amount of $8,000,000.00, as may

hereafter be amended from time to time.

(ooo) NOTE. Singly and collectively, the Existing Inventory

Loan Note and the New Inventory Loan Note.

(ppp) NOTE RECEIVABLE. A promissory note executed in favor

of Borrower in connection with a Purchaser's acquisition of an Interval.

<PAGE>

(qqq) OBLIGATIONS. All amounts due or becoming due to

Lender in respect of the Loan under any of the Loan Documents, including

principal, interest, prepayment premiums, contributions, taxes, insurance, loan

charges, custodial fees, attorneys' and paralegals' fees and expenses and other

fees or expenses incurred by Lender or advanced to or on behalf of Borrower by

Lender pursuant to any of the Loan Documents, and the prompt and complete

payment and performance by the Borrower of all obligations, indebtedness and

liabilities pursuant to this Agreement or any of the Loan Documents or otherwise

(rrr) OPERATING CONTRACT OR OPERATING CONTRACTS. As defined

in Section 6.20.

(sss) OPERATING EXPENSES. Shall mean the total of all

expenditures, computed in accordance with Generally Accepted Accounting

Principles, of whatever kind relating to the ownership, operation, maintenance

and management of the Resorts that are incurred on a regular monthly or other

periodic basis, including, without limitation, utilities, ordinary and capital

repairs and maintenance, insurance premiums, license fees, property taxes and

assessments, management fees, payroll and related taxes, computer processing

charges, operational equipment or other lease payments as approved by Lender,

and other similar costs.

(ttt) PERSON. An individual, partnership, corporation,

limited liability company, trust, unincorporated organization, other entity, or

a government or agency or political subdivision thereof.

(uuu) PLEDGED NOTE RECEIVABLE. Any Note Receivable that at

any time has been pledged to Lender by Borrower pursuant to this Agreement or

any of the other Loan Documents, including any Ineligible Note Receivable.

(vvv) PRIME RATE DETERMINATION DATE. The term "Prime Rate

Determination Date" shall mean the first day of each month, provided, however,

that if the first day of any month is not a Business Day, than the Prime Rate

Determination Date for such month shall be the Business Day immediately

preceding the first day of the month in question. Notwithstanding the foregoing,

the initial Prime Rate Determination Date shall be the Closing Date.

(www) PRIME RATE. The highest prime rate of interest from

time to time announced or published in the Money Rates column of the Wall Street

Journal (Eastern Edition) (the "WSJ"). In the event that the prime rate

established by the WSJ shall no longer be available, due to either the non

existence of the WSJ or the WSJ's failure to publish a prime rate, then the

Prime Rate shall be the highest prime rate published by a major money center

bank selected by Lender.

(xxx) PROPERTY OR PROPERTIES. Any interest in any kind of

property or asset, whether real, personal or mixed, tangible or intangible.

(yyy) PURCHASE PRICE. The total purchase price of an

Interval, as approved by Lender from time to time, relating to the sale by the

Borrower to a Purchaser of an Interval comprising a part of the Inventory.

(zzz) PURCHASER. Any Person who purchases one or more

Intervals.

<PAGE>

(aaaa) RELEASE PRICE. The term "Release Price" shall have

the meaning ascribed to such term in Section 2.3(b)hereof.

(bbbb) RETAIL VALUE. The term "Retail Value" shall mean the

fair market value of the Inventory and each Interval constituting part of the

Inventory, as determined by Lender in its sole discretion.

(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 Loan is

$10,000,000, the Required Retail Value of the Inventory will be $66,666,666.66.

(dddd)) RESORT OR RESORTS (ALSO "ELIGIBLE RESORT" OR

"ELIGIBLE RESORTS"). Individually and collectively, as applicable, each or all

of the interval ownership and time-share projects consisting of: (i) (A) Holly

Lake Ranch, Hawkins, Texas; (B) Piney Shores Resort, Conroe, Texas; (C) Lake O'

The Woods, Flint, Texas; (D) Hill Country Resort, Canyon Lake, Texas; (E) Ozark

Mountain Resort, Kimberling City, Missouri; (F) Holiday Hills Resort, Branson,

Missouri; (G) Fox River Resort, LaSalle County, Illinois; (H) Timber Creek

Resort, Jefferson County, Missouri; (I) Oak N' Spruce Resort, South Lee,

Massachusetts; (J) Apple Mountain Resort, Habersham County, Georgia; (K) The

Villages, Flint, Texas and (L) Silverleaf's Seaside Resort, Galveston County,

Texas (also sometimes individually and collectively referred to herein as the

"Existing Resorts") and (ii) subject to Lender's prior written approval and

satisfaction by the Borrower of the conditions precedent set forth in Sections

3.4 and 4.5 hereof, the Additional Eligible Resorts. The term "Resort" or

"Resorts" includes, among other things, the undivided annual or (biennial)

timeshare ownership interests (Intervals) in the respective Resorts, and the

appurtenant exclusive rights to use Units in one or more buildings or phases and

all appurtenant or related properties, amenities, facilities, equipment,

appliances, fixtures, easements, licenses, rights and interests, including

without limitation, the Common Elements, as established by and more fully

defined and described in the respective Declarations, and the other Timeshare

Documents.

(eeee) REVENUES. The term "Revenues" shall mean all proceeds

for the sale of Intervals, regardless of whether such proceeds are in the form

of cash or Notes Receivables.

(ffff) 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.

(gggg) 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.

(hhhh) 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.,

<PAGE>

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.

(iiii) SILVERLEAF FINANCE II STOCK AND SUBORDINATED NOTE

PLEDGE AGREEMENT. Shall mean the agreement previously executed by Borrower,

pursuant to which the Silverleaf Finance II Stock and the Silverleaf Finance II

Subordinated Note is pledged to Lender, as security for the Loan.

(jjjj) SOVEREIGN FACILITY. The term "Sovereign Facility"

shall mean that certain credit facility provided by Sovereign to Borrower

pursuant to the documents listed on Schedule 1.1 (jjjj) hereto (the "SOVEREIGN

DOCUMENTS).

(kkkk) SPV. Shall mean Silverleaf Finance II, Inc., a

Delaware corporation.

(llll) SPV ASSETS. Shall mean all assets sold or conveyed by

Borrower to the SPV pursuant to the Silverleaf Finance II Documents.

(mmmm) 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."

(nnnn) STANDBY MANAGER. Shall mean the Person selected by

Borrower, and acceptable to Lender, in its sole discretion, to act as standby

manager of Borrower's Resorts in accordance with this Agreement. Lender hereby

approves J&J Limited, Inc. as the initial Standby Manager.

(oooo) STANDBY MANAGEMENT AGREEMENT. Shall mean the

agreement that has been entered into between the Standby Manager and Borrower

providing for the management of Borrower's business and the Resorts on the

occurrence of an Event of Default hereunder.

(pppp) STANDBY MANAGEMENT AGREEMENT ASSIGNMENT. Shall mean

the assignment by Borrower to Lender of all of Borrower's rights under the

Standby Management Agreement

(qqqq) STOCK PLEDGE AGREEMENT. Shall mean the agreement

previously delivered by Borrower, pursuant to which all issued and outstanding

shares of Silverleaf Finance I, Inc.'s capital stock and all right, title and

interest in such shares, all certificates, instruments or other documents

evidencing or representing the same and all dividends and distributions

therefrom, including dividends and distributions paid in stock (the "SILVERLEAF

FINANCE I, INC. STOCK") are pledged to Lender as security for the Loan.

(rrrr) SURVEY. A plat or survey of the Resort prepared by a

licensed surveyor acceptable to Lender and in a form acceptable to Lender.

<PAGE>

(ssss) TANGIBLE NET WORTH. Tangible Net Worth means, with

respect to any Person, the amount calculated in accordance with GAAP as (i) the

consolidated net worth of such Person and its consolidated subsidiaries, plus

(ii) to the extent not otherwise included in such consolidated net worth,

unsecured subordinated debt of such Person and its consolidated subsidiaries,

the terms and conditions of which are reasonably satisfactory to Lender, minus

(iii) the consolidated intangibles of such Person and its consolidated

subsidiaries, 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.

Notwithstanding the foregoing, if subsequent to the Effective Date deferred

sales are no longer considered an asset under GAAP, Lender agrees, at the

request of Borrower, to determine, in its reasonable discretion, whether

deferred sales should continue to be considered an asset for purposes of

determining Borrower's Tangible Net Worth.

(tttt) INTENTIONALLY OMITTED.

(uuuu) TERM. A period of 3 years from the Closing Date, plus

the number of days from the Closing Date to the end of the month in which the

Closing Date occurs.

(vvvv) TERM SHEET. Singly and collectively: (i) the term

sheet issued by Lender with respect to the Existing Inventory Loan, as amended

by the term sheet dated March 28, 2001, issued by Lender with respect to the

Existing Inventory Loan, and (ii) the Commitment Letter dated February 17, 2004

issued by Lender with respect to the New Inventory Loan, copies of each are

attached hereto as Schedule 1.1(vvvv).

(wwww) TFC CONDUIT LOAN. Shall mean that certain loan

facility provided by Textron Financial Corporation to SPV in accordance with the

terms of the Silverleaf Finance II Documents.

(xxxx) TIMESHARE ACT. Any statute, act, regulation,

ordinance, rule or law applicable to the establishment and operation of the

Resorts and the sales of the Intervals.

(yyyy) TIMESHARE DOCUMENTS. Any registration statement

required under any Timeshare Act approving the establishment and operation of

the Resorts and the sales of Intervals.

(zzzz) TIMESHARE OWNERS' ASSOCIATION. With respect to each

Resort, the Silverleaf Club, a Texas non-profit corporation, and the applicable

not-for-profit corporations described on Schedule 1.1(zzzz).

(aaaaa) TOTAL INTEREST EXPENSE. For any period, the aggregate

amount of interest required to be paid or accrued by Borrower and its

subsidiaries during such period on all indebtedness of Borrower and its

subsidiaries outstanding during all or any part of such period, whether such

interest was or is required to be reflected as an item of expense or

capitalized, including payments consisting of interest in respect of any

capitalized lease, or any synthetic lease and including commitment fees, agency

fees, facility fees, balance deficiency fees and similar fees or expenses in

connection with the borrowing of money.

<PAGE>

(bbbbb) UCC FINANCING STATEMENTS. The UCC-1 Financing

Statements, naming the Borrower as debtor and the Lender as secured party,

heretofore or hereafter filed in connection with the Loan and all amendments

thereto.

(ccccc) UNIT. With respect to each Resort, one living unit in

a building incorporated into the Resort pursuant to the Declaration, together

with all related or appurtenant Common Elements and related or appurtenant

interests in services, easements and other rights or benefits, as described and

provided for in the Declaration, including but not limited to the right to use

the Resort amenities and facilities in accordance with the Timeshare Documents.

SECTION 2 -- THE LOAN

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 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) $18,000,000.00 (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. Borrower acknowledges and

agrees that Lender may make Advances from the Existing Inventory Loan and/or the

New Inventory 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 borrower, repay and reborrow Advances and 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 Second Amended and Restated Intercreditor Agreement between Lender,

Heller, Borrower and Sovereign dated of even date herewith, as amended hereafter

(the "INTERCREDITOR AGREEMENT"). 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.

2.2 INTEREST RATE. From and after the Closing Date, (i) with

respect to the Existing Inventory Loan, the aggregate principal balance of all

Advances made with respect to the Existing Inventory Loan shall bear interest at

a rate equal to the Interest Rate applicable to the Existing Inventory Loan; and

(ii) with respect to the New Inventory Loan, the aggregate principal balance of

all Advances made with respect to the New Inventory Loan shall bear interest at

the Interest Rate applicable to the New Inventory Loan. The aggregate principal

amount of all Advances, that are outstanding from time to time, will bear

interest at a rate equal to the applicable Interest Rate. Each Advance shall

bear interest at the applicable Interest Rate as of Lender's wiring of funds

through Lender's receipt of repayment of the Loan (if received by Lender later

than 12 noon, Eastern Standard Time, then interest accrual shall be through the

next Business Day following such receipt). Immediately upon the occurrence of an

Event of Default and after the Final Maturity Date (if the Loan is not paid in

full on the Final Maturity Date), at Lender's election in its sole discretion,

the Loan will bear interest at the Default Rate.

<PAGE>

2.3 PAYMENTS. The Borrower agrees punctually to pay or cause to be

paid to the Lender, all principal and interest due under the Note in respect of

the Loan made by the Lender hereunder. The Borrower shall make the following

payments on the Loan:

(a) MONTHLY PAYMENTS. The Borrower shall pay to the

Lender, on the first day of each month during the Term, commencing on April 1,

2004, interest on the outstanding principal balance of the 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; and (iv) to the reduction of the principal balance of the

Existing Inventory Loan and the New Inventory 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.

(b) INTERVAL RELEASE PRICE PAYMENTS. Prior to the release

by Lender of any Interval from the Collateral in accordance with Section 2.10

hereof, the Borrower shall pay to the Lender an amount equal to the greater of:

(i) $1,600.00 for each such Interval, or (ii) an amount necessary to fully repay

the Loan upon sale of 75% of the Inventory (the "RELEASE PRICE"), which payment

shall be applied by Lender in accordance with Section 3(a); provided, however,

that if the Retail Value of the Inventory, as determined by the Lender, is equal

to or greater than the Interval Release Threshold, the Borrower shall not be

required to pay a Release Payment with respect to the release of any Interval

for so long as the Retail Value of the Inventory equals or exceeds the Interval

Release Threshold.

amount of the Loan together with all other Obligations shall be paid in full by

not later than the Final Maturity Date.

2.4 PREPAYMENTS.

(a) VOLUNTARY PREPAYMENTS. Borrower may not voluntarily

prepay the Loan, in whole or in part, except that: (i) provided that no Event of

Default shall have occurred and be continuing and (ii) Borrower pays the Release

Price in accordance with Section 2.3(b) hereof, then at any time during the Term

of the Loan, the Loan may be prepaid in part in connection with any prepayment

which arises from release of any Interval from the Collateral, subject to

Section 2.10 hereof.

(b) MANDATORY PREPAYMENTS.

(i) If at any time and for any reason, the

outstanding unpaid principal balance of the Loan shall exceed

the amount which satisfies the Loan to Retail Value Ratio,

then, within five (5) Business Days following Borrower's

receipt of telecopied notice from Lender of the occurrence of

such excess or, absent such telecopied notice, within fifteen

(15) days after the end of the calendar month in

<PAGE>

which such excess occurred, Borrower shall either: (x) prepay

the principal balance of the Loan in an amount equal to the

difference between the aggregate principal amount of the Loan

and the amount necessary to comply with the Loan to Retail

Value Ratio of the Inventory or (y) Borrower shall grant to

Lender a first mortgage Lien on additional Intervals from

Eligible Resorts so that the Retail Value of the Inventory,

including such additional Intervals, equals or exceeds the

Required Retail Value of the Inventory and the Loan to Retail

Value Ratio is satisfied. In granting to Lender a first

mortgage lien on such additional Intervals, Borrower shall

comply with the document delivery and recordation requirements

set forth in Section 4 of this Agreement and Borrower shall

deliver to Lender its written certification that the Retail

Value of the Inventory, including such additional Intervals,

is equal to or greater than the Required Retail Value and

satisfies the Loan to Retail Value Ratio. If Borrower elects

to prepay the excess principal balance of the Loan pursuant to

this Section (i) above, no prepayment premium shall be payable

in connection with such prepayment.

(ii) On or before August 31, 2004, Borrower shall

prepay the sum of $2,000,000 on the New Inventory Loan so that

the outstanding principal balance of the New Inventory Loan

(and Lender's commitment to make Advances under the New

Inventory Loan) shall be reduced to $6,000,000.00. From and

after August 31, 2004, the maximum amount available for

Advances under the New Inventory Loan shall be $6,000,000.00

and the maximum aggregate principal amount under the Existing

Inventory Loan and the New Inventory Loan shall be

$16,000,000, subject to Section 2.1 hereof.

to the contrary, any prepayment under this Section 2.4 must include all accrued

but unpaid interest, and accrued but unpaid contributions, taxes, insurance,

loan charges custodial fees, attorneys' and paralegals' fees and expenses,

amounts due pursuant to Section 2.5 hereof as a result of a Funding Loss and

other fees or expenses incurred by Lender or advanced to or on behalf of

Borrower by Lender pursuant to any of the Loan Documents accrued but unpaid.

(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 law 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 Lender and

Sovereign to be applied in the order set forth in that certain Intercreditor

Agreement between Lender, Heller and Sovereign dated of even date herewith. 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.

<PAGE>

2.5 PAYMENT OF FUNDING LOSSES AND OTHER AMOUNTS RELATING TO LIBOR

CONTRACT, ETC.

(a) Funding Losses: Breaking of LIBOR contract, Change in

Law, Etc. Borrower hereby agrees to pay to Lender any amount necessary to

compensate Lender for any losses or costs (including, without limitation, the

costs of breaking any "LIBOR" contract, if applicable, or funding losses

determined on the basis of Lender's reinvestment rate and the interest rate

thereon) (collectively, "FUNDING LOSSES") sustained by Lender: (i) if the Loan,

or any portion hereof, is prepaid for any reason whatsoever on any date other

than the Final Maturity Date (including, without limitation, from condemnation

or insurance proceeds); (ii) upon the conversion of the interest rate on the

Loan to an interest rate based on the Prime Rate in accordance with Section (b)

hereof; (iii) as a consequence of the reduction of any amounts received or

receivable from Borrower, in either case, due to the introduction of, or any

change in, law or applicable regulation or treaty (including the administration

or interpretation thereof), whether or not having the force of law, or due to

the compliance by Lender with any directive, whether or not having the force of

law, or request from any central bank or domestic or foreign governmental

authority, agency or instrumentality having jurisdiction; (iv) as a consequence

of the breaking of any LIBOR contract and/or (v) any other set of circumstances

not attributable to Lender's acts. Payment of Funding Losses hereunder shall be

in addition to any obligation to pay any other amounts due and owing under this

Agreement or any other Loan Documents.

(b) Conversion to Interest Rate Based on Prime Rate. If

Lender determines (which determination shall be conclusive and binding upon

Borrower, absent manifest error) (i) that dollar deposits in an amount

approximately equal to the then outstanding principal balance of the Loan are

not generally available at such time in the London Interbank Market for deposits

in Eurodollars, (ii) that the rate at which such deposits are being offered will

not adequately and fairly reflect the cost to Lender of maintaining the Interest

Rate based on LIBOR, or of funding the same in such market for such Interest

Accrual Period, due to circumstances affecting the London Interbank Market

generally, (iii) that reasonable means do not exist for ascertaining LIBOR, (iv)

that the Interest Rate based on LIBOR would be in excess of the maximum interest

rate which Borrower may by law pay, then, in any such event, or (v) any LIBOR

contract is broken as a result of the sale in bulk of Inventory relating to the

Resorts by Borrower, Lender shall so notify Borrower and, as of the date of such

notification with respect to an event described in clauses (ii), (iv) or (v)

above, or as of the expiration of the applicable LIBOR Rate Period with respect

to an event described in clause (i) or (iii) above, interest shall accrue at a

rate equal to the Prime Rate plus a sufficient spread so that the resulting per

annum interest rate is approximately equal to what the rate would have been

based on LIBOR plus three and one-quarter percent (3.25%) per annum, which new

rate shall apply until such time as the situations described above are no longer

in effect, or as otherwise provided herein; provided, however, if the situation

described in clause (ii) above occurs, (x) Borrower shall have the option, to be

exercised by written notice to Lender, to pay to Lender (in the manner

reasonably required by Lender) for such increased cost of maintaining the

Interest Rate based on LIBOR, and (y) if the same only affects a portion of the

Loan, then only such portion shall have interest accrue at a rate equal to the

Prime Rate plus a sufficient spread so that the resulting per annum interest

rate is approximately equal to what the rate would have been based on LIBOR plus

three and one-quarter percent (3.25%) per annum, and interest shall continue to

accrue on the remaining portion at the Interest Rate based on LIBOR.

<PAGE>

introduction of, or any change in, any law, regulation or treaty, or in the

interpretation thereof by any governmental authority charged with the

administration or interpretation thereof, shall make it unlawful for Lender to

maintain the Interest Rate based on LIBOR with respect to the Loan, or any

portion thereof, or to fund the Loan, or any portion thereof, in Eurodollars in

the London Interbank Market, then, (i) the Loan (or such portion of the Loan)

shall, with respect to Lender, thereafter bear interest shall accrue at a rate

equal to the Prime Rate plus a sufficient spread so that the resulting per annum

interest rate is approximately equal to what the rate would have been based on

LIBOR plus three and one-quarter percent (3.25%) per annum (unless the Default

Rate shall be applicable), and (ii) Borrower shall pay to Lender the amount of

Funding Losses (if any) incurred in connection with such conversion. The accrual

of interest shall accrue at a rate equal to the Prime Rate plus a sufficient

spread so that the resulting per annum interest rate is approximately equal to

what the rate would have been based on LIBOR plus three and one-quarter percent

(3.25%) per annum, which new rate shall continue until such date, if any, as the

situation described in this Section (c) is no longer in effect.

(d) Capital Adequacy Events, Etc. If Lender shall have

determined that the applicability of any law, rule, regulation or guideline

adopted pursuant to or arising out of the July 1988 report of the Basle

Committee on Banking Regulations and Supervisory Practices entitled

"International Convergence of Capital Measurement and Capital Standards", or the

adoption of any other law, rule, regulation or guideline (including, but not

limited to, any United States law, rule, regulation or guideline) regarding

capital adequacy, or any change becoming effective in any of the foregoing or in

the enforcement or interpretation or administration of any of the foregoing by

any court or any domestic or foreign governmental authority, central bank or

comparable agency charged with the enforcement or interpretation or

administration thereof, or compliance by Lender, with any request or directive

regarding capital adequacy (whether or not having the force of law) of any such

authority, central bank or comparable agency, has or would have the effect of

reducing the rate of return on the capital of Lender or Lender's holding

company, as the case may be, to a level below that which Lender or its holding

company, as the case may be, could have achieved but for such applicability,

adoption, change or compliance (taking into consideration Lender's or its

holding company, as the case may be, policies with respect to capital adequacy)

(the foregoing being hereinafter referred to as "CAPITAL ADEQUACY EVENTS"),

then, upon demand by Lender, Borrower shall pay to Lender on behalf of any such

Lender, from time to time, such additional amount or amounts as will compensate

Lender for any such reduction suffered.

(e) Payment of Amounts Due under Section 2.5. Any amount

payable by Borrower under Section (a) or (d) hereof shall be paid to Lender

within five (5) days of receipt by Borrower of a certificate signed by an

officer of Lender setting forth the amount due and the basis for the

determination of such amount, which statement shall be conclusive and binding

upon Borrower, absent manifest error. Failure on the part of Lender to demand

payment from Borrower for any such amount attributable to any particular period

shall not constitute a waiver of Lender's right to demand payment of such amount

for any subsequent or prior period. Lender shall use reasonable efforts to

deliver to Borrower prompt notice of any event described in Section (a) or (d)

hereof and of the amount to be paid under this Section (e) as a result thereof;

provided, however, any failure by Lender to so notify Borrower shall not affect

Borrower's obligation to make the payments to be made under this Section (e) as

a result thereof. All

<PAGE>

amounts which may become due and payable by Borrower in accordance with the

provisions of this Section (e) shall constitute additional interest hereunder

and shall be secured by this Agreement and the other Loan Documents."

2.6 COMMITMENT FEE.

(a) EXISTING INVENTORY LOAN COMMITMENT FEE. Borrower

acknowledges and agrees that a Commitment Fee of $100,000 was due and payable

exclusively to Lender in connection with the Existing Inventory Loan and Lender

acknowledges receipt and payment of such Commitment Fee.

(b) NEW INVENTORY LOAN COMMITMENT FEE. Borrower

acknowledges and agrees that a Commitment Fee of $80,000 shall be due and

payable exclusively to Lender in connection with the New Inventory Loan, and

that such Commitment shall be payable by Borrower to Lender on the date of the

initial Advance of the New Inventory Loan.

2.7 LOAN TERM. The term of the Loan shall terminate on March 31,

2007.

2.8 MAXIMUM OBLIGATION OF LENDER UNDER THE LOAN, THE EXISTING

CREDIT FACILITY AND THE ADDITIONAL CREDIT FACILITY. 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 Existing

Inventory Loan, the New Inventory Loan, the Existing Credit Facilities or the

Additional Credit Facility, Lender shall not be obligated to fund any Advance

hereunder, which when taken together with the Loans or Advances made by Lender,

on its own behalf as Lender (and as opposed to Advances required to be made by

Lender's participants and co-lenders under the Existing Credit Facilities), to

the Borrower under this Agreement, the Original Loan Agreement, the Existing

Credit Facilities and the Additional Credit Facility, would cause the aggregate

amount of such Loans and Advances by Lender, on its own behalf, to Borrower to

exceed a maximum aggregate amount of: (i) prior to August 31, 2004-$56,996,300

and (ii) after August 31,2004 and prior to the Final Maturity Date-$54,996,300.

2.9 SUSPENSION OF ADVANCES.

(a) Suspension of Sales. If any stay, order, cease and

desist order, injunction, temporary restraining order or similar judicial or

nonjudicial sanction shall be issued limiting or otherwise materially adversely

affecting any Interval sales activities, other business operations in respect of

the Resorts, or the enforcement of the remedies of the Lender hereunder, then,

in such event, the Lender shall have no obligation to make any Advances

hereunder: (i) in respect of Intervals which are the subject of any stay, order,

cease and desist order, injunction, temporary restraining order or similar

judicial or nonjudicial sanction has been issued until the stay, order, cease

and desist order, injunction, temporary restraining order or similar judicial or

nonjudicial sanction has been lifted or released to the satisfaction of the

Lender and (ii) in respect of Intervals at any Resort if: (x) the stay, order,

cease and desist order, injunction, temporary restraining order or similar

judicial or nonjudicial sanction in question has not been lifted or released to

the satisfaction of the Lender within sixty (60) days of its issuance and (y)

there is a reduction in the total number of sales of Intervals by the Borrower

in any Loan Year of more than twenty percent (20%) from the total number of

sales of Intervals in the immediately preceding Loan Year.

<PAGE>

(b) Change in Control. If there shall occur a change,

singly or in the aggregate, of more than fifty percent (50%) of the executive

management of Borrower as described in Schedule 2.9(b) hereto, Lender shall have

no obligation to make any Advances hereunder, unless within thirty (30) days

prior thereto Borrower provides Lender with written information setting forth

the replacement executive management personnel of Borrower together with a

description of those Persons' experience, ability and reputation, and Lender,

acting in good faith, determines that the replacement management personnel's

experience, ability and reputation is equal to or greater than that of Borrower

as set forth on Schedule 2.9(b). Notwithstanding the foregoing, the makeup of

the Borrower's Board of Directors may be altered in accordance with the Bond

Holder Exchange Documents, provided that Lender shall have no obligation to make

any Advances hereunder if more than two (2) of the five (5) Board of Directors'

positions are controlled by the Bond Holders.

of Default. Lender shall not be obligated to fund any Advance hereunder if: (i)

Borrower shall fail 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) a Default or Event of Default shall have occurred and be

continuing.

2.10 RELEASE OF INTERVALS FROM INVENTORY. Upon written request of

the Borrower, and provided that no Event of Default shall have occurred and be

continuing hereunder, Lender shall release from the Collateral, one or more

Intervals subject to the following conditions: (i) payment by Borrower to Lender

at the time of such release of the Release Price for each such Interval and (ii)

the remaining Collateral satisfies the Required Retail Value.

2.11 LIMITATIONS ON ADVANCES WITH RESPECT TO OAK N' SPRUCE RESORT.

Notwithstanding anything herein to the contrary, the Lender shall be under no

obligation to make Advances in respect of Intervals from Oak N' Spruce Resort if

any such Advance, together with any prior Advances made under this Loan

Agreement, the Original Loan Agreement, the Additional Credit Facility and/or

the Existing Credit Facilities, would exceed, in the aggregate, $32,000,000.00,

subject to Section 4.5(c)(xvi).

SECTION 3 -- COLLATERAL GRANT OF SECURITY INTEREST

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 as set forth below). To

further secure the payment and performance of the Obligations, Borrower shall

also execute and deliver to Lender: (i) the Land Mortgages, granting Lender a

first priority mortgage lien on the Land and (ii) the Additional Resort

Collateral Mortgages 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

Assignments granting Lender a first priority security interest on that portion

of the Additional Resort Collateral consisting of personal property; (2) the

Stock Pledge Agreement granting Lender a first priority security interest in the

Silverleaf Finance I, Inc. Stock; (3) the Amended Standby Management Agreement

Assignment, assigning to Lender, all of Borrower's right, title and interest in

the

<PAGE>

Amended Standby Management Agreement; and (4) the Silverleaf Finance II Stock

and Subordinated Note Pledge Agreement 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:

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 all 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, the Existing Credit Facilities and the Sovereign

Facility.

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 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 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 Sovereign Facility" shall mean the Notes Receivable and

related mortgages exclusively assigned to Sovereign in connection with an

advance under its loan documents.

3.2 FINANCING STATEMENTS. Borrower agrees, at its own expense, to

execute the financing statements provided for by the Code together with any and

all other instruments or documents and take such other action as may be required

to perfect and to continue the perfection of Lender's security interests in the

Collateral and, unless prohibited by law, Borrower hereby authorizes Lender to

execute and file any such financing statements on the Borrower's behalf.

3.3 INSURANCE. Borrower shall maintain insurance coverage on the

Resorts and the Collateral in accordance with Section 7.1(d) hereof.

<PAGE>

3.4 SUBSTITUTION OF INVENTORY. Lender agrees that Borrower may,

from time to time during the Term hereof, replace any Interval or Intervals by

granting to Lender a first mortgage Lien on a new Interval or Intervals owned by

the Borrower at an Eligible Resort. In granting to Lender a first mortgage Lien

on any such new Interval or Intervals, Borrower shall comply with the document

delivery and recordation requirements set forth in Section 4 of this Agreement

and Borrower shall deliver to Lender its written certification that the Retail

Value of the Inventory after any such substitution, is equal to or greater than

the Required Retail Value and satisfies the Loan to Value Ratio. In connection

with any such replacement of Inventory under this Section 3.4 or Section 2.4(b)

hereof, Borrower may propose to Lender that one or more additional time-share

plans and projects owned and operated by Borrower be included among the Eligible

Resorts . Any such proposal will be in writing, and will be accompanied or

supported by the due diligence and supporting Borrower, Affiliate, project,

financial and related information identified in Section 4 hereto, and such other

information as Lender may require. Borrower will reasonably cooperate with

Lender's underwriting and due diligence, and Borrower will be responsible for

payment upon billing for Lender's out-of-pocket expenses in connection

therewith. Subject to Lender's satisfactory underwriting and due diligence

review, including satisfaction of the conditions in Section 4 and Section 5

hereof as they relate to such additional time-share resorts, Lender may, but

shall not be required to, approve one or more such additional time-share

resorts, including future phases or condominiums in an Existing Eligible Resort,

as an Eligible Resort. Subject in each instance to Lender's acceptable

underwriting and due diligence review, and Lender's prior written approval, any

project as may be approved by Lender after the Closing Date, if any, is

hereinafter referred to singly as an "ADDITIONAL ELIGIBLE RESORT" and

collectively as the "ADDITIONAL ELIGIBLE RESORTS."

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 Sovereign Facility, Lender's security interest in the

collateral securing such facility 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 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)

<PAGE>

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.

3.6 INTENTIONALLY OMITTED.

3.7 SECURITY INTEREST IN ALL PLEDGED NOTES RECEIVABLE. Lender

shall have a continuing security interest in all of the Pledged Notes

Receivable, including all Notes Receivable in the Ineligible Note Portfolio and

any Notes Receivable pledged to Sovereign 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 Tranche A 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 in the

Ineligible Note Portfolio. 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, for itself and as agent for Sovereign, all original Notes

Receivable comprising the Ineligible Note Portfolio and to the extent not

previously delivered to Lender, the documents listed in Section 5.1(b) of the

Tranche A 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.

To perfect the security interest of Lender in the Ineligible Note

Portfolio, Borrower agrees, subject to Lender's prior approval, to execute and

cause to be filed, at Borrower's sole cost and expense, UCC-1 financing

statement(s) with the appropriate state and local governmental authorities as

requested by Lender. Borrower also shall execute and deliver in escrow to

Lender, for itself and as agent on behalf of Sovereign, an assignment of

Mortgages (the "ASSIGNMENT(S) OF MORTGAGES") and as approved by Lender and

Sovereign at their sole and absolute discretion, assigning equally to Lender and

Sovereign all of Borrower's rights, title and interests in each and all of the

Mortgages relating to the Notes Receivable in the Ineligible Note Portfolio.

Borrower further agrees to promptly execute and deliver modifications or

additional Assignments of Mortgages requested by Lender and Sovereign in order

to continue the security interests of Lender and Sovereign in the Ineligible

Note Portfolio. Borrower acknowledges and agrees that upon an Event of Default,

Lender, or a designee as designated by Lender and Sovereign pursuant to the

terms of the Intercreditor Agreement, shall have the right to automatically

record, at Borrower's sole cost and expense, all such Assignments of Mortgages

executed by Borrower and delivered to Lender in accordance with the terms of

this Section 3.7.

SECTION 4 -- CONDITIONS PRECEDENT TO THE CLOSING

4.1 CONDITIONS PRECEDENT. The obligation of Lender to enter into

this Agreement and to fund the initial Advance shall be subject to the

satisfaction of each of the following conditions precedent, in addition to all

of the conditions precedent set forth elsewhere in the Loan Documents:

<PAGE>

(a) REPRESENTATIONS, WARRANTIES, COVENANTS AND

AGREEMENTS. The representations and warranties contained in the Loan Documents

are and shall be true and correct in all respects, and all covenants and

agreements have been complied with and correct in all respects, and all

covenants and agreements to have been complied with and performed by Borrower

shall have been fully complied with and performed to the satisfaction of Lender.

(b) NO PROHIBITED ACTS. Borrower shall not have taken any

action or permitted any condition to exist that would have been prohibited by

any provision of this Agreement or the Loan Documents.

heretofore delivered by Borrower to Lender with respect to the Existing Resorts,

including information and documents delivered in connection with the Existing

Credit Facilities and/or the Additional Resort Facility, remain true and correct

in all respects.

(d) APPROVAL OF DOCUMENTS PRIOR TO CLOSING DATE. Borrower

has delivered to Lender (with copies to Lender's counsel), at least fifteen (15)

Business Days prior to the Closing Date, and Lender has reviewed and approved,

at least five (5) Business Days prior to the Closing Date, the form and content

of all of the items specified in Section 4.1(d)(i) through (vi) 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 the

Loan or 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, unless expressly stated to be an obligation

and expense of Lender. Lender shall have the right of prior approval of any

Person responsible for preparing a Submission ("PREPARER") and may disapprove

any Preparer in its sole discretion, for any reason, including without

limitation, that Lender believes that the experience, skill, reputation or other

aspect of the Preparer is unsatisfactory in any respect. All Submissions

required pursuant to this Agreement shall be addressed to Lender and include the

following language: "THE UNDERSIGNED ACKNOWLEDGES THAT TEXTRON FINANCIAL

CORPORATION IS RELYING ON THE WITHIN INFORMATION IN CONNECTION WITH ITS

DETERMINATION TO MAKE A LOAN TO SILVERLEAF RESORTS, INC. IN CONNECTION WITH THE

SUBJECT COLLATERAL."

(i) A certificate in the form attached as

Exhibit A, to be dated as of the Closing Date and signed by

the president, vice president, or secretary of the Borrower,

certifying that the conditions specified in Sections (a), (b)

and (c) above are true;

(i) Copies of any amendments to the articles of

incorporation of Borrower not previously delivered to the

Lender, certified to be true and complete by Borrower and the

Secretary of State of the State of Texas and a current

certificate of good standing for Borrower, and copies of any

amendments to the by-laws of Borrower not previously delivered

to the Lender, certified to be true, correct and complete by

the secretary or assistant secretary of Borrower;

<PAGE>

(iii) a certificate of the Secretary of the

Borrower certifying the adoption by the Board of Directors of

the Borrower of a resolution authorizing Borrower to enter

into and execute this Agreement, the Note, and the other Loan

Documents, to borrow the Loan from Lender, and to grant to

Lender a first priority security interest in and to the

Collateral;

(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 the Agreement, the Note and the

AGREEMENTS / CONTRACTS

CLAUSES

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