CONSOLIDATED, AMENDED AND RESTATED LOAN, SECURITY AND AGENCY AGREEMENT

Ex. 10.1

CONSOLIDATED, AMENDED AND RESTATED

among
SILVERLEAF RESORTS, INC.
(as Borrower)

and
THE PARTIES WHICH HEREAFTER EXECUTE THIS AGREEMENT
(as Lenders)

and
TEXTRON FINANCIAL CORPORATION
(as Lender and Facility and Collateral Agent)

As of August 5, 2005

CONSOLIDATED, AMENDED AND RESTATED

      THIS CONSOLIDATED, AMENDED AND RESTATED LOAN, SECURITY AND AGENCY AGREEMENT , dated as of August 5, 2005, entered into by and among SILVERLEAF RESORTS, INC. (as “ Borrower ”), the parties, including TEXTRON FINANCIAL CORPORATION (“ TFC ”), a Delaware corporation, which execute and deliver this Agreement in their respective capacities as lenders hereunder (collectively, the “ Lenders ” and each individually, a “ Lender ”) and TEXTRON FINANCIAL CORPORATION as facility agent and collateral agent (“ Agent ”).

W I T N E S S E T H :

     WHEREAS, Borrower and TFC entered into an Amended and Restated Loan, Security and Agency Agreement (Tranche A), dated as of April 30, 2002, as amended to date (the “ Tranche A Loan Agreement ”), pursuant to which the Borrower executed an Amended and Restated Secured Promissory Note in the original principal amount of $56,894,400.00, dated April 30, 2002, in favor of TFC (the “ Tranche A Note ”);

     WHEREAS, Borrower and Lenders entered into an Amended and Restated Loan, Security and Agency Agreement (Tranche B), dated as of April 30, 2002, as amended to date (the “ Tranche B Loan Agreement ”), pursuant to which Borrower executed: (i) an Amended and Restated Secured Promissory Note in the original principal amount of $40,305,200.00, dated April 30, 2002, in favor of TFC; (ii) an Amended and Restated Secured Promissory Note in the original principal amount of $7,899,500.00, dated April 30, 2002, in favor of Webster Bank, currently known as Webster Bank, National Association; and (iii) a Secured Promissory Note in the original principal amount of $7,899,500.00, dated April 30, 2002, in favor of Bank of Scotland (singly and collectively the “ Tranche B Note ”);

     WHEREAS, Borrower and TFC entered into an Amended and Restated Loan and Security Agreement (Tranche C), dated as of April 17, 2001, as amended to date (the “ Tranche C Loan Agreement ”, collectively with the Tranche A Loan Agreement and the Tranche B Loan Agreement, the “ Original Loan Agreement ”), pursuant to which Borrower executed an Amended and Restated Secured Promissory Note in the original principal amount of $8,060,000.00, dated April 30, 2002, in favor of TFC (the “ Tranche C Note ”, collectively with the Tranche A Note and the Tranche B Note, the “ Original Note ”);

     WHEREAS, the Lenders and Borrower have agreed to enter into this Agreement, as such term is hereafter defined, to consolidate, amend and restate the: (i) Tranche A Loan Agreement; (ii) Tranche B Loan Agreement; and (iii) Tranche C Loan Agreement;

     WHEREAS, pursuant to this Agreement, the Original Note will be replaced by a Consolidated, Amended and Restated Secured Promissory Note or Notes in the aggregate principal amount of $100,000,000.00 in favor of Agent, as agent for each of the Lenders (singly and collectively the “ Note ”);

     WHEREAS, in connection with the Loans to be made by Lenders pursuant to this Agreement, Textron Financial Corporation has agreed to act as facility agent and collateral agent for the other Lenders and to perform such duties with respect to the Loans as are expressly set forth herein;

     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 to this Agreement, intending to be legally bound, agree as follows:

Section 1-Definition Of Terms

     Capitalized terms used in this Agreement are defined in this Section 1. The definitions include the singular and plural forms of the terms defined.

     (a) 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 3.6 hereof.

     (b) Advance . A portion of the proceeds of the Loans advanced from time to time by Lenders to Borrower in accordance with the terms of this Agreement.

     (c) Affiliate . Any party controlled by, controlling, or under common control with, Borrower.

     (d) Agreement . This Consolidated, Amended and Restated Loan, Security and Agency Agreement by and among Borrower, Agent and each Lender which executes this Agreement (including the Exhibits and Schedules to it), as it may be amended from time to time.

     (e) Assignment of Notes Receivable and Mortgages . The term “Assignment of Notes Receivable and Mortgages” shall mean a recordable Collateral Assignment of Notes Receivable and Mortgages, in the form attached hereto as Exhibit G, made by Borrower in favor of Agent, as collateral agent for each Lender, evidencing the assignment to Agent, as collateral agent for each Lender, of all of the Pledged Notes Receivable and Mortgages.

     (f) Backup Servicing Agreement . Shall mean that certain Backup Servicing Agreement dated as of April 10, 2001, as amended to date.

     (g) Borrowing Base . With respect to each Eligible Note Receivable, pledged to Agent hereunder in connection with each Advance from and after the Effective Date, an amount equal to seventy-five percent (75%) of the remaining principal balance of each such Eligible Note Receivable.

     (h) Closing Date . The term “Closing Date” shall mean the date hereof.

     (i) Code . The Uniform Commercial Code in force in the State of Rhode Island as amended from time to time.

     (j) Collateral . Collectively, all now owned or hereafter acquired right, title and interest of Borrower, in all of the following:

(i) Pledged Notes Receivable and all proceeds of or from them;

(ii) Mortgages and all proceeds of or from them;

(iii) Documents, instruments, accounts, chattel paper, and general intangibles relating to the Pledged Notes Receivable and the related Mortgages;

(iv) All collateral under the Inventory Loan;

(v) The Silverleaf Finance II Stock;

(vi) The Silverleaf Finance II Subordinated Note;

(vii) All books, records, reports, computer tapes, disks and software relating to the Collateral; and

(viii) 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.

     (k) Commitment . The term “Commitment” shall refer singly to the obligation of each Lender to make a Loan or Loans to Borrower in an aggregate amount not to exceed the Pro Rata Percentage for each Lender of each Advance and collectively to all Loans to be made by all Lenders as provided herein. The Commitment as of the Closing Date is set forth on Exhibit A hereto, and may from time to time be increased by Agent and Lender upon written notice to Borrower. The maximum aggregate Commitment of the Lenders hereunder shall be $100,000,000.00.

     (l) 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.

     (m) Custodian . Wells Fargo Bank, National Association having an address of 751 Kasota Ave, MAC# N9328-011, Minneapolis, MN 55414, or such other custodial agent as may be approved by Agent in writing from time to time. Custodian shall be Lender’s agent for the purpose of maintaining possession of all present and future Collateral documents described in Section 3.5 hereof.

     (n) Custodial Agreement . The Custodial and Collateral Agency Agreement, dated as of January 13, 2005 by and among Agent, as Agent for each Lender, Borrower and Custodian, pursuant to which the Custodian is to maintain possession of all present and future Collateral documents described in Section 3.5 hereof, or any custodial agreement entered into as a replacement of such agreement..

     (o) Debtor Relief Laws . Any applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar law, proceeding or device providing for the relief of debtors from time to time in effect and generally affecting the rights of creditors.

     (p) Declaration or Declarations . With respect to each Resort, the applicable Declaration or Declarations described on Schedule 1.1(p) attached hereto.

     (q) Declarant Rights . Shall mean the rights of the declarant in the Declaration for each Resort.

     (r) Default . An event or condition the occurrence of which immediately is or, with a lapse of time or the giving or notice or both, becomes an Event of Default.

     (s) Default Rate . The term “Default Rate” shall have the meaning given to such term in the Note.

     (t) Division or Commission . The governmental authority of each state in which a Resort is located, having jurisdiction over the establishment and operation of the Resorts in question and the sale of Intervals at such Resort.

     (u) 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.

     (v) Effective Date . The term “Effective Date” shall have the meaning given in Section 14.1 hereof.

     (w) Eligible Notes Receivable . Those Pledged Notes Receivable which satisfy each of the following criteria:

(i) Borrower shall be the sole payee;

(ii) it arises from a bona fide sale by Borrower of one or more Intervals;

(iii) the Interval sale from which it arises shall not have been cancelled by Purchaser, and any statutory or other applicable cancellation or rescission period shall have expired and the Interval sale is otherwise in compliance with this Agreement;

(iv) it is secured by a Mortgage on the purchased Interval;

(v) principal and interest payments on it are payable to Borrower in legal tender of the United States;

(vi) payments of principal and interest on it are payable in equal monthly installments;

(vii) it shall have an original term of no more than one hundred twenty (120) months;

(viii) a cash down payment has been received from Purchaser or the maker in an amount equal to at least ten percent (10%) of the actual purchase price of each Interval, and Purchaser shall have received no cash or other rebates of any kind;

(ix) no monthly installment is more than thirty (30) days contractually past due at the time of an Advance in respect of such Eligible Note Receivable, or more than sixty (60) days contractually past due at any time;

(x) the rate of interest payable on the unpaid balance is at least the rate required so that when the Advance is made in respect of such Eligible Note Receivable the average interest rate on all Eligible Notes Receivable in respect of which Advances are outstanding shall not be less than twelve and one-half percent (12.5%) per annum at any time;

(xi) Purchaser of the related Interval has immediate access, for the timeshare “unit week” related to such purchase, to the Interval described in the Mortgage securing such Eligible Note Receivable, which Interval has been completed, developed, and furnished in accordance with the specifications provided in the Purchaser’s purchase contract, public offering statement and other Timeshare Documents; and Purchaser has, subject to the terms of the Declaration, purchase contract, public offering statement and other Timeshare Documents, complete and unrestricted access to the related Interval and the Resort;

(xii) neither Purchaser of the related Interval or any other maker of the Note is an Affiliate of, or related to, or employed by Borrower;

(xiii) Purchaser or other maker has no claim against Borrower and no defense, set-off or counterclaim with respect to the Note Receivable;

(xiv) the maximum remaining principal balance of any such Note Receivable shall not exceed $35,000 and the total maximum remaining principal balance of the Notes Receivable executed by any one Purchaser or other maker shall not exceed $60,000 in the aggregate (or such greater amount as may be approved in writing in advance by Agent);

(xv) it is executed by a U.S. or Canadian resident; provided, however, that no more than ten percent (10%) of the outstanding principal balance of all Eligible Notes Receivable shall at any time be comprised of Notes Receivable executed by Canadian residents, and, to the extent such outstanding principal balance of such Notes exceeds ten percent (10%), they shall not be considered Eligible Notes Receivable;

(xvi) the original of such Note Receivable has been endorsed to Agent and delivered to the Custodian as provided in this Agreement, and the terms thereof and all instruments related thereto shall comply in all respects with all applicable federal and state laws and the regulations promulgated thereunder;

(xvii) the Unit in which the timeshare Interval being financed or evidenced by such Note Receivable is located, shall not be subject to any Lien which is not previously consented to in writing by Agent; and

(xviii) If the loan is a newly originated Eligible Note Receivable which is replacing an existing Eligible Note Receivable pledged as Collateral under the Agreement and the proceeds have been used to finance the purchase of an Interval which is being upgraded by the Purchaser to a more expensive Interval:

(1) the principal balance of the existing Eligible Note Receivable which is being upgraded may still be included for purposes of calculating the Borrowing Base for a period of time expiring on the earlier to occur of (i) the 31st day after the consumer documents effecting the upgrade have been executed or (ii) the date on which any payment on such Eligible Note Receivable becomes thirty (30) or more days past due;

(2) on or before the second business day after the expiration of the statutory rescission period in connection with any consumer documents executed effecting any upgrade involving an Eligible Note Receivable and in any event within ten (10) days of such upgrade, the Borrower shall deliver to the Agent or its designee the original of the new promissory note, comparable instrument or installment sale contract executed in connection with such upgrade duly endorsed in blank by the Borrower and the Borrower will cause all payments made with respect to such new promissory

note, comparable instrument or installment sale contract to be forwarded to the lockbox; and

(3) any new upgraded Note Receivable involving a prior Eligible Note Receivable shall only be included as part of the Borrowing Base if the prior Eligible Note Receivable has been removed from the Borrowing Base and the new upgraded Note Receivable satisfies all conditions for an Eligible Note Receivable.

     (x) Encumbered Intervals . The Intervals subject to the Mortgages.

     (y) 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 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 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.

     (z) Environmental Indemnification Agreement . The term “Environmental Indemnification Agreement” shall mean the Environmental Indemnification Agreement made by Borrower to Lenders pursuant to this Original Loan Agreement, as the same may be amended from time to time.

     (aa) Exchange Company . Resort Condominiums International, Inc. (“RCI”).

     (bb) Event of Default . Defined in Section 8.1 of this Agreement.

     (cc) Final Maturity Date . The term “Final Maturity Date” shall mean the earlier of (a) June 30, 2011 or (b) the weighted average maturity date of the Pledged Notes Receivable pledged as Collateral as of the end of the Revolving Loan Term, as determined by the Agent in its reasonable discretion.

     (dd) Financial Statements . The tax returns and balance sheets and statements of income and expense of Borrower, and the related notes and schedules delivered by Borrower to Agent prior to the date of this Agreement and provided for in Section 4.4(c) of this Agreement; and quarterly and annual financial statements and reports required to be provided to Lenders pursuant to Section 7.1(h).

     (ee) 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.

     (ff) 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.

     (gg) Interest Rate . The Interest Rate on the 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 one percent (1.0%) per annum, provided, however, that at no time shall the Interest Rate be less than six percent (6.0%) per annum.

     (hh) Interval . With respect to each Resort the undivided fractional fee interval ownership interest as a tenant-in-common (sometimes referred to in the Timeshare Documents as a vacation ownership interest, condoshare interest, or condoshare week) in a Unit 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 to use 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 to use 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.

     (ii) Inventory Loan . The term “Inventory Loan” shall mean that certain $21,000,000 time share interval inventory loan provided by TFC to Borrower

pursuant to that certain Amended and Restated Loan and Security Agreement dated as of March 5, 2004, as amended to date, (the “Inventory Loan Agreement”). The terms “Existing Inventory Loan” and “New Inventory Loan” shall have the meanings given in the Inventory Loan Agreement.

     (jj) Inventory Mortgage or Inventory Mortgages . The term “Inventory Mortgage” or “Inventory 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, as applicable, executed and delivered by Borrower to Agent encumbering all of the right, title and interest of the Borrower in the Intervals and Common Elements, and related or appurtenant easement, access and use rights and benefits, that is collateral under the Inventory Loan.

     (kk) 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.

     (ll) Loan or Loans . The terms “Loan” and “Loans” mean, as the context requires, singly each loan and collectively all loans made by TFC to Borrower prior to the Effective Date pursuant to the Original Loan Agreement. The term “Loan” shall also mean, as the context requires, collectively all Loans made to Borrower hereunder.

     (mm) 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 Note;

(iii) The Environmental Indemnification Agreement;

(iv) The Assignment of Notes Receivable and Mortgages;

(v) Borrower’s Certificate and Request for Advance;

(vi) The Lockbox Agreement;

(vii) The Custodial Agreement;

(viii) The Stock and Subordinated Note Pledge Agreement;

(ix) The Standby Servicing Agreement Assignment;

(x) 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 required to be filed pursuant to the Code; and

(xi) Other Items ; Such other agreements, documents, instruments, certificates and materials as Agent may request to evidence the Obligations; to evidence and perfect the rights and Liens and security interests of Agent, as agent for Lenders, 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.

     (nn) Loan Year . The period commencing on the Effective Date through the last day of the next full twelve calendar month period and each successive twelve calendar month period thereafter during the Loan Term.

     (oo) Lockbox Agent . JP Morgan Chase Bank, a New York banking association having a place of business at 2200 Ross Avenue, Dallas, Texas 75201, or such other financial institution as may be approved by Agent in writing from time to time.

     (pp) Lockbox Agreement . The Lockbox and Servicing Agreement, dated as of December 16, 1999, by and among Borrower, Lenders, Agent, Servicing Agent and Lockbox Agent, pursuant to which the Lockbox Agent is to provide lockbox, reporting and related services and is to provide for the receipt of payments on the Notes Receivable and the disbursement of such payments to Agent.

     (qq) Mandatory Prepayment . Any prepayment required by Section 2.5(b) of this Agreement.

     (rr) 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.

     (ss) Mortgage . A properly recorded, first priority mortgage, deed of trust, deed to secure debt, assignment of beneficial interest or other security instrument, as applicable, executed and delivered by each Purchaser to Borrower, securing a Pledged Note Receivable and encumbering all of the right, title and interest of such Purchaser in the related Encumbered Interval and Common Elements, and related or appurtenant easement, access and use rights and benefits. Agent acknowledges that assignments of beneficial interest executed by Purchasers of Intervals at Oak N’ Spruce Resort after July 2004 will not be recorded.

     (tt) Net Securitization Cash Flow . 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.

     (uu) Note . The term “Note” shall have the meaning given in the recitals hereto.

     (vv) Note Receivable . A promissory note executed in favor of Borrower in connection with a Purchaser’s acquisition of an Interval.

     (ww) Obligations . All amounts due or becoming due to each Lender in respect of the Loan or Loans 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 a Lender or advanced to or on behalf of Borrower by a Lender pursuant to any of the Loan Documents, and the prompt and complete payment and performance by Borrower of all obligations, indebtedness and liabilities pursuant to this Agreement or any of the Loan Documents or otherwise

     (xx) Operating Contract or Operating Contracts . As defined in Section 6.20.

     (yy) 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 Agent, and other similar costs.

     (zz) Participant . Participant shall mean, singly and collectively, any bank or other entity, which is indirectly or directly funding any Lender with respect to the Loan, in whole or in part, including, without limitation, any direct or indirect assignee of, or participant in, the Loan.

     (aaa) Payment Authorization Agreement . Pre-authorized electronic debit agreement by a Purchaser for payment of a Note Receivable.

     (bbb) Person . An individual, partnership, corporation, limited liability company, trust, unincorporated organization, other entity, or a government or agency or political subdivision thereof.

     (ccc) Pledged Notes Receivable . Any Note Receivable which at any time has been pledged to Agent on behalf of Lenders by Borrower pursuant to this Agreement or any of the Loan Documents.

     (ddd) Prescribed Laws . The term “Prescribed Laws” shall mean, collectively, (a) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107 56) (the USA PATRIOT Act), (b) Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With

Persons Who Commit, Threaten to Commit, or Support Terrorism, (c) the International Emergency Economic Power Act, 50 U.S.C. § 1701 et seq., (d) the Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and (d) all other Legal Requirements relating to money laundering or terrorism, and, in each case, any Executive Orders or regulations promulgated under any such laws.

     (eee) 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 Effective Date.

     (fff) 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 nonexistence 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.

     (ggg) Property or Properties . Any interest in any kind of property or asset, whether real, personal or mixed, tangible or intangible.

     (hhh) Pro Rata Percentage . The applicable percentage of the Loan that each Lender has agreed to make to Borrower pursuant to this Agreement as set forth in Exhibit A hereto, as such percentage may from time to time be amended by Agent and the applicable Lender.

     (iii) Purchase Price . The total purchase price of a timeshare Interval, as set forth in the Timeshare Documents and Note Receivable relating to the purchase of such Interval.

     (jjj) Purchaser . Any Person who purchases one or more Intervals.

     (kkk) Quarterly Financial Report . Individually and collectively, as applicable, the financial reports delivered in accordance with Section 7.1(h)(i).

     (lll) 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; (L) Silverleaf’s Seaside Resort, Galveston County, Texas; (M) Orlando Breeze Resort, Polk County, Florida (also sometimes individually and collectively referred to herein as the “Existing Resorts”) and

     (ii) subject to Agent’s prior written approval and satisfaction by Borrower of the conditions precedent set forth in Sections 3.6 and 4.4 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.

     (mmm) Revenues . Shall mean all proceeds from the sale of Intervals, regardless of whether such proceeds are in the form of cash or Notes Receivable.

     (nnn) Revolving Loan Term . Shall mean the period commencing on the Effective Date and ending on June 30, 2008.

     (ooo) Security . Shall have the same meaning as in Section 2(1) of the Securities Act of 1933, as amended.

     (ppp) Servicing Agent . Agent’s exclusive agent, which shall be such Person or Persons designated by Borrower and approved by Agent in its sole discretion, for the purposes of billing and collecting amounts due on account of the Pledged Notes Receivable, providing reports pursuant to the Lockbox Agreement and performing other servicing functions not performed by the Lockbox Agent. Borrower shall be the Servicing Agent until: (i) an Event of Default shall have occurred and Agent replaces Borrower as Servicing Agent as provided in Section 9.1 (i); or (ii) Agent elects to appoint the Standby Servicer in accordance with Section 10.14 hereof.

     (qqq) Silverleaf Club . Shall mean Silverleaf Club, a Texas non-profit corporation.

     (rrr) 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.

     (sss) 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.

     (ttt) Silverleaf Finance II Subordinated Note . Shall mean the Subordinated Note, dated as of December 19, 2003, payable by SPV to the order of Silverleaf Resorts, Inc., and any other promissory note issued in replacement or restatement thereof, or otherwise issued to evidence SPV’s obligation to pay the deferred purchase price of Receivables under the Developer Transfer Agreement which is part of

the Silverleaf Finance II Documents, in each case as amended or otherwise modified from time to time, and all proceeds of the foregoing.

     (uuu) Silverleaf Finance II Stock and Subordinated Note Pledge Agreement . Shall mean the agreement pursuant to which the Silverleaf Finance II Stock and the Silverleaf Finance II Subordinated Note is pledged to Agent, as agent for each Lender, as security for the Loan.

     (vvv) SPV . Shall mean Silverleaf Finance II, Inc., a Delaware corporation.

     (www) SPV Assets . Shall mean all assets sold or conveyed by Borrower to the SPV pursuant to the Silverleaf Finance II Documents.

     (xxx) Standby Servicer . Shall mean the Person selected by Agent to act as standby servicer in accordance with this Agreement. The current Standby Servicer is Concord Servicing Corporation.

     (yyy) Standby Servicing Agreement . Shall mean the agreement pursuant to which the Standby Servicer shall provide servicing functions with respect to the Pledged Notes Receivable in accordance with Sections 9.1(i) and 10.14 hereof.

     (zzz) Stock and Subordinated Note Pledge Agreement . Shall mean the agreement pursuant to which all issued and outstanding shares of Silverleaf Finance II, 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 II, Inc. Stock”), and the subordinated note evidencing Silverleaf Finance II, Inc.’s obligation to pay the deferred purchase price of the receivables under the Silverleaf Finance II Documents are pledged to Agent, as agent for each Lender, as security for the Loan.

     (aaaa) Survey . A plat or survey of the Resorts prepared by a licensed surveyor acceptable to Agent and in a form acceptable to Agent.

     (bbbb) Term . The period beginning on the Effective Date and ending on the Final Maturity Date.

     (cccc) TFC Conduit Loan . Shall mean that certain loan facility provided by Textron Financial Corporation (TFC) to SPV in accordance with the terms of the Silverleaf Finance II Documents.

     (dddd) 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.

     (eeee) Timeshare Documents . Any registration statement required under any Timeshare Act approving the establishment and operation of the Resorts and the sales of Intervals.

     (ffff) Timeshare Owners’ Association . With respect to each Resort, the applicable not-for-profit corporations described on Schedule 1.1(yyy).

     (gggg) 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, minus (ii) 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, Agent 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.

     (hhhh) 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.

     (iiii) Transfer Account . The account established by Agent to which all Loans by Lenders will be made.

     (jjjj) UCC Financing Statements . The UCC-1 Financing Statements, naming Borrower as debtor and Agent as secured party on behalf of Lenders, heretofore or hereafter filed in connection with the Loans and all amendments thereto.

     (kkkk) 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 Facility Fee . Borrower acknowledges and agrees that a facility fee in the amount of one half percent (0.5%) of the Lenders’ Commitment as set forth on Exhibit A hereto is due and payable to Agent. Borrower acknowledges, agrees and confirms that Lender has earned such facility fee notwithstanding whether the Loan or any portion is funded and further agrees that the facility fee shall be payable by Borrower to Agent from the proceeds of the initial Advance

hereunder. The initial Advance, which shall be in an amount at least equal to the facility fee, shall occur on the date that this Agreement becomes effective, and replaces the Original Loan Agreement.

     Borrower further acknowledges and agrees that upon each increase of the Lenders’ Commitment in accordance with Section 1(k), an additional facility fee in the amount of one half percent (0.5%) of such increase shall be due and payable to Agent. Borrower acknowledges, agrees and confirms that Lender(s) shall have earned such facility fee notwithstanding whether the Loan or any portion is funded and further agrees that such facility fee shall be payable by Borrower from the proceeds of the next Advance after such increase or, if sooner, within 30 days after such increase.

     (a) Lenders . Borrower and TFC agree that no party other than TFC will execute this Agreement in the capacity of Lender without the prior written consent of Borrower.

     (b) Revolving Loan . Upon the terms and subject to the conditions set forth in this Agreement, each Lender agrees severally, at any time and from time to time during the Revolving Loan Term, to make a loan or loans to Borrower, and Borrower may borrow, repay and reborrow during the Revolving Loan Term, in an aggregate amount not to exceed at any time the lesser of each Lender’s Pro Rata Percentage of: (i) the Borrowing Base; or (ii) such Lender’s Commitment as set forth on Exhibit A hereto, which may from time to time be increased by Agent and Lender upon written notice to Borrower.

     (c) Lending Limits . Borrower acknowledges, agrees and confirms that the obligations of all Lenders, including TFC, to make Loans under this Agreement to Borrower is limited to the lesser of: (i) the Borrowing Base or (ii) the maximum aggregate Commitment of $100,000,000.00. Borrower further acknowledges, agrees and confirms that the obligation of each Lender, including TFC, to make loans hereunder to Borrower is limited to: (i) with respect to each Advance hereunder, each Lender’s Pro Rata Percentage of any such Advance hereunder and (ii) with respect to all Advances made hereunder, such Lender’s obligation hereunder shall be limited to its Commitment as set forth on Exhibit A hereto, which may from time to time be increased by Agent and Lender upon written notice to Borrower.

     (d) Making of Loans . Each Loan by a Lender shall be made ratably in accordance with each Lender’s respective Pro Rata Percentage, provided, however, that the failure of any Lender to make any required Loan shall not in itself relieve any other Lender of its obligation to make any required Loan hereunder. Likewise, no Lender, including TFC, shall be responsible or liable for the failure of any other Lender to make any Loan required to be made by such other Lender, nor shall any Lender, including TFC, be obligated to make any Loan or Loans in excess of its respective Pro Rata Percentage, but not in excess of its Commitment, in the event that any other Lender fails or refuses to make a Loan or Loans as provided hereunder. As and when additional

Lenders, other than TFC, execute and deliver this Agreement, then (A) such additional Lenders shall be deemed to have simultaneously purchased from each of the other Lenders which has previously executed and delivered this Agreement, a share in such other Lenders’ Loans so that the amount of the Loans of all Lenders shall be pro rata as otherwise set forth above and (B) such other adjustments shall be made from time to time as shall be equitable to insure that the Advances to Borrower are made ratably by each Lender in accordance with its respective Pro Rata Percentage.

          (e) Note Evidencing Borrower’s Obligations . Borrower’s obligations to pay the principal of and interest on the Loan or Loans made by each Lender shall be evidenced by the Note to Agent, as agent for each Lender, which Note shall be dated as of the date hereof and be in the principal amount of $100,000,000.00. The Note will mature on the Final Maturity Date, bear interest as provided in Section 2.3 hereof and be otherwise entitled to the benefits of this Agreement. Notwithstanding the stated principal amount of the Note, the aggregate outstanding principal amount of the Loan at any time shall be the aggregate principal amount owing on the Note at such time. Agent shall and is hereby authorized to record on the grid attached to the Note (or, alternatively, in its internal books and records) the date and amount of each Advance made by Lenders, the interest rate and interest period applicable thereto and each repayment thereof; and such grid or other books and records shall, as between Borrower and each Lender, absent manifest error, constitute prima facie evidence of the accuracy of the information contained therein. Failure by Agent to so record any Advance made by Lenders (or any error in such recordation) or any payment thereon shall not affect the Obligations of Borrower under this Agreement or under the Note and shall not adversely affect Lender’s rights under this Agreement with respect to the repayment thereof. At the election of any Lender, Borrower shall execute and deliver to such Lender a note in a stated principal amount equal to such Lender’s Pro Rata Percentage of the Loan, which such note or notes shall be on the same terms and conditions as provided above and which note or notes shall be included within the definition of “Note” as such term is used herein.

          (f) Notice of Advances .

(i) Upon receipt by Agent from Borrower of a written request for Advance in accordance with Section 5 hereof and Borrower’s satisfaction of the requirements set forth in Section 5 hereof, Agent shall give a written notice (a “ Notice of Borrowing ”) to each Lender, (which Notice of Borrowing shall be given to each Lender not less than two (2) business days prior to the date of the proposed Advance), setting forth: (i) the total amount of the Advance requested by Borrower; (ii) the aggregate amount of all Loans previously made by each respective Lender; (iii) the outstanding principal balance of the Loan; (iv) the current Interest Rate as determined in accordance with Section 2.3 hereof; (v) each such Lender’s Pro Rata Percentage of the requested Advance and (vi) the date on which such Advance is to be made; or

(ii) at its option, the Agent shall provide to each Lender: (A) each month by the close of business on the fifth (5th) business day following receipt by Agent from Borrower, but in no event later than the 30th day of the month: (i) an updated borrowing base report (a “ Borrowing Base Report ”) in the form attached as Exhibit B; and (ii) an updated trial balance and aging report for the Pledged Notes Receivable (a “ Collateral Data Report ”); and (B) by the close of business on the tenth (10th) business day following receipt by Agent from Borrower of the Borrowing Base Report and the Collateral Data Report: (i) a summary of all Advances made by Agent during the immediately preceding month (a “ Summary of Weekly Advances ”); and (ii) a summary report of Advances and repayments or collections for the immediately preceding month and a calculation of the net Lender’s Advance required of such Lender with respect to all Advances made during the immediately preceding month (a “ Lender Advance Report ”).

          (g) Disbursement of Funds .

(i) If notice of Advances is provided in accordance with Section 2.2(g)(i) above, then after receiving a Notice of Borrowing from Agent, each Lender shall, not later than 11:00 a.m., Eastern Standard Time, on the date specified in such Notice of Borrowing on which the proposed Advance is to be made, wire transfer to Agent at the Transfer Account, in immediately available funds, an amount equal to each such Lender’s Pro Rata Percentage of the proposed Advance as set forth in the Notice of Borrowing. Upon Agent’s receipt of funds from each Lender equal to the amount of the requested Advance, and subject to Borrower’s compliance with the terms and conditions of this Agreement, Agent shall disburse the Advance to Borrower by wire transfer of funds as directed in writing by Borrower. If Agent shall not receive funds from any Lender as set forth above, then the amount of the Advance in question shall be automatically reduced by an amount equal to the missing Lender’s Pro Rata Percentage of the Advance in question, and Agent shall, subject to Borrower’s compliance with the terms and conditions of this Agreement, disburse the Advance in the reduced amount to Borrower by wire transfer of funds as directed in writing by Borrower. Agent, in its sole and absolute discretion, may (but shall not be obligated to) make the full amount of the requested Advance available to Borrower prior to the receipt by Agent from one or more Lenders of funds representing such Lender’s or Lenders’ Pro Rata Percentage of the Advance in question. If the funds representing such Lender’s or Lenders’ Pro Rata Percentage of the Advance in question are not received by Agent within two business days of the date of such Advance, Borrower shall immediately, upon demand of Agent, repay such amount to Agent. Nothing herein shall be deemed to relieve any Lender from its obligations hereunder or to prejudice any rights Agent may have against any Lender as a result of any Lender’s failure to make any Loan or Loans as provided herein; or

(ii) If notice of Advances is provided in accordance with Section 2.2(f)(ii)above, then by the close of business on the third (3rd) business day following such Lender’s receipt of the Lender Advance Report, such Lender shall wire transfer to Agent at the Transfer Account, in immediately available funds, the net amount due from such Lender as set forth in the Lender Advance Report. If the funds representing such Lender’s amount of the Advance or Advances in question are not received by Agent within five (5) business days of the date of such Lender’s receipt of the Lender Advance Report, Borrower shall immediately, upon demand of Agent, repay such amount to Agent. Nothing herein shall be deemed to relieve any Lender from its obligations hereunder or to prejudice any rights Agent may have against any Lender as a result of any Lender’s failure to make any Loan or Loans as provided herein.

          2.3 Interest Rate . From and after the Effective Date, the aggregate principal amount of all Advances, that are outstanding from time to time, shall bear interest at the Interest Rate. Each Advance shall bear interest at the Interest Rate as of the date of Agent’s wiring of funds to Borrower through the date of Agent’s receipt of repayment of the Loan (if received by Agent later than 12 noon, Eastern Standard Time, then interest accrual shall be through the next Business Day following such receipt). Interest will accrue daily, and shall be payable monthly in arrears. 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 Agent’s election in its sole discretion, the Loan will bear interest at the Default Rate. Each Lender’s Loan shall bear interest at the Interest Rate or the Default Rate as applicable as of the date funds are received by Agent as provided in Section 2.2(g) through the date of Agent’s wiring of repayment funds to each Lender in accordance with Sections 2.2(g) and 2.4(c).

          2.4 Payments . From and after the Effective Date, Borrower agrees punctually to pay or cause to be paid to Agent, as agent for each Lender all principal and interest due under each Note in respect of the Loans. Borrower shall make the following payments on the Loan:

          (a) Monthly Payments . Borrower shall direct or otherwise cause all makers of all Pledged Notes Receivable to pay all monies due thereunder to the lockbox established pursuant to the Lockbox Agreement, or as otherwise required by Agent. One hundred percent (100%) of the cleared funds collected from the Pledged Notes Receivable each week will be paid to Agent by the Lockbox Agent pursuant to the Lockbox Agreement, and will be applied by Agent first to the payment of costs or expenses incurred by Agent pursuant to this Agreement in creating, maintaining, protecting or enforcing the Liens in and to the Collateral and in collecting any amounts due to any Lender in connection with the Loan (“ Collection Costs ”) and the balance to each Lender in accordance with the applicable percentage of the outstanding principal balance of the Loan that each Lender has made (the “ Pro Rata Payment Percentage ”) as provided in Section 2.6 hereof. Each Lender shall apply each such payment in the following order: (i) to any interest accrued at the applicable Default Rate; (ii) then to interest accrued and payable at the Interest Rate; and (iii) then to outstanding principal. In the event that the cleared funds received by Agent are insufficient to pay the amounts described in aforementioned clauses (i)-(ii), then Borrower shall pay the difference to

Agent on or before the fifth (5th) day of the following month. In the event Borrower receives any payments on any of the Pledged Notes Receivable directly from or on behalf of the maker or makers thereof, Borrower shall receive all such payments in trust for the sole and exclusive benefit of Lenders; and Borrower shall deliver to the Lockbox Agent all such payments (in the form so received by Borrower) as and when received by Borrower, unless Agent shall have notified Borrower to deliver directly to Agent all payments in respect of the Pledged Notes Receivable which may be received by Borrower, in which event all such payments (in the form received) shall be endorsed by Borrower to Agent as agent for Lenders and delivered to Agent promptly upon Borrower’s receipt thereof.

          (b) Final Payment . The entire outstanding principal amount of the Loan, together with all other Obligations hereunder, shall be due and payable on the Final Maturity Date.

          (c) Payments to Lender . Agent may at its sole and absolute discretion either: (i) promptly upon receipt wire transfer to any Lender its Pro Rata Percentage of any payment received from Borrower in accordance with this Section 2.4 or Section 2.5; or (ii) include any Lender’s Pro Rata Percentage of any payment received from Borrower in accordance with this Section 2.4 or Section 2.5 in the Lender Advance Report pursuant to Section 2.2(f)(ii), for transfer to Lender pursuant to 2.2(g).

          2.5 Prepayments .

          (a) Voluntary Prepayments . Except for regular payments of interest and principal as provided hereunder, prepayments, (i) shall not be permitted during the first Loan Year, and (ii) may be made in whole, but not in part, upon five (5) days prior written notice to the Agent at any time after the end of the first Loan Year upon payment of the applicable Prepayment Premium (whether such prepayment results from voluntary payments by Borrower, acceleration, or otherwise); provided, however, that (A) payments or prepayments of Pledged Notes Receivable made by Purchasers who are not directly or indirectly solicited by Borrower to make such prepayment shall not violate this Section 2.5(a), and no Prepayment Premium shall be payable as a result of any such payment by Purchasers; and (B) if at any time the Borrower wishes to release any Pledged Notes Receivable for the purpose of including those Pledged Notes Receivable in a Securitization pooling or similar conduit transaction, and after 30 days’ prior written notice to Agent, Borrower may prepay the principal balance of the Loan in whole or in part, to the extent necessary to cause the then current outstanding unpaid principal balance of the Loan to be equal to or less than the Borrowing Base, and no Prepayment Premium will be due where such prepayment is the result of a Securitization closing, as certified by Borrower to Agent. If Borrower voluntarily prepays the entire Receivables Loan for any reason other than pursuant to a Securitization, such prepayment must be accompanied by full payment of the outstanding balance under the Inventory Loan.

          (b) Mandatory Prepayments .

(i) Overadvances. If at any time the outstanding principal balance of the Loan exceeds the Borrowing Base or the maximum aggregate Commitment, Borrower shall, within five (5) Business Days after notice, either (A) prepay the Loan in an amount necessary to reduce the outstanding principal balance of the Loan to an amount within the lending limits set forth in Section 2.2(c), or (B) pledge and deliver to Lender such additional or replacement Eligible Notes Receivable such that the remaining outstanding principal balance of the Loan is within the lending limits set forth in Section 2.2(c).

(ii) Ineligible Pledged Notes Receivable. If at any time after the expiration of the Revolving Loan Term, Agent determines that any Pledged Notes Receivable which are included in the Borrowing Base, do not qualify as Eligible Notes Receivable (“Ineligible Notes Receivable”), then Borrower shall, within five (5) Business Days after notice, either (A) prepay the Loan in an amount equal to the balance due under such Pledged Note Receivable, or (B) replace the Ineligible Note Receivable with an Eligible Note Receivable having an outstanding aggregate principal balance equal to or in excess of the outstanding principal balance of such Ineligible Note Receivable. The pledge and delivery to Agent as agent for Lenders of additional Eligible Notes Receivable shall comply with the document delivery and recordation requirements set forth in Section 5.1 of this Agreement.

(iii) No Prepayment Premium. No Prepayment Premium shall be due in connection with any mandatory prepayment made in accordance with Sections 2.5(b)(i) or 2.5(b)(ii) above.

          (c) Prepayment Premium . Except as specifically set forth in Section 2.5(a), above, any prepayment of the Loan pursuant to Section 2.5(a) above must be accompanied by a prepayment premium (the “Prepayment Premium”) calculated, as of immediately prior to such prepayment, as follows:

          (d) Prepayment Premium upon Acceleration . If the Loan is accelerated based on an Event of Default prior to the expiration of the first Loan Year, or if Borrower undertakes a voluntary prepayment prior to expiration of the first Loan Year, at Agent’s sole discretion, payments on the Loan must include the Prepayment Premium that would be applicable if prepayment occurred in the second Loan Year.

          2.6 Pro Rata Treatment . Each repayment of principal and interest shall be allocated among Lenders in accordance with their respective Pro Rata Payment Percentage. Each Lender agrees that in computing such Lender’s portion of any Advance to be made hereunder, Agent may, in its discretion, round each Lender’s such Advance to the next higher or lower whole dollar amount. If any Lender shall, through the exercise of a right of banker’s lien, set-off, counterclaim or otherwise, obtain payment with respect to its Loans which results in its receiving more than its Pro Rata Payment Percentage of any payments described above, then (A) such Lender shall be deemed to have simultaneously purchased from each of the other Lenders a share in such other Lender’s Loans so that the amount of the Loans of all Lenders shall be pro rata as otherwise set forth above, (B) such Lender shall immediately pay to the other Lenders their Pro Rata Payment Percentage of the payments otherwise received as consideration for such purchase and (C) such other adjustments shall be made from time to time as shall be equitable to insure that all Lenders share such payments ratably. If all or any portion of any such excess payment is thereafter recovered from Lender which received the same, the purchase provided in this Section 2.6 shall be deemed to have been rescinded to the extent of such recovery, without interest. Borrower expressly consents to the foregoing arrangements and agrees that each Lender so purchasing a portion of another Lender’s loans may exercise all rights of payment (including all rights of set-off, banker’s lien or counterclaim) with respect to such portion as fully as if such Lender were the direct holder of such portion.

          2.7 Maximum Obligation of Textron Financial Corporation Under the Loan and the Inventory Loan . Borrower acknowledges, agrees and confirms that notwithstanding anything to the contrary herein, in any other Loan Document or in any document evidencing or securing the Inventory Loan, TFC, as a Lender, shall not be obligated to fund any Advance hereunder, which when taken together with the loans or advances made by TFC to Borrower under this Agreement and the Inventory Loan, would cause the aggregate amount of such loans and advances by TFC to Borrower to exceed a maximum aggregate amount of $71,000,000.00.

          2.8 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 Agent and Lenders hereunder, then, in such event, Agent and Lenders shall have no obligation to make any Advances hereunder: (i) in respect of Pledged Notes Receivable from the sale 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 Agent and (ii) in respect of Pledged Notes Receivable from the sale 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 Agent within sixty (60) days of its issuance and (y) there is a reduction in the total number of sales of Intervals by 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.

          (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 2.10(b) hereto, Lender shall have no obligation to make any Advances hereunder, unless within thirty (30) days prior thereto Borrower provides Agent with written information setting forth the replacement executive management personnel of Borrower together with a description of those Persons’ experience, ability and reputation, and Agent, 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 2.10(b). Agent 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 Borrower’s bond holders.

Section 3-Collateral

          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 Agent, as agent for each Lender:

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

          (b) a second priority security interest in all collateral under the Inventory Loan, subject only to the security interest securing the Inventory Loan;

          (c) a subordinate security interest in the Silverleaf Finance II Stock and the Silverleaf Finance II Subordinated Note of equal priority with the security interest securing the Existing Inventory Loan; and

          (d) a first or second priority security interest as applicable in all books, records, reports, computer tapes, disks and software relating to the Collateral and 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.

          To further secure the payment and performance of the Obligations, Borrower shall also execute and deliver to Agent, as agent for each Lender, the modifications to the Inventory Mortgages granting Agent, as agent for each Lender, first priority mortgage liens on the Intervals.

          For convenience of administration, Agent is acting as agent for Lenders under the Agreement. Agent, as such agent, may execute any of its duties hereunder by or through its agents, officers or employees and shall be entitled to rely upon the advice of counsel as to its duties. Agent, as such agent, shall not be liable to Lenders for any action taken or omitted to be taken by it in good faith and shall neither be responsible to Lenders for the consequences of any oversight or error of judgment nor be answerable to Lenders for any loss unless the same shall happen through Agent’s gross negligence or willful misconduct. To the extent that Agent, as such agent, shall not be reimbursed by Borrower for any costs, liabilities or expenses incurred in such capacity, Lenders shall reimburse Agent therefor pro rata in accordance with their respective Pro Rata Percentages (including Agent as one of Lenders for this purpose). Each Lender agrees that Agent shall be entitled to take and shall only be required to take, any action which it is permitted to take under this Agreement.

          3.2 Financing Statements . Borrower agrees, at its own expense, to execute the financing statements, continuation statements and amendments 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 Agent’s security interests in the Collateral. Borrower hereby authorizes Agent to execute and/or file on Borrower’s behalf any such financing statements, continuation statements and amendments.

          3.3 Priority of Each Lender’s Liens . Each Lender shall have an equal security interest in the Collateral based upon its Pro Rata Percentage and no Lender’s security interest in the Collateral shall have priority over any other Lender’s security interest in the Collateral, except where TFC, as a secured party pursuant to another security agreement may have a security interest in the Collateral, which is distinct from Agent’s security interest in the Collateral as a Lender under this Agreement.

          3.4 Insurance . Insurance coverage with respect to the Resort(s) is provided by the Silverleaf Club. Borrower shall furnish Agent, upon request, with satisfactory evidence that the Units, Buildings and Resorts are adequately insured. Such insurance coverage shall insure against such risks, be in such amounts, with such companies and on such other terms as Agent may reasonably require. Each such policy shall name Agent as an additional insured and loss payee as agent for Lenders, as their respective interests may appear.

          3.5 Protection of Collateral; Reimbursement . The portion of the Collateral consisting of: (i) the original Pledged Notes Receivable, (ii) the original Mortgages, (iii) the original purchase contracts (including addendum) related to such Pledged Notes Receivable and Mortgages, and (iv) originals or true copies of the related truth-in-lending disclosure, loan application, warranty deed, and if required by Agent, the related Purchaser’s acknowledgement receipt and the Exchange Company application and disclosures, shall be delivered at Borrower’s expense to the Custodian, and held in Custodian’s possession and control pursuant to the Custodial Agreement. All fees and costs arising under the Custodial Agreement shall be borne and paid by Borrower; and if Borrower fails to promptly pay any portion thereof when due, Agent may, at its option, but shall not be required to, pay the same and charge Borrower’s account therefor, and Borrower agrees promptly to reimburse Agent therefor with interest accruing thereon daily at the Default Rate. All sums so paid or incurred by Agent for any of the foregoing and any and all other sums for which Borrower may become liable hereunder and all

costs and expenses (including attorneys’ and paralegals’ fees, legal expenses and court costs) which Agent may incur in enforcing or protecting its Lien on, or rights and interest in, the Collateral or any of its rights or remedies under this Agreement or any other Loan Document or with respect to any of the transactions hereunder or thereunder, until paid by Borrower to Agent with interest at the Default Rate, shall be included among the Obligations, and, as such, shall be secured by all of the Collateral. Agent shall not be liable or responsible in any way for the safekeeping of any of the Collateral or for any loss or damage thereto or for any diminution in the value thereof, or for any act or default of the Custodian, Lockbox Agent, or Servicing Agent or any warehouseman, carrier, forwarding agency, or other Person whomsoever.

          3.6 Additional Eligible Resorts . From time to time during the Term, Borrower may propose to Agent that one or more additional time-share plans and projects owned and operated by Borrower be included among the Eligible Resorts in respect of which Advances may be made. 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 4.4 hereto, and such other information as Agent may require. Borrower will reasonably cooperate with Agent’s underwriting and due diligence, and Borrower will be responsible for payment upon billing for Agent’s out-of-pocket expenses in connection therewith. Subject to Agent’s 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, Agent 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 qualifying for Advances under and subject to the terms of this Agreement and the other Loan Documents.

          Subject in each instance to Agent’s underwriting and due diligence review, and Agent’s prior written approval, any project as may be approved by Agent and Lenders after the Closing Date, if any, is hereinafter referred to as an “Additional Eligible Resort”. Any Advances hereunder with respect to any Additional Eligible Resort will be subject to all terms and conditions of this Agreement and the other Loan Documents.

          3.7 Modification of Eligible Notes Receivable . Notwithstanding anything herein to the contrary, Borrower shall have the right to modify the interest rate and term only of the Eligible Notes Receivable without Agent’s prior consent, provided that: (i) any such change in the rate of interest on any one or more Eligible Notes Receivable shall not reduce the average interest rate on all Eligible Notes Receivable to less than twelve and one half percent (12 ¹ / 2 %) per annum at any time; (ii) the term of no Eligible Notes Receivable shall be increased to a term longer than one hundred twenty (120) months from the date of the first required monthly payment of such Eligible Note Receivable, except that with respect to any Eligible Note Receivable in respect of which one or more monthly payments have been deferred, the term of such Eligible Note Receivable may be extended one month for each such deferred payment provided, however, that in no event shall the term of such Eligible Note Receivable be increased to a term longer than one hundred twenty eight (128) months from the date of the first required monthly payment of such Eligible Note Receivable; (iii) at no time may Borrower so modify the terms of Eligible Notes Receivable constituting more than fifteen percent (15%) of the outstanding principal balance of all Eligible Notes Receivable at any time. Solely for purposes of calculating the foregoing fifteen percent (15%) limit, an Eligible Note Receivable shall not be considered “to have been modified” if the Purchaser in respect of such note: (y) has made at least

a ten percent (10%) down payment on the Interval and (z) has made at least six (6) monthly payments, with at least four (4) payments being made after the date the note was modified; (iv) Borrower immediately provides Agent with notice of any such modification together with any original documentation evidencing such modification and (v) no Eligible Note Receivable is modified more than once in any twelve (12) month period or more than twice during the term of such Eligible Note Receivable.

          3.8 Assumption of Obligations under Eligible Notes Receivable . Notwithstanding anything herein to the contrary, upon the sale by a Purchaser of an Interval, the new Purchaser of the Interval may be substituted as obligor under the Eligible Note Receivable in question, provided that: (i) said new Purchaser assumes in writing all of the obligations of the original obligor under the Eligible Note Receivable in question; (ii) the Eligible Note Receivable continues to meet all of the criteria for an Eligible Note Receivable as set forth herein and (iii) the new Purchaser has made a cash down payment equal to at least 10% of the original sales price of the Interval in question, which down payment shall be in addition to the cash down payment made by the original obligor.

          3.9 Purchaser/Criteria . All Eligible Notes Receivable pledged as Collateral to Agent subsequent to the Effective Date will be underwritten in a manner consistent with the Borrower’s general underwriting criteria, as approved in writing by Agent, including, without limitation: (i) the requirement that a majority of sales shall be made to Purchasers with minimum annual income as follows: $35,000 for purchasers residing in the state of Texas, $40,000 for purchasers residing in the state of Illinois, and $45,000 for purchasers residing in the state of Massachusetts, (ii) the requirement for a cash down payment of at least 15% of the sales price of the Interval for any Purchaser with a FICO score less than 600, and (iii) the requirement that the weighted average FICO Credit Bureau Scores of all Purchasers with respect to which a FICO score can be obtained be not less than 640, provided that the aggregate outstanding principal balance of Eligible Notes Receivable pledged to Agent with respect to which a FICO score can not be obtained, does not exceed ten percent (10%) of the aggregate outstanding principal amount of all Eligible Notes Receivable pledged to Agent. Borrower shall not materially alter its general underwriting criteria without the prior written approval of Agent, which approval, Agent may withhold in its sole discretion. On a semi-annual basis, Borrower shall provide Agent with written certification that the underwriting criteria as approved by Agent remain in full force and effect and have not been revised or altered without Agent’s consent.

          3.10 Cross Collateralization . The Collateral also secures the Obligations of Borrower under the Inventory Loan. Upon repayment of this Loan and the satisfaction by Borrower of all of the Obligations under this Loan, the Collateral shall continue to secure the Inventory Loan as provided in the documents evidencing and securing the Inventory Loan.

Section 4-Conditions Precedent To The Closing

          4.1 Conditions Precedent . The obligation of Agent and Lenders under this Agreement and the obligation to fund any Advance, including the initial Advance, hereunder 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:

          (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 are 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 Agent.

          (b) No Prohibited Acts . Borrower shall not have taken any action or permitted any condition to exist which would have been prohibited by any provision of this Agreement or the Loan Documents.

          (c) No Changes . That all information and documents heretofore delivered by Borrower to Agent with respect to Borrower or the Existing Resorts, including information and documents delivered in connection with the Original Loan and the Inventory Loan, remain true and correct in all respects.

          (d) Approval of Documents Prior to Effective Date . Borrower has delivered to Agent (with copies to Agent’s counsel), and Agent has reviewed and approved the form and content of all of the items specified in Subsection 4.1(d)(i) through 4.1(d)(v) below (the “Submissions”). Agent shall have the right to review and approve any changes to the form of any of the Submissions. If Agent disapproves of any changes to any of the Submissions, Agent shall have the right to require Borrower either to cure or correct the defect objected to by Agent or to elect not to fund the Loan or any Advance. Under no circumstances shall Agent’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 Agent. Agent 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 Agent 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 Agent and include the following language: “THE UNDERSIGNED ACKNOWLEDGES THAT TEXTRON FINANCIAL CORPORATION AS AGENT FOR EACH LENDER 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 to be dated as of the Effective Date and signed by the president, vice president, or secretary of Borrower, certifying that the conditions specified in Sections 4.1(a), 4.1(b) and 4.1(c) above are true;

(ii) Copies of any amendments to the articles of incorporation of Borrower not previously delivered to Agent, 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

Agent, certified to be true, correct and complete by the secretary or assistant secretary of Borrower;

(iii) A certificate of the Secretary of Borrower certifying the adoption by the Board of Directors of Borrower of a resolution authorizing Borrower to enter into and execute this Agreement, the Notes, and the other Loan Documents, to borrow the Loan from Lenders, and to grant to Lenders 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 Notes and the other Loan Documents; and

(v) Copies or other evidence of all loans to Borrower from any officers, shareholders, or Affiliates of Borrower not previously delivered to Agent.

          (e) Execution and Delivery of Loan Documents . Borrower shall have delivered to Agent, on or before the Effective Date, the following Loan Documents, each of which when required, shall be in recordable form:

(i) This Agreement;

(ii) Closing Opinions for Borrower;

(iii) Consolidated Amended and Restated Note;

(iv) Environmental Indemnification Agreement;

(v) Modification to Interval Mortgages . Borrower shall have executed and delivered to Agent, on or before the Effective Date, modifications to the Interval Mortgages, each of which shall be in recordable form;

(vi) Intercreditor Agreement . Borrower, Sovereign, CapitalSource, and Resort Funding shall have executed and delivered to Agent, on or before the Effective Date, the intercreditor agreement; and

(vii) Other Items . Such other agreements, documents, instruments, certificates and materials as Agent may request to evidence the Obligations; to evidence and perfect the rights and Liens and security interests of Agent as agent for Lenders contemplated by the Loan Documents, and to effectuate the transactions contemplated herein.

          (f) Effective Date Conditions . On or before the Effective Date, the following conditions shall be satisfied:

(i) Assignment of Co-lenders’ Interests . Agent shall have obtained from each Co-Lender: (1) an assignment of all right, title and interest of each Co-Lender in and to the Loans and Collateral under the Original Loan Agreement; and (2) an endorsement by each Co-Lender of such Co-Lender’s note or notes under the Original Loan Agreement.

(ii) Outstanding Balance . The Lenders’ maximum aggregate Commitment as set forth on Exhibit A hereto shall be greater than the then outstanding balance under the Original Loan Agreement.

(iii) UCC Search . Agent shall have obtained, at Borrower’s cost, such searches of the applicable public records as it deems necessary under Texas, and other applicable law to verify that it has a first or second, as applicable, and prior perfected Lien and security interest covering all of the Collateral. Agent shall not be obligated to fund any Advance if Agent determines that Lenders do not have a first or second, as applicable, and prior perfected lien and security interest covering any portion of the Collateral, except as expressly provided herein.

(iv) Litigation Search . Agent shall have obtained, at Borrower’s cost, an independent search to verify that there are no bankruptcy, foreclosure actions or other material litigation or judgments pending or outstanding against the Resorts, any portion of the Collateral, Borrower, or any Affiliates of Borrower (each a “Material Party”). The term “other material litigation” as used herein shall not include matters in which (i) a Material Party is plaintiff and no counterclaim is pending or (ii) which Agent determines in its sole discretion exercised in good faith, are immaterial due to settlement, insurance coverage, frivolity, or amount or nature of claim. Lenders shall not be obligated to fund any Advance if Agent determines that any such litigation is pending.

(v) Counsel Opinion Regarding Title Insurance Policies . Borrower shall deliver to Agent, an opinion or opinions of counsel in a form acceptable to Agent in Agent’s sole discretion, confirming that: (1) each Lien on the Encumbered Intervals from the Resorts in Texas, including: (i) Holly Lake Ranch, Hawkins, Texas; (ii) Piney Shores Resort, Conroe, Texas; (iii) Lake O’ The Woods, Flint, Texas; (iv) Hill Country Resort, Canyon Lake, Texas; (v) The Villages, Flint, Texas; and (vi) Silverleaf’s Seaside Resort, Galveston County, that is perfected by an Inventory Mortgage, will retain the priority interest afforded by the original recording of that Inventory Mortgage notwithstanding the recording of the modification to the Inventory Mortgage required under Section 3.1 hereof; and (2) the modification of the Inventory Mortgages as provided herein will not impair the coverage afforded by the mortgagee’s title insurance policies previously issued in connection with the execution and recordation of the Inventory Mortgages, and those policies remain in full force and effect.

(vi) Recording of Modifications to Inventory Mortgages . The modifications to the Inventory Mortgages for the Resorts in Texas, including: (i) Holly Lake Ranch, Hawkins, Texas; (ii) Piney Shores Resort, Conroe, Texas; (iii) Lake O’ The Woods, Flint, Texas; (iv) Hill Country Resort, Canyon Lake, Texas; (v) The Villages, Flint, Texas; and (vi) Silverleaf’s Seaside Resort, Galveston County, shall have been duly recorded in the applicable land records.

(vii) Insurance . Evidence that Borrower is maintaining all policies of insurance required by and in accordance with Section 7.1(d) hereof, including copies of the most current paid insurance premium invoices;

(viii) Governmental Permits . To the extent not previously delivered to Agent, copies of all applicable government permits, approvals, consents, licenses and certificates with respect to the use and operation of the Resorts;

(ix) Taxes . Evidence satisfactory to Agent that all taxes and assessments owed by or for which Borrower is responsible for collection had been paid with respect to the Resorts and the Collateral, including but not limited to sales taxes, room occupancy taxes, payroll taxes, personal property taxes, excise taxes, intangible taxes, real property taxes and any assessments related to the resorts or the Collateral. Copies of the most current tax bills for the Resorts shall be provided to Agent;

          (g) Post Closing Obligations .

(i) Title Insurance Policies . Within 90 days after the Closing Date the Borrower shall deliver to Agent, with respect to each parcel of real property comprising the Inventory from the Resorts in Missouri, Illinois and Georgia, including: (i) Ozark Mountain Resort, Kimberling City, Missouri; (ii) Holiday Hills Resort, Branson, Missouri; (iii) Timber Creek Resort, Jefferson County, Missouri; (iv) Fox River Resort, LaSalle County, Illinois; and (v) Apple Mountain Resort, Habersham County, Georgia; a new mortgagee’s title insurance policy (the “Inventory Title Policy” or an endorsement to the existing mortgagee’s title insurance policy updating each applicable policy previously issued with respect to the Inventory through the date that the modifications required under Section 4.1(g)(ii) hereof are duly recorded in the applicable land records for each state in which the Inventory is located (the “Inventory Title Endorsement”). If an Inventory Title Policy is obtained, each such Inventory Title Policy shall: (i) be in an amount equal to the full amount required for such title insurance under the Inventory Loan; (ii) insure the Inventory Mortgages as modified in accordance with Section 3.1 hereof; and (iii) be issued by companies and in form and substance satisfactory to Agent in its sole discretion. If an Inventory Title Endorsement is obtained, each such Inventory Title Endorsement shall: (i) insure that the

modification of the Inventory Mortgages as provided herein will not impair the coverage afforded by endorsed title insurance policies, and that those policies remain in full force and effect; (ii) insure that the modification of the Inventory Mortgages as provided herein will not impair the lien of the insured mortgage; and (iii) be issued by companies and in form and substance satisfactory to Agent in its sole discretion. Borrower shall be responsible for the payment of all costs and expenses of the foregoing Inventory Title Policy and/or Endorsement.

(ii) Recording of Modifications to Inventory Mortgages . Within 90 days after the Closing Date the modifications to the Inventory Mortgages for the Resorts in Missouri, Illinois and Georgia, including: (i) Ozark Mountain Resort, Kimberling City, Missouri; (ii) Holiday Hills Resort, Branson, Missouri; (iii) Timber Creek Resort, Jefferson County, Missouri; (iv) Fox River Resort, LaSalle County, Illinois; and (v) Apple Mountain Resort, Habersham County, Georgia; shall be duly recorded in the applicable land records for each state in which the Inventory is located.

          4.2 Expenses . Borrower shall have paid all fees and expenses required to be paid pursuant to this Agreement. Lenders shall have no obligation to fund any Loan or make the initial Advance or any subsequent Advance unless the amount of the initial Advance together with any moneys paid by Borrower is sufficient to satisfy all fees and expenses required to be paid pursuant to this Agreement.

          4.3 Proceedings Satisfactory . Borrower shall execute all of the Loan Documents approved by Agent on the Effective Date, and all actions taken in connection with the execution or delivery of the Loan Documents, and all documents and papers relating thereto, shall be satisfactory to Agent and its counsel. Agent and its counsel shall have received copies of such documents and papers as Agent or such counsel may reasonably request in connection therewith, all in form and substance satisfactory to Agent and its counsel.

          4.4 Conditions Precedent to Funding of Advances with Respect to Additional Eligible Resorts . As provided in Section 3.6 hereof, Borrower may propose to Agent that Agent approve one or more additional timeshare plans for inclusion hereunder as an Additional Eligible Resort in respect of which Advances may be made. The obligation of Lenders to fund any Advances with respect to an Additional Eligible Resort 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:

          (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 shall be 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 Agent.

          (b) No Prohibited Acts . Borrower shall not have taken any action or permitted any condition to exist which would have been prohibited by any provision of the Loan Documents.

          (c) Approval of Documents Prior to Advance . Borrower has delivered or caused to be delivered to Agent (with copies to Agent’s counsel), at least fifteen (15) Business Days prior to the date of each Advance, and Agent has reviewed and approved, at least five (5) Business Days prior to the date of each Advance, the form and content of all of the items specified in each of the Submissions required pursuant to this Section 4.4. Agent shall have the right to review and approve any changes to the form of any of the Submissions. If Agent disapproves of any changes to any of the Submissions, Agent shall have the right to require Borrower either to cure or correct the defect objected to by Agent or to elect on behalf of Lenders not to fund the Loan or any Advance. Under no circumstances shall Agent’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 Agent. Agent shall have the right of prior approval of any Preparer and may disapprove any Preparer in its sole discretion, for any reason, including without limitation, that Agent 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 Agent and include the following language: “THE UNDERSIGNED ACKNOWLEDGES THAT TEXTRON FINANCIAL CORPORATION AS AGENT FOR EACH LENDER 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 C, to be dated as of the date of each such Advance and signed by the president, vice president, or secretary of Borrower, certifying that the conditions specified in Sections 4.4(a) and 4.4(b) above are true;

(ii) copies of the articles of incorporation of Borrower, together with any amendments thereto certified to be true and complete by Borrower and the Secretary of State of the State of Texas, a current certificate of good standing for Borrower issued by the Secretary of State of the State of Texas, a current certificate of authority to conduct business issued by the secretary of state in each state in which Borrower conducts business, and copies of the by-laws of Borrower certified to be true, correct and complete by the secretary or assistant secretary of Borrower;

(iii) a Survey for each Additional Eligible Resort for which Eligible Notes Receivable are being pledged to Agent in connection with the Advance in question;

(iv) a certificate of the secretary or assistant secretary of Borrower certifying the adoption by the board of directors thereof, respectively, of a

resolution authorizing the addition of the Resort in question as an Additional Eligible Resort and to authorize Borrower to enter into, execute and deliver any Documents in connection therewith;

(v) 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 all documents required in connection with such Additional Eligible Resort as required pursuant to this Section 4.4;

(vi) an inspection report or reports covering each Additional Eligible Resort for which Eligible Notes Receivable are being pledged to Agent in connection with the Advance in question, including without limitation all real property and personal property subject to the Declaration and all adjacent property, confirming:

(1) the absence of Hazardous Materials on the personal property and real property comprising each such Additional Eligible Resort;

(2) that the inspection firm has obtained, reviewed and included within its report a CERCLIS printout from the Environmental Protection Agency (the “EPA”), statements from the EPA and other applicable state and local authorities and a Phase I Environmental Audit, all of which information shall confirm that there are no known or suspected Hazardous Materials located at, used or stored on, or transported to or from each such Additional Eligible Resort or in such proximity thereto as to create a material risk of contamination of each such Additional Eligible Resort;

(vii) evidence that Borrower is maintaining all policies of insurance required by and in accordance with Section 7.1(d) hereof, including copies of the most current paid insurance premium invoices;

(viii) evidence that Borrower and the Timeshare Documents for each Additional Eligible Resort for which Eligible Notes Receivable are being pledged to Agent as agent for Lenders in connection with the Advance in question are in compliance with all applicable laws in connection with its sales of Intervals, including without limitation, the Timeshare Acts;

(ix) a current preliminary title report or certificate of title for each Additional Eligible Resort for which Eligible Notes Receivable are being pledged to Agent in connection with the Advance in question, with copies of all title exceptions;

(x) copies of all applicable governmental permits, approvals, consents, licenses, and certificates for the establishment of each Additional Eligible

Resort for which Eligible Notes Receivable are being pledged to Agent as agent for Lenders in connection with the Advance in question as timeshare projects in accordance with the applicable Timeshare Act, and for the occupancy and intended use and operation of each such Additional Eligible Resort, including the Units, including a letter certification from Borrower regarding zoning classification and compliance, letters or other satisfactory evidence from utility companies, governmental entities or other persons confirming that water, sewer (sanitary and storm), electricity, solid waste disposal, telephone, police, fire and rescue services are being provided to each Resort, and any business licenses necessary for operation of each such Additional Eligible Resort;

(xi) certified true, correct and complete copies of all of the Timeshare Documents for each Additional Eligible Resort for which Eligible Notes Receivable are being pledged to Agent as agent for Lenders in connection with the Advance in question;

(xii) evidence satisfactory to Agent that all taxes and assessments owed by or for which Borrower is responsible for collection have been paid, including but not limited to sales taxes, room occupancy taxes, payroll taxes, personal property taxes, excise taxes, intangibles taxes, real property taxes, and income taxes, and any assessments related to each Additional Eligible Resort for which Eligible Notes Receivable are being pledged to Agent as agent for Lenders in connection with the Advance in question and copies of the most current paid tax bills for each such Additional Eligible Resort evidencing that each such Additional Eligible Resort have been segregated from all other property on the applicable municipal taxrolls;

(xiii) written confirmation from an architect covering each Additional Eligible Resort, for which Eligible Notes Receivable are being pledged to Agent as agent for Lenders in connection with the Advance in question as to the physical condition of the improvements at each such Additional Eligible Resort, including that soil conditions are sufficient to support all existing and any contemplated improvements to the real property; which written confirmation shall be in form and substance reasonably acceptable to Agent;

(xiv) such credit references on Borrower as Agent deems necessary in its sole discretion;

(xv) copies or other evidence of all loans to Borrower from any officers, shareholders, or Affiliates of Borrower, if any;

(xvi) a commitment to issue Mortgagee Title Policies from Title Company for each such Additional Eligible Resort. Notwithstanding anything heretofore to the contrary, Agent and each Lender agree that

Borrower shall not be required to provide such a commitment or a Mortgagee Title Insurance Policy with respect to Oak N’ Spruce Resort until such time as deeded Intervals are permitted under local law governing the Oak N’ Spruce Resort. Notwithstanding anything heretofore to the contrary, if any claim, lien, encumbrance, charge or other matter arises with respect to any Interval or Intervals for which an Eligible Note Receivable has been pledged to Agent as agent for Lenders pursuant to this Agreement, then, in such event:

(a) The Note Receivable with respect to the Interval in question shall cease to be an Eligible Note Receivable and Borrower immediately shall either replace the Note Receivable in question or make a Mandatory Prepayment as provided in Section 2.5(b) hereof; and

(b) The Resort at which the Interval in question is located shall cease to be an Additional Eligible Resort, unless and until Borrower shall cure any such claim, lien, encumbrance, charge or other matter to the satisfaction of Agent. Furthermore, any and all further requests for Advances in respect of such Resort must be accompanied by satisfactory Mortgagee Title Policies for all Intervals with respect to which such Advances are requested.

(xvii) the Financial Statements;

(xviii) to the extent not previously delivered hereunder or in connection with the Inventory Loan, Borrower will execute, or cause to be executed with respect to each Additional Eligible Resort, an Assignment of Notes Receivable and Mortgages, Borrower’s Affidavit with Respect to the Additional Eligible Resorts and an Environmental Indemnification Agreement;

(xix) with respect to any improvements, including any Units, constructed at a Resort within the twenty-four month period prior to any Advance with respect to an Additional Eligible Resort, Borrower shall also deliver to Agent, for its approval, such documents and instruments as Agent may reasonably request in connection with such newly constructed improvements, including, without limitation, copies of building permits, plans and specifications, construction and architectural contracts, title insurance insuring over, among other things, mechanics liens, certificates of occupancy and satisfactory evidence of the completion of such improvements;

(xx) such other documents, instruments, agreements, tests, reports and inspections as Agent may require with respect to Borrower or any applicable Affiliate, the Loan or any Resort, including any Additional Eligible Resort; and

(xxi) Upon request of Agent, Borrower shall deliver to Agent evidence, satisfactory to Agent, that there is no material litigation, written complaint, suit, action, written claim or written charge pending against Borrower or any Affiliate with any court or with any governmental authority with respect to the Resorts, the Timeshare Documents, any Eligible Notes Receivable, any Interval, or any marketing, offer or sale of any Interval.

          (d) Physical Inspection . Agent shall be satisfied with its physical inspection of the Additional Eligible Resorts.

          (e) UCC Search . Agent shall have obtained, at Borrower’s cost, such searches of the applicable public records as it deems necessary under all applicable law to verify that it has a first or second, as applicable, and prior perfected Lien and security interest covering all of the Collateral. Agent shall not be obligated to fund any Advance if Agent determines that Lenders do not have a first or second, as applicable, and prior perfected lien and security interest covering any portion of the Collateral, except as expressly provided herein.

          (f) Litigation Search . Agent shall have obtained, at Borrower’s cost, an independent search to verify that there are no bankruptcy, foreclosure actions or other material litigation or judgments pending or outstanding against the Additional Eligible Resorts, any portion of the Collateral, Borrower, or any Affiliate, (each a “Material Party”). The term “other material litigation” as used herein shall not include matters in which (i) a Material Party is plaintiff and no counterclaim is pending or (ii) which Agent determines, in its sole discretion, exercised in good faith, are immaterial due to settlement, insurance coverage, frivolity, or amount or nature of claim. Agent shall not be obligated to fund any Advance if it determines that any such litigation is pending.

          (g) Opinions of Borrower’s Counsel . Borrower shall deliver to Agent, for the benefit of Agent and each Lender, at Borrower’s sole cost and expense, such opinions of counsel, including counsel admitted in each state in which each Additional Eligible Resort is located, as to such matters with respect to Borrower and each Additional Eligible Resort as Agent may request, and in form and substance acceptable to Agent in its sole discretion.

          (h) Funding Procedure . Borrower shall have complied to Agent’s satisfaction with each of the conditions precedent to funding of an Advance set forth in Section 5 hereof.

          (i) Management of Resort . Borrower shall provide evidence satisfactory to Agent that Borrower, or an Affiliate, is the manager or operator of each Resort, pursuant to a written management or operating agreement, in form and substance satisfactory to Agent, which with respect to all Resorts shall have a term of at least three years..

          (j) Other Items . Such other agreements, documents, instruments, certificates and materials as Agent may request to determine the acceptability of any such

Additional Eligible Resort, to evidence the Obligations, to evidence and perfect the rights and Liens and security interests of Agent contemplated by the Loan Documents, and to effectuate the transactions contemplated herein, including, without limitation, true copies of all Resort Documents for each such Additional Eligible Resort, all Timeshare Documents and operating and management contracts and agreements, evidence of compliance with the applicable Timeshare Act and other applicable laws, evidence of all required governmental licenses and permits; title searches; title commitments or policies, including complete and legible copies of each title exception, engineering, environmental and soil reports and evidence of compliance with all applicable zoning and building codes; each of which shall be satisfactory to Agent in its sole and absolute discretion.

Section 5-Funding Procedure

     5.1 The obligation of any Lender to make any loan shall be subject to the satisfaction of all of the following conditions precedent:

          (a) Requests for Advances . Each request for an Advance shall:

(i) be in writing in form attached hereto as Exhibit C and shall certify the amount of the then-current Borrowing Base and specify the principal amount of the Advance requested and designate the account to which the proceeds of such Advance are to be transferred;

(ii) state that the representations and warranties of Borrower contained in the Agreement and any closing or funding related certifications are true and correct as of the date of the request and, after giving effect to the making of such requested Advance, will be true and correct as of the date on which the requested Advance is to be made;

(iii) state that no Default or Event of Default exists as of the date of the request and, after giving effect to the making of such requested Advance, no Default or Event of Default would exist as of the date on which the requested Advance is to be made;

(iv) be delivered to the office of Agent at least five (5) Business Days prior to the date of the requested Advance;

(v) be signed by a principal financial officer of Borrower;

(vi) certify that Borrower has no knowledge of any asserted or threatened defense, offset, counterclaim, discount or allowance in respect of each Note Receivable to be pledged in connection with such requested Advance, or in respect of any of the Pledged Notes Receivable;

(vii) contain an aging report of the Pledged Notes Receivable; identifying, among other things, which among them are Eligible Notes Receivable; and

(viii) contain a delinquency report which shall be in form and substance satisfactory to Agent and shall show which of such Notes Receivable is delinquent and the duration of such delinquency, and which of such Pledged Notes Receivable is not an Eligible Note Receivable;

          (b) Loan Documents/Collateral . Not less than five (5) Business Days prior to the date of any Advance, Borrower shall have:

(i) delivered to Agent a list of all Eligible Notes Receivable and related Mortgages which are to be the subject of such requested Advance, indicating the unpaid principal balance owing on each of the Pledged Notes Receivable deemed to be an Eligible Note Receivable, together with such additional information as A