Ex. 10.4
SECOND AMENDMENT TO
AMENDED AND RESTATED
LOAN, SECURITY AND AGENCY AGREEMENT (TRANCHE B)
THIS SECOND AMENDMENT TO AMENDED AND
RESTATED LOAN, SECURITY AND AGENCY AGREEMENT (TRANCHE B) dated as
of February 28, 2005 (the “ Second
Amendment ”), is entered into by and among
SILVERLEAF RESORTS, INC ., a Texas corporation (the “
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 (the “
Agent ”).
W I T N E S S E T
H:
WHEREAS, Agent and Borrower were
parties to that certain Loan, Security and Agency Agreement dated
as of December 16, 1999 (the “Original
Agreement”), pursuant to which the Borrower executed its
Secured Promissory Note in favor of the Agent, as agent for
Lenders, in the amount of $71,000,000.00, as amended to date (the
“Original Note”);
WHEREAS, Agent and Borrower entered
into a First Amendment to Loan, Security and Agency Agreement dated
as of April 17, 2001 (the “First Amendment to Original
Agreement”) to, among other things, incorporate the terms of
a certain Forbearance Agreement dated as of April 6, 2001;
WHEREAS, pursuant to the First
Amendment to Original Agreement the Original Note was replaced by a
Secured Promissory Note or Notes in the aggregate original
principal amount of $71,000,000.00 in favor of Lenders;
WHEREAS, TFC and Borrower further
amended and restated the Original Agreement in its entirety
pursuant to an Amended and Restated Loan, Security and Agency
Agreement (Tranche B) (as amended to date and hereby, the
“Loan Agreement”) dated April 30, 2002 to, among
other things, restructure and modify the Loan, including separating
the Loan into two separate components – the Revolving Loan
Component in the original principal amount of up to $56,104,200.00
and the Term Loan Component in the original principal amount of up
to $14,895,800.00; to reduce the Commitment, as defined in the Loan
Agreement, to $63,022,400.00 less the outstanding principal balance
of the Term Loan Component from time to time and to reduce the
aggregate Commitment under the Loan Agreement, under the Additional
Credit Facility and the Tranche C Facility, as such terms are
defined in the Loan Agreement, to $136,000,000.00 less the
outstanding principal balance of the Term Loan Component and the
aggregate term loan component of the Additional Credit Facility and
the Tranche C Facility from time to time; and to replace the
Amended Note with: (i) an Amended and Restated Secured
Promissory Note or Notes in the aggregate original principal amount
of $56,104,200.00 in favor of Lenders (singly and collectively the
“Revolving Loan Component Note”) and (ii) a
Secured Promissory Note or Notes
in the aggregate original
principal amount of $14,895,800.00 in favor of Lenders (singly and
collectively the “Term Loan Component Note”, and
together with the Revolving Loan Component Note, sometimes referred
to herein singly and collectively as the “Note”);
WHEREAS, TFC and Borrower amended the
Loan Agreement pursuant to a Letter Amendment dated June 12, 2002
to establish a definition for “modified Eligible Note
Receivable”;
WHEREAS, TFC and Borrower amended the
Loan Agreement pursuant to a Letter Amendment dated March 27,
2003 to reinstate the maximum allowable ratio of Marketing and
Sales Expenses to the Borrower’s net proceeds from the sale
of Intervals to a ratio of .550 to 1;
WHEREAS, TFC and Borrower amended the
Loan Agreement pursuant to a Letter Agreement dated
September 25, 2003 to exclude the $28,711,000 increase in
Borrower’s allowance for doubtful accounts during the quarter
ended March 31, 2003 from the calculations of EBITDA, the
Interest Coverage Ratio and Consolidated Net Income under the Loan
Agreement and to approve the retirement of certain subordinated
notes with a face value of $7,620,000;
WHEREAS, Borrower entered into:
(i) a Letter Agreement with TFC dated November 17, 2003
(the “November Letter Agreement”); (ii) an
amendment to the Heller Documents dated November 21, 2003; and
(iii) an amendment to the Sovereign Documents dated
October 1, 2003; each for the purpose of, among other things,
waiving certain Events of Default that may have arisen under the
Loan Agreement, the Heller Documents and the Sovereign Documents
described therein, respectively;
WHEREAS, Agent and Borrower entered
into a First Amendment to the Amended and Restated Loan, Security
and Agency Agreement dated as of December 19, 2003 (the
“First Amendment”) to, among other things, restructure
and modify the Loan, including reducing the Commitment, as defined
in the First Amendment, to (i) $44,104,600.00 for the Revolving
Loan Component; and (ii) $11,040,000.00 for the Term Loan
Component, for a total Commitment under this Agreement of
$55,144,600.00 and to reduce the aggregate Commitment under the
Loan Agreement, the Additional Credit Facility and the Tranche C
Facility, as such terms are defined in the First Amendment, to
$95,000,000.00 for the Revolving Loan Component and $24,000,000.00
for the Term Loan Component; and to replace the Term Loan Component
Secured Promissory Note or Notes with an Amended Secured Promissory
Note in the aggregate original principal amount of $11,040,000.00
in favor of Lender (the “Term Loan Component Note”, and
together with the Revolving Loan Component Note, sometimes referred
to herein singly and collectively as the “Note”);
WHEREAS, TFC and Borrower amended the
Loan Agreement pursuant to a Letter Amendment dated March 5,
2004 to clarify the definition of “Inventory Loan” and
the Maximum Obligation of TFC under the Loan Agreement, the
Additional Credit Facility, the Tranche C Credit Facility and the
Inventory Loan;
WHEREAS, TFC and Borrower amended the
Loan Agreement pursuant to two Letter Amendments dated
July 30, 2004 to (i) clarify the priority of security in
the Silverleaf Finance II
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Stock and the Silverleaf
Finance II Subordinated Note, and (ii) modify the definition
of Collateral in connection with the amendments to the Sovereign
Facility dated as of July 30, 2004; and
WHEREAS, in connection with the Loans
to be made by Lenders pursuant to the Loan 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, for good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1.
Terms . All capitalized terms not otherwise defined
herein shall have the meaning ascribed to such term in the Loan
Agreement.
2. Elimination
of Requirement for Business Plan . The Loan Agreement is
modified in part to add the following provision:
“
Elimination of Requirement for Business Plan .
Provided no Event of Default or condition, omission or act which,
with the passage of time, notice or both, would constitute an Event
of Default, has occurred, the requirement for Borrower to maintain
and adhere to the Business Plan is eliminated in all respects from
and after the date that: (i) the Term Loan Component has been
paid in full; and (ii) Borrower has achieved the net income
projection for the six months ending December 31, 2004 and exceeded
by 10% the net income projection for the fiscal year ending
December 31, 2004, as those net income projections appear in
the Business Model dated November 13, 2003, such net income
results to be evidenced by audited Financial Statements delivered
by Borrower to Agent.”
3.
Definitions . Section 1.1 is hereby amended in
part to add the following new paragraphs:
“(sssss) Backup Servicing Agreement .
Shall mean that certain Backup Servicing Agreement dated as of
April 10, 2001, as amended by the First Amendment to the
Backup Servicing Agreement dated as of April 30,
2002.”
“(ttttt) Declarant Rights . Shall mean
the rights of the declarant described on Schedule 1.1(c)
attached hereto.”
“(uuuuu) Management Agreement . Shall
mean that certain Management Agreement by and between Silverleaf
Club and Silverleaf Resorts, Inc. dated as of March 28, 1990
as amended to date.”
“(vvvvv) Utility Purchase Agreement .
Shall mean that certain Asset Purchase Agreement between Silverleaf
Resorts, Inc. and Algonquin Water Resources of Texas, Inc. and
Algonquin Water Resources of Missouri, Inc. and Algonquin Water
Resources of Illinois, Inc. and Algonquin Water Resources of
America, Inc. and Algonquin Power Income Fund dated as of
August 29, 2004.”
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“(wwwww) Utility Rights . Shall mean the
Facilities, Real Property and Utilities, as those terms are defined
in the Utility Purchase Agreement, that are part of the Additional
Resort Collateral.”
4. Release of
Utility Rights, Additional Resort Collateral and Sovereign
Collateral . Section 3 is hereby amended in part to
add the following new Section 3.15:
“
3.15 Release of Liens . Notwithstanding
anything contrary in the Loan Agreement, and provided no Event of
Default or condition, omission or act which, with the passage of
time, notice or both, would constitute an Event of Default, has
occurred:
(a) the Utility Rights shall be released from the Lien of the
security interest granted to Agent hereunder on the date that:
(i) the sale of the Utility Rights is closed pursuant to the
Utility Purchase Agreement; and (ii) the net proceeds of such
sale in an amount not less than thirteen million dollars
($13,000,000) is paid to Agent;
(b) the Additional Resort Collateral, except for the Declarant
Rights and the Management Agreement, shall be released from the
Lien of the security interest granted to Agent hereunder on the
date that the Term Loan Component has been paid in full;
(c) all collateral securing the Sovereign Facility, which
shall mean the Notes Receivable and related Mortgages exclusively
assigned to Sovereign in connection with an advance under its loan
documents, shall be released from the Lien of the security interest
granted to Agent hereunder on the date that: (i) the Term Loan
Component has been paid in full; (ii) Borrower has achieved
the net income projection for the six months ending
December 31, 2004 and exceeded by 10% the net income
projection for the fiscal year ending December 31, 2004, as
those net income projections appear in the Business Model dated
November 13, 2003, such net income results to be evidenced by
audited Financial Statements delivered by Borrower to Agent; and
(iii) all Collateral is released from any lien granted to
Sovereign pursuant to the Sovereign Documents; and
(d) the Declarant Rights and the Management Agreement shall be
released from the Liens of the security interest granted to Agent
hereunder on the date that: (i) the Term Loan Component has
been paid in full; (ii) Borrower has achieved the net income
projection for the six months ending December 31, 2004 and
exceeded by 10% the net income projection for the fiscal year
ending December 31, 2004, as those net income projections
appear in the Business Model dated November 13, 2003, such net
income results to be evidenced by audited Financial Statements
delivered by Borrower to Agent; (iii) Borrower files a
negative pledge in a form acceptable to Agent on the land records
for each Resort that neither Declarant Rights nor the Management
Agreement will be assigned, transferred, or encumbered; and
(iv) the Declarant Rights and the Management Agreement are
also released from any lien granted to Sovereign pursuant to the
Sovereign
4
Documents.
Notwithstanding anything herein to the contrary, to the extent that
the Declarant Rights or Management Agreement have not already been
released from any lien granted to Agent hereunder, on the date that
the maximum aggregate Commitment under this Agreement, the
Additional Credit Facility, and the Tranche C Credit Facility has
been reduced to $82,000,000.00 for the Revolving Loan Component,
the Declarant Rights and Management Agreement shall be released
from the Lien of the security interest granted to Agent hereunder,
provided that: (1) Borrower files a negative pledge in a form
acceptable to Agent on the land records for each Resort that
neither the Declarant Rights nor the Management Agreement will be
assigned, transferred, or encumbered and (2) the Declarant
Rights and Management Agreement are also released from any lien
granted to Sovereign pursuant to the Sovereign Documents.
5. Tangible
Net Worth . Provided that: (i) no Event of Default or
condition, omission or act which, with the passage of time, notice
or both, would constitute an Event of Default, has occurred; and
(ii) Tangible Net Worth as of December 31, 2004 meets or
exceeds the requirement of the existing Section 7.1(cc)(i)
Tangible Net Worth Covenant, Section 7.1(cc)(i) will be
deleted in its entirety and replaced with the following new
Section 7.1(cc)(i), on the date that: (1) the Term Loan
Component has been paid in full; and (2) Borrower has achieved
the net income projection for the six months ending
December 31, 2004 and exceeded by 10% the net income
projection for the fiscal year ending December 31, 2004, as
those net income projections appear in the Business Model dated
November 13, 2003, such net income results to be evidenced by
audited Financial Statements delivered by Borrower to Agent:
“(i)
Tangible Net Worth. Borrower shall at all times have
and maintain Tangible Net Worth in an amount which shall not be
less than an amount equal to the Tangible Net Worth as stated in
the annual audited financial statement
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