FIRST AMENDMENT TO AMENDED AND RESTATED INVENTORY LOAN AND SECURITY AGREEMENT

Exhibit 10.1
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FIRST AMENDMENT TO
AMENDED AND RESTATED
INVENTORY LOAN AND SECURITY AGREEMENT

     THIS FIRST AMENDMENT TO AMENDED AND RESTATED INVENTORY LOAN AND SECURITY AGREEMENT (this “ Amendment ”) is dated as of June 4, 2008 (the “ Closing Date ”), by and between CAPITALSOURCE FINANCE LLC , a Delaware limited liability company, as secured party (herein referred to as the “ Lender ” ) and SILVERLEAF RESORTS, INC. , a Texas corporation, as debtor (herein referred to as the “ Borrower ” ).

RECITALS

     A. Borrower and Lender have entered into that certain Amended and Restated Inventory Loan and Security Agreement, dated as of April 28, 2006 (as amended and modified from time to time, the “ Loan Agreement ”).

     B. The Borrower and Lender desire to amend the Loan Agreement on the terms and conditions as hereinafter set forth.

     NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

AGREEMENT

ARTICLE I
Definitions

      1.01 Capitalized terms used in this Amendment are defined in the Loan Agreement, as amended hereby, unless otherwise stated.

ARTICLE II
Amendments to Loan Agreement

     Effective as of the date hereof, the Loan Agreement is hereby amended as follows:

      2.01 Amendment to Section 1.1 . The definition of “Commitment Period” in Section 1.1 of the Loan Agreement is hereby amended to replace the date “April 29, 2009” therein with the phrase “April 30, 2010, subject to Borrower’s right to extend the Commitment Period set forth in Section 2.9 hereof”.

      2.02 Amendment to Section 1.1 . The definition of “Maturity Date” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

          “ Maturity Date —means April 30, 2012, subject to Borrower’s right to extend the Maturity Date set forth in Section 2.9 hereof”.”

      2.03 Amendment to Section 1.1 . The definition of “Maximum Loan Amount” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

          “ Maximum Loan Amount —means $50,000,000.”

      2.04 Amendment to Section 1.1 . The definition of “Prime Rate” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

     “ Prime Rate — means the ‘Prime’ rate of interest published each Business Day in The Wall Street Journal as the ‘Prime Rate.’ The Prime Rate shall adjust daily and automatically without notice to Borrower. If more than one ‘Prime Rate’ is published in The Wall Street Journal for a day, the highest of such ‘Prime Rates’ shall be used. If The Wall Street Journal is no longer published or ceases to publish the ‘Prime Rate’, Lender may substitute another publication publishing the ‘Prime Rate’, reasonably acceptable to Lender. If ‘Prime Rates’ are no longer generally published or are limited, regulated or administered by a governmental or quasi-governmental body, Lender may substitute another rate approximating the ‘Prime Rate’. Notwithstanding the foregoing, in no event shall the Prime Rate be less than five and one-half percent (5.50%).”

      2.05 Amendment to Section 1.1 . The definition of “Receivables Loan” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

     “ Receivables Loan —means that certain receivables loan in the aggregate principal amount of $20,000,000 extended to Borrower and certain of its Affiliates by Lender pursuant to the Receivables Loan Documentation.”

      2.06 Amendment to Section 1.1 . The definition of “Unused Line Fee” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

     “ Unused Line Fee —means a fee payable to Lender in an amount calculated as of the last day of each calendar month equal to one quarter of one percent (0.250%) per annum of the difference between (a) the Maximum Loan Amount and (b) the average outstanding principal balance of the Loan during such month. Notwithstanding the foregoing, the Unused Line Fee shall be waived in the event the average outstanding principal balance of the Loan is in excess of $15,000,000 during such month.”

      2.07 Amendment to Section 1.1 . Section 1.1 of the Loan Agreement is hereby amended to add the definition of “Material Adverse Change” in correct alphabetical order as set forth below:

     “ Material Adverse Change — means any development, event, condition, obligation, liability or circumstance or set of events, conditions, obligations, liabilities or circumstances or any change(s) which:  (i) has had, or reasonably could be expected to have (as determined by Lender), a material adverse effect upon or change in (a) the legality, validity or enforceability of any Loan Document, or (b) the validity, perfection or priority of any Lien granted to Lender under this Agreement or any other Loan Document; (ii) has been, or reasonably could be expected to be (as determined by Lender), material and adverse to the value of any of the Collateral or to the business, operations, prospects, properties, assets, liabilities or condition (financial or otherwise) of the Borrower (including, without limitation, the termination of any applicable timeshare, condominium or similar regime whether by consent of the Timeshare Interest owners, Timeshare Unit owners or otherwise, any modification or amendment to any Declaration that shall, in the reasonable opinion of Lender, adversely affect the Collateral, Timeshare Interest, Timeshare Unit, any Resort or the operations or prospects of any Resort, or the substantial destruction of any Resort, if not fully insured); or (iii) has materially impaired, or reasonably could be expected to materially impair (as determined by Lender), the ability of the Borrower to perform any of the Obligations, or to consummate the transactions, under the Loan Documents.”

      2.08 Amendment to Section 2. 1(a)(vii) . Section 2.1(a)(vii) of the Loan Agreement is hereby amended to replace the amount of “$30,000,000” with the amount of “$50,000,000”.

      2.09 Amendment to Section 2.3(c) . Section 2.3(c) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

     “ Limited Voluntary Prepayments . The Loan may not be prepaid in whole during the Commitment Period. Borrower may prepay the Loan in whole and terminate this Agreement at any time after the Commitment Period; provided , however , that any such prepayment in full other than through the payments of Release Prices, or any termination of this Agreement, shall be subject to a prepayment premium in an amount equal to $500,000; further provided , that, so long as such prepayment is not made with the proceeds of a financing provided to Borrower by any other lender or financial institution (other than a securitization or through a bond offering), Borrower may prepay the Loan in part so long as the Loan has not been paid in full and this Agreement has not been terminated, and any such prepayment shall be subject to no prepayment premium; and further provided , that any such prepayment of the Loan described in the immediately preceding clause shall not cause the outstanding principal amount of the Loan to be less than $5,000,000 after giving effect to such prepayment unless, notwithstanding anything to the contrary in the immediately preceding clause,

such prepayment is a prepayment of the Loan in full and a termination of this Agreement (and in which case such prepayment, notwithstanding anything herein to the contrary, shall be subject to the prepayment premium described above). Any prepayments in full other than through the payments of Release Prices or any termination of this Agreement hereunder shall be made only after forty-five (45) days prior written notice from Borrower to Lender.”

      2.10 Amendment to Section 2.3(e) . Section 2.3(e) of the Loan Agreement is hereby amended to replace the amount of “$30,000,000” with the amount of “$50,000,000”.

      2.11 Amendment to Section 2 . Section 2 of the Loan Agreement is hereby amended by adding Section 2.9 thereto to read as follows:

     “ 2.9 Extension Option. Borrower may request that Lender extend each of the Commitment Period and Maturity Date of the Loan for one (1) additional term of twelve calendar months in accordance with the requirements below. Such extension request shall be granted to Borrower upon the satisfaction of the following conditions:

     (a) Borrower shall have delivered to Lender a written request to extend the Commitment Period and Maturity Date at least sixty (60), but not more than ninety (90) calendar days prior to the expiration of the Commitment Period;

     (b) Borrower shall have delivered to Lender concurrently with making the written extension request in clause (a) above an extension fee equal to the product of 0.25% and the Maximum Loan Amount;

     (c) no Default or Event of Default shall have occurred at the time of making the extension request or the commencement of the extension term;

     (d) Borrower shall have executed any reasonable agreements, documents or amendments to Loan Documents reasonably requested by Lender;

     (e) during the extended term, all terms and conditions of the Loan Documents (other than the original termination of the Commitment Period or Maturity Date or this extension option) shall continue to apply; and

     (f) Borrower shall pay all out-of-pocket costs and expenses incurred by Lender in connection with such extension and Lender’s reasonable attorneys’ fees.”

      2.12 Amendment to Section 7.23 . Section 7.23 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

     “ 7.23 Marketing and Sales Expenses . As of the last day of each fiscal quarter, Borrower will not permit the four quarter cumulative ratio of Sales and

Marketing Costs to the Borrower’s net proceeds from the sale of Timeshare Interests as recorded on the Borrower’s financial statements for the immediately preceding four (4) consecutive fiscal quarters of the Borrower to equal or exceed a ratio of .600 to 1; provided , however , that notwithstanding the foregoing, in the event that Borrower delivers written evidence satisfactory to Lender that the ratio in this Section 7.23 is no longer required to be test