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
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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
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