<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number: 001-13003
SILVERLEAF RESORTS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-2259890
(State of incorporation) (I.R.S. Employer
Identification No.)
1221 RIVER BEND DRIVE, SUITE 120
DALLAS, TEXAS 75247
(Address of principal executive offices, including zip code)
214-631-1166
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Number of shares of common stock outstanding of the issuer's Common Stock, par
value $0.01 per share, as of May 10, 2000: 12,889,417
<PAGE> 2
SILVERLEAF RESORTS, INC.
INDEX
<TABLE>
<CAPTION>
Page
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION (Unaudited)
Item 1. Condensed Consolidated Statements of Income for the three months
ended March 31, 2000 and 1999........................................ 1
Condensed Consolidated Balance Sheets as of March 31, 2000
and December 31, 1999................................................ 2
Condensed Consolidated Statement of Shareholders' Equity for the
three months ended March 31, 2000.................................... 3
Condensed Consolidated Statements of Cash Flows for the three
months ended March 31, 2000 and 1999................................. 4
Notes to the Condensed Consolidated Financial Statements............. 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................ 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................... 11
Item 6. Exhibits and Reports on Form 8-K..................................... 11
Signatures........................................................... 12
</TABLE>
<PAGE> 3
SILVERLEAF RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
REVENUES:
Vacation Interval sales $ 53,886 $ 41,328
Sampler sales 1,297 700
------------ ------------
Total sales 55,183 42,028
Interest income 8,769 5,666
Interest income from affiliates 8 12
Management fee income 81 900
Other income 865 474
------------ ------------
Total revenues 64,906 49,080
COSTS AND OPERATING EXPENSES:
Cost of Vacation Interval sales 9,442 5,769
Sales and marketing 30,527 20,685
Provision for uncollectible notes 5,388 4,133
Operating, general and administrative 7,307 5,368
Other expense 934 753
Depreciation and amortization 1,781 1,205
Interest expense 6,478 3,282
------------ ------------
Total costs and operating expenses 61,857 41,195
Income before provision for income taxes 3,049 7,885
Provision for income taxes (1,174) (3,036)
------------ ------------
NET INCOME $ 1,875 $ 4,849
============ ============
NET INCOME PER COMMON SHARE:
BASIC $ 0.15 $ 0.38
============ ============
DILUTED $ 0.15 $ 0.38
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 12,889,417 12,889,417
============ ============
DILUTED 12,889,417 12,889,417
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
1
<PAGE> 4
SILVERLEAF RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 2000 1999
----------- ------------
<S> <C> <C>
Cash and cash equivalents $ 12,211 $ 4,814
Restricted cash 903 903
Notes receivable, net of allowance for uncollectible notes of
$35,942 and $32,326, respectively 316,312 286,581
Amounts due from affiliates 7,405 6,596
Inventories 116,937 112,810
Land, equipment, buildings, and utilities, net 51,596 51,050
Prepaid and other assets 17,321 17,203
--------- ---------
TOTAL ASSETS $ 522,685 $ 479,957
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses $ 16,116 $ 15,539
Unearned revenues 5,902 5,601
Income taxes payable 518 185
Deferred income taxes, net 28,902 28,251
Notes payable and capital lease obligations 233,162 194,171
Senior subordinated notes 75,000 75,000
--------- ---------
Total Liabilities 359,600 318,747
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, par value $0.01 per share, 100,000,000
shares authorized, 13,311,517 shares issued, and
12,889,417 shares outstanding 133 133
Additional paid-in capital 109,339 109,339
Retained earnings 58,612 56,737
Treasury stock, at cost (422,100 shares) (4,999) (4,999)
--------- ---------
Total Shareholders' Equity 163,085 161,210
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 522,685 $ 479,957
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 5
SILVERLEAF RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(in thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Common Stock
---------------------------
Number of $0.01 Additional Treasury Stock
Shares Par Paid-in Retained ------------------------
Issued Value Capital Earnings Shares Cost Total
--------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
January 1, 2000 13,311,517 $ 133 $ 109,339 $ 56,737 (422,100) $ (4,999) $ 161,210
Net income -- -- -- 1,875 -- -- 1,875
--------------- ---------- ---------- ---------- ---------- ---------- ----------
March 31, 2000 13,311,517 $ 133 $ 109,339 $ 58,612 (422,100) $ (4,999) $ 163,085
=============== ========== ========== ========== ========== ========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 6
SILVERLEAF RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
2000 1999
---------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,875 $ 4,849
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 1,780 1,205
Deferred income taxes 651 1,332
Increase (decrease) in cash from changes in
assets and liabilities:
Amounts due from affiliates (809) (921)
Inventories (4,127) (11,014)
Prepaid and other assets (195) 1,484
Accounts payable and accrued expenses 577 6,669
Unearned revenues 301 600
Income taxes payable 333 (2,953)
-------- --------
Net cash provided by operating activities 386 1,251
-------- --------
INVESTING ACTIVITIES:
Purchases of land, equipment, buildings, and utilities (471) (7,491)
Proceeds from sales of land, equipment, buildings, and utilities -- 4,494
Notes receivable, net (29,731) (24,123)
-------- --------
Net cash used in investing activities (30,202) (27,120)
-------- --------
FINANCING ACTIVITIES:
Proceeds from borrowings from unaffiliated entities 51,123 37,380
Payments on borrowings to unaffiliated entities (13,910) (9,626)
-------- --------
Net cash provided by financing activities 37,213 27,754
-------- --------
Net increase in cash 7,397 1,885
CASH AND CASH EQUIVALENTS:
Beginning of period 4,814 11,355
-------- --------
End of period $ 12,211 $ 13,240
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 4,654 $ 1,432
Income taxes paid $ 190 $ 4,657
Equipment acquired under capital lease or note $ 1,778 $ 4,596
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 7
SILVERLEAF RESORTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BACKGROUND
These condensed consolidated financial statements of Silverleaf Resorts, Inc.
and subsidiaries ("the Company") presented herein do not include certain
information and disclosures required by accounting principles generally
accepted in the United States of America for complete financial statements.
However, in the opinion of management, all adjustments considered necessary for
a fair presentation have been included. Operating results for the three months
ended March 31, 2000 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2000.
These condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and footnotes included in
the Company's Form 10-K for the year ended December 31, 1999 (File No.
001-13003) as filed with the Securities and Exchange Commission. The accounting
policies used in preparing these condensed consolidated financial statements
are the same as those described in such Form 10-K. Certain previously reported
amounts, however, have been reclassified to conform to the 2000 presentation.
SFAS No. 133 -- In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No. 133, as amended,
is effective for fiscal years beginning after June 15, 2000 and will be adopted
for the period beginning January 1, 2001. SFAS No. 133 requires that all
derivative instruments be recorded on the balance sheet at their fair value.
Changes in the fair value of the derivatives are recorded each period in
current earnings or other comprehensive income depending on whether a
derivative is designated as part of a hedge transaction, and if it is, the type
of hedge transaction. The impact of SFAS No. 133 on the Company's results of
operations, financial position, or cash flows will be dependent on the level
and types of derivative instruments the Company will have entered into at the
time the standard is implemented.
NOTE 2 - EARNINGS PER SHARE
For the three months ended March 31, 2000 and 1999, the weighted average shares
outstanding assuming dilution was anti-dilutive.
5
<PAGE> 8
NOTE 3 - DEBT
Loans, notes payable, capital lease obligations, and senior subordinated notes
as of March 31, 2000 and December 31, 1999 (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- ------------
<S> <C> <C>
$60 million revolving loan agreement, which contains certain financial
covenants, due December 2000, principal and interest payable
from the proceeds obtained on customer notes receivable pledged
as collateral for the note, at an interest rate of LIBOR plus 2.55%............. $ 32,524 $ 39,623
$70 million revolving loan agreement, capacity reduced by amounts
outstanding under the $10 million inventory loan agreement, which
contains certain financial covenants, due August 2004, principal and
interest payable from the proceeds obtained on customer notes
receivable pledged as collateral for the note, at an interest rate of
LIBOR plus 2.65%................................................................ 47,590 45,680
$75 million revolving loan agreement, which contains certain financial
covenants, due April 2005, principal and interest payable from the
proceeds obtained on customer notes receivable pledged as collateral
for the note, at an interest rate of LIBOR plus 3.00%........................... 72,722 62,215
$75 million revolving loan agreement, which contains certain financial
covenants, due November 2005, principal and interest payable from the
proceeds obtained on customer notes receivable pledged as collateral
for the note, at an interest rate of LIBOR plus 2.67%........................... 29,553 14,150
$30 million revolving loan agreement, which contains certain financial
covenants, due September 2006, principal and interest payable from the
proceeds obtained on customer notes receivable pledged as collateral
for the note, at an interest rate of Prime...................................... 20,244 6,678
$10 million inventory loan agreement, which contains certain financial
covenants, due August 2002, interest payable monthly, at an interest
rate of LIBOR plus 3.50%........................................................ 9,936 9,937
$10 million inventory loan agreement, which contains certain financial
covenants, due November 2001, interest payable monthly, at an interest
rate of LIBOR plus 3.25%........................................................ 3,948 --
Various notes, due from April 2000 through November 2009, collateralized
by various assets with interest rates ranging from 4.20% to 14.0%............... 4,100 4,088
--------- ---------
Total notes payable....................................................... 220,617 182,371
Capital lease obligations......................................................... 12,545 11,800
--------- ---------
Total notes payable and capital lease obligations......................... 233,162 194,171
10 1/2% senior subordinated notes, due 2008, interest payable semi-
annually on April 1 and October 1, guaranteed by all of the Company's
present and future domestic restricted subsidiaries............................. 75,000 75,000
--------- ---------
$ 308,162 $ 269,171
========= =========
</TABLE>
At March 31, 2000, LIBOR rates were from 6.13% to 6.29%, and the Prime rate was
9.00%. At December 31, 1999, LIBOR rates were from 5.82% to 6.00%, and the
Prime rate was 8.50%.
6
<PAGE> 9
NOTE 4 - SUBSIDIARY GUARANTEES
All subsidiaries of the Company have guaranteed the $75.0 million of senior
subordinated notes. The separate financial statements and other disclosures
concerning each guaranteeing subsidiary (each, a "Guarantor Subsidiary") are
not presented herein because the Company's management has determined that such
information is not material to investors. The guarantee of each Guarantor
Subsidiary is full and unconditional and joint and several. Each Guarantor
Subsidiary is a wholly owned subsidiary of the Company, and together comprise
all direct and indirect subsidiaries of the Company.
Combined summarized operating results of the Guarantor Subsidiaries for the
three months ended March 31, 2000 and 1999, are as follows (in thousands):
<TABLE>
<CAPTION>
March 31,
-----------------------
2000 1999
----------- ----------
<S> <C> <C>
Revenues $ -- $ 1
Expenses -- (45)
--------- ----------
Net loss $ -- $ (44)
========= ==========
</TABLE>
Combined summarized balance sheet information as of March 31, 2000 for the
Guarantor Subsidiaries is as follows (in thousands):
<TABLE>
<CAPTION>
March 31,
2000
----------
<S> <C>
Other assets $ 10
----------
Total assets $ 10
==========
Investment by parent (includes equity
and amounts due to parent) $ 10
----------
Total liabilities and equity $ 10
==========
</TABLE>
7
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain matters discussed throughout this Form 10-Q filing are forward looking
statements that are subject to risks and uncertainties that could cause actual
results to differ materially from those projected. Such risks and uncertainties
include, but are not limited to, those discussed in the Company's Form 10-K for
the year ended December 31, 1999 (File No. 001-13003).
The Company currently owns and/or operates 22 resorts in various stages of
development. These resorts offer a wide array of country club-like amenities,
such as golf, swimming, horseback riding, boating, and many organized
activities for children and adults. The Company represents an owner base of
over 106,000. The condensed consolidated financial statements of the Company
include the accounts of Silverleaf Resorts, Inc. and its subsidiaries, all of
which are wholly owned.
RESULTS OF OPERATIONS
The following table sets forth certain operating information for the Company.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
2000 1999
-------- --------
<S> <C> <C>
As a percentage of total revenues:
Vacation Interval sales 83.0% 84.2%
Sampler sales 2.0% 1.4%
----- -----
Total sales 85.0% 85.6%
Interest income 13.5% 11.6%
Management fee income 0.1% 1.8%
Other income 1.4% 1.0%
----- -----
Total revenues 100.0% 100.0%
As a percentage of Vacation Interval sales:
Cost of Vacation Interval sales 17.5% 14.0%
Provision for uncollectible notes 10.0% 10.0%
As a percentage of total sales:
Sales and marketing 55.3% 49.2%
As a percentage of total revenues:
Operating, general and administrative 11.3% 10.9%
Depreciation and amortization 2.7% 2.5%
Other expense 1.4% 1.5%
As a percentage of interest income:
Interest expense 73.8% 57.8%
</TABLE>
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Revenues
Revenues for the quarter ended March 31, 2000 were $64.9 million, representing
a $15.8 million or 32.2% increase over revenues of $49.1 million for the
quarter ended March 31, 1999. The increase was primarily due to a $12.6 million
increase in sales of Vacation Intervals and a $3.1 million increase in interest
income. The strong increase in Vacation Interval sales primarily resulted from
an increase in the number of upgrade sales for the first quarter of 2000 versus
the same period of 1999, improved closing percentages at several sales offices,
and increased sales prices.
8
<PAGE> 11
In the first quarter of 2000, the number of Vacation Intervals sold, exclusive
of upgraded Vacation Intervals, increased 19.2% to 4,624 from 3,879 in the same
period of 1999; the average price per interval increased 10.4% to $8,993 from
$8,146. Total interval sales for the first quarter of 2000 included 1,666
biennial intervals (counted as 833 Vacation Intervals) compared to 1,417 (709
Vacation Intervals) in the first quarter of 1999. The Company also increased
sales of upgraded intervals through the continued implementation of marketing
and sales programs focused on selling upgraded intervals to the Company's
existing Vacation Interval owners. In the first quarter of 2000, the 2,934
upgraded Vacation Intervals were sold at an average price of $4,193 compared to
2,248 upgraded Vacation Intervals sold at an average price of $4,329 during the
comparable 1999 period.
Sampler sales increased $597,000 to $1.3 million for the quarter ended March
31, 2000, compared to $700,000 for the same period in 1999. The increase
primarily resulted from a $544,000 cumulative reclassification between sampler
sales and related expenses in the first quarter of 1999, in order to restate
sampler unearned revenues and sampler deferred expenses separately on the
balance sheet.
Interest income increased 54.6% to $8.8 million for the quarter ended March 31,
2000, from $5.7 million for the same period of 1999. This increase primarily
resulted from a $118.2 million increase in notes receivable, net of allowance
for uncollectible notes, since March 31, 1999, due to increased sales.
Management fee income, which consists of management fees collected from the
resorts' management clubs, can not exceed the management clubs' net income.
Management fee income decreased $819,000 for the first quarter of 2000, as
compared to the first quarter of 1999, due to increased operating expenses at
the management clubs.
Other income consists of water and utilities income, condominium rental income,
marina income, golf course and pro shop income, and other miscellaneous items.
Other income increased $391,000 to $865,000 for the first quarter of 2000
compared to $474,000 for the same period of 1999. The increase primarily
relates to growth in water and utilities income and increased golf course and
pro shop income at two resorts.
Cost of Sales
Cost of sales as a percentage of Vacation Interval sales increased to 17.5% in
the first quarter of 2000, from 14.0% for the same period of 1999. As the
Company continues to deplete its inventory of low-cost Vacation Intervals
acquired primarily in 1995 and 1996, the Company's sales mix has shifted to
more recently constructed units, which were built at a higher average cost per
Vacation Interval. Hence, the cost of sales as a percentage of Vacation
Interval sales has increased compared to 1999. This increase, however, was
partially offset by increased sales prices since the first quarter of 1999.
Sales and Marketing
Sales and marketing costs as a percentage of total sales increased to 55.3% for
the quarter ended March 31, 2000, from 49.2% for the same period of 1999. Due
to recent growth rates and implementation of new leads generation programs, the
Company experienced relatively higher marketing costs in the first quarter of
2000. The Company increased its headcount at the call centers significantly
during the first quarter of 2000, which created inefficiencies due to temporary
lack of available training resources. In addition, the Company has moved
towards reliance on national retail chains for its leads generation efforts, in
addition to the traditional local programs. The transition to national programs
has been slower in generating leads than originally planned. A major focus of
Company management in 2000 is to improve the efficiencies of the marketing
process, which will bring sales and marketing expenses more in line with
expectations.
Provision for Uncollectible Notes
The provision for uncollectible notes as a percentage of Vacation Interval
sales was unchanged at 10.0% for the first quarter of 2000, compared to the
first quarter of 1999.
Operating, General and Administrative
Operating, general and administrative expenses as a percentage of total
revenues increased to 11.3% for the quarter
9
<PAGE> 12
ended March 31, 2000, as compared to 10.9% for the quarter ended March 31, 1999.
The increase is primarily attributable to increased legal expenses, increases in
payroll taxes, employee benefits, and workers' compensation related to Company
growth, and an increase in title and recording fees due to increased borrowings
against pledged notes receivable.
Other Expense
Other expense consists of water and utilities expenses, golf course and pro
shop expenses, marina expenses, and other miscellaneous expenses. Other expense
as a percentage of total revenues remained relatively flat at 1.4% for the
quarter ended March 31, 2000, as compared to 1.5% for the quarter ended March
31, 1999. The $181,000 increase in other expense primarily relates to increased
water and utilities expense.
Depreciation and Amortization
Depreciation and amortization expense as a percentage of total revenues was
relatively flat at 2.7% for the quarter ended March 31, 2000, compared to 2.5%
for the quarter ended March 31, 1999. Overall, depreciation and amortization
expense increased $576,000 for the first quarter of 2000, as compared to 1999,
primarily due to investments in automated dialers, investments in telephone
systems, and investments in a central marketing facility, which opened in
September 1999.
Interest Expense
Interest expense as a percentage of interest income increased to 73.8% for the
first quarter of 2000, from 57.8% for the same period of 1999. This increase is
primarily the result of interest expense related to increased borrowings
against pledged notes receivable. Also, the Company's weighted average cost of
borrowing increased slightly in the first quarter of 2000 compared to the first
quarter of 1999.
Income before Provision for Income Taxes
Income before provision for income taxes decreased to $3.0 million for the
quarter ended March 31, 2000, as compared to $7.9 million for the quarter ended
March 31, 1999, as a result of the above mentioned operating results.
Provision for Income Taxes
Provision for income taxes as a percentage of income before provision for
income taxes remained flat at 38.5% in the first quarter of 2000, as compared
to the first quarter of 1999.
Net Income
Net income decreased to $1.9 million for the quarter ended March 31, 2000, as
compared to $4.8 million for the quarter ended March 31, 1999, as a result of
the above mentioned operating results.
LIQUIDITY AND CAPITAL RESOURCES
SOURCES OF CASH. The Company generates cash primarily from down payments on the
sale of Vacation Intervals, sampler sales, collections of principal and
interest on customer notes receivable from Vacation Interval owners, management
fees, and resort and utility operations. During the three months ended March
31, 2000, cash provided by operations was $386,000, compared to cash provided
by operating activities of $1.3 million for the same period of 1999. The
decrease in cash provided by operating activities was primarily a result of a
decrease in net income and the timing of operational payments. The Company
typically receives a 10% down payment on sales of Vacation Intervals and
finances the remainder by receipt of a seven to ten year customer promissory
note. The Company generates cash from financing of customer notes receivable
(i) by borrowing at an advance rate of 70% to 85% of eligible customer notes
receivable and (ii) from the spread between interest received on customer notes
receivable and interest paid on related borrowings. Because the Company uses
significant amounts of cash in the development and marketing of Vacation
Intervals, but collects cash on customer notes receivable over a seven-year to
ten-year period, borrowing against receivables has historically been a
necessary part of normal operations.
10
<PAGE> 13
For the three months ended March 31, 2000 and 1999, cash provided by financing
activities was $37.2 million and $27.8 million, respectively. The increase in
net cash provided by financing activities was primarily due to increased
borrowings against pledged notes receivable during the three months ended March
31, 2000, compared to the same period of 1999. As of March 31, 2000, the
Company's credit facilities provide for loans of up to $320.0 million. At March
31, 2000, approximately $216.5 million of principal and interest related to
advances under the credit facilities was outstanding. For the three months
ended March 31, 2000, the weighted average cost of funds for all borrowings,
including the senior subordinated debt, was approximately 9.4%.
The Company believes that with respect to its current operations and capital
commitments, its borrowing capacity under existing third-party lending
agreements, together with cash generated from operations and future borrowings,
will be sufficient to meet the Company's working capital and capital
expenditure needs through the year ended December 31, 2000. The Company will
continue to review the possibility of extending its borrowing capacity with
existing lenders or issuing additional debt or mortgage-backed securities to
finance future acquisitions, refinance debt, finance mortgage receivables, and
provide for other working capital purposes.
USES OF CASH. Investing activities typically reflect a net use of cash as a
result of loans to customers in connection with the Company's Vacation Interval
sales, capital additions, and property acquisitions. Net cash used in investing
activities for the three months ended March 31, 2000 and 1999, was $30.2
million and $27.1 million, respectively. The increase was primarily due to the
increased level of customer notes receivable resulting from higher sales volume
and $4.5 million of cash received in the first quarter of 1999 related to sales
of equipment.
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is currently subject to litigation arising in the normal course of
its business. From time to time, such litigation includes claims regarding
employment, tort, contract, truth-in-lending, the marketing and sale of
Vacation Intervals, and other consumer protection matters. Litigation has been
initiated from time to time by persons seeking individual recoveries for
themselves, as well as, in some instances, persons seeking recoveries on behalf
of an alleged class. In the judgement of the Company, none of these lawsuits or
claims against the Company, either individually or in the aggregate, is likely
to have a material adverse effect on the Company, its business, results of
operations, or financial condition.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Contract of sale dated September 23, 1999 among the Company and George
Woelfel, individually and as Co-Trustee, and PNC Bank, N.A., as
Co-Trustee of the Woefel PNC Trust.
27.0 Financial Data Schedule.
- ----------
(b) Reports on Form 8-K
None.
11
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 10, 2000 By: /s/ ROBERT E. MEAD
---------------------------
Robert E. Mead
Chairman of the Board and
Chief Executive Officer
Dated: May 10, 2000 By: /s/ HARRY J. WHITE, JR.
---------------------------
Harry J. White, Jr.
Chief Financial Officer
12
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
10.1 Contract of sale dated September 23, 1999 among the Company
and George Woelfel, individually and as Co-Trustee, and PNC
Bank, N.A., as Co-Trustee of the Woefel PNC Trust.
27.0 Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 10.1
CONTRACT OF SALE
This Agreement is entered into by and between GEORGE WOELFEL,
individually and as Co-Trustee of the Woelfel PNC Trust, and PNC BANK, N.A., as
Co-Trustee of the Woelfel PNC Trust (collectively "Seller") and SILVERLEAF
RESORTS, INC., a Texas corporation ("Purchaser").
W I T N E S S E T H:
FOR AND IN CONSIDERATION of the promises, undertakings, and mutual
covenants of the parties herein set forth, Seller hereby agrees to sell and
Purchaser hereby agrees to purchase and pay for all that certain property
hereinafter described in accordance with the following terms and conditions:
ARTICLE I
PROPERTY
The conveyance by Seller to Purchaser shall include the following
described tracts or parcels of land, together with all and singular the rights
and appurtenances pertaining to such land including any right, title and
interest of Seller in and to adjacent strips or gores, streets, alleys, or
rights-of-way and all rights of ingress and egress thereto:
Those certain tracts of land located in the Township of
Butler, Luzerne County, Pennsylvania, commonly known as excepted
Parcels 8X, 9X and 11X and any other parcels of land or legal interest
held by Seller located within and formerly part of Beech Mountain
Lakes.
Hereafter the aforesaid real property is referred to as the "Subject Property."
The conveyance by Seller to Purchaser shall also include all buildings and other
improvements on the Subject Property.
ARTICLE II
PURCHASE PRICE
The purchase price to be paid by Purchaser to Seller for the Subject
Property shall be the sum of Three Hundred Thousand and No/100 Dollars
($300,000.00). The purchase price shall be payable all in cash at the closing.
-1-
<PAGE> 2
ARTICLE III
EARNEST MONEY
Within two (2) business days after final execution of this Contract by
all parties hereto, Purchaser shall deliver Purchaser's check in the amount of
Sixty Thousand and No/100 Dollars ($60,000.00) to Davis Chant, 106 East Harford
Street, Milford, Pennsylvania 18337 (the "Escrow Agent"). The Escrow Agent shall
immediately cash the earnest money check and deposit the proceeds thereof in an
interest bearing account, the earnings from which shall accrue to the benefit of
Purchaser (hereinafter the proceeds of the earnest money check shall be referred
to as the "earnest money"). If Purchaser does not terminate this Contract during
the Title Review Period (as defined in Article V hereinbelow), then, within two
(2) business days after the expiration of the Title Review Period, the Escrow
Agent shall immediately disburse the entire $60,000.00 earnest money deposit to
Seller; upon such disbursement the $60,000.00 earnest money deposit shall be
non-refundable to the Purchaser except in the event of a default by Seller
hereunder, but if this Contract closes, then the entire $60,000.00 earnest money
deposit shall be applied in partial satisfaction of the purchase price payable
at closing. Notwithstanding the foregoing or anything to the contrary contained
herein, in no event shall the $60,000.00 earnest money deposit be disbursed to
Seller until or unless Seller has complied with Seller's obligation to withdraw
as a party from Case No. 2001-C of 1999.
In the event that this Contract is closed, then all earnest money shall
be applied in partial satisfaction of the purchase price. In the event that this
Contract is not closed, then the earnest money shall be disbursed in the manner
provided for elsewhere herein.
ARTICLE IV
PRE-CLOSING OBLIGATIONS OF PURCHASER AND SELLER
As soon as reasonably possible after execution of this Contract by all
parties hereto, Seller, at Purchaser's sole cost and expense, shall obtain and
deliver to Purchaser copies of the following (collectively the "Purchaser Due
Diligence Items"):
a. An updated survey of the Subject Property dated subsequent
to the date of execution of this Contract and prepared by a licensed
professional engineer or surveyor acceptable to Purchaser, which Survey
shall: (a) include a metes and bounds legal description of the Subject
Property; (b) accurately show all improvements, encroachments and uses
and accurately show all easements and encumbrances visible or listed on
the Title Commitment (identifying each by recording reference if
applicable); (c) recite the number of acres included in the
- 2 -
<PAGE> 3
Subject Property; (d) state whether the Subject Property (or any
portion thereof) lies within a flood zone, or flood prone area; and (e)
contain a certificate verifying that the Survey was made on the ground,
that the Survey is correct, that there are no improvements,
encroachments, easements, uses or encumbrances except as shown on the
survey plat, that the area represented for the Subject Property has
been certified by the surveyor as being correct, and that the Subject
Property does not lie within any flood zone or flood prone area, except
as indicated thereon. Unless otherwise agreed by Seller and Purchaser,
the metes and bounds description contained in the Survey shall be the
legal description employed in the documents of conveyance of the
Subject Property; and
b. A current commitment (the "Title Commitment") for the
issuance of an owner's policy of title insurance to the Purchaser,
together with good and legible copies of all documents constituting
exceptions to Seller's title as reflected in the Title Commitment.
By execution hereof, George Woelfel, individually and as Co-Trustee of the
Woelfel PNC Trust, and acting in his capacity as Co-Trustee of the Woelfel PNC
Trust, will and does hereby agree to withdraw as a party from Case No. 2001-C of
1999 and from any involvement whatsoever by George Woelfel, any members of his
family, and the Woelfel PNC Trust, including the financing of any litigation,
objections or appeals by third parties, in any objection, appeals, or litigation
concerning the application by Purchaser for a timeshare project at and upon
Beech Mountain Lakes, Butler Township, Luzerne County, Pennsylvania. Woelfel
agrees that from and after the date hereof neither Woelfel nor any members of
his family nor the Woelfel PNC Trust will become involved in any controversies
or litigation that might delay or hinder Purchaser with respect to the
development of Purchaser's proposed timeshare project at Beech Mountain Lakes.
Woelfel agrees to have Case No. 2001-C of 1999 withdrawn by Woelfel. Purchaser
shall simultaneously with the withdrawal of Case No. 2001-C of 1999 file a
dismissal with prejudice of the declaratory judgment action filed to Case No.
2433-C of 1999.
ARTICLE V
TITLE INSPECTION PERIOD
Purchaser shall have a period of time commencing on the date of
execution of this Contract and expiring five (5) days from the date on which
Purchaser obtains the last of the items to be obtained by Purchaser pursuant to
Article IV(a) and (b) hereinabove within which to review and approve the status
of Seller's title to the Subject Property (the "Title Review Period"), which
Title Review Period shall not exceed forty-five (45) days without a written
explanation from Purchaser and a written consent to extend the Title Review
Period by Seller, which consent shall not be unreasonably withheld. If the
information to be provided to or obtained by Purchaser pursuant to the
provisions of Article IV hereinabove reflects or discloses any defect, exception
or other matter
- 3 -
<PAGE> 4
affecting the Subject Property ("Title Defects") that renders title to the
Subject Property unmarketable, then prior to the expiration of the Title Review
Period Purchaser shall provide Seller with written notice of Purchaser's
objections. Seller may, at Seller's sole option, elect to cure or remove the
objections raised by Purchaser; provided, however, that Seller shall have no
obligation to do so. Should Seller elect to attempt to cure or remove the
objections, Seller shall have ten (10) days from the date of Purchaser's written
notice of objections (the "Cure Period") in which to accomplish the cure. In the
event Seller either elects not to cure or remove the objections or is unable to
accomplish the cure prior to the expiration of the Cure Period, then Seller
shall so notify Purchaser in writing specifying which objections Seller does not
intend to cure, and then Purchaser shall be entitled, as Purchaser's sole and
exclusive remedies, either to terminate this Agreement by providing written
notice of termination to Seller within ten (10) days from the date on which
Purchaser receives Seller's no-cure notice or waive the objections and close
this transaction as otherwise contemplated herein. If Purchaser shall fail to
notify Seller in writing of any objections to the state of Seller's title to the
Subject Property as shown by the Survey and Title Commitment, then Purchaser
shall be deemed to have no objections to the state of Seller's title to the
Subject Property as shown by the Survey and Title Commitment, and any exceptions
to Seller's title which have not been objected to by Purchaser and which are
shown on the Survey or described in the Title Commitment shall be considered to
be "Permitted Exceptions." It is further understood and agreed that any Title
Defects which have been objected to by Purchaser and which are subsequently
waived by Purchaser shall be Permitted Exceptions. Notwithstanding the foregoing
or anything to the contrary contained herein, Purchaser agrees that Purchaser
will not raise any issues which have been asserted in the pleadings filed in
connection with the declaratory judgment action filed in Case No. 2433-C of 1999
as a title defect.
ARTICLE VI
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER
Seller represents and warrants to Purchaser that at closing Seller
shall convey the Subject Property to Purchaser free and clear of all liens,
encumbrances, security interests, leases, and easements except for the Permitted
Exceptions. At closing , title to the Subject Property shall be good and
marketable and shall be such as will be insured at regular rates, without
exception, by a title insurance company of Purchaser's choice licensed to do
business in Pennsylvania.
- 4 -
<PAGE> 5
Seller further covenants and agrees with Purchaser that, from the date
hereof until the closing, Seller shall not sell, assign, or convey any right,
title, or interest whatsoever in or to the Subject Property, or create or permit
to exist any lien, security interest, easement, encumbrance, charge, or
condition affecting the Subject Property (other than the Permitted Exceptions)
without promptly discharging the same prior to closing.
All of the foregoing representations and warranties of Seller are made
by Seller both as of the date hereof and as of the date of the closing
hereunder. Notwithstanding the foregoing or anything to the contrary contained
herein, it is understood and agreed that the representations and warranties set
forth hereinabove shall survive the closing of this Contract only for a period
of one (1) year following the closing date, but not thereafter, and Seller shall
have no liability of any kind whatsoever for any breach thereof except to the
extent a claim is asserted against Seller within such one (1) year period.
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
The obligation of Purchaser to close this Contract shall, at the option
of Purchaser, be subject to the following conditions precedent:
a. All of the representations, warranties and agreements of
Seller set forth in this Contract shall be true and correct in all
material respects as of the date hereof and at closing, and Seller
shall not have on or prior to closing, failed to meet, comply with or
perform in any material respect any conditions or agreements on
Seller's part as required by the terms of this Contract;
b. There shall be no change in the matters reflected in the
Title Commitment, and there shall not exist any encumbrance or title
defect affecting the Subject Property not described in the Title
Commitment except for the Permitted Exceptions; and
c. There shall be no changes in the matters reflected in the
Survey, and there shall not exist any easement, right-of-way,
encroachment, waterway, pond, flood plain, conflict or protrusion with
respect to the Subject Property not shown on the Survey;
If any such condition is not fully satisfied by closing, Purchaser may
terminate this Contract by written notice to Seller whereupon this Contract
shall be cancelled, all earnest money shall be returned to Purchaser and
thereafter neither Seller nor Purchaser shall have any continuing obligations
one unto the other.
- 5 -
<PAGE> 6
ARTICLE VIII
CLOSING
The closing hereunder shall take place at the offices of the title
company which issues the Title Commitment. The closing shall occur within ten
(10) days from the date on which Seller has received final approval of the
planning and zoning for Seller's proposed development at Beech Mountain Lakes
from Butler Township and all appeal periods regarding such planning and zoning
approval have expired, but in no event shall the closing occur later than one
hundred eighty (180) days from the date of execution of this Contract. Purchaser
shall notify Seller at least five (5) days in advance of the exact time and date
of closing.
ARTICLE IX
SELLER'S OBLIGATIONS AT CLOSING
At the closing, Seller shall do the following:
a. Deliver to Purchaser a deed covering the Subject Property,
duly signed and acknowledged by Seller, which deed shall be in form
reasonably acceptable to Purchaser for recording and shall convey to
Purchaser good and marketable title to the Subject Property, free and
clear of all liens, rights-of-way, easements, and other matters
affecting title to the Subject Property, except for the Permitted
Exceptions.
b. Deliver or cause to be delivered to Purchaser an ALTA
owner's form of title insurance policy (the "Title Policy") insuring
Purchaser in the amount of the purchase price that Purchaser has
acquired good and marketable title to the Subject Property, subject
only to the Permitted Exceptions. Purchaser shall be entitled to
request the title company to provide, at Purchaser's sole cost and
expense, such endorsements (or amendments) to the Title Policy as
Purchaser may reasonably require so long as such endorsements or
amendments impose no additional liability on Seller or delay the
closing. Purchaser acknowledges and agrees that the Title Policy may be
actually delivered within a reasonable time following the closing so
long as Purchaser has received at closing a current binding title
commitment obligating the title company to deliver the Title Policy.
Purchaser shall pay the premium for a standard owner's form of title
insurance policy in the amount of the purchase price, and Purchaser
shall pay the cost of any title endorsements required by Purchaser and
the cost of any reinsurance required by Purchaser.
c. Deliver a non-withholding statement that will satisfy the
requirements of Section 1445 of the Internal Revenue Code so that
Purchaser is not required to withhold any portion of the purchase price
for payment to the Internal Revenue Service.
d. Deliver to Purchaser any other documents or items necessary
or convenient in the reasonable judgment of Purchaser to carry out the
intent of the parties under this Contract.
- 6 -
<PAGE> 7
ARTICLE X
PURCHASER'S OBLIGATIONS AT CLOSING
At the closing, Purchaser shall deliver to Seller the purchase price in
cash.
ARTICLE XI
COSTS AND ADJUSTMENTS
At closing, the following items shall be adjusted or prorated between
Seller and Purchaser:
a. Any real estate transfer taxes or sales taxes payable in
connection with the sale of the Subject Property shall be divided
equally between Seller and Purchaser.
b. Ad valorem taxes for the Subject Property for the current
calendar year shall be prorated as of the date of closing, and Seller
shall pay to Purchaser in cash at closing Seller's pro rata portion of
such taxes. Seller's pro rata portion of such taxes shall be based upon
taxes actually assessed for the current calendar year or, if for any
reason such taxes for the Subject Property have not been actually
assessed, such proration shall be based upon the amount of such taxes
for the immediately preceding calendar year, and adjusted by cash
settlement when exact amounts are available. However, anything herein
to the contrary notwithstanding, any tax abatement or refund for a
period of time prior to closing shall belong to Seller.
c. All other closing costs, including but not limited to,
recording and escrow fees shall be paid by the Purchaser; provided,
however, that Seller and Purchaser shall each be responsible for the
fees and expenses of their respective attorneys.
Seller agrees to indemnify and hold Purchaser harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature (except those items which under the terms of this Contract specifically
become the obligation of Purchaser), brought by third parties and based on
events occurring on or before the date of closing and which are in any way
related to the ownership, maintenance, or operation of the Subject Property, and
all expenses related thereto, including, but not limited to, court costs and
attorneys' fees.
Purchaser agrees to indemnify and hold Seller harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature, brought by third parties and based on events occurring subsequent to the
date of closing and which are in any way related to the ownership, maintenance
or operation of the Subject Property, and all expenses related thereto,
including, but not limited to, court costs and attorneys' fees.
Notwithstanding anything to the contrary contained herein, the
indemnities set forth in this Article XI shall survive the closing hereunder.
- 7 -
<PAGE> 8
ARTICLE XII
ENTRY ON PROPERTY
Purchaser, Purchaser's agents, employees, servants, or nominees, are
hereby granted the right to enter upon the Subject Property at any time prior to
closing for the purpose of inspecting the Subject Property and conducting such
engineering and mechanical tests as Purchaser may deem necessary or advisable,
any such inspections and tests to be made at Purchaser" sole expense. Purchaser
agrees to indemnify and hold Seller harmless from and against any and all
losses, damages, costs, or expenses incurred by Seller as a result of any
inspections or tests made by Purchaser.
ARTICLE XIII
POSSESSION OF PROPERTY
Possession of the Property free and clear of all uses and
encroachments, except the Permitted Exceptions, shall be delivered to Purchaser
at closing.
ARTICLE XIV
NOTICES
All notices, demands, or other communications of any type given by the
Seller to the Purchaser, or by the Purchaser to the Seller, whether required by
this Contract or in any way related to the transaction contracted for herein,
shall be void and of no effect unless given in accordance with the provisions of
this paragraph. All notices shall be in writing and delivered to the person to
whom the notice is directed, either in person, by facsimile transmission, or by
United States Mail, as a registered or certified item, return receipt requested.
Notices delivered by mail shall be deemed given when deposited in a post office
or other depository under the care or custody of the United States Postal
Service, enclosed in a wrapper with proper postage affixed, addressed as
follows:
Seller: George Woelfel
R.R. 1, Box 310
Sugarloaf, Pennsylvania 18249
Purchaser: Silverleaf Resorts, Inc.
1221 Riverbend Dr., Suite 120
Dallas, Texas 75247
Telephone No.: (214) 631-1166
Facsimile No.: (214) 905-0514
- 8 -
<PAGE> 9
With Required Copy to: Meadows, Owens, Collier, Reed,
Cousins & Blau, L.L.P.
3700 Bank of America Plaza
901 Main Street
Dallas, Texas 75202
Attn: George R. Bedell, Esq.
Telephone No.: (214) 749-2448
Facsimile No.: (214) 747-3732
ARTICLE XV
REMEDIES
In the event that Seller fails to timely comply with all conditions,
covenants and obligations of Seller hereunder, it shall be an event of default
and Purchaser shall have the option (i) to terminate this Contract by providing
written notice thereof to Seller, in which event the earnest money shall be
returned immediately to Purchaser by the Escrow Agent and the parties hereto
shall have no further liabilities or obligations one unto the other; (ii) to
waive any defect or requirement and close this Contract; or (iii) to sue Seller
for specific performance or for damages. The exercise of any of the foregoing
remedies of Purchaser shall not in any manner be construed as a waiver of
Purchaser's right to seek specific performance or to sue for damages, and in the
event of a default by Seller hereunder, Purchaser shall be entitled to enforce
specific performance hereunder or sue Seller for damages.
In the event that Purchaser fails to timely comply with all conditions,
covenants, and obligations Purchaser has hereunder, such failure shall be an
event of default, and Seller's sole remedy shall be to receive the Earnest
Money. The Earnest Money is agreed upon by and between the Seller and Purchaser
as liquidated damages due to the difficulty and inconvenience of ascertaining
and measuring actual damages, and the uncertainty thereof, and no other damages,
rights, or remedies shall in any case be collectible, enforceable, or available
to the Seller other than in this paragraph defined, and Seller shall accept the
Earnest Money as Seller's total damages and relief.
- 9 -
<PAGE> 10
ARTICLE XVI
ASSIGNMENT
Purchaser shall have the right to nominate who shall take title and who
shall succeed to Purchaser's duties and obligations hereunder, or assign this
Contract to any person, firm, corporation, or other entity which Purchaser may,
at Purchaser's sole option, choose, and from and after such nomination or
assignment, wherever in this Contract reference is made to Purchaser such
reference shall mean the nominee or assignee who shall succeed to all the
rights, duties, and obligations of Purchaser hereunder.
ARTICLE XVII
INTERPRETATION AND APPLICABLE LAW
This Agreement shall be construed and interpreted in accordance with
the laws of the State of Pennsylvania. Where required for proper interpretation,
words in the singular shall include the plural; the masculine gender shall
include the neuter and the feminine, and vice versa. The terms "successors and
assigns" shall include the heirs, administrators, executors, successors, and
assigns, as applicable, of any party hereto.
ARTICLE XVIII
AMENDMENT
This Contract may not be modified or amended, except by an agreement in
writing signed by the Seller and the Purchaser. The parties may waive any of the
conditions contained herein or any of the obligations of the other party
hereunder, but any such waiver shall be effective only if in writing and signed
by the party waiving such conditions and obligations.
ARTICLE XIX
AUTHORITY
Each person executing this Contract warrants and represents that he is
fully authorized to do so.
- 10 -
<PAGE> 11
ARTICLE XX
ATTORNEYS' FEES
In the event it becomes necessary for either party to file a suit to
enforce this Contract or any provisions contained herein, the prevailing party
shall be entitled to recover, in addition to all other remedies or damages,
reasonable attorneys' fees and costs of court incurred in such suit.
ARTICLE XXI
DESCRIPTIVE HEADINGS
The descriptive headings of the several paragraphs contained in this
Contract are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
ARTICLE XXII
ENTIRE AGREEMENT
This Contract (and the items to be furnished in accordance herewith)
constitutes the entire agreement between the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings of the parties in connection therewith. No representation,
warranty, covenant, agreement, or condition not expressed in this Contract shall
be binding upon the parties hereto or shall affect or be effective to interpret,
change, or restrict the provisions of this Contract.
ARTICLE XXIII
MULTIPLE ORIGINALS ONLY
Numerous copies of this Contract may be executed by the parties hereto.
Each such executed copy shall have the full force and effect of an original
executed instrument.
ARTICLE XXIV
ACCEPTANCE
Seller shall have until 5:00 o'clock p.m., September 20, 1999, to
execute and return a fully executed original of this Contract to Purchaser,
otherwise this Contract shall become null and void. Time is of the essence of
this Contract. The date of execution of this Contract by Seller shall be the
date of execution of this Contract. If the final date of any period falls upon a
Saturday, Sunday,
- 11 -
<PAGE> 12
or legal holiday under the laws of the State of Pennsylvania, then in such event
the expiration date of such period shall be extended to the next day which is
not a Saturday, Sunday, or legal holiday under the laws of the State of
Pennsylvania.
ARTICLE XXV
REAL ESTATE COMMISSION
Seller represents and warrants to Purchaser that Seller has not
contacted or entered into any agreement with any real estate broker, agent,
finder, or any other party in connection with this transaction, and that Seller
has not taken any action which would result in any real estate broker's,
finder's, or other fees or commissions being due and payable to any other party
with respect to the transaction contemplated hereby. Purchaser hereby represents
and warrants to Seller that Purchaser has not contracted or entered into any
agreement with any real estate broker, agent, finder, or any other party in
connection with this transaction, and that Purchaser has not taken any action
which would result in any real estate broker's, finder's, or other fees or
commissions being due or payable to any other party with respect to the
transaction contemplated hereby. Each party hereby indemnifies and agrees to
hold the other party harmless from any loss, liability, damage, cost, or expense
(including reasonable attorneys' fees) resulting to the other party by reason of
a breach of the representation and warranty made by such party herein.
Notwithstanding anything to the contrary contained herein, the indemnities set
forth in this Article XXV shall survive the closing.
ARTICLE XXVI
CONFIDENTIALITY
Seller and Purchaser hereby agree that the terms and conditions of this
Contract shall be kept confidential and shall not be disclosed by either party
in any manner whatsoever, either in whole or in part, except to persons within
their organizations or families, regulatory agencies, auditors and accountants,
and business-related entities who have a need to know as part of their duties
and responsibilities.
- 12 -
<PAGE> 13
EXECUTED on this the 15th day of September, 1999.
SELLER:
/s/ GEORGE WOELFEL
--------------------------------------
GEORGE WOELFEL,
INDIVIDUALLY AND AS
CO-TRUSTEE OF THE WOELFEL
PNC TRUST
PNC BANK, N.A., CO-TRUSTEE
OF THE WOELFEL PNC TRUST
By: /s/ DAVID J. STEBER
-----------------------------------
Name: David J. Steber
---------------------------------
Its: Asst. V.P. & Trust Officer
----------------------------------
EXECUTED on this the 23rd day of September, 1999.
PURCHASER:
SILVERLEAF RESORTS, INC.
By: /s/ ROBERT E. MEAD
-----------------------------------
Name: Robert E. Mead
---------------------------------
Its: CEO
----------------------------------
RECEIPT OF EARNEST MONEY AND ONE (1) EXECUTED COUNTERPART OF THIS CONTRACT IS
HEREBY ACKNOWLEDGED:
ESCROW AGENT:
/s/ DAVIS CHANT
- ------------------------------
DAVIS CHANT
-13-
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