EXHIBIT 10.1
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
dated as of June 4, 1996
among
COBBLESTONE GOLF GROUP, INC.,
as Borrower,
COBBLESTONE HOLDINGS, INC.,
as Guarantor
VARIOUS FINANCIAL INSTITUTIONS,
and
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION,
individually and as Agent
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TABLE OF CONTENTS
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SECTION 1.1 DEFINITIONS...................................................... 1
1.2 Reallocation of Loans and Commitments............................ 28
SECTION 2 COMMITMENTS OF THE LENDERS; TYPES OF LOANS;
BORROWING PROCEDURES; LETTERS OF CREDIT........................ 30
2.1 Commitments...................................................... 30
2.1.1 Working Capital Revolving Commitments..................... 31
2.1.2 Reducing Revolver Loan Commitment......................... 31
2.2 Various Types of Loans........................................... 32
2.3 Borrowing Procedures............................................. 33
2.4 Procedures for Conversion of Type of Loan........................ 33
2.5 Conditions to the Making of Reducing Revolver Loans
Used to Finance Subsequent Acquisitions........................ 33
2.6 Other Terms Applicable to Delayed Subsequent
Acquisition Capital Expenditures and Designated
Non-Recurring Capital Expenditures............................. 38
2.7 Warranty......................................................... 40
2.8 Conditions....................................................... 41
2.9 Commitments Several.............................................. 41
2.10 Letters of Credit................................................ 41
2.10.1 Issuance of Letters of Credit............................ 41
2.10.2 Issuance Requests........................................ 41
2.10.3 Amendments............................................... 43
2.10.4 Letter of Credit Fees.................................... 43
2.10.5 Other Lenders' Participations; Reimbursements............ 44
2.10.6 Disbursements............................................ 45
2.10.7 Reimbursement............................................ 46
2.10.8 Deemed Disbursements..................................... 46
2.10.9 Nature of Reimbursement Obligations...................... 47
SECTION 3 NOTES EVIDENCING LOANS........................................... 49
3.1 Notes............................................................ 49
3.2 Recordkeeping.................................................... 50
SECTION 4 INTEREST......................................................... 50
4.1 Interest Rates................................................... 50
4.2 Interest Payment Dates........................................... 50
4.3 Interest Periods................................................. 51
4.4 Setting and Notice of Eurodollar Rates........................... 51
4.5 Computation of Interest.......................................... 51
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SECTION 5 FEES............................................................. 52
5.1 Working Capital Revolving Loan Non-Use Fee....................... 52
5.2 Reducing Revolver Loan Non-Use Fee............................... 52
5.3 Additional Fees.................................................. 52
SECTION 6 REDUCTION OR TERMINATION OF COMMITMENTS; REPAYMENTS;
PREPAYMENTS.................................................... 52
6.1 Reduction or Termination of the Commitments................ 53
6.1.1 Scheduled Mandatory Reductions of Reducing
Revolver Loan Commitments................................ 53
6.1.2 Mandatory Reduction from Asset Sale........................ 53
6.1.3 Mandatory Reduction from Debt Securities Sale.............. 53
6.1.4 Mandatory Reduction from Equity Securities Sale............ 53
6.1.5 Voluntary Reduction or Termination......................... 53
6.1.6 All Reduction.............................................. 54
6.2 Repayments................................................. 54
6.3 Prepayments...................................................... 54
6.3.1 Mandatory Prepayments from Asset Sales..................... 54
6.3.2 Mandatory Prepayments from Debt Securities Sale............ 54
6.3.3 Mandatory Prepayments from Equity Securities Sale.......... 55
6.3.4 Mandatory Prepayments Due to Commitment Reductions......... 55
6.3.5 Voluntary Prepayments...................................... 55
6.3.6 All Prepayments............................................ 55
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.................. 56
7.1 Making of Payments............................................... 56
7.2 Application of Certain Payments.................................. 56
7.3 Due Date Extension............................................... 56
7.4 Setoff........................................................... 56
7.5 Proration of Payments............................................ 57
7.6 Net Payments; Tax Exemptions..................................... 57
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS......... 58
8.1 Increased Costs.................................................. 58
8.2 Basis for Determining Interest Rate Inadequate or Unfair......... 60
8.3 Changes in Law Rendering Eurodollar Loans Unlawful............... 60
8.4 Funding Losses................................................... 61
8.5 Right of Lenders to Fund through Other Offices................... 61
8.6 Discretion of Lenders as to Manner of Funding.................... 62
8.7 Mitigation of Circumstances; Replacement of Affected Lender...... 62
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8.8 Conclusiveness of Statements; Survival of
Provisions........................................................ 63
SECTION 9 WARRANTIES.......................................................... 63
9.1 Organization, etc................................................. 63
9.2 Authorization; No Conflict........................................ 63
9.3 Validity and Binding Nature....................................... 64
9.4 Financial Information............................................. 64
9.5 No Material Adverse Change........................................ 65
9.6 Litigation........................................................ 65
9.7 Ownership of Properties; Liens.................................... 66
9.8 Subsidiaries; Capitalization...................................... 66
9.9 Pension and Welfare Plans......................................... 66
9.10 Investment Company Act........................................... 67
9.11 Public Utility Holding Company Act............................... 67
9.12 Regulations G, T, U and X........................................ 67
9.13 Taxes............................................................ 67
9.14 Solvency, etc.................................................... 67
9.15 Insurance........................................................ 68
9.16 Contracts; Labor Matters......................................... 68
9.17 Environmental and Safety and Health Matters...................... 68
9.18 Real Property.................................................... 69
9.19 Information...................................................... 69
9.20 Patents, Trademarks, etc......................................... 70
9.21 The Collateral Documents......................................... 70
SECTION 10 COVENANTS.......................................................... 71
10.1 Reports, Certificates and Other Information...................... 71
10.1.1 Annual Report............................................. 71
10.1.2 Quarterly Reports......................................... 71
10.1.3 Monthly Reports........................................... 72
10.1.4 Certificates.............................................. 72
10.1.5 Reports to SEC, Shareholders and Holders of Debt..........
10.1.6 Budget, Etc............................................... 73
10.1.7 Stockholders' Agreements.................................. 73
10.1.8 Notice of Default, Litigation and ERISA Matters
10.1.9 Subsidiaries.............................................. 74
10.1.10 Management Reports....................................... 74
10.1.11 Insurance Information.................................... 74
10.1.12 Capital Stock Ownership.................................. 74
10.1.13 Update on Delayed Subsequent Acquisition Capital
Expenditures............................................. 74
10.1.14 Other Information........................................ 75
10.2 Books, Records and Inspections................................... 75
10.3 Insurance........................................................ 75
10.4 Compliance with Laws; Maintenance of Property; Payment
of Taxes and Liabilities......................................... 76
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10.5 Maintenance of Existence, etc.................................... 76
10.6 Financial Covenants.............................................. 76
10.6.1 Funded Debt to Adjusted EBITDA Ratio...................... 76
10.6.2 Net Worth................................................. 77
10.6.3 Fixed Charge Coverage Ratio............................... 77
10.6.4 Interest Coverage Ratio................................... 77
10.6.5 Bank Debt to Adjusted EBITDA Ratio........................ 79
10.7 Limitations on Debt.............................................. 79
10.8 Liens............................................................ 80
10.9 Capital Expenditures............................................. 81
10.10 Operating Leases................................................ 82
10.11 Dividends, etc.................................................. 83
10.12 Investments..................................................... 84
10.13 Mergers, Consolidations, Sales, Capital Stock Issuances, Etc....
10.14 Guaranty and Collateral Documents............................... 86
10.15 Use of Proceeds................................................. 87
10.16 Transactions with Affiliates.................................... 87
10.17 Employee Benefit Plans.......................................... 87
10.18 Environmental Covenants......................................... 88
10.18.1 Environmental Response Obligation........................ 88
10.18.2 Environmental Liabilities................................ 88
10.18.3 Environmental Notices.................................... 88
10.19 Unconditional Purchase Obligations.............................. 89
10.20 Inconsistent Agreements......................................... 89
10.21 Further Assurances.............................................. 89
10.22 Modification, etc. of Certain Agreements........................ 89
10.23 Negative Pledges; Subsidiary Payments........................... 90
10.24 Fiscal Year..................................................... 90
10.25 Tax Sharing Agreements.......................................... 90
10.26 Conduct of Business............................................. 90
SECTION 11 CONDITIONS OF..................................................... 90
11.1 Amendment Effective Time........................................ 90
11.2 Documentary Conditions.......................................... 90
11.2.1 Notes.................................................... 90
11.2.2 Resolutions.............................................. 90
11.2.3 Consents, etc............................................ 91
11.2.4 Incumbency and Signature Certificates.................... 91
11.2.5 Guaranty................................................. 92
11.2.6 Security Agreement, etc.................................. 92
11.2.7 Pledge Agreements........................................ 92
11.2.8 Real Estate Documentation................................ 92
11.2.9 Landlord's Consents...................................... 93
11.2.10 Opinions of Counsel for Parent, the
Company and the Guarantors.............................. 93
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11.2.11 Insurance................................................. 93
11.2.12 Senior Note Documents..................................... 93
11.2.13 Other..................................................... 94
11.3 Other Conditions to Amendment Effective Time..................... 94
11.3.1 Fees...................................................... 94
11.3.2 No Material Adverse Effect................................ 94
11.3.3 Further Requests.......................................... 94
11.3.4 Satisfactory Legal Form................................... 94
11.4 Amendment Effective Time and All Credit Extensions............... 94
11.4.1 Required Notice........................................... 94
11.4.2 No Default................................................ 95
11.4.3 Representations and Warranties............................
11.4.4 No Litigation, etc........................................ 95
11.4.5 Subsequent Acquisitions and Delayed Subsequent
Acquisition Capital Expenditures..........................
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT................................. 96
12.1 Events of Default................................................ 96
12.1.1 Non-Payment of the Loans, etc............................. 96
12.1.2 Default under Other Debt.................................. 96
12.1.3 Other Material Obligations................................ 96
12.1.4 Bankruptcy, Insolvency, etc............................... 96
12.1.5 Non-Compliance with Provisions of This Agreement..........
12.1.6 Warranties................................................ 97
12.1.7 Pension Plans............................................. 97
12.1.8 Judgments................................................. 97
12.1.9 Invalidity of Guaranty, etc............................... 98
12.1.10 Invalidity of Collateral Documents, etc...................
12.1.11 Change in Control......................................... 98
12.1.12 Material Adverse Effect................................... 98
12.2 Effect of Event of Default....................................... 98
SECTION 13 THE AGENT.......................................................... 99
13.1 Appointment and Authorization............................... 99
13.2 Delegation of Duties........................................ 99
13.3 Liability of Agent.......................................... 99
13.4 Reliance by Agent........................................... 100
13.5 Notice of Default........................................... 100
13.6 Credit Decision............................................. 101
13.7 Indemnification............................................. 101
13.8 Agent in Individual Capacity................................ 102
13.9 Successor Agent............................................. 103
13.10 Collateral Matters.......................................... 103
13.11 Issuer...................................................... 104
SECTION 14 GENERAL............................................................ 104
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14.1 Waiver; Amendments............................................... 104
14.2 Confirmations.................................................... 105
14.3 Notices.......................................................... 105
14.4 Computations..................................................... 105
14.5 Regulation U..................................................... 105
14.6 Costs, Expenses and Taxes........................................ 105
14.7 Captions......................................................... 106
14.8 Assignments; Participations...................................... 106
14.8.1 Assignments............................................... 106
14.8.2 Participations............................................ 107
14.9 Governing Law.................................................... 108
14.10 Counterparts.................................................... 108
14.11 Successors and Assigns.......................................... 108
14.12 Indemnification by the Company.................................. 109
14.13 Confidentiality................................................. 109
14.14 Maximum Interest................................................ 110
14.15 Forum Selection and Consent to Jurisdiction..................... 111
14.16 Waiver of Jury Trial............................................ 111
SECTION 15 GUARANTY OF PARENT................................................. 111
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EXHIBITS AND SCHEDULES
EXHIBIT A-1 Form of Working Capital Revolving Note
EXHIBIT A-2 Form of Reducing Revolver Note
EXHIBIT B-1 Form of Compliance Certificate
EXHIBIT B-2 Form of Subsequent Acquisition Certificate
EXHIBIT C Form of Guaranty
EXHIBIT D Form of Security Agreement
EXHIBIT E-1 Form of Company Pledge Agreement
EXHIBIT E-2 Form of Subsidiary Pledge Agreement
EXHIBIT E-3 Form of Parent Pledge Agreement
EXHIBIT F-1 Form of Opinion of Latham & Watkins
EXHIBIT F-2 Form of Opinion of Quarles & Brady
EXHIBIT F-3 Form of Opinion of Page & Addison
EXHIBIT F-4 Form of Opinion of Lionel, Sawyer & Collins
EXHIBIT F-5 Form of Opinion of Young, Goldman & Van Beek
EXHIBIT G Form of Assignment Agreement
EXHIBIT H Form of Landlord's Consent
EXHIBIT I Form of Certificate as to Senior Note Documents
EXHIBIT J-1 Form of Issuance Request
EXHIBIT J-2 Form of Letter of Credit Amendment Request
EXHIBIT K-1 Sample Financial Schedule - Corporate Expenditures
EXHIBIT K-2 Sample Golf Course Property Financial Statement (The Club at
Trophy Club) - Cost of Goods Sold and Operating Expenses
EXHIBIT L Form of Mortgage Amendment
EXHIBIT M Form of Hazardous Materials Indemnity
SCHEDULE 1 Commitments and Percentages
SCHEDULE 1.2 Existing Commitments and Loans
SCHEDULE 2.1 Certain Specified Capital Expenditures
SCHEDULE 9.6 Litigation
SCHEDULE 9.8 Subsidiaries; Capitalization
SCHEDULE 9.9 Welfare Plans
SCHEDULE 9.15 Insurance
SCHEDULE 9.16 Contracts; Labor Matters
SCHEDULE 9.17 Environmental and Safety and Health Matters
SCHEDULE 9.18 Properties
SCHEDULE 10.7 Debt
SCHEDULE 10.8 Liens
SCHEDULE 10.12 Investments
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SECOND AMENDED AND RESTATED
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CREDIT AGREEMENT
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This SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 4, 1996
(as amended or otherwise modified from time to time, this "Agreement"), is
entered into among COBBLESTONE GOLF GROUP, INC., a Delaware corporation (the
"Company"), COBBLESTONE HOLDINGS, INC., a Delaware corporation ("Parent"), the
undersigned financial institutions (together with their respective successors
and assigns, collectively the "Lenders" and individually each a "Lender"), and
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, a national banking
association having its principal office at 1455 Market Street, Agency Management
Services #5596, San Francisco, California 94103 (in its individual capacity,
"BofA"), as agent for the Lenders.
WITNESSETH:
WHEREAS certain parties to this agreement entered into a Credit Agreement
dated as of January 31, 1994 (as amended, the "Original Credit Agreement");
WHEREAS the Original Credit Agreement was amended and restated in its
entirety pursuant to the Amended and Restated Credit Agreement dated as of March
30, 1995 (as amended and in effect on the date hereof, the "Existing Credit
Agreement");
WHEREAS the parties hereto desire to amend and restate the Existing Credit
Agreement as this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
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SECTION 1.1 DEFINITIONS. When used herein, the following terms shall have
the following meaning (such definitions to be applicable to both the singular
and plural forms of such terms):
Additional Bank Warrants means the warrants, issued by Parent to certain
Lenders in connection with the closing of the Existing Credit Agreement, to
purchase an aggregate of (a) 3,633 shares of Parent's common stock, $0.01 par
value per share, and (b) 13,279 shares of Parent's Series A Preferred Stock,
$0.01 par value per share.
Adjusted EBITDA means, at the last date of any Fiscal Quarter in each
Fiscal Year, an amount equal to:
(a) for the Pre-Existing Properties, the actual aggregate Golf Course
Property EBITDA attributable to the Pre-Existing Properties for the
most recent complete consecutive four Fiscal Quarters as of such date;
plus
(b) for any Golf Course Property acquired in a Subsequent Acquisition,
(i) if such date is the end-date of the first incomplete Fiscal
Quarter following such Subsequent Acquisition, projected Golf
Course Property EBITDA attributable to such Golf Course Property
for the first four complete consecutive Fiscal Quarters to occur
following such Subsequent Acquisition; or
(ii) if such date is the end-date of the first complete Fiscal Quarter
ending following such Subsequent Acquisition, the product of
(A) the quotient of (x) actual Golf Course Property EBITDA
attributable to such Golf Course Property for such Fiscal
Quarter, divided by (y) projected Golf Course Property
EBITDA attributable to such Golf Course Property for such
Fiscal Quarter (provided that such quotient shall not be
greater than 1.5), times
2
(B) projected Golf Course Property EBITDA attributable to such
Golf Course Property for the first four complete consecutive
Fiscal Quarters to occur following such Subsequent
Acquisition; or
(iii) if such date is the end-date of the second complete
consecutive Fiscal Quarter ending following such Subsequent
Acquisition, the product of
(A) the quotient of (x) actual Golf Course Property EBITDA
attributable to such Golf Course Property for the first two
complete consecutive Fiscal Quarters following such
Subsequent Acquisition, divided by (y) projected Golf Course
Property EBITDA attributable to such Golf Course Property
for such two complete consecutive Fiscal Quarters (provided
that such quotient shall not be greater than 1.5), times
(B) projected Golf Course Property EBITDA attributable to such
Golf Course Property for the first four complete consecutive
Fiscal Quarters to occur following such Subsequent
Acquisition; or
(iv) if such date is the end-date of the third complete consecutive
Fiscal Quarter ending following such Subsequent Acquisition, the
product of
(A) the quotient of (x) actual Golf Course Property EBITDA
attributable to such Golf Course Property for the first
three complete consecutive Fiscal Quarters following such
Subsequent Acquisition, divided by (y) projected Golf Course
Property EBITDA attributable to such Golf Course Property
for such three complete consecutive Fiscal Quarters
(provided that such quotient shall not be greater than 1.5),
times
(B) projected Golf Course Property EBITDA attributable to such
Golf Course Property for the first four complete consecutive
Fiscal
3
Quarters to occur following such Subsequent
Acquisition; or
(v) if such date is the end-date of the fourth or any subsequent
complete consecutive Fiscal Quarter ending following such
Subsequent Acquisition, the actual Golf Course Property EBITDA
attributable to such Golf Course Property for the most recent
four complete consecutive Fiscal Quarters as of such date;
minus
(c) the actual Corporate Expenditures for the most recent four complete
consecutive Fiscal Quarters as of such date.
Adjusted Working Capital means the excess of:
(a) (i) the consolidated current assets of the Company and its
Subsidiaries, less (ii) the amount of cash and Cash Equivalent Investments
of the Company and its Subsidiaries included in such consolidated current
assets;
over
(b) (i) consolidated current liabilities of the Company and its
Subsidiaries, less (ii) the amount of short-term Debt (including current
maturities of long-term Debt) of the Company and its Subsidiaries included
in such consolidated current liabilities.
Advance - see Section 2.2.
Affected Lender means any Lender that has given notice to the Company
(which has not been rescinded) of (i) any obligation by the Company to pay any
amount pursuant to Section 7.6 or 8.1 or (ii) the occurrence of any
circumstances of the nature described in Section 8.2 or 8.3.
Affected Loan - see Section 8.3.
Affiliate of any Person means any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person.
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Agent means BofA in its capacity as agent for the Lenders hereunder and any
successor thereto in such capacity.
Agent-Related Persons means BofA and any successor agent arising under
Section 13.9, together with their respective Affiliates (including, in the case
of BofA, the Arranger), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
Agreement - see the Preamble.
Alternate Reference Rate means, on any day, the greater of (a) the Federal
Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as
publicly announced from time to time by BofA in San Francisco, California, as
its "reference rate." (The "reference rate" is a rate set by BofA based upon
various factors, including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate.) Any change
in the reference rate announced by BofA shall take effect at the opening of
business on the day specified in the public announcement of such change.
Amendment Effective Time means the time when the conditions precedent for
the effectiveness of this Agreement specified in Section 11 shall have been met
or waived.
Arranger means BA Securities, Inc., a Delaware corporation.
Asset Sale means any sale, transfer or other disposition (including by way
of merger or consolidation) by Parent, the Company or any Subsidiary of any
asset (including any capital stock of the Company or any Subsidiary) outside the
ordinary course of business to a Person other than the Company or a Subsidiary,
and shall also include any condemnation, expropriation, loss or casualty (to the
extent that an Event of Default or Unmatured Event of Default exists as of the
date of such casualty or the receipt of insurance proceeds related thereto) of
any such asset; provided that any sale of a Golf Course Property or a golf
course or a Person owning a Golf Course Property or a golf course by Parent, the
Company or any Subsidiary to a Person other than the Company or any Subsidiary
shall be an Asset Sale.
Assignee - see Section 14.8.1.
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Assignment Agreement - see Section 14.8.1.
BAI means Bank of America Illinois, an Illinois banking corporation.
Bank Debt means the outstanding principal amount of all Loans under the
Credit Agreement.
Bank Debt to Adjusted EBITDA Ratio means, as of any measurement date, the
ratio of
(i) the sum of (A) Bank Debt as of such date plus (B) the aggregate
amount of projected Delayed Subsequent Acquisition Capital Expenditures as
of such date described in Sections 2.1.2(a)(i)(B) and (C), to
(ii) the sum of (A) Adjusted EBITDA as of such date less (B) any net
increase in Membership Notes Receivable (both current and noncurrent)
during the period over which such Adjusted EBITDA was measured above (1)
for the period between the Amendment Effective Date and June 29, 1997,
$5,400,000 and (2) for all Fiscal Quarter end-dates on or after June 30,
1997, the Fiscal Quarter-end balance four Fiscal Quarters prior thereto
plus (C) any net decrease in Membership Notes Receivable (both current and
non-current) during the period over which such Adjusted EBITDA was measured
below (1) for the period between the Amendment Effective Date and June 29,
1997, the June 30, 1996 Fiscal Quarter-end balance and (2) for all Fiscal
Quarter end-dates on or after June 30, 1997, the Fiscal Quarter-end balance
four Fiscal Quarters prior thereto.
Beneficial Owner is used as defined in Rule 13d-3 promulgated by the SEC
under the Securities Exchange Act of 1934, as amended; and "Beneficially Owned"
shall have a correlative meaning.
BofA - see the Preamble.
Brentwood means Brentwood Golf Partners, L.P., a Delaware limited
partnership and/or its Affiliates.
Budget - see Section 10.1.6.
Business Day means any day on which commercial banks are open for
commercial banking business in San Francisco, Chicago and New
6
York and, in the case of a Business Day which relates to a Eurodollar Loan, the
Cayman Islands.
Capital Expenditures means all expenditures which, in accordance with
generally accepted accounting principles, would be required to be capitalized
and shown on the consolidated balance sheet of the Company, but excluding any
such expenditures made pursuant to Capital Leases or purchase money financing
permitted hereunder.
Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person which, in conformity with generally accepted accounting principles, is
accounted for as a capital lease on the balance sheet of such Person.
Cash Equivalent Investment means, at any time:
(a) any evidence of Debt, maturing not more than one year after such
time, issued or guaranteed by the United States Government;
(b) commercial paper, maturing not more than one year from the date
of issue, which is issued by
(i) a corporation (except an Affiliate of the Company) organized
under the laws of any State of the United States of America or of the
District of Columbia and rated at least A-1 by Standard & Poor's
Corporation or P-1 by Moody's Investors Service, Inc., at the time of
investment, or
(ii) the Agent or any Lender (or its holding company);
(c) any certificate of deposit or bankers' acceptance or eurodollar
time deposit, maturing not more than one year after the date of issue,
which is issued by either
(i) a financial institution that is a member of the Federal
Reserve System and has a combined capital and surplus and undivided
profits of not less than $500,000,000 at the time of investment, or
(ii) the Agent or any Lender; or
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(d) any repurchase agreement with a term of one year or less which
(i) is entered into with
(A) the Agent or any Lender, or
(B) any other commercial banking institution of the stature
referred to in clause (c)(i),
(ii) is secured by a fully perfected Lien in any obligation of
the type described in any of clauses (a) through (c), and
(iii) has a market value at the time such repurchase agreement
is entered into of not less than 100% of the repurchase obligation of
the Agent or such Lender (or other commercial banking institution)
thereunder;
(e) investments in money market funds that invest primarily in Cash
Equivalent Investments described in clauses (a) through (d); or
(f) investments in short-term asset management accounts offered by
the Agent or any Lender for the purpose of investing in loans to any
corporation (other than an Affiliate of the Company) organized under the
laws of any state of the United States or of the District of Columbia and
rated at least A-1 by Standard & Poor's Corporation or P-1 by Moody's
Investors Service, Inc.
Cash Flow Subsequent Acquisition Capital Expenditures means Capital
Expenditures that cease to be Delayed Subsequent Acquisition Capital
Expenditures in accordance with the definition thereof because such Capital
Expenditures are not funded by the Company or any Subsidiary from Reducing
Revolver Loans.
8
Change In Control means the occurrence of any of the following:
(a) the failure by Brentwood and James A. Husband to be the Beneficial
Owner of each class of the issued and outstanding capital stock of Parent
representing more than 50%, on a fully diluted basis, of the voting power
in elections for directors of Parent, without regard to the occurrence of
any contingency;
(b) a majority of the Board of Directors of Parent ceases to be
comprised of Continuing Directors;
(c) the failure of Parent to be the Beneficial Owner of all of the
issued and outstanding capital stock of the Company, and of all options,
warrants or rights to subscribe for such capital stock; or
(d) any "change in control" or similar event under the Senior Note
Documents.
Collateral Document means the Security Agreement, each Pledge Agreement,
each Mortgage, each Mortgage Amendment, each Hazardous Materials Indemnity, and
each other instrument or document executed and delivered by Parent, the Company
or any Subsidiary pursuant to or in connection with any thereof in accordance
with the terms of this Agreement.
Commercial Letter of Credit means any Letter of Credit which is drawable
upon presentation of a sight draft and other documents evidencing the sale or
shipment of goods purchased by the Company or any Subsidiary in the ordinary
course of business.
Commitment means, as to any Lender, such Lender's Working Capital Revolving
Commitment and/or Reducing Revolver Loan Commitment, as applicable.
Common Stock means the common stock of Parent, $0.01 par value per share.
Company - see the Preamble.
Company Pledge Agreement - see Section 11.2.7(a).
9
Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the consolidated net income (or loss) of the
Company and its Subsidiaries for such period.
Contingent Liability means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person's obligation under any Contingent Liability shall (subject to any
limitation set forth therein) be deemed to be the outstanding principal amount
of the debt, obligation or other liability guaranteed thereby.
Continuing Director means a director who either (a) was a member of the
Board of Directors of Parent prior to the Amendment Effective Time and
continuously thereafter or (b) after the Amendment Effective Time became a
director of Parent and whose election or nomination for election subsequent to
such date was approved by (i) a vote of the majority of the Continuing Directors
then on the Board of Directors of Parent or (ii) Brentwood.
Corporate Expenditures means corporate overhead expenditures of Parent and
the Company, in accordance with generally accepted accounting principles, which
are not expenditures of any Subsidiary or related to any individual Golf Course
Property, and which expenditures are calculated in a manner consistent with (and
include, but are not limited to) the lines "Salaries & Wages," "Outside
Services," "Payroll Costs," "Employee Benefits," "Rent and Parking," "Travel &
Entertainment," "Telephone," "Legal and Accounting Fees," "Brentwood Fees,"
"Other Office Overhead," and "Corporate Bonuses" set forth in the financial
schedule set forth at Exhibit K-1.
Cost of Goods Sold means any expenditures classified as cost of goods sold
in accordance with generally accepted accounting principles, which are
expenditures of any Subsidiary or related to any individual Golf Course
Property, and which expenditures are calculated in a manner consistent with (and
include, but are not limited to) the lines "Cost of Goods Golf Retail," "Cost of
Goods F&B" and "Cost of
10
Goods Tennis" set forth in the financial statements for The Club at Trophy Club
Golf Course Property set forth at Exhibit K-2.
Credit Extension means any Loan, Letter of Credit or Reimbursement
Obligation.
Debt of any Person means, without duplication, (a) all indebtedness of such
Person for borrowed money, whether or not evidenced by bonds, debentures, notes
or similar instruments, (b) all obligations of such Person as lessee under
Capital Leases which have been recorded as liabilities on a balance sheet of
such Person, (c) all obligations of such Person to pay the deferred purchase
price of property or services (other than current accounts payable in the
ordinary course of business), (d) all indebtedness secured by a Lien on the
property of such Person, whether or not such indebtedness shall have been
assumed by such Person (it being understood that if such Person has not assumed
or otherwise become personally liable for any such indebtedness, the amount of
the Debt of such Person in connection therewith shall be limited to the lesser
of the face amount of such indebtedness or the fair market value of all property
of such Person securing such indebtedness), (e) all obligations, contingent or
otherwise, with respect to the face amount of all letters of credit (whether or
not drawn) and banker's acceptances issued for the account of such Person, (f)
liabilities of such Person in respect of Hedging Agreements, and (g) all
Contingent Liabilities of such Person.
Debt Securities Sale means any public or private sale or issuance by
Parent, the Company or any Subsidiary of its Debt securities, except issuances
of Debt permitted under Section 10.7.
Default Rate means the rate of interest at any time applicable to any Loan
or Reimbursement Obligation, as applicable, plus 2% per annum.
Delayed Subsequent Acquisition Capital Expenditures means any Capital
Expenditures made in connection with any Subsequent Acquisition, which had been
projected to be and which shall be made within the 18 months following such
Subsequent Acquisition (except to the extent otherwise permitted hereunder) in
accordance with the projections for such Subsequent Acquisition delivered
pursuant to Section 2.5(e)(i) and which are financed with the proceeds of
Reducing Revolver Loans borrowed in accordance with Section 2.6(a) (or term
loans borrowed in accordance with Section
11
2.6(a) of the Original Credit Agreement or the Existing Credit Agreement);
provided that (a) upon certification by the Company to the Agent and the
Lenders, at the time of delivery of any financial statement pursuant to Section
10.1.1 or 10.1.2 or of any Subsequent Acquisition Certificate, that it does not
intend to make certain identified Delayed Subsequent Acquisition Capital
Expenditures and that it requests that such Delayed Subsequent Acquisition
Capital Expenditures cease to be treated as such hereunder, such Delayed
Subsequent Acquisition Capital Expenditures shall cease to be treated as Delayed
Subsequent Acquisition Capital Expenditures hereunder for all purposes and (b)
upon certification by the Company to the Agent and the Lenders, at the time of
delivery of any financial statement pursuant to Section 10.1.1 or 10.1.2 or of
any Subsequent Acquisition Certificate, that it does not intend to use the
proceeds of Reducing Revolver Loans to fund certain identified Delayed
Subsequent Acquisition Capital Expenditures because such Delayed Subsequent
Acquisition Capital Expenditures will not be funded from Loans, such Delayed
Subsequent Acquisition Capital Expenditures shall be treated hereunder as Cash
Flow Subsequent Acquisition Capital Expenditures for all purposes and shall
cease to be treated as Delayed Subsequent Acquisition Capital Expenditures
hereunder for all purposes.
Designated Non-Recurring Capital Expenditures - see Section 10.9(d).
Disbursement - see Section 2.10.6.
Disbursement Date - see Section 2.10.6.
Disqualified Capital Stock means (a) except as set forth in clause (b)
below, with respect to any Person, capital stock of such Person that, by its
terms or by the terms of any security into which it is convertible, exercisable
or exchangeable, is, or upon the happening of an event or the passage of time
would be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such Person or any of its Subsidiaries, in whole or in part,
on or prior to the Reducing Revolver Termination Date or the Working Capital
Revolving Termination Date and (b) with respect to any Subsidiary of such Person
(including with respect to any Subsidiary of Parent), any capital stock other
than any common stock with no special rights and no preferences, privileges, or
redemption or repayment provisions.
12
Dollar and the sign "$" mean lawful money of the United States of America.
EBITDA means, for any period of four complete consecutive Fiscal Quarters,
the sum, without duplication, of
(a) Consolidated Net Income for such period,
plus
(b) Interest Expense for such period,
plus
(c) all depreciation and amortization of assets (including
goodwill and other intangible assets) of the Company and its
Subsidiaries deducted in determining Consolidated Net Income for such
period,
plus
(d) all federal, state, local and foreign income taxes of the
Company and its Subsidiaries deducted in determining Consolidated Net
Income for such period,
plus (minus)
(e) other non-cash and non-operating charges deducted in
determining Consolidated Net Income for such period (or gains added in
determining Consolidated Net Income for such period).
Environmental Laws means the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, any so-
called "Superfund" or "Superlien" law, the Toxic Substances Control Act, and any
other applicable federal, state or local statute, law, ordinance, code, rule,
regulation, order, decree or other requirement regulating, relating to, or
imposing liability or standards of conduct (including, but not limited to,
permit requirements and emission or effluent restrictions) concerning any
Hazardous Materials, as now or at any time hereafter in effect.
Equity Documents means the Stockholders' Agreement, the Original Bank
Warrants and the Additional Bank Warrants.
13
Equity Securities Sale means any public or private sale or transfer by
Parent, the Company or any Subsidiary of its capital stock, except (x) any sale
or transfer of capital stock of Parent (i) to the Persons listed on Schedule 9.8
hereto in the amounts set forth on such Schedule 9.8, and (ii) to members of
management and directors of Parent or any of its Subsidiaries or to any Person
selling any Golf Course Property or interest therein in connection with a
Subsequent Acquisition in an aggregate amount for all sales or transfers under
this clause (x)(ii) not to exceed 15% of the total outstanding shares of any
class or series of capital stock of Parent as of the Amendment Effective Time
(but giving effect to the issuances described in clause (i) above), (y) capital
contributions to the Company or its Subsidiaries and (z) the issuance of Common
Stock pursuant to the Senior Note Documents.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
Escondido Subsidiary means Escondido Consulting, Inc., a California
corporation, the principal asset of which is the lease of The Vineyard at
Escondido Golf Course Property located at 925 San Pasqual Road, Escondido,
California.
Escondido Subsidiary Loan Agreement means the two promissory notes dated as
of December 1, 1993 made by the Escondido Subsidiary payable to the City of
Escondido in the original aggregate principal amount of $6,274,640.
Eurocurrency Reserve Percentage means, with respect to any Eurodollar Loan
for any Interest Period, a percentage (expressed as a decimal) equal to the
daily average during such Interest Period of the percentage in effect on each
day of such Interest Period, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor), for determining the aggregate maximum
reserve requirements applicable to "Eurocurrency Liabilities" pursuant to
Regulation D of such Board of Governors or any other then applicable regulation
of such Board of Governors which prescribes reserve requirements applicable to
"Eurocurrency Liabilities" as presently defined in Regulation D.
14
Eurodollar Loan means any Loan which bears interest at a rate determined by
reference to the Eurodollar Rate (Reserve Adjusted).
Eurodollar Office means with respect to any Lender the office or offices of
such Lender which shall be making or maintaining the Eurodollar Loans of such
Lender hereunder or such other office or offices through which such Lender
determines its Eurodollar Rate. A Eurodollar Office of any Lender may be, at the
option of such Lender, either a domestic or foreign office.
Eurodollar Rate means, with respect to any Eurodollar Loan for any Interest
Period, the rate per annum at which Dollar deposits in immediately available
funds are offered to the Grand Cayman Branch of BofA two Business Days prior to
the beginning of such Interest Period by major banks in the interbank eurodollar
market as at or about 11:00 a.m., New York time, for delivery on the first day
of such Interest Period, for the number of days comprised therein and in an
amount equal or comparable to the amount of the Eurodollar Loan of BAI for such
Interest Period.
Eurodollar Rate (Reserve Adjusted) means, with respect to any Eurodollar
Loan for any Interest Period, a rate per annum (rounded upwards, if necessary,
to the nearest 1/16 of 1%) determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) 1-Eurocurrency
Reserve Percentage
Event of Default means any of the events described in Section 12.1.
Excluded Taxes - see the definition of "Taxes."
Exemption Agreement - see Section 7.6(b).
Exemption Representation - see Section 7.6(c).
Existing Credit Agreement is defined in the recitals.
Existing Lender means a "Lender" under and as defined in the Existing
Credit Agreement immediately prior to the Amendment Effective Time.
Existing Loans means Existing Revolving Loans and Existing Term Loans.
15
Existing Revolving Commitment means a "Revolving Commitment" under and as
defined in the Existing Credit Agreement immediately prior to the Amendment
Effective Time.
Existing Revolving Loan means a "Revolving Loan" under and as defined in
the Existing Credit Agreement immediately prior to the Amendment Effective Time.
Existing Term Commitment means a "Term Loan Commitment" under and as
defined in the Existing Credit Agreement immediately prior to the Amendment
Effective Time.
Existing Term Loan means a "Term Loan" under and as defined in the Existing
Credit Agreement immediately prior to the Amendment Effective Time.
Federal Funds Rate means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor
publication, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published for any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Agent.
Financial Standby Letter of Credit means any Standby Letter of Credit which
any Lender is required under applicable law (including under 12 CFR Part 3,
Appendix A, Section 3, clause (b)) to classify as a financial letter of credit
with respect to its participation therein pursuant to this Agreement.
FIRREA means the Financial Institutions Reform, Recovery and Enforcement
Act of 1989, as amended and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to time.
Fiscal Quarter means a fiscal quarter of a Fiscal Year.
Fiscal Year means the fiscal year of Parent and the Company and its
Subsidiaries, which period shall be the 12-month period ending on September 30
of each year. References to a Fiscal Year
16
with a number corresponding to any calendar year (e.g., "Fiscal Year 1993")
refer to the Fiscal Year ending on September 30 of such calendar year.
Fixed Charge Coverage Ratio means, for any period of four complete
consecutive Fiscal Quarters, the ratio of
(a) the remainder of, without duplication,
(i) EBITDA for such period,
plus
(ii) at any measurement date, the unused principal amount of the
Working Capital Revolving Commitments,
plus
(iii) at any measurement date, the amount of cash and Cash
Equivalent Investments shown on the Company's consolidated balance
sheet at such date,
minus
(iv) all federal, state, local and foreign income taxes paid
with respect to income of the Company and Subsidiaries during such
period or accrued and payable for such period,
minus
(v) Capital Expenditures (other than Capital Expenditures funded
by Reducing Revolver Loans and other than Designated Non-Recurring
Capital Expenditures) during such period (exclusive of such Capital
Expenditures that were funded from the first $1,000,000 in Net Cash
Proceeds from all Asset Sales received in each Fiscal Year),
to
(b) the sum, without duplication, of
(i) repayments of principal of Reducing Revolver Loans
pursuant to Section 6.3.4 made during
17
such period (whether such repayments were made on the last day of the
relevant Fiscal Quarter as a result of the commitment reduction
scheduled for such day in accordance with Section 6.1.1 or were made
at any time during such Fiscal Quarter), regularly scheduled principal
payments with respect to any other long-term Debt of the Company and
its Subsidiaries made during such period, and the portion of any
payments with respect to Capital Leases allocable to principal made
during such period,
plus
(ii) Interest Expense for such period.
Floating Rate Loan means any Loan which bears interest at or by reference
to the Alternate Reference Rate.
Funded Debt means the remainder of (x) the outstanding principal amount of
all Debt of the Company and its Subsidiaries, excluding (i) all Contingent
Liabilities and any contingent obligations in respect of undrawn letters of
credit (except to the extent constituting Contingent Liabilities in respect of
any Funded Debt of a Person other than the Company or any Subsidiary), (ii)
liabilities in respect of Hedging Agreements, (iii) Debt of the Company to
Subsidiaries and Debt of Subsidiaries to the Company or to other Subsidiaries
and (iv) Debt in respect of Capital Leases and purchase money financing
permitted hereunder minus (y) cash and Cash Equivalent Investments held by the
Company and its Subsidiaries in excess of $1,000,000.
Funded Debt to Adjusted EBITDA Ratio means, as of any measurement date, the
ratio of
(i) the sum of (A) Funded Debt as of such date plus (B) the aggregate
amount of projected Delayed Subsequent Acquisition Capital Expenditures as
of such date described in Sections 2.1.2(a)(i)(B) and (C), to
(ii) the sum of (A) Adjusted EBITDA as of such date less (B) any net
increase in Membership Notes Receivable (both current and non-current)
during the period over which such Adjusted EBITDA was measured above (1)
for the period between the Amendment Effective Date and June 29, 1997,
$5,400,000 and (2) for all Fiscal Quarter end-dates on or after June 30,
1997, the Fiscal Quarter-end balance four
18
Fiscal Quarters prior thereto plus (C) any net decrease in Membership Notes
Receivable (both current and non-current) during the period over which such
Adjusted EBITDA was measured below (1) for the period between the Amendment
Effective Date and June 29, 1997, the June 30, 1996 Fiscal Quarter-end
balance and (2) for all Fiscal Quarters end-dates on or after June 30,
1997, the Fiscal Quarter-end balance four Fiscal Quarters prior thereto.
Golf Course Property means any parcel or parcels of real property owned or
leased by or licensed to the Company or a Subsidiary that includes, as the
principal component of such parcel or parcels, a golf course or golf facility
(including driving ranges, "pitch and putt" and "par three" courses).
Golf Course Property EBITDA means, for any period and for any Golf Course
Property, the remainder of
(a) net revenues attributable to such Golf Course Property,
minus
(b) Cost of Goods Sold attributable to such Golf Course Property,
minus
(c) Operating Expenses attributable to such Golf Course Property,
plus
(d) depreciation and amortization attributable to such Golf Course
Property to the extent deducted in order to arrive at such Cost of
Goods Sold or Operating Expenses in the calculation thereof;
provided, that (x) for any such calculation made with respect to any period
prior to the acquisition of such Golf Course Property, such calculation shall be
certified in good faith by a Responsible Officer as being true and accurate in
the Company's best judgment based on all available historical information for
such period, and (y) for any such calculation made with respect to any period
after such acquisition, such calculation shall be certified as being
19
made for such period in accordance with generally accepted accounting principles
consistently applied.
Guarantor means (a) as of the Amendment Effective Time, Parent and each
Subsidiary listed on Schedule 9.8, and (b) thereafter, the Persons referred to
in clause (a) and each other Person which from time to time executes and
delivers a counterpart of the Guaranty.
Guaranty - see Section 11.2.5.
Hazardous Materials means any toxic substance, hazardous substance,
hazardous material, hazardous chemical or hazardous waste defined or qualifying
as such in (or for the purposes of) any Environmental Law, or any pollutant or
contaminant, and shall include, but not be limited to, petroleum, including
crude oil or any fraction thereof which is liquid at standard conditions of
temperature or pressure (60 degrees fahrenheit and 14.7 pounds per square inch
absolute), any radioactive material, including, but not limited to, any source,
special nuclear or by-product material as defined at 42 U.S.C. section 2011 et
seq., as amended from time to time, polychlorinated biphenyls and asbestos in
any form or condition.
Hazardous Materials Indemnity means any hazardous materials undertaking and
indemnity entered into in connection with any Mortgage, substantially in the
form of Exhibit M.
Hedging Agreement means any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designed to protect a Person against fluctuations in
interest rates, currency exchange rates or commodity prices.
Highest Lawful Rate means, on any date, the maximum non-usurious interest
rate that may, under applicable federal and applicable state law, be contracted
for, charged or received under such laws.
Incurrence Test - see Section 2.5(a).
Indemnified Liabilities - see Section 14.12(a).
Interest Coverage Ratio means, as of the last day of any period of four
complete consecutive Fiscal Quarters, the ratio of
20
(a) EBITDA for such period ending on such day to (b) Interest Expense for such
period.
Interest Expense means for any period the excess of (a) the consolidated
interest expense of the Company and its Subsidiaries for such period (including,
without limitation, all imputed interest on Capital Leases, all imputed interest
on Hedging Agreements, all fees under Sections 5.1, 5.2 and 5.3, and all
liquidated damages payable under the Senior Notes, but excluding (x) payments
and amortization of commissions and fees paid as a condition to (i) the
Amendment Effective Time or in connection with the closing of or amendments to
the Original Credit Agreement or the Existing Credit Agreement or (ii) the
Senior Notes and (y) all imputed interest over (b) the consolidated interest
income of the Company and its Subsidiaries for such period (excluding all
imputed interest income on the Membership Notes).
Interest Period - see Section 4.3.
Investment means, with respect to any Person:
(a) any loan or advance made by such Person to any other Person; and
(b) any ownership or similar interest held by such Person in any other
Person.
The amount of any Investment shall be the original principal or capital
amount thereof less all returns of principal or equity thereon (and without
adjustment by reason of the financial condition of such other Person) and shall,
if made by the transfer or exchange of property other than cash, be deemed to
have been made in an original principal or capital amount equal to the fair
market value of such property.
Issuance Request - see Section 2.10.2.
Issuer means BAI in its capacity as issuer of any Letter of Credit.
L/C Fee Rate means the rate per annum set forth in the table below for the
applicable type of Letter of Credit opposite the applicable Funded Debt to
Adjusted EBITDA Ratio:
21
Financial Non-Financial
Standby Standby Commercial
Funded Debt to Adjusted Letter Letter Letter
EBITDA Ratio of Credit of Credit of Credit
- ----------------------------- -------------- ----------- ----------
Equal to or greater 2.75% 1.50% 1.00%
than 5.75 to 1
Equal to or greater 2.50% 1.25% 1.00%
than 5.0 to 1 but
less than 5.75 to 1
Equal to or greater 2.25% 1.25% 1.00%
than 3.50 to 1 but
less than 5.0 to 1
Less than 3.50 2.00% 1.00% 1.00%.
The L/C Fee Rate shall be adjusted, to the extent applicable, (x) 45 days
(or, in the case of the last Fiscal Quarter of any Fiscal Year, 90 days) after
the end of each Fiscal Quarter based on the Funded Debt to Adjusted EBITDA Ratio
as of the last day of such Fiscal Quarter and (y) on the date of the borrowing
of the Reducing Revolver Loans applied to fund each Subsequent Acquisition
(after giving effect to such borrowing); it being understood that if the Company
fails to deliver the financial statements required by Section 10.1.1 or 10.1.2,
as applicable, by the 45th day (or, if applicable, the 90th day) after any
Fiscal Quarter, the L/C Fee Rate shall be 2.75% for Financial Standby Letters of
Credit until such financial statements are delivered.
Landlord's Consent means a landlord's consent substantially in the form of
Exhibit H, in each case with such changes as may be reasonably agreed to by the
Agent.
Lender - see the Preamble.
Lender Party - see Section 14.12(a).
Lending Office - see Section 8.1.
22
Letter of Credit means any Financial Standby Letter of Credit, Non-
Financial Standby Letter of Credit and/or Commercial Letter of Credit, as the
context may require or allow.
Letter of Credit Amendment Request - see Section 2.10.3.
Liabilities - see Section 15.
Lien means, when used with respect to any Person, any interest of any other
Person in any real or personal property, asset or other right owned or being
purchased or acquired by such Person which secures payment or performance of any
obligation and shall include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.
Loan Documents means this Agreement, the Notes, the Letters of Credit, the
Guaranty, any Hedging Agreement entered into with any Lender or any Affiliate
thereof, the Collateral Documents, each borrowing or continuation notice, each
Issuance Request, each Letter of Credit Amendment Request, and each other
instrument or document executed and delivered by Parent, the Company or any
Subsidiary to the Agent or any Lender pursuant to or in connection with any
thereof in accordance with the terms of this Agreement, but excluding the Equity
Documents and the Senior Note Documents.
Loans means Working Capital Revolving Loans and Reducing Revolver Loans.
Maintenance Capital Expenditures means all Capital Expenditures other than
Delayed Subsequent Acquisition Capital Expenditures, Cash Flow Subsequent
Acquisition Capital Expenditures and Designated Non-Recurring Capital
Expenditures.
Margin means the rate per annum set forth in the table below for the
applicable type of Loan opposite the applicable Funded Debt to Adjusted EBITDA
Ratio then in effect:
Funded Debt to Adjusted EBITDA Ratio Margin for Margin for
- -------------------------------------- Floating Eurodollar
Rate Loans Loans
---------- ----------
Equal to or greater than 5.75 to 1 1.50% 2.75%
Equal to or greater than 5.0 to 1 1.25% 2.50%
but less than 5.75 to 1
23
Equal to or greater than 3.5 to 1 1.00% 2.25%
but less than 5.0 to 1
Less than 3.50 to 1 0.75% 2.00%
The Margin shall be adjusted, to the extent applicable, 45 days (or, in the case
of the last Fiscal Quarter of any Fiscal Year, 90 days) after the end of each
Fiscal Quarter based on the Funded Debt to Adjusted EBITDA Ratio as of the last
day of such Fiscal Quarter; it being understood that (a) if the Company fails to
deliver the financial statements required by Section 10.1.1 or 10.1.2, as
applicable, by the 45th day (or, if applicable, the 90th day) after any Fiscal
Quarter, the Margin shall be 1.50% for Floating Rate Loans and 2.75% for
Eurodollar Loans until such financial statements are delivered and (b) no
decrease in the Margin shall be effected on any date on which an Event of
Default exists (but shall be delayed until the first date on which no Event of
Default exists). Any change in the Margin shall be immediately effective for all
outstanding Loans.
Margin Stock means any "margin stock" or "margin security" as defined in
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System.
Material Adverse Effect means a material adverse effect on (a) the
condition (financial or otherwise), operations, business, properties or assets
of the Company and its Subsidiaries taken as a whole or (b) the ability of
Parent, the Company and the Guarantors taken as a whole to timely and fully
perform any of their respective payment or other material obligations under this
Agreement or any other Loan Document or Senior Note Document to which any of
them is a party.
Membership Notes Receivable means, at any date of determination, the
principal amount of notes receivable (both current and non-current) due as of
such date from members of all Golf Course Properties owned by the Company or its
Subsidiaries.
Mortgage means a mortgage, leasehold mortgage, deed of trust or similar
document granting a Lien on real property in appropriate form for filing or
recording in the applicable jurisdiction and otherwise reasonably satisfactory
to the Agent, executed and delivered pursuant to the Original Credit Agreement,
the Existing Credit Agreement or Section 10.14.
24
Mortgage Amendment means each amendment (which shall include, without
limitation, extensions of the applicable Mortgage to any real property interests
that have resulted from Delayed Subsequent Acquisition Capital Expenditures made
prior to the Amendment Effective Date) to a Mortgage previously executed by the
Company or a Subsidiary, in appropriate form for filing or recording in the
applicable jurisdiction, substantially in the form of Exhibit L and reasonably
satisfactory to the Agent, executed and delivered pursuant to Section 11.2.8.
Net Cash Proceeds means
(a) with respect to any Asset Sale, the aggregate cash proceeds (including
cash proceeds received in respect of non-cash proceeds and
condemnation awards, and casualty loss insurance recoveries to the
extent the affected assets are not replaced or repaired in accordance
with the applicable Collateral Document(s)) received by the Company or
any Subsidiary pursuant to such Asset Sale, net of (i) the direct
costs relating to such Asset Sale (including, without limitation,
sales commissions and legal, accounting and investment banking fees),
(ii) taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), (iii) amounts required to be applied to the repayment
of any Debt secured by a Lien on the asset subject to such sale (other
than the Loans) and (iv) any reserve for adjustment in respect of the
sale price of such asset (until such amount is available to the
Company or the applicable Subsidiary); and
(b) with respect to any Debt Securities Sale or Equity Securities Sale,
the aggregate cash proceeds received by the Company or any Subsidiary
pursuant to such Debt Securities Sale or Equity Securities Sale, net
of the direct costs relating to such Debt Securities Sale or Equity
Securities Sale (including, without limitation, sales and
underwriter's commissions and legal, accounting and investment banking
fees).
Net Worth means the Company's consolidated stockholders' equity.
Non-Financial Standby Letter of Credit means any Standby Letter of Credit
that is not a Financial Standby Letter of Credit.
25
Notes means each of the Working Capital Revolving Note and the Reducing
Revolver Note.
Obligations means all unpaid principal of and accrued and unpaid interest
on the Notes, all accrued and unpaid fees and expenses, the stated amount of any
outstanding Letter of Credit, all Reimbursement Obligations, and all other
obligations of the Company or, as applicable, any Affiliate to the Lenders or to
any Lender, Agent or the Issuer arising under or in connection with the Loan
Documents.
Occupational Safety and Health Law means the Occupational Safety and Health
Act of 1970 and any other federal, state or local statute, law, ordinance, code,
rule, regulation, order or decree regulating, relating to or imposing liability
or standards of conduct concerning employee health and/or safety.
Operating Expenses means all operating expenses of the Company or any
Subsidiary, or relating to any individual Golf Course Property, calculated in
accordance with generally accepted accounting principles, and calculated in a
manner consistent with (and include but are not limited to) the lines "Admin &
General (Incl Taxes/Insurance)", "Golf Dept", "Golf Retail", "Course
Maintenance", "Food & Beverage", "Golf Schools", "Membership", "Tennis", and
"Pool" set forth in the financial statements for The Club at Trophy Club Golf
Course Property set forth at Exhibit K-2.
Original Bank Warrants means the warrants, issued by Parent to certain
Lenders in connection with the closing of the Original Credit Agreement, to
purchase an aggregate of (a) 5,472 shares of Parent's common stock, $0.01 par
value per share, and (b) 20,000 shares of Parent's Series A Preferred Stock,
$0.01 par value per share.
Original Credit Agreement is defined in the recitals.
Parent - see the Preamble.
Parent Guaranty - see Section 15.
Parent Pledge Agreement - see Section 11.2.7(c).
Participant - see Section 14.8.2.
26
PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to title IV of ERISA (other than a multi-
employer plan as defined in section 4001(a)(3) of ERISA), and to which the
Company or any corporation, trade or business that is, along with the Company, a
member of a controlled group of corporations or a controlled group of trades or
businesses, as described in section 414 of the Internal Revenue Code of 1986, as
amended, or section 4001 of ERISA, may have any liability, including any
liability by reason of having been a substantial employer within the meaning of
section 4063 of ERISA at any time during the preceding five years or by reason
of being deemed to be a contributing sponsor under section 4069 of ERISA.
Permitted Acquisition Costs means (without duplication) the costs paid or
payable by the Company or a Subsidiary in connection with a Subsequent
Acquisition, including without limitation the purchase price of such Subsequent
Acquisition (including any principal and interest payments required on a
deferred purchase money note issued in connection with such Subsequent
Acquisition); any other assumed Debt; all closing costs, accountants' and
advisors' fees and expenses, attorneys' fees and disbursements, title fees and
premiums, appraisals, environmental and hydrological report fees, survey costs,
brokerage commissions, internally capitalized costs relating to such Subsequent
Acquisition and other out-of-pocket costs incurred in connection with such
Subsequent Acquisition; Delayed Subsequent Acquisition Capital Expenditures
relating to such Subsequent Acquisition (including engineering and
architectural fees); and the initial working capital requirements relating to
such Subsequent Acquisition.
Person means any natural person, corporation, partnership, trust,
association, governmental authority or unit, or any other entity, whether acting
in an individual, fiduciary or other capacity.
Pledge Agreements means the Company Pledge Agreement, the Parent Pledge
Agreement and each Subsidiary Pledge Agreement.
Pre-Existing Properties means the following Golf Course Properties at the
following locations:
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(a) Balboa Park Municipal Golf Course, located in San Diego, California;
(b) Saticoy Golf Course, located in Ventura, California;
(c) El Camino Country Club, located in Oceanside, California;
(d) Foothills Golf Club, located in Phoenix, Arizona;
(e) Woodcrest Country Club, located in Grand Prairie, Texas;
(f) Carmel Mountain Ranch Country Club and Golf Course, located in San
Diego, California;
(g) Morgan Run Resort and Club, located in Rancho Santa Fe, California;
(h) The Vineyard at Escondido, located in Escondido, California;
(i) The Club at Trophy Club, located in Trophy Club, Texas;
(j) Pecan Grove Plantation Country Club, located in Richmond, Texas;
(k) Ahwatukee Country Club and The Lakes at Ahwatukee, located in Phoenix,
Arizona;
(l) The Ranch Country Club and Stonebridge Country Club, each located in
McKinney, Texas;
(m) Red Mountain Ranch Country Club, located in Mesa, Arizona;
(n) The Hills of Lakeway, Live Oak Golf Course and Yaupon Golf Course,
each located in Austin, Texas; and
(o) Brandermill Country Club, located in Richmond, Virginia.
Qualified Capital Stock means any capital stock of Parent or any Subsidiary
is not Disqualified Capital Stock.
Recipient Taxes - see Section 7.6(a).
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Reducing Revolver Loan - see Section 2.1.2.
Reducing Revolver Loan Commitment means as to any Lender the commitment of
such Lender to make Reducing Revolver Loans pursuant to Section 2.1.2. The
amount of the Reducing Revolver Loan Commitment of each Lender is set forth on
Schedule 1.
Reducing Revolver Loan Percentage means as to any Lender the percentage
which (a) such Lender's Reducing Revolver Loan Commitment (or, after the
termination of the Reducing Revolver Loan Commitments, the aggregate principal
amount of such Lender's Reducing Revolver Loans) is of (b) the aggregate amount
of the Reducing Revolver Loan Commitments of all Lenders (or, after the
termination of the Reducing Revolver Loan Commitments, the aggregate principal
amount of all Reducing Revolver Loans). The initial Reducing Revolver Loan
Percentage for each Lender is set forth opposite such Lender's name on Schedule
1.
Reducing Revolver Note - see Section 3.1(b).
Reducing Revolver Termination Date means June 30, 2002 or such other date
on which the Reducing Revolver Loan Commitments shall terminate pursuant to
Section 12.
Reimbursement Obligation - see Section 2.10.7.
Required Lenders means Lenders having an aggregate Total Percentage of at
least 51%.
Responsible Officer means the Company's chief executive officer or chief
financial officer.
SEC means the Securities and Exchange Commission.
Security Agreement - see Section 11.2.6.
Senior Company Notes means the __% Senior Notes due June 2003 of the
Company.
Senior Zero-Coupon Notes means the __% Senior Zero-Coupon Notes due June
2004 of Parent.
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Senior Note Documents means any instrument evidencing or issued in
connection with Senior Notes, or pursuant to which any Debt consisting of Senior
Notes may be incurred.
Senior Notes means any of (a) the Senior Company Notes and (b) the Units of
Parent, consisting of the Senior Zero-Coupon Notes and the shares of Common
Stock.
Standby Letter of Credit means any Letter of Credit other than a Commercial
Letter of Credit.
Stated Expiry Date - see Section 2.10.2(b)(i).
Stockholders' Agreement means the Stockholders' Agreement dated as of
January 31, 1994 by and among Parent and the shareholders of Parent.
Stonebridge means Stonebridge Ranch Development Corporation, a Delaware
corporation.
Subordinated Debt means Debt of the Company having terms (including,
without limitation, as to covenants, acceleration, defaults, interest rate,
maturity and amortization), and which is subordinated to the Obligations of the
Company hereunder, in a manner satisfactory to the Required Lenders.
Subsequent Acquisition means the acquisition by the Company or any
Subsidiary, on or after the Amendment Effective Time, of a Golf Course Property
located in the United States (excluding Puerto Rico and other possessions and/or
territories of the United States), which term shall include (but not be limited
to) all Permitted Acquisition Costs incurred in connection therewith.
Subsequent Acquisition Certificate means a certificate, substantially in
the form of Exhibit B-2 hereto, delivered by a Responsible Officer of the
Company pursuant to Section 2.5(e)(v).
Subsidiary means, with respect to any Person, a Person of which such Person
and/or its other Subsidiaries own, directly or indirectly, such number of
outstanding shares or other ownership interests as have more than 50% of the
ordinary voting power for the election of directors (or, in the case of a Person
that is not a corporation, the ordinary voting power concerning such matters as
to which such ownership interests are entitled to vote). Unless the context
otherwise requires, each reference to
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Subsidiaries herein shall be a reference to Subsidiaries of the Parent or the
Company, as the context permits.
Subsidiary Pledge Agreement - see Section 11.2.7(b).
Taxes relative to any Person means taxes, assessments or other governmental
charges or levies imposed upon such Person, its income or any of its properties,
franchises or assets (excluding, in the case of payments made to a Lender or the
Agent (all of the following taxes being "Excluded Taxes") taxes imposed upon the
overall net income of such Lender or the Agent).
Total Percentage means as to any Lender the percentage which (a) the
aggregate amount of such Lender's Working Capital Revolving Commitment (or,
after the termination of the Working Capital Revolving Commitments, the
aggregate principal amount of such Lender's Working Capital Revolving Loans and
Reimbursement Obligations) plus such Lender's Reducing Revolver Loan Commitment
(or, after the termination of the Reducing Revolver Loan Commitments, the
aggregate principal amount of such Lender's Reducing Revolver Loans) is of (b)
the aggregate amount of the Working Capital Revolving Commitments of all Lenders
(or, after the termination of the Working Capital Revolving Commitments, the
outstanding principal amount of all Working Capital Revolving Loans and
Reimbursement Obligations) plus the Reducing Revolver Loan Commitments of all
Lenders (or, after the termination of the Reducing Revolver Loan Commitments,
the outstanding principal amount of all Reducing Revolver Loans).
Transaction Documents means the Loan Documents, the Equity Documents and
the Senior Note Documents.
Type of Loan or Borrowing - see Section 2.2. The types of Loans or
borrowings under this Agreement are Floating Rate Loans or borrowings and
Eurodollar Loans or borrowings.
Unmatured Event of Default means any event which if it continues uncured
will, with lapse of time or notice or lapse of time and notice, constitute an
Event of Default.
Welfare Plan means a "welfare plan", as such term is defined in section
3(1) of ERISA.
Wholly-Owned Subsidiary means a Subsidiary of which the Company and/or its
Subsidiaries own, directly or indirectly, all
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of the outstanding shares of capital stock (other than directors' qualifying
shares).
Working Capital Revolving Commitment means as to any Lender the commitment
of such Lender to make Working Capital Revolving Loans pursuant to Section 2.1.1
and its obligation pursuant to Section 2.10.5 to participate in Letters of
Credit. The initial amount of the Working Capital Revolving Commitment of each
Lender is set forth on Schedule 1.
Working Capital Revolving Loan - see Section 2.1.1.
Working Capital Revolving Note - see Section 3.1(a).
Working Capital Revolving Percentage means as to any Lender the percentage
which (a) such Lender's Working Capital Revolving Commitment (or, after the
termination of the Working Capital Revolving Commitments, the aggregate
principal amount of such Lender's Working Capital Revolving Loans and
Reimbursement Obligations) is of (b) the aggregate amount of the Working Capital
Revolving Commitments of all Lenders (or, after the termination of the Working
Capital Revolving Commitments, the aggregate principal amount of all Working
Capital Revolving Loans and Reimbursement Obligations). The initial Working
Capital Revolving Percentage for each Lender is set forth opposite such Lender's
name on Schedule 1.
Working Capital Revolving Termination Date means June 30, 2002 or such
other date on which the Working Capital Revolving Commitments shall terminate
pursuant to Section 12.
1.2 Reallocation of Loans and Commitments.
(a) Each of the Lenders agrees that effective as of the Amendment
Effective Time,
(i) each Existing Revolving Commitment and, if any, Existing
Revolving Loan shall, upon sale, assignment and assumption in
accordance with clauses (ii) and (iii) below, be deemed to be a
Working Capital Revolving Commitment and a Working Capital
Revolving Loan; and each Existing Term Commitment and, if any,
Existing Term Loan shall, upon sale, assignment and assumption
in accordance with clauses (ii) and
32
(iii) below, be deemed to be a Reducing Revolver Loan
Commitment and a Reducing Revolver Loan;
(ii) each of the Existing Lenders shall be deemed to have sold and
assigned any portion of its Existing Revolving Commitment,
Existing Revolving Loans, Existing Term Commitment and Existing
Term Loans which is in excess of the amount of such Existing
Lender's Working Capital Revolving Commitment, Working Capital
Revolving Percentage of all outstanding Working Capital
Revolving Loans, Reducing Revolver Loan Commitment, and
Reducing Revolver Loan Percentage of all outstanding Reducing
Revolver Loans, respectively, after giving effect to the
effectiveness hereof; and
(iii) each of the Lenders shall, to the extent applicable, be deemed
to have purchased and assumed that portion of the Existing
Revolving Commitments, the Existing Revolving Loans, the
Existing Term Commitments and the Existing Term Loans (which
shall be deemed to be, after giving effect to clause (i) above,
Working Capital Revolving Commitments, Working Capital
Revolving Loans, Reducing Revolver Loan Commitments and
Reducing Revolver Loans, respectively) which is being sold
pursuant to clause (ii) above, and to have increased its
Working Capital Revolving Commitment and/or Reducing Revolver
Loan Commitment in an amount, which will cause such Lender's
Working Capital Revolving Commitment, Working Capital Revolving
Percentage of all outstanding Working Capital Revolving Loans,
Reducing Revolver Loan Commitment and Reducing Revolver Loan
Percentage of all outstanding Reducing Revolver Loans, to be in
each such case as set forth on Schedule 1.
(b) Each Existing Lender represents and warrants to the Agent and each
Lender that, at the Amendment Effective Time (but before giving effect to the
restatement hereof), (i) its Existing Revolving Commitment, its Existing
Revolving Loans, its Existing Term Commitment and its Existing Term Loans are in
the amounts set forth on Schedule 1.2; and (ii) to the extent that such Existing
Lender is making a sale and assignment pursuant to clause (a)(ii)
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of this Section 1.2, the rights and interests being assigned are free and clear
of any adverse claim or encumbrance.
(c) The Company, Parent, the Existing Lenders and the Agent agree that each
Existing Lender which is making a sale and assignment pursuant to clause (a)(ii)
of this Section 1.2 shall, as of the Amendment Effective Time, relinquish its
rights and be released from its obligations under this Agreement and the
Existing Credit Agreement to the extent of the rights and interests so sold and
assigned.
(d) At the Amendment Effective Time, (i) each Lender which is purchasing
Existing Revolving Loans or Existing Term Loans (which in accordance with clause
(a)(i) above shall be deemed to be Working Capital Revolving Loans or Reducing
Revolver Loans, respectively) and/or increasing its Existing Revolving
Commitment and/or Existing Term Commitment (which in accordance with clause
(a)(i) above shall be deemed to be its Working Capital Revolving Commitment or
its Reducing Revolver Loan Commitment, respectively) pursuant to clause (a)(iii)
of this Section 1.2 shall deliver to the Agent immediately available funds to
cover such purchase and/or increase and (ii) the Agent shall, to the extent of
the funds so received, disburse such funds to the Existing Lenders which are
making sales and assignments pursuant to clause (a)(ii) of this Section 1.2.
(e) The Company agrees that, at the Amendment Effective Time, the Company
will (i) prepay all Loans outstanding under the Existing Credit Agreement and
(ii) pay to the Agent for the account of each Existing Lender all interest, fees
and other amounts (including amounts payable pursuant to Section 8.4) owed to
such Existing Lender under the Existing Credit Agreement.
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SECTION 2 COMMITMENTS OF THE LENDERS; TYPES OF LOANS;
BORROWING PROCEDURES; LETTERS OF CREDIT.
2.1 Commitments. On and subject to the terms and conditions of this
Agreement, each of the Lenders, severally and for itself alone, agrees that as
of the Amendment Effective Time, such Lender shall be deemed to have made a
Working Capital Revolving Loan and a Reducing Revolver Loan to the Company in an
amount equal to the amount set forth beside its name under the headings
"Outstanding Working Capital Revolving Loans" and "Outstanding Reducing Revolver
Loans" on Schedule 1. In addition, each of the Lenders, severally and for itself
above, agrees as follows:
2.1.1 Working Capital Revolving Commitments. (a) Each Lender agrees to
make revolving loans to the Company (together with revolving loans deemed made
in accordance with Section 2.1 above, its "Working Capital Revolving Loans")
from time to time on or after the Amendment Effective Time but before the
Working Capital Revolving Termination Date in such Lender's Working Capital
Revolving Percentage of such aggregate amounts as the Company may from time to
time request from all Lenders under the Working Capital Revolving Commitments,
provided that no Lender shall be permitted or required to make any Working
Capital Revolving Loan if, after giving effect thereto, the sum of (i) the
aggregate principal amount of all Working Capital Revolving Loans then
outstanding plus (ii) the aggregate undrawn stated amount of all then
outstanding Letters of Credit and all Reimbursement Obligations then due and
payable would exceed $5,000,000 (as such amount may be reduced from time to time
pursuant to Section 6).
(b) Working Capital Revolving Loans will be made only to (i) finance
Maintenance Capital Expenditures, (ii) provide working capital (including,
without limitation, payments under Section 10.11), (iii) fund escrow accounts or
make "good faith" deposits or similar deposits or payments in connection with a
Subsequent Acquisition pursuant to a purchase agreement for such Subsequent
Acquisition, in accordance with Section 10.12(h)(ii), and (iv) finance any
payment by Parent in accordance with Section 10.11. Subject to the foregoing,
Working Capital Revolving Loans may be repaid and reborrowed from time to time.
2.1.2 Reducing Revolver Loan Commitments. (a) Subject to the next
35
succeeding sentence, each Lender agrees to make revolving loans to the Company
(together with Reducing Revolver Loans deemed made in accordance with Section
2.1 above, its "Reducing Revolver Loans") from time to time on or after the
Amendment Effective Time in such Lender's Reducing Revolver Loan Percentage of
such aggregate amounts as the Company may from time to time request from all
Lenders under the Reducing Revolver Loan Commitments, provided that the
aggregate principal amount of all Reducing Revolver Loans of all Lenders shall
not exceed $45,000,000 (as such amount may be reduced from time to time pursuant
to Section 6). Notwithstanding the foregoing, no borrowing of Reducing Revolver
Loans shall be made on any date if
(i) in the case of Reducing Revolver Loans used to finance any
Subsequent Acquisition (and not used to finance Delayed Subsequent
Acquisition Capital Expenditures), after giving effect to such borrowing,
the aggregate principal amount of Reducing Revolver Loans outstanding would
exceed the remainder of (A) $45,000,000 (as such amount may be reduced from
time to time pursuant to Section 6) less (B) the aggregate amount of all
Delayed Subsequent Acquisition Capital Expenditures permitted in accordance
with Section 2.6 (but subject to the definition thereof) for all Subsequent
Acquisitions closed prior to such date, which Delayed Subsequent
Acquisition Capital Expenditures have not been financed by Reducing
Revolver Loans already made prior to such date or by Term Loans under the
Existing Credit Agreement, less (C) the amount of Delayed Subsequent
Acquisition Capital Expenditures projected to be made in connection with
such Subsequent Acquisition for which such Reducing Revolver Loans are
being borrowed, and
(ii) in the case of Reducing Revolver Loans used to finance Delayed
Subsequent Acquisition Capital Expenditures, the principal amount of such
Reducing Revolver Loans would exceed the aggregate amount of all Delayed
Subsequent Acquisition Capital Expenditures permitted in accordance with
Section 2.6 (but subject to the definition thereof) for all Subsequent
Acquisitions closed prior to such date, which Delayed Subsequent
Acquisition Capital Expenditures have not been financed by Reducing
Revolver Loans already made prior to such date or by Term Loans under the
Existing Credit Agreement.
(b) Reducing Revolver Loans will be made only (i) on and after the
Amendment Effective Time, for the purpose of financing
36
Permitted Acquisition Costs in connection with Subsequent Acquisitions made from
time to time if, and only if, each of the conditions precedent set forth in
Section 2.5 for each such Subsequent Acquisition is satisfied or waived in
accordance with the terms of this Agreement, (ii) on and after the Amendment
Effective Time, for the purpose of financing Delayed Subsequent Acquisition
Capital Expenditures made from time to time if, and only if, each of the
conditions precedent set forth in Section 2.5 for each related Subsequent
Acquisition was satisfied or waived at the time of such Subsequent Acquisition
and, in addition, each of the conditions precedent set forth in Section 2.6(a)
is satisfied or waived with respect to such Delayed Subsequent Acquisition
Capital Expenditures and (iii) on and after the Amendment Effective Time, for
the purpose of financing Designated Non-Recurring Capital Expenditures made from
time to time if, and only if, each of the conditions precedent set forth in
Section 2.6(c) is satisfied or waived with respect to such Designated Non-
Recurring Capital Expenditures. Subject to the foregoing, Reducing Revolver
Loans may be repaid and reborrowed from time to time.
2.2 Various Types of Loans. Each Loan may be divided into tranches which
are either a Floating Rate Loan or a Eurodollar Loan (each a "type" of Loan), as
the Company shall specify in the related notice of borrowing or conversion
pursuant to Section 2.3 or 2.4. Eurodollar Loans having the same Interest
Period are sometimes called an "Advance" or collectively "Advances". Floating
Rate Loans and Eurodollar Loans may be outstanding at the same time. Not more
than twelve different Advances of Eurodollar Loans shall be outstanding at any
one time, and the aggregate principal amount of each Advance of Eurodollar Loans
shall at all times be at least $500,000. All borrowings, conversions and
repayments of Loans shall be effected so that each Lender will have a pro rata
share (according to its Working Capital Revolving Percentage or Reducing
Revolver Loan Percentage, as applicable) of all types and Advances of Working
Capital Revolving Loans and Reducing Revolver Loans, as applicable.
37
2.3 Borrowing Procedures. The Company shall give written or telephonic
notice to the Agent of each proposed borrowing not later than (a) in the case of
a borrowing of Floating Rate Loans, 10:00 a.m., Chicago time, on the Business
Day of the proposed date of such borrowing, and (b) in the case of a borrowing
of Eurodollar Loans, noon, Chicago time, at least three Business Days prior to
the proposed date of such borrowing. Each such notice shall be effective upon
receipt by the Agent, shall be irrevocable, and shall specify the date, amount
and type of borrowing and, in the case of a borrowing of Eurodollar Loans, the
initial Interest Period therefor. Promptly upon receipt of such notice, the
Agent shall advise each Lender thereof. Not later than 1:00 p.m., Chicago time,
on the date of a proposed borrowing, each Lender shall provide the Agent at the
principal office of the Agent in San Francisco with immediately available funds
covering such Lender's Working Capital Revolving Percentage or Reducing Revolver
Loan Percentage, as applicable, of such borrowing and, subject to the
satisfaction of the conditions precedent set forth in Section 11 with respect to
such borrowing, the Agent shall pay over the requested amount to the Company on
the requested borrowing date. Each borrowing shall be on a Business Day. Each
Floating Rate borrowing shall be in an aggregate amount of at least $250,000.
Unless the Company shall otherwise direct in writing, the proceeds of all
borrowings shall be deposited to the Company's demand deposit account no. 72-
10604 maintained with BAI.
2.4 Procedures for Conversion of Type of Loan. Subject to the provisions
of Section 2.2, the Company may convert all or any part of any outstanding Loan
into a Loan of a different type by giving written or telephonic notice to the
Agent not later than (a) in the case of conversion into a Floating Rate Loan,
noon, Chicago time, at least three Business Days prior to the proposed date of
such conversion, and (b) in the case of a conversion into a Eurodollar Loan,
noon, Chicago time, at least three Business Days prior to the proposed date of
such conversion. Each such notice shall be effective upon receipt by the Agent,
shall be irrevocable, and shall specify the date and amount of such conversion,
the Loan to be so converted, the type of Loan to be converted into and, in the
case of a conversion into a Eurodollar Loan, the initial Interest Period
therefor. Promptly upon receipt of such notice, the Agent shall advise each
Lender thereof. Subject to Sections 2.7 and 2.8, such Loan shall be so
converted on the requested date of conversion. Each conversion shall be on a
Business Day.
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2.5 Conditions to the Making of Reducing Revolver Loans Used to Finance
Subsequent Acquisitions. The Company shall not, and shall not permit any
Subsidiary to, make any Subsequent Acquisition after the Amendment Effective
Time unless, and the Lenders shall have no obligation to fund any Reducing
Revolver Loan used to finance any Subsequent Acquisition unless, each of the
following conditions precedent is satisfied with respect to such Subsequent
Acquisition:
(a) The Company's ratio of (x) the sum of, without duplication (A)
Funded Debt projected to be outstanding (after giving effect to such
Subsequent Acquisition) plus (B) Delayed Subsequent Acquisition Capital
Expenditures projected to be made in connection with such Subsequent
Acquisition plus (C) Delayed Subsequent Acquisition Capital Expenditures
projected to be made in connection with all previous Subsequent
Acquisitions and not yet made (and subject to the definition thereof), to
(y) the sum of (A) Adjusted EBITDA (calculated on a pro forma basis as of
the last date of the next succeeding Fiscal Quarter for the proposed
Subsequent Acquisition or any Subsequent Acquisition consummated in the
then-current Fiscal Quarter, and calculated on a pro forma basis as of the
last date of the next preceding Fiscal Quarter for any Subsequent
Acquisition consummated prior to the then-current Fiscal Quarter) less (B)
any increases in Membership Notes Receivable above (i) for the period
between the Amendment Effective Date and June 29, 1997, $5,400,000 and (ii)
for all Fiscal Quarters ending on or after June 30, 1997, the Fiscal
Quarter-end balance four Fiscal Quarters prior plus (C) reductions in
Membership Notes Receivable below (i) for the period between the Amendment
Effective Date and June 29, 1997, the June 30, 1996 Fiscal Quarter-end
balance and (ii) for all Fiscal Quarters ending on or after June 30, 1997,
the Fiscal Quarter-end balance four Fiscal Quarters prior, shall be less
than or equal to:
(i) 6.5 to 1.0 from the Amendment Effective Time to and
including March 30, 1997;
(ii) 6.25 to 1.0 from March 31, 1997 to and including June 29,
1997;
39
(iii) 6.0 to 1.0 from June 30, 1997 to and including September
29, 1997;
(iv) 5.75 to 1.0 from September 30, 1997 to and including
December 30, 1997;
(v) 5.5 to 1.0 from December 31, 1997 to and including March
30, 1998;
(vi) 5.25 to 1.0 from March 31, 1998 to and including June 29,
1998;
(vii) 5.0 to 1.0 from June 30, 1998 to and including December
30, 1998;
(viii) [other dates] (the condition in this clause (a) being
the "Incurrence Test");
(b) at the time of such Subsequent Acquisition, Parent, Company and
its Subsidiaries, on a consolidated basis, shall have no more than
$2,000,000 in cash and Cash Equivalent Investments, or such cash and Cash
Equivalent Investments in excess of $2,000,000 shall be used in making such
Subsequent Acquisition prior to using Loans borrowed under this Agreement;
(c) the Company or the relevant Subsidiary making such Subsequent
Acquisition shall grant to the Agent, for the benefit of the Lenders, a
first priority perfected security interest (subject only to Liens permitted
hereunder) on (i) all assets acquired in such Subsequent Acquisition,
including, without limitation, accounts receivable, inventory, equipment,
real property, intangibles and any stock or other ownership interests of
any Person acquired by the Company or its Subsidiaries in such Subsequent
Acquisition, and (ii) any material leasehold interest acquired by the
Company or any Subsidiary in connection with such Subsequent Acquisition;
the Company shall have paid all mortgage recordation taxes, title insurance
premiums and other fees or costs associated with the grant of such security
interest, with the allocated value of the mortgage amount applicable to any
such mortgage recordation taxes (in any jurisdiction that restricts
foreclosure or other enforcement recoveries to the mortgage amount as to
which mortgage recordation taxes have been paid) being not less than the
product of (i) 1.40 times (ii) the sum of (without
40
duplication) the Reducing Revolver Loans borrowed to finance such
Subsequent Acquisition and any Permitted Acquisition Costs incurred in
connection therewith; the Company shall take and cause each Subsidiary to
take such action in connection therewith as the Agent may reasonably
require; and the Company or such Subsidiary shall deliver to the Agent and
the Lenders an opinion or opinions of independent counsel as to such
security interest and as to such other matters (including, without
limitation, water rights issues) in connection with such Subsequent
Acquisition as the Agent may reasonably require;
(d) no Event of Default or Unmatured Event of Default shall exist at
the time of or after giving effect to such Subsequent Acquisition;
(e) the Company shall provide to the Agent and the Lenders the
following information with respect to such Subsequent Acquisition, no later
than ten Business Days prior to the projected closing date for such
Subsequent Acquisition:
(i) a detailed business plan, which shall include (without
limitation) an estimated schedule of all sources and uses of funds,
including (without limitation) an estimated schedule for all Delayed
Subsequent Acquisition Capital Expenditures (it being understood that
(A) all Delayed Subsequent Acquisition Capital Expenditures for such
Subsequent Acquisition must be completed within 18 months of the
borrowing date for the initial Reducing Revolver Loans (or term loans
made under the Original Credit Agreement or the Existing Credit
Agreement) funding such Subsequent Acquisition, and (B) the actual
uses for such Delayed Subsequent Acquisition Capital Expenditures, on
an aggregate basis for any Golf Course Property, must be consistent in
all material respects with the projected uses for such Delayed
Subsequent Acquisition Capital Expenditures specified in such
schedule);
(ii) historical financial and operating data for at least the
most recent 12 complete consecutive calendar months for which
financial statements are
available for the Golf Course Property subject to such Subsequent
Acquisition, and all other historical financial and operating data and
descriptive material
41
in the Company's possession relating to such Golf Course Property, it
being understood that all such data and descriptive material (as well
as the business plan referred to in subclause (i) above and the
projections referred to in subclause (iv) below) shall be those
prepared for the Company's Board of Directors for purposes of
approving such Subsequent Acquisition and shall be in substantially
the same format and level of detail as those previously prepared by
the Company for the Subsequent Acquisition of The Club at Trophy Club
Golf Course Property located in Trophy Club, Texas and distributed to
the Agent and the Lenders;
(iii) the purchase agreement pursuant to which such Subsequent
Acquisition will be consummated (or, if not yet executed, the most
current version of such purchase agreement; provided that the final
version is provided at least three Business Days prior to the closing
date for such Subsequent Acquisition), and each material services
agreement, consulting agreement, lease, credit or financing agreement
or other material agreement relating to such Subsequent Acquisition or
applicable to such Golf Course Property to be in effect after the
consummation of such Subsequent Acquisition (or, if not yet executed,
the most current version of any such agreement; provided that the
final version is provided at least three Business Days prior to the
closing date for such Subsequent Acquisition);
(iv) detailed financial projections (x) on an annual basis,
for the seven Fiscal Years following such Subsequent Acquisition, and
(y) on a monthly basis, for the first four Fiscal Quarters (and any
calendar months occurring prior to the beginning of such first Fiscal
Quarter) following such Subsequent Acquisition;
(v)(a) Subsequent Acquisition Certificate, (A) showing the
calculations made to determine compliance with the Incurrence Test,
(B) as to such business plan, historical data, descriptive material,
projections, and all other materials furnished under this Section 2.5,
(C) as to compliance with all conditions set forth in this Section
2.5, and (D) as to resolutions and other corporate and third party
authorizations for such Subsequent Acquisition;
42
(vi) [under review] a Phase I environmental report prepared by
an environmental firm on Agent's approved list regarding the real
property and other assets to be acquired in such Subsequent
Acquisition, which report (A) shall have been prepared in accordance
with the Agent's Phase I Environmental Site Assessment Scope of Work
and Report Outline, (B) shall include as an attachment the Agent's
Environmental Questionnaire and Disclosure Statement, and (C) shall
show no evidence that the Company would not be able to make the
representations and warranties set forth at Section 9.17 of this
Agreement, or to comply with the covenants set forth at Section 10.18
of this Agreement, after giving effect to such Subsequent Acquisition;
and
(vii) such other information as the Agent or any Lender may
reasonably request with respect to such Subsequent Acquisition;
(f) the Permitted Acquisition Costs (which costs, if not finally
determined at the time of determining compliance with this clause (f),
shall represent the Company's best estimate thereof) for such Subsequent
Acquisition (including, without limitation, any escrow account, "good
faith" deposit or similar deposit or payment made in connection with such
Subsequent Acquisition in accordance with Section 10.12(h)), shall not
exceed $15,000,000;
(g) the Person or assets to be acquired in such Subsequent Acquisition
shall not have experienced, based on financial information provided by the
seller, during the most recently completed twelve complete consecutive
calendar months for which financial statements are available prior to the
date of borrowing the Reducing Revolver Loans to fund such Subsequent
Acquisition, negative cumulative Golf Course Property EBITDA in excess of
<$1,000,000>, when taken together with the negative cumulative Golf Course
Property EBITDA for the most recently completed twelve complete consecutive
calendar months for all other Subsequent Acquisitions consummated after the
Amendment Effective Time (measured in each case as of the date of
consummation of such Subsequent Acquisition); provided, however, that if an
acquired Golf Course Property that had negative cumulative Golf Course
Property EBITDA on the date of consummation of the acquisition has been
owned by the Company for more than
43
one year and such Golf Course Property has had positive cumulative Golf
Course Property EBITDA for the most recent four complete consecutive Fiscal
Quarters, the negative Golf Course Property EBITDA attributable to such
Golf Course Property shall no longer be included for purposes of
calculating compliance with this clause (g);
(h) the borrowing of Reducing Revolver Loans applied to fund such
Subsequent Acquisition shall include any amounts previously borrowed as
Working Capital Revolving Loans and applied to fund any escrow account,
"good faith deposit" or similar deposit or payment made in connection with
such Subsequent Acquisition in accordance with Section 10.12(i); and such
Working Capital Revolving Loans shall be repaid with the proceeds of such
Reducing Revolver Loans on or promptly after the borrowing date of such
Reducing Revolver Loans.
2.6 Other Terms Applicable to Delayed Subsequent Acquisition Capital
Expenditures and Designated Non-Recurring Capital Expenditures.
(a) The Company shall not, and shall not permit any Subsidiary to,
make any Delayed Subsequent Acquisition Capital Expenditures unless, and
the Lenders shall have no obligation to fund any Reducing Revolver Loan
used to finance any Delayed Subsequent Acquisition Capital Expenditures
unless, each of the following conditions precedent is satisfied with
respect to such Delayed Subsequent Acquisition Capital Expenditures:
(i) except as otherwise provided for herein, any Reducing
Revolver Loans used to finance such Delayed Subsequent Acquisition
Capital Expenditures shall be borrowed, and such Delayed Subsequent
Acquisition Capital Expenditures shall be completed, no later than 18
months after the borrowing date for the initial Reducing Revolver
Loans (or term loans made under the Original Credit Agreement or the
Existing Credit Agreement) used to finance the related Subsequent
Acquisition;
(ii) such Delayed Subsequent Acquisition Capital Expenditures
shall be described in writing in reasonable detail to the Agent and
the Lenders, by no
44
later than three Business Days prior to the Company's submission of
the initial borrowing notice relating to the Reducing Revolver Loans
to fund such Delayed Subsequent Acquisition Capital Expenditures;
(iii) the Company or the relevant Subsidiary making such
Delayed Subsequent Acquisition Capital Expenditures shall grant to the
Agent, for the benefit of the Lenders, a first priority security
interest (subject only to Liens permitted hereunder) on all assets
acquired or constructed with such Delayed Subsequent Acquisition
Capital Expenditures;
(iv) the amount of such Delayed Subsequent Acquisition Capital
Expenditures does not exceed the amount designated therefor (on an
aggregate basis for any Golf Course Property), and the actual uses of
such Delayed Subsequent Acquisition Capital Expenditures does not vary
in material respects from the uses designated therefor, in the
business plan furnished by the Company pursuant to Section 2.5(e)(i);
(v) no Event of Default or Unmatured Event of Default shall
exist at the time of or after giving effect to such Delayed Subsequent
Acquisition Capital Expenditures;
(vi) if such Delayed Subsequent Acquisition Capital
Expenditure is for an improvement to real property, the Agent shall
have received a currently dated (x) Pending Disbursement Endorsement
to the title insurance policy for the Mortgage relating to the Golf
Course Property as to which such Delayed Subsequent Acquisition
Capital Expenditures relate confirming that the amount of insurance
offered by such policy has been increased (or the commitment of the
title insurer has been increased) by the amount of any Delayed
Subsequent Acquisition Capital Expenditures being funded with such
Loans being borrowed (without duplication of amounts of insurance
offered and paid for under Section 2.5(c)) and (y) a later date
endorsement showing no exceptions not reasonably acceptable to the
Agent; and
(vii) the Company shall have provided to the Agent and the
Lenders such information relating to such
45
Delayed Subsequent Acquisition Capital Expenditures as the Agent or
any Lender may reasonably request.
(b) An amount equal to the aggregate amount of all Delayed Subsequent
Acquisition Capital Expenditures not yet funded by Reducing Revolver Loans
shall be deducted from the principal amount of Reducing Revolver Loans
available to be borrowed for Subsequent Acquisitions in accordance with
Section 2.1.2(a). Upon certification by the Company to the Agent and the
Lenders as to any Delayed Subsequent Acquisition Capital Expenditures no
longer being Delayed Subsequent Acquisition Capital Expenditures in
accordance with the definition of "Delayed Subsequent Acquisition Capital
Expenditures", the amount of such Delayed Subsequent Acquisition Capital
Expenditures will no longer be so deducted from the principal amount of
Reducing Revolver Loans available to be borrowed for Subsequent
Acquisitions.
(c) The Company shall not, and shall not permit any Subsidiary to,
make any Designated Non-Recurring Capital Expenditure unless, and the
Lenders shall have no obligation to fund any Reducing Revolver Loan used to
finance any Designated Non-Recurring Capital Expenditures unless, each of
the following conditions precedent is satisfied with respect to such
Designated Non-Recurring Capital Expenditures:
(i) at the borrowing date for the applicable Reducing
Revolver Loans the Company shall be in compliance with the Incurrence
Test (after including such Designated Non-Recurring Capital
Expenditures in the numerator of the Incurrence Test in the
calculation thereof);
(ii) such Designated Non-Recurring Capital Expenditures shall
be described in writing in reasonable detail to the Agent and the
Lenders and certified by a Responsible Officer as qualifying as a
Designated Non-Recurring Capital Expenditure, by no later than ten
Business Days prior to the Company's submission of the initial
borrowing notice relating to the Reducing Revolver Loans to fund such
Designated Non-Recurring Capital Expenditures;
(iii) the Company or the relevant Subsidiary making such
Designated Non-Recurring Capital Expenditures shall grant to the
Agent, for the benefit
46
of the Lenders, a first priority security interest (subject only to
Liens permitted hereunder) on all assets acquired or constructed with
such Designated Non-Recurring Capital Expenditures;
(iv) no Event of Default or Unmatured Event of Default shall
exist at the time of or after giving effect to such Designated Non-
Recurring Capital Expenditures; and
(v) if such Designated Non-Recurring Capital Expenditure is for
an improvement to real property, the Agent shall have received a
currently dated (x) Pending Disbursement Endorsement to the title
insurance policy for the Mortgage relating to the Golf Course Property
as to which such Designated Non-Recurring Capital Expenditures relate
confirming that the amount of insurance offered by such policy has
been increased (or the commitment of the title insurer has been
increased) by the amount of any Designated Non-Recurring Capital
Expenditures being funded with such Loans being borrowed (without
duplication of amounts of insurance offered and paid for under Section
2.5(c)) and (y) a later date endorsement showing no exceptions not
reasonably acceptable to the Agent.
2.7 Warranty. Each notice of borrowing pursuant to Section 2.3, each
Issuance Request pursuant to Section 2.10.2 and each Letter of Credit Amendment
Request pursuant to Section 2.10.3 shall automatically constitute a warranty by
the Company to the Agent and each Lender on the date of such requested Credit
Extensions as to the facts specified in Sections 11.4.2 through 11.4.5.
2.8 Conditions. Notwithstanding any other provision of this Agreement, no
Lender shall be obligated to make any Credit Extension if the conditions
specified in Sections 11.4.2 through 11.4.5 have not been satisfied or waived.
2.9 Commitments Several. The failure of any Lender to make a requested
Credit Extension on any date shall not relieve any other Lender of its
obligation to make a Credit Extension on such date, but no Lender shall be
responsible for the failure of any other Lender to make any Credit Extension to
be made by such other Lender.
47
2.10 Letters of Credit.
2.10.1 Issuance of Letters of Credit. On the terms and subject to
the conditions set forth in this Agreement, the Issuer shall issue from
time to time on or after the Amendment Effective Time and prior to the
Working Capital Revolving Termination Date (and, in the case of Commercial
Letters of Credit, prior to 15 Business Days before the Working Capital
Revolving Termination Date), one or more irrevocable Letters of Credit on
behalf of and for the account of the Company or any Subsidiary, each of
which Letters of Credit shall be denominated in Dollars and issued to
support obligations of the Company or a Subsidiary incurred in the ordinary
course of business; provided that no Letter of Credit shall be issued if
after the issuance thereof (a) the sum of (i) outstanding Working Capital
Revolving Loans plus (ii) the aggregate undrawn stated amounts of Letters
of Credit plus (iii) the aggregate unpaid Reimbursement Obligations then
due and payable hereunder would exceed $5,000,000 (as such amount may be
reduced from time to time pursuant to Section 6) or (b) the sum of the
amounts in clauses (a)(ii) plus (a)(iii) above would exceed $2,500,000.
Letters of Credit will be issued only for the purposes set forth in Section
2.1.1(b).
48
2.10.2 Issuance Requests.
(a) By delivering a duly completed issuance request (an
"Issuance Request") in the form of Exhibit J-1, accompanied by a duly
completed application for a Letter of Credit, on or before 9:00 a.m.,
Chicago time, at least one Business Day prior to the requested
Business Day of issuance, to the Agent and the Issuer, the Company may
request the issuance from time to time of Letters of Credit; it being
understood that the Issuer may require
by notice to the Company a postponement of such requested issuance
date to the extent reasonably necessary for the preparation and
negotiation of such Letter of Credit and all related documentation.
Each Issuance Request and application shall be irrevocable, and upon
its receipt thereof, the Agent shall promptly notify the Lenders
thereof. Issuance Requests and applications (and all attachments
thereto) may be delivered to the Agent and the Issuer by facsimile or
telex if such deliveries are confirmed, or by delivery of the original
executed Issuance Requests and applications (and all attachments
thereto) to such Persons, in each case not later than one Business Day
prior to the date of issuance. The Agent shall promptly notify the
Issuer and the Company if, after giving effect to the issuance of any
requested Letter of Credit, the limitation set forth in the proviso to
Section 2.10.1 would be violated.
(b) Each Letter of Credit shall be in a form mutually
satisfactory to the Issuer and the Company and shall, by its terms,
(i) be stated to expire on a date (its "Stated Expiry
Date") not later than the earlier of (A) one year after the date
of issuance thereof and (B) the Working Capital Revolving
Termination Date,
(ii) unless the Agent shall otherwise agree, terminate on
or prior to its Stated Expiry Date immediately upon notice to the
Issuer from the beneficiary thereunder that all obligations
covered thereby have been terminated, paid or otherwise satisfied
in full, and
49
(iii) provide for payment not earlier than three (3)
Business Days (unless the Issuer shall otherwise agree) after
demand for payment under such Letter of Credit and full
satisfaction of the conditions precedent thereto, and provide
solely for payment upon the presentation of a sight draft rather
than a time draft.
(c) The Issuer shall make the original of each Letter of Credit
it issues available (but in the case of replacement Letters of Credit,
only against delivery by such beneficiary of the Letter of Credit
being replaced) to the beneficiary indicated in the respective
Issuance Request (and provide on the date of issuance a copy thereof
to the Agent).
2.10.3 Amendments. Any extension of the Stated Expiry Date, increase
in the stated amount, or other modification of a Letter of Credit shall be
made only upon satisfaction of all of the procedures and conditions for the
issuance of a new Letter of Credit of the same type, except that the
Company's request therefor shall be in the form of Exhibit J-2 (a "Letter
of Credit Amendment Request").
2.10.4 Letter of Credit Fees.
(a) The Company agrees to pay to the Agent with respect to each
Letter of Credit, for the account of the Issuer and each other Lender,
ratably in accordance with their respective Working Capital Revolving
Percentages, accrual fees at the applicable L/C Fee Rate for a Letter
of Credit of such type (calculated in each case from and including the
date of issuance (or date of renewal or extension, if any) thereof to,
but not including, the Stated Expiry Date thereof or, if earlier, the
date upon which such Letter of Credit is cancelled, fully drawn or
terminated), in each case on the daily average undrawn stated amount
thereof, payable in arrears on a 360-day year for each Fiscal Quarter
within five (5) days after the Company's receipt of any statement of
such fees provided by the Agent or Issuer for such Fiscal Quarter;
provided that during the existence of any Event of Default, each of
such accrual fees shall be increased by 2.0% per annum.
50
(b) The Company further agrees to pay upon demand made by the
Issuer from time to time, solely to the Issuer:
(i) all reasonable and customary fees and expenses of the
Issuer, as advised by the Issuer from time to time, in connection
with the negotiation, maintenance, modification (if any),
amendment, renewal, administration and collection of, or drawing
under, Letters of Credit issued by the Issuer;
(ii) an issuance fee of 0.125% of the face amount of each
Letter of Credit issued, payable at the same time as the accrual
fees described in clause (a) above; and
(iii) without duplication of payments made under Section 8,
any applicable reserve, assessment, insurance charge, premium or
levy imposed on the Issuer by any governmental authority,
including Federal Deposit Insurance Corporation assessments and
charges, with respect to any Letter of Credit issued hereunder.
51
2.10.5 Other Lenders' Participations; Reimbursements.
(a) Each Letter of Credit shall, effective upon issuance and
without further action, be issued on behalf of each Lender (including
the Issuer) in accordance with the immediately succeeding sentence, in
each case pro rata according to such Lender's respective Working
Capital Revolving Percentage. Each Lender shall, to the extent of its
Working Capital Revolving Percentage, be deemed to have irrevocably
purchased a participation in the amount of its Working Capital
Revolving Percentage in each Letter of Credit issued on its behalf and
shall reimburse promptly to the Agent, on behalf of the Issuer, for
Reimbursement Obligations not reimbursed in accordance with Section
2.10.7 by the Company, or which have been reimbursed by the Company
but must be returned, restored or disgorged by the Issuer for any
reason, and each Lender (including the Issuer) shall, to the extent of
its Working Capital Revolving Percentage, be entitled to receive from
the Agent a ratable portion of the accrual fees received by the Agent,
pursuant to Section 2.10.4(a), with respect to such Letter of Credit.
(b) If the Company fails to satisfy its obligations set forth in
the last sentence of Section 2.10.6 and Section 2.10.7 to reimburse to
the Agent, on behalf of the Issuer, in an amount equal to the amount
of any drawing honored by the Issuer under a Letter of Credit, the
Issuer shall promptly notify the Agent and each Lender of the
unreimbursed amount of such drawing and of such Lender's respective
participation therein. If such notice is delivered, each Lender shall
make available to the Agent, on behalf of the Issuer, whether or not
any Default shall have occurred and is continuing, an amount equal to
the amount of the participation, in same day or immediately available
funds, at the Issuer's office specified in such notice, not later than
12:00 noon, Chicago time, on the Business Day after the date notified
by the Issuer. If any Lender fails to make available to the Agent, on
behalf of the Issuer, as provided herein, the amount of such
participation, the Issuer shall be entitled to recover such amount,
together in each case with interest thereon at the Federal Funds Rate
for three Business Days and thereafter at the rate applicable to
Floating Rate Loans, (x) on demand to such Lender, (y)
52
by setoff against any payments made to the Issuer hereunder for the
account of such Lender, or (z) by payment to the Issuer by the Agent
of the amounts otherwise payable to such Lender under this Agreement.
Each Lender hereby authorizes the Agent to make the payments
described in clause (z) of the preceding sentence. Nothing in this
Section shall be deemed to prejudice the right of any Lender to
recover from the Issuer any amount made available by such Lender to
the Issuer pursuant to this Section if a court of competent
jurisdiction determines that the making of any payment by the Issuer
with respect to its Letter of Credit, and in respect of which a
participation payment was made by such Lender, constituted gross
negligence or willful misconduct on the part of the Issuer. The Issuer
shall transfer to the Agent, not later than the Business Day following
receipt, all payments received by the Issuer from the Company in, or
otherwise applied to, reimbursement of drawings honored by the Issuer
under any Letter of Credit and the Agent shall promptly distribute to
each Lender that has paid all amounts payable by such Lender under
this Section with respect to any Letter of Credit, such Lender's
Working Capital Revolving Percentage of such payments.
2.10.6 Disbursements. The Issuer will notify the Agent and the
Company in writing promptly following receipt of the presentment of any
demand for payment under any Letter of Credit, together with notice of the
amount of such payment and the date under the time zone of the jurisdiction
of the Issuer (the "Disbursement Date") such payment shall be made. Subject
to the terms and provisions of such Letter of Credit, the Issuer shall make
such payment ("Disbursement") to the respective beneficiary (or its
designee). Prior to 12:00 noon, Chicago time, on the applicable
Disbursement Date, the Company shall reimburse the Issuer for such
Disbursement. To the extent the Issuer is not, by 12:00 noon, Chicago time,
on the Disbursement Date of any Disbursement under a Letter of Credit,
reimbursed in full by the Company, the Issuer will promptly notify the
Agent and the Agent will promptly notify each Bank thereof, and the Company
shall be deemed to have requested that Floating Rate Loans be made by the
Lenders to be disbursed on the Disbursement Date under such Letter of
Credit, subject to the amount of the unutilized portion of the Working
Capital
53
Revolving Commitment and subject to the conditions set forth in Section
11.4. Any notice given by the Issuer or pursuant to this Section 2.10.6 may
be oral if immediately confirmed in writing (including by facsimile);
provided that the lack of such an immediate confirmation shall not affect
the conclusiveness or binding effect of such notice. With respect to an
unreimbursed drawing that is not converted into Floating Rate Loans to the
Company in whole or in part, because of the Company's failure to satisfy
the conditions set forth in Section 11.4 or for any other reason, the
Company shall be deemed to have incurred from the Issuer a Letter of Credit
borrowing in the amount of such unreimbursed drawing, which Letter of
Credit borrowing shall be due and payable on demand (together with
interest) and shall bear interest at a rate per annum equal to the
Alternate Reference Rate plus 2% per annum, and each Lender's payment to
the Issuer pursuant to Section 2.10.5(b) shall be deemed payment in respect
of its participation in such Letter of Credit borrowing and shall
constitute a Letter of Credit advance from such Lender in satisfaction of
its participation obligation under Section 2.10.5(b).
2.10.7 Reimbursement. The obligation of the Company ("Reimbursement
Obligations") under the last sentence of Section 2.10.6 to reimburse the
Issuer for each Disbursement (including interest thereon) made under such
Issuer's Letters of Credit, and the obligation of each Lender under Section
2.10.5 to make participation payments in each unreimbursed thereunder,
shall be, to the fullest extent permitted by applicable law, absolute and
unconditional under any and all circumstances and irrespective of any
setoff, counterclaim or defense to payment which the Company may have or
have had against the Agent, the Issuer, any Lender or the beneficiary of
any Letter of Credit, including any defense based upon the occurrence of
any Event of Default or Unmatured Event of Default, any draft, demand or
certificate or other document presented under such Letter of Credit proving
to be forged, fraudulent, invalid or insufficient, the failure of any
Disbursement to conform to the terms of such Letter of Credit (if, in the
Issuer's good faith opinion, such Disbursement is determined to be
appropriate) or any non-application or misapplication by such beneficiary
of the proceeds of such Disbursement, or the legality, validity, form,
regularity or enforceability of such Letter of Credit, it being understood
that the Issuer shall remain liable for any liability or
54
expense determined by a final judgment of a court of competent jurisdiction
to have been caused in all material respects by the Issuer's gross
negligence or willful misconduct.
2.10.8 Deemed Disbursements. Upon the occurrence and during the
continuation of any (x) acceleration upon an Event of Default, pursuant to
Section 12.2, or (y) upon any Unmatured Event of Default under Section
12.1.4, amounts equal to the respective amounts undrawn and available under
each Letter of Credit shall, at the option of the Agent or at the direction
of the Required Lenders and without demand upon or notice to the Company,
be deemed to have been paid or disbursed by the Issuer (notwithstanding
that such amounts may not in fact have been so paid or disbursed) and, upon
notification by the Agent to the Issuer and the Company of the Company's
obligations under this Section, the Company shall be immediately obligated
to reimburse the Agent for the benefit of the Issuer the amount deemed to
have been so paid or disbursed with respect to the Letters of Credit;
provided that, with respect to any such amounts deemed disbursed but not
reimbursed by the Company to the Agent, such amounts shall not be deemed to
bear interest until such time as a Reimbursement Obligation with respect
thereto shall arise. All amounts so received by the Agent from the Company
pursuant to this Section shall be held as collateral security for the
repayment of the Company's obligations in connection with the Letters of
Credit. To the extent the aggregate amount deposited by the Company with
the Agent pursuant to this Section and not previously applied by the Agent
to any Reimbursement Obligation exceeds the sum of (x) the aggregate
undrawn stated amounts of Letters of Credit plus (y) all unpaid
Reimbursement Obligations, the Agent will promptly return the amount of
such excess to the Company (except to the extent applied by the Agent to
the payment of amounts then due and owing hereunder). When all Events of
Default have been cured or waived, the Agent shall promptly return to the
Company all amounts, including interest as described in the immediately
succeeding sentence, less expenses, then on deposit pursuant to this
Section with the Agent. All amounts on deposit pursuant to this Section
shall, until their application to any Reimbursement Obligation or their
return to the Company, bear interest at the rate from time to time in
effect generally payable on Cash Equivalent Investments (net of the costs
of any reserve requirements, in respect of
55
("Reimbursement Obligations") under the last sentence of Section 2.10.6 to
reimburse the Issuer for each Disbursement (including interest thereon)
made under such Issuer's Letters of Credit, and the obligation of each
Lender under Section 2.10.5 to make participation payments in each
unreimbursed thereunder, shall be, to the fullest extent permitted by
applicable law, absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which
the Company may have or have had against the Agent, the Issuer, any Lender
or the beneficiary of any Letter of Credit, including any defense based
upon the occurrence of any Event of Default or Unmatured Event of Default,
any draft, demand or certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient,
the failure of any Disbursement to conform to the terms of such Letter of
Credit (if, in the Issuer's good faith opinion, such Disbursement is
determined to be appropriate) or any non-application or misapplication by
such beneficiary of the proceeds of such Disbursement, or the legality,
validity, form, regularity or enforceability of such Letter of Credit, it
being understood that the Issuer shall remain liable for any liability or
expense determined by a final judgment of a court of competent jurisdiction
to have been caused in all material respects by the Issuer's gross
negligence or willful misconduct.
2.10.8 Deemed Disbursements. Upon the occurrence and during the
continuation of any (x) acceleration upon an Event of Default, pursuant to
Section 12.2, or (y) upon any Unmatured Event of Default under Section
12.1.4, amounts equal to the respective amounts undrawn and available under
each Letter of Credit shall, at the option of the Agent or at the direction
of the Required Lenders and without demand upon or notice to the Company,
be deemed to have been paid or disbursed by the Issuer (notwithstanding
that such amounts may not in fact have been so paid or disbursed) and, upon
notification by the Agent to the Issuer and the Company of the Company's
obligations under this Section, the Company shall be immediately obligated
to reimburse the Agent for the benefit of the Issuer the amount deemed to
have been so paid or disbursed with respect to the Letters of Credit;
provided that, with respect to any such amounts deemed disbursed but
56
not reimbursed by the Company to the Agent, such amounts shall not be
deemed to bear interest until such time as a Reimbursement Obligation with
respect thereto shall arise. All amounts so received by the Agent from the
Company pursuant to this Section shall be held as collateral security for
the repayment of the Company's obligations in connection with the Letters
of Credit. To the extent the aggregate amount deposited by the Company with
the Agent pursuant to this Section and not previously applied by the Agent
to any Reimbursement Obligation exceeds the sum of (x) the aggregate
undrawn stated amounts of Letters of Credit plus (y) all unpaid
Reimbursement Obligations, the Agent will promptly return the amount of
such excess to the Company (except to the extent applied by the Agent to
the payment of amounts then due and owing hereunder). When all Events of
Default have been cured or waived, the Agent shall promptly return to the
Company all amounts, including interest as described in the immediately
succeeding sentence, less expenses, then on deposit pursuant to this
Section with the Agent. All amounts on deposit pursuant to this Section
shall, until their application to any Reimbursement Obligation or their
return to the Company, bear interest at the rate from time to time in
effect generally payable on Cash Equivalent Investments (net of the costs
of any reserve requirements, in respect of amounts on deposit pursuant to
this Section 2.10.8, pursuant to Regulation D), which interest shall be
held by the Agent as additional collateral security for the repayment of
the Reimbursement Obligations of the Company in connection with the Letters
of Credit.
2.10.9 Nature of Reimbursement Obligations. The Company shall
assume all risks of acts, omissions or misuse by the beneficiary of each
Letter of Credit issued on its behalf. Neither the Issuer (except to the
extent of any liability determined by a final judgment of a court of
competent jurisdiction to have been caused in all material respects by the
Issuer's gross negligence or willful misconduct), any Lender nor the Agent
shall be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness or
legal effect of such Letter of Credit or any particular conditions
stipulated in the documents or
57
superimposed thereon, or any document presented under the Letter of
Credit, or any document submitted by any party in connection with the
application for and issuance of such Letter of Credit, even if it
should be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged;
(b) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any instrument transferring or assigning or purporting
to transfer or assign such Letter of Credit or the rights or benefits
thereunder or proceeds thereof in whole or in part, which instrument
may be invalid or ineffective for any reason;
(c) failure of such beneficiary to comply fully with conditions
required to demand payment under such Letter of Credit;
(d) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, facsimile, telex or
otherwise;
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under such
Letter of Credit or of the proceeds thereof;
(f) the existence of the property purporting to be represented
by documents;
(g) any difference in character, quality, quantity, condition or
value between any property description in documents presented under
the Letter of Credit and the property purporting to be represented by
such documents;
(h) partial or incomplete shipment or failure or omission to
ship any and all of the property referred to in the Letter of Credit;
(i) the character, validity, adequacy or genuineness of any
insurance or any risk connected with insurance;
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(j) any deviation from instructions, delay, default or fraud by
the shipper or anyone else in connection with the property or shipment
thereof;
(k) the solvency, responsibility or relationship to the property
of any Person issuing any documents relating thereto;
(l) any delay in giving or failure to give any necessary notices;
(m) any breach of contract between the shippers or vendors and
the Company; or
(n) the failure of any instrument to bear any reference or
adequate reference to the Letter of Credit, or the failure of any
draft to be accompanied by documents at negotiation, or the failure of
any Person to note the amount of any draft on the reverse of the
Letter of Credit or to surrender or take up the Letter of Credit or to
send forward documents apart from drafts as required by the terms of
the Letter of Credit.
None of the foregoing shall affect, impair or prevent the vesting of any rights
or powers granted the Issuer, any Lender or the Agent hereunder. In furtherance
of any of the foregoing, any action taken or omitted to be taken by the Issuer
in good faith shall be binding upon the Company and shall not put the Issuer
under any resulting liability to such Person.
SECTION 3 NOTES EVIDENCING LOANS.
3.1 Notes.
(a) The Revolving Loans of each Lender shall be evidenced by a global
promissory note (as amended, supplemented, replaced or otherwise modified
from time to time, the "Working Capital Revolving Note") substantially in
the form of Exhibit A-1, with appropriate insertions, dated June 4, 1996,
payable to the order of the Agent (for the account of the Lenders) in the
amount of $5,000,000 (or, if less, in the aggregate unpaid principal amount
of all Working
59
Capital Revolving Loans and Reimbursement Obligations), and
payable in full on the Working Capital Revolving Termination Date.
(b) The Reducing Revolver Loans of each Lender shall be evidenced by a
global promissory note (as amended, supplemented, replaced or otherwise
modified from time to time, the "Reducing Revolver Note") substantially in
the form of Exhibit A-2, with appropriate insertions, dated June 4, 1996,
payable to the order of the Agent for the account of the Lenders in the
amount of $[40,000,000] (or, if less, in the aggregate unpaid principal
amount of all Reducing Revolver Loans), and payable in full on the Reducing
Revolver Termination Date.
(c) As of the Amendment Effective Time, each of the promissory notes
issued under the Existing Credit Agreement shall be null and void (having
been replaced by the Notes hereunder).
3.2 Recordkeeping. The Agent shall hold each of the Reducing Revolver
Note and the Working Capital Revolving Note for the ratable benefit of each
Lender with a Reducing Revolver Loan Commitment or Reducing Revolver Loans and a
Working Capital Revolving Commitment, Working Capital Revolving Loans or
Reimbursement Obligations, as applicable. Each of the Reducing Revolver Note
and the Working Capital Revolving Note shall evidence each such Lender's
Reducing Revolver Loan Percentage and Working Capital Revolving Percentage,
respectively, of the aggregate outstanding Reducing Revolver Loans, Working
Capital Revolving Loans and Reimbursement Obligations, as applicable.
The Agent shall record in its records, or at its option on the schedule
attached to the applicable Note, the date and amount of each Loan or
Reimbursement Obligation, each repayment or prepayment thereof, and, in the case
of any Eurodollar Loan, the dates on which the Interest Period for such Loan
shall begin and end. The aggregate unpaid principal amount so recorded shall be
rebuttable presumptive evidence of the principal amount owing and unpaid on such
Note. The failure to so record or any error in so recording any such amount in
such records or on such schedule shall not, however, limit or otherwise affect
the obligations of the Company
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hereunder or under any Note to repay the principal amount of the applicable
Loans and Reimbursement Obligations evidenced together with all interest
accruing thereon.
SECTION 4 INTEREST.
4.1 Interest Rates. The Company promises to pay interest on the unpaid
principal amount of each Loan for the period commencing on the date of such Loan
until (but excluding the date on which) such Loan is paid in full, as follows:
(a) at all times while such Loan is a Floating Rate Loan, at a rate
per annum equal to the sum of the Alternate Reference Rate from time to
time in effect plus the Margin; and
(b) at all times while such Loan is a Eurodollar Loan, at a rate per
annum equal to the sum of the Eurodollar Rate (Reserve Adjusted) applicable
to each Interest Period for such Loan plus the Margin;
provided, however, that at any time an Event of Default exists, the interest
rate applicable to each Loan shall be the Default Rate.
4.2 Interest Payment Dates. Accrued interest on each Floating Rate Loan
shall be payable in arrears on June 30, 1996, on the last day of each Fiscal
Quarter thereafter and at maturity, commencing with the first of such dates to
occur after the date of such Loan. Accrued interest on each Eurodollar Loan
shall be payable on the last day of each Interest Period relating to such Loan,
at maturity and, with respect to any Interest Period of six months, at the date
three months from the beginning of such Interest Period. After maturity,
accrued interest on all Loans shall be payable on demand.
4.3 Interest Periods. (a) Each "Interest Period" for a Eurodollar Loan
shall commence on the date such Eurodollar Loan is made or converted from a
Floating Rate Loan, or on the expiration of the immediately preceding Interest
Period for such Eurodollar Loan, and shall end on the date which is 7, 14 or 21
days or one, two, three or, if available, six months thereafter, as the Company
may specify:
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(i) in the case of an Interest Period which commences on the date a
Eurodollar Loan is made or converted from a Floating Rate Loan, in the
related notice of borrowing or conversion pursuant to Section 2.3 or 2.4,
or
(ii) in the case of a succeeding Interest Period with respect to any
Eurodollar Loan, by written or telephonic notice to the Agent not later
than noon, Chicago time, at least three Business Days prior to the first
day of such succeeding Interest Period, it being understood that (i) each
such notice shall be effective upon receipt by the Agent and (ii) if the
Company fails to give such notice, such Loan shall automatically become a
Floating Rate Loan at the end of its then-current Interest Period.
(b) Each Interest Period that begins on the last day of a calendar month
(or on a day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month. Each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the immediately
succeeding Business Day (unless such immediately succeeding Business Day is the
first Business Day of a calendar month, in which case such Interest Period shall
end on the immediately preceding Business Day).
4.4 Setting and Notice of Eurodollar Rates. The applicable Eurodollar
Rate for each Interest Period shall be determined by the Agent, and notice
thereof shall be given by the Agent promptly to the Company and each Lender.
Each determination of the applicable Eurodollar Rate by the Agent shall be
conclusive and binding upon the parties hereto, in the absence of demonstrable
error. The Agent shall, upon written request of the Company or any Lender,
deliver to the Company or such Lender a statement showing the computations used
by the Agent in determining any applicable Eurodollar Rate hereunder.
4.5 Computation of Interest. Interest shall be computed for the actual
number of days elapsed on the basis of a year of 360 days. The applicable
interest rate for each Floating Rate Loan shall change simultaneously with each
change in the Alternate Reference Rate.
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SECTION 5 FEES.
5.1 Working Capital Revolving Loan Non-Use Fee. The Company agrees to pay
to the Agent for the account of each Lender a non-use fee for the period from
and including the Amendment Effective Time to but excluding the Working Capital
Revolving Termination Date of 1/2 of 1% per annum on the daily average of the
unused amount of such Lender's Working Capital Revolving Commitment, it being
understood that the principal amount of any Letters of Credit shall be
considered usage of the aggregate Working Capital Revolving Commitments in such
amount. Such non-use fee shall be payable in arrears on June 30, 1996, on the
last day of each calendar quarter thereafter and on the Working Capital
Revolving Termination Date, in each case for the period then ending for which
such non-use fee shall not have been theretofore paid. Such non-use fee shall
be computed for the actual number of days elapsed on the basis of a year of 360
days.
5.2 Reducing Revolver Loan Non-Use Fee. The Company agrees to pay to the
Agent for the account of each Lender a non-use fee for the period from and
including the Amendment Effective Time to but excluding the Reducing Revolver
Termination Date of 1/2 of 1% per annum on the daily average of the unused
amount of such Lender's Reducing Revolver Loan Commitment. Such non-use fee
shall be payable in arrears on June 30, 1996, on the last day of each calendar
quarter thereafter and on the Reducing Revolver Termination Date, in each case
for the period then ending for which such non-use fee shall not have been
theretofore paid. Such non-use fee shall be computed for the actual number of
days elapsed on the basis of a year of 360 days.
5.3 Additional Fees. The Company agrees to pay to the Agent such
additional fees, in each case at such times and in such amounts, as are mutually
agreed upon by the Company and the Agent.
SECTION 6 REDUCTION OR TERMINATION OF COMMITMENTS;
REPAYMENTS; PREPAYMENTS.
6.1 Reduction or Termination of the Commitments.
6.1.1 Scheduled Mandatory Reductions of Reducing Revolver Loan
Commitments. On the last Business Day of each
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Fiscal Quarter, during the period from September 30, 1998 to and including
June 30, 1999, the aggregate Reducing Revolver Loan Commitments of all
Lenders shall be reduced in an amount equal to 4.0% of the principal amount
of the aggregate Reducing Revolving Loan Commitments in effect as of the
Amendment Effective Time. On the last Business Day of each Fiscal Quarter
during the period from September 30, 1999 to and including June 30, 2002,
the aggregate Reducing Revolver Loan Commitments of all Lenders shall be
reduced in an amount equal to 7.0% of the principal amount of the aggregate
Reducing Revolving Loan Commitments in effect as of the Amendment Effective
Time.
6.1.2 Mandatory Reduction from Asset Sale. By no later than the date
360 days after the consummation of any Asset Sale, if the Net Cash Proceeds
of such Asset Sale have not been invested (or committed, pursuant to a
binding commitment subject only to reasonable customary closing conditions,
to be invested, and in fact is so invested, within an additional 90 days)
in fixed assets or real property which in the good faith judgment of the
Board of Directors of the Company consist of a Golf Course Property or
Properties or in a Designated Non-Recurring Capital Expenditure or in 100%
of the issued and outstanding capital stock of a Person the assets of which
are principally comprised of such fixed assets or real property, then the
Commitments shall be permanently reduced by an amount equal to 100% of the
Net Cash Proceeds of such Asset Sale not so reinvested, with such
reductions to be applied first to the Reducing Revolver Loan Commitments
until reduced to $0 and second to the Working Capital Revolving
Commitments.
6.1.3 Mandatory Reduction from Debt Securities Sale. Concurrently
with the consummation of any Debt Securities Sale, the Commitments shall be
permanently reduced by an amount equal to 100% of the Net Cash Proceeds of
such Debt Securities Sale, with such reductions to be applied first to the
Reducing Revolver Loan Commitments until reduced to $0 and second to the
Working Capital Revolving Commitments; provided that the Company shall not
be required to make such reduction in respect of the first $5,000,000 of
Net Cash Proceeds received by the Company after the Amendment Effective
Time.
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6.1.4 Mandatory Reduction from Equity Securities Sale. Concurrently
with the consummation of any Equity Securities Sale, the Commitments shall
be permanently reduced by an amount equal to 50% of the Net Cash Proceeds
of such Equity Securities Sale, with such reductions to be applied first to
the Reducing Revolver Loan Commitments until reduced to $0 and second to
the Working Capital Revolving Commitments.
6.1.5 Voluntary Reduction or Termination. The Company may from time
to time prior to the Working Capital Revolving Termination Date (in the
case of Working Capital Revolving Commitments) or prior to the Reducing
Revolver Termination Date (in the case of the Reducing Revolver Loan
Commitments), on at least three Business Days' prior written notice
received by the Agent (which shall promptly advise each Lender thereof),
permanently reduce (a) the amount of the Working Capital Revolving
Commitments to an amount not less than the sum of (i) the aggregate
principal amount of all outstanding Working Capital Revolving Loans (after
giving effect to any payment) plus (ii) the aggregate stated amount of all
then outstanding Letters of Credit and Reimbursement Obligations and/or (b)
the amount of the Reducing Revolver Loan Commitments to an amount not less
than the aggregate principal amount of all outstanding Reducing Revolver
Loans (after giving effect to any payment). Any such reduction shall be in
an aggregate amount of $500,000 or a higher integral multiple of $100,000.
The Company may at any time on like notice prior to the Working Capital
Revolving Termination Date (in the case of Working Capital Revolving
Commitments) or prior to the Reducing Revolver Termination Date (in the
case of the Reducing Revolver Loan Commitments) terminate the Working
Capital Revolving Commitments and/or the Reducing Revolver Loan
Commitments, as the case may be, upon payment in full of the applicable
Notes, cancellation of all outstanding Letters of Credit and payment of all
other Obligations of the Company hereunder.
6.1.6 All Reductions. All reductions of the Working Capital
Revolving Commitments and the Reducing Revolver Loan Commitments shall be
pro rata among the Lenders according to their Working Capital Revolving
Percentages or Reducing Revolver Loan Percentages, as the case may be.
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6.2 Repayments. The Working Capital Revolving Loans of each Lender
shall mature and be payable in full on the Working Capital Revolving
Termination Date. The Reducing Revolver Loans of each Lender shall mature
and be payable in full on the Reducing Revolver Termination Date.
6.3 Prepayments.
6.3.1 Mandatory Prepayments from Asset Sales. Within 15 days
after any Asset Sale, the Company shall make a prepayment of the
Reducing Revolver Loans in an amount equal to 100% of the Net Cash
Proceeds of such Asset Sale; provided that the Company shall not be
required to make such prepayment in respect of the first $500,000 of
Net Cash Proceeds received in each Fiscal Year.
6.3.2 Mandatory Prepayments from Debt Securities Sale. Within 15
days after the consummation of any Debt Securities Sale, the Company
shall make a prepayment of the Reducing Revolver Loans in an amount
equal to 100% of the Net Cash Proceeds of such Debt Securities Sale;
provided that the Company shall not be required to make such
prepayment in respect of the first $5,000,000 of Net Cash Proceeds
received by the Company after the Amendment Effective Time.
6.3.3 Mandatory Prepayments from Equity Securities Sale. Within
15 days after the consummation of any Equity Securities Sale, the
Company shall make a prepayment of the Reducing Revolver Loans in an
amount equal to 50% of the Net Cash Proceeds of such Equity Securities
Sale.
6.3.4 Mandatory Prepayments Due to Commitment Reductions. If,
after giving effect to any reduction of the Working Capital Revolving
Commitments or the Reducing Revolver Loan Commitments pursuant to
Section 6.1, (a) the sum of (i) the aggregate principal amount of all
outstanding Working Capital Revolving Loans plus (ii) the aggregate
stated amount of all then-outstanding Letters of Credit and
Reimbursement Obligations exceeds the aggregate amount of the Working
Capital Revolving Commitments or (b) the aggregate principal amount of
all outstanding Reducing Revolver Loans exceeds the aggregate amount
of the Reducing Revolver Loan Commitments,
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respectively, the Company will make an immediate repayment of Working
Capital Revolving Loans or Reducing Revolver Loans, as the case may be, in
an amount equal to such excess; provided that if, after giving effect to
any such repayment of Working Capital Revolving Loans, the sum of (x) the
aggregate principal amount of all outstanding Revolving Loans plus (y) the
aggregate stated amount of all then outstanding Letters of Credit and
Reimbursement Obligations exceeds the aggregate amount of the Working
Capital Revolving Commitments, the Company will deposit with the Agent cash
collateral in the amount of such excess on the same terms as any amounts
held by the Agent pursuant to Section 2.10.8.
6.3.5 Voluntary Prepayments. The Company may from time to time
prepay the Loans in whole or in part, provided that (a) the Company shall
give the Agent (which shall promptly advise each Lender) not less than one
Business Day's prior written notice thereof in the case of Floating Rate
Loans and not less than three Business Days' prior written notice thereof
in the case of Eurodollar Loans, specifying the Loans to be prepaid and the
date and amount of prepayment, (b) each partial prepayment shall be in a
principal amount of at least $500,000 and an integral multiple of $100,000,
(c) any prepayment of a Eurodollar Loan on a day other than the last day of
an Interest Period therefor shall be subject to Section 8.4 and (d) any
prepayment of any Loan shall include accrued interest to the date of
prepayment on the principal amount being repaid.
6.3.6 All Prepayments. All prepayments of Working Capital Revolving
Loans shall be pro rata among the Lenders according to their Working
Capital Revolving Percentages. All prepayments of Reducing Revolver Loans
shall be pro rata among the Lenders according to their Reducing Revolver
Loan Percentages.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or interest on the
Credit Extensions, and of all fees, shall be made by the Company to BAI, as
agent of the Agent, in immediately available funds at BAI's principal office in
Chicago not later than
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noon, Chicago time, on the date due (and BAI agrees to remit any such funds
received to the Agent); and funds received after that hour shall be deemed to
have been received by the Agent on the next following Business Day. Upon notice
from the Agent to BAI, the Company hereby authorizes BAI to charge the Company's
demand deposit account no. 72-10604 maintained with BAI for the amount of any
such payment on the due date therefor (but only to the extent of funds available
in such account), and hereby authorizes BAI to remit any such amount to the
Agent, but BAI's or the Agent's failure to so charge such account shall in no
way affect the obligation of the Company to make any such payment. The Agent
shall promptly remit to each Lender its share of all such payments received in
collected funds by the Agent for the account of such Lender.
All payments under Sections 8.1 and 8.4 shall be made by the Company
directly to the Lender or Lenders entitled thereto.
7.2 Application of Certain Payments. Except as otherwise expressly
provided herein, each payment of principal shall be applied to such Credit
Extensions as the Company shall direct by notice to be received by the Agent on
or before the date of such payment or, in the absence of such notice, as the
Agent shall determine in its discretion. Concurrently with each remittance to
any Lender of its share of any such payment, the Agent shall advise such Lender
as to the application of such payment.
7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Credit Extensions, or of any fees, falls due on a day
which is not a Business Day, then such due date shall be extended to the
immediately following Business Day (except, in the case of a Eurodollar Loan, if
the immediately following Business Day is the first Business Day of a calendar
month, in which case such due date shall the be immediately preceding Business
Day) and, in the case of principal, additional interest shall accrue and be
payable for the period of any such extension.
7.4 Setoff. Each of Parent and the Company agrees that the Agent and each
Lender have all rights of set-off and bankers' lien provided by applicable law,
and in addition thereto, each of Parent and the Company agrees that at any time
any Unmatured Event of
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Default under Section 12.1.1 or 12.1.4 or any Event of Default exists, the Agent
and each Lender may apply to any obligation of each of Parent and the Company
hereunder, whether or not then due, any and all balances, credits, deposits,
accounts or moneys of each of Parent and the Company then or thereafter with the
Agent or such Lender.
7.5 Proration of Payments. If any Lender shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of offset or
otherwise) on account of principal of or interest on any Credit Extension in
excess of its pro rata share (based on such Lender's Total Percentage) of
payments and other recoveries obtained by all Lenders on account of principal of
and interest on Credit Extensions then held by them (other than any non-pro rata
interest payment resulting from a Loan being an Affected Loan), such Lender
shall purchase from the other Lenders such participation in the Credit
Extensions held by them as shall be necessary to cause such purchasing Lender to
share the excess payment or other recovery ratably with each of them; provided,
however, that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Lender, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery.
7.6 Net Payments; Tax Exemptions.
-----------------------------
(a) All payments by Parent or the Company of principal, interest, fees,
indemnities and other amounts payable hereunder and under the Notes shall be
made to the recipient thereof without setoff or counterclaim and free and clear
of, and without withholding or deduction for or on account of, any present or
future Taxes (other than Excluded Taxes) now or hereafter imposed on such
recipient or its income, property, assets or franchises (such recipient's
"Recipient Taxes"), except to the extent that such withholding or deduction (i)
is required by applicable law, (ii) results from the breach by such recipient of
its Exemption Agreement (as defined below) or (iii) would not be required if
such recipient's Exemption Representation (as defined below) were true. If any
such withholding or deduction is required by applicable law, Parent or the
Company (as the case may be) will:
(A) pay to the relevant authorities the full amount so
69
required to be withheld or deducted;
(B) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authorities; and
(C) except to the extent that such withholding or deduction results
from the breach, by the recipient of a payment, of its Exemption Agreement
or would not be required if such recipient's Exemption Representation were
true, pay to the Agent for the account of the relevant recipient such
additional amount as is necessary to ensure that the net amount actually
received by such recipient will equal the full amount such recipient would
have received had no such withholding or deduction been required.
(b) In consideration of Parent's and the Company's agreements in clause (a)
of this Section 7.6, each Lender which is not organized under the laws of the
United States or a State thereof hereby agrees (such Lender's "Exemption
Agreement"), to the extent permitted by applicable law (including any applicable
double taxation treaty of the jurisdiction of its incorporation and the
jurisdiction in which its Eurodollar Office is located), to execute and deliver
to the Company (i) on or before the first scheduled payment date after the
Amendment Effective Time, a United States Internal Revenue Service Form 1001 or
4224 as appropriate (or successor forms), properly completed and claiming a
complete exemption, as the case may be, from withholding or deduction for or on
account of Recipient Taxes of such Lender, and (ii) a new Form 1001 or 4224 (or
successor form), as appropriate, upon the expiration or obsolescence of any
previously delivered Form.
(c) Each Lender hereby represents and warrants (such Lender's "Exemption
Representation") to Parent and the Company that on the Amendment Effective Time
(or, if later, the date it becomes a party to this Agreement) it is entitled to
receive payments of principal of, and interest on, Credit Extensions made by
such Lender without withholding or deduction for or on account of such Lender's
Recipient Taxes imposed by the United States of America or any political
subdivision thereof.
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SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS.
8.1 Increased Costs. (a) If, after the Amendment Effective Time, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any Affiliate of such
Lender through which the Credit Extensions and/or Commitments are funded (a
"Lending Office")) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency which
becomes effective after the Amendment Effective Time,
(A) shall subject any Lender (or any Lending Office of such Lender)
to any tax, duty or other charge (other than Excluded Taxes) with respect
to its Credit Extensions or its obligation to make Credit Extensions, or
shall change the basis of taxation of payments to any Lender of the
principal of or interest on its Credit Extensions or any other amounts due
under this Agreement in respect of its Credit Extensions or its obligation
to make Credit Extensions (except for changes in the rate of tax on the
overall net income of such Lender or its Lending Office imposed by the
jurisdiction in which such Lender's principal executive office or Lending
Office is located); or
(B) shall impose, modify or deem applicable any reserve (including,
without limitation, any reserve imposed by the Board of Governors of the
Federal Reserve System, but excluding any reserve included in the
determination of interest rates pursuant to Section 4), special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by any Lender (or any Lending Office of such Lender); or
(C) shall impose on any Lender (or its Lending Office) any other
condition affecting its Credit Extensions or its obligation to make Credit
Extensions ;
and the result of any of the foregoing is to increase the cost to
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(or in the case of Regulation D of the Board of Governors of the Federal Reserve
System, to impose a cost on) such Lender (or any Lending Office of such Lender)
of making or maintaining any Credit Extension, or to reduce the amount of any
sum received or receivable by such Lender (or its Lending Office) under this
Agreement, then within 10 days after demand by such Lender (which demand shall
be accompanied by a statement setting forth in reasonable detail the basis for
and a calculation of the amount of such demand, a copy of which shall be
furnished to the Agent), the Company shall pay directly to such Lender such
additional amount or amounts as will compensate such Lender for such increased
cost or such reduction.
(b) If any Lender shall reasonably determine that the adoption or phase-in
of any applicable law, rule or regulation regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Lending Office) or any Person controlling such Lender with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's or such controlling
Person's capital as a consequence of such Lender's obligations hereunder
(including, without limitation, such Lender's obligations under the Working
Capital Revolving Commitment or the Reducing Revolver Loan Commitment) to a
level below that which such Lender or such controlling Person could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such controlling Person's policies with respect to capital
adequacy) by an amount deemed by such Lender or such controlling Person to be
material, then from time to time, within 10 days after demand by such Lender
(which demand shall be accompanied by a statement setting forth in reasonable
detail the basis for and a calculation of the amount of such demand, a copy of
which shall be furnished to the Agent), the Company shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such
controlling Person for such reduction.
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8.2 Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period:
(a) deposits in Dollars (in the applicable amounts) are not being
offered to the Agent in the interbank eurodollar market for such Interest
Period, or the Agent otherwise reasonably determines (which determination
shall be binding and conclusive on the Company) that by reason of
circumstances affecting the interbank eurodollar market adequate and
reasonable means do not exist for ascertaining the applicable Eurodollar
Rate;
(b) two or more Lenders having an aggregate Working Capital Revolving
Percentage or Reducing Revolver Loan Percentage, as applicable, of 20% or
more advise the Agent that the Eurodollar Rate (Reserve Adjusted) as
determined by the Agent will not adequately and fairly reflect the cost to
such Lenders of maintaining or funding such Loans for such Interest Period
(taking into account any amount to which such Lenders may be entitled under
Section 8.1); or
(c) Lenders having an aggregate Working Capital Revolving Percentage
or Reducing Revolver Loan Percentage, as applicable, of 20% or more advise
the Agent, that the making or funding of Eurodollar Loans has become
impracticable as a result of an event occurring in the interbank market
after the Amendment Effective Time which in the opinion of such Lenders
materially affects such Loans;
then the Agent shall promptly notify the other parties thereof and, so long as
such circumstances shall continue, (i) no Lender shall be under any obligation
to make or convert into Eurodollar Loans and (ii) on the last day of the current
Interest Period for each Eurodollar Loan, such Loan shall, unless then repaid in
full, automatically convert to a Floating Rate Loan.
8.3 Changes in Law Rendering Eurodollar Loans Unlawful. In the event that
any change in (including the adoption of any new) applicable laws or
regulations, or any change in the interpretation of applicable laws or
regulations by any governmental or other regulatory body charged with the
administration thereof, should make it (or in the good faith judgment of any
Lender cause a
73
substantial question as to whether it is) unlawful for any Lender to make,
maintain or fund Eurodollar Loans, then such Lender shall promptly notify each
of the other parties hereto and, so long as such circumstances shall continue,
(a) such Lender shall have no obligation to make or convert into Eurodollar
Loans (but shall make Floating Rate Loans concurrently with the making of or
conversion into Eurodollar Loans by the Lenders which are not so affected, in
each case in an amount equal to such Lender's pro rata share of all Eurodollar
Loans which would be made or converted into at such time in the absence of such
circumstances) and (b) on the last day of the current Interest Period for each
Eurodollar Loan of such Lender (or, in any event, on such earlier date as may be
required by the relevant law, regulation or interpretation), such Eurodollar
Loan shall, unless then repaid in full, automatically convert to a Floating Rate
Loan. Each Floating Rate Loan made by a Lender which, but for the circumstances
described in the foregoing sentence, would be a Eurodollar Loan (an "Affected
Loan") shall remain outstanding for the same period as the Advance of Eurodollar
Loans of which such Affected Loan would be a part absent such circumstances.
8.4 Funding Losses. The Company hereby agrees that upon demand by any
Lender (which demand shall be accompanied by a statement setting forth the basis
for the calculations of the amount being claimed, a copy of which shall be
furnished to the Agent) the Company will indemnify such Lender against any net
loss or expense (including, without limitation, all lost profits) which such
Lender may sustain or incur (including, without limitation, any net loss or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund or maintain any Eurodollar Loan), as
reasonably determined by such Lender, as a result of (a) any payment or
prepayment or conversion of any Eurodollar Loan of such Lender on a date other
than the last day of an Interest Period for such Loan (including, without
limitation, any conversion pursuant to Section 8.3) or (b) any failure of the
Company to borrow or convert any Loans on a date specified therefor in a notice
of borrowing or conversion pursuant to this Agreement. For this purpose, all
notices of borrowing or conversion to the Agent pursuant to this Agreement shall
be deemed to be irrevocable.
8.5 Right of Lenders to Fund through Other Offices. Each
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Lender may, if it so elects, fulfill its commitment as to any Eurodollar Loan by
causing a foreign branch or Affiliate of such Lender to make such Loan, provided
that in such event for the purposes of this Agreement such Loan shall be deemed
to have been made by such Lender and the obligation of the Company to repay such
Loan shall nevertheless be to such Lender and shall be deemed held by it, to the
extent of such Loan, for the account of such branch or Affiliate, and provided,
further, the cost to the Company of causing such foreign branch or Affiliate to
make such Loan shall not be greater than the cost would have been if such Lender
had funded such Loan directly.
8.6 Discretion of Lenders as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Lender shall be entitled to
fund and maintain its funding of all or any part of its Loans in any manner it
sees fit, it being understood, however, that for the purposes of this Agreement
all determinations hereunder shall be made as if such Lender had actually funded
and maintained each Eurodollar Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the Eurodollar Rate for
such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Affected Lender. (a)
Each Lender shall promptly notify the Company and the Agent of any event of
which it has knowledge which will result in, and will use reasonable commercial
efforts available to it (and not, in such Lender's good faith judgment,
otherwise disadvantageous to such Lender) to mitigate or avoid, (i) any
obligation by the Company to pay any amount pursuant to Section 7.6 or 8.1 and
(ii) the occurrence of any circumstances of the nature described in Section 8.2
or 8.3 (and, if any Lender has given notice of any such event described in
clause (i) or (ii) above and thereafter such event ceases to exist, such Lender
shall promptly so notify the Company and the Agent). Without limiting the
foregoing, each Lender will designate a different Lending Office if such
designation will avoid (or reduce the cost to the Company of) any event
described in clause (i) or (ii) of the preceding sentence and such designation
will not, in such Lender's sole judgment, be otherwise disadvantageous to such
Lender.
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(b) At any time any Lender is an Affected Lender, the Company may replace
such Affected Lender as a party to this Agreement with one or more other bank(s)
or financial institution(s) reasonably satisfactory to the Agent (and upon
notice from the Company such Affected Lender shall assign pursuant to an
Assignment Agreement, and without recourse or warranty, its Commitments, if any,
its Loans, its Reimbursement Obligations, and all of its other rights and
obligations hereunder, to such replacement bank(s) or other financial
institution(s) for a purchase price equal to the sum of the principal amount of
the Loans and Reimbursement Obligations so assigned, all accrued and unpaid
interest thereon, its ratable share of all accrued and unpaid non-use fees, any
amounts payable under Section 8.4 as a result of such Lender receiving payment
of any Eurodollar Loan prior to the end of an Interest Period therefor and all
other Obligations owed to such Affected Lender hereunder).
8.8 Conclusiveness of Statements; Survival of Provisions. Determinations
and statements of any Lender pursuant to Section 8.1, 8.2, 8.3 or 8.4 shall be
conclusive absent demonstrable error. Lenders may use reasonable averaging and
attribution methods in determining compensation under Sections 8.1 and 8.4, and
the provisions of such Sections shall survive repayment of the Obligations,
cancellation of the Notes and the Letters of Credit, and any termination of this
Agreement.
SECTION 9 WARRANTIES.
To induce the Agent and the Lenders to enter into this Agreement, and the
Lenders to make Credit Extensions hereunder, each of Parent and the Company
warrants to the Agent and the Lenders that:
9.1 Organization, etc. Each of Parent and the Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware; each Subsidiary which is a corporation is duly organized,
validly existing and in good standing under the laws of the state of its
incorporation; and each Subsidiary which is a joint venture is duly organized
and validly existing as a California general partnership; each of Parent, the
Company and each Subsidiary is duly qualified to do business in each
jurisdiction where the nature of its business makes such qualification
necessary, except where the failure to be so
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qualified would not have a Material
Adverse Effect; and each of Parent, the Company and each Subsidiary has full
corporate power and authority to own its property and conduct its business as
presently conducted by it.
9.2 Authorization; No Conflict. The execution and delivery by Parent and
the Company of this Agreement and each other Transaction Document to which it is
a party, the Credit Extensions hereunder, the execution and delivery by each
Guarantor of each Loan Document to which it is a party, the performance by each
of Parent and the Company of its obligations under each Transaction Document to
which it is a party, and the performance by each Guarantor of its obligations
under each Loan Document to which it is a party are within the corporate powers
of Parent, the Company and each Guarantor, as applicable, have been duly
authorized by all necessary corporate action on the part of Parent, the Company
and each Guarantor (including any necessary shareholder action), (a) have
received all necessary governmental or third party approvals (if any shall be
required), and (b) do not and will not (i) violate any provision of law or any
order, decree or judgment of any court or other government agency which is
binding on Parent, the Company or any Guarantor, (ii) contravene or conflict
with, or result in a breach of, any provision of the Certificate of
Incorporation, By-Laws or other organizational documents of Parent, the Company
or any Guarantor, (iii) contravene or conflict with, or result in a
breach of, any provision of any agreement, indenture, instrument or other
document, or any judgment, order or decree, which is binding on Parent, the
Company, any Guarantor or any other Subsidiary or (iv) result in, or require,
the creation or imposition of any Lien on any property of Parent, the Company,
any Guarantor or any other Subsidiary (other than pursuant to the Loan
Documents), except in the case of clauses (a) and (b)(i) and (iii), such
violations, conflicts, contraventions or breaches that, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect.
9.3 Validity and Binding Nature. This Agreement is, and upon the
execution and delivery thereof each other Transaction Document to which Parent
or the Company is a party will be, the legal, valid and binding obligation of
Parent or the Company, as the case may be, enforceable against Parent or the
Company, as the case may be, in accordance with its terms, except that
enforceability may be
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limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in equity or at law); and each Loan
Document to which any Guarantor is a party will be, upon the execution and
delivery thereof by such Guarantor, the legal, valid and binding obligation of
such Guarantor, enforceable against such Guarantor in accordance with its terms,
except that enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and by
general principles of equity (regardless of whether enforcement is sought in
equity or at law).
9.4 Financial Information. (a) The audited consolidated and unaudited
consolidating financial statements of the Company and its Subsidiaries as at
September 30, 1995 and for the year then ended, and the unaudited, year-to-date
consolidated and consolidating financial statements of the Company and its
Subsidiaries for the three months ended March 31, 1996, together with the
unaudited financial statements for each Pre-Existing Property, for the three
months ended March 31, 1996, (i) are true and correct in all material respects,
subject to normal year-end adjustments, (ii) have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved (except as disclosed therein and, in the case of interim
financial statements, for the absence of footnote disclosures and year-end
adjustments) and (iii) present fairly the consolidated financial condition of
the Company and its Subsidiaries at such dates and the results of their
operations for the periods then ended, subject to normal year-end adjustments.
(b) The unaudited consolidated balance sheet of Parent and
its Subsidiaries as of March 31, 1996 (giving effect to the refinancing
contemplated by this Agreement and the other transactions contemplated to occur
on such date), a copy of which has been delivered to each Lender, was prepared
by Parent in accordance with generally accepted accounting principles.
(c) The forecasted consolidated (i) balance sheet, (ii) profit and loss
statement, (iii) cash flow statement and (iv)
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capitalization statement, together with supporting details and a statement of
underlying assumptions, copies of which have been delivered to each Lender, have
been prepared by the Company in light of the past operations of the business of
the Company and its Subsidiaries and are based upon, as of the Amendment
Effective Time, the good faith estimate of the Company and its senior
management, historical financial information and assumptions the Company deems
reasonable and appropriate in light of current circumstances (it being
understood that such forecasted data do not constitute a representation or
warranty that the results stated therein will be achieved).
(d) Other than any liability incident to any litigation or proceedings set
forth in Schedule 9.6 and such other Contingent Liabilities set forth on such
Schedule 9.6 and the guaranties of the Senior Company Notes by the Company's
Subsidiaries, neither Parent nor any of its Subsidiaries has any material
contingent liabilities not provided for or disclosed in the financial statements
referred to in clause (a).
9.5 No Material Adverse Change. Since September 30, 1995, no event or
events have occurred which, individually or in the aggregate, have had or are
reasonably likely to have a Material Adverse Effect.
9.6 Litigation. Except as set forth in Schedule 9.6, no litigation,
arbitration, governmental investigation, proceeding or inquiry is pending, or,
to the best knowledge of Parent and the Company (after due inquiry), threatened
against Parent or any of its Subsidiaries:
(a) (i) which seeks to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of, (x) the loan
and equity transactions contemplated by the Transaction Documents (other
than any such litigation, arbitration, governmental investigation,
proceeding or inquiry with respect to the Stockholders' Agreement brought
by or against or affecting any Person (except any Lender or any initial or
successive transferee of any Lender) Beneficially Owning less than 5% of
the capital stock of Parent), or (y) any material agreement pursuant to
which equity capital is contributed to Parent or Parent's capital stock is
issued (it
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being understood that a material agreement for purposes of this clause (y)
would be an agreement entered into with a Person Beneficially Owning 5% or
more of the capital stock of Parent), or (ii) which relates to the validity
of any of the foregoing agreements or instruments (subject to the foregoing
qualifications); or
(b) which is a development in the litigation, arbitration,
governmental investigation, proceeding or inquiry set forth in such
Schedule 9.6 (i) that would have or is reasonably likely to have a Material
Adverse Effect or (ii) that is reasonably likely to adversely affect the
Lenders and that arises with respect to any of the agreements described in
clause (a) above or any transactions contemplated hereby or thereby; or
(c) which otherwise could reasonably be expected to have a Material
Adverse Effect.
9.7 Ownership of Properties; Liens. Each of Parent, the Company and each
Subsidiary owns good and marketable title to, or a valid leasehold interest in,
or a valid right to use, all of its Golf Course Properties and all other
properties and assets, real and personal, tangible and intangible, of any nature
whatsoever (including patents, trademarks, trade names, service marks and
copyrights), free and clear of all Liens, charges and claims (including
infringement claims with respect to patents, trademarks, copyrights and the
like) except as permitted pursuant to Section 10.8.
9.8 Subsidiaries; Capitalization.
(a) As of the Amendment Effective Time, the Company has no
Subsidiaries except those listed in Schedule 9.8.
(b) Parent has no Subsidiaries except the Company.
(c) Schedule 9.8 sets forth each class of capital stock of Parent that
is outstanding on a fully diluted basis on the Amendment Effective Time,
and which is intended to be issued promptly following the Amendment
Effective Time, and each person to whom more than 2% of the outstanding
shares of such
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capital stock is or will be issued and the percentage of such common stock
Beneficially Owned by such Person.
9.9 Pension and Welfare Plans. Except as disclosed to the Lenders in
writing prior to the Amendment Effective Time, during the twelve-consecutive-
month period prior to the date of the execution and delivery of this Agreement
or the making of any Credit Extension hereunder, (a) no steps have been taken to
terminate any Pension Plan which would be reasonably likely to result in Parent
or the Company being required to make a contribution to such Pension Plan, or
incurring a liability or obligation to such Pension Plan, in excess of $250,000,
and (b) no contribution failure has occurred with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA. No condition
exists or event or transaction has occurred with respect to any Pension Plan
which could result in the incurrence by Parent or the Company of any material
liability, fine or penalty under ERISA or the Internal Revenue Code. Except as
set forth on Schedule 9.9, neither Parent nor the Company has any contingent
liability with respect to any post-retirement benefit under a Welfare Plan,
other than liability for continuation coverage described in Part 6 of subtitle B
of title I of ERISA.
9.10 Investment Company Act. Neither Parent, the Company nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
9.11 Public Utility Holding Company Act. Neither Parent, the Company nor
any Subsidiary is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
9.12 Regulations G, T, U and X. Neither Parent nor the Company is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock. None of the
proceeds of any Credit Extension will be used for the purpose of, or be made
available by Parent, the Company or any of its Subsidiaries in any manner to any
other Person to enable or assist such Person in, purchasing or carrying Margin
Stock.
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9.13 Taxes. Each of Parent, the Company and each Subsidiary has filed all
tax returns and reports required by law to have been filed by it and has paid
all taxes and governmental charges thereby shown to be owing, except (a) as
disclosed on Schedule 9.6 and (b) for any such taxes or charges which are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with generally accepted accounting principles
shall have been set aside on its books.
9.14 Solvency, etc. At the Amendment Effective Time (or, in the case of any
Person which becomes a Guarantor after the Amendment Effective Time, on the date
such Person becomes a Guarantor), and immediately prior to and after giving
effect to each borrowing hereunder and the use of the proceeds thereof, (a) each
of Parent's, the Company's and each Guarantor's assets will exceed its
liabilities and (b) each of Parent, the Company and each Guarantor will be
solvent, will be able to pay its debts as they mature, will own property with
fair saleable value greater than the amount required to pay its debts as they
come due and will have capital sufficient to carry on its business as then
constituted.
9.15 Insurance. Set forth on Schedule 9.15 is a complete and accurate
summary of the property and casualty insurance program carried by Parent, the
Company and its Subsidiaries at the Amendment Effective Time, including the
insurer's(s') name(s), policy number(s), expiration date(s), amount(s) of
coverage, type(s) of coverage, the annual premium(s), Best's policyholder's and
financial size ratings of the insurer(s), exclusions, deductibles and self-
insured retention and a description in reasonable detail of (a) any
retrospective rating plan, fronting arrangement or other self-insurance or risk
assumption agreed to by Parent, the Company or any Subsidiary or imposed upon
Parent, the Company or any Subsidiary by any such insurer and (b) any self-
insurance program that is in effect.
9.16 Contracts; Labor Matters. Except as disclosed on Schedule 9.16: (a)
neither Parent, the Company nor any Subsidiary is a party to any contract or
agreement, or is subject to any charge, corporate restriction, judgment, decree
or order, which materially and adversely affects its business, property, assets,
operations or condition, financial or otherwise; (b) no labor
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contract to which Parent, the Company or any Subsidiary is a party or is
otherwise subject is scheduled to expire prior to the Reducing Revolver
Termination Date or the Working Capital Revolving Termination Date; (c) neither
Parent, the Company nor any Subsidiary has, within the two-year period preceding
the Amendment Effective Time, taken any action which would have constituted or
resulted in a "plant closing" or "mass layoff" within the meaning of the Federal
Worker Adjustment and Retraining Notification Act of 1988 or any similar
applicable federal, state or local law, and neither Parent nor the Company has
any reasonable expectation that any such action is or will be required at any
time prior to the Reducing Revolver Termination Date or the Working Capital
Revolving Termination Date; and (d)(i) neither Parent, the Company nor any
Subsidiary is a party to any labor dispute and (ii) there are no strikes or
walkouts relating to any labor contracts to which Parent, the Company or any
Subsidiary is a party or is otherwise subject.
9.17 Environmental and Safety and Health Matters. Except as disclosed on
Schedule 9.17, Parent, the Company and each of its Subsidiaries and each
property, operation and facility that Parent, the Company or any Subsidiary
owns, operates or controls (including, without limitation, each Golf Course
Property) (i) complies in all material respects with (A) all applicable
Environmental Laws and (B) all applicable Occupational Safety and Health Laws;
(ii) is not subject to any judicial or administrative proceeding alleging the
violation of any Environmental Law or Occupational Safety and Health Law; (iii)
has not received any notice (A) that it may be in violation of any Environmental
Law or Occupational Safety and Health Law, or (B) threatening the commencement
of any proceeding relating to allegedly unlawful, unsafe or unhealthy
conditions, or (C) alleging that it is or may be responsible for any response,
cleanup, or corrective action, including but not limited to any remedial
investigation/feasibility study, under any Environmental Law or Occupational
Safety and Health Law; (iv) is not the subject of federal or state investigation
evaluating whether any investigation, remedial action or other response is
needed to respond to (A) a spillage, disposal or release or threatened release
into the environment of any Hazardous Material, or (B) any allegedly unsafe or
unhealthful condition; (v) has not filed any notice under or relating to any
Environmental Law or Occupational Safety and Health Law indicating
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or reporting (A) any past or present spillage, disposal or release into the
environment of, or treatment, storage or disposal of, any Hazardous Material, or
(B) any potentially unsafe or unhealthful condition, and to the best of Parent's
and the Company's knowledge there exists no basis for such notice irrespective
of whether such notice was actually filed; and (vi) has no material contingent
liability in connection with (A) any actual or potential spillage, disposal or
release into the environment of, or otherwise with respect to, any Hazardous
Material, whether on any premises owned or occupied by Parent, the Company or
any Subsidiary or on any other premises, or (B) any unsafe or unhealthful
condition. Except as disclosed on Schedule 9.17, there are no Hazardous
Materials on, in or under any property or facilities owned, operated or
controlled by Parent, the Company or any Subsidiary (including, without
limitation, Golf Course Properties), including but not limited to such Hazardous
Materials that may be contained in underground storage tanks, but excepting
Hazardous Materials used in the ordinary course of the business of Parent, the
Company and its Subsidiaries and used, stored, handled, treated and disposed in
all material respects in accordance with all applicable laws, including
Environmental Laws and Occupational Safety and Health Laws.
9.18 Real Property. Set forth on Schedule 9.18 is a complete and accurate
list, as of the Amendment Effective Time, of the address and legal description
of any real property owned or leased by Parent, the Company or any Subsidiary
(including, without limitation, Golf Course Properties), together with, in the
case of leased property, the name and mailing address of the lessor of such
property.
9.19 Information. All written information heretofore or contemporaneously
herewith furnished by or on behalf of Parent, the Company or any Subsidiary to
any Lender for purposes of or in connection with this Agreement, the other Loan
Documents or the Senior Note Documents and the transactions contemplated hereby
and thereby is, and all written information hereafter furnished by or on behalf
of Parent, the Company or any Subsidiary to any Lender pursuant hereto or in
connection herewith will be true and accurate in every material respect on the
date as of which such information is dated or certified, and none of such
information is or will be incomplete by omitting to state any material fact
necessary to make
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such information not misleading; provided that the foregoing representation and
warranty shall be made not on an absolute basis but rather on the qualified
basis of to the best knowledge of Parent, the Company or such Subsidiary, as the
case may be, after due inquiry if such representation and warranty is made with
respect to historical information as to any Golf Course Property as to any date
prior to its acquisition by the Company or any Subsidiary or with respect to any
other information not prepared by or on behalf of Parent, the Company, any
Subsidiary, Brentwood or any of their respective Affiliates.
9.20 Patents, Trademarks, etc. Parent, the Company and each of its
Subsidiaries owns (or is licensed to use) and possesses all such patents, patent
rights, trademarks, trademark rights, trade names, trade name rights, service
marks, service mark rights, and copyrights as Parent and the Company considers
necessary for the conduct of the businesses of Parent and the Company and its
Subsidiaries as now conducted without, individually or in the aggregate, any
infringement or alleged infringement, except as disclosed in Schedule 9.6, upon
rights of other Persons which might reasonably be expected to have a Material
Adverse Effect, and there is no individual patent or patent license or trademark
or trademark right the loss or which might reasonably be expected to have a
Material Adverse Effect.
9.21 The Collateral Documents. The provisions of the Collateral Documents
executed by Parent, the Company or any Subsidiary in favor of the Agent securing
the Notes and all other Obligations from time to time outstanding hereunder and
under the other Loan Documents are effective to create, in favor of the Agent,
on behalf of the Lenders, a legal, valid and enforceable Lien in all right,
title and interest of Parent, the Company or such Subsidiary, as applicable, in
any and all of the collateral described therein, and when all appropriate
filings and recordings have been made, each of such Collateral Documents will
constitute a fully perfected Lien in all right, title and interest of Parent,
the Company or such Subsidiary in such collateral superior in right to any
Liens, existing or future, which Parent, the Company or such Subsidiary or any
creditors thereof or purchasers therefrom, or any other Person, may have against
such collateral or interests therein, except to the extent, if any, otherwise
provided therein or in this Agreement.
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SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments, the expiration or
cancellation of all Letters of Credit and thereafter until all Obligations of
Parent and the Company hereunder and under the other Loan Documents are paid in
full, each of Parent and the Company agrees that, unless at any time the
Required Lenders shall otherwise expressly consent in writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to each Lender:
10.1.1 Annual Report. Promptly when available and in any event within 90
days after the close of each Fiscal Year, (a) a copy of the annual reports of
Parent and its Subsidiaries and the Company and its Subsidiaries, respectively,
for such Fiscal Year, including therein consolidated balance sheets of Parent
and its Subsidiaries and the Company and its Subsidiaries, respectively, as of
the end of such Fiscal Year and consolidated statements of earnings and cash
flow of Parent and its Subsidiaries and the Company and its Subsidiaries,
respectively, for such Fiscal Year, which reports (i) shall be certified by
Ernst & Young, or other independent auditors of recognized national standing
selected by Parent and reasonably acceptable to the Required Lenders, in an
audit report which shall be without qualification as to going concern or scope
and (ii) shall be accompanied by a written statement from such auditors to the
effect that in making the examination necessary for the signing of such audit
reports they have not become aware of any Event of Default or Unmatured Event of
Default that has occurred and is continuing or, if they have become aware of any
such event, describing it in reasonable detail; and (b) a copy of the
consolidating balance sheets of Parent and its Subsidiaries and the Company and
its Subsidiaries, respectively, as of the end of such Fiscal Year and
consolidating statements of earnings for Parent and its Subsidiaries and the
Company and its Subsidiaries, respectively, for such Fiscal Year, together with
a certificate of a Responsible Officer certifying that such financial statements
in clauses (a) and (b) fairly present the financial condition and results of
operations of Parent and its Subsidiaries and the Company and its Subsidiaries,
respectively, as of the dates and periods indicated.
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10.1.2 Quarterly Reports. Promptly when available and in any event within
45 days after the end of the first three Fiscal Quarters of each Fiscal Year,
consolidated and consolidating balance sheets of Parent and its Subsidiaries and
the Company and its Subsidiaries, respectively, as of the end of such Fiscal
Quarter and consolidated and consolidating statements of earnings and
consolidated statements of cash flow for such Fiscal Quarter and for the period
beginning with the first day of such Fiscal Year and ending on the last day of
such Fiscal Quarter, including with respect to statements of earnings a
comparison with the corresponding Fiscal Quarter and period of the previous
Fiscal Year and a comparison with the Budget for such Fiscal Quarter and for
such period of such Fiscal Year, together with a certificate of a Responsible
Officer to the effect that such financial statements fairly present the
financial condition and results of operations of Parent and its Subsidiaries and
the Company and its Subsidiaries, respectively, as of the dates and periods
indicated, subject to changes resulting from normal year-end adjustments.
10.1.3 Monthly Reports. Promptly when available and in any event within
30 days after the end of each month of each Fiscal Year, consolidated and
consolidating balance sheets of the Company and its Subsidiaries as of the end
of such calendar month and consolidated and consolidating statements of earnings
and consolidated statements of cash flow for such month and for the period
beginning with the first day of such Fiscal Year and ending on the last day of
such month, including with respect to statements of earnings a comparison with
the corresponding month and period of the previous Fiscal Year and a comparison
with the Budget for such month and for such period of such Fiscal Year, together
with (a) a certificate of a Responsible Officer to the effect that such
financial statements fairly present the financial condition and results of
operations of the Company and its Subsidiaries as of the dates and periods
indicated, subject to changes resulting from normal year-end adjustments, and
(b) (i) for those Golf Course Properties with members, a report of the number of
members by membership category per Golf Course Property and (ii) such
information as the Company provided under the Original Credit Agreement in
respect of its Golf Course Properties.
10.1.4 Certificates. Contemporaneously with the furnishing of a copy of
each annual audit report pursuant to Section 10.1.1,
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and each set of quarterly statements pursuant to Section 10.1.2, a duly
completed certificate in the form of Exhibit B-1, with appropriate insertions,
dated the date of such annual report or such quarterly statements and signed by
a Responsible Officer of the Company, containing a computation of each of the
financial ratios and restrictions set forth in this Section 10 and to the effect
that such Responsible Officer has not become aware of any Event of Default or
Unmatured Event of Default that has occurred and is continuing or, if there is
any such event, describing it and the steps, if any, being taken to cure it.
10.1.5 Reports to SEC, Shareholders and Holders of Debt. Promptly upon
the filing or sending thereof, a copy of (a) any annual, periodic or special
report or registration statement (inclusive of exhibits thereto) filed with the
SEC or any securities exchange by Parent or the Company, (b) any report, proxy
statement or similar communication to Parent's or the Company's shareholders
generally and (c) all material notices, documents, or other instruments required
to be delivered pursuant to any agreement governing any Funded Debt of the
Company or any Subsidiary or any Debt of Parent (including, in each case,
without limitation any Senior Note Documents) and not otherwise required to be
delivered hereunder.
10.1.6 Budget, Etc. (i) Promptly upon completion thereof, but in no event
later than October 31 of each Fiscal Year, a copy of the Company's annual
statement of earnings forecast on a consolidated basis, including a forecasted
balance sheet and statement of cash flow, and an earnings forecast for each Golf
Course Property owned or operated by the Company or its Subsidiaries, in each
case on an annual basis for the three succeeding Fiscal Years, and (ii) promptly
upon completion thereof, but in no event later than October 31 of each Fiscal
Year, a copy of Parent's annual statement of earnings forecast on a consolidated
basis (the "Budget"), and an earnings forecast for each Golf Course Property
owned or operated by the Company or its Subsidiaries, in each case on a monthly
basis for the succeeding Fiscal Year.
10.1.7 Stockholders' Agreements. Promptly upon the execution and delivery
thereof, copies of any stockholder or similar agreement entered into by Parent
and any holder of the capital stock of Parent.
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10.1.8 Notice of Default, Litigation and ERISA Matters. Promptly (and in
any event within one Business Day in the case of clause (a) and within three
Business Days in the case of clauses (b) through (e)) after any officer of
Parent or the Company learns of any of the following, written notice describing
the same and the steps being taken by Parent, the Company or the Subsidiary
affected thereby with respect thereto:
(a) the occurrence of an Event of Default or an Unmatured Event of
Default;
(b) any litigation, arbitration or governmental investigation,
proceeding or inquiry not previously disclosed by Parent or the Company to
the Lenders which has been instituted or, to the knowledge of Parent or the
Company, is threatened against Parent, the Company or any Subsidiary or to
which any of the properties of any thereof is subject which has had or is
reasonably likely to have a Material Adverse Effect;
(c) any material adverse development which occurs in any litigation,
arbitration or governmental investigation, proceeding or inquiry previously
disclosed on Schedule 9.6 or pursuant to clause (b);
(d) the institution of any steps by Parent, the Company,
any of its Subsidiaries or any other Person to terminate any Pension Plan,
or the failure to make a required contribution to any Pension Plan if such
failure is sufficient to give rise to a Lien under Section 302(f) of ERISA,
or the taking of any action with respect to a Pension Plan which could
result in the requirement that Parent or the Company furnish a bond or
other security to the PBGC or such Pension Plan, or the occurrence of any
event with respect to any Pension Plan which could result in the incurrence
by Parent or the Company of any material liability, fine or penalty, or any
material increase in the contingent liability of Parent or the Company with
respect to any post-retirement Welfare Plan benefit; and
(e) the occurrence of any other event or circumstance which has had
or is reasonably likely to have a Material Adverse Effect.
89
10.1.9 Subsidiaries. Promptly upon the occurrence thereof, a written
report of any change in the list of Subsidiaries of Parent or the Company.
10.1.10 Management Reports. Promptly upon the request of the Agent or any
Lender, copies of all detailed financial and management reports submitted to
Parent or the Company by independent auditors in connection with any annual or
interim audit made by such auditors of the books of Parent or the Company.
10.1.11 Insurance Information. Not later than 90 days after the end of
each Fiscal Year, a complete and accurate summary of the property and casualty
insurance program of Parent and the Company, containing substantially the same
information with respect to such insurance program as the information set forth
on Schedule 9.15; and promptly upon the occurrence thereof, a written report of
any change in Parent's or the Company's insurance program which will materially
reduce the amount or scope of coverage.
10.1.12 Capital Stock Ownership. Concurrently with the delivery of the
annual and quarterly financial statements described in Sections 10.1.1 and
10.1.2, a report showing the ownership of each class of capital stock of Parent
that is outstanding at the end of such Fiscal Quarter (which report need not
disclose the identity of any Person Beneficially Owning less than 2% of such
capital stock).
10.1.13 Update on Delayed Subsequent Acquisition Capital Expenditures.
Concurrently with the delivery of the annual and quarterly financial statements
described in Sections 10.1.1 and 10.1.2, a report showing changes to projected
Delayed Subsequent Acquisition Capital Expenditures during the previous Fiscal
Quarter, including amounts spent and remaining to be spent per Golf Course
Property.
10.1.14 Other Information. Promptly from time to time, such other
information concerning Parent, the Company and its Subsidiaries as any Lender or
the Agent may reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each Subsidiary to
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial
90
statements in accordance with generally accepted accounting principles; permit,
and cause each Subsidiary to permit, on reasonable notice and at reasonable
times and intervals (or at any time without notice during the existence of an
Event of Default or Unmatured Event of Default) any Lender or the Agent or any
representative thereof to inspect the properties and operations of the Company
and of such Subsidiary; and permit, and cause each Subsidiary to permit, on
reasonable notice and at reasonable times and intervals (or at any time without
notice during the existence of an Event of Default or Unmatured Event of
Default) any Lender or the Agent or any representative thereof to visit any or
all of its offices, to perform appraisals and audits of the Company's or such
Subsidiary's real and/or personal property, to discuss its financial matters
with its officers and, after notice to Parent or the Company, its independent
auditors (and each of Parent and the Company hereby authorizes such independent
auditors to discuss such financial matters with the Agent or any representative
thereof), and to examine (and, at the expense of the Company or the applicable
Subsidiary, photocopy extracts from) any of its books or other corporate
records. All such visits, appraisals, audits, discussions, and examinations
shall be at the Company's expense; provided that so long as no Event of Default
or Unmatured Event of Default exists, the Company shall not be required to pay
for more than two such visits, appraisals and audits in any Fiscal Year by the
Lenders (which visits, appraisals and audits shall be coordinated through the
Agent) and provided, further, that the Company shall not be required to pay for
any marketing visits made in the ordinary course of business by any Lender.
10.3 Insurance. Maintain, and cause each Subsidiary to maintain, with
reputable, financially sound insurance companies (rated at least A by A.M. Best
& Co.), insurance to such extent and against such hazards and liabilities as is
customarily maintained by companies similarly situated (and, in any event, such
insurance as may be required by any law or governmental regulation or any court
order or decree); and, upon request of the Agent or any Lender, furnish to the
Agent or such Lender a certificate setting forth in reasonable detail the nature
and extent of all insurance maintained by Parent, the Company and its
Subsidiaries.
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10.4 Compliance with Laws; Maintenance of Property; Payment of Taxes and
Liabilities.
(a) Comply, and cause each Subsidiary to comply, in all material
respects with all applicable laws, rules, regulations and orders the
noncompliance with which would be reasonably likely to have a Material
Adverse Effect;
(b) maintain or cause to be maintained, and cause each Subsidiary to
maintain or cause to be maintained, in good repair, working order and
condition (ordinary wear and tear excepted) all material properties
(including, without limitation, Golf Course Properties) used in its
business, and make, and cause each Subsidiary to make, all appropriate
repairs, renewals and replacements of such properties;
(c) pay, and cause each Subsidiary to pay, prior to delinquency, all
taxes and other governmental charges against it or any of its property;
provided, however, that the foregoing shall not require Parent, the Company
or any Subsidiary to pay any such tax or charge so long as it shall contest
the validity thereof in good faith by appropriate proceedings and shall set
aside on its books such reserves with respect thereto as are required by
generally accepted accounting principles; and
(d) not, and not permit any Subsidiary to, file or consent to the
filing of any consolidated income tax return with any Person other than
Parent.
10.5 Maintenance of Existence, etc. Maintain and preserve, and (subject
to Section 10.13) cause each Subsidiary to maintain and preserve, (a) its
existence and good standing in the jurisdiction of its incorporation and (b) its
qualification and good standing as a foreign corporation in each jurisdiction
where the nature of its business makes such qualification necessary, except
where the failure to be so qualified would not reasonably be expected to have a
Material Adverse Effect.
10.6 Financial Covenants.
10.6.1 Funded Debt to Adjusted EBITDA Ratio. Not permit the Funded Debt
to Adjusted EBITDA Ratio to exceed the following ratios as of the following
dates:
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Fiscal Funded Debt to
Quarter Ending: Adjusted EBITDA Ratio
--------------- ---------------------
06/30/96 7.00:1.00
09/30/96 7.00:1.00
12/31/96 7.00:1.00
03/31/97 7.00:1.00
06/30/97 6.75:1.00
09/30/97 6.75:1.00
12/31/97 6.75:1.00
03/31/98 6.50:1.00
06/30/98 6.00:1.00
09/30/98 5.70:1.00
12/31/98 5.40:1.00
03/31/99 5.00:1.00
06/30/99 4.60:1.00
09/30/99 4.25:1.00
12/31/99 3.85:1.00
03/31/00 3.55:1.00
06/30/00 3.30:1.00
09/30/00 and thereafter
3.00:1.00;
10.6.2 Net Worth. Not permit, at any date, Net Worth to be less than the
sum of (a) $55,000,000, plus (b) 50% of Consolidated Net Income (if Consolidated
Net Income is positive) from April 1, 1996 to such date, plus (c) 100% of the
Net Cash Proceeds from any sale of capital stock of Parent, the Company or any
Subsidiary occurring after the Amendment Effective Time, plus (d) 100% of the
increase in Net Worth resulting from the purchase of a Golf Course Property or
any other asset after the Amendment Effective Time using capital stock of Parent
in consideration therefor.
10.6.3 Fixed Charge Coverage Ratio. Not permit the Fixed Charge Coverage
Ratio to be less than the following ratios as of the following dates:
Fiscal Fixed Charge
Quarter Ending: Coverage Ratio
--------------- --------------
06/30/96 1.00:1.00
09/30/96 1.00:1.00
12/31/96 1.10:1.00
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03/31/97 1.15:1.00
06/30/97 1.30:1.00
09/30/97 1.35:1.00
12/31/97 1.35:1.00
03/31/98 1.40:1.00
06/30/98 1.40:1.00
09/30/98 1.35:1.00
12/31/98 1.25:1.00
03/31/99 1.15:1.00
06/30/99 1.05:1.00
09/30/99 and thereafter 1.00:1.00;
10.6.4 Interest Coverage Ratio. Not permit the Interest Coverage Ratio to
be less than the following ratios as of the following dates:
Fiscal Interest
Quarter Ending: Coverage Ratio
--------------- --------------
06/30/96 1.25:1.00
09/30/96 1.25:1.00
12/31/96 1.35:1.00
03/31/97 1.40:1.00
06/30/97 1.55:1.00
09/30/97 1.60:1.00
12/31/97 1.60:1.00
03/31/98 1.60:1.00
06/30/98 1.70:1.00
09/30/98 1.75:1.00
12/31/98 1.85:1.00
03/31/99 1.95:1.00
06/30/99 2.05:1.00
09/30/99 2.15:1.00
12/31/99 2.30:1.00
03/31/00 2.45:1.00
06/30/00 2.65:1.00
09/30/00 2.80:1.00
12/31/00 2.95:1.00
03/31/01 and thereafter
3.00:1.00;
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10.6.5 Bank Debt to Adjusted EBITDA Ratio. Not permit the Bank Debt to
Adjusted EBITDA Ratio to exceed the following ratios as of the following dates:
Fiscal Bank Debt to
Quarter Ending: Adjusted EBITDA Ratio
--------------- ---------------------
06/30/96 2.85:1.00
09/30/96 2.85:1.00
12/31/96 2.85:1.00
03/31/97 2.85:1.00
06/30/97 2.50:1.00
09/30/97 2.50:1.00
12/31/97 2.50:1.00
03/31/98 2.50:1.00
06/30/98 2.25:1.00
09/30/98 2.00:1.00
12/31/98 1.75:1.00
03/31/99 1.55:1.00
06/30/99 1.35:1.00
09/30/99 1.05:1.00
12/31/99 and thereafter 1.00:1.00;
10.7 Limitations on Debt. Not, and not permit any Subsidiary to, create,
incur, assume or suffer to exist any Debt, except
(a) obligations arising under (i) the Loan Documents and (ii) the
Senior Note Documents (as such Senior Note Documents may be amended or
modified in compliance with Section 10.22);
(b) Debt of the Company or any Subsidiary in respect of Capital
Leases or Debt secured by a Lien on the assets acquired with the proceeds
thereof (including, without limitation, in each case, such Debt assumed in
connection with a Subsequent Acquisition) in an aggregate principal amount
not to exceed $7,500,000;
(c) unsecured Debt of Subsidiaries to the Company or to other
Subsidiaries; provided that if such Debt is evidenced by a promissory note
or other instrument that may be pledged by possession, such note or other
instrument shall be pledged to the Agent for the benefit of the Lenders;
95
(d) unsecured Debt of the Company to Subsidiaries; provided that if
such Debt is evidenced by a promissory note or other instrument that may be
pledged by possession, such note or other instrument shall be pledged to
the Agent for the benefit of the Lenders;
(e) at any date, Hedging Agreements entered into by the Company or
any Subsidiary intended to hedge interest rate risk relating to the Loans,
in a notional principal amount not to exceed the principal amount of the
Loans outstanding on such date;
(f) Contingent Liabilities of the Company or any Subsidiary in
respect of any obligation of Parent, the Company or any Subsidiary
permitted under this Agreement;
(g) Debt in respect of taxes, assessments or governmental charges to
the extent that payment thereof shall not at the time be required to be
made in accordance with Section 10.4;
(h) other Debt of the Company or any Subsidiary outstanding at the
Amendment Effective Time and listed under the heading "Continuing Debt" in
Schedule 10.7 or hereafter incurred in connection with Liens permitted by
Section 10.8, and extensions, renewals and refinancings of any Debt
described in this clause (h) so long as the principal amount thereof is not
increased;
(i) Debt of the Company or any Subsidiary consisting of usual and
customary purchase price adjustments and indemnities under contracts to
purchase or sell Golf Course Properties or other assets;
(j) the Existing Loans (provided that all such Debt shall be
refinanced in accordance with Section 1.2 at the Amendment Effective Time);
and
(k) other Debt of the Company or any Subsidiary, in addition to Debt
permitted by the foregoing clauses of this Section 10.7, not exceeding
$1,000,000 in the aggregate in outstanding principal amount.
10.8 Liens. Not, and not permit any Subsidiary to, create or
96
permit to exist any Lien on any of its real or personal properties, assets or
rights of whatsoever nature (whether now owned or hereafter acquired), except
(a) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or being contested in good
faith by appropriate proceedings and, in each case, for which it maintains
reserves required by this Agreement;
(b) Liens arising in the ordinary course of business (such as (i)
Liens of carriers, warehousemen, mechanics and materialmen and other
similar Liens imposed by law and (ii) Liens incurred in connection with
worker's compensation, unemployment compensation and other types of social
security (excluding Liens arising under ERISA) or in connection with surety
and appeal bonds, bids, performance bonds and similar obligations) for sums
not overdue or being contested in good faith by appropriate proceedings and
not involving any deposits or advances or borrowed money or the deferred
purchase price of property or services, and, in each case, for which it
maintains adequate reserves;
(c) Liens existing at the Amendment Effective Time and identified on
Schedule 10.8;
(d) Liens in connection with Debt permitted under Section 10.7(b), so
long as such Liens do not encumber any assets other than the assets
financed by such Debt;
(e) attachments, judgments and other similar Liens, for sums not
exceeding $250,000 (excluding any portion thereof which is covered by
insurance so long as the insurer is reasonably likely to be able to pay and
has accepted a tender of defense and indemnification) arising in connection
with court proceedings, provided the execution or other enforcement of such
Liens is effectively stayed and claims secured thereby are being actively
contested in good faith and by appropriate proceedings;
(f) easements, rights of way, restrictions, minor defects or
irregularities in title, rights of lessors or sublessors, and other similar
Liens not interfering in any material respect with the ordinary conduct of
the business of
97
the Company and its Subsidiaries taken as a whole;
(g) leases or subleases granted by the Company or any Subsidiary in
the ordinary course of its business;
(h) extensions, renewals or replacements of any Lien permitted by the
foregoing provisions of this Section 10.8, but only if the principal amount
of the Debt secured thereby immediately prior to such extension, renewal or
replacement is not increased and such Lien is not extended to any other
property;
(i) Liens in favor of the Agent for the benefit of the Lenders; and
(j) escrow accounts, "good faith" deposits or similar deposits in
connection with any Subsequent Acquisition or Asset Sale permitted in
accordance with Section 10.12(i).
10.9 Capital Expenditures. Not, and not permit any Subsidiary to, make or
commit to make any Capital Expenditures except
(a) Delayed Subsequent Acquisition Capital Expenditures relating to
any Golf Course Property acquired after the Amendment Effective Time in
accordance with Section 2.5 or 2.6, as applicable,
(b) Maintenance Capital Expenditures in an amount not to exceed,
without duplication the sum of (x) the first $1,000,000 in Net Cash
Proceeds from all Asset Sales received in any Fiscal Year and (y) the
amount of any proceeds of casualty insurance not required to be prepaid in
accordance with the definition of "Asset Sale",
(c) any Maintenance Capital Expenditures (in addition to those
permitted by clause (b) above) so long as, after giving effect to all
Maintenance Capital Expenditures under this clause (c), the aggregate
amount of all such Maintenance Capital Expenditures under this clause (c)
made by the Company and its Subsidiaries during any Fiscal Year shall not
exceed 3.5% of consolidated net revenues of Parent and its Subsidiaries for
the immediately preceding Fiscal Year; provided that any amounts of
permitted Maintenance Capital
98
Expenditures under this clause (c) not spent in any Fiscal Year may be
carried over and spent in the next succeeding Fiscal Year; provided,
further, that in any such succeeding Fiscal Year, the amount of such
Maintenance Capital Expenditures spent in such Fiscal Year shall be
allocated first against the permitted amount of Maintenance Capital
Expenditures for such Fiscal Year until such entire permitted amount is
used and second against any carryover amount arising from the preceding
proviso,
(d) Capital Expenditures ("Designated Non-Recurring Capital
Expenditures"), in an amount not to exceed $7,500,000 in aggregate during
the term of this Agreement, for purposes of non-recurring improvements at
Golf Course Properties owned by the Company or its Subsidiaries at the
Amendment Effective Time or acquired thereafter in accordance with Section
2.5, in accordance with Section 2.6(c), and
(e) Cash Flow Subsequent Acquisition Capital Expenditures to the
extent such Capital Expenditures would be permitted hereunder as Delayed
Subsequent Acquisition Capital Expenditures.
10.10 Operating Leases. Not permit the aggregate amount of all payments
by the Company and its Subsidiaries as lessee under operating leases to exceed
[$350,000] in any Fiscal Year; provided that the foregoing limitation shall not
apply to the leases relating to (a) the Balboa Park Municipal Golf Course,
located in San Diego, California, (b) the Saticoy Golf Course, located in
Ventura, California and (c) The Vineyard at Escondido Golf Course, located in
Escondido, California; and provided further that the Company and its
Subsidiaries shall be permitted to enter into operating leases for Golf Course
Properties under which the lessor is National Golf Operating Partners, L.P. with
aggregate payments (including payments under the operating leases relating to
the Carmel Mountain Ranch Country Club and Golf Course, located in San Diego,
California and Sweetwater Country Club, located in Houston,
Texas) not to exceed (x) for the period from the Amendment Effective Time
through September 30, 1997, $5,000,000, (y) for the period from October 1, 1997
through September 29, 1998, $7,500,000 and (z) thereafter, $10,000,000 in any
Fiscal Year.
10.11 Dividends, etc. Not, and not permit any Subsidiary to, (a) declare
or pay any dividends on any of its capital stock (other
99
than stock dividends), (b) purchase or redeem any capital stock of Parent or any
of its Subsidiaries or any warrants, options or other rights in respect of such
stock, (c) make any other distribution to shareholders of Parent or any
Subsidiary, (d) prepay, purchase or redeem any Debt issued under the Senior Note
Documents or any Subordinated Debt or (e) set aside funds for any of the
foregoing; except that:
(i) any Subsidiary may pay dividends to the Company or to any other
Wholly-Owned Subsidiary; and
(ii) the Company may make payments to Parent in an amount required
to permit Parent to pay any federal, state or local income tax
liability of Parent; provided that no such amount shall exceed
the amount which the Company and its Subsidiaries would have had
to pay if the Company and its Subsidiaries were not members of an
affiliated group filing consolidated returns with Parent (and
Parent shall immediately return any refund, rebate or credit
received by Parent to the Company if, after giving effect to such
refund, rebate or credit, this proviso would be violated);
(iii) not less than ten Business Days after the Company has delivered
to the Lenders a written statement setting forth a description of
the "put" rights of the holder of capital stock of Parent issued
upon exercise of any Original Bank Warrant then being exercised
in accordance with Article IX of any Original Bank Warrant, and
not more than two Business Days before such amount is due and
payable, the Company may make payments to Parent in an amount
required to permit Parent to repurchase such capital stock of
such holder required by such "put" provisions of such Original
Bank Warrant;
(iv) so long as no Event of Default or Unmatured Event of Default
exists or would result therefrom, the Company or any Subsidiary
may purchase stock of any minority shareholder of a Subsidiary;
provided that the aggregate amount of all such purchases during
the term of this Agreement shall not exceed $950,000;
100
(v) so long as no Event of Default or Unmatured Event of Default
exists or would result therefrom, the Company may make payments
to Parent in an amount required to purchase or redeem capital
stock of Parent from any individual (or the estate or heirs of
any individual) who has ceased to be an officer, director or
employee of Parent, the Company or any of its Subsidiaries;
provided that the aggregate amount of all such purchases in any
Fiscal Year shall not exceed $300,000;
(vi) Parent may make payments to members of Parent's board of
directors for customary directors' fees (so long as such payments
do not exceed $25,000 in any Fiscal Year), and reasonable travel
and other expenses of such directors;
(vii) Ocean Vista Land Company may make payments of dividends with
respect to preferred stock of Ocean Vista Land Company
outstanding on January 31, 1994;
(viii) the Company may make payments to Parent in order to pay
fees and expenses permitted under Section 10.16 and reasonable
general and administrative expenses not to exceed $100,000 in any
consecutive Four Fiscal Quarters; and
(ix) the Company may make distributions to Parent to pay liquidated
damages due on the Senior Zero-Coupon Notes as in effect at the
Amendment Effective Time.
10.12 Investments. Not, and not permit any Subsidiary to, make, incur,
assume or suffer to exist any Investment in any other Person, except:
(a) Investments existing at the Amendment Effective Time and
identified in Schedule 10.12;
(b) Cash Equivalent Investments;
(c) Investments by Parent in the Company, and Investments by the
Company in its Subsidiaries or by any Subsidiary in any other Subsidiary,
in the form of contributions to capital or loans or advances;
101
(d) Investments by the Company or any Subsidiary in any Subsidiary,
in the form of capital contributions existing at the Amendment Effective
Time;
(e) loans or advances made by any Subsidiary to the Company;
(f) loans or advances to officers and employees of the Company or of
any Subsidiary for travel, relocation, or other
ordinary business expenses not in excess of $250,000 in the aggregate at
any time;
(g) advances to Parent permitted in accordance with Sections 10.11
and 10.16;
(h) bank deposits of the Company or any Subsidiary in the ordinary
course of business (i) with any Lender or any financial institution that is
a member of the Federal Reserve System and has a combined capital and
surplus and undivided profits of not less than $500,000,000, (ii) held in
refundable and non-refundable escrow accounts, "good faith" deposits or
similar deposits or payments made in connection with a Subsequent
Acquisition pursuant to the purchase agreement related to such Subsequent
Acquisition, so long as the aggregate amount thereof permitted by this
clause (ii) does not at any time exceed $1,250,000 (provided that (x) no
such accounts, deposits or payments that are non-refundable may be made
prior to the approval of the applicable purchase agreement for such
Subsequent Acquisition by the Board of Directors of the Company and (y) no
more than $750,000 of such accounts, deposits or payments may be non-
refundable), or (iii) with any other commercial banking institution so long
as all deposits permitted by this clause (iii) do not at any time exceed
$250,000;
(i) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods and services in
the ordinary course of business; and
(j) Subsequent Acquisitions permitted by Section 2.5.
10.13 Mergers, Consolidations, Sales, Capital Stock Issuances, Etc. Not,
and not permit any Subsidiary to, be a party to any merger or consolidation, or
purchase or otherwise acquire
102
all or substantially all of the assets or any stock of any class of, or any
partnership or joint venture interest in, any other Person, or, except in the
ordinary course of its business, sell, transfer, convey or lease any of its
assets, or sell or assign with or without recourse any receivables, or issue any
capital stock, except for
(a) so long as no Event of Default or Unmatured Event of Default has
occurred and is continuing or would result therefrom, any such merger or
consolidation, sale, transfer, conveyance, lease or assignment of or by any
Wholly-Owned Subsidiary into the Company or into, with or to any other
Wholly-Owned Subsidiary,
(b) so long as no Event of Default or Unmatured Event of Default has
occurred and is continuing or would result therefrom, any such purchase or
other acquisition by the Company or any Wholly-Owned Subsidiary of the
assets or stock
of any Wholly-Owned Subsidiary,
(c) Investments (including Investments by way of merger) permitted by
Section 10.12,
(d) Subsequent Acquisitions if permitted by Section 2.5,
(e) so long as no Event of Default or Unmatured Event of Default has
occurred and is continuing or would result therefrom, any Asset Sales for
an aggregate purchase price not exceeding $15,000,000 during the term of
this Agreement; provided that the Net Cash Proceeds thereof shall be
applied in accordance with Section 6.3.1,
(f) so long as no Event of Default or Unmatured Event of Default has
occurred and is continuing or would result therefrom, issuances of shares
of Qualified Capital Stock of Parent to (x) members of management or
directors of Parent and/or (y) the Person selling any Golf Course Property
or interest in a Person that holds a Golf Course Property in a Subsequent
Acquisition, in an aggregate amount during the period this Agreement shall
remain in effect, for the shares of any class or series for both clauses
(x) and (y) together, of 15% of the total outstanding shares of such class
or series of capital stock of Parent as of the Amendment Effective Time
(but giving effect to the issuances described in clause (x)(i)
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of the definition of Equity Securities Sale); provided that any issuance of
capital stock described in clause (x)(i) of the definition of Equity
Securities Sale may be made irrespective of the existence of any Unmatured
Event of Default, and
(g) so long as no Event of Default or Unmatured Event of Default has
occurred and is continuing or is reasonably likely to result therefrom, any
other issue of Qualified Capital Stock of the Company or Parent (in
addition to those permitted under clause (f) above), provided that the Net
Cash Proceeds thereof are applied (if required by the definition of Equity
Securities Sale) in accordance with Section 6.3.3.
10.14 Guaranty and Collateral Documents. Immediately upon the creation or
acquisition of any Subsidiary, whether or not in connection with any Subsequent
Acquisition,
(a) cause such Subsidiary to execute and deliver a counterpart of the
Guaranty;
(b) deliver or cause to be delivered all shares of capital stock of
such Subsidiary owned by Parent or any of its Subsidiaries to the Agent in
accordance with the Company Pledge Agreement or a Subsidiary Pledge
Agreement, as applicable;
(c) cause such Subsidiary to execute and deliver a counterpart of the
Security Agreement and to take such action in connection therewith
(including, without limitation, executing UCC financing statements), as the
Agent shall find necessary or convenient to obtain a first priority
perfected security interest on the accounts receivable, inventory,
equipment, general intangibles, and other personal property of such
Subsidiary (subject to Liens permitted by this Agreement); and
(d) grant to the Agent, for the benefit of the Lenders, a Mortgage on
all material real property owned or leased by such Subsidiary.
10.15 Use of Proceeds. Not use or permit any proceeds of any Credit
Extension to be used, either directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, (a) of
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"purchasing or carrying" any Margin Stock, (b) that would be inconsistent with
the second sentence of Section 2.1.1 or 2.1.2, as applicable, or (c) of
purchasing or otherwise acquiring any stock of any Person if such Person (or its
board of directors) has (i) announced that it will oppose such purchase or other
acquisition or (ii) commenced any litigation which alleges that such purchase or
other acquisition violates, or will violate, applicable law.
10.16 Transactions with Affiliates. Not, and not permit any Subsidiary
to, enter into or cause, suffer or permit to exist any transaction, arrangement
or contract with any of its other Affiliates (other than Parent, the Company or
any Subsidiary) which is on terms which are less favorable than are obtainable
from any Person which is not one of its Affiliates. Without limiting the
foregoing, neither Parent nor the Company will, and will not permit any
Subsidiary to, pay any management, consulting or similar fee to any Affiliate
(other than to Parent, the Company or a Subsidiary); provided that, so long as
there exists and is continuing no Event of Default under Section 12.1.1, the
Company may (a) pay fees and reimburse expenses to Brentwood Buyout Partners,
L.P. in accordance with that certain Corporate Development and Administrative
Services Agreement dated as of September 30, 1992 between Brentwood Buyout
Partners, L.P. and The Sticks Group, Inc., as in effect on the Amendment
Effective Time and (b) pay investment banking fees to Brentwood not to exceed
1-1/2% of the amount of Permitted Acquisition Costs for any Subsequent
Acquisition(with such Permitted Acquisition Costs to be calculated without
taking into account such investment banking fees payable to Brentwood).
10.17 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in compliance in all material respects with all
applicable requirements of law and regulations, and, without limiting the
generality of the foregoing, not at any time permit the aggregate accumulated
benefit obligations of all Pension Plans to exceed the aggregate assets of all
Pension Plans (as shown on the most recent Form 5500 filed with the Internal
Revenue Service with respect to each such Pension Plan).
10.18 Environmental Covenants.
10.18.1 Environmental Response Obligation. (a) Comply, and cause each
Subsidiary to comply, in all material respects with any Federal or state
judicial or administrative order requiring the
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performance at any real property owned, operated or leased by Parent, the
Company or any Subsidiary (including, without limitation, Golf Course
Properties) of activities in response to the release or threatened release of a
Hazardous Material, except for the period of time that Parent, the Company or
such Subsidiary is diligently in good faith contesting such order; (b) notify
the Agent within ten days of the receipt of any written claim, demand,
proceeding, action or notice of liability by any Person arising out of or
relating to the release or threatened release of a Hazardous Material; and (c)
notify the Agent within ten days of any release, threat of release, or disposal
of Hazardous Material reported by Parent, the Company or any Subsidiary to any
governmental or regulatory authority at any real property owned, operated, or
leased by Parent, the Company or any Subsidiary (including, without limitation,
Golf Course Properties).
10.18.2 Environmental Liabilities. (a) Comply, and cause each Subsidiary
to comply, in all material respects with all material Environmental Laws; (b)
without limiting clause (a), not commence disposal of any Hazardous Material
into or onto any real property owned, operated or leased by Parent, the Company
or any Subsidiary (including, without limitation, Golf Course Properties) except
in compliance in all material respects with Environmental Laws; and (c) without
limiting clause (a), not allow any Lien imposed pursuant to any law, regulation
or order relating to Hazardous Materials or the disposal thereof to remain on
any real property owned, operated or leased by Parent, the Company or any
Subsidiary (including, without limitation, Golf Course Properties).
10.18.3 Environmental Notices. Without limiting Section 10.18.1 or any
other provision of this Agreement,
(a) promptly notify the Agent and provide copies upon receipt of all
written claims, complaints, notices or inquiries relating to the condition
of its facilities and properties (including, without limitation, Golf
Course Properties) or compliance with all Environmental Laws and
Occupational Health and Safety Laws, to the extent that such condition or
non-compliance would reasonably be likely to have a Material Adverse
Effect, and promptly cure and have dismissed with prejudice (or diligently
contest) to the satisfaction of the Agent any actions and proceedings
relating to compliance with such Laws; and
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(b) provide such information and certifications which the Agent may
reasonably request from time to time to evidence compliance with this
Section.
10.19 Unconditional Purchase Obligations. Not, and not permit any
Subsidiary to, enter into or be a party to any contract for the purchase of
materials, supplies or other property or services, if such contract requires
that payment be made by it regardless of whether or not delivery is ever made of
such materials, supplies or other property or services.
10.20 Inconsistent Agreements. Not, and not permit any Subsidiary to,
enter into any agreement containing any provision which would be violated or
breached by any Credit Extension by the Company hereunder or by the performance
by Parent, the Company or any Subsidiary of any of its Obligations hereunder or
under any other Transaction Document.
10.21 Further Assurances. Take, and cause each Subsidiary to take, such
actions as may be required, and such actions as the Agent may reasonably
request, from time to time (including, without limitation, the execution and
delivery of guaranties, security agreements, pledge agreements, mortgages, stock
powers, financing statements and other documents, the filing or recording of any
of the foregoing, and the delivery of stock certificates and other collateral
with respect to which perfection is obtained by possession) to ensure that (a)
the Obligations of Parent and the Company hereunder and under the other Loan
Documents are secured by first priority perfected security interests and Liens
on substantially all assets of Parent and the Company (subject to Liens
permitted hereunder) and guaranteed by all Subsidiaries (including, promptly
upon the acquisition or creation thereof, any Subsidiary created or acquired
after the date hereof) and (b) the Obligations of each Subsidiary under the
Guaranty are secured by substantially all of the assets of such Subsidiary
(subject to Liens permitted hereunder), subject, in the case of both clause (a)
and clause (b) above, to such exceptions as the Agent or the Required Lenders
may permit from time to time.
10.22 Modification, etc. of Certain Agreements. Not consent to or enter
into any amendment, supplement or other modification of
(a) any material term, provision or agreement contained
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in the certificate of incorporation of Parent or the Company if such
amendment, supplement or other modification is reasonably likely to be
adverse in any material respect to the Lenders; or
(b) any material term, provision or agreement of the Stockholders'
Agreement, any Additional Bank Warrant, any Original Bank Warrant, any
Senior Note Document, or any lease relating to the Balboa Park Municipal
Golf Course Golf Course Property located in San Diego, California, Saticoy
Golf Course Property, located in Ventura, California, The Vineyard at
Escondido Golf Course Property located in Escondido, California, and the
Carmel Mountain Ranch Country Club and Golf Course, located in San Diego,
California, if such amendment, supplement or other modification is
reasonably likely to be adverse in any material respect to the Lenders.
10.23 Negative Pledges; Subsidiary Payments. Not, and not permit any
Subsidiary to, enter into any agreement (excluding this Agreement or any
Transaction Document) (a) prohibiting the creation or assumption of any Lien
upon its properties, revenues, or assets, whether now owned or hereafter
acquired, or (b) which would restrict the ability of any Subsidiary to pay or
make dividends or distributions in cash or kind, to make loans, advances or
other payments of whatsoever nature, or to make transfers or distributions of
all or any part of its assets, in each case to the Company or to any corporation
as to which such Subsidiary is a Subsidiary, except (i) non-assignment clauses
in existing leases and future leases or agreements relating to purchase money
financing permitted hereunder (other than future leases or purchase money
agreements of Golf Course Properties) and (ii) security agreements, pledge
agreements and similar instruments existing on the Amendment Effective Time.
10.24 Fiscal Year. Not change its Fiscal Year.
[10.25 TAX SHARING AGREEMENTS. NOT ENTER INTO ANY TAX SHARING OR SIMILAR
AGREEMENT OR ARRANGEMENT OTHER THAN AS MAY BE APPROVED IN WRITING BY THE
REQUIRED LENDERS.]
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10.26 Conduct of Business.
(a) In the case of Parent, not engage in any business other than the
ownership of all of the Company's capital stock and the issuance of the
Senior Zero-Coupon Notes.
(b) In the case of the Company, not, and not permit any Subsidiary to,
engage in any business other than (i) the ownership and management of golf
courses and related facilities located in the United States (excluding
Puerto Rico, and the territories and possessions of the United States) and
(ii) businesses closely related thereto.
SECTION 11 CONDITIONS OF CREDIT EXTENSIONS.
SECTION 11.1 Amendment Effective Time. On and from the first date that the
Agent shall have received counterparts of this Agreement duly executed by the
Company, Parent, the Agent and each Lender listed on the signature pages hereof,
and that each of the conditions in Sections 11.2, 11.3 and 11.4 shall have been
satisfied, the terms and conditions of the Existing Credit Agreement shall be
superseded and restated in their entirety by the terms and conditions of this
Agreement and this Agreement shall take effect. This Agreement shall not
constitute a novation, and the execution and delivery by the Company of this
Agreement and the Notes is in substitution for, but not in payment of, the
Company's obligations incurred under or evidenced by the Existing Credit
Agreement and the "Notes" delivered thereunder and as defined therein. In
addition, it is the intention of the parties that the Liens created under the
"Collateral Documents" (as defined in the Original Agreement) shall remain in
full force and effect under this Agreement and the Collateral Documents
hereunder, without any loss or impairment of perfection or priority.
The Agent shall give notice to the Company and to each Lender that the
Amendment Effective Time has occurred. Each agreement, opinion or certificate
described in Sections 11.2, 11.3 and 11.4 shall be dated the date of the
Amendment Effective Time, unless the applicable subsection of any such Section
explicitly provides otherwise or the Agent in its sole discretion allows
otherwise.
11.2 Documentary Conditions. The occurrence of the Amendment Effective
Time is, in addition to the conditions precedent specified in Sections 11.3 and
11.4, subject to the conditions
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precedent that the Agent shall have received, on or prior to June 28, 1996, all
of the following documents described in this Section 11.2, each duly executed
and dated the Amendment Effective Time (or such earlier date as shall be
satisfactory to the Agent), in form and substance satisfactory to the Agent, and
each (except for the Notes, of which only the originals shall be signed) in
sufficient number of signed counterparts to provide one for each Lender:
11.2.1 Notes. The Notes.
11.2.2 Resolutions. Certified copies of resolutions of the Board of
Directors of each of Parent and the Company authorizing or ratifying the
execution, delivery and performance by each of Parent and the Company, as
applicable, of the Loan Documents and Senior Note Documents to which it is a
party; and certified copies of resolutions of the Board of Directors of each
Guarantor authorizing or ratifying the execution, delivery and performance by
such Guarantor of the Guaranty and the other Loan Documents to which such
Guarantor is a party.
11.2.3 Consents, etc. Certified copies of all documents evidencing any
necessary corporate action, material consents and governmental approvals (if
any) required for the execution, delivery and performance by Parent, the Company
and each Guarantor of the Loan Documents and Senior Note Documents to which such
Person is a party.
11.2.4 Incumbency and Signature Certificates. A certificate of the
Secretary or an Assistant Secretary of Parent, the Company and each Guarantor
certifying the names of the officer or officers of such Person authorized to
sign the Loan Documents and Senior Note Documents to which such Person is a
party, together with a sample of the true signature of each such officer (it
being understood that the Agent and each Lender may conclusively rely on each
such certificate until formally advised by a like certificate of any changes
therein).
11.2.5 Guaranty. An amended and restated guaranty, substantially in the
form of Exhibit C, executed by the Guarantors (other than Parent) (as amended,
supplemented or otherwise modified from time to time, the "Guaranty").
11.2.6 Security Agreement, etc. An amended and restated
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security agreement, substantially in the form of Exhibit D (as amended,
supplemented or otherwise modified from time to time, the "Security Agreement")
issued by Parent, the Company and each Guarantor, together with evidence,
satisfactory to the Agent, that all filings and recordings necessary to maintain
the Agent's Lien on any collateral granted under the Security Agreement have
been duly made and are in full force and effect (subject to such exceptions as
the Agent may approve).
11.2.7 Pledge Agreements. Each of
(a) an amended and restated pledge agreement, substantially in the
form of Exhibit E-1, issued by the Company (as amended, supplemented or
otherwise modified from time to time, the "Company Pledge Agreement"),
(b) amended and restated pledge agreements, each substantially in the
form of Exhibit E-2, issued by each of Foothills Holding Company, Inc., a
Nevada corporation, OVLC Management Corp., a California corporation, and
Ocean Vista Land Company, a California corporation (such pledge agreement,
together with any other pledge agreement executed in the future by a
Subsidiary pursuant hereto, in each case as amended, supplemented or
otherwise modified from time to time, each a "Subsidiary Pledge
Agreement"), and
(c) an amended and restated pledge agreement, substantially in the
form of Exhibit E-3, issued by Parent (as amended, supplemented or
otherwise modified from time to time, the "Parent Pledge Agreement"),
together with, in the case of each Pledge Agreement, the stock certificates to
be pledged thereunder and stock powers executed in blank (to the extent not
previously furnished to the Agent).
11.2.8 Real Estate Documentation. With respect to each parcel of real
property owned or leased by the Company or any Subsidiary as to which the Agent
holds a Mortgage, a duly executed Mortgage Amendment, together with (a) date
down endorsements of the title insurance policies as to each such Mortgage,
effective as of the Amendment Effective Time, in form and substance satisfactory
to the Agent, (b) a Hazardous Materials Indemnity relating to each such
Mortgage, or (c) such other documentation as the Agent may reasonably request,
in form and substance satisfactory to the
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Agent, as to the priority and continued validity of each such Mortgage.
11.2.9 Landlord's Consents. With respect to each material parcel of real
property leased by the Company or any Subsidiary (other than (i) Balboa Park
Municipal Golf Course Property located in San Diego, California, (ii) The
Vineyard at Escondido Golf Course Property located in Escondido, California and
(iii) Carmel Mountain Ranch Country Club and Golf Course, located in San Diego,
California), a duly executed Landlord's Consent (unless already provided in
connection with the Original Credit Agreement or the Existing Credit Agreement).
11.2.10 Opinions of Counsel for Parent, the Company and the Guarantors.
The opinions of
(a) Latham & Watkins, Illinois and California counsel for Parent, the
Company and the Guarantors, in the form of Exhibit F-1; and
(b) Quarles & Brady, special Arizona counsel for the Company and those
of its Subsidiaries organized under the laws of Arizona, in the form of
Exhibit F-2;
(c) Page & Addison, special Texas counsel for the Company and those of
its Subsidiaries organized under the laws of Texas, in the form of Exhibit
F-3;
(d) Lionel, Sawyer & Collins, special Nevada counsel to the Company
and those of its Subsidiaries organized under the laws of Nevada, in the
form of Exhibit F-4;
(e) Mays & Valentine, special Virginia counsel for the Company and
those of its Subsidiaries organized under the laws of Virginia, in the form
of Exhibit F-5.
11.2.11 Insurance. Independent evidence of insurance coverage required
pursuant to Section 10.3 (to the extent not already furnished to Agent).
11.2.12 Senior Note Documents. A certificate of a Responsible Officer of
Parent and the Company, substantially in the form of Exhibit J, certifying as to
fully executed copies of the Senior Note Documents (which shall be attached
thereto), together
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with evidence satisfactory to the Agent that (x) the Company has received the
proceeds of the Senior Company Notes, (y) Parent has received the proceeds of
the issuance of the Units of Parent (consisting of the Senior Zero-Coupon Notes
and the Common Stock) and that such proceeds of the issuance of the Units have
been irrevocably contributed to the capital of the Company by Parent and
accordingly constitute a portion of the equity of the Company, and (z) the
proceeds of the Senior Company Notes and such capital contributions have been
applied by the Company to repay in full all Existing Loans, interest and fees
thereon and all other amounts due under the Existing Credit Agreement.
11.2.13 Other. Such other documents as the Agent or any Lender may
reasonably request.
11.3 Other Conditions to Amendment Effective Time. The occurrence of the
Amendment Effective Time is, in addition to the conditions precedent specified
in Sections 11.2 and 11.4, subject to the following conditions precedent:
11.3.1 Fees. The Company shall have paid all fees and expenses then due
and payable to the Agent or any Lender (including, to the extent then billed,
all amounts payable pursuant to Section 14.6).
11.3.2 No Material Adverse Effect. Since September 30, 1995, there has
not occurred any material adverse effect on (a) the condition (financial or
otherwise), operations, business, properties, assets or prospects of the Company
and its Subsidiaries taken as a whole or (b) the ability of Parent, the Company
and the Guarantors taken as a whole to timely and fully perform any of their
payment or other material Obligations under this Agreement or any other
Transaction Document to which it is a party.
11.3.3 Further Requests. The Agent shall have received all documents any
Lender may reasonably request relating to the existence of Parent, the Company
or any Subsidiary, the corporate authority for and the validity of this
Agreement and each Transaction Document and any other matters relevant hereto.
11.3.4 Satisfactory Legal Form. All documents executed or submitted
pursuant hereto by or on behalf of Parent, the Company and any Subsidiary shall
be reasonably satisfactory in form and substance to the Agent and its counsel;
and the Agent and its
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counsel shall have received all information and such counterpart originals or
such certified or other copies of such materials as any Lender or its counsel
may reasonably request.
11.4 Amendment Effective Time and All Credit Extensions. The occurrence
of the Amendment Effective Time and obligation of each Lender to make each
Credit Extension on or after the Amendment Effective Time is subject to the
following further conditions precedent that:
11.4.1 Required Notice. The Agent shall have received a notice of the
borrowing of such Loan in accordance with Section 2.3, an Issuance Request in
accordance with Section 2.10.2 or a Letter of Credit Amendment Request in
accordance with Section 2.10.3, as applicable.
11.4.2 No Default. Immediately prior to and after making such Credit
Extension or the occurrence of the Amendment Effective Time, no Event of Default
or Unmatured Event of Default shall have occurred and be continuing.
11.4.3 Representations and Warranties Correct. The representations and
warranties of Parent and the Company contained in this Agreement and the other
Loan Documents (except the representations and warranties set forth in Sections
9.6 and 9.8(a) and (c) of this Agreement) shall be true and correct in all
material respects on and as of the date of such Credit Extension, except to the
extent that any such representation and warranty was made as of another date, in
which case it shall have been true and correct as of such other date.
11.4.4 No Litigation, etc. Except as set forth in Schedule 9.6, no
litigation, arbitration, governmental investigation, proceeding or inquiry shall
be pending, or, to the best knowledge of Parent and the Company (after due
inquiry), threatened against Parent, the Company or any Subsidiary:
(a) (i) which seeks to enjoin or otherwise prevent the consummation of
or to recover any damages or obtain relief as a result of (x) the loan and
equity transactions contemplated by the Transaction Documents (other than
any such litigation, arbitration, governmental investigation, proceeding or
inquiry with respect to the Stockholders' Agreement brought by or against
or affecting any Person (except any Lender or any
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initial or successive transferee of any Lender) Beneficially Owning less
than 5% of the capital stock of Parent), or (y) any material agreement
pursuant to which equity capital is contributed to Parent or Parent's
capital stock is issued (it being understood that a material agreement for
purposes of this clause (y) would be an agreement entered into with a
Person Beneficially Owning 5% or more of the capital stock of Parent), or
(ii) which relates to the validity or enforceability of any of the
foregoing agreements or instruments (subject to the foregoing
qualifications);
(b) which is a development in the litigation, arbitration,
governmental investigation, proceeding or inquiry set forth in Schedule 9.6
(i) that has or is reasonably likely to have a Material Adverse Effect or
(ii) that is reasonably likely to adversely affect the Lenders and that
arises with respect to any of the agreements described in clause (a) above
or any transactions contemplated hereby or thereby; or
(c) which has or is reasonably likely to have a Material Adverse
Effect.
11.4.5 Subsequent Acquisitions and Delayed Subsequent Acquisition Capital
Expenditures. With respect to any Reducing Revolver Loan requested by the
Company to fund any Subsequent Acquisition, Delayed Subsequent Acquisition
Capital Expenditures or Designated Non-Recurring Capital Expenditures, the
Company shall have satisfied each of the conditions set forth in Section 2.5 or
2.6, as applicable.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default in the payment when due of
the principal of any Loan or Reimbursement Obligation; or default, and
continuance thereof for three Business Days, in the payment when due of any
interest on any Loan or Reimbursement Obligation, or any fee or other amount
payable by the Company hereunder or under any other Loan Document.
12.1.2 Default under Other Debt. Any default shall occur and shall not
have been waived under the terms applicable to any Debt
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of Parent, the Company or any Subsidiary having an aggregate principal amount
exceeding $250,000 and such default shall (a) consist of the failure to pay such
Debt when due (subject to any applicable grace period), whether by acceleration
or otherwise, (b) accelerate the maturity of such Debt or (c) permit the holder
or holders of such Debt, or any trustee or agent for such holder or holders, to
cause such Debt to become due and payable prior to its expressed maturity.
12.1.3 Other Material Obligations. A default which has not been waived in
the payment when due (subject to any grace period), whether by acceleration or
otherwise, or in the performance or observance of (subject to any grace period),
any material obligation of, or condition agreed to by, Parent, the Company or
any Subsidiary with respect to any material purchase or lease of goods or
services (except only to the extent that the other party has not taken action to
assert such default or the existence of any such default is being contested by
Parent, the Company or such Subsidiary in good faith and by appropriate
proceedings and appropriate reserves have been made in respect of such default),
if the aggregate liability of Parent, the Company and its Subsidiaries in
respect of all such purchases and leases so affected shall exceed $500,000.
12.1.4 Bankruptcy, Insolvency, etc. Parent, the Company or any Subsidiary
becomes insolvent or generally fails to pay, or admits in writing its inability
or refusal to pay, debts as they become due; or Parent, the Company or any
Subsidiary applies for, consents to, or acquiesces in the appointment of a
trustee, receiver or other custodian for Parent, the Company or such Subsidiary
or any property thereof, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for Parent, the Company or any
Subsidiary or for a substantial part of the property of any thereof and is not
discharged within 60 days; or any bankruptcy, reorganization, debt arrangement,
or other case or proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is commenced in respect of Parent, the
Company or any Subsidiary, and if such case or proceeding is not commenced by
Parent, the Company or such Subsidiary, it is consented to or acquiesced in by
Parent, the Company or such Subsidiary, or remains for 60 days undismissed.
12.1.5 Non-Compliance with Provisions of This Agreement.
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Failure by Parent or the Company to comply with or to perform any covenant set
forth in Section 10.1.9(a), 10.3, 10.5 through 10.13, 10.15, 10.16, 10.22 or
10.23; failure by Parent or the Company to comply with or to perform any
covenant set forth in Section 10.14 or 10.21 and continuance of such failure for
five days after notice thereof to the Company from the Agent or any Lender; or
failure by Parent or the Company to comply with or to perform any other
provision of this Agreement (and not constituting an Event of Default under any
of the other provisions of this Section 12) and continuance of such failure for
30 days after notice thereof to the Company from the Agent or any Lender.
12.1.6 Warranties. Any warranty made by Parent, the Company or any
Subsidiary in any Transaction Document is false or misleading in any material
respect when made, or any schedule, certificate, financial statement, report,
notice or other writing furnished by or on behalf of Parent, the Company or any
Subsidiary to the Agent or any Lender is false or misleading in any material
respect on the date as of which the facts therein set forth are stated or
certified, it being understood that any such warranty shall have been made to
the best knowledge of Parent, the Company or such Subsidiary, as the case may
be, after due inquiry if made with respect to historical information as to any
Golf Course Property as at any date prior to its acquisition by the Company or
any Subsidiary or with respect to any other information not prepared by Parent,
the Company, any Subsidiary, Brentwood, or any of their respective Affiliates.
12.1.7 Pension Plans. (i) Institution of any steps by Parent, the Company
or any other Person to terminate a Pension Plan if as a result of such
termination Parent or the Company could be required to make a contribution to
such Pension Plan, or could incur a liability or obligation to such Pension
Plan, in excess of $250,000, or (ii) a contribution failure occurs with respect
to any Pension Plan sufficient to give rise to a Lien under section 302(f) of
ERISA.
12.1.8 Judgments. Final judgments which exceed an aggregate of $250,000
(excluding any portion thereof which is covered by insurance so long as the
insurer is reasonably likely to be able to pay and has accepted a tender of
defense and indemnification) shall be rendered against Parent or the Company or
any Subsidiary and shall not have been discharged or vacated or had execution
thereof stayed pending appeal within 30 days after entry or filing of such
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judgments.
12.1.9 Invalidity of Guaranty, etc. The Guaranty (or, as to Parent, the
guaranty of Parent set forth in Section 15 hereof) shall be revoked or otherwise
cease to be in full force and effect (whether with respect to amounts already
advanced or to be advanced) with respect to any Guarantor (other than as
expressly permitted hereunder or thereunder), any Guarantor shall fail (subject
to any applicable grace period) to comply with or to perform any applicable
provision of the Guaranty, or any Guarantor (or any Person by, through or on
behalf of such Guarantor) shall contest in any manner the validity, binding
nature or enforceability of the Guaranty with respect to such Guarantor.
12.1.10 Invalidity of Collateral Documents, etc. Any Collateral Document
shall cease to be in full force and effect with respect to the Company or any
Guarantor (other than as expressly permitted hereunder or thereunder), any
default shall occur (subject to any applicable grace period) under any
Collateral Document, or the Company or any Guarantor (or any Person by, through
or on behalf of the Company or any Guarantor) shall contest in any manner the
validity, binding nature or enforceability of any Collateral Document.
12.1.11 Change in Control. A Change In Control shall occur.
12.1.12 Material Adverse Effect. The Required Lenders shall have
determined in good faith that an event has occurred or a condition exists that
has had or is reasonably likely to have a Material Adverse Effect (other than a
Material Adverse Effect that relates solely to the ability of Parent, the
Company and the Guarantors to perform their material obligations under the
Equity Documents or Senior Note Documents).
12.2 Effect of Event of Default. If any Event of Default described in
Section 12.1.4 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Notes, the Reimbursement
Obligations and all other Obligations hereunder shall become immediately due and
payable, all without presentment, demand, protest or notice of any kind; and, in
the case of any other Event of Default, the Agent may (and upon written request
of the Required Lenders shall) declare the Commitments (if they have not
theretofore terminated) to be terminated and/or declare all Notes, the
Reimbursement Obligations and all other
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Obligations hereunder to be due and payable, whereupon the Commitments (if they
have not theretofore terminated) shall immediately terminate and/or all Notes,
the Reimbursement Obligations and all other Obligations hereunder shall become
immediately due and payable, all without presentment, demand, protest or notice
of any kind. The Agent shall promptly advise the Company of any such
declaration, but failure to do so shall not impair the effect of such
declaration. Notwithstanding the foregoing, the effect as an Event of Default of
any event described in Section 12.1.1 or Section 12.1.4 may be waived by the
written concurrence of all of the Lenders, and the effect as an Event of Default
of any other event described in this Section 12 may be waived by the written
concurrence of the Required Lenders.
SECTION 13 THE AGENT.
13.1 Appointment and Authorization. Each Lender hereby irrevocably
(subject to Section 13.9) appoints, designates and authorizes the Agent to take
such action on such Lender's behalf under the provisions of this Agreement and
each other Transaction Document and to exercise such powers and perform such
duties as are expressly delegated to the Agent by the terms of this Agreement or
any other Transaction Document, together with such powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in any other Transaction Document, the Agent
shall not have any duties or responsibilities except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other
Transaction Document or otherwise exist against the Agent.
13.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Transaction Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
13.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other
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Transaction Document or the transactions contemplated hereby (except for
liability caused by its own gross negligence or willful misconduct, and
determined to have been so caused by a final judgment of a court of competent
jurisdiction), or (ii) be responsible in any manner to any of the Lenders for
any recital, statement, representation or warranty made by the Company, Parent
or any Subsidiary or Affiliate of the Company or Parent, or any officer thereof,
contained in this Agreement or in any other Transaction Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Transaction Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Transaction
Document, or for any failure of the Company, Parent or any other party to any
Transaction Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Transaction
Document, or to inspect the properties, books or records of the Company, Parent
or any of the Company's or Parent's Subsidiaries or Affiliates.
13.4 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons, and upon advice and statements of legal counsel (including counsel
to the Company and/or Parent), independent accountants and other experts
selected by the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Transaction
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or
any other Transaction Document
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in accordance with a request or consent of the Required Lenders and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 11, each Lender that has executed this Agreement shall
be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter either sent by the Agent to such Lender
for consent, approval, acceptance or satisfaction, or required thereunder
to be consented to or approved by or acceptable or satisfactory to the
Lender.
13.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Event of Default or Unmatured Event of
Default, except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Agent for the account of the Lenders, unless
the Agent shall have received written notice from a Lender or the Company
referring to this Agreement, describing such Event of Default or Unmatured Event
of Default and stating that such notice is a "notice of default". The Agent
will notify the Lenders of its receipt of any such notice. The Agent shall take
such action with respect to such Event of Default or Unmatured Event of Default
as may be requested by the Required Lenders in accordance with Section 12.2;
provided, however, that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default or
Unmatured Event of Default as it shall deem advisable or in the best interest of
the Lenders.
13.6 Credit Decision. Each Lender acknowledges that none of the Agent-
Related Persons has made any representation or warranty to it, and that no act
by the Agent hereinafter taken, including any review of the affairs of the
Company, Parent and their Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
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creditworthiness of the Company, Parent and their Subsidiaries, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Company hereunder. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Transaction Documents, and
to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company and Parent. Except for notices, reports and
other documents expressly herein required to be furnished to the Lenders by the
Agent, the Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Company which may come into the possession of any of the Agent-Related Persons.
13.7 Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Lenders shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Company and without
limiting the obligation of the Company to do so), pro rata (based on the
Lenders' respective Total Percentage), from and against any and all Indemnified
Liabilities; provided, however, that no Lender shall be liable for the payment
to the Agent-Related Persons of any portion of such Indemnified Liabilities
caused solely by such Person's gross negligence or willful misconduct and
determined to have been so caused by a final judgment by a court of competent
jurisdiction. Without limitation of the foregoing, each Lender shall reimburse
the Agent upon demand for its ratable share of any costs or out-of-pocket
expenses (including reasonable fees of attorneys for the Agent (including the
allocable costs of internal legal services and all disbursements of internal
counsel)) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other
Transaction Document, or any document contemplated by or referred to herein, to
the extent that the Agent is not reimbursed for such expenses by or on behalf of
the Company. The undertaking in this Section shall survive the expiration or
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termination of the Commitments and payment of the Loans and other liabilities of
the Company hereunder and the resignation or replacement of the Agent.
For the purposes of this Section 13.7, "Indemnified Liabilities" shall
mean: "any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements
(including reasonable fees of attorneys for the Agent (including the
allocable costs of internal legal services and all disbursements of
internal counsel)) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the
termination, resignation or replacement of the Agent or replacement of any
Lender) be imposed on, incurred by or asserted against any such Person in
any way relating to or arising out of this Agreement, any Transaction
Document or any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any
such Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including (a)
any case, action or proceeding before any court or other governmental
authority relating to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up or relief of debtors, or (b) any
general assignment for the benefit of creditors, composition, marshalling
of assets for creditors, or other, similar arrangement in respect of its
creditors generally or any substantial portion of its creditors, whether
undertaken under U.S. Federal, state or foreign law, including the U.S.
bankruptcy code or any appellate proceeding) related to or arising out of
this Agreement, any Transaction Document or the Loans or the use of the
proceeds thereof, whether or not any Agent-Related Person, any Lender or
any of their respective officers, directors, employees, counsel, agents or
attorneys-in-fact is a party thereto."
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13.8 Agent in Individual Capacity. BofA and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company, Parent and
their Subsidiaries and Affiliates as though BofA were not the Agent hereunder
and without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, BofA or its Affiliates may receive information
regarding the Company, Parent or their Affiliates (including information that
may be subject to confidentiality obligations in favor of the Company, Parent or
any such Affiliate) and acknowledge that the Agent shall be under no obligation
to provide such information to them. With respect to their Loans, BofA and its
Affiliates shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though BofA were not the Agent, and
the terms "Lender" and "Lenders" may include BofA and its Affiliates, to the
extent applicable, in their individual capacities.
13.9 Successor Agent. The Agent may, and at the request of the Required
Lenders shall, resign as Agent upon 30 days' notice to the Lenders. If the
Agent resigns under this Agreement, the Required Lenders shall appoint from
among the Lenders (with, so long as no Event of Default or Unmatured Event of
Default exists, the prior written consent of the Company, which shall not be
unreasonably withheld or delayed) a successor agent for the Lenders. If no
successor agent is appointed prior to the effective date of the resignation of
the Agent, the Agent may appoint, after consulting with the Lenders and the
Company, a successor agent from among the Lenders (with, so long as no Event of
Default or Unmatured Event of Default exists, the prior written consent of the
Company, which shall not be unreasonably withheld or delayed). Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 13,
Section 14.6 and Section 14.12 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement. If
no successor agent has accepted appointment as Agent by the date which is 30
days following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective
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and the Lenders shall perform all of the duties of the Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as provided
for above.
13.10 Collateral Matters. The Lenders irrevocably authorize the Agent, at
its option and in its discretion, to release any Lien granted to or held by the
Agent upon any collateral held pursuant to any Collateral Document and to
release any Guarantor from its obligations under the Guaranty (or, as to Parent,
the guaranty set forth in Section 15 hereof) (a) upon termination of the
Commitments, cancellation, expiration or cash collateralization in full of all
Letters of Credit and payment in full of all Credit Extensions and all other
Obligations of the Company; (b) in the case of any Lien, constituting property
sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder; (c) in the case of any Lien, constituting
property in which the Company or any Subsidiary owned no interest at the time
the Lien was granted or at any time thereafter; (d) in the case of any Lien,
constituting property leased to the Company or any Subsidiary under a lease
which has expired or been terminated in a transaction permitted under this
Agreement or is about to expire and which has not been, and is not intended by
the Company or such Subsidiary to be, renewed or extended; (e) in the case of
any Lien, constituting property leased to the Company pursuant to a Capital
Lease or property financed through a purchase money financing, in each case
permitted hereunder if the Lien on such property is prohibited by the terms of
such Capital Lease or purchase money financing; (f) in the case of any
Guarantor, if such Guarantor or any Person owning such Guarantor is sold or to
be sold or disposed of as part of or in connection with any disposition
permitted hereunder; or (g) subject to the penultimate sentence of Section 14.1,
if approved, authorized or ratified in writing by the Required Lenders. Upon
request by the Agent at any time, the Lenders will confirm in writing the
Agent's authority to release particular types or items of Collateral pursuant to
this Section 13.10.
13.11 Issuer. The Issuer shall enjoy all the rights of the Agent under
this Article XIII mutatis mutandis as if the provisions of this Article XIII
referred to the Issuer.
SECTION 14 GENERAL.
14.1 Waiver; Amendments. No delay on the part of the Agent
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or any Lender in the exercise of any right, power or remedy shall operate as a
waiver thereof, nor shall any single or partial exercise by any of them of any
right, power or remedy preclude other or further exercise thereof, or the
exercise of any other right, power or remedy. No amendment, modification or
waiver of, or consent with respect to, any provision of this Agreement or any
other Loan Documents shall in any event be effective unless the same shall be in
writing and signed and delivered by the Company and by Lenders having an
aggregate Total Percentage of not less than the aggregate Total Percentage
expressly designated herein with respect thereto or, in the absence of such
designation as to any provision of this Agreement or any other Loan Documents,
by the Required Lenders, and then any such amendment, modification, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No amendment, modification, waiver or consent (a) shall
amend, modify or waive the Incurrence Test relating to the making of any
Subsequent Acquisition, any Designated Non-Recurring Capital Expenditures or the
funding thereof without the consent of all Lenders or (b) shall (i) extend or
increase the amount of any Commitment, (ii) extend the date for any scheduled
payment of any principal of or interest on the Credit Extensions or any fees
payable hereunder, (iii) reduce the principal amount of any Loan or
Reimbursement Obligation, the rate of interest thereon or any fees payable
hereunder, (iv) release any Guarantor from its obligations under the Guaranty
(except as provided hereunder or thereunder) or release all or substantially all
of the collateral granted under the Collateral Documents (except as provided
hereunder or thereunder), or (v) change the aggregate Total Percentage required
to effect an amendment, modification, waiver or consent without, in each case,
the consent of all Lenders. No provisions of Section 2.10 shall be amended,
modified or waived without the consent of the Issuer. No provisions of Section
13 shall be amended, modified or waived without the consent of the Agent or the
Issuer.
14.2 Confirmations. The Company and each holder of a Note agree from time
to time, upon written request received by it from the other, to confirm to the
other in writing (with a copy of each such confirmation to the Agent) the
aggregate unpaid principal amount of the Loans and Reimbursement Obligations
then outstanding under such Note.
14.3 Notices. Except as otherwise provided in Sections 2.3, 2.4 and 4.3,
all notices hereunder shall be in writing (including,
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without limitation, facsimile transmission) and shall be sent to the applicable
party at its address shown below its signature hereto or at such other address
as such party may, by written notice received by the other parties hereto, have
designated as its address for such purpose. Notices sent by facsimile
transmission shall be deemed to have been given when sent; notices sent by mail
shall be deemed to have been given three Business Days after the date when sent
by registered or certified mail, postage prepaid; and notices sent by hand
delivery shall be deemed to have been given when received. For purposes of
Sections 2.3, 2.4 and 4.3, the Agent shall be entitled to rely on telephonic
instructions from any person that the Agent in good faith believes is an
authorized officer or employee of the Company, and the Company shall hold the
Agent and each Lender harmless from any loss, cost or expense resulting from any
such reliance.
14.4 Computations. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with generally accepted accounting principles applied on a basis
consistent with those used in the preparation of the Company's audited financial
statements referred to in clause (a) of Section 9.4.
14.5 Regulation U. Each Lender represents that it in good faith is not
relying, either directly or indirectly, upon any Margin Stock as collateral
security for the extension or maintenance by it of any credit provided for in
this Agreement.
14.6 Costs, Expenses and Taxes. The Company agrees to pay on demand (a) all
reasonable out-of-pocket costs and expenses of the Agent and the Issuer
(including (x) the reasonable fees and charges of counsel for the Agent and the
Issuer, (y) the fees and charges of local counsel, if any, who may be retained
by such counsel, and (z) the allocable costs of internal legal services and all
disbursements of internal counsel) in connection with the negotiation,
preparation, execution, delivery and administration of this Agreement, the other
Transaction Documents and all other documents provided for herein or delivered
or to be delivered hereunder or in connection herewith (including, without
limitation, any amendment, supplement or waiver to any Transaction Document and
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the arrangement and syndication of the financing provided under the Transaction
Documents), and (b) all reasonable out-of-pocket costs and expenses (including
(x) attorneys' fees, court costs and other legal expenses of all counsel and (y)
the allocable costs of internal legal services and all disbursements of internal
counsel) incurred by the Agent, the Issuer and each Lender in connection with
the enforcement of this Agreement, the other Transaction Documents or any such
other documents. In addition, the Company agrees to pay, and to save the Agent,
the Issuer and the Lenders harmless from all liability for, any stamp or other
similar taxes which may be payable in connection with the execution and delivery
of this Agreement, the Credit Extensions hereunder, the issuance of the Notes or
the execution and delivery of any other Transaction Document or any other
document provided for herein or delivered or to be delivered hereunder or in
connection herewith. All obligations provided for in this Section 14.6 shall
survive repayment of the Obligations, cancellation of the Notes and Letters of
Credit and termination of each Transaction Document.
14.7 Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
14.8 Assignments; Participations.
14.8.1 Assignments. Any Lender may at any time assign and delegate to one
or more Affiliates or may, with the prior written consent of the Agent, the
Issuer and the Company (which consents shall not be unreasonably delayed or
withheld, it being understood that an assignment to a business competitor of the
Company shall be a reasonable basis for withholding such consent), at any time
assign and delegate to one or more commercial banks or other Persons (any Person
to whom such an assignment and delegation is to be made being herein called an
"Assignee"), all or any fraction of such Lender's Credit Extensions and
Commitments (which assignment and delegation shall be of a constant, and not a
varying, percentage of all the assigning Lender's Working Capital Revolving
Commitments and Working Capital Revolving Loans and Reimbursement Obligations
and/or all of such Lender's Reducing Revolver Loan Commitment and Reducing
Revolver Loans, as the case may be) in a minimum aggregate amount equal to the
lesser of (i) the sum of the assigning Lender's remaining Credit Extensions and
(to the extent not used) Commitments, and (ii) $5,000,000; provided, however,
that the Company and the Agent shall be entitled to continue to deal
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solely and directly with such Lender in connection with the interests so
assigned and delegated to an Assignee until the date when all of the following
conditions shall have been met:
(a) five Business Days (or such lesser period of time as the Agent
and the assigning Lender shall agree) shall have passed after written
notice of such assignment and delegation, together with payment
instructions, addresses and related information with respect to such
Assignee, shall have been given to the Company, the Issuer and the Agent by
such assigning Lender and the Assignee,
(b) the assigning Lender and the Assignee shall have executed and
delivered to the Company, the Issuer and the Agent an assignment agreement
substantially in the form of Exhibit G (an "Assignment Agreement"),
together with any documents required to be delivered thereunder, which
Assignment Agreement shall have been consented to (if required) and
accepted by the Agent, the Issuer and the Company,
(c) the Assignee, if not organized under the laws of the United
States or a State thereof, shall have delivered to the Company a United
States Internal Revenue Service Form 1001 or 4224 as appropriate (or
successor forms), properly completed and claiming a complete exemption, as
the case may be, from withholding or deduction for or on account of
Recipient Taxes of such Assignee; and
(d) the assigning Lender or the Assignee shall have paid the Agent a
processing fee of $3,500.
From and after the date on which the conditions described above have been met,
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Lender hereunder, and (y) the assigning Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it pursuant to such Assignment Agreement, shall be released from
its obligations hereunder. Accrued interest on that part of the Loans being
assigned shall be paid as provided in the Assignment Agreement. Accrued interest
and accrued fees shall be paid at the same time or times provided in
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this Agreement. Any attempted assignment and delegation not made in accordance
with this Section 14.8.1 shall be null and void.
14.8.2 Participations. Any Lender may at any time sell to one or more
commercial banks or other Persons participating interests in any Credit
Extension owing to such Lender, the Working Capital Revolving Commitment of such
Lender, the Reducing Revolver Loan Commitment of such Lender, or any other
interest of such Lender hereunder (any Person purchasing any such participating
interest being herein called a "Participant"). In the event of a sale by a
Lender of a participating interest to a Participant, (x) such Lender shall
remain the Lender for all purposes of this Agreement, (y) the Company, the
Issuer and the Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations hereunder and (z) all
amounts payable by the Company shall be determined as if such Lender had not
sold such participation and shall be paid directly to such Lender. No
Participant shall have any direct or indirect voting rights hereunder except
with respect to any of the events described in the penultimate sentence of
Section 14.1. Each Lender agrees to incorporate the requirements of the
preceding sentence into each participation agreement which such Lender enters
into with any Participant. The Company agrees that if amounts outstanding under
this Agreement and the Notes are due and payable (as a result of acceleration or
otherwise), each Participant shall be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement and
any Note to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement; provided that such right
of setoff shall be subject to the obligation of each Participant to share with
the Lenders, and the Lenders agree to share with each Participant, as provided
in Section 7.5. The Company also agrees that each Participant shall be entitled
to the benefits of Section 8 as if it were a Lender (provided that no
Participant shall receive any greater compensation pursuant to Section 8 than
would have been paid to the participating Lender if no participation had been
sold).
14.9 Governing Law. This Agreement and each Note shall be a contract made
under and governed by the internal laws of the State of Illinois. Whenever
possible each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
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shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of Parent, the Issuer and the Company and rights of
the Agent, the Issuer and the Lenders expressed herein or in any other
Transaction Document shall be in addition to and not in limitation of those
provided by applicable law.
14.10 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.
14.11 Successors and Assigns. This Agreement shall be binding upon
Parent, the Company, the Lenders, the Issuer and the Agent and their respective
successors and assigns, and shall inure to the benefit of Parent, the Company,
the Lenders, the Issuer and the Agent and the permitted successors and assigns
of the Lenders and the Agent.
14.12 Indemnification by the Company.
(a) In consideration of the execution and delivery of this Agreement by
the Agent, the Issuer and the Lenders and the agreement to extend the
Commitments provided hereunder, the Company hereby agrees to indemnify,
exonerate and hold the Agent, the Issuer, each Lender and each of the officers,
directors, employees, agents and attorneys-in-fact of the Agent, the Issuer and
each Lender (collectively the "Lender Parties" and individually each a "Lender
Party") free and harmless from and against any and all actions, causes of
action, suits, losses, liabilities, damages and expenses, including, without
limitation, reasonable attorneys' fees and charges (collectively therein called
the "Indemnified Liabilities"), incurred by the Lender Parties or any of them as
a result of, or arising out of, or relating to
(i) any tender offer, merger, purchase of stock, purchase of
assets or other similar transaction financed or proposed to be
financed in whole or in part, directly or indirectly, with the
proceeds of any of the Credit Extensions,
(ii) the execution, delivery, performance or
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enforcement of this Agreement or any other Transaction Document by any
of the Lender Parties, or
(iii) any investigation, litigation or proceeding related to any
violation or alleged violation of any Environmental Law or
Occupational Safety and Health Law,
except for any such Indemnified Liabilities arising for the account of a
particular Lender Party that are determined in a final judgment of a court of
competent jurisdiction to have been caused in all material respects by such
Lender Party's gross negligence or willful misconduct. If and to the extent that
the foregoing undertaking may be unenforceable for any reason, the Company
hereby agrees to make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law. Nothing set forth above shall be construed to relieve any Lender Party from
any obligation it may have under this Agreement.
(b) All obligations provided for in this Section 14.12 shall survive
repayment of the Loans, cancellation of the Notes, cancellation or expiration of
the Letters of Credit and any termination of the Transaction Documents.
14.13 Confidentiality. The Agent and the Lenders shall hold all non-
public information obtained pursuant to the requirements of this Agreement in
accordance with their customary procedures for handling confidential information
of this nature and in accordance with safe and sound banking practices and, in
any event, may make disclosure on the same confidential basis as provided for
herein that is reasonably required by any actual or bona fide potential
transferee or participant in connection with the contemplated transfer of any
Note or participation therein, or as required or requested by any governmental
agency or representative thereof or pursuant to legal process; provided that,
unless prohibited by applicable law or court order, each of the Agent and each
Lender shall promptly notify the Company of any request by any governmental
agency or representative thereof (other than any such request in connection with
an examination of the financial condition of the Agent or such Lender by such
governmental agency) for disclosure of any such non-public information prior to
disclosure of such information, and at the request of the Company will take
reasonable efforts to maintain the confidentiality of such information.
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14.14 Maximum Interest. Anything in this Agreement or any Note or any other
Loan Document to the contrary notwithstanding, the Company shall never be
required to pay unearned interest on any Note and shall never be required to pay
interest on any Note or on any other Loan Document at a rate in excess of the
Highest Lawful Rate, and if the effective rate of interest which would otherwise
be payable under this Agreement and any Note and the other Loan Documents would
exceed the Highest Lawful Rate, or if the holder of any Note shall receive
monies that are deemed to constitute interest which would increase the effective
rate of interest payable by the Company under this Agreement and any Note and
the other Loan Documents to a rate in excess of the Highest Lawful Rate, then
(i) the amount of interest which would otherwise be payable by the Company under
this Agreement and such Note and the other Loan Documents shall be reduced to
the amount allowed by applicable law, and (ii) any unearned interest paid by the
Company or any interest paid by the Company in excess of the Highest Lawful Rate
shall, at the option of the holder of such Note, be either refunded to the
Company or credited on the principal of such Note. It is further agreed that,
without limitation of the foregoing, all calculations of the rate of interest
contracted for, charged or received by the Lenders under any Note, or under this
Agreement or any other Loan Document, are made for the purpose of determining
whether such rate exceeds the Highest Lawful Rate applicable to the Lenders
(such Highest Lawful Rate being the "Maximum Permissible Rate"), and shall be
made, to the extent permitted by usury laws applicable to the Lenders (now or
hereafter enacted), by amortizing, prorating and spreading in equal parts during
the period of the full stated term of the Loans evidenced by the Notes and other
Loan Documents all interest at any time contracted for, charged or received by
the Lenders in connection therewith. If at any time and from time to time (i)
the amount of interest payable to the Lenders on any date shall be computed at
the Maximum Permissible Rate pursuant to this Section 14.14 and (ii) in respect
of any subsequent interest computation period the amount of interest otherwise
payable to the Lender would be less than the amount of interest payable to the
Lenders computed at the Maximum Permissible Rate, then the amount of interest
payable to the Lenders in respect of such subsequent interest computation period
shall continue to be computed at the Maximum Permissible Rate until the total
amount of interest payable to the Lenders shall equal the total amount of
interest which would have been payable to the Lenders if the total amount of
interest had been computed without giving effect to this Section 14.14.
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14.15 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER TRANSACTION DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
AGENT'S OR ISSUER'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF PARENT, THE COMPANY, THE
AGENT, THE ISSUER AND EACH LENDER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. EACH OF PARENT, THE COMPANY, THE AGENT, THE
ISSUER AND EACH LENDER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF ILLINOIS. EACH OF PARENT AND THE COMPANY HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
14.16 WAIVER OF JURY TRIAL. EACH OF PARENT, THE COMPANY, THE AGENT, THE
ISSUER AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH
ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SECTION 15 GUARANTY OF PARENT.
Parent hereby unconditionally, as primary obligor and not merely as surety,
guarantees the full and prompt payment when due, whether by acceleration or
otherwise, and at all times thereafter, of all obligations (monetary or
otherwise) of the Company to the Lenders and the Agent, under or in connection
with the Credit Agreement, the Notes, the Letters of Credit any other Loan
Document and any other document or instrument (including, without limitation,
any Hedging Agreement entered into with any Lender or any Affiliate thereof)
executed in connection therewith, in each
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case howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due, in
each case as the same may be amended, modified, extended or renewed from time to
time (all such obligations being herein collectively called the "Liabilities");
provided, however, that the liability of Parent hereunder shall be limited to
the maximum amount of the Liabilities which Parent may guaranty without
violating any fraudulent conveyance or fraudulent transfer law (plus all costs
and expenses paid or incurred by the Agent or any Lender in enforcing this
guaranty of Parent (this "Parent Guaranty") under this Section 15 against
Parent.
This Parent Guaranty shall in all respects be a continuing, absolute and
unconditional guaranty, and shall remain in full force and effect
(notwithstanding, without limitation, the dissolution of Parent or Company or
that at any time or from time to time no Liabilities are outstanding) until all
Commitments have terminated and all Liabilities have been paid in full.
Parent further agrees that if at any time all or any part of any payment
theretofore applied by the Agent or any Lender to any of the Liabilities is or
must be rescinded or returned by the Agent or such Lender for any reason
whatsoever (including, without limitation, the insolvency, bankruptcy or
reorganization of the Company or Parent), such Liabilities shall, for the
purposes of this Guaranty, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence, notwithstanding
such application by the Agent or such Lender, and this Parent Guaranty shall
continue to be effective or be reinstated, as the case may be, as to such
Liabilities, all as though such application by the Agent or such Lender had not
been made.
The Agent or any Lender may, from time to time, at its sole discretion and
without notice to Parent, take any or all of the following actions: (a) retain
or obtain a security interest in any property to secure any of the Liabilities
or any obligation hereunder, (b) retain or obtain the primary or secondary
obligation of any obligor or obligors, in addition to Parent, with respect to
any of the Liabilities, (c) extend or renew any of the Liabilities for one or
more periods (whether or not longer than the original period), alter or exchange
any of the Liabilities, or release or compromise any obligation of any of the
undersigned hereunder or any obligation of any nature of any other obligor with
respect to
135
any of the Liabilities, (d) release its security interest in, or surrender,
release or permit any substitution or exchange for, all or any part of any
property securing any of the Liabilities or any obligation hereunder, or extend
or renew for one or more periods (whether or not longer than the original
period) or release, compromise, alter or exchange any obligations of any nature
of any obligor with respect to any such property, and (e) resort to Parent for
payment of any of the Liabilities when due (subject to any applicable grace
period), whether or not the Agent or such Lender shall have resorted to any
property securing any of the Liabilities or any obligation hereunder or shall
have proceeded against any other Guarantor or any other obligor primarily or
secondarily obligated with respect to any of the Liabilities.
Parent hereby waives each of the following, to the fullest extent allowed
by law:
(a) all statutes of limitations as a defense to any action brought by
Agent against Parent;
(b) any defense based upon:
(i) the unenforceability or invalidity of all or any part of the
Credit Agreement or the Liabilities, or any security or other guaranty
for the Liabilities or the lack of perfection or failure of priority
of any security for the Liabilities; or
(ii) any act or omission of the Company or any other Person that
directly or indirectly results in the discharge or release of the
Company or any other Person or any of the Liabilities or any security
therefor; or
(iii) any disability or any other defense of the Company or any
other Person with respect to the Liabilities, whether consensual or
arising by operation of law or any bankruptcy, insolvency or debtor-
relief proceeding, or from any other cause;
(c) any right (whether now or hereafter existing) to require Agent, as
a condition to the enforcement of this Parent Guaranty, to:
(i) accelerate the Liabilities; or
136
(ii) give notice to Parent of the terms, time and place of any
public or private sale of any security for the Liabilities; or
(iii) proceed against the Company, Parent or any other Person,
or proceed against or exhaust any security for the Liabilities;
(d) until payment in full of the Liabilities and termination of the
Commitments, all rights of subrogation, all rights to enforce any remedy
that Agent now or hereafter has against the Company or any other Person,
and any benefit of, and right to participate in, any security now or
hereafter held by the Company with respect to the Liabilities;
(e) presentment, demand, protest and notice of any kind, including
without limitation notices of default and notice of acceptance of this
Parent Guaranty;
(f) all suretyship defenses and rights of every nature otherwise
available under California law and the laws of any other jurisdiction,
including without limitation all defenses arising under Sections 2787
through 2855, and Sections 2899 and 3433 of the California Civil Code and
any successor provisions of those Sections; and
(g) all other rights and defenses the assertion or exercise of which
would in any way diminish the liability of Parent hereunder.
Parent further agrees to pay all expenses (including attorneys' fees and
legal expenses) paid or incurred by the Agent or any Lender in endeavoring to
collect the Liabilities of Parent, or any part thereof, and in enforcing this
Parent Guaranty against Parent.
The creation or existence from time to time of additional Liabilities to
the Agent or the Lenders or any of them is hereby authorized, without notice to
Parent, and shall in no way affect or impair the rights of the Agent or the
Lenders or the obligations of Parent under this Parent Guaranty, including
Parent's guaranty of such additional Liabilities.
The Agent and any Lender may from time to time without notice
137
to Parent, assign or transfer any or all of the Liabilities or any interest
therein to the extent permitted by this Agreement; and, notwithstanding any such
assignment or transfer or any subsequent permitted assignment or transfer
thereof, such Liabilities shall be and remain Liabilities for the purposes of
this Parent Guaranty, and each and every immediate and successive permitted
assignee or transferee of any of the Liabilities or of any interest therein
shall, to the extent of the interest of such assignee or transferee in the
Liabilities, be entitled to the benefits of this Parent Guaranty to the same
extent as if such assignee or transferee were a Lender.
No delay on the part of the Agent or any Lender in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Agent or any Lender of any right or remedy shall preclude other
or further exercise thereof or the exercise of any other right or remedy; nor
shall any modification or waiver of any provision of this Parent Guaranty be
binding upon the Agent or the Lenders except as expressly set forth in a writing
duly signed and delivered on behalf of the Agent. No action of the Agent or any
Lender permitted hereunder shall in any way affect or impair the rights of the
Agent or any Lender or the obligations of Parent under this Parent Guaranty. For
purposes of this Parent Guaranty, Liabilities shall include all obligations of
the Company to the Agent or any Lender arising under or in connection with the
Credit Agreement, any Note, any Letter of Credit or any other Loan Document
notwithstanding any right or power of the Company or anyone else to assert any
claim or defense as to the invalidity or unenforceability of any obligation, and
no such claim or defense shall affect or impair the obligations of Parent
hereunder.
Parent authorizes Agent, at its sole option, without notice or demand and
without affecting the liability of Parent hereunder, to release and reconvey
(with or without the receipt of any consideration) any Lien against any or all
security for the Credit Agreement, and to foreclose any or all deeds of trust,
mortgages or other instruments or agreements by judicial or nonjudicial sale,
all without affecting the liability of Parent hereunder. Parent expressly
waives any defense to the recovery by Agent from Parent of any deficiency after
a nonjudicial sale, including without limitation any defense arising as a result
of any election of remedies by Agent which limits or destroys Parent's
subrogation rights or Parent's right to proceed against the Company for
138
reimbursement (including without limitation any election by Agent to exercise
its rights under the power of sale in any mortgage or deed of trust and any
consequential loss by Parent of the right to recover any deficiency from the
Company). Parent waives any defenses or benefits that may be derived from
California Code of Civil Procedure Sections 580a, 580b, 580d or 726, or
comparable provisions of the laws of the State of California or any other
jurisdiction, and all other suretyship defenses it would otherwise have under
California law or the laws of any other jurisdiction. Parent waives any right to
receive notice of any judicial or nonjudicial sale or foreclosure of any real
property, and the failure of Parent to receive such notice shall not impair or
affect Parent's liability hereunder.
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Delivered at New York, New York, as of the day and year first above written.
COBBLESTONE HOLDINGS, INC.
By: ---------------------------------------------
Title: Vice President and Chief Financial Officer
Name Printed: Stefan C. Karnavas
Address: 3702 Via de la Valle
Suite 202
Del Mar, California 92104
Attention: Stefan C. Karnavas
Telephone: 619-794-2602
Facsimile: 619-794-7805
COBBLESTONE GOLF GROUP, INC.
By: ---------------------------------------------
Title: Vice President and Chief Financial Officer
Name Printed: Stefan C. Karnavas
Address: 3702 Via de la Valle
Suite 202
Del Mar, California 92104
Attention: Stefan C. Karnavas
Telephone: 619-794-2602
Facsimile: 619-794-7805
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION,
as Agent
By:_________________________________________________
Address: 1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Leandro Balidoy
Telephone: 415-436-4008
Facsimile: 415-436-3359
with a copy to:
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Attention: Patrick A. Dunbar
Telephone: 312-828-3065
Facsimile: 312-828-3555
BANK OF AMERICA ILLINOIS, individually and as Issuer
By:_________________________________________________
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Attention: Patrick A. Dunbar
Telephone: 312-828-3065
Facsimile: 312-828-3555
THE FIRST NATIONAL BANK OF BOSTON
By:_______________________________________
Address: Diversified Finance
MS 01-08-05
100 Federal Street
Boston, Massachusetts 02110
Attention: Drew Piculell
Telephone: 617-434-4060
Facsimile: 617-434-4929
STATE STREET BANK AND TRUST COMPANY
By:__________________________________________
Address: 225 Franklin Street
Boston, Massachusetts 02110-2804
Attention: Karen E. Pellegrini
Telephone: 617-654-3248
Facsimile: 617-338-4041
UNION BANK OF CALIFORNIA, N.A.
By:________________________________________
Address: Asset Based Finance Group
70 South Lake Avenue
Suite 900
Pasadena, California 91101
Attention: Stephen R. Sweeney/Sean Spring
Telephone: 818-304-1816
Facsimile: 818-304-1845
Solely as an Existing Lender:
FLEET BANK
By:_________________________________
Address: Mail Stop: MA BO F40
75 State Street
Boston, MA 02109
Attention: William M. Clark
Telephone: 617/346-1623
Facsimile: 617/346-1561
Solely as an Existing Lender:
PILGRIM AMERICA PRIME RATE TRUST
By:__________________________________
Address: Two Renaissance Square
40 North Central Avenue
Suite 1200
Phoenix, Arizona 85004
Attention: Michael Bacevich
Telephone: 602/417-8301
Facsimile: 602/417-8258
Solely as an Existing Lender:
VAN KAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST
By:_____________________________________
Address: One Parkview Plaza
Oakbrook Terrace, IL 60181
Attention: Brian Good
Telephone: 708/684-6740
Facsimile: 708/684-6425