1
EXHIBIT 10.1
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is made and entered into as of July 1, 2001,
by and between THOUSAND TRAILS, INC., a Delaware corporation ("Borrower"), and
UNION BANK OF CALIFORNIA, N.A., a national banking association ("Bank").
SECTION 1. THE CREDIT
1.1 CREDIT FACILITIES
1.1.1 THE REVOLVING LOAN. Bank will loan to Borrower an amount not to exceed
Fifteen Million and No/100 Dollars ($15,000,000.00) outstanding in the aggregate
at any one time (the "Revolving Loan"). The proceeds of the Revolving Loan shall
be used for Borrower's general working capital purposes. Borrower may borrow,
repay and reborrow all or part of the Revolving Loan in accordance with the
terms of the Revolving Note (defined below) ; PROVIDED, HOWEVER, THAT FOR AT
LEAST ONE (1) DAY DURING EACH TWELVE (12) MONTH PERIOD, THE PRINCIPAL AMOUNT
OUTSTANDING UNDER THE REVOLVING LOAN MUST BE NOT MORE THAN FIVE MILLION AND
NO/100 DOLLARS ($5,000,000.00). All borrowings of the Revolving Loan must be
made before July 1, 2003, at which time all unpaid principal and interest of the
Revolving Loan shall be due and payable. The Revolving Loan shall be evidenced
by Bank's standard form of commercial promissory note (the "Revolving Note").
Bank shall enter each amount borrowed and repaid in Bank's records and such
entries shall be deemed correct. Omission of Bank to make any such entries shall
not discharge Borrower of its obligation to repay in full with interest all
amounts borrowed.
1.2 TERMINOLOGY. The following words and phrases, whether used in their
singular or plural form, shall have the meanings set forth below:
"GAAP" means generally accepted accounting principles and practices
consistently applied. Accounting terms used in this Agreement but not
otherwise expressly defined have the meanings given them by GAAP.
"Lien" means any voluntary or involuntary security interest, mortgage,
pledge, claim, charge, encumbrance, title retention agreement, or third
party interest, covering all or any part of the property of Borrower or
any Guarantor.
"Loan" means all the credit facilities described above.
"Loan Documents" means this Agreement, the Note, and all other documents,
instruments and agreements required by Bank and executed in connection
with this Agreement, the Note, the Loans, and with all other credit
facilities from time to time made available to Borrower by Bank.
"Note" means all the promissory notes described above.
1.3 PREPAYMENT. The Loan may be prepaid in full or in part but only in
accordance with the terms of the Note, and any such prepayment shall be subject
to any prepayment fee provided for therein. In the event of a principal
prepayment on any term indebtedness, the amount prepaid shall be applied to the
scheduled principal installments due in the reverse order of their maturity on
the Loan being prepaid.
Page 1
2
1.4 INTEREST. The unpaid principal balance of the Loan shall bear interest at
the rate or rates provided in the Note.
1.5 BALANCES. Borrower shall maintain its major depository accounts with Bank
until all obligations of Borrower to Bank under the Loan Documents have been
paid in full.
1.6 DISBURSEMENT. Bank shall disburse the proceeds of the Loan as provided in
Bank's standard form Authorization(s) to Disburse executed by Borrower.
1.7 SECURITY. Prior to any Loan disbursement, Borrower shall execute one or
more security agreements on Bank's standard form, and one or more financing
statements suitable for filing in the official records of the appropriate state
government and/or any other location required by Bank, granting to Bank a first
priority security interest in such of Borrower's property as is described in
said security agreement(s). Any exceptions to Bank's first priority Lien are
permitted only as provided in this Agreement. At Bank's request, Borrower will
obtain executed landlord's and mortgagee's waivers, each on Bank's form,
covering all of Borrower's property located on leased or encumbered real
property.
SECTION 2. CONDITIONS PRECEDENT
Bank shall not be obligated to disburse all or any portion of the Loans unless
at or prior to the time of each such disbursement, the following conditions have
been fulfilled to Bank's satisfaction:
2.1 COMPLIANCE. Borrower shall have performed and complied with all terms and
conditions required by this Agreement to be performed or complied with, and
shall have executed and delivered to Bank the Note and all other Loan Documents.
2.2 GUARANTIES. Coast Financial Services, Inc., National American Corporation,
Resort Parks International, Inc., Thousand Trails (Canada) Inc., Thousand Trails
Management Services, Inc. and Leisure Time Resorts of America, Inc.
(individually a "Guarantor" and collectively "Guarantors") shall have executed
and delivered to Bank their respective continuing guaranties in form and amount
satisfactory to Bank.
2.3 AUTHORIZATION TO OBTAIN CREDIT. Borrower shall have provided Bank with an
executed copy of Bank's form Authorization to Obtain Credit, authorizing the
execution, delivery and performance of this Agreement and the other Loan
Documents. Such resolutions shall also designate the persons who are authorized
to act on Borrower's behalf in connection with this Agreement to do the things
required of Borrower pursuant to this Agreement.
2.4 TERMINATION STATEMENTS. Borrower shall have provided Bank with termination
statements executed by such secured creditors as may be required by Bank,
suitable for filing with the Secretary of State in each state designated by
Bank.
2.5 CONTINUING COMPLIANCE. At the time any disbursement is to be made and
immediately thereafter, there shall not exist any Event of Default (as
hereinafter defined) or any event, condition, or act which with notice or lapse
of time, or both, would constitute an Event of Default.
Page 2
3
SECTION 3. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
3.1 BUSINESS ACTIVITY. Borrower's principal business is owner/operator of camp
grounds.
3.2 AFFILIATES AND SUBSIDIARIES. Borrower's affiliates and subsidiaries (those
entities in which Borrower has either a controlling interest or a twenty-five
percent (25%) or more ownership interest) and their addresses, and the names of
the persons or entities owning five percent (5%) or more of the equity interests
in Borrower, are as provided on a schedule delivered to Bank on or before the
date of this Agreement.
3.3 ORGANIZATION AND QUALIFICATION. Borrower is duly organized and existing
under the laws of the state of its organization, is duly qualified and in good
standing in any jurisdiction where such qualification is required, and has the
power and authority to carry on the business in which it is engaged and/or
proposes to engage.
3.4 POWER AND AUTHORIZATION. Borrower has the power and authority to enter
into this Agreement and to execute and deliver the Note and all other Loan
Documents. This Agreement and all things required by this Agreement and the
other Loan Documents have been duly authorized by all requisite action of
Borrower.
3.5 AUTHORITY TO BORROW. The execution, delivery and performance of this
Agreement, the Note and all other Loan Documents are not in contravention of any
of the terms of any indenture, agreement or undertaking to which Borrower is a
party or by which it or any of its property is bound or affected.
3.6 COMPLIANCE WITH LAWS. Borrower is in compliance with all applicable laws,
rules, ordinances or regulations which materially affect the operations or
financial condition of Borrower.
3.7 TITLE. Except for assets which may have been disposed of in the ordinary
course of business, Borrower has good and marketable title to all property
reflected in its financial statements delivered to Bank and to all property
acquired by Borrower since the date of said financial statements, free and clear
of all Liens, except Liens specifically referred to in said financial
statements.
3.8 FINANCIAL STATEMENTS. Borrower's financial statements, including both a
balance sheet at June 30, 2000, together with supporting schedules, and an
income statement for the six (6) months ended December 31, 2000, have heretofore
been furnished to Bank, are true and complete, and fairly represent Borrower's
financial condition for the period covered thereby. Since December 31, 2000,
there has been no material adverse change in Borrower's financial condition or
operations.
3.9 LITIGATION. There is no litigation or proceeding pending or threatened
against Borrower or any of its property which is reasonably likely to affect the
financial condition, property or business of Borrower in a materially adverse
manner or result in liability in excess of Borrower's insurance coverage.
Page 3
4
3.10 ERISA. Borrower's defined benefit pension plans (as defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), meet, as
of the date hereof, the minimum funding standards of Section 302 of ERISA, and
no Reportable Event or Prohibited Transaction as defined in ERISA has occurred
with respect to any such plan.
3.11 REGULATION U. No action has been taken or is currently planned by
Borrower, or any agent acting on its behalf, which would cause this Agreement or
the Note to violate Regulation U or any other regulation of the Board of
Governors of the Federal Reserve System, or to violate the Securities and
Exchange Act of 1934, in each case as in effect now or as the same may hereafter
be in effect. Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock as one of its important
activities and, except as may be expressly agreed to and documented between
Borrower and Bank, none of the proceeds of the Loan will be used directly or
indirectly for such purpose.
3.12 NO EVENT OF DEFAULT. Borrower is not now in default in the payment of any
of its material obligations, and there exists no Event of Default, and no
condition, event or act which with notice or lapse of time, or both, would
constitute an Event of Default.
3.13 CONTINUING REPRESENTATIONS AND WARRANTIES. The foregoing representations
and warranties shall be considered to have been made again at and as of the date
of each and every Loan disbursement and shall be true and correct as of each
such date.
SECTION 4. AFFIRMATIVE COVENANTS
Until all sums payable pursuant to this Agreement, the Note and the other Loan
Documents have been paid in full, unless Bank otherwise consents in writing,
Borrower agrees that:
4.1 USE OF PROCEEDS. Borrower will use the proceeds of the Loan only as
provided in Section 1 above.
4.2 PAYMENT OF OBLIGATIONS. Borrower will pay and discharge promptly all
taxes, assessments and other governmental charges and claims levied or imposed
upon it or its property, or any part thereof; PROVIDED, HOWEVER, that Borrower
shall have the right in good faith to contest any such taxes, assessments,
charges or claims and, pending the outcome of such contest, to delay or refuse
payment thereof provided that adequately funded reserves are established by it
to pay and discharge any such taxes, assessments, charges and claims.
4.3 MAINTENANCE OF EXISTENCE. Borrower will maintain and preserve its
existence, its assets, and all rights, franchises, licenses and other authority
necessary for the conduct of its business, and will maintain and preserve its
property, equipment and facilities in good order, condition and repair. Bank
may, at reasonable times, visit and inspect any of Borrower's properties.
4.4 RECORDS. Borrower will keep and maintain full and accurate accounts and
records of its operations in accordance with GAAP and will permit Bank, at
Borrower's expense, to have access thereto, to make examination and photocopies
thereof, and to make audits of Borrower's accounts and records and Bank's
collateral during regular business hours.
Page 4
5
4.5 INFORMATION FURNISHED. Borrower will furnish to Bank:
(a) Within sixty (60) days after the close of each fiscal quarter, except
for the final quarter of each fiscal year, its unaudited balance sheet as
of the close of such fiscal quarter, its unaudited income and expense
statement with year-to-date totals and supportive schedules, and its
statement of retained earnings for that fiscal quarter, all prepared in
accordance with GAAP.
(b) Within one hundred and thirty-five (135) days after the close of each
fiscal year, a copy of its statement of financial condition including at
least its balance sheet as of the close of such fiscal year and its income
and expense statement, and its retained earnings statement for such fiscal
year, examined and prepared on an audited basis by independent certified
public accountants selected by Borrower and reasonably satisfactory to
Bank, in accordance with GAAP along with any management letter provided by
such accountants when received.
(c) Within sixty (60) days after the close of each fiscal quarter with the
exception of the quarter ending June 30, a certification of compliance
with all covenants under this Agreement, executed by Borrower's Chief
Financial Officer, in form acceptable to Bank. Within one hundred and
thirty-five (135) days after the close of each fiscal year end a
certification of compliance with all covenants under this Agreement,
executed by Borrower's Chief Financial Officer, in form acceptable to Bank
(d) Prompt written notice to Bank of any Event of Default or breach under
any of the terms or provisions of this Agreement or any other Loan
Document, any litigation which would have a material adverse effect on
Borrower's financial condition, and any other matter which has resulted
in, or is likely to result in, a material adverse change in Borrower's
financial condition or operations.
(e) Prompt written notice to Bank of any change in Borrower's officers and
other senior management, Borrower's name and state of organization, and
the location of Borrower's assets.
(f) Within fifteen (15) days after Borrower knows or has reason to know
that any Reportable Event or Prohibited Transaction (as defined in ERISA)
has occurred with respect to any defined benefit pension plan of Borrower,
a statement of an authorized officer of Borrower describing such event or
condition and the action, if any, which Borrower proposes to take with
respect thereto.
(g) Such other financial statements and information as Bank may reasonably
request from time to time.
4.6 TANGIBLE NET WORTH. Borrower will at all times maintain Tangible Net Worth
of not less than Eighteen Million and No/100 Dollars ($18,000,000.00). "Tangible
Net Worth" means Borrower's net worth increased by indebtedness subordinated to
Bank and decreased by patents, licenses, trademarks, trade names, goodwill and
other similar intangible assets (except deferred selling expense and deferred
tax assets), organizational expenses, security deposits, prepaid costs and
expenses and monies due from affiliates (including officers, shareholders and
directors).
Page 5
6
4.7 MINIMUM ADJUSTED EBITDA. Borrower will maintain a minimum Adjusted EBITDA
of not less than Seven Million Five Hundred Thousand and No/100 Dollars
($7,500,000.00) measured on a rolling four quarter basis. "Adjusted EBITDA"
means net income plus interest expenses, income tax, depreciation, amortization,
and net sales revenue deferrals, less gains on the sale of assets, net selling
expense deferrals, and non-recurring income, all on rolling four quarter basis.
In the event of an acquisition/merger, Adjusted EBITDA shall omit effect, if
any, on net change in any deferred revenue and/or deferred expenses.
4.8 LEVERAGE RATIO. Borrower will not allow the ratio of total Funded Debt to
Adjusted EBITDA for the twelve (12) month period ending on the last day of each
quarter to exceed 1.25:1.00. "Funded Debt" means all interest bearing debt.
4.9 INSURANCE. Borrower will keep all of its insurable property, whether real,
personal or mixed, insured by companies approved by Bank, against fire and such
other risks, and in such amounts as is customarily obtained by companies
conducting similar business with respect to like properties. Borrower will
furnish to Bank statements of its insurance coverage, will promptly upon Bank's
request furnish other or additional insurance deemed necessary by Bank to the
extent that such insurance may be available, and hereby assigns to Bank, as
security for Borrower's obligations to Bank, the proceeds of any such insurance.
Prior to any Loan disbursement, Bank will be named loss payee under all policies
insuring the collateral. Borrower will maintain adequate worker's compensation
insurance and adequate insurance against liability for damage to persons or
property. All policies shall require at least ten (10) days' written notice to
Bank before alteration or cancellation.
4.10 ADDITIONAL REQUIREMENTS. Upon Bank's demand, Borrower will promptly take
such further action and execute all such additional documents and instruments in
connection with this Agreement and the other Loan Documents as Bank in its
reasonable discretion deems necessary, and promptly supply Bank with such other
information concerning its affairs as Bank may request from time to time.
4.11 LITIGATION AND ATTORNEYS' FEES. Upon Bank's demand, Borrower will promptly
pay to Bank reasonable attorneys' fees, including the reasonable estimate of the
allocated costs and expenses of in-house legal counsel and staff, and all costs
and other expenses paid or incurred by Bank in collecting, modifying or
compromising the Loan or in enforcing or exercising its rights or remedies
created by, connected with or provided for in this Agreement and the other Loan
Documents. If any judicial action, arbitration or other proceeding is commenced,
only the prevailing party shall be entitled to attorneys' fees and court costs.
4.12 BANK EXPENSES. Upon Bank's request, Borrower will pay or reimburse Bank
for all costs, expenses and fees incurred by Bank in preparing and documenting
this Agreement and the Loan, and all amendments and modifications to any Loan
Documents, including but not limited to all filing and recording fees, costs of
appraisals, insurance and attorneys' fees.
SECTION 5. NEGATIVE COVENANTS
Until all sums payable pursuant to this Agreement, the Note and the other Loan
Documents have been paid in full, unless Bank otherwise consents in writing,
Borrower agrees that:
5.1 LIENS. Borrower will not create, assume or suffer to exist any Lien on any
of its property, whether real, personal or mixed, now owned or hereafter
acquired, or upon the income or profits thereof, except (a) Liens in favor of
Bank, (b) Liens for taxes not delinquent and taxes
Page 6
7
and other items being contested in good faith, (c) equipment Liens granted in
the ordinary course of business, not exceeding, in the aggregate $200,000
annually; and (d) minor encumbrances and easements on real property which do not
affect its market value.
5.2 BORROWINGS. Borrower will not sell, discount or otherwise transfer any
account receivable or any note, draft or other evidence of indebtedness, except
to Bank or except to a financial institution at face value for deposit or
collection purposes only, and without any fees other than the financial
institution's normal fees for such services. Borrower will not borrow any money,
become contingently liable to borrow money, or enter any agreement to directly
or indirectly obtain borrowed money, except pursuant to agreements with Bank.
5.3 SALE OF ASSETS, LIQUIDATION OR MERGER. Except for sales of real property
not exceeding, $1,000,000.00, in the aggregate, each calendar year Borrower will
not liquidate, dissolve or enter into any consolidation, merger, partnership or
other combination, or convey, sell or lease all or the greater part of its
assets or business; or and, except for acquisitions not exceeding $5,000,000.00,
in the aggregate each calendar year, Borrowers will not purchase or lease all or
the greater part of the assets or business of another.
5.4 LOANS, ADVANCES AND GUARANTIES. Borrower will not, except in the ordinary
course of business as currently conducted, make any loans or advances, become a
guarantor or surety, or pledge its credit or properties.
5.5 INVESTMENTS. Whenever there is an outstanding balance under the Revolving
Loan, Borrower will not purchase or hold the debt or equity of another except
for savings accounts and certificates of deposit of Bank, direct U.S. Government
obligations, and commercial paper issued by corporations with the top ratings of
Moody's or Standard & Poor's, provided that all such permitted investments shall
mature within one year of purchase.
5.6 PAYMENT OF DIVIDENDS. Borrower can declare or pay any dividends, or
authorize or make any other distribution with respect to any of its stock now or
hereafter outstanding other than dividends payable solely in its own common
stock; provided, however, that such payments will not cause a violation of any
provision of this Agreement.
5.7 REDEMPTION OF STOCK. Borrower will not redeem or retire any share of its
capital stock for value, to the extent that such action would cause a violation
of any provision of this Agreement.
5.8 AFFILIATE TRANSACTIONS. Borrower will not transfer any property to any
affiliate, except for value received in the normal course of business and for an
amount, including any management or service fee(s), as would be conducted and
charged with an unrelated or unaffiliated entity.
5.9 RESTRICTIONS ON BORROWER'S AGREEMENTS. Borrower shall not enter into any
covenant or other agreement, except with Bank, that restricts or is intended to
restrict it from pledging, granting a security interest in, mortgaging,
assigning, encumbering, or otherwise creating a lien on any of its property,
whether real or personal, tangible or intangible, existing or hereafter
acquired.
Page 7
8
SECTION 6. EVENTS OF DEFAULT
The occurrence of any of the following events ("Events of Default") shall (a)
terminate any obligation of Bank to make or continue the Loan and (b) unless
otherwise provided under the Note, after five-business-days notice from Bank, if
not cured during said notice period, make all sums of interest and principal and
any other amounts owing under the Loan immediately due and payable:
6.1 Borrower shall default in the due and punctual payment of the principal of
or the interest on the Note or on any amounts owing under any of the Loan
Documents.
6.2 Any default shall occur under the Note.
6.3 Borrower shall default in the due performance or observance of any covenant
or condition of the Loan Documents.
6.4 Any guaranty or subordination agreement required hereunder shall be breached
or becomes ineffective, or any Guarantor or subordinating creditor shall die,
disavow or attempt to revoke or terminate such guaranty or subordination
agreement.
SECTION 7. GENERAL PROVISIONS
7.1 ADDITIONAL REMEDIES. The rights, powers and remedies given to Bank hereunder
shall be cumulative and not alternative and shall be in addition to all rights,
powers and remedies given to Bank by law against Borrower or any other person or
entity including but not limited to Bank's rights of setoff and banker's lien.
7.2 NONWAIVER. Any forbearance or failure or delay by Bank in exercising any
right, power or remedy hereunder shall not be deemed a waiver thereof and any
single or partial exercise of any right, power or remedy shall not preclude the
further exercise thereof. No waiver shall be effective unless it is in writing
and signed by an officer of Bank.
7.3 INUREMENT. The benefits of this Agreement and the other Loan Documents shall
inure to the successors and assigns of Bank and the permitted successors and
assigns of Borrower, but any attempted assignment by Borrower without Bank's
prior written consent shall be null and void.
7.4 APPLICABLE LAW. This Agreement and the other Loan Documents shall be
governed by and construed according to the laws of the State of Washington.
7.5 SEVERABILITY. Should any one or more provisions of this Agreement or any
other Loan Document be determined to be illegal or unenforceable, all other
provisions of such document shall nevertheless be effective.
7.6 CONTROLLING DOCUMENT. In the event of any inconsistency between the terms of
this Agreement and any other Loan Document, the terms of the other Loan Document
shall prevail.
7.7 CONSTRUCTION. The section and subsection headings herein are for convenient
reference only and shall not limit or otherwise affect the interpretation of
this Agreement.
Page 8
9
7.8 AMENDMENTS. This Agreement may be amended only in writing signed by all
parties hereto.
7.9 COUNTERPARTS. Borrower and Bank may execute one or more counterparts to this
Agreement, each of which shall be deemed an original, but all such counterparts
when taken together, shall constitute one and the same agreement.
7.10 NOTICES. Any notices or other communications provided for or allowed
hereunder shall be effective only when given by one of the following methods and
addressed to the parties at their respective addresses and shall be considered
to have been validly given (a) upon delivery, if delivered personally, (b) upon
receipt, if mailed, first class postage prepaid, with the United States Postal
Service, (c) on the next business day, if sent by overnight courier service of
recognized standing, or (d) upon telephoned confirmation of receipt, if
telecopied or e-mailed. The addresses to which notices or demands are to be
given may be changed from time to time by notice delivered as provided above.
7.11 INTEGRATION CLAUSE. Except for the other Loan Documents, this Agreement
constitutes the entire agreement between Bank and Borrower regarding the Loan,
and all prior oral or written communications between Borrower and Bank shall be
of no further effect or evidentiary value.
THIS AGREEMENT is executed on behalf of the parties by their duly authorized
representative(s) as of the date first above written.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
Page 9
10
THOUSAND TRAILS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Title: Vice President
--------------------------------
Address:
0000 XXX Xxx, Xxx. 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Vice
President, General Counsel and Secretary
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxx X. Xxxxxx
-----------------------------------
Xxx X. Xxxxxx, III
Vice President
Address:
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxxxxx, III, Vice President
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
Page 10
