EXHIBIT 10.8.14
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$50,000,000
CREDIT AGREEMENT
AMONG
SIGNATURE RESORTS, INC.
CERTAIN LENDERS PARTY HERETO
AND
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE LENDER
JANUARY 9, 1997
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TABLE OF CONTENTS
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Page
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ARTICLE 1
Definitions
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Section 1.1 Defined Terms....................................... 1
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Section 1.2 Amendments and Renewals............................. 23
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Section 1.3 Construction........................................ 24
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ARTICLE 2
Advances
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Section 2.1 The Advances........................................ 24
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Section 2.2 Manner of Borrowing and Disbursement................ 25
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Section 2.3 Interest............................................ 27
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Section 2.4 Fees................................................ 28
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Section 2.5 Prepayments......................................... 29
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Section 2.6 Reduction of Commitment............................. 30
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Section 2.7 Non-Receipt of Funds by the Administrative Lender... 30
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Section 2.8 Payment of Principal of Advances.................... 31
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Section 2.9 Reimbursement....................................... 31
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Section 2.10 Manner of Payment................................... 31
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Section 2.11 LIBOR Lending Offices............................... 32
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Section 2.12 Sharing of Payments................................. 33
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Section 2.13 Calculation of LIBOR Rate........................... 33
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Section 2.14 Taxes............................................... 33
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Section 2.15 Letters of Credit................................... 37
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ARTICLE 3
Conditions Precedent
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Section 3.1 Conditions Precedent to the Initial Advance and the
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Initial Issuance of Letters of Credit........................ 42
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Section 3.2 Conditions Precedent to All Advances and Letters of
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Credit....................................................... 44
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Section 3.3 Conditions Precedent to Conversions and
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Continuations................................................ 45
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ARTICLE 4
Representations and Warranties
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Section 4.1 Representations and Warranties...................... 46
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Section 4.2 Survival of Representations and Warranties, etc..... 54
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ARTICLE 5
General Covenants
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Section 5.1 Preservation of Existence and Similar Matters....... 55
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Section 5.2 Business; Compliance with Applicable Law............ 55
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Section 5.3 Maintenance of Properties........................... 55
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Section 5.4 Accounting Methods and Financial Records............ 55
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Section 5.5 Insurance........................................... 55
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Section 5.6 Payment of Taxes and Claims......................... 56
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Section 5.7 Visits and Inspections.............................. 56
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Section 5.8 Use of Proceeds..................................... 56
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SECTION 5.9 INDEMNITY........................................... 56
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Section 5.10 Environmental Law Compliance........................ 58
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Section 5.11 Further Assurances.................................. 59
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Section 5.12 Management of Projects.............................. 59
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Section 5.13 Obligations to Purchasers........................... 59
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Section 5.14 Owners Associations................................. 59
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Section 5.15 Note Receivable Information......................... 60
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Section 5.16 Maintenance of Borrowing Base....................... 60
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Section 6.1 Borrowing Base Report............................... 61
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Section 6.2 Eligible Notes Receivable Report.................... 61
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Section 6.4 Annual Financial Statements and Information;
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Certificate of No Default...................................... 62
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Section 6.5 Compliance Certificate.............................. 63
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Section 6.6 Copies of Other Reports and Notices................. 63
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Section 6.7 Notice of Litigation, Default and Other Matters..... 64
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Section 6.8 ERISA Reporting Requirements........................ 64
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ARTICLE 7
Negative Covenants
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Section 7.1 Indebtedness........................................ 65
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Section 7.2 Liens............................................... 66
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Section 7.3 Investments......................................... 66
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Section 7.4 Liquidation, Merger................................. 67
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Section 7.5 Sales of Assets..................................... 67
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Section 7.6 Acquisitions........................................ 67
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Section 7.7 Capital Expenditures................................ 68
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Section 7.8 Restricted Payments................................. 68
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Section 7.9 Affiliate Transactions.............................. 68
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Section 7.10 Compliance with ERISA............................... 68
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Section 7.11 Minimum Interest Coverage Ratio..................... 69
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Section 7.12 Minimum Tangible Net Worth.......................... 69
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Section 7.13 Maximum Senior Debt to Capital...................... 69
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Section 7.14 Maximum Total Debt to Capital....................... 69
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Section 7.15 Sale and Leaseback.................................. 69
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Section 7.16 Business............................................ 69
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Section 7.17 Fiscal Year......................................... 69
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Section 7.18 Amendment of Organizational Documents............... 70
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Section 7.19 Amendments and Waivers of Subordinated Debt......... 70
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Section 7.20 Use of Lenders' Name................................ 70
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Section 7.21 Servicing and Collection Agreement.................. 70
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Section 7.22 Custodial Agreement................................. 70
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Section 7.23 Notes Receivable.................................... 71
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Section 8.1 Events of Default................................... 71
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Section 8.2 Remedies............................................ 74
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ARTICLE 9
Changes in Circumstances
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Section 9.1 LIBOR Basis Determination Inadequate................ 74
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Section 9.2 Illegality.......................................... 75
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Section 9.3 Increased Costs..................................... 75
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Section 9.4 Effect On Base Rate Advances........................ 77
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Section 9.5 Capital Adequacy.................................... 77
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Section 9.6 Replacement Lender.................................. 77
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ARTICLE 10
Agreement Among Lenders
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Section 10.1 Agreement Among Lenders............................. 78
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Section 10.2 Lender Credit Decision.............................. 80
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Section 10.3 Benefits of Article................................. 81
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ARTICLE 11
Miscellaneous
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Section 11.1 Notices............................................. 81
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Section 11.2 Expenses............................................ 82
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Section 11.3 Waivers............................................. 83
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Section 11.4 Calculation by the Lenders Conclusive and Binding... 83
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Section 11.5 Set-Off............................................. 84
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Section 11.6 Assignment.......................................... 84
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Section 11.7 Counterparts........................................ 86
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Section 11.8 Severability........................................ 86
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Section 11.9 Interest and Charges................................ 86
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Section 11.10 Headings............................................ 87
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Section 11.11 Amendment and Waiver................................ 87
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Section 11.12 Exception to Covenants.............................. 87
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Section 11.13 No Liability of Issuing Bank........................ 87
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Section 11.14 Confidentiality..................................... 88
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Section 11.15 No Liability of Lenders to Purchasers............... 88
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SECTION 11.16 GOVERNING LAW....................................... 88
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SECTION 11.17 WAIVER OF JURY TRIAL................................ 89
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SECTION 11.18 ENTIRE AGREEMENT.................................... 89
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Schedules and Exhibits
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Schedule 1: LIBOR Lending Offices
Schedule 2: Existing Liens
Schedule 3: Existing Litigation and Material Liabilities
Schedule 4: Subsidiaries
Schedule 5: Existing Investments
Schedule 6: Existing Indebtedness
Schedule 7: Qualification and Good Standing
Schedule 8: Intellectual Property and Disputes Relating Thereto
Schedule 9: Labor Relations
Exhibit A: Revolving Credit Note
Exhibit B: Swing Line Note
Exhibit C: Security Agreement
Exhibit D: Borrowing Base Report
Exhibit E: Compliance Certificate
Exhibit F: Assignment Agreement
Exhibit G: Subsidiary Guaranty
Exhibit H: Notice of Borrowing
Exhibit I: Assignment of Pledged Documents
Exhibit J: Minimum Underwriting Guidelines
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CREDIT AGREEMENT
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THIS CREDIT AGREEMENT is dated as of January 9, 1997, among SIGNATURE RESORTS,
INC., a Maryland corporation (the "Borrower"), the Lenders from time to time
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party hereto, and NATIONSBANK OF TEXAS, N.A., a national banking association, as
administrative agent for the Lenders.
BACKGROUND
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The Lenders have been requested to provide the Borrower the funds required to
(a) refinance certain existing debt of the Borrower and its Subsidiaries (as
hereinafter defined), (b) finance acquisitions permitted hereunder, (c) finance
eligible mortgage loans, and (d) finance the ongoing working capital and general
corporate requirements of the Borrower and its Subsidiaries. The Lenders have
agreed to provide such financing, subject to the terms and conditions set forth
below.
In consideration of the mutual covenants and agreements contained herein, and
other good and valuable consideration hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
Definitions
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Section 1.1 Defined Terms. For purposes of this Agreement:
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"Acquisition" means any transaction pursuant to which the Borrower or any of
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its Subsidiaries, (a) whether by means of a capital contribution or purchase or
other acquisition of Capital Stock, (i) acquires more than 50% of the Capital
Stock in any Person pursuant to a solicitation by the Borrower or such
Subsidiary of tenders of Capital Stock of such Person, or through one or more
negotiated block, market, private or other transactions, or a combination of any
of the foregoing, or (ii) makes any corporation a Subsidiary of the Borrower or
such Subsidiary, or causes any corporation, other than a Subsidiary of the
Borrower or such Subsidiary, to be merged into the Borrower or such Subsidiary
(or agrees to be merged into any other corporation other than a wholly-owned
Subsidiary (excluding directors' qualifying shares) of the Borrower or such
Subsidiary), or (b) purchases all or substantially all of the business or assets
of any Person or of any operating division of any Person.
"Administrative Lender" means NationsBank of Texas, N.A., a national banking
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association, as administrative agent for Lenders, or such successor
administrative agent appointed pursuant to Section 10.1(b) hereof.
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"Advance" means a Revolving Credit Advance or a Swing Line Advance and
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"Advances" means Revolving Credit Advances and Swing Line Advances.
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"Affiliate" means, as applied to any Person, any other Person that, directly
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or indirectly, through one or more Persons, Controls or is Controlled By or
Under Common Control with, that Person.
"Agreement" means this Credit Agreement, as amended, modified, supplemented or
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restated from time to time.
"Agreement Date" means the date of this Agreement.
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"Applicable Environmental Laws" means applicable laws pertaining to health or
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the environment, including without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended from time to time,
"CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended by the
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Used Oil Recycling Act of 1980, the Solid Waste Disposal Act amendments of 1980,
and the Hazardous and Solid Waste Amendments of 1984 (as amended from time to
time, "RCRA").
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"Applicable Law" means (a) in respect of any Person, all provisions of
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constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person and its properties, including,
without limiting the foregoing, all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a
party, and (b) in respect of contracts relating to interest or finance charges
that are made or performed in the State of Texas, "Applicable Law" shall mean
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the laws of the United States of America, including without limitation 12 USC
(S)(S) 85 and 86(a), as amended from time to time, and any other statute of the
United States of America now or at any time hereafter prescribing the maximum
rates of interest on loans and extensions of credit, and the laws of the State
of Texas, including, without limitation, Art. 1H, if applicable, and if Art. 1H
is not applicable, Art. 1D and any other statute of the State of Texas
prescribing maximum rates of interest with respect to extensions of credit;
provided that the parties hereto agree that the provisions of Chapter 15, Title
79, Revised Civil Statutes of Texas, 1925, as amended, shall not apply to
Advances, this Agreement, the Notes or any other Loan Documents.
"Applicable LIBOR Rate Margin" means the following per annum percentages,
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applicable in the following situations:
Applicability Percentage
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(a) Sum of (i) aggregate outstanding Advances
and (ii) aggregate Reimbursement Obligations
is greater than or equal to 75% of Eligible
Notes Receivable 1.375%
(b) Sum of (i) aggregate outstanding Advances
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and (ii) aggregate Reimbursement Obligations
is greater than or equal to 65% but less
than 75% of Eligible Notes Receivable 1.125%
(c) Sum of (i) aggregate outstanding Advances
and (ii) aggregate Reimbursement Obligations
is less than 65% of Eligible Notes Receivable 0.875%
The Applicable LIBOR Rate Margin payable by the Borrower on the LIBOR Advances
outstanding hereunder shall be subject to reduction or increase, as applicable
and as set forth in the table above, on a monthly basis according to the
aggregate outstanding Advances and Reimbursement Obligations.
"Art. 1D" means Article 5069-1D, Title 79, Revised Civil Statutes of Texas,
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1925, as amended.
"Art. 1H" means Article 5069-1H, Title 79, Revised Civil Statutes of Texas,
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1925, as amended.
"Art. 1.04" means Article 5069-1.04, Title 79, Revised Civil Statutes of
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Texas, as amended.
"Assignees" means any assignee of a Lender pursuant to an Assignment Agreement
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and shall have the meaning ascribed thereto in Section 11.6 hereof.
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"Assignment Agreement" has the meaning specified in Section 11.6 hereof.
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"Assignment of Pledged Documents" means an Assignment of Pledged Documents, in
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substantially the form of Exhibit I hereto, pursuant to which the Borrower and
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each Restricted Subsidiary transfers and assigns in blank or to the
Administrative Lender, all of the right, title and interest of the Borrower and
each Restricted Subsidiary in and to each Note Receivable and the other Pledged
Documents with respect to each such Note Receivable, free and clear of all Liens
as collateral security for the Obligations.
"Authorized Signatory" means such senior personnel of the Borrower as may be
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duly authorized and designated in writing by the Borrower to execute documents,
agreements and instruments on behalf of the Borrower, and to request Advances
and Letters of Credit hereunder.
"Base Rate Advance" means any Advance bearing interest at the Base Rate Basis.
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"Base Rate Basis" means, for any day, a per annum interest rate equal to the
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higher of (a) the sum of (i) 0.50% plus (ii) the Federal Funds Rate on such day
or (b) the Prime Rate on such day. The Base Rate Basis shall be adjusted
automatically without notice as of the opening of business on the effective date
of each change in the Prime Rate or the Federal Funds Rate, as
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the case may be, to account for such change.
"Borrower" has the meaning specified in the introductory provision hereof.
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"Borrowing Base" means, at the time in question, an amount equal to 85% of the
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aggregate unpaid principal balance of Eligible Notes Receivable.
"Borrowing Base Report" means a report, signed by an Authorized Signatory, in
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substantially the form of Exhibit D, appropriately completed.
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"Business Day" means a day on which commercial banks are open (a) for the
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transaction of business in Dallas, Texas, and, (b) with respect to any LIBOR
Advance, for the transaction of international business (including dealings in
U.S. dollar deposits) in London, England.
"Capital" means, for any date of calculation, for the Borrower and the
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Restricted Subsidiaries, on a consolidated basis determined in accordance with
GAAP, the sum of (a) Funded Debt plus (b) Net Worth.
"Capital Expenditures" means, for any period, expenditures made by the
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Borrower and the Restricted Subsidiaries to acquire or construct fixed assets,
plant and equipment (including renewals, improvements and replacements during
such period and the aggregate amount of items leased or acquired under
Capitalized Lease Obligations at the cost of the item, but excluding capital
expenditures made with insurance proceeds to the extent used to replace or
repair damaged fixed assets, plant and equipment) computed in accordance with
GAAP, consistently applied, provided however, that the term "Capital
Expenditures" shall not include (i) Investments permitted hereunder, (ii)
Acquisitions permitted hereunder or (iii) expenditures made by the Borrower or
the Restricted Subsidiaries to acquire or construct time-share residential real
estate projects that are acquired or constructed for the purpose of creating,
maintaining or enhancing the Borrower's inventory of Time-Share Interests.
"Capital Stock" means, as to any Person, the equity interests in such Person,
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including, without limitation, the shares of each class of capital stock in any
Person that is a corporation, and each class of partnership interest (including,
without limitation, general, limited and preference units) in any Person that is
a partnership.
"Capitalized Lease Obligations" means that portion of any obligation of the
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Borrower or any Restricted Subsidiary as lessee under a lease which at the time
are recorded as capitalized lease obligations on the balance sheet of the
Borrower or such Restricted Subsidiary prepared in accordance with GAAP.
"Cash and Cash Equivalents" means with respect to the Borrower and each
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Restricted Subsidiary (a) cash (which, after the occurrence of an Event of
Default, shall exclude any cash proceeds of Accounts), (b) securities issued or
directly and fully guaranteed or insured by the United States Government or any
agency or instrumentality thereof having maturities of not more
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than six months from the date of acquisition, (c) certificates of deposit and
eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any Lender or with any domestic
commercial bank having capital and surplus in excess of $500,000,000, (d)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (b) and (c) entered into with any
financial institution meeting the qualifications specified in clause (c) above,
(e) commercial paper issued by any Lender or the parent corporation of any
Lender, and commercial paper rated A-1 or the equivalent thereof by Standard &
Poor's Ratings Group, a Division of XxXxxx-Xxxx, Inc., a New York corporation,
or P-1 or the equivalent thereof by Xxxxx'x Investors Service, Inc., and in each
case maturing within six months after the date of acquisition, and (f) a readily
redeemable "money market mutual fund" advised by a bank described in clause (c)
hereof, or an investment advisor registered under Section 203 of the Investment
Advisors Act of 1940, that has and maintains an investment policy limiting its
investments primarily to instruments of the types described in clauses (a)
through (e) hereof and having on the date of such Investment total assets of at
least One Hundred Million Dollars ($100,000,000.00).
"Change of Control" means the occurrence of any of the following events after
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the Agreement Date: (a) any Person or any Persons acting together which would
constitute a "group" (a "Group") for purposes of Section 13(d) of the Securities
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Exchange Act of 1934, as amended (the "Exchange Act"), or any successor
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provision thereto, other than the Group whose nominees constituted a majority of
the board of directors of the Borrower as of the close of business on the
Agreement Date, together with any Affiliates or Related Persons thereof, shall
beneficially own (as defined in Rule 13d-3 of the Securities and Exchange
Commission under the Exchange Act or any successor provision thereto) at least
30% of the aggregate voting power of all classes of Capital Stock of the
Borrower entitled to vote generally in the election of directors of the
Borrower; (b) any Person or Group, other than any Person or Group whose nominees
constituted a majority of the board of directors of the Borrower as of the close
of business on the Agreement Date, together with any Affiliates or Related
Persons thereof, shall succeed in having sufficient of its or their nominees
elected to the Board of Directors of the Borrower, such that such nominees, when
added to any existing director remaining on the Board of Directors of the
Borrower after such election who is an Affiliate or Related Person of such
Group, shall constitute a majority of the Board of Directors of the Borrower; or
(c) any "change of control" or "change in control" or similar term howsoever
defined in any agreement governing any other Indebtedness of the Borrower or any
of its Subsidiaries.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Collateral" means any collateral hereafter granted by any Person to the
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Administrative Lender for the benefit of the Lenders to secure the Obligations.
"Collateral Document" means any document under which Collateral is granted and
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any document related thereto.
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"Commitment Fee" has the meaning specified in Section 2.4(a) hereof.
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"Commitment" means $50,000,000, as reduced from time to time pursuant to
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Section 2.6 hereof.
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"Compliance Certificate" means a certificate, signed by an Authorized
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Signatory, in substantially the form of Exhibit E, appropriately completed.
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"Control" or "Controlled By" or "Under Common Control" means possession,
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directly or indirectly, of power to direct or cause the direction of management
or policies (whether through ownership of voting securities, by contract or
otherwise); provided, however, that in any event any Person which beneficially
owns, directly or indirectly, 10% or more (in number of votes) of the securities
having ordinary voting power for the election of directors of a corporation
shall be conclusively presumed to control such corporation.
"Controlled Group" means as of the applicable date, as to any Person not an
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individual, all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) which are under common control with
such Person and which, together with such Person, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code; provided, however,
that the Subsidiaries of the Borrower shall be deemed to be members of the
Borrower's Controlled Group.
"Custodial Agreement" means an agency and custodial agreement among the
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Borrower, each Restricted Subsidiary that owns any of the Notes Receivable
included in the Borrowing Base, the Administrative Lender and the Custodian
providing for the maintenance of the Pledged Documents.
"Custodian" means LaSalle National Bank, N.A. or such other Person(s)
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designated from time to time by the Administrative Lender and approved by the
Borrower and each Restricted Subsidiary that is a party to the Custodial
Agreement (which approvals shall not be unreasonably withheld) to maintain
physical possession of the Pledged Documents.
"Debtor Relief Laws" means any applicable liquidation, conservatorship,
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bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief Laws affecting the rights of creditors generally from time to time
in effect.
"Deed of Trust" means any deed of trust or mortgage executed and delivered by
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a Purchaser, encumbering all the right, title and interest of each such
Purchaser in and to its purchased Time-Share Unit as security for the
Purchaser's obligations under any Note Receivable.
"Default" means an Event of Default and/or any of the events specified in
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Section 8.1, regardless of whether there shall have occurred any passage of time
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or giving of notice that would be necessary in order to constitute such event an
Event of Default.
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"Default Rate" means a simple per annum interest rate equal to (a) with
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respect to Base Rate Advances the lesser of (i) the Highest Lawful Rate or (ii)
the Prime Rate plus 2.00% or (b) with respect to LIBOR Advances, the lesser of
(i) the Highest Lawful Rate or (ii) the LIBOR Basis plus 2% in excess of the
Applicable Rate Margin then in effect.
"Determining Lenders" means, on any date of determination, any combination of
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the Lenders having more than 50% of the aggregate amount of the Advances (which
for purposes of the calculation shall include for each Lender an amount equal to
the product of such Lender's Specified Percentage multiplied by the aggregate
amount of Swing Line Advances outstanding) then outstanding; provided, however,
that if there are no Advances outstanding hereunder, "Determining Lenders" shall
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mean any combination of Lenders whose Specified Percentages aggregate more than
50%.
"Dividend" means, as to any Person, (a) any declaration or payment of any
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dividend (other than a stock dividend) on, or the making of any distribution on
account of, any shares of Capital Stock of, or other similar interest in, such
Person and (b) any purchase, redemption, or other acquisition or retirement for
value of any shares of Capital Stock of, or similar interest in, such Person.
"Dollar" or "$" means the lawful currency of the United States of America.
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"Domestic Subsidiary" means any Subsidiary of the Borrower other than a
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Foreign Subsidiary.
"EBIT" means, for any period, determined in accordance with GAAP on a
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consolidated basis for the Borrower and the Restricted Subsidiaries, the sum of
(a) Pretax Net Income (excluding therefrom, to the extent included in
determining Pretax Net Income, any items of extraordinary gain, including net
gains on the sale of assets other than asset sales in the ordinary course of
business, and adding thereto, to the extent included in determining Pretax Net
Income, any items of extraordinary loss, including net losses on the sale of
assets), plus (b) interest expense, plus (c) non-recurring charges incurred as a
result of business combinations utilizing the pooling accounting method to the
extent that such charges would be permitted to be capitalized utilizing the
purchase accounting method.
"EBITDA" means, for any period, determined in accordance with GAAP on a
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consolidated basis for the Borrower and its Subsidiaries, the sum of (a) EBIT
plus (b) depreciation, amortization and other non-cash charges (to the extent
included in determining EBIT).
"Eligible Notes Receivable" means at the time of any determination thereof,
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the Notes Receivable of the Borrower and the Restricted Subsidiaries (at least
85% of which the Purchasers in respect thereof are residents of the United
States, Puerto Rico, the United States Virgin Islands or Canada) which are
reasonably acceptable to the Determining Lenders in their discretion for
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the purposes of determining the Borrowing Base and as to which the following
requirements have been fulfilled with respect to each Note Receivable:
(a) The Borrower or a Restricted Subsidiary has lawful and absolute title
to such Note Receivable;
(b) The interest of the Borrower or the applicable Restricted
Subsidiary(ies) in such Note Receivable is subject to a first priority security
interest in favor of the Administrative Lender pursuant to the Collateral
Documents, prior to the rights of, and enforceable against, all other Persons;
(c) The Note Receivable shall not have a term of greater than one-hundred
twenty (120) months and the Note Receivable shall be payable in equal monthly
payments in amounts sufficient to repay in full the principal balance thereof
and accrued interest thereon during such term;
(d) The Purchaser in respect of such Note Receivable shall have timely made
at least the first three regularly scheduled installment payments due thereon;
(e) The Purchaser in respect of such Note Receivable has made a cash down
payment of at least ten percent (10%) of the aggregate actual purchase price of
all Time-Share Interests purchased by such Purchaser, all of the Notes
Receivable with respect to such Purchaser qualify as, and are included as,
Eligible Notes Receivable and as Collateral hereunder and no part of such cash
down payment by such Purchaser has been made or loaned to the Purchaser by the
Borrower or any of its Subsidiaries or an Affiliate of the Borrower or any of
its Subsidiaries;
(f) The terms of such Note Receivable have not been restructured, rewritten
or otherwise modified in any manner that would reduce the interest rate with
respect thereto, reduce the principal amount thereof, reduce the amount of any
scheduled payment(s) with respect thereto, extend the maturity date thereof,
release or impair any collateral securing same, release or impair any
obligations or duties of any Purchaser with respect thereto or in any manner
that would otherwise result in such Note Receivable not qualifying as an
Eligible Note Receivable hereunder;
(g) No installment of such Note Receivable is past due;
(h) The Unit in respect of such Note Receivable has been completed,
developed, and furnished pursuant to the specifications provided in the Purchase
Documents or a certificate of occupancy or a bond insuring the completion
thereof has been posted;
(i) The Purchaser is not an Affiliate of, related to or employed by, the
Borrower or any of its Subsidiaries nor is the purchaser in default under any
Note Receivable or other obligation of such Purchaser to the Borrower or to any
of the Borrower's Subsidiaries;
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(j) The Note Receivable is free and clear of all Liens, and subject to no
claims of rescission, invalidity, unenforceability, illegality, defense,
discount, offset or counterclaim;
(k) The Purchaser in respect of such Note Receivable has no right to
rescind the purchase of the Time-Share Interest;
(l) All sales and financing documents relating to the Note Receivable have
been executed and delivered to the Custodian and/or the Administrative Lender
and have not been modified from the standard forms theretofore approved by the
Administrative Lender;
(m) The terms of such Note Receivable and all related instruments comply
with all Laws ;
(n) The Note Receivable is recognized on the books of the Borrower or the
applicable Restricted Subsidiaries as a bona fide sale of a fee simple interest
time-share estate in one or more Time-Share Interests, and such sale is
evidenced by Purchase Documents and secured by a first priority mortgage or deed
of trust on the purchased Time-Share Interest, which mortgage or deed of trust
has been assigned by the Borrower or the applicable Restricted Subsidiary to the
Administrative Lender;
(o) The Purchaser meets the Minimum Underwriting Guidelines set forth on
Exhibit J hereto for classification of the applicable Note Receivable from
---------
such Purchaser as "Class A Paper", "Class B Paper" or "Class C Paper"; provided,
however, that the aggregate outstanding balance of Notes Receivable that
constitute "Class C Paper" and that are included in the Borrowing Base shall
not, at any time, exceed 35% of the aggregate outstanding balance at such time
of all Notes Receivable then included in the Borrowing Base;
(p) The Time-Share Interest purchased and to which the Note Receivable
relates is not subject to any Lien (other than Liens for ad valorem taxes that
are not yet due and payable and Liens for association assessment that are not
yet due and payable), and either (i) the Unit with respect to the Time-Share
Interest purchased and to which such Note Receivable relates is not subject to
any Lien or (ii) the Time-Share Interest purchased and to which the Note
Receivable relates has been permanently and irrevocably released from any Lien
(including, without limitation, any after-acquired property provisions thereof)
with respect to such Unit;
(q) The Deed of Trust securing the Note Receivable is insured under a
mortgagee title insurance policy in favor of the Borrower or the applicable
Restricted Subsidiary acceptable to the Administrative Lender, subject only to
those exceptions to title as the Administrative Lender approves;
(r) Payments under the Note Receivable are to be in legal tender of the
United States;
(s) The Note Receivable and the other Purchase Documents are valid, genuine
and enforceable against the Purchaser;
-9-
(t) The Purchaser in respect of the Note Receivable has not assigned his or
her obligations under such Note Receivable or rights in the applicable Time-
Share Interest, except to the extent that any such Purchaser has assigned its
interest in a Time-Share Interest to such Purchaser's former spouse in
connection with divorce proceedings between such Purchaser and such former
spouse or to a member of such Purchaser's immediate family and, in either case,
such Purchaser remains primarily liable with respect to such Note Receivable;
(u) The payments due under such Note Receivable have been made by the
Purchaser in respect thereof and not by the Borrower or any of its Subsidiaries
or any Affiliate of the Borrower or any of its Subsidiaries on such Purchaser's
behalf;
(v) The Purchaser in respect of such Note Receivable is not subject to any
Debtor Relief Laws and is not an adverse party in any Litigation (and has not
threatened any Litigation) with the Borrower or any of its Subsidiaries or any
Lender;
(w) The Borrower or the applicable Restricted Subsidiary, as applicable,
has performed all of its obligations to the Purchasers in respect of such Note
Receivable, and there shall be no executory obligations to such Purchaser to be
performed by the Borrower or the applicable Restricted Subsidiary; and
(x) The Project containing the Unit subject to such Note Receivable is
located in the United States of America or in such other jurisdiction(s) as may,
from time to time, be designated in writing by the Determining Lenders.
"Equity" means shares of capital stock or partnership, profits, capital or
------
member interest, or options, warrants or any other right to subscribe for or
otherwise acquire capital stock or a partnership, profits, capital or member
interest, of the Borrower or any Subsidiary of the Borrower.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
-----
from time to time, and any regulation promulgated thereunder.
"ERISA Event" means, with respect to the Borrower and its Subsidiaries, (a) a
-----------
Reportable Event (other than a Reportable Event not subject to the provision for
30-day notice to the PBGC pursuant to regulations issued under Section 4043 of
ERISA), (b) the withdrawal of any such Person or any member of its Controlled
Group from a Plan subject to Title IV of ERISA during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the
filing of a notice of intent to terminate under Section 4041(c) of ERISA, (d)
the institution of proceedings to terminate a Plan by the PBGC, (e) the failure
to make required contributions which could result in the imposition of a lien
under Section 412 of the Code or Section 302 of ERISA, or (f) any other event or
condition which might reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan or the imposition of any
-10-
liability under Title IV of ERISA other than PBGC premiums due but not
delinquent under Section 4007 of ERISA.
"Event of Default" means any of the events specified in Section 8.1, provided
---------------- -----------
that any requirement for notice or lapse of time has been satisfied.
"Federal Funds Rate" means, for any day, the rate per annum equal to the
------------------
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of Dallas on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average of the quotations for
the day for such transactions received by the Administrative Lender from three
Federal funds brokers of recognized standing selected by it.
"Fee Letter" has the meaning specified in Section 2.4(b) hereof.
---------- --------------
"Foreign Subsidiary" means any Subsidiary of the Borrower which is not
------------------
organized under the laws of any state of the United States of America, the
District of Columbia or the United States Virgin Islands.
"GAAP" means generally accepted accounting principles applied on a consistent
----
basis, set forth in the Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants, or their successors which
are applicable in the circumstances as of the date in question. The requirement
that such principles be applied on a consistent basis shall mean that the
accounting principles applied in a current period are comparable in all material
respects to those applied in a preceding period.
"Guarantor" means each direct and indirect Restricted Domestic Subsidiary of
---------
the Borrower.
"Guaranty" or "Guaranteed", means (a) as applied to an obligation of another
-------- ----------
Person, (i) a guaranty, direct or indirect, in any manner, of any part or all of
such obligation, and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of nonperformance) of any part
or all of such obligation, including, without limiting the foregoing, any
reimbursement obligations with respect to amounts which may be drawn by
beneficiaries of outstanding letters of credit and (b) an agreement, direct or
indirect, contingent or otherwise, to maintain the net worth, working capital,
earnings or other financial performance of another Person; provided, however,
Guaranty does not mean (y) the endorsement of instruments for collection or
deposit in the ordinary course of business and (z) customary indemnities given
in connection with asset sales in the ordinary course of business.
-11-
"Hedge Agreements" means any and all agreements, devices or arrangements
----------------
designed to protect at least one of the parties thereto from the fluctuations of
interest rates, exchange rates or forward rates applicable to such party's
assets, liabilities or exchange transactions, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap, swap or collar protection
agreements, and forward rate currency or interest rate options, as the same may
be amended or modified and in effect from time to time, and any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"Highest Lawful Rate" means at the particular time in question the maximum
-------------------
rate of interest which, under Applicable Law, the Lenders are then permitted to
charge on the Obligations. If the maximum rate of interest which, under
Applicable Law, the Lenders are permitted to charge on the Obligations shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective time of each change in the Highest Lawful Rate without notice to the
Borrower. For purposes of determining the Highest Lawful Rate under the
Applicable Law of the State of Texas, the applicable rate ceiling shall be (a)
the weekly rate ceiling described in and computed in accordance with the
provisions of Art. 1H, or (b) either the quarterly ceiling or the annualized
ceiling computed pursuant to Art. 5069-ID.008, Title 79, Revised Civil Statutes
of Texas, as amended; provided, however, that at any time the weekly rate
-------- -------
ceiling, the quarterly ceiling or the annualized ceiling shall be less than 18%
per annum or more than 24% per annum, the provisions of Art. 5069-1D.009(a) and
(b), Title 79, Revised Civil Statutes of Texas, as amended, shall control for
purposes of such determination, as applicable.
"Indebtedness" means, with respect to any Person, without duplication, (a) all
------------
obligations for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations under conditional
sale or other title retention agreements relating to property or assets
purchased by such Person, (d) all obligations issued or assumed as the deferred
purchase price of property or services, (e) all obligations secured by any Lien
on any property or asset owned by such Person (other than accounts payable
arising in the ordinary course of business), whether or not the obligation
secured thereby shall have been assumed (provided that, unless such obligations
shall have been assumed, for purposes of this definition the amount of such
Indebtedness at any time shall be deemed to equal the fair market value of such
property or asset at such time), (f) the principal portion of all obligations of
such Person under any synthetic lease, tax retention operating lease, off-
balance sheet loan or similar off-balance sheet financing product where such
transaction is considered borrowed money indebtedness for tax purposes but is
classified as an Operating Lease in accordance with GAAP, (g) to the extent not
otherwise included, all Capitalized Lease Obligations of such Person, all
obligations of any general partnership, joint venture or other Person to the
extent that the Person in question is liable, whether contractually, as a matter
of applicable law or otherwise, for such obligations, all obligations in respect
of letters of credit, bankers' acceptances and similar instruments, all
obligations under Hedge Agreements, and all obligations in respect of payment,
performance and similar bonds, (h) the Net Exposure Under Securitizations (i) an
amount equal
-12-
to eight times the annual rental payment(s) under, or in connection with, any
Operating Lease entered into as part of, or in connection with, any sale and
leaseback transaction and (ii) any Guaranty of such Person of any obligation of
another Person constituting obligations of a type set forth above.
"Indemnified Matters" has the meaning specified in Section 5.9(a) hereof.
------------------- --------------
"Indemnitees" has the meaning specified in Section 5.9(a) hereof.
----------- --------------
"Intangible Assets" means those assets which are treated as intangible
-----------------
pursuant to GAAP, and in any event including, without limitation: (a)
obligations, if any, owing by Affiliates to the Borrower or to any Restricted
Subsidiary, (b) accounts, notes or mortgages receivable which are deemed by the
Borrower, any of the Restricted Subsidiaries or the Administrative Lender to be
uncollectible or which should be subject to a reserve for bad debts in
accordance with GAAP or which are subject to claims or set-offs (to the extent
of such claim or set-off); (c) leases and leasehold improvements; (d) any asset
which is intangible or lacks intrinsic and marketable value or collectibility,
including without limitation goodwill, noncompetition agreements, patents,
copyrights, trademarks, franchises or organization or research and development
costs; (e) organizational and experimental expense; and (f) unamortized debt
discount and expense.
"Interest Coverage Ratio" means the ratio of EBITDA to Interest Expense,
-----------------------
calculated for the four consecutive fiscal quarters ending on the date of
calculation.
"Interest Expense" means, for any period, determined in accordance with GAAP
----------------
on a consolidated basis for the Borrower and the Restricted Subsidiaries,
interest expense (including interest expense pursuant to Capitalized Lease
Obligations).
"Interest Period" means the period beginning on the day any LIBOR Advance is
---------------
made and ending one, two, three or six months thereafter (as the Borrower shall
select); provided, however, that all of the foregoing provisions are subject to
-------- -------
the following:
(a) if any Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day, unless, with respect to a LIBOR Advance, the result of such
extension would be to extend such Interest Period into another calendar month,
in which event such Interest Period shall end on the immediately preceding
Business Day;
(b) any Interest Period with respect to a LIBOR Advance that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(c) the Borrower may not select any Interest Period which ends after the
Maturity Date.
-13-
"Investment" means any acquisition of all or substantially all assets of any
----------
Person, or any direct or indirect purchase or other acquisition of, or
beneficial interest in, capital stock or other securities of any other Person,
or any direct or indirect loan, advance (other than loans or advances to
employees for moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution to, or
investment in any other Person, including without limitation the purchase of
accounts receivable of any other Person that are not current assets or do not
arise in the ordinary course of business.
"Issuing Bank" means NationsBank of Texas, N.A., a national banking
------------
association, in its capacity as issuer of the Letters of Credit.
"Law" means any statute, law, ordinance, regulation, rule, order, writ,
---
injunction, or decree of any Tribunal.
"Lender" means each financial institution shown on the signature pages hereof
------
so long as such financial institution maintains a portion of the Commitment or
is owed any part of the Obligations (including the Administrative Lender in its
individual capacity), and each Assignee that hereafter becomes a party hereto
pursuant to Section 11.6 hereof, subject to the limitations set forth therein.
------------
"L/C Related Documents" has the meaning specified in Section 2.15(e) hereof.
--------------------- ---------------
"Letter of Credit" has the meaning specified in Section 2.15(a) hereof.
---------------- ---------------
"Letter of Credit Agreement" has the meaning specified in Section 2.15(b)
-------------------------- ---------------
hereof.
"Letter of Credit Facility" has the meaning specified in Section 2.15(a)
------------------------- ---------------
hereof.
"LIBOR Advance" means an Advance which the Borrower requests to be made as a
-------------
LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance with the
provisions of Section 2.2 hereof.
-----------
"LIBOR Basis" means a simple per annum interest rate equal to the lesser of
-----------
(a) the Highest Lawful Rate, or (b) the sum of the LIBOR Rate plus the
Applicable LIBOR Rate Margin. The LIBOR Basis shall, with respect to LIBOR
Advances subject to reserve or deposit requirements, be subject to premiums for
such reserve or deposit requirements assessed by each Lender to the extent
incurred by such Lender, which are payable directly to each Lender. Once
determined, the LIBOR Basis shall remain unchanged during the applicable
Interest Period.
"LIBOR Lending Office" means, with respect to a Lender, the office designated
--------------------
as its LIBOR Lending Office on Schedule 1 attached hereto, and such other office
----------
of the Lender or any of its Affiliates hereafter designated by notice to the
Borrower and the Administrative Lender.
-14-
"LIBOR Rate" means, for any LIBOR Advance for any Interest Period therefor,
----------
the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term "LIBOR Rate" shall mean, for any LIBOR Advance for any
----------
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
-------- -------
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates.
"Lien" means, with respect to any property, any mortgage, lien, pledge,
----
collateral assignment, hypothecation, charge, security interest, title retention
agreement, levy, execution, seizure, attachment, garnishment or other similar
encumbrance of any kind in respect of such property, whether or not xxxxxx,
vested or perfected.
"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
----------
investigation by or before any Tribunal, including, without limitation,
proceedings, claims, lawsuits, and/or investigations under or pursuant to any
environmental, occupational, safety and health, antitrust, unfair competition,
securities, Tax or other Law, or under or pursuant to any contract, agreement or
other instrument.
"Loan Documents" means this Agreement, the Notes, the Security Agreements, any
--------------
other Collateral Document, the Subsidiary Guaranty, the Administrative Lender
Fee Letter, any Hedge Agreements entered into with any Lender, the Assignments
of Pledged Documents, and any other document or agreement executed or delivered
from time to time by the Borrower, any Subsidiary of the Borrower or any other
Person in connection herewith or as security for the Obligations.
"Material Adverse Effect" means any act or circumstance or event that (a)
-----------------------
could reasonably be expected to be material and adverse to the business,
financial condition, results of operations, or business prospects of the
Borrower and its Restricted Subsidiaries taken as a whole, or (b) in any manner
whatsoever does or could reasonably be expected to materially and adversely
affect the validity or enforceability of any Loan Document.
"Maturity Date" means February 27, 1998, or the earlier date of termination in
-------------
whole of the Commitment pursuant to Section 2.6 or 8.2 hereof.
----------- ---
"Multiemployer Plan" means, as to any Person, at any time, a "multiemployer
------------------
plan" within the meaning of Section 4001(a)(3) of ERISA and to which such Person
or any member of its Controlled Group is making, or is obligated to make
contributions or has made, or been obligated to make, contributions within the
past five (5) years.
-15-
"NationsBank" means NationsBank of Texas, N.A., a national banking
-----------
association, in its capacity as a Lender hereunder, but not in its capacity as
Administrative Lender hereunder.
"Necessary Authorization" means any right, franchise, license, permit,
-----------------------
consent, approval or authorization from, or any filing or registration with, any
Tribunal or any Person necessary or appropriate to enable the Borrower or any
Subsidiary of the Borrower to maintain and operate its business and properties,
including the sale of any Inventory.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer or other
-----------------
disposition of any asset by any Person, the amount of cash received by such
Person in connection with such transaction (including cash proceeds of any
property received in consideration of any such sale, lease, transfer or other
disposition) after deducting therefrom the aggregate, without duplication, of
the following amounts to the extent properly attributable to such transaction or
to the asset that is the subject thereof: (i) reasonable brokerage commissions,
legal fees, finder's fees, financial advisory fees, accounting fees,
underwriting fees, investment banking fees and other similar commissions and
fees, in each case, to the extent paid or payable by such Person; (ii) filing,
recording or registration fees or charges or similar fees or charges paid by
such Person; (iii) taxes paid or payable by such Person or any shareholder,
partner or member of such Person to governmental taxing authorities as a result
of such sale or other disposition; and (iv) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness that is
secured by a Lien on the asset in question and that is required to be repaid
under the terms thereof as a result of such asset sale.
"Net Exposure Under Securitization" means, for any date of calculation, the
---------------------------------
sum of (i) any and all obligations and liabilities of the Borrower or any
Restricted Subsidiary under, or in connection with, any Securitization, as of
such date of calculation, to the extent that same constitute liabilities of the
Borrower or of such Restricted Subsidiary under GAAP or would, under GAAP,
constitute liabilities of the Borrower or of such Restricted Subsidiary if such
Securitization was treated as an on balance sheet transaction and (ii) the fair
market value of any and all property of the Borrower or of any Restricted
Subsidiary that is pledged or encumbered, or as to which the interest(s) of the
Borrower or any Restricted Subsidiary are subordinated or otherwise impaired, as
security for or as a credit enhancement or otherwise in connection with, any
Securitization.
"Net Income" means, with respect to any Person for any period, the net income
----------
(loss) of such Person, after provisions for taxes and extraordinary items,
determined in accordance with GAAP.
"Net Worth" means, as of any date of calculation, for the Borrower and the
---------
Restricted Subsidiaries, on a consolidated basis, determined in accordance with
GAAP, the consolidated total stockholders' equity of the Borrower and the
Restricted Subsidiaries.
"Note Receivable" means a promissory note executed by a Purchaser in favor of
---------------
the
-16-
Borrower which has arisen out of the sale of a Time-Share Interest to a
Purchaser, which note is secured by a Deed of Trust.
"Notes" means, collectively, the Revolving Credit Notes and the Swing Line
-----
Note.
"Notice of Borrowing" has the meaning specified in Section 2.2(a) hereof.
------------------- --------------
"Notice of Issuance" has the meaning specified in Section 2.15(b) hereof.
------------------ ---------------
"Obligations" means (a) all obligations of any nature (whether matured or
-----------
unmatured, fixed or contingent, including the Reimbursement Obligations) of the
Borrower or any other Obligor to any Lender or the Administrative Lender under
any of the Loan Documents as they may be amended from time to time, and (b) all
obligations of the Borrower or any other Obligor for losses, damages, expenses
or any other liabilities of any kind that any Lender may suffer by reason of a
breach by the Borrower or any other Obligor of any obligation, covenant or
undertaking with respect to any Loan Document payable by the Borrower or any
other Obligor under any Loan Document.
"Obligor" means the Borrower and each Guarantor.
-------
"Operating Lease" means any operating lease, as defined in the Financial
---------------
Accounting Standard Board Statement of Financial Accounting Standards No. 13,
dated November, 1976 or otherwise in accordance with GAAP.
"Participant" has the meaning specified in Section 11.6(c) hereof.
----------- ---------------
"Participation" has the meaning specified in Section 11.6(c) hereof.
------------- ---------------
"Payment Date" means the last day of the Interest Period for any LIBOR
------------
Advance.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding
----
to any or all of its functions under ERISA.
"Permitted Liens" means, as applied to any Person:
---------------
(a) Any Lien in favor of the Lenders to secure the Obligations hereunder;
(b) (i) Liens on real estate for ad valorem taxes not yet delinquent, and
(ii) Liens for taxes, assessments, governmental charges, levies or claims that
are not yet delinquent or that are being diligently contested in good faith by
appropriate proceedings in accordance with Section 5.6 hereof and for
-----------
which adequate reserves shall have been set aside on such Person's books, but
only so long as no foreclosure, restraint, sale or similar proceedings have been
commenced with respect thereto;
-17-
(c) Liens of carriers, landlords, warehousemen, mechanics, laborers and
materialmen incurred in the ordinary course of business for sums not yet due or
being contested in good faith, if such reserve or appropriate provision, if any,
as shall be required by GAAP shall have been made therefor;
(d) Liens incurred in the ordinary course of business in connection with
worker's compensation, unemployment insurance or similar legislation;
(e) Easements, right-of-way, restrictions and other similar encumbrances
on the use of real property which do not interfere in any material respect with
the ordinary conduct of the business of such Person;
(f) Liens in respect of judgments or awards for which appeals or
proceedings for review are being prosecuted and in respect of which a stay of
execution upon any such appeal or proceeding for review shall have been secured,
provided that (i) such Person shall have established adequate reserves for such
judgments or awards, (ii) such judgments or awards shall be fully insured
(subject to customary deductibles) and the insurer shall not have denied
coverage, or (iii) such judgments or awards shall have been bonded to the
satisfaction of the Determining Lenders;
(g) Any Liens which secure Indebtedness that is permitted by
Section 7.1 (b) hereof; provided, however, that (i) none of such Liens shall
---------------
cover or apply to any of the Collateral, (ii) the fair market value of the
property covered by any such Lien shall not exceed, in the case of property
other than notes receivable or accounts receivable, 125% of the principal amount
of the Indebtedness secured by such Lien and (iii) none of such Liens shall
secure any Subordinated Debt;
(h) Liens arising from filing Uniform Commercial Code financing statements
for precautionary purposes relating solely to true leases of personal property
permitted by this Agreement under which the Borrower or any of its Subsidiaries
is a lessee;
(i) Any zoning or similar law or right reserved to or vested in any
Tribunal to control or regulate the use of any real property;
(j) Any Lien in favor of any Lender to secure any obligations owed to such
Lender in respect of any Hedge Agreement;
(k) Liens incurred or deposits made to secure the performance of bids,
trade contracts (other than for Indebtedness), statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business; and
(l) any replacements or renewals of Liens (but no increases in the
Indebtedness secured thereby) permitted by clauses (h) and (i) hereof.
-18-
"Person" means an individual, corporation, partnership, trust or
------
unincorporated organization, or a government or any agency or political
subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of ERISA
----
(including a Multiemployer Plan) pursuant to which any employees of the
Borrower, its Subsidiaries or any member of their Controlled Group participate.
"Pledged Documents" means, collectively, the Notes Receivable, the Deeds of
-----------------
Trust and the Purchase Documents.
"Pretax Net Income" means net profit (or loss) before taxes of the Borrower
-----------------
and the Restricted Subsidiaries, on a consolidated basis, determined in
accordance with GAAP.
"Prime Rate" means, at any time, the prime interest rate announced or
----------
published by the Reference Lender from time to time as its reference rate for
the determination of interest rates for loans of varying maturities in United
States dollars to United States residents of varying degrees of creditworthiness
and being quoted at such time by the Reference Lender as its "prime rate;" it
being understood that such rate may not be the lowest rate of interest charged
by the Reference Lender.
"Projects" means those time-share residential real estate projects constructed
--------
by the Borrower or any of its Subsidiaries in which the Borrower sells Time-
Share Interests and as to which any of the Notes Receivable generated therefrom
constitute Collateral hereunder.
"Purchase Documents" means any purchase agreement and related sale and escrow
------------------
documents executed and delivered by a Purchaser to the Borrower or any of its
Subsidiaries with respect to the purchase of a Time-Share Interest.
"Purchaser" means a Person who purchases a Time-Share Interest in a Project
---------
from the Borrower or any of its Subsidiaries or any other obligor in respect of
the Note Receivable executed in connection therewith.
"Quarterly Date" means the last day of each March, June, September and
--------------
December, beginning December 31, 1997.
"Reference Lender" means NationsBank; provided that if the commitments of
----------------
NationsBank hereunder shall terminate and if NationsBank shall have no Advances
and Letters of Credit outstanding hereunder, NationsBank shall cease to be the
Reference Lender, and Administrative Lender (after consultation with Borrower)
shall, with notice to Borrower and Lenders, designate another Lender as the
Reference Lender.
"Reimbursement Obligations" means, in respect of any Letter of Credit as at
-------------------------
any date of determination, the sum of (a) the maximum aggregate amount which is
then available to be drawn under such Letter of Credit plus (b) the aggregate
amount of all drawings under such
-19-
Letter of Credit not theretofore reimbursed by the Borrower.
"Related Person" means (a) any Affiliate of the Borrower, (b) any individual
--------------
or entity who directly or indirectly holds 10% or more of any class of Capital
Stock of the Borrower, (c) any relative of such individual by blood, marriage or
adoption not more remote than first cousin and (d) any officer or director of
the Borrower.
"Release Date" means the date on which the Notes have been paid, all other
------------
Obligations due and owing have been paid and performed in full, and the
Commitments have been terminated.
"Reportable Event" has the meaning set forth in Section 4043(b) of ERISA.
----------------
"Restricted Domestic Subsidiary" means each Domestic Subsidiary which has
------------------------------
executed a Subsidiary Guaranty and has delivered to the Lenders such board
resolutions, officer's certificates and opinions of counsel as the
Administrative Lender shall have reasonably requested.
"Restricted Foreign Subsidiary" means each Foreign Subsidiary with respect to
-----------------------------
which at least 65% of whose Capital Stock has been pledged to the Administrative
Lender, for the benefit of the Lenders, pursuant to documentation acceptable to
the Administrative Lender and as to which the Lenders have received such board
resolutions, officer's certificates and opinions of counsel as the
Administrative Lender shall have reasonably requested.
"Restricted Payments" means, collectively, (i) Dividends and (ii) any (A)
-------------------
payment or prepayment of principal, premium or penalty on any Subordinated Debt
of the Borrower or any Subsidiary of the Borrower or any defeasance, redemption,
purchase, repurchase or other acquisition or retirement for value, in whole or
in part, of any Subordinated Debt (including, without limitation, the setting
aside of assets or the deposit of funds therefor) and (B) prepayment of interest
on any Subordinated Debt.
"Restricted Subsidiary" means any Restricted Domestic Subsidiary or any
---------------------
Restricted Foreign Subsidiary.
"Revolving Credit Advance" means an Advance made pursuant to Section 2.1(a)
------------------------ --------------
hereof.
"Revolving Credit Notes" means the promissory notes of the Borrower evidencing
----------------------
Revolving Credit Advances, substantially in the form of Exhibit A hereto,
---------
together with any extensions, renewals or amendments thereof or thereto, and any
substitutions therefor.
"Rights" means rights, remedies, powers and privileges.
------
"Security Agreement" means any Security Agreement, substantially in the form
------------------
of Exhibit C hereto, as amended, modified, renewed, supplemented or restated
---------
from time to time.
-20-
"Securitization" means a sale or hypothecation of Notes Receivable by the
--------------
Borrower in which the proceeds thereof are utilized to repay in full all
outstanding Advances attributable to such Notes Receivable pursuant to
documentation acceptable to the Administrative Lender.
"Securitization Subsidiary" means any subsidiary of the Borrower which is
-------------------------
organized for the sole purpose of facilitating a Securitization and which
performs no business and has no other assets outside of those necessary to
consummate a Securitization.
"Senior Debt" means, as of the date of any determination, the remainder of (a)
-----------
Total Debt minus (b) Subordinated Debt.
"Servicing Agent" means All Seasons Resorts, Inc. or, should such entity cease
---------------
to act as Servicing Agent under the Servicing and Collection Agreement, such
other entity as the Administrative Lender, the Borrower and each Restricted
Subsidiary that is a party to the Servicing and Collection Agreement may
appoint.
"Servicing and Collection Agreement" means the Mortgage Loan Servicing and
----------------------------------
Lockbox Agreement, in such form as the Administrative Lender shall prescribe, to
be made and entered into among the Borrower, the Administrative Lender, each
Restricted Subsidiary that owns any of the Notes Receivable included in the
Borrowing Base and the Servicing Agent, as from time to time modified, replaced
or restated.
"Solvent" means, with respect to any Person, that the fair value of the assets
-------
of such Person (both at fair valuation and at present fair saleable value) is,
on the date of determination, greater than the total amount of liabilities
(including contingent and unliquidated liabilities) of such Person as of such
date and that, as of such date, such Person is able to pay all liabilities of
such Person as such liabilities mature and such Person does not have
unreasonably small capital with which to carry on its business. In computing
the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability discounted to present value
at rates believed to be reasonable by such Person.
"Special Counsel" means the law firm of Xxxxxxx, Xxxxxxx & Xxxxxxx, P.C., or
---------------
such other legal counsel as the Administrative Lender may select.
"Specified Percentage" means, as to any Lender, the percentage indicated
--------------------
beside its name on the signature pages hereof, or if applicable, specified in
its most recent Assignment Agreement.
"Subordinated Debt" means, collectively, (i) the 5.75% Convertible
-----------------
Subordinated Notes, issued by the Borrower as of January 15, 1997, in the
aggregate original principal amount of $138,000,000, due in 2007, (ii) the 9.75%
Senior Subordinated Notes, issued by the Borrower
-21-
as of August 1, 1997, in the aggregate original principal amount of
$200,000,000, due October 1, 2007 and (ii) any other Indebtedness of the
Borrower or any Subsidiary of the Borrower having maturities and terms, and
which is subordinated to payment of the Obligations in a manner, approved in
writing by the Administrative Lender and the Determining Lenders, with only such
changes or amendments as are not prohibited by Section 7.20 hereof.
------------
"Subsidiary" of any Person means any corporation, partnership, joint venture,
----------
trust or estate or other Person of which (or in which) more than 50% of:
(a) the outstanding capital stock having voting power to elect a majority
of the Board of Directors of such corporation (irrespective of whether at the
time capital stock of any other class or classes of such corporation shall or
might have voting power upon the occurrence of any contingency),
(b) the interest in the capital or profits of such partnership or joint
venture,
(c) the beneficial interest of such trust or estate, or
(d) the equity interest of such other Person,
is at the time directly or indirectly owned by such Person, by such Person and
one or more of its Subsidiaries or by one or more of such Person's Subsidiaries;
provided, however, that (i) no Person shall be deemed to be a Subsidiary of the
Borrower solely by virtue of the fact that certain shares of the stock of such
Person have been pledged to the Borrower and (ii) the Securitization Subsidiary
shall not be deemed to be a Subsidiary for purposes of this Agreement.
"Subsidiary Guaranty" means a guaranty, substantially in the form of Exhibit G
------------------- ---------
hereto, executed and delivered by each Guarantor, as such guaranty(ies) may be
amended, supplemented, modified, renewed or otherwise restated from time to
time.
"Swing Line Advance" means an Advance made pursuant to Section 2.1(b) hereof.
------------------ --------------
"Swing Line Bank" means NationsBank of Texas, N.A. and any successors thereto
---------------
appointed in accordance with Section 10.1(b) hereof.
---------------
"Swing Line Facility" has the meaning specified in Section 2.1(b) hereof.
------------------- --------------
"Swing Line Note" means the Swing Line Note of the Borrower payable to the
---------------
order of the Swing Line Bank, substantially in the form of Exhibit B hereto,
---------
together with any extensions, renewals or amendments thereof or thereto, and any
substitutions therefor.
"Tangible Net Worth" means the sum of the following for the Borrower and the
------------------
Restricted Subsidiaries, on a consolidated basis, determined in accordance with
GAAP, (a) Net Worth minus (b) the sum of the following (without duplication in
respect of items already
-22-
deducted in arriving at Net Worth): Intangible Assets, and any write-up in the
book value of assets resulting from revaluation thereof subsequent to December
31, 1996.
"Taxes" has the meaning specified in Section 2.14 hereof.
----- ------------
"Time-Share Interest" means an undivided fee simple ownership interest as
-------------------
tenants in common with all other Purchasers with respect to any Unit with
respect to the exclusive right to use such Unit and the common areas for the
Project with respect to such Unit for a specified length of time, on an annual
or a biennial basis.
"Total Capital" means, as of any date of determination, the sum of (a) Total
-------------
Debt plus (b) Tangible Net Worth.
"Total Debt" means, as of any date of determination, determined for the
----------
Borrower and the Restricted Subsidiaries on a consolidated basis, without
duplication, (i) indebtedness for borrowed money, (ii) obligations evidenced by
bonds, debentures, notes or other similar instruments, (iii) obligations to pay
the deferred purchase price of property or services other than trade payables
incurred in the ordinary course of business, (iv) obligations in respect of
letters of credit, banker's acceptances and similar instruments, (v) obligations
under Hedge Agreements, (vi) Capitalized Lease Obligations, (vii) obligations in
respect of payment, performance and similar bonds, and (viii) Net Exposure Under
Securitization.
"Tribunal" means any state, commonwealth, federal, foreign, territorial, or
--------
other court or government body, subdivision, agency, department, commission,
board, bureau, or instrumentality of a governmental or other regulatory or
public body or authority.
"UCC" means the Uniform Commercial Code of Texas, as amended from time to
---
time, and the Uniform Commercial Code applicable in such other states as any
Collateral may be located.
"Unit" means a residential unit in a Project as shown on the recorded
----
condominium plat therefor or other evidence thereof, as required or permitted
under applicable Law.
"Unused Portion" means an amount equal to the result of (a) the Commitment
--------------
minus (b) the sum of (i) the outstanding Advances plus (ii) the outstanding
Reimbursement Obligations in respect of the Letters of Credit.
Section 1.2 Amendments and Renewals. Each definition of an agreement in this
-----------------------
Article 1 shall include such agreement as amended to date, and as amended or
---------
renewed from time to time in accordance with its terms, but only with the prior
written consent of the Determining Lenders or all the Lenders as required
pursuant to Section 11.11 hereof.
-------------
Section 1.3 Construction. The terms defined in this Article 1 (except as
------------
otherwise expressly provided in this Agreement) for all purposes shall have the
meanings set forth in
-23-
Section 1.1 hereof, and the singular shall include the plural, and vice versa,
-----------
unless otherwise specifically required by the context. All accounting terms used
in this Agreement which are not otherwise defined herein shall be construed in
accordance with GAAP on a consolidated basis for the Borrower and its
Subsidiaries, unless otherwise expressly stated herein.
ARTICLE 2
Advances
--------
Section 2.1 The Advances.
------------
(a) Revolving Credit Advances. Each Lender severally agrees, upon the
-------------------------
terms and subject to the conditions of this Agreement, to make Revolving Credit
Advances to the Borrower from time to time until the Maturity Date in an
aggregate amount not to exceed its Specified Percentage of the Commitment less
its Specified Percentage of the aggregate amount of all Reimbursement
Obligations then outstanding (assuming compliance with all conditions to
drawing), for the purposes set forth in Section 5.8(a) hereof. Subject to
--------------
Section 2.9 hereof, Revolving Credit Advances may be repaid and then
-----------
reborrowed. Notwithstanding any provision in any Loan Document to the contrary,
in no event shall the principal amount of all outstanding Revolving Credit
Advances exceed the lesser of (i) the result of (A) the Borrowing Base minus (B)
the aggregate outstanding Reimbursement Obligations and Swing Line Advances and
(ii) the Commitment. Any Revolving Credit Advance shall, at the option of the
Borrower as provided in Section 2.2 hereof (and, in the case of LIBOR Advances,
-----------
subject to the provisions of Article 9 hereof), be made as a Base Rate
---------
Advance or a LIBOR Advance; provided that there shall not be outstanding, at any
one time, more than five LIBOR Advances.
(b) The Swing Line Loans. The Borrower may request Swing Line Bank to
--------------------
make, and Swing Line Bank agrees to make, on the terms and conditions
hereinafter set forth, advances ("Swing Line Advances") to the Borrower from
-------------------
time to time on any Business Day during the period from the date hereof until
the Maturity Date in an aggregate amount not to exceed at any time outstanding
the lesser of (i) $10,000,000, and (ii) the Commitment, less the sum of (A) the
aggregate principal amount of Revolving Credit Advances then outstanding plus
----
(B) the aggregate principal amount of all Reimbursement
Obligations then outstanding (assuming compliance with all conditions to
drawing) (the "Swing Line Facility"). Each Swing Line Advance shall be in
-------------------
an amount not less than $100,000 and in multiples thereof. Each Swing Line
Advance shall be a Base Rate Advance. Within the limits of the Swing Line
Facility, Swing Line Advances may be repaid and then reborrowed.
-24-
Section 2.2 Manner of Borrowing and Disbursement.
------------------------------------
(a) In the case of Base Rate Advances, the Borrower, through an Authorized
Signatory, shall give the Administrative Lender prior to 11:00 a.m., Dallas,
Texas time, on the date of any proposed Base Rate Advance irrevocable written
notice, or irrevocable telephonic notice followed immediately by written notice,
in substantially the form of Exhibit H hereto (a "Notice of Borrowing")
--------- -------------------
(provided, however, that the Borrower's failure to confirm any telephonic notice
in writing shall not invalidate any notice so given), of its intention to borrow
a Base Rate Advance hereunder. Such notice of borrowing shall specify the
requested funding date, which shall be a Business Day, and the amount of the
proposed aggregate Base Rate Advances to be made by Lenders.
(b) In the case of LIBOR Advances, the Borrower, through an Authorized
Signatory, shall give the Administrative Lender at least three Business Days'
irrevocable written notice, or irrevocable telephonic notice followed
immediately by written notice (provided, however, that the Borrower's failure to
confirm any telephonic notice in writing shall not invalidate any notice so
given) pursuant to a Notice of Borrowing, of its intention to borrow a LIBOR
Advance hereunder. Notice shall be given to the Administrative Lender prior to
11:00 a.m., Dallas, Texas time, in order for such Business Day to count toward
the minimum number of Business Days required. LIBOR Advances shall in all
cases be subject to Article 9 hereof. For LIBOR Advances, the notice of
---------
borrowing shall specify the requested funding date, which shall be a Business
Day, the amount of the proposed aggregate LIBOR Advances to be made by Lenders
and the Interest Period selected by the Borrower, provided that no such Interest
Period shall extend past the Maturity Date, or prohibit or impair the Borrower's
ability to comply with Section 2.5 or 2.8 hereof.
----------- ---
(c) In the case of Swing Line Advances, the Borrower, through an Authorized
Signatory, shall give the Swing Line Bank and the Administrative Lender prior to
12:00 noon, Dallas, Texas time, on the date of any proposed Swing Line Advance
irrevocable written notice or irrevocable telephonic notice followed immediately
by written notice (provided, however, that the Borrower's failure to confirm any
telephonic notice in writing shall not invalidate any notice so given), of its
intention to borrow or reborrow a Swing Line Advance. Such notice of borrowing
shall specify the requested funding date, which shall be a Business Day, and the
amount of the proposed Swing Line Advance.
(d) Subject to Sections 2.1 and 2.9 hereof, the Borrower shall have the
------------ ---
option (i) to convert at any time all or any part (subject to the requirements
contained herein as to the minimum amounts of LIBOR Advances) of the outstanding
Base Rate Advances to LIBOR Advances and all or any part of the outstanding
LIBOR Advances to Base Rate Advances or (ii) upon expiration of any Interest
Period applicable to a LIBOR Advance, to continue all or any portion of such
LIBOR Advance equal to $5,000,000 and integral multiples of $1,000,000 in excess
of that amount as a LIBOR Advance and the succeeding Interest Period(s) of such
continued LIBOR Advance shall commence on the last day of the Interest Period of
the LIBOR Advance to be continued; provided, however, (A) LIBOR Advances may
only be converted into
-25-
Base Rate Advances on the expiration date of the Interest Period applicable
thereto and (B) notwithstanding anything in this Agreement to the contrary, no
outstanding Advance may be continued as, or converted into, a LIBOR Advance when
any Default or Event of Default has occurred and is continuing. At least two
Business Days prior to a proposed conversion/continuation date, the Borrower,
through an Authorized Signatory, shall give the Administrative Lender
irrevocable written notice, or irrevocable telephonic notice followed
immediately by written notice (provided, however, that the Borrower's failure to
confirm any telephonic notice in writing shall not invalidate any notice so
given), stating (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount of the Advance to be converted/continued, (iii)
in the case of a conversion to, or a continuation of, a LIBOR Advance, the
requested Interest Period, and (iv) in the case of a conversion of a Base Rate
Advance to a LIBOR Advance or continuation of a LIBOR Advance, stating that no
Default or Event of Default has occurred and is continuing. If the Borrower
shall fail to give any notice in accordance with this Section 2.2(d), the
--------------
Borrower shall be deemed irrevocably to have requested that such LIBOR Advance
be converted to a Base Rate Advance in the same principal amount. Notice shall
be given to the Administrative Lender prior to 11:00 a.m., Dallas, Texas time,
in order for such Business Day to count toward the minimum number of Business
Days required.
(e) The aggregate amount of Base Rate Advances to be made by the Lenders on
any day shall be in a principal amount which is at least $2,000,000 and which is
an integral multiple of $500,000; provided, however, that such amount may equal
the unused amount of the applicable Commitment. The aggregate amount of LIBOR
Advances having the same Interest Period and to be made by the Lenders on any
day shall be in a principal amount which is at least $5,000,000 and which is an
integral multiple of $1,000,000.
(f) The Administrative Lender shall promptly notify the Lenders of each
notice (other than with respect to a Swing Line Advance) received from the
Borrower pursuant to this Section. Each Lender shall, not later than 2:00 p.m.,
Dallas, Texas time, on the date of any Advance, deliver to the Administrative
Lender, at its address set forth herein, such Lender's Specified Percentage of
such Advance in immediately available funds in accordance with the
Administrative Lender's instructions. Prior to 3:00 p.m., Dallas, Texas time, on
the date of any Advance hereunder, the Administrative Lender shall, subject to
satisfaction of the conditions set forth in Article 3, disburse the amounts
---------
made available to the Administrative Lender by the Lenders by (i) transferring
such amounts by wire transfer pursuant to the Borrower's instructions, or (ii)
in the absence of such instructions, crediting such amounts to the account of
the Borrower maintained with the Administrative Lender. All Advances shall be
made by each Lender according to its Specified Percentage.
(g) The Swing Line Bank shall, not later than 1:30 p.m., Dallas, Texas
time, on the date of any Swing Line Advance, deliver to the Administrative
Lender at its address set forth herein, the amount of such Swing Line Advance in
immediately available funds in accordance with the Administrative Lender's
instructions. Prior to 2:00 p.m., Dallas, Texas time, on the date of any Swing
Line Advance, the Administrative Lender shall, subject to the
conditions set forth in Article 3, disburse the amount made available to
---------
the Administrative Lender by the
-26-
Swing Line Bank by (i) transferring such amounts by wire transfer pursuant to
the Borrower's instruction or (ii) in the absence of such instructions,
crediting such amounts to the account of the Borrower maintained with the
Administrative Lender. Forthwith upon demand by the Swing Line Bank and in any
event upon the making of the request or the granting of the consent specified by
Section 8.2 to authorize the Administrative Lender to declare the Advances due
-----------
and payable pursuant to the provisions of Section 8.2, each Lender, including
-----------
the Swing Line Bank, notwithstanding the failure of the Borrower at such time to
satisfy each condition specified in Article 3, shall make by 12:00 noon (Dallas,
Texas time) on the first Business Day following receipt by such Lender of notice
from the Swing Line Bank, a Revolving Credit Advance which is a Base Rate
Advance in an amount equal to the product of (i) the Specified Percentage of
such lender times (ii) the aggregate outstanding principal amount of the Swing
Line Advances. The proceeds of such Revolving Credit Advances shall be applied
by the Administrative Lender to repay the outstanding Swing Line Advances.
Section 2.3 Interest.
--------
(a) On Base Rate Advances.
---------------------
(i) The Borrower shall pay interest on the outstanding unpaid principal amount
of the Base Rate Advances outstanding from time to time, until such Base
Rate Advances are due (whether at maturity, by reason of acceleration, by
scheduled reduction, or otherwise) and repaid at a simple interest rate per
annum equal to the Base Rate Basis for the Base Rate Advances as in effect
from time to time. If at any time the Base Rate Basis would exceed the
Highest Lawful Rate, interest payable on the Base Rate Advances shall be
limited to the Highest Lawful Rate, but the Base Rate Basis shall not
thereafter be reduced below the Highest Lawful Rate until the total amount
of interest accrued on the Base Rate Advances equals the amount of interest
that would have accrued if the Base Rate Basis had been in effect at all
times.
(ii) Interest on the Base Rate Advances shall be computed on the basis of a year
of 365 or 366 days, as appropriate, for the actual number of days elapsed,
and shall be payable in arrears on each Quarterly Date and on the Maturity
Date.
(b) On LIBOR Advances.
-----------------
(i) The Borrower shall pay interest on the unpaid principal amount of each
LIBOR Advance, from the date such Advance is made until it is due (whether
at maturity, by reason of acceleration, by scheduled reduction, or
otherwise) and repaid, at a rate per annum equal to the LIBOR Basis for
such LIBOR Advance. The Administrative Lender, whose determination shall
be controlling in the absence of manifest error, shall determine the LIBOR
Basis on the second Business Day prior to the applicable funding date and
shall notify the Borrower and the Lenders of such LIBOR Basis.
-27-
(ii) Subject to Section 11.9 hereof, interest on each LIBOR Advance shall be
------------
computed on the basis of a 360-day year for the actual number of days
elapsed, and shall be payable in arrears on the applicable Payment Date and
on the Maturity Date; provided, however, that if the Interest Period for
such LIBOR Advance exceeds three months, interest shall also be due and
payable in arrears on each three-month anniversary of the commencement of
such Interest Period during such Interest Period.
(c) On Swing Line Advances.
----------------------
(i) The Borrower shall pay interest on the outstanding principal amount of each
Swing Line Advance, from the date each Swing Line Advance is made until it
is due (whether at maturity, by acceleration or otherwise) or repaid, at a
rate per annum equal to the Base Rate Basis in effect from time to time.
If at any time the Base Rate Basis would exceed the Highest Lawful Rate,
interest payable on the Swing Line Advances shall be limited to the Highest
Lawful Rate, but the Base Rate Basis shall not thereafter be reduced below
the Highest Lawful Rate until the total amount of interest accrued on the
Swing Line Advances equals the amount of interest that would have accrued
if the Base Rate Basis had been in effect at all times.
(ii) Interest on each Swing Line Advance shall be computed on the basis of a
year of 365 or 366 days, as applicable, for the number of days elapsed, and
shall be payable quarterly in arrears on each Quarterly Date and on the
Maturity Date.
(d) Interest After an Event of Default. (i) After an Event of Default
----------------------------------
(other than an Event of Default specified in Section 8.1(f) or (g) hereof) and
-------------- ---
during any continuance thereof, at the option of Determining Lenders and
provided that the Administrative Lender has given notice to the Borrower of the
decision to charge interest at the Default Rate, and (ii) after an Event of
Default specified in Section 8.1(f) or (g) hereof and during any continuance
-------------- ---
thereof, automatically and without any action or notice by the Administrative
Lender or any Lender, the Obligations shall bear interest at a rate per annum
equal to the Default Rate. Such interest shall be payable on the earlier of
demand or the Maturity Date, and shall accrue until the earlier of (i) waiver or
cure (to the satisfaction of the Determining Lenders) of the applicable Event of
Default, (ii) agreement by the Lenders to rescind the charging of interest at
the Default Rate, or (iii) payment in full of the Obligations. The Lenders shall
not be required to accelerate the maturity of the Advances, to exercise any
other rights or remedies under the Loan Documents, or to give notice to the
Borrower of the decision to charge interest at the Default Rate.
Section 2.4 Fees.
----
(a) Commitment Fee. Subject to Section 11.9 hereof, the Borrower agrees
-------------- ------------
to pay to the Administrative Lender, for the ratable account of the Lenders, a
commitment fee (the "Commitment Fee") on the daily average Unused Portion
--------------
during the period commencing on the Agreement Date and ending on the Maturity
Date, at the following per annum percentages, applicable in the following
situations:
-28-
Applicability Percentage
------------- ----------
(a) Sum of (i) aggregate outstanding Advances and
(ii) aggregate Reimbursement Obligations is
greater than or equal to 75% of
Eligible Notes Receivable 0.375%
(b) Sum of (i) aggregate outstanding Advances and
(ii) aggregate Reimbursement Obligations is
less than 75% of Eligible Notes Receivable 0.250%
The Commitment Fee shall be subject to reduction or increase, as applicable and
as set forth in the table above, on a daily basis according to the aggregate
outstanding Advances and Reimbursement Obligations. The fee shall be (i)
payable in arrears on each Quarterly Date and on the Maturity Date, (ii) fully
earned when due and, subject to Section 11.9 hereof, nonrefundable when paid and
------------
(iii) subject to Section 11.9 hereof, computed on the basis of a year of 365 or
------------
366 days, as appropriate, for the actual number of days elapsed.
(b) Other Fees. Subject to Section 11.9 hereof, the Borrower agrees to
---------- ------------
pay to the Administrative Lender, for the account of the Administrative Lender,
the fees on the dates and in the amounts specified in the letter agreement
(the "Fee Letter"), dated as of the Agreement Date, between the Borrower
----------
and the Administrative Lender.
Section 2.5 Prepayments.
-----------
(a) Voluntary LIBOR Advance Prepayments. Upon three Business Days' prior
-----------------------------------
telephonic notice (to be promptly followed by written notice) by an Authorized
Signatory to the Administrative Lender, LIBOR Advances may be voluntarily
prepaid but only so long as the Borrower concurrently reimburses the Lenders in
accordance with Section 2.9 hereof. Any notice of prepayment shall be
-----------
irrevocable.
(b) Mandatory Prepayment. On or before the date of any reduction of the
--------------------
Commitment, the Borrower shall prepay applicable outstanding Advances in an
amount necessary to reduce the sum of outstanding Advances and Reimbursement
Obligations to an amount less than or equal to the Commitment as so reduced. On
any date that the aggregate principal amount of outstanding Advances and
Reimbursement Obligations exceed the Borrowing Base, the Borrower shall
immediately prepay Advances in an amount equal to such excess amount and all
interest attributable to such excess amount. To the extent required by the
immediately preceding two sentences, the Borrower shall first prepay all Base
Rate Advances and shall thereafter prepay LIBOR Advances. To the extent that any
prepayment requires that a LIBOR Advance be repaid on a date other than the last
day of its Interest Period, the Borrower shall reimburse each Lender in
accordance with Section 2.9 hereof. To the extent that outstanding Advances
-----------
exceed the Commitment after any reduction thereof, the Borrower shall repay any
such excess amount and all accrued interest attributable to such excess Advances
on the date of such reduction.
-29-
(c) Payments, Generally. Any prepayment of any LIBOR Advance shall be
-------------------
accompanied by interest accrued on the principal amount being prepaid. Any
voluntary partial payment of a Base Rate Advance shall be in a principal amount
which is at least $2,000,000 and which is an integral multiple of $500,000
(unless constituting a payment of all outstanding Base Rate Advances). Any
voluntary partial payment of a LIBOR Advance shall be in a principal amount
which is at least $5,000,000 and which is an integral multiple of $1,000,000
(unless constituting a payment of all outstanding LIBOR Advances), and to the
extent that any prepayment of a LIBOR Advance is made on a date other than the
last day of its Interest Period, the Borrower shall reimburse each Lender in
accordance with Section 2.9 hereof. Any voluntary partial payment of a Swing
-----------
Line Advance shall be in a principal amount which is at least $100,000 or an
integral multiple thereof.
Section 2.6 Reduction of Commitment.
-----------------------
(a) Voluntary Reduction. The Borrower shall have the right, upon not
-------------------
less than ten Business Days' notice by an Authorized Signatory to the
Administrative Lender (if telephonic, to be confirmed by telex or in writing on
or before the date of reduction or termination), which shall promptly notify the
Lenders, to terminate or reduce the Commitment, in whole or in part, without
premium or penalty except as provided in the next sentence. Each partial
termination shall be in an aggregate amount which is at least $5,000,000 and
which is an integral multiple of $1,000,000, and no voluntary reduction of the
Commitment shall cause any LIBOR Advance to be repaid prior to the last day of
its Interest Period unless the Borrower shall reimburse each Lender in
accordance with Section 2.9 hereof.
-----------
(b) Mandatory Reduction. The Commitment shall be automatically reduced
-------------------
to zero on the Maturity Date.
(c) General Requirements. Upon any reduction of the Commitment pursuant to
--------------------
this Section, the Borrower shall immediately make a repayment of applicable
Advances in accordance with Section 2.5(b) hereof. The Borrower shall
--------------
reimburse each Lender in connection with any such payment in accordance
with Section 2.9 hereof to the extent applicable. The Borrower shall not
-----------
have any right to rescind any termination or reduction. Once reduced, the
Commitment may not be increased or reinstated.
Section 2.7 Non-Receipt of Funds by the Administrative Lender. Unless the
-------------------------------------------------
Administrative Lender shall have been notified by a Lender no later than the
date that such Lender receives notice of a proposed Revolving Credit Advance
from the Administrative Lender pursuant to Section 2.2(e) hereof that such
--------------
Lender does not intend to make the proceeds of such Revolving Credit Advance
available to the Administrative Lender, the Administrative Lender may assume
that such Lender has made such proceeds available to the Administrative Lender
on such date, and the Administrative Lender may in reliance upon such assumption
(but shall not be required to) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Lender by such Lender, the
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Administrative Lender shall be entitled to recover such amount on demand from
such Lender (or, if such Lender fails to pay such amount forthwith upon such
demand, from the Borrower) together with interest thereon in respect of each day
during the period commencing on the date such amount was available to the
Borrower and ending on (but excluding) the date the Administrative Lender
receives such amount from (a) the Lender, at a per annum rate equal to the
lesser of (i) the Highest Lawful Rate or (ii) the Federal Funds Rate or (b) the
Borrower, at the per annum rate applicable at the time to such Revolving Credit
Advance. No Lender shall be liable for any other Lender's failure to fund a
Revolving Credit Advance hereunder.
Section 2.8 Payment of Principal of Advances. To the extent not otherwise
--------------------------------
required to be paid earlier as provided herein, the principal amount of the
Advances, all accrued interest and fees thereon, and all other Obligations
related thereto, shall be due and payable in full on the Maturity Date.
Section 2.9 Reimbursement. Whenever any Lender shall sustain or incur
-------------
(other than through a default by that Lender) any losses (inclusive of any such
losses attributable to change(s) in the LIBOR Rate during the applicable
period(s), but exclusive of any losses of any other anticipated profits on the
part of such Lender) or reasonable out-of-pocket expenses actually incurred in
connection with (a) failure by the Borrower to borrow any LIBOR Advance after
having given notice of its intention to borrow in accordance with Section 2.2
-----------
hereof (whether by reason of the Borrower's election not to proceed or the non-
fulfillment of any of the conditions set forth in Article 3 hereof) or (b) any
prepayment for any reason of any LIBOR Advance in whole or in part (including a
prepayment pursuant to Section 9.3(b) hereof) on other than the last day of an
--------------
Interest Period applicable to such LIBOR Advance, the Borrower agrees to pay
to any such Lender, within 30 days after demand by such Lender, an amount
sufficient to compensate such Lender for all such losses (inclusive of any such
losses attributable to change(s) in the LIBOR Rate during the applicable
period(s), but exclusive of any losses of any other anticipated profits on the
part of such Lender) and out-of-pocket expenses, subject to Section 11.9 hereof.
------------
Such losses shall include, without limiting the generality of the foregoing,
reasonable expenses incurred by such Lender in connection with the re-employment
of funds prepaid, repaid, converted or not borrowed, converted or paid, as the
case may be. A certificate as to any amounts payable to any Lender under this
Section 2.9 submitted to the Borrower by such Lender shall certify that such
-----------
amounts were actually incurred by such Lender and shall show in reasonable
detail an accounting of the amount payable and the calculations used to
determine in good faith such amount and shall be conclusive absent manifest or
demonstrable error. Nothing in this Section 2.9 shall provide the Borrower or
-----------
any Subsidiary of the Borrower the right to inspect the records, files or books
of any Lender.
-31-
Section 2.10 Manner of Payment.
-----------------
(a) Each payment (including prepayments) by the Borrower of the principal
of or interest on the Advances, fees, and any other amount owed under this
Agreement or any other Loan Document shall be made not later than 12:00 noon
(Dallas, Texas time) on the date specified for payment under this Agreement to
the Administrative Lender at the Administrative Lender's office, in lawful money
of the United States of America constituting immediately available funds.
(b) If any payment under this Agreement or any other Loan Document shall be
specified to be made upon a day which is not a Business Day, it shall be made on
the next succeeding day which is a Business Day, unless, with respect to a
payment due in respect of a LIBOR Advance, such Business Day falls in another
calendar month, in which case payment shall be made on the preceding Business
Day. Any extension of time shall in such case be included in computing interest
and fees, if any, in connection with such payment.
(c) Without waiving any other rights or recourse that the Borrower may
otherwise have against any Lender for such Lender's breach of its obligations
hereunder, the Borrower agrees to pay principal, interest, fees and all other
amounts due under the Loan Documents without deduction for set-off or
counterclaim or any deduction whatsoever.
(d) If some but less than all amounts due from the Borrower are received by
the Administrative Lender, the Administrative Lender shall apply such amounts in
the following order of priority: (i) to the payment of the Administrative
Lender's reasonable expenses incurred on behalf of the Lenders then due and
payable, if any; (ii) to the payment of all other fees then due and payable;
(iii) to the payment of interest then due and payable on the Advances; (iv) to
the payment of all other amounts not otherwise referred to in this clause (d)
then due and payable under the Loan Documents; and (v) to the payment of
principal then due and payable on the Advances.
(e) Each payment by the Borrower in respect of obligations relating to the
Revolving Credit Advances and the Letters of Credit (whether for principal,
interest, fees or otherwise) shall be made to the Administrative Lender for the
account of the Lenders pro rata in accordance with their respective Specified
Percentages. Each payment by the Borrower in respect of obligations relating to
Swing Line Advances (whether for principal, interest, fees or otherwise) shall
be made to the Administrative Lender for the account of the Swing Line Bank.
Section 2.11 LIBOR Lending Offices. Each Lender's initial LIBOR Lending
---------------------
Office is set forth opposite its name in Schedule 1 attached hereto. Each Lender
----------
shall have the right at any time and from time to time to designate a different
office of itself or of any Affiliate of such Lender as such Lender's LIBOR
Lending Office, and to transfer any outstanding LIBOR Advance to such LIBOR
Lending Office. No such designation or transfer shall result in any liability on
the part of the Borrower for increased costs or expenses resulting solely from
such designation or transfer (except any such transfer which is made by a
Lender pursuant to
-32-
Section 9.2 or 9.3 hereof, or otherwise for the purpose of complying
----------- ---
with Applicable Law, to the extent that Applicable Law, or any relevant
construction or interpretation thereof, changes after the Agreement Date).
Increased costs for expenses resulting from a change in law occurring subsequent
to any such designation or transfer shall be deemed not to result solely from
such designation or transfer.
Section 2.12 Sharing of Payments. Any Lender obtaining a payment (whether
-------------------
voluntary or involuntary, due to the exercise of any right of set-off, or
otherwise) on account of its Advances or its participation in the Letters of
Credit (other than pursuant to Sections 2.4(b), 2.14, 2.15(d), 9.3 or 9.5 or in
--------------- ---- ------- --- ---
respect of Swing Line Advances) in excess of its Specified Percentage of all
payments made by the Borrower with respect to Advances and the Letters of Credit
shall purchase from each other Lender such participation in the Advances made by
such other Lender or its participation in the Letters of Credit as shall be
necessary to cause such purchasing Lender to share the excess payment pro rata
according to Specified Percentages with each other Lender; provided, however,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section, to the fullest extent permitted by law, may exercise
all its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
Section 2.13 Calculation of LIBOR Rate. The provisions of this Agreement
-------------------------
relating to calculation of the LIBOR Rate are included only for the purpose of
determining the rate of interest or other amounts to be paid hereunder that are
based upon such rate, it being understood that each Lender shall be entitled to
fund and maintain its funding of all or any part of a LIBOR Advance as it sees
fit.
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Section 2.14 Taxes.
-----
(a) Any and all payments by the Borrower hereunder shall be made, in
accordance with Section 2.10, free and clear of and without deduction for any
------------
and all present or future taxes, levies, imposts, deductions, charges and
withholdings, and all liabilities with respect thereto, excluding, in the
---------
case of each Lender and the Administrative Lender, (i) taxes imposed on, based
upon or measured by its overall net income, net worth or capital, and franchise
taxes, doing business taxes or minimum taxes imposed on it, (A) by the
jurisdiction under the laws of which such Lender or the Administrative Lender
(as the case may be) is organized or in which it has its applicable lending
office or any political subdivision thereof; or (B) by any other jurisdiction,
or any political subdivision thereof, other than those imposed solely by reason
of (1) an asserted relation of such jurisdiction to the transactions
contemplated by this Agreement, (2) the activities of the Borrower in such
jurisdiction or (3) the activities in connection with the transactions
contemplated by this Agreement of a Lender or the Administrative Lender; (ii)
taxes imposed by reason of failure by the Lender or the Administrative Lender to
comply with the requirements of paragraph (e) of this Section 2.14; and (iii)
------------
in the case of any Lender, any Taxes in the nature of transfer, stamp, recording
or documentary taxes resulting from a transfer (other than as a result of
foreclosure) by such Lender of all or any portion of its interest in this
Agreement, the Notes or any other Loan Documents; (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by Law to
-----
deduct or withhold any Taxes from or in respect of any sum payable hereunder to
any Lender or the Administrative Lender, (x) the sum payable shall be increased
as may be necessary so that after making all required deductions for Taxes
(including deductions applicable to additional sums payable under this Section
-------
2.14) such Lender or the Administrative Lender (as the case may be) receives an
----
amount equal to the sum it would have received had no such deductions been made,
(y) the Borrower shall make such deductions and (z) the Borrower shall pay the
full amount of Taxes deducted to the relevant taxation authority or other
authority in accordance with Applicable Law.
(b) In addition, the Borrower agrees to pay any and all stamp and
documentary taxes and any and all other excise and property taxes, charges and
similar levies (other than Taxes described in clause (iii) of the first sentence
of Section 2.14(a)) that arise from any payment made hereunder or from the
---------------
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other
-----
Taxes").
-----
(c) The Borrower will indemnify each Lender and the Administrative Lender
for the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable
under this Section 2.14) paid by such Lender or the Administrative Lender
------------
(as the case may be) and all liabilities (including penalties, additions to tax,
interest and reasonable expenses) arising therefrom or with respect thereto
whether or not such Taxes or Other Taxes were correctly or legally asserted,
other than penalties, additions to tax, interest and expenses arising as a
result of gross negligence or wilful misconduct on the part of
such Lender or the Administrative Lender, provided, however, that the
-------- -------
Borrower shall have no obligation to indemnify such Lender or the Administrative
Lender unless and until such
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Lender or the Administrative Lender shall have delivered to the Borrower a
certificate certifying that such Taxes or Other Taxes (and/or penalties,
additions to tax, interest and reasonable expenses) were actually incurred by
such Lender or the Administrative Lender and showing in reasonable detail an
accounting of the amount payable and the calculations used to determine in good
faith such amount, which certificate shall be conclusive absent manifest or
demonstrable error. Nothing in this Section 2.14 shall provide the Borrower
------------
or any Subsidiary of the Borrower the right to inspect the records, files or
books of any Lender or the Administrative Lender. This indemnification shall be
made within 30 days from the date such Lender or the Administrative Lender (as
the case may be) makes written demand therefor.
(d) As soon as practicable after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Lender the original or a certified
copy of a receipt evidencing payment thereof. For purposes of this Section 2.14
------------
the terms "United States" and "United States Person" shall have the
------------- --------------------
meanings set forth in Section 7701 of the Code.
(e) Each Lender which is not a United States Person hereby agrees that:
(i) it shall, no later than the Agreement Date (or, in the case of a
Lender which becomes a party hereto pursuant to Section 11.6 after the
------------
Agreement Date, the date upon which such Lender becomes a party hereto) and
at such times as necessary in the reasonable determination of the Borrower,
deliver to the Borrower through the Administrative Lender, with a copy to
the Administrative Lender:
(A) if any lending office is located in the United States of America,
two (2) accurate and complete signed originals of Internal
Revenue Service Form 4224 or any successor thereto ("Form 4224"),
---------
(B) if any lending office is located outside the United States of
America, two (2) accurate and complete signed originals of
Internal Revenue Service Form 1001 or any successor thereto
("Form 1001"),
---------
in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the
account of such lending office or lending offices under this Agreement free
from withholding of United States Federal income tax;
(ii) if at any time such Lender changes its lending office or lending
offices or selects an additional lending office it shall, at the same time
or reasonably promptly thereafter but only to the extent the forms
previously delivered by it hereunder are no longer effective, deliver to
the Borrower through the Administrative Lender, with a copy to the
Administrative Lender, in replacement for the forms previously delivered by
it hereunder:
(A) if such changed or additional lending office is located in the
United States
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of America, two (2) accurate and complete signed
originals of Form 4224; or
(B) otherwise, two (2) accurate and complete signed originals of Form
1001,
in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the
account of such changed or additional lending office under this Agreement
free from withholding of United States Federal income tax;
(iii) it shall, before or promptly after the occurrence of any event
(including the passing of time but excluding any event mentioned in clause
(ii) above) requiring a change in the most recent Form 4224 or Form 1001
previously delivered by such Lender and if the delivery of the same be
lawful, deliver to the Borrower through the Administrative Lender with a
copy to the Administrative Lender, two (2) accurate and complete original
signed copies of Form 4224 or Form 1001 in replacement for the forms
previously delivered by such Lender;
(iv) it shall, promptly upon the request of the Borrower to that
effect, deliver to the Borrower such other forms or similar documentation
as may be required from time to time by any applicable law, treaty, rule or
regulation in order to establish such Lender's tax status for withholding
purposes; and
(v) it shall notify the Borrower after any event (including an
amendment to, or a change in any applicable law or regulation or in the
written interpretation thereof by any regulatory authority or any judicial
authority, or by ruling applicable to such Lender of any governmental
authority charged with the interpretation or administration of any law)
shall occur that results in such Lender no longer being capable of
receiving payments under this Agreement without any deduction or
withholding of United States federal income tax.
(f) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.14 shall survive the payment in full of principal and interest
------------
hereunder.
(g) Each Lender (and the Administrative Lender with respect to payments to
the Administrative Lender for its own account) agrees that (i) it will take all
reasonable actions by all usual means to maintain all exemptions, if any,
available to it from United States withholding taxes (whether available by
treaty, existing administrative waiver or by virtue of the location of any
Lender's lending office), (ii) it will use reasonable best efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its lending office, if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts which may
thereafter accrue and would not, in the reasonable judgment of such Lender, be
materially disadvantageous to such Lender, and (iii) otherwise cooperate with
the Borrower to
-36-
minimize amounts payable by the Borrower under this Section 2.14; provided,
------------ --------
however, the Lenders and the Administrative Lender shall not be obligated by
-------
reason of this Section 2.14(g) to contest the payment of any Taxes or Other
---------------
Taxes or to disclose any information regarding its tax affairs or tax
computations or reorder its tax or other affairs or tax or other planning.
Subject to the foregoing, to the extent the Borrower pays sums pursuant to this
Section 2.14 and the Lender or the Administrative Lender receives a refund of
------------
any or all of such sums, such refund shall be applied to reduce any amounts
then due and owing under this Agreement or, to the extent that no amounts are
due and owing under this Agreement at the time such refunds are received, the
party receiving such refund shall promptly pay over all such refunded sums to
the Borrower, provided that (i) no Event of Default is in existence at such time
or (ii) all of the Obligations have been fully and finally paid or satisfied. At
such time, if any, that such Default or Event of Default is cured or waived, the
party receiving such refund shall promptly pay over all such refunded sums to
the Borrower.
(h) If the Borrower becomes obligated to pay additional amounts described
in this Section 2.14 to any Lender, the Borrower may designate a financial
------------
institution reasonably acceptable to the Administrative Lender to replace such
Lender by purchasing for cash and receiving an assignment of such Lender's pro
rata share of the Commitment and the Rights of such Lender under the Loan
Documents without recourse to or warranty by, or expense to, such Lender, for a
purchase price equal to the outstanding amounts owed to such Lender (including
such additional amounts owing to such Lender pursuant to this Section 2.14).
------------
Upon execution of an Assignment Agreement, such other financial institution
shall be deemed to be a "Lender" for all purposes of this Agreement as set forth
in Section 11.6 hereof.
------------
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Section 2.15 Letters of Credit.
-----------------
(a) The Letter of Credit Facility. The Borrower may request the Issuing
-----------------------------
Bank, on the terms and conditions hereinafter set forth, to issue, and the
Issuing Bank shall, if so requested, issue, letters of credit (the "Letters
-------
of Credit") for the account of the Borrower or any other Obligor from time
---------
to time on any Business Day from the date of the initial Advance until the
Maturity Date in an aggregate maximum amount (assuming compliance with all
conditions to drawing) not to exceed, at any time outstanding, the least of (i)
$20,000,000 (the "Letter of Credit Facility"), (ii) the remainder of
-------------------------
the Borrowing Base minus the aggregate principal amount of Advances then
outstanding, and (iii) the Commitment. No Letter of Credit shall have an
expiration date (including all rights of renewal) later than the earlier of (i)
the Maturity Date or (ii) one year after the date of issuance thereof.
Immediately upon the issuance of each Letter of Credit, the Issuing Bank shall
be deemed to have sold and transferred to each Lender, and each Lender shall be
deemed to have purchased and received from the Issuing Bank, in each case
irrevocably and without any further action by any party, an undivided interest
and participation in such Letter of Credit, each drawing thereunder and the
obligations of the Borrower under this Agreement in respect thereof in an amount
equal to the product of (x) such Lender's Specified Percentage times (y) the
maximum amount available to be drawn under such Letter of Credit (assuming
compliance with all conditions to drawing). Within the limits of the Letter of
Credit Facility, and subject to the limits referred to above, the Borrower may
request the issuance of Letters of Credit under this Section 2.15(a), repay
---------------
any Advances resulting from drawings thereunder pursuant to Section 2.15(c) and
---------------
request the issuance of additional Letters of Credit under this Section 2.15(a).
---------------
(b) Request for Issuance. Each Letter of Credit shall be issued upon
--------------------
notice, given not later than 11:00 a.m. (Dallas, Texas time) on the fourth
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to the Issuing Bank. Each Letter of Credit shall be
issued upon notice given in accordance with the terms of any separate agreement
between the Borrower and the Issuing Bank in form and substance reasonably
satisfactory to the Borrower and the Issuing Bank providing for the issuance of
Letters of Credit pursuant to this Agreement and containing terms and conditions
not inconsistent with this Agreement (a "Letter of Credit Agreement"), provided
-------------------------- --------
that if any such terms and conditions are inconsistent with this Agreement, this
Agreement shall control. Each such notice of issuance of a Letter of Credit by
the Borrower (a "Notice of Issuance") shall be in writing or by telecopier,
------------------
specifying therein, in the case of a Letter of Credit, the requested (A) date of
such issuance (which shall be a Business Day), (B) maximum amount of such Letter
of Credit, (C) expiration date of such Letter of Credit, (D) name and address of
the beneficiary of such Letter of Credit, and (E) form of such Letter of Credit
and specifying such other information as shall be required pursuant to the
relevant Letter of Credit Agreement. If the requested terms of such Letter of
Credit are acceptable to the Issuing Bank in its reasonable discretion, the
Issuing Bank will, upon fulfillment of the applicable conditions set
forth in Article 3 hereof, make such Letter of Credit available to the
---------
Borrower at its office referred to in Section 11.1 or as otherwise agreed
------------
with the Borrower in connection with such issuance.
-38-
(c) Drawing and Reimbursement. The payment by the Issuing Bank of a draft
-------------------------
drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Bank of an Advance, which shall bear
interest at the Base Rate Basis, in the amount of such draft (but without
any requirement for compliance with the conditions set forth in Article 3
---------
hereof). In the event that a drawing under any Letter of Credit is not
reimbursed by the Borrower by 11:00 a.m. (Dallas, Texas time) on the first
Business Day after such drawing, the Issuing Bank shall promptly notify
Administrative Lender and each other Lender. Each such Lender shall, on the
first Business Day following such notification, make a Revolving Credit Advance,
which shall bear interest at the Base Rate Basis, and shall be used to repay the
applicable portion of the Issuing Bank's Advance with respect to such Letter of
Credit, in an amount equal to the amount of its participation in such drawing
for application to reimburse the Issuing Bank (but without any requirement for
compliance with the applicable conditions set forth in Article 3 hereof) and
---------
shall make available to the Administrative Lender for the account of the Issuing
Bank, by deposit at the Administrative Lender's office, in same day funds, the
amount of such Revolving Credit Advance. In the event that any Lender fails to
make available to the Administrative Lender for the account of the Issuing Bank
the amount of such Revolving Credit Advance, the Issuing Bank shall be entitled
to recover such amount on demand from such Lender together with interest thereon
at a rate per annum equal to the lesser of (i) the Highest Lawful Rate or (ii)
the Federal Funds Rate.
(d) Increased Costs. If after the Agreement Date any change in any Law
---------------
or in the interpretation thereof by any court or administrative or governmental
authority charged with the administration thereof shall either (i) impose,
modify or deem applicable any reserve, special deposit or similar requirement
against letters of credit or guarantees issued by, or assets held by, or
deposits in or for the account of, the Issuing Bank or any Lender or any
corporation controlling the Issuing Bank or any Lender or (ii) impose on the
Issuing Bank or any Lender or any corporation controlling the Issuing Bank or
any Lender any other condition regarding this Agreement or any Letter of Credit,
and the result of any event referred to in the preceding clause (i) or (ii)
shall be to increase the cost to the Issuing Bank or any corporation controlling
the Issuing Bank of issuing or maintaining any Letter of Credit or to any Lender
or any corporation controlling such Lender of purchasing any participation
therein or making any Advance pursuant to Section 2.15(c), then, within 30 days
---------------
after demand by the Issuing Bank or such Lender (which demand shall be made not
later than one year after the Issuing Bank or applicable Lender receives notice
of the relevant change), the Borrower shall, subject to Section 11.9 hereof,
------------
pay to the Issuing Bank or such Lender, from time to time as specified by the
Issuing Bank or such Lender, additional amounts that shall be sufficient to
compensate the Issuing Bank or such Lender or any corporation controlling such
Lender for such increased cost. A certificate as to the amount of such increased
cost, submitted to the Borrower by the Issuing Bank or such Lender, shall
certify that such increased costs were actually incurred by the Issuing Bank or
such Lender and shall show in reasonable detail an accounting of the amount
payable and the calculation used to determine in good faith such amount and
shall be conclusive absent manifest or demonstrable error. In determining such
amount, the Issuing Bank or such Lender may use any reasonable averaging or
attribution method. Nothing in this Section 2.15(d) shall provide the
---------------
Borrower or any Subsidiary of the Borrower the right to inspect the records,
files or
-39-
books of the Issuing Bank or any Lender. If the Borrower becomes obligated to
pay additional amounts described in this Section 2.15(d) to any Lender, the
---------------
Borrower may designate a financial institution reasonably acceptable to the
Administrative Lender to replace such Lender by purchasing for cash and
receiving an assignment of such Lender's pro rata share of the Commitments and
the Rights of such Lender under the Loan Documents without recourse to or
warranty by, or expenses to, such Lender, for a purchase price equal to the
outstanding amounts owing to such Lender (including such additional amounts
owing to such Lender pursuant to this Section 2.15(d). Upon execution of an
---------------
Assignment Agreement, such other financial institution shall be deemed to be a
"Lender" for all purposes of this Agreement as set forth in Section 11.6 hereof.
------------
The obligations of the Borrower under this Section 2.15(d) shall survive
---------------
termination of this Agreement. The Issuing Bank or any Lender claiming any
additional compensation under this Section 2.15(d) shall use reasonable efforts
---------------
(consistent with legal and regulatory restrictions) to reduce or eliminate any
such additional compensation which may thereafter accrue and which efforts would
not, in the reasonable judgment of the Issuing Bank or such Lender, be otherwise
disadvantageous.
(e) Obligations Absolute. The obligations of the Borrower under this
--------------------
Agreement with respect to any Letter of Credit, any Letter of Credit Agreement
and any other agreement or instrument relating to any Letter of Credit or any
Advance pursuant to Section 2.15(c) shall be unconditional and irrevocable,
---------------
and shall be paid strictly in accordance with the terms of this Agreement, such
Letter of Credit Agreement and such other agreement or instrument under all
circumstances, including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of this Agreement, any
other Loan Document, any Letter of Credit Agreement, any Letter of Credit
or any other agreement or instrument relating thereto (collectively, the
"L/C Related Documents");
----------------------
(ii) (A) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations of the Borrower in respect
of the Letters of Credit or any Advance pursuant to Section 2.15(c) or (B)
--------------- ---
any other amendment or waiver of or any consent to departure from all or
any of the L/C Related Documents;
(iii) the existence of any claim, set-off, defense or other right that
the Borrower may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any Persons for whom any such beneficiary or any
such transferee may be acting), the Issuing Bank, any Lender or any other
Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the L/C Related Documents or any unrelated
transaction;
(iv) any statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect,
except to the extent finally determined by a court of competent
jurisdiction to be the result of the gross negligence or willful misconduct
of the Issuing Bank in connection therewith;
-40-
(v) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not comply with the terms
of the Letter of Credit, except to the extent finally determined by a court
of competent jurisdiction to be the result of the gross negligence or
willful misconduct of the Issuing Bank in connection therewith;
(vi) any exchange, release or non-perfection of any Collateral, or any
release or amendment or waiver of or consent to departure from any
guarantee, for all or any of the Obligations of the Borrower in respect of
the Letters of Credit or any Advance pursuant to Section 2.15(c); or
---------------
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower or a guarantor, except to the extent finally
determined by a court of competent jurisdiction to be the result of the
gross negligence or willful misconduct of the Issuing Bank in connection
therewith.
(f) Compensation for Letters of Credit.
----------------------------------
(i) Credit Fee. Subject to Section 11.9 hereof, the Borrower shall pay
---------- ------------
to the Administrative Lender for the ratable account of each Lender a fee
(which shall be payable quarterly in arrears on each Quarterly Date and on
the Maturity Date) equal to a rate per annum equal to the product of the
Applicable LIBOR Rate Margin in effect from time to time multiplied by the
average daily amount available for drawing under all outstanding Letters of
Credit. Subject to Section 11.9 hereof, such fee shall be computed on the
------------
basis of a 360-day year for the actual number of days elapsed.
(ii) Fronting Fee. Subject to Section 11.9 hereof, the Borrower shall
------------ ------------
pay to the Administrative Lender for the account of the Issuing Bank a
fronting fee (which shall be payable in arrears on each Quarterly Date and
on the Maturity Date) in an amount equal to 0.10% per annum on the average
daily amount available for drawing under all outstanding Letters of Credit,
computed, subject to Section 11.9 hereof, on the basis of a 360-day year
------------
for the actual number of days elapsed.
(iii) Other Fees. Subject to Section 11.9 hereof, the Borrower shall
---------- ------------
pay, with respect to each amendment, renewal or transfer of each Letter of
Credit and each drawing made thereunder, reasonable documentary and
processing charges in accordance with the Issuing Bank's standard schedule
for such charges in effect at the time of such amendment, renewal,
transfer or drawing, as the case may be.
-41-
(g) L/C Cash Collateral Account.
---------------------------
(i) Upon the Maturity Date or the occurrence, and during the continuance,
of an Event of Default and demand by the Administrative Lender pursuant to
Section 8.2(c), the Borrower will promptly pay to the Administrative Lender
--------------
in immediately available funds an amount equal to the maximum amount then
available to be drawn under the Letters of Credit then outstanding. Any
amounts so received by the Administrative Lender shall be deposited by the
Administrative Lender in a deposit account maintained by the Issuing Bank
(the "L/C Cash Collateral Account").
---------------------------
(ii) As security for the payment of all Reimbursement Obligations and for
any other Obligations, the Borrower hereby grants, conveys, assigns,
pledges, sets over and transfers to the Administrative Lender (for the
benefit of the Issuing Bank and Lenders), and creates in the Administrative
Lender's favor (for the benefit of the Issuing Bank and Lenders) a Lien in,
all money, instruments and securities at any time held in or acquired in
connection with the L/C Cash Collateral Account, together with all proceeds
thereof. The L/C Cash Collateral Account shall be under the sole dominion
and control of the Administrative Lender and the Borrower shall have no
right to withdraw or to cause the Administrative Lender to withdraw any
funds deposited in the L/C Cash Collateral Account. At any time and from
time to time, upon the Administrative Lender's request, the Borrower
promptly shall execute and deliver any and all such further instruments and
documents, including UCC financing statements, as may be necessary,
appropriate or desirable in the Administrative Lender's judgment to obtain
the full benefits (including perfection and priority) of the security
interest created or intended to be created by this paragraph (ii) and of
the rights and powers herein granted. The Borrower shall not create or
suffer to exist any Lien on any amounts or investments held in the L/C Cash
Collateral Account other than the Lien granted under this paragraph (ii).
(iii) The Administrative Lender shall (A) apply any funds in the L/C Cash
Collateral Account on account of Reimbursement Obligations when the same
become due and payable, (B) after the Maturity Date, apply any proceeds
remaining in the L/C Cash Collateral Account first to pay any unpaid
-----
Obligations then outstanding hereunder and then to refund any remaining
----
amount to the Borrower.
(iv) The Borrower, no more than once in any calendar month, may direct
the Administrative Lender to invest the funds held in the L/C Cash
Collateral Account (so long as the aggregate amount of such funds exceeds
any relevant minimum investment requirement) in (A) Cash and Cash
Equivalents or direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency
thereof and (B) one or more other types of investments permitted by the
Determining Lenders, in each case with such maturities as the Borrower,
with the consent of the Determining Lenders, may specify, pending
application of such funds on account of Reimbursement Obligations or on
account of other Obligations, as the case may be. In the absence of any
such direction from the Borrower, the Administrative Lender shall
-42-
invest the funds held in the L/C Cash Collateral Account (so long as the
aggregate amount of such funds exceeds any relevant minimum investment
requirement) in one or more types of investments with the consent of the
Determining Lenders with such maturities as the Borrower, with the consent
of the Determining Lenders, may specify, pending application of such funds
on account of Reimbursement Obligations or on account of other Obligations,
as the case may be. All such investments shall be made in the
Administrative Lender's name for the account of the Lenders, subject to the
ownership interest therein of the Borrower. The Borrower recognizes that
any losses or taxes with respect to such investments shall be borne solely
by the Borrower, and the Borrower agrees to hold the Administrative Lender
and the Lenders harmless from any and all such losses and taxes.
Administrative Lender may liquidate any investment held in the L/C Cash
Collateral Account in order to apply the proceeds of such investment on
account of the Reimbursement Obligations as provided in Section 2.15(g)
---------------
(iii) hereof (or on account of any other Obligation then due and payable,
-----
as the case may be) without regard to whether such investment has matured
and without liability for any penalty or other fee incurred (with respect to
which the Borrower hereby agrees to reimburse the Administrative Lender) as
a result of such application.
(v) After the establishment of the L/C Cash Collateral Account pursuant
to Section 2.15(g)(i) hereof, the Borrower shall pay to the Administrative
------------------
Lender the fees customarily charged by the Issuing Bank with respect to the
maintenance of accounts similar to the L/C Cash Collateral Account.
ARTICLE 3
Conditions Precedent
--------------------
Section 3.1 Conditions Precedent to the Initial Advance and the Initial
-----------------------------------------------------------
Issuance of Letters of Credit. The obligation of each Lender to make the initial
-----------------------------
Revolving Credit Advance, the obligation of the Issuing Bank to issue the
initial Letter of Credit and the obligation of the Swing Line Bank to make the
initial Swing Line Advance are subject to (i) receipt by the Administrative
Lender of the following items which are to be delivered, in form and substance
satisfactory to each Lender, with a copy (except for the Notes and this
Agreement) for each Lender, and (ii) satisfaction of the following conditions
which are to be satisfied:
(a) A loan certificate of each Obligor certifying as to the accuracy of its
representations and warranties in the Loan Documents with respect to such
Obligor, and including a certificate of incumbency with respect to each
Authorized Signatory, and including (i) a copy of the articles or certificate of
incorporation or similar organizational documents of such Obligor, certified to
be true, complete and correct by the secretary of state of its state of
organization, (ii) a copy of the true, complete and correct Bylaws or similar
governance documents of such Obligor, and (iv) a copy of a certificate of good
standing and a certificate of existence for its state of organization and each
state in which the nature of its business requires it
-43-
to be qualified;
(b) a duly executed Revolving Credit Note payable to the order of each
Lender and in an amount for each Lender equal to its Specified Percentage of the
Commitment;
(c) the duly executed Swing Line Note payable to the order of the Swing
Line Bank, in the principal amount of $10,000,000;
(d) UCC searches in appropriate jurisdictions where Collateral is located;
(e) opinions of counsel to each Obligor addressed to the Lenders and in
form and substance reasonably acceptable to the Administrative Lender, dated the
Agreement Date, and addressing the matters set forth in Sections 4.1(a),
---------------
(b), (c), (e), (f), (h), (m), (n), (o) and (p), as deemed appropriate by
--- --- --- --- --- --- --- --- ---
the Administrative Lender, and if the Projects have not been registered under
the Federal Interstate Land Sales Full Disclosure Act, stating that the Projects
do not fall within the purview of the Federal Interstate Land Sales Full
Disclosure Act, and covering such other matters incident to the transactions
contemplated hereby as the Administrative Lender or Special Counsel may
reasonably request;
(f) reimbursement for the Administrative Lender for Special Counsel's
reasonable and customary fees (on an hourly basis) and expenses rendered
through the date hereof, to the extent invoiced;
(g) evidence that all proceedings of each Obligor taken in connection with
the transactions contemplated by this Agreement and the other Loan Documents
shall be reasonably satisfactory in form and substance to the Lenders and
Special Counsel; and the Lenders shall have received copies of all documents or
other evidence which the Administrative Lender, Special Counsel or any Lender
may reasonably request in connection with such transactions;
(h) any fees or expenses required to be paid on or before the Agreement
Date pursuant to the Fee Letter;
(i) duly executed and completed Security Agreements, dated as of the
Agreement Date, granting a Lien, in all Collateral covered thereby, together
with related financing statements, and insurance certificates listing
Administrative Lender, as its interest may appear, as loss payee and additional
insured and otherwise in a form required by the Collateral Documents;
(j) the duly executed Servicing and Collection Agreement;
(k) the duly executed Custodial Agreement;
(l) simultaneously with the making of the initial Revolving Credit Advance,
executed UCC-3 Termination Statements to be filed in appropriate jurisdictions
to terminate all Liens against assets of the Borrower and its Subsidiaries other
than Permitted Liens;
-44-
(m) copies of the form of Purchase Documents which have been or are being
used in connection with the Projects;
(n) there shall have occurred no material adverse change in the business,
assets or financial condition of the Borrower and its Subsidiaries, taken as a
whole, since the date of the financial statements referred to in
Section 4.1(j)(i) hereof;
-----------------
(o) each of the Guaranties, duly executed by the Guarantor party thereto;
(p) in form and substance reasonably satisfactory to the Lenders and
Special Counsel, such other documents, instruments and certificates as the
Administrative Lender or any Lender may reasonably require in connection with
the transactions contemplated hereby, including without limitation, evidence of
the status, organization or authority of the Borrower or any Subsidiary of the
Borrower, and the enforceability of the Obligations; and
(q) The Borrower shall have delivered a Borrowing Base Report reflecting
Eligible Notes Receivable as of the Agreement Date.
Section 3.2 Conditions Precedent to All Advances and Letters of Credit.
----------------------------------------------------------
The obligation of each Lender to make each Revolving Credit Advance
hereunder (including the initial Revolving Credit Advance), the obligation of
the Issuing Bank to issue each Letter of Credit (including the initial Letter of
Credit) and the obligation of the Swing Line Bank to make each Swing Line
Advance (including the initial Swing Line Advance) are subject to fulfillment of
the following conditions immediately prior to or contemporaneously with each
such Advance or issuance:
(a) With respect to each Advance and each issuance of a Letter of Credit,
all of the representations and warranties of each Obligor under the Loan
Documents, which, pursuant to Section 4.2 hereof, are made at and as of the
-----------
time of each such Advance or issuance, shall be true and correct at such time in
all material respects, both before and after giving effect to the application of
the proceeds of the Advance or Letter of Credit.
(b) The incumbency of the Authorized Signatories shall be as stated in the
certificate of incumbency delivered in the Borrower's loan certificate
pursuant to Section 3.1(a) or as subsequently modified and reflected in a
--------------
certificate of incumbency delivered to the Administrative Lender. The Lenders
may, without waiving this condition, consider it fulfilled and a representation
by the Borrower made to such effect if no written notice to the contrary, dated
on or before the date of such Advance or Letter of Credit, is received by the
Administrative Lender from the Borrower prior to the making of such Advance or
issuance of such Letter of Credit;
(c) There shall not exist a Default or Event of Default hereunder that has
not been waived or cured to the satisfaction of the Determining Lenders or all
Lenders, as required
-45-
pursuant to Section 11.11 hereof;
-------------
(d) The aggregate Advances and Letters of Credit, after giving effect to
such proposed Advance or Letter of Credit, shall not exceed the maximum
principal amount then permitted to be outstanding hereunder;
(e) No order, judgment, injunction or decree of any Tribunal shall purport
to enjoin or restrain any Lender or the Issuing Bank from making any Advance or
issuing any Letter of Credit;
(f) There shall not be pending, or to the knowledge of the Borrower,
threatened any Litigation against or affecting the Borrower or any Subsidiary of
the Borrower or any property of the Borrower or any Subsidiary of the Borrower
that has not been disclosed in writing by the Borrower pursuant to Section
-------
4.1(h) or 6.7(a) prior to the making of the last preceding Advance or the
------ ------
issuance of the last preceding Letter of Credit (or in the case of the initial
Advances and Letters of Credit, prior to the Agreement Date) and there shall
have occurred no development not so disclosed in any such Litigation that, in
either event, could reasonably be expected to have a Material Adverse Effect;
(g) There shall have occurred no material adverse change in the business,
financial condition, results of operations or business prospects of the Borrower
and its Subsidiaries, taken as a whole, since December 31, 1996; and
(h) The Borrower shall have delivered a current Borrowing Base Report
evidencing that there is availability under the Commitment after taking into
account the projected Advance or Letter of Credit.
Notwithstanding anything herein to the contrary, the obligation of each Lender
to make a Revolving Credit Advance pursuant to Section 2.15(c) shall be absolute
---------------
and unconditional and shall not be affected by any circumstances, including,
without limitation, (i) the occurrence of any Default or Event of Default, (ii)
the failure of the Borrower to satisfy any condition set forth in this Section
-------
3.2 or (iii) any other circumstance, happening or event whatsoever.
---
Section 3.3 Conditions Precedent to Conversions and Continuations.
-----------------------------------------------------
The obligation of the Lenders to convert any existing Base Rate Advance
into a LIBOR Advance or to continue any existing LIBOR Advance is subject to the
condition precedent that on the date of such conversion or continuation no
Default or Event of Default shall have occurred and be continuing or would
result from the making of such conversion or continuation. The acceptance of
the benefits of each such conversion and continuation shall constitute a
representation and warranty by the Borrower to each of the Lenders that no
Default or Event of Default shall have occurred and be continuing or would
result from the making of such conversion or continuation.
-46-
ARTICLE 4
Representations and Warranties
------------------------------
Section 4.1 Representations and Warranties. The Borrower hereby
------------------------------
represents and warrants to each Lender as follows:
(a) Organization; Power; Qualification. The respective jurisdiction of
----------------------------------
organization or incorporation and percentage ownership by the Borrower of
the Subsidiaries listed on Schedule 4 are true and correct as of the
----------
Agreement Date. Schedule 4 is a complete and accurate listing as of the
----------
Agreement Date, showing with respect to the Borrower and each Subsidiary of the
Borrower (a) its mailing address, which is its principal place of business, (b)
the classes of its Capital Stock and the number and amount of its Capital Stock
authorized and outstanding, (c) each record and beneficial owner of 5% or more
of the outstanding Capital Stock of each Restricted Subsidiary, and (d) all
outstanding options, rights, rights of conversion, redemption, purchase or
repurchase, rights of first refusal and similar rights relating to the Capital
Stock of the Restricted Subsidiaries. All of the outstanding Capital Stock of
the Borrower and each Subsidiary of the Borrower is validly issued, fully paid
and non-assessable. Each of the Borrower and its Subsidiaries is a corporation
or other legal Person duly organized, validly existing and in good standing
under the laws of its state of incorporation or organization. Each of the
Borrower and its Subsidiaries has the legal power and authority to own its
properties and to carry on its business as now being and hereafter proposed to
be conducted. Each of the Borrower and its Subsidiaries is authorized to do
business, duly qualified and in good standing as set forth in
Schedule 7 and no qualification or authorization is necessary in any other
----------
jurisdictions in which the character of its properties or the nature of its
business requires such qualification or authorization, except where the failure
to be so qualified or authorized could not reasonably be expected to have a
Material Adverse Effect.
(b) Authorization. The Borrower has legal power and has taken all
-------------
necessary legal action to authorize it to borrow and request Letters of Credit
hereunder. Each of the Borrower and its Subsidiaries has legal power and has
taken all necessary legal action to execute, deliver and perform the Loan
Documents to which it is party in accordance with the terms thereof, and to
consummate the transactions contemplated thereby. Each Loan Document has been
duly executed and delivered by the Borrower or the Subsidiary of the Borrower
executing it. Each of the Loan Documents to which the Borrower or any of its
Subsidiaries is a party is a legal, valid and binding obligation of the Borrower
or such Subsidiary, as applicable, enforceable in accordance with its terms,
subject, to enforcement of remedies, to the following qualifications: (i)
equitable principles generally, and (ii) Debtor Relief Laws (insofar as any such
law relates to the bankruptcy, insolvency or similar event of the Borrower or
any Subsidiary of the Borrower).
(c) Compliance with Other Loan Documents and Contemplated Transactions.
------------------------------------------------------------------
The execution, delivery and performance by the Borrower and its Subsidiaries of
the Loan Documents to which they are respectively a party, and the consummation
of the transactions contemplated thereby, do not and will not (i) require any
consent or approval necessary on or
-47-
prior to the Agreement Date not already obtained, except to the extent that the
failure to obtain any such consent or approval could not reasonably be expected
to have a Material Adverse Effect, (ii) violate any Applicable Law, (iii)
conflict with, result in a breach of, or constitute a default under the
certificate of incorporation, by-laws or other similar organizational or
governance document of the Borrower or any Subsidiary of the Borrower, (iv)
conflict with, result in a breach of, or constitute a default under any
Necessary Authorization, indenture, agreement or other instrument, to which the
Borrower or any Subsidiary of the Borrower is a party or by which they or their
respective properties may be bound, the result of which could reasonably be
expected to have a Material Adverse Effect, or (v) result in or require the
creation or imposition of any Lien (other than Liens in favor of the Lenders to
secure the Obligations hereunder) upon or with respect to any property now owned
or hereafter acquired by the Borrower or any Subsidiary of the Borrower.
(d) Business. The Borrower and its Subsidiaries are engaged primarily in
--------
the business of acquiring, developing and operating time share resorts and other
time-share activities, providing financing for the purchase of Units or other
interests in its time-share resorts and other leisure activities (exclusive of
gaming) and activities directly related to the foregoing.
(e) Licenses, etc. All Necessary Authorizations have been duly obtained,
--------------
and are in full force and effect without any known conflict with the rights of
others and free from any unduly burdensome restrictions, unless the failure to
obtain or have in effect such Necessary Authorizations could not reasonably be
expected to result in a Material Adverse Effect. The Borrower and its
Subsidiaries are and will continue to be in compliance in all material respects
with all provisions thereof. No circumstance exists which could reasonably be
expected to impair the utility of the Necessary Authorization or the right to
renew such Necessary Authorization the effect of which could reasonably be
expected to have a Material Adverse Effect. No Necessary Authorization is the
subject of any pending or, to the best of the Borrower's knowledge, threatened
challenge, suspension, cancellation or revocation, the effect of which could
reasonably be expected to have a Material Adverse Effect.
(f) Compliance with Law. The Borrower and its Subsidiaries are in
-------------------
compliance in all respects with all Applicable Laws, except where the failure to
so comply could not reasonably be expected to have a Material Adverse Effect.
(g) Title to Properties. The Borrower and its Restricted Subsidiaries have
-------------------
good and indefeasible title to, or a valid leasehold interest in, all of their
material assets. None of their assets are subject to any Liens, except Permitted
Liens. No financing statement or other Lien filing (except relating to Permitted
Liens) is on file in any state or jurisdiction that names the Borrower or any of
its Restricted Subsidiaries as debtor or covers (or purports to cover) any
assets of the Borrower or any of its Restricted Subsidiaries. The Borrower and
its Restricted Subsidiaries have not signed any such financing statement or
filing, nor any security agreement authorizing any Person to file any such
financing statement or filing (except relating to Permitted Liens).
-48-
(h) Litigation. Except as reflected on Schedule 3 hereto, as of the
---------- ----------
Agreement Date there is no Litigation pending against, or, to the Borrower's
current actual knowledge, threatened against the Borrower, or in any other
manner relating directly and adversely to the Borrower or any of its
Subsidiaries, or any of their respective properties, in any court or before any
arbitrator of any kind or before or by any governmental body in which the amount
claimed (in excess of applicable insurance) exceeds $500,000.
(i) Taxes. All material federal, state and other tax returns of the
-----
Borrower and its Subsidiaries required by law to be filed have been duly filed
or extensions have been timely filed, and all material federal, state and other
Taxes upon the Borrower, its Subsidiaries or any of their properties, income,
profits and assets, which are due and payable, have been paid,
unless the same are being diligently contested in accordance with Section
-------
5.6 hereof. The charges, accruals and reserves on the books of the
---
Borrower and its Subsidiaries in respect of their Taxes are, in the
reasonable judgment of the Borrower, adequate.
(j) Financial Statements; Material Liabilities.
------------------------------------------
(i) The Borrower has heretofore delivered to Lenders (a) the audited
consolidated balance sheets of the Borrower and its Subsidiaries as at
December 31, 1996, and the related statements of earnings and changes in
investment and statement of cash flows for the twelve-month period then
ended, and (b) unaudited consolidated balance sheets of the Borrower and its
Subsidiaries as at June 30, 1997, and the related statements of earnings and
statement of cash flows for the six-month period then ended. Such financial
statements were prepared in conformity with GAAP (except for the absence of
footnotes) and fairly present, in all material respects, the financial
position of the Borrower and its Subsidiaries as at the date thereof and the
combined results of operations and cash flows for the period covered
thereby.
(ii) The projected financial statements of the Borrower and its
Subsidiaries delivered to the Lenders prior to or on the Agreement Date were
prepared in good faith and management of the Borrower believes them to be
based on reasonable assumptions (which assumptions have been included in the
most recent projections furnished to the Lenders prior to the Agreement
Date) and to fairly present in all material respects the projected financial
condition of the Borrower and its Subsidiaries and the projected results of
operations as of the dates and for the periods shown for the Borrower and
its Subsidiaries, it being recognized by the Lenders that such projections
as to future events are not to be viewed as facts and that actual results
during the period or periods covered by any such projections may differ from
the projected results.
(iii) The financial statements of the Borrower and its Subsidiaries
delivered to the Lenders pursuant to Section 6.1, 6.2 and 6.3 hereof fairly
----------- --- ---
present in all material respects their respective financial condition and
their respective results of operations as of the dates and for the periods
shown, all in accordance with GAAP, subject to normal year-end adjustments.
The latest of such financial statements reflects all material
-49-
liabilities, direct and contingent, of the Borrower and each Subsidiary of
the Borrower that are required to be disclosed in accordance with GAAP. As
of the date of the latest of such financial statements, there were no
Guaranties, liabilities for Taxes, forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments that are
substantial in amount that are required to be reflected but that are not
reflected on such financial statements or the footnotes thereto.
(k) No Adverse Change. Since December 31, 1996, no event or circumstance
-----------------
has occurred or arisen which is reasonably likely to have a Material Adverse
Effect.
(l) ERISA. None of the Borrower or its Controlled Group maintains or
-----
contributes to any Plan subject to Title IV of ERISA other than those disclosed
to the Administrative Lender in writing. Each such Plan (other than any
Multiemployer Plan) is in compliance in all material respects with the
applicable provisions of ERISA, the Code, and any other applicable Law, except
to the extent that failure to so comply would not reasonably be expected to have
a Material Adverse Effect. With respect to each Plan (other than any
Multiemployer Plan) of the Borrower and each member of its Controlled Group, all
reports required under ERISA or any other Applicable Law to be filed with any
Tribunal, the failure of which to file could reasonably be expected to result in
liability of the Borrower or any member of its Controlled Group in excess of
$100,000, have been duly filed. All such reports are true and correct in all
material respects as of the date given. No Plan of the Borrower or any member of
its Controlled Group has been terminated under Section 4041(c) of ERISA nor has
any accumulated funding deficiency (as defined in Section 412(a) of the Code)
been incurred (without regard to any waiver granted under Section 412 of the
Code), nor has any funding waiver from the Internal Revenue Service been
received or requested the result of which could reasonably be expected to have a
Material Adverse Effect. None of the Borrower or any member of its Controlled
Group has failed to make any contribution or pay any amount due or owing as
required under the terms of any such Plan, or by Section 412 of the Code or
Section 302 of ERISA by the due date under Section 412 of the Code and Section
302 of ERISA, the result of which could reasonably be expected to have a
Material Adverse Effect. There has been no ERISA Event or any event requiring
disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any
Plan (other than any Multiemployer Plan) or its related trust of the Borrower or
any member of its Controlled Group since the effective date of ERISA. The
present value of the benefit liabilities, as defined in Title IV of ERISA, of
each Plan subject to Title IV of ERISA (other than a Multiemployer Plan) of the
Borrower and each member of its Controlled Group does not exceed by more than
$500,000 the present value of the assets of each such Plan as of the most recent
valuation date using each such Plan's actuarial assumptions at such date. There
are no pending, or to the Borrower's knowledge threatened, claims, lawsuits or
actions (other than routine claims for benefits in the ordinary course) asserted
or instituted against, and neither the Borrower nor any member of its Controlled
Group has knowledge of any threatened litigation or claims against, the assets
of any Plan or its related trust or against any fiduciary of a Plan with respect
to the operation of such Plan, the result of which could reasonably be expected
to have a Material Adverse Effect. None of the Borrower or, to the Borrower's
knowledge, any member of its Controlled Group has engaged in any prohibited
transactions, within the meaning of Section 406
-50-
of ERISA or Section 4975 of the Code, in connection with any Plan the result of
which could reasonably be expected to have a Material Adverse Effect. None of
the Borrower or any member of its Controlled Group has incurred or reasonably
expects to incur (A) any liability under Title IV of ERISA (other than premiums
due under Section 4007 of ERISA to the PBGC), (B) any withdrawal liability (and
no event has occurred which with the giving of notice under Section 4219 of
ERISA would result in such liability) under Section 4201 of ERISA as a result of
a complete or partial withdrawal (within the meaning of Section 4203 or 4205 of
ERISA) from a Multiemployer Plan, as defined in Section 1.1 of this Agreement
but without regard to the five-year limitation provided therein or (C) any
liability under Section 4062 of ERISA to the PBGC or to a trustee appointed
under Section 4042 of ERISA. None of the Borrower, any member of its Controlled
Group, or any organization to which the Borrower or any member of its Controlled
Group is a successor or parent corporation within the meaning of ERISA Section
4069(b), has engaged in a transaction within the meaning of ERISA Section 4069,
the result of which could reasonably be expected to have a Material Adverse
Effect. None of the Borrower or any member of its Controlled Group maintains or
has established any Plan, which is a welfare benefit plan within the meaning of
Section 3(1) of ERISA and which provides for continuing benefits or coverage for
any participant or any beneficiary of any participant after such participant's
termination of employment, except as may be required by any Applicable Law, the
result of which could reasonably be expected to have a Material Adverse Effect.
Each of Borrower and its Controlled Group which maintains a Plan which is a
welfare benefit plan within the meaning of Section 3(1) of ERISA has complied in
all material respects with any applicable notice and continuation requirements
of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and
the regulations thereunder. None of the Borrower or any member of its Controlled
Group maintains, has established, or has ever participated in a multiemployer
welfare benefit arrangement within the meaning of Section 3(40)(A) of ERISA.
(m) Compliance with Regulations G, T, U and X. The Borrower is not engaged
-----------------------------------------
principally or as one of its important activities in the business of extending
credit for the purpose of purchasing or carrying any margin stock within the
meaning of Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System, and no part of the proceeds of the Advances or Letters of Credit
will be used to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock. No more than 25% of
the assets of the Borrower and its Subsidiaries are margin stock. None of the
Borrower and its Subsidiaries nor any agent acting on their behalf, have taken
or will knowingly take any action which would cause this Agreement or any other
Loan Documents to violate any regulation of the Board of Governors of the
Federal Reserve System or to violate the Securities Exchange Act of 1934, in
each case as in effect now or as the same may hereafter be in effect.
(n) Authorization. The Borrower and its Subsidiaries are not required to
-------------
obtain any Necessary Authorization on or prior to the Agreement Date that has
not already been obtained from, or effect any material filing or registration
that has not already been effected with, any Tribunal in connection with the
execution and delivery of this Agreement or any other Loan Document, or the
performance thereof, in accordance with their respective terms, including any
borrowings hereunder, except for the filing of financing statements (and other
similar notices)
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containing a description of the Collateral with certain Tribunals.
(o) Absence of Default. The Borrower and its Subsidiaries are in
------------------
compliance in all material respects with all of the provisions of their
certificate of incorporation and by-laws (or similar organizational and
governance documents), and no event has occurred or failed to occur, which has
not been remedied or waived, the occurrence or non-occurrence of which
constitutes, or which with the passage of time or giving of notice or both would
constitute, (i) an Event of Default or (ii) a default by the Borrower or any of
its Subsidiaries under any indenture, agreement or other instrument, or any
judgment, decree or order to which the Borrower or any of its Subsidiaries or by
which they or any of their respective properties is bound, except to the extent
that such default could not reasonably be expected to have a Material Adverse
Effect.
(p) Governmental Regulation. Neither the Borrower nor any of its
-----------------------
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act or the
Investment Company Act of 1940. Neither the entering into or performance by the
Borrower of this Agreement nor the issuance of the Notes violates any provision
of such act or requires any consent, approval, or authorization of, or
registration with, the Securities and Exchange Commission or any other Tribunal
pursuant to any provisions of such act.
(q) Environmental Matters. Neither the Borrower nor any Subsidiary has any
---------------------
current actual knowledge that any substance deemed hazardous by any Applicable
Environmental Law, has been installed (i) on any real property fee title to
which is now owned by the Borrower or any of its Subsidiaries or (ii) by
Borrower or any of its Subsidiaries on any real property leased by the Borrower
or any of its Subsidiaries, in either case in a manner which does not comply
with Applicable Environmental Laws, except to the extent that the failure to so
comply could not reasonably be expected to have a Material Adverse Effect. The
Borrower and its Subsidiaries are not in violation of or subject to any
existing, pending or, to the best of the Borrower's knowledge, threatened
investigation or inquiry by any Tribunal or to any remedial obligations under
any Applicable Environmental Laws, the effect of which could reasonably be
expected to have a Material Adverse Effect. The Borrower and its Subsidiaries
have not obtained and are not required to obtain any permits, licenses or
similar authorizations other than certificates of occupancy and building permits
and other authorizations that have been obtained to construct, occupy, operate
or use any buildings, improvements, fixtures, and equipment forming a part of
any real property owned or leased by the Borrower or any Subsidiary of the
Borrower by reason of any Applicable Environmental Laws, except to the extent
that the failure to so obtain could not reasonably be expected to have a
Material Adverse Effect. The Borrower and its Subsidiaries undertook, at the
time of acquisition of fee title to any real property, reasonable inquiry into
the previous ownership and uses of such real property consistent with good
commercial or customary practice. The Borrower and its Subsidiaries have taken
reasonable steps to determine, and the Borrower and its Subsidiaries have no
current actual knowledge, that any hazardous substances or solid wastes have
been disposed of or otherwise released (i) on or to the real property fee title
to which is owned by the Borrower or any of its Subsidiaries or (ii) by Borrower
or any of its Subsidiaries on or to any real property leased by Borrower or any
of its
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Subsidiaries, all within the meaning of the Applicable Environmental Laws, the
effect of which could reasonably be expected to have a Material Adverse Effect.
To the extent required to do so by any Applicable Environmental Laws, the
Borrower and its Subsidiaries have disposed of all hazardous substances and
solid wastes (if any), all within the meaning of the Applicable Environmental
Laws, generated in their respective businesses in compliance with all Applicable
Environmental Laws, except to the extent that the failure to so comply could not
reasonably be expected to have a Material Adverse Effect.
(r) Certain Fees. No broker's, finder's or other fee or commission will be
------------
payable by the Borrower (other than to the Lenders hereunder) with respect to
the making of the Commitments or the Advances hereunder. The Borrower agrees to
indemnify and hold harmless the Administrative Lender and each Lender from and
against any claims, demand, liability, proceedings, costs or expenses asserted
with respect to or arising in connection with any such fees or commissions
payable by the Borrower.
(s) Patents, Etc. Except as reflected on Schedule 8 hereto, the Borrower
------------ ----------
and its Subsidiaries have collectively obtained or applied for all patents,
trademarks, service marks, trade names, copyrights, licenses and other rights,
free from burdensome restrictions, that are necessary for the operation of their
business as presently conducted and as proposed to be conducted, except to the
extent that the failure to so obtain or apply could not reasonably be expected
to have a Material Adverse Effect. Except as reflected on Schedule 8 hereto,
----------
nothing has come to the current actual knowledge of the Borrower or any of its
Subsidiaries to the effect that (i) any process, method, part or other material
presently contemplated to be employed by the Borrower or any Subsidiary of the
Borrower may infringe any patent, trademark, service xxxx, trade name,
copyright, license or other right owned by any other Person, or (ii) there is
pending or overtly threatened any claim or litigation against or affecting the
Borrower or any Subsidiary of the Borrower contesting its right to sell or use
any such process, method, part or other material, which could reasonably be
expected to have a Material Adverse Effect.
(t) Disclosure. All factual information furnished by the Borrower or any
----------
of its Subsidiaries in writing to the Administrative Lender or any Lender in
connection with this Agreement, the other Loan Documents or any transaction
contemplated herein or therein is, and all other factual information hereafter
furnished by or on behalf of the Borrower or any of its Subsidiaries in writing
to the Administrative Lender or any Lender will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided. There is no fact known
to the Borrower and not known to the public generally that could reasonably be
expected to have a Material Adverse Effect, which has not been set forth in this
Agreement or in the documents, certificates and statements furnished to the
Lenders by or on behalf of the Borrower prior to the date hereof in connection
with the transaction contemplated hereby.
(u) Solvency. The Borrower is, and Borrower and its Subsidiaries on a
--------
consolidated
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basis are, Solvent.
(v) Labor Relations. Except as provided on Schedule 9, neither the
--------------- ----------
Borrower nor any Subsidiary is a party to a collective bargaining agreement or
similar agreement, and the Borrower and each Subsidiary is in compliance in all
material respects with all Laws respecting employment and employment practices,
terms and conditions of employment, wages and hours and other laws related to
the employment of its employees, except where the failure to comply could not
reasonably be expected to result in a Material Adverse Effect, and there are no
arrears in the payment of wages, withholding or social security taxes,
unemployment insurance premiums or other similar obligations of the Borrower or
any Subsidiary or for which the Borrower or any Subsidiary may be responsible
other than in the ordinary course of business, except for such unpaid or
unwithheld arrears which could not reasonably be expected to result in a
Material Adverse Effect. There is no strike, work stoppage or labor dispute with
any union or group of employees pending or overtly threatened involving Borrower
or any Subsidiary that could reasonably be expected to have a Material Adverse
Effect.
(w) Consolidated Business Entity. The Borrower and its Subsidiaries are
----------------------------
engaged in the business of developing and operating time-share resorts and other
leisure activities. These operations require financing on a basis such that the
credit supplied can be made available from time to time to the Borrower and
various of its Subsidiaries, as required for the continued successful operation
by the Borrower and its Subsidiaries as a whole. The Borrower and its
Subsidiaries expect to derive benefit (and the board of directors of the
Borrower and its Subsidiaries have determined that the Borrower and its
Subsidiaries may reasonably be expected to derive benefit), directly or
indirectly, from the credit extended by the Lenders hereunder, both in their
separate capacities and as members of the group of companies, since the
successful operation and condition of the Borrower and its Subsidiaries is
dependent on the continued successful performance of the functions of the group
as a whole.
(x) Time-Share Interest Exchange Network. Borrower and its Subsidiaries
------------------------------------
are members and participants, pursuant to validly executed and enforceable
written agreements in Resort Condominiums International, L.L.C. and Interval
International. Borrower and its Subsidiaries have paid all fees and other
amounts due and owing under such agreements and are not otherwise in default
thereunder.
(y) Time-Share Interests. The sale, offering of sale, and financing of
--------------------
Time-Share Interests in the Projects (i) do not constitute the sale, or the
offering of sale, of securities subject to registration requirements of the
Securities Act of 1933, as amended, or any state or foreign securities Law, (ii)
do not violate any time-sharing or other Law of any state or foreign country in
which sales or solicitation of Time-Share Interests occur, and (iii) do not
violate any consumer credit or usury Laws of any state or foreign country in
which sales or solicitation of Time-Share Interests occur. The Borrower and its
Subsidiaries have not failed to make or cause to be made any registrations or
declarations with any Tribunal necessary to the ownership of the Projects or to
the conduct of its business, including, without limitation, the operation of the
Projects and the sale, or offering for sale, of Time-Share Interests therein.
Borrower and its Subsidiaries have, to
-54-
the extent required by its activities and businesses, fully complied with (i)
all of the applicable provisions of (A) the Consumer Credit Protection Act, as
amended, (B) the Federal Trade Commission Act, as amended, (C) the Federal
Interstate Land Sales Full Disclosure Act, as amended, (D) any other Laws of any
Tribunal otherwise applicable, and (E) all rules and regulations promulgated
under any of the foregoing. True and complete copies of the Purchase Documents
and other documents requested by the Administrative Lender which have been and
are being used by the Borrower and its Subsidiaries in connection with the
Projects and the sale or offering for sale of Time-Share Interests therein have
been delivered to the Administrative Lender. The Time-Share Interests in the
Projects constitute undivided interests in real property under the Laws of the
jurisdictions in which the applicable Units are located.
(z) Common Areas. The common areas and amenities appurtenant to sold Time-
------------
Share Interests, and the streets and other off-site improvements contained
within the Projects have been completed or a bond insuring the completion
thereof has been obtained and such interests in such common areas are free and
clear of all Liens except Permitted Liens.
(aa) Subordinated Debt. The terms, provisions, covenants and requirements
-----------------
contained in the documents, instruments and agreements relating to the
Subordinated Debt are not more restrictive than the comparable terms,
provisions, covenants and requirements contained in this Agreement and the other
Loan Documents. All of the Obligations constitute senior indebtedness under the
documents, instruments and agreements evidencing or relating to the Subordinated
Debt and, as such, all of the Obligations are expressly superior in right of
payment to the Subordinated Debt.
Section 4.2 Survival of Representations and Warranties, etc.
-----------------------------------------------
All representations and warranties made under this Agreement and the other
Loan Documents shall be deemed to be made at and as of the Agreement Date and at
and as of the date of each Advance and the date of issuance of each Letter of
Credit, and each shall be true and correct in all material respects when made,
except to the extent (a) previously fulfilled in accordance with the terms
hereof or (b) previously waived in writing by the Determining Lenders with
respect to any particular factual circumstance or permitted by the terms of this
Agreement. All such representations and warranties shall survive, and not be
waived by, the execution hereof by any Lender, any investigation or inquiry by
any Lender, or by the making of any Advance or the issuance of any Letter of
Credit under this Agreement.
ARTICLE 5
General Covenants
-----------------
So long as any of the Obligations are outstanding and unpaid or any Commitment
is outstanding (whether or not the conditions to borrowing have been or can be
fulfilled):
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Section 5.1 Preservation of Existence and Similar Matters.
---------------------------------------------
The Borrower shall, and shall cause each Subsidiary of the Borrower to:
(a) except as otherwise permitted pursuant to Section 7.4 hereof,
-----------
preserve and maintain, or timely obtain and thereafter preserve and maintain,
its existence, rights, franchises, licenses, authorizations, consents,
privileges and all other Necessary Authorizations from any Tribunal, the loss of
which could reasonably be expected to have a Material Adverse Effect; and
(b) except as otherwise permitted pursuant to Section 7.4 hereof, qualify
-----------
and remain qualified and authorized to do business in each jurisdiction in which
the character of its properties or the nature of its business requires such
qualification or authorization, unless the failure to do so could not reasonably
be expected to have a Material Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The Borrower and
----------------------------------------
its Subsidiaries shall (a) engage primarily in the businesses set forth in
Section 4.1(d) hereof, and (b) comply in all respects with the requirements
--------------
of all Applicable Law, except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect.
Section 5.3 Maintenance of Properties. To the maximum extent that the
-------------------------
Borrower and/or any Subsidiary of the Borrower has the right, power or authority
(whether as a matter of contract, at law or otherwise) to do so, the Borrower
shall, and shall cause each Subsidiary of the Borrower to, maintain or cause to
be maintained all its properties (whether owned or held under lease) in
reasonably good repair, working order and condition, taken as a whole, and from
time to time make or cause to be made all appropriate (in the reasonable
judgment of the Borrower) repairs, renewals, replacements, additions,
betterments and improvements thereto, except where the failure to so maintain,
repair, renew, replace or improve could not reasonably be expected to have a
Material Adverse Effect.
Section 5.4 Accounting Methods and Financial Records. The Borrower shall,
----------------------------------------
and shall cause each Subsidiary of the Borrower to, maintain a system of
accounting established and administered in accordance with GAAP, keep adequate
records and books of account in which complete entries will be made and all
transactions reflected in accordance with GAAP, and keep accurate and complete
records of its respective assets. The Borrower and each of its Subsidiaries
shall maintain its fiscal year in the manner in existence on the Agreement Date.
Section 5.5 Insurance. The Borrower shall, and shall cause each Restricted
---------
Subsidiary of the Borrower to, maintain insurance from responsible companies in
such amounts and against such risks as shall be customary and usual in the
industry for companies of similar size and capability. Each insurance policy
shall (a) provide for at least 30 days' prior notice to the Administrative
Lender of any proposed termination or cancellation of such policy, whether on
account of default or otherwise and (b) otherwise contain the requirements for
insurance set forth in the Security Agreements.
Section 5.6 Payment of Taxes and Claims. The Borrower shall, and shall
---------------------------
cause each
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Subsidiary of the Borrower to, pay and discharge all material Taxes to which
they are subject prior to the date on which penalties attach thereto, and all
lawful material claims for labor, materials and supplies which, if unpaid, might
become a Lien upon any of its properties; except that no such Tax or claim need
be paid which is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on the
appropriate books, but only so long as no Lien shall attach with respect thereto
and no foreclosure, distraint, sale or similar proceedings shall have been
commenced. The Borrower shall, and shall cause each Subsidiary of the Borrower
to, timely file all information returns (or extensions of such filing deadlines)
required by federal, state or local tax authorities.
Section 5.7 Visits and Inspections. The Borrower shall, and shall cause
----------------------
each Subsidiary of the Borrower to, promptly permit representatives of the
Administrative Lender or any Lender from time to time after reasonable notice by
the Administrative Lender or any Lender to (a) visit and inspect the properties
of the Borrower and its Subsidiaries as often as the Administrative Lender or
any Lender shall reasonably deem advisable, (b) audit, inspect and make extracts
from and copies of the Borrower's and each such Subsidiary's books and records,
and (c) discuss with the Borrower's and each such Subsidiary's appropriate
directors, officers, employees and auditors its business, assets, liabilities,
financial positions, results of operations and business prospects, provided
--------
that such representatives of the Administrative Lender or any Lender shall keep
confidential all information obtained pursuant to this Section 5.7 to the extent
-----------
required by Section 11.14. The Borrower shall pay the reasonable expenses
-------------
related to up to three (3) such inspections and audits performed by the
Administrative Lender per twelve-month period. Prior to the occurrence of an
Event of Default, all such visits and inspections shall be conducted during
normal business hours. Following the occurrence and during the continuance of an
Event of Default, such visits and inspections shall be conducted at any time
requested by the Administrative Lender or any Lender without any requirement for
reasonable notice.
Section 5.8 Use of Proceeds. The proceeds of the Advances and the Letters
---------------
of Credit shall be used by the Borrower (a) to refinance certain existing debt
of the Borrower and its Subsidiaries, (b) finance Acquisitions permitted under
Section 7.6 hereof, (c) finance eligible mortgage loans, (d) finance the
-----------
ongoing working capital and general corporate requirements of the Borrower and
its Subsidiaries, and (e) for other legitimate corporate purposes not otherwise
prohibited hereunder.
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SECTION 5.9 INDEMNITY.
---------
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(a) THE BORROWER AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS THE
ADMINISTRATIVE LENDER, EACH LENDER, EACH OF THEIR RESPECTIVE AFFILIATES, AND
EACH OF THEIR RESPECTIVE (INCLUDING SUCH AFFILIATES') OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ATTORNEYS, SHAREHOLDERS AND CONSULTANTS (INCLUDING, WITHOUT
LIMITATION, THOSE RETAINED IN CONNECTION WITH THE SATISFACTION OR ATTEMPTED
SATISFACTION OF ANY OF THE CONDITIONS SET FORTH HEREIN) OF EACH OF THE FOREGOING
(COLLECTIVELY, "INDEMNITEES") FROM AND AGAINST ANY AND ALL LIABILITIES,
-----------
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, PROCEEDINGS (WHETHER CIVIL OR
CRIMINAL), JUDGMENTS, SUITS, CLAIMS, REASONABLE COSTS, REASONABLE EXPENSES AND
REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT
LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR SUCH
INDEMNITEES IN CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL
PROCEEDING, WHETHER OR NOT SUCH INDEMNITEES SHALL BE DESIGNATED A PARTY
THERETO), IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH INDEMNITEES (WHETHER
DIRECT, INDIRECT OR CONSEQUENTIAL AND WHETHER BASED ON ANY FEDERAL, STATE, OR
LOCAL LAWS AND REGULATIONS, UNDER COMMON LAW OR AT EQUITABLE CAUSE, OR ON
CONTRACT, TORT OR OTHERWISE, ARISING FROM OR CONNECTED WITH THE PAST, PRESENT OR
FUTURE OPERATIONS OF THE BORROWER, ITS SUBSIDIARIES OR THEIR RESPECTIVE
PREDECESSORS IN INTEREST, OR THE PAST, PRESENT OR FUTURE ENVIRONMENTAL CONDITION
OF PROPERTY OF THE BORROWER OR ITS SUBSIDIARIES), RELATING TO OR ARISING OUT OF
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY ACT, EVENT OR TRANSACTION OR
ALLEGED ACT, EVENT OR TRANSACTION RELATING OR ATTENDANT THERETO, THE MANAGEMENT
OF THE ADVANCES OR LETTERS OF CREDIT, INCLUDING IN CONNECTION WITH, OR AS A
RESULT, IN WHOLE OR IN PART, OF ANY ORDINARY OR MERE NEGLIGENCE OF
ADMINISTRATIVE LENDER OR ANY LENDER (OTHER THAN THOSE MATTERS RAISED EXCLUSIVELY
BY A PARTICIPANT OR OTHER LENDER AGAINST THE ADMINISTRATIVE LENDER OR ANY LENDER
AND NOT THE BORROWER OR ANY OF ITS SUBSIDIARIES), OR THE USE OR INTENDED USE OF
THE PROCEEDS OF THE ADVANCES OR LETTERS OF CREDIT HEREUNDER, OR IN CONNECTION
WITH ANY INVESTIGATION OF ANY POTENTIAL MATTER COVERED HEREBY, OR THE PROJECTS,
OR ANY LENDER'S STATUS BY VIRTUE OF THE ASSIGNMENT OF PLEDGED DOCUMENTS, OR ANY
ACT OR OMISSION BY THE BORROWER, ANY OF ITS SUBSIDIARIES, THE CUSTODIAN OR THE
SERVICING AGENT, OR THE EMPLOYEES OR AGENTS OF ANY OF THEM, OR ANY ACT OR
OMISSION BY ALL BROKERS, AGENTS OR OTHER SALESMEN OF TIME-SHARE INTERESTS, BUT
EXCLUDING (I) ANY CLAIM OR LIABILITY THAT ARISES AS THE RESULT OF THE GROSS
NEGLIGENCE OR WILFUL MISCONDUCT OF ANY INDEMNITEE, AS FINALLY JUDICIALLY
DETERMINED BY A COURT OF
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COMPETENT JURISDICTION, AND (ii) MATTERS RAISED BY ONE LENDER OR PARTICIPANT
AGAINST ANOTHER LENDER OR PARTICIPANT OR BY ANY SHAREHOLDERS OF A LENDER OR A
PARTICIPANT AGAINST A LENDER OR A PARTICIPANT OR THE RESPECTIVE MANAGEMENT OF
SUCH LENDER OR PARTICIPANT (COLLECTIVELY, "INDEMNIFIED MATTERS"). TO THE
--------------------
EXTENT THAT ANY INDEMNIFIED MATTER INVOLVES ONE OR MORE INDEMNITEES, SUCH
INDEMNITEES SHALL USE THE SAME LEGAL COUNSEL UNLESS ANY INDEMNITEE IN ITS
REASONABLE DISCRETION DETERMINES THAT CONFLICTS EXIST OR MAY ARISE IN CONNECTION
WITH SUCH REPRESENTATION.
(b) WITHOUT DUPLICATION, THE BORROWER SHALL PERIODICALLY, UPON REQUEST,
REIMBURSE EACH INDEMNITEE FOR ITS REASONABLE LEGAL AND OTHER ACTUAL REASONABLE
EXPENSES (INCLUDING THE REASONABLE COST OF ANY INVESTIGATION AND PREPARATION)
INCURRED IN CONNECTION WITH ANY INDEMNIFIED MATTER. THE REIMBURSEMENT,
INDEMNITY AND CONTRIBUTION OBLIGATIONS UNDER THIS SECTION SHALL BE IN ADDITION
TO ANY LIABILITY WHICH THE BORROWER MAY OTHERWISE HAVE, SHALL EXTEND UPON THE
SAME TERMS AND CONDITIONS TO EACH INDEMNITEE, AND SHALL BE BINDING UPON AND
INURE TO THE BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL
REPRESENTATIVES OF THE BORROWER, THE ADMINISTRATIVE LENDER, THE LENDERS AND ALL
OTHER INDEMNITEES. THIS SECTION SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT
AND PAYMENT OF THE OBLIGATIONS.
Section 5.10 Environmental Law Compliance. The use which the Borrower or
----------------------------
any Subsidiary of the Borrower intends to make of any real property which is
owned or leased by it will not result in the disposal or other release of any
hazardous substance or solid waste on or to such real property which is in
violation of Applicable Environmental Laws, the effect of which could reasonably
be expected to have a Material Adverse Effect. As used herein, the terms
"hazardous substance" and "release" as used in this Section shall have the
meanings specified in CERCLA (as defined in the definition of Applicable
Environmental Laws), and the terms "solid waste" and "disposal" shall have the
meanings specified in RCRA (as defined in the definition of Applicable
Environmental Laws); provided, however, that if CERCLA or RCRA is amended so as
to broaden or lessen the meaning of any term defined thereby, such broader or
lesser meaning shall apply subsequent to the effective date of such amendment;
and provided further, to the extent that any other law applicable to the
Borrower, any Subsidiary or any of their properties establishes a meaning for
"hazardous substance," "release," "solid waste," or "disposal" which is broader
or lesser than that specified in either CERCLA or RCRA, such broader or lesser
meaning shall apply. The Borrower agrees to indemnify and hold the
Administrative Lender and each Lender harmless from and against, and to
reimburse them with respect to, any and all claims, demands, causes of action,
loss, damage, liabilities, reasonable costs and reasonable expenses (including
reasonable attorneys' fees and courts costs) of any kind or character, known
-60-
or unknown, fixed or contingent, asserted against or incurred by any of them at
any time and from time to time by reason of or arising out of (a) the failure of
the Borrower or any Subsidiary to perform any of their obligations hereunder
regarding asbestos or Applicable Environmental Laws, (b) any violation on or
before the Release Date of any Applicable Environmental Law in effect on or
before the Release Date, and (c) any act, omission, event or circumstance
existing or occurring on or prior to the Release Date (including without
limitation the presence on such real property or release from such real property
of hazardous substances or solid wastes disposed of or otherwise released on or
prior to the Release Date), resulting from or in connection with the ownership
of the real property, regardless of whether the act, omission, event or
circumstance constituted a violation of any Applicable Environmental Law at the
time of its existence or occurrence; provided that, the Borrower shall not be
under any obligation to indemnify the Administrative Lender or any Lender to the
extent that any such liability arises as the result of the gross negligence or
wilful misconduct of such Person, as finally judicially determined by a court of
competent jurisdiction. The provisions of this paragraph shall survive the
Release Date and shall continue thereafter in full force and effect.
Section 5.11 Further Assurances. At any time or from time to time
------------------
upon request by the Administrative Lender, the Borrower or any Subsidiary of the
Borrower shall execute and deliver such further documents and do such other acts
and things as the Administrative Lender may reasonably request in order to
effect fully the purposes of this Agreement and the other Loan Documents and to
provide for payment of the Obligations in accordance with the terms of this
Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, the Borrower agrees to (a) update and deliver to the Administrative
Lender Schedules 3 and 4 hereto at the time of delivery of the
----------- -
financial statements set forth in Sections 6.1 and 6.2 hereof if the information
------------ ---
provided therein is not complete and correct, and (b) update and deliver to
the Administrative Lender Schedule 1 to the Security Agreements promptly upon
----------
discovery if the information provided therein is not complete and correct.
Section 5.12 Management of Projects. To the maximum extent that the
----------------------
Borrower and/or any Subsidiary of the Borrower has the right, power or authority
(whether as a matter of contract, at law or otherwise) to do so, the Borrower
shall, and shall cause each of its Subsidiaries to, maintain managers and
management contracts with respect to each Project which are reasonably
satisfactory to the Administrative Lender. The Borrower shall not change the
manager of any Project or materially amend, modify or waive any provision of or
terminate the management contract for any Project without the prior written
consent of the Administrative Lender.
Section 5.13 Obligations to Purchasers. The Borrower shall, and shall
-------------------------
cause each of its Subsidiaries to, fulfill all obligations to the Purchasers
under Eligible Notes Receivable which are used in making the Borrowing Base
computations or otherwise constitute part of the Collateral.
Section 5.14 Owners Associations. The Borrower shall, and shall cause
-------------------
each of its
-61-
Subsidiaries to, cause each Purchaser to automatically be a member of each
Project's owners association or associations, if any, and shall be entitled to
vote on the affairs thereof (subject, however, to any preferential voting rights
in favor of the Borrower or any of its Subsidiaries as permitted under
applicable time-share Laws). Each such owners association shall have the
authority to fix and levy pro rata upon each Purchaser annual assessments to
cover the costs of maintaining and operating such Project (including, without
limitation, taxes and assessments not levied by the appropriate taxing authority
directly against owners of Time-Share Interests) and to establish a reasonable
reserve for improvements, the replacement of property and furnishings, and
contingencies. If the Borrower or any of its Subsidiaries controls an owners
association, the Borrower or any of its Subsidiaries will while it controls such
association: (i) cause such owners association to (A) discharge timely and
completely its obligations under such Project's governing documents and maintain
the reserve described above; and (ii) pay to such owners association not less
often than every twelve months hereafter the difference between (A) the
cumulative total amount of the maintenance and operating expenses incurred by
such association, together with the amount of any installment of real property
taxes currently due and payable with respect to such Project not directly levied
against owners of Time-Share Interests, through the end of the calendar month
preceding the month in which such payment is made and (B) the cumulative total
amount of assessments (less amounts thereof allocated to reserve expenses)
payable to the association by Time-Share Interest owners other than the Borrower
or its Subsidiaries, as appropriate, through the end of the calendar month
preceding the month in which such payment is made.
Section 5.15 Note Receivable Information. The Borrower shall, and shall
---------------------------
cause each of its Subsidiaries to, maintain accurate and complete files relating
to the Notes Receivable and other Collateral, and such files will contain copies
of each Note Receivable, copies of all relevant credit memoranda relating to
such Notes Receivable and all collection information and correspondence related
thereto.
Section 5.16 Maintenance of Borrowing Base. The Borrower shall, and shall
-----------------------------
cause each of its Restricted Subsidiaries to, at all times maintain the
Borrowing Base at an amount equal to or greater than the aggregate principal
amount of all outstanding Revolving Credit Advances, Swing Line Advances and
Reimbursement Obligations. If any Note Receivable is included in the Borrowing
Base as an Eligible Note Receivable and such Note Receivable thereafter fails to
meet the criteria for inclusion as an Eligible Note Receivable, the Borrower
shall have the right to (i) within three (3) days after occurrence of the event
or circumstance that results in such Note Receivable not qualifying as an
Eligible Note Receivable, provide additional Notes Receivable, satisfying the
definition of Eligible Notes Receivable and (ii) upon satisfaction of the
requirements of the preceding clause (i), obtain a release of the nonqualifying
Note Receivables from the Liens hereunder in favor of the Administrative Lender
and the Lenders. Provided, further, that if a Note Receivable is not past-due or
otherwise in default and such Note Receivable ceases to qualify as an Eligible
Note Receivable solely by virtue of (i) the reduction of the amount of any
scheduled payment(s) with respect thereto or (ii) the extension of the maturity
date thereof, a Note Receivable received by the Borrower or a Restricted
Subsidiary in
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substitution or replacement therefor shall not fail to qualify as an Eligible
Note Receivable solely by virtue of the fact that the Purchaser in respect of
such substitution or replacement Note Receivable has not made at least the first
regularly scheduled payment due thereon.
ARTICLE 6
Information Covenants
---------------------
So long as any of the Obligations are outstanding and unpaid or any Commitment
is outstanding (whether or not the conditions to borrowing have been or can be
fulfilled), the Borrower shall furnish or cause to be furnished to each Lender
or shall notify each Lender of the following events:
Section 6.1 Borrowing Base Report. Within 15 days after the end of each month
---------------------
of each fiscal year, the Borrowing Base Report setting forth (a) a certification
of Eligible Notes Receivable, (b) calculation of the Borrowing Base, and (c) an
asset portfolio report in form and substance satisfactory to the Administrative
Lender.
Section 6.2 Eligible Notes Receivable Report. Within 30 days after the second
--------------------------------
fiscal quarter and the last fiscal quarter of each fiscal year, a report showing
through the end of such fiscal quarter, (a) the opening and closing balances on
each Eligible Note Receivable, (b) all payments received on each Eligible Note
Receivable allocated to interest, principal, late charges, taxes or the like,
(c) the average rate of interest for all Eligible Notes Receivable, (d) an
itemization of delinquencies, prepayments and any other adjustments for each
Eligible Note Receivable, (e) the average down payment received with respect to
all Eligible Notes Receivable, and (g) the nature and status of any claims
asserted or legal action pending with respect to any Eligible Note Receivable.
Section 6.3 Quarterly Financial Statements and Information.
----------------------------------------------
(a) Within 45 days after the end of each fiscal quarter of each fiscal
year, the consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as at the end of such fiscal quarter and the related consolidated
and consolidating statements of income for such fiscal quarter and for the
elapsed portion of the year ended with the last day of such fiscal quarter, and
consolidated and consolidating statements of cash flow for the elapsed portion
of the year ended with the last day of such fiscal quarter, all of which shall
be certified by the president, chief financial officer or treasurer of the
Borrower, to, in his or her opinion acting solely in his or her capacity as an
officer of the Borrower, present fairly in all material respects, in accordance
with GAAP (except for the absence of footnotes), the financial position and
results of operations of the Borrower and its Subsidiaries as at the end of and
for such fiscal quarter, and for the elapsed portion of the year ended with the
last day of such fiscal quarter, subject only to normal year-end adjustments.
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(b) Within 45 days after the end of each fiscal quarter of each fiscal
year, the consolidated and consolidating balance sheets of the Borrower and the
Restricted Subsidiaries as at the end of such fiscal quarter and the related
consolidated and consolidating statements of income for such fiscal quarter and
for the elapsed portion of the year ended with the last day of such fiscal
quarter, and consolidated and consolidating statements of cash flow for the
elapsed portion of the year ended with the last day of such fiscal quarter, all
of which shall be certified by the president, chief financial officer or
treasurer of the Borrower, to, in his or her opinion acting solely in his or her
capacity as an officer of the Borrower, present fairly in all material respects,
in accordance with GAAP (except for the absence of footnotes), the financial
position and results of operations of the Borrower and the Restricted
Subsidiaries as at the end of and for such fiscal quarter, and for the elapsed
portion of the year ended with the last day of such fiscal quarter, subject only
to normal year-end adjustments.
Section 6.4 Annual Financial Statements and Information; Certificate of No
--------------------------------------------------------------
Default
-------
(a) Within 90 days after the end of each fiscal year, a copy of (i) the
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries, as of the end of the current and prior fiscal years and (ii) the
consolidated and consolidating statements of earnings and consolidated
statements of changes in shareholders' equity, and statements of cash flow as of
and through the end of such Fiscal Year, all of which are prepared in accordance
with GAAP, and certified by independent certified public accountants reasonably
acceptable to the Lenders (provided, however, any former big six public
accounting firm shall be acceptable to the Lenders), whose opinion shall be in
scope and substance in accordance with generally accepted auditing standards and
shall be unqualified as to scope of audit and going concern.
(b) Within 90 days after the end of each fiscal year, a copy of (i) the
consolidated and consolidating balance sheets of the Borrower and the Restricted
Subsidiaries, as of the end of the current and prior fiscal years and (ii) the
consolidated and consolidating statements of earnings and consolidated
statements of changes in shareholders' equity, and statements of cash flow as of
and through the end of such Fiscal Year, all of which shall be certified by the
president, chief financial officer or treasurer of the Borrower, to, in his or
her opinion acting solely in his or her capacity as an officer of the Borrower,
conform to the presentation of the audited financial statements to
be delivered pursuant to Section 6.4(a) hereof and to present fairly
-------------
in all material respects, in accordance with GAAP (except for the absence of
footnotes), the financial position and results of operations of the Borrower and
the Restricted Subsidiaries as at the end of and for such fiscal year.
(c) As soon as available, but in any event within 30 days after December
31, 1997 and within 30 days after the end of each fiscal year thereafter, a copy
of the annual consolidated financial projections (including proforma income
statements, balance sheets and statements of cash flow) of the Borrower and the
Restricted Subsidiaries for the succeeding fiscal year.
Section 6.5 Compliance Certificate. At the time financial statements are
----------------------
furnished pursuant to Sections 6.3 and 6.4 hereof, the Compliance
------------ ---
Certificate, completed as provided
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therein, executed by the president, the chief financial officer, or treasurer of
the Borrower.
Section 6.6 Copies of Other Reports and Notices.
-----------------------------------
(a) Promptly upon their becoming available, a copy of (i) all material
final reports or letters submitted to the Borrower or any Subsidiary of the
Borrower by accountants in connection with any annual, interim or special audit,
including without limitation any final report prepared in connection
with the annual audit referred to in Section 6.2 hereof, and, if requested
-----------
by the Administrative Lender, any other comment letter submitted to management
in connection with any such audit, (ii) each financial statement, report, notice
or proxy statement sent by the Borrower to stockholders generally, (iii) each
regular, periodic or other report and any registration statement (other than
statements on Form S-8) or prospectus (or material written communication in
respect of any thereof) filed by the Borrower or any Subsidiary of the Borrower
with any securities exchange, with the Securities and Exchange Commission or any
successor agency, (iv) all press releases concerning material financial aspects
of the Borrower or any Subsidiary of the Borrower, and (v) forms of Purchase
Documents and, to the extent requested by the Administrative Lender, other
documents being used in connection with the Projects to the extent
different from those delivered pursuant to Section 3.1(l) hereof;
--------------
(b) Promptly upon becoming aware that (i) the holder(s) of any note(s) or
other evidence of indebtedness or other security of the Borrower or any
Subsidiary of the Borrower in excess of $500,000 in the aggregate has given
notice or taken any action with respect to a breach, failure to perform, claimed
default or event of default thereunder, (ii) any occurrence or non-occurrence of
any event which constitutes or which with the passage of time or giving of
notice or both could constitute a material breach by the Borrower or any
Subsidiary of the Borrower under any material agreement or instrument other than
this Agreement to which the Borrower or any Subsidiary of the Borrower is a
party or by which any of their properties may be bound, or (iii) any event,
circumstance or condition which could reasonably be expected to be classified as
a Material Adverse Effect, a written notice specifying the details thereof (or
the nature of any claimed default or event of default) and what action is being
taken or is proposed to be taken with respect thereto;
(c) Promptly upon becoming aware that any party to any Capitalized Lease
Obligations or Operating Lease, in each case, in excess of $500,000, has given
notice or taken any action with respect to a breach, failure to perform, claimed
default or event of default thereunder, a written notice specifying the details
thereof (or the nature of any claimed default or event of default) and what
action is being taken or is proposed to be taken with respect thereto;
(d) Promptly upon receipt thereof, information with respect to and copies
of any notices received from any Tribunal relating to any order, ruling, law,
information or policy that relates to a breach of or noncompliance with any Law,
or could reasonably be expected to result in the payment of money by the
Borrower or any Subsidiary of the Borrower in an amount of $500,000 or more in
the aggregate, or otherwise have a Material Adverse Effect, or result in the
loss or suspension of any Necessary Authorization where such loss could
reasonably be expected
-65-
to have a Material Adverse Effect; and
(e) From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the assets, business, liabilities, financial position, projections, results of
operations or business prospects of the Borrower and its Subsidiaries, as the
Administrative Lender or any Lender may reasonably request.
Section 6.7 Notice of Litigation, Default and Other Matters. Prompt notice of
-----------------------------------------------
the following events after the Borrower has knowledge or notice thereof:
(a) The commencement of all Litigation and investigations by or before any
Tribunal, and all actions and proceedings in any court or before any arbitrator
involving claims (i) for damages (including punitive damages) in excess of
$500,000 (after deducting the amount with respect to the Borrower or any
Subsidiary of the Borrower is insured), against or in any other way relating
directly to the Borrower, any Subsidiary of the Borrower, or any of their
respective properties or businesses or (ii) which otherwise could affect any
Collateral and which could reasonably be expected to have a Material Adverse
Effect; and
(b) Promptly upon the happening of any condition or event of which the
Borrower has current actual knowledge which constitutes a Default, a written
notice specifying the nature and period of existence thereof and what action is
being taken or is proposed to be taken with respect thereto.
Section 6.8 ERISA Reporting Requirements.
----------------------------
(a) Promptly and in any event (i) within 30 days after the Borrower or any
member of its Controlled Group has current actual knowledge that any ERISA Event
described in clause (a) of the definition of ERISA Event or any event described
in Section 4063(a) of ERISA with respect to any Plan of the Borrower or any
member of its Controlled Group has occurred, and (ii) within 10 days after the
Borrower or any member of its Controlled Group has current actual knowledge that
any other ERISA Event with respect to any Plan of the Borrower or any member of
its Controlled Group has occurred or a request for a minimum funding waiver
under Section 412 of the Code has been made with respect to any Plan of the
Borrower or any member of its Controlled Group, a written notice describing such
event and describing what action is being taken or is proposed to be taken with
respect thereto, together with a copy of any notice of such event that is given
to the PBGC;
(b) Promptly and in any event within three Business Days after receipt
thereof by the Borrower or any member of its Controlled Group from the PBGC,
copies of each notice received by the Borrower or any member of its Controlled
Group of the PBGC's intention to terminate any Plan or to have a trustee
appointed to administer any Plan;
(c) Promptly and in any event within 30 days after the filing thereof by
the Borrower or any member of its Controlled Group with the United States
Department of Labor or the
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Internal Revenue Service, copies of each annual report (including Schedule B
thereto, if applicable) with respect to each Plan subject to Title IV of ERISA
of which Borrower or any member of its Controlled Group is the "plan sponsor";
(d) Promptly, and in any event within 10 Business Days after receipt
thereof, a copy of any correspondence the Borrower or any member of its
Controlled Group receives from the Plan Sponsor (as defined by Section
4001(a)(10) of ERISA) of any Plan concerning potential withdrawal liability
pursuant to Section 4219 or 4202 of ERISA, and a statement from the chief
financial officer of the Borrower or such member of its Controlled Group setting
forth details as to the events giving rise to such potential withdrawal
liability and the action which the Borrower or such member of its Controlled
Group is taking or proposes to take with respect thereto;
(e) Notification within 30 days of any material increases in the benefits
provided under any existing Plan which is not a Multiemployer Plan, or the
establishment of any new Plans, or the commencement of contributions to any Plan
to which the Borrower or any member of its Controlled Group was not previously
contributing, which could reasonably be expected in any such case to result in
an additional material liability to the Borrower;
(f) Notification within three Business Days after the Borrower or any
member of its Controlled Group knows that the Borrower or any such member of its
Controlled Group has filed or intends to file a notice of intent to terminate
any Plan under a distress termination within the meaning of Section 4041(c) of
ERISA and a copy of such notice; and
(g) Within three Business Days after receipt of written notice of
commencement thereof, notice of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower or any member of
its Controlled Group with respect to any Plan, except those which, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
ARTICLE 7
Negative Covenants
------------------
So long as any of the Obligations are outstanding and unpaid or any Commitment
is outstanding (whether or not the conditions to borrowing have been or can be
fulfilled):
Section 7.1 Indebtedness. The Borrower shall not, and shall not permit any
------------
Restricted Subsidiary to, create, assume, incur or otherwise become or remain
obligated in respect of, or permit to be outstanding, or suffer to exist any
Indebtedness, except:
(a) Indebtedness under the Loan Documents; and
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(b) Other Indebtedness, if, and only to the extent that, immediately prior
to, and after giving effect to, the incurrence of such Indebtedness, no Default
or Event of Default exists.
Section 7.2 Liens. The Borrower shall not, and shall not permit any
-----
Restricted Subsidiary to, create, assume, incur, permit or suffer to exist,
directly or indirectly, any Lien on any of its assets, whether now owned or
hereafter acquired, except Permitted Liens.
Section 7.3 Investments. The Borrower shall not, and shall not permit any
-----------
Restricted Subsidiary to, make any Investment, except that the Borrower and any
Restricted Subsidiary may purchase or otherwise acquire and own:
(a) Cash and Cash Equivalents;
(b) Accounts receivable that arise in the ordinary course of business and are
payable on standard terms;
(c) Investments in existence on the Agreement Date which are described on
Schedule 5 hereto;
----------
(d) Investments which are Acquisitions permitted pursuant to Section 7.6
-----------
hereof;
(e) Investments in the form of Hedge Agreements entered into with any Lender;
(f) Investments in Subsidiaries of the Borrower which are Restricted
Subsidiaries;
(g) Guaranties of Indebtedness (i) of any Person other than the Borrower or
a Restricted Subsidiary to the extent that (x) the aggregate amount of such
Guaranties by the Borrower and the Restricted Subsidiaries does not exceed ten
percent (10%) of the combined total assets of the Borrower and the Restricted
Subsidiaries and (y) immediately prior to and after giving effect to any such
proposed Guaranty there shall not exist a Default or Event of Default and (ii)
of the Borrower or of a Restricted Subsidiary to the extent that such Guaranty,
and the Indebtedness guaranteed thereby, are permitted by Section 7.1 hereof;
-----------
(h) Investments in joint ventures provided that (i) immediately prior to
and after giving effect to any such proposed Investment there shall not exist a
Default or Event of Default, (ii) the Administrative Lender shall have received
at least 10 Business Days prior to the date of such Investment a Compliance
Certificate setting forth the covenant calculations, both immediately prior to
and after giving effect to the proposed Investment, and (iii) the joint venture
shall be in the business described in Schedule 4.1(d) hereof or other activities
---------------
directly related thereto; and
(i) Investments in, or with respect to, any Person other than the Borrower
or a Restricted Subsidiary to the extent that (i) the aggregate amount of such
Investments by the Borrower and the Restricted Subsidiaries does not at any time
exceed ten percent (10%) of the
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combined total assets of the Borrower and the Restricted Subsidiaries and (ii)
immediately prior to and after giving effect to any such proposed Investment
there shall not exist a Default or Event of Default.
(j) Other Investments not to exceed $7,500,000 in the aggregate amount
outstanding at any time.
Section 7.4 Liquidation, Merger. The Borrower shall not, and shall not permit
-------------------
any Restricted Subsidiary to, at any time:
(a) liquidate or dissolve itself (or suffer any liquidation or dissolution)
or otherwise wind up, except that a Restricted Subsidiary may liquidate or
dissolve into the Borrower or a Restricted Subsidiary; or
(b) enter into any merger or consolidation unless (i) with respect to a
merger or consolidation involving the Borrower, the Borrower shall be the
surviving corporation, or if the merger or consolidation involves a Restricted
Subsidiary and not the Borrower, such Restricted Subsidiary shall be the
surviving corporation, (ii) such transaction shall not be utilized to circumvent
compliance with any term or provision herein and (iii) no Default or Event of
Default shall then be in existence or occur as a result of such transaction.
Section 7.5 Sales of Assets. The Borrower shall not, and shall not permit any
---------------
Restricted Subsidiary to, sell, lease, transfer or otherwise dispose of, any of
its assets except (a) inventory and Time-Share Interests in the ordinary course
of business, (b) obsolete or worn-out assets, (c) sales of tangible assets in
which the Net Cash Proceeds from the disposition thereof are reinvested, within
90 days before or after such disposition, in productive tangible assets of a
similar nature of the Borrower and the Restricted Subsidiaries, (d) asset sales
between Obligors, (e) sales of Notes Receivable (other than Notes Receivable
included as Collateral hereunder) to unrelated third parties for full and fair
consideration, (f) other asset sales not to exceed $5,000,000 in the aggregate
amount during any one fiscal year and (g) other dispositions that constitute
grants by the Borrower or a Restricted Subsidiary of Permitted Liens.
Section 7.6 Acquisitions. The Borrower shall not, and shall not permit any
------------
Restricted Subsidiary to, make any Acquisitions; provided, however, if
immediately prior to and after giving effect to the proposed Acquisition there
shall not exist a Default or Event of Default, the Borrower or any Restricted
Subsidiary may make Acquisitions so long as (i) such Acquisition shall not be
opposed by the board of the directors of the Person being acquired, (ii) Lenders
shall have received written notice at least 10 Business Days prior to the date
of such Acquisition, (iii) the Administrative Lender shall have received at
least 10 Business Days prior to the date of such Acquisition a Compliance
Certificate setting forth the covenant calculations both immediately prior to
and after giving effect to the proposed Acquisition, (iv) the assets, property
or business acquired shall be in the business described in Section 4.1(d) hereof
--------------
and, (v) either (x)contemporaneously with the consummation of such Acquisition,
the Person being acquired shall become a Restricted Subsidiary or (y) such
Acquisition would be permitted as an
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Investment under Section 7.3(i).
Section 7.7 Capital Expenditures. The Borrower shall not, and shall not permit
--------------------
any Restricted Subsidiary to, make or commit to make any Capital Expenditures
during any fiscal year in an aggregate amount in excess of $10,000,000.
Section 7.8 Restricted Payments. The Borrower shall not, and shall not permit
-------------------
any Restricted Subsidiary to, directly or indirectly declare, pay or make any
Restricted Payments except (a) Dividends payable by a Restricted Subsidiary to
the Borrower or to a Guarantor, (b) scheduled payments of principal and interest
on the Subordinated Debt; provided, however, the Borrower shall not, and shall
not permit any Restricted Subsidiary to, declare, pay or make any Restricted
Payments permitted by this Section 7.8 unless there shall exist no Default or
-----------
Event of Default prior to or after giving effect to any such proposed Restricted
Payment, and (c) Dividends payable by the Borrower in respect of its Capital
Stock, if, and to the extent that, (i) no Default or Event of Default or Event
shall exist prior to or after giving effect to the declaration and/or payment of
any such Dividend(s) and (ii) the aggregate amount of all such Dividends
declared and/or paid by the Borrower during any fiscal year of the Borrower does
not exceed the sum of (x) $10,000,000, plus (y) 50% of the Net Income of the
Borrower (excluding from the calculation thereof any Net Income attributable to
any Subsidiary of the Borrower other the Restricted Subsidiaries) during the
immediately preceding fiscal year of the Borrower.
Section 7.9 Affiliate Transactions. The Borrower shall not, and shall not
----------------------
permit any Restricted Subsidiary to, at any time engage in any transaction with
an Affiliate other than in the ordinary course of business and on terms not less
advantageous to the Borrower or such Restricted Subsidiary than would be the
case if such transaction had been effected with a non-Affiliate. The Borrower
shall not, and shall not permit any Restricted Subsidiary to, incur or suffer to
exist any Indebtedness, or any Guaranty of any such Indebtedness, to any
Affiliate, unless such Affiliate shall (i) be a Restricted Subsidiary (ii)
subordinate the payment and performance thereof to the Obligations on terms,
conditions and documentation satisfactory to the Determining Lenders or (iii)
pledge the applicable Indebtedness to the Administrative Lender pursuant to
documentation acceptable to the Administrative Lender.
Section 7.10 Compliance with ERISA. The Borrower shall not, and shall not
---------------------
permit any Subsidiary to, directly or indirectly, or permit any member of its
Controlled Group to directly or indirectly, (a) terminate any Plan so as likely
to result in any material (in the reasonable opinion of the Determining Lenders)
liability to the Borrower or any member of its Controlled Group taken as a
whole, (b) permit to exist any ERISA Event, or any other event or condition with
respect to a Plan which could reasonably be expected to have a Material Adverse
Effect, (c) make a complete or partial withdrawal (within the meaning of Section
4201 of ERISA) from any Multiemployer Plan so as likely to result in any
material (in the reasonable opinion of the Determining Lenders) liability to the
Borrower or any member of its Controlled Group taken as a whole, (d) enter into
any new Plan or modify any existing Plan so as to increase its obligations
thereunder which could reasonably be expected to have a Material Adverse Effect,
or (e) permit the present value of all benefit liabilities, as defined in Title
IV of ERISA, under any Plan (other than a Multiemployer Plan) of the Borrower or
any member of its Controlled Group that is subject to Title IV of
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ERISA (using the actuarial assumptions utilized by each such Plan) to exceed the
fair market value of Plan assets allocable to such benefits by more than
$200,000, all determined as of the most recent valuation date for such Plan.
Section 7.11 Minimum Interest Coverage Ratio. The Borrower shall not permit
-------------------------------
the Interest Coverage Ratio to be less than 2.50 to 1 at the end of any fiscal
quarter.
Section 7.12 Minimum Tangible Net Worth. The Borrower shall not permit the
--------------------------
Tangible Net Worth to be less than an amount equal to the sum of (a)
$155,000,000, plus (b) 50% of cumulative Net Income for the period from, but not
including, June 30, 1997 through the date of calculation (but excluding from the
calculation of such cumulative Net Income the effect, if any, of any fiscal
quarter (or portion of a fiscal quarter not then ended) of the Borrower for
which Net Income was a negative number), plus (c) 75% of the Net Cash Proceeds
received by the Borrower after June 30, 1997 as a result of any offering of
Equity or pursuant to any conversion or exchange of convertible Indebtedness or
preferred Capital Stock into common Capital Stock of the Borrower, plus (d) an
amount equal to 75% of the tangible net worth of any Person that becomes a
Restricted Subsidiary or is merged into or consolidated with the Borrower or any
Restricted Subsidiary or substantially all of the assets of which are acquired
by the Borrower or any Restricted Subsidiary to the extent the purchase price
paid therefor is paid in equity securities of the Borrower or any Subsidiary of
the Borrower.
Section 7.13 Maximum Senior Debt to Capital. The Borrower shall not permit the
------------------------------
ratio of Senior Debt to Total Capital to exceed 0.35 to 1 at the end of any
fiscal quarter.
Section 7.14 Maximum Total Debt to Capital. The Borrower shall not permit the
-----------------------------
ratio of Total Debt to Total Capital to exceed (a) 0.70 to 1 at December 31,
1997 and (b) 0.65 to 1 at the end of any fiscal quarter thereafter.
Section 7.15 Sale and Leaseback. The Borrower shall not, and shall not permit
------------------
any Subsidiary of the Borrower to, enter into any arrangement whereby it sells
or transfers any of its assets, and thereafter rents or leases such assets,
except to the extent that the fair market value of the asset(s) covered by all
such arrangements entered into during any fiscal year of the Borrower does not,
in the aggregate, exceed $2,000,000.
Section 7.16 Business. Neither the Borrower nor any Restricted Subsidiary
--------
shall conduct any business other than the business described in Section 4.1(d)
--------------
hereof.
Section 7.17 Fiscal Year. The Borrower shall not, and shall not permit any
-----------
Restricted Subsidiary to, change its fiscal year except to a fiscal year ending
December 31.
Section 7.18 Amendment of Organizational Documents. The Borrower shall not,
-------------------------------------
and shall not permit any Restricted Subsidiary to, amend its articles of
incorporation or bylaws (or similar organizational or governance documents) in
any manner that could reasonably be
-71-
expected to (a) result in a Material Adverse Effect or (b) impair or affect the
Rights of the Administrative Lender or any Lender under any Loan Documents or in
respect of any Collateral.
Section 7.19 Amendments and Waivers of Subordinated Debt. The Borrower shall
--------------------------------------------
not, and shall not permit any Restricted Subsidiary to, change or amend (or take
any action or fail to take any action the result of which is an effective
amendment or change) or accept any waiver or consent with respect to, any
document, instrument or agreement relating to any Subordinated Debt that would
result in (a) an increase in the principal, interest, overdue interest, fees or
other amounts payable under the Subordinated Debt, (b) an acceleration in any
date fixed for payment or prepayment of principal, interest, fees or other
amounts payable under the Subordinated Debt (including, without limitation, as a
result of any redemption), (c) a reduction in any percentage of holders of the
Subordinated Debt required under the terms of the Subordinated Debt to take (or
refrain from taking) any action under the Subordinated Debt, (d) a change in any
financial covenant under the Subordinated Debt making such financial covenant
more restrictive, (e) a change in any default or event of default (however
designated) under the Subordinated Debt which makes such default or event of
default more restrictive, (f) a change in the definition of "Change of Control"
as provided in the Subordinated Debt which would result in such definition being
more restrictive than such definition in this Agreement, (g) a change in any of
the subordination provisions of the Subordinated Debt, (h) a change in any
covenant, term or provision in the Subordinated Debt which would result in such
term or provision being more restrictive than the terms of this Agreement and
the other Loan Documents or (i) a change in any term or provision of the
Subordinated Debt that could have, in any material respect, an adverse effect on
the interest of the Lenders.
Section 7.20 Use of Lenders' Name. The Borrower shall not, and shall not
--------------------
permit any Subsidiary to, use the name of any Lender or any Affiliate of any
Lender in connection with any of their respective businesses or activities,
except in connection with internal business matters, administration of any of
the Advances and as required in dealings with any Tribunal.
Section 7.21 Servicing and Collection Agreement. The Borrower shall not, and
----------------------------------
shall not permit any Restricted Subsidiary to, amend, modify or terminate the
Servicing and Collection Agreement; provided, however, that the Person(s)
serving as servicer(s) and/or collector(s) thereunder may be replaced with other
Person(s) who are reasonably acceptable to the Administrative Lender. The
Servicing and Collection Agreement shall be cancelable by the Administrative
Lender upon the occurrence of an Event of Default.
Section 7.22 Custodial Agreement. The Borrower shall not, and shall not permit
-------------------
any Subsidiary to, (a) amend, modify or terminate the Custodial Agreement or (b)
interfere with the Custodians's performance of its duties under the Custodial
Agreement or take any action that would be inconsistent with the Custodial
Agreement.
Section 7.23 Notes Receivable. The Borrower shall not, and shall not permit
----------------
any Restricted Subsidiary to, amend, modify or waive any terms of any Note
Receivable included in the Borrowing Base or permit any departure from the
obligations thereunder unless, and only to
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the extent that, (a) at the time of any such amendment, modification or waiver,
no default, event of default or breach (howsoever designated) exists under, or
with respect to, the applicable Note Receivable, and (b) either (x) such
amendment, modification or waiver does not, and could not reasonably be expected
to, result in such Note Receivable not constituting an Eligible Note Receivable
hereunder or (y) such amendment, modification or waiver is evidenced by a
replacement Note Receivable that is an Eligible Note Receivable.
ARTICLE 8
Default
-------
Section 8.1 Events of Default. Each of the following shall constitute an Event
-----------------
of Default, whatever the reason for such event, and whether voluntary,
involuntary, or effected by operation of law or pursuant to any judgment or
order of any court or any order, rule or regulation of any governmental or non-
governmental body:
(a) Any representation or warranty made under any Loan Document shall prove
to have been incorrect or misleading in any material respect when made;
(b) The Borrower shall fail to pay any (i) principal under any Note when
due or (ii) interest under any Note or any fees payable hereunder or any other
costs, fees, expenses or other amounts payable hereunder or under any other Loan
Document within two Business Days after the date due;
(c) The Borrower or any Restricted Subsidiary shall default in the
performance or observance of any agreement or covenant contained in Section 5.1
-----------
or Article 7;
---------
(d) The Borrower or any Restricted Subsidiary shall default in the
performance or observance of any other agreement or covenant contained in this
Agreement not specifically referred to elsewhere in this Section 8.1, and
-----------
such default shall not be cured within a period of fifteen days after the
earlier of notice from the Administrative Lender thereof or actual notice
thereof by the Borrower or such Restricted Subsidiary;
(e) There shall occur any default or breach in the performance or
observance of any agreement or covenant in any of the Loan Documents (other than
this Agreement) and such default shall not be cured within a period of thirty
days after the earlier of notice from the Administrative Lender thereof or
actual notice thereof by an officer of any Obligor;
(f) There shall be commenced an involuntary proceeding or an involuntary
petition shall be filed in a court having competent jurisdiction seeking (i)
relief in respect of any Obligor or any Subsidiary of the Borrower, or a
substantial part of the property or the assets of such Obligor or Subsidiary of
the Borrower, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable Federal, state or foreign bankruptcy
law or other similar law, (ii) the appointment of a receiver, liquidator,
assignee, trustee,
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custodian, sequestrator or similar official of any Obligor or
any Subsidiary of the borrower, or of any substantial part of their respective
properties, or (iii) the winding-up or liquidation of the affairs of any Obligor
or any Subsidiary of the Borrower, and any such proceeding or petition shall
continue unstayed and in effect for a period of forty-five days;
(g) Any Obligor or any Subsidiary of the Borrower shall (i) file a
petition, answer or consent seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable Federal,
state or foreign bankruptcy law or other similar law, (ii) consent to the
institution of proceedings thereunder or to the filing of any such petition or
to the appointment or taking of possession of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of any Obligor or any
Subsidiary of the Borrower or of substantially all of its properties, (iii) file
an answer admitting the material allegations filed against it in any such
proceeding, (iv) make a general assignment for the benefit of creditors, (v)
become unable, admit in writing its ability or fail generally to pay its debts
as they become due, or (vi) any Obligor or any Subsidiary of the Borrower shall
take any corporate action in furtherance of any such action;
(h) A final judgment or judgments shall be entered by any court against any
Obligor for the payment of money which exceeds $500,000 in the aggregate, or a
warrant of attachment or execution or similar process shall be issued or levied
against property of any Obligor which, together with all other such property of
the Borrower and its Subsidiaries subject to other such process, exceeds in
value $500,000 in the aggregate, and if such judgment or award is not insured
or, within 30 days after the entry, issue or levy thereof, such judgment,
warrant or process shall not have been paid or discharged or stayed pending
appeal, or if, after the expiration of any such stay, such judgment, warrant or
process shall not have been paid or discharged;
(i) With respect to any Plan of the Borrower or any member of its
Controlled Group: (i) the Borrower, any such member, or any other party-in-
interest or disqualified person (other than any Lender) shall engage in
transactions which in the aggregate would reasonably be expected to result in a
direct or indirect liability to the Borrower or any member of its Controlled
Group under Section 409 or 502 of ERISA or Section 4975 of the Code; (ii) the
Borrower or any member of its Controlled Group shall incur any accumulated
funding deficiency, as defined in Section 412 of the Code, or request a funding
waiver from the Internal Revenue Service for contributions; (iii) the Borrower
or any member of its Controlled Group shall incur any withdrawal liability as a
result of a complete or partial withdrawal within the meaning of Section 4203 or
4205 of ERISA, or any other liability with respect to a Plan, unless the amount
of such liability has been funded within the Plan or pursuant to one or more
insurance contracts; (iv) a termination of a Multiemployer Plan, as defined in
Section 1.1 hereof but without regard to the five-year limitation set forth
therein, shall occur pursuant to Section 4041A of ERISA; (v) the Borrower or any
member of its Controlled Group shall fail to make a required contribution by the
due date under Section 412 of the Code or Section 302 of ERISA which would
result in the imposition of a lien under Section 412 of the Code or Section 302
of ERISA; (vi) the Borrower, any member of its Controlled Group or any Plan
sponsor shall notify the PBGC of an intent to
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terminate, or the PBGC shall institute proceedings to terminate, or the PBGC
shall institute proceedings to terminate, any Plan (other than a Multiemployer
Plan) subject to Title IV of ERISA; (vii) a Reportable Event shall occur with
respect to a Plan (other than a Multiemployer Plan) subject to Title IV of
ERISA, and within 15 days after the reporting of such Reportable Event to the
Administrative Lender, the Administrative Lender shall have notified the
Borrower in writing that the Determining Lenders have made a determination that,
on the basis of such Reportable Event, there are reasonable grounds for the
termination of such Plan by the PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer such Plan and as a
result thereof an Event of Default shall have occurred hereunder; (viii) a
trustee shall be appointed by a court of competent jurisdiction to administer
any Plan (other than a Multiemployer Plan) or the assets thereof; or (ix) any
ERISA Event with respect to a Plan (other than a Multiemployer Plan) subject to
Title IV of ERISA shall have occurred, and 30 days thereafter (A) such ERISA
Event, other than such event described in clause (f) of the definition of ERISA
Event herein, (if correctable) shall not have been corrected and (B) the then
present value of such Plan's benefit liabilities, as defined in Title IV of
ERISA, shall exceed the then current value of assets accumulated in such Plan;
provided, however, that the events listed in subsections (i) - (ix)
-------- -------
above shall constitute Events of Default only if the maximum aggregate liability
which the Borrower or any member of its Controlled Group has a reasonable
likelihood of incurring under the applicable provisions of ERISA resulting from
an event or events exceeds $200,000.
(j) The Borrower or any Restricted Subsidiary shall default in the payment
of any Indebtedness or any lease obligations in an aggregate amount of $200,000
or more beyond any grace period provided with respect thereto, or any other
event or condition shall exist under any agreement or instrument under which
such Indebtedness is created or evidenced beyond any applicable grace period, if
the effect of such event or condition is to permit or cause the holder of such
Indebtedness (or a trustee on behalf of any such holder) to (i) cause such
Indebtedness to be prepaid or to become due prior to its date of maturity or
(ii) require the Borrower or any Restricted Subsidiary to purchase, prepay or
redeem such Indebtedness;
(k) Any real property lease where the Borrower or any Restricted Subsidiary
is the lessee shall terminate or cease to be effective, and termination or
cessation thereof, together with all other leases, if any, which have been
terminated or cease to be effective, could reasonably be expected to have a
Material Adverse Effect; provided, however, that termination or cessation of a
lease shall not constitute an Event of Default if another lease reasonably
satisfactory to the Determining Lenders is contemporaneously substituted
therefor;
(l) Any provision of any Loan Document shall for any reason cease to be
valid and binding on or enforceable against any party to it (other than the
Administrative Lender or any Lender) other than in accordance with its terms, or
any such party (other than the Administrative Lender or any Lender) shall so
assert in writing;
(m) Any Collateral Document shall for any reason (other than pursuant to
the terms thereof) cease to create a valid and perfected first priority Lien in
any Collateral subject thereto;
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or
(n) A Change of Control shall occur.
Section 8.2 Remedies. If an Event of Default shall have occurred and shall be
--------
continuing:
(a) With the exception of an Event of Default specified in Section 8.1(f)
--------------
or (g) hereof, the Administrative Lender shall, upon the direction of the
---
Determining Lenders, terminate the Commitments and/or declare the principal of
and interest on the Advances and all Obligations and other amounts owed under
the Loan Documents to be forthwith due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything in the Loan Documents to the contrary notwithstanding.
(b) Upon the occurrence of an Event of Default specified in Section 8.1(f)
--------------
or (g) hereof, such principal, interest and other amounts shall thereupon and
---
concurrently therewith become due and payable and the Commitments shall
forthwith terminate, all without any action by the Administrative Lender, any
Lender or any holders of the Notes and without presentment, demand, protest or
other notice of any kind, all of which are expressly waived, anything in the
Loan Documents to the contrary notwithstanding.
(c) If any Letter of Credit shall be then outstanding, the Administrative
Lender may, and upon the direction of the Determining Lenders shall, demand upon
the Borrower to, and forthwith upon such demand, the Borrower shall, pay to the
Administrative Lender in same day funds at the office of the Administrative
Lender for deposit in the L/C Cash Collateral Account, an amount equal to the
maximum amount available to be drawn under the Letters of Credit then
outstanding.
(d) The Administrative Lender and the Lenders may exercise all of the
Rights granted to them under the Loan Documents or under Applicable Law.
(e) The Rights of the Administrative Lender and the Lenders hereunder shall
be cumulative, and not exclusive.
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ARTICLE 9
Changes in Circumstances
------------------------
Section 9.1 LIBOR Basis Determination Inadequate. If with respect to any
------------------------------------
proposed LIBOR Advance for any Interest Period, (i) any Lender determines that
deposits in dollars (in the applicable amount) are not being offered to that
Lender in the relevant market for such Interest Period or (ii) the Determining
Lenders determine that the LIBOR Rate for such proposed LIBOR Advance does not
adequately cover the cost to such Lender of making and maintaining such proposed
LIBOR Advance for such Interest Period, such Lender or Determining Lenders, as
the case may be, shall forthwith give notice thereof to the Borrower, whereupon
until such Lender or Determining Lenders, as the case may be, notify the
Borrower that the circumstances giving rise to such situation no longer exist,
the obligation of such Lender to make LIBOR Advances shall be
suspended; provided, however, such Lender or the Determining Lenders, as the
-------- -------
case may be, shall promptly notify the Borrower if the circumstances giving rise
to such situation no longer exist.
Section 9.2 Illegality. If any change in applicable law, rule or regulation,
----------
or adoption thereof, or any change in any 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 LIBOR Lending Office) with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency, shall make it unlawful or impossible for such Lender (or its LIBOR
Lending Office) to make, maintain or fund its LIBOR Advances, such Lender shall
so notify the Borrower and the Administrative Lender. Before giving any notice
to the Borrower pursuant to this Section, the notifying Lender shall designate
a different LIBOR Lending Office or other lending office if such designation
will avoid the need for giving such notice and will not, in the sole judgment
of the Lender, be materially disadvantageous to the Lender. Upon receipt of
such notice, notwithstanding anything contained in Article 2 hereof, the
---------
Borrower shall repay in full the then outstanding principal amount of each LIBOR
Advance owing to the notifying Lender, together with accrued interest thereon
and any reimbursement required under Section 2.9 hereof, on either (a) the last
-----------
day of the Interest Period applicable to such Advance, if the Lender may
lawfully continue to maintain and fund such Advance to such day, or (b)
immediately, if the Lender may not lawfully continue to fund and maintain such
Advance to such day or if the Borrower so elects. Concurrently with repaying
each affected LIBOR Advance owing to such Lender if the Borrower does not
terminate this Agreement, notwithstanding anything contained in Article 2
---------
hereof, the Borrower may, without any requirement to satisfy the conditions
precedent set forth in Section 3.1, 3.2 or 3.3, borrow a Base Rate Advance
----------- --- ---
from such Lender, and such Lender shall make such Base Rate Advance, in an
amount such that the outstanding principal amount of the Advances owing to such
Lender shall equal the outstanding principal amount of the Advances owing
immediately prior to such repayment.
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Section 9.3 Increased Costs.
---------------
(a) If after the Agreement Date any change in or adoption of any law, rule
or regulation, 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
LIBOR Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or compatible agency:
(i) shall subject a Lender (or its LIBOR Lending Office) to any Tax
(net of any tax benefit engendered thereby) with respect to its LIBOR
Advances or its obligation to make such Advances, or shall change the basis
of taxation of payments to a Lender (or to its LIBOR Lending Office) of the
principal of or interest on its LIBOR Advances or in respect of any other
amounts due under this Agreement, as the case may be, or its obligation to
make such Advances (except for changes in the rate of tax on the overall
net income, net worth or capital of the Lender and franchise taxes, doing
business taxes or minimum taxes imposed upon such Lender); or
(ii) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, a Lender's
LIBOR Lending Office or shall impose on the Lender (or its LIBOR Lending
Office) or on the London interbank market any other condition affecting its
LIBOR Advances or its obligation to make such Advances (but excluding any
reserves or deposits that are included in the calculation of LIBOR Basis);
and the result of any of the foregoing is to increase the cost to a Lender (or
its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to
reduce the amount of any sum received or receivable by a Lender (or its LIBOR
Lending Office) with respect thereto, by an amount deemed by a Lender to be
material, then, within 30 days after demand by a Lender, the Borrower agrees to
pay to such Lender such additional amount as will compensate such Lender for
such increased costs or reduced amounts, subject to Section 11.9 hereof. The
------------
affected Lender will as soon as practicable notify the Borrower of any event of
which it has knowledge, occurring after the date hereof, which will entitle such
Lender to compensation pursuant to this Section and will designate a different
LIBOR Lending Office or other lending office if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the
reasonable judgment of the affected Lender made in good faith, be
disadvantageous to such Lender.
(b) A certificate of any Lender claiming compensation under this Section
and setting forth the additional amounts to be paid to it hereunder shall
certify that such amounts or costs were actually incurred by such Lender and
shall show in reasonable detail an accounting of the amount payable and the
calculations used to determine in good faith such amount and shall be conclusive
absent manifest or demonstrable error. In determining such amount, a Lender may
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use any reasonable averaging and attribution methods. Nothing in this Section
-------
9.3 shall provide the Borrower or any Subsidiary of the Borrower the right to
---
inspect the records, files or books of any Lender. If a Lender demands
compensation under this Section, the Borrower may at any time, upon at least
five Business Days' prior notice to the Lender, after reimbursement to the
Lender by the Borrower in accordance with this Section of all costs incurred,
prepay in full the then outstanding LIBOR Advances of the Lender, together with
accrued interest thereon to the date of prepayment, along with any reimbursement
required under Section 2.9 hereof. Concurrently with prepaying such LIBOR
-----------
Advances, the Borrower may borrow a Base Rate Advance from the Lender, and the
Lender shall make such Base Rate Advance, in an amount such that the outstanding
principal amount of the Advances owing to such Lender shall equal the
outstanding principal amount of the Advances owing immediately prior to such
prepayment.
Section 9.4 Effect On Base Rate Advances. If notice has been given pursuant to
----------------------------
Section 9.1, 9.2 or 9.3 hereof suspending the obligation of a Lender to make
----------- --- ---
LIBOR Advances, or requiring LIBOR Advances of a Lender to be repaid or prepaid,
then, unless and until the Lender notifies the Borrower that the circumstances
giving rise to such repayment no longer apply, all Advances which would
otherwise be made by such Lender as LIBOR Advances shall be made instead as Base
Rate Advances.
Section 9.5 Capital Adequacy. If after the Agreement Date, (a) the
----------------
introduction of or any change in or in the interpretation of any law, rule or
regulation or (b) compliance by a Lender with any law, rule or regulation or any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law) adopted or promulgated after the
Agreement Date affects or would affect the amount of capital required or
expected to be maintained by a Lender or any corporation controlling such
Lender, and such Lender determines that the amount of such capital is increased
by or based upon the existence of such Lender's commitment or Advances hereunder
and other commitments or advances of such Lender of this type, then, within 30
days after demand by such Lender, subject to Section 11.9, the Borrower shall
------------
immediately pay to such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender with respect to such
circumstances, to the extent that such Lender reasonably determines in good
faith such increase in capital to be allocable to the existence of such Lender's
Commitments hereunder. A certificate as to any additional amounts payable to any
Lender under this Section 9.5 submitted to the Borrower by such Lender shall
-----------
certify that such amounts were actually incurred by such Lender or corporation
controlling such Lender and shall show in reasonable detail an accounting of the
amount payable and the calculations used to determine in good faith such amount
and shall be conclusive absent manifest or demonstrable error. In determining
such amount, such Lender or a corporation controlling such Lender may use any
reasonable averaging and attribution methods. Notwithstanding the foregoing,
nothing in this Section 9.5 shall provide the Borrower or any Subsidiary of the
-----------
Borrower the right to inspect the records, files or books of any Lender or any
corporation controlling such Lender.
Section 9.6 Replacement Lender. If (i) any Lender is unable or unwilling to
------------------
make, maintain or fund any LIBOR Advance pursuant to Section 9.1 or 9.2 or (ii)
----------- ---
the Borrower
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becomes obligated to pay additional amounts to any Lender described in Section
-------
9.3 or 9.5, the Borrower may designate a financial institution reasonably
--- ---
acceptable to the Administrative Lender to replace such Lender by purchasing for
cash and receiving an assignment of such Lender's pro rata share of such
Lender's Commitment and the Rights of such Lender under the Loan Documents
without recourse to or warranty by, or expense to, such Lender, for a purchase
price equal to the outstanding amounts owing to such Lender (including such
additional amounts owing to such Lender pursuant to Section 9.2, 9.3 or 9.5).
---------------- ---
Upon execution of an Assignment Agreement, such other financial institution
shall be deemed to be a "Lender" for all purposes of this Agreement as set forth
in Section 11.6 hereof.
------------
ARTICLE 10
Agreement Among Lenders
-----------------------
Section 10.1 Agreement Among Lenders. The Lenders agree among themselves that:
-----------------------
(a) Administrative Lender. Each Lender hereby appoints the Administrative
---------------------
Lender as its nominee in its name and on its behalf, to receive all documents
and items to be furnished hereunder; to act as nominee for and on behalf of all
Lenders under the Loan Documents; to, except as otherwise expressly set forth
herein, take such action as may be requested by the Determining Lenders,
provided that, (i) unless and until the Administrative Lender shall have
received such requests, the Administrative Lender may take such administrative
action, or refrain from taking such administrative action, as it may deem
advisable and in the best interests of the Lenders, and (ii) the Administrative
Lender shall not be required to take any action that exposes the Administrative
Lender to personal liability or that is contrary to any Loan Document or
Applicable Law; to arrange the means whereby the proceeds of the Advances of the
Lenders are to be made available to the Borrower; to distribute promptly to each
Lender information, requests and documents received from the Borrower hereunder
and not otherwise provided to such Lender by the Borrower or any other Person,
and each payment (in like funds received) with respect to any of such Lender's
Advances, or the ratable amount of fees or other amounts; and to deliver to the
Borrower requests, demands, approvals and consents received from the Lenders.
Administrative Lender agrees to promptly distribute to each Lender, at such
Lender's address set forth below information, requests, documents and payments
received from the Borrower and not otherwise provided to such Lender by the
Borrower or any other Person. The Administrative Lender shall have no fiduciary
relationship in respect of any Lender by reason of this Agreement or any other
Loan Document. The Administrative Lender shall have no duties or
responsibilities except those expressly set forth in this Agreement. The duties
of the Administrative Lender are mechanical and administrative in nature.
(b) Replacement of Administrative Lender. Should the Administrative
------------------------------------
Lender or any successor Administrative Lender ever cease to be a Lender
hereunder, or should the Administrative Lender or any successor Administrative
Lender ever resign as Administrative Lender, or should the Administrative Lender
or any successor Administrative Lender ever be
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removed with cause or without cause by the action of all Lenders (other than the
Administrative Lender), then the Lender appointed by the other Lenders (with the
consent of the Borrower, which consent shall not be unreasonably withheld) shall
forthwith become the Administrative Lender, and the Borrower and the Lenders
shall execute such documents as any Lender may reasonably request to reflect
such change. If the Administrative Lender also then serves in the capacity of
the Swing Line Bank or the Issuing Bank, such resignation or removal shall
constitute resignation or removal of the Swing Line Bank and the Issuing Bank.
Any resignation or removal of the Administrative Lender or any successor
Administrative Lender shall become effective upon the appointment by the Lenders
of a successor Administrative Lender; provided, however, if no successor
Administrative Lender shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Administrative Lender's giving of
notice of resignation or the Lenders' removal of the retiring Administrative
Lender, then the retiring Administrative Lender may, on behalf of the Lenders,
appoint a successor Administrative Lender, which shall be a commercial bank
organized under the Laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as the Administrative Lender hereunder by a
successor Administrative Lender, such successor Administrative Lender shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Administrative Lender, and the retiring Administrative Lender shall be
discharged from its duties and obligations under the Loan Documents, provided
that if the retiring or removed Administrative Lender is unable to appoint a
successor Administrative Lender, the Administrative Lender shall, after the
expiration of a 60 day period from the date of notice, be relieved of all
obligations as Administrative Lender hereunder. Notwithstanding any
Administrative Lender's resignation or removal hereunder, the provisions of this
Article shall continue to inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Administrative Lender under this
Agreement.
(c) Expenses. Each Lender shall pay its pro rata share, based on its
--------
Specified Percentage, of any expenses paid by the Administrative Lender directly
and solely in connection with any of the Loan Documents and/or the
Securitization Documents if Administrative Lender does not receive reimbursement
therefor from other sources within 60 days after the date incurred. Any amount
so paid by the Lenders to the Administrative Lender shall be returned by the
Administrative Lender pro rata to each paying Lender to the extent later paid by
the Borrower or any other Person on the Borrower's behalf to the Administrative
Lender.
(d) Delegation of Duties. The Administrative Lender may execute any of its
--------------------
duties hereunder by or through officers, directors, employees, attorneys or
agents, and shall be entitled to (and shall be protected in relying upon) advice
of counsel concerning all matters pertaining to its duties hereunder.
(e) Reliance by Administrative Lender. The Administrative Lender and its
---------------------------------
officers, directors, employees, attorneys and agents shall be entitled to rely
and shall be fully protected in relying on any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telex or teletype
message, statement, order, or other document or conversation
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reasonably believed by it or them in good faith to be genuine and correct and to
have been signed or made by the proper Person and, with respect to legal
matters, upon opinions of counsel selected by the Administrative Lender. The
Administrative Lender may, in its reasonable judgment, deem and treat the payee
of any Note as the owner thereof for all purposes hereof.
(f) Limitation of Administrative Lender's Liability. Neither the
-----------------------------------------------
Administrative Lender nor any of its officers, directors, employees, attorneys
or agents shall be liable for any action taken or omitted to be taken by it or
them hereunder in good faith and believed by it or them to be within the
discretion or power conferred to it or them by the Loan Documents or be
responsible for the consequences of any error of judgment, except for its or
their own gross negligence or wilful misconduct. Except as aforesaid, the
Administrative Lender shall be under no duty to enforce any rights with respect
to any of the Advances, or any security therefor. The Administrative Lender
shall not be compelled to do any act hereunder or to take any action towards the
execution or enforcement of the powers hereby created or to prosecute or defend
any suit in respect hereof, unless indemnified to its reasonable satisfaction
against loss, cost, liability and expense unless expressly provided to the
contrary herein. The Administrative Lender shall not be responsible in any
manner to any Lender for the effectiveness, enforceability, genuineness,
validity or due execution of any of the Loan Documents, or for any
representation, warranty, document, certificate, report or statement made herein
or furnished in connection with any Loan Documents, or be under any obligation
to any Lender to ascertain or to inquire as to the performance or observation of
any of the terms, covenants or conditions of any Loan Documents on the part of
the Borrower. TO THE EXTENT NOT REIMBURSED BY THE BORROWER, EACH LENDER HEREBY
SEVERALLY INDEMNIFIES AND HOLDS HARMLESS THE ADMINISTRATIVE LENDER, PRO RATA
ACCORDING TO ITS SPECIFIED PERCENTAGE, FROM AND AGAINST ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES AND/OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE
IMPOSED ON, ASSERTED AGAINST, OR INCURRED BY THE ADMINISTRATIVE LENDER (IN SUCH
CAPACITY) IN ANY WAY WITH RESPECT TO ANY LOAN DOCUMENTS OR ANY ACTION TAKEN OR
OMITTED BY THE ADMINISTRATIVE LENDER UNDER THE LOAN DOCUMENTS (INCLUDING ANY
NEGLIGENT ACTION OF THE ADMINISTRATIVE LENDER), EXCEPT TO THE EXTENT THE SAME
ARE FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION TO RESULT FROM GROSS
NEGLIGENCE OR WILFUL MISCONDUCT BY THE ADMINISTRATIVE LENDER. THE INDEMNITY
PROVIDED IN THIS SECTION 10.1(f) SHALL SURVIVE TERMINATION OF
---------------
THIS AGREEMENT.
(g) Liability Among Lenders. No Lender shall incur any liability (other
-----------------------
than the sharing of expenses and other matters specifically set forth herein and
in the other Loan Documents) to any other Lender, except for acts or omissions
in bad faith.
(h) Rights as Lender. With respect to its commitment hereunder, the
----------------
made by it and the Notes issued to it, the Administrative Lender shall have the
same rights as a Lender and may exercise the same as though it were not the
Administrative Lender, and the term
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"Lender" or "Lenders" shall, unless the context otherwise indicates, include the
Administrative Lender in its individual capacity. The Administrative Lender or
any Lender may accept deposits from, act as trustee under indentures of, and
generally engage in any kind of business with, the Borrower and any of its
Affiliates, and any Person who may do business with or own securities of the
Borrower or any of its Affiliates, all as if the Administrative Lender were not
the Administrative Lender hereunder and without any duty to account therefor to
the Lenders.
Section 10.2 Lender Credit Decision. Each Lender acknowledges that it has,
----------------------
independently and without reliance upon the Administrative Lender or any other
Lender and based upon the financial statements referred to in Sections 4.1(j),
---------------
6.1, and 6.2 hereof, and such other documents and information as it has deemed
--- ---
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Lender or any other Lender and based upon such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents. Each Lender also acknowledges that its
decision to fund the initial Revolving Credit Advances shall constitute evidence
to the Administrative Lender that such Lender has deemed all of the conditions
set forth in Section 3.1 to have been satisfied.
Section 10.3 Benefits of Article. None of the provisions of this Article shall
-------------------
inure to the benefit of any Person other than Lenders and, with respect to
Section 10.1(b), the Borrower; consequently, no such other Person shall be
---------------
entitled to rely upon, or to raise as a defense, in any manner whatsoever, the
failure of the Administrative Lender or any Lender to comply with such
provisions.
ARTICLE 11
Miscellaneous
-------------
Section 11.1 Notices.
-------
(a) All notices and other communications under this Agreement shall be in
writing (except in those cases where giving notice by telephone is expressly
permitted) and shall be deemed to have been given on the date personally
delivered or sent by telecopy (answerback received) or by facsimile
transmission, or three days after deposit in the mail, designated as certified
mail, return receipt requested, postage-prepaid, or one day after being
entrusted to a reputable commercial overnight delivery service, addressed to the
party to which such notice is directed at its address determined as provided in
this Section. All notices and other communications under this Agreement shall be
given to the parties hereto at the following addresses:
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(i) If to the Borrower, at:
Signature Resorts, Inc.
0000 X. Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer, Treasurer
and General Counsel
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxx Xxxx, III
Xxxxxxxxx, Xxxxxxx & Xxxxx, LLP
The Xxxxxxx Building, 16th Floor
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Telephone: 000-000-0000
Facsimile: 404-681-1046
(ii) If to the Administrative Lender, at:
NationsBank of Texas, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxx Xxxxx
Senior Vice President
Telephone: 000-000-0000
Facsimile: 000-000-0000
(iii) If to a Lender, at its address shown below its name on the
signature pages hereof, or if applicable, set forth in its
Assignment Agreement.
(b) Any party hereto may change the address to which notices shall be
directed by giving 10 days' written notice of such change to the other parties.
Section 11.2 Expenses. The Borrower shall promptly pay:
--------
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(a) all reasonable out-of-pocket expenses of the Administrative Lender in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents, the transactions contemplated hereunder
and thereunder, and the making of Advances hereunder, including without
limitation the reasonable fees and disbursements of Special Counsel;
(b) all reasonable out-of-pocket expenses and reasonable attorneys' fees of
the Administrative Lender in connection with the administration of the
transactions contemplated in this Agreement and the other Loan Documents and the
preparation, negotiation, execution and delivery of any waiver, amendment or
consent by the Administrative Lender relating to this Agreement or the other
Loan Documents; and
(c) all reasonable costs, out-of-pocket expenses and reasonable attorneys'
fees of the Administrative Lender and each Lender incurred for enforcement,
collection, restructuring, refinancing and "work-out", or otherwise incurred in
obtaining performance under the Loan Documents, which in each case shall include
without limitation fees and expenses of consultants, counsel for the
Administrative Lender and any Lender, and administrative fees for the
Administrative Lender.
Section 11.3 Waivers. The rights and remedies of the Lenders under this
-------
Agreement and the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies which they would otherwise have. No failure or delay by
the Administrative Lender or any Lender in exercising any right shall operate as
a waiver of such right. The Lenders expressly reserve the right to require
strict compliance with the terms of this Agreement in connection with any
funding of a request for an Advance or issuance of a Letter of Credit. In the
event that any Lender decides to fund an Advance at a time when the Borrower is
not in strict compliance with the terms of this Agreement, such decision by such
Lender shall not be deemed to constitute an undertaking by the Lender to fund
any further requests for Advances or preclude the Lenders from exercising any
rights available under the Loan Documents or at law or equity. Any waiver or
indulgence granted by the Lenders shall not constitute a modification of this
Agreement, except to the extent expressly provided in such waiver or indulgence,
or constitute a course of dealing by the Lenders at variance with the terms of
the Agreement such as to require further notice by the Lenders of the Lenders'
intent to require strict adherence to the terms of the Agreement in the future.
Any such actions shall not in any way affect the ability of the Administrative
Lender or the Lenders, in their discretion, to exercise any rights available to
them under this Agreement or under any other agreement, whether or not the
Administrative Lender or any of the Lenders are a party thereto, relating to the
Borrower.
Section 11.4 Calculation by the Lenders Conclusive and Binding. Any
-------------------------------------------------
mathematical calculation required or expressly permitted to be made by the
Administrative Lender or any Lender under this Agreement shall be made in its
reasonable judgment and in good faith, and shall when made, absent manifest
error, be controlling.
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Section 11.5 Set-Off. In addition to any rights now or hereafter granted under
-------
Applicable Law and not by way of limitation of any such rights, upon the
occurrence and during the continuation of an Event of Default, each Lender and
any subsequent holder of any Note, and any assignee of any Note is hereby
authorized by the Borrower at any time or from time to time, without notice to
the Borrower or any other Person, any such notice being hereby expressly waived,
to set-off, appropriate and apply any deposits (general or special (except trust
and escrow accounts), time or demand, including without limitation Indebtedness
evidenced by certificates of deposit, in each case whether matured or unmatured)
and any other Indebtedness at any time held or owing by such Lender or holder to
or for the credit or the account of the Borrower, against and on account of the
Obligations and other liabilities of the Borrower to such Lender or holder,
irrespective of whether or not (a) the Lender or holder shall have made any
demand hereunder, or (b) the Lender or holder shall have declared the principal
of and interest on the Advances and other amounts due hereunder to be due and
payable as permitted by Section 8.2. Any sums obtained by any Lender or by any
-----------
assignee or subsequent holder of any Note shall be subject to pro rata treatment
of all Obligations and other liabilities hereunder. Any Lender exercising any
Rights under this Section 11.5 shall give the Borrower prompt notice thereof
------------
after such exercise.
Section 11.6 Assignment.
----------
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under the other Loan Documents without the prior
written consent of the Lenders.
(b) No Lender shall be entitled to assign or grant a participation in its
interest in this Agreement, its Notes or its Advances, except as hereinafter set
forth.
(c) Without the consent of the Borrower, any Lender may at any time sell
participations in all or any part of its Advances and Reimbursement Obligations
(collectively, "Participations") to any banks or other financial institutions
--------------
("Participants") provided that neither such Participation nor any agreement
------------
relating thereto shall confer on any Person (other than the parties hereto) any
right to vote on, approve or sign amendments or waivers, or any other
independent benefit or any legal or equitable right, remedy or other claim under
this Agreement or any other Loan Documents, other than the right to vote on,
approve, or sign amendments or waivers or consents with respect to items that
would result in (i) any increase in the commitment of any Participant; or
(ii)(A) the extension of the date of maturity of, or (B) the extension of the
due date for any payment of principal, interest or fees respecting, or (C) the
reduction of the amount of any installment of principal or interest on or the
change or reduction of any mandatory reduction required hereunder, or (D) a
reduction of the rate of interest on, the Advances, the Letters of Credit, or
the Reimbursement Obligations to which such Participant is entitled; or (iii)
the release of security for the Obligations, including without limitation any
guarantee, except pursuant to this Agreement or the other Loan Documents; or
(iv) the reduction of any fees payable hereunder to which such Participant is
entitled. Notwithstanding the foregoing, the Borrower agrees that the
Participants shall be entitled to the benefits of Article 9 hereof as
---------
though they were Lenders and the Lenders may, subject to Section 11.14 hereof,
-------------
provide copies
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of all financial information received from the Borrower to such Participants.
(d) Each Lender may assign to one or more financial institutions organized
under the laws of the United States, or any state thereof, or under the laws of
any other country that is a member of the Organization for Economic Cooperation
and Development, or a political subdivision of any such country, which is
engaged in making, purchasing or otherwise investing in commercial loans in the
ordinary course of its business (each, an "Assignee") its rights and obligations
--------
under this Agreement and the other Loan Documents; provided, however, that (i)
-------- -------
each such assignment shall be subject to the prior written consent of the
Administrative Lender and Borrower, which consent shall not be unreasonably
withheld (provided, however, notwithstanding anything herein to the contrary,
-------- -------
no consent of the Borrower is required for any assignment during any time that
an Event of Default has occurred and is continuing), (ii) no such assignment
shall be in an amount of Commitments less than $10,000,000 unless such lesser
amount represents the entirety of the Commitments of the applicable Lender,
(iii) the applicable Lender, Administrative Lender and applicable Assignee shall
execute and deliver to the Administrative Lender an Assignment and Acceptance
Agreement (an "Assignment Agreement") in substantially the form of Exhibit F
-------------------- ---------
hereto, together with the Notes subject to such assignment, (iv) the Assignee
executing the Assignment, shall deliver to the Administrative Lender a
processing fee of $3,500 and (v) each such assignment shall be a constant, not a
varying, percentage of the assigning Lender's Rights and obligations in respect
of the Advances. Upon such execution, delivery and acceptance from and after the
effective date specified in each Assignment, which effective date shall be at
least three Business Days after the execution thereof, (A) the Assignee
thereunder shall be party hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment, have the rights
and obligations of a Lender hereunder and (B) the applicable Lender shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment, relinquish such rights and be released from such
obligations under this Agreement.
(e) Notwithstanding anything in clause (d) above to the contrary, any
Lender may assign and pledge all or any portion of its Advances and Notes to any
Federal Reserve Bank as collateral security pursuant to Regulation A of F.R.S.
Board and any Operating Circular issued by such Federal Reserve Bank; provided,
however, that no such assignment under this clause (e) shall release the
assignor Lender from its obligations hereunder.
(f) Upon its receipt of an Assignment Agreement executed by a Lender and
an Assignee, and any Note or Notes subject to such assignment, the Borrower
shall, within five Business Days after its receipt of such Assignment Agreement,
at no expense to the Borrower, execute and deliver to the Administrative Lender
in exchange for the surrendered Notes new Notes to the order of such Assignee in
an amount equal to the portion of the Advances and Commitments assigned to it
pursuant to such Assignment Agreement and new Notes to the order of the assignor
Lender in an amount equal to the portion of the Advances and Commitments
retained by it hereunder. Such new Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Notes, shall
be dated the effective date of such Assignment Agreement and shall otherwise be
in substantially the form of Exhibit A.
---------
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(g) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 11.6, disclose to
------------
the assignee or Participant or proposed assignee or participant, any information
relating to the Borrower furnished to such Lender by or on behalf of the
Borrower, provided such Person agrees in writing to handle such information in
accordance with the standards set forth in Section 11.14 hereof.
-------------
(h) Except as specifically set forth in this Section 11.6, nothing in this
------------
Agreement or any other Loan Documents, expressed or implied, is intended to or
shall confer on any Person other than the respective parties hereto and thereto
and their successors and assignees permitted hereunder and thereunder any
benefit or any legal or equitable right, remedy or other claim under this
Agreement or any other Loan Documents.
(i) Notwithstanding anything in this Section 11.6 to the contrary, no
------------
Assignee or Participant (nor the assigning or participating Lender) shall be
entitled to receive (whether individually or collectively) any greater payment
under Section 2.14 or Section 9.3 or Section 9.5 than such assigning or
------------ ----------- -----------
participating Lender would have been entitled to receive with respect to the
interest assigned or participated to such Assignee or Participant.
Section 11.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 Severability. Any provision of this Agreement which is for any
------------
reason prohibited or found or held invalid or unenforceable by any court or
governmental agency shall be ineffective to the extent of such prohibition or
invalidity or unenforceability without invalidating the remaining provisions
hereof in such jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 11.9 Interest and Charges. It is not the intention of any parties to
--------------------
this Agreement to make an agreement in violation of the laws of any applicable
jurisdiction relating to usury. Regardless of any provision in any Loan
Documents, no Lender shall ever be entitled to receive, collect or apply, as
interest on the Obligations, any amount in excess of the Highest Lawful Amount.
If any Lender or participant ever receives, collects or applies, as interest,
any such excess, such amount which would be excessive interest shall be deemed a
partial repayment of principal and treated hereunder as such; and if principal
is paid in full, any remaining excess shall be paid to the Borrower. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, the Borrower and the Lenders
shall, to the maximum extent permitted under Applicable Law, (a) characterize
any nonprincipal payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effect thereof, and (c) amortize,
prorate, allocate and spread in equal parts, the total amount of interest
throughout the entire contemplated term of the Obligations so that the interest
rate is uniform throughout the entire term of the Obligations; provided,
however, that if the Obligations are paid and performed in full prior to the end
of the full contemplated term
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thereof, and if the interest received for the actual period of existence thereof
exceeds the Highest Lawful Rate, the Lenders shall refund to the Borrower the
amount of such excess or credit the amount of such excess against the total
principal amount of the Obligations owing, and, in such event, the Lenders shall
not be subject to any penalties provided by any laws for contracting for,
charging or receiving interest in excess of the Highest Lawful Rate. This
Section shall control every other provision of all agreements pertaining to the
transactions contemplated by or contained in the Loan Documents.
Section 11.10 Headings. Headings used in this Agreement are for convenience
--------
only and shall not be used in connection with the interpretation of any
provision hereof.
Section 11.11 Amendment and Waiver. The provisions of this Agreement may not
--------------------
be amended, modified or waived except by the written agreement of the Borrower
and the Determining Lenders; provided, however, that no such amendment,
modification or waiver shall be made (a) without the consent of all Lenders, if
it would (i) increase the Specified Percentage or commitment of any Lender, or
(ii) extend or postpone the date of maturity of, extend the due date for any
payment of principal or interest on, reduce the amount of any installment of
principal or interest on, or reduce the rate of interest on, any Revolving
Credit Advance, the Reimbursement Obligations or other amount owing under any
Loan Documents to which such Lender is entitled, or (iii) release any security
for or guaranty of the Obligations (except pursuant to this Agreement or the
other Loan Documents), or (iv) reduce the fees payable hereunder to which such
Lender is entitled, or (v) revise this Section 11.11, or (vi) waive the date for
-------------
payment of any principal, interest or fees hereunder or (vii) amend the
definition of Determining Lenders; (b) without the consent of the Swing Line
Bank, if it would alter the rights, duties or obligations of the Swing Line
Bank; (c) without the consent of the Administrative Lender, if it would alter
the rights, duties or obligations of the Administrative Lender; or (d) without
the consent of the Issuing Bank, if it would alter the rights, duties or
obligations of the Issuing Bank. Neither this Agreement nor any term hereof may
be amended orally, nor may any provision hereof be waived orally but only by an
instrument in writing signed by the Administrative Lender and, in the case of an
amendment, by the Borrower.
Section 11.12 Exception to Covenants. Neither the Borrower nor any Subsidiary
----------------------
of the Borrower shall be deemed to be permitted to take any action or fail to
take any action which is permitted as an exception to any of the covenants
contained herein or which is within the permissible limits of any of the
covenants contained herein if such action or omission would result in the breach
of any other covenant contained herein.
Section 11.13 No Liability of Issuing Bank. The Borrower assumes all risks of
----------------------------
the acts or omissions of any beneficiary or transferee of any Letter of Credit
with respect to its use of such Letter of Credit. Neither the Issuing Bank nor
any Lender nor any of their respective officers or directors shall be liable or
responsible for: (a) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith; (b)
the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or
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forged; (c) payment by the Issuing Bank against presentation of documents that
do not comply with the terms of a Letter of Credit, including failure of any
documents to bear any reference or adequate reference to the Letter of Credit,
except for any payment made upon the Issuing Bank's gross negligence or wilful
misconduct; or (d) any other circumstances whatsoever in making or failing to
make payment under any Letter of Credit, except that the Borrower shall have a
claim against the Issuing Bank, and the Issuing Bank shall be liable to the
Borrower, to the extent of any direct, but not consequential, damages suffered
by the Borrower that a court of competent jurisdiction determines were caused by
(i) the Issuing Bank's wilful misconduct or gross negligence or (ii) the Issuing
Bank's wilful failure to make lawful payment under a Letter of Credit after the
presentation to it of a draft and certificates strictly complying with the terms
and conditions of the Letter of Credit. In furtherance and not in limitation of
the foregoing, the Issuing Bank may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of
any notice or information to the contrary.
Section 11.14 Confidentiality. Each Lender and the Administrative Lender
---------------
agrees (on behalf of itself and each of its Affiliates, directors, officers,
employees and representatives) to use reasonable precautions to keep
confidential, in accordance with customary procedures for handling confidential
information of this nature and in accordance with safe and sound banking
practices, any non-public information supplied to it by the Borrower pursuant to
this Agreement which is identified by the Borrower as being confidential at the
time the same is delivered to the Lenders or the Administrative Lender, provided
that nothing herein shall limit the disclosure of any such information (a) to
the extent required by statute, rule, regulation or judicial process, (b) to
counsel for any Lender or the Administrative Lender, (c) to bank examiners,
auditors or accountants of any Lender, (d) to the Administrative Lender or any
other Lender, (e) in connection with any Litigation to which any one or more of
Lenders is a party, provided, further, that, unless specifically prohibited by
Applicable Law or court order, each Lender shall, prior to disclosure thereof,
notify Borrower of any request for disclosure of any such non-public information
(i) by any Tribunal or representative thereof (other than any such request in
connection with an examination of such Lender's financial condition by such
governmental agency) or (ii) pursuant to legal process, or (f) to any Assignee
or Participant (or prospective Assignee or Participant) so long as such Assignee
or Participant (or prospective Assignee or Participant) agrees in writing to
handle such information in accordance with the provisions of this Section 11.14.
-------------
Section 11.15 No Liability of Lenders to Purchasers. The Lenders do not
-------------------------------------
assume and shall have no responsibility, obligation or liability to the
Purchasers, the Lenders' relationship being solely that of a creditor who has
taken, as security for Indebtedness owed to it, an Assignment of Pledged
Documents.
SECTION 11.16 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
-------------
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS) AND THE UNITED
STATES OF AMERICA. THE LOAN DOCUMENTS ARE PERFORMABLE IN DALLAS, TEXAS,
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AND BORROWER AND EACH SURETY, GUARANTOR, ENDORSER AND ANY OTHER PARTY EVER
LIABLE FOR PAYMENT OF ANY MONEY PAYABLE WITH RESPECT TO THE LOAN DOCUMENTS,
JOINTLY AND SEVERALLY WAIVE THE RIGHT TO BE SUED ELSEWHERE. WITHOUT EXCLUDING
ANY OTHER JURISDICTION, THE BORROWER, THE ADMINISTRATIVE LENDER AND EACH LENDER
EACH AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS,
SHALL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS AND HEREBY SUBMITS WITH RESPECT TO ITSELF AND ITS
PROPERTY TO THE JURISDICTION OF ANY SUCH COURT FOR THE PURPOSE OF ANY SUIT,
ACTION, PROCEEDING OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT.
SECTION 11.17 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE ADMINISTRATIVE
--------------------
LENDER AND THE LENDERS HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY AND
INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO ANY OF
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION IS A
MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO THIS AGREEMENT AND MAKING ANY
ADVANCES HEREUNDER.
SECTION 11.18 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE
----------------
OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
REGARDING THE SUBJECT MATTER HEREIN AND THEREIN AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
===============================================================================
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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SCHEDULE 1
----------
LIBOR LENDING OFFICES
NATIONSBANK OF TEXAS, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
SCHEDULE 1 - Page 1
----------
SCHEDULE 2
----------
EXISTING LIENS
PROPERTY SUBJECT AMOUNT OF
TO LIEN LIENHOLDER DEBT SECURED MATURITY DATE
---------------- ---------- ------------ -------------
SCHEDULE 1 - Page 2
----------
SCHEDULE 3
----------
EXISTING LITIGATION
AND MATERIAL LIABILITIES
SCHEDULE 1 - Page 3
----------
SCHEDULE 4
----------
SUBSIDIARIES
State of
Incorporation Percentage
Name or Organization of Ownership Owner
---- --------------- ------------ -----
SCHEDULE 1 - Page 4
----------
SCHEDULE 5
----------
EXISTING INVESTMENTS
SCHEDULE 1 - Page 5
----------
SCHEDULE 6
----------
EXISTING INDEBTEDNESS
SCHEDULE 1 - Page 6
----------
SCHEDULE 7
----------
AUTHORIZATION, QUALIFICATION AND GOOD STANDING
SCHEDULE 1 - Page 7
----------
