SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
__________________
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 17, 1998
Commission file numbers 33-89818, 33-96568, 333-08041 and 333-57107
CLUB CORPORATION INTERNATIONAL
(Exact name of registrant as specified in its charter)
NEVADA 75-1311242
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification no.)
3030 LBJ FREEWAY, SUITE 700 DALLAS, TEXAS 75234
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 243-6191
Former name, former address and former fiscal year,
if changed since last report: NONE
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No.
-----
The number of shares of the Registrant's Common Stock outstanding as of June 17,
1998 was 84,975,103.
<PAGE>
CLUB CORPORATION INTERNATIONAL
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Independent Auditors' Review Report
Consolidated Balance Sheet
Consolidated Statement of Operations
Consolidated Statement of Stockholders' Equity
Consolidated Statement of Cash Flows
Condensed Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Part II. OTHER INFORMATION
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REVIEW REPORT
-----------------------------------
The Board of Directors
Club Corporation International:
We have reviewed the consolidated balance sheet of Club Corporation
International and subsidiaries (ClubCorp) as of June 17, 1998 and June 11, 1997
and the related consolidated statements of operations for the twelve weeks and
twenty four weeks ended June 17, 1998 and June 11, 1997 and stockholders' equity
and cash flows for the twenty four weeks ended June 17, 1998 and June 11, 1997,
respectively. These consolidated financial statements are the responsibility of
the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of ClubCorp as of December 31, 1997
and the related consolidated statements of operations, stockholders' equity and
cash flows for the year then ended (not presented herein); and in our report
dated February 27, 1998, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying consolidated balance sheet as of December 31, 1997 is fairly
presented, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
KPMG Peat Marwick LLP
Dallas, Texas
July 23, 1998
<PAGE>
CLUB CORPORATION INTERNATIONAL
- ------------------------------
CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except share amounts)
(Unaudited)
<TABLE>
<CAPTION>
June 11, December 31, JUNE 17,
Assets 1997 1997 1998
------ ----------- -------------- -----------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 122,874 $ 101,419 $ 81,863
Membership and other receivables, net 74,802 76,522 80,677
Inventories 14,975 14,954 17,609
Other assets 12,401 14,546 12,859
----------- -------------- -----------
Total current assets 225,052 207,441 193,008
Property and equipment, net 669,560 677,227 706,213
Other assets 123,463 126,884 139,116
----------- -------------- -----------
$1,018,075 $ 1,011,552 $1,038,337
=========== ============== ===========
Liabilities and Stockholders' Equity
- -------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 46,470 $ 57,996 $ 50,193
Long-term debt - current portion 82,879 74,621 16,467
Other liabilities 70,903 53,974 71,170
----------- -------------- -----------
Total current liabilities 200,252 186,591 137,830
Long-term debt 204,246 181,236 240,794
Other liabilities 92,121 48,169 47,498
Membership deposits 78,258 83,066 88,328
Redemption value of common stock held by benefit plan 44,879 53,652 56,786
Stockholders' equity:
Common stock, $.01 par value, 100,000,000 shares
authorized, 90,219,408 issued, 85,267,515 outstanding
at June 11, 1997, 85,003,839 at December 31, 1997
and 84,975,103 at June 17, 1998 902 902 902
Additional paid-in capital 10,589 10,607 10,987
Accumulated other comprehensive income (130) 260 (94)
Retained earnings 470,540 542,936 555,116
Treasury stock (38,703) (42,215) (43,024)
Redemption value of common stock held by benefit plan (44,879) (53,652) (56,786)
----------- -------------- -----------
Total stockholders' equity 398,319 458,838 467,101
----------- -------------- -----------
$1,018,075 $ 1,011,552 $1,038,337
=========== ============== ===========
</TABLE>
See accompanying condensed notes to consolidated financial statements.
<PAGE>
CLUBCORPORATION INTERNATIONAL
- -----------------------------
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
12 WEEKS ENDED 24 WEEKS ENDED
---------------------- ---------------------
June 11, JUNE 17, June 11, JUNE 17,
1997 1998 1997 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating revenues $ 201,767 $ 212,910 $ 360,890 $ 384,869
Operating costs and expenses 160,395 163,854 303,120 316,200
Selling, general and administrative expenses 15,564 17,565 29,809 31,981
---------- ---------- ---------- ----------
Operating income 25,808 31,491 27,961 36,688
Gain (loss) on divestitures 9,510 (2,408) 11,786 (2,062)
Interest and investment income 1,764 1,837 3,671 3,986
Interest expense (8,221) (7,376) (16,206) (14,871)
---------- ---------- ---------- ----------
Income from continuing operations before income tax
provision, minority interest and extraordinary item 28,861 23,544 27,212 23,741
Income tax provision (1,830) (9,018) (2,823) (9,461)
Minority interest (71) (205) 57 (924)
---------- ---------- ---------- ----------
Income from continuing operations
before extraordinary item 26,960 14,321 24,446 13,356
Discontinued operations:
Gain on disposal of financial services segment,
net of income tax provision of $15,221 - - 25,146 -
---------- ---------- ---------- ----------
Income before extraordinary item 26,960 14,321 49,592 13,356
Extraordinary item - loss on extinguishment of debt,
net of income taxes of $634 - (1,176) - (1,176)
---------- ---------- ---------- ----------
Net income $ 26,960 $ 13,145 $ 49,592 $ 12,180
========== ========== ========== ==========
Basic and diluted earnings per share:
Income from continuing operations $ .32 $ .17 $ .29 $ .16
Discontinued operations - - .29 -
Extraordinary item - loss on extinguishment of debt - (.02) - (.02)
---------- ---------- ---------- ----------
Net income $ .32 $ .15 $ .58 $ .14
========== ========== ========== ==========
</TABLE>
See accompanying condensed notes to consolidated financial statements.
<PAGE>
CLUB CORPORATION INTERNATIONAL
- ------------------------------
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Twenty Four Weeks Ended June 11, 1997 and June 17, 1998
(Dollars in thousands, except share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
other
Common stock (100,000,000 shares comprehensive
Authorized, par value $.01 per share) income
-------------------------------------------- -------------
Foreign
Treasury Additional Currency
Shares Stock Shares Par Paid-in Translation
Issued Shares Outstanding Value Capital Adjustment
---------- ---------- ------------ ------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1996 90,219,408 4,826,167 85,393,241 $ 902 $ 10,380 $ (54)
Net income - - - - - -
Purchase of treasury stock - 179,431 (179,431) - - -
Stock issued in connection with bonus plans - (53,705) 53,705 - 209 -
Foreign currency translation adjustment - - - - - (76)
Market adjustment - - - - - -
Change in redemption value - - - - - -
---------- ---------- ------------ ------ ----------- -------------
Balances at June 11, 1997 90,219,408 4,951,893 85,267,515 $ 902 $ 10,589 $ (130)
========== ========== ============ ====== =========== =============
Balances at December 31, 1997 90,219,408 5,215,569 85,003,839 $ 902 $ 10,607 $ 260
Net income - - - - - -
Purchase of treasury stock - 90,885 (90,885) - - -
Stock issued in connection with bonus plans - (62,149) 62,149 - 380 -
Foreign currency translation adjustment - - - - - (354)
Change in redemption value - - - - - -
---------- ---------- ------------ ------ ----------- -------------
Balances at June 17, 1998 90,219,408 5,244,305 84,975,103 $ 902 $ 10,987 $ (94)
========== ========== ============ ====== =========== =============
Accumulated
other
comprehensive
income
-------------------
Unrealized Redemption
Gains or Value of
Losses on Common
Investments in Stock Total
Debt and Retained Treasury Held by Stockholders'
Equity Securities Earnings Stock Benefit Plan Equity
------------------- --------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1996 $ (46) $ 420,948 $ (37,100) $ (43,233) $ 351,797
Net income - 49,592 - - 49,592
Purchase of treasury stock - - (2,019) - (2,019)
Stock issued in connection with bonus plans - - 416 - 625
Foreign currency translation adjustment - - - - (76)
Market adjustment 46 - - - 46
Change in redemption value - - - (1,646) (1,646)
------------------- --------- ---------- -------------- ---------------
Balances at June 11, 1997 $ - $ 470,540 $ (38,703) $ (44,879) $ 398,319
=================== ========= ========== ============== ===============
Balances at December 31, 1997 $ - $ 542,936 $ (42,215) $ (53,652) $ 458,838
Net income - 12,180 - - 12,180
Purchase of treasury stock - - (1,312) - (1,312)
Stock issued in connection with bonus plans - - 503 - 883
Foreign currency translation adjustment - - - - (354)
Change in redemption value - - - (3,134) (3,134)
------------------- --------- ---------- -------------- ---------------
Balances at June 17, 1998 $ - $ 555,116 $ (43,024) $ (56,786) $ 467,101
=================== ========= ========== ============== ===============
</TABLE>
See accompanying condensed notes to consolidated financial statements.
<PAGE>
CLUB CORPORATION INTERNATIONAL
- ------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
24 WEEKS ENDED
----------------------
June 11, JUNE 17,
1997 1998
---------- ----------
<S> <C> <C>
Cash flows from operations:
Net income $ 49,592 $ 12,180
Adjustments to reconcile net income to cash flows
provided from operations:
Depreciation and amortization 22,207 24,367
Loss (gain) on divestitures (11,786) 2,062
Minority interest in net income (loss) of subsidiaries (57) 924
Gain on disposal of financial services segment (25,146) -
Extraordinary item - loss on extinguishment of debt - 1,810
Equity in earnings in partnerships and joint ventures (3,468) (269)
Amortization of discount on membership deposits 2,833 3,175
Deferred income taxes 1,775 7,749
Decrease in real estate held for sale 3,401 4,590
Increase in membership and other receivables, net (1,914) (9,527)
Decrease in accounts payable and accrued liabilities (8,210) (3,659)
Increase in deferred membership dues 6,365 8,127
Other 11,246 2,206
---------- ----------
Cash flows provided from operations 46,838 53,735
Cash flows from investing activities:
Additions to property and equipment (26,712) (35,907)
Development of real estate ventures (2,971) (6,919)
Development of new facilities (2,463) (5,708)
Acquisition of facilities (2,960) (9,038)
Investment in joint ventures (800) (15,687)
Proceeds from disposition of subsidiaries and assets, net 11,129 4,697
Proceeds from disposal of financial services segment, net 89,968 -
Other 5,772 484
---------- ----------
Cash flows provided from (used by) investing activities 70,963 (68,078)
Cash flows from financing activities:
Borrowings of long-term debt 10,187 221,535
Repayments of long-term debt (62,501) (222,469)
Membership deposits received, net 605 1,210
Treasury stock transactions, net (2,019) (1,312)
Repayment of Federal Home Loan bank advances (3,153) -
Dividend paid to minority shareholder of financial services segment (12,500) (4,177)
---------- ----------
Cash flow used by financing activities (69,381) (5,213)
---------- ----------
Total net cash flows 48,420 (19,556)
Cash and cash equivalents at beginning of period 74,454 101,419
---------- ----------
Cash and cash equivalents at end of period $ 122,874 $ 81,863
========== ==========
</TABLE>
See accompanying condensed notes to consolidated financial statements.
<PAGE>
CLUB CORPORATION INTERNATIONAL
- ------------------------------
Condensed Notes to Consolidated Financial Statements
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------
Consolidation
- -------------
The consolidated financial statements include the accounts of Club Corporation
International (Parent) and its subsidiaries (collectively ClubCorp) except for
certain subsidiaries of Franklin Federal Bancorp, a Federal Savings Bank
(Franklin). On January 2, 1997, Franklin sold certain assets and transferred
certain liabilities to Norwest Corporation. Thus, Franklin is classified as a
discontinued operation in the accompanying consolidated financial statements.
Interim presentation
- ---------------------
The accompanying consolidated financial statements have been prepared by
ClubCorp and are unaudited. Certain information and footnote disclosures
normally included in financial statements presented in accordance with generally
accepted accounting principles have been omitted from the accompanying
statements. ClubCorp's management believes the disclosures made are adequate to
make the information presented not misleading. However, the financial statements
should be read in conjunction with the financial statements and notes thereto of
ClubCorp for the year ended December 31, 1997 which were a part of ClubCorp's
Form 10-K.
In the opinion of ClubCorp management, the accompanying unaudited consolidated
financial statements reflect all adjustments (consisting of normal recurring
accruals) necessary to present fairly the consolidated financial position of
ClubCorp as of June 11, 1997 and June 17, 1998 and the consolidated results of
operations and cash flows for the twelve weeks and twenty four weeks ended June
11, 1997 and June 17, 1998, respectively. Interim results are not necessarily
indicative of fiscal year performance because of the impact of seasonal and
short-term variations.
Earnings per share
- --------------------
Earnings per share for the twelve weeks ended June 11, 1997 and June 17, 1998 is
computed using the weighted average number of shares outstanding of 85,352,087
and 85,005,398 for basic and 85,799,131 and 86,100,933 for diluted,
respectively. For the twenty four weeks ended June 11, 1997 and June 17, 1998,
earnings per share is computed using the weighted average number of shares
outstanding of 85,399,516 and 85,035,693 for basic and 85,857,664 and 86,461,292
for diluted, respectively. The weighted average shares outstanding used in the
calculation of diluted earnings per share includes options to purchase common
stock.
Reclassifications
- -----------------
Certain amounts previously reported have been reclassified to conform with the
current period presentation.
NOTE 2. TOTAL COMPREHENSIVE INCOME
- --------------------------------------
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income".
SFAS 130 requires that an entity include in total comprehensive income certain
amounts which were previously recorded directly to stockholders' equity. For the
twelve weeks and twenty four weeks ended June 11, 1997 and June 17, 1998 the
other comprehensive income amounts included in total comprehensive income
consisted of unrealized gains on investments in debt and equity securities and
foreign currency translation adjustments. Total comprehensive income was
$26,904,000 and $12,921,000 for the twelve weeks ended and $49,562,000 and
$11,826,000 for the twenty four weeks ended June 11, 1997 and June 17, 1998,
respectively.
NOTE 3. OMNIBUS STOCK OPTION PLAN
- --------------------------------------
The Club Corporation International Omnibus Stock Plan (Plan) was adopted to be
effective February 1998. The Plan provides for granting to key employee partners
options to purchase shares of common stock at a price not less than fair market
value at the date of grant. The vesting will be determined at the time of grant
and will generally be three to five years. The initial grant was 1,805,000
options with a five year vesting and a ten year expiration date. None of these
options are currently exercisable.
NOTE 4. SENIOR CREDIT FACILITY
- ----------------------------------
On May 27, 1998, Parent finalized a five-year $300,000,000 unsecured revolving
credit facility agreement with a group of banks. The obligations under this
facility are guaranteed by certain of its subsidiaries. The interest rate is
determined using a LIBOR-based pricing matrix as defined in the agreement. As
of June 17, 1998, ClubCorp has used this facility to refinance approximately
$174,944,000 in existing debt and related accrued interest of its subsidiaries.
In conjunction with this refinancing, unamortized loan costs and discounts on
long-term debt totaling $1,810,000 are shown in the accompanying Consolidated
Statement of Operations as an extraordinary item - loss on extinguishment of
debt. The amount outstanding under this agreement, including letters of credit
of $14,657,000, as of June 17, 1998, is $189,657,000 at an interest rate of
LIBOR plus 62.5 basis points.
NOTE 5. COMMITMENTS AND CONTINGENCIES
- -----------------------------------------
ClubCorp is subject to certain pending or threatened litigation and other
claims. Management, after review and consultation with legal counsel, believes
ClubCorp has meritorious defenses to these matters and that any potential
liability from these matters would not materially affect ClubCorp's consolidated
financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
Club Corporation International ("ClubCorp" or the "Company") is a holding
company incorporated under the laws of the State of Nevada that, through its
subsidiaries, owns, operates and/or manages country clubs, golf clubs, public
golf courses, city clubs, city/athletic clubs, athletic clubs, resorts, and
certain related real estate through sole ownership, partial ownership (including
joint venture interests) and management agreements. The Company's operations are
organized into four business segments according to the type of facility or
service - resorts, country club and golf facilities, city facilities, and
international and other businesses. The Company's primary sources of revenue
include membership dues, fees, and deposits, food and beverage sales, revenues
from golf operations and lodging.
The predecessor corporation to ClubCorp was organized in 1957 under the
name Country Clubs, Inc. All references herein to ClubCorp shall also include
Country Clubs, Inc. and its successor corporations. For purposes of this
document, references to the "Company" include ClubCorp's various subsidiaries.
However, each of ClubCorp and its subsidiaries is careful to maintain its
separate legal existence, and general references to the Company should not be
interpreted in any way to reduce the legal distinctions between the subsidiaries
or between ClubCorp and its subsidiaries.
The following discussion of the Company's financial condition and results
of operations for the 12 and 24 weeks ended June 17, 1998 and June 11, 1997
should be read in conjunction with the Company's Annual Report on Form 10-K for
the year ended December 31, 1997, as filed with the Securities and Exchange
Commission.
RESULTS OF OPERATIONS
12 WEEKS ENDED JUNE 17, 1998 COMPARED TO 12 WEEKS ENDED JUNE 11, 1997
Consolidated Operations
Operating revenues increased 5.5% to $212.9 million for the 12 weeks ended
June 17, 1998 from $201.8 million for the 12 weeks ended June 11, 1997 due
primarily to increased revenues at mature facilities. Operating revenues of
mature facilities (i.e., those for which a comparable period of activity exists,
generally those owned for at least eighteen months to two years) increased 8.3%
to $195.4 million from $180.4 million for the same period.
Operating costs and expenses, consisting of direct operating costs,
facility rentals, maintenance, and depreciation and amortization, increased
2.2%, to $163.9 million for the 12 weeks ended June 17, 1998 from $160.4 million
for the 12 weeks ended June 11, 1997, principally reflecting increased operating
costs and expenses at mature facilities which increased 4.5% to $157.1 million
from $150.3 million for the same period, due primarily to increased costs of
sales for food and beverage, golf operations, lodging, real estate sales and
inflationary payroll cost increases.
Selling, general and administrative expenses increased 12.8% to $17.6
million from $15.6 million, due primarily to bonus accruals for executives,
regional and corporate management.
Interest expense decreased 9.8% to $7.4 million from $8.2 million for the
same period due mainly to 1997 and 1998 divestitures.
Income from continuing operations decreased to $14.3 million from $27.0
million due to gains on the sale or divestiture of four facilities in the 12
weeks ended June 11, 1997.
Segment and Other Information - 12 Weeks
Resorts
The following table presents certain summary financial data and other
operating data for the Company's resort segment for the 12 week periods ended
June 11, 1997 and June 17, 1998:
<TABLE>
<CAPTION>
MATURE RESORTS TOTAL RESORTS
---------------- ----------------
1997 1998 1997 1998
------- ------- ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C>
Number of facilities at period end 4 4 8 6
Operating revenues $38,160 $43,650 $43,442 $46,316
Operating costs and expenses 30,598 32,889 37,601 36,651
------- ------- ------- -------
Segment operating income $ 7,562 $10,761 $ 5,841 $ 9,665
======= ======= ======= =======
</TABLE>
Operating revenues from total resorts increased 6.6% due primarily to
increased revenues at mature facilities offset to some extent by the effect of
divestitures. Operating revenues from mature resorts increased 14.4%, which is
indicative of increases of 9.2% in the occupancy rate and 6.0% in the average
daily revenue per occupied room for Pinehurst, Homestead, and Barton Creek.
Pinehurst continued to experience significant increases in operating revenues
which are attributable to its hosting of the 1999 U.S. Open.
Country Club and Golf Facilities
The following table presents certain summary financial data and other
operating data for the Company's country club and golf facility segment for the
12 week periods ended June 11, 1997 and June 17, 1998:
<TABLE>
<CAPTION>
MATURE TOTAL
COUNTRY CLUB COUNTRY CLUB
AND GOLF AND GOLF
FACILITIES FACILITIES
---------------- ----------------
1997 1998 1997 1998
------- ------- ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C>
Number of facilities at period end 98 98 112 110
Operating revenues $86,093 $92,835 $88,918 $96,864
Operating costs and expenses 68,344 73,174 70,488 76,885
------- ------- ------- -------
Segment operating income $17,749 $19,661 $18,430 $19,979
======= ======= ======= =======
</TABLE>
Operating revenues from total country club and golf facilities increased
8.9% primarily due to increased revenues at mature properties. Operating
revenues from mature country club and golf facilities increased 7.8% due to an
increase in members, the opening of several courses at existing facilities which
were closed for renovation during the prior year, and the acquisition of pro
shops previously owned by golf professionals.
City Facilities
The following table presents certain summary financial data and other
operating data for the Company's city facility segment for the 12 week periods
ended June 11, 1997 and June 17, 1998:
<TABLE>
<CAPTION>
MATURE CITY TOTAL CITY
FACILITIES FACILITIES
---------------- ----------------
1997 1998 1997 1998
------- ------- ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C>
Number of facilities at period end 91 91 91 94
Operating revenues $56,164 $58,874 $56,696 $59,791
Operating costs and expenses 51,379 51,018 52,002 51,745
------- ------- ------- -------
Segment operating income $ 4,785 $ 7,856 $ 4,694 $ 8,046
======= ======= ======= =======
</TABLE>
Operating revenues from total city facilities increased 5.8% primarily due
to increased revenues at mature facilities. Operating revenues from mature city
facilities increased by 6.0% due to an increase in members and facilities usage.
International and Realty
International operating revenues decreased by 18.5% to $2.2 million from
$2.7 million due primarily to decreased equity earnings from a city club in
Singapore that opened in 1997.
Realty operating revenues decreased 13.1% to $5.3 million in 1998 from $6.1
million in 1997 due to decreased sales of land held for resale in connection
with a golf facility in Colorado.
24 WEEKS ENDED JUNE 17, 1998 COMPARED TO 24 WEEKS ENDED JUNE 11, 1997
Consolidated Operations
Operating revenues increased 6.7% to $384.9 million for the 24 weeks ended
June 17, 1998 from $360.9 million for the 24 weeks ended June 11, 1997 due
primarily to increased revenues at mature facilities. Operating revenues of
mature facilities (i.e., those for which a comparable period of activity exists,
generally those owned for at least eighteen months to two years) increased 7.4%
to $348.8 million from $324.9 million for the same period.
Operating costs and expenses, consisting of direct operating costs,
facility rentals, maintenance, and depreciation and amortization, increased
4.3%, to $316.2 million for the 24 weeks ended June 17, 1998 from $303.1 million
for the 24 weeks ended June 11, 1997, principally reflecting increased operating
costs and expenses at mature facilities which increased 4.5% to $301.4 million
from $288.4 million for the same period, due primarily to increases in costs of
sales for food and beverage, golf operations, real estate sales, lodging and
inflationary payroll cost increases.
Selling, general and administrative expenses increased 7.4% to $32.0
million for the 24 weeks ended June 17, 1998 from $29.8 million for the 24 weeks
ended June 11, 1997, due primarily to bonus accruals for executives, corporate
and regional management.
Interest expense decreased 8.0% to $14.9 million from $16.2 million for the
same period, due mainly to 1997 and 1998 divestitures.
Income from continuing operations decreased to $13.4 million from $24.5
million due to gains on the sale or divestiture of five facilities in the 24
weeks ended June 11, 1997.
Segment and Other Information - 24 Weeks
Resorts
The following table presents certain summary financial data and other
operating data for the Company's resort segment for the 24 week periods ended
June 11, 1997 and June 17, 1998:
<TABLE>
<CAPTION>
MATURE RESORTS TOTAL RESORTS
-------------------- ----------------
1997 1998 1997 1998
--------- --------- ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C>
Number of facilities at period end 4 4 8 6
Operating revenues $ 63,842 $ 70,876 $71,192 $74,867
Operating costs and expenses 58,426 61,477 69,184 68,098
--------- --------- ------- -------
Segment operating income $ 5,416 $ 9,399 $ 2,008 $ 6,769
========= ========= ======= =======
Room nights available 183,601 183,127
Occupancy rate 46.0% 48.5%
Average daily room rate per occupied room $ 109 $ 118
Average daily revenue per occupied room $ 640 $ 712
</TABLE>
Operating revenues from total resorts increased 5.2% due primarily to
increased revenues at mature facilities offset to some extent by the effect of
divestitures. Operating revenues from mature resorts increased 11.0%, which is
indicative of increases of 3.8% in the occupancy rate, 8.3% in the average daily
room rate per occupied room, and 11.3% in the average daily revenue per occupied
room for Pinehurst, Barton Creek, and Homestead. Pinehurst continued to
experience significant increases in operating revenues which are attributable to
its hosting of the 1999 U.S. Open.
Country Clubs and Golf Facilities
The following table presents certain summary financial data and other
operating data for the Company's country club and golf facility segment for the
24 week periods ended June 11, 1997 and June 17, 1998:
<TABLE>
<CAPTION>
MATURE TOTAL
COUNTRY CLUB COUNTRY CLUB
AND GOLF AND GOLF
FACILITIES FACILITIES
------------------ ------------------
1997 1998 1997 1998
-------- -------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C>
Number of facilities at period end 98 98 112 110
Operating revenues $152,365 $162,713 $158,155 $169,754
Operating costs and expenses 128,158 134,926 133,213 141,748
-------- -------- -------- --------
Segment operating income $ 24,207 $ 27,787 $ 24,942 $ 28,006
======== ======== ======== ========
</TABLE>
Operating revenues from total country club and golf facilities increased
7.3% primarily due to increased revenues at mature facilities. Operating
revenues from mature country club and golf facilities increased 6.8% primarily
due to an increase in members, the opening of several courses at existing
facilities which were closed for renovation during the prior year, and the
acquisition of pro shops previously owned by golf professionals.
City Facilities
The following table presents certain summary financial data and other
operating data for the Company's city facility segment for the 24 week periods
ended June 11, 1997 and June 17, 1998:
<TABLE>
<CAPTION>
MATURE CITY TOTAL CITY
FACILITIES FACILITIES
------------------ ------------------
1997 1998 1997 1998
-------- -------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C>
Number of facilities at period end 91 91 91 94
Operating revenues $108,739 $115,229 $110,445 $116,837
Operating costs and expenses 101,843 104,974 103,897 106,478
-------- -------- -------- --------
Segment operating income $ 6,896 $ 10,255 $ 6,548 $ 10,359
======== ======== ======== ========
</TABLE>
Operating revenues from total city facilities increased 5.8% due primarily
to increased revenues at mature facilities. Operating revenues from mature city
facilities increased by 6.0% due to an increase in members and facility usage.
International and Realty
International operating revenues decreased to $4.0 million from $5.7
million primarily due to decreased equity earnings from a city club in Singapore
that opened in 1997.
Realty operating revenues increased to $11.6 million in 1998 from $8.5
million in 1997 primarily due to increased sales of real estate held for resale
in connection with a golf facility in Colorado.
SEASONALITY
The Company's quarterly results fluctuate as a result of a number of
factors. Usage of the Company's country club and golf facilities and resorts
declines significantly during the first and fourth quarters, when colder
temperatures and shorter days reduce the demand for golf and golf-related
activities. The Company's city facilities generate a disproportionately greater
share of their yearly revenues in the fourth quarter, which includes the holiday
and year-end party season. As a result of these factors, the Company usually
generates a disproportionate share of its revenues in the second, third, and
fourth quarters of each year and has lower revenues in the first quarter. The
timing of purchases, sales, or leases of facilities also have caused and may
cause the Company's results of operations to vary significantly in otherwise
comparable periods. In addition, the Company's results can be affected by
non-seasonal and severe weather patterns.
LIQUIDITY AND CAPITAL RESOURCES
The Company finances its operations and capital replacements primarily
through cash flows from operations. Historically, the Company financed its
capital expansions through cash from operations and long-term debt at the
subsidiary level. Most capital expenditures other than capital replacements are
considered discretionary and could be curtailed in periods of low liquidity.
Capital replacements are planned expenditures made each year to maintain high
quality standards of facilities for the purpose of meeting existing members'
expectations and to attract new members. Capital replacements have ranged from
3.8% to 5.2% of operating revenues during the last three years. The Company
distinguishes capital expenditures made to refurbish and replace existing
property and equipment (i.e., capital replacements) from other discretionary
capital expenditures such as the expansion of existing facilities (i.e., capital
expansions) and acquisition or development of new facilities.
The Company has committed to provide updated technology to all of its
properties during 1998 and 1999. This technology will include installation of
point-of-sale hardware and software, replacement of computer hardware and
software to provide network capabilities, the purchase and development of
accounting software and hardware, and the installation of electronic time
management systems. In January of 1998, the Company signed an agreement with
Oracle Corporation to purchase new software for its accounting, purchasing, and
human resources applications. The decision to acquire Oracle's software was
made primarily to better enable management to improve operating efficiencies,
exceed member expectations, grow the people, performance, profits, and markets
by re-engineering processes using enterprise resource planning software.
Executive management intends to allocate the necessary resources to develop
additional technology applications and tools that will allow the properties to
operate more effectively and efficiently and to increase the value of membership
in conjunction with service excellence. Completion of the technology upgrade,
including conversion of the existing software, is expected to require
approximately $18.0 to $23.0 million in additional expenditures, of which $15.0
to $20.0 million will be capitalized. The upgrade will be funded through both a
capital lease with a bank over a four to five year period and through cash flows
from operations.
Computer programs were historically written using two digits rather than
four digits to identify the year. The computer might then recognize the two
digits "00" as year 1900 rather than year 2000 resulting in possible system
failures, miscalculations, and/or loss of data. This is referred to as the
"Year 2000" issue. Implementation of Oracle software and updating and/or
replacement of other software programs addresses the Company's Year 2000 issue
and is expected to be completed by October 1999. If the conversion is not
completed in a timely manner, Year 2000 issues may have a significant impact on
the Company's operations. The Company, however, has alternative plans in the
event Oracle is not implemented in a timely manner. The Company does not
believe that the Year 2000 problem will have a material adverse effect on the
business operations or the financial performance of the Company. There can be
no assurance, however, that the Year 2000 problem will not adversely affect the
Company and its business.
Membership deposits represent advance initiation deposits paid by members
and are refundable a fixed number of years (generally 30 years) after the date
of acceptance as a member. Management does not consider maturities of membership
deposits over the next five years to be significant. Due to the utilization of
long-term operating leases and membership deposits, the Company's leverage ratio
(i.e., long-term debt to total capital) has been maintained at manageable levels
which allow for adequate capability to finance future growth with long-term
debt.
All of the assets of the ClubCorp Stock Investment Plan ("Plan") are
invested in shares of ClubCorp's common stock, $.01 par value per share ("Common
Stock"), except for temporary investments of cash pending investment in Common
Stock. All distributions from the Plan are made in cash. As a means of providing
liquidity to the trustees of the Plan to meet their fiduciary obligations to
distribute cash to participants requesting withdrawals, ClubCorp has provided
the trustees the right ("Redemption Right") to cause the Company to redeem
Common Stock, held in trust on behalf of the Plan, at the most recent appraised
price as necessary to meet certain requirements. Withdrawals by participants and
terminations by, and/or resignations from, the Company of participants in excess
of anticipated levels could give rise to the exercise of withdrawal rights in
substantial amounts and place significant demands on the liquidity of the
Company. In such an event, the resources available to meet business expansion or
other working capital needs could be adversely affected. As of June 17, 1998,
the value of the Redemption Right was $56.8 million. The most recent appraised
price of the Common Stock is $15.04 as of June 17, 1998. The appraised value of
the Common Stock at June 17, 1998 is $1,278.0 million. The Redemption Right has
never been exercised by the Plan, although the Company from time to time has
repurchased Common Stock into treasury from certain stockholders. The Company
does not believe that the Redemption Right will be exercised to any material
extent by the Plan to meet any of its fiduciary obligations.
Club Corporation International finalized an agreement on May 27, 1998 with
a group of banks for a five-year $300.0 million unsecured senior revolving
credit facility. The Company's obligations under this facility are guaranteed
by certain of its subsidiaries. The interest rate is determined using a
LIBOR-based pricing matrix as defined in the agreement. It is anticipated that
interest rates under this facility will be substantially lower than interest
rates on indebtedness which was repaid. The Company has used the facility to
refinance approximately $174.9 million in existing debt and related accrued
interest of certain of its subsidiaries. In conjunction with this refinancing,
unamortized loan costs and discounts on long-term debt totaling $1.8 million are
shown in the accompanying Consolidated Statement of Operations as an
extraordinary item - loss on extinguishment of debt. The Company also intends
to use the facility for working capital, capital expenditures, and acquisitions.
The amount outstanding under this agreement, including letters of credit of
$14.8 million, as of June 17, 1998, is $189.7 million at an interest rate of
LIBOR plus 62.5 basis points.
The Company uses financial instruments, principally swaps, to manage its
interest rate exposure primarily from borrowings under its revolving credit
facility. These contracts generally hedge balances for periods and amounts
consistent with the Company's exposure and do not constitute investments
independent of such exposures. The Company does not use these financial
instruments for speculative or trading purposes. Swaps outstanding as of June
11, 1997 and June 17, 1998 were not material.
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
Certain information in this Quarterly Report on Form 10-Q may contain
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. All statements other than statements of
historical fact are "forward-looking statements" for purposes of these
provisions, including any projections of earnings, revenues or other financial
items, any statements of the plans and objectives of management for future
operations, any statements concerning proposed new products or services, any
statements regarding future economic conditions or performance and any statement
of assumptions underlying any of the foregoing. In some cases, forward-looking
statements can be identified by the use of terminology such as "may," "will,"
"expects," "plans," "anticipates," "estimates," "potential" or "continue," or
the negative thereof or other comparable terminology. Although the Company
believes that the expectations reflected in its forward-looking statements are
reasonable, it can give no assurance that such expectations or any of its
forward-looking statements will prove to be correct, and actual results could
differ materially from those projected or assumed in the Company's
forward-looking statements. Forward-looking statements are subject to inherent
risks and uncertainties, some of which are summarized in this section.
The success of the Company depends on the Company's ability to attract and
retain members at its clubs and maintain or increase usage of its facilities.
The Company continues to focus its efforts on membership enrollment programs and
quality service to reduce attrition as one of its top priorities for 1998. For
the last several years, the Company has focused on efforts to retain existing
members, attract new members and increase club usage through various programs
and membership activities, including increasing member participation by
continuing to implement member survey suggestions and increasing the involvement
of member boards of governors in planning day-to-day activities. Although
retention of existing members is one of ClubCorp's top priorities and the
Company devotes substantial efforts to ensuring that members and customers are
satisfied, many of the factors affecting club membership and facility usage are
beyond the control of the Company. There can be no assurance that the Company
will be able to maintain or increase membership or facilities' usage.
Significant periods of attrition rates exceeding enrollments rates or facility
usage below historical levels could have a material adverse effect on the
Company's business, operating results, and financial condition.
As of July 30, 1998, the Company was in the final stages of negotiations to
lease one property and build three properties. The consummation of the lease
and development of these properties is expected to require approximately $10.0
to $12.0 million in capital expenditures, to be funded primarily with cash flows
from operations and external financing of Club Corporation International. The
eventual outcome of the negotiations cannot be accurately predicted at this
time.
In June of 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS 133
establishes accounting and reporting standards for derivative instruments,
including certain derivatives embedded in other contracts, and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the balance sheet and measure those instruments at fair
value. SFAS 133 will be effective for the Company in its fiscal year ending in
2000. Due to the nature of the operations of the Company, the effect of
implementation of SFAS 133 is not expected to have a significant impact on the
financial position or results of operations of the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Refer to Note 5 to Condensed Notes to Consolidated Financial
Statements
Item 2. Changes in Securities and Use of Proceeds
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
On May 11, 1998, the shareholders of Club Corporation International
held their annual meeting to elect directors. The following directors were
elected: Robert H. Dedman, Sr., Albert E. Chew, III, Nancy M. Dedman, Robert H.
Dedman, Jr., Jerry W. Dickenson, Mark W. Dietz, Patricia Dedman Dietz, James M.
Hinckley, Robert H. Johnson, James E. Maser, James P. McCoy, Jr., Richard S.
Poole, and Terry A. Taylor. There were no other matters voted upon at the
meeting.
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.21 - $300,000,000 Credit Agreement Among Club Corporation
International and Certain Lenders and Co-Agents dated May 27, 1998
10.22 - Second Amendment to the Club Corporation International
Executive Stock Option Plan
15.1 - Letter from KPMG Peat Marwick LLP regarding unaudited
interim financial statements
(b) Reports on Form 8-K
The Company filed Form 8-K for the quarterly period ended June
17, 1998 on May 4, 1998 which included Item 8.
Change in Fiscal Year.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLUB CORPORATION INTERNATIONAL
Date: August 3, 1998 By: /s/ James P. McCoy, Jr.
-------------------------------
James P. McCoy, Jr.
Executive Vice President and
Chief Financial Officer
(chief accounting officer)
Exhibit 10.21
$300,000,000
CREDIT AGREEMENT
AMONG
CLUB CORPORATION INTERNATIONAL
CERTAIN LENDERS NAMED HEREIN
NATIONSBANK, N.A., AS ADMINISTRATIVE AGENT
AND
CREDIT LYONNAIS NEW YORK BRANCH
AND
FIRST UNION NATIONAL BANK
AS CO-AGENTS
May 27, 1998
TABLE OF CONTENTS
ARTICLE 1
Definitions
Section 1.1 Defined Terms
Section 1.2 Amendments and Renewals
Section 1.3 Construction
ARTICLE 2
Advances
Section 2.1 The Advances
Section 2.2 Manner of Borrowing and Disbursement
Section 2.3 Interest
Section 2.4 Fees
Section 2.5 Prepayments
Section 2.6 Reduction of Commitment
Section 2.7 Non-Receipt of Funds by the Administrative Agent
Section 2.8 Payment of Principal of Advances
Section 2.9 Reimbursement
Section 2.10 Manner of Payment
Section 2.11 LIBOR Lending Offices
Section 2.12 Sharing of Payments
Section 2.13 Calculation of LIBOR Rate
Section 2.14 Taxes
Section 2.15 Letters of Credit
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advances and the Initial
Letters of Credit
Section 3.2 Conditions Precedent to All Advances and Letters of Credit
Section 3.3 Conditions Precedent to Conversions and Continuations
ARTICLE 4
Representations and Warranties
Section 4.1 Representations and Warranties
Section 4.2 Survival of Representations and Warranties, etc
ARTICLE 5
General Covenants
Section 5.1 Preservation of Existence and Similar Matters
Section 5.2 Business; Compliance with Applicable Law
Section 5.3 Maintenance of Properties
Section 5.4 Accounting Methods and Financial Records
Section 5.5 Insurance
Section 5.6 Payment of Taxes and Claims
Section 5.7 Visits and Inspections
Section 5.8 Use of Proceeds
SECTION 5.9 INDEMNITY
Section 5.10 Environmental Law Compliance
Section 5.11 Further Assurances
Section 5.12 Year 2000 Compliance
Section 5.13 Non-Guarantors as Guarantors
ARTICLE 6
Information Covenants
Section 6.1 Quarterly Financial Statements and Information
Section 6.2 Annual Financial Statements and Information; Certificate of No
Default
Section 6.3 Compliance Certificate
Section 6.4 Copies of Other Reports and Notices
Section 6.5 Notice of Litigation, Default and Other Matters
Section 6.6 ERISA Reporting Requirements
Section 6.7 Year 2000 Compliance
ARTICLE 7
Negative Covenants
Section 7.1 Unsecured Indebtedness
Section 7.2 Secured Indebtedness
Section 7.3 Liens
Section 7.4 Investments
Section 7.5 Liquidation, Merger
Section 7.6 Guaranties
Section 7.7 Sales of Assets
Section 7.8 Acquisitions
Section 7.9 Restricted Payments
Section 7.10 Affiliate Transactions
Section 7.11 Compliance with ERISA
Section 7.12 Maximum Leverage Ratio
Section 7.13 Minimum Fixed Charge Coverage Ratio
Section 7.14 Minimum Tangible Net Worth
Section 7.15 Sale or Discount of Receivables
Section 7.16 Business
Section 7.17 Fiscal Year
Section 7.18 Amendment of Organizational Documents
Section 7.19 Non-Guarantors
Section 7.20 Restrictions on Subsidiaries
ARTICLE 8
Default
Section 8.1 Events of Default
Section 8.2 Remedies
ARTICLE 9
Changes in Circumstances
Section 9.1 LIBOR Basis Determination Inadequate
Section 9.2 Illegality
Section 9.3 Increased Costs
Section 9.4 Effect On Base Rate Advances
Section 9.5 Capital Adequacy
ARTICLE 10
Agreement Among Lenders
Section 10.1 Agreement Among Lenders
Section 10.2 Lender Credit Decision
Section 10.3 Benefits of Article
ARTICLE 11
Miscellaneous
Section 11.1 Notices
Section 11.2 Expenses
Section 11.3 Waivers
Section 11.4 Determination by the Lenders Conclusive and Binding
Section 11.5 Set-Off
Section 11.6 Assignment
Section 11.7 Counterparts
Section 11.8 Severability
Section 11.9 Interest and Charges
Section 11.10 Headings
Section 11.11 Amendment and Waiver
Section 11.12 Exception to Covenants
Section 11.13 No Liability of Issuing Bank
Section 11.14 Confidentiality
Section 11.15 No Duties of Co-Agents
SECTION 11.16 GOVERNING LAW
SECTION 11.17 WAIVER OF JURY TRIAL
SECTION 11.18 ENTIRE AGREEMENT
Schedules and Exhibits
Schedule 1: Commitments and Specified Percentages
Schedule 2: LIBOR Lending Offices
Schedule 3: Existing Liens
Schedule 4: Subsidiaries
Schedule 5: Existing Investments
Schedule 6: Existing Indebtedness
Schedule 7: Existing Letters of Credit
Schedule 8: Investment Policy
Schedule 9: Labor Matters
Schedule 10: Non-Guarantors
Exhibit A: Revolving Credit Note
Exhibit B: Compliance Certificate
Exhibit C: Assignment Agreement
Exhibit D: Subsidiary Guaranty
Exhibit E: Notice of Borrowing
Exhibit F: Swing Line Note
Exhibit G: Notice of Continuation/Conversion
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of May 27, 1998, among CLUB CORPORATION
INTERNATIONAL, a Nevada corporation (the "Borrower"), the Lenders from time to
time party hereto, CREDIT LYONNAIS NEW YORK BRANCH, as a co-agent for the
Lenders, FIRST UNION NATIONAL BANK, as a co-agent for the Lenders, and
NATIONSBANK, N.A., a national banking association, as administrative agent for
the Lenders.
BACKGROUND
The Lenders have been requested to provide the Borrower funds to (a)
refinance a portion of the existing debt of the Borrower and its Subsidiaries
(as hereinafter defined), (b) finance acquisitions, and (c) finance the ongoing
working capital and general corporate requirements of the Borrower and its
Subsidiaries. The Lenders have agreed to provide a portion of 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
Section 1.1 Defined Terms. For purposes of this Agreement:
"Acquisition" means any transaction pursuant to which the Borrower or any
of its Subsidiaries, (a) whether by means of a capital contribution or purchase
or other acquisition of stock or other securities or other equity participation
or interest, (i) acquires (or after giving effect to such transaction owns) more
than 50% of the equity interest in any Person pursuant to a solicitation by the
Borrower or such Subsidiary of tenders of equity securities 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) except as permitted by Section
7.5(b) hereof with respect to an existing Subsidiary of the Borrower, makes any
existing 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 in one
transaction or a series of related transactions all or more than 50% of the
business or assets of any Person or of any operating division, facility or group
of facilities of any Person.
"Acquisition Consideration" means the consideration given by the Borrower
or any of its Subsidiaries for an Acquisition, including but not limited to the
sum of (without duplication) (a) the fair market value of any cash, property
(including capital stock or other equity securities or interests) or services
given, plus (b) consideration paid with proceeds of Indebtedness permitted
pursuant to this Agreement, plus (c) the amount of any Indebtedness, accounts
payable and accrued expenses assumed, incurred or guaranteed in connection with
such Acquisition by the Borrower or any of its Subsidiaries.
"Additional Costs" has the meaning specified in Section 9.5 hereof.
"Adjusted LIBOR Rate" means, for any LIBOR Advance for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100th of 1%) determined by the Administrative Agent to be equal to the
quotient obtained by dividing (a) the LIBOR Rate for such LIBOR Advance for any
Interest Period by (b) 1 minus the Reserve Requirement for such LIBOR Advance
for any Interest Period.
"Administrative Agent" means NationsBank, N.A., a national banking
association, as administrative agent for Lenders, or such successor
administrative agent appointed pursuant to Section 10.1(b) hereof.
"Administrative Agent Fee Letter" has the meaning specified in Section
2.4(c)(i) hereof.
"Advance" means any amount advanced or deemed advanced by a Lender to the
Borrower pursuant to Article 2 hereof.
"Affiliate" means, as applied to any Person, any other Person that,
directly or indirectly, through one or more Persons, Controls or is Controlled
By or Under Common Control with, such Person, or a Person who Controls or is
Controlled By, such Person.
"Agreement" means this Credit Agreement, as amended, modified, supplemented
or restated from time to time to the extent permitted pursuant hereto and
pursuant to the Intercreditor Agreement.
"Agreement Date" means the date of this Agreement.
"Applicable Environmental Laws" means Applicable Laws pertaining to health
or 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 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"), the Texas Water Code, and the Texas Solid
Waste Disposal Act.
"Applicable Law" means (a) in respect of any Person, all provisions of
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
the laws of the United States of America, including without limitation 12 USC
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 now or at any
time hereafter prescribing maximum rates of interest on loans and extensions of
credit; provided that the parties hereto agree pursuant to Texas Finance Code
Section 346.004 that the provisions of Chapter 346 of the Texas Finance Code
shall not apply to Advances, this Agreement, the Notes or any other Loan
Documents.
"Applicable Margin" means the following per annum percentages, applicable
in the following situations:
Applicability LIBOR Basis
- ------------- -----------
(a) The Leverage Ratio is less than 1.75 to 1 0.250
(b) The Leverage Ratio is greater than or equal
to 1.75 to 1 but less than 2.25 to 1 0.325
(c) The Leverage Ratio is greater than or equal
to 2.25 to 1 but less than 2.75 to 1 0.425
(d) The Leverage Ratio is greater than or equal
to 2.75 to 1 but less than 3.25 to 1 0.500
(e) The Leverage Ratio is greater than or equal
to 3.25 to 1 0.750
The Applicable 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 quarterly basis according to the performance of
the Borrower as tested by using the Leverage Ratio as of the end of the most
recent Fiscal Quarter (calculated for the twelve Fiscal Months preceding the
date of determination); provided, that each adjustment in the LIBOR Basis as a
result of a change in the Applicable Margin shall be effective on the date which
is two Business Days following receipt by the Administrative Agent of the
financial statements required to be delivered pursuant to Section 6.1 or 6.2, as
applicable, hereof and the Compliance Certificate required pursuant to Section
6.3 hereof. If such financial statements and Compliance Certificate are not
received by the Lenders by the date required, the Applicable Margin shall be
determined as if the Leverage Ratio is greater than or equal to 3.25 to 1 until
such time as such financial statements and Compliance Certificate are received.
Notwithstanding the above, until such time as the Lenders have received the
financial statements required for the third Fiscal Quarter of the Borrower's
1998 Fiscal Year and related Compliance Certificate, the Applicable Margin shall
be determined as if the Leverage Ratio is greater than or equal to 2.25 to 1 but
less than 2.75 to 1.
"Arrangement Fee Letter" means that certain letter, dated April 17, 1998,
from NationsBank, N.A., and NationsBanc Montgomery Securities LLC, providing an
arrangement fee with respect to the Commitment.
"Art. 1D" means Article 5069-1D, Title 79, Revised Civil Statutes of Texas,
1925, as amended.
"Art. 1H" means Article 5069-1H, Title 79, Revised Civil Statutes of Texas,
1925, as amended.
"Assignment Agreement" has the meaning specified in Section 11.6(d) hereof.
"Authorized Signatory" means such senior personnel of the Borrower as may
be 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.
"Base Rate Basis" means, for any day, a per annum interest rate equal to
the 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 Federal Funds Rate, as applicable, to
account for such change.
"Business Day" means a day on which commercial banks are open (a) for the
transaction of commercial banking business in Dallas, Texas, and (b) with
respect to any LIBOR Advance, for the transaction of international commercial
banking business (including dealings in Dollar deposits) in London, England.
"Capitalized Lease Obligations" means that portion of any obligation of the
Borrower or any of its Subsidiaries as lessee under a lease which at the time
would be required to be capitalized on a balance sheet of the Borrower or such
Subsidiary prepared in accordance with GAAP.
"Capital Stock" means, as to any Person, the equity interests in such
Person, 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, and each class of member interest in any Person
that is a limited liability company.
"CERCLA" means 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.
"Change of Control" means the occurrence of any of the following events
after the Agreement Date: (a) the sale, lease or transfer of all or
substantially all of the Borrower's assets to any Person or Group, (b) the
adoption of a plan relating to the liquidation or dissolution of the Borrower,
(c) any Person or Group (other than Robert H. Dedman, Sr.) shall beneficially
own (as defined in Rule 13d-3 of the Securities and Exchange Commission under
the Exchange Act or any successor provision thereto) more than 50% of the
aggregate Voting Power of the Borrower, or (d) during any period of twenty-four
consecutive months (excluding, however, any such period during which a public
offering of the Capital Stock of the Borrower occurs), individuals who at the
beginning of such period constituted the Board of Directors of the Borrower
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of the Borrower was approved
by a vote of a majority of the directors of the Borrower then still in office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved), cease for any reason to
constitute a majority of the Board of Directors of the Borrower then in office.
"Closing Fee Letter" has the meaning specified in Section 2.4(b) hereof.
"Co-Agent" means either Credit Lyonnais New York Branch or First Union
National Bank.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" means the commitment of the Lenders, subject to the terms and
conditions hereof, to make Advances or to issue or participate in Letters of
Credit up to an aggregate principal amount of $300,000,000, as such amount may
be reduced pursuant to Section 2.6, hereof.
"Compliance Certificate" means a certificate, signed by an Authorized
Signatory, in substantially the form of Exhibit B, appropriately completed.
"Control" or "Controlled By" or "Under Common Control" means possession,
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, but not solely by being an officer or director of that Person);
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 with respect to a corporation shall be conclusively
presumed to control such corporation.
"Controlled Group" means as of the applicable date, as to any Person not an
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) or (c) of the Code; provided, however, that the
Subsidiaries of the Borrower shall be deemed to be members of the Borrower's
Controlled Group.
"Debtor Relief Laws" means any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief Laws affecting the rights of creditors generally from time to time
in effect.
"Default" means an Event of Default and/or any of the events specified in
Section 8.1, hereto regardless of whether there shall have occurred any passage
of time or giving of notice that would be necessary in order to constitute such
event an Event of Default.
"Default Rate" means a simple per annum interest rate equal to (a) with
respect to Base Rate Advances the lesser of (i) the Highest Lawful Rate or (ii)
the Base Rate Basis then in effect plus 2.00% or (b) with respect to LIBOR
Advances, the lesser of (i) the Highest Lawful Rate or (ii) the LIBOR Basis then
in effect plus 2.00%.
"Determining Lenders" means, on any date of determination, any combination
of Lenders whose Specified Percentages aggregate more than 50%; provided,
however, in the event that the Commitment has been terminated, "Determining
Lenders" means, on any date of determination, any combination of Lenders having
more than 50% of Advances (other than Swing Line Advances) then outstanding.
"Dividend" means, as to any Person, (a) any declaration or payment of any
dividend (other than a dividend in stock or in the right to acquire stock) on,
or the making of any distribution on account of, any Capital Stock of such
Person and (b) any purchase, redemption, or other acquisition or retirement for
value of any Capital Stock of such Person.
"Dollar" or "$" means the lawful currency of the United States of America.
"EBITDA" means, for any period, determined in accordance with GAAP on a
consolidated basis for the Borrower and its 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 other than asset
sales in the ordinary course of business), plus (b) depreciation and
amortization, plus (c) interest expense (including but not limited to interest
expense pursuant to Capitalized Lease Obligations), plus (d) to the extent
included in determining Pretax Net Income, non-recurring, non-cash charges,
minus (e) to the extent included in determining Pretax Net Income, non-recurring
credits.
"EBITDAR" means, for any period, determined in accordance with GAAP on a
consolidated basis for the Borrower and its Subsidiaries, the sum of (a) EBITDA,
plus (b) lease expense pursuant to Operating Leases.
"Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; and
(c) any other Person approved by the Administrative Agent and, unless an Event
of Default has occurred and is continuing at the time any assignment is effected
in accordance with Section 11.6 hereof, the Borrower, such approval not to be
unreasonably withheld or delayed by the Borrower or the Agent and such approval
to be deemed given by the Borrower if no objection is received by the assigning
Lender and the Administrative Agent from the Borrower within two Business Days
after notice of such proposed assignment has been provided by the assigning
Lender to the Borrower; provided, however, that neither the Borrower nor any of
its Affiliates shall qualify as an Eligible Assignee.
"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 could reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination by the PBGC of, or the appointment by the
appropriate United States District Court of a trustee to administer, any Plan or
the imposition of any 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 hereof,
provided that any requirement for notice or lapse of time has been satisfied.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Matters" has the meaning specified in Section 5.9(a) hereof.
"Existing Letters of Credit" means those Letters of Credit existing on the
Agreement Date and set forth on Schedule 7 hereto.
"Facility Fee" has the meaning specified in Section 2.4(a) hereof.
"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 Agent from three
Federal funds brokers of recognized standing selected by it.
"Financial Statements" has the meaning specified in Section 4.1(j) hereof.
"Fiscal Month" means a consecutive 28-day period. The first Fiscal Month
of the Fiscal Year shall commence on the first day of the Fiscal Year.
"Fiscal Quarter" means four periods in each Fiscal Year. The first three
shall consist of three consecutive Fiscal Months and the last shall consist of
four consecutive Fiscal Months. The First Quarter of the Fiscal Year shall
commence on the first day of the Fiscal Year.
"Fiscal Year" means a period commencing on the Thursday following the last
Wednesday in December and ending on the last Wednesday of the following
December.
"Fixed Charges" means, for any date of calculation, calculated for the
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP,
the sum of, without duplication, (a) interest expense (including but not limited
to interest expense pursuant to Capitalized Lease Obligations, but not including
amortization of discount on Membership Deposits and amortization of discounts on
Indebtedness), plus (b) lease expense under Operating Leases, in each case for
the applicable period immediately preceding the date of calculation.
"Fixed Charge Coverage Ratio" means, for any date of determination (which
shall be as of the last day of each Fiscal Quarter), the ratio of (a) the sum of
(i) EBITDAR minus (ii) Maintenance Capital Expenditures to (b) Fixed Charges, in
each case for the immediately preceding four Fiscal Quarters.
"Form 1001" has the meaning specified in Section 2.13(e)(i)(B) hereof.
"Form 4224" has the meaning specified in Section 2.13(e)(i)(A) hereof.
"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.
"Group" means any Persons acting together which would constitute a "group"
for purposes of Section 13(d) of the Exchange Act or any successor provision
thereto.
"Guarantor" means each direct and indirect Subsidiary of the Borrower which
executes a Subsidiary Guaranty.
"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 the endorsement of instruments for collection or deposit
in the ordinary course of business.
"Hazardous Substance" means any hazardous, dangerous or toxic substance or
material in the meaning of any Law.
"Hedge Agreements" means any and all non-speculative agreements, devices or
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, currency exchange rates, forward rates
applicable to such party's assets, commodity prices (including commodity hedging
agreements), 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. 1D.003, or (b) if the parties subsequently contract as
allowed by Applicable Law, the quarterly ceiling or the annualized ceiling
computed pursuant to Art. 1D.008; 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. 1D.009(a) and
(b) shall control for purposes of such determination, as applicable.
"Increased Advance Costs" has the meaning specified in Section 9.3 hereof.
"Increased Letter of Credit Costs" has the meaning specified in Section
2.15(d) hereof.
"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 (excluding trade accounts payable in the
ordinary course of business), (e) all obligations secured by any Lien on any
property or asset owned by such Person, whether or not the obligation secured
thereby shall have been assumed, (f) to the extent not otherwise included, all
Capitalized Lease Obligations of such Person, all obligations in respect of
letters of credit, bankers' acceptances and similar instruments, and all
obligations under Hedge Agreements, (g) any "withdrawal liability" of such
Person as such term is defined under Part I of Subtitle E of Title IV or ERISA,
(h) all preferred stock issued by such Person and required by the terms thereof
to be redeemed, or for which mandatory sinking fund payments are due, by a fixed
date, (i) the principal portion of all obligations of such Person under any
Synthetic Lease, and (j) 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.
"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:
(i) 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 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;
(ii) any Interest Period 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
(iii) there shall be outstanding at any one time no more than ten
Interest Periods in the aggregate.
"Investment" means any direct or indirect purchase or other acquisition of,
capital stock or other securities of, or beneficial interest in, any other
Person which is not an Acquisition, 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.
"Investment Policy" means those investments permitted to be made by the
Borrower and its Subsidiaries set forth in the Investment Policy of the Borrower
attached hereto as Schedule 8, as such Investment Policy may be amended with the
consent of the Board of Directors of the Borrower after the Agreement Date, but
only to the extent that such amendments are approved in writing by the
Determining Lenders.
"Issuing Bank" means any Lender which agrees to issue a Letter 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
Agent in its individual capacity), and each Eligible Assignee that hereafter
becomes a party hereto pursuant to Section 11.6 hereof, subject to the
limitations set forth therein.
"L/C Cash Collateral Account" has the meaning specified in Section
2.15(g)(i) hereof.
"L/C Related Documents" has the meaning specified in Section 2.15(e)(i)
hereof.
"Letter of Credit" means any letter of credit issued by an Issuing Bank
pursuant to Section 2.15(a) hereof (or any Existing Letter of Credit).
"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.
"Leverage Ratio" means, for any date of calculation (which shall be as of
the last day of each Fiscal Quarter), the ratio of Total Debt as of the date of
determination to EBITDA calculated for the four consecutive Fiscal Quarters
ending on the date of calculation. For purpose of calculation of the Leverage
Ratio only, with respect to assets not owned at all times during the four Fiscal
Quarters immediately preceding the date of calculation of EBITDA, there shall be
(i) included in EBITDA the proforma EBITDA (but calculated to exclude any
increase in EBITDA which would be the result of any expenses that the Borrower
projects to be eliminated by such proposed acquisition) of any assets acquired
during any such four Fiscal Quarters and (ii) excluded from EBITDA the EBITDA of
any assets disposed of during any of such Fiscal Quarters.
"LIBOR Advance" means any Advance bearing interest at the LIBOR Basis.
"LIBOR Basis" means, with respect to any LIBOR Advance, a per annum
interest rate equal to the lesser of (a) the Highest Lawful Rate, or (b) the sum
of the Adjusted LIBOR Rate applicable to such LIBOR Advance plus the Applicable
Margin.
"LIBOR Lending Office" means, with respect to a Lender, the office
designated as its LIBOR Lending Office on Schedule 2 attached hereto, and such
other office of the Lender or any of its Affiliates hereafter designated by
written notice to the Borrower and the Administrative Agent.
"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 choate,
vested or perfected, excluding (a) Liens securing Indebtedness among the
Obligors, provided that such Indebtedness is subordinated to the Obligations in
a manner satisfactory to the Determining Lenders and (b) Liens to secure
Indebtedness of any Non-Guarantor owed to any Obligor.
"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, any Subsidiary Guaranty,
the L/C Related Documents, the Arrangement Fee Letter, the Administrative Agent
Fee Letter, any Hedge Agreement with any Lender or an Affiliate of any Lender,
and any other document or agreement executed or delivered from time to time by
the Borrower and any of its Subsidiaries or any other Person in connection
herewith or as security for the Obligations.
"Maintenance Capital Expenditures" means, for any date of determination, an
amount equal to the product of (a) 5% multiplied by (b) gross revenue of the
Borrower and its Subsidiaries, on a consolidated basis, determined in accordance
with GAAP, calculated for the
four consecutive Fiscal Quarters ending on the date of calculation.
"Material Adverse Effect" means any act or circumstance or event that (a)
could reasonably be expected to be material and adverse to the business, assets,
liabilities, financial condition, results of operations or prospects of the
Borrower and its Subsidiaries taken as a whole, or (b) in any manner whatsoever
does or could reasonably be expected to materially and adversely affect (i) the
validity or enforceability of any Loan Document, (ii) the ability of the
Borrower and its Subsidiaries taken as a whole to perform their respective
Obligations under the Loan Documents, or (iii) the Rights of the Lenders or the
Administrative Agent under any of the Loan Documents.
"Maturity Date" means May 27, 2003, or the earlier date of termination in
whole of the Commitment pursuant to Section 2.6 or 8.2 hereof.
"Membership Deposits" means the advance initiation deposits paid to
Subsidiaries of the Borrower by members of Subsidiaries of the Borrower upon
their acceptance as a member of Subsidiaries of the Borrower, and as reported in
accordance with GAAP.
"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.
"NationsBank" means NationsBank, N.A., a national banking association, in
its capacity as a Lender.
"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 to enable the Borrower or any of its
Subsidiaries to maintain and operate its business and properties.
"Negative Pledge" means any agreement, contract or other arrangement
whereby the Borrower or any of its Subsidiaries is prohibited from, or would
otherwise be in default as a result of, creating, assuming, incurring or
suffering to exist, directly or indirectly, any Lien on any of its assets in
favor of the Administrative Agent for the benefit of the Lenders under this
Agreement.
"Net Cash Proceeds" means, with respect to any sale, transfer or issuance
of Capital Stock to 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, 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 any asset that may
be the subject thereof: (i) reasonable brokerage commissions, legal fees,
finder's fees, financial advisory fees, fees for solvency opinions, accounting
fees, underwriting fees, investment banking fees and other similar commissions
and fees, and expenses, 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; and (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 (after taking into
account any available tax credits or deductions or any tax sharing
arrangements).
"Net Income" means net earnings (or deficit) after taxes of the Borrower
and its Subsidiaries, on a consolidated basis, determined in accordance with
GAAP.
"Net Tangible Assets" means, for the Borrower and its Subsidiaries, on a
consolidated basis, determined in accordance with GAAP, an amount equal to the
total assets of the Borrower and its Subsidiaries minus goodwill and any other
items that are classified as intangibles in accordance with GAAP.
"Net Worth" means, for the Borrower and its Subsidiaries, on a consolidated
basis, determined in accordance with GAAP, total stockholders' equity.
"Non-Guarantors" means the Subsidiaries of the Borrower which are not
Guarantors. The Borrower may designate a Guarantor as a Non-Guarantor (in which
case such Subsidiary shall be released from its obligations in respect of the
Subsidiary Guaranty by the Administrative Agent) and a Non-Guarantor as a
Guarantor (in which case such Subsidiary shall execute a Subsidiary Guaranty and
deliver such certificates and documents related thereto as shall be required by
the Administrative Agent) by written notice to the Administrative Agent;
provided, however, at the time of such designation and after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing;
provided, however, notwithstanding the above, the following Subsidiaries shall
at no time be Non-Guarantors: Club Corporation of America, a Delaware
corporation, Club Resorts Holding, Inc., a Nevada corporation, and The
International Group of Club Corp., a Nevada corporation.
"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 Continuation/Conversion" has the meaning specified in Section
2.2(d) 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, the Administrative Agent or any
Affiliate of any 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, the Administrative Agent or any Affiliate of 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.
"Other Taxes" has the meaning specified in Section 2.14(b) hereof.
"Ownership Information" has the meaning specified in Section 11.6(j)
hereof.
"Participants" has the meaning specified in Section 11.6(c) hereof.
"Participations" 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 Administrative Agent to secure the
Obligations hereunder;
(b) 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;
(c) Liens of carriers, warehousemen, mechanics, laborers, landlords and
materialmen and other similar Liens incurred in the ordinary course of business
or by operation of Law 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 or deposits made in the ordinary course of business
in connection with worker's compensation, unemployment insurance, pensions or
other social security programs 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 arising from filing Uniform Commercial Code financing
statements for precautionary purposes relating solely to operating leases of
personal property permitted by this Agreement under which the Borrower or any of
its Subsidiaries is a lessee;
(g) Any zoning or similar law or right reserved to or vested in any
Tribunal to control or regulate the use of any real property;
(h) Liens incurred or deposits made to secure the performance of bids,
tenders, leases, 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;
(i) Any leases or subleases currently in effect, entered into in the
ordinary course of business or entered into in compliance with the Loan
Documents;
(j) Any Liens which are described on Schedule 3 hereto (and any
replacement, extension or renewal thereof), and Liens resulting from the
refinancing of the related Indebtedness, provided that the Indebtedness secured
thereby shall not be increased and the Liens shall not cover additional assets
of the Borrower; and
(k) Liens created to secure the purchase price of assets acquired (or
existing on property at the time such property is acquired) by such Person,
which is incurred solely for the purpose of financing the acquisition of such
assets and incurred at the time of acquisition or which exists against such
assets at the time of acquisition thereof or within 180 days thereafter,
provided that (i) each such Lien shall at all times be confined solely to the
asset or assets so acquired (and proceeds thereof), and refinancings thereof so
long as any such Lien remains solely on the asset or assets acquired (and the
proceeds thereof), (ii) the aggregate principal amount of Indebtedness
outstanding at any time secured by any Liens (including, without limitation,
clause (j) above) shall not exceed 15% of Net Tangible Assets, and (iii) the
aggregate consideration paid for such assets does not exceed 100% of the fair
market value of such assets.
"Permitted Secured Indebtedness" means Indebtedness of the Borrower and its
Subsidiaries secured by Liens described in clauses (j) and (k) of the definition
of Permitted Liens.
"Person" means an individual, corporation, partnership, limited liability
company, 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.
"Pretax Net Income" means net profit (or loss) before taxes of the Borrower
and its 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.
"Quarterly Date" means the last day of each March, June, September and
December, beginning June 30, 1998.
"Reference Lender" means NationsBank; provided that if NationsBank shall
cease to be the Administrative Agent hereunder, NationsBank shall cease to be
the Reference Lender, and the new Administrative Agent (after consultation with
the Borrower) shall, with notice to the Borrower and the Lenders, designate
itself as the Reference Lender.
"Register" has the meaning specified in Section 11.6(j) hereof.
"Regulatory Modification" has the meaning specified in Section 9.5 hereof.
"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 Letter of Credit not theretofore reimbursed by
the Borrower.
"Release Date" means the date on which the Notes have been paid in full,
all other Obligations due and owing have been paid and performed in full, and
the Commitment has been terminated.
"Reportable Event" has the meaning set forth in Section 4043(c) of ERISA.
"Reserve Requirement " means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks with respect to (a) any
category of liabilities which includes deposits by reference to which the
Adjusted LIBOR Rate is to be determined, or (b) any category of extensions of
credit or other assets which include LIBOR Advances. The Adjusted LIBOR Rate
shall be adjusted automatically on and as of the effective date of any change in
the Reserve Requirement.
"Responsible Officer" means, of any Person, the President, chief operating
officer, chief executive officer, chief financial officer, chief accounting
officer or treasurer of such Person.
"Restricted Payments" means, collectively, (a) Dividends, and (b) any
payment or prepayment of principal, premium or penalty on any Indebtedness of
the Borrower or any of its Subsidiaries or any defeasance, redemption, purchase,
repurchase or other acquisition or retirement for value, in whole or in part, of
any Indebtedness (including, without limitation, the setting aside of assets or
the deposit of funds therefor) other than payment of principal of Indebtedness
at regularly scheduled maturities.
"Revolving Credit Advance" means an Advance made pursuant to Section 2.1(a)
hereof.
"Revolving Credit Notes" means the promissory notes of Borrower evidencing
Revolving Credit Advances hereunder, substantially in the form of Exhibit A
hereto, together with any extension, renewal, or amendment thereof, or
substitution therefor.
"Rights" means rights, remedies, powers and privileges.
"Secured Indebtedness" means Indebtedness of the Borrower and its
Subsidiaries secured by Liens.
"Solvent" means, with respect to any Person, that as of the date of
determination, (a) the fair saleable value of the assets of such Person is
greater than the total amount of liabilities (including contingent and
unliquidated liabilities) of such Person, (b) such Person is able to pay the
probable liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such Person, and (c) 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 Donohoe, Jameson & Carroll, P.C.,
or such other legal counsel as the Administrative Agent may select.
"Specified Percentage" means, as to any Lender, the percentage indicated
beside its name on Schedule 1 hereto as its Specified Percentage, or as adjusted
or specified in any amendment to this Agreement or in any Assignment Agreement.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, 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, notwithstanding anything above to the contrary, Subsidiary
shall also mean and include any other Person the financial results of which are
consolidated with the financial results of the Borrower pursuant to GAAP.
"Subsidiary Guaranty" means a guaranty, substantially in the form of
Exhibit D hereto, executed by each direct and indirect Subsidiary of the
Borrower, as 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, N.A. and any successor 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, evidencing Swing Line Advances hereunder,
substantially in the form of Exhibit F hereto, together with any extension,
renewal or amendment thereof or substitution therefor.
"Synthetic Lease" means any synthetic lease, tax retention generating
lease, or off-balance sheet financing product where such transaction is
considered borrowed money indebtedness for tax purposes but which is classified
as an Operating Lease pursuant to GAAP.
"Tangible Net Worth" means the sum of the following for the Borrower and
its 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 deducted in arriving at Net Worth): the book value of
all assets which would be treated as intangible assets under GAAP, including
without limitation, goodwill, trademarks, copyrights, patents, organizational
expense and experimental expense, deferred assets, unamortized debt discount and
expense, any write-up in the book value of assets resulting from the revaluation
thereof subsequent to December 31, 1997.
"Taxes" has the meaning specified in Section 2.14(a) hereof.
"Total Debt" means, as of any date of determination, determined for the
Borrower and its Subsidiaries on a consolidated basis, to the extent that the
following would appear as a liability upon the consolidated balance sheet of the
Borrower and its Subsidiaries in accordance with GAAP: (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) Capitalized Lease Obligations, and (v) Membership Deposits.
"Tribunal" means any (a) 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 or (b) private arbitration board or
panel.
"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.
"Unsecured Indebtedness" means Indebtedness of the Borrower and its
Subsidiaries other than Secured Indebtedness.
"Voting Power" means, with respect to any Person, the power ordinarily
(without the occurrence of a contingency) to elect the members of the board of
directors (or persons performing similar functions).
"Year 2000 Compliant" has the meaning specified in Section 4.1(x) hereof.
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 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. If
as a result of a determination by any Tribunal the Borrower and its Subsidiaries
are required to account for Membership Deposits in a manner other than that
currently reported by the Borrower and its Subsidiaries, the Borrower and the
Lenders agree to negotiate in good faith such amendments to this Agreement to
reflect such change in accounting treatment so that the economic effect and
financial treatment is as similar as possible, given such change in accounting
treatment.
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 to but not including 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 (i)
Reimbursement Obligations then outstanding (assuming compliance with all
conditions to drawing) and (ii) Swing Line Advances then outstanding, for the
purposes set forth in Section 5.8 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 (a) the
sum of the principal amount of all outstanding (i) Revolving Credit Advances,
(ii) Reimbursement Obligations and (iii) Swing Line Advances exceed the
Commitment.
(b) Swing Line Advances. The Borrower may request the Swing Line Bank
to make, and the Swing Line Bank shall 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 Agreement Date to
the Maturity Date in an aggregate principal amount not to exceed at any time
outstanding the lesser of (a) $15,000,000 and (b) an amount equal to the
Commitment minus (i) the aggregate principal amount of Revolving Credit Advances
then outstanding and (ii) the aggregate amount of all Reimbursement Obligations
then outstanding (the "Swing Line Facility"). Each Swing Line Advance shall be
in an amount not less than $100,000. Within the limits of the Swing Line
Facility and subject to the terms hereof, Swing Line Advances may be repaid and
then reborrowed.
(c) Any Advance, other than a Swing Line 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 ten LIBOR Advances.
Section 2.2 Manner of Borrowing and Disbursement
(a) Base Rate Advances. In the case of Base Rate Advances (other than
Swing Line Advances), the Borrower, through an Authorized Signatory, shall give
the Administrative Agent 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 E 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) LIBOR Advances. In the case of LIBOR Advances, the Borrower,
through an Authorized Signatory, shall give the Administrative Agent 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 Agent 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.
(c) Swing Line Advances. In the case of Swing Line Advances, the
Borrower, through an Authorized Signatory, shall give the Swing Line Bank and
the Administrative Agent prior to 12:00 noon, Dallas, Texas time, on the date of
any proposed Swing Line Advance irrevocable telephonic notice (provided,
however, (i) the Borrower shall deliver written notice at least once a week
confirming the telephonic notices given by the Borrower with respect to Swing
Line Advances during the immediately preceding week and (ii) 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 (i) the requested funding date, which
shall be a Business Day, (ii) the amount of the proposed Swing Line Advance and
(iii) the maturity date of the proposed Swing Line Advance (which maturity date
shall be no later than the fourteenth day after the requested date of such Swing
Line Advance).
(d) Continuation/Conversion. 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 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 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. Not later than 11:00 a.m., Dallas, Texas time on
the date of any proposed continuation of or a conversion to a Base Rate Advance
and not later than 11:00 a.m., Dallas, Texas time at least three Business Days
prior to any proposed continuation of or conversion to a LIBOR Advance, the
Borrower, through an Authorized Signatory, shall give the Administrative Agent
irrevocable written notice, or irrevocable telephonic notice followed
immediately by written notice, in substantially the form of Exhibit G hereto (a
"Notice of Continuation/Conversion") (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) prior to the expiration of any then-relevant Interest Period
with respect to any LIBOR Advance, 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.
(e) Minimum Amount. The aggregate amount of Base Rate Advances (other
than Swing Line Advances) to be made by the Lenders on any day shall be in a
principal amount which is at least $1,000,000 and which is an integral multiple
of $500,000; provided, however, that such amount may equal the unused amount of
the 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) Notice and Disbursement. The Administrative Agent 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 Agent, at its address set forth herein, such
Lender's Specified Percentage of such Advance in immediately available funds in
accordance with the Administrative Agent's instructions. Prior to 2:30 p.m.,
Dallas, Texas time, on the date of any Advance hereunder, the Administrative
Agent shall, subject to satisfaction of the conditions set forth in Article 3,
disburse the amounts made available to the Administrative Agent 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 Agent.
All Revolving Credit Advances shall be made by each Lender according to its
Specified Percentage. Upon the request of any Lender, the Administrative Agent
shall notify such Lender of the aggregate principal amount of Swing Line
Advances outstanding at such time.
(g) The Swing Line Bank shall, not later than 2:00 p.m., Dallas, Texas
time, on the date of any Swing Line Advance, deliver to the Administrative Agent
at its address set forth herein, the amount of such Swing Line Advance in
immediately available funds in accordance with the Administrative Agent's
instructions. Prior to 2:30 p.m., Dallas, Texas time, on the date of any Swing
Line Advance, the Administrative Agent shall, subject to the conditions set
forth in Article 3, disburse the amount made available to the Administrative
Agent by the 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 Agent. Forthwith upon demand by the Swing Line Bank at
any time, including after a Default or Event of Default, and in any event upon
the making of the direction specified by Section 8.2 to authorize the
Administrative Agent 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 Agent 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 each Base Rate Advance from the date such Base Rate Advance
is made until such Base Rate Advance is 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) Subject to Section 11.9 hereof, 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 outstanding 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 Agent, whose determination
shall be controlling in the absence of demonstrable error, shall determine the
LIBOR Basis on the second Business Day prior to the applicable funding,
conversion or continuation date and shall notify the Borrower and the Lenders of
such LIBOR Basis. The Administrative Agent shall, at the request of the
Borrower, furnish such information concerning the calculation of the LIBOR Basis
as the Borrower may reasonably request.
(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 such Swing Line Advance, from the date of such Swing Line Advance is
made until it is due (whether at maturity, by reason of acceleration or
otherwise) and repaid, at an interest rate per annum equal to a fixed interest
rate agreed to by the Borrower and the Swing Line Bank for such Swing Line
Advance, but in no event higher than the Highest Lawful Rate.
(ii) Subject to Section 11.9 hereof, interest on each Swing Line
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 maturity date of each
Swing Line Advance and on the Maturity Date.
(d) Interest After an Event of Default. (i) Subject to Section 11.9
hereof, after an Event of Default (other than an Event of Default specified in
Section 8.1(e) or (f) hereof) and during any continuance thereof, at the option
of the Determining Lenders and after written notice to the Borrower by the
Administrative Agent, and (ii) after an Event of Default specified in Section
8.1(e) or (f) hereof and during any continuance thereof, automatically and
without any action by the Administrative Agent 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 of the applicable Event of
Default, (ii) agreement by the Determining 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 or to
exercise any other rights or remedies under the Loan Documents to charge
interest at the Default Rate. The Lenders shall not be required to give notice
to the Borrower of the decision to charge interest at the Default Rate.
Section 2.4 Fees
(a) Facility Fee. Subject to Section 11.9 hereof, the Borrower agrees
to pay to the Administrative Agent, for the ratable account of the Lenders, a
facility fee ("Facility Fee") in an amount equal to the product of (i) each
Lender's Specified Percentage multiplied by the Commitment multiplied (ii) by
the following per annum percentages, applicable in the following situations:
<TABLE>
<CAPTION>
Applicability Percentage
<S> <C>
(a) The Leverage Ratio is less than 1.75 to 1 0.150
(b) The Leverage Ratio is greater than or equal to 1.75 to 1 but less than 2.25 to 1 0.175
(c) The Leverage Ratio is greater than or equal to 2.25 to 1 but less than 2.75 to 1 0.200
(d) The Leverage Ratio is greater than or equal to 2.75 to 1 0.250
</TABLE>
Such Facility Fee shall accrue beginning on the Agreement Date and shall be (i)
payable in arrears on each Quarterly Date and on the Maturity Date, fully earned
when due and, subject to Section 11.9 hereof, nonrefundable when paid and (ii)
subject to Section 11.9 hereof, computed on the basis of a 360-day year, for the
actual number of days elapsed. The Facility Fee shall be subject to reduction
or increase, as applicable and as set forth in the table above, on a quarterly
basis according to the performance of the Borrower as tested by using the
Leverage Ratio as of the end of the most recent Fiscal Quarter (calculated for
the twelve Fiscal Months preceding the date of determination). Any such
increase or reduction in such fee shall be effective on the date which is two
Business Days after receipt by the Lenders of the financial statements required
pursuant to Section 6.1 or 6.2, as applicable, hereof and the Compliance
Certificate required pursuant to Section 6.3 hereof. If such financial
statements and Compliance Certificate are not received by the Lenders on the
date required, the fee payable in respect of the Commitment shall be determined
as if the Leverage Ratio is greater than or equal to 2.75 to 1 until such time
as such financial statements and Compliance Certificate are received.
Notwithstanding the above, until such time as the Lenders shall have received
the financial statements required for the third Fiscal Quarter of the Borrower's
1998 Fiscal Year and related Compliance Certificate, the facility fee shall be
determined as if the Leverage Ratio is greater than or equal to 2.25 to 1 but
less than 2.75 to 1.
(b) Closing Fee. Subject to Section 11.9 hereof, the Borrower agrees
to pay to the Administrative Agent, for the account of each Lender, a closing
fee in the amounts specified in a letter agreement, dated as of the Agreement
Date, between the Borrower and each Lender (the "Closing Fee Letter"). Such fee
shall be payable on the Agreement Date, and, subject to Section 11.9 hereof,
fully-earned when due and nonrefundable when paid.
(c) Other Fees. Subject to Section 11.9 hereof, the Borrower agrees to
pay to the Administrative Agent, for the account of (i) the Administrative
Agent, the fees on the dates and in the amounts specified in the letter
agreement (the "Administrative Agent Fee Letter"), dated as of the Agreement
Date, between the Borrower and the Administrative Agent, and (ii) NationsBank,
N.A. and NationsBanc Montgomery Securities LLC the fees specified in the
Arrangement Fee Letter on the Agreement Date.
Section 2.5 Prepayments
(a) Voluntary Prepayments. Upon one Business Day's prior telephonic
notice (to be promptly followed by written notice) by an Authorized Signatory to
the Administrative Agent, Base Rate Advances may be voluntarily prepaid without
premium or penalty. Upon two Business Days' prior telephonic notice (to be
promptly followed by written notice) by an Authorized Signatory to the
Administrative Agent, LIBOR Advances may be voluntarily prepaid, without premium
or penalty, 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 first, prepay applicable outstanding
Revolving Credit Advances and second, prepay Swing Line Advances in an amount
necessary to reduce the sum of outstanding Revolving Credit Advances, Swing Line
Advances and Reimbursement Obligations to an amount less than or equal to the
Commitment as so reduced. To the extent required by the immediately preceding
sentence, 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 Revolving Credit Advances and Swing Line
Advances exceed the Commitment after any reduction thereof, the Borrower shall
repay any such excess amount and all accrued interest attributable to such
excess Revolving Credit Advances and Swing Line Advances on the date of such
reduction.
(c) Payments, Generally. Any prepayment of any 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 $1,000,000 and which is an integral multiple of $500,000. 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,
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.
Section 2.6 Reduction of Commitment
(a) Voluntary Reduction. The Borrower shall have the right, upon not
less than 5 Business Days' notice by an Authorized Signatory to the
Administrative Agent (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. 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 in 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. Any such reduction of the Commitment shall be applied pro rata among
the Lenders based on the respective Specified Percentages.
(b) Mandatory Reduction. On the Maturity Date, the Commitment shall be
automatically reduced to zero.
(c) General Requirements. Upon any reduction of the Commitment
pursuant to this Section, the Borrower shall immediately make a repayment of
Revolving Credit Advances and/or Swing Line 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 AgentUnless the
Administrative Agent shall have been notified by a Lender prior to the date of
any proposed Advance (which notice shall be effective upon receipt) that such
Lender does not intend to make the proceeds of such Advance available to the
Administrative Agent, the Administrative Agent may assume that such Lender has
made such proceeds available to the Administrative Agent on such date, and the
Administrative Agent 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 Agent
by such Lender, the Administrative Agent 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 Agent 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 Advance. No Lender shall be liable for any other Lender's failure to fund
an Advance hereunder. The failure or refusal by any Lender to make available to
the Administrative Agent the proceeds of any Advance shall not relieve any
Lender from its several obligation hereunder to make its Specified Percentage of
any requested Advance available to the Administrative Agent.
Section 2.8 Payment of Principal of Advances
(a) Revolving Credit Advances. To the extent not otherwise required to
be paid earlier as provided herein, the principal amount of the Revolving Credit
Advances shall be due and payable on the Maturity Date.
(b) Swing Line Advances. To the extent not otherwise required to be
paid earlier as provided herein, the outstanding principal amount of each Swing
Line Advance shall be due and payable on its maturity date pursuant to Section
2.2(c)(iii) hereof.
Section 2.9 Reimbursement. Whenever any Lender shall sustain or incur
any losses or reasonable out-of-pocket expenses 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), (b) any prepayment for any reason of
any LIBOR Advance in whole or in part (including, but not limited to, a
prepayment pursuant to Section 9.3(b) hereof) on other than the last day of an
Interest Period applicable to such LIBOR Advance or (c) any prepayment of any of
its LIBOR Advances that is not made on any date specified in a notice of
prepayment given by the Borrower, 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 (including loss of anticipated profits) and
reasonable out-of-pocket expenses, subject to Section 11.9 hereof. 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 demonstrable error.
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 Agent at the Administrative Agent'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) 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 Agent, the Administrative Agent shall apply such
amounts in the following order of priority; (i) to the payment of the
Administrative Agent's 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, first on the Revolving
Credit Advances and, second on the Swing Line Advances; (iv) 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, first on the Revolving Credit Advances and, second on the Swing Line
Advances.
(e) At all times prior to the Lenders making a Revolving Credit Advance
pursuant to Section 2.2(g) hereof, the Administrative Agent shall distribute all
payments in respect of the Swing Line Advances to the Swing Line Bank. At such
time, if any, that the Lenders make a Revolving Credit Advance pursuant to
Section 2.2(g) hereof, the Administrative Agent shall distribute all payments in
respect of the Swing Line Advances to the Lenders in accordance with the
respective Specified Percentages.
Section 2.11 LIBOR Lending Offices. Each Lender's initial LIBOR
Lending Office is set forth opposite its name in Schedule 2 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.
Section 2.12 Sharing of Payments. If any Lender shall obtain a payment
(whether voluntary or involuntary, due to the exercise of any right of set-off,
or otherwise) on account of its Advances (other than pursuant to Sections
2.4(c), 2.14, 2.15(d), 9.3 or 9.5 hereof or in respect of Swing Line Advances)
in excess of its Specified Percentage, then such Lender shall purchase from each
other Lender such participation in the Advances made by such other Lender as
shall be necessary to cause such purchasing Lender to share the excess payment
pro rata according to its Specified Percentage; 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.
Section 2.14 Taxes.
(a) Any and all payments by the Borrower hereunder shall be made, in
accordance with Section 2.10 hereof, 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 Agent, (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, by the jurisdiction under
the laws of which such Lender or the Administrative Agent (as the case may be)
is organized or in which it has its applicable lending office or any political
subdivision thereof; (ii) taxes imposed by reason of failure by the Lender or
the Administrative Agent to comply with the requirements of paragraph (e) of
this Section 2.14; (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; and (iv)
taxes, levies, imposts, deductions, charges, withholdings and liabilities which
are finally judicially determined by a court of competent jurisdiction to have
arisen as a result of gross negligence or wilful misconduct of the
Administrative Agent or any Lender (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 Agent, to the extent not prohibited by Applicable Law, (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 Agent
(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 those described in clauses (iii) and (iv) 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
Agent 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 Agent
(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 which are finally
judicially determined by a court of competent jurisdiction to have arisen as a
result of gross negligence or wilful misconduct on the part of such Lender or
the Administrative Agent. This indemnification shall be made within 30 days
from the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Borrower
will furnish to the Administrative Agent 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 Agent, with a copy to the
Administrative Agent:
(A) if any lending office is located in the United States, two (2)
accurate and complete signed originals of Internal Revenue Service Form 4224 or
any successor form thereto ("Form 4224"),
(B) if any lending office is located outside the United States,
two (2) accurate and complete signed originals of Internal Revenue Service Form
1001 or any successor form thereto ("Form 1001"),
in each case establishing that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest, fees, or other
amounts payable at such lending office or lending offices under this Agreement
or any other Loan Document free from deduction or 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 not effective with respect to such
changed or additional lending office or lending offices, deliver to the Borrower
through the Administrative Agent, with a copy to the Administrative Agent, in
replacement for the forms previously delivered by it hereunder:
(A) if such changed or additional lending office is located in the
United States, 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 establishing that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest, fees, or other
amounts payable at such changed or additional lending office under this
Agreement or any other Loan Document free from deduction of 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 Agent, with a copy to the
Administrative Agent, two (2) accurate and complete original signed copies of
Form 4224 or Form 1001, in each case establishing that such Lender is on the
date of delivery thereof entitled to receive payments of principal, interest,
fees, or other amounts payable under this Agreement or any other Loan Document
free from deduction or withholding of United States federal income tax, 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;
(v) it shall notify the Borrower promptly 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; and
(vi) if such Lender is not a "bank" or other person described in
Section 881(c)(3) of the Code and cannot deliver either Form 4224 or Form 1001,
a statement that such Lender is not a "bank" under Section 881(c)(3)(A) of the
Code and two original copies of Internal Revenue Service Form W-8 (or any
successor form), properly completed and duly executed by such Lender.
(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 the Obligations.
(g) Each Lender (and the Administrative Agent with respect to payments
to the Administrative Agent 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), and (ii) it will use reasonable 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 sole judgment of such Lender, be
disadvantageous to such Lender; provided, however, no Lender nor the
Administrative Agent shall be obligated by reason of this Section 2.14(g) to (a)
disclose any information regarding its tax affairs or tax computations or
reorder its tax or other affairs or tax or other planning or (b) contest the
payment of any Taxes or Other Taxes. Subject to the foregoing, to the extent
the Borrower pays sums pursuant to this Section 2.14 and the Lender or the
Administrative Agent receives a refund of any or all of such sums, the party
receiving such refund shall promptly pay over all such refunded sums to the
Borrower, provided that no Default or Event of Default is in existence at such
time. 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.
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, one or more Letters of Credit
for the account of the Borrower and/or any of its Subsidiaries (provided that,
if any Letter of Credit is issued for the account of any Subsidiary, the
Borrower shall be jointly and severally liable with respect to such Letter of
Credit pursuant to the terms of the Letter of Credit Agreement (as defined
below) governing such Letter of Credit) 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 lesser of (i) $50,000,000 (the "Letter of
Credit Facility") and (ii) an amount equal to the Commitment minus the aggregate
principal amount of Revolving Credit Advances and Swing Line Advances then
outstanding. No Letter of Credit shall have an expiration date (including all
rights of renewal) later than the earlier of (i) ten days prior to the Maturity
Date or (ii) one year after the date of issuance thereof. Immediately upon the
issuance of each Letter of Credit (or upon satisfaction of the conditions
precedent set forth in Sections 3.1 and 3.2 hereof with respect to the Existing
Letters 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 Revolving Credit Advances
resulting from drawings thereunder pursuant to Section 2.15(c) hereof 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 third
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to the Issuing Bank and the Administrative Agent. 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 (a "Letter of
Credit Agreement"), provided that if any terms and conditions of such Letter of
Credit Agreement are inconsistent with or more restrictive than 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 by telephone or
telecopier, specifying therein, in the case of a Letter of Credit, the requested
(i) date of such issuance (which shall be a Business Day), (ii) maximum amount
of such Letter of Credit, (iii) expiration date of such Letter of Credit, (iv)
name and address of the beneficiary of such Letter of Credit, and (v) form of
such Letter of Credit and specifying such other information as shall be required
pursuant to the relevant Letter of Credit Agreement. Upon sending each Notice
of Issuance to the Issuing Bank, the Borrower shall promptly send a copy thereof
to the Administrative Agent. 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 hereof or as otherwise agreed with the Borrower in
connection with such issuance. No less than once each calendar month, the
Issuing Bank shall give a summary report of the issued and outstanding Letters
of Credit to the Administrative Agent, in form and substance satisfactory to the
Administrative Agent.
(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 a Revolving Credit 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 12:00 noon (Dallas, Texas time) on the first
Business Day after such drawing, the Issuing Bank shall promptly notify
Administrative Agent, which shall notify each other Lender. Each such Lender
shall, on the first Business Day following such notification, make a Revolving
Credit Advance (or, if as a result of any Debtor Relief Law, the Lenders are
prohibited from making a Revolving Credit Advance, each Lender shall fund its
participation purchased pursuant to Section 2.15(a) hereof by making such amount
available to the Administrative Agent), 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 Agent for the account of the Issuing Bank, by deposit at the
Administrative Agent's office, in same day funds, the amount of such Advance.
In the event that any Lender fails to make available to the Administrative Agent
for the account of the Issuing Bank the amount of such 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, (i) any change or phase-in after the
Agreement Date in any Law or in the interpretation thereof by any Tribunal
charged with the administration thereof or (ii) compliance by a Lender with any
Law or any guideline or requirement from any central bank or Tribunal (whether
or not having the force of law) adopted or promulgated after the Agreement Date
(including any implementation of the Basle Accord or similar guideline or
requirement adopted, promulgated or becoming effective after the Agreement Date)
shall either (A) 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 (B)
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 (A) or (B) 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)
hereof ("Increased Letter of Credit Costs"), then, within 30 days after demand
by the Issuing Bank or such Lender, 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 Letter of Credit Costs. A certificate as to the
amount of such Increased Letter of Credit Costs, submitted to the Borrower by
the Issuing Bank or such Lender, shall certify that such Increased Letter of
Credit 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 demonstrable error. In determining such amount, the Issuing Bank or such
Lender may use any reasonable averaging or attribution method.
(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
Revolving Credit Advance pursuant to Section 2.15(c) hereof 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 Revolving Credit Advance pursuant to Section
2.15(c) hereof 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 that any such forged, fraudulent, invalid, insufficient,
untrue or inaccurate statement was relied upon as a result of the Issuing Bank's
gross negligence or willful misconduct;
(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 for any payment made upon the Issuing Bank's gross
negligence or willful misconduct;
(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 Revolving Credit Advance pursuant to Section 2.15(c)
hereof; 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, other than the Issuing's Bank gross
negligence or willful misconduct.
(f) Compensation for Letters of Credit.
(i) Credit Fee. Subject to Section 11.9 hereof, the Borrower
shall pay to the Administrative Agent for the account of the Lenders according
to their Specified Percentages, a per annum fee (which shall be payable
quarterly in arrears on each Quarterly Date and on the Maturity Date) equal to
the product of the Applicable Margin in effect from time to time for Revolving
Credit Advances 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 Agent for the account of the Issuing Bank a per
annum fronting fee (which shall be payable quarterly in arrears on each
Quarterly Date and on the Maturity Date) in an amount equal to the product of
0.125% 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.
(iii) Administrative Fee. 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.
(g) L/C Cash Collateral Account.
(i) Upon the occurrence of an Event of Default and demand by the
Administrative Agent pursuant to Section 8.2(c) hereof (except in the case of an
Event of Default specified in Section 8.1(e) or (f) hereof, without any demand
or taking of any other action by the Administrative Agent or any Lender), the
Borrower will promptly pay to the Administrative Agent 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 Agent shall be deposited by the Administrative Agent in a deposit
account maintained by the Administrative Agent (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 Agent (for the benefit of
the Issuing Bank and Lenders), and creates in the Administrative Agent'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 Agent and the Borrower shall have no right to withdraw or to
cause the Administrative Agent to withdraw any funds deposited in the L/C Cash
Collateral Account during the continuance of any Event of Default. At any time
and from time to time, upon the Administrative Agent's reasonable 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 Agent's reasonable 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 Agent 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 Agent 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 Agent shall
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 Administrative Agent, with the
consent of the Determining Lenders, may determine, 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 Agent'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 Agent and the
Lenders harmless from any and all such losses and taxes, the Administrative
Agent 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 Agent) 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 Agent the fees customarily charged by the Administrative Agent
with respect to the maintenance of accounts similar to the L/C Cash Collateral
Account.
(vi) At such time as no Event of Default is in existence, the
Administrative Agent shall return any amount remaining in the L/C Cash
Collateral Account to the Borrower.
ARTICLE 3 Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advances and the
Initial Letters of Credit. The obligation of each Lender to make the initial
Advance (and participate in the Existing Letters of Credit) and the obligation
of the Issuing Bank to issue the initial Letter of Credit is subject to (i)
receipt by the Administrative Agent of the following items which are to be
delivered, in form and substance reasonably 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 required by the Administrative
Agent to be delivered certifying as to the accuracy of its representations and
warranties in the Loan Documents, certifying, in the case of any such Obligor,
that no Default or Event of Default has occurred, 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 other 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 a certificate of
good standing and a certificate of existence for its state of organization and,
in the case of any such Obligor, each state in which the nature of its business
requires it to be qualified to do business, (iii) a copy of such Obligor's
bylaws, partnership agreement or similar document, certified to be true,
complete and correct by its secretary or general partner, as the case may be,
and (iv) a copy of corporate or similar resolutions authorizing the execution,
delivery and performance of the Loan Documents to be executed by such Obligor;
(b) a certificate of incumbency with respect to each Authorized
Signatory of each Obligor not required to be delivered pursuant to clause (a)
immediately above, together with a copy of corporate or similar resolutions
authorizing the execution, delivery and performance of the Loan Documents to be
executed by such Obligor;
(c) 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;
(d) opinions of counsel to each Obligor addressed to the Lenders and in
form and substance reasonably satisfactory to the Administrative Agent and
Special Counsel, dated the Agreement Date, and covering certain of the matters
set forth in Sections 4.1(a), (b), (c), (h), (m), (n) and (p) and such other
matters incident to the transactions contemplated hereby as the Administrative
Agent or Special Counsel may reasonably request;
(e) reimbursement for the Administrative Agent for Special Counsel's
reasonable and customary fees (on an hourly basis) and expenses rendered through
the Agreement Date;
(f) 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
Administrative Agent and Special Counsel; and the Administrative Agent shall
have received copies of all documents or other evidence which the Administrative
Agent or Special Counsel may reasonably request in connection with such
transactions;
(g) any fees or any expenses required to be paid pursuant to Section
2.4(b) hereof, the Administrative Agent Fee Letter and the Arrangement Fee
Letter;
(h) simultaneously with the making of the initial 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 (or written agreements from each holder of such Liens to
promptly execute such Termination Statements);
(i) all Indebtedness of the Borrower and its Subsidiaries not otherwise
permitted pursuant to Sections 7.1 and 7.2 hereof shall have been (or shall be
consummated simultaneously with the initial Advance hereunder) refinanced or
repaid in full and all obligations of the Borrower and its Subsidiaries under
such Indebtedness shall terminate;
(j) the duly executed Swing Line Note, payable to the order of the
Swing Line Bank in the amount of the Swing Line Facility;
(k) the Compliance Certificate, duly executed as of the Fiscal Quarter
ended March 25, 1998, evidencing that no Default or Event of Default would have
occurred at the end of such Fiscal Quarter had this Agreement been in effect at
such time;
(l) the duly executed Subsidiary Guaranty executed by all Guarantors
(which shall be all Subsidiaries of the Borrower which are not Non-Guarantors);
(m) the Schedule of Non-Guarantors in the form of Schedule 10 hereto;
and
(n) in form and substance reasonably satisfactory to the Administrative
Agent and Special Counsel, such other documents, instruments and certificates as
the Administrative Agent or any Lender may reasonably require in connection with
the transactions contemplated hereby.
Section 3.2 Conditions Precedent to All Advances and Letters of Credit.
The obligation of each Lender to make each Advance hereunder (including the
initial Advance) and the obligation of the Issuing Bank to issue or extend each
Letter of Credit (including the initial Letter of Credit) is subject to
fulfillment of the following conditions immediately prior to or
contemporaneously with each such Advance or issuance or extension:
(a) With respect to each Advance and each issuance or extension of a
Letter of Credit, all of the representations and warranties of the Borrower
under this Agreement, 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, 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 3.1(b) or as subsequently modified and reflected
in a certificate of incumbency delivered to the Administrative Agent. 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 Agent from the Borrower prior to the making of
such Advance or issuance or extension of such Letter of Credit;
(c) There shall not exist a Default or Event of Default hereunder;
(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 or extending any Letter of Credit;
(f) There shall be no Litigation pending against, or, to the Borrower's
knowledge, threatened against the Borrower or any of its Subsidiaries, 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 which could
reasonably be expected to have a Material Adverse Effect; and
(g) There shall have occurred no material adverse change in the
business, assets, operations, prospects or conditions (financial or otherwise)
of the Borrower and its Subsidiaries, taken as a whole, since December 31, 1997.
Notwithstanding the above, the obligation of each Lender to make a
Revolving Credit Advance pursuant to Sections 2.2(g) and 2.15(c) (or fund its
participation in respect of Letters of Credit 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, except that, notwithstanding clauses (i), (ii) and (iii) immediately
above, the conditions precedent set forth in Sections 3.1 and 3.2 with respect
to the Swing Line Advance or the Letter of Credit for which such Revolving
Credit Advance is made pursuant to Section 2.2(g) or 2.15(c) (or participation
funded) shall have been satisfied in full at the time of the making of such
Swing Line Advance or the issuance or extension of such Letter of Credit.
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.
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. As of the Agreement Date, the
respective jurisdiction of organization or incorporation of the Borrower and its
Subsidiaries and the percentage ownership by the Borrower and its Subsidiaries
of any Subsidiary listed on Schedule 4 are true and correct. All of the
outstanding Capital Stock of the Borrower and its Subsidiaries 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, except where the failure to have such power
and authority could not reasonably be expected to have a Material Adverse
Effect. Each of the Borrower and its Subsidiaries is authorized to do business
and is duly qualified and in good standing in each jurisdiction 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 its Subsidiary 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
such Subsidiary).
(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 prior to the Agreement Date not already
obtained, (ii) violate any Applicable Law, (iii) conflict with, result in a
breach of, or constitute a default under the certificate of incorporation or
by-laws or other applicable organizational documents of the Borrower or any of
its Subsidiaries, (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 of its Subsidiaries is a party or by
which they or their respective properties may be bound, or (v) result in or
require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by the Borrower or any of its
Subsidiaries.
(d) Business. The Borrower is a holding company, and its Subsidiaries
are engaged primarily in the operation of private clubs (including city,
city/athletic, athletic and country clubs), resorts, golf clubs and public golf
facilities through sole ownership, partial ownership (including joint venture
interests) and management agreements and other activities related thereto,
including, but not limited to, the hospitality business.
(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. The Borrower
and its Subsidiaries are and will continue to be in compliance with all
provisions thereof, except to the extent that any such failure to comply could
not reasonably be expected to have a Material Adverse Effect. 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 (including, without
limitation, all Applicable Environmental 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 Subsidiaries have good
title to, or a valid leasehold or subleasehold 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 and other Liens for which releases and UCC-3 Termination
Statements have been obtained pursuant to Section 3.1(h) hereof) is on file in
any state or jurisdiction that names the Borrower or any of its Subsidiaries as
debtor or covers (or purports to cover) any assets of the Borrower or any of its
Subsidiaries, except for Indebtedness with respect to which the requirements of
Section 3.1(h) hereof have been satisfied. The Borrower and its 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).
(h) Litigation. Except as disclosed in writing to the Lenders prior to
the Agreement Date, as of the Agreement Date there is no Litigation pending
against, or, to the Borrower's current actual knowledge, threatened against the
Borrower or any of its Subsidiaries, 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 an aggregate
amount (excluding liabilities for which credit worthy insurance companies have
acknowledged coverage) exceeds $1,000,000.
(i) Taxes. All 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 Taxes shown to be due and payable on
such returns, 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 the audited
consolidated balance sheets of the Borrower and its Subsidiaries as at December
31, 1997, and the related statements of earnings and changes in shareholders'
equity and statement of cash flows for the Fiscal Year then ended (the
"Financial Statements"). The Financial Statements were prepared in conformity
with GAAP 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 are
based on good faith estimates and assumptions made by the management of the
Borrower and believed to be reasonable at the time made, 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 and 6.2 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 liabilities, direct
and contingent, of the Borrower and each Subsidiary of the Borrower that are
required to be disclosed in accordance with GAAP.
(k) No Adverse Change. Since December 31, 1997, no event or
circumstance has occurred or arisen which is reasonably likely to have a
Material Adverse Effect.
(l) ERISA. Each Plan of the Borrower and its Controlled Group (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
$500,000, 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 or its related trust of the Borrower or any member of its Controlled Group
since the effective date of ERISA, the result of which could reasonably be
expected to have a Material Adverse Effect. 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 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 by an amount which could reasonably be expected to have
a Material Adverse Effect. 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 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
withdrawn from any Multiemployer Plan, nor 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, or (C) any liability under Section 4062 of ERISA to the
PBGC or to a trustee appointed under Section 4042 of ERISA, the result of which
could reasonably be expected to have a Material Adverse Effect. 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. Any Plan that is a
welfare benefit plan within the meaning of 3(1) of ERISA maintained or
contributed by the Borrower or any member of its Controlled Group and which
provides for continuing benefits or coverage for any participant or any
beneficiary of any participant after such participant's termination of
employment may be terminated by the Borrower or any member of its Controlled
Group at any time without liability other than liability that could not
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 the provisions of Parts 6 and 7 of subtitle B of Title I of ERISA,
as amended, and the regulations thereunder, except to the extent that the
failure to so comply could not reasonably be expected to have a Material Adverse
Effect. None of the Borrower or any member of its Controlled Group maintains or
has established 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. 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 take any action which might
cause the Borrower, the Lenders, this Agreement or any other Loan Document to
violate any regulation of the Board of Governors of the Federal Reserve System
or to violate the Exchange Act, in each case as in effect now or as the same may
hereafter be in effect. Neither the making of any Advances, the issuance or
extension of any Letters of Credit nor the application of any proceeds thereof
will violate, or be inconsistent with, the provisions Regulations G, T, U and X
of the Board of Governors of the Federal Reserve System.
(n) Required Consents. The Borrower and its Subsidiaries are not
required to obtain any material 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.
(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, by-laws and other organizational 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, the result of which with respect to any default set forth
in clause (ii) could reasonably be expected to have a Material Adverse Effect.
(p) Governmental Regulation. Neither the Borrower nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended. 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. The Borrower does not have any knowledge or
reason to believe that any Hazardous Substance has been placed (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 failed to obtain and comply with any
permits, licenses or similar authorizations required to be obtained by reason of
any Applicable Environmental laws with respect to any real property owned or
leased by the Borrower or any of its Subsidiaries, except to the extent that the
failure to so obtain could not reasonably be expected to have a Material Adverse
Effect. The Borrower has no current actual knowledge that any Hazardous
Substances 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 Subsidiaries, all within the meaning of the Applicable
Environmental Laws, the effect of which could 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 under the Arrangement Fee Letter and
as set forth in Section 2.4 hereof) with respect to the making of the Commitment
or the Advances hereunder. The Borrower agrees to indemnify and hold harmless
the Administrative Agent 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.
(s) Intellectual Property. The Borrower and its Subsidiaries have
collectively obtained or applied for or licensed or otherwise obtained the right
to use all patents, trademarks, service marks, trade names, copyrights, and
other rights, free from Liens (except Permitted Liens), that are necessary for
the operation of their business as presently conducted and as proposed to be
conducted. 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 of
its Subsidiaries infringes any valid and enforceable patent, trademark, service
mark, 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 of its Subsidiaries 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 information, reports, financial statements,
exhibits and schedules furnished in writing by the Borrower or any of its
Subsidiaries to the Administrative Agent or any Lender in connection with this
Agreement or the other Loan Documents is, and all other such written information
hereafter furnished by or on behalf of the Borrower or any of its Subsidiaries
to the Administrative Agent or any Lender will be, true and accurate in all
material respects (or, in the case of projections based on reasonable estimates
and assumptions) on the date as of which such information is dated or certified
and not incomplete by omitting to state any material fact necessary to make such
information 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 hereof in connection with the transactions contemplated
hereby or thereby.
(u) Solvency. The Borrower is, and Borrower and its Subsidiaries on a
consolidated basis are, Solvent.
(v) Labor Relations. Except as set forth on Schedule 9 hereto, neither
the Borrower nor any of its Subsidiaries 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. There are no arrears in
the payment of wages, withholding or social securities taxes, unemployment
insurance premiums or other similar obligations of the Borrower or any of its
Subsidiaries or for which the Borrower or any such Subsidiary may be responsible
other than in the ordinary course of business. There is no strike, work
stoppage or labor dispute with any union or group of employees pending or
overtly threatened involving Borrower or any of its Subsidiaries.
(w) Common Enterprise. The Borrower and its Subsidiaries are engaged
in the businesses set forth in Section 4.1(d) hereof. 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 of the Borrower and its Subsidiaries as a
whole. The Borrower and its Subsidiaries expect to derive benefit (and the
boards 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) Year 2000 Compliance. The Borrower is (i) developing a review and
assessment of all areas within its and each of its Subsidiaries' business and
operations (including those affected by suppliers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Borrower or any of its Subsidiaries (or its suppliers
and vendors) may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), and (ii) developing a plan and timeline for addressing the Year 2000
Problem on a timely basis. The Borrower reasonably believes that all computer
applications (including those of its suppliers and vendors) that are material to
its or any of its Subsidiaries' business and operations will on a timely basis
be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 Compliant"), except to the extent
that a failure to do so could not reasonably be expected to have a Material
Adverse Effect.
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 any continuation or conversion of an
Advance) and the date of issuance or extension of each Letter of Credit, and
each shall be true and correct when made, except to the extent (a) previously
fulfilled in accordance with the terms hereof, (b) previously waived in writing
by the Determining Lenders with respect to any particular factual circumstance
or permitted by the terms of this Agreement or (c) such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true and correct on and as of
such date. 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 or extension of any
Letter of Credit under this Agreement.
ARTICLE 5
General Covenants
Prior to the Release Date:
Section 5.1 Preservation of Existence and Similar Matters. The
Borrower shall, and shall cause each of its Subsidiaries 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 material respects with the
requirements of all Applicable Law, including, without limitation, all
Applicable Environmental Laws.
Section 5.3 Maintenance of Properties. The Borrower shall, and shall
cause each of its Subsidiaries to, maintain or cause to be maintained all its
properties (whether owned or held under lease) in adequate operating condition
and repair for purposes of their current use with due regard to the age thereof,
taken as a whole, subject to ordinary wear and tear, and from time to time make
or cause to be made all appropriate repairs, renewals, replacements, additions,
betterments and improvements thereto.
Section 5.4 Accounting Methods and Financial Records. The Borrower
shall, and shall cause each of its Subsidiaries 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.
Section 5.5 Insurance. The Borrower shall, and shall cause each of its
Subsidiaries 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 provide
for at least 30 days' prior notice to the Administrative Agent of any proposed
termination or cancellation of such policy, whether on account of default or
otherwise.
Section 5.6 Payment of Taxes and Claims. The Borrower shall, and shall
cause each of its Subsidiaries to, pay and discharge all material taxes to which
they are subject prior to the date on which penalties attach thereto, and all
lawful claims for labor, materials and supplies which, if unpaid, might by Law
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 any Lien related thereto is a Permitted
Lien and no foreclosure, distraint, sale or similar proceedings shall have been
commenced. The Borrower shall, and shall cause each of its Subsidiaries 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 of its Subsidiaries to, promptly permit representatives of the
Administrative Agent or any Lender from time to time after reasonable notice by
the Administrative Agent or any Lender to (a) visit and inspect the properties
of the Borrower and its Subsidiaries as often as the Administrative Agent or any
Lender shall reasonably deem advisable, (b) review, 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 directors,
officers, employees and auditors its business, assets, liabilities, financial
positions, results of operations and business prospects, provided that such
representatives of the Administrative Agent 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 out-of-pocket
expenses related to inspections and reviews performed (a) at any time by the
Administrative Agent, and (b) after the occurrence and during the continuance of
an Event of Default, by each Lender. Except after the occurrence and during the
continuance 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 Agent 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 to (a) pay certain outstanding
Indebtedness of the Borrower and its Subsidiaries, (b) finance acquisitions, and
(c) finance the ongoing working capital and general corporate requirements of
the Borrower and its subsidiaries.
SECTION 5.9 INDEMNITY.
(A) THE BORROWER AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS
THE ADMINISTRATIVE AGENT, EACH LENDER, EACH OF THEIR RESPECTIVE AFFILIATES, AND
EACH OF THEIR RESPECTIVE (INCLUDING SUCH AFFILIATES') OFFICERS, DIRECTORS,
EMPLOYEES, TRUSTEES, AGENTS, ATTORNEYS 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, JUDGMENTS, SUITS, CLAIMS,
REASONABLE COSTS, REASONABLE OUT-OF-POCKET 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,
WHETHER BASED ON ANY FEDERAL, STATE, OR LOCAL LAWS AND REGULATIONS, UNDER COMMON
LAW OR AT EQUITY, OR ON CONTRACT, TORT OR OTHERWISE, AND WHETHER ARISING FROM OR
CONNECTED WITH THE PAST, PRESENT OR FUTURE OPERATIONS OF THE BORROWER OR ANY
SUBSIDIARY OF THE BORROWER OR THEIR RESPECTIVE PREDECESSORS IN INTEREST, OR THE
PAST, PRESENT OR FUTURE ENVIRONMENTAL CONDITION OF PROPERTY OF THE BORROWER OR
ANY SUBSIDIARY OF THE BORROWER), 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 THERETO, INCLUDING IN CONNECTION WITH, OR AS A RESULT,
IN WHOLE OR IN PART, OF ANY ORDINARY OR MERE NEGLIGENCE OF ADMINISTRATIVE AGENT
OR ANY LENDER (OTHER THAN THOSE MATTERS RAISED EXCLUSIVELY BY A PARTICIPANT
AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER AND NOT THE BORROWER), 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,
BUT EXCLUDING (I) ANY CLAIM OR LIABILITY THAT IS THE RESULT OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNITEE, AS ADMITTED IN WRITING BY
SUCH INDEMNITEE OR FINALLY JUDICIALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION, AND (II) MATTERS RAISED BY ONE LENDER AGAINST ANOTHER LENDER OR
INDEMNITEE OR BY ANY SHAREHOLDERS OF A LENDER AGAINST A LENDER OR INDEMNITEE OR
ITS MANAGEMENT (COLLECTIVELY, EXCEPT FOR THE MATTERS REFERRED TO CLAUSES (I) OR
(II) ABOVE, "INDEMNIFIED MATTERS", AND THE MATTERS REFERRED TO IN CLAUSES (I) OR
(II) ABOVE, COLLECTIVELY, "EXCLUDED MATTERS").
(B) WITHOUT DUPLICATION, THE BORROWER SHALL PERIODICALLY, UPON REQUEST,
REIMBURSE EACH INDEMNITEE FOR ITS REASONABLE OUT-OF-POCKET LEGAL AND OTHER
ACTUAL REASONABLE EXPENSES (INCLUDING THE REASONABLE COST OF ANY INVESTIGATION
AND PREPARATION) INCURRED IN CONNECTION WITH ANY INDEMNIFIED MATTER; PROVIDED
THAT SUCH INDEMNITEE SHALL PROVIDE ADEQUATE DOCUMENTATION OF SUCH EXPENSES;
PROVIDED, FURTHER, THAT IF AN INDEMNITEE IS REIMBURSED HEREUNDER FOR SUCH
AMOUNT, THE AMOUNT SO PAID SHALL BE REFUNDED TO THE BORROWER IF AND TO THE
EXTENT IT IS FINALLY JUDICIALLY DETERMINED THAT THE INDEMNIFIED MATTER IN
QUESTION WAS AN EXCLUDED MATTER. THE REIMBURSEMENT AND INDEMNITY OBLIGATIONS
UNDER THIS SECTION 5.9 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 AGENT, THE LENDERS AND ALL OTHER INDEMNITEES. THIS SECTION SHALL
SURVIVE ANY TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE OBLIGATIONS AND
SHALL CONTINUE WITH RESPECT TO ANY LENDER THAT MAY ASSIGN ALL OF ITS RIGHTS AND
OBLIGATIONS UNDER THE LOAN DOCUMENTS.
Section 5.10 Environmental Law Compliance. In addition to and without
limiting the generality of Section 5.2 hereof, the use which the Borrower or any
of its Subsidiaries 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, the effect of which could reasonably be
expected to have a Material Adverse Effect. As used herein, the term "release"
as used in this Section shall have the meaning 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 "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.
Section 5.11 Further Assurances. At any time or from time to time upon
reasonable request by the Administrative Agent, the Borrower or any of its
Subsidiaries shall execute and deliver such further documents and do such other
acts and things as the Administrative Agent 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 update and deliver to the Administrative Agent
Schedule 4 hereto at the time of delivery of the financial statements set forth
in Sections 6.1 (with respect to the identities, jurisdiction of organization
and ownership of the Guarantors) and 6.2 (with respect to the identities,
jurisdictions of organization and ownership of the Borrower's Subsidiaries)
hereof if the information provided therein is not complete and correct.
Section 5.12 Year 2000 Compliance. The Borrower shall, and shall cause
each of its Subsidiaries to, maintain its computer applications to be Year 2000
Compliant, except to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect.
Section 5.13 Non-Guarantors as Guarantors. At any time that an Event
of Default occurs as a result of a breach of Section 7.19 hereof, the Borrower
agrees to immediately cause such of its Subsidiaries to execute a Subsidiary
Guaranty (and to deliver such certificates and documents related thereto as
shall be required by the Administrative Agent) and thereby become Guarantors as
are necessary to cure such breach of Section 7.19 hereof; provided, however,
nothing provided in this Section 5.13 shall be deemed to provide any grace
period for any Event of Default that occurs as a result of a breach of Section
7.19 hereof.
ARTICLE 6
Information Covenants
Prior to the Release Date, the Borrower shall furnish or cause to be
furnished to each Lender:
Section 6.1 Quarterly Financial Statements and Information. Within 60
days after the end of each Fiscal Quarter of each Fiscal Year (other than the
end of a Fiscal Quarter which coincides with the end of a Fiscal Year), the
consolidated balance sheets of the Borrower and its Subsidiaries as at the end
of such Fiscal Quarter and the related consolidated statements of earnings for
such Fiscal Quarter and for the elapsed portion of the year ended with the last
day of such Fiscal Quarter, and consolidated 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 a Responsible Officer, 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.
Section 6.2 Annual Financial Statements and Information; Certificate of
No Default.
(a) Within 120 days after the end of each Fiscal Year, a copy of (i)
the consolidated balance sheets of the Borrower and its Subsidiaries, as of the
end of the current and prior Fiscal Years and (ii) the consolidated statements
of earnings and consolidated statements of changes in shareholders' equity and
consolidated statements of cash flow as of and through the end of such Fiscal
Year (together with certain consolidating statements in form reasonably
satisfactory to the Administrative Agent), all of which are prepared in
accordance with GAAP, and said consolidated statements certified by independent
certified public accountants reasonably acceptable to the Administrative Agent,
whose opinion shall be in scope and substance in accordance with generally
accepted auditing standards and shall be unqualified in all respects.
(b) Simultaneously with the delivery of the statements required by this
Section 6.2, a letter from the Borrower's public accountants stating to the
effect that during their audit of such financial statements nothing has come to
their attention that would result in a Default or Event of Default under this
Agreement, recognizing, however, that the scope and purpose of their audit was
not to determine compliance with the terms of this Agreement or whether a
Default or Event of Default has otherwise occurred.
Section 6.3 Compliance Certificate. At the time financial statements
are furnished pursuant to Sections 6.1 and 6.2 hereof, the Compliance
Certificate, completed as provided therein.
Section 6.4 Copies of Other Reports and Notices.
(a) Promptly upon their becoming available, copies of (i) all material
reports or letters submitted to the Borrower or any of its Subsidiaries by
accountants in connection with any annual, interim or special audit, including
without limitation any report prepared in connection with the annual audit
referred to in Section 6.2 hereof, and any other comment letter submitted to
management in connection with any such audit, (ii) 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 of its Subsidiaries with any securities exchange,
with the Securities and Exchange Commission or any successor agency, and (iii)
all press releases concerning material financial aspects of the Borrower or any
of its Subsidiaries;
(b) Promptly upon the Borrower becoming aware that (i) the holder(s) of
any note(s) or other evidence of Indebtedness or other security of the Borrower
or any of its Subsidiaries in excess of $250,000 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 or (ii) 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 the Borrower becoming aware that any party to any
Capitalized Lease Obligations in excess of $250,000 or Operating Lease in which
the annual rentals thereunder exceed $100,000 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 by the Borrower 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, and could reasonably be expected to result in the
payment of money by the Borrower or any of its Subsidiaries of the Borrower in
an amount of $250,000 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 to have a Material
Adverse Effect; and
(e) From time to time and promptly upon each request, such material
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 Agent or any Lender may reasonably request.
Section 6.5 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 for damages (including punitive damages) in excess
of $1,000,000 (after deducting the amount with respect to which creditworthy
insurance companies have acknowledged coverage), against or in any other way
relating directly to the Borrower, any of its Subsidiaries or any of their
respective properties or businesses; 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 6.6 ERISA Reporting Requirements.
(a) Promptly and in any event (i) within 30 days after the Borrower 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 Business 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 ten Business Days after receipt
thereof by the Borrower, copies of each notice received by the Borrower or any
member of its Controlled Group from the PBGC of the PBGC's intention to
terminate any Plan or to have a trustee appointed to administer any Plan;
(c) Promptly upon the request of the Administrative Agent, 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 by the Borrower, 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 five Business Days after the Borrower 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 five Business Days after receipt by the Borrower 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, if adversely determined could not reasonably be expected to have a
Material Adverse Effect.
Section 6.7 Year 2000 Compliance. The Borrower will promptly notify
the Administrative Agent in the event the Borrower discovers or determines that
any computer application (including those of its suppliers and vendors) that is
material to its or any of its Subsidiaries' business and operations will not be
Year 2000 Compliant on a timely basis, except to the extent that such failure
could not reasonably be expected to have a Material Adverse Effect.
ARTICLE 7
Negative Covenants
Prior to the Release Date:
Section 7.1 Unsecured Indebtedness. The Borrower shall not, and shall
not permit any Subsidiary of the Borrower to, create, assume, incur or otherwise
become or remain obligated in respect of, or permit to be outstanding, or suffer
to exist any Unsecured Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Hedging obligations under Hedge Agreements entered into with any
Person that is a Lender or an Affiliate of a Lender at the time of entering into
such Hedge Agreement;
(c) Unsecured Indebtedness existing on the Agreement Date which is
described on Schedule 6 hereto, including renewals, replacements and
refinancings (but no increases) thereof;
(d) Unsecured Indebtedness in respect of endorsement of negotiable
instruments in the ordinary course of business;
(e) Unsecured Indebtedness owing to any Obligor by the Borrower or any
of its Subsidiaries, which Indebtedness (i) is evidenced by an entry on the
financial records of the Borrower and any such Subsidiary and (ii) if owed by an
Obligor, is subordinated to the Obligations in a manner satisfactory to the
Determining Lenders, and which will permit payments to be made on such
Indebtedness provided that no Default or Event of Default shall exist before
such payment or after giving effect thereto;
(f) Guaranties by Subsidiaries of the Borrower of Unsecured
Indebtedness of the Borrower or other Subsidiaries of the Borrower and
Guaranties by the Borrower of Unsecured Indebtedness of Subsidiaries of the
Borrower, in each case to the extent such underlying Unsecured Indebtedness is
permitted hereunder;
(g) Unsecured Indebtedness consisting of performance bonds or surety or
appeal bonds provided by the Borrower or any of its Subsidiaries in the ordinary
course of business and which do not secure other Indebtedness;
(h) Guaranties permitted pursuant to Section 7.6 hereof; and
(i) Other Unsecured Indebtedness of the Borrower and its Subsidiaries,
provided that (i) prior to and after giving effect to such other Unsecured
Indebtedness, no Default or Event of Default shall have occurred and be
continuing, (ii) the terms, covenants and provisions of such other Indebtedness
shall not be more restrictive than any terms, covenants or provisions of this
Agreement, and (iii) no scheduled principal payment of such other Unsecured
Indebtedness shall occur prior to 180 days after the scheduled Maturity Date.
Section 7.2 Secured Indebtedness. The Borrower shall not, and shall
not permit any of its Subsidiaries to, create, assume, incur or otherwise become
or remain obligated in respect of, or permit to be outstanding, or suffer to
exist any Secured Indebtedness, except for Permitted Secured Indebtedness.
Section 7.3 Liens. The Borrower shall not, and shall not permit any
Subsidiary of Borrower 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. The Borrower shall not, and shall
not permit any Subsidiary to, become subject to a Negative Pledge other than in
respect of Permitted Secured Indebtedness, provided that such agreement relates
only to the assets purchased or acquired.
Section 7.4 Investments. The Borrower shall not, and shall not permit
any Subsidiary of Borrower to, make any Investment, except that the Borrower and
any Subsidiary of the Borrower may purchase or otherwise acquire and own:
(a) Accounts receivable that arise in the ordinary course of business
and are payable in a manner consistent with past practices;
(b) Investments in existence on the Agreement Date which are described
on Schedule 5 hereto;
(c) Investments in the form of Hedge Agreements permitted by Section
7.1(b) hereof;
(d) Investments pursuant to the Investment Policy;
(e) Investments in Obligors;
(f) Investments in Non-Guarantors (calculated on the initial investment
amount but adjusted to take into account any proceeds received by the Borrower
or any other Obligor on a liquidation or repayment of any such Investments) not
to exceed, together with other Investments pursuant to Section 7.4(g) hereof
(calculated as provided in Section 7.4(g) hereof) and Acquisitions of
Non-Guarantors pursuant to Section 7.8 hereof (calculated using the aggregate
Acquisition Consideration therefor), 10% of Net Worth at any time; and
(g) Investments not otherwise permitted pursuant to clauses (a) through
(e) above (calculated on the initial investment amount but adjusted to take into
account any proceeds received by the Borrower or any other Obligor on a
liquidation or repayment of any such Investments) not to exceed, together with
Investments in (calculated as provided in Section 7.4(f) hereof) and
Acquisitions of Non-Guarantors pursuant to Section 7.8 hereof (calculated using
the aggregate Acquisition Consideration therefor), 10% of Net Worth at any time;
provided, however, that no Investment otherwise permitted by clauses (f) and (g)
above shall be permitted to be made if, immediately before or after giving
effect thereto, any Event of Default shall have occurred and be continuing.
Section 7.5 Liquidation, Merger. The Borrower shall not, and shall not
permit any Subsidiary of Borrower to, at any time:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up, except that (i) a Subsidiary of the Borrower
may liquidate or dissolve into the Borrower or a Subsidiary of the Borrower
which is an Obligor, and (ii) a Subsidiary of the Borrower which is not an
Obligor may liquidate or dissolve into the Borrower or a Subsidiary of the
Borrower; or
(b) enter into any merger or consolidation unless (i) with respect to a
merger or consolidation, the Borrower shall be the surviving corporation, unless
the merger or consolidation involves a Guarantor and the Borrower is not merging
with another Person, and either (A) such Guarantor shall be the surviving
corporation, (B) the survivor of the merger becomes a Guarantor, (C) the entity
formed in the consolidation becomes a Guarantor, or (D) the survivor is, or is
properly designated as, a Non-Guarantor, (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 7.6 Guaranties. The Borrower shall not, and shall not permit
any Subsidiary to, at any time make or issue any Guaranty, or assume, be
obligated with respect to, or permit to be outstanding any Guaranty, of any
obligation of any other Person except (a) the Subsidiary Guaranty, (b) the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection, (c) the Guaranty of Indebtedness permitted by Sections
7.1 and 7.2 hereof, and (d) the Guaranty of Indebtedness of Persons other than
the Borrower and its Subsidiaries, provided that the aggregate principal amount
of such Indebtedness which is guaranteed by the Borrower and its Subsidiaries
shall not at any time exceed 7-1/2% of Net Tangible Assets.
Section 7.7 Sales of Assets. The Borrower shall not, and shall not
permit any of its Subsidiaries to, sell, transfer or otherwise dispose of, any
of its assets except (a) inventory in the ordinary course of business, (b)
obsolete or worn-out assets, (c) sales and dispositions from the Borrower or any
of its Subsidiaries to any Obligor, and (d) other asset sales not otherwise
permitted, provided that (i) such sales are for full and fair consideration and
(ii) the aggregate amount of assets sales during any Fiscal Year do not exceed
7-1/2% of Net Tangible Assets as of the end of the immediately preceding Fiscal
Year.
Section 7.8 Acquisitions. The Borrower shall not, and shall not permit
any of its Subsidiaries 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 of its
Subsidiaries may make Acquisitions so long as (a) such Acquisition shall not be
opposed by the board of the directors of the Person being acquired, (b) if the
Acquisition Consideration for such Acquisition is greater than or equal to
$25,000,000, the Lenders shall have received written notice thereof at least 5
Business Days prior to the date of such Acquisition, together with a Compliance
Certificate setting forth the covenant calculations both immediately prior to
and after giving effect to the proposed Acquisition, but calculated to exclude
any increases in EBITDA which would be the result of any expenses that the
Borrower projects to be eliminated by such proposed Acquisition, (c) the assets,
property or business acquired shall be primarily in the business described in
Section 4.1(d) hereof, (d) if such Acquisition results in a Subsidiary which is
to be a Guarantor, (i) such Subsidiary shall execute a Subsidiary Guaranty and
(ii) the Administrative Agent on behalf of the Lenders shall receive such board
resolutions, officer's certificates and opinions of counsel as the
Administrative Agent shall reasonably request in connection with such
Acquisition; and (e) the aggregate Acquisition Consideration for all
Non-Guarantors, together with Investments in Non-Guarantors (calculated as
provided in Section 7.4(f) hereof) and other Investments (calculated as provided
in Section 7.4(g) hereof) pursuant to Section 7.4(g) hereof, shall not exceed
10% of Net Worth at any time.
Section 7.9 Restricted Payments. The Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly declare, pay or make
any Restricted Payments except (a) Dividends payable by a Subsidiary to the
Borrower or another Subsidiary that is an Obligor, (b) Dividends payable by the
Borrower in an aggregate amount not to exceed 50% of cumulative Net Income for
the period from, but not including, December 31, 1997 through the date of the
proposed Dividend (provided that with respect to any Fiscal Quarter (or portion
of a Fiscal Quarter not then ended) of the Borrower for which Net Income was a
negative number the amount of Dividends permitted to be paid shall be reduced by
100% of such negative number), and (c) payments and prepayments of principal of
Indebtedness other than Indebtedness permitted to be incurred pursuant to
Section 7.1(i) hereof; provided, however, the Borrower shall not pay or make any
Restricted Payments permitted by this Section 7.9 unless there shall exist no
Default or Event of Default prior to or after giving effect to any such proposed
Restricted Payment.
Section 7.10 Affiliate Transactions. The Borrower shall not, and shall
not permit any of its Subsidiaries to, at any time engage in any transaction
with an Affiliate (other than the Borrower or any Obligor) on terms materially
less advantageous to the Borrower or such 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 of its Subsidiaries to, in any event incur or
suffer to exist any Indebtedness or Guaranty in favor of any Affiliate, unless
such Affiliate shall subordinate the payment and performance thereof to the
Obligations on terms, conditions and documentation reasonably satisfactory to
the Determining Lenders, and which will permit payments to be made on any
Indebtedness or Guaranty in favor of any Affiliate provided that no Default or
Event of Default shall exist before such payment or after giving effect thereto.
Section 7.11 Compliance with ERISA. The Borrower shall not, and shall
not permit any of its Subsidiaries 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 liability to the Borrower or any member of its
Controlled Group taken as a whole which could reasonably be expected to have a
Material Adverse Effect, (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 which could
reasonably be expected to have a Material Adverse Effect on the Borrower or any
member of its Controlled Group taken as a whole, or (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.
Section 7.12 Maximum Leverage Ratio. The Borrower shall not permit the
Leverage Ratio to be greater than 3.75 to 1 at the end of any Fiscal Quarter.
Section 7.13 Minimum Fixed Charge Coverage Ratio. The Borrower shall
not permit the Fixed Charge Coverage Ratio to be less than 1.50 to 1 at the end
of any Fiscal Quarter.
Section 7.14 Minimum Tangible Net Worth. The Borrower shall not permit
the Tangible Net Worth at any time to be less than the sum of (a) $368,261,100,
plus (b) 50% of cumulative Net Income for the period from, but not including,
December 31, 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) an amount equal to 100% of the
tangible net worth of any Person that becomes a Subsidiary of the Borrower or is
merged into or consolidated with the Borrower or any Subsidiary of the Borrower
or substantially all of the assets of which are acquired by the Borrower or any
Subsidiary of the Borrower to the extent the purchase price paid therefor is
paid in equity securities of the Borrower or any Subsidiary of the Borrower,
plus (d) 75% of the Net Cash Proceeds (but without duplication) of any offerings
of capital stock or other equity interests of the Borrower or any of its
Subsidiaries.
Section 7.15 Sale or Discount of Receivables. The Borrower shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly, sell,
with or without recourse, for discount or otherwise, any notes or accounts
receivable.
Section 7.16 Business. Neither the Borrower nor any of its
Subsidiaries shall conduct any business other than the business described in
Section 4.1(d) hereof.
Section 7.17 Fiscal Year. Neither the Borrower nor any of its
Subsidiaries shall change its Fiscal Year.
Section 7.18 Amendment of Organizational Documents. The Borrower shall
not, and shall not permit any Subsidiary of the Borrower to, amend its articles
of incorporation, bylaws or other applicable organizational documents in any
manner that could reasonably be expected to result in a Material Adverse Effect.
Section 7.19 Non-Guarantors. The Borrower shall not permit either the
aggregate amount of (a) EBITDA calculated with respect to all Non-Guarantors
only during any period of four consecutive Fiscal Quarters to exceed 20% of
EBITDA of the Borrower and all of its Subsidiaries during any such period of
four consecutive Fiscal Quarters or (b) assets of all Non-Guarantors as of the
end of any Fiscal Quarter to exceed 20% of the assets of the Borrower and all of
its Subsidiaries as of the end of any such Fiscal Quarter.
Section 7.20 Restrictions on Subsidiaries. The Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Subsidiary to pay dividends or make any other
distributions to the Borrower or any of its Subsidiaries, except to the extent
that such encumbrances and restrictions would not, in the aggregate, affect the
ability of the Subsidiaries to make such dividends and distributions in amounts
sufficient such that the Borrower can timely pay and perform all Obligations in
full.
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 the earlier of (A) three days after the date due or
(B) one Business Day after written notice thereof from the Administrative Agent;
(c) The Borrower or any of its Subsidiaries shall default in the
performance or observance of any agreement or covenant contained in Article 7
hereof;
(d) The Borrower or any of its Subsidiaries shall default in the
performance or observance of any other agreement or covenant contained in this
Agreement or any other Loan Document not specifically referred to elsewhere in
this Section 8.1, and such default shall not be cured within a period of thirty
days after the earlier of notice from the Administrative Agent thereof or actual
notice thereof by the Borrower or such Subsidiary;
(e) 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 the Borrower or any other Obligor, or a
substantial part of the property or the assets of the Borrower or such Obligor,
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, custodian, sequestrator or similar official of the Borrower or any
other Obligor, or of any substantial part of their respective properties, or
(iii) the winding-up or liquidation of the affairs of the Borrower or any other
Obligor and any such proceeding or petition shall continue unstayed and in
effect for a period of 60 consecutive days; or any order for relief shall be
entered in any such proceeding;
(f) The Borrower or any other Obligor 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 the Borrower or
any other Obligor 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 inability, or fail generally, to pay its
debts as they become due, or (vi) the Borrower or any other Obligor shall take
any corporate or other action in furtherance of any such action;
(g) A final judgment or judgments shall be entered by any court against
the Borrower or any other Obligor for the payment of money which exceeds
$250,000 in the aggregate, or a warrant of attachment or execution or similar
process shall be issued or levied against property of the Borrower or any other
Obligor which, together with all other such property of the Borrower and the
Obligors subject to other such process, exceeds in value $250,000 in the
aggregate, and if such judgment or award is not insured or, within 45 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;
(h) 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 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) 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; (v) the Borrower, any member of
its Controlled Group or any Plan sponsor shall notify the PBGC of an intent to
terminate, or the PBGC shall institute proceedings to terminate, or the PBGC
shall institute proceedings to terminate, any Plan subject to Title IV of ERISA;
(vi) a Reportable Event shall occur with respect to a Plan subject to Title IV
of ERISA, and within 15 days after the reporting of such Reportable Event to the
Administrative Agent, the Administrative Agent 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; (vii) a trustee shall be
appointed by a court of competent jurisdiction to administer any Plan or the
assets thereof; or (viii) any ERISA Event with respect to a 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) - (viii) 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 such event
or events could reasonably be expected to exceed $500,000.
(i) The Borrower or any other Obligor shall fail to make any payment
when due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) with respect to any Indebtedness in excess of $1,000,000
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 become due or prepaid prior to its date of maturity or (ii)
require the Borrower or any other Obligor to purchase, prepay or redeem such
Indebtedness;
(j) Any real property lease where the Borrower or any Subsidiary of the
Borrower is the lessee shall terminate or cease to be effective, and termination
or cessation thereof, together with all other real property 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 real property lease shall not constitute an Event of Default
if another real property lease reasonably satisfactory to the Administrative
Agent is contemporaneously substituted therefor;
(k) 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 Agent or any Lender) in any material respect, or any such party
(other than the Administrative Agent or any Lender) shall so assert in writing;
or
(l) 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(e) or (f) hereof, the Administrative Agent may at its election (provided
that the Administrative Agent has not previously received notice to the contrary
from the Determining Lenders), and shall upon the direction of the Determining
Lenders, terminate the Commitment and/or by written notice to the Borrower
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, except for notices expressly set forth in the Loan
Documents.
(b) Upon the occurrence of an Event of Default specified in Section
8.1(e) or (f) hereof, such principal, interest and other amounts shall thereupon
and concurrently therewith become due and payable and the Commitment shall
forthwith terminate, all without any action by the Administrative Agent, 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 Agent may at its election, and shall upon the direction of the
Determining Lenders, make demand upon the Borrower to, and forthwith upon such
demand (but in the case of an Event of Default specified in Section 8.1(e) or
(f) hereof, without any demand or taking of any other action by the
Administrative Agent or any Lender), the Borrower shall, pay to the
Administrative Agent in same day funds at the office of the Administrative Agent
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 Agent 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 Agent and the Lenders hereunder
shall be cumulative, and not exclusive.
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 and fairly reflect 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 prompt
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 or phase-in of 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 promptly so notify the Borrower and the Administrative Agent. 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 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.
Section 9.3 Increased Costs.
(a) If any change, phase-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 (A) 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 and (B) withholding taxes of any
Tribunal other than the United States of America or any state thereof; 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 ("Increased Advance Costs"), 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 Advance Costs, 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 sole 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
controlling absent demonstrable error. In determining such amount, a Lender may
use any reasonable averaging and attribution methods. Nothing in this Section
9.3 shall provide the Borrower or any of its Subsidiaries 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, 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
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 (a) the phase-in or 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 or any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law) (any of such events in clauses (a) and (b) herein being referred to as a
"Regulatory Modification") 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 20 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 (collectively, "Additional Costs"), 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 to the
extent not compensated for in the Base Rate Basis or in the LIBOR Rate Basis or
in amounts paid by the Borrower pursuant to Section 9.3 hereof. A certificate
as to such amounts submitted to the Borrower by a Lender hereunder shall, in the
absence of demonstrable error, be controlling and binding for all purposes. 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.
ARTICLE 10
Agreement Among Lenders
Section 10.1 Agreement Among Lenders. The Lenders agree among
themselves that:
(a) Administrative Agent. Each Lender hereby appoints the
Administrative Agent 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
Agent shall have received such requests, the Administrative Agent 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 Agent shall not be required to take any action that exposes the
Administrative Agent 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, 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. The Administrative Agent agrees to promptly distribute to each
Lender, at such Lender's address set forth below information, requests,
documents and payments received from the Borrower. The Administrative Agent
shall have no trustee or other fiduciary relationship in respect of any Lender
by reason of this Agreement or any other Loan Document. The Administrative
Agent shall have no duties or responsibilities except those expressly set forth
in this Agreement. The duties of the Administrative Agent are mechanical and
administrative in nature.
(b) Replacement of Administrative Agent. Should the Administrative
Agent or any successor Administrative Agent ever cease to be a Lender hereunder,
or should the Administrative Agent or any successor Administrative Agent ever
resign as Administrative Agent, or should the Administrative Agent or any
successor Administrative Agent ever be removed with cause or without cause by
the action of the Determining Lenders (other than the Administrative Agent),
then the Lender appointed by the Determining Lenders (other than the
Administrative Agent) with the approval of the Borrower (provided that if an
Event of Default shall have occurred and be continuing, the approval of the
Borrower shall not be required) shall forthwith become the Administrative Agent,
and the Borrower and the Lenders shall execute such documents as any Lender may
reasonably request to reflect such change at no cost to the Borrower. If the
Administrative Agent 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 and the successor
Administrative Agent shall serve in the capacity of the Swing Line Bank and the
Issuing Bank. Any resignation or removal of the Administrative Agent or any
successor Administrative Agent shall become effective upon the appointment by
the Lenders of a successor Administrative Agent from among the other Lenders and
written notice thereto to the Borrower; provided, however, if no successor
Administrative Agent shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Administrative Agent's giving of
notice of resignation or the Lenders' removal of the retiring Administrative
Agent, then the retiring Administrative Agent may, on behalf of the Lenders and,
provided that no Event of Default shall have occurred and be continuing, with
the consent of the Borrower, which consent shall not be unreasonably withheld,
appoint a successor Administrative Agent, 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 Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations under the Loan Documents, provided
that if the retiring or removed Administrative Agent is unable to appoint a
successor Administrative Agent, the Administrative Agent shall, after the
expiration of a 60 day period from the date of notice, be relieved of all
obligations as Administrative Agent hereunder. Notwithstanding any
Administrative Agent'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 Agent under this
Agreement.
(c) Expenses. Each Lender shall pay its pro rata share, based on its
Specified Percentage, of any reasonable expenses paid by the Administrative
Agent directly and solely in connection with any of the Loan Documents (other
than expenses for which the Administrative Agent has received compensation in
the form of the fees set forth in the Administrative Agent Fee Letter) if the
Administrative Agent 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 Agent shall be returned by the Administrative Agent 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 Agent.
(d) Delegation of Duties. The Administrative Agent 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 Agent. The Administrative Agent 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 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 Agent. The Administrative Agent 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 Agent's Liability. Neither the
Administrative Agent 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 willful misconduct. Except as aforesaid, the Administrative Agent
shall be under no duty to enforce any rights with respect to any of the
Advances, or any security therefor. The Administrative Agent 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. The Administrative Agent 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 or any other Obligor. TO THE EXTENT NOT REIMBURSED BY THE
BORROWER, EACH LENDER HEREBY SEVERALLY INDEMNIFIES AND HOLDS HARMLESS THE
ADMINISTRATIVE AGENT, PRO RATA ACCORDING TO ITS SPECIFIED PERCENTAGE, FROM AND
AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, REASONABLE EXPENSES AND/OR DISBURSEMENTS OF
ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, ASSERTED AGAINST, OR
INCURRED BY THE ADMINISTRATIVE AGENT (IN SUCH CAPACITY) IN ANY WAY WITH RESPECT
TO ANY LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THE ADMINISTRATIVE AGENT
UNDER THE LOAN DOCUMENTS (INCLUDING ANY NEGLIGENT ACTION OF THE ADMINISTRATIVE
AGENT), EXCEPT TO THE EXTENT THE SAME ARE FINALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION TO RESULT FROM GROSS NEGLIGENCE OR WILLFUL MISCONDUCT BY
THE ADMINISTRATIVE AGENT. 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
Advances made by it and the Notes issued to it, the Administrative Agent shall
have the same rights as a Lender and may exercise the same as though it were not
the Administrative Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent 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 Agent were not the Administrative Agent 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 Agent 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 Agent 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 Advances shall constitute evidence to the
Administrative Agent 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;
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 Agent
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 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:
(i) If to the Borrower, at:
Club Corporation International
3030 LBJ Freeway, Suite 700
Dallas, Texas 75234
Attention: Treasurer
Telephone: (972) 888-7332
Telecopier: (972) 888-6239
(ii) If to the Administrative Agent, at:
NationsBank, N.A.
901 Main Street, 14th Floor
Dallas, Texas 75202-3714
Attn: Molly Oxford
Telephone: (214) 508-3255
Telecopier: (214) 508-2515
(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:
(a) all reasonable out-of-pocket expenses of the Administrative Agent
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, including reasonable
attorneys' fees, of the Administrative Agent in connection with 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 Agent relating to this Agreement or the other Loan Documents; and
(c) all reasonable out-of-pocket costs, expenses and attorneys' fees of
the Administrative Agent 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 reasonable fees and expenses of consultants, legal counsel for the
Administrative Agent and any Lender and administrative fees for the
Administrative Agent.
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 Agent 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. 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 Agent 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 Agent or any of
the Lenders are a party thereto, relating to the Borrower or any of its
Subsidiaries.
Section 11.4 Determination by the Lenders Conclusive and Binding. Any
determination or mathematical calculation required or expressly permitted to be
made by the Administrative Agent or any Lender under this Agreement shall be
controlling, absent demonstrable error.
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 hereof
(but after each set-off such Lender shall promptly notify the Administrative
Agent and the Borrower). 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 in accordance with each Specified
Percentage.
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) Each Lender may sell participations to one or more banks or other
entities (the "Participants") in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Advances or Reimbursement Obligations owing to it and the Note or
Notes held by it) (the "Participations"); provided, however, that (i) such
Lender's obligations under this Agreement (including, without limitation, its
Specified Percentage of the Commitment) shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Lender shall remain the holder of any such Note
for all purposes of this Agreement, (iv) the Borrower, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, (v) no Participant under any such Participation shall have any right
to approve any amendment or waiver of any provision of any Loan Document, or any
consent to any departure by the Borrower therefrom, except to the extent that
such amendment, waiver or consent would (A) reduce or postpone any date fixed
for payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder (B) increase the commitment of any Participant or (C)
release any Collateral or security for the Obligations, except pursuant to the
Loan Documents, in each case to the extent subject to such Participation, and
(vi) no Participation shall be in an amount less than $5,000,000. The Lenders
may, subject to Section 11.14 hereof, provide copies of all financial
information received from the Borrower to such Participants.
(d) Each Lender may assign to one or more Eligible Assignees 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 Agent and Borrower, which consents shall not be
unreasonably withheld (provided, however, notwithstanding anything herein to the
contrary, no consent of the (A) Borrower is required for any assignment (x)
during any time that an Event of Default has occurred and is continuing, (y) to
an Affiliate of a Lender and (z) to another Lender hereunder and (B)
Administrative Agent is required for any assignment (y) to an Affiliate of a
Lender and (z) to another Lender hereunder), (ii) no such assignment shall be in
an amount less than $5,000,000, unless the commitment of a Lender is less than
$5,000,000, in which case such assignment may be in the aggregate amount of such
Lender's Specified Percentage of the Commitment, (iii) the applicable Lender,
Administrative Agent, the Borrower and Eligible Assignee shall execute and
deliver to the Administrative Agent an Assignment and Acceptance Agreement (an
"Assignment Agreement") in substantially the form of Exhibit C hereto, together
with the Notes subject to such assignment and (iv) the Eligible Assignee
executing the Assignment, shall deliver to the Administrative Agent a processing
fee of $3,500. 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 and the recordation of the
information therein in the Register pursuant to Section 11.6(j) hereof, (A) the
Eligible 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; provided, however, the
indemnities and rights provided such Lender in Section 5.9, Article 9 and
Section 11.2 hereof shall survive such assignment.
(e) Notwithstanding anything in clause (d) above to the contrary, (i)
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 and
(ii) any Lender that is a fund may at any time assign or pledge all or any
portion of its rights under this Agreement to secure such Lender's indebtedness;
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 Eligible Assignee, and any Note or Notes subject to such assignment, the
Borrower shall, subject to the Borrower's rights under Section 11.6(d), within
five Business Days after its receipt of such Assignment Agreement execute and
deliver to the Administrative Agent in exchange for the surrendered Notes new
Notes to the order of such Eligible Assignee in an amount equal to the portion
of the Advances and the Specified Percentage of the Commitment 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 the Specified
Percentage of the Commitment 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 hereto.
(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 Eligible Assignee or Participant or proposed Eligible 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
Eligible 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 or any other Lender would have been entitled to receive
with respect to the interest assigned or participated to such Eligible Assignee
or Participant.
(j) The Administrative Agent shall maintain at its address referred to
in Section 11.1 a copy of each Assignment Agreement delivered to and accepted by
it and a register (the "Register") for the recordation of the names and
addresses of the Lenders, any U.S. taxpayer identification number, the Specified
Percentages of the Lenders (the "Ownership Information"), whether such Lender is
an original Lender or the assignee of another Lender pursuant to an Assignment
Agreement and the effective date and the amount of each Assignment Agreement
delivered to and accepted by it and the parties thereto. Any transfer of an
ownership interest in any Advance, including any right to principal or interest
payable with respect to such Advance, shall be subject to and conditioned upon
the due recordation of such transfer and the Ownership Information with respect
to the transferee in the Register and such transfer shall be effective only upon
such recordation (and not prior thereto), which recordation the Administrative
Agent agrees to make. The entries in the Register shall be controlling and
binding for all purposes, absent demonstrable error, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes hereof. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
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 or any
other Loan Document 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 or thereof 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 charge, receive, collect or
apply, as interest on the Obligations, any amount in excess of the Highest
Lawful Rate. 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 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 amount of the Commitment, (ii) change the Specified
Percentage or commitment of any Lender, or (iii) 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 Advance, the Reimbursement Obligations or other amount
owing under any Loan Documents to which such Lender is entitled or (iv) release
any guaranty of the Obligations or any of the L/C Cash Collateral (except, in
any case, pursuant to this Agreement or the other Loan Documents), or (v) reduce
the fees payable hereunder to which such Lender is entitled, or (vi) revise,
amend, modify or waive this Section 11.11, or (vii) waive or extend the date for
payment or prepayment of any principal, interest or fees hereunder or (vii)
amend the definition of "Determining Lenders" or "Specified Percentage", (b)
without the consent of the Administrative Agent, if it, would alter the rights,
duties or obligations of the Administrative Agent; (c) without the consent of
the Issuing Bank, if it would alter the rights, duties or obligations of the
Issuing Bank; or (d) without the consent of the Swing Line Bank, if it would
alter the rights, duties or obligations of the Swing Line 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 Agent and, in the case of an amendment, by the Borrower. The
Lenders agree that they shall not charge an amendment fee for any amendment to
this Agreement which is necessary solely as a result of the accounting change
referred to in the last sentence of Section 1.3 hereof.
Section 11.12 Exception to Covenants. Neither the Borrower nor any of
its Subsidiaries 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 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; 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 finally judicially determines were caused by (i) the Issuing Bank's
willful misconduct or gross negligence or (ii) the Issuing Bank's willful
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
Agent agrees (on behalf of itself and each of its Affiliates, directors,
officers, employees and representatives) to use reasonable efforts to keep
confidential, in accordance with customary procedures for handling confidential
information of this nature and in accordance with safe and sound banking or
investment practices, any non-public information supplied to it by the Borrower
or any of its Affiliates pursuant to this Agreement, 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 Agent, (c) to bank or other examiners,
regulatory bodies, auditors or accountants of any Lender, (d) to the
Administrative Agent or any other Lender or any Affiliate thereof, (e) in
connection with any Litigation relating to the transactions contemplated by the
Loan Documents to which any one or more of Lenders is a party, (f) to the extent
necessary in connection with the exercise of any Right under this Agreement or
any other Loan Document, or (g) to any Eligible Assignee or Participant (or
prospective Eligible Assignee or Participant) or to any direct or indirect
contractual counterparties in swap agreements or to the professional advisors of
such swap counterparties so long as such Eligible Assignee or Participant (or
prospective Eligible Assignee or Participant) or direct or indirect contractual
counterparties in swap agreements or such swap counterparties' professional
advisors agrees to handle such information in accordance with the provisions of
this Section 11.14.
Section 11.15 No Duties of Co-Agents. The Borrower and the Lenders
acknowledge that neither Co-Agent shall have any duties, responsibilities or
liabilities in their respective capacities as Co-Agents.
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 COUNTY,
TEXAS, AND THE 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 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 AGENT 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.
<PAGE>
IN WITNESS WHEREOF, this Credit Agreement is executed as of the date first
set forth above.
BORROWER: CLUB CORPORATION INTERNATIONAL
By: /s/ James P. McCoy
Name: James P. McCoy, Jr.
Title: Executive Vice President
<PAGE>
ADMINISTRATIVE AGENT:
NATIONSBANK, N.A., as Administrative Agent
By: /s/Dan Killian
Name: Dan Killian
Title: Vice President
CO-AGENTS:
CREDIT LYONNAIS NEW YORK BRANCH, as Co-Agent
By: /s/ Robert Ivosevich
Name: Robert Ivosevich
Title: Senior Vice President
FIRST UNION NATIONAL BANK, as Co-Agent
By: /s/ Peter Steffen
Name: Peter Steffen
Title: Senior Vice President
LENDERS:
NATIONSBANK, N.A., as a Lender, Swing Line Bank and Issuing Bank
By: /s/ Dan Killian
Name: Dan Killian
Title: Vice President
901 Main Street, 67th Floor
Dallas, Texas 75202
Attn: Dan M. Killian
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Robert Ivosevich
Name: Robert Ivosevich
Title: Senior Vice President
1301 Avenue of the Americas
New York, New York 10019
FIRST UNION NATIONAL BANK
By: /s/ Peter Steffen
Name: Peter Steffen
Title: Senior Vice President
301 South College Street
Charlotte, North Carolina 28288-0745
BANK ONE, TEXAS N.A.
By: /s/ Alan L. Miller
Name: Alan L. Miller
Title: Vice President
1717 Main Street
Dallas, Texas 75201
SOUTHTRUST BANK, N.A.
By: /s/ Daniel Gorman Jr.
Name: Daniel Gorman Jr.
Title: Vice President
420 North 20th Street, 11th Floor
Birmingham, Alabama 35203
WELLS FARGO BANK (TEXAS), N.A.
By: /s/ Brent Bertino
Name: Brent Bertino
Title: Assistant Vice President
1445 Ross Avenue, 3rd Floor
Dallas, Texas 75202
BRANCH BANKING AND TRUST
By: /s/ Cory Boyte
Name: Cory Boyte
Title: Vice President
110 South Stratford Road, Suite 301
Winston-Salem, North Carolina 27104
<PAGE>
COMERICA BANK
By: /s/ Reginald M. Goldsmith, III
Name: Reginald M. Goldsmith, III
Title: Vice President
4100 Spring Valley, Suite 900
Dallas, Texas 75244
DEPOSIT GUARANTY NATIONAL BANK
By: /s/ Mark D. Evans
Name: Mark D. Evans
Title: Vice President
333 Texas Street
DGT-3
Shreveport, Louisiana 71101
HIBERNIA NATIONAL BANK
By: /s/ Christopher B. Pitre
Name: Christopher B. Pitre
Title: Vice President
313 Carondelet Street
New Orleans, Louisiana 70130
MELLON BANK, N.A.
By: /s/ Mark F. Johnston
Name: Mark F. Johnston
Title: Vice President
One Mellon Bank Center
Room 4525
Pittsburgh, Pennsylvania 15258
<PAGE>
EXHIBIT A
REVOLVING CREDIT NOTE
- -----------------------
Dallas, Texas $___________ ___________, 1998
CLUB CORPORATION INTERNATIONAL, a Nevada corporation (the "Borrower"), for
value received, promises to pay to the order of ("Lender") or its registered
assigns, at the principal office of NationsBank, N.A., in lawful money of the
United States of America, the principal sum of ($), or such lesser sum as shall
be due and payable from time to time hereunder, as hereinafter provided. All
capitalized terms used but not defined herein shall have the meanings set forth
in the Credit Agreement described below.
Principal of and interest on the unpaid principal balance of Revolving
Credit Advances under this Revolving Credit Note (this "Note") from time to time
outstanding shall be due and payable as set forth in the Credit Agreement.
This Note is issued pursuant to and evidences Revolving Credit Advances
under a Credit Agreement, dated as of May 27, 1998, among the Borrower,
NationsBank, N.A., as Administrative Agent, Credit Lyonnais New York Branch, as
Co-Agent, First Union National Bank, as Co-Agent, and the lenders parties
thereto (as amended, restated, supplemented, renewed, extended or otherwise
modified from time to time, "Credit Agreement"), to which reference is made for
a statement of the rights and obligations of the Lender and the duties and
obligations of the Borrower in relation thereto; but neither this reference to
the Credit Agreement nor any provision thereof shall affect or impair the
absolute and unconditional obligation of the Borrower to pay the principal sum
of and interest on this Note when due.
THIS NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW), AND OF THE UNITED STATES OF AMERICA. THE
BORROWER AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS,
TEXAS SHALL HAVE JURISDICTION OVER THE PROCEEDINGS IN CONNECTION WITH THIS NOTE
AND THE OTHER LOAN DOCUMENTS.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES 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.
CLUB CORPORATION INTERNATIONAL
By:
Name:
Title:
<PAGE>
EXHIBIT C
ASSIGNMENT AND ACCEPTANCE
Dated _______________, _____
Reference is made to the Credit Agreement dated as of May 27, 1998 (as
amended, modified or supplemented, the "Credit Agreement") among Club
Corporation International, a Nevada corporation ("Borrower"), NationsBank, N.A.
as Administrative Agent ("Administrative Agent"), Credit Lyonnais New York
Branch, as a Co-Agent, First Union National Bank, as a Co-Agent, and the lenders
parties thereto. Capitalized terms used but not defined herein shall have the
meanings set forth in the Credit Agreement.
("Assignor") and ("Assignee") agree as follows:
1. Subject to the terms and conditions of this Assignment and
Acceptance, Assignor hereby sells and assigns to Assignee, and Assignee hereby
purchases and assumes from Assignor, $ in aggregate amount of the Commitment in
effect on the Effective Date (as defined below), and the related pro rata share
of the principal amount of Revolving Credit Advances owing to Assignor on the
Effective Date, the Revolving Credit Note held by Assignor, and Assignor's
participation in any Letters of Credit and Reimbursement Obligations outstanding
on the Effective Date.
2. Assignor (a) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (b) makes no representation or
warranty and assumes no responsibility with respect to (i) any statements,
warranties, or representations made in or in connection with the Credit
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency, or value of the Credit Agreement or any other Loan Document or (ii)
the financial condition of the Borrower or any other Obligor or the performance
or observance by the Borrower or any other Obligor of any of their respective
obligations under the Credit Agreement or any other Loan Document; and (c)
attaches the Revolving Credit Note referred to in Paragraph 1 above to exchange
such Revolving Credit Note for new Revolving Credit Notes as provided in Section
11.6(f) of the Credit Agreement.
3. Assignee (a) confirms that it has received a copy of the Credit
Agreement and the other Loan Documents, together with copies of the financial
statements referred to in Sections 4.1(j), 6.1 and 6.2 of the Credit Agreement
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Acceptance; (b) agrees that it will, independently and without reliance upon the
Administrative Agent, Assignor, or any other Lender, and based on 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 the Credit Agreement
and the other Loan Documents; (c) appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement, the other Loan Documents, and this Assignment and
Acceptance as are delegated to the Administrative Agent and the Collateral Agent
by the terms thereof and hereof, together with such powers as are reasonably
incidental thereto and hereto; (d) agrees that it will perform in accordance
with its terms all of the obligations which by the terms of the Credit
Agreement, the other Loan Documents, and this Assignment and Acceptance are
required to be performed by it as a Lender; (e) certifies that it is an Eligible
Assignee; and (f) specifies the addresses set forth in Schedule I attached
hereto as its address for the receipt of notices and as its initial LIBOR Lender
Office, respectively[; and (g) attaches the forms prescribed by the IRS
certifying as to Assignee's status for purposes of determining exemption from
United States withholding taxes with respect to all payments to be made to
Assignee under the Credit Agreement, the other Loan Documents, and this
Assignment and Acceptance].
4. The effective date for this Assignment and Acceptance shall be, (the
"Effective Date").
5. Upon such acceptance as of the Effective Date, the recordation of
the information herein in the Register and upon the remittance of a $3,500
processing fee to the Administrative Agent (less any processing fee paid in
respect of a simultaneous assignment under the Term Credit Agreement), (a)
Assignee shall be a party to the Credit Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (b) Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Credit Agreement.
6. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of Texas. Without excluding any other
jurisdiction, Assignee agrees that the courts of Texas will have jurisdiction
over proceedings in connection herewith.
7. After giving effect to this Assignment and Acceptance (and all other
assignments under the Credit Agreement to be effective as of the Effective
Date):
a. Assignee's Specified Percentage shall be _____%.
b. Assignor's Specified Percentage shall be _____%.
8. This Assignment and Acceptance 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.
[NAME OF ASSIGNOR]
By:
Name:
Title:
[NAME OF ASSIGNEE]
By:
Name:
Title:
Accepted this ___ day of ____________, _____
NATIONSBANK, N.A.,
as Administrative Agent
By:
Name:
Title:
CLUB CORPORATION INTERNATIONAL
By:
Name:
Title:
Schedule I
ASSIGNEE'S ADDRESS
- -------------------
1. Address for the Advances and Receipt of Notices
------------------------------------------------------
2. Initial LIBOR Lending Office
-------------------------------
<PAGE>
EXHIBIT D
SUBSIDIARY GUARANTY
GUARANTY, dated _____________________________, made by each of the parties
listed on the signature pages hereof (collectively, the "Guarantors", and each,
a "Guarantor"), in favor of the Guaranteed Parties referred to below.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Club Corporation International, a Nevada corporation (the
"Borrower"), has entered into a Credit Agreement, dated as of May 27, 1998,
among the lenders party thereto, Credit Lyonnais New York Branch, as Co-Agent,
First Union National Bank, as Co-Agent, and NationsBank, N.A., as the
administrative agent for said financial institutions (said Credit Agreement, as
it may be amended, supplemented or otherwise modified from time to time, being
the "Credit Agreement", and capitalized terms not defined herein but defined
therein being used herein as therein defined); and
WHEREAS, the Borrower, directly or indirectly, owns beneficially and of
record more than 50% of the capital stock or other equity interests of the
Guarantors, and the Borrower and each of the Guarantors are members of the same
consolidated group of companies and are engaged in related businesses, and the
Guarantors will derive direct and indirect economic benefit from the Advances;
and
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make Advances under the Credit Agreement that the Guarantors shall have executed
and delivered this Guaranty; and
WHEREAS, the Lenders, the Administrative Agent and any Affiliate of any
Lender entering into a Hedge Agreement with the Borrower or any Affiliate of the
Borrower are herein referred to as the "Guaranteed Parties";
NOW, THEREFORE, in consideration of the premises and to induce the Lenders
to make Advances and issue Letters of Credit, the Guarantors hereby agree as
follows:
SECTION 1. Guaranty. The Guarantors hereby jointly and severally
unconditionally and irrevocably guarantee the full and prompt payment when due,
whether at stated maturity, by acceleration or otherwise, of, and the
performance of, (a) the Obligations, whether now or hereafter existing and
whether for principal, interest, fees, expenses or otherwise, (b) any and all
reasonable out-of-pocket expenses (including, without limitation, reasonable
counsel fees and expenses) incurred by any of the Guaranteed Parties in
enforcing any rights under this Guaranty and (c) all present and future amounts
that would become due but for the operation of Section 502 or 506 or any other
provision of Title 11 of the United States Code and all present and future
accrued and unpaid interest (including, without limitation, all post-petition
interest if the Borrower or any Guarantor voluntarily or involuntarily becomes
subject to any Debtor Relief Laws) (the items set forth in clauses (a), (b) and
(c) immediately above being herein referred to as the "Guaranteed Obligations").
Upon failure of the Borrower to pay any of the Guaranteed Obligations when due
(whether at stated maturity, by acceleration or otherwise), the Guarantors
hereby further jointly and severally agree to pay the same, and the Guarantors
will promptly pay the same, without any demand or notice whatsoever, including
without limitation, any notice having been given to the Guarantor of either the
acceptance by the Guaranteed Parties of this Guaranty or the creation or
incurrence of any of the Obligation. This Guaranty is an absolute guaranty of
payment and performance and not a guaranty of collection, meaning that it is not
necessary for the Guaranteed Parties, in order to enforce payment by the
Guarantors, first or contemporaneously to accelerate payment of any of the
Guaranteed Obligations, to institute suit or exhaust any rights against any
Obligor, or to enforce any Rights against any collateral. In any action or
proceeding involving any state corporate Law, or any state or federal
bankruptcy, insolvency, reorganization or other Law affecting the rights of
creditors generally (collectively, the "Fraudulent Transfer Laws") if the
obligations of any Guarantor hereunder would otherwise, in each case after
giving effect to all other liabilities of such Guarantor, contingent or
otherwise, that are relevant under the Fraudulent Transfer Laws (specifically
excluding, however, any liabilities of such Guarantor in respect of intercompany
indebtedness to the Borrower, other Affiliates of the Borrower or other Obligors
to the extent that such indebtedness would be discharged in an amount equal to
the amount paid by such Guarantor hereunder) and after giving effect as assets
to the value (as determined under the applicable provisions of Fraudulent
Transfer Laws) of any agreement providing for an equitable allocation among such
Guarantor and other Obligors of obligations arising under guaranties by such
parties (including, without limitation, Section 10 of this Guaranty), be held or
determined to be void, invalid or unenforceable or subordinated to the claims of
any other creditors, on account of the amount of its liability under this
Guaranty, then, notwithstanding any other provision hereof to the contrary, the
amount of such liability shall, without any further action by such Guarantor,
any Lender, the Administrative Agent or any other Person, be automatically
limited and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.
SECTION 2. Guaranty Absolute. Each Guarantor guaranties that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Credit Agreement, the Notes and the other Loan Documents, without set-off or
counterclaim, and regardless of any Law now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Guaranteed Parties
with respect thereto. The liability of each Guarantor under this Guaranty shall
be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of any
other Loan Document or any other agreement or instrument relating to any Loan
Document, or avoidance or subordination of any of the Guaranteed Obligations;
(b) any change in the time, manner or place of payment of, or in any
other term of, or any increase in the amount of, all or any of the Guaranteed
Obligations, or any other amendment or waiver of any term of, or any consent to
departure from any requirement of, the Credit Agreement, the Notes or any of the
other Loan Documents;
(c) any exchange, release or non-perfection of any Lien on any
collateral for, or any release or amendment or waiver of any term of any other
guaranty of, or any consent to departure from any requirement of any other
guaranty of, all or any of the Guaranteed Obligations;
(d) the absence of any attempt to collect any of the Guaranteed
Obligations from the Borrower or from any other Guarantor or any other action to
enforce the same or the election of any remedy by any of the Guaranteed Parties;
(e) any waiver, consent, extension, forbearance or granting of any
indulgence by any of the Guaranteed Parties with respect to any provision of any
other Loan Document;
(f) the election by any of the Guaranteed Parties in any proceeding
under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code")
of the application of section 1111(b)(2) of the Bankruptcy Code;
(g) any borrowing or grant of a security interest by the Borrower, as
debtor-in-possession, under section 364 of the Bankruptcy Code; or
(h) any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a borrower or a guarantor.
SECTION 3. Waiver. (a) Each Guarantor hereby (i) waives (A) promptness,
diligence, notice of acceptance and any and all other notices with respect to
any of the Obligations or this Guaranty, (B) any requirement that any of the
Guaranteed Parties protect, secure, perfect or insure any security interest in
or other Lien on any property subject thereto or exhaust any right or take any
action against the Borrower or any other Person or any Collateral, (C) the
filing of any claim with a court in the event of receivership or bankruptcy of
the Borrower, (D) protest or notice with respect to nonpayment of all or any of
the Guaranteed Obligations, (E) the benefit of any statute of limitation, (F)
all demands whatsoever (and any requirement that same be made on the Borrower as
a condition precedent to such Guarantor's obligations hereunder) and (G) all
rights by which it might be entitled to require suit on an accrued right of
action in respect of any of the Guaranteed Obligations or require suit against
the Borrower or any other Guarantor or Person, whether arising pursuant to
Section 34.02 of the Texas Business and Commerce Code, as amended, Section
17.001 of the Texas Civil Practice and Remedies Code, as amended, Rule 31 of the
Texas Rules of Civil Procedure, as amended, or otherwise; and (ii) covenants and
agrees that, except as set forth in Section 11 hereof, this Guaranty will not be
discharged except by complete performance of the Guaranteed Obligations and any
other obligations of such Guarantor contained herein.
(b) If, in the exercise of any of its rights and remedies, any of the
Guaranteed Parties shall forfeit any of its rights or remedies, including,
without limitation, its right to enter a deficiency judgment against the
Borrower or any other Person, whether because of any applicable law pertaining
to "election of remedies" or the like, each Guarantor hereby consents to such
action by such Guaranteed Party and waives any claim based upon such action.
Any election of remedies which results in the denial or impairment of the right
of such Guaranteed Party to seek a deficiency judgment against the Borrower
shall not impair the obligation of such Guarantor to pay the full amount of the
Guaranteed Obligations or any other obligation of such Guarantor contained
herein.
(c) In the event any of the Guaranteed Parties shall bid at any
foreclosure or trustee's sale or at any private sale permitted by law or under
any of the Loan Documents, such Guaranteed Party may bid all or less than the
amount of the Guaranteed Obligations and the amount of such bid, if successful,
need not be paid by such Guaranteed Party but shall be credited against the
Guaranteed Obligations. The amount of the successful bid at any such sale,
whether such Guaranteed Party or any other Person is the successful bidder,
shall be conclusively deemed to be the fair market value of the Collateral and
the difference between such bid amount and the remaining balance of the
Guaranteed Obligations shall be deemed to be the amount of the Guaranteed
Obligations guaranteed under this Guaranty, subject to any present or future law
or court decision or ruling may have the effect of reducing the amount of any
deficiency claim to which any of the Guaranteed Parties might otherwise be
entitled by reason of such bidding at any such sale.
(d) Each Guarantor agrees that notwithstanding the foregoing and
without limiting the generality of the foregoing if, after the occurrence and
during the continuance of an Event of Default, the Guaranteed Parties are
prevented by Applicable Law from exercising their respective rights to
accelerate the maturity of the Guaranteed Obligations, to collect interest on
the Guaranteed Obligations, or to enforce or exercise any other right or remedy
with respect to the Guaranteed Obligations, or the Administrative Agent is
prevented from taking any action to realize on the Collateral, such Guarantor
agrees to pay to the Administrative Agent for the account of the Guaranteed
Parties, upon demand therefor, the amount that would otherwise have been due and
payable had such rights and remedies been permitted to be exercised by the
Guaranteed Parties.
(e) Each Guarantor hereby assumes responsibility for keeping itself
informed of the financial condition of the Borrower and of each other guarantor
of all or any part of the Guaranteed Obligations, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations or any part
thereof, that diligent inquiry would reveal. Each Guarantor hereby agrees that
the Guaranteed Parties shall have no duty to advise any Guarantor of information
known to any of the Guaranteed Parties regarding such condition or any such
circumstance. In the event that any of the Guaranteed Parties in its sole
discretion undertakes at any time or from time to time to provide any such
information to any Guarantor, such Guaranteed Party shall be under no obligation
(i) to undertake any investigation not a part of its regular business routine,
(ii) to disclose any information which, pursuant to accepted or reasonable
banking or commercial finance practices, such Guaranteed Party wishes to
maintain confidential, or (iii) to make any other or future disclosures of such
information or any other information to such Guarantor.
(f) Each Guarantor consents and agrees that the Guaranteed Parties
shall be under no obligation to marshall any assets in favor of any Guarantor or
otherwise in connection with obtaining payment of any or all of the Guaranteed
Obligations from any Person or source.
SECTION 4. Representations and Warranties. Each Guarantor hereby
represents and warrants to the Guaranteed Parties as follows:
(a) Such Guarantor (i) is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of the state of
its organization, (ii) is duly qualified as a foreign corporation or other legal
organization and in good standing under the laws of each jurisdiction in which
the character of its properties or the nature of its business requires such
qualification, except where the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect, (iii) has all requisite power and
authority to own its properties, to lease the property it operates under lease
and to conduct its business as now or currently proposed to be conducted, (iv)
is in compliance with its certificate of incorporation, by-laws, or other
similar organizational and governance documents, (v) is in compliance with all
other applicable requirements of Law except for such noncompliances as in the
aggregate would have no Material Adverse Effect, and (vi) has all Necessary
Authorizations, except for Necessary Authorizations which can be obtained by the
taking of ministerial action to secure the grant or transfer thereof or failures
which in the aggregate would not have any reasonable likelihood of having a
Material Adverse Effect.
(b) The execution, delivery and performance by such Guarantor of this
Guaranty:
(i) is within its legal powers;
(ii) has been duly authorized by all necessary legal action,
including, without limitation, the consent of stockholders, partners or other
equity holders where required; and
(iii) does not and will not (A) contravene its certificate of
incorporation or by-laws or other comparable governing documents, (B) violate
any other applicable requirement of Applicable Law (including, without
limitation, Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System), or any order or decree of any Tribunal or arbitrator, (C)
conflict with or result in the breach of, or constitute a default under, or
result in or permit the termination or acceleration of, any of its agreements,
(D) result in the creation or imposition of any Lien upon any of its property,
or (E) require the consent or approval of any Tribunal or any other Person
necessary on or prior to the Agreement Date not already obtained.
(c) This Guaranty has been duly executed and delivered by such
Guarantor and is the legal, valid and binding obligation of such Guarantor
enforceable against it in accordance with its terms, subject to Debtor Relief
Laws (insofar as any such law relates to the bankruptcy, insolvency or similar
event of the Guarantor) and general principles of equity.
(d) Except as disclosed in writing to the Lenders prior to the
Agreement Date, as of the Agreement Date there is no Litigation pending against
such Guarantor or any of its Subsidiaries, or in any other manner relating
directly and adversely to such Guarantor or any of its Subsidiaries, or any of
their properties, in any court, Tribunal or arbitrator with respect to which
there is a reasonable likelihood of an adverse determination and that, if
adversely determined, is reasonably likely to have a Material Adverse Effect.
The performance by such Guarantor under this Guaranty is not restrained or
enjoined (either temporarily, preliminarily or permanently).
SECTION 5. Amendments. Etc. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by any Guarantor herefrom shall in
any event be effective unless the same shall be in writing, approved by the
Determining Lenders (or by all the Lenders where the approval of each Lender is
required under the Credit Agreement) and signed by the Administrative Agent, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
SECTION 6. Addresses for Notices. All notices and other communications
provided for hereunder 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 (answer back
received), 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, if to any
Guarantor, addressed to it at its address specified on the signature pages
hereof, and if to any Guaranteed Party, addressed to it at the address of such
Guaranteed Party specified in the Credit Agreement.
SECTION 7. No Waiver; Remedies. (a) No failure on the part of any
Guaranteed Party to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by Law or any of the other Loan
Documents.
(b) Failure by any of the Guaranteed Parties at any time or times
hereafter to require strict performance by the Borrower, any Guarantor or any
other Person of any of the provisions, warranties, terms or conditions contained
in any of the Loan Documents now or at any time or times hereafter executed by
the Borrower, any Guarantor or such other Person and delivered to any of the
Guaranteed Parties shall not waive, affect or diminish any right of any of the
Guaranteed Parties at any time or times hereafter to demand strict performance
thereof, and such right shall not be deemed to have been modified or waived by
any course of conduct or knowledge of any of the Guaranteed Parties or any
agent, officer, employee of any of the Guaranteed Parties.
(c) No waiver by the Guaranteed Parties of any default shall operate as
a waiver of any other default or the same default on a future occasion, and no
action by any of the Guaranteed Parties permitted hereunder shall in way affect
or impair any of the rights of the Guaranteed Parties or the obligations of any
Guarantor under this Guaranty or under any of the other Loan Documents, except
as specifically set forth in any such waiver. Any determination by a court of
competent jurisdiction of the amount of any principal and/or interest or other
amount constituting any of the Guaranteed Obligations shall be conclusive and
binding on each Guarantor irrespective of whether such Guarantor was a party to
the suit or action in which such determination was made.
SECTION 8. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, each of the Guaranteed Parties, is hereby
authorized at any time and from time to time, to the fullest extent permitted by
Law, to set off and apply any and all deposits (general or special (except trust
and escrow accounts), time or demand, provisional or final) at any time held and
other Indebtedness at any time owing by such Guaranteed Party to or for the
credit or the account of each Guarantor against any and all of the obligations
of each Guarantor now or hereafter existing under this Guaranty, irrespective of
whether or not such Guaranteed Party shall have made any demand under this
Guaranty and although such obligations may be contingent and unmatured. The
rights of each Guaranteed Party under this Section 8 are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which such Guaranteed Party may have.
SECTION 9. Continuing Guaranty; Transfer of Notes. Subject to Section 11,
this Guaranty is a continuing guaranty and shall remain in full force and effect
until the Release Date, (ii) be binding upon each Guarantor, its successors and
assigns, and (iii) inure to the benefit of and be enforceable by the Guaranteed
Parties and their respective successors, transferees, and permitted assigns.
Without limiting the generality of the foregoing clause (iii), each of the
Guaranteed Parties may assign or otherwise transfer any Note held by it or
Guaranteed Obligations owing to it to any other Person, and such other Person
shall thereupon become vested with all the rights in respect thereof granted to
such Guaranteed Party herein or otherwise with respect to such of the Notes and
Guaranteed Obligations so transferred or assigned, subject, however, to
compliance with the provisions of Section 11.6 of the Credit Agreement in
respect of assignments. No Guarantor may assign any of its obligations under
this Guaranty without first obtaining the written consent of all Lenders, and
any purported assignment or transfer without such consent shall be void.
SECTION 10. Reimbursement. To the extent that any Guarantor shall be
required to repay a portion of the Advances which shall exceed the greater of
(a) the amount of such Advances actually received by such Guarantor and (b) the
amount which such Guarantor would otherwise have paid if such Guarantor had
repaid the aggregate amount of such Advances (excluding the amount thereof
repaid by the Borrower) in the same proportion as such Guarantor's net worth
immediately after the later of the Agreement Date or the date such Guarantor
becomes a party to this Guaranty bears to the aggregate net worth of the
Guarantors (calculated for each Guarantor based on such Guarantor's net worth
immediately after the later of the Agreement Date or the date such Guarantor
becomes a party to this Guaranty), then such Guarantor shall be reimbursed by
the other Guarantors for the amount of such excess, pro rata, based on their
respective net worth immediately after the Agreement Date or the date such
Guarantor becomes a party to this Guaranty, as applicable. This Section 10 is
intended only to define the relative rights of the Guarantors, and nothing set
forth in this Section 10 is intended to or shall impair the obligations of the
Guarantors, jointly and severally, to pay to the Guaranteed Parties the
Guaranteed Obligations as and when the same shall become due and payable in
accordance with the terms hereof.
SECTION 11. Reinstatement. This Guaranty shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Obligor for liquidation or reorganization, should any Obligor become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of any
Obligor's assets, and shall, to the fullest extent permitted by Applicable Law,
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant to
Applicable Law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligees of the Guaranteed Obligations or such part thereof,
whether as a "voidable preference," "fraudulent transfer," or otherwise, all as
though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Guaranteed Obligations shall, to the fullest extent permitted by law, be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
SECTION 12. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND THE UNITED STATES OF
AMERICA.
SECTION 13. Submission to Jurisdiction; Jury Trial. (a) Any legal action
or proceeding with respect to this Guaranty or any document related thereto may
be brought in the courts of the State of Texas or the United States of America
for Dallas, Texas, and, each of the Guarantors and Guaranteed Parties hereby
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each of the
Guarantors and Guaranteed Parties hereby irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions.
(b) Nothing contained in this Section 13 shall affect the right of any
Guarantor or Guaranteed Party to serve process in any other manner permitted by
law or commence legal proceedings or otherwise proceed against any other party
or its property in any other jurisdiction.
(c) THE GUARANTORS AND GUARANTEED PARTIES EACH, TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW, WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON OR ARISING OUT OF THIS GUARANTY OR ANY OTHER
LOAN DOCUMENT.
SECTION 14. Section Titles. The Section titles contained in this Guaranty
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of this Guaranty.
SECTION 15. Execution in Counterparts. This Guaranty may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute one and the same
Guaranty.
SECTION 16. Miscellaneous. All references herein to the Borrower or to
any Guarantor shall include their respective successors and assigns, including,
without limitation, a receiver, trustee or debtor-in-possession of or for the
Borrower or such Guarantor. All references to the singular shall be deemed to
include the plural where the context so requires.
SECTION 17. Subrogation and Subordination.
(a) Subrogation. Notwithstanding any reference to subrogation
contained herein to the contrary, until the Release Date, each Guarantor hereby
irrevocably waives any claim or other rights which it may have or hereafter
acquire against the Borrower that arise from the existence, payment, performance
or enforcement of such Guarantor's obligations under this Guaranty, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution, indemnification, any right to participate in any claim or remedy
of any Lender against the Borrower or any collateral which any Lender now has or
hereafter acquires, whether or not such claim, remedy or right arises in equity,
or under contract, statutes or common law, including without limitation, the
right to take or receive from the Borrower, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim or other rights. If any amount shall be paid to any
Guarantor in violation of the preceding sentence and the Guaranteed Obligations
shall not have been paid in full, such amount shall be deemed to have been paid
to such Guarantor for the benefit of, and held in trust for the benefit of, the
Lenders, and shall forthwith be paid to the Administrative Agent to be credited
and applied upon the Guaranteed Obligations, whether matured or unmatured, in
accordance with the terms of the Credit Agreement. Each Guarantor acknowledges
that it will receive direct and indirect benefits from the financing
arrangements contemplated by the Credit Agreement and that the waiver set forth
in this Section 17(a) is knowingly made in contemplation of such benefits.
(b) Subordination. All debt and other liabilities of the Borrower to
any Guarantor ("Borrower Debt") are expressly subordinate and junior to the
Guaranteed Obligations and any instruments evidencing the Borrower Debt to the
extent provided below.
(i) Until the Release Date, each Guarantor agrees that it will not
request, demand, accept, or receive (by set-off or other manner) any payment
amount, credit or reduction of all or any part of the amounts owing under the
Borrower Debt or any security therefor, except as specifically allowed pursuant
to clause (ii) below;
(ii) Notwithstanding the provisions of clause (i) above, the
Borrower may pay to the Guarantors and the Guarantors may receive and retain
from the Borrower regularly scheduled payments due and owing under the terms of
the Borrower Debt, provided that the Borrower's right to pay and the Guarantors'
right to receive any such regularly scheduled amount shall automatically and be
immediately suspended and cease (A) upon the occurrence of a Default (as defined
in the Loan Documents) or (B) if, after taking into account the effect of such
payment, a Default would occur and be continuing. The Guarantors' right to
receive amounts under this clause (ii) (including any amounts which theretofore
may have been suspended) shall automatically be reinstated in such time as the
Default which was the basis of such suspension has been cured to the Lenders'
satisfaction (provided that no subsequent Default has occurred) or such earlier
date, if any, and the Administrative Agent gives notice to the Guarantors of
reinstatement by the Determining Lenders, in the Determining Lenders' sole
discretion;
(iii) If any Guarantor receives any payment on the Borrower Debt
in violation of this Guaranty, such Guarantor will hold such payment in trust
for the Lenders and will immediately deliver such payment to the Administrative
Agent;
(iv) Until the Release Date, no Guarantor will demand or
accelerate the maturity of all or any part of the Borrower Debt, nor collect or
enforce, or attempt to collect or enforce, from the Borrower all or any part of
the Borrower Debt, whether through the commencement or joinder of a suit, action
or proceeding of any type (judicial or otherwise) or proceeding under any Debtor
Relief Laws (the "Insolvency Proceeding"), the enforcement of any rights against
any property of the Borrower, or otherwise, except where any Guaranteed Party
shall request such Guarantor to file a claim in connection with any such
proceeding and except as set forth in clause (v) below; and
(v) In the event of any Insolvency Proceeding, the Guaranteed
Obligations shall first be paid, discharged and performed in full before any
payment or performance is made upon the Borrower Debt notwithstanding any other
provisions which may be made in such Insolvency Proceeding. In the event of any
Insolvency Proceeding, each Guarantor will at any time prior to the Release Date
(A) file, at the request of any Guaranteed Party, any claim, proof of claim or
similar instrument necessary to enforce the Borrower's obligation to pay the
Borrower Debt, and (B) hold in trust for and pay to the Guaranteed Parties any
and all monies, obligations, property, stock dividends or other assets received
in any such proceeding on account of the Borrower Debt in order that the
Guaranteed Parties may apply such monies or the cash proceeds of such other
assets to the Obligations. In the event that any Guarantor fails to take such
action upon any Guaranteed Party's request, such Guaranteed Party shall be
deemed to have been appointed the attorney-in-fact for such Guarantor with
respect to the Borrower Debt, and such Guaranteed Party may in that capacity (i)
demand, sue for, collect and receive any and all such monies, dividends or other
assets, (ii) file any claim, proof of claim or similar instrument, and (iii)
institute such other proceedings which such Guaranteed Party, may deem
reasonably necessary for the collection of the Guaranteed Obligations and the
enforcement of the terms of this Guaranty. Upon request of any Guaranteed
Party, each Guarantor will execute and deliver to such Guaranteed Party such
other and further powers of attorney or other instruments as such Guaranteed
Party may reasonably request to effect the purposes of this Guaranty. If in any
proceeding to enforce the payment of the Guaranteed Obligations it becomes
necessary that any Guarantor itself prove such claims, such Guarantor shall do
so upon reasonable request by such Guaranteed Party. In proving these claims,
however, such Guarantor shall act as the collection agent of such Guaranteed
Party and shall promptly pay any funds so received to such Guaranteed Party.
SECTION 18. Guarantor Insolvency. Should any Guarantor voluntarily seek,
consent to, or acquiesce in the benefits of any Debtor Relief Law or become a
party to or be made the subject of any proceeding provided for by any Debtor
Relief Law (other than as a creditor or claimant) that could suspend or
otherwise adversely affect the rights of any Lender granted hereunder, then, the
obligations of such Guarantor under this Guaranty shall be, as between such
Guarantor and such Lender, a fully-matured, due, and payable obligation of such
Guarantor to such Lender (without regard to whether the Borrower is then in
default under the Credit Agreement or whether any part of the Guaranteed
Obligations is then due and owing by the Borrower to such Lender), payable in
full by such Guarantor to such Lender upon demand, which shall be the estimated
amount owing in respect of the contingent claim created hereunder.
SECTION 19. Rate Provision. It is not the intention of any Lender to make
an agreement violative of the laws of any applicable jurisdiction relating to
usury. Regardless of any provision in this Guaranty, no Lender shall ever be
entitled to contract, charge, receive, collect or apply, as interest on the
Guaranteed Obligations, any amount in excess of the Highest Lawful Rate. In no
event shall any Guarantor be obligated to pay any amount in excess of the
Highest Lawful Rate. If from any circumstance the Administrative Agent or any
Lender shall ever receive, collect or apply anything of value deemed excess
interest under Applicable Law, an amount equal to such excess shall be applied
to the reduction of the principal amount of outstanding Advances, and any
remainder shall be promptly refunded to the payor. In determining whether or
not interest paid or payable with respect to the Guaranteed Obligations, under
any specified contingency, exceeds the Highest Lawful Rate, the Guarantors and
the Lenders shall, to the maximum extent permitted by Applicable Law, (a)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (b) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such Obligations so that the interest paid
on account of such Guaranteed Obligations does not exceed the Highest Lawful
Rate and/or (c) allocate interest between portions of such Guaranteed
Obligations; provided that if the Guaranteed Obligations are paid and performed
in full prior to the end of the full contemplated term thereof, and if the
interest received for the actual period of existence thereof exceeds the Highest
Lawful Rate, the Lenders shall refund to the payor the amount of such excess or
credit the amount of such excess against the total principal amount owing, and,
in such event, no Lender shall be subject to any penalties provided by any laws
for contracting for, charging or receiving interest in excess of the Highest
Lawful Rate.
Section 20. Severability. Any provision of this Guaranty 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 21. ENTIRE AGREEMENT. THIS GUARANTY REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer on the date first above
written.
Notice Address for all Guarantors
for this Guaranty:
By:
Name:
Title:
Telephone:
Telecopier:
Accepted and Acknowledged:
NATIONSBANK, N.A., as
the Administrative Agent
By:
Name:
Title:
<PAGE>
EXHIBIT E
NOTICE OF BORROWING
NationsBank, N.A., as
the Administrative Agent
901 Main Street, _____ Floor
Dallas, Texas 75202
Attention: ________________
Re: Club Corporation International
--------------------------------
Ladies and Gentlemen:
The undersigned, an Authorized Signatory of Club Corporation International,
pursuant to the Credit Agreement, dated as of May 27, 1998, among the
undersigned, the financial institutions party thereto, Credit Lyonnais New York
Branch, as Co-Agent, First Union National Bank, as Co-Agent and NationsBank,
N.A., as the Administrative Agent (said Agreement, as it may be amended,
supplemented or otherwise modified from time to time, being the "Credit
Agreement" and capitalized terms not defined herein but defined therein being
used herein as therein defined), hereby gives you notice, irrevocably, pursuant
to Section 2.2 of the Credit Agreement, that the undersigned hereby requests a
Revolving Credit Advance under the Credit Agreement, and in that connection sets
forth below the information relating to such borrowing (the "Proposed
Borrowing") as required by Section 2.2 of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is _____________, ____.
(ii) The aggregate amount of the Revolving Credit Advances constituting
the Proposed Borrowing is $___________, of which amount $_______ consists of
Base Rate Advances, $_________ consists of LIBOR Rate Advances having an
initial Interest Period of _____ months.
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Borrowing, before
and after giving effect thereto and to the application of the proceeds
therefrom:
(A) the representations and warranties of the Borrower contained in
Article 4 of the Credit Agreement and in each of the other Loan Documents to
which it is a party (other than those representations and warranties that
specifically relate to an earlier date) are true and correct as though made on
and as of such date, except as otherwise expressly provided in Section 4.2 of
the Credit Agreement; and
(B) no Default or Event of Default is continuing, or will result from
the Proposed Borrowing.
Very truly yours,
CLUB CORPORATION INTERNATIONAL
By:
Name:
Title:
<PAGE>
EXHIBIT F
SWING LINE NOTE
- -----------------
Dallas, Texas $15,000,000 ___________, 1998
CLUB CORPORATION INTERNATIONAL, a Nevada corporation (the "Borrower"), for
value received, promises to pay to the order of NationsBank, N.A. ("Lender") or
its registered assigns, at the principal office of NationsBank, N.A., in lawful
money of the United States of America, the principal sum of Fifteen Million and
No/100 Dollars ($15,000,000), or such lesser sum as shall be due and payable
from time to time hereunder, as hereinafter provided. All capitalized terms
used but not defined herein shall have the meanings set forth in the Credit
Agreement described below.
Principal of and interest on the unpaid principal balance of Swing Line
Advances under this Swing Line Note (this "Note") from time to time outstanding
shall be due and payable as set forth in the Credit Agreement.
This Note is issued pursuant to and evidences Swing Line Advances under a
Credit Agreement, dated as of May 27, 1998, among the Borrower, NationsBank,
N.A., as Administrative Agent, Credit Lyonnais New York Branch, as Co-Agent,
First Union National Bank, as Co-Agent, and the lenders parties thereto (as
amended, restated, supplemented, renewed, extended or otherwise modified from
time to time, "Credit Agreement"), to which reference is made for a statement of
the rights and obligations of the Lender and the duties and obligations of the
Borrower in relation thereto; but neither this reference to the Credit Agreement
nor any provision thereof shall affect or impair the absolute and unconditional
obligation of the Borrower to pay the principal sum of and interest on this Note
when due.
THIS NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW), AND OF THE UNITED STATES OF AMERICA. THE
BORROWER AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS,
TEXAS SHALL HAVE JURISDICTION OVER THE PROCEEDINGS IN CONNECTION WITH THIS NOTE
AND THE OTHER LOAN DOCUMENTS.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES 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.
CLUB CORPORATION INTERNATIONAL
By:
Name:
Title:
<PAGE>
EXHIBIT G
NOTICE OF CONTINUATION/CONVERSION
NationsBank, N.A., as
the Administrative Agent
901 Main Street, _____ Floor
Dallas, Texas 75202
Attention: ___________________
Re: Club Corporation International
--------------------------------
Ladies and Gentlemen:
The undersigned, an Authorized Signatory of Club Corporation International,
pursuant to the Credit Agreement, dated as of May 27, 1998, among the
undersigned, the lenders party thereto Credit Lyonnais New York Branch, as
Co-Agent, First Union National Bank, as Co-Agent, and NationsBank, N.A., as the
Administrative Agent (said Agreement, as it may be amended, supplemented or
otherwise modified from time to time, being the "Credit Agreement" and
capitalized terms not defined herein but defined therein being used herein as
therein defined), hereby gives you notice, irrevocably, pursuant to Section 2.2
of the Credit Agreement, that the undersigned hereby requests a [conversion]
[continuation] on _____________, ____ of $________________ in principal amount
of presently outstanding Revolving Credit Advances that are [Base Rate Advances]
[LIBOR Advances having an Interest Period ending on ____________, ______] [to]
[as] [Base Rate] [LIBOR] Advances. [The Interest Period for such amount
requested to be [converted to] [continued as] LIBOR Advances is [1] [2] [3] [6]
months.
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the [conversion]
[continuation], before and after giving effect thereto:
(A) the representations and warranties of the Borrower contained in
Article 4 of the Credit Agreement and in each of the other Loan Documents to
which it is a party (other than those representations and warranties that
specifically relate to an earlier date) are true and correct as though made on
and as of such date, except as otherwise expressly provided in Section 4.2 of
the Credit Agreement; and
(B) no Default or Event of Default is continuing, or will result from
the [continuation] [conversion].
Very truly yours,
CLUB CORPORATION INTERNATIONAL
By:
Name:
Title:
EXHIBIT 10.22
AMENDMENT TWO TO THE
CLUB CORPORATION INTERNATIONAL
EXECUTIVE STOCK OPTION PLAN
Amendment made this 14th day of April, 1998, to the Club Corporation
International Executive Stock Option Plan (the "Plan") by Club Corporation
International ("ClubCorp").
W I T N E S S E T H:
-------------------
WHEREAS, ClubCorp established the Plan, effective August 31, 1995; and
WHEREAS, pursuant to Section 9 of the Plan, ClubCorp has the right to amend
the Plan; and
WHEREAS, ClubCorp desires to amend the Plan to accelerate the period for
full vesting of Options under the Plan.
NOW THEREFORE, pursuant to its authority under Section 9 of the Plan,
ClubCorp hereby amends the Plan, effective April 14, 1998, as follows:
1. Existing Section 6.5(iv) is deleted in its entirety and the following is
substituted in its place:
"(iv) the end of ten (10) years from the date the Option is granted."
IN WITNESS WHEREOF, this Amendment has been executed by the person duly
authorized by ClubCorp on the day and year first above written.
CLUB CORPORATION INTERNATIONAL
By: /s/ Terry A. Taylor
-------------------
Its: Senior Vice President
---------------------
EXHIBIT 15.1
Club Corporation International
Dallas, Texas
Ladies and Gentlemen:
Re: Registration Statement Nos. 33-89818, 33-96568, 333-08041 and 333-57107
With respect to the subject registration statements, we acknowledge our
awareness of the use therein of our report dated July 23, 1998, related to our
review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of sections 7 and 11 of the Act.
KPMG Peat Marwick LLP
Dallas, Texas
August 3, 1998
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-29-1998
<PERIOD-END> JUN-17-1998
<CASH> 81,863
<SECURITIES> 0
<RECEIVABLES> 100,056
<ALLOWANCES> 6,935
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<TOTAL-LIABILITY-AND-EQUITY> 1,038,337
<SALES> 109,664
<TOTAL-REVENUES> 384,869
<CGS> 94,970
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<LOSS-PROVISION> 1,321
<INTEREST-EXPENSE> 14,871
<INCOME-PRETAX> 23,741
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<NET-INCOME> 12,180
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