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Loan Participation Agreement

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LOAN PARTICIPATION AGREEMENT dated as of January 14, 2002 (this "Participation Agreement") by and among (i) the lenders (the "Lenders") party to the Credit Agreement (as defined below), (ii) Fleet National Bank, N.A. (formerly known as BankBoston, N.A.), as agent (the "Agent") under the Credit Agreement (as defined below) and (iii) Madeleine L.L.C. (the "Participant").


W I T N E S S E T H:


WHEREAS, the Lenders and the Agent are parties to that certain Amended, Restated and Consolidated Credit Agreement dated as of October 12, 1999, as amended by the First, Second, Third and Fourth Amendments thereto (the "Credit Agreement"), by and among American Skiing Company ("American Skiing") and the other borrowers party thereto (collectively, the "Borrowers"), the Lenders and the Agent;


WHEREAS, pursuant to the Credit Agreement, the Lenders have made Loans and other financial accommodations to the Borrowers which remain outstanding;


WHEREAS, each Revolving Credit Lender wishes to sell, transfer, assign and convey to the Participant, and the Participant wishes to purchase, accept and acquire from each such Revolving Credit Lender, an undivided junior and subordinated participating interest in each such Revolving Credit Lender's pro rata share of the Participated Advances (as defined below), in accordance with the terms and conditions set forth herein; and


WHEREAS, this Participation Agreement sets forth the terms and conditions of such sale and purchase, and of the continuing administration by the Agent and the Lenders of the Credit Agreement, as may be amended, the other Lender Agreements, any Collateral and the Loans;


NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:


Section 1. Definitions. Unless otherwise defined herein, capitalized terms used herein have the meanings assigned in the Credit Agreement and the following terms shall have the following meanings:


"Fifth Amendment" shall mean the Fifth Amendment, dated as of
the date hereof, to the Credit Agreement, executed and delivered on the
date hereof by the parties to the Credit Agreement.


"Participant" shall have the meaning set forth in the
Preamble.


"Participated Advances" shall mean those certain Revolving
Credit Advances to be made on a non-revolving basis on the date hereof
by the Revolving Credit Lenders to the Borrowers pursuant to the Credit
Agreement, as amended by the Fifth Amendment, in an aggregate amount
equal to $7,200,000, the proceeds of which are to be used solely to pay
interest in such amount due on January 15, 2002 under the Senior
Subordinated Notes.


Section 2. Sale and Purchase of Junior and Subordinated Participating Interest in the Participated Advances. Each Revolving Credit Lender hereby sells, transfers, assigns and conveys to the Participant, and the Participant hereby purchases, accepts and acquires from such Revolving Credit Lender, an undivided junior and subordinated participating interest in such Revolving Credit Lender's pro rata share of the Participated Advances. Contemporaneously with the making of the Participated Advances, (i) the Participant shall pay to the Agent at the account designated in Part 1 of Schedule A hereto, for the ratable benefit of the Revolving Credit Lenders, in immediately available funds, an amount equal to the aggregate amount of the Participated Advances and (ii) the Borrowers shall pay to the Participant at the account designated in Part 2 of Schedule A hereto, in immediately available funds, an amount equal to the aggregate amount of the Participated Advance Fees (as defined in the Fifth Amendment).


Section 3. Terms of Participated Advances. As set forth in the Credit Agreement, as amended by the Fifth Amendment, and notwithstanding anything to the contrary set forth in the other Lender Agreements:


(a) except as provided in Section 3(b) below, any and all amounts received by the Agent or any of the Lenders from any of the Borrowers in respect of the Lender Obligations shall be applied as follows:


(i) first, to pay in full in cash interest on the Lender Obligations (other than the Participated Advances) then due and payable under the Lender Agreements;


(ii) second, to pay in full in cash interest on the Participated Advances then due and payable under the Lender Agreements;


(iii) third, to pay or prepay in full in cash all Lender Obligations (other than in respect of the Participated Advances); and


(iv) fourth, to pay or prepay in full in cash all Lender Obligations in respect of the Participated Advances.


(b) any and all amounts received by the Agent or any of the Lenders from any sale or other disposition of, or realization on, any of the assets or capital stock of any of the Steamboat Subsidiaries shall be applied as follows:


(i) first, to pay or prepay in full in cash all principal of and interest on the Additional Revolving Credit Advances;


(ii) second, to pay or prepay in full in cash all principal of and interest on the Participated Advances; and


(iii) third, to pay or prepay in full in cash the Lender Obligations in accordance with the Credit Agreement, as may be amended.


If for any reason, the Agent and the Lenders are required to disgorge
to any Borrower or any other Person any payments received pursuant to
this Section 3(b), promptly after receipt by the Participant of notice
thereof from the Agent or such Lender, pay to the Agent or such Lender,
as the case may be, an amount equal to the lesser of (i) the amount so
disgorged (ii) the amount received by the Participant pursuant to
clause (ii) above.


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Section 4. Subordination of Participating Interests. (a) The Participant hereby agrees that, except as provided in Section 3, (i) its junior and subordinated participating interest in the Participated Advances shall be a "last-out", "first-loss" participation and shall be junior and subordinated to each Lender's right to prior payment in full of all Lender Obligations due to such Lender, as well as to such Lender's interest in any Loans, Notes, Collateral, the Credit Agreement, as may be amended, and any other Lender Agreements including, without limitation, interest on the Loans, to the extent that such interest shall constitute an allowed claim in bankruptcy or similar proceeding, (ii) its junior and subordinated participating interest in the Participated Advances does not afford it any of the rights or privileges of a Lender under the Credit Agreement, as may be amended, or any of the other Lender Agreements, including, without limitation, (A) the right to participate in any meetings or conference calls among the Agent, the Lenders and/or the Borrowers and (B) except for the Participated Advance Fees, the right to any fees payable to the Lenders under the Credit Agreement, as may be amended, or any other Lender Agreement, (iii) the Agent and the Lenders shall retain the exclusive right to carry out the provisions of the Credit Agreement, as may be amended, and any other Lender Agreements, to enforce and collect the Loans, and otherwise to exercise and enforce all rights and privileges accruing to the Agent or any Lender with respect to the Loans, the Notes, Collateral, the Credit Agreement, as may be amended, and any other Lender Agreements, all in the Agent's or such Lender's sole business judgment, exercised in good faith, and (iv) the Agent and the Lenders may, in their sole discretion, exercised in good faith, without prior notice to the Participant, (A) agree to any amendment, modification or waiver of any of the terms of the Credit Agreement, as may be amended, or any other Lender Agreement, (B) consent to any action or failure to act by the Borrowers or any party under the Credit Agreement, as may be amended, or any other Lender Agreement, and (C) exercise or refrain from exercising any rights or remedies which the Agent or any Lender may have with respect to the Loans, the Notes, Collateral, the Credit Agreement, as may be amended, and any other Lender Agreements, including, without limitation, the right at any time, in their sole discretion, exercised in good faith, to (1) to declare, or refrain from declaring, any Loan and any Note due and payable when permitted to do so pursuant to the Credit Agreement, as may be amended, or any other Lender Agreement, (2) to foreclose and sell and otherwise deal with, or refrain from foreclosing and selling or otherwise dealing with, any Collateral, (3) to enforce, or refrain from enforcing, the Credit Agreement, as may be amended, or any other Lender Agreement or (4) to file any proof of claim with respect to the Lender Obligations, including the Participated Advances, and vote to accept or reject a plan of reorganization with respect to such claim in a bankruptcy proceeding of any Borrower; provided, however, that, notwithstanding anything to the contrary in the foregoing revisions of this Section 4(a);


(x) in any bankruptcy or similar proceeding affecting any Borrower, the Agent and the Lenders shall include all Lender Obligations relating to the Participated Advances in any proof of claim filed by them with respect to the Lender Obligations or shall otherwise file such proofs of claims with respect to the Participated Advances as the Participant may reasonably request to preserve any claim against any of the Borrowers with respect to the Participated Advances;


(y) without the prior written consent of the Participant, neither the Agent nor any Lender shall (I) forgive any portion or modify the amount of the principal of or the rate of interest applicable to the Participated Advances, (II) postpone the scheduled payment, repayment or prepayment of any principal of or interest on the Participated Advances, or (III) release, or subordinate any security interest in or other Lien on, all or any material portion of the Collateral for, or any material guarantor of, the Lender Obligations except in connection with dispositions made in accordance with Sections 4.1 and 9.8 of the Credit Agreement, provided that the proceeds of any such disposition are applied as provided in Section 3; and


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(z) without the prior written consent of the Participant, neither the Agent nor any Lender shall consent to, or waive any noncompliance by the Borrowers with any covenant prohibiting, the incurrence by any of the Borrowers of (i) any Indebtedness other than Indebtedness that is permitted by the Credit Agreement and Section 3.1 of the Fifth Amendment (other than debtor-in-possession financing) or (ii) any additional Indebtedness under the Lender Agreements other than Revolving Credit Advances, Reimbursement Obligations and Swing Line Loans, in each case not to exceed the maximum amount thereof permitted under the Credit Agreement;


(b) So long as any Lender Obligations are outstanding and have not been indefeasibly paid in full in cash or cash equivalents, whether or not any insolvency proceeding has been commenced by or
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