Sample Contracts - Loan Agreement - Pacific Life Insurance Co., Braemar Country Club Inc., Brookhaven Country Club Inc., Fair Oaks Club Corp. d/b/a Fair Oaks Ranch Golf & Country Club, Irving Club Acquisition Corp. d/b/a Las Colinas Country Club, New England Country Club Management Inc. d/b/a Ipswich Country Club, Richardson Country Club Corp. d/b/a/ Canyon Creek Country Club, Akron Management Corp. d/b/a Firestone Country Club, Granch Golf Club Inc. d/b/a Gainey Ranch Golf Club, Hackberry Creek Country Club Inc., Walnut Creek Management Corp. d/b/a Walnut Creek Country Club, Kingwood Country Club Inc. d/b/a Atascocita Country Club d/b/a Deerwood Country Club, Oak Pointe Country Club Inc., ClubCorp Golf of Florida LLC d/b/a East Lake Woodlands Country Club, ClubCorp Golf of Texas LP d/b/a Trophy Club Country Club, The Clubs at Stonebridge Ranch and The Clubs of Lakeway d/b/a The Hills Country Club, Porter Valley Country Club Inc. and San Francisco Tennis Club Inc.

Sample Business Contracts

Featured Directories of All Loan and Credit Agreements

LOAN AGREEMENT By and Between PACIFIC LIFE INSURANCE COMPANY, a California corporation "Lender" and THE COUNTRY CLUB LOAN PARTIES NAMED HEREIN Dated as of June 2, 2003 <PAGE> LOAN AGREEMENT (Country Club Loans) This LOAN AGREEMENT is entered into as of this 2nd day of June, 2003 (the "Agreement"), by and between PACIFIC LIFE INSURANCE COMPANY, a California corporation, ("Lender") and each of the Country Club Loan Parties identified on Schedule I attached hereto, with reference to the following facts and circumstances: RECITALS A. Each Country Club Loan Party is the owner of the respective Country Club Property identified opposite the name of such Country Club Loan Party on Schedule II attached hereto; B. The Country Club Loan Parties and CCI (collectively, the "Loan Parties"), have requested that Lender advance the proceeds of a loan in the aggregate maximum principal amount of Two Hundred Forty Million Dollars ($240,000,000.00) (the "Loan") to each Country Club Loan Party in the amount allocated to such Country Club Loan Party set forth opposite the name of such Country Club Loan Party on Schedule II (each such allocated amount of the Loan being referred to herein as a "Country Club Loan" and collectively as the "Country Club Loans"); C. Lender has agreed to advance the proceeds of the Loan to the Country Club Loan Parties on the terms and conditions set forth herein; AGREEMENT NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto hereby agree as follows: Section 1. Definitions: Certain Terms. 1.1. Definitions. For purposes of this Agreement, the terms set forth below shall have the following meanings: "Affiliate" means, with respect to any specified Person, any other Person Controlling or Controlled by or under common Control with such specified Person. "Agreement" means this Agreement, the Schedules and Exhibits attached hereto, and any and all amendments, modifications, supplements, extensions, restatements and substitutions thereof and thereto. "Akron Management" means Akron Management Corp., d/b/a Firestone Country Club, an Ohio corporation. "ALTA Survey" is defined in Section 3.2(a)(i). <PAGE> "ALTA Title Policy" means with respect to a Country Club Property an ALTA policy of title insurance (1970 Form), in states where available, and otherwise an extended coverage policy of title insurance, and in each case (i) issued by the Title Company, (ii) with no exception for creditor's rights (unless the deletion of such exception for creditor's rights is prohibited by the law of the state in which such title policy is being issued), (iii) naming Lender as insured, (iv) in the Title Insurance Amount, and (iv) showing the Mortgage on such Country Club Property as an encumbrance thereon subject only to Permitted Encumbrances, and the balance of the policy reflecting a state of title satisfactory to Lender in its reasonable discretion. "Alternative Rate" means, for a particular day, either the method for calculating a market rate of interest that replaced the LIBOR Rate, or if there is no replacement for the LIBOR Rate, then a method for calculating a market rate of interest that is on the date of calculation as close to the LIBOR Rate as possible in terms of both the amount of the LIBOR Rate when last calculated for purposes of this Agreement and the fluctuations in the LIBOR Rate during the three (3) year period preceding the date the LIBOR Rate was last calculated for purposes of this Agreement (all as determined by Lender in its sole and absolute discretion). The Alternative Rate shall change daily when and as Lender shall determine. "Annual Compliance Certificate" is defined in Section 5.4(a)(xi). "Annual Debt Service" means for a Country Club Loan the interest and principal payments that would be paid on the Principal Indebtedness of such Country Club Loan outstanding on the applicable determination date during a period of four consecutive Fiscal Quarters, computed by (x) applying to the Principal Indebtedness a per annum rate of interest equal to the greater of (i) the applicable Contract Rate for such Country Club Loan or (ii) eight percent (8%), and (y) assuming monthly payments of interest in arrears, and (z) assuming a monthly payment of principal computed by amortizing the Principal Indebtedness outstanding on the applicable determination date over the number of months remaining until the Maturity Date of such Country Club Loan at the greater of (i) the applicable Contract Rate for such Country Club Loan, or (ii) eight percent (8%). For purposes of determining Annual Debt Service, the applicable Contract Rate for a Country Club Loan that is a Variable Rate Loan shall be the Contract Rate in effect on the date of determination. "Applicable Time Period" is defined in Section 5.3(b) "Appropriate Filing Office" means the records office in which UCC-1 Financing Statements are filed, located in the State in which a filing is required to be made pursuant to the Texas UCC in order to perfect Lender's security interest in the collateral described therein. "Appropriate Officer" means with respect to a Loan Party, any of the chief financial officer, chief accounting officer or treasurer of such Loan Party. -2- <PAGE> "Appropriate Recording Office" means the office of public records in which instruments affecting title to real property are recorded, located in the State and County in which the Country Club Property is located. "Approved Financial Institution" means a commercial bank, savings and loan association or other depository approved by Lender. "Approved Original Property Closing Date Appraisal" is defined in Section 2.3(b)(vii). Approved Original Property Substitution Date Appraisal" is defined in Section 2.3(b)(vii). "Approved Substitute Property MAI Appraisal" is defined in Section 2.3(b)(vii). "Audited Statements" is defined in Section 5.2. "Basis Point" means one one-hundredth of one percent (.01%). "Braemar" means Braemar Country Club, Inc., a California corporation. "Braemar Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "Brookhaven" means Brookhaven Country Club, Inc., a Texas corporation. "Brookhaven Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "Business Day" means any day other than (i) a Saturday or a Sunday, or (ii) a day on which federally insured depository institutions in the State of California are authorized or obligated by law, governmental decree or executive order to be closed. "Businesses" is defined in Section 4.25(a). "California Country Club Property" is defined in Section 3.2(a)(xxxvi). "Canyon Creek Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "Cap Agreements" means any and all agreements, devices or arrangements designed to protect at least one of the parties thereto from fluctuations of interest rates, including interest rate cap or collar protection agreements, interest rate swap agreements or interest rate options, as the same may be amended or modified and in effect from time to time, and any and all terminations or assignments of any of the foregoing. "Capital Expenditure Project" is defined in Section 5.22. -3- <PAGE> "Capital Expenditures" means with respect to each Country Club Property and any businesses conducted thereon: Capital Lease Obligations in connection with Capital Leases on equipment used in connection with such Country Club Property and the businesses conducted thereon, including, without limitation, golf carts, grounds equipment, and utility and maintenance vehicles; expenditures for physical improvements, including, without limitation, tenant improvements, septic systems, building additions, irrigation system improvements and additions, paving and repaving cart paths, parking areas and roadways, exterior painting, golf course renovations, and installation of new golf holes; acquisition of furniture, fixtures and equipment, including, without limitation, clubhouse furniture and fixtures, kitchen equipment, major utilities (for example, transformers), computer equipment and systems and telephone systems. "Capital Expenditures Amount" is defined in Section 5.3(b) "Capital Lease" is defined in the definition of Capital Lease Obligations. "Capital Lease Obligations" of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) personal property (a "Capital Lease"), or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. "Cash Equivalents" is defined in Section 6.5. "CCI" means ClubCorp, Inc., a Delaware corporation. "CERA" is defined in Section 3.2(b). "CERA Depository Bank" is defined in Section 3.2(b). "Charges" is defined in Section 9.2. "CICR" is defined in Section 6.5. "CICR Cure" is defined in Section 6.3. "CICR Plan of Action" is defined in Section 6.3(c). "Closing" means the fulfillment of each of the conditions set forth in Section 3.2 hereof that by the terms of said Section are to be fulfilled by the Closing Date (or the waiver thereof by Lender in writing). "Closing Certification" is defined in Section 3.2(a)(xiv). "Closing Date" means the date on which the Closing occurs. "CLR" is defined in Section 6.5. "CLR Cure" is defined in Section 6.2. -4- <PAGE> "CLR Plan of Action" is defined in Section 6.2(c). "ClubCorp Florida" means ClubCorp Golf of Florida, L.L.C., d/b/a East Lake Woodlands Country Club, a Delaware limited liability company. "ClubCorp Texas" means ClubCorp Golf of Texas, L.P., d/b/a Trophy Club Country Club, The Clubs at Stonebridge Ranch and The Clubs of Lakeway, d/b/a The Hills Country Club, a Texas limited partnership. "ClubCorp Texas GP" means ClubCorp Gen Par of Texas, L.L.C., a Delaware limited liability company, the sole general partner of ClubCorp Texas. "Code" means the Internal Revenue Code of 1986, as amended, and as it may be further amended from time to time, any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form and proposed regulations thereunder to the extent that, by reason of their proposed effective date, such proposed regulations would apply. "Collateral" means all property, whether Real Property or Personal Property, subject to the Liens of the Security Documents. "Consent to Assignment" is defined in Section 3.2(a)(xxix). "Consolidated EBITDA" is defined in Section 6.5. "Consolidated Interest Coverage Ratio" is defined in Section 6.5. "Consolidated Interest Expense" is defined in Section 6.5. "Consolidated Leverage Ratio" is defined in Section 6.5. "Consolidated Total Debt" is defined in Section 6.5. "Contingent Obligation" means any obligation of a Country Club Loan Party guaranteeing or effectively guaranteeing any indebtedness, leases, dividends or other obligations ("primary obligations") of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any pledge or hypothecation of property by such Country Club Loan Party for the benefit of another and any obligation of such Country Club Loan Party, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability, of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of such primary obligation against loss in respect thereof. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable or if such -5- <PAGE> Country Club Loan Party's obligation is less than the stated or determinable amount, the maximum reasonably anticipated liability of such Country Club Loan Party in respect thereof (assuming such Country Club Loan Party is required to perform thereunder) as determined by Lender in good faith. "Contract Rate" means the Three and Five Year Loan Contract Rate, the Seven Year Loan Contract Rate, or the Ten Year Loan Contract Rate, as applicable. "Control" means, as to any Person, the power to direct the management and policies of such Person, directly or indirectly, whether through ownership of a majority of voting rights or other beneficial interest, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative to the foregoing. "Controlling Interest" means the interest of a Controlling Person in another Person over which the Controlling Person has Control. "Controlling Ownership Interest" means, with respect to any Person, a Controlling Interest in such Person which arises out of direct or indirect beneficial ownership thereof. "Control Person" or "Controlling Person" means, as to any Person, any other Person that has the ability to exercise Control over such first Person. "Counterparty" means the provider of a Cap Agreement. "Country Club Loan" is defined in Recital B. "Country Club Loan Party" means each of Braemar, Brookhaven, Fair Oaks, Irving, New England Country Club, Richardson, Akron Management, Granch, Hackberry, Walnut Creek, Kingwood, Oak Pointe, ClubCorp Florida, ClubCorp Texas, Porter Valley, and San Francisco Tennis Club. "Country Club Loan Party Account" is defined in Section 3.2(c). "Country Club Loan Party Account Control Agreement" is defined in Section 3.2(c). "Country Club Loan Party Bank" is defined in Section 3.2(c). "Country Club Property" means each of the Braemar Property, the Brookhaven Property, the Fair Oaks Ranch Property, the Las Colinas Property, the Ipswich Property, the Canyon Creek Property, the Firestone Property, the Gainey Ranch Property, the Hackberry Creek Property, the Walnut Creek Property, the Kingwood Property, the Oak Pointe Property, the Trophy Property, the East Lake Woodlands Property, the Porter Valley Property, the Stonebridge Ranch Property, the Lakeway Property, and the San Francisco Tennis Club Property. "DCR" means Debt Coverage Ratio. -6- <PAGE> "Debt Coverage Ratio" means the ratio of (x) the aggregate Net Operating Income of the Country Club Loan Parties for which there remains outstanding Country Club Loans on the applicable determination date (after giving pro forma effect to any defeasance, release or substitution to be made pursuant to Section 2.3(b) of this Agreement), as set forth in the financial statements provided to Lender for the four Fiscal Quarters ending immediately prior to the applicable determination date, to (y) the aggregate Annual Debt Service for the outstanding Country Club Loans (after giving pro forma effect to any defeasance, release or substitution to be made pursuant to Section 2.3(b) of this Agreement). "Default Rate" has the meaning given the term in the Note. "Defeasance Date" is defined in Section 2.3(b)(v). "Defeasance Deposit" is defined in Section 2.3(b)(v). "Defeasance Loan Party" is defined in Section 2.3(b)(v). "Defeasance Notice" is defined in Section 2.3(b)(v). "Defeasance Security Agreement" is defined in Section 2.3(b)(v). "East Lake Woodlands Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "Effective Gross Income" means for a Country Club Loan Party for the period in question all income, including, but not limited to, initiation deposits and fees, monthly dues, room revenue (if applicable), greens fees, cart rental income, and other income (excluding investment income) derived from the Country Club Property of such Country Club Loan Party, less cost of goods sold associated with such sources of income (all as determined in accordance with GAAP consistently applied.) "Engineer" is defined in Section 3.2(a)(xxxvi). "Environmental Costs" is defined in Section 8.2(f). "Environmental Indemnity" means, for each Country Club Property, an environmental indemnity, dated as of the Closing Date executed by the Country Club Loan Party that owns such Country Club Property, in favor of Lender. "Environmental Laws" means all federal, state, or local laws, statutes, codes, ordinances, rules, regulations, standards, policies or other governmental directives or requirements, as well as common law, including, without limitation, any judgments or orders applicable to the Loan Parties or the Real Properties, (whether now existing or hereafter enacted or promulgated), pertaining to human health, to the environment, to any Hazardous Substances (including, without limitation, the presence, discharge, generation, removal, transportation, storage or handling of Hazardous Substances), to industrial hygiene and/or to environmental conditions existing in, on, above, under, at, from or about the Real Properties, including, without limitation: (1) the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and -7- <PAGE> Reauthorization Act of 1986 (as now or hereafter amended, "CERCLA"), 42 U.S.C.(S)(S) 9601 et seq.; (2) the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, as amended by the Hazardous and Solid Waste Amendments of 1984 (as now or hereafter amended, "RCRA"), 42 U.S.C.(S)(S) 6901 et seq.; (3) the Toxic Substances Control Act (as now or hereafter amended, "TSCA"), 15 U.S.C.(S)(S) 2601 et seq.; (4) the Emergency Planning and Community Right-to-Know Act (as now or hereafter amended, "EPCRA"), 42 U.S.C.(S)(S) 11001 et seq.; (5) the Federal Water Pollution Control Act, also known as the Clean Water Act (as now or hereafter amended, "CWA"), 33 U.S.C.(S)(S) 1251 et seq.; (6) the Clean Air Act, as amended by the Clean Air Act Amendments (as now or hereafter amended, "CAA"), 42 U.S.C.(S)(S) 7401 et seq.; (7) the National Environmental Policy Act (as now or hereafter amended, "NEPA"), 42 U.S.C.(S)(S) 4321, et seq.; (8) the Endangered Species Act of 1973 (as now or hereafter amended), 16 U.S.C.(S)(S) 1531 et seq.; (9) the Occupational Safety and Health Act (as now or hereafter amended, "OSHA"), 29 U.S.C.(S)(S) 651 et seq.; (10) the Hazardous Material Transportation Act (as now or hereafter amended), 49 U.S.C.(S)(S) 5101 et seq.; (11) any corresponding applicable state laws of the states in which the Real Properties are situated; and (12) all regulations, rules, guidelines, or standards promulgated pursuant to such federal, state and local laws, as such regulations, rules, guidelines, and standards may be amended from time to time, including, but not limited to, any rules and/or regulations applicable to jurisdictional wetlands. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto, as interpreted by the rules and regulations thereunder, all as the same may be in effect from time to time. References to sections of ERISA shall be construed also to refer to any successor sections. "ERISA Affiliate" means an entity which is a member of a group which includes any Loan Party and which is treated as a single employer under Sections 414(b) or (c) of the Code. "ERISA Event" means any of the following events: (i) with respect to any Plan, the occurrence of a Reportable Event or the substantial cessation of operations (within the meaning of Section 4062(e) of ERISA); (ii) the withdrawal by any Loan Party or any ERISA Affiliate from a Multiple Employer Plan during a Plan year in which it was a substantial employer (as such term is defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan; (iii) the distribution of a notice of intent to terminate or the actual termination of a Plan subject to Title IV of ERISA pursuant to Section 4041(a)(2) or 4041A of ERISA; (iv) the institution of proceedings to terminate or the actual termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (vi) the complete or partial withdrawal of any Loan Party or any ERISA Affiliate from a Multiemployer Plan; (vii) the conditions for imposition of a lien under Section 302(f) of ERISA exist with respect to any Plan; or (viii) the adoption of an amendment to any Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA. "Evasion Prepayment Premium" is defined in Section 2.3(b)(iv). "Event of Default" is defined in Section 8. -8- <PAGE> "Fair Oaks" means Fair Oaks Club Corp., d/b/a Fair Oaks Ranch Golf & Country Club, a Texas corporation. "Fair Oaks Ranch Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "Firestone Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "First Year Loan Period" is defined in Section 6.2(b). "First Year Prorated Period" means the period of time from the Closing Date through and including December 30, 2003. "Fiscal Month" means a period of twenty-eight (28) consecutive calendar days, commencing on the first day following the termination of the prior Fiscal Month. The first Fiscal Month shall begin on the first day of the Fiscal Year. "Fiscal Quarter" means any one of four periods during a Fiscal Year, the first three of which shall consist of three (3) Fiscal Months and the last of which shall consist of four (4) Fiscal Months. The first Fiscal Quarter of each Fiscal Year shall commence on the first day of the Fiscal Year and the last Fiscal Quarter shall end on the last day of the Fiscal Year. "Fiscal Week" means a period of seven (7) consecutive days, commencing on the first day following the termination of the prior Fiscal Week. The first Fiscal Week shall begin on the first day of the Fiscal Year. "Fiscal Year" means a period commencing on the Wednesday following the last Tuesday in December of each calendar year and ending on the last Tuesday of the next following December. "Five Year Loan" means individually and collectively the Country Club Loans in the amounts set forth in Schedule II made by Lender to Kingwood, Oak Pointe, ClubCorp Florida, ClubCorp Texas with respect to the Trophy Property and the Stonebridge Ranch Property and Porter Valley. "Five Year Loan Maturity Date" means July 1, 2008. "Fixed Rate Loan" means any Seven Year Loan or Ten Year Loan. "Foreclosed Property" is defined in Section 9.20(r). "GAAP" means generally accepted accounting principles in the United States of America as of the date of the applicable financial report. "Gainey Ranch Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. -9- <PAGE> "Gleneagles Borrower" means GCC Asset Management, Inc., a Texas corporation. "Gleneagles Obligations" means those certain obligations of Gleneagles Borrower described in the Mortgages, including, without limitation, payment by Gleneagles Borrower of an Indebtedness, with interest thereon, evidenced by and in accordance with the terms of that certain Secured Promissory Note, dated August 6, 1996, in the original principal amount of Nine Million and 00/100 Dollars ($9,000,000.00), by Gleneagles Borrower in favor and for the benefit of Lender (as the same may be amended, modified, extended, renewed, restated or supplemented), and the payment, performance and discharge of each and every obligation, covenant and agreement of Gleneagles Borrower contained in such note and in all other loan documents and instruments executed and delivered by Gleneagles Borrower to evidence or secure such Indebtedness or otherwise relating thereto, including, without limitation, pursuant to that certain Loan Agreement, dated as of August 6, 1996, by Gleneagles Borrower and Lender (as the same may be amended, modified, extended, renewed, restated or supplemented), and that certain Deed of Trust, Financing Statement, and Security Agreement (with Assignment of Rents and Leases and Fixture Filing), dated as of August 6, 1996, by Gleneagles Borrower, as trustor, in favor of James A. Stockard, as trustee, for the benefit of Lender, as beneficiary, and recorded in the Official Records of Collin County, Texas, on August 7, 1996, as Instrument No. 96-0067086, as amended by that certain Amendment to Deed of Trust, Financing Statement, and Security Agreement (with Assignment of Rents and Fixture Filing), dated as of December 6, 1996, and recorded in the Official Records of Collin County, Texas, as Instrument Number 97-0003533 (as the same may be further amended, modified, extended, renewed, restated or supplemented), all as more particularly described in the Mortgages. "Governmental Authority" means any federal, state, local or foreign court, agency, authority, board, bureau, commission, department, office or instrumentality of any nature whatsoever or any governmental or quasi-governmental unit, whether now or hereafter in existence, or any officer or official thereof, having jurisdiction over any Country Club Loan Party or any Country Club Property. "Granch" mean GRanch Golf Club, Inc., d/b/a Gainey Ranch Golf Club, an Arizona corporation. "Guarantor" means CCI. "Guaranty" means the Continuing, Limited Guaranty dated of even date herewith by CCI as Guarantor in favor of Lender. "Hackberry" means Hackberry Creek Country Club, Inc., a Texas corporation. "Hackberry Creek Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "Hazardous Substance" with respect to a Country Club Property is defined in the Mortgage encumbering such Country Club Property. -10- <PAGE> "Impositions " means all taxes (including, without limitation, all ad valorem, sales (including those imposed on lease rentals), use, single business, gross receipts, value added, intangible transaction privilege, privilege or license or similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not commenced or completed within the term of the applicable Mortgage), ground rents, water, sewer or other rents and charges, excises, levies, fees (including, without limitation, license, permit, inspection, authorization and similar fees), and all charges of any Governmental Authority, in each case whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character in respect of a Country Club Property (including all interest and penalties thereon), which at any time prior to, during or in respect of the term hereof are assessed or imposed on, or in respect of, or are or will be a lien upon (a) a Country Club Loan Party (including, without limitation, all franchise, single business or other taxes imposed on such Country Club Loan Party for the privilege of doing business in the jurisdiction in which such Country Club Loan Party's Country Club Property, or any other Collateral delivered or pledged to Lender in connection with the Country Club Loan of such Country Club Loan Party, is located) or Lender, (b) a Country Club Property, or any other Collateral delivered or pledged to Lender in connection with the Loan, or any part thereof or any Property Income therefrom or any estate, right, title or interest therein, or (c) any occupancy, operation, use or possession of, or sales from, or activity conducted on, or in connection with such Country Club Property or the leasing or use of such Country Club Property or any part thereof. Notwithstanding the foregoing, Impositions shall not include any federal or state or local taxes measured by income of and payable by Lender. "Improvements" with respect to a Country Club Property is defined in the Mortgage encumbering such Country Club Property. "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 Capital Lease Obligations of such Person, all obligations in respect to letters of credit, bankers' acceptances and similar instruments, (g) any "withdrawal liability" of such Person as such term is defined under Part I of Subtitle E of Title IV of ERISA, (h) all redeemable stock, (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. "Insurance Proceeds" means amounts paid or payable with respect to a particular Country Club Property pursuant to any insurance policy maintained by the Country Club Loan Party that owns or has an interest in such Country Club Property or the Tenants of such Country Club Property. "Insurance Requirements" means with respect to a Country Club Property all provisions of the insurance policies covering or applicable to all or any part of such Country -11- <PAGE> Club Property or the ownership, use, improvement, operation or maintenance thereof, all requirements of the issuer of any of such insurance policies and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions, including, without limitation, any local board of fire underwriters) applicable to such Country Club Property. "Intellectual Property" is defined in Section 4.20. "Interest Determination Date" is defined in the definition of LIBOR Rate. "Interest Period" means (i) the period beginning on the Closing Date and ending on the last day of the calendar month in which the Closing Date occurs, and (ii) each calendar month thereafter; provided, however, no Interest Period for a Country Club Loan shall extend beyond the Maturity Date applicable to such Country Club Loan. "Ipswich Property" means the leasehold estate arising under the Ipswich Ground Lease encumbering the fee interest described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "Ipswich Ground Lease" means that certain Ground Lease dated September 18, 1987, by and between New England Country Club and the Ipswich Ground Lessor, as amended. "Ipswich Ground Lessor" means Ipswich Club Homes Homeowners' Association, Inc., a Massachusetts corporation. "Irving" means Irving Club Acquisition Corp., d/b/a Las Colinas Country Club, a Texas corporation. "Kingwood" means Kingwood Country Club, Inc., d/b/a Atascocita Country Club, dba Deerwood Country Club, a Texas corporation. "Kingwood Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "Lakeway Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "Las Colinas Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "Lease(s)" means any and all leases, lettings, tenancies, occupancy agreements and licenses (to the extent assignable) of a Country Club Loan Party or Country Club Property or any part thereof now or hereafter entered into, and all amendments, extensions, renewals and guarantees thereof, all security therefor, and all moneys payable thereunder. "Lender" means Pacific Life Insurance Company, a California corporation. -12- <PAGE> "LIBOR Business Day" means each day (i) other than a Saturday or Sunday and other than any other day on which federally insured depository institutions in New York State are authorized or obligated by law, governmental decree or executive order to be closed, and (ii) on which banks are open for dealing in foreign currency and exchange in London, England and New York, New York. "LIBOR Rate" means the 30-day London Interbank Offered Rate for United States dollar deposits as of 11:00 a.m. (London time) on the date which is two (2) LIBOR Business Days prior to the Closing Date (rounded to five decimal places), and (ii) with respect to all other Interest Periods, the 30-day London Interbank Offered Rate for United States dollar deposits as of 11:00 a.m. (London time) on the date (the "Interest Determination Date") which is two (2) LIBOR Business Days prior to the first day of such Interest Period (rounded to five decimal places), in each case as quoted on Telerate page 3750 or on such replacement system as is then customarily used to quote LIBOR as determined by Lender. If two or more such rates appear on Telerate page 3750 or associated pages, the rate in respect of such Interest Period shall be the arithmetic mean of such offered rates (rounded to five decimal places). "Lien" means any lien, mortgage, pledge, security interest or other encumbrance of any nature upon any property of any Person, including, without limitation, any mechanic's lien, materialmen's lien, conditional sale or other title retention agreement or lease in the nature thereof. "Loan" is defined in Recital B, and includes each of the Country Club Loans. "Loan Assignee" is defined in Section 9.1. "Loan Commitment Letter" means that certain Mortgage Loan Application, dated January 31, 2003, as amended by letter dated March 6, 2003, executed by each Loan Party, Lender and the Resort Loan Parties (as defined in the Resort Loan Agreement). "Loan Documents" means, collectively, this Agreement, the Note, the Security Documents, the Environmental Indemnities, the Closing Certifications, the Loan Commitment Letter, any side letter agreements or certificates executed and delivered by any Country Club Loan Party in connection with the Loan or any disbursement of the proceeds thereof, and any other document, instrument or agreement executed by any Country Club Loan Party and delivered to Lender and evidencing, securing or relating to the Loan, as any of the same may from time to time be amended. " Loan Documents" also includes any document or agreement hereinafter executed in connection with the Loan which specifies that it is a Loan Document. "Loan Indebtedness" means the indebtedness in the original principal amount of the Loan evidenced by the Note, together with all other obligations and liabilities due or to become due to Lender pursuant hereto, under the Note or in accordance with any of the other Loan Documents, all amounts, sums and expenses paid by or payable to Lender hereunder or pursuant to the Note or any of the other Loan Documents, and all other covenants, obligations and liabilities of any Country Club Loan Party hereunder or pursuant to the Note or any of the other Loan Documents, together with all interest thereon. -13- <PAGE> "Loan Parties" is defined in Recital B. "Loan Sale Amount" is defined in Section 9.1. "Loan Sale Notice" is defined in Section 9.1. "Loan Sale Price" is defined in Section 9.1. "Loan Transactions " is defined in Section 4.8. "Loan Year" means each successive twelve month period beginning on the Closing Date, if Closing occurs on the first day of a month, or on the first day of the first month following the Closing Date, if Closing does not occur on the first day of a month. In the latter case, the first Loan Year shall be the period from the Closing Date to the end of the calendar month in which the Closing Date occurs and the first full Loan Year shall be the twelve month period commencing on the first day of the following month. "Loss of Yield" is defined in Section 2.3(b)(ii). "Loss Proceeds" means Insurance Proceeds and proceeds in respect of any Taking. "Lost Creek Borrower" means Hill Country Golf, Inc., a Texas corporation. "Lost Creek Obligations " means those certain obligations of Lost Creek Borrower described in the Mortgages, including, without limitation, payment by Lost Creek Borrower of an Indebtedness, with interest thereon, evidenced by and in accordance with the terms of that certain Secured Promissory Note dated December 20, 1996, in the original principal amount of Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00), by Lost Creek Borrower in favor and for the benefit of Lender (as the same may be amended, modified, extended, renewed, restated or supplemented), and the payment, performance and discharge of each and every obligation, covenant and agreement of Lost Creek Borrower contained in such note and in all other loan documents and instruments executed and delivered by Lost Creek Borrower to evidence or secure such Indebtedness or otherwise relating thereto, including, without limitation, pursuant to that certain Loan Agreement, dated as of December 20, 1996, by Lost Creek Borrower and Lender (as the same may be amended, modified, extended, renewed, restated or supplemented), and that certain Deed of Trust, Financing Statement, and Security Agreement (with Assignment of Rents and Leases and Fixture Filing), dated as of December 20, 1996, by Lost Creek Borrower, as trustor, in favor of James A. Stockard, as trustee, for the benefit of Lender, as beneficiary, and recorded in the Official Records of Travis County, Texas, on December 23, 1996, as Film Code No. 00005524167 (as the same may be amended, modified, extended, renewed, restated or supplemented), all as more particularly described in the Mortgages. "Management Agreement" means any one or more of the consulting or centralized services agreements listed on Schedule 1.1A attached hereto to which a Country Club Loan Party is a party, and any substitute of any such Management Agreement, or modification thereof, consented to by Lender pursuant to Section 5.20 hereof. -14- <PAGE> "Manager" means the consultant or service provider under each Management Agreement approved by Lender, including any substitute Manager under a substitute Management Agreement to which Lender has consented pursuant to Section 5.20 hereof. "Material Adverse Effect" means, on any date, a change in the facts or circumstances applicable to any Country Club Loan Party or the Country Club Loan Parties taken as a whole such as would cause a reasonable Person to conclude that, as a result of such change, such Country Club Loan Party's ability or the ability of all the Country Club Loan Parties taken as a whole to make payments on the Loan in compliance with the terms of the Loan Documents will be jeopardized. "Material Collateral Impairment" means, on any date of determination thereof, any fact or circumstance in respect of the Collateral which, singly or when aggregated with any other facts or circumstances if uncured, could reasonably be expected to (i) result in the imposition of liability on Lender, or (ii) materially impair the value or use of any Country Club Property and/or other Collateral, or (iii) materially impair the legality of any Country Club Property or any business operations thereon. "Maximum Foreseeable Loss" or "MFL" means for a California Country Club Property, the property damage loss expectation (excluding related business interruption loss) associated with a 500-year earthquake at such California Country Club Property, expressed as the percentage of the construction cost to effect restoration of the Improvements located thereon to their pre-earthquake condition (allowing for salvage and demolition) to the present day replacement cost of such Improvements, assuming virgin site conditions. "Maturity Date" means the Three Year Loan Maturity Date, Five Year Loan Maturity Date, Seven Year Loan Maturity Date and/or Ten Year Loan Maturity Date, as applicable. "Maximum Lawful Rate" is defined in Section 9.2. "Moody's" means Moody's Investors Service, Inc., or any successor or assignee of the business of such company in the business of rating securities. "Mortgage" means any mortgage, deed of trust, assignment of rents, security agreement and fixture filing, or similar instrument executed by a Country Club Loan Party in favor of Lender, for a Country Club Property, and delivered to Lender in accordance with this Agreement, as the same may be hereafter amended from time to time. "Multiemployer Plan" means a Plan which is a "multiemployer plan" as defined in Sections 3(37) or 4001(a)(3) of ERISA. "Multiple Employer Plan" means a Plan (other than a Multiemployer Plan) which any Country Club Loan Party or any ERISA Affiliate and at least one employer other than any ERISA Affiliate are contributing sponsors. -15- <PAGE> "Net Operating Income" means for a Country Club Loan Party the amount by which such Country Club Loan Party's Effective Gross Income for the period in question exceeds such Country Club Loan Party's Total Expenses for the same period. "New England Country Club" means New England Country Club Management, Inc., d/b/a Ipswich Country Club, a Massachusetts corporation. "No Prepayment Period" is defined in Section 2.3(b)(iv). "Non-Defeasing Country Club Loan Parties" is defined in Section 2.3(b)(v). "Non-Releasing Country Club Loan Parties" is defined in Section 2.3(b)(vi). "Non-Substituting Country Club Loan Parties" is defined in Section 2.3(b)(vii). "Note" means that certain Secured Promissory Note (Country Club Loans) of even date herewith, made by the Country Club Loan Parties, jointly and severally, in favor of Lender in the original principal amount of the Loan. "Oak Pointe" means Oak Pointe Country Club, Inc., a Michigan corporation. "Oak Pointe Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "Operating Statement" is defined in Section 5.3. "Option Consideration" is defined in Section 9.1. "Original Property" is defined in Section 2.3(b)(vii). "Parent" is defined in the definition of Subsidiary. "PBGC," means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA and any successor thereof. "Permitted Encumbrances" means (i) the Liens created by the Loan Documents, and (ii) with respect to any Country Club Property (A) any covenants, conditions, Liens, restrictions, rights of way, easements and other matters, whether or not of public record, approved by Lender in writing prior to the Closing Date, (B) any Leases in effect on the Closing Date, and (C) any future Leases that are not prohibited by the Mortgage encumbering such Country Club Property. "Person" means any individual, corporation, limited liability company, partnership, joint venture, estate, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof and any fiduciary acting in such capacity on behalf of any of the foregoing. "Personal Property" means any portion of the Country Club Properties that is not real property. -16- <PAGE> "Personal Property Lease" means any lease or sublease affecting any portion of the Personal Property. "Plan" means any employee benefit plan (as defined in Section 3(3) of ERISA) which is covered by ERISA and with respect to which any Country Club Loan Party or any ERISA Affiliate is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" within the meaning of Section 3(5) of ERISA. "Porter Valley" means Porter Valley Country Club, Inc., a California corporation. "Porter Valley Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "Post-Closing Due Date" is defined in Section 5.24. "Post-Closing Item" is defined in Section 5.24. "Post-Closing Items List" is defined in Section 5.24. "Potential Default" means an event or condition which, but for the lapse of time or the giving of notice, or both, would, unless cured or waived, constitute an Event of Default. "Prepayment Premium" is defined in Section 2.3(b)(ii). "Pretax Net Income" is defined in Section 6.5. "Principal Indebtedness" means with respect to a Country Club Loan, the outstanding principal balance of such Country Club Loan, and with respect to the Loan, the outstanding principal balance of the Loan, in each case at the date of determination. "Probable Maximum Loss" or "PML" means with respect to a California Country Club Property, the property damage loss expectation (excluding related business interruption loss) associated with a 200-year earthquake at such California Country Club Property, expressed as the percentage of the construction cost to effect restoration of the Improvements located thereon to their pre-earthquake condition (allowing for salvage and demolition) to the present day replacement cost of such Improvements, assuming virgin site conditions. "Property Income" means with respect to a Country Club Property, all rents, income, issues, profits, security deposits (but only upon (i) forfeiture thereof by the applicable Tenant or (ii) the Country Club Loan Party otherwise becoming entitled thereto pursuant to the terms of the applicable Lease) and other benefits to which the Country Club Loan Party may now or hereafter be entitled from such Country Club Property or under or in connection with the Leases, including, without limitation, all income received from Tenants and all Tenant expense reimbursement income received by such Country Club Loan Party pursuant to the Leases. -17- <PAGE> "Proposed Defeasance Loan" is defined in Section 2.3(b)(v). "Proposed Defeasance Property" is defined in Section 2.3(b)(v). "Proposed Release Loan" is defined in Section 2.3(b)(vi). "Proposed Release Mortgage" is defined in Section 2.3(b)(vi). "Proposed Release Property" is defined in Section 2.3(b)(vi). "Quarterly Compliance Certificate" is defined in Section 5.4(b)(iv). "Quarterly Reporting Date" is defined in Section 5.4(b). "Real Properties" is defined in Section 4.25(a). "Real Property Lease" means any lease or sublease affecting any portion of the real property or leasehold estate that makes up any Country Club Property or any portion thereof. "Reconfiguration Plans" is defined in Section 5.23. "Related Person" means, with respect to any specified Person, any other Person that is an Affiliate of the specified Person or any partner of the specified Person (if such Person is a partnership) or any shareholder of the specified Person (if such Person is a corporation) or any member of the specified Person (if such Person is a limited liability company). "Release Date" is defined in Section 2.3(b)(vi). "Release Notice" is defined in Section 2.3(b)(vi). "Releasing Loan Party" is defined in Section 2.3(b)(vi). "Report" has the meaning set forth in Section 3.2(a)(xxviii). "Requirements of Law" means, as to any Person or any property of such Person, (i) the corporate charter and by-laws (in the case of a corporation), partnership agreement and certificate or statement of partnership (in the case of a partnership), operating agreement and articles of organization (in the case of a limited liability company), or other organizational or governing documents of such Person, (ii) any law, treaty, rule or regulation (including, without limitation, Environmental Laws, the Americans with Disabilities Act and Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act) Act of 2001, adopted as Public Law 107-56), or final and binding determination of an arbitrator, or determination of any Governmental Authority applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject or (iii) any recorded deed of restriction, declaration, covenant running with the land or otherwise, now or hereafter in force (including, without -18- <PAGE> limitation, any such deed, declaration or covenant which constitutes a Permitted Encumbrance). "Resort Loan Agreement" is defined in Section 3.2(i). "Restructuring Charges" is defined in Section 6.5. "Richardson" means Richardson Country Club Corp., d/b/a/ Canyon Creek Country Club, a Texas corporation. "San Francisco Tennis Club" means San Francisco Tennis Club, Inc., a California corporation. "San Francisco Tennis Club Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "S&P" means Standard & Poor's Ratings Group, a division of The McGraw Hill Companies, Inc., or any successor or assignee of the business of such division in the business of rating securities. "Scheduled Defeasance Payments" is defined in Section 2.3(b)(v). "Scheduled Prepayment Date" is defined in Section 2.3(b)(iv). "Security Agreement" means any security agreement executed by a Country Club Loan Party or an Affiliate or Related Person and delivered to Lender covering any and all Personal Property of such Country Club Loan Party or such Affiliate or Related Person, including any and all Intellectual Property. "Security Documents" means, collectively, (i) the Mortgages, (ii) UCC-1 Financing Statements, (iii) the Security Agreements, and (iv) such additional financing statements, documents, instruments and agreements as Lender may receive or cause to be executed pursuant to any Security Document, as all of the foregoing may be amended from time to time. "Seven Year Loan" means individually and collectively the Country Club Loans in the amounts set forth in Schedule II made by Lender to Akron Management, Granch, Hackberry and Walnut Creek. "Seven Year Loan Contract Rate" means a per annum rate of interest equal to 6.110%. "Seven Year Loan Maturity Date" means July 1, 2010. "Stonebridge Ranch Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "Subsidiary" means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests -19- <PAGE> having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person ("Parent"). "Substitute Country Club Loan Party" is defined in Section 2.3(b)(vii). "Substitute Property" is defined in Section 2.3(b)(vii). "Substitution" is defined in Section 2.3(b)(vii). "Substitution Date" is defined in Section 2.3(b)(vii). "Substitution Request" is defined in Section 2.3(b)(vii). "Successor Loan Party" is defined in Section 2.3(b)(v). "Survey" is defined in Section 3.2(a)(i). "Taking" means a taking of a Country Club Property or any part thereof in or by condemnation or other eminent domain proceedings pursuant to any law, general or special, or by reason of the temporary requisition of the use or occupancy of such Country Club Property, or any part thereof, by any Governmental Authority. "TCMP" is defined in Section 2.3(b)(ii). "Tenants" means all tenants, lessees, sublessees, licensees and other persons occupying space at any Country Club Property. "Ten Year Loan" means individually and collectively the Country Club Loans in the amounts set forth in Schedule II made by Lender to Braemar, Brookhaven, Fair Oaks, Irving, New England Country Club and Richardson. "Ten Year Loan Contract Rate" means a per annum rate of interest equal to 6.726%. "Ten Year Loan Maturity Date" means July 1, 2013. "Texas UCC" means the Uniform Commercial Code in effect in Texas, as it may be amended from time to time. "Three Year Loan" means individually and collectively the Country Club Loans in the amounts set forth in Schedule II made by Lender to ClubCorp Texas with respect to the Lakeway Property and San Francisco Tennis Club. "Three and Five Year Loan Contract Rate" means a per annum rate of interest equal to the greater of (a) Four and One Quarter Percent (4.25%), or (b) the sum of (i) the LIBOR Rate, plus (ii) the Three and Five Year Loan LIBOR Margin; provided, however, that if the LIBOR Rate is unavailable, or if insufficient LIBOR funds are available in the -20- <PAGE> London Inter-Bank Market for determination of the LIBOR Rate (which availability in each case shall be determined by Lender in its sole and absolute discretion), then in lieu of the LIBOR Rate there shall be used the Alternative Rate for purposes of determining the Three and Five Year Loan Contract Rate pursuant to this clause (b). The Three and Five Year Loan Contract Rate may change for each Interest Period when and as the LIBOR Rate (or Alternative Rate, if applicable) shall change. "Three and Five Year Loan LIBOR Margin" means Two Hundred Seventy Five (275) Basis Points. "Three Year Loan Maturity Date" means July 1, 2006. "Title Affected Properties" is defined in Section 5.23. "Title Affected Property" is defined in Section 5.23. "Title Affected Property Owner" is defined in Section 5.23. "Title Company" means LandAmerica. "Title Event" is defined in Section 5.23. "Title Event Notice" is defined in Section 5.23. "Title Insurance Amount" means with respect to each Country Club Property the amount set forth on Schedule 1.1B attached hereto. "Title Issues" is defined in Section 5.23. "Total Expenses" means for a Country Club Loan Party for the period in question the total actual or deemed expenses relating to the operation, maintenance, leasing and management of the Country Club Property of such Country Club Loan Party actually or deemed to have been incurred or accrued during such period other than total debt service for such period, depreciation of improvements, and capital items, provided that all such exclusions for the period in question are evidenced by an operating statement prepared in accordance with GAAP consistently applied and delivered to Lender. Total Expenses will include ground rent, if any, a property management fee equal to the greater of the actual management fees charged or three percent (3%) of Effective Gross Income, and reserves or expenditures for Capital Expenditures (including payment of Capital Lease Obligations) equal to two and fifty hundredths percent (2.50%) of Effective Gross Income. "Triggering Aggregate Lien Amount" is defined in Section 8.1(b). "Trophy Property" means the real described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "UCC-1 Financing Statements" means each and all of the UCC-1 Financing Statements to be filed in the Appropriate Filing Offices in connection with the funding of the Country Club Loans, to evidence and/or perfect Lender's Lien on portions of the subject -21- <PAGE> Country Club Property in which a Lien may be created or perfected by the filing of UCC-1 Financing Statements, and any amendments to such UCC-l Financing Statements from time to time. "UCC Search" means a search of the records of the Appropriate Filing Offices for UCC-1 Financing Statements. "Unrestricted" is defined in the definition of Unrestricted Cash. "Unrestricted Cash" is defined in Section 6.5. "U.S. Obligations" is defined in Section 2.3(b)(v). "Variable Rate Loan" means any Three Year Loan or Five Year Loan. "Walnut Creek" means Walnut Creek Management Corporation, d/b/a Walnut Creek Country Club, a Texas corporation. "Walnut Creek Property" means the real property described on Exhibit 1, and all Improvements located thereon and Personal Property related thereto. "Welfare Plan" is defined in Section 4.17(g). 1.2. Certain Terms. Unless the context indicates otherwise, all accounting terms are used herein as defined under GAAP. All Section references are to Sections of this Agreement unless otherwise specified. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined; provided that if such definition of a term in the singular form contains a reference to more than one person or thing, whether tangible or intangible, the plural form of such term shall be a reference to two or more of the persons or things composing such definition. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, replaced, substituted, supplemented or otherwise modified (subject to any restrictions on such amendments, replacements, substitutions, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement. Section 2. The Loan. 2.1. Agreement to Lend. In reliance upon the representations and warranties contained in Section 4 of this Agreement and in the Closing Certifications, Lender hereby -22- <PAGE> agrees on the terms and conditions set forth herein and in the other Loan Documents to loan to each Country Club Loan Party an amount not to exceed the amount of such Country Club Loan Party's respective Country Club Loan set forth in Schedule II attached hereto. 2.2. Interest on the Principal Indebtedness. Interest on the Principal Indebtedness shall accrue at the rate and be payable in the manner and at the times set forth in this Section 2.2: (a) Contract Rate. The Principal Indebtedness of each Country Club Loan shall bear interest at the following interest rates: (i) Variable Rate Loans. The Principal Indebtedness on the Variable Rate Loans from time to time outstanding shall bear interest at the Three and Five Year Loan Contract Rate. (ii) Seven Year Loans. The Principal Indebtedness on the Seven Year Loans from time to time outstanding shall bear interest at the Seven Year Loan Contract Rate. (iii) Ten Year Loans. The Principal Indebtedness on the Ten Year Loans from time to time outstanding shall bear interest at the Ten Year Loan Contract Rate. (b) Computation of Interest. Interest on the Principal Indebtedness shall be computed as follows: (i) Variable Rate Loans. Interest at the Three and Five Year Loan Contract Rate shall be computed on the basis of a year of three hundred sixty (360) days for the actual number of days occurring in the period for which such interest is payable. (ii) Fixed Rate Loans. Interest at the Seven Year Loan Contract Rate or the Ten Year Loan Contract Rate shall be computed on the basis of a year of three hundred sixty (360) days and a month of thirty (30) days. (c) Accrual of Interest. Interest shall commence to accrue on the Loan on the earlier to occur of the date on which (x) Lender disburses the proceeds of the Loan to or at the direction of the Loan Parties, or (y) Lender disburses the proceeds of the Loan into an escrow established by Lender to effectuate the disbursement of the proceeds of the Loan to the Loan Parties. (d) Default Rate. Following the maturity of a Country Club Loan, whether by acceleration or otherwise, or following the occurrence of an Event of Default and during the continuance thereof, the unpaid principal balance of such Country Club Loan, and all accrued and unpaid interest thereon and other charges in connection therewith, will thereafter bear interest at a rate equal to the lesser of the Contract Rate for such Country Club Loan plus 6% per annum or the Maximum Lawful Rate and will be payable on demand. -23- <PAGE> (e) Late Charge. In addition to the payments otherwise specified in this Agreement, the Note or any other Loan Document, if Lender does not receive any installment in full on the date such installment payment is due and payable, there shall be paid to Lender (without provision for any grace or cure period) a late charge equal to four percent (4%) of the amount of such delinquent payment to compensate Lender for such default and the additional costs and administrative efforts required by reason of such default. 2.3. Payment of Principal and Interest. (a) Periodic Payments of Principal and Interest. The Principal Indebtedness and interest accruing thereon shall be paid as follows: (i) Variable Rate Loans. There shall be due and payable on the Closing Date interest on the Principal Indebtedness outstanding on the Closing Date for Variable Rate Loans from the Closing Date through the last day of the first Interest Period, and there shall be due and payable on the first day of each Interest Period commencing with the first day of the third Interest Period (x) interest on the Principal Indebtedness of Variable Rate Loans that has accrued during the Interest Period preceding the date on which payment is to be made as provided in this Section 2.3(a)(i), and (y) a portion of the Principal Indebtedness of Variable Rate Loans computed by amortizing the Principal Indebtedness outstanding on such payment date over a period of Twenty Five (25) years at the Three and Five Year Loan Contract Rate applicable to the respective Variable Rate Loan at the commencement of the Interest Period for which payment is being made. All outstanding Principal Indebtedness on Three Year Loans, together with all accrued and unpaid interest thereon, shall be due and payable on the Three Year Loan Maturity Date. All outstanding Principal Indebtedness on Five Year Loans, together with all accrued and unpaid interest thereon, shall be due and payable on the Five Year Loan Maturity Date. (ii) Fixed Rate Loans. There shall be due and payable on the Closing Date interest on the Principal Indebtedness outstanding on the Closing Date for Fixed Rate Loans from the Closing Date through the last day of the first Interest Period, and there shall be due and payable on the first day of each Interest Period commencing with the first day of the third Interest Period (x) interest on the Principal Indebtedness of each of the Fixed Rate Loans that has accrued during the preceding Interest Period, and (y) a portion of the Principal Indebtedness of each of the Fixed Rate Loans computed by amortizing the Principal Indebtedness outstanding on the Closing Date over a period of Twenty Five (25) years at the Contract Rate applicable to the respective Fixed Rated Loan. All outstanding Principal Indebtedness on the Seven Year Loan, together with all accrued and unpaid interest thereon, shall be due and payable on the Seven Year Loan Maturity Date. All outstanding Principal Indebtedness on the Ten Year Loan, together with all accrued and unpaid interest thereon, shall be due and payable on the Ten Year Loan Maturity Date. (b) Restrictions on Prepayment. (i) Variable Rate Loans. Country Club Loan Parties with Three Year Loans shall have no right to prepay any portion of the Principal Indebtedness of their respective Three Year Loans from time to time outstanding prior to and including the second (2nd) anniversary of the Closing Date. From and after the day following the second -24- <PAGE> (2nd) anniversary of the Closing Date, Country Club Loan Parties with Three Year Loans may prepay, in whole but not in part, the outstanding Principal Indebtedness of their respective Three Year Loans upon thirty (30) days' prior written notice sent to and received by Lender at Lender's address as provided and in the manner specified in this Agreement; provided that any such prepayment shall be accompanied by the payment of (x) all accrued and unpaid interest, and (y) any other amounts due and unpaid under the Loan Documents. Country Club Loan Parties with Five Year Loans shall have no right to prepay any portion of the Principal Indebtedness of their respective Five Year Loans from time to time outstanding prior to and including the third (3rd) anniversary of the Closing Date. From and after the day following the third (3rd) anniversary of the Closing Date, Country Club Loan Parties with Five Year Loans may prepay, in whole but not in part, the outstanding Principal Indebtedness of their respective Five Year Loans upon thirty (30) days' prior written notice sent to and received by Lender at Lender's address as provided and in the manner specified in this Agreement; provided that any such prepayment shall be accompanied by the payment of (x) all accrued and unpaid interest, and (y) any other amounts due and unpaid under the Loan Documents. Any prepayment permitted by this Section 2.3(b)(i) shall be made on the first day of the Interest Period following the expiration of the thirty (30) day period after Lender receives the written notice required by this Section 2.3(b)(i). (ii) Fixed Rate Loans. (1) Country Club Loan Parties with Fixed Rate Loans shall have no right to prepay any portion of the Principal Indebtedness of their respective Fixed Rate Loans from time to time outstanding prior to and including the second (2nd) anniversary of the Closing Date. From and after the day following the second anniversary of the Closing Date, Country Club Loan Parties with Fixed Rate Loans may prepay, in whole but not in part, the outstanding Principal Indebtedness of their respective Fixed Rate Loans upon ninety (90) days' prior written notice sent to and received by Lender at Lender's address as provided and in the manner specified in this Agreement; provided that any prepayment shall be accompanied by the payment of (A) all accrued and unpaid interest, (B) any other amounts due and unpaid under the Loan Documents, and (C) the Prepayment Premium. Any prepayment permitted by this Section 2.3(b)(ii) shall be made on the first day of the month following the expiration of the ninety (90) day period after Lender receives the written notice required by this Section 2.3(b)(ii). (2) The term "Prepayment Premium" means an amount equal to the greater of (A) one percent (1%) of the outstanding Principal Indebtedness being prepaid, and (B) the Loss of Yield. (3) The term "Loss of Yield" means the excess, if any, of (A) the net present value of the monthly payments from the date of prepayment through and including the Maturity Date of the Country Club Loan being prepaid pursuant to this Section 2.3(b)(ii), and the residual principal balance of such Country Club Loan, using a discount rate of the TCMP for the most current week prior to the prepayment having a term most equal to the number of years remaining in the term for such Country Club Loan, over (B) the outstanding Principal Indebtedness for such Country Club Loan at the time of prepayment. -25- <PAGE> FOR EXAMPLE: Assume for purposes of this example that the original loan balance for a Country Club Loan being prepaid was $10,000,000 with a fixed monthly payment of $91,473.93. Assume further for purposes of this example only that the term of such Country Club Loan is five (5) years. The outstanding principal balance, after the 43rd monthly principal and interest payment, is $9,793,615, the Contract Rate is 10.5% and there are 17 months remaining before the Maturity Date of such Country Club Loan. Assume further that there is a payment for the entire indebtedness on Wednesday, January 27. If the average Treasury Constant Maturities Percentage (the "TCMP") as reported in Federal Reserve Statistical Release H.15 (519) for the most current week prior to the prepayment (the week ending Friday, January 22) for Treasuries maturing in one year is 7.5% and in two years is 8.0%, then the Loss of Yield would be calculated as follows: Original Principal Balance $10,000,000.00 Fixed Original Monthly Payment 91,473.93 Outstanding Principal Indebtedness $ 9,793,615.00 Balance At Maturity $ 9,688,170.00 The net present value of the remaining payment stream (including the residual principal balance) using the Discount Rate of 7.5% for the remaining 17 months would be: HP12c calculation: a) $9,688,170 FV (Principal Indebtedness at Maturity Date) b) $91,473.93 PMT (monthly payment on original Principal Indebtedness) c) 17 N (months to maturity) d) 7.50 Gi (discount rate or TCMP) e) PV = $10,185,424 CHS f) Less $9,793,615 (Principal Indebtedness at date of prepayment) = $391,809 (Loss of Yield) (iii) Notice of Prepayment Irrevocable. Any written notice of an intended prepayment permitted under any clause of this Section 2.3(b) shall be final and irrevocable. The failure to prepay pursuant to such prepayment notice on the date specified in the relevant clause of this Section 2.3(b) shall constitute an Event of Default under this Agreement. (iv) Prepayment During No Prepayment Period. The period of time set forth in clauses (i) and (ii) of this Section 2.3(b) during which a Country Club Loan -26- <PAGE> Party shall have no right to prepay any portion of such Country Club Loan Party's Country Club Loan shall be referred to herein as the "No Prepayment Period" (1) Any prepayment of the whole or any part of the outstanding Principal Indebtedness of any Country Club Loan prior to the end of the applicable No Prepayment Period, whether voluntary or involuntary, including, without limitation, upon an Event of Default under this Agreement or under any Mortgage or a default by any Country Club Loan Party under any of the other Loan Documents, and the acceleration of the Maturity Date of any portion of the Loan by Lender, and the subsequent tender of payment of the amount necessary to satisfy the entire Indebtedness hereof made at any time by any one or more of the Country Club Loan Parties, or by anyone on behalf of any of the Country Club Loan Parties when not permitted as provided in this Section 2.3(b), or (2) any prepayment of the whole or any part of the outstanding Principal Indebtedness of any Country Club Loan after the end of the applicable No Prepayment Period on other than the date set forth in clauses (i) or (ii), as applicable (each such date being referred to herein as a "Scheduled Prepayment Date"), whether voluntary or involuntary, shall constitute an evasion of the prepayment terms of this Agreement and shall be deemed to be a voluntary prepayment of the entire Loan, and to the extent permitted by law, any such prepayment shall include an amount equal to five percent (5%) of the then outstanding Principal Indebtedness (after deducting from such outstanding Principal Indebtedness any amounts which Lender applies thereto from any CERA if Lender takes possession thereof following such Event of Default or default) (the "Evasion Prepayment Premium"); provided, however, that any prepayment in whole or in part of the outstanding Principal Indebtedness of the Loan resulting from application thereto of any Loss Proceeds required by Lender pursuant to the provisions of this Agreement or any of the Mortgages shall not include an Evasion Prepayment Premium, unless the events or circumstances leading up to, and/or including, the event which causes such Loss Proceeds to be available are the result of any bad faith act or omission of any Country Club Loan Party. Notwithstanding anything contained in this Section 2.3 to the contrary, it is expressly understood and agreed that the agreement by each Country Club Loan Party (i) not to prepay any Country Club Loan prior to the end of the applicable No Prepayment Period or on other than a Scheduled Prepayment Date, and (ii) to pay the Evasion Prepayment Premium set forth herein for any such prepayment of the Principal Indebtedness of the Loan prior to the end of the applicable No Prepayment Period or on other than a regularly Scheduled Prepayment Date constitute bargained-for consideration. It is further understood and agreed that the Evasion Prepayment Premium imposed herein shall be construed, interpreted and enforced in such a manner as to give effect to the Evasion Prepayment Premium required to be paid hereunder to the fullest extent possible and permitted by law with any portion of the Evasion Prepayment Premium that may be unlawful or unenforceable being waived and automatically stricken or otherwise changed to cause the Evasion Prepayment Premium, as revised, to be otherwise enforceable. It is the express intent of the parties hereto that under no circumstances shall the Principal Indebtedness of any Country Club Loan be prepaid by anyone prior to the end of the No Prepayment Period or on other than a Scheduled Prepayment Date, except upon the required application of any Loss Proceeds pursuant to the terms of this Agreement and the Mortgages, without paying to Lender the Evasion Prepayment Premium required herein and allowed by applicable law whether or not such prepayment occurs prior to or as a result of a foreclosure sale. Acceptance of the Evasion Prepayment Premium shall not prevent Lender from exercising any of its other rights and remedies under the Loan Documents or otherwise. -27- <PAGE> /s/ Illegible ----------------------------- Initials of Authorized Representative of Each Country Club Loan Party BY INITIALING BELOW, EACH COUNTRY CLUB LOAN PARTY HEREBY EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT, PURSUANT TO THE FOREGOING PROVISIONS OF THIS AGREEMENT AND THE PROVISIONS OF EACH MORTGAGE, EACH COUNTRY CLUB LOAN PARTY HAS AGREED THAT NEITHER SUCH COUNTRY CLUB LOAN PARTY NOR ANYONE ELSE HAS A RIGHT TO PREPAY THE OUTSTANDING PRINCIPAL INDEBTEDNESS OF ANY COUNTRY CLUB LOAN IN WHOLE OR IN PART PRIOR TO THE END OF THE APPLICABLE NO PREPAYMENT PERIOD OR ON OTHER THAN A SCHEDULED PREPAYMENT DATE AND OTHERWISE IN STRICT COMPLIANCE WITH THIS SECTION 2.3(b), EXCEPT BY REQUIRED APPLICATION OF ANY LOSS PROCEEDS PURSUANT TO THE PROVISIONS OF THIS AGREEMENT AND THE MORTGAGES, WITHOUT PAYMENT OF A PREMIUM, AND THAT SUCH COUNTRY CLUB LOAN PARTY, OR ANYONE ELSE MAKING SUCH PREPAYMENT, SHALL BE LIABLE FOR THE PAYMENT OF THE EVASION PREPAYMENT PREMIUM, WHETHER SUCH PREPAYMENT IS VOLUNTARY OR INVOLUNTARY OR RESULTS FROM THE ACCELERATION OF THE MATURITY HEREOF PRIOR TO THE END OF THE NO PREPAYMENT PERIOD DUE TO SUCH COUNTRY CLUB LOAN PARTY'S DEFAULT OR AN EVENT OF DEFAULT, INCLUDING, BUT NOT LIMITED TO, A TRANSFER OR FURTHER ENCUMBRANCE OF ANY COUNTRY CLUB PROPERTY, OR OTHERWISE, AND WHETHER OR NOT SUCH PREPAYMENT OCCURS PRIOR TO OR AS A RESULT OF A FORECLOSURE SALE. FURTHERMORE, BY INITIALING BELOW, EACH COUNTRY CLUB LOAN PARTY HEREBY WAIVES ANY RIGHTS IT MAY HAVE UNDER SECTION 2954.10 OF THE CALIFORNIA CIVIL CODE, OR ANY SUCCESSOR STATUTE THEREOF, AND EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT LENDER HAS MADE THE LOAN IN RELIANCE UPON SAID AGREEMENTS AND WAIVER BY EACH COUNTRY CLUB LOAN PARTY AND THAT LENDER WOULD NOT HAVE MADE THE LOAN WITHOUT SUCH AGREEMENTS AND WAIVER BY EACH COUNTRY CLUB LOAN PARTY. /s/ Illegible ----------------------------- Initials of Authorized Representative of Each Country Club Loan Party. (v) Defeasance of a Country Club Loan. No Country Club Loan Party shall have the right to defease any portion of the Principal Indebtedness from time to time outstanding under its respective Country Club Loan prior to and including (a) the second (2nd) anniversary of the Closing Date for Three Year Loans, Seven Year Loans and Ten Year Loans, and (b) the third (3rd) anniversary of the Closing Date for Five Year Loans. From and after the day following (x) the second (2nd) anniversary of the Closing Date for Three Year Loans, Seven Year Loans and Ten Year Loans, and (y) the third (3rd) anniversary of the Closing Date for Five Year Loans, a Country Club Loan Party (the "Defeasance Loan Party") may defease, in whole but not in part, the outstanding Principal Indebtedness of its respective Country Club Loan (the "Proposed Defeasance Loan") upon ninety (90) days' prior written notice (the "Defeasance Notice") sent to and received by -28- <PAGE> Lender at Lender's address as provided in and in the manner specified in this Agreement, and Lender shall cause the lien of the Mortgage (the "Proposed Defeasance Mortgage") encumbering the Country Club Property (the "Proposed Defeasance Property") of the Defeasance Loan Party to be released upon fulfillment of the following conditions precedent on or before the first day of the Interest Period (the "Defeasance Date ") immediately following the ninetieth (90th) day after receipt by Lender of the Defeasance Notice: (A) No Event of Default or Potential Default shall have occurred and be continuing either at the time Lender receives the Defeasance Notice or on the Defeasance Date; (B) For Three Year Loans, Seven Year Loans and Ten Year Loans, the Defeasance Date shall be no earlier than the later to occur of the first Business Day following the second (2nd) anniversary of the Closing Date, or the ninetieth (90th) day after receipt by Lender of the Defeasance Notice; for Five Year Loans, the Defeasance Date shall be no earlier than the later to occur of the first Business Day following the third (3rd) anniversary of the Closing Date, or the ninetieth (90th) day after receipt by Lender of the Defeasance Notice; (C) The DCR on the Defeasance Date for the Country Club Loans other than the Proposed Defeasance Loan shall be no less than the greater of (i) the DCR for the Country Club Loans including the Proposed Defeasance Loan immediately prior to the Defeasance Date, or (ii) those set forth in the following table: If Principal Indebtedness of Country Club DCR Shall Be no Less Than: Loans other than the Proposed Defeasance Loan on the Defeasance Date Is Equal to or Less Than $125,000,000 2.00X $175,000,000 1.85X $250,000,000 1.75X (D) Lender shall have received interest accrued and unpaid on the Principal Indebtedness of the Proposed Defeasance Loan to and including the Defeasance Date; (E) Lender shall have received payment of all other sums due under this Agreement with respect to the Proposed Defeasance Loan, the Proposed Defeasance Mortgage and the other Loan Documents as they relate to the Proposed Defeasance Loan; (F) Lender shall have received the Defeasance Deposit; and -29- <PAGE> (G) Lender shall have received: (I) a security agreement, in form and substance satisfactory to Lender, creating a first priority lien on the Defeasance Deposit and the U.S. Obligations (hereinafter defined) purchased on behalf of the Defeasance Loan Party with the Defeasance Deposit in accordance with the provisions of this Section 2.3(b)(v) (the "Defeasance Security Agreement"); (II) a release of the Proposed Defeasance Property from the lien of the Proposed Defeasance Mortgage (for execution by Lender) in a form appropriate for the jurisdiction in which the Proposed Defeasance Property is located; (III) a certificate executed by an Appropriate Officer of CCI and the Defeasance Loan Party, certifying that the requirements set forth in this Section 2.3(b)(v) have been satisfied; (IV) an opinion of counsel for the Defeasance Loan Party in form satisfactory to Lender stating, among other things, that Lender has a perfected first priority security interest in the Defeasance Deposit and the U.S. Obligations purchased by Lender on behalf of the Defeasance Loan Party; (V) such endorsements to the ALTA Title Policies as Lender may reasonably require ensuring the continuing first priority of the Liens of the Mortgages securing the Country Club Loans of the Non-Defeasing Country Club Loan Parties following the defeasance of the Proposed Defeasance Mortgage; and (VI) such other certificates, documents or instruments as Lender may reasonably require. (H) There shall be no less than three (3) Mortgages securing Country Club Loans after the release of the Proposed Defeasance Mortgage; (I) The Defeasance Loan Party shall appoint Lender as its agent and attorney-in-fact (said appointment being coupled with an interest) for the purpose of using the Defeasance Deposit to purchase U.S. Obligations which provide payments on or prior to, but as close as possible to, all successive scheduled payment dates after the Defeasance Date upon which interest and principal payments are required under this Agreement with respect to the Proposed Defeasance Loan (including the amounts due on the Maturity Date for the Proposed Defeasance Loan) and in amounts equal to the scheduled payments due on such dates and on such Maturity Date under this Agreement (the "Scheduled Defeasance Payments"). The Defeasance Loan Party, pursuant to the Defeasance Security Agreement or other appropriate documents, shall authorize and direct that the payments received from the U.S. Obligations may be made directly to Lender and applied to satisfy the obligations of the Defeasance Loan Party under this Agreement and under the other Loan Documents; (J) Upon compliance with the requirements of this Section 2.3(b)(v), the Proposed Defeasance Property shall be released from the lien of the Proposed Defeasance Mortgage and the pledged U.S. Obligations shall be substituted as part of the -30- <PAGE> Collateral securing obligations theretofore secured by the Proposed Defeasance Mortgage. Any portion of the Defeasance Deposit in excess of the amount necessary to purchase the U.S. Obligations required pursuant to this Section 2.3(b)(v) shall be remitted to the Defeasance Loan Party together with the release of the Proposed Defeasance Property from the lien of the Proposed Defeasance Mortgage. In connection with such release, Lender shall establish or designate a successor entity (the "Successor Loan Party"), and the Defeasance Loan Party shall transfer, delegate and assign all obligations, rights and duties of the Defeasance Loan Party under and to this Agreement and all other Loan Documents together with the pledged U.S. Obligations to such Successor Loan Party. Such Successor Loan Party shall assume the obligations of the Defeasance Loan Party under this Agreement and under the Defeasance Security Agreement, and the Defeasance Loan Party shall be relieved of its obligations hereunder and thereunder. The Defeasance Loan Party shall pay to any such Successor Loan Party any consideration required by such Successor Loan Party for assuming the obligations under this Agreement and the Defeasance Security Agreement, but in any event at least $1000.00. The Defeasance Loan Party shall pay all costs and expenses incurred by Lender, including Lender's attorneys' fees and expenses, in connection with the defeasance of the Proposed Defeasance Loan; and (K) As used in this Agreement, the following terms shall have the following meanings: (I) "Defeasance Deposit" means an amount equal to the remaining Principal Indebtedness on the Proposed Defeasance Loan immediately prior to the Defeasance Date, the Loss of Yield over the remainder of the term of the Proposed Defeasance Loan from the Defeasance Date to the Maturity Date of the Proposed Defeasance Loan, any costs and expenses incurred or to be incurred in the purchase of U.S. Obligations necessary to meet the Scheduled Defeasance Payments and any revenue, documentary stamp or intangible taxes or any other tax or charge due in connection with the transfer of the obligations of the Defeasance Loan Party or otherwise required to accomplish the agreements of this Section 2.3(b)(v); and (II) "U.S. Obligations" means direct non-callable obligations of the United States of America; and (III) In calculating DCR and Annual Debt Service for purposes of this Section 2.3(b)(v), (a) the applicable determination date shall be the Defeasance Date, (b) Net Operating Income shall be calculated for all Country Club Loan Parties, other than the Defeasance Loan Party, for which there remains outstanding a Country Club Loan on the Defeasance Date (collectively, the "Non-Defeasing Country Club Loan Parties"), which Net Operating Income shall be for the four Fiscal Quarters ending immediately prior to the Defeasance Date and shall be as set forth in the financial statements provided to Lender for such four Fiscal Quarters, and (c) Annual Debt Service shall be calculated based on the Country Club Loans of the Non-Defeasing Country Club Loan Parties. (vi) Release of the Releasing Loan Party Mortgage. From and after the day following the second (2nd) anniversary of the Closing Date for Three Year Loans, Seven Year Loans and Ten Year Loans and from and after the day following the -31- <PAGE> third (3rd) anniversary of the Closing Date for Five Year Loans, a Country Club Loan Party (the "Releasing Loan Party") may obtain a release of the Mortgage (the "Proposed Release Mortgage") securing the Country Club Loan (the "Proposed Release Loan") that encumbers its Country Club Property (the "Proposed Release Property") upon ninety (90) days' prior written notice (the "Release Notice") sent to and received by Lender at Lender's address as provided in and in the manner specified in this Agreement, and Lender shall cause the lien of the Proposed Release Mortgage to be released upon fulfillment of the following conditions precedent on or before the first day of the Interest Period (the "Release Date") immediately following the ninetieth (90th) day after receipt by Lender of the Release Notice: (A) The Releasing Loan Party shall have paid Lender the outstanding Principal Indebtedness of the Proposed Release Loan plus (x) all accrued and unpaid interest thereon, (y) the Prepayment Premium for Seven Year Loans and Ten Year Loans, and (z) all other sums due under this Agreement with respect to the Proposed Release Loan, the Proposed Release Mortgage and the other Loan Documents as they relate to the Proposed Release Loan; (B) For Three Year Loans, Seven Year Loans and Ten Year Loans, the Release Date shall be no earlier than the later to occur of the first Business Day following the second (2nd) anniversary of the Closing Date, or the ninetieth (90th) day after receipt by Lender of the Release Notice; for Five Year Loans, the Release Date shall be no earlier than the later to occur of the first Business Day following the third (3rd) anniversary of the Closing Date, or the ninetieth (90th) day after receipt by Lender of the Release Notice; (C) No Event of Default or Potential Default shall have occurred and be continuing either at the time Lender receives the Release Notice or on the Release Date; (D) Lender shall have received evidence that the DCR for the Country Club Loans other than the Proposed Release Loan shall be no less than the greater of (i) the DCR for the Country Club Loans including the Proposed Release Loan immediately prior to the Release Date, or (ii) those set forth in the following table: If Principal Indebtedness of Country Club DCR Shall Be no Less Than: Loans other than the Proposed Release Loan on the Release Date Is Equal to or Less Than $125,000,000 2.00X $175,000,000 1.85X $250,000,000 1.75X (E) Lender shall have received such endorsements to the ALTA Title Policies as Lender may reasonably require ensuring the continuing first priority -32- <PAGE> of the Liens of the Mortgages securing the Country Club Loans of the Non-Releasing Country Club Loan Parties following the release of the Proposed Release Loan; (F) There shall be no less than three (3) Mortgages securing the Country Club Loans following the release of the Proposed Release Mortgage; and (G) Lender shall have received such other certificates, documents or instruments as Lender may reasonably request. (H) In calculating DCR and Annual Debt Service for purposes of this Section 2.3(b)(vi), (a) the applicable determination date shall be the Release Date, (b) Net Operating Income shall be calculated for all Country Club Loan Parties, other than the Releasing Loan Party, for which there remains outstanding a Country Club Loan on the Release Date (collectively, the "Non-Releasing Country Club Loan Parties"), which Net Operating Income shall be for the four Fiscal Quarters ending immediately prior to the Release Date and shall be as set forth in the financial statements provided to Lender for such four Fiscal Quarters, and (c) Annual Debt Service shall be calculated based on the Country Club Loans of the Non-Releasing Country Club Loan Parties. (vii) Substitution of Country Club Property. A Country Club Loan Party may request in a writing delivered to Lender at any time ("Substitution Request") that a different property (a "Substitute Property") be substituted (a "Substitution") for the Country Club Property of such Country Club Loan Party (the "Original Property"). Lender may in its sole discretion, but shall have no obligation to, approve such Substitution Request; provided that Lender shall only consider a Substitution Request upon fulfillment of the following conditions precedent: (A) No Event of Default or Potential Default shall have occurred and be continuing either at the time Lender receives the Substitution Request or on the date the Substitution takes place as determined by Lender ("Substitution Date"); (B) Lender shall have received evidence that the DCR for the Country Club Loans (including the Substitute Property on a pro forma basis) after giving effect to the Substitution shall be no less than those set forth in the following table: If Principal Indebtedness of the Country Club Loans immediately after Substitution Is Equal to or Less Than DCR Shall Be no Less Than: $125,000,000 2.00X $175,000,000 1.85X $250,000,000 1.75X -33- <PAGE> (C) The appraised value of the Substitute Property on the Substitution Date (as set forth in an MAI appraisal of the Substitute Property approved by Lender in its sole discretion and dated as of the Substitution Date (the "Approved Substitute Property MAI Appraisal") shall be not less than both (i) the appraised value of the Original Property as set forth in the appraisal of the Original Property approved by Lender at the Closing of the Loan (the "Approved Original Property Closing Date Appraisal"), and (b) One Hundred Ten Percent (110%) of the appraised value of the Original Property on the Substitution Date, as set forth in an MAI appraisal of the Original Property approved by Lender in its sole discretion and dated as of the Substitution Date (the "Approved Original Property Substitution Date Appraisal"); (D) The Net Operating Income for the Substitute Property shall be equal to or greater than the historical Net Operating Income for the Original Property, all as determined by Lender in its discretion; (E) There shall be funded a reserve for capital expenditures with respect to the Substitute Property in the amounts and at the times required by Lender in its sole discretion; (F) Lender shall have received: (I) a release of the Original Property from the lien of the Mortgage (for execution by Lender) in a form appropriate for the jurisdiction in which the Original Property is located; (II) a certificate executed by an Appropriate Officer of CCI, the Country Club Loan Party that owns the Original Property and the owner of the Substitute Property (the "Substitute Country Club Loan Party"), certifying that the requirements set forth in this Section 2.3(b)(vii) have been satisfied; (III) a Mortgage, in form and substance satisfactory to Lender, creating a first priority lien in favor of Lender on the Substitute Property to secure all the obligations of the Country Club Loan Parties (including the Substitute Country Club Loan Party) under this Agreement, the Note and all other Loan Documents; (IV) an environmental indemnity agreement covering the Substitute Property executed by the Substitute Country Club Loan Party as Indemnitor in favor of Lender, in substantially the same form as the Environmental Indemnities; (V) an opinion of counsel for the Country Club Loan Party that owns the Original Property and for the Substitute Country Club Loan Party in form satisfactory to Lender and its counsel covering such matters as Lender and its counsel may require in their sole discretion; (VI) such endorsements to the ALTA Title Policies as Lender may reasonably require ensuring the first priority of the Lien of the Mortgage on the Substitute Property and ensuring the continuing first priority of the Liens of the Mortgages on each Country Club Loan Property of each Country Club Loan Party, other -34- <PAGE> than the Country Club Loan Party that owns the Original Property, for which there remains outstanding a Country Club Loan on and after the date of the Substitution (collectively, the "Non-Substituting Country Club Loan Parties"); and (VII) such other certificates, documents or instruments as Lender may require, including, without limitation, an assumption of the obligations of the Country Club Loan Party that owns the Original Property by the Substitute Country Club Loan Party under all the Loan Documents and such amendments to the Loan Documents as Lender may require as a condition to Lender's consent to the Substitution, which consent may be given or withheld by Lender for any reason or no reason in Lender's sole and absolute discretion. 2.4. Manner of and Place of Payment. All payments made hereunder, under the Note or under any other Loan Document shall be made in accordance with the provisions hereof or thereof without setoff or counterclaim as against Lender, in lawful money of the United States of America, free and clear of and without deduction for any taxes, fees or other charges of any nature whatsoever imposed by any taxing authority. All payments made hereunder, under the Note or under any other Loan Document must be received by 11:00 a.m., California time and made to Lender at its offices located at 700 Newport Center Drive, Newport Beach, California 92660, Attention: Loan Services, or as Lender may designate from time to time by notice. If a payment is received after the time specified above, the payment shall be deemed received by Lender on the following Business Day. If any payment is due and payable on other than a Business Day, that payment shall be payable on the next succeeding Business Day. 2.5. Legal Tender. All amounts payable hereunder, under the Note or under any other Loan Document are payable in lawful money or legal tender of the United States of America. Section 3. Disbursement of Loan Proceeds. 3.1. Funding of Loan. (a) Upon the fulfillment of all the conditions set forth in this Section 3 to the disbursement of the proceeds of the Loan, or the waiver of any such conditions in writing, Lender shall disburse to or at the direction of each Country Club Loan Party the amount of the Country Club Loan set forth for such Country Club Loan Party on Schedule II. (b) If requested by CCI and the Country Club Loan Parties, Lender shall fund the proceeds of the Loan required to be funded by Lender pursuant to this Agreement through an escrow. If funding is to take place through an escrow, conditions denominated conditions precedent in this Agreement, other than conditions that are by their terms, to be fulfilled no later than a specified number of days before the Closing Date, may be fulfilled simultaneously with such funding through escrow. (c) Each Country Club Loan Party and Lender hereby acknowledge and agree that on the date of the execution and delivery of this Agreement by Lender, all of the -35- <PAGE> conditions to funding set forth in this Section 3 have been fulfilled, and that on such date, Lender is unconditionally obligated to fund the Loan. 3.2. Conditions Precedent to Funding of Loan. In addition to the requirements, conditions and limitations set forth in Section 3.1, the obligation of Lender to make the Loan shall be subject to fulfillment of the following conditions precedent: (a) The Loan Parties shall have provided, at their expense, to Lender not more than thirty (30) days after the date of the Loan Commitment Letter nor less than fifteen (15) days prior to the Closing Date (unless a different time for delivery is otherwise indicated), the following items, each of which must be prepared by parties reasonably approved by Lender, and must be in form and content satisfactory to Lender in all respects: (i) With respect to each Country Club Property, a current survey (a "Survey") by a licensed surveyor reasonably satisfactory to Lender and in any event complying with the requirements of the Title Company and any reinsurers, which Survey shall include a legal description of such Country Club Property, the square footage of the land and Improvements (together with an indication as to whether or not any portion of the Country Club Property is located in a flood risk zone), and certification to Lender and to the Title Company in a form reasonably satisfactory to Lender. Lender may request that the Survey comply with the current Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys (such a Survey being referred to herein as an "ALTA Survey") for any portion of any Country Club Property, but only if either (x) the preparation of such a Survey would not delay the Closing of the Loan beyond June 3, 2003 or (y) Lender reasonably determines that such a Survey is required to assure Lender that there are no material issues concerning the location of Improvements on such Country Club Property and the relation of such Improvements to the boundaries of such Country Club Property and any easements or other Improvements located on such Country Club Property. (ii) With respect to each Country Club Property, an ALTA Title Policy together with (A) legible photocopies of all recorded title exceptions and a full-size copy of all recorded subdivision, tract or plat maps of such Country Club Property approved (to the extent required by any Requirements of Law) by all Governmental Authorities, if applicable, and (B) such endorsements as Lender may require, including, without limitation, a zoning endorsement and endorsements insuring against encroachments except those approved by Lender prior to Closing, and endorsements insuring that the golf course and all other Improvements are located within the legal descriptions attached to the Mortgages and insured under such policy, in each case regardless of whether there is for the property covered by the policy an ALTA Survey. The Title Company shall reinsure its liability under such policy with such reinsurers and in such amounts as Lender may require in its discretion. (iii) With respect to each Loan Party, a current UCC Search together with copies of any filed UCC-1 Financing Statements. (iv) With respect to each Loan Party, searches of ownership of, and Liens on, Intellectual Property in the appropriate governmental offices. -36- <PAGE> (v) With respect to each Loan Party, such patent/trademark/copyright filings, duly executed and acknowledged where required, as are reasonably requested by Lender in order to perfect Lender's security interest in the Intellectual Property of such Loan Party. (vi) With respect to each Country Club Property, evidence of the insurance coverage set forth in the Mortgage encumbering such Country Club Property. (vii) [Intentionally Deleted]. (viii) Duplicate originals (or copies certified by the relevant Country Club Loan Party and the lessee thereto as being true copies of such originals) of all Real Property Leases affecting each Country Club Property as of the Closing Date, together with (x) a subordination, nondisturbance and attornment agreement signed by each lessee party to such Real Property Lease, and (y) current estoppel certificates from all such lessees in occupancy at the time of Closing on any portion of the Country Club Property on forms prepared by Lender's counsel. (ix) Duplicate originals (or copies certified by the relevant Country Club Loan Party and the lessor thereto as being true copies of such originals), of all golf cart leases affecting any Country Club Property or any business located thereon as of the Closing Date. (x) With respect to each Country Club Property, a detailed operating statement certified by an Appropriate Officer of the Country Club Loan Party owning such Country Club Property and of CCI showing actual Fiscal Month totals of amounts collected and expended for such Country Club Property for 2002. (xi) With respect to each Country Club Property, a schedule of greens fees in effect as of the Closing Date for non-members certified by an Appropriate Officer of the Country Club Loan Party owning such Country Club Property. (xii) With respect to each Country Club Property, a club membership roll (including a maturity report) dated not earlier than ten (10) days prior to the Closing Date showing members' names, types of memberships, amount of initiation deposits and initiation fees (and due dates), effective dates and all membership dues, certified by an Appropriate Officer of the Country Club Loan Party owning such Country Club Property as being accurate and complete in all material respects. (xiii) With respect to each Country Club Property, copies of the most recent bill for real property taxes and any other taxes constituting a lien on such Country Club Property, or other evidence that the Country Club Property is segregated on the tax rolls from all other property. (xiv) A closing certification (each, a "Closing Certification") executed by an Appropriate Officer of each Country Club Loan Party covering such matters as Lender may request, including, but not limited to, a representation that there is no litigation pending against such Country Club Loan Party or the Country Club Property owned by such Country Club Loan Party and encumbered by a Mortgage. -37- <PAGE> (xv) With respect to any Country Club Property that is part of a larger parcel of land, evidence that the lien of the Mortgage on, or a foreclosure of such lien and conveyance of the Country Club Property of less than the entire parcel will not violate any subdivision or lot split rules, regulations or ordinances applicable to the Country Club Property or the parcel of which the Country Club Property is a part. (xvi) With respect to each Country Club Property, a copy of any reciprocal easement agreement or operating agreement affecting such Country Club Property together with a current estoppel certificate in form satisfactory to Lender from the parties to any such agreement. (xvii) With respect to each Country Club Property, a copy of the Management Agreement and of any other management or consulting agreement covering all or any part of such Country Club Property or any business conducted thereon, together with one or more agreements, in form and substance satisfactory to Lender executed by the Manager under the Management Agreement and the managers and consultants under any of such other management or consultant agreements, subordinating their rights to the payment of management and consultant fees, waiving lien rights and agreeing to continue or terminate performance, upon certain events specified therein. (xviii) An opinion of counsel of each Loan Party satisfactory to Lender covering such matters as Lender or its counsel may reasonably request. (xix) With respect to each Country Club Property, a copy of the permanent certificate of occupancy or its equivalent for any hotel, restaurant, clubhouse, any other outbuilding or any other Improvement issued by the appropriate Governmental Authority. (xx) An M.A.I. appraisal for each Country Club Property prepared by an appraiser reasonably satisfactory to Lender and otherwise in form and substance and prepared as of a date reasonably satisfactory to Lender. The M.A.I appraisals for all the Country Club Properties shall support a value of not less than Three Hundred Twenty Million Nine Hundred Ten Thousand Dollars ($320,910,000.00) in the aggregate. (xxi) With respect to each Country Club Property, an inventory of all personal property with a market value equal to or greater than $3,000 located on or used in connection with the Country Club Property or in which the Country Club Loan Party that owns such Country Club Property has an interest. (xxii) With respect to each Country Club Property, copies of all operating licenses and permits issued by Governmental Authorities having jurisdiction over such Country Club Property. (xiii) With respect to each Country Club Property, a zoning compliance letter issued by the Governmental Authority having jurisdiction over the Country Club Property for zoning purposes. (xiv) With respect to the Firestone Property, a property condition report in form and substance and prepared by a Person satisfactory to Lender. -38- <PAGE> (xxv) With respect to each Country Club Property, at least 20 days prior to Closing, a report acceptable to Lender evidencing the continued availability of water to such Country Club Property in quantities sufficient to maintain the continuous operation of the golf course, hotel, restaurant, swimming pools, fountains, water features and/or any other business or businesses located on such Country Club Property. (xxvi) With respect to each Country Club Property, evidence of the availability, adequacy and status of connection of all utilities required for the operation of such Country Club Property other than water, including specifically, gas, electricity, storm water, sewer and telephone services. (xxvii) With respect to each Country Club Property, at least 20 days prior to Closing, if available, duplicate copies in reproducible form of final "design" plans and specifications (including soils reports, supporting engineering calculations and any related shop, fabrication and erection drawings) approved by the Governmental Authority having jurisdiction over the Country Club Property and used in the construction of the Improvements located thereon. (Lender further shall have the right to make such inspections of each Country Club Property as it deems necessary to determine, to Lender's satisfaction, that the Improvements were constructed and completed in accordance with the plans and specifications and are structurally sound and in good physical condition. Any review or approval by Lender of the plans and specifications and any inspection by Lender of the Improvements on any Country Club Property shall not constitute an assumption of liability, a warranty or a representation by Lender or any of its agents to any Person concerning any Country Club Property or any Improvements thereon.) (xxviii) With respect to each Country Club Property, at least 45 days prior to Closing, a preliminary site assessment report (each, a "Report") with respect to Hazardous Substances covering such Country Club Property prepared by a qualified state registered professional environmental auditor. Each Report shall include, but not be limited to: (i) past uses of the site, (ii) a determination of the existence, identity, location and amount of asbestos, PCBs, petroleum and petroleum products, and other Hazardous Substances, (iii) a mold assessment, (iv) a determination of the existence at any time of any underground storage tanks which may have contained Hazardous Substances, including petroleum or petroleum products, (v) a determination of the likelihood of soil or groundwater contamination on or under such Country Club Property or from such Country Club Property under or onto neighboring property or from neighboring property onto or under such Country Club Property, (vi) an estimation of the cost of remediation of any Hazardous Substances located on or under such Country Club Property or released in connection therewith and the health and safety risks resulting from the presence of any Hazardous Substances on or under such Country Club Property, and (vii) disclosure of inclusion or potential inclusion of such Country Club Property or neighboring properties on any state or Federal listing of environmental problem sites. Based upon Lender's review of a Report for a Country Club Property or Lender's inspection of such Country Club Property, Lender may require as a further condition to Closing the relevant Loan Party to provide further information or a detailed environmental report or site characterization (which may include soil, groundwater and mold sampling and testing), an update of the Report and/or a Phase II environmental report. -39- <PAGE> (xxix) With respect to each Variable Rate Loan, (i) evidence satisfactory to Lender that the Country Club Loan Party with such Variable Rate Loan has entered into a Cap Agreement with a Counterparty reasonably acceptable to Lender with a protected interest rate cap at or below 500 basis points over 30-Day LIBOR on the Closing Date, and (ii) an assignment by such Country Club Loan Party to Lender of its interest in the Cap Agreement, together with a written consent of the Counterparty to the Cap Agreement to such assignment and to payment to Lender of all sums owing to such Country Club Loan Party under the Cap Agreement without offset or deduction of any kind, except as expressly provided in the Cap Agreement, on a form satisfactory to Lender (a "Consent to Assignment"). The Cap Agreement will be effective beginning with the first day of the calendar month following the Closing Date (or with the Closing Date if the Closing Date shall occur on the first day of a calendar month) and the term of the Cap will be for a minimum of two (2) years. The notional amount for the Cap Agreement shall be the principal amount of the Variable Rate Loan in question and all payment terms, including the Interest Determination Date and the Interest Period, shall match the payment terms of such Variable Rate Loan. (xxx) All of the Loan Documents and the Guaranty each (except the UCC-1 Financing Statements) to be duly executed by all of the parties thereto (other than Lender). (xxxi) Such documents and certificates as Lender or its counsel may reasonably request relating to the organization, existence and good standing of each Loan Party, the authorization of the Loan and the transacti

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