<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM 10-Q
------------------------------
(Mark one)
[X] Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities and Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from __________ to __________
COMMISSION FILE NUMBER 1-14020
CASTLE & COOKE, INC.
(Exact name of registrant as specified in its charter)
HAWAII 77-0412800
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10900 WILSHIRE BOULEVARD, 16TH FLOOR
LOS ANGELES, CA 90024
(Address of principal executive offices and zip code)
(310) 208-3636
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Shares Outstanding at October 31, 1998
----- --------------------------------------
<S> <C>
Common Stock, without par value 17,015,958 shares
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CASTLE & COOKE, INC.
FORM 10-Q
FOR THE QUARTER ENDED
SEPTEMBER 30, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1998 and
December 31, 1997. . . . . . . . . . . . . . . . . . . . . . . . . . .3
Consolidated Statements of Operations - Quarter and nine months
ended September 30, 1998 and September 30, 1997. . . . . . . . . . . .4
Consolidated Statements of Cash Flows -- Nine months
ended September 30, 1998 and September 30, 1997. . . . . . . . . . . .5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . .6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . .8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . 16
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
2
<PAGE>
CASTLE & COOKE, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
Cash and cash equivalents $ 5,320 $ 1,612
Receivables, net 34,226 30,530
Real estate developments 509,330 506,784
Property and equipment, net 487,365 460,919
Other assets 24,505 19,415
----------- -----------
Total assets $ 1,060,746 $ 1,019,260
----------- -----------
----------- -----------
Notes payable $ 250,051 $ 176,101
Note payable to Dole 10,000 10,000
Accounts payable 25,684 18,162
Accrued liabilities 28,160 28,263
Deferred income taxes 179,594 176,357
Deferred income and other liabilities 33,446 26,633
----------- -----------
Total liabilities 526,935 435,516
----------- -----------
Common shareholders' equity
Common stock 512,032 511,616
Treasury stock, at cost (58,353) -
Retained earnings 80,132 72,128
----------- -----------
Total common shareholders' equity 533,811 583,744
----------- -----------
Total liabilities and shareholders' equity $ 1,060,746 $ 1,019,260
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
3
<PAGE>
CASTLE & COOKE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT EARNINGS (LOSS) PER COMMON SHARE AMOUNTS)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues
Residential and other property sales $ 52,121 $ 28,680 $ 113,652 $ 82,653
Resort revenues 13,770 13,027 53,093 43,311
Commercial and other revenues 13,245 12,754 39,121 37,732
--------- --------- --------- ---------
Total revenues 79,136 54,461 205,866 163,696
COST OF OPERATIONS
Cost of residential and other property sales 42,343 26,033 97,469 74,855
Cost of resort operations 18,656 18,284 60,657 54,445
Cost of commercial and other operations 8,347 6,959 24,548 21,635
General and administrative expenses 3,278 2,815 10,084 9,929
--------- --------- --------- ---------
Total cost of operations 72,624 54,091 192,758 160,864
--------- --------- --------- ---------
Operating income 6,512 370 13,108 2,832
Interest and other income, net 1,540 524 2,665 1,628
Interest expense, net 2,053 105 3,827 689
--------- --------- --------- ---------
Income before income taxes 5,999 789 11,946 3,771
Income tax provision (1,980) (313) (3,942) (1,491)
--------- --------- --------- ---------
Net income 4,019 476 8,004 2,280
Preferred stock dividend and accretion - (1,050) - (3,150)
--------- --------- --------- ---------
Net income (loss) available to common shareholders $ 4,019 $ (574) $ 8,004 $ (870)
--------- --------- --------- ---------
--------- --------- --------- ---------
Basic and diluted earnings (loss) per common share $ 0.24 $ (0.03) $ 0.42 $ (0.04)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
CASTLE & COOKE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------
September 30, September 30,
1998 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 8,004 $ 2,280
Adjustments to reconcile net income to cash flow
provided by operating activities:
Depreciation 13,399 13,109
Equity (earnings) loss, net of dividends received (1,156) 99
Other 40 40
Changes in operating assets and liabilities:
Increase in receivables, net (3,696) (4,158)
Increase in real estate developments (6,369) (5,519)
Decrease in income tax receivable - 9,209
Increase in accounts payable 7,522 1,662
Increase (decrease) in accrued liabilities 574 (1,479)
Increase in deferred income taxes 3,237 4,530
Net change in other assets and liabilities 3,515 (2,116)
----------- -----------
Net cash provided by operating activities 25,070 17,657
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (37,335) (22,783)
----------- -----------
Net cash used in investing activities (37,335) (22,783)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase under revolving loan agreements 73,950 2,976
Purchase of stock (58,353) -
Proceeds from exercise of stock options 376 395
Preferred stock dividends paid - (2,625)
----------- -----------
Net cash provided by financing activities 15,973 746
----------- -----------
Net increase (decrease) in cash and cash equivalents 3,708 (4,380)
Cash and cash equivalents at beginning of period 1,612 5,663
----------- -----------
Cash and cash equivalents at end of period $ 5,320 $ 1,283
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
CASTLE & COOKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The consolidated financial statements included herein have been prepared by
Castle & Cooke, Inc. ("the Company"), without audit, and include all adjustments
which are, in the opinion of management, necessary for a fair presentation of
the results of operations for the quarters and nine months ended September 30,
1998 and September 30, 1997, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures in such financial statements are adequate to make the information
presented not misleading. The consolidated financial statements should be read
in conjunction with the Company's consolidated financial statements and the
notes thereto for the year ended December 31, 1997, included in the Company's
Annual Report on Form 10-K filed with the Securities and Exchange Commission.
The Company was formed on October 10, 1995 to be the successor of the
assets and related liabilities of the real estate and resorts business of Dole
Food Company, Inc. and its subsidiaries ("Dole"). On December 28, 1995, Dole
completed the separation of its real estate and resorts business from its food
business through a pro rata distribution of the stock of the Company to its
shareholders.
The Company's operating results are subject to significant variability
as a result of, among other things, the receipt of regulatory approvals,
status of development in particular projects and the timing of sales of homes
and homesites in developed projects, income producing properties, and
non-income producing properties. The results of operations for the quarter
and nine months ended September 30, 1998, are not necessarily indicative of
the results to be expected for the full year. In addition, the statements
contained herein, which are not historical facts, are forward-looking
statements based on economic forecasts, strategic plans and other factors
that, by their nature, involve risk and uncertainties. Potential risks and
uncertainties include, but are not limited to, such things as product demand,
the Company's lack of experience in operating in markets outside of its
current markets or in developing products that are different from its current
products, the effect of geographic concentration of assets or markets, the
impact of competitive products and pricing, governmental regulations and the
need for governmental approvals and the year 2000 problem. Other factors
that could cause actual future results to differ materially from past results
include the following: business conditions and general economy; competitive
factors; political decisions affecting land use; capital resources and
interest rates; and other risks inherent in the real estate business.
Certain reclassifications have been made to the 1997 consolidated financial
statements to conform to the 1998 presentation.
NOTE 2. EARNINGS PER COMMON SHARE
Basic earnings per share was computed by dividing net income (loss),
after reduction for preferred stock dividends and accretion (if applicable),
by the sum of (1) the weighted average number of shares of common stock
outstanding during the period and (2) the weighted average number of
non-employee director stock grants outstanding during the period. The
computation of diluted earnings per share further assumes the dilutive effect
of employee stock options. The weighted average number of shares of common
stock outstanding was 17,007,279 and 19,978,398 during the third quarter of
1998 and 1997, respectively. The weighted average number of non-employee
director stock grants outstanding was 7,058 and 4,954 during the third
quarter of 1998 and the third quarter of 1997, respectively. The weighted
average number of shares of common stock outstanding was 18,983,346 and
19,963,883 during the first nine months of 1998 and 1997, respectively. The
weighted average number of non-employee director stock grants outstanding was
5,894 and 3,469 during the first nine months of 1998 and 1997, respectively.
6
<PAGE>
CASTLE & COOKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. EARNINGS PER COMMON SHARE (CONTINUED)
The computation of dilutive earnings per share includes the assumed
exercise of 96,366 options outstanding during the third quarter of 1998. The
computation of dilutive earnings per share during the third quarter of 1997 does
not include the assumed exercise of 87,654 options because their effect was
anti-dilutive. The computation of dilutive earnings per share during the first
nine months of 1998 includes the assumed exercise of 93,453 options outstanding.
The computation of dilutive earnings per share during the first nine months of
1997 does not include the assumed exercise of 57,054 options because their
effect was anti-dilutive.
NOTE 3. COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are contingently liable as joint
indemnitors to surety companies for subdivision, off-site improvement and
construction bonds issued on their behalf.
The Company is involved from time to time in various claims and legal
actions arising in the normal course of business. In the opinion of management,
the final resolution of these matters is not expected to have a material adverse
effect on the Company's financial position or results of operations.
NOTE 4. SUPPLEMENTAL CASH FLOW INFORMATION
The Company made interest payments of approximately $10.7 million and $8.7
million during the first nine months of 1998 and 1997, respectively. Total
interest capitalized into real estate developments and property and equipment
under construction totaled approximately $8.3 million and $8.0 million during
the first nine months of 1998 and 1997, respectively.
During the first nine months of 1998, the Company made income tax payments
of approximately $703,000. During the first nine months of 1997, the Company
made income tax payments of $73,000 and received income tax refunds of
approximately $12.3 million.
NOTE 5. NEW ACCOUNTING PRONOUNCEMENT
Effective January 1, 1998, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 130-"Reporting Comprehensive Income" (SFAS
No. 130). This statement establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The implementation of SFAS No. 130 did not have an impact
on the Company's results of operations or financial position.
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133- "Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative instruments and
hedging activities. It requires an entity to recognize all derivatives in the
statement of financial position and measure those instruments at fair value.
The Company must implement SFAS No. 133 by the first quarter of 2000, and it is
not expected to have a significant adverse effect on the results of operations.
NOTE 6. STOCK REPURCHASE
In connection with its "Dutch Auction" self-tender offer, the Company
repurchased 3,015,764 shares of the Company's common stock at a price of $19.25
per share on July 6, 1998.
7
<PAGE>
CASTLE & COOKE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES
Third quarter consolidated revenues increased 45% to $79.1 million in 1998
from $54.4 million in 1997. Excluding the bulk land sales in the third quarter
of 1998, residential and other property sales for the third quarter increased
53% to $44.0 million in 1998 from $28.7 million in 1997. This increase is
primarily due to homesite deliveries at the new Keene's Pointe development in
Orlando, Florida, which commenced deliveries in the second quarter of 1998. In
the third quarter of 1998, the Keene's Pointe development delivered 73 homesites
with revenues of $8.4 million, or $115,000 per homesite. The remaining revenue
increase during the third quarter of 1998 compared to the third quarter of 1997
is attributable to increased home sales on Oahu and increased homesite
deliveries at the Bakersfield developments. Third quarter Oahu home deliveries
increased 13% to 103 homes in 1998 from 91 homes in 1997. Third quarter mainland
homesite deliveries, including the Keene's Pointe deliveries noted above,
increased 122% to 222 homesites in 1998 from 100 homesites in 1997. The third
quarter average price per homesite increased 68% to $64,000 in 1998 from $38,000
in 1997, which was primarily due to the Keene's Pointe development. Included in
the 1998 third quarter residential and other property sales are the sale of two
undeveloped land holdings for a total of $8.1 million and earnings before taxes
of $3.2 million. The land was located in Westlake Village, California and Oahu,
Hawaii.
Consolidated revenues for the first nine months of the year increased 26%
to $205.9 million in 1998 from $163.7 million in 1997. Excluding the bulk land
sales in the third quarter of 1998, residential and other property sales for the
first nine months of the year increased 28% to $105.5 million in 1998 from
$82.7 million in 1997. This increase is primarily due to homesite deliveries at
the new Keene's Pointe development in Orlando, Florida, which commenced
deliveries in the second quarter of 1998. During the first nine months of 1998,
the Keene's Pointe development delivered 119 homesites with revenues of $11.9
million, or $100,000 per homesite. The remaining revenue increase during the
first nine months of 1998 compared to the prior year is attributable to
increased home sales on Oahu and increased homesite deliveries at the
Bakersfield developments. Oahu home deliveries for the first nine months
increased 10% to 274 homes in 1998 from 250 homes in 1997. Mainland homesite
deliveries for the first nine months, including the Keene's Pointe deliveries
noted above, increased 31% to 649 homesites in 1998 from 496 homesites in 1997.
The average price per homesite for the first nine months of 1998 increased 64%
to $46,000 from $28,000 during the first nine months of 1997, which was
primarily due to the Keene's Pointe development.
Resort revenues for the first nine months increased 23% to $53.1 million in
1998 from $43.3 million in 1997. This increase is primarily due to increased
resort residential sales. Resort residential sales were $13.1 million in 1998
compared to $4.6 million in 1997. The Company sold eight residential units at
its two luxury resort residential developments for a total of $9.9 million
during the first nine months of 1998, compared to three residential units for a
total of $3.4 million during the first nine months of 1997. Resort residential
sales also include the sale of seven plantation homes for a total of $1.3
million during the first nine months of 1998 compared to six plantation homes
for a total of $1.2 million during the first nine months of 1997. In addition,
the 1998 resort residential revenues include construction contract revenues of
$1.9 million relating to the construction of a senior housing facility on Lanai,
which will be owned and operated by an independent third party.
8
<PAGE>
CASTLE & COOKE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
REVENUES (CONTINUED)
The following table sets forth combined operating statistics for the two hotels:
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Average daily room rate $ 267 $ 264 $ 283 $ 277
Occupancy rate 58% 65% 67% 67%
</TABLE>
COST AND EXPENSES
Third quarter consolidated cost of operations increased to $72.6 million in
1998 from $54.1 million in 1997. Excluding the 1998 bulk land sales, the cost
of residential property sales as a percentage of residential property sales
decreased to 85% in the third quarter of 1998 from 91% in the third quarter of
1997. This decrease is primarily due to the new Keene's Pointe project in
Orlando project and improved results at the Seven Oaks development in
Bakersfield, California.
Excluding luxury resort residential sales and depreciation, the cost of
resort operations as a percentage of resort revenues increased to 125% during
the third quarter of 1998 from 123% during the third quarter of 1997. This
increase is primarily due to decreased resort revenues. Since a significant
portion of the resort operations' costs are fixed costs, these costs will not
increase or decrease proportionately as occupancy and resort revenues increase
or decrease. Resort depreciation was $1.8 million and $2.2 million during the
third quarter of 1998 and 1997, respectively.
The third quarter cost of commercial and other operations as a percentage
of commercial and other revenues increased to 63% during the third quarter of
1998 from 55% during the third quarter of 1997. This increase is primarily due
to the venture the Company entered into during 1998 with Horizon/Glen Outlet
Centers Limited Partnership ("Horizon"), called Castle & Cooke Outlet Centers,
LLC ("CCOC"). Prior to this venture, the Dole Cannery Factory Outlet Center in
Honolulu was leased to Horizon and a significant portion of the operating
expenses were paid by Horizon. Subsequent to the CCOC venture with Horizon, all
of this outlet center's operating expenses are paid by CCOC, which is
substantially owned by the Company. Depreciation in the cost of commercial and
other operations was $2.0 million during the third quarter of 1998 compared to
$1.8 million during the third quarter of 1997. The increase is primarily due to
the Premier II office building, which was completed in late 1997.
Consolidated cost of operations for the first nine months increased to
$192.8 million in 1998 from $160.9 million in 1997. Excluding the bulk land
sales in 1998, the cost of residential and other property sales as a percentage
of residential and other property sales decreased to 88% during the first nine
months of 1998 from 91% in 1997. This improvement is primarily due to the new
Keene's Pointe project discussed above.
9
<PAGE>
CASTLE & COOKE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COST AND EXPENSES (CONTINUED)
Excluding luxury resort residential sales and depreciation, the cost of
resort operations as a percentage of resort revenues decreased to 107% during
the first nine months of 1998 from 112% during the first nine months of 1997.
This improvement is primarily due to increased resort revenue. Since a
significant portion of the resort operations' costs are fixed costs, these costs
will not increase or decrease proportionately as resort revenues increase or
decrease. In addition, the Company continues to implement cost saving measures
relating to payroll and other significant resort operating costs. Resort
depreciation was $6.3 million and $7.0 million during the first nine months of
1998 and 1997, respectively. The cost of resort residential cost of sales as a
percentage of resort residential revenues increased to 89% during the first nine
months of 1998 from 87% during the first nine months of 1997. The cost of resort
residential sales for the two luxury projects was $7.0 million for the first
nine months of 1998 and $2.3 million for the first nine months of 1997. The
cost of resort residential sales for the Lanai plantation home project was
$977,000 for the first nine months of 1998 and $766,000 for the first nine
months of 1997. Also included in the resort residential cost of sale are
closing and selling costs of $1.7 million for the first nine months of 1998 and
$890,000 for the first nine months of 1997. Included in the 1998 resort
residential cost of sales is $1.9 million of construction costs relating to the
contract to build the senior housing complex on Lanai.
The cost of commercial and other operations as a percentage of commercial
and other revenues increased to 63% during the first nine months of 1998 from
57% during the first nine months of 1997. This increase is primarily due to the
Horizon venture, discussed above. Depreciation in the cost of commercial and
other operations was $6.2 million during the first nine months of 1998 compared
to $5.2 million during the first nine months of 1997. The increase is primarily
due to the Premier II office building, which was completed in late 1997.
Interest and other income increased to $1.5 million in the third quarter of
1998 from $524,000 in the third quarter of 1997. This increase is primarily due
to CCOC's equity earnings. One of CCOC's investments is in a limited
partnership that owns five factory outlet centers throughout the United States.
CCOC's allocated earnings from this investment is directly related to the
earnings of one of the centers, known as the Lake Elsinore Outlet Center.
Interest and other income increased to $2.7 million for the first nine months of
1998 from $1.6 million in 1997. The increase is primarily due to the CCOC
investment earnings discussed above, partially offset by a decrease in interest
and other income as compared to the prior year. The earnings recognized by CCOC
associated with the Lake Elsinore Outlet Center was $905,000 for the third
quarter of 1998 and $1.8 million for the nine months ended September 30, 1998.
10
<PAGE>
CASTLE & COOKE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COST AND EXPENSES (CONTINUED)
The Company's interest expense increased during the third quarter and nine
months ended September 30, 1998 as compared to the prior year primarily due to
increased debt. The Company's borrowings and related interest incurred are
summarized as follows:
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
(in thousands)
Total borrowings at month end $ 260,051 $ 186,101 $ 260,051 $ 186,101
Total interest incurred $ 4,742 $ 2,836 $ 12,101 $ 8,717
Less: interest capitalized into real estate developments
and property and equipment under construction (2,689) (2,731) (8,274) (8,028)
--------- --------- --------- ---------
Interest expense, net of capitalized interest 2,053 105 3,827 689
Amortization in cost of residential and other
property sales of interest previously capitalized $ 1,503 $ 921 $ 3,532 $ 2,180
</TABLE>
NET INCOME AND EARNINGS PER SHARE
The Company's effective income tax rate decreased to 33% in 1998 from 39.5%
in 1997. The 33% effective tax rate in 1998 is primarily due to low-income
housing tax credits.
The preferred stock dividend and accretion in 1997 relates to the $35
million cumulative preferred stock issued in connection with the Company's
separation from Dole in December of 1995. The Company redeemed all of its
outstanding preferred stock in December of 1997.
Third quarter net income available to common shareholders increased to $4.0
million in 1998 from a net loss of $574,000 in 1997. The net income available
to common shareholders for the first nine months of 1998 was $8.0 million
compared to net loss available to common shareholders of $870,000 for the first
nine months of 1997. This increase is primarily due to better operating results
described above.
11
<PAGE>
CASTLE & COOKE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BACKLOG
The Company's new orders and backlog for homes and homesites for 1998
compared to 1997 were as follows:
<TABLE>
<CAPTION>
Quarter Ended Nine months Ended
September 30, September 30,
------------------------ ------------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
BACKLOG-HOMES
Units
Backlog at beginning of the period 97 82 46 55
Add: New orders 105 131 331 319
Less: Deliveries (110) (95) (285) (256)
--------- --------- --------- ---------
Backlog at end of the period 92 118 92 118
--------- --------- --------- ---------
--------- --------- --------- ---------
Dollars
Backlog at beginning of the period $ 27,475 $ 24,134 $ 11,920 $ 15,143
Add: New orders 26,967 31,644 87,973 82,086
Less: Deliveries (28,737) (24,496) (74,188) (65,947)
--------- --------- --------- ---------
Backlog at end of the period $ 25,705 $ 31,282 $ 25,705 $ 31,282
--------- --------- --------- ---------
--------- --------- --------- ---------
MAINLAND BACKLOG- HOMESITES
Units
Backlog at beginning of the period 635 199 405 232
Add: New orders 77 159 734 522
Less: Deliveries (222) (100) (649) (496)
--------- --------- --------- ---------
Backlog at end of the period 490 258 490 258
--------- --------- --------- ---------
--------- --------- --------- ---------
Dollars
Backlog at beginning of the period $ 27,282 $ 7,659 $ 19,964 $ 7,959
Add: New orders 7,771 3,695 30,994 13,284
Less: Deliveries (14,126) (3,810) (30,031) (13,699)
--------- --------- --------- ---------
Backlog at end of the period $ 20,927 $ 7,544 $ 20,927 $ 7,544
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Home backlog decreased to $25.7 million at September 30, 1998 compared to
$31.3 million at September 30, 1997, primarily due to a backlog decrease at the
Oahu projects. The Company believes this decrease is due to the depressed
Hawaii economy. Primarily due to the Asian economic crisis and other factors,
the Company does not believe that the Hawaii economy will show significant
improvements in 1999 compared to 1998. The decrease in new home orders in the
third quarter of 1998 is primarily due to the timing of new product
introductions at the Oahu residential developments. Although new home orders
have increased for the first nine months of 1998 compared to the first nine
months of 1997, the Company does not anticipate that new orders will be
significantly higher for the full twelve months of 1998 when compared to 1997.
The increase in new homesite orders for the first nine months of 1998 as
compared to 1997 is primarily due to the new Keene's Pointe development in
Orlando, Florida (113 homesites ordered) where sales commenced in 1998 and
increased activity at the Bakersfield and Arizona developments. Included in
backlog at September 30, 1998, are homesites to be sold to builders under
option contracts, pursuant to which approximately 124 homesites with an
aggregate sales price of approximately $6.3 million are expected to close
after September 30, 1999.
12
<PAGE>
CASTLE & COOKE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BACKLOG (CONTINUED)
As of September 30, 1998, there are five sales contracts for townhomes
under construction at the Manele Bay residential project on the island of
Lanai, which have an aggregate sales value of approximately $6.1 million
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital to operate its resorts, to purchase and
develop land, to construct homes and homesites and to acquire, develop and
operate commercial property.
On May 16, 1997, the Company's existing credit agreement with a syndicate
of banks was amended and restated (the "Credit Agreement"). Pursuant to this
Credit Agreement, the banks agreed to provide a three- year revolving credit
facility of up to $250 million, based upon a percentage of value of certain
commercial properties and home building inventory (the "Borrowing Base"). At
September 30, 1998, the Borrowing Base allows the Company to borrow up to $250
million. The Credit Agreement bears interest at a variable rate based on the
London Interbank Offered Rate ("LIBOR") or at an alternative rate based upon a
designated bank's prime rate or the federal funds rate. At September 30, 1998,
total borrowings under the Credit Agreement were $238 million and the weighted
average interest rate was 7.05%. On September 9, 1998, the Company entered into
a $20 million revolving credit agreement with a bank. This revolving credit
agreement, which is due on December 31, 1998 is expected to be repaid from the
proceeds of a $50 million term loan, which the Company is currently negotiating
with an insurance company and is expected to close before the end of 1998. At
September 30, 1998, total borrowings under this $20 million revolving credit
agreement were $10 million with an interest rate of 7.34%. The $50 million term
loan is expected to have an interest rate of 6.73%, a thirty year amortization
schedule with a ten year term. Effective October 1, 1997, the Company entered
into two five year interest rate contracts to hedge against rising interest
rates. These contracts effectively convert $80 million of the Company's variable
rate debt to fixed rated debt at an average rate of 7.4%, as adjusted based on
the Company's total debt outstanding. Market risk exposure is limited to the
net interest differential between the variable rate debt under the credit
facility and the fixed rate debt, which is reflected in interest incurred. At
September 30, 1998, the Company is in compliance with the various financial
covenants of its loan agreements.
In connection with its "Dutch Auction" self-tender offer, the Company
repurchased 3,015,764 shares of the Company's common stock at a price of $19.25
per share on July 6, 1998. The total repurchase price of approximately $58
million was funded primarily from borrowings under the Credit Agreement.
The Company believes that its existing financial resources, together with
the planned $50 million term loan discussed above are adequate to meet its
short-term and long-term cash needs. There can be no assurance, however, that
the existing capital together with such additional capital will be sufficient.
The Company may be required to seek additional capital from the sale of assets
or from a variety of other potential sources.
Residential development spending was $87.2 million in the first nine months
of 1998. Spending during the first nine months of 1998 at the Mililani, Royal
Kunia and Lalea residential developments on Oahu was approximately $30.9
million, $15.1 million and $7.5 million, respectively. Spending during the
first nine months of 1998 at the Bakersfield, California; Orlando, Florida; and
Sierra Vista, Arizona residential developments was approximately $14.3 million,
$14.0 million and $2.7 million, respectively.
13
<PAGE>
CASTLE & COOKE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
Total resort capital spending was approximately $3.6 million for the first
nine months of 1998. Developmental expenditures on the island of Lanai totaled
$12.7 million during the first nine months of 1998. Spending during the first
nine months of 1998 at the Manele and Koele luxury resort residential projects
was approximately $8.5 million and $327,000, respectively. Spending during the
first nine months of 1998 at the Lanai plantation homes was approximately $1.5
million. Construction costs for the senior housing center on Lanai was $2.1
million for the first nine months of 1998.
Capital expenditures at the commercial projects totaled $33.7 million
during the first nine months of 1998. Commercial spending included $3.1
million for the construction of the 129,000 square foot Two Premier Plaza
office building in Atlanta, Georgia; $2.2 million for construction of the
43,000 square foot Regents Center II office building in Tempe, Arizona; $3.1
million for the acquisition of land and the early planning for the
construction of the 173,000 square foot Falls of the Neuse office building in
Raleigh, North Carolina; $8.8 million for construction of the Coyote Creek
Golf Course and clubhouse in San Jose, California; and $4.4 million for
construction of the Keene's Pointe Golf Course and clubhouse in Orlando,
Florida. Commercial spending in Bakersfield, California, included $3.8
million for the final phase of the 300,000 square foot Marketplace shopping
center, $2.0 million for a 100,000 square foot industrial building and $2.4
million for a 75,000 square foot office building.
Cash flow from operating activities increased $7.4 million during the
first nine months of 1998 as compared to the corresponding period in 1997.
The increase is primarily due to improved operating results and the timing of
payables and tax refunds. The Company received a $9.2 million tax refund
during the first nine months of 1997. No tax refund was received in 1998.
However, the Company's increase in accounts payable provided an additional
$5.9 million in 1998 compared to the corresponding period in the prior year
to partially offset the 1997 tax refund. Cash flow used in investing
activities increased $14.6 million during the first nine months of 1998 as
compared to the corresponding period in 1997. The increase is primarily due
to increased construction activity on the commercial developments. Cash flow
provided by financing activities increased $15.2 million during the first
nine months in 1998 as compared to the corresponding period in 1997. The
change is primarily due to net borrowings under the Credit Agreement (or its
predecessor) of $74.0 million partially offset by the $58.4 million cost of
repurchasing 3,015,764 shares of the Company's common stock.
Year 2000
READINESS
The year 2000 ("Y2K") problem arose because many existing computer programs
use two digits instead of four to refer to the year. These programs may be
unable to properly interpret a year that begins with "20" (i.e., the year
2000), which could cause disruption of normal business activities. The Company
uses computer software and related technologies that will be affected by the
Year 2000 problem. The Company also relies upon a number of third parties in
conducting its business and could be adversely affected if these third parties
are not Y2K compliant.
The Company is addressing the Y2K problem with a company-wide program
involving its corporate office and principal locations. This program includes
the identification of affected software and systems through an inventory and
assessment, communications with the Company's material suppliers and other third
parties to determine the extent to which the Company is vulnerable to failure by
them to be Y2K compliant, and the development and implementation of a
remediation and response plan.
14
<PAGE>
CASTLE & COOKE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Company is currently in the inventory and assessment phase, creating
an inventory and assessing the Company's information technology systems (such
as business computing systems and technical infrastructure), as well as
non-information technology systems (such as embedded technology). This
inventory and assessment phase is estimated to be approximately 80% complete.
Subject to new information becoming available, the Company expects this to be
complete by the end of 1998.
In conjunction with the inventory and assessment, the Company is
developing and implementing a remediation and response plan intended to
remedy Y2K deficiencies and to address contingencies for unforeseen problems.
In most cases, the Company will replace older software with new, upgraded
software and systems that are Y2K compliant. The Company's major accounting
systems are either currently Y2K compliant or are expected to be Y2K
compliant by the end of the first quarter of 1999.
In addition to problems that may arise if material suppliers are not Y2K
compliant, systemic problems in the economy resulting from the Y2K problem, such
as problems with air traffic control, other transportation systems, power supply
or overall economic dislocation would affect the Company. In addition, the
Company's development and other activities could be halted or materially delayed
if its lenders are, as a result of the Y2K problem, unable to advance funds from
credit or similar facilities.
COSTS
The amount spent by the Company as of September 30, 1998 to address the Y2K
problem is approximately $110,000. Given the information available at this
time, the Company currently anticipates the total cost (including past
expenditures) to remediate the Y2K problem will not exceed $700,000. Although
the timing of some of these expenditures may be accelerated by the Y2K problem,
in most instances they will involve expenditures that would have occurred in the
normal course of business.
RISKS AND CONTINGENCY PLANS
The Company is currently uncertain as to what are the most reasonably
likely worst case Y2K scenarios for its operations. The Company will continue
to analyze this issue and to develop a contingency plan to respond to these
scenarios as more information becomes available.
Statements herein that are not historical facts are "forward-looking
statements." For example, the estimated costs of the Company's Y2K compliance
project and the dates on which the Company plans to complete its remediation and
other activities are based on management's best estimates, which were derived
from numerous assumptions about future events, including the availability of
remediation resources, the existence and adequacy of third party Y2K compliance
plans, the ability to identify and correct all relevant computer codes, and
other factors. There can be no guarantee that these estimates and plans will be
achieved and actual results could differ materially.
15
<PAGE>
CASTLE & COOKE, INC.
PART II.
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS
Exhibit
No.
-------
4.3 Revolving Credit Agreement dated as of September 9, 1998, among
Castle & Cooke, Inc., As Borrower, The Chase Manhattan Bank and
Other Parties which may become Parties Hereto, as Lenders, and
the Chase Manhattan Bank, as Administrative Agent.
27 Financial Data Schedule
(b) Reports on Form 8-K
THE REGISTRANT FILED NO REPORTS ON FORM 8-K DURING THE QUARTER
ENDED SEPTEMBER 30, 1998.
All other items required under Part II are omitted because they are not
applicable.
16
<PAGE>
CASTLE & COOKE, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CASTLE & COOKE, INC.
Registrant
Date: November 12, 1998 BY /s/ Edward C. Roohan
------------------------------------
Edward C. Roohan
Vice President and
Chief Financial Officer
(Principal financial officer)
Date: November 12, 1998 BY /s/ Scott J. Blechman
------------------------------------
Scott J. Blechman
Vice President and
Corporate Controller
(Principal accounting officer)
17
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
in the amount of
$20,000,000
among
CASTLE & COOKE, INC.,
as Borrower
THE CHASE MANHATTAN BANK
and
OTHER PARTIES WHICH MAY BECOME PARTIES HERETO,
as Lenders
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
-------------------------------
September 9, 1998
-------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.01. Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.02. Classification of Loans and Borrowings . . . . . . . . . . . . .9
SECTION 1.03. Terms Generally. . . . . . . . . . . . . . . . . . . . . . . . .9
SECTION 1.04. Accounting Terms; GAAP . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II
THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.01. Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.02. Loans and Borrowings . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.03. Requests for Revolving Borrowings. . . . . . . . . . . . . . . 10
SECTION 2.04. Funding of Borrowings. . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.05. Interest Elections . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.06. Termination and Reduction of Commitments . . . . . . . . . . . 12
SECTION 2.07. Repayment of Loans; Evidence of Debt . . . . . . . . . . . . . 13
SECTION 2.08. Prepayment of Loans. . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.09. Unused Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.10. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.11. Alternate Rate of Interest . . . . . . . . . . . . . . . . . . 15
SECTION 2.12. Increased Costs. . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.13. Break Funding Payments . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.14. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.15. Payments Generally; Pro Rata Treatment; Sharing of Set-offs. . 17
SECTION 2.16. Mitigation Obligations; Replacement of Lenders . . . . . . . . 18
SECTION 2.17. Mandatory Reduction of Commitments; Acceleration of Maturity
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE III
REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.01. Organization; Powers . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.02. Authorization; Enforceability. . . . . . . . . . . . . . . . . 19
SECTION 3.03. Governmental Approvals; No Conflicts . . . . . . . . . . . . . 20
SECTION 3.04. Financial Condition; No Material Adverse Change. . . . . . . . 20
SECTION 3.05. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.06. Litigation and Environmental Matters . . . . . . . . . . . . . 20
SECTION 3.07. Compliance with Laws and Agreements. . . . . . . . . . . . . . 21
SECTION 3.08. Investment and Holding Company Status. . . . . . . . . . . . . 21
SECTION 3.09. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.10. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.11. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.12. Year 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.13. Secured Credit Agreement . . . . . . . . . . . . . . . . . . . 22
i
<PAGE>
ARTICLE IV
CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.01. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.02. Each Credit Event. . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.01. Financial Statements and Other Information . . . . . . . . . . 23
SECTION 5.02. Notices of Material Events . . . . . . . . . . . . . . . . . . 24
SECTION 5.03. Existence; Conduct of Business . . . . . . . . . . . . . . . . 24
SECTION 5.04. Payment of Obligations . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.05. Maintenance of Properties; Insurance . . . . . . . . . . . . . 25
SECTION 5.06. Books and Records; Inspection Rights . . . . . . . . . . . . . 25
SECTION 5.07. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.08. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.09. Secured Credit Agreement . . . . . . . . . . . . . . . . . . . 25
ARTICLE VI
NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.01. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.02. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.03. Fundamental Changes. . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. . . 26
SECTION 6.05. Hedging Agreements . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.06. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.07. Transactions with Affiliates . . . . . . . . . . . . . . . . . 26
SECTION 6.08. Restrictive Agreements . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.09. Subsidiary Indebtedness. . . . . . . . . . . . . . . . . . . . 27
SECTION 6.10. Secured Credit Agreement . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.01. Events of Default under this Agreement . . . . . . . . . . . . 27
SECTION 7.02. Event of Default under the Secured Credit Agreement. . . . . . 29
ARTICLE VIII
THE ADMINISTRATIVE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 9.01. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 9.02. Waivers; Amendments. . . . . . . . . . . . . . . . . . . . . . 31
SECTION 9.03. Expenses; Indemnity; Damage Waiver . . . . . . . . . . . . . . 32
SECTION 9.04. Successors and Assigns . . . . . . . . . . . . . . . . . . . . 33
ii
<PAGE>
SECTION 9.05. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9.06. Counterparts; Integration; Effectiveness . . . . . . . . . . . 35
SECTION 9.07. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9.08. Right of Setoff. . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process . . 35
SECTION 9.10. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.11. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.12. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.13. Interest Rate Limitation . . . . . . . . . . . . . . . . . . . 37
</TABLE>
SCHEDULES:
Schedule 2.01 -- Commitments
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
iii
<PAGE>
REVOLVING CREDIT AGREEMENT dated as of September 9,
1998, among CASTLE & COOKE, INC., as Borrower, THE CHASE
MANHATTAN BANK and OTHER PARTIES WHICH MAY BECOME PARTIES
HERETO, as Lenders, and THE CHASE MANHATTAN BANK, as
Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. (a) As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"ADJUSTED LIBO RATE" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to 1.75% (175 basis points) PLUS
(a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory
Reserve Rate.
"ADMINISTRATIVE AGENT" means The Chase Manhattan Bank, in its capacity
as administrative agent for the Lenders hereunder.
"ADMINISTRATIVE QUESTIONNAIRE" means an Administrative Questionnaire
in a form supplied by the Administrative Agent.
"AFFILIATE" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"ALTERNATE BASE RATE" means, for any day, a rate per annum equal to
the greatest of (a) the Prime Rate in effect on such day, and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the
Alternate Base Rate due to a change in the Prime Rate, or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate, or the Federal Funds Effective Rate, respectively.
"APPLICABLE PERCENTAGE" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
"ASSESSMENT RATE" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R.
Part 327 (or any successor provision) to the Federal Deposit Insurance
Corporation for insurance by such Corporation of
1
<PAGE>
time deposits made in dollars at the offices of such member in the United
States; PROVIDED that if, as a result of any change in any law, rule or
regulation, it is no longer possible to determine the Assessment Rate as
aforesaid, then the Assessment Rate shall be such annual rate as shall be
determined by the Administrative Agent to be representative of the cost of such
insurance to the Lenders.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of EXHIBIT A or any other form approved by the Administrative Agent.
"AVAILABILITY PERIOD" means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
"BOARD" means the Board of Governors of the Federal Reserve System of
the United States of America.
"BORROWER" means Castle & Cooke, Inc., a Hawaii corporation.
"BORROWING" means Revolving Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect.
"BORROWING REQUEST" means a request by the Borrower for a Revolving
Borrowing in accordance with Section 2.03.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City or Honolulu are authorized or
required by law to remain closed; PROVIDED that, when used in connection with a
Eurodollar Loan, the term "BUSINESS DAY" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"CHANGE IN CONTROL" shall have the meaning given to such term in the
Secured Credit Agreement.
"CHANGE IN LAW" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
by any Governmental Authority or in the interpretation or application thereof by
any Governmental Authority after the date of this Agreement or (c) compliance by
any Lender (or, for purposes of Section 2.12(b), by any lending office of such
Lender or by such Lender's holding company, if any) with any request, guideline
or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COMMITMENT" means, with respect to each Lender, the commitment of
such Lender to make Revolving Loans hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Credit
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.06 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04. The initial
amount of each Lender's Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Commitment, as applicable. The initial aggregate amount of the Lenders'
Commitments is $20,000,000.00.
2
<PAGE>
"CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"CONTROLLING" and "CONTROLLED" have meanings correlative thereto.
"DEFAULT" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"DISCLOSED MATTERS" means any actions, suits and proceedings and the
environmental matters disclosed to the Administrative Agent pursuant to the
Secured Credit Agreement.
"DOLLARS" or "$" refers to lawful money of the United States of
America.
"EFFECTIVE DATE" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"EURODOLLAR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"EVENT OF DEFAULT" has the meaning assigned to such term in
Article VII.
"EXCLUDED TAXES" means, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.16(b), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 2.14(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.14(a).
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
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"FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or controller of the Borrower.
"FOREIGN LENDER" means any Lender that is organized under the laws of
a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"GAAP" means generally accepted accounting principles in the United
States of America.
"GOVERNMENTAL AUTHORITY" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.
"INFORMATION" has the meaning given to such term in Section 9.12.
"INTEREST ELECTION REQUEST" means a request by the Borrower to convert
or continue a Revolving Borrowing in accordance with Section 2.05.
"INTEREST PAYMENT DATE" means (a) with respect to any ABR Loan, the
last day of each calendar month and (b) with respect to any Eurodollar Loan, the
last day of the Interest Period applicable to the Borrowing of which such Loan
is a part.
"INTEREST PERIOD" means with respect to any Eurodollar Borrowing, the
one month period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one thereafter;
PROVIDED, that (i) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (ii) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period.
For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective date of the
most recent conversion or continuation of such Borrowing.
"LENDERS" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"LIBO RATE" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO RATE" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the
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Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"LOANS" means the loans made by the Lenders to the Borrower pursuant
to this Agreement.
"MATERIAL INDEBTEDNESS" means Indebtedness (other than the Loans or
Loans under the Secured Credit Agreement), of any one or more of the Borrower
and its Subsidiaries in an aggregate principal amount exceeding $1,000,000.00.
"MATURITY DATE" means December 31, 1998 (subject to acceleration
pursuant to the provisions of Section 2.17).
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"OTHER TAXES" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"PERMITTED ENCUMBRANCES" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of
business and securing obligations that are not overdue by more than 30 days
or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Section 7.01; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrower or any Subsidiary;
(g) Liens in favor of the Administrative Agent constituting collateral
for and under the Secured Credit Agreement.
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PROVIDED that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
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"PERMITTED INVESTMENTS" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof which
has a combined capital and surplus and undivided profits of not less than
$500,000,000; and
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria described in
clause (c) above.
"PERSON" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 302 of ERISA, and in respect of which the
Borrower or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"PRIME RATE" means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"REGISTER" has the meaning set forth in Section 9.04.
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"REQUIRED LENDERS" means, at any time, Lenders having Revolving Credit
Exposures and unused Commitments representing at least 51% of the sum of the
total Revolving Credit Exposures and unused Commitments at such time.
"RESTRICTED PAYMENT" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock of the Borrower or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such shares of capital stock of the Borrower
or any option, warrant or other right to acquire any such shares of capital
stock of the Borrower.
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"REVOLVING CREDIT EXPOSURE" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans at such time.
"REVOLVING LOAN" means a Loan made pursuant to Section 2.03.
"S&P" means Standard & Poor's.
"SECURED CREDIT AGREEMENT" means that certain Amended and Restated
Credit Agreement, dated as of May 16, 1997, among Castle & Cooke, Inc., as
borrower, the Administrative Agent, as administrative agent, and the Lenders set
forth therein, in the principal amount of up to $250,000,000.00, as such
Agreement may be amended and/or restated from time to time.
"STATUTORY RESERVE RATE" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
"TAXES" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TRANSACTIONS" means the execution, delivery and performance by the
Borrower of this Agreement, the borrowing of Loans, and the use of the proceeds
thereof.
"TYPE", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate, or the
Alternate Base Rate.
"UNUSED FEE" shall have the meaning given to such term in Section
2.09.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
(b) Capitalized terms not otherwise defined herein shall have the meaning
given to such terms in the Secured Credit Agreement.
SECTION 1.02. CLASSIFICATION OF LOANS AND BORROWINGS. For purposes
of this Agreement, Loans may be classified and referred to by Class (E.G., a
"Revolving Loan") or by Type (E.G., a "Eurodollar Loan") or by Class and Type
(E.G., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
referred to by Class (E.G., a "Revolving Borrowing") or by Type (E.G., a
"Eurodollar Borrowing") or by Class and Type (E.G., a "Eurodollar Revolving
Borrowing").
SECTION 1.03. TERMS GENERALLY. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include
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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, supplemented or otherwise modified (subject to any
restrictions on such amendments, 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, (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 and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.04. ACCOUNTING TERMS; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; PROVIDED
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS. Subject to the terms and conditions set
forth herein, each Lender agrees to make Revolving Loans to the Borrower from
time to time during the Availability Period in an aggregate principal amount
that will not result in such Lender's Revolving Credit Exposure exceeding such
Lender's Commitment. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow
Revolving Loans.
SECTION 2.02. LOANS AND BORROWINGS. (a) Each Revolving Loan shall
be made as part of a Borrowing consisting of Revolving Loans made by the Lenders
ratably in accordance with their respective Commitments. The failure of any
Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder; PROVIDED that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.
(b) Subject to Section 2.11, each Revolving Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; PROVIDED that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement.
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(c) At the commencement of each Interest Period for any Eurodollar
Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $500,000.00 and not less than $1,000,000.00. At the time
that each ABR Revolving Borrowing is made, such Borrowing shall be in an
aggregate amount that is an integral multiple of $50,000.00 and not less than
$100,000.00; PROVIDED that an ABR Revolving Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the total Commitments.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.
SECTION 2.03. REQUESTS FOR REVOLVING BORROWINGS. To request a
Revolving Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
2:00 P.M., New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
2:00 P.M.., New York City time, one Business Day before the date of the proposed
Borrowing. Each such telephonic Borrowing Request shall be irrevocable and
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a written Borrowing Request in a form approved by the Administrative
Agent and signed by the Borrower. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and
(iv) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.04.
If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. The Interest Period
with respect to any requested Eurodollar Revolving Borrowing shall be an
Interest Period of one month's duration. Promptly following receipt of a
Borrowing Request in accordance with this Section, the Administrative Agent
shall advise each Lender of the details thereof and of the amount of such
Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. FUNDING OF BORROWINGS. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 3:00 P.M. New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the Borrower by promptly crediting the amounts so received, in like funds, to
an account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable
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Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender's Loan included in such
Borrowing.
SECTION 2.05. INTEREST ELECTIONS. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request.
Thereafter, the Borrower may elect to convert such Borrowing to a different Type
or to continue such Borrowing, all as provided in this Section. The Borrower
may elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing
(in which case the information to be specified pursuant to clause (iii)
below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day; and
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing, where each such Eurodollar Borrowing shall have an
Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) IF THE BORROWER FAILS TO DELIVER A TIMELY INTEREST ELECTION
REQUEST WITH RESPECT TO A EURODOLLAR REVOLVING BORROWING PRIOR TO THE END OF THE
INTEREST PERIOD APPLICABLE THERETO, THEN, UNLESS SUCH BORROWING IS REPAID AS
PROVIDED HEREIN, AT THE END OF SUCH INTEREST PERIOD SUCH BORROWING SHALL BE
CONVERTED TO AN ABR BORROWING. Notwithstanding any contrary provision hereof,
if an Event of Default has occurred and is continuing and the Administrative
Agent, at the request of the Required Lenders, so notifies the Borrower, then,
so long as an Event of Default is continuing (i) no outstanding Revolving
Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii)
unless repaid, each Eurodollar Revolving Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.
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SECTION 2.06. TERMINATION AND REDUCTION OF COMMITMENTS. (a) Unless
previously terminated, the Commitments shall terminate on the Maturity Date.
(b) The Borrower may at any time terminate, or from time to time
reduce, the Commitments; PROVIDED that (i) each reduction of the Commitments
shall be in an amount that is an integral multiple of $500,000.00 and not less
than $1,000,000.00 and (ii) the Borrower shall not terminate or reduce the
Commitments if, after giving effect to any concurrent prepayment of the Loans in
accordance with Section 2.08, the sum of the Revolving Credit Exposures would
exceed the total Commitments.
(c) The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under paragraph (b) of this Section at
least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable; PROVIDED that a notice of termination of
the Commitments delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrower (by notice to the Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied. Any termination or reduction of the Commitments shall be permanent.
Each reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments.
(d) In addition to a reduction of the Commitments pursuant to clause
(b) above, the Commitments shall be reduced in accordance with the provisions of
Section 2.17.
SECTION 2.07. REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Revolving Loan
on the Maturity Date, or sooner as may be required hereunder, including without
limitation, pursuant to the provisions of Section 2.17.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be PRIMA FACIE evidence of the
existence and amounts of the obligations recorded therein; PROVIDED that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more
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promissory notes in such form payable to the order of the payee named therein
(or, if such promissory note is a registered note, to such payee and its
registered assigns).
SECTION 2.08. PREPAYMENT OF LOANS. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to prior notice in accordance with paragraph (b) of this Section.
(b) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Revolving Borrowing, not later than 2:00 P.M.., New
York City time, three Business Days before the date of prepayment or (ii) in the
case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New
York City time, one Business Day before the date of prepayment. Each such
notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Borrowing or portion thereof to be prepaid; PROVIDED
that, if a notice of prepayment is given in connection with a conditional notice
of termination of the Commitments as contemplated by Section 2.06, then such
notice of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.06. Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Revolving
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Revolving Borrowing of the same Type as provided in Section 2.02.
Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.10.
SECTION 2.09. UNUSED FEES. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender an Unused Fee (each an
"UNUSED FEE"), which shall accrue at the rate of 0.3% (30 basis points) per
annum on the daily amount of the amount by which the Commitment of such Lender
exceeds such Lender's Applicable Percentage of the outstanding principal balance
of all Loans during the period from and including the Effective Date to but
excluding the date on which such Commitment terminates. Accrued Unused Fees
shall be payable in arrears on the last day of each calendar month and on the
date on which the Commitment of a Lender, as applicable, terminates, commencing
on the first such date to occur after the date hereof; PROVIDED that any Unused
Fees accruing after the date on which the Commitment of a Lender, as applicable,
terminates shall be payable on demand. All Unused Fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).
(b) All Unused Fees payable hereunder shall be paid on the dates due,
in immediately available funds, to the Administrative Agent for distribution to
the Lenders. Unused Fees paid shall not be refundable under any circumstances.
SECTION 2.10. INTEREST. (a) The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing.
(c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.
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(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Eurodollar Revolving
Loans, upon termination of the Commitments; PROVIDED that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment of
an ABR Revolving Loan prior to the end of the Availability Period), accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Revolving Loan prior to the end of the current Interest Period
therefor, accrued interest on such Loan shall be payable on the effective date
of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate, or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.11. ALTERNATE RATE OF INTEREST. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as
applicable, for such Interest Period; or
(b) the Administrative Agent is advised by a Lender that the Adjusted
LIBO Rate for such Interest Period will not adequately and fairly reflect
the cost to such Lenders (or Lender) of making or maintaining their Loans
(or its Loan) included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be
ineffective and (ii) if any Borrowing Request requests a Eurodollar Revolving
Borrowing, such Borrowing shall be made as an ABR Borrowing.
SECTION 2.12. INCREASED COSTS. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or to
reduce the amount of any sum received or receivable by such Lender (whether of
principal, interest or otherwise), then the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.
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(b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of this Agreement or the Loans made by such Lender to a level
below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's or holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company as specified in
paragraph (a) or (b) of this Section shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay such Lender
the amount shown as due on any such certificate within 10 days after receipt
thereof.
(d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's right to
demand such compensation; PROVIDED that the Borrower shall not be required to
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor;
PROVIDED FURTHER that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 270-day period referred to above shall be
extended to include the period of retroactive effect thereof.
SECTION 2.13. BREAK FUNDING PAYMENTS. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice may be revoked
under Section 2.08(b) and is revoked in accordance therewith), or (d) the
assignment of any Eurodollar Loan or Fixed Rate Loan other than on the last day
of the Interest Period applicable thereto as a result of a request by the
Borrower pursuant to Section 2.16, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount of such Loan had such event not occurred, at the Adjusted LIBOR
Rate that would have been applicable to such Loan, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the amount of
interest which would accrue on such principal amount for such period at the
interest rate which such Lender would bid were it to bid, at the commencement of
such period, for dollar deposits of a comparable amount and period from other
banks in the eurodollar market. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.
SECTION 2.14. TAXES. (a) Any and all payments by or on account of
any obligation of the Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; PROVIDED that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or Lender
(as the case may be) receives an amount equal to the sum it would have received
had no
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such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent and each
Lender, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrower hereunder (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability
delivered to the Borrower by a Lender, or by the Administrative Agent on its own
behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate.
SECTION 2.15. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF
SET-OFFS. (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees, amounts payable under Section
2.12, 2.13 or 2.14, or otherwise) prior to 2:00 P.M., New York City time, on the
date when due, in immediately available funds, without set-off or counterclaim.
Any amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 380 Madison Avenue,
New York, New York, and except that payments pursuant to Sections 2.12, 2.13,
2.14 and 9.03 shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal then due to such parties.
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(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Revolving Loans
and accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash at
face value) participations in the Revolving Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans; PROVIDED that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans to any assignee
or participant, other than to the Borrower or any Subsidiary or Affiliate
thereof (as to which the provisions of this paragraph shall apply). The
Borrower consents to the foregoing and agrees, to the extent it may effectively
do so under applicable law, that any Lender acquiring a participation pursuant
to the foregoing arrangements may exercise against the Borrower rights of
set-off and counterclaim with respect to such participation as fully as if such
Lender were a direct creditor of the Borrower in the amount of such
participation.
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders that the Borrower will not make such
payment, the Administrative Agent may assume that the Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.04(b) or 2.15(d), then the Administrative Agent may,
in its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
SECTION 2.16. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS. (a)
If any Lender requests compensation under Section 2.12, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.14, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.12 or 2.14, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.12, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.14,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
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Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement
(other than any outstanding Competitive Loans held by it) to an assignee that
shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); PROVIDED that (i) the Borrower shall have received the
prior written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under
Section 2.12 or payments required to be made pursuant to Section 2.14, such
assignment will result in a reduction in such compensation or payments. A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
SECTION 2.17. MANDATORY REDUCTION OF COMMITMENTS; ACCELERATION OF
MATURITY DATE. Notwithstanding anything to the contrary herein contained or
implied, no Mortgaged Properties, New Mortgaged Properties or Additional
Mortgaged Properties (as such terms are defined in the Secured Credit Agreement)
shall be sold to a Person or Persons which are not an Affiliate or Affiliates of
the Borrower, refinanced, or otherwise released as Collateral under and for the
Secured Credit Agreement, unless (a) the proceeds from such sale, refinancing,
or other event resulting in any such release, after payment of all reasonable
and customary costs and expenses actually incurred by the Borrower in connection
therewith, shall be an amount equal to or greater than (i) the outstanding
principal balances of the Loans on such date, all accrued and unpaid interest
thereon through such date, all other sums due and unpaid hereunder on such date
(including, without limitation, any unpaid portion of the Unused Fee through
such date) and, if such date is not the last day of an Interest Period, a sum
sufficient to pay the amount due pursuant to Section 2.13 on a prepayment of all
the Loans outstanding on such date and (ii) any sums which may be due and
payable pursuant to the Secured Credit Agreement as a consequence of such sale,
refinancing or other release of Collateral AND (b) contemporaneously with such
sale, refinancing or other release of Collateral (x) the sum described in
clause (i) above is paid to the Administrative Agent as a mandatory prepayment
of the Loans hereunder and all other sums referred to in clause (i) above, and
(y) any sums required to be paid to the Administrative Agent under the Secured
Credit Agreement pursuant to the Secured Credit Agreement as a consequence of
such sale, refinancing or other release of Collateral are paid in compliance
with the Secured Credit Agreement. In such event, the Commitments shall be
reduced to $0, and the Maturity Date shall be accelerated from December 31, 1998
to the date of any such sale, refinancing or other release of Collateral.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
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SECTION 3.02. AUTHORIZATION; ENFORCEABILITY. The Transactions are
within the Borrower's corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. This Agreement has
been duly executed and delivered by the Borrower and constitutes a legal, valid
and binding obligation of the Borrower, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 3.03. GOVERNMENTAL APPROVALS; NO CONFLICTS. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of the Borrower or any of its Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon the Borrower or any of its
Subsidiaries or its assets, or give rise to a right thereunder to require any
payment to be made by the Borrower or any of its Subsidiaries, and (d) will not
result in the creation or imposition of any Lien on any asset of the Borrower or
any of its Subsidiaries.
SECTION 3.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (a)
The Borrower has heretofore furnished to the Lenders its consolidated balance
sheet and statements of income, stockholders equity and cash flows (i) as of and
for the fiscal year ended December 31, 1997, reported on by Arthur Andersen LLP,
independent public accountants, and (ii) as of and for the fiscal quarter and
the portion of the fiscal year ended June 30, 1998, certified by its chief
financial officer. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Borrower and its consolidated Subsidiaries as of such dates and for such periods
in accordance with GAAP, subject to year-end audit adjustments and the absence
of footnotes in the case of the statements referred to in clause (ii) above.
(b) Since June 30, 1998, there has been no material adverse change in
the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole.
SECTION 3.05. PROPERTIES. (a) Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for minor defects in
title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes.
(b) Each of the Borrower and its Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Borrower and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.06. LITIGATION AND ENVIRONMENTAL MATTERS. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.
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(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither the Borrower nor any of
its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. COMPLIANCE WITH LAWS AND AGREEMENTS. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.
SECTION 3.08. INVESTMENT AND HOLDING COMPANY STATUS. Neither the
Borrower nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. TAXES. Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $1,000,000.00 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $1,200,000.00 the fair
market value of the assets of all such underfunded Plans.
SECTION 3.11. DISCLOSURE. The Borrower has disclosed to the Lenders
all agreements, instruments and corporate or other restrictions to which it or
any of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements,
certificates or other information furnished by or on behalf of the Borrower to
the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; PROVIDED that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time.
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SECTION 3.12. YEAR 2000. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (i) the Borrower's
computer systems and (ii) equipment containing embedded microchips (including
systems and equipment supplied by others or with which Borrower's systems and
the testing of all such systems and equipment, as so reprogrammed, will be
completed by September 30, 1999. The cost to the Borrower of such reprogramming
and testing and of the reasonably foreseeable consequences of year 2000 to the
Borrower (including, without limitation, reprogramming errors and the failure of
others' systems or equipment) will not result in a Default or a Material Adverse
Effect. Except for such of the reprogramming referred to in the preceding
sentence as may be necessary, the computer and management information systems of
the Borrower and its Subsidiaries are and, with ordinary course upgrading and
maintenance, will continue for the term of this Agreement to be, sufficient to
permit the Borrower to conduct its business without Material Adverse Effect.
SECTION 3.13. SECURED CREDIT AGREEMENT. Each representation of the
Borrower under Article III of the Secured Credit Agreement (if and to the extent
not made in Sections 3.01 through 3.13 hereof) are deemed repeated herein and
made by the Borrower hereunder.
ARTICLE IV
CONDITIONS
SECTION 4.01. EFFECTIVE DATE. The obligations of the Lenders to make
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received from
each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart
of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of Goodsill Anderson Quinn & Stifel in form and
substance reasonably satisfactory to the Administrative Agent. The
Borrower hereby requests such counsel to deliver such opinion.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of the
Borrower, the authorization of the Transactions and any other legal matters
relating to the Borrower, this Agreement or the Transactions, all in form
and substance satisfactory to the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the
conditions set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower hereunder.
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The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m., New
York City time, on September 30, 1998 (and, in the event such conditions are not
so satisfied or waived, the Commitments shall terminate at such time).
SECTION 4.02. EACH CREDIT EVENT. The obligation of each Lender to
make a Loan on the occasion of any Borrowing, is subject to the satisfaction of
the following conditions:
(a) The representations and warranties of the Borrower set forth in
this Agreement shall be true and correct on and as of the date of such
Borrowing.
(b) At the time of and immediately after giving effect to such
Borrowing, no Default or Event of Default shall have occurred and be
continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in paragraphs (a)
and (b) of this Section.
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full, the Borrower covenants and agrees with the Lenders that:
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION. The
Borrower will furnish to the Administrative Agent and each Lender:
(a) within 95 days after the end of each fiscal year of the Borrower,
its audited consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and for
such year, setting forth in each case in comparative form the figures for
the previous fiscal year, all reported on by Arthur Andersen LLP or other
independent public accountants of recognized national standing (without a
"going concern" or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect
that such consolidated financial statements present fairly in all material
respects the financial condition and results of operations of the Borrower
and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;
(b) within 50 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, its consolidated balance
sheet and related statements of operations, stockholders' equity and cash
flows as of the end of and for such fiscal quarter and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form
the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all
material respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes;
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(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto and (ii) stating whether any
change in GAAP or in the application thereof has occurred since the date of
the audited financial statements referred to in Section 3.04 and, if any
such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate;
(d) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Borrower or any Subsidiary with the Securities and Exchange Commission,
or any Governmental Authority succeeding to any or all of the functions of
said Commission, or with any national securities exchange, or distributed
by the Borrower to its shareholders generally, as the case may be; and
(e) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of this Agreement,
as the Administrative Agent or any Lender may reasonably request.
SECTION 5.02. NOTICES OF MATERIAL EVENTS. The Borrower will furnish
to the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate
amount exceeding $500,000.00; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. EXISTENCE; CONDUCT OF BUSINESS. The Borrower will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; PROVIDED that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under
Section 6.03.
SECTION 5.04. PAYMENT OF OBLIGATIONS. The Borrower will, and will
cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
the Borrower or such Subsidiary has
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set aside on its books adequate reserves with respect thereto in accordance with
GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.05. MAINTENANCE OF PROPERTIES; INSURANCE. The Borrower
will, and will cause each of its Subsidiaries to, (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations.
SECTION 5.06. BOOKS AND RECORDS; INSPECTION RIGHTS. The Borrower
will, and will cause each of its Subsidiaries to, keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Administrative Agent or any Lender, upon reasonable prior notice, to visit
and inspect its properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and independent accountants, all at such reasonable times and as often as
reasonably requested.
SECTION 5.07. COMPLIANCE WITH LAWS. The Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.08. USE OF PROCEEDS. The proceeds of the Loans will be
used only for general working capital. No part of the proceeds of any Loan will
be used, whether directly or indirectly, for any purpose that entails a
violation of any of the Regulations of the Board, including Regulations G, U and
X.
SECTION 5.09. SECURED CREDIT AGREEMENT. Each affirmative covenant of
the Borrower under Article V of the Secured Credit Agreement (if and to the
extent not made in Sections 5.01 through 5.08 hereof) are deemed repeated herein
and made hereunder.
ARTICLE VI
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in
full or terminated, the Borrower covenants and agrees with the Lenders that:
SECTION 6.01. INDEBTEDNESS. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness created hereunder; and
(b) Indebtedness permitted under, and not prohibited by, the Secured
Credit Agreement.
SECTION 6.02. LIENS. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
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unless and to the extent the existence of such Lien or Liens would not violate
the provisions of the Secured Credit Agreement.
SECTION 6.03. FUNDAMENTAL CHANGES. The Borrower will not, and will
not permit any of its Subsidiaries to, engage to any material extent in any
business other than businesses of the type conducted by the Borrower and its
Subsidiaries on the date of execution of this Agreement and businesses
reasonably related thereto, or otherwise violate, or permit any of its
Subsidiaries to violate, the provisions of the Secured Loan Agreement.
SECTION 6.04. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS. The Borrower will not, and will not permit any of its
Subsidiaries to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly owned Subsidiary prior to such merger) any
capital stock, evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person constituting a business unit, other than
Permitted Investments, if and to the extent the making of any such Permitted
Investments would not violate the provisions of the Secured Loan Agreement.
SECTION 6.05. HEDGING AGREEMENTS. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any Hedging Agreement, other
than Hedging Agreements entered into in the ordinary course of business to hedge
or mitigate risks to which the Borrower or any Subsidiary is exposed in the
conduct of its business or the management of its liabilities.
SECTION 6.06. RESTRICTED PAYMENTS. The Borrower will not, and will
not permit any of its Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, except (a) the Borrower may
declare and pay dividends with respect to its capital stock payable solely in
additional shares of its common stock, (b) Subsidiaries may declare and pay
dividends ratably with respect to their capital stock and (c) the Borrower may
make Restricted Payments pursuant to and in accordance with stock option plans
or other benefit plans for management or employees of the Borrower and its
Subsidiaries.
SECTION 6.07. TRANSACTIONS WITH AFFILIATES. The Borrower will not,
and will not permit any of its Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) in the ordinary course of business at prices and
on terms and conditions not less favorable to the Borrower or such Subsidiary
than could be obtained on an arm's-length basis from unrelated third parties,
(b) transactions between or among the Borrower and its wholly owned Subsidiaries
not involving any other Affiliate and (c) any Restricted Payment permitted by
Section 6.06.
SECTION 6.08. RESTRICTIVE AGREEMENTS. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that violates any of
the provisions of the Secured Credit Agreement.
SECTION 6.09. SUBSIDIARY INDEBTEDNESS. The Borrower will not permit
its Subsidiaries to have any Indebtedness other than indebtedness such
Subsidiaries are permitted or required to have pursuant to the provisions of the
Secured Credit Agreement.
SECTION 6.10. SECURED CREDIT AGREEMENT. Notwithstanding anything
herein contained or implied, any action, circumstance, event or activity
relating to the Borrower or its Subsidiaries which are
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prohibited by Article VI of the Secured Credit Agreement shall be deemed
prohibited under Article VI of this Agreement.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. EVENTS OF DEFAULT UNDER THIS AGREEMENT. If any of the
following events ("EVENTS OF DEFAULT") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan when and
as the same shall become due and payable, whether at the due date thereof
or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement, when and as the same shall become
due and payable, and such failure shall continue unremedied for a period
three (3) Business Days;
(c) any representation or warranty made or deemed made by or on behalf
of the Borrower or any Subsidiary in or in connection with this Agreement
or any amendment or modification hereof or waiver hereunder, or in any
report, certificate, financial statement or other document furnished
pursuant to or in connection with this Agreement or any amendment or
modification hereof or waiver hereunder, shall prove to have been incorrect
when made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.03 (with respect to the
Borrower's existence) or 5.08 or in Article VI;
(e) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after notice thereof from
the Administrative Agent to the Borrower (which notice will be given at the
request of any Lender);
(f) the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of
any Material Indebtedness, when and as the same shall become due and
payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become
due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity; PROVIDED that this clause (g)
shall not apply to secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets securing such
Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Borrower or any Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a
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receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Subsidiary or for a substantial part of its assets,
and, in any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of
the foregoing shall be entered;
(i) the Borrower or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or
other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this Article, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any
Subsidiary or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of creditors
or (vi) take any action for the purpose of effecting any of the foregoing;
(j) the Borrower or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become
due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $5,000,000.00 which are not covered by insurance shall
be rendered against the Borrower, any Subsidiary or any combination thereof
and the same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action shall
be legally taken by a judgment creditor to attach or levy upon any assets
of the Borrower or any Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the
Borrower and its Subsidiaries in an aggregate amount exceeding
(i) $500,000.00 in any year or (ii) $1,000,000.00 for all periods;
(m) a Change in Control shall occur; or
(n) an Event of Default shall occur under the Secured Credit
Agreement;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower; and
in case of any event with respect to the Borrower described in clause (h) or (i)
of this Article, the Commitments shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.
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SECTION 7.02. EVENT OF DEFAULT UNDER THE SECURED CREDIT AGREEMENT.
Without limiting any provisions, rights or remedies hereunder or under the
Secured Credit Agreement, the Borrower agrees that any Default hereunder shall
be a Default under the Secured Credit Agreement, and any Event of Default
hereunder shall be an Event of Default under the Secured Credit Agreement, if
and to the extent the Required Lenders under the Secured Credit Agreement shall
elect to declare any such Default or Event of Default, as the case may be, under
this Agreement, a Default or Event of Default under the Secured Credit
Agreement. In any of such events, the Administrative Agent and the Lenders
thereunder shall be entitled to all of the rights and remedies available to them
under the Secured Credit Agreement upon the occurrence of a Default or an Event
of Default, as the case may be, thereunder. The Lenders under the Secured
Credit Agreement are third-party beneficiaries of the provisions of this Section
7.02.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
Each of the Lenders hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms hereof, together with such actions and powers as are
reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02), and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02) or in the absence of its own gross negligence or
wilful misconduct. The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.
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The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent which shall be a bank with an office in New York,
New York, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrower to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Borrower
and such successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in
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writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at 10900 Wilshire Boulevard, Suite 1600,
Los Angeles, California 90024, Attention of Edward C. Roohan (Telecopy
No. (310) 824-7770);
(b) if to the Administrative Agent, to The Chase Manhattan Bank, 380
Madison Avenue, 11th Floor, New York, New York 10017, Attention of Marc E.
Costantino (Telecopy No. (212) 622-3580), with a copy to The Chase
Manhattan Bank, 270 Park Avenue, New York 10017, Attention of Legal
Department (Telecopy No. (212) 270-2934);
(c) if to any of the Lenders, to it at its address (and telecopy
number) as set forth on SCHEDULE 2.01; and
(d) if to any other Lender, to it at its address (and telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. WAIVERS; AMENDMENTS. (a) No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders; PROVIDED that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) postpone the
scheduled date of payment of the principal amount of any Loan, or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse
any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby, (iv)
change Section 2.15(b) or (c) in a manner that would alter the pro rata sharing
of payments required thereby, without the written consent of each Lender, or (v)
change any of the provisions of this Section or the definition of "Required
Lenders" or any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender; PROVIDED FURTHER that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent hereunder
without the prior written consent of the Administrative Agent.
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SECTION 9.03. EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation
and administration of this Agreement or any amendments, modifications or waivers
of the provisions hereof (whether or not the transactions contemplated hereby or
thereby shall be consummated) and (ii) all out-of-pocket expenses incurred by
the Administrative Agent or any Lender, including the fees, charges and
disbursements of any counsel for the Administrative Agent or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement, including its rights under this Section, or in connection with
the Loans made hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Loans.
(b) The Borrower shall indemnify the Administrative Agent, each
Lender, and each Related Party of any of the foregoing Persons (each such Person
being called an "INDEMNITEE") against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses, including
the fees, charges and disbursements of any counsel for any Indemnitee, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the consummation of the Transactions or any
other transactions contemplated hereby, (ii) any Loan or the use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; PROVIDED that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent such
Lender's Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
PROVIDED that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable not later than
10 days after written demand therefor.
SECTION 9.04. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed
31
<PAGE>
or implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby; to the extent
expressly contemplated hereby, the Related Parties of each of the Administrative
Agent and the Lenders; and, with respect to Section 7.02, the Administrative
Agent and the Lenders under the Secured Loan Agreement), any legal or equitable
right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees which are
institutional lenders all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans at the
time owing to it); PROVIDED that (i) except in the case of an assignment to a
Lender or an Affiliate of a Lender, each of the Borrower and the Administrative
Agent must give their prior written consent to such assignment (which consent
shall not be unreasonably withheld), (ii) except in the case of an assignment to
a Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender's Commitment, the amount of the Commitment of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000.00 unless each of the
Borrower and the Administrative Agent otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, (iv) the parties
to each assignment shall execute and deliver to the Administrative Agent an
Assignment and Acceptance, together with a processing and recordation fee of
$3,500, and (v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire; and PROVIDED FURTHER that
any consent of the Borrower otherwise required under this paragraph shall not be
required if an Event of Default has occurred and is continuing. Subject to
acceptance and recording thereof pursuant to paragraph (d) of this Section, from
and after the effective date specified in each Assignment and Acceptance the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.12, 2.13, 2.14 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "REGISTER"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
32
<PAGE>
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, sell participations to one or more banks or other entities
(a "PARTICIPANT") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); PROVIDED that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; PROVIDED that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (f) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.12, 2.13 and 2.14 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted
by law, each Participant also shall be entitled to the benefits of Section 9.08
as though it were a Lender, provided such Participant agrees to be subject to
Section 2.15(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.12 or 2.14 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower's
prior written consent. A Participant that would be a Foreign Lender if it were
a Lender shall not be entitled to the benefits of Section 2.14 unless the
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.14(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; PROVIDED that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.05. SURVIVAL. All covenants, agreements, representations
and warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.12, 2.13, 2.14 and 9.03 and Article VIII shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Commitments or the termination of this Agreement or any
provision hereof.
SECTION 9.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement
and any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous
33
<PAGE>
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
SECTION 9.07. SEVERABILITY. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Administrative Agent or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement
against the Borrower or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) To the fullest extent permitted by applicable law, each party to
this Agreement irrevocably consents to service of process in the manner provided
for notices in Section 9.01. Nothing in this Agreement will affect the right of
any party to this Agreement to serve process in any other manner permitted by
law.
34
<PAGE>
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. HEADINGS. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. CONFIDENTIALITY. Each of the Administrative Agent and
the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to any assignee of
or Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Borrower
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section or (ii) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source
other than the Borrower. For the purposes of this Section, "INFORMATION" means
all information received from the Borrower relating to the Borrower or its
business, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower; PROVIDED that, in the case of information received
from the Borrower after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
SECTION 9.13. INTEREST RATE LIMITATION. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "CHARGES"), shall exceed the
maximum lawful rate (the "MAXIMUM RATE") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
CASTLE & COOKE, INC., as Borrower
By /s/ Edward C. Roohan
-------------------------------------------------
Name: Edward C. Roohan
Title: Vice President and Chief Financial Officer
By /s/ Scott J. Blechman
-------------------------------------------------
Name: Scott J. Blechman
Title: Vice President & Corporate Controller
THE CHASE MANHATTAN BANK, as a Lender and as
Administrative Agent,
By /s/ Marc E. Costantino
-------------------------------------------------
Name: Marc E. Costantino
Title: Vice President
36
<PAGE>
EXHIBIT A
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of [ ] (as
amended and in effect on the date hereof, the "Credit Agreement"), among
[ ], the Lenders named therein and The Chase Manhattan Bank,
as Administrative Agent for the Lenders. Terms defined in the Credit Agreement
are used herein with the same meanings.
The Assignor named on the reverse hereof hereby sells and assigns,
without recourse, to the Assignee named on the reverse hereof, and the Assignee
hereby purchases and assumes, without recourse, from the Assignor, effective as
of the Assignment Date set forth on the reverse hereof, the interests set forth
on the reverse hereof (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth on the reverse hereof in the Commitment of the Assignor on
the Assignment Date and Revolving Loans owing to the Assignor which are
outstanding on the Assignment Date, but excluding accrued interest and fees to
and excluding the Assignment Date. The Assignee hereby acknowledges receipt of
a copy of the Credit Agreement. From and after the Assignment Date (i) the
Assignee shall be a party to and be bound by the provisions of the Credit
Agreement and, to the extent of the Assigned Interest, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent of
the Assigned Interest, relinquish its rights and be released from its
obligations under the Credit Agreement.
This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is a Foreign Lender, any
documentation required to be delivered by the Assignee pursuant to Section
2.14(e) of the Credit Agreement, duly completed and executed by the Assignee,
and (ii) if the Assignee is not already a Lender under the Credit Agreement, an
Administrative Questionnaire in the form supplied by the Administrative Agent,
duly completed by the Assignee. The [Assignee/Assignor] shall pay the fee
payable to the Administrative Agent pursuant to Section 9.04(b) of the Credit
Agreement.
This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("Assignment Date"):
A-1
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Percentage Assigned of
Facility/Commitment
(set forth, to at least 8
Commitment Assigned/ decimals, as a percentage
Principal Amount of of the Facility and the
Outstanding Revolving aggregate Commitments of
Loans Assigned Principal Amount Assigned all Lenders thereunder)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C> <C>
Commitment Assigned: $ %
- --------------------------------------------------------------------------------
Revolving Loans:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
The terms set forth above and on the reverse side hereof are hereby agreed to:
[Name of Assignor] , as Assignor
By:
------------------------------------
Name:
Title:
[Name of Assignee] , as Assignee
By:
------------------------------------
Name:
Title:
A-2
<PAGE>
The undersigned hereby consent to the within assignment:
[Name of Borrower], The Chase Manhattan Bank,
as Administrative Agent,
By: By:
--------------------------- --------------------------
Name: Name:
Title: Title:
A-3
<PAGE>
SCHEDULE 2.01
COMMITMENTS
<TABLE>
<CAPTION>
Lender Commitment
------ ----------
<S> <C>
The Chase Manhattan Bank $20,000,000.00
</TABLE>
A-4
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 5,320
<SECURITIES> 0
<RECEIVABLES> 34,226
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 657,173
<DEPRECIATION> 169,808
<TOTAL-ASSETS> 1,060,746
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 512,032
<OTHER-SE> 21,779
<TOTAL-LIABILITY-AND-EQUITY> 1,060,746
<SALES> 205,866
<TOTAL-REVENUES> 205,866
<CGS> 182,674
<TOTAL-COSTS> 192,758
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,827
<INCOME-PRETAX> 11,946
<INCOME-TAX> 3,942
<INCOME-CONTINUING> 8,004
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,004
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
