UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended September 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the transition period from to
Commission File No.
1-6442
ORANGE-CO, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-0918547
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
2020 U.S. Highway 17 South
P.O. Box 2158
Bartow, Florida 33831 (941) 533-0551
(Address of principal executive offices) (Registrant's telephone no.)
Securities registered pursuant to Section 12(b) of the Act: Common Stock,
$.50 par value
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.
[ ]
Aggregate market value of the common stock held by non-affiliates of
Registrant at December 4, 1998 (based on the closing price on
December 4, 1998): $38,286,279.
Number of shares outstanding of common stock, $.50 par value, as of
November 30, 1998: 10,309,975 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in
Part III of this Annual Report on Form 10-K: Proxy Statement for the
1999 Annual Meeting of Stockholders - Items 10, 11, 12 and 13
-1-
ORANGE-CO, INC.
INDEX TO ANNUAL REPORT
ON FORM 10-K
PAGE NO.
Part I
Item 1 - Business 3
Item 2 - Properties 10
Item 3 - Legal Proceedings 10
Item 4 - Submission of Matters to a Vote of Security Holders 10
Part II
Item 5 - Market for the Registrant's Common Stock and
Related Shareholder Matters 11
Item 6 - Selected Financial Data 11
Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
Item 8 - Financial Statements and Supplementary Data 24
Item 9 - Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 41
Part III
Item 10 - Directors and Executive Officers of the Registrant 42
Item 11 - Executive Compensation 42
Item 12 - Security Ownership of Certain Beneficial Owners
and Management 42
Item 13 - Certain Relationships and Related Transactions 42
Part IV
Item 14 - Exhibits, Financial Statement Schedule and
Reports on Form 8-K 43
-2-
PART 1
Item 1. BUSINESS
OVERVIEW
Orange-co, Inc. and subsidiaries (the "Company") is an
integrated citrus company primarily engaged in growing and
processing citrus products as well as packaging and marketing these
products and other beverages. As of November 30, 1998, the Company
owned and managed approximately 16,796 acres of Florida citrus
groves and the fruit harvested therefrom. The production from these
groves is principally used in the Company's citrus processing
operations in Bartow, Florida (the "Bartow Plant"). This processing
facility has concentrate, blending, single strength not from
concentrate ("NFC") juice, by-products, packaging and storage
operations providing the versatility to make many citrus and related
beverage products for sale in a variety of markets. The Company
also packages and sells non-citrus beverages to complement the
citrus related products supplied to its customers in the foodservice
business. Additionally, the Company offers a line of formulated
citrus and non-citrus beverage bases for reconstitution by
industrial and retail packers. The Company entered the formulated
beverage base business in August 1993 with the purchase of all of
the capital stock of International Fruit, Inc. Also, the Company
has recently developed capabilities in the private label, shelf
stable juices for distribution in the retail grocery business.
The Company's processed juice production has typically varied
from season to season depending on the size of the Florida crop, the
Company's crop and other conditions in the industry. The Florida
citrus industry experiences fluctuations, which can be wide ranging,
in the size of the citrus crop harvested from season to season
causing fluctuations in citrus juice prices and therefore presenting
significant variations in industry economic conditions and
opportunities. The Company's fruit production from its groves has
fluctuated in a manner similar to the Florida citrus industry. It
is anticipated that the continuing rehabilitation of the Company's
groves, located in DeSoto, Charlotte and Polk Counties, Florida,
which began in 1992, will provide relatively more fruit from the
Company's groves in the coming years as these efforts take
effect. As the Company enters the 1998-99 season, the United States
Department of Agriculture ("USDA") has announced an anticipated
Florida crop of approximately 190,000,000 boxes of round oranges.
It is uncertain what the effect of this size crop will be on the
Company's results for the 1998-99 fiscal year. The 1997-98 crop was
determined to be 244,000,000 boxes of round oranges.
During fiscal 1996, the Company sold the remaining assets of
its Mexican subsidiary OrancoMex S.A. de C.V. This subsidiary last
operated in 1992. The assets of the subsidiary represented less
than 1/2 of 1% of the Company's assets at time of the final sale.
In September of 1997, the Company dissolved OrancoMex S.A. de C.V.
SALES BY PRODUCT LINE
<TABLE>
<CAPTION>
The following table sets forth the Company's sales by product
line for the past three years (in thousands).
Years Ended September 30,
1998 1997 1996
<S> <C> <C> <C>
Beverage Division $114,204 $104,480 $114,035
Grove Management Division 4,676 4,857 5,095
-------- -------- --------
Total Sales $118,880 $109,337 $119,130
======== ======== ========
-3-
</TABLE>
BEVERAGE DIVISION
The Company produces bulk frozen concentrated orange juice
("FCOJ") and frozen concentrated grapefruit juice ("FCGJ")
(collectively, "concentrate"), NFC orange and grapefruit juice,
reconstituted juices and several citrus by-products at its Bartow
Plant. The production of concentrate principally involves
extracting the juice from the fruit, evaporating most of the water
from the juice and then refrigerating the juice concentrate at the
proper storage temperature. The Bartow Plant's current production
capacity is estimated to be approximately 11,000,000 boxes of fruit
annually.
<TABLE>
<CAPTION>
The production of this facility over the past five years as
measured by boxes processed is as follows:
YEAR BOXES PROCESSED
<S> <C>
1993-94 9,296,000
1994-95 9,597,000
1995-96 9,978,000
1996-97 10,230,000
1997-98 9,937,000
</TABLE>
In fiscal 1994, the Company expanded its bulk concentrate
storage capacity by approximately 3.8 million gallons providing a
total storage capacity of approximately 7.5 million gallons of bulk
frozen concentrated juices.
The Company packages a portion of the concentrate in various
containers for sale to major food service companies for ultimate
distribution to restaurants, hotels, hospitals and other food
service customers. The remainder of the concentrate is sold in bulk
to dairies and other industrial users. Additionally, a portion of
the fruit is processed into NFC juice products. The Company does
from time to time, depending upon conditions then existing in the
citrus industry, decide to vary its sales mix.
Within the food service market, the Company also provides a
full line of beverage products to supplement its traditional
emphasis on orange juice. The Company's product line also includes
several types of juices, including: orange, grapefruit, non-citrus
beverages such as grape, apple, cranberry, fruit punch and lemonade,
a variety of 10% to 50% juice base drinks, and liquid concentrated
tea and coffee.
The Company also provides or sells juice dispensers for
utilization at the consuming account to complement its foodservice
business through its subsidiary, Orange-co Dispenser Services, Inc.
Additionally, Orange-co Dispenser Services, Inc. provides service on
the dispensing equipment and technical training of customer
representatives.
In August 1993 the Company expanded its drink base products to
include a line of citrus and non-citrus formulated frozen
concentrated drink bases sold to dairies and other industrial and
retail packers. This expansion took place through the purchase of
all of the outstanding stock of International Fruit, Inc., an
established producer and marketer of these products.
In July 1996 the Company purchased the assets of the Birds
Eye(r) and Gold `N' Rich(r) foodservice frozen concentrated juice
products business for the foodservice business in the United States,
its territories, Puerto Rico and the U.S. Military. Included in this
purchase was a partial assignment of the rights to use the Birds
Eye(R) trademark in the territories previously mentioned.
-4-
<TABLE>
<CAPTION>
The following table sets forth the equivalent concentrate and
NFC gallons produced at the Company's Bartow plant during each of
the last five seasons. The number of equivalent gallons shown is
based on a concentrate factor of 65 degree brix for orange juice and
58 degree brix for grapefruit juice, which is a measure of the
percent of sugar in the fruit juice.
Bartow Bartow
Plant: Plant:
Processed Processed
Orange Grapefruit
Season Juice Juice Total
<S> <C> <C> <C>
1993-94 7,138,798 968,449 8,107,247
1994-95 7,132,492 844,309 7,976,801
1995-96 7,777,916 652,693 8,430,609
1996-97 7,979,675 805,825 8,785,500
1997-98 8,083,077 588,477 8,671,554
</TABLE>
The sales prices for bulk citrus juice sold by the Company are
determined by market prices which in the past have been subject to
fluctuations which are expected to continue. The Company uses the
frozen concentrate orange juice futures market to hedge fruit, FCOJ
inventory, and purchase and sales commitments against such
fluctuations.
The Bartow Plant also produces several citrus by-products. One
process extracts d'limonene oil (a chemical additive for products
such as paint thinner, cleansers and cosmetics) and other citrus
oils from orange peel and processes the remaining peel and pulp for
sale as cattle feed. A secondary extraction process is also
performed in which juice is extracted from the fruit pulp separated
from the juice during the concentrate operation. This product is
used in the production of an orange pulp wash concentrate (an
ingredient used in beverages consisting of less than 10% natural
juices) and is sold in bulk to various customers. The Bartow Plant
also produces a by-product known as pulp cells, which is sold to
manufacturers for use as a filler and flavor ingredient in citrus
juice products.
The Company operates a cold storage facility at Bartow,
Florida, which is certified by the United States Customs Service for
duty deferred customs storage and by the New York Cotton Exchange as
a delivery point for FCOJ futures contracts. As previously
mentioned the Company expanded this facility in February 1994 by 3.8
million gallons to a total capacity of 7.5 million gallons of
concentrate.
THE GROVES
As of November 30, 1998, the Company owned approximately 13,928
acres of citrus groves and also managed approximately 2,868 acres of
citrus groves owned by other growers (collectively, the "Groves").
The Groves constitute approximately 1.9% of Florida's total grove
acreage, which is reported to be approximately 847,000 acres. The
following table lists the locations of the Groves by county and the
approximate number of acres of groves owned by the Company or
managed by the Company for other growers in Florida as of November
30, 1998.
<TABLE>
<CAPTION>
GROVES GROVES
LOCATION OWNED MANAGED
<S> <C> <C>
Polk County 647 -
DeSoto County 12,415 2,643
Charlotte County 866 225
------ -----
Totals 13,928 2,868
====== =====
</TABLE>
-5-
<TABLE>
<CAPTION>
The following table reflects the production expressed in the
number of 90-pound boxes from Company owned and managed groves for
each of the past five seasons. The Company's harvesting and
processing activities generally begin in November of each year and
continue through the following May or June. This period of
production is referred to herein as a "season".
Average
Production
Season Owned Groves Managed Groves Total Production Per Acre(1)
(in Acres) (in boxes)
<S> <C> <C> <C> <C>
1993-94 11,523 2,695 3,542,218 249
1994-95 11,367 2,611 5,057,925 362
1995-96 11,023 2,396 4,919,459 367
1996-97 11,601 1,965 5,261,841 388
1997-98 11,865 1,931 5,389,732 391
</TABLE>
<F1>
(1)Calculated by dividing total production by total number of
productive grove acres owned and managed as of September 30,
1994, 1995, 1996, 1997 and 1998. Productive grove acres does not
include acreage used for access and water management.
<TABLE>
<CAPTION>
The following table lists the actual Florida crop of round
oranges over the past five seasons expressed in the number of ninety
pound boxes.
SEASON NINETY POUND BOXES
<S> <C>
1993-94 174,200,000
1994-95 205,500,000
1995-96 203,300,000
1996-97 226,200,000
1997-98 244,000,000
</TABLE>
As previously mentioned, the USDA has announced an anticipated
Florida orange crop of approximately 190,000,000 boxes of round
oranges for the 1998-99 season.
In addition to citrus grove acreage, as of November 30, 1998
the Company owned approximately 5,577 acres of land, much of it in
the vicinity of the Groves, of which approximately 1,950 acres are
prepared for citrus planting, approximately 1,295 acres are
suitable for cultivation and 2,332 acres are used as water retention
areas, roadways and similar ancillary uses or are unusable.
The Company's plan calls for, among other actions, the
continued rehabilitation of its citrus acreage thereby increasing
productivity, cash flow and market values. During fiscal 1992
through fiscal 1998, the Company accelerated its rehabilitation of
the Groves by planting approximately 770,000 trees and installing
improved irrigation systems covering approximately 10,851 acres.
During the past five seasons, substantially all of the fruit
harvested from the Groves was used in the Company's processing
plant. Most of the 1998-99 crop from the Groves is expected to be
used in the Company's processing plant.
-6-
GROVE MANAGEMENT
In addition to caring for its own groves, the Company provides
grove care, harvesting and marketing services for groves owned by
others. The Company's grove care services include periodic
application of fertilizers, herbicides and pesticides, monitoring
for diseases and pests, liaison with local water control districts
as to irrigation and drainage requirements and monitoring rainfall
and temperature information. In addition to performing these
services as part of a standard-care contract, the Company also
performs other custom-care services, including trimming, topping,
application of soil conditioners, reshaping of beds and replacement
of damaged or dead trees on an "as needed" basis. As of November
30, 1998, the Company managed 2,215 acres on a standard-care basis
and 653 acres on a custom-care basis.
Grove care contracts generally provide for services at the
Company's cost plus a negotiated fee, usually expressed as a
percentage of cost. Grove care charges are payable monthly. The
Company's grove care contracts are generally short-term in nature or
terminable upon short notice.
The Company enters into marketing contracts with growers
("participation contracts"), whereby the Company purchases the fruit
for a price to be determined by the proceeds ultimately received by
the Company for the products sold from that season's fruit less
production and overhead costs, industry assessments and a service
fee. These contracts are generally renewable annually and are
terminable upon short notice. The Company's remaining fruit
purchases are either made under annual contracts that provide for
purchase based upon market prices prevailing at the time of the
agreement or are made on a "spot" basis.
PETROLEUM PRODUCTS AND RELATED BUSINESSES
Prior to fiscal 1995, the Company was engaged in the wholesale
and retail sale of petroleum products through a subsidiary, Frank
Carroll Oil Company ("Carroll Oil"). The Company completed the sale
of 100% of Carroll Oil stock effective September 30, 1994 for total
proceeds of approximately $966,000 in cash and notes and accordingly
is no longer engaged in the sale and distribution of petroleum
products.
EMPLOYEES
As of November 30, 1998 the Company employed approximately 250
full-time, non-seasonal employees in production-related activities,
including its operations at the Bartow Plant and its grove
management operations. The Company also employs approximately 100
administrative personnel. The number of employees increases to
approximately 520 during the Company's peak period of operations.
Management believes that the relations between the Company and its
employees are good.
GENERAL INFORMATION REGARDING CITRUS OPERATIONS
AGRICULTURAL CONDITIONS The citrus industry is subject to various
factors over which growers and processors have limited or no
control, including weather conditions, disease, pestilence and water
supply. Although the subtropical Florida climate generally favors
cultivation of citrus fruit, no citrus-producing area of Florida is
immune from weather conditions which can damage citrus trees and
fruit. In the past, damaging frosts or freezes have occurred
throughout Florida. A freeze can adversely affect the productivity
of groves for the year in which it occurs and for several years
thereafter by causing tree damage or destruction. Other weather
conditions which could adversely affect the groves and grove
production include, but are not limited to, drought, excessive
moisture, hurricanes, wind and hail. The Company does maintain
limited crop insurance. The Company, however, does not maintain
insurance on its trees.
-7-
MARKET PRICE FLUCTUATIONS Market prices for processed citrus juice
are subject to fluctuations. The variation in the size of the
citrus crop as previously mentioned has in the past resulted in
large changes in the price of FCOJ, FCGJ and related products.
Market prices are highly sensitive to crop sizes as well as other
factors such as weather and competition from foreign crops.
The Company uses the FCOJ futures market to hedge fruit and
FCOJ inventory to reduce price risk. Under this program the Company
may enter into sales contracts on the FCOJ futures market in
relation to its current and future orange juice concentrate
inventories to offset anticipated fluctuations in concentrate
prices, thereby protecting margins in advance of actual sale and
delivery. Additionally, the Company may enter into purchase
contracts for FCOJ on the futures market to reduce the price risk
and assure an adequate supply of purchased FCOJ. The Company
maintains accounts with brokers which have deposit requirements that
can fluctuate as a result of changes in the price of FCOJ futures,
which can affect liquidity.
GOVERNMENTAL REGULATIONS Fresh citrus fruit and processed juice are
produced and marketed under strict federal and state regulations and
supervision. The Company has experienced no difficulties in
complying with these regulations.
All property in the State of Florida is subject to the
jurisdiction of water management districts which manage water to
maximize its supply, quality and flood protection. Currently all
necessary water permits have been obtained for the Groves. In the
event of a water shortage, the water management districts have the
authority to restrict water usage in the Groves which could have a
material adverse effect upon the Groves and their production of
fruit. Certain of the Groves are also located within local water
management districts which are established either by the Florida
Department of Environmental Protection or by the landowners
themselves. The water management districts primarily regulate the
drainage and irrigation of the lands within each district and make
annual assessments on the landowners for the costs of related
improvements, maintenance and operations.
Certain provisions of the Immigration Reform and Control Act of
1986 could limit the availability of seasonal labor necessary to
harvest the Company's crops. The Company has not experienced a
shortage of seasonal labor in the past. However, during the 1998-99
season to date, the industry has experienced a shortage of labor
making timely harvesting more difficult.
During fiscal 1998 and 1997, the Company spent approximately
$124,000 and $133,000 respectively, on its spray field system for
disposing of waste water at the Bartow facility and on other
environmental matters none of which was capitalized during fiscal
1998. The Company anticipates the expenditure of approximately an
additional $125,000 during fiscal 1999 on the sprayfield system and
other environmental matters.
SEASONALITY AND WORKING CAPITAL The citrus industry is seasonal,
with the Company harvesting fruit and processing it into juice from
November through June. Inventories of processed juice are
accumulated during each season to enable the Company to cover sales
commitments and deliveries through the beginning of the production
cycle in the next season. This cyclical peaking of processed juice
inventories generally results in a need for larger amounts of
working capital during certain times of the year. The Company
principally uses a line of credit to finance inventories. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources."
COMPETITION The Company competes with numerous growers and
processors, some of which are larger than the Company. Price,
quality and marketing are the principal competitive factors in
selling processed juices. The Company believes that its production
capacity and efficiencies, when fully utilized, enhance its ability
to compete. Because of the size of the domestic citrus industry, no
individual grower or processor can exercise appreciable influence
over the selling price of the Company's bulk citrus products nor the
price of its fruit. However, the
-8-
market for the Company's value- added beverage products sold to food
service customers is characterized by fewer producers, some of which
are significantly larger than the Company and can influence the market
price for these products. Although the Company accounted for approximately
4.7% of Florida FCOJ production during the 1997-98 season, several other
producers accounted for greater percentages. Foreign processors of
concentrate, particularly Brazilian, are believed to produce
concentrate at a lower cost than that produced in the United States.
Brazilian processors may also receive subsidies from the Brazilian
government for which there are no comparable benefits received by
domestic processors. The effect of these cost advantages is
partially diminished by a United States import tariff.
Nevertheless, because of the volume of their exports to the United
States and other countries and their lower cost of production,
Brazilian producers may affect the selling prices for concentrate,
and Brazilian exports of concentrate have been viewed by many in the
industry as a competitive threat to domestic processors. Even so,
the Company considers Brazilian exports to be a potential source of
supply during periods when domestic citrus products are unavailable
or in short supply. The Company believes that the continued
development of markets for concentrate, such as Japan and Europe,
may offset to some extent the impact of Brazilian competition.
The North American Free Trade Agreement ("NAFTA") with Mexico
and Canada, which was implemented in January 1994, provides for the
elimination of United States tariffs on citrus products imported
into the United States from Mexico over a 15 year period which could
increase competition for domestic suppliers.
The Company has several registered trademarks which are not
currently in use. As previously mentioned, the Company obtained the
rights to use the Birds Eye(r) and the Gold `N' Rich(r) trademarks
for use in the foodservice juice business.
FOREIGN AND DOMESTIC OPERATIONS The Company derived approximately
10.5%, 9.5% and 8.3%, of its revenue from foreign sales during
fiscal 1998, 1997, and 1996, respectively. All of the Company's
foreign sales are from its Florida operations. As of September 30,
1998 and 1997, 14.9% and 8.5% respectively of the Company's receivables
were due from foreign custmers.
Substantially all of the Company's assets are located in the
state of Florida.
BUSINESS SEGMENTS During fiscal 1998, 1997 and 1996 the Company's
gross sales, net income and assets were materially attributable to
the citrus business. The Company has two customers that accounted
for 20.6% and 15.1% of revenue for fiscal 1998. Relationships
between the Company and these two customers are currently good and
are expected to remain so. All other customers individually
accounted for less than 10% of total sales for fiscal 1998. For
further information on significant customers over 10% of total
Company sales see Note 1 of the Notes to Consolidated Financial
Statements "Summary of Significant Accounting Policies".
-9-
ITEM 2. PROPERTIES
<TABLE>
<CAPTION>
The following table sets forth certain information regarding
the principal properties owned by the Company and its wholly owned
subsidiaries as of November 30, 1998.
Location General Character Approximate Size
<S> <C> <C>
Polk, Charlotte and Citrus groves and
DeSoto, Counties, FL(1) related acreage 18,588 acres
Bartow, FL (1) Citrus processing plant 551 acres
80,000 boxes per day
average capacity
Concentrate storage
storage facility 7,500,000 gallon capacity
DeSoto County, FL Undeveloped land 366 acres
</TABLE>
<F1>
(1)Portions of these properties are encumbered by certain mortgages.
Management believes that the Company's Bartow plant and related
storage facilities are in good operating condition and are adequate
to support its current operations.
The Company has a continuing program to consolidate certain of
its grove holdings into more contiguous and efficient parcels and
rehabilitated selected parcels through the installation of more
effective irrigation systems and significant replanting of
citrus trees. The Company has also committed to certain other
improvements including those to its Bartow citrus processing
facility (see Management's Discussion and Analysis of Financial
Condition and Results of Operations: Liquidity and Capital
Resources).
A portion of the Company's properties are subject to mortgages
securing long-term debt or are covered by negative pledges
restricting mortgages or pledges of such properties. (See Notes 4
and 8 of the Notes to Consolidated Financial Statements "Property
and Equipment" and "Notes Payable to Banks and Long-term Debt".)
ITEM 3. LEGAL PROCEEDINGS
There are no reportable legal proceedings under this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
-10-
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SHAREHOLDER MATTERS
The Company's common stock is traded on the New York Stock
Exchange under the symbol "OJ". The following table sets forth the
range of high and low closing prices per share for each full
quarterly period within the two most recent fiscal years.
<TABLE>
<CAPTION>
FISCAL 1998 HIGH LOW
<S> <C> <C>
First Quarter $8.4375 $7.6875
Second Quarter 7.9375 6.6875
Third Quarter 6.9375 5.6250
Fourth Quarter 6.5000 5.0000
FISCAL 1997 HIGH LOW
First Quarter $8.0000 $6.7500
Second Quarter 8.1250 7.5000
Third Quarter 7.8750 7.5000
Fourth Quarter 8.1875 7.6250
</TABLE>
Orange-co, Inc. and Subsidiaries is a 52.4% beneficially owned
subsidiary of Ben Hill Griffin, Inc. and an affiliate. On November
30, 1998, there were approximately 4,209 named holders of record
of the Company's common stock.
On February 3, 1997 the Company paid a dividend of $.10 per
common share for shareholders of record as of January 20, 1997. On
February 1, 1996 the Company paid a dividend of $.10 per common
share. Prior to 1996 the Company had previously last paid a
dividend of $.02 per share on its common stock in November 1988.
Any payment of cash dividends in the future will be dependent upon
the Company's financial condition, loan covenants, capital
requirements, earnings, and other factors that the Company deems
relevant.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
The following selected financial data as of and for the years
ended September 30, 1998, 1997, 1996, 1995, and 1994, have been
derived from the audited financial statements of the Company. Sales
and net income from continuing operations before income taxes
reflect the treatment of the Petroleum Division as a discontinued
operation on a consistent basis. The Company completed the sale of
the Petroleum Division in September 1994. The following data should
be read in conjunction with, and is qualified in its entirety by
reference to, the financial statements and the accompanying notes
contained elsewhere in this report under the heading "Financial
Statements and Supplementary Data".
-11-
<CAPTION>
Years Ended September 30, 1998, 1997, 1996, 1995, and 1994
Historical(1)
(in thousands, except per share data)
1998 1997 1996 1995 1994
STATEMENT OF OPERATIONS DATA
<S> <C> <C> <C> <C>
Sales $118,880 $109,337 $119,130 $111,325 $76,756
========= ======== ======== ======== =======
(Loss)income from continuing
operations before income
taxes $ (2,083) $ 1,833 $ 14,487 $ 14,776 $ 5,886
========= ======== ======== ======== =======
Net (loss)income $ (1,413) $ 1,079 $ 10,091 $ 9,135 $ 3,345
========= ======== ======== ======== =======
Net (loss)income per
common share $ (.14) $ .10 $ .98 $ .89 $ .32
========= ======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
As of September 30, 1998, 1997, 1996, 1995, and 1994
(in thousands)
1998 1997 1996 1995 1994
BALANCE SHEET DATA
<S> <C> <C> <C> <C> <C>
Total assets $208,362 $201,129 $199,695 $171,441 $169,404
======== ======== ======== ======== ========
Long-term debt (less
current portion) $ 54,901 $ 46,764 $ 46,663 $ 31,252 $ 38,499
======== ======== ======== ======== ========
Stockholders' equity $107,690 $109,100 $109,011 $ 99,932 $ 90,797
======== ======== ======== ======== ========
</TABLE>
<F1>
(1)Not covered by accountant's report.
On February 3, 1997 the Company paid a dividend of $.10 per
common share for shareholders of record as of January 20, 1997. On
February 1, 1996 the Company paid a dividend of $.10 per common
share. Prior to 1996 the Company had previously last paid a
dividend of $.02 per share on its common stock in November 1988.
-12-
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FISCAL 1998 VERSUS FISCAL 1997
The discussion that follows is based on the Consolidated
Statements of Operations and compares the results of the Company's
operations for the year ended September 30, 1998 to the Company's
operations for the year ended September 30, 1997.
<TABLE>
<CAPTION>
The following table reflects changes in sales, cost of sales
and gross profit by division and other changes in the Statements of
Operations through net income.
Year Ended September 30, 1998 vs. Year Ended September 30, 1997
Increases/(Decreases)
(in thousands)
Cost of
Sales Goods Net Changes
Sold to Income
<S> <C> <C> <C>
Beverage Division . . . . . . . . $ 9,724 $11,801 $ (2,077)
Grove Management Division . . . . (181) (118) (63)
-------- -------- ---------
Total . . . . . . . . . . . . . . $ 9,543 $11,683 $ (2,140)
======== ========
Other costs and expense, net:
Selling, general and administrative . . . . . . . . (496)
Gain on disposition of property and equipment . . . (316)
Other . . . . . . . . . . . . . . . . . . . . . . . (372)
Interest . . . . . . . . . . . . . . . . . . . . . . . . (547)
========
Income(loss) before income tax . . . . . . . . . . . . . (3,871)
Provision for income taxes . . . . . . . . . . . . . . . 1,379
========
Net income(loss) . . . . . . . . . . . . . . . . . . . . $(2,492)
========
</TABLE>
SALES
Total net sales from operations increased approximately
$9,543,000 or 8.7% for the fiscal year ended September 30, 1998
compared to the prior year ended September 30, 1997. The principal
increase of approximately $9,724,000 occurred in the Beverage
Division. However, the Grove Management Division sales decreased
approximately $181,000 compared to the prior year.
BEVERAGE DIVISION The Beverage Division sales increased
approximately $9,724,000 during fiscal 1998 compared to the prior
year. A principal component of this increase was an increase of
approximately $15,771,000 in revenues as a result of increased
volumes of bulk citrus juice products sold compared to the prior
year. Partially offsetting this volume increase was a decrease of
approximately $3,878,000 from the Company's bulk citrus juice
products due to lower prices for these products sold. The increase
in volumes was due primarily to an expanding sales program for bulk
citrus juice products. In October 1997, the USDA announced a
Florida crop estimate of approximately 254,000,000 boxes of round
oranges for the 1997-98 season. This represented a significant
increase from the 1996-97 actual of approximately 226,200,000 boxes
of round oranges. The anticipation of this significant increase had
a deflating effect on prices throughout fiscal 1998 compared to the
prior year. The actual final crop for the 1997-98 season was
approximately 244,000,000 boxes of round oranges.
-13-
As we entered the 1998-99 season, the USDA has estimated a Florida
orange crop of approximately 190,000,000 boxes of round oranges.
The Florida citrus industry is highly cyclical, subject to varying
weather conditions and other natural phenomena, sometimes creating
fluctuations in economic conditions and opportunities.
Sales of the Company's packaged citrus juices decreased
approximately $896,000 during fiscal 1998 compared to the prior
year. Of this decrease, approximately $1,918,000 was due to
decreased prices for these products compared to the prior year.
Partially offsetting this decrease was an increase of approximately
$1,022,000 as a result of increased volumes for packaged citrus
juice products compared to the prior year.
The Company's non-orange packaged juices and drink base sales
decreased approximately $394,000 during fiscal 1998 compared to the
prior year. The principal component of this decrease of
approximately $344,000 resulted from decreased volumes of these
products being sold. Additionally, price decreases for these
products accounted for a decrease of approximately $50,000 compared
to the prior year.
Storage, handling, processing citrus for customers under
contract, and other sales increased approximately $102,000 during
fiscal 1998 compared to the prior year principally as a result of an
increase in the volume of these services being performed.
Additionally, sales of citrus by-products, including feed,
pulp cells, and citrus oils, decreased approximately $981,000 during
fiscal 1998 compared to the prior year principally as a result of
decreased prices for these products in the current year.
GROVE MANAGEMENT DIVISION Grove Management Division sales
decreased approximately $181,000 during fiscal 1998 compared to the
prior year. The principal decrease during fiscal 1998 of
approximately $132,000 was due to a reduction in the price of fruit
sold to third party packers and processors. Revenues from grove
caretaking also decreased during fiscal 1998 by approximately
$7,000. Additionally, harvesting revenues decreased by
approximately $42,000 primarily due to a reduction in the volume of
boxes harvested during the current fiscal year.
GROSS PROFIT
Gross profit for fiscal 1998 decreased approximately $2,140,000
or 22.7% compared to the prior year. The Beverage Division
accounted for the principal decrease with a decrease in gross profit
of approximately $2,077,000 while the Grove Management Division
gross profit decreased approximately $63,000.
BEVERAGE DIVISION The decrease in gross profit of approximately
$2,077,000 in the Beverage Division resulted from numerous increases
and decreases in volume, selling price, cost of production and
combinations thereof. The effect of these changes are quantified as
follows.
The principal decrease in gross profit of approximately
$3,878,000 resulted from decreased prices for the Company's bulk
citrus juice products during fiscal 1998 compared to the prior year.
This decrease was partially offset by an increase in gross profit of
approximately $3,608,000 as a combined result of higher volumes of
citrus juice products sold and lower costs of raw fruit and
purchased concentrate used in the production of these products
during fiscal 1998 compared to the prior year.
-14-
The Company utilizes the FCOJ futures market to hedge fruit
inventory, anticipated requirements and sales commitments of FCOJ.
The effects of this hedging activity, if any, are reflected in sales
or in the cost of inventories and flow through the Consolidated
Statements of Operations as the associated products are sold.
As of September 30, 1998 the Company held contracts for FCOJ
futures with unrealized losses of approximately $2,000 which would
have been realized if said positions had been prematurely liquidated
on that date. These unrealized losses are based upon the closing
market prices of equivalent futures obligations and do not
necessarily represent prices at which the Company expects to sell
the FCOJ.
The table below provides information about the Company's FCOJ
futures contracts, and options that are sensitive to changes in commodity
prices, specifically FCOJ prices. For the futures and option contracts
the table presents the total dollar contract amount by expected maturity
dates. Contract amounts are used to calculate the contractual payments
and quantity of FCOJ to be exchanged under the futures contracts.
Contractural cash flows from derivative financial instruments if
executed at maturity would be as follows at September 30, 1998:
Maturity
Date
FCOJ Futures
Contracts (Net Long) $(1,530,000) November 1998 - March 1999
FCOJ Option
Contracts (Net Calls) $5,899,000 November 1998 - January 1999
The contractual cash flows from the derivatives are based upon the
execution of the underlying futures contracts and do not necessarily
represent actual cash flows when the futures and options mature or
otherwise terminate.
Gross profit from the sale of the Company's packaged citrus
juice products decreased approximately $2,307,000 during fiscal 1998
compared to the prior year. The principal decrease of approximately
$1,918,000 resulted from a decrease in price for packaged citrus
juice products sold. Additionally, there was a decrease in gross
profit of approximately $779,000 as a result of decreased volumes of
these products being sold compared to the prior year. Partially
offsetting these decreases was an increase of approximately $390,000
as a result of lower costs of production principally from raw fruit
and purchased solids utilized in the production of these products
during fiscal 1998.
Gross profit from the sale of the Company's non-orange packaged
juices and drink base products increased approximately $1,148,000
during fiscal 1998 compared to the prior year. The principal
increase of approximately $1,401,000 was the result of decreased
costs of ingredients and production costs. These increases were
partially offset by decreases in gross profit of approximately
$203,000 and $50,000 as a result of lower volumes and prices
respectively compared to the prior year.
The sale of the Company's by-products decreased gross profit
approximately $348,000 during fiscal 1998 compared to the prior
year. The principal decrease of approximately $1,853,000 was
primarily the result of decreased prices. Partially offsetting this
decrease was an increase of approximately $1,505,000 as a result of
lower production costs and increased volumes compared to the prior
year.
Gross profit from storage, handling and other activities
decreased by approximately $300,000 during fiscal 1998 compared to
the same period in the prior year. This decrease resulted primarily
from a reduction in the volume of citrus processed for customers
under contract and related storage and handling activities.
-15-
GROVE MANAGEMENT DIVISION Grove Management Division gross profit
decreased by approximately $63,000 during fiscal 1998 compared to
the prior year. Gross profit decreased approximately $139,000 as a
result of a decrease in the volume of fruit sold to third party
packers and processors. Partially offsetting this decrease was an
increase in gross profit from harvesting activities of approximately
$61,000 due to a reduction in the cost of these activities compared
to the prior year. Additionally, gross profit also increased
approximately $15,000 from grove caretaking activities.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased
approximately $496,000 or 9.3% for fiscal 1998 compared to the prior
year. Of this increase approximately $450,000 resulted from an
increase in other costs and approximately $46,000 resulted from
increased staffing and labor costs compared to the prior year.
GAIN/(LOSS) ON DISPOSITION OF PROPERTY AND EQUIPMENT
The gain on the disposition of property and equipment decreased
approximately $316,000 for fiscal 1998 compared to the prior year.
The principal reason for this decrease was a gain of approximately
$438,000 on the disposition of certain commercial properties in
fiscal 1997 for which there was no comparable activity for fiscal
1998. Offsetting this decrease was a gain of approximately $122,000
on an involuntary conversion of property during fiscal 1998.
OTHER
Other expenses increased approximately $372,000 in fiscal 1998
compared to the prior year. Of this increase approximately $189,000
resulted from an increase of the provision for uncollectible receivables
and approximately $171,000 resulted from increased amortization costs.
INTEREST EXPENSE
Interest expense increased by approximately $547,000 or 20.1%
in fiscal 1998 compared to the prior year. The primary increase of
approximately $272,000 was due to an increase in interest rates and
an increase of approximately $36,000 was due to an increase in the
average outstanding debt. Additionally, an increase of
approximately $148,000 was due to a decrease in capitalized
interest, and an increase of approximately $91,000 was due to an
increase in deferred loan costs and other charges.
OTHER SIGNIFICANT EVENTS
As previously mentioned, the USDA has announced an anticipated
Florida orange crop of approximately 190,000,000 boxes of round
oranges for the 1998-99 season.
The Company's sales or costs were not impacted significantly by
the effects of general price level inflation during fiscal 1998.
The inability of computers, software and other equipment utilizing
microporcessors to recognize and properly process date fields containing
a two-digit year is commonly referred to as the Year 2000 Compliance issue.
As the year 2000 approaches, such systems may be unable to accurately
process certain date-based information.
-16-
During the past four fiscal years, the Company has been making
capital expenditures to improve and update its computer systems to
enhance the efficiency of its production, processing, marketing,
sales and management systems. As a result, it has concurrently
addressed the "Year 2000" issue. Management believes that the new
systems will be completed in mid fiscal 1999 and that the Company's
systems will then be in compliance with "Year 2000" issues. While
the Company is communicating with certain key suppliers, customers
and other constituents to determine their Year 2000 readiness, there
can be no assurance that the failure of such third parties to
adequately address their respective Year 2000 issues will not have a
material adverse effect on the Company's business, financial
condition and results of operations.
The total cost to the Company of these Year 2000 Compliance
activities has not been and is not anticipated to be material to its
financial position or results of operations in any given year. These
costs and the date on which the Company plans to complete the Year 2000
modification and testing processes are based on management's best
estimates, which were derived utilizing numerous assumptions of future
events, including the continued availability of certain resources,
third-party modification plans and other factors. However, there can
be no guarantee that these estimates will be achieved, and actual
results could differ from those plans.
-17-
FISCAL 1997 VERSUS FISCAL 1996
The discussion that follows is based on the Consolidated
Statements of Operations and compares the results of the Company's
continuing operations for the year ended September 30, 1997 to the
Company's continuing operations for the year ended September 30,
1996.
<TABLE>
<CAPTION>
The following table reflects changes in sales, cost of sales
and gross profit by division and other changes in the Statements of
Operations through net income.
Year Ended September 30, 1997 vs. Year Ended September 30, 1996
Increases/(Decreases)
(in thousands)
Cost of
Goods Net Changes
Sales Sold to Income
<S> <C> <C> <C>
Beverage Division . . . . . . . . $(9,555) $2,551 $(12,106)
Grove Management Division . . . . (238) (6) (232)
======== ======= =========
Gross Profit . . . . . . . . . . $(9,793) $2,545 $(12,338)
======== =======
Other costs and expense, net:
Selling, general and administrative . . . . . . . . (117)
Gain on disposition of property and equipment . . . 416
Other . . . . . . . . . . . . . . . . . . . . . . . 49
Interest . . . . . . . . . . . . . . . . . . . . . . . . (664)
========
Income before income tax . . . . . . . . . . . . . . . . (12,654)
Income tax expense . . . . . . . . . . . . . . . . . . . 3,642
========
Net income . . . . . . . . . . . . . . . . . . . . . . . $(9,012)
========
</TABLE>
SALES
Total net sales from operations decreased approximately
$9,793,000 or 8.2% for the fiscal year ended September 30, 1997
compared to the prior year ended September 30, 1996. The principal
decrease of approximately $9,555,000 occurred in the Beverage
Division. The Grove Management Division sales decreased
approximately $238,000 compared to the prior year.
BEVERAGE DIVISION The Beverage Division sales decreased
approximately $9,555,000 during fiscal 1997 compared to the prior
year. A principal component of this reduction was a decrease of
approximately $14,783,000 in revenues as a result of lower prices
for bulk citrus juice products sold compared to the prior year.
Partially offsetting this price decrease was an increase of
approximately $4,088,000 from the Company's bulk citrus juice
products due to higher volumes of these products sold. The increase
in volumes was due primarily to an expanding sales program for bulk
citrus juice products. In October 1996, the USDA announced a
Florida crop estimate of approximately 220,000,000 boxes of round
oranges for the 1996-97 season. This represented a significant
increase from the 1995-96 actual of approximately 203,300,000 boxes
of round oranges. The anticipation of this significant increase had
a deflating effect on prices throughout fiscal 1997 compared to the
prior year. The actual final crop for the 1996-97 season was
approximately 226,200,000 boxes of round oranges. As we entered the
1997-98 season, the USDA has estimated a Florida orange crop of
approximately 254,000,000 boxes of round oranges. The actual crop
for the 1997-98 season is estimated to have been 244,000,000 boxes
of round oranges.
-18-
Sales of the Company's packaged citrus juices increased
approximately $576,000 during fiscal 1997 compared to the prior
year. Of this increase, a sales increase of approximately
$2,315,000 was due to increased volumes compared to the prior year
principally as a result of the purchase of the Birds Eyer
foodservice juice business in July 1996. Partially offsetting this
increase was a decrease of approximately $1,739,000 as a result of
lower prices for packaged citrus juice products compared to the
prior year.
The Company's non-orange packaged juices and drink base sales
increased approximately $2,219,000 during fiscal 1997 compared to
the prior year. The principal component of this increase of
approximately $1,786,000 resulted from increased prices for these
products. Additionally, volume increases for these products
accounted for an increase of approximately $433,000 compared to the
prior year.
Storage, handling, processing citrus for customers under
contract, and other revenues decreased approximately $1,078,000
during fiscal 1997 compared to the prior year principally as a
result of a decrease in the volume of these services being
performed.
Additionally, revenues from the sale of citrus by-products,
including feed, pulp cells, and citrus oils, decreased approximately
$577,000 during fiscal 1997 compared to the prior year principally
as a result of decreased prices for these products in the current
year.
GROVE MANAGEMENT DIVISION Grove Management Division revenues
decreased approximately $238,000 during fiscal 1997 compared to the
prior year. The principal decrease during fiscal 1997 of
approximately $390,000 was due to a reduction in the volume of fruit
sold to third party packers and processors. Revenues from grove
caretaking also decreased during fiscal 1997 by approximately
$15,000. Partially offsetting these decreases were increases in
harvesting revenues of approximately $167,000 due to a higher volume
of boxes harvested.
GROSS PROFIT
Gross profit for fiscal 1997 decreased approximately
$12,338,000 or 56.7% compared to the prior year. The Beverage
Division accounted for the principal decrease with a decrease in
gross profit of approximately $12,106,000 while the Grove Management
Division gross profit decreased approximately $232,000.
BEVERAGE DIVISION The decrease in gross profit of approximately
$12,106,000 in the Beverage Division resulted from numerous
increases and decreases. However, the principal decrease in gross
profit of approximately $14,783,000 resulted from decreased prices
for the Company's bulk citrus juice products during fiscal 1997
compared to the prior year. This decrease was partially offset by
an increase in gross profit of approximately $2,043,000 as a
combined result of higher volumes of citrus juice products sold and
lower costs of raw fruit and purchased concentrate used in the
production of these products during fiscal 1997 compared to the
prior year.
The Company has in the past utilized and may in the future
utilize the FCOJ futures market to hedge fruit inventory,
anticipated requirements and sales commitments of FCOJ. The effects
of this hedging activity, if any, are reflected in sales or in the
cost of inventories and flow through in the Consolidated Statements
of Operations as the associated products are sold. As of September
30, 1997 the Company held contracts for FCOJ futures with unrealized
gains of approximately $267,000 which would have been realized if
said positions had been prematurely liquidated on that date. These
unrealized gains are based upon the closing market price of the
equivalent futures obligations and do not necessarily represent
prices at which the Company expects to sell the FCOJ.
-19-
Gross profit from the sale of the Company's packaged citrus
juice products increased approximately $470,000 during fiscal 1997
compared to the prior year. The principal increase of approximately
$1,415,000 resulted from an increase in volumes of packaged citrus
juice products sold. Additionally, gross profit increased
approximately $794,000 as a result of lower costs of production
resulting principally from lower costs of raw fruit and purchased
solids utilized in the production of these products during fiscal
1997. Partially offsetting these increases was a decrease in gross
profit of approximately $1,739,000 as a result of lower prices for
these products being sold compared to the prior year.
Gross profit from the sale of the Company's non-orange packaged
juices and drink base products increased approximately $616,000
during fiscal 1997 compared to the prior year. The principal
increase of approximately $1,786,000 was the result of increased
prices compared to the prior year primarily due to the change in
product mix resulting from the purchase of the Birds Eyer
foodservice juice business in July 1996. Additionally there was an
increase in volumes of these products of approximately $293,000.
These increases were partially offset by a decrease in gross profit
of approximately $1,463,000 as a result of higher cost of production
for these products.
The sale of the Company's by-products decreased gross profit
approximately $1,119,000 during fiscal 1997 compared to the prior
year. The principal decrease of approximately $577,000 was
primarily the result of decreased prices. Additionally cost of
sales increased approximately $542,000 compared to the prior year.
Gross profit from storage, handling and other activities
increased by approximately $667,000 during fiscal 1997 compared to
the same period in the prior year. The primary increase of
approximately $917,000 resulted from a reduction in operating
costs. Additionally, gross profit increased by approximately
$389,000 as a result of an increase in service fees collected.
Partially offsetting this increase was a decrease in gross profit of
approximately $639,000 resulting from a reduction in the volume of
citrus processed for customers under contract and related storage
and handling activities.
GROVE MANAGEMENT DIVISION Grove Management Division gross profit
decreased by approximately $232,000 during fiscal 1997 compared to
the prior year. Gross profit decreased approximately $236,000 as a
result of a decrease in the volume of fruit sold to third party
packers and processors. Additionally, gross profit from caretaking
activities decreased by approximately $77,000. Partially offsetting
these decreases was an increase in gross profit from harvesting
activities of approximately $81,000 due to a higher volume of boxes
harvested.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased
approximately $117,000 or 2.3% for fiscal 1997 compared to the prior
year. Of this increase approximately $26,000 resulted from an
increase in salary and benefit costs compared to the prior year.
In addition, there was an increase in other costs of approximately
$91,000 during fiscal 1997 compared to the prior year.
GAIN/(LOSS) ON DISPOSITION OF PROPERTY AND EQUIPMENT
The gain on the disposition of property and equipment increased
approximately $416,000 for fiscal 1997 compared to the prior year.
The principal reason for this increase was a gain of approximately
$438,000 on the disposition of certain commercial properties for
which there was no comparable activity for fiscal 1996.
-20-
OTHER
Other income increased approximately $49,000 in fiscal 1997
compared to the prior year primarily as a result of a
reclassification of expenses and an increase in miscellaneous
income.
INTEREST EXPENSE
Interest expense increased by approximately $664,000 or 32.2%
in fiscal 1997 compared to the prior year. The primary increase of
approximately $596,000 was due to an increase in the average
outstanding debt. Additionally, an increase of approximately
$144,000 was due to an increase in interest rates. Partially
offsetting these increases were an increase in capitalized interest
of approximately $57,000 and a decrease in other related interest
charges of approximately $19,000.
OTHER SIGNIFICANT EVENTS
As previously mentioned, the USDA anticipated a Florida orange
crop of approximately 254,000,000 boxes of round oranges for the
1997-98 season. The actual crop for the 1997-98 season is estimated
to have been 244,000,000 boxes of round oranges.
The Company's sales or costs were not impacted significantly by
the effects of general price level inflation during fiscal 1997.
-21-
LIQUIDITY AND CAPITAL RESOURCES
The Company's Bartow processing plant normally operates from
early November through late May or June. While the plant is in
operation, the inventory of processed juice increases to a level
which will cover anticipated deliveries until the following November
when the plant begins operation again. The Company's working
capital credit facility is generally utilized to finance these
inventories. Borrowings under this credit facility normally peak in
late May or June. The Company began processing activities for the
1997-98 season in late October and completed processing of fruit in
May.
The Company's ability to generate cash adequate to meet its
operating needs, including the refinancing of its inventories and
trade receivables, has been supported primarily by cash flow from
operations and periodic borrowings under its $45 million credit
facility. This facility is secured principally by most of the
Company's current assets. The outstanding balance at September 30,
1998 was approximately $24,008,000 and approximately $8,735,000 of
additional borrowings were available under this facility. The
interest rate is variable based upon the financial institution's
cost of funds plus a margin. The terms of this agreement call for
repayment of the principal amount in April 2000; accordingly, it is
classified as long-term. Management anticipates that this facility
will continue to be renewed as long-term each year. As of November
30, 1998, the Company's outstanding balance was approximately
$23,849,000, and approximately $8,164,000 of additional borrowings
were available under this facility. The Company anticipates that
the working capital facility will be adequately serviced with cash
proceeds from operations.
Additionally, as of September 30, 1998 the Company had another
$10 million short-term credit facility, which expires in April 1999.
As of September 30, 1998, there was no outstanding balance on this
facility. The interest rate on this facility is variable based
upon the financial institution's cost of funds plus a margin. As of
November 30, 1998, there was no outstanding balance on this facility.
Current assets increased approximately $3,285,000 as of
September 30, 1998 compared to September 30, 1997. The principal
component of this was an increase in inventory of approximately
$3,393,000 in the current year due principally to an increase in
finished goods and fruit-on-tree inventory. There was a decrease in
cash and short-term cash investments of approximately $168,000 and
advances on fruit purchases increased approximately $428,000. The
Company's accounts receivable increased approximately $180,000 compared
to the prior fiscal year. Additionally, there was an increase
of approximately $78,000 in current deferred income taxes compared to
the prior year.
Current liabilities increased approximately $597,000 during
fiscal 1998 compared to the fiscal year ended September 30, 1997.
The principal component of this increase was a $4,120,000 increase
in accounts payable and accrued liabilities. Offsetting this
increase, there was a decrease of approximately $3,523,000 in
current installments on long-term debt primarily as a result of the
refinancing of a $3,990,000 balance on a current mortgage note.
At September 30, 1998 the Company's outstanding long-term debt
was approximately $54,901,000 including the working capital facility
of approximately $24,008,000. In addition, current installments of
long-term debt were approximately $3,753,000 with the remaining
amounts due on various dates over the subsequent ten years. The
Company anticipates that amounts due over the next twelve months
will be paid out of working capital. As of September 30, 1998 the
Company was out of compliance with loan convenants related to debt
service coverage ratios. Waivers were obtained from these financial
institutions.
-22-
The Company completed the installation of new irrigation
systems for 998 acres of Company-owned Joshua, Polk County, and
Bermont groves during fiscal 1998 at a cost of approximately
$956,000. New irrigation systems for an additional 2,205 acres and
other projects are currently under construction for which
approximately $583,000 has been expended to date. In addition,
citrus groves costing approximately $220,000 were purchased during
fiscal 1998, and costs of caring for newly planted trees in the
amount of approximately $2,292,000 were capitalized. Additional
expenditures of approximately $4,043,000 were made during the current
year primarily for the purpose of improving the efficiency and capacity
of the Bartow processing facility and approximately $3,044,000 to
support the Company's juice and coffee dispenser programs. Also
during fiscal 1998 expenditures of approximately $142,000 were made
for grove operations equipment other than for irrigation. The
Company has financed these improvements from working capital or by
securing additional funds under existing mortgages.
-23-
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX
Pages
(1) Financial Statements.
The Company's Financial Statements included in Item 8 hereof,
as required at September 30, 1998, 1997 and 1996.
Report of Independent Certified Public Accountants 25
Consolidated Balance Sheets 26
Consolidated Statements of Operations 27
Consolidated Statements of Cash Flows 28
Consolidated Statements of Stockholders' Equity 29
Notes to Consolidated Financial Statements 30-41
(2) Financial Statement Schedule. Financial Statement
Schedule of the Company appended hereto, as required at
September 30, 1998, 1997 and 1996.
Schedule VIII-Allowance for Doubtful Accounts 41
(3) All other schedules to the Consolidated Financial
Statements specified by Article 12 of Regulation S-X are
not required under the related instruction or are
inapplicable and therefore have been omitted.
-24-
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Orange-co, Inc. and Subsidiaries:
We have audited the accompanying consolidated balance sheets of
Orange-co, Inc. and subsidiaries as of September 30, 1998, and 1997,
and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the years in the three-year
period ended September 30, 1998. In connection with our audit of
the consolidated financial statements, we have also audited the
financial statement schedule as listed in Item 8 (2) herein. These
consolidated financial statements and financial statement schedule
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements and financial statement schedule based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Orange-co, Inc. and subsidiaries as of September 30,
1998 and 1997, and results of their operations and their cash flows
for each of the years in the three-year period ended September 30,
1998, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
/s/KPMG Peat Marwick LLP
- ------------------------
KPMG Peat Marwick LLP
Orlando, Florida
December 4, 1998
-25-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
(in thousands)
September 30, September 30,
1998 1997
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 841 $ 1,009
Receivables 8,621 8,441
Advances on fruit purchases 879 451
Inventories 50,482 47,089
Deferred income taxes 2,476 2,398
Prepaid and other 57 683
----------- -----------
Total Current Assets 63,356 60,071
----------- -----------
Property and equipment, net 126,992 123,271
----------- -----------
Other assets:
Excess of cost over net assets of acquired
companies (net) 10,647 11,024
Notes receivable 1,196 1,458
Other 6,171 5,305
----------- -----------
Total Other Assets $ 18,014 $ 17,787
----------- -----------
Total Assets $ 208,362 $ 201,129
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments on long-term debt $ 3,753 $ 7,276
Accounts payable 5,697 4,113
Accrued liabilities 11,690 9,154
----------- -----------
Total current liabilities 21,140 20,543
Deferred income taxes 23,129 23,676
Other liabilities 1,502 1,046
Long-term debt 54,901 46,764
----------- -----------
Total liabilities 100,672 92,029
----------- -----------
Stockholders' equity:
Preferred stock, $.10 par value, 10,000,000
shares authorized, none issued - -
Common stock, $.50 par value, 30,000,000 shares
authorized, 10,349,399 shares issued 5,175 5,175
Capital in excess of par value 71,417 71,417
Retained earnings 31,472 32,887
----------- -----------
108,064 109,479
Less:
Treasury stock, at cost: 39,424 shares at
September 30, 1998 and 39,924 shares
at September 30, 1997 (374) (379)
----------- -----------
Total stockholders' equity 107,690 109,100
----------- -----------
Total liabilities and stockholders'
equity $ 208,362 $ 201,129
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-26-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
(in thousands except per share data)
1998 1997 1996
<S> <C> <C> <C>
Sales $118,880 $109,337 $119,130
Cost of sales 111,602 99,919 97,374
--------- --------- ---------
Gross profit 7,278 9,418 21,756
Other income and (expenses), net:
Selling, general and administrative (5,806) (5,310) (5,193)
Gain on disposition of property and equipment 122 438 22
Other (358) 14 (35)
Interest (3,274) (2,727) (2,063)
--------- --------- ---------
(Loss)income before income tax (2,038) 1,833 14,487
Income tax (benefit)expense (625) 754 4,396
--------- --------- ---------
Net (loss)income (1,413) 1,079 10,091
========= ========= =========
Net (loss)income per common shares,
basic and diluted $ (.14) $ .10 $ .98
========= ========= =========
Average number of common shares
outstanding, basic and diluted 10,310 10,307 10,301
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-27-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
(in thousands)
1998 1997 1996
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)income $ (1,413) $ 1,079 $10,091
--------- -------- --------
Adjustments to reconcile net (loss)income
to net cash provided by (used for)
operating activities:
Depreciation and amortization 7,583 6,275 4,972
(Decrease)increase deferred income taxes (625) 197 (504)
(Gain) on disposition of property and
equipment (122) (438) (22)
Changes in assets & liabilities:
(Increase)decrease in receivables (180) 6,464 (5,288)
(Increase)decrease in advances on fruit
purchases (428) 266 70
(Increase) in inventories (3,393) (4,941) (6,081)
Decrease(increase) in prepaids and other 626 (665) 15
(Increase)decrease in accounts payable
and accrued liabilities 4,120 (4,223) 1,778
Other, net 137 191 (537)
--------- --------- ---------
Total adjustments 7,718 3,126 (5,597)
--------- --------- ---------
Net cash provided by operating activities 6,305 4,205 4,494
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property & equipment 769 1,807 1,687
Decrease(increase) in note & mortgage
receivables 262 1,100 (1,757)
Additions to property & equipment (11,280) (9,654) (18,498)
(Increase) in other assets (841) (689) (1,223)
--------- --------- ---------
Net cash (used for) investing activities (11,090) (7,436) (19,791)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid - (1,031) (1,030)
Proceeds from long-term debt 4,614 3,722 16,972
Proceeds from issuance of treasury stock 3 41 18
--------- --------- ---------
Net cash provided by financing activities 4,617 2,732 15,960
--------- --------- ---------
NET (DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS (168) (499) 663
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 1,009 1,508 845
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 841 $ 1,009 $ 1,508
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-28-
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
(in thousands)
Total
Capital in Stock-
Common Stock Excess of Retained Treasury Stock holders'
Shares Amount Par Value Earnings Shares Amount Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
Sept. 30, 1995 10,349 $5,175 $71,417 $23,823 51 $(483) $ 99,932
Issuance of
treasury stock - - - (15) (4) 33 18
Dividend paid - - - (1,030) - - (1,030)
Net Income - - - 10,091 - - 10,091
------ ------ ------- -------- ------ ------ --------
Balance at
Sept. 30, 1996 10,349 $5,175 $71,417 $32,869 47 $(450) $109,011
Issuance of
treasury stock - - - (30) (7) 71 41
Dividend paid - - - (1,031) - - (1,031)
Net Income - - - 1,079 - - 1,079
------ ------ ------- -------- ------ ------ --------
Balance at
Sept. 30, 1997 10,349 $5,175 $71,417 $32,887 40 $(379) $109,100
Issuance of
treasury stock - - - (2) (1) 5 3
Net Loss - - - (1,413) - - (1,413)
------ ------ ------- -------- ------ ------ -------
Balance at
Sept. 30, 1998 10,349 $5,175 $71,417 $31,472 39 $(374) $107,690
====== ====== ======= ======== ====== ====== =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-29-
ORANGE-CO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Description of Operations - Orange-co, Inc. and Subsidiaries
(the "Company"), a 52.4% beneficially owned subsidiary of Ben Hill
Griffin, Inc. and an affiliate, is principally engaged in growing
and processing citrus products as well as packaging and marketing
these products and other beverages.
During the year ended September 30, 1998, the Company had two
customers who individually accounted for approximately 20.6% and
15.1% of sales. During the year ended September 30, 1997, the
Company had two customers who individually accounted for
approximately 22.3% and 14.1% of sales. During the year ended
September 30, 1996, the Company had two customers who individually
accounted for approximately 20.5% and 17.6% of sales.
Market prices for processed juices are subject to wide fluctuations.
The variation in the size of the citrus crop, both domestic and foreign,
can result in large changes in the price of the Company's bulk citrus
products as well as the cost of production.
Principles of Consolidation - The consolidated financial
statements of the Company include the accounts of Orange-co, Inc.
and its subsidiaries after elimination of all material intercompany
accounts and transactions.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. These
estimates also affect the reported revenues and expenses during the
period. Actual results could differ from the estimated amounts.
Inventories - Inventories produced from purchased fruit,
Company-owned groves and purchased finished product are valued at
the lower of cost or market, determined using the first-in, first-
out (FIFO) method. Inventories of materials and supplies are
recorded at the lower of FIFO cost or market. Cost includes all
direct and indirect manufacturing costs attributable to production
including fruit cost, labor and overhead.
Unharvested fruit crop is stated at the lower of cost or
market. The cost for unharvested fruit crop is based on the
accumulated production costs during the year ended September 30, 1998.
The Company engages in frozen concentrated orange juice
("FCOJ") futures hedging activities with the Citrus Associates of
the New York Cotton Exchange for the purpose of hedging against
price fluctuations of FCOJ, and not for trading or speculative
purposes. These activities include selling price and purchase price
hedges for FCOJ deliveries and anticipated purchases of FCOJ. Gains
or losses realized from hedged transactions of FCOJ deliveries and
of anticipated purchases of FCOJ are recognized as an addition or
reduction to the selling price or cost of purchased products and flow
through the Consolidated Statement of Operations as the associated
products are sold. The Company is currently hedging commitments to
purchase FCOJ and raw fruit inventory for the 1998-99 season using
contracts expiring during November 1998 through March 1999. Unrealized
gains and losses are considered in determining lower of cost or market
calculations for related FCOJ included in ending inventory.
-30-
Property and Equipment - Property and equipment are recorded
at cost less accumulated depreciation. Depreciation is recognized
principally using the straight-line method in amounts adequate to
depreciate cost over the estimated useful lives of the applicable
assets.
Costs pertaining to planting and caretaking of citrus trees are
initially capitalized and then, after the trees reach commercially
viable, fruit-producing status, depreciated over the estimated life
of the trees.
Maintenance, repairs and minor renewals are charged to expense
as incurred while major renewals and improvements that extend useful
lives are capitalized. The cost and related allowance for
depreciation or amortization of assets sold or otherwise disposed of
are removed from the related accounts, and the resulting gains or
losses are reflected in the results of operations.
Interest is capitalized in connection with the construction of
major facilities and young trees planted prior to their productive
stage. The interest is amortized over the related asset's useful
life through depreciation.
The Company reviews its long-lived assets and certain identifiable
intangibles to be held and used for impairments whenever changes in
circumstances indicate that the carrying amount of the asset may
not be recoverable. The Company has reviewed its long-lived assets
for impairment and has determined that no adjustment to the carrying
value is required.
Excess of Cost Over Net Assets of Acquired Companies - The
excess of the aggregate purchase price over the fair value of net
assets acquired is recorded at cost less accumulated amortization of
approximately $4,427,000 as of September 30, 1998 and $4,051,000 as
of September 30, 1997. Amortization is recognized over a 40-year
period using the straight-line method.
Cash and Cash Equivalents - Cash and cash equivalents consist
principally of cash, time deposits and interest bearing investments
with maturities of three months or less. For purposes of the
Consolidated Statements of Cash Flows, all highly liquid investments
are considered to be cash equivalents.
Earnings Per Share - Net income per share is computed by
dividing net income by the weighted average number of common and
common stock equivalents issued and outstanding during the period.
Effective for interim and annual financial statements for fiscal
year ending after December 15, 1997, the FASB has issued SFAS 128
"Earnings per Share" which changes the requirements for the
calculation and disclosure of earnings per share in the financial
statements. The Company adopted SFAS 128 for its interim and annual
reporting periods beginning in its 1998 fiscal year. Its adoption
had no material effect on the financial statements.
Reclassifications - Certain accounts may have been
reclassified in the 1997 and 1996 financial statements to conform to
the 1998 financial statement presentation.
Income Taxes - The Company uses the asset and liability method
of accounting for income taxes. Under the asset and liability
method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
-31-
Application of Accounting Standards - In June 1998 the
Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities". SFAS 133 requires that an
entity recognize all derivatives as either assets or liabilities in
the statement of financial position and measure those instruments at
fair value. Under the comprehensive income reporting method adopted
under SFAS 130 "Reporting Comprehensive Income", gains or losses
resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. The key criterion for hedge
accounting is that the hedging relationship must be highly effective
in achieving offsetting changes in fair value or cash flows. SFAS
133 is effective for interim and annual periods beginning after June
15, 1999. The Company is currently evaluating, and has not yet
determined, the effect that the adoption of SFAS 133 will have on
its financial statements.
The Financial Accounting Standards Board recently issued SFAS
131, "Disclosures about Segments of an Enterprise and Related
Information", which is effective for the Company's fiscal year
beginning October 1, 1998. Under SFAS 131 the basis for
determining an enterprise's operating segments is the manner in
which management operates the businesses. The Company does not
expect that the adoption of this pronouncement will significantly
effect its financial disclosure obligations.
The Financial Accounting Standards Board has issued SFAS 132,
"Employer's Disclosures about Pensions and other Postretirement
Benefits", which is effective for the Company's fiscal year
beginning October 1, 1998. SFAS l32 requires certain additional
disclosures and standardizes the disclosure requirements for
pensions and other postretirement benefits. The Company does not
expect that the adoption of this pronouncement will significantly
impact its financial disclosure obligations.
-32-
2. Financial Instruments Fair Value, Credit Risks, and Off-Balance
Sheet Risk - The carrying amounts reported in the
Consolidated Balance Sheets for cash and cash equivalents, accounts
receivable, accounts payable and short-term debt approximate fair
value due to the short-term maturity of these financial instruments.
The fair value of notes receivable is not considered practical to
estimate due to the nature of the accounts, the lack of a market
available to approximate their fair value and their immateriality.
The carrying value of the variable rate long-term debt approximates
fair value due to frequent repricing. The fair value of the fixed
rate long-term debt is estimated using discounted cash flows based
upon the incremental borrowing rates currently available to the
Company for mortgage loans with similar remaining terms and
maturity. The carrying value for these financial instruments and
their corresponding fair value are listed below as of September 30,
1998 and 1997.
<TABLE>
<CAPTION>
Financial Instruments at Carrying Amount Fair Value
September 30, 1998 (in thousands)
<S> <C> <C>
Cash and cash equivalents $ 841 $ 841
Accounts and notes receivable 9,817 9,817
Accounts payable 5,697 5,697
Variable rate long-term debt 31,683 31,683
Fixed rate long-term debt with
financial institutions 26,971 27,088
</TABLE>
<TABLE>
<CAPTION>
Financial Instruments at Carrying Amount Fair Value
September 30, 1997 (in thousands)
<S> <C> <C>
Cash and cash equivalents $ 1,009 $ 1,009
Accounts and notes receivabl 9,899 9,899
Accounts payable 4,113 4,113
Variable rate long-term debt 32,755 32,755
Fixed rate long-term debt with
Financial institutions 20,893 20,169
Other long-term debt 392 392
</TABLE>
As of September 30, 1998, the Company was subjected to a
concentration of credit risk as a result of two customers who
individually accounted for approximately 12.9% and 12.2% of trade
receivables. No collateral is required on these trade receivables
due to collection experience and trade practices. Additionally, the
Company's accounts receivable are concentrated generally in the
beverage and foodservice industries. Management believes the
allowance for doubtful accounts is adequate under the circumstances.
As of September 30, 1998 the Company held contracts for net FCOJ
futures positions totaling approximately $1,530,000 net and net FCOJ
options with an intrinsic market value of approximately $42,000.
Unrealized losses on the contracts for FCOJ futures was approximately
$2,000. Exposure to off-balance sheet risk related to these positions
results from market fluctuations of FCOJ future prices relative to the
Company's open positions. Cash deposit requirements with brokers as of
September 30, 1998 totaled approximately $128,000 and will vary with
market price fluctuations.
-33-
3. Receivables
<TABLE>
<CAPTION>
The major components of receivables as of September 30, 1998
and 1997 are summarized as follows (in thousands):
1998 1997
<S> <C> <C>
Trade receivables $ 8,654 $ 6,699
7%-12.9% mortgage and promissory notes receivable 1,917 2,237
Deposits with brokers, net 224 312
Other 358 1,689
Allowance for doubtful accounts (1,336) (1,038)
-------- --------
Net receivables 9,817 9,899
Less non-current portion 1,196 1,458
-------- --------
Current receivables $ 8,621 $ 8,441
======== ========
As of September 30, 1998 and 1997, 14.9% and 8.5% respectively of the
Company's receivables were due from foreign customers. The Company derived
approximately 10.5%, 9.5% and 8.3% of its revenue from foreign sales during
fiscal 1998, 1997, and 1996, respectively.
4. Inventories
</TABLE>
<TABLE>
<CAPTION>
The major components of inventory as of September 30, 1998 and
1997, are summarized as follows (in thousands):
1998 1997
<S> <C> <C>
Finished goods $35,390 $32,095
Fruit-on-tree inventory 11,099 10,514
Other 3,993 4,480
------- -------
Total $50,482 $47,089
======= =======
</TABLE>
5. Property and Equipment
<TABLE>
<CAPTION>
The major components of property and equipment as of September
30, 1998 and 1997 are summarized as follows (in thousands):
Estimated
1998 1997 Useful Life
Years
<S> <C> <C> <C>
Land and improvements $ 5,906 $ 4,838 5 to 30
Citrus groves 97,322 94,887 33
Buildings and improvements 7,283 8,089 10 to 33
Machinery and equipment 60,941 56,794 3 to 20
Construction in progress 5,840 3,391
-------- --------
$177,292 $167,999
Less accumulated depreciation 50,300 44,728
-------- --------
Total $126,992 $123,271
======== ========
</TABLE>
-34-
<TABLE>
<CAPTION>
The Company leases equipment under both short and long term
operating leases. Approximate future minimum obligations under
these leases with initial or remaining lease terms in excess of 1
year for the years ended September 30, are as follows:
<S> <C>
1999 $ 549,000
2000 $ 396,000
2001 $ 305,000
2002 $ 173,000
2003 $ 25,000
</TABLE>
Rent expense charged to operations amounted to approximately
$1,504,000 for the year ended September 30, 1998, $2,003,000 for the
year ended September 30, 1997, and $1,880,000 for the year ended
September 30, 1996.
6. Accrued Liabilities
<TABLE>
<CAPTION>
The major components of accrued liabilities as of September 30,
1998 and 1997 are summarized as follows (in thousands):
1998 1997
<S> <C> <C>
Taxes $ 1,754 $ 944
Amounts due inventory suppliers 5,972 4,932
Accrued labor and benefit expenses 1,923 1,383
Accrued sales rebates 1,259 1,169
Other 782 726
------- ------
Total $11,690 $9,154
======= ======
</TABLE>
The Company has marketing contracts with fruit growers
("participation contracts") whereby the Company purchases fruit for
a price to be determined by the proceeds ultimately received by the
Company for the products sold from that season's fruit. Progress
payments are made when the fruit is received. The estimated unpaid
portion at September 30, 1998 and 1997 was $5,972,000 and $4,932,000
respectively, "Amounts due inventory suppliers".
-35-
7. Income Taxes
<TABLE>
<CAPTION>
Total income tax (benefit)expense for the years ended September
30, 1998, 1997 and 1996 was as follows (in thousands):
1998 1997 1996
<S> <C> <C> <C>
Income tax (benefit)expense $ (625) $ 754 $4,396
</TABLE>
<TABLE>
<CAPTION>
Income tax (benefit)expense attributable to income from
continuing operations for the years ended September 30, 1998, 1997
and 1996 consisted of the following (in thousands):
Current Deferred Total
<S> <C> <C> <C>
Year ended September 30, 1998
U.S. Federal $ - $ (565) $ (565)
State and Local - (60) (60)
------- ------- -------
Total $ - $ (625) $ (625)
======= ======= =======
Year ended September 30, 1997
U.S. Federal $ 498 $ 169 $ 667
State and Local 59 28 87
------ ------- -------
Total $ 557 $ 197 $ 754
======= ======= =======
Year ended September 30, 1996
U.S. Federal $4,219 $ (454) $3,765
State and Local 681 (50) 631
------- ------- -------
Total $4,900 $ (504) $4,396
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Income tax (benefit)expense attributable to income from
continuing operations was $(625,000), $754,000, and $4,396,000, for
the years ended September 30, 1998, 1997, and 1996, respectively,
and differs from the amounts computed by applying the U.S. federal
income tax rate of 34% to pretax (loss)income from continuing
operations as a result of the following (in thousands):
1998 1997 1996
<S> <C> <C> <C>
Computed "expected" tax (benefit)expense $ (693) $ 623 $4,926
Increase (reduction) in income taxes
resulting from:
Change in the valuation allowance for
deferred tax assets allocated to
income tax (benefit)expense 12 100 (1,284)
Loss on foreign operations - 7 65
Amortization of goodwill and other 186 93 128
State and local income taxes, net
of Federal income tax (benefit)expense (44) 58 416
Foreign sales corporation benefit (45) (97) (106)
Other, net (41) (30) 251
-------- ------- -------
Total $ (625) $ 754 $4,396
======== ======== =======
</TABLE>
-36-
<TABLE>
<CAPTION>
The tax effects of temporary differences that gave rise to
significant portions of the deferred tax assets and deferred tax
liabilities at September 30, 1998 and 1997 are presented below (in
thousands):
1998 1997
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts $ 503 $ 390
Capitalized inventory costs 349 119
Reserve on carrying value of property
and equipment 310 69
Accrued reserves and expenses 988 1,479
Net capital loss carryforwards 589 589
Net operating loss carryforwards 1,126 -
Investment tax credit carryforwards 394 507
Alternative minimum tax credit carryforwards 974 974
--------- ---------
Total gross deferred tax assets 5,233 4,127
Less valuation allowance (574) (674)
--------- ---------
Net deferred tax assets $ 4,659 $ 3,453
--------- ---------
Deferred tax liabilities:
Plant and equipment, principally due to
allocation of purchase price of businesses
acquired and to differences in depreciation
and capitalized interest (25,250) (24,670)
Other (62) (61)
--------- ---------
Total gross deferred tax liabilities (25,312) (24,731)
--------- ---------
Net deferred tax liability $(20,653) $(21,278)
========= =========
</TABLE>
The net change in the total valuation allowance for the year
ended September 30, 1998 was a decrease of $100,000, which resulted
from expiring investment tax credits. The net changes in the total
valuation allowance for the years ended September 30, 1996 and 1997
were a decrease of $1,284,000 and a decrease of $1,096,000, respectively.
The decrease in 1997 was principally as a result of investment tax
credits expiring unreserved. The Company utilized all of the net
operating loss carryforward as of September 30, 1997. Additionally, a
net capital loss with a tax benefit of $1,196,000 was utilized during
fiscal 1997.
For the year ended September 30, 1998 the Company paid income
taxes of approximately $19,000. Offsetting these payments, the
Company received refunds of overpayments in prior years of
approximately $654,000. Income taxes paid amounted to approximately
$1,108,000 and $4,256,000, for the years ended September 30, 1997 and
1996 respectively.
For tax reporting purposes as of September 30, 1998, the
Company had unused net capital loss carryforwards of approximately
$589,000 and investment tax credit carryforwards of approximately
$507,000 which expire in varying amounts through the year 2002. In
addition, the Company has alternative minimum tax credit
carryforwards of approximately $974,000 which are available to
reduce future federal regular income taxes, if any, over an
indefinite period. Management believes that the net deferred tax
assets of $4,659,000 are materially recoverable.
-37-
8. Notes Payable to Banks and Long-term Debt
<TABLE>
<CAPTION>
Notes payable to banks and long-term debt as of September 30,
1998 and 1997 consisted of the following (in thousands):
1998 1997
<S> <C> <C>
Mortgage notes payable bearing interest
from 6.9% to 7.85% due in varying
installments through 2003 $33,838 $24,645
Working capital line of credit bearing
a variable rate of interest (6.375% at
9/30/98) based upon the financial
institution's cost of funds, due in
April 2000 24,008 28,380
Mortgage note payable bearing interest
at 7% due semi-annually, principal due
annually through January 2009 579 623
Grove purchase installment notes, bearing
interest at 7% to 8% due in varying
installments through August 2005 229 392
------- -------
$58,654 $54,040
Less current installments on long-term
debt and note payable to bank 3,753 7,276
------- -------
Total $54,901 $46,764
======= =======
Certain mortgage agreements contain loan covenants. As of September
30, 1998 the Company was out of compliance with loan covenants related to
debt service coverage ratios. Waivers were obtained from these financial
institutions.
</TABLE>
<TABLE>
<CAPTION>
Principal payments for the years subsequent to 1999 are as
follows (in thousands):
<S> <C>
2000 $ 27,710
2001 $ 6,057
2002 $ 3,182
2003 $ 7,830
Thereafter $ 10,122
</TABLE>
As of September 30, 1998 the Company had a $45 million working
capital facility, which expires in April 2000, with an outstanding
balance of $24,008,000 with additional available borrowings of
approximately $8,735,000. As of September 30, 1998, the Company also
had additional available short-term borrowings of $10,000,000 under
its revolving line of credit, which expires in April 1999.
Interest paid net of amounts capitalized was approximately
$3,264,000, $2,737,000, and $1,949,000 for the years ended September
30, 1998, 1997, and 1996, respectively. Interest capitalized was
approximately $651,000, $799,000, and $742,000 for the years ended
September 30, 1998, 1997, and 1996, respectively.
-38-
9. 401(k) Plan
The Company provides a retirement plan (the "Plan") which meets
the qualifications under Section 401(k) of the Internal Revenue Code
(the "Code"). Employees who have completed the required service (as
defined) are eligible to make tax-deferred contributions and to
participate in an employer matching contribution. The Company
contributed approximately $86,000, $66,000, and $61,000, under the
Plan for the years ended September 30, 1998, 1997, and 1996,
respectively. The Company also accrued approximately $90,000 during
fiscal 1998 for contributions to the Plan for the 1998 Plan year.
In December 1990, the assets of the Employees Stock Ownership Trust
("ESOT") were merged into the Plan. At September 30, 1998 the Plan
held approximately .45% of the outstanding common stock of the
Company.
10. Profit Sharing Plan
Effective January 1, 1993, the Company established a Profit
Sharing Retirement Plan ("Profit Sharing Plan") which meets the
qualifications of Section 401(c) of the Code. All employees begin
participation on the later of January 1, 1993 or date of employment.
Vesting is governed by a seven year graduated vesting schedule
including credit for continuous service with the Company prior to
the effective date. The Company's discretionary contribution is
determined annually by the Board of Directors and is allocated among
eligible participants' accounts in the proportion that each
participant's compensation bears to the total qualified compensation
of all eligible employees during the year. The Company contributed
approximately $269,000 and $694,000 to the Profit Sharing Plan
during fiscal 1998 and 1997, respectively, which represented
discretionary contributions for the 1997 and 1996 Profit Sharing
Plan years, respectively. In addition, the Company accrued
approximately $225,000 during fiscal 1998 to be contributed to the
Profit Sharing Plan for the 1998 Plan year.
11. Other Retirement Benefits
Certain officers and employees have employment contracts for
additional retirement benefits, the cost of which is being accrued
on a present value basis over the remaining term of the employment
agreements. The lives of the officers and employees have been
insured as a means of funding such benefits. These contracts became
effective for fiscal 1994 and thereafter. The Company incurred
expenses related to these benefits of approximately $185,000,
$251,000, and $66,000 for the years ended September 30, 1998, 1997
and 1996, respectively. The accrued liability for these additional
retirement benefits at September 30, 1998 was approximately $870,000.
The Company has no additionally reportable post retirement or
employment benefits.
12. Stock Options
In April 1987, the Company adopted an Employee Stock Option
Plan (the 1987 Plan) under which a committee of the Board of
Directors was authorized to grant either incentive stock options
("ISOs") or non-qualified stock options. The 1987 Plan provided for
the granting of ISOs and non-qualified options for a period of ten
years to purchase up to an aggregate of 750,000 shares of common
stock. The option price of all common stock issued under the 1987
Plan was at least 100% of the fair market value on the date of grant.
The options granted to purchase shares generally became exercisable
on a cumulative basis at 33-1/3% each year, commencing with the second
year. The 1987 Plan expired during fiscal 1997 and no further options
can be granted. There are options on 18,825 shares issued and outstanding
as of September 30, 1998.
-39-
<TABLE>
<CAPTION>
A summary of the changes in the shares under option for the
1987 Plan is as follows:
1987 Plan
Shares Price
<S> <C> <C>
Outstanding at
September 30, 1995 44,100 $5.4375 - $10.00
Granted - -
Exercised 3,500 $5.4375
Expired 9,375 $5.4375 - $10.00
Outstanding at
September 30, 1996 31,225 $5.4375 - $10.00
Granted - -
Exercised 7,500 $5.4375
Expired 4,400 $9.6250 - $10.00
Outstanding at
September 30, 1997 19,325 $5.4375 - $9.625
Granted - -
Exercised 500 $9.4887
Expired - -
Outstanding at
September 30, 1998 18,825 $5.4375 - $9.625
</TABLE>
Options granted under the 1987 Plan expire at various dates through
August 2001. Stock options under the 1987 Plan are accounted for
using the intrinsic value method of accounting prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees". Under this method there was no reportable
intrinsic value for outstanding options.
13. Related Party Transactions
Ben Hill Griffin, Inc. and an affiliate collectively and
beneficially held approximately 52.4% majority ownership of Orange-
co, Inc. as of September 30, 1998. Ben Hill Griffin, Inc. is a
privately owned agribusiness corporation located in Frostproof,
Florida.
During the fiscal year ended September 30, 1998 the Company had
incurred an estimated $6,001,000 in fruit participation cost from
fruit purchased from its parent, Ben Hill Griffin, Inc. Of that
amount approximately $2,427,000 was paid as of September 30, 1998
with the accrued balance of $3,574,000 to be paid by March 1, 1999.
Final payment amounts under the Company's fruit participation
program are based upon returns from the ultimate disposition of the
fruit received. For the fiscal year ended September 30, 1997 the
Company incurred a total of $9,224,000 in fruit participation cost
from fruit purchased from its parent, Ben Hill Griffin, Inc. As of
September 30, 1997 a total of $6,085,000 had been paid against this
amount and an estimated balance of $3,139,000 was accrued to be paid
on March 1, 1998. For the fiscal year ended September 30, 1996 the
Company incurred a total of $6,323,000 in fruit participation cost
from fruit purchased from its parent, Ben Hill Griffin, Inc. As of
September 30, 1996 a total of $3,212,000 had been paid against this
amount and an estimated balance of $3,111,000 was accrued to be paid
on March 1, 1997. Fruit purchases made from the parent company
under the Company's participation program are under terms equivalent
to fruit purchased from other grower participants. For the fiscal
year ended September 30, 1996 the Company also incurred $392,000
for fruit purchased from Ben Hill Griffin, Inc. under a spot fruit
purchase contract. Additionally, the Company paid approximately
$2,716,000, $2,539,000, and $2,862,000, to Ben Hill Griffin, Inc.
for other goods and services, principally the purchase of fertilizer
and citrus trees at prices approximating market, during fiscal 1998,
1997 and 1996, respectively.
-40-
<TABLE>
<CAPTION>
14. Interim Financial Information (unaudited)
(in thousands except per share amounts)
Gross Earnings
Quarters Ended Sales Profit Net Income Per Share
<S> <C> <C> <C> <C>
Fiscal 1998
September 30, 1998 $ 29,945 $ 3,941 $ 790 $ .08
June 30, 1998 31,418 4,861 1,656 .16
March 31, 1998 31,807 (489) (1,899) (.18)
December 31, 1997 25,710 (1,035) (1,960) (.19)
-------- -------- --------- --------
$118,880 $ 7,278 $ (1,413) $ (.14)
======== ======== ========= ========
Fiscal 1997
September 30, 1997 $ 25,399 $ 959 $ (280) $ (.04)
June 30, 1997 26,360 998 (455) (.04)
March 31, 1997 29,154 2,750 276 .03
December 31, 1996 28,424 4,711 1,538 .15
-------- ------- ------ --------
$109,337 $ 9,418 $ 1,079 $ .10
======== ======= ========= ========
</TABLE>
<TABLE>
<CAPTION>
ORANGE-CO, INC. AND SUBSIDIARIES
SCHEDULE VIII - ALLOWANCE FOR DOUBTFUL ACCOUNTS
FOR THE YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
(in thousands)
Column A Column B Column C Column D Column E
Balance @ Additions
Beginning Charged to Balance @
Description of Period Expense Deductions End of Period
<S> <C> <C> <C> <C>
Year ended
September 30, 1998 $1,038 $677 $(379) $1,336
====== ==== ====== ======
Year ended
September 30, 1997 $ 918 $120 $ - $1,038
====== ==== ====== ======
Year ended
September 30, 1996 $ 798 $120 $ - $ 918
====== ==== ====== ======
</TABLE>
ITEM 9. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure
None
-41-
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by Item 10 will be set forth in the
Company's 1999 Proxy Statement under the caption "Nominees For
Election As Directors" and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by Item 11 will be set forth in the
Company's 1999 Proxy Statement under the caption "Executive Officers
and Compensation" and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by Item 12 will be set forth in the
Company's 1999 Proxy Statement under the caption "Security Ownership
of Certain Beneficial Owners", "Nominees for Election as Directors"
and "Stock Ownership of Executive Officers", and is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions
The information required by Item 13 will be set forth in the
Company's 1999 Proxy Statement under the caption "Transactions With
Management And Others" and is incorporated herein by reference.
-42-
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1) The financial statements required to be filed as part
of this Report, and the report thereon by KPMG Peat Marwick LLP, are
set forth under Item 8 and listed on Page 24 herein.
(2) The financial statement schedule required to be filed
herewith are listed on Page 24 herein.
(3) The exhibits required to be filed herewith are listed
on the "Exhibit Index" commencing at Page 46 herein.
(b) During the last quarter of the period covered by this
Report the Company filed no reports on Form 8-K.
(c) The exhibits required to be filed herewith are listed on
the "Exhibit Index" commencing on Page 46 herein and incorporated
herein by reference.
(d) The financial statements required to be filed as part of
the Report and the report thereon by KPMG Peat Marwick LLP are set
forth under Item 8 and are listed on Page 24 herein and are
incorporated herein by reference.
-43-
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.
ORANGE-CO, INC.
(Registrant)
Date: December 14, 1998 By:/s/ Gene Mooney
Gene Mooney
President and
Chief Operating Officer
Date: December 14, 1998 By:/s/ Dale A. Bruwelheide
Dale A. Bruwelheide
Vice President,
Chief Financial Officer and
Principal Accounting Officer
-44-
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the date indicated.
Date: December 14, 1998 /s/ B. H. Griffin, III
B. H. Griffin, III
Chairman, CEO and Director
Date: December 14, 1998 /s/ Richard A. Coonrod
Richard A. Coonrod
Director
Date: December 14, 1998 /s/ Paul E. Coury, MD
Paul E. Coury, MD
Director
Date: December 14, 1998 /s/ George W. Harris, Jr.
George W. Harris, Jr.
Director
Date: December 14, 1998 /s/ Dr. W. Bernard Lester
Dr. W. Bernard Lester
Director
Date: December 14, 1998 /s/ Bobby F. McKown
Bobby F. McKown
Director
Date: December 14, 1998 /s/ Gene Mooney
Gene Mooney
Director
Date: December 14, 1998 /s/ C. B. Myers, Jr.
C. B. Myers, Jr.
Director
Date: December 14, 1998 /s/ Thomas H. Taylor, Sr.
Thomas H. Taylor, Sr.
Director
-45-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
For the fiscal year Commission File
ended September 30, 1998 Number 1-6442
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
ORANGE-CO, INC.
(Exact name of registrant is specified in its charter)
EXHIBITS
INDEX
-46-
EXHIBITS INDEX
Exhibit Description of Exhibits Sequential
No. Page No.
3.1 Restated Articles of Incorporation of the
company, as amended, filed as Exhibits 3.1 to
Stoneridge Resources, Inc.'s Registration
Statement No. 33-24085 on Form S-1 and
incorporated herein by reference.
3.2 By-laws of the Company, as amended the year 52
ended September 30, 1998.
10.8 Orange-co of Florida, Inc. Deferred Compensation
Plan effective December 1, 1988 as amended
through December 15, 1994 last filed as Exhibit
10.8 on Form 10-K for fiscal year ended September
30, 1994.
10.12 Loan Agreement between Orange-co, Inc. Orange-co 65
of Florida, Inc. and Farm Credit of Southwest
Florida, ACA, dated April 10, 1993 and
originally filed as Exhibit 10.12 on Form 10-Q
for the fiscal quarter ended March 31, 1993.
EXHIBITS INDEX
Sequential
Exhibit Description of Exhibits Page No.
No.
10.14 Loan Agreement By and Among Orange-co, Inc. 96
and Orange-co of Florida, Inc. and Sun Bank
National Association for a Revolving Line of
Credit in the amount of $20,000,000 dated
June 16, 1993 and originally filed as Exhibit
10.14 on Form 10-Q for the fiscal quarter ended
June 30, 1993.
10.15 Thermal Energy Sales Agreement By and Between 137
Orange-co of Florida, Inc. and AP Cogen Ltd.,
dated May 27, 1993 and originally filed as
Exhibit 10.15 on Form 10-Q for the fiscal
quarter ended June 30, 1993.
10.17 Orange-co of Florida, Inc. Management 170
Security Plan effective October 1, 1993 and
originally filed as Exhibit 10.17 on Form 10-Q
for the fiscal quarter ended December 31, 1993.
10.18 The First Amendment to the Loan Agreement By
and Among Orange-co, Inc. and SunBank,
National Association for a Revolving Line of
Credit dated April 1, 1994 and filed as
Exhibit 10.18 on Form 10-Q for the fiscal
quarter ended June 30, 1994 and incorporated
herein by reference.
10.19 The Second Amendment to the Loan Agreement By
and Among Orange-co, Inc., and SunBank
National Association for a Revolving Line of
Credit dated April 1, 1994 and filed as
Exhibit 10.19 on Form 10-Q for the fiscal
quarter ended June 30, 1994 and incorporated
herein by reference.
10.20 Stock Acquisition Agreement Between Orange-
co, Inc. and Childs Oil Company, Inc. dated
September 9, 1994 for the sale of Frank
Carroll Oil Company Stock as originally
filed as Exhibit 10.20 on Form 10K for the
fiscal year ended September 30, 1994 and
incorporated herein by reference.
10.21 The Third Amendment to the Loan Agreement By
and Among Orange-co, Inc. Orange-co of
Florida, Inc. and SunBank, National
Association for a Revolving Line of Credit
dated January 27, 1995 and filed as Exhibit
10.21 on Form 10-Q for the fiscal quarter
ended December 31, 1994 and incorporated
herein by reference.
EXHIBITS INDEX
Sequential
Exhibit Description of Exhibits Page No.
No.
10.23 The Fifth Amendment to the Loan Agreement By
and Among Orange-co, Inc., Orange-co of
Florida, Inc. and SunTrust Bank, Central
Florida, National Association dated April 5,
1996 and filed as Exhibit 10.23 on Form 10-Q
for the fiscal quarter ended March 31, 1996
and incorporated herein by reference.
10.24 Second Amendment to the Loan Agreement
between Orange-co, Inc. and Farm Credit of
Southwest Florida, ACA dated May 16, 1996 and
filed as Exhibit 10.24 on Form 10-Q for the
fiscal quarter ended June 30, 1996 and
incorporated herein by reference.
10.25 Asset Purchase Agreement between Kraft Foods,
Inc. and Orange-co, Inc. and filed as Exhibit
10.25 on Form 10-Q for the quarter ended June
30, 1996 and incorporated herein by
reference.
10.27 The Sixth Amendment to the Loan Agreement By
and Among Orange-co, Inc., Orange-co of
Florida, Inc., and SunTrust Bank, Central
Florida, National Association, dated April
25, 1997 and filed as Exhibit 10.27 on Form
10-Q for the fiscal quarter ended March 31,
1997 and incorporated herein by reference.
10.28 The Seventh Amendment to the Loan Agreement
By and Among Orange-co, Inc., Orange-co of
Florida, Inc. and SunTrust Bank, Central
Florida, National Association dated February
3, 1998 and filed as Exhibit 10.28 on Form 10-
Q for the fiscal quarter ended December 31,
1997 and incorporated herein by reference.
10.29 Renewal Term Note between Orange-co, Inc. and
Farm Credit of Southwest Florida, ACA dated
April 1, 1998 and filed as Exhibit 10.29 on
Form 10-Q for the fiscal quarter ended March
31, 1998 and incorporated herein by
reference.
-48-
EXHIBITS INDEX Sequential
Page No.
Exhibit Description of Exhibits
No.
10.30 Loan Agreement by and among Farm Credit of
South Florida, ACA, Farm Credit of Southwest
Florida, ACA, and Orange-co, Inc. and Orange-
co of Florida, Inc. dated June 30, 1998 and
filed as Exhibit 10.30 on Form 10-Q for the
fiscal quarter ended June 30, 1998 and
incorporated herein by reference.
10.31 Consolidated, Amended and Restated Florida
Mortgage and Security Agreement between
Orange-co of Florida, Inc. and John Hancock
Mutual Life Insurance Company dated June 2,
1998; and Renewal Note between Orange-co of
Florida, Inc. and John Hancock Mutual Life
insurance Company dated June 2, 1998 and
filed as Exhibit 10.30 on Form 10-Q for the
fiscal quarter ended June 30, 1998 and
incorporated herein by reference.
21 Subsidiaries of the Company. 50
24.1 Consent letter from KPMG Peat Marwick LLP. 51
27 Financial Data Schedule (Electronic Filing Only)
99.2 First Amendment to Orange-co of Florida, Inc.
401(k) Salary Deferral Plan effective
December 15, 1994 and incorporated herein by
reference.
99.3 Profit Sharing Plan and Trust for Employees 181
of Orange-co of Florida, Inc. effective
January 1, 1993 and originally filed as
Exhibit 99.3 on Form 10K for the fiscal
year ended September 30, 1994.
-49-
EXHIBIT 21
ORANGE-CO, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE COMPANY
The following is a list of subsidiaries of Orange-co, Inc. as
of December 15, 1998, other than subsidiaries which, considered in
the aggregate as a single subsidiary, would not constitute a
significant subsidiary as defined by Securities and Exchange
Commission Regulation S-X. All of the subsidiaries are included in
the Consolidated Financial Statements of Orange-co, Inc.
Name of Subsidiary State or Country of Incorporation
Orange-co of Florida, Inc. (1) Florida
Florida Fresh-Pack Corporation (1) Florida
Orange-co Dispenser Service, Inc. (2) Florida
International Fruit, Inc. (2) Florida
Orange-co International Sales Inc. (2) U.S. Virgin Islands
(1) A wholly-owned subsidiary of Orange-co, Inc.
(2) A wholly-owned subsidiary of Orange-co of Florida, Inc.
-50-
EXHIBIT 24.1
Consent of Independent Auditors
The Board of Directors and Stockholders
Orange-co, Inc. and Subsidiaries
We consent to incorporation by reference in the registration
statement (No. 33-17386) on Form S-8 of Orange-co, Inc. and
subsidiaries of our report dated December 4, 1998 relating to the
consolidated balance sheet of Orange-co Inc. and subsidiaries as of
September 30, 1998, and the related consolidated statements of
operations, stockholders' equity, and cash flows and related
schedule for the year then ended, which report appears in the
September 30, 1998 annual report on Form 10-K of Orange-co, Inc. and
subsidiaries.
/s/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Orlando, Florida
December 4, 1998
-51-
EXHIBIT 3.2
Revised as of December 15, 1992
BYLAWS
OF
ORANGE-CO, INC.
ARTICLE I
IDENTIFICATION
SECTION 1. Seal. The seal of the Corporation shall be
circular in form and mounted upon a metal die, suitable for
impressing upon paper, and shall bear the name of the
Corporation and the words and number "Florida, Corporate Seal,
1960".
SECTION 2. Fiscal Year. The fiscal year of the
Corporation shall be determined by appropriate resolution of the
Board of Directors and may be changed from time to time by the
Board of Directors.
SECTION 3. Place of Business. The Corporation may have
offices and do business at any place in any of the states,
districts or territories of the United States and in any and all
foreign countries.
ARTICLE II
STOCK CERTIFICATES, TRANSFER AND RECORDS
SECTION 1. Forms of Share Certificates. The shares of the
Corporation shall be represented by certificates, in such forms
as the Board of Directors may prescribe, signed by the Chairman
of the Board or the President or a Vice President and the
Secretary or an Assistant Secretary and sealed with the seal of
the Corporation or a facsimile thereof. The signatures of the
officers upon a certificate may be facsimiles if the certificate
is manually signed on behalf of a Transfer Agent or a Registrar
other than the Corporation or its employee. In case any officer
who has signed or whose facsimile signature has been placed upon
a certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with
the same effect as if he were such officer at the date of issue.
Each certificate representing shares shall state upon the
face thereof:
(1) The name of the Corporation;
(2) That the Corporation is formed under the laws of the State
of Florida;
(3) The name of the person or persons to whom issued:
(4) The number and class of shares, and the designation of the
series, if any, which such certificate represents; and
(5) The par value of each share represented by such
certificate, if any, which such certificate represents; and
-52-
Should the Articles of Incorporation presently authorize,
or be amended to authorize, the issuance of shares of more the
one class or more than one series, in that event each
certificate representing shares issued by the Corporation shall
set forth or fairly summarize upon the face or back of the
certificate, or shall state that the Corporation will furnish to
any shareholder upon request and without charge, a full
statement of:
(1) The designations, preference, limitations, and relative
rights of each class or series of authorized shares to be
issued.
(2) The variations in the relative rights and preferences
between the shares of each such series so far as the same have
been fixed and determined and the authority of the Board of
Directors to fix and determine the relative rights and
preferences of subsequent series.
Each certificate representing shares which are restricted
as to sale, disposition or other transfer of such shares shall
state that such shares are restricted as to transfer and shall
set forth or fairly summarize upon the certificate or shall
state that the Corporation will furnish to any shareholder upon
request and without charge a full statement of such
restrictions.
SECTION 2. Transfer of Shares. The rights against the
Corporation inherent in the shares represented by any stock
certificate of this Corporation are transferable only by
registraton of such shares in the name of the assignee as the
registered holder on the Stock Transfer Books of the
Corporation. The Board of Directors may appoint one or more
Transfer Agents and/or Registrars, jointly or severally, of the
certificates representing the shares of the stock of the
Corporation and the Board of Directors may adopt such rules and
regulations concerning the issue, transfer and registration of
the stock of this Corporation as it may deem expedient,
consistent with law and may delegate the maintenance of the
Stock Transfer Books and Record of Shareholders and Shareholders
Meeting Ledger derived therefrom to any duly appointed Transfer
Agent of the Corporation.
SECTION 3. Record of Shareholders. The Corporation shall
keep at its registered office or principal place of business or
at the office of its Transfer Agent or Registrar, records, a
record of shareholders, setting forth, among other things, the
names and addresses of the holders of all issued shares of the
Corporation, the number, class and series, if any, of shares and
the date of issue of the certificates representing such shares
and a Stock Register, setting forth the total number of shares
which the Corporation is authorized to issue, and the total
number of shares actually issued.
The officer or agent having charge of the Stock Transfer
Books for shares of the corporation shall make, at least 10 days
before each meeting of shareholders, a Shareholders Meeting
Ledger which shall be a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof,
with the address of the number and class and series, if any, of
shares held by each. Such list shall be kept on file in the
registered office of the
-53-
Corporation, at the principal place of
business of the Corporation or at the office of the transfer
agent for a period of 10 days prior to such meeting and shall be
subject to inspection by any shareholder at any time during
usual business hours. Such list shall also be produced and kept
open at the time and place of the meeting and shall be subject
to the inspection of any shareholder at any time during the
meeting. Shareholders shall be responsible for notifying the
Corporation or a Transfer Agent, in writing, of any changes in
their names of addresses from time to time, and failure to do so
will relieve the Corporation, its other stockholders, directors,
officers, agents and attorneys, of liability for failure to
direct notices or other documents, or to pay over or transfer
dividends or other property or rights to a name or address other
than the name and address appearing in the Stock Transfer Books
of Record of Shareholders.
The original Stock Transfer Books shall be prime facie
evidence as to who are the shareholders entitled to examine such
list or transfer books or to vote at any meeting of
shareholders.
Any person who shall have been a holder of record of one
quarter of one percent of shares or of voting trust certificates
therefore at least six months immediately preceding his demand
or shall be the holder of record of, or the holder of record of
voting trust certificates for, at least five percent of the
outstanding shares of any class or series of the Corporation
upon written demand stating the purpose thereof, shall have the
right to examine, in person or by agent or attorney, at any
reasonable times, for any proper purpose its relevant books and
records of accounts, minutes and record of shareholders of the
Corporation, may make extracts therefrom at their own expense.
This right of inspection shall not extend to any person who has
within two years sold or offered for sale any list of
shareholders of the Corporation or any other Corporation, has
aided or abetted any person in procuring any list of
shareholders or holders of voting trust certificates for any
such purpose, has improperly used any information secured
through any prior examination of the books and records of
account, minutes or record of shareholders or of holders of
voting trust certificates for shares of the Corporation or any
other corporation, or was not acting in good faith or for a
proper purpose in making his demand.
SECTION 4. Loss of Certificate. In case of loss or
destruction of any certificate of stock, the Board of Directors
may authorize the issuance of another certificate in its place
upon proof, satisfactory to the Board, of such loss or
destruction. If the directors deem it advisable they may
require the giving of a satisfactory bond of indemnity to the
Corporation in such sum as they may provide before issuing such
duplicate certificate.
-54-
ARTICLE III
MEETING OF STOCKHOLDERS
SECTION 1. Place of Meetings. All meetings of the
shareholders of the Corporation shall be held either at the
principal office of the Corporation or at such other place in
the United States as shall be designated by the Board of
Directors.
SECTION 2. Annual Meeting and Meetings for the Election of
Directors. An annual meeting of the shareholders for the
election of directors and transaction of other business shall be
held on such date and at such place in such city of the Board of
Directors may determine.
SECTION 3. Special Meetings. Special meetings of the
shareholders may be called by the Board of Directors, or the
holder of not less than 10% of all of the shares entitled to
vote at the meeting.
SECTION 4. Notice of Meetings - Waiver. Written notice
stating the place, day and hour of the meeting and, in the case
of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered to each shareholder of
record entitled to vote at such meeting not less than 10 nor
more than 70 days before the date of the meeting, either
personally or by first class mail, by or at the direction of the
President, the Secretary or the officer or persons calling the
meeting. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail addressed to the
shareholder at his address as it appears on the Stock Transfer
Books of the Corporation, with postage thereon prepaid. A
shareholder may waive notice in writing of a shareholders'
meeting either before or after the time of such meeting, and the
business or purpose of such meeting need not be specified in the
waiver. Attendance by a shareholder at a shareholders' meeting
shall also constitute a waiver of notice of such meeting, except
when the person attends the meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction
of any business because the meeting is not lawfully convened.
SECTION 5. Closing of Transfer Books and Fixing of Record
Date. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders or any
adjournment thereof, or shareholders entitled to receive payment
of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of
Directors of the Corporation may provide that the Stock Transfer
Books shall be closed for a stated period but not to exceed, in
any case, 70 days. If the Stock Transfer Books shall be closed
for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be
closed for at least 10 days immediately preceding such meeting.
-55-
In lieu of closing the Stock Transfer Books, the Board of
Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be
no more than 70 days and, in case of a meeting of shareholders,
not less than 10 days prior to the date on which the particular
action, requiring such determination of shareholders, is to be
taken.
If the Stock Transfer Books are not closed and no record
date is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders, or
shareholders entitled to receive payment of a dividend, the date
on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, shall be the record date for
such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has
been made as provided in this section, such determination shall
apply to any adjournment thereof, unless the Board of Directors
fixes a new record date under this section for the adjourned
meeting.
SECTION 6. Voting at Meetings.
(A) VOTING RIGHTS. At each election of directors, every
shareholder entitled to vote at such meeting shall have the
right to vote, in person or by proxy, the number of shares owned
by him on the record date for as many persons as there are
directors to be elected. At each shareholders' meeting every
shareholder entitled to vote at such meeting shall have the
right to vote in person or by proxy, the number of shares owned
him on the record date upon each proposal duly presented at the
meeting.
Shares held by an administrator, executor, guardian,
conservator, committee, or other fiduciary, except a trustee,
may be voted by him, either in person or by proxy, without
transfer of such shares into his name. Shares held by a trustee
may be voted by him, either in person or by proxy, only after
the shares have been transferred into his name as trustee, or
into the name of his nominee. The Corporation shall not be
entitled to vote Treasure Shares. In all cases a resolution
shall be considered to be adopted by the shareholders if
approved by the affirmative vote of a majority of the shares
represented and entitled to vote on the question at a meeting
duly held at which a quorum is present.
(A) QUORUM. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at
a meeting of shareholders. When a specified item of business is
required to be voted on by a class or series, a majority of
class or series shall constitute a quorum for the transaction
such item of business by that class or series. After a quorum
has been established at a shareholders' meeting, the subsequent
withdrawal of shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a
quorum, shall not affect the validity of any action taken at the
meeting or any adjournment thereof.
(B) PROXIES. A shareholder may vote either in person or by
proxy executed in writing by the shareholder, or his duly
authorized attorney-in-fact.
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(C) JUDGES OF PROXIES, VOTES AND ELECTIONS. The Board of
Directors at its annual meeting may appoint two or more Judges
of Proxies, Votes and Elections to serve until the final
adjournment of the next annual stockholders' meeting. If they
fail to make such appointment, or if their appointees, or any of
them, fail to appear at any meeting of shareholders, the
Chairman of the meeting of the Shareholders may appoint other
Judges to serve for the meeting.
Each Judge, before entering upon the discharge of his
duties, shall take and sign an oath faithfully to execute the
duties of a Judge at such meeting with strict impartiality and
according to the best of his ability.
The Judges shall determine the number of shares
outstanding and the voting power of each, the shares represented
at the meeting, the existence of a quorum, and the validity and
effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes,
ballots or consents, determine the result, and do such acts as
are proper to conduct the election or vote with fairness to all
shareholders. On request of the person presiding at the meeting
or any shareholder entitled to vote thereat, the Judges shall
make a report in writing of any challenge, question or matter
determined by them and execute a certificate of any fact found
by them. Any report or certificate made by them shall be prima
facie evidence of the facts stated and of the vote as certified
by them.
SECTION 7. Adjournment of Meetings. If a meeting is
adjourned to another time or place, it shall not be necessary to
give any notice of the adjourned meeting if the time and place
to which the meeting is adjourned are announced at the meeting
at which the adjournment is taken, and any business may be
transacted at the adjourned meeting that might have been
transacted on the original date of the meeting. If, however,
after the adjournment the Board of Directors fixes a new record
date for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder of record on the new
record date who is entitled to vote at such meeting.
SECTION 8. Action Without a Meeting. When shareholders
holding not less than a majority of the voting shares entitled
to vote on or authorize an action shall determine to take such
action with a meeting, they shall sign a written consent on the
record of the actin taken and such action shall be as valid as
if a meeting had been legally called and notified.
SECTION 9. Minutes. Minutes shall be made of all
shareholder proceedings, which minutes shall be taken and kept
by the Secretary of the Corporation.
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ARTICLE IV
THE BOARD OF DIRECTORS
SECTION 1. Number, Tenure and Qualifications. The
business and affairs of the Corporation shall be managed under
the direction of the Board of Directors. The Board of Directors
of this Corporation consists of not less than three or more than
eleven members, the exact number to be set by the Board of
Directors of the Corporation. Each Director shall hold office
until the next annual meeting of shareholders and until his
successor shall have been elected and qualified or until his
earlier resignation, removal from office, or death. Directors
need not be residents of the State of Florida or shareholders of
the Corporation.
SECTION 2. Election. At the annual meeting of
shareholders, the shareholders shall elect directors to hold
office until the next succeeding annual meeting or until their
successors have been elected and qualified. If directors are
not elected at the annual meeting, the incumbent directors shall
continue in office until their successors are elected and
qualified.
SECTION 3. Vacancies. Whenever any vacancies shall occur
in the Board of Directors by death, resignation, removal,
increase in the number of directors or otherwise, the same may
be filled by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors,
and the director so elected shall hold office only until the
next election of directors by shareholders.
SECTION 4. Place, Call and Adjournment of Directors'
Meetings. Meetings of the Board of Directors may be held either
within or without the state. Meetings of the Board of Directors
may be called by the Chairman of the Board, by the President of
the Corporation or by any two directors. The Chairman of the
Board shall preside at all directors' meetings.
A majority of the directors present at a meeting, whether
or not a quorum is present, may adjourn any meeting to another
time and place. Notice of any adjournment of a meeting to
another time or place shall be given, in the manner described
above, to the directors who were not present at the time of the
adjournment and, unless such time and place are announced at the
meeting, to the other directors.
SECTION 5. Annual Meeting. The Board of Directors shall
meet each year immediately after the annual meeting of
shareholders for the purpose of organization, election of
officers and consideration of any other business that may
properly be brought before the meeting. No notice of any kind
to either old or new members of the Board of Directors for such
annual meeting shall be necessary.
SECTION 6. Other Meetings. Other meetings of the Board
of Directors may be held upon written notice by mail, telegram
or cablegram at least two days prior to the day for such
meeting. Notice of any such meeting of the Board of Directors
may be waived in writing signed by the person or persons
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entitled to such notice, whether before or after the time of
such meeting. Attendance of a director at such meeting shall
constitute a waiver of notice thereof. The purpose or purposes
of such meeting of the Board of Directors need not be specified
in the notice or waiver of notice of such meeting.
SECTION 7. Quorum and Acts. A majority of the members of
the Board of Directors then in office shall constitute a quorum
for the transaction of business. The act of a majority of the
directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors, except that any
action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting if a consent
in writing, setting forth the action so to be taken, signed by
all of the directors, is filed in the minutes of the proceedings
of the Board.
Members of the Board of Directors or any committee thereof
shall be deemed present at any meeting of the Board or the
committee if a conference telephone or other similar
communications equipment by means of which all persons
participating in the meeting can hear each other is used.
SECTION 8. Removal. At a meeting of shareholders called
expressly for that purpose, any director or the entire Board of
Directors may be removed, with or without cause, by a vote of
the holders of a majority of the shares then entitled to vote at
an election of directors.
SECTION 9. Resignation. Any director of the Corporation
may resign at any time by giving written notice to the Board of
Directors or to the President or to the Secretary of the
Corporation. Such resignation shall take effect at the time
specified therein; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it
effective.
SECTION 10. Committees. The Board of Directors, by
resolution adopted by a majority of the entire Board, may
designate from among its members an executive committee and
other committees, each of which, to the extent provided in the
resolution, shall have all the authority of the Board, except
that no such committee shall have authority to:
(1) Approve or recommend to the shareholders actions or
proposals required to be approved by shareholders.
(2) Designate candidates for the office of director, for
purposes of proxy solicitation by shareholders.
(3) Fill vacancies on the Board of Directors or any committee
thereof.
(4) Amend the Bylaws.
(5) Authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the Board
of Directors.
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(6) Authorize or approve the issuance or sale of, or any
contract to issue or sell, shares or designate the terms of a
series or a class of shares, except that the Board of Directors,
having acted regarding general authorization for the issuance or
sale of shares, or any contract therefor, and, in the case of a
series, the designation thereof, may pursuant to a general
formula or method specified by the Board by resolution or by
adoption of a stock option or other plan, authorize a committee
to fix the terms of any contract for the sale of the shares to
be issued or sold, including, without limitation, the price, the
rate or manner of payment of dividends, provisions for
redemption, sinking fund, conversion, and voting or preferential
rights, and provisions for other features of a class of shares,
or a series of a class of shares with full power in such
committee to adopt any final resolution setting forth all the
terms thereof and to authorize the statement of the terms of a
series for filing with the Florida Department of State.
The Board of Directors may designate one or more directors
as alternate members of any such committee, who may replace any
absent member or members at any meeting of such committee.
Unless a greater proportion is required by the resolution
designating a committee, a majority of the entire authorized
number of members of such committee shall constitute a quorum
for the transaction of business, and the vote of a majority of
the members present at a meeting at the time of such vote, if a
quorum is then present, shall be the act of such committee,
except that any action which may be taken at a meeting of such
committee may be taken without a meeting if consent in writing,
setting forth the action so to be taken, signed by all of the
members of the committee, is filed in the minutes of the
proceedings of the committee.
Each such committee shall serve at the pleasure of the
Board of Directors.
SECTION 11. Compensation. The Board of Directors shall
have authority to fix the compensation of directors for services
in any capacity.
SECTION 12. Interest of a Director in Transactions. No
contract or other transaction between a corporation and one or
more of it directors or any other corporation, firm, association
or entity in which one or more of its directors are directors or
officers or are financially interested, shall be either void or
voidable because of such relationship or interest or because
such director or directors are present at the meeting of the
Board of Directors or a committee thereof which authorizes,
approves or ratifies such contract or transaction or because his
or their votes are counted for such purpose, if:
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(1) The fact of such relationship or interest is disclosed or
known to the Board of Directors or committee which authorizes,
approves or ratifies the contract or transaction by a vote or
consent sufficient for the purpose without counting the votes or
consents of such interested directors; or
(2) The fact of such relationship or interest is disclosed or
known to the shareholders entitle to vote and they authorize,
approve or ratify such contract or transaction by vote or
written consent; or
(3) The contract or transactions is fair and reasonable as to
the Corporation at the time it is authorized by the Board, a
committee, or the shareholders.
Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board
of Directors or a committee thereof, which authorizes, approves
or ratifies such contract or transactions.
ARTICLE V
THE OFFICERS
SECTION 1. Officers. The Board of Directors at their
annual meeting each year shall elect a Chairman of the Board,
Vice-Chairman of the Board, President, Secretary, and Treasurer,
and such other officers and assistant officers and agents as may
be deemed necessary by the Board of Directors. Any two or more
offices may be held by the same person. All officers shall
serve until the next annual meeting of the Board of Directors or
until their respective successors are elected and qualify.
SECTION 2. Vacancies. Whenever any vacancies shall occur
in any office by death, resignation, removal, increase in the
number of officers of the Corporation, or otherwise, the same
shall be filled by the Board of Directors, and the officer so
elected shall hold office until his successor is chosen and
qualified.
SECTION 3. Duties. The Chairman of the Board shall be the
Chief Executive Officer of the Corporation, unless the Board of
Directors specifically appoints another individual to that
position, and the Chief Executive Officer shall preside at all
stockholders' meetings and meetings of the Board of Directors.
The Vice-Chairman of the Board, in the absence of the Chairman
of the Board, shall preside at all stockholders' meetings or
meetings of the Board of Directors. The President shall be the
Chief Operating Officer of the Corporation, unless the Board
specifically appoints another individual to that position. The
Secretary and the Treasurer shall perform such duties as are
from time to time assigned to them by the Board of Directors.
The Treasurer shall have custody of all corporate funds and
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financial records, shall keep full and accurate accounts of
receipts and disbursements and render account thereof at the
annual meeting of stockholders and whenever else required by the
Board of Directors, the Chief Executive Officer or the
President. It shall be the responsibility of the Treasurer to
prepare the following not later than four months after the close
of each fiscal year and to maintain such in the registered
office of the Corporation:
(a) A balance sheet showing in reasonable detail the financial
condition of the Corporation as of the close of its fiscal year.
(b) A profit and loss statement showing the results of its
operation during its fiscal year.
SECTION 4. Compensation. The compensation of the officers
shall be fixed, from time to time, by the Board of Directors.
SECTION 5. Removal. Any officer elected or appointed by
the Board of Directors may be removed by the Board whenever in
its judgment the best interests of the Corporation will be
served thereby. Removal shall be without prejudice to the
contract rights, if any, of the person removed. Election or
appointment of an officer shall not of itself create contract
rights.
SECTION 6. Resignation. Any officer of the Corporation
may resign at any time by giving written notice to the Board of
Directors or to the President or to the Secretary of the
Corporation. Such resignation shall take effect at the time
specified therein; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it
effective.
SECTION 7. Corporate Instruments. All checks and drafts
on, and withdrawals from, the Corporation's accounts with banks
or other financial institutions, and all bills of exchange,
notes and other instruments for the payment of money, drawn,
made, endorsed, or accepted by the Corporation, shall be signed
on its behalf by the person or persons thereunto authorized by,
or pursuant to resolution of, the Board of Directors.
ARTICLE VI
AMENDMENTS
The Board of Directors of the Corporation shall have the
power to alter, amend or repeal the Bylaws or adopt new Bylaws;
provided, however, any Bylaw may be repealed or changed by the
shareholders, and new Bylaws may be adopted by the shareholders.
The shareholders may prescribe, in any Bylaw made by them, that
such Bylaw shall not be altered, amended or repealed by the
Board of Directors.
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ARTICLE VII
ACQUISITION OF CONTROL SHARES
The corporation expressly elects not to be governed by
Florida Statute 607.109, entitled "Control-Share Acquisitions",
of the Florida General Corporation Act, which was effective July
2, 1987.
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CERTIFICATE AS TO BY-LAWS
OF ORANGE-CO, INC. AND ORANGE-CO OF FLORIDA, INC.
April 19, 1993
I, John R. Alexander, Secretary of Orange-co, Inc. and Secretary
of Orange-co of Florida, Inc., hereby certify that the attached
copies of the By-laws of Orange-co, Inc. and Orange-co of
Florida, Inc. are complete an that each respective By-laws have
not been amended, annulled, rescinded or revoked since the date
of the last amendments as reflected on the attached copies.
/s/ John R. Alexander
----------------------------
John R. Alexander, Secretary
Orange-co, Inc.
/s/ John R. Alexander
----------------------------
John R. Alexander, Secretary
Orange-co of Florida, Inc.
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Exhibit 10.12
______________________________
LOAN AGREEMENT
Between
ORANGE-CO., INC.
ORANGE-CO. OF FLORIDA, INC.
And
FARM CREDIT OF SOUTHWEST FLORIDA, ACA
______________________________
DATED AS OF APRIL 19, 1993
$7,600,000.00 Term Loan
______________________________
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS 1
1.1 Defined Terms 1
1.2 Other Definitional Provisions 2
SECTION 2. AMOUNT AND TERMS OF LOANS 3
2.1 The Term Loan 3
2.2 Use of Proceeds of Term Loan 3
2.3 Note 3
2.4 Interest Rate 3
2.5 Repayment 4
2.6 Payments and Computations 4
2.7 Prepayments 5
2.8 Appraisal Fee 5
SECTION 3. SECURITY 5
3.1 Mortgage and Security Agreement 6
3.2 Assignment of Rents and Leases 6
SECTION 4. REPRESENTATIONS AND WARRANTIES 7
4.1 Corporate Existence of Borrowers;
Compliance with Law 7
4.2 Corporate Power; Authorization to Execute
Loan Documents; No Consent 7
4.3 Enforceable Obligations 8
4.4 Financial Condition of Borrowers 8
4.5 No Litigation 8
4.6 Investment Company Act 9
4.7 Disclosure and No Untrue Statements 9
4.8 Title to Assets; Leases in Good Standing 9
4.9 Payment of Taxes 9
4.10 Agreement or Contract Restrictions; No Default 9
4.11 Racketeer Influenced and Corrupt
Organization(s) Act 10
SECTION 5. CONDITIONS OF LENDING 10
5.1 No Default 10
5.2 Opinion of Borrowers' Counsel 10
5.3 Opinion of Lender's Counsel 11
5.4 Loan Documents 11
5.5 Supporting Documents 11
SECTION 6. AFFIRMATIVE COVENANTS 12
6.1 Financial Reports and Other Data 12
6.2 Payment of Indebtedness to Lender;
Performance of Other Covenants;
Payment of Other Obligations 14
6.3 Conduct of Business; Maintenance of Existence 14
6.4 Maintenance of Property 14
6.5 Right of Inspection; Discussions 14
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6.6 Notices 14
6.7 Payment of Taxes; Liens 15
6.8 Insurance of Properties 15
6.9 Title Insurance 15
6.10 True Books 16
6.11 Observance of Laws 16
6.12 Further Assurances 16
6.13 ERISA Benefit Plans 16
6.14 Change of Name, Principal Place of
Business, Office, or Agent 16
6.15 Financial Covenants 17
SECTION 7. NEGATIVE COVENANTS 17
7.1 Limitations on Mortgages, Liens, Etc. 17
7.2 Guaranties 17
7.3 Merger, Dissolution, Etc. 17
7.4 Regulation U 18
7.5 Changes in Governing Documents, Accounting
Methods, Fiscal Year 18
SECTION 8. EVENTS OF DEFAULT 18
8.1 Payment of Obligations Under Loan Documents 19
8.2 Representation or Warranty 19
8.3 Covenants or Defaults Under the Loan Documents 19
8.4 Payment, Performance, or Default of Other
Monetary Obligations 19
8.5 Covenants or Defaults to Lender or Others 19
8.6 Liquidation; Dissolution; Bankruptcy; Etc. 20
8.7 Involuntary Bankruptcy, Etc. 20
8.8 Judgments 20
8.9 Attachment, Garnishment, Liens Imposed by Law 20
8.10 Corporate Existence 21
8.11 Invalidity of Security Interest and Liens;
Transfer of Collateral 21
8.12 Change of Ownership of Borrower 21
8.13 Notice and Cure Periods 21
SECTION 9. MISCELLANEOUS 21
9.1 Course of Dealing; Amendment; Supplemental
Agreements 21
9.2 Waiver By Lender of Requirements 22
9.3 Waiver of Default 22
9.4 Notices 22
9.5 No Waiver; Cumulative Remedies 22
9.6 Reliance Upon, Survival of and Materiality
of Representations and Warranties,
Agreements, and Covenants 23
9.7 Severability and Enforceability of Provisions 23
9.8 Payment of Expenses, Including Attorneys'
Fees and Taxes 23
9.9 Successors and Assigns 24
9.10 Counterparts; Effective Date 24
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9.11 Participations 24
9.12 Governing Law 24
9.13 Venue; Personal Jurisdiction over Borrowers 25
9.14 Title and Headings; Table of Contents 25
9.15 Complete Agreement; No Other Consideration 25
9.16 Legal or Governmental Limitations 25
9.17 Waiver of Trial by Jury 25
9.18 Purchase of Stock 26
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LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of this 19th
day of April, 1993, by and between ORANGE-CO., INC., a Florida
corporation, and ORANGE-CO. OF FLORIDA, INC., a Florida
corporation (individually, a Borrower, and collectively, the
"Borrowers") and FARM CREDIT OF SOUTHWEST FLORIDA, ACA, a
federally chartered corporation (the "Lender").
BACKGROUND
Borrowers have applied to Lender for a term loan in the
amount of Seven Million Six Hundred Thousand and No/100 Dollars
($7,600,000.00). Lender is willing to make such term loan to
Borrowers upon the terms and conditions described in this
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements, covenants, and conditions herein, Borrowers
and Lender agree as follows:
SECTION 1. DEFINITIONS.
1.1 Defined Terms. Except as otherwise expressly provided
in this Agreement, the capitalized terms used in the foregoing
preamble and background sections and the following capitalized
terms shall have the respective meanings ascribed to them for all
purposes of this Agreement:
"Agreement" means this Loan Agreement, as the same may be
amended, supplemented, or otherwise modified from time to time in
accordance with the provisions hereof.
"Business Day" means a day that is not a Saturday, a Sunday,
or a day on which Lender is closed pursuant to authorization or
requirement of law.
"Consistent Basis" means, in reference to the application of
Generally Accepted Accounting Principles, that the accounting
principles observed in the current period are comparable in all
material respects to those applied in the preceding period.
"Current Ratio" means the quotient of current assets of
Borrowers divided by current liabilities of Borrowers as such
terms are defined under Generally Accepted Accounting Principles
applied on a Consistent Basis.
"Debt-to Equity Ratio" means the Net Worth of Borrowers
divided by the total liabilities of Borrowers (excluding deferred
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taxes of Borrowers) as determined in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis.
"ERISA" means the Employee Retirement Income Security Act of
1974, as the same may be supplemented or amended from time to
time.
"Event of Default" means any of the events specified in
Section 8 hereof.
"Generally Accepted Accounting Principles" means those
principles of accounting set forth in Opinions of the Financial
Accounting Standards Board or the American Institute of Certified
Public Accountants or which have other substantial authoritative
support and are applicable in the circumstances as of the date of
any report required herein or as of the date of an application of
such principles as required herein.
"Loan Documents" means this Agreement, the Term Note, the
Mortgage, and the Assignment of Rents and Leases and any other
documents or instruments executed in connection with this
Agreement.
"Net Worth" means the depreciated book value of all assets
of Borrowers less all liabilities of Borrowers, all as determined
in accordance with Generally Accepted Accounting Principles
applied on a Consistent Basis.
"Person" means any corporation, business entity, natural
person, firm, joint venture, partnership, trust, unincorporated
organization, association, government, or any department or
agency of any government.
"Subsidiary" means any corporation of which more than 50% of
voting stock at any time is owned or controlled, directly or
indirectly, by any Borrower.
"Working Capital" means the current assets of Borrowers less
the current liabilities of Borrowers, all as determined in
accordance with Generally Accepted Accounting Principles applied
on a Consistent Basis.
1.2 Other Definitional Provisions.
(a) The terms "material" and "materially" shall have
the meanings ascribed to such terms under Generally Accepted
Accounting Principles as such would be applied to the business of
Borrowers or others, except as the context shall clearly
otherwise require; (b) all of the terms defined in this Agreement
shall have such defined meanings when used in other documents
issued under, or delivered pursuant to, this Agreement unless the
context shall
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otherwise require; (c) all terms defined in this
Agreement in the singular shall have comparable meanings when
used in the plural, and vice versa; (d) accounting terms to the
extent not otherwise defined shall have the respective meanings
given them under, and shall be construed in accordance with,
Generally Accepted Accounting Principles; (e) terms defined in,
or by reference to, Article 9 of the Uniform Commercial Code as
adopted in Florida to the extent not otherwise defined herein
shall have the respective meanings given to them in Article 9
with the exception of the word "document" unless the context
clearly requires such meaning; (f) the words "hereby," "hereto,"
"hereof," "herein," "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; (g) the
masculine and neuter genders are used herein and whenever used
shall include the masculine, feminine, and neuter as well; and
(h) whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the
successors and assigns of such parties unless the context shall
expressly provide otherwise.
SECTION 2. AMOUNT AND TERMS OF LOANS.
2.1 The Term Loan. Subject to the terms and conditions of
this Agreement, Lender agrees to make a term loan in the amount
of Seven Million Six Hundred Thousand and No/100 Dollars
($7,600,000.00) to Borrowers (the "Term Loan").
2.2 Use of Proceeds of Term Loan. The proceeds of the Term
Loan shall be used by Borrowers solely to partially refinance
certain obligations of Borrowers to Washington Square.
2.3 Note. The Term Loan shall be evidenced by the
promissory note of Borrowers (the "Term Note"), payable to order
of Lender in substantially the form of Exhibit "A" hereto and
dated the date of this Agreement.
2.4 Interest Rate.
(a) The principal amount from time to time outstanding
under the Term Loan shall bear interest at a fixed rate of
interest of six and nine-tenths percent (6.9%) per annum.
(b) If any installment payments under the Term Note
are not paid within sixty (60) calendar days of their due date or
if an Event of Default otherwise occurs under the Loan Documents
and is not cured within sixty (60) days from the date of such
Event of Default, the interest rate applicable to the Term Note
shall be increased on the sixty-first (61st) day after the
payment was due or Event of Default occurred by an amount equal
to two percent
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(2.0%) per annum above the existing rate of
interest applicable to the Term Note (the "Default Rate"). The
outstanding principal balance of the Term Note shall bear
interest at the Default Rate until the first day of the next
succeeding month in which all delinquent payments are made and
all Events of Default are cured. The amounts outstanding under
the Term Note shall also bear interest at the Default Rate
subsequent to the maturity or due date of the Term Note, whether
by acceleration or otherwise.
2.5 Repayment.
(a) Principal under the Term Loan shall be payable in
nineteen (19) equal consecutive quarterly installments of
$190,000.00 each, beginning on July 1, 1993, and continuing on
the like day of each October, January, April, and July thereafter
until April 1, 1998 (the "Maturity Date"), at which time the
entire remaining indebtedness evidenced by the Term Loan, if not
sooner paid, shall be due and payable. Interest shall be payable
monthly in arrears beginning on May 1, 1993, and continuing on a
like day of each month thereafter until the Maturity Date of the
Term Note, at which time all amounts outstanding under the Term
Note shall be due and payable.
(b) If any payment of principal or interest or both
under the Term Loan is more than twenty-nine (29) days late,
Borrowers will pay Lender a late charge equal to one and one-half
percent (1.5%) of the payment (the "Late Fee"). The provisions
herein for a Late Fee shall not be deemed to extend the time for
any payment or to constitute a "grace period" giving Borrowers a
right to cure such default.
2.6 Payments and Computations.
(a) Each payment and prepayment by Borrowers of
principal or interest under the Term Note shall be made in such
coin or currency of the United States of America as at the time
of payment is legal tender for the payment of public and private
debt. If any installment of principal or interest under the Term
Note becomes due and payable on a day other than a Business Day,
the due date thereof shall be extended to the next succeeding
Business Day, and, in the case of principal, interest shall be
payable during the extension at the annual rate specified in the
note for the payment of interest before maturity.
(b) Unless otherwise specified herein, all payments
and prepayments shall be applied by Lender first to interest and
lawful charges then accrued, and then to principal, unless
otherwise determined by Lender in its sole discretion. Borrowers
hereby authorize Lender, if and to the extent that payment owed
to Lender hereunder is not made when due, to charge from time to
time against
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any or all of either Borrower's accounts with
Lender, in which event Lender will give prompt notice to
Borrowers of such charge; provided, however, that the failure to
give such notice shall not affect the validity of such charge.
(c) Interest and any fees hereunder shall be computed
on the basis of a year of 365 or 366 days, as the case may be,
and be charged for the actual number of days elapsed.
2.7 Prepayments. The Term Note may be prepaid in whole or
in part on any scheduled payment date, in increments of
$1,000,000.00 or integral multiples thereof, plus accrued
interest at the rate set forth in the Term Note on the amount
prepaid. Unless otherwise agreed, all prepayments will be
applied to installments in the inverse order of their maturity.
Notwithstanding the foregoing, the Borrowers' right to prepay the
Term Note shall be conditioned upon the payment of a prepayment
premium equal to the amount by which:
(a) The present value of all interest and principal
payments prepaid discounted at a rate equal to the sum of (i) the
then existing yield on U. S. Treasury Obligations having a
maturity date corresponding to the remaining life of the Term
Note being prepaid, plus (ii) 175 basis points, exceeds
(b) The amount of principal being prepaid.
Borrowers will not be required to pay a prepayment premium if
the yield then existing on Treasury Notes or Treasury Bond having
a maturity closest to the date of the final scheduled payment of
principal on the Term Note plus 175 basis points is equal to or
greater than the rate of interest set forth in the Term Note.
The prepayment premium required by this Subsection shall be
payable if the outstanding principal balance of the Term Note is
accelerated after the occurrence of an Event of Default and the
Term Note is thereafter paid in full.
2.8 Appraisal Fee. Borrowers shall pay Lender an appraisal
fee of $7,500.00, which fee shall reimburse Lender for its costs
of appraising the value of the collateral for the Term Loan. The
appraisal will be prepared by Lender or Lender's agents on
Lender's standard forms and be in form and substance acceptable
to Lender at its sole discretion.
SECTION 3. SECURITY.
Payment of the loan or loans hereunder shall be secured as
provided in this Section 3.
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3.1 Mortgage and Security Agreement. Payment of the Term
Note and any other obligations under the Loan Documents, and any
other obligations of either Borrower to Lender, presently
existing or hereafter arising, shall be secured by a mortgage and
security agreement in form and substance satisfactory to Lender
covering certain real and personal property located in DeSoto
County, as more specifically described therein, of which Orange-
Co., Inc. ("Orange-Co"), is the record title holder, and all
crops, irrigation equipment, and fixtures relating to such real
property (the "Mortgage"). The lien of the Mortgage does not
encumber crops once the crops are severed from the citrus trees
until Lender acquires title to the real property encumbered by
the Mortgage by foreclosure or otherwise. The Mortgage shall be
sufficient, when properly recorded in the public records of the
appropriate jurisdiction, to grant to Lender a first lien against
the property described therein, subject to no prior liens or
encumbrances except in favor of Lender or as Lender permits in
writing. Orange-Co will execute or otherwise provide to Lender
any and all modifications, financing statements, and other
agreements or consents required by Lender now or in the future in
connection therewith. Orange-Co shall, at Lender's request and
after the occurrence of an Event of Default and the expiration of
any applicable cure period, comply with the Food Security Act and
provide any purchasers, commission merchants, or selling agents
of the crops with a notice stating (1) the name and address of
the Lender, (2) the name and address of Orange-Co, (3) the tax
identification number of Orange-Co, (4) a description of the
collateral that has been pledged to Lender as security for the
Term Note, and (5) any payment obligations imposed on the buyer
by Lender as a condition for waiver or release of the security
interest. Orange-Co agrees to provide all such purchasers,
commission merchants, or selling agents with the notice specified
above within one year prior to the date of any sale of the crops.
3.2 Assignment of Rents and Leases. Payment of the Term
Note and any other obligations under the Loan Documents, and any
other obligations of either Borrower to Lender, presently
existing or hereafter arising, shall be secured by an assignment
given by Orange-Co of all rents and leases, presently existing or
hereafter arising, from the real property encumbered by the
Mortgage, in form and substance satisfactory to Lender (the
"Assignment of Rents and Leases"). The Assignment of Rents and
Leases shall be sufficient, when evidence thereof is properly
filed or recorded in the appropriate jurisdiction, to grant to
Lender a first perfected security interest in the collateral
covered thereby, subject to no prior liens or encumbrances.
Orange-Co will execute or otherwise provide to Lender any and all
modifications, financing statements, and other agreements or
consents required by Lender now or in the future in connection
therewith.
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SECTION 4. REPRESENTATIONS AND WARRANTIES.
To induce Lender to enter into this Agreement and to make
the loan or loans hereunder, Borrowers represent and warrant to
Lender (which representations and warranties shall survive the
delivery of the documents mentioned herein and the making of the
loan or loans contemplated hereby) as follows:
4.1 Corporate Existence of Borrowers; Compliance with Law.
Each Borrower is a corporation duly incorporated and organized,
validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Each Borrower has the
corporate power to own its properties and to carry on its
business as now being conducted, is duly qualified as a foreign
corporation to do business in every jurisdiction in which the
nature of its business makes such qualification necessary and is
in good standing in such jurisdictions, has all licenses and
permits necessary to carry on and conduct its business in all
states and localities wherein it now operates, and is in
compliance with all other requirements of law applicable to it
and to its business. Neither Borrower has any Subsidiaries,
except Morrison Pump & Equipment Company, Frank Carroll Oil
Company, Florida Fresh-Pak Corporation, JV#1, Inc., Interfruit
Holdings, Inc and Orancomex, S.A. de C.V.
4.2 Corporate Power; Authorization to Execute Loan
Documents; No Consent. Each Borrower has the corporate power and
authority and the legal right to execute, deliver, and perform
the Loan Documents to be executed by it and to borrow thereunder
and has taken all corporate action necessary to authorize the
execution, delivery, and performance of such Loan Documents and
to authorize the borrowings contemplated thereby. The execution,
delivery, and performance by Borrowers of the Loan Documents to
be executed by them will not contravene, conflict with, result in
the breach of, or constitute a violation of or default under, or
result in the creation of any lien, charge, or encumbrance upon
any property or assets of either Borrower pursuant to, the
articles of incorporation or bylaws of such Borrower, or any
applicable law, rule, regulation, judgment, order, writ,
injunction, or decree or any indenture or other agreement or
instrument to which either Borrower is a party, or by which
either Borrower or its property may be bound or affected. No
consent, license, or authorization of, or filing with, or notice
to, any Person or entity (including, without limitation, any
governmental authority), is necessary or required in connection
with the execution, delivery, performance, validity, or
enforceability of the Loan Documents and the borrowings as
contemplated thereunder, except for consents, licenses,
authorizations, filings, and notices obtained or performed by
such Borrower and of which Lender has been provided written
notice, or referred to or disclosed in the Loan Documents.
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Any
such consents, licenses, authorizations, filings, or notices
remain in full force and effect.
4.3 Enforceable Obligations. The Loan Documents when
executed and delivered to Lender will constitute legal, valid,
and binding agreements enforceable against the respective parties
thereto and any property described therein in accordance with
their respective terms.
4.4 Financial Condition of Borrowers.
(a) The financial statements as at December 31, 1992,
of Borrowers, copies of which have been furnished to Lender, are
correct, complete, and fairly present the financial condition of
Borrowers as at the date of the financial statements and fairly
present the results of the operations of Borrowers for the period
covered thereby.
(b) Neither Borrower has any material direct or
contingent liabilities, liabilities for taxes, long-term leases,
or unusual forward or long-term commitments as of the date of
this Agreement which are not disclosed by, provided for, or
reserved against in the financial statements or referred to in
notes thereto, and at the date of this Agreement there are no
material unrealized or anticipated losses from any unfavorable
commitments of either Borrower. The financial statements
furnished to Lender have been prepared in accordance with
Generally Accepted Accounting Principles applied on a Consistent
Basis maintained throughout the period involved. There has been
no material adverse change in the business, properties, or
condition, financial or otherwise, of either Borrower since the
date of such financial statements except for changes to the
financial statements of Borrowers that relate to the adoption of
F.A.S.B. Standard No. 109.
4.5 No Litigation. There is no suit or proceeding at law
or in equity (including proceedings by or before any court,
arbitrator, governmental or administrative commission, board or
bureau, or other administrative agency) pending, or to the
knowledge of either Borrower threatened, by or against or
involving such Borrower or against any of its properties,
existence, or revenues which, if adversely determined, would have
a material adverse effect on the properties, assets, or business
or on the condition, financial or otherwise, of such Borrower or
materially impair the right or ability of such Borrower to carry
on its operations substantially as now conducted or as
anticipated to be conducted in the future, or, regardless of
outcome, which would be required to be disclosed in notes to any
balance sheet as of the date hereof of such Borrower prepared in
reasonable detail in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis.
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4.6 Investment Company Act. Neither Borrower is an
"investment company" or a company "controlled" by an "investment
company" (as each of the quoted terms is defined or used in the
Investment Company Act of 1940, as amended).
4.7 Disclosure and No Untrue Statements. No representation
or warranty made by either Borrower in the Loan Documents or
which will be made by such Borrower from time to time in
connection with the Loan Documents (a) contains or will contain
any misrepresentation or untrue statement of fact, or (b) omits
or will omit to state any material fact necessary to make the
statements therein not misleading. There is no fact known to
either Borrower which adversely affects, or which might in the
future adversely affect, the business, assets, properties or
condition, financial or otherwise, of such Borrower, except as
set forth or referred to in the Loan Documents or otherwise
disclosed in writing to Lender.
4.8 Title to Assets; Leases in Good Standing. Each
Borrower has good and marketable title in fee to such of its
fixed assets as are real property and good and marketable title
to its other properties and assets, including the properties and
assets reflected in the financial statements and notes thereto
described in Subsection 4.4 hereof, except for such assets as
have been disposed of in the ordinary course of business, and all
such properties and assets are free and clear of all liens,
mortgages, pledges, security interests, charges, title retention
agreements, or other encumbrances of any kind except those
permitted under Subsection 7.2. Each Borrower enjoys peaceful
and undisturbed possession under all leases under which it is now
operating, none of which contain any burdensome or unusual
provisions which may affect its operations, and all said leases
are valid, subsisting, and in full force and effect, and such
Borrower is not in violation of any material term of any such
lease.
4.9 Payment of Taxes. Each Borrower has filed or caused to
be filed all federal, state, and local tax returns which are
required to be filed by it and has paid or caused to be paid all
taxes as shown on said returns or on any assessment received by
it, to the extent that such taxes have become due, except as
otherwise permitted by the provisions hereof, and no controversy
in respect of additional income taxes of either Borrower is
pending, or, to the knowledge of such Borrower, threatened. Each
Borrower has set up reserves which are believed by its officers
to be adequate for the payment of all taxes for which a notice of
assessment has been received and for the payment of such taxes
for the years that have not been audited by the respective tax
authorities.
4.10 Agreement or Contract Restrictions; No Default.
Neither Borrower is a party to, nor is bound by, any agreement,
contract, or instrument or subject to any charter or other
corporate
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restriction which materially or adversely affects the
business, properties, assets, operations, or condition, financial
or otherwise, of such Borrower except as disclosed in the
financial statements and notes thereto described in
Subsection 4.4 hereof. To the best of each Borrower's knowledge,
each Borrower is in full compliance with and is not in default in
the performance, observance, or fulfillment of any obligations,
covenants, or conditions contained in any agreement or instrument
to which it is a party.
4.11 Racketeer Influenced and Corrupt Organization(s) Act.
Neither Borrower has been and is not now engaged, and will not
engage, directly or indirectly, in any pattern of "racketeering
activity" or in any "collection of any unlawful debt," as each of
the quoted terms or phrases is defined or used by the Racketeer
Influenced and Corrupt Organization(s) Act of either the United
States or the State of Florida, Title 18, United States Code,
Section 1961 et seq.; Chapter 895, Florida Statutes,
respectively, as each act now exists or is hereafter amended (the
"RICO Lien Acts"). None of either Borrower's real property, none
of either Borrower's interest or interests of any kind, including
beneficial interest or interests, mortgages and leases, in or on
real property and none of either Borrower's personal property,
including money, has ever been, is now, or is in any way
reasonably anticipated by such Borrower to become, subject to any
lien, notice, civil investigative demand, action, suit or any
proceeding pursuant to the RICO Lien Acts.
SECTION 5. CONDITIONS OF LENDING.
The obligation of Lender to make the loan or loans or to
permit any borrowings hereunder is conditioned upon the
performance of all agreements by Borrowers contained herein, as
well as satisfaction of the following conditions precedent:
5.1 No Default. On the date hereof, Borrowers shall be in
compliance with all terms and conditions set forth herein, and no
Event of Default, nor any event which upon notice or lapse of
time or both would constitute an Event of Default, shall have
occurred and be continuing at the time of such borrowing, unless
such Event of Default shall have been waived by Lender in
writing.
5.2 Opinion of Borrowers' Counsel. On or prior to the date
of this Agreement, and to the extent required by Lender at the
time of any borrowing hereunder, Lender shall have received the
favorable opinion of counsel for Borrowers, in form and substance
satisfactory to Lender.
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5.3 Opinion of Lender's Counsel. At the option of Lender,
Lender shall have received at the time of closing the favorable
opinion of Holland & Knight, counsel of Lender, in form and
substance satisfactory to Lender, as to such matters as Lender
may require. All legal matters in connection with the Loan
Documents and the transactions herein and therein contemplated
and all documents and proceedings shall be satisfactory in form
and substance to counsel of Lender.
5.4 Loan Documents. On or prior to the date of this
Agreement, Lender shall have received, duly executed, this
Agreement and the other Loan Documents, all in form and substance
satisfactory to Lender and counsel for Lender.
5.5 Supporting Documents. On or prior to the date of this
Agreement, Lender shall have received the following documents
satisfactory in form and substance to Lender and counsel for
Lender and, as requested by Lender, certified by appropriate
corporate or governmental authorities:
(a) A certificate of good standing of each Borrower
certified by the secretary of state, or other appropriate
governmental authority, of the state of incorporation of such
Borrower;
(b) A copy of the articles of incorporation of each
Borrower in effect on the date hereof certified by the secretary
of state, or other appropriate governmental authority, of the
state of incorporation of such Borrower, accompanied by a
certificate from an appropriate officer of such Borrower that the
copy is complete and that the articles of incorporation have not
been amended, annulled, rescinded, or revoked since the date of
the certificate of the secretary of state or other appropriate
governmental authority;
(c) A copy of the bylaws of each Borrower in effect on
the date of this Agreement, accompanied by a certificate from an
appropriate officer of such Borrower that the copy is true and
complete and that the bylaws have not been amended, annulled,
rescinded, or revoked since the date of the bylaws or the last
amendment reflected in the copy, if any;
(d) A copy of resolutions of the board of directors of
each Borrower authorizing the execution, delivery, and
performance of the Loan Documents and the borrowings thereunder,
and specifying the officer or officers of such Borrower
authorized to execute the Loan Documents, accompanied by a
certificate from an appropriate officer that the resolutions are
true and complete, were duly adopted at a duly called meeting in
which a quorum was present and acting throughout, or were duly
adopted by written action, and have
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not been amended, annulled,
rescinded or revoked in any respect and remain in full force and
effect on the date of the certificate, together with an
incumbency certificate containing the names, titles, and genuine
signatures of all duly elected officers of such Borrower as of
the date of this Agreement, accompanied by a certificate from an
appropriate officer that the information is true and complete;
(e) UCC-1 Financing Statements (local and state)
covering personal property and fixtures encumbered by the
Mortgage, or otherwise a portion of the collateral for the loan
or loans evidenced hereby, and such other instruments as
necessary to insure Lender a perfected first security interest in
such personal property and fixtures, subject only to those
matters approved by Lender;
(f) A mortgagee title insurance binder and policy
insuring the Mortgage as a valid first lien on the property
covered thereby, subject only to those exceptions approved in
writing by Lender, issued by a title insurance company
satisfactory to Lender, and including any reinsurance agreements
required by Lender;
(g) A Phase I environmental audit of the real property
encumbered by the Mortgage, the results of which must be
satisfactory to Lender at its sole discretion.
(h) such additional supporting documents as Lender may
request.
SECTION 6. AFFIRMATIVE COVENANTS.
Borrowers covenant and agree that from the date of this
Agreement until payment in full of all present or future
indebtedness hereunder and termination of all present or future
credit facilities established hereunder, unless Lender shall
otherwise consent in writing, Borrowers will fully comply with
the following provisions applicable to them:
6.1 Financial Reports and Other Data.
(a) Borrowers will, as soon as practicable and in any
event within forty-five (45) days after the end of each fiscal
quarter, deliver or cause to be delivered to Lender a
consolidated balance sheet as at the last day of such quarter and
the related consolidated statement of income for such quarter and
cumulative year-to-date for Borrowers, all in reasonable detail
and satisfactory in scope to Lender and certified by the chief
financial officer of each Borrower to have been prepared in
accordance with Generally Accepted Accounting Principles applied
on
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a Consistent Basis, subject to changes resulting from normal,
recurring year-end adjustments. Borrowers may provide Lender
with a copy of their 10-Q reports filed with the Securities and
Exchange Commission in lieu of such quarterly financial
statements if the chief financial officer of each Borrower
provides Lender a separate certification that meets the
requirements of this Subsection;
(b) Borrowers will, as soon as practicable and in any
event within ninety (90) days after the end of each fiscal year,
deliver to Lender audited financial statements which audit shall
be performed in accordance with generally accepted auditing
standards. Such financial statements shall include the balance
sheet of Borrowers as at the end of such fiscal year, and related
statements of income, and changes in financial position for such
fiscal year, setting forth in each case in comparative form
figures for the corresponding period in the preceding fiscal
year, prepared in accordance with Generally Accepted Principles
applied on a Consistent Basis, all in reasonable detail and
satisfactory in scope to Lender and certified by and containing
an opinion acceptable to Lender from independent certified public
accountants of recognized national standing selected by Borrowers
and satisfactory to Lender;
(c) Together with each delivery of those items
required by clauses (a) and (b) above, Borrowers shall deliver to
Lender a certificate executed by the chief financial officer of
each Borrower, containing computations indicating compliance with
Subsections 6.15, and stating that to the best of the officer's
knowledge, (i) Borrowers have kept, observed, performed, and
fulfilled each and every agreement binding on them contained in
the Loan Documents, and is not at the time in default of the
keeping, observance, performance, or fulfillment of any of the
terms, provisions, and conditions thereof, and (ii) that none of
the Events of Default or events which upon notice or the lapse of
time or both would constitute Events of Default has occurred, or
specifying all such defaults and events of which he may have
knowledge;
(d) Borrowers will provide Lender with a copy of their
10-K reports filed with the Securities and Exchange Commission
within fifteen (15) days of filing such reports.
(e) With reasonable promptness, Borrowers will deliver
such additional financial or other data as Lender may from time
to time reasonably request; and
(f) Lender is hereby authorized to deliver a copy of
any financial statements or any other information relating to the
business, operations, or financial condition of Borrowers which
may be furnished to them or come to its attention pursuant to the
Loan
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Documents or otherwise, to any regulatory body or agency
having jurisdiction over Lender or to any Person which shall, or
shall have the right or obligation to, succeed to all or any part
of Lender's interest in the Loan Documents.
6.2 Payment of Indebtedness to Lender; Performance of Other
Covenants; Payment of Other Obligations. (a) Borrowers will make
full and timely payment of the principal of and interest on the
indebtedness owed hereunder; (b) Borrowers will duly comply with
all the terms and covenants contained in the Loan Documents; and
(c) Borrowers will make full and timely payment of all other
indebtedness of either Borrower to Lender, whether now existing
or hereafter arising.
6.3 Conduct of Business; Maintenance of Existence. Each
Borrower will do or cause to be done all things necessary to
preserve and to keep in full force and effect its corporate
existence and rights and its franchises, licenses, trade names,
patents, trademarks, and permits which are necessary for the
continuance of its business, and continue to engage principally
in the business currently operated by Borrowers.
6.4 Maintenance of Property. Each Borrower will maintain
its property in good order and repair and, from time to time,
make all needful and proper repairs, renewals, replacements,
additions, and improvements thereto, so that the business carried
on may be properly and advantageously conducted at all times in
accordance with prudent business management.
6.5 Right of Inspection; Discussions. Each Borrower will
permit any Person designated by Lender, at Lender's expense, to
visit and inspect any of the properties, corporate books,
records, papers, and financial reports of such Borrower,
including the making of any copies thereof and abstracts
therefrom, and to discuss its affairs, finances, and accounts
with its principal officers, all at such reasonable times and as
often as Lender may reasonably request. Each Borrower will also
permit Lender, or its designated representative, to audit or
appraise any of its assets or financial and business records.
6.6 Notices. Each Borrower will promptly give notice to
Lender of:
(a) The occurrence of any default or Event of Default
(or event which would constitute a default or Event of Default
but for the requirement that notice be given or time elapse or
both) hereunder or under any other obligation of such Borrower,
in which case such notice shall specify the nature thereof, the
period of existence thereof, and the action that such Borrower
proposes to take with respect thereto;
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(b) the occurrence of any material casualty to any
material facility of such Borrower or any other force majeure
(including, without limitation, any strike or other labor
disturbance) materially affecting the operation or value of any
such facility (specifying whether or not such casualty or force
majeure is covered by insurance); and
(c) the commencement or any material change in the
nature or status of any litigation, dispute, or proceeding that
may involve a claim for damages, injunctive relief, enforcement,
or other relief pending, being instituted, or threatened by,
against or involving such Borrower, or any attachment, levy,
execution, or other process being instituted by or against any
assets of such Borrower, which might impair the conduct of such
Borrower's business or might affect financially or otherwise its
business, operations, assets, properties, prospects, or
condition.
6.7 Payment of Taxes; Liens. Each Borrower will promptly
pay, or cause to be paid, all taxes, assessments, and other
governmental charges which may lawfully be levied or assessed
(i) upon the income or profits of such Borrower, (ii) upon any
property, real, personal or mixed, belonging to such Borrower, or
upon any part thereof, or (iii) by reason of employee benefit
plans sponsored by such Borrower, and also any lawful claims for
labor, material and supplies which, if unpaid, might become a
lien or charge against any such property; provided, however,
neither Borrower shall be required to pay any such tax,
assessment, charge, levy, or claim so long as the validity
thereof shall be actively contested in good faith by appropriate
proceedings and such Borrower shall have set aside on its books
adequate reserves (determined in accordance with Generally
Accepted Accounting Principles) with respect to any such tax,
assessment, charge, levy, or claim so contested; but provided
further that any such tax, assessment, charge, levy, or claim
shall be paid forthwith upon the commencement of proceedings to
foreclose any lien securing the same.
6.8 Insurance of Properties. Each Borrower will maintain
liability insurance with insurance companies acceptable to Lender
against the risks for which provision for such insurance is
usually made by other Persons engaged in a similar business
similarly situated and to the same extent thereto and carry such
other types and amounts of insurance as are usually carried by
Persons engaged in the same or a similar business similarly
situated, and upon request deliver to Lender a certificate from
the insurer setting forth the nature of the risks covered by such
insurance, the amount carried with respect to each risk, and the
name of the insurer.
6.9 Title Insurance. Orange-Co will, upon the request of
Lender, obtain mortgagee's title insurance or an update thereof
satisfactory and acceptable to Lender for each parcel of real
property subject to any mortgage hereunder.
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6.10 True Books. Each Borrower will keep proper and true
books of record and account, satisfactory to Lender, in which
full, true, and correct entries will be made of all of its
dealings and transactions, and establish on its books such
reserves as may be required by Generally Accepted Accounting
Principles with respect to all taxes, assessments, charges,
levies, and claims referred to in Subsection 6.7 hereof, and with
respect to its business in general, and will include such
reserves in any interim as well as year-end financial statements.
6.11 Observance of Laws. Each Borrower will conform to and
duly observe all laws, regulations, and other valid requirements
of any governmental authority with respect to the conduct of its
business.
6.12 Further Assurances. At its cost and expense, upon
request of Lender, each Borrower will duly execute and deliver or
cause to be duly executed and delivered to Lender such further
instruments or documents and do and cause to be done such further
acts as may be reasonably necessary or proper in the opinion of
Lender to carry out more effectively the provisions and purposes
of this Agreement.
6.13 ERISA Benefit Plans. Each Borrower will comply with
all requirements of ERISA applicable to it and will not
materially increase its liabilities under or violate the terms of
any present or future benefit plans maintained by it without the
prior approval of the Lender. Each Borrower will furnish to
Lender as soon as possible and in any event within 10 days after
such Borrower or a duly appointed administrator of a plan (as
defined in ERISA) knows or has reason to know that any reportable
event, funding deficiency, or prohibited transaction (as defined
in ERISA) with respect to any plan has occurred, a statement of
the chief financial officer of such Borrower describing in
reasonable detail such reportable event, funding deficiency, or
prohibited transaction and any action which such Borrower
proposes to take with respect thereto, together with a copy of
the notice of such event given to the Pension Benefit Guaranty
Corporation or the Internal Revenue Service or a statement that
said notice will be filed with the annual report to the United
States Department of Labor with respect to such plan if such
filing has been authorized.
6.14 Change of Name, Principal Place of Business,
Office, or Agent. Each Borrower will notify Lender of any change
in the name of such Borrower, the principal place of business of
such Borrower, the office where the books and records of such
Borrower are kept, or any change in the registered agent of such
Borrower for the purposes of service of process.
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6.15 Financial Covenants. Borrowers will, in accordance
with Generally Accepted Accounting Principles applied on a
Consistent Basis, maintain on a consolidated basis:
(a) Minimum Working Capital at all times of not less
than Ten Million and 0/1.00 Dollars ($10,000,000.00).
(b) A Current Ratio at all times greater than or equal
to 1.5 to 1.0.
(c) A Debt-to Equity Ratio not to exceed .65 to 1.0 at
any time.
The financial covenants required by this Subsection 6.15
shall be measured as of the last day of each fiscal quarter of
Borrowers. The financial covenant requirements of this
Subsection shall be computed on the basis that F.A.S.B. Standard
No. 109 does not apply to the financial statements of the
Borrowers.
SECTION 7. NEGATIVE COVENANTS.
Borrowers covenant and agree that from the date of this
Agreement until payment in full of all present or future
indebtedness hereunder and termination of all present or future
credit facilities established hereunder, unless Lender shall
otherwise consent in writing, Borrowers will fully comply with
the following provisions applicable to them:
7.1 Limitations on Mortgages, Liens, Etc. Orange-Co will
not, directly or indirectly, create, incur, assume, or suffer or
permit to exist any mortgage, pledge, lien, security interest, or
other charge or encumbrance (including the lien or retained
security title of a conditional vendor or lessor) upon or with
respect to the real and personal property encumbered by the
Mortgage or Assignment of Rents and Leases.
7.2 Guaranties. Neither Borrower will, directly or
indirectly, guarantee, assume, endorse, become a surety or
accommodation party for, or otherwise in any way extend credit or
become responsible for or remain liable or contingently liable in
connection with any indebtedness or other obligations of any
other Person or entity except guaranties and endorsements made in
connection with the deposit of negotiable instruments and other
items for collection or credit in the ordinary course of business
and guaranties of any obligations of any Subsidiary of either
Borrower.
7.3 Merger, Dissolution, Etc. Neither Borrower will,
directly or indirectly, (a) enter into any transaction of merger
or consolidation; or (b) change the nature of its business; or
(c) enter into any arrangement, directly or indirectly, with any
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Person whereby such Borrower shall sell or transfer any property,
real or personal, used or useful in its business, whether now
owned or hereafter acquired, and thereafter rent or lease such
property which such Borrower intends to use for substantially the
same purpose or purposes as the property being sold or
transferred; or (d) invest in, transfer any assets to, or do
business through any Subsidiary not described in Subsection 4.1
hereof; (e) wind up, liquidate, or dissolve itself or its
business; or (f) agree to any of the foregoing.
7.4 Regulation U. Neither Borrower will permit any part of
the proceeds of the loan or loans made pursuant to this Agreement
to be used to purchase or carry or to reduce or retire any loan
incurred to purchase or carry any margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal
Reserve System) or to extend credit to others for the purpose of
purchasing or carrying any such margin stock, or to be used for
any other purpose which violates, or which would be inconsistent
with, the provisions of Regulation U or other applicable
regulation. Each Borrower covenants that it is not engaged and
will not become engaged as one of its principal or important
activities in extending credit for the purpose of purchasing or
carrying such margin stock. If requested by Lender, each
Borrower will furnish to Lender in connection with any loan or
loans hereunder, a statement in conformity with the requirements
of Federal Reserve Form U-1 referred to in said Regulation. In
addition, each Borrower covenants that no part of the proceeds of
the loan or loans hereunder will be used for the purchase of
commodity future contracts (or margins therefor for short sales)
for any commodity not required for the normal raw material
inventory of such Borrower.
7.5 Changes in Governing Documents, Accounting Methods,
Fiscal Year. Neither Borrower will amend in any respect its
articles of incorporation or bylaws from that in existence on the
date of this Agreement or change its accounting methods or
practices, its depreciation or amortization policy or rates, or
its fiscal year end from that in existence as of the date of the
financial statements provided to Lender pursuant to
Subsection 6.1 hereof, except as required to comply with law or
with Generally Accepted Accounting Principles.
SECTION 8. EVENTS OF DEFAULT.
If any one or more of the following events (herein called
"Events of Default") shall occur, Lender may, at its option at
any time thereafter, declare the indebtedness owed to Lender by
Borrowers hereunder and all other obligations and indebtedness
owed by either Borrower to Lender to be forthwith due and
payable, whereupon the indebtedness owed to Lender by such
Borrower hereunder and all other obligations and indebtedness
owed by either
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Borrower to Lender with accrued interest thereon,
whether contingent or direct, shall forthwith become due and
payable, without presentment, demand, protest, or other notice of
any kind from Lender, all of which are hereby expressly waived,
anything contained in the Loan Documents to the contrary
notwithstanding, and, in addition, Lender may immediately proceed
to do all things provided for by law or the Loan Documents to
enforce its rights hereunder and to collect all amounts owing to
Lender by such Borrower, and automatically all commitments to
extend credit or to make advances subsequent to the occurrence of
the Event of Default shall immediately terminate. No right,
power, or remedy conferred upon Lender by the Loan Documents
shall be exclusive of any other right, power, or remedy referred
to therein or now or hereafter available at law or in equity.
8.1 Payment of Obligations Under Loan Documents. Either
Borrower fails to pay when due any principal, interest, or other
amount due on any indebtedness owed Lender under the Loan
Documents.
8.2 Representation or Warranty. Any representation or
warranty made or deemed made by either Borrower herein or in any
writing furnished in connection with or pursuant to the Loan
Documents, or any report, certificate, financial statement, or
other information provided by others and furnished by either
Borrower to Lender in connection with or pursuant to the Loan
Documents, shall be false or misleading in any material respect
on the date when made or when deemed made.
8.3 Covenants or Defaults Under the Loan Documents. Either
Borrower or any other Person fails to fully and promptly perform
when due any agreement, covenant, term, or condition binding on
it contained in this Agreement or any other Loan Document, or
otherwise a part of the transactions covered hereby or a default
or event of default occurs under any other Loan Document.
8.4 Payment, Performance, or Default of Other Monetary
Obligations. Either Borrower fails to make payment on any
contract obligation or of principal or interest on any
indebtedness other than that created under the Loan Documents,
whether owed to Lender or others, beyond any period of grace
provided with respect thereto, or fails to fully and promptly
perform any other obligation, agreement, term, or condition
contained in any agreement under which any such other
indebtedness is created, or there is otherwise a default or event
of default thereunder.
8.5 Covenants or Defaults to Lender or Others. Either
Borrower fails to fully and promptly perform when due any
agreement, covenant, term, or condition binding on it contained
in any lease, contract, or other agreement to which it is a
party or in respect of which it is obligated, other than the Loan
Documents and other than any monetary default (as described in
Subsection 8.4 above),
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or there is otherwise a default or event
of default thereunder.
8.6 Liquidation; Dissolution; Bankruptcy; Etc.
Liquidation, dissolution, or incompetency of either Borrower,
suspension of the business of either Borrower, or the filing or
commencement by either Borrower of a voluntary petition, case,
proceeding, or other action seeking reorganization, arrangement,
readjustment of its debts, or any other relief under any existing
or future law of any jurisdiction, domestic or foreign, state or
federal, relating to bankruptcy, insolvency, reorganization or
relief of debtors, or any other action of either Borrower
indicating its consent to, approval of, or acquiescence in, any
such petition, case, proceeding, or other action seeking to have
an order for relief entered with respect to it or its debts; the
application by either Borrower for, or the appointment, by
consent or acquiescence of, a receiver, trustee, custodian, or
other similar official for such Borrower or for all or a
substantial part of its property; the making by either Borrower
of an assignment for the benefit of creditors; or the inability
of either Borrower or the admission by either Borrower in writing
of its inability to pay its debts as they mature.
8.7 Involuntary Bankruptcy, Etc. Commencement of an
involuntary petition, case, proceeding, or other action against
either Borrower under the Bankruptcy Code or seeking
reorganization, arrangement, readjustment of its debts, or any
other relief under any existing or future law of any
jurisdiction, domestic or foreign, state or federal, relating to
bankruptcy, insolvency, reorganization, or relief of debtors; or
the involuntary appointment of a receiver, trustee, custodian, or
other similar official for either Borrower or for all or a
substantial part of such Borrower's property or assets; or there
shall be commenced against either Borrower any case, proceeding,
or other action seeking issuance of a warrant of attachment,
execution, distraint, or similar process against all or any
substantial part of such Borrower's assets or property which
results in the entry of an order for such relief, and the
continuance of any of such for thirty (30) days without being
vacated, discharged, stayed, bonded, or dismissed.
8.8 Judgments. The rendition of a judgment against either
Borrower for the payment of damages or money in an amount in
excess of $50,000.00, if the same is not discharged or if a writ
of execution or similar process is issued with respect thereto
and is not stayed within the time allowed by law for filing
notice of appeal of the final judgment.
8.9 Attachment, Garnishment, Liens Imposed by Law. The
issuance of a writ of attachment or garnishment against, or the
imposition of a lien by operation of law on, any property of
either Borrower, if the amount of the claim or the value of the
affected property is in excess of $50,000.00, if twenty (20) days
have
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elapsed and the proceeding or lien has not been vacated,
satisfied, dismissed, or stayed pending appeal.
8.10 Corporate Existence. Any act or omission (formal or
informal) of either Borrower or its officers, directors, or
shareholders leading to, or resulting in, the termination,
invalidation (partial or total), revocation, suspension,
interruption, or unenforceability of its corporate existence,
rights, licenses, franchises, or permits.
8.11 Invalidity of Security Interest and Liens; Transfer of
Collateral. For any reason after the execution and delivery
thereof, any document delivered pursuant hereto that creates, or
was intended to create, a security interest or to provide
collateral security for indebtedness created hereunder ceases to
be in full force and effect, or the liens intended to be created
thereby cease to be or are not valid and perfected first liens,
subject to no other liens except as expressly permitted herein,
or any collateral covered thereby is transferred to another
Person without the prior written consent of Lender.
8.12 Change of Ownership of Borrower. Any change in
majority ownership of either Borrower.
8.13 Notice and Cure Periods. Lender agrees that it will
provide Borrowers written notice of the occurrence of an Event of
Default under Subsections 8.3, 8.4, 8.5, 8.8, 8.9, 8.10, and 8.11
and allow Borrowers sixty (60) days from the date of such notice
to cure the Event of Default before Lender accelerates the
indebtedness evidenced by the Term Note or exercises any remedies
available to it under the Loan Documents or applicable Florida
law, except that Lender may charge Borrowers the Default Rate
pursuant to Subsection 2.4(b) hereof. Borrowers agree and
acknowledge that Borrowers under this Agreement have the right to
cure the Events of Default listed in this paragraph and no other
Events of Default.
SECTION 9. MISCELLANEOUS.
9.1 Course of Dealing; Amendment; Supplemental Agreements.
No course of dealing between the parties hereto shall be
effective to amend, modify, or change any provision of this
Agreement. This Agreement may not be amended, modified, or
changed in any respect except by an agreement in writing signed
by the party against whom such change is to be enforced. The
parties hereto may, subject to the provisions of this Subsection,
from time to time, enter into written agreements supplemental
hereto for the purpose of adding any provisions to this Agreement
or changing in any manner the rights and obligations of the
parties hereunder. Any such supplemental agreement in writing
shall be binding upon the parties thereto.
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9.2 Waiver By Lender of Requirements. Lender may sign and
deliver to Borrowers a written statement waiving any of the
requirements of this Agreement and in such event the waiver shall
be effective only in the specific instance and for the specific
purpose for which given.
9.3 Waiver of Default. Lender may, by written notice to
Borrowers, at any time and from time to time, waive any Event of
Default and its consequences, or any default in the performance
or observance of any condition, covenant, or other term hereof
and its consequences. Any such waiver shall be for such period
and subject to such conditions as shall be specified in any such
notice. In the case of any such waiver, Borrowers and Lender
shall be restored to their former positions prior to such Event
of Default or default and shall have the same rights as they had
thereto, and any Event of Default or default so waived shall be
deemed to be cured and not continuing; but no such waiver shall
extend to any subsequent or other Event of Default or default, or
impair any right consequent thereto.
9.4 Notices. Notwithstanding any provisions to the
contrary contained in the other Loan Documents, all notices,
requests and demands to or upon the parties to this Agreement
pursuant to any Loan Document shall be deemed to have been given
or made when delivered by hand, or when deposited in the mail,
postage prepaid by registered or certified mail, return receipt
requested, addressed as follows or to such other address as may
be hereafter designated in writing by one party to the other:
Borrowers: Orange-Co., Inc.
Orange-Co. of Florida, Inc.
2020 U. S. Highway 17, South
Bartow, Florida 33830
Attention: Dale Bruwelheide
Chief Financial Officer
Lender: Farm Credit of Southwest Florida, ACA
340 North Broward Avenue
Arcadia, Florida 33821
Attention: Jimmy V. Knight
Executive Vice President
except in cases where it is expressly herein provided that such
notice, request, or demand is not effective until received by the
party to whom it is addressed.
9.5 No Waiver; Cumulative Remedies. No omission or failure
of Lender to exercise and no delay in exercising by Lender of any
right, power, or privilege hereunder, shall impair such right,
power, or privilege, shall operate as a waiver thereof or be
construed to be a waiver thereof; nor shall any single or partial
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exercise of any right, power, or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other
right, power, or privilege. The rights and remedies provided in
the Loan Documents are cumulative and not exclusive of any rights
or remedies provided by law, and the warranties, representations,
covenants, and agreements made therein shall be cumulative,
except in the case of irreconcilable inconsistency, in which case
the provisions of this Agreement shall control.
9.6 Reliance Upon, Survival of and Materiality of
Representations and Warranties, Agreements, and Covenants. All
representations and warranties, agreements, and covenants made by
either Borrower in the Loan Documents are material and shall be
deemed to have been relied upon by Lender, notwithstanding any
investigation heretofore or hereafter made by Lender, and shall
survive the execution and delivery of the Loan Documents and the
making of the loan or loans herein contemplated, and shall
continue in full force and effect so long as any indebtedness is
owed to Lender by either Borrower pursuant hereto or so long as
there shall be any commitment by Lender to make loans to either
Borrower hereunder. All statements contained in any certificate
or other paper delivered to Lender at any time by or on behalf of
either Borrower pursuant hereto shall constitute representations
and warranties by such Borrower hereunder.
9.7 Severability and Enforceability of Provisions. In the
event that any one or more of the provisions of the Loan
Documents is determined to be invalid, illegal, or unenforceable
in any respect as to one or more of the parties, all remaining
provisions nevertheless shall remain effective and binding on the
parties thereto and the validity, legality, and enforceability
thereof shall not be affected or impaired thereby. To the extent
permitted by applicable law, the parties hereby waive any
provision of law that renders any provision hereof invalid,
illegal, or unenforceable in any respect.
9.8 Payment of Expenses, Including Attorneys' Fees and
Taxes. Borrowers agree (a) to pay or reimburse Lender for all
its reasonable and customary out-of-pocket costs and expenses
incurred in connection with the preparation, negotiation,
execution, and delivery of, and any amendment, supplement, or
modification to, or waiver or consent under, the Loan Documents,
and the consummation of the transactions contemplated thereby,
including, without limitation, the reasonable and customary fees
and disbursements of counsel for Lender, taxes, and all recording
or filing fees, (b) to pay or reimburse Lender for all of its
costs and expenses incurred in connection with the
administration, supervision, collection, or enforcement of, or
the preservation of any rights under, the Loan Documents,
including, without limitation, the fees and disbursements of
counsel for Lender, including attorneys' fees out of court, in
trial, on appeal, in bankruptcy proceedings, or otherwise,
(c) without limiting the generality of provision (a)
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hereof, to
pay or reimburse Lender for, and indemnify and hold Lender
harmless against liability for, any and all documentary stamp
taxes, non-recurring intangible taxes, or other taxes, together
with any interest, penalties, or other liabilities in connection
therewith, that Lender now or hereafter determines are payable
with respect to the Loan Documents, the obligations evidenced by
the Loan Documents, any advances under the Loan Documents, and
any guaranties or mortgages or other security instruments, and
(d) to pay, indemnify, and hold Lender harmless from and against
any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or
disbursements of any kind or nature whatsoever with respect to
the execution, delivery, enforcement, performance, and
administration of the Loan Documents. The agreements in this
Subsection shall survive repayment of all other amounts payable
hereunder or pursuant hereto, now or in the future, and shall be
secured by all collateral that secures the loan or loans
described herein.
9.9 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of Lender and Borrowers,
and, to the extent permitted herein, their respective successors,
assignees, or transferees. In the event of such transfer or
assignment, the rights and privileges herein conferred upon
Lender shall automatically extend to and be vested in the
successor, assignee, or transferee of Lender, and Lender shall be
relieved of all liability hereunder. Borrowers may not assign or
transfer any of their rights or obligations under this Agreement
without the prior written consent of Lender.
9.10 Counterparts; Effective Date. This Agreement may be
signed in any number of separate counterparts, no one of which
need contain all of the signatures of the parties, and as many of
such counterparts as shall together contain all of the signatures
of the parties shall be deemed to constitute one and the same
instrument. A set of the counterparts of this Agreement signed
by all parties hereto shall be lodged with Lender. This
Agreement shall become effective upon the receipt by Lender of
signed counterparts of this Agreement from each of the parties
hereto or telecopy confirmation of the signing of counterparts of
this Agreement by each of the parties hereto.
9.11 Participations. Borrowers recognize that Lender may
enter into participation agreements with other financial
institutions, including one or more banks or other lenders,
whereby Lender will allocate a portion of the loan or loans
contemplated hereunder. Upon the written request of Borrowers,
Lender will advise Borrowers of the names of any participants and
the extent of their interest herein.
9.12 Governing Law. The validity, interpretation, and
enforcement of this Agreement, of the rights and obligations of
the
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parties hereto, and of the other documents delivered in
connection herewith shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Florida
excluding those laws relating to the resolution of conflicts
between laws of different jurisdictions.
9.13 Venue; Personal Jurisdiction over Borrowers. In any
litigation in connection with or to enforce this Agreement or any
of the other Loan Documents, each Borrower irrevocably consents
to and confers personal jurisdiction on the courts of the State
of Florida or the United States courts located within the State
of Florida, expressly waives any objections as to venue in any of
such courts, and agrees that service of process may be made on
each Borrower by mailing a copy of the summons and complaint by
registered or certified mail, return receipt requested, to its
address. Nothing contained herein shall, however, prevent Lender
from bringing any action or exercising any rights within any
other state or jurisdiction or from obtaining personal
jurisdiction by any other means available by applicable law.
9.14 Title and Headings; Table of Contents. The titles and
headings preceding the text of the Preamble, Preliminary
Statement, Sections, and Subsections of this Agreement and the
Table of Contents have been included solely for convenience of
reference and shall neither constitute a part of this Agreement
nor affect its meaning, interpretation, or effect.
9.15 Complete Agreement; No Other Consideration. The Loan
Documents contain the final, complete, and exclusive expression
of the understanding of Borrowers and Lender with respect to the
transactions contemplated by the Loan Documents and supersede any
prior or contemporaneous agreement or representation, oral or
written, by or between the parties related to the subject matter
hereof. Without limiting the generality of the foregoing, there
does not exist any consideration or inducement other than as
stated herein for the execution, delivery, and performance by
Borrowers of the Loan Documents.
9.16 Legal or Governmental Limitations. Anything contained
in this Agreement to the contrary notwithstanding, Lender shall
not be obligated to extend credit or make loans to Borrowers in
an amount in violation of any limitations or prohibitions
provided by any applicable statute or regulation.
9.17 Waiver of Trial by Jury. Each Borrower and Lender
hereby knowingly, voluntarily, and intentionally waive the right
they may have to a trial by jury in respect of any litigation
based hereon, or arising out of, under, or in connection with the
Loan Documents and any other document executed in conjunction
with the loan or loans hereunder, or any course of conduct,
course of dealing, statement (whether oral or written), or action
of either party.
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This provision is a material inducement for
Lender to enter into any loan transactions hereunder.
9.18 Purchase of Stock. This loan is subject to the
required ownership by Borrowers of stock in Lender in the amount
of $1,000.00 total par value. The stock is subject to the risk
of capital impairment and shall be retired at the sole discretion
of Lender's board of directors. The Lender will have a first
lien on Borrowers' stock as security for the Term Note.
Ownership of the Borrowers' stock will be evidenced by entries
recorded in the books of Lender.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
BORROWERS:
WITNESSES: ORANGE-CO., INC., a
Florida corporation
/s/ John R. Alexander By: /s/ Gene Mooney
- --------------------- -----------------------------
/s/ David Gene Mooney, as its President
- ---------------------
/s/ John R. Alexander By: /s/ Dale A. Bruwelheide
- --------------------- -----------------------------
/s/ David Dale Bruwelheide, as its
- --------------------- Vice President and Chief
Financial Officer
(Corporate Seal)
ORANGE-CO. OF FLORIDA, INC.,
a Florida corporation
/s/ John R. Alexander By: /s/ Gene Mooney
- --------------------- -----------------------------
Gene Mooney, as its President
/s/ David
- ---------------------
/s/ John R. Alexander By: /s/ Dale A. Bruwelheide
- --------------------- ------------------------------
Dale Bruwelheide, as its
/s/ David Vice President and Chief
- --------------------- Financial Officer
(Corporate Seal)
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LENDER:
FARM CREDIT OF SOUTHWEST
FLORIDA, ACA, a federally
chartered corporation
/s/ David By: /s/ Jimmy V. Knight
- --------------------- ------------------------
Jimmy V. Knight, as its
/s/ John R. Alexander Executive Vice President
- ---------------------
(Corporate Seal)
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Exhibit 10.14
LOAN AGREEMENT
By and Among
ORANGE-CO, INC.
and
ORANGE-CO OF FLORIDA, INC.
(the "Borrowers")
and
SUN BANK, NATIONAL ASSOCIATION
(the "Bank")
June 16, 1993
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TABLE OF CONTENTS
(The Table of Contents for this Loan Agreement is for convenience
of reference only and is not intended to define, limit or
describe the scope or intent of any provisions of this Loan
Agreement.)
Article Section Heading Page
ARTICLE ONE DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 Definitions 1
Section 1.02 Accounting Terms 11
ARTICLE TWO AMOUNT AND TERMS OF THE LOAN
Section 2.01 Working Capital Loan 11
Section 2.02 Advances; Interest Rate Selection 12
Section 2.03 Interest on the Note 13
Section 2.04 Restriction on Prepayment 14
Section 2.05 Calculation of Interest 14
Section 2.06 Place of Payment 14
Section 2.07 Set-Off 14
Section 2.08 Payment of Note 15
Section 2.09 Application of Payments 15
Section 2.10 Loan Fee 15
ARTICLE THREE REPRESENTATIONS AND WARRANTIES
Section 3.01 Organization; Corporate 15
Powers; Etc.
Section 3.02 Authorization of Loan; Etc. 15
Section 3.03 Conflicting Agreements and 16
Other Matters
Section 3.04 Financial Statements 16
Section 3.05 Changes in Financial Conditions; 17
Adverse Developments
Section 3.06 Tax Returns and Payments 17
Section 3.07 Agreements 17
Section 3.08 Title to Properties and Assets; 18
Liens; Etc.
Section 3.09 Securities Act 18
Section 3.10 Regulation G; Etc.
Section 3.11 Litigation; Etc. 18
Section 3.12 Regulation U 18
Section 3.13 Patents, Trademarks, Franchises, 19
Etc.
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Section 3.14 ERISA 19
Section 3.15 Governmental Consent 20
Section 3.16 Holding Company Status 20
Section 3.17 Investment Company Status 20
Section 3.18 Outstanding Debt 20
Section 3.19 Consents and Approvals 20
Section 3.20 Places of Business 20
Section 3.21 Priority of Security Interest 21
Section 3.22 Subsidiaries 21
ARTICLE FOUR COVENANTS OF THE BORROWER
Section 4.01 Affirmative Covenants 21
Section 4.02 Negative Covenants 27
ARTICLE FIVE CONDITIONS OF LENDING
Section 5.01 Representations and Warranties 28
Section 5.02 No Default 28
Section 5.03 Additional Working Capital Note 28
Section 5.04 Officer's Certificate 29
Section 5.05 Opinion of Borrowers' Counsel 29
Section 5.06 Loan Documents 29
Section 5.07 Supporting Documents 29
Section 5.08 Loan Permitted by Applicable 30
Laws
Section 5.09 Proceedings 30
Section 5.10 Subsequent Opinions 30
ARTICLE SIX EVENTS OF DEFAULT
Section 6.01 Events of Default 31
ARTICLE SEVEN RIGHTS UPON DEFAULT
Section 7.01 Acceleration 32
Section 7.02 Right of Setoff 33
Section 7.03 Other Rights 33
Section 7.04 Uniform Commercial Code 33
ARTICLE EIGHT MISCELLANEOUS
Section 8.01 No Waiver; Cumulative 33
Remedies
Section 8.02 Amendments; Etc. 33
Section 8.03 Addresses for Notices; Etc. 33
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Section 8.04 Applicable Law 34
Section 8.05 Survival of Representations 34
and Warranties
Section 8.06 Time of the Essence 34
Section 8.07 Headings 34
Section 8.08 Severability 34
Section 8.09 Counterparts 35
Section 8.10 Conflict 35
Section 8.11 Term 35
Section 8.12 Expenses 35
Section 8.13 Successors and Assigns 35
Section 8.14 No Third Party Beneficiaries 36
Section 8.15 Waiver of Jury Trial 36
Section 8.16 Entire Agreement 36
SIGNATURES AND SEALS
EXHIBIT "A: - LIST OF PLACES OF BUSINESSES
EXHIBIT "B" - SUBSIDIARIES
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LOAN AGREEMENT
THIS LOAN AGREEMENT made and entered into this 16th day of
June, 1993 by and between:
ORANGE-CO, INC., a Florida corporation
and ORANGE-CO OF FLORIDA, INC., a Florida
corporation, 2020 Highway 17 South, Bartow,
Florida 33830 (hereinafter collectively
referred to as the "Borrowers");
and
SUN BANK, NATIONAL ASSOCIATION, a
national banking association, 200 South
Orange Avenue, Orlando, Florida 32801
(hereinafter referred to as the "Bank").
W I T N E S S E T H:
WHEREAS, the Borrowers desire to borrow and obtain from the
Bank a working capital line of credit loan up to the maximum
principal amount of $20,000,000.00; and
WHEREAS, the Bank is willing to grant such loan upon the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the above
premises and the mutual covenants and agreements contained
herein, the Borrowers and the Bank agree as follows:
ARTICLE ONE
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01 Definitions. For the purposes of this
Agreement, the following terms shall have the respective meanings
specified in this Section 1.01 (such meanings to be equally
applicable to both the singular and plural forms of the terms
defined):
"Account" shall mean any right to payment for goods sold or
leased or for services rendered by either Borrower which is not
evidenced by an instrument or chattel paper, whether or not it
has been earned by performance including, but not limited to, all
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contract rights and agreements to purchase or sell citrus fruit
or juice.
"Account Debtor" shall mean the Person who is obligated on
an Account.
"Advance" shall mean individually and collectively the
proceeds of the Working Capital Loan delivered to the Borrowers
by the Bank pursuant to Section 2.02 hereof.
"Affiliate" shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common
control with either Borrower, including a Subsidiary. A Person
shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract,
or otherwise.
"Agreement" shall mean this Loan Agreement as originally
executed by the parties hereto and all permitted supplements,
amendments, modifications and restatements hereof.
"Banking Day" shall mean that part of any day for dealings
by and between banks, excluding Saturday, Sunday or a day in
which commercial banks in Florida are authorized to close.
"Base Accounts" shall mean all Accounts of either Borrower
arising from sales made to customers and in which the Bank has a
perfected first priority Security Interest and such Borrower has
furnished to the Bank information as set forth in Section 4.01
(a) (v) hereinbelow. If and when a particular Base Account
exists by virtue of constituting proceeds of Base Inventory, the
Inventory giving rise to the Base Account automatically loses its
status as Base Inventory.
"Base Inventory" shall mean Inventory comprised of citrus
fruit juice and other fruit juice and juice concentrate,
including pulp washes and other citrus beverages, other juice
based, isotonic, and tea beverages owned by and (i) in the
possession and under the control of either Borrower or (ii)
located in a warehouse acceptable to the Bank in its sole
discretion; and as to which such Borrower has acquired title and
the Bank has acquired a perfected first priority Security
Interest and such Borrower has furnished to the Bank the
information required by Section 4.01 hereinbelow. Inventory
immediately loses its status as Base Inventory if and when such
Borrower either (i) sells it other than when selling it short on
the futures market or pursuant to a forward contract, or (ii)
otherwise passes title to it or consumes it or the Bank releases
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or ceases to have a perfected first priority Security Interest
therein.
"Borrower's Loan Certificate" shall mean the Certificate of
the Secretary or Assistant Secretary of the Borrowers referred to
in and required by Section 5.07(a) of this Agreement.
"Borrowing Base" shall mean, at any date of determination
thereof, an amount equal to the then aggregate of (i) eighty-five
percent (85%) of the Qualified Accounts, (ii) eighty-five percent
(85%) of Finished Goods Inventory, and (iii) eighty-five percent
(85%) of Specialty Products Inventory. The value of the Qualified
Accounts shall be reasonably determined by the Bank. The
Finished Goods Inventory that has been hedged shall be valued at
the hedged price and the Finished Goods Inventory that has not
been hedged shall be valued at the lower of the near month's
futures price or the Florida bulk cash price. The Specialty
Products Inventory shall be valued at standard cost.
"Borrowing Base Certificate" shall mean a certificate
executed and certified correct by an officer of the Borrowers, in
form acceptable to the Bank, setting forth a calculation of the
Borrowing Base and borrowing availability under the Working
Capital Loan.
"Cash Flow Before Debt Service" shall mean (i) the sum of
the Borrowers' net profits before taxes plus (ii) depreciation,
amortization, and other non-cash charges plus (iii) interest paid
or accrued for the most recent twelve months.
"Cash Management Agreement" the cash management agreement
between the Borrower and the Bank as the same may be amended or
modified from time to time.
"Chattel Paper" shall mean a writing or writings that
evidence both a monetary obligation and a security interest in,
or lease of specific goods.
"Collateral" shall mean all (i) the Accounts, Chattel Paper,
Documents, Farm Products, General Intangibles, Instruments and
Inventory, whether now owned or hereafter acquired by either
Borrower, and Proceeds thereof and, (ii) all other property and
money of either Borrower now or hereafter in the possession,
custody or control of the Bank or any of its affiliates.
"Current Assets" shall mean those assets which in the
regular course of business of the Borrowers and their
Subsidiaries on a consolidated basis will be readily and quickly
realized, or converted into cash, all in accordance with GAAP
within the applicable accounting or time period together with
such additional assets as may readily be converted into cash
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without impairing the business of the Borrowers or any of their
Subsidiaries, and shall include cash, temporary investments,
receivables, inventories and prepaid expenses but shall exclude
all inter-company assets between any Borrower, the other Borrower
or Subsidiaries.
"Current Liabilities" shall mean those liabilities of the
Borrowers and their Subsidiaries on a consolidated basis, or any
portion thereof, the maturity of which will not extend beyond one
year from the date said determination is to be made.
"Current Ratio" shall mean the ratio of the Borrowers'
Current Assets to Current Liabilities, determined on a
consolidated basis.
"Day" shall mean a calendar day, unless the context
indicates otherwise.
"Debt Service" shall mean the sum of the principal and
interest paid by the Borrowers for the most recent twelve (12)
months.
"Default" shall mean any event or condition which with the
passage of time or giving of notice, or both, would constitute an
Event of Default.
"Default Rate" shall mean the lesser of (i) Prime Rate plus
three percent (3%) or (ii) the highest rate of interest permitted
from time to time by applicable law.
"Documents" shall mean a bill of lading, dock warrant, dock
receipt, a warehouse receipt or order for the delivery of goods,
but also any other document which in the regular course of
business or financing is treated as adequately evidencing that
the person in possession of it is entitled to receive, hold and
dispose of the document and the goods it covers.
"Dollars" shall mean lawful money of the United States of
America.
"Due Date" shall mean the date any payment of principal or
interest is due and payable on the Loan or the Note.
"ERISA" shall mean the Employment Retirement Income Security
Act of 1974, as amended.
"Events of Default" shall mean the events of default
specified in Article Six of this Agreement and each of the Events
of Default shall be an "Event of Default".
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"Farm Products" shall mean crops or livestock or supplies
used or produced in farming operations or products of crops or
livestock in their unmanufactured states if they are in the
possession of either Borrower engaged in raising, fattening,
grazing or other farming operations including harvested but
unprocessed citrus fruit.
"Financing Statement" shall mean the financing statement
permitted under the UCC or any other state law for the purpose of
perfecting the Security Interest.
"Finished Goods Inventory" shall mean that portion of the
Qualified Inventory which constitutes frozen concentrated orange
juice in a form which could be deliverable under the New York
Cotton Exchange Contracts after such is blended with other
current Inventory or water, as may be necessary to meet the
requirements for such delivery. The blended frozen concentrated
orange juice shall be rated U.S. Grade "A" with a "brix" value of
not less than 51 degrees plus or minus 3 degrees, having a brix-
to-acid ratio of not less than 13:1 nor more than 19:1 and a
minimum score of 94. Qualified Inventory that is classified as
"Finished Goods Inventory" shall not be simultaneously classified
as "Specialty Products Inventory."
"Funded Liabilities" shall mean and include without
duplication,
(i) any liability or obligation payable more than one year
from the date of creation thereof, which under GAAP is shown on
the balance sheet as a liability (excluding reserves for deferred
income taxes and other reserves to the extent that such reserves
do not constitute an obligation),
(ii) indebtedness payable more than one year from the date
of creation thereof which is secured by any Lien on property
owned by either Borrower or any Subsidiary, whether or not the
indebtedness secured thereby shall have been assumed by either
Borrower or any Subsidiary,
(iii) guarantees, endorsements (other than endorsements of
negotiable instruments for collection in the ordinary course of
business), and other contingent liabilities (whether direct or
indirect) in connection with the obligations, stock, or dividends
of any Person,
(iv) obligations under any contract providing for the making
of loans, advances, or capital contributions to any Person in
order to enable such Person primarily to maintain working
capital, net worth, or any other balance sheet condition or to
pay debts, dividends, or expenses, and
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(v) obligations under any contract which, in economic
effect, is substantially equivalent to a guarantee;
all as determined in accordance with GAAP.
"GAAP" shall mean generally accepted accounting principles
consistently applied to the particular item.
"General Intangibles" shall mean any personal property of
either Borrower, (including things in action) other than goods,
Accounts, Chattel Paper, Documents, Instruments and money.
"IRS Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Initial Advance" shall mean the delivery of a portion of
the proceeds of the Working Capital Loan pursuant to the terms
hereof to pay the amount necessary in order to cover all costs
and expenses incident to the closing of the transactions
contemplated hereby, including, without limitation, the
attorneys' fees and costs of the Bank's legal counsel.
"Initial Advance Date" shall mean the date of this
Agreement.
"Instruments" shall mean negotiable instruments or any other
writing which evidences a right to payment of money and is not
itself a security agreement or lease and is of a type which is in
ordinary course of business transferred by delivery with any
necessary endorsement or assignment.
"Interest Period" shall mean any interest period applicable
to a particular Advance on a Loan which, in the case of a Prime
Loan, shall be daily, and, in the case of a LIBOR Loan, shall be
determined in accordance with Section 2.02 hereof.
"Interest Rate" shall mean the fluctuating interest rate
applicable to the Loan, which, in the case of the Working Capital
Loan shall equal either (i) LIBOR plus one hundred (100) basis
points or (ii) Prime Rate minus one half of one percent (0.5%);
provided, however, the Interest Rate shall never exceed the
maximum rate allowable by law.
"Interest Rate Determination Date" shall mean each date for
calculating LIBOR or the Prime Rate, as the case may be, for the
purpose of determining the Interest Rate with respect to a
particular Interest Period which date shall be the first Banking
Day of the related Interest Period in the case of either a Prime
Loan or a LIBOR Loan.
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"Inventory" shall mean goods held for sale or lease or being
possessed for sale or lease in the business of the Borrowers, now
or hereafter conducted, including all materials, goods and work-
in process, finished goods and other tangible property now owned
or hereafter acquired and held for sale or lease or furnished or
to be furnished under contracts of service or used or consumed in
the business of either Borrower including citrus fruit (after
severance from the tree), citrus fruit juices, concentrate and
products thereof.
"LIBOR" shall mean, with respect to any Interest Period, the
interest rate announced by the Bank as its LIBOR rate on the
applicable Interest Rate Determination Date for the applicable
Interest Period.
"LIBOR Loan" shall mean the Loan or portion(s) thereof
bearing interest based upon LIBOR.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien, or charge of any kind (including any agreement
to give any of the foregoing, any conditional sales or other
title retention agreements, or any lease in the nature thereof,
and the filing of or agreement to give any financing statement
under the Uniform Commercial Code of any jurisdiction).
"Loan" or "Loans" shall mean the Working Capital Loan.
"Loan Documents" shall mean this Agreement, the Note, the
Financing Statements, the Security Documents, and all of the
other documents, agreements, certificates, schedules, notes,
statements and opinions, however described, referenced herein or
executed or delivered pursuant hereto or in connection with or
arising with the Loan or the transactions contemplated by this
Agreement.
"Margin Securities" shall mean any "margin securities"
within the meaning of Regulation G of the Board of Governors of
the Federal Reserve System (12 CFR Part 207).
"Net Worth" shall mean the excess of (i) Total Assets over
(ii) Total Liabilities.
"Note" or "Notes" shall mean the Working Capital Note, as
the context may require.
"Obligations", with respect to the Borrowers, shall mean,
individually and collectively, the payment and performance
duties, obligations and liabilities of either Borrower to the
Bank, evidenced by the Note, together with all accrued but unpaid
interest thereon, and all other payment and performance duties,
obligations and liabilities of either Borrower to the Bank,
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however and whenever incurred, acquired or evidenced, whether
primary or secondary, direct or indirect, absolute or contingent,
sole or joint and several, or due or to become due, including,
without limitation, all such duties, obligations and liabilities
of either Borrower to the Bank, under and pursuant to this
Agreement, the Note and the Security Documents and all renewals,
modifications or extensions of any thereof.
"Officers' Certificate" shall mean a certificate signed in
the name of Borrowers, by a President, a Vice President, or
Treasurer.
"Opinion" shall mean the legal opinion of counsel to the
Borrowers, in form acceptable to the Bank.
"Person" shall mean any individual, joint venturer,
partnership, firm, corporation, trust, unincorporated
organization or other organization or entity, or a governmental
body or any department or agency thereof, and shall include both
the singular and the plural.
"Place of Business" shall mean any location in which the
Borrower undertakes its business, all as set forth in Exhibit "A"
attached hereto.
"Plan" shall mean an employee benefit plan or plans and any
trust created thereunder which has been established or maintained
or hereafter is established or maintained for employees of either
Borrower or any Subsidiary, provided such plan is covered by
Title I or IV of ERISA.
"Prime Rate" shall mean the interest rate (not necessarily
the best or lowest rate), announced by Sun Banks, Inc., from time
to time, as the Prime Rate (which interest rate is only a
benchmark, is purely discretionary and is not necessarily the
best or lowest interest rate charged borrowing customers of any
subsidiary bank of Sun Banks, Inc.); provided, however, that said
interest rate will never exceed the maximum rate allowed, from
time to time, by law, with any change in the Prime Rate to be
effective on the day any such change in the Prime Rate is
announced by the Bank.
"Prime Rate Loan" shall mean the Loan or portion(s) thereof
bearing interest based upon the Prime Rate.
"Principal Place of Business" shall mean the principal place
of business and the headquarters of the Borrowers at which all of
their records are kept, currently at the address set forth in the
preamble to this Agreement.
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"Proceeds" shall mean whatever is received upon the sale,
exchange, collection or other disposition of the Collateral.
"Prohibited Transaction" shall have the meaning assigned to
that term in Section 406 of Title I of ERISA.
"Qualified Accounts" shall mean all Base Accounts of the
Borrowers excluding (i) Accounts from any Affiliates, (ii)
Accounts outstanding and not paid in full for a period of sixty
(60) days from and after the date of the Account, (iii) all
Accounts from any Account Debtor if ten percent (10%) of the
Accounts from that Account Debtor have not been paid within
ninety (90) days after the date of the Account, (iv) Accounts
from any Account Debtor to whom either Borrower is indebted and
as to which any defense, set-off or counterclaim with respect to
payment in full of said obligations has been asserted or
threatened by the Account Debtors, (v) any Account that either
Borrower determines is not collectible in accordance with
customary terms applicable to such Account, and (vi) any other
Accounts that the Bank in its reasonable discretion determines
not to be a Qualified Account.
"Qualified Inventory" shall mean the value of Base Inventory
as determined by the Bank pursuant to the terms and conditions of
this Agreement in its reasonable discretion after deducting
therefrom the value of Base Inventory considered by the Bank in
its reasonable discretion not to be creditworthy, and after
taking into account charges and liens other than those of the
Bank of all kinds affecting the Base Inventory, which
determination shall be conclusive and binding upon the Borrower.
"Related Entity" shall mean any entity if, with respect to
either Borrower, any of the entity's employees fall within any of
the following categories: (a) employees of controlled group of
corporations as defined in Section 414(b) of the IRS Code; (b)
employees of partnerships, proprietorships or other entities
which are under common control as defined in Section 414(c) of
the IRS Code; (c) employees of affiliated service groups as
defined in Section 414(m) of the IRS Code; or (d) employees of
entities which are deemed affiliated or related to either
Borrower in accordance with Sections 414(n) or (o) of the IRS
Code.
"Reportable Event" shall have the meaning assigned to that
term in Section 4043 of Title IV of ERISA.
"Revolving Period" shall mean the period during the term of
the Working Capital Loan, commencing on the date hereof and
ending on the occurrence of (i) an Event of Default or (ii)
January 31, 1995, or such later date as the Bank may in its
absolute discretion agree to in writing, whichever first occurs.
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"Security Agreements" shall mean the security agreements of
the Borrowers granting a Security Interest to the Bank in the
Collateral, in form acceptable to the Bank, and all supplements,
amendments, modifications and restatements thereof.
"Security Documents" shall mean the Security Agreements, and
all other documents, agreements, assignments, filings, financing
statements, certificates of title, notices, returns and other
security instruments and records, however described or
denominated, now or hereafter created or existing, pledging or
evidencing any pledge of any property or assets, however
described, to secure any or all of the Obligations.
"Security Interest" shall mean the first priority security
interest in the Collateral granted by the Borrowers to the Bank
under the Security Agreements.
"Specialty Products Inventory" shall mean Base Inventory of
either Borrower consisting of citrus and non-citrus fruit juices
and other juice based, isotonic, and tea beverages, both in
concentrate and single strength formulations, for sale to
institutional and other customers. Qualified Inventory that is
classified as "Specialty Products Inventory" shall not be
simultaneously classified as "Finished Goods Inventory."
"Subsequent Advances" shall mean individually and
collectively all Advances hereunder after the Initial Advance.
"Subsidiary" shall mean any corporation fifty percent (50%)
or more of the voting stock of which is owned, directly or
indirectly, by either Borrower, and shall include subsidiaries of
a subsidiary.
"Total Assets" shall mean all assets of the Borrowers and
their Subsidiaries, determined on a consolidated basis, all as
determined in accordance with GAAP.
"Total Liabilities" or "Liabilities" shall mean all
liabilities and obligations of the Borrowers and their
Subsidiaries, determined on a consolidated basis, all as
determined in accordance with GAAP, and shall include Funded
Liabilities and/or Current Liabilities, as the case may be.
"UCC" shall mean the Florida Uniform Commercial Code, as
amended.
"Voting Stock" of any corporation shall mean shares of any
class or classes (however designated) having ordinary voting
power for the election of at least a majority of the members of
the Board of Directors (or other governing bodies) of such
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corporation, other than shares having such power only by reason
of the happening of a contingency.
"Wholly-Owned Subsidiary" shall mean any Subsidiary, all of
the stock of every class of which, except directors' qualifying
shares, shall, at the time as of which any determination is being
made, be owned by either Borrower either directly or through
wholly-owned Subsidiaries.
"Working Capital Loan" shall mean the loan or loans up to
but not exceeding the principal amount of $20,000,000.00 made to
the Borrowers by the Bank pursuant to and in accordance with the
terms of this Agreement.
"Working Capital Note" shall mean the Borrowers' promissory
note or notes evidencing the Working Capital Loan, in form
acceptable to the Bank, and any and all allonges thereto, and any
and all extensions, renewals or modifications thereof.
SECTION 1.02 Accounting Terms. All accounting terms used
herein shall be construed in accordance with GAAP (unless such
terms are specifically defined otherwise herein) consistently
applied and all financial data submitted pursuant to this
Agreement shall be prepared in accordance with GAAP. In the event
of ambiguities or changes in GAAP, the more conservative
principle or interpretation shall be used.
ARTICLE TWO
AMOUNTS AND TERMS OF THE LOAN
SECTION 2.01 Working Capital Loan. The Bank agrees from
time to time during the Revolving Period to lend to the
Borrowers, upon the request of either Borrower, or pursuant to
the Cash Management Agreement, on the terms and conditions set
forth herein, up to the lesser of (i) $20,000,000.00 or (ii) the
amount of the Borrowing Base. During the Revolving Period, the
Borrowers shall be entitled to receive the entire proceeds of the
Working Capital Loan in one or more Advances pursuant to Section
2.02 hereof, except as otherwise specifically set forth in this
Agreement. Advances under the Working Capital Loan shall be
evidenced by the Working Capital Note, payable as provided in
Section 2.08 hereof. After the expiration of the Revolving
Period, the Borrowers shall not be entitled to receive any
Subsequent Advance. The Working Capital Loan may revolve during
the Revolving Period; accordingly, during the Revolving Period,
the Borrowers may borrow up to the maximum principal amount of
said Loan, repay all or any portion of such principal amount of
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said Loan, and reborrow up to such maximum principal amount,
subject to the terms and conditions set forth herein.
SECTION 2.02 Advances; Interest Rate Selection.
(a) On the Initial Advance Date and upon satisfaction of
the conditions precedent set forth in Article Five hereof, the
Initial Advance with respect to the Loan shall be disbursed by
the Bank on behalf of the Borrowers. If the Borrowers shall fail
to satisfy the conditions precedent set forth in Article Five
hereof on the Initial Advance Date, the Bank's commitment to lend
funds to or on behalf of the Borrowers shall terminate. After the
Initial Advance and upon continued satisfaction of the conditions
precedent set forth in Article Five hereof, the Borrowers shall
be entitled to receive Subsequent Advances.
(b) When necessary, the Bank shall as soon as practical
provide Borrowers with its determination of the then available
Interest Rates offered by the Bank on the Loan for the requested
Interest Periods (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) and the
Borrowers shall give the Bank notice, in writing if required by
the Bank, by 1:00 p.m. Orlando, Florida time, or such other time
as may be acceptable to the Bank (an "Interest Rate Selection
Notice") which shall specify (i) the amount(s) of the Advance(s)
on the Loan(s), (ii) whether the Advance(s) shall bear interest
based upon Prime Rate or LIBOR and (iii) in the case of an
Advance bearing interest based upon LIBOR, the Interest Period(s)
applicable thereto. The Bank shall have no duty or obligation to
verify or confirm the authority of the representative of the
Borrowers requesting any such Subsequent Advance as long as said
person identifies himself as an employee or representative of the
Borrowers.
(c) By giving notice as set forth hereinabove, the
Borrowers shall have the option, subject to the other provisions
of this Section 2.02, to specify whether the Interest Period
applicable to a LIBOR Loan commencing on any such date shall be a
period of 1, 30, 60, 90 or 180 days or such other period as may
be agreed upon between the Borrowers and the Bank; provided,
that:
(i) in the case of immediately successive Interest
Periods, each successive Interest Period shall commence on the
Day on which the immediately preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on
a Day which is not a Banking Day, that Interest Period shall be
extended to expire on the next succeeding Banking Day; provided,
that if any such Interest Period would otherwise expire on a Day
which is not a Banking Day but is a Day of the month after which
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no further Banking Day occurs in that month, that Interest Period
shall expire on the next preceding Banking Day;
(iii) any Interest Period which begins on the last
Banking Day of a calendar month (or on a Day for which there is
no numerically corresponding Day in the calendar month at the end
of such Interest Period) shall end on the last Banking Day of a
calendar month;
(iv) no Interest Period applicable to a Loan shall
extend beyond, the last day of the Revolving Period, as it may
exist from time to time.
(v) if the Borrower fails to provide the Bank with an
Interest Rate Selection Notice by the last Day of an Interest
Period for a particular Loan, the Borrower shall be deemed to
have selected an Interest Period maturing on the next Business
Day for such Loan.
(d) Requests by the Borrowers for any Subsequent Advance
hereunder on any date shall be in the minimum principal amount of
$10,000.00 or such lesser amount as may be acceptable to the
Bank. The Bank shall make each Subsequent Advance hereunder on
the date proposed by the Borrowers therefor (which may be the
same Banking Day if such request is made by the Borrowers and is
received by the Bank prior to 1:00 p.m. Orlando time), otherwise
no earlier than the following Banking Day) by crediting the
amount of each Subsequent Advance requested by the Borrowers to
the general deposit account of the Borrowers maintained with the
Bank or any other subsidiary bank of Sun Banks, Inc.
SECTION 2.03 Interest on The Note. The Loan shall be
evidenced by the Note and shall be due and payable in accordance
with and as required by Section 2.08. The Borrowers shall not be
liable under the Working Capital Note except with respect to
funds actually advanced to either Borrower by the Bank pursuant
to the terms hereof. The Note shall bear interest from the date
thereof on the unpaid principal balance thereof from time to time
outstanding at a fluctuating interest rate per annum equal to the
lesser of (i) the rate specified in the Note or (ii) the maximum
rate of interest permitted by law from time to time.
From and after the Due Date, interest shall accrue on the unpaid
principal balance of the Loan and on all accrued but unpaid
interest thereon, or on any defaulted payment, from the Due Date
at the Default Rate. Such interest shall continue to accrue until
the date of payment in full of all principal and accrued but
unpaid interest of such defaulted payment, if applicable.
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SECTION 2.04 Restriction on Prepayment. The Borrowers may
not prepay all or any part of the principal amount of the Loan
outstanding except on the last Banking Day of the Interest Period
applicable to a particular Advance. Each prepayment other than
full payment shall be made prior to 2:00 P.M. (Orlando time) on
the date of the prepayment, and shall be made on a Banking Day in
immediately available funds. Prepayments may be made by the Bank
pursuant to the Cash Management Agreement.
SECTION 2.05 Calculation of Interest. Any interest due on
the Loan or any other Obligations shall be calculated on the
basis of a year containing 365 days. The interest due on any date
for payment of interest hereunder shall be that interest to the
extent accrued as of midnight on the last Day immediately prior
to that interest payment date. Notwithstanding anything herein or
in any Loan Document to the contrary, the sum of all interest and
all other amounts deemed interest under Florida or
other applicable law which may collected by the Bank hereunder
shall not exceed the maximum lawful interest rate permitted by
such law from time to time. The Bank and the Borrowers intend and
agree that under no circumstance shall the Borrowers be required
to pay interest on the Loan or on any other Obligations at a rate
in excess of the maximum interest rate permitted by applicable
law from time to time, and in the event any such interest is
received or charged by the Bank in excess of that rate, the
Borrowers shall be entitled to an immediate refund of any such
excess interest by a credit to and payment toward the unpaid
balance of the Loan (such credit to be considered to have been
made at the time of the payment of the excess interest) with any
excess interest not so credited to be immediately paid to the
Borrowers by the Bank.
SECTION 2.06 Place of Payment. All payments by the
Borrowers under the Loan Documents shall be made to the Bank at
its office located at 200 South Orange Avenue, Orlando, Florida,
in lawful money of the United States of America and in
immediately available funds.
SECTION 2.07 Set-off. Each of the Borrowers hereby grants
to the Bank a lien on, and a security interest in, the deposit
balances, accounts, items, certificates of deposit and monies of
such Borrowers and each Subsidiary in the possession of or on
deposit with the Bank or any of its affiliates to secure and as
collateral for the payment and performance of the Obligations.
Upon Default, the Bank may at any time and from time to time,
without demand or notice, appropriate and set-off against and
apply the same to the Obligations when and as due and payable.
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SECTION 2.08 Payment of Note. The Borrowers shall jointly
and severally pay the Working Capital Note together with interest
at the rate set forth in said Note as follows:
(i) Interest shall be payable on the first day of
each and every July, October, January and April during the
Revolving Period commencing on July 1, 1993.
(ii) The entire unpaid principal balance together with
accrued interest shall be due and payable in full on the last day
of the Revolving Period.
SECTION 2.09 Application of Payments. All payments (other
than prepayments as set forth in Section 2.04) made on the Note
shall be applied first to interest accrued to the date of payment
and next to the unpaid principal balance provided, however, in
the event an Event of Default occurs, payments shall be applied
first to any costs or expenses, including attorneys fees, that
the Bank may incur in exercising its rights under the Loan
Documents, as the Bank may determine.
SECTION 2.10 Loan Fee. The Borrower shall pay a loan fee
equal to one fourth of one percent (0.25%) of the amount of the
Loan.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
The Borrowers individually and collectively represent and
warrant to the Bank that:
SECTION 3.01 Organization; Corporate Powers; Etc. Each
Borrower (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida, (ii)
has all requisite power and authority, corporate and otherwise,
to own its respective properties and assets and to carry on its
respective business as now conducted and proposed to be
conducted, (iii) is duly qualified to do business and is in good
standing in every jurisdiction in which the character of its
properties or assets owned or the nature of its activities
conducted makes such qualification necessary including the State
of Florida, and (iv) has the corporate power and authority to
execute and deliver, and to perform its obligations under this
Agreement, the Note, the Security Documents and the other Loan
Documents.
SECTION 3.02 Authorization of Loan; Etc. The execution,
delivery and performance of the Loan Documents by the Borrowers
(a) have been duly authorized by all requisite corporate action
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(no shareholder action being required pursuant to applicable law)
and (b) will not (i) violate (y) any provision of law, any
governmental rule or regulation, any order of any court or other
agency of government or the Articles of Incorporation or by-laws
of either Borrower or (z) any provision of any indenture,
agreement or other instrument to which either Borrower is a party
or by which either Borrower or any of its properties or assets
are bound, (ii) be in conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument, or (iii)
result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the properties
or assets of either Borrower other than as permitted by the terms
hereof.
SECTION 3.03 Conflicting Agreements and Other Matters.
Neither Borrower is a party to any contract or agreement or
subject to any charter or other corporate restriction which
materially and adversely affects its respective business,
property or assets, or financial condition. Neither the
execution nor delivery of this Agreement, the Note, the Security
Documents or the other Loan Documents, nor fulfillment of nor
compliance with the terms and provisions hereof or the other Loan
Documents will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or
result in any violation of, or result in the creation of any Lien
upon any of the properties or assets of either Borrower pursuant
to, the charter or by-laws of such Borrower, any award of any
arbitrator or any agreement (including any agreement with
stockholders), instrument, order, judgment, decree, statute, law,
rule or regulation to which either Borrower is subject. Neither
Borrower is a party to, or otherwise subject to any provision
contained in, any instrument evidencing indebtedness, any
agreement relating thereto or any other contract or agreement
(including its charter) which restricts or otherwise limits the
incurring of the debt to be evidenced by the Note.
SECTION 3.04 Financial Statements. The Borrowers have
furnished the Bank with an audited consolidated balance sheet of
the Borrowers and their Subsidiaries as at September 30, 1992,
and audited consolidated profit and loss and surplus statement of
the Borrowers and their Subsidiaries for the fiscal year ended on
such date, all audited by KPMG Peat Marwick certified to be
correct by a principal financial officer of the Borrower. Such
financial statements (including any related schedules and/or
notes) are true and correct in all material respects and have
been prepared in accordance with GAAP and show all liabilities,
direct and contingent, of the Borrowers and their Subsidiaries
required to be shown in accordance with such principles. The
balance sheets fairly present the condition of the Borrowers and
their Subsidiaries as at the dates thereof, and the profit and
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loss and surplus statements fairly present the results of the
operations of the Borrowers and their Subsidiaries for the
periods indicated. There has been no material adverse change in
the business, condition or operations (financial or otherwise) of
the Borrowers or their Subsidiaries taken as a whole since the
date of the financing statements noted above.
SECTION 3.05 Changes in Financial Conditions; Adverse
Developments. From the date of the annual financial statements
referenced in Section 3.04 hereof, to the date of this Agreement,
there has been, and to the date of the Initial Advance and each
Subsequent Advance there will be, no change in the properties,
assets, liabilities, financial condition, business, operations,
affairs or prospects of the Borrowers and their Subsidiaries on a
consolidated basis from that set forth or reflected in the fiscal
year-end balance sheet referred to in Section 3.04, other than
changes in the ordinary course of business and those changes that
have been disclosed to the Bank, including acquisitions, none of
which have been, either in any case or in the aggregate,
materially adverse.
SECTION 3.06 Tax Returns and Payments. All federal, state
and local tax returns and reports of the Borrowers required to be
filed have been filed, and all taxes, assessments, fees and other
governmental charges upon the Borrowers, or upon any of its
properties, assets, incomes or franchises, which are due and
payable in accordance with such returns and reports, have been
paid, other than those presently (a) payable without penalty or
interest, or (b) contested in good faith and by appropriate and
lawful proceedings prosecuted diligently. The aggregate amount of
the taxes, assessments, charges and levies so contested is not
material to the condition (financial or otherwise) and operations
of the Borrowers. The charges, accruals, and reserves on the
books of the Borrowers in respect of federal, state and local
taxes for all fiscal periods to date are adequate and the
Borrowers know of no other unpaid assessment for additional
federal, state or local taxes for any such fiscal period or of
any basis therefor. The Borrowers have and will establish all
necessary reserves and make all payments required of them to be
set aside or made in regard to all F.I.C.A., withholding, sales
or excise, and all other similar federal, state and local taxes.
SECTION 3.07 Agreements.
(a) Neither Borrower is a party to any agreement, indenture,
lease or instrument or subject to any charter or other corporate
restriction or any judgment, order, writ, injunction, decree,
rule or regulation materially and adversely affecting its
respective business, properties, assets, operations or condition
(financial or otherwise). There are no material unrealized losses
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with respect to any such agreement, indenture, lease or
instrument.
(b) Neither Borrower is in default in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it
is a party.
(c) Each Borrower enjoys peaceful and undisturbed possession
in all material respects under all leases as to which it is a
lessee and all such leases are valid and subsisting and in full
force and effect.
SECTION 3.08 Title to Properties and Assets; Liens; Etc.
Each Borrower has good and marketable title to its respective
real properties other than properties which it leases and good
title to all of its other properties and assets, including the
properties and assets reflected in the balance sheet hereinabove
described (other than properties and assets disposed of in the
ordinary course of business). Each Borrower enjoys peaceful and
undisturbed possession of all leases necessary in any material
respect for the operation of its respective properties and
assets, none of which contains any unusual or burdensome
provisions which might materially affect or impair the operation
of such properties and assets.
SECTION 3.09 Securities Acts. Neither Borrower nor any
agent acting on the behalf of either of them has, directly or
indirectly, taken or will take any action which would subject the
issuance of the Note to the provisions of Section 5 of the
Securities Act of 1933, as amended, or to the provisions of any
securities or Blue Sky law of any applicable jurisdiction.
SECTION 3.10 Regulation G. Etc. Neither Borrower nor any
agent acting on the behalf of either of them has taken or will
take any action which might cause this Agreement or the Note to
violate Regulation G, T or X or any other regulation of the Board
of Governors of the Federal Reserve System or to violate the
Securities Exchange Act of 1934, in each case as in effect now or
as the same may hereafter be in effect.
SECTION 3.11 Litigation; Etc. There are no actions,
proceedings or investigations, however described or denominated,
pending or, to the knowledge of either Borrower, threatened,
against either Borrower or any Subsidiary, or affecting either
Borrower or any Subsidiary (or any basis therefor known to either
Borrower) which, either in any case or in the aggregate, might
result in any material adverse change in the financial condition,
business, prospects, affairs or operations of the Borrowers or
their Subsidiaries or in any of their properties or assets, or in
any material impairment of the right or ability of the Borrowers
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or any Subsidiary to carry on their respective operations as now
conducted or proposed to be conducted, or in any material
liability on the part of the Borrowers or any Subsidiary, or
which questions the validity of this Agreement, the Note, the
Security Documents or any of the other Loan Documents or of any
action taken or to be taken in connection with the transactions
contemplated hereby or thereby.
SECTION 3.12 Regulation U. Neither Borrower is engaged
principally in, and has as one of its important activities, the
business of extending credit for the purpose of purchasing or
carrying any Margin Securities. No part of the proceeds of the
Loan hereunder will be used to carry on any margin security
transactions within the meaning Regulation.
SECTION 3.13 Patents; Trademarks; Franchises; Etc. Except
as disclosed to the Bank, the Borrowers own or have the right to
use all of the patents, trademarks, service marks, trade names,
copyrights, franchises and licenses, and all rights with respect
thereto, necessary for the conduct of their business as now
conducted or proposed to be conducted without any known conflict
with the rights of others, and, in each case, subject to no
mortgage, pledge, lien, lease, encumbrance, charge, security
interest, title retention agreement or option. Each such asset or
agreement is in full force and effect, and the holder thereof has
fulfilled and performed all of its obligations with respect
thereto. No event has occurred or exists which permits, or after
notice or lapse of time or both would permit, revocation or
termination, or which materially adversely affects or in the
future may (so far as the Borrowers now foresee) materially
adversely affect, the rights of such holder thereof with respect
thereto. No other license or franchise is known by the Borrowers
to be necessary to the operations of the businesses of the
Borrowers as now conducted or proposed to be conducted.
SECTION 3.14 ERISA. No material employee benefit plan
established or maintained by either Borrower or any Subsidiary or
Affiliate of the Borrowers (including any multiemployer plan to
which either Borrower or any Affiliate of the Borrowers
contributes) which is subject to Part 3 of Subtitle B of Title I
of ERISA had a material accumulated funding deficiency (as such
term is defined in Section 302 of ERISA) as of the last day of
the most recent fiscal year of such plan ended prior to the date
hereof, or would have had an accumulated funding deficiency (as
so defined) on such day if such year were the first year of such
plan to which Part 3 of Subtitle B of Title I of ERISA applied,
and no material liability to the Pension Benefit Guaranty
Corporation, has been, or is expected by the Borrowers or any
Affiliate of the Borrowers to be, incurred with respect to any
such plan by the Borrowers or any Affiliate of the Borrowers.
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Neither Borrower is required to contribute to or is
contributing to a "Multiemployer Pension Plan" (as such term is
defined in the Multiemployer Pension Plan Amendments Act of
1980). Neither Borrower has any "withdrawal liability" (as also
defined in such Act) to any multiemployer pension plan.
SECTION 3.15 Governmental Consent. Neither the nature of
the Borrowers nor of their business or properties nor any
relationship between the Borrowers and any other Person, nor any
circumstance in connection with the Loan or the issuance and
delivery of the Note is such as to require any consent, approval
or other action by or any notice to or filing with any court or
administrative or governmental body (other than routine filings
after the date of any closing with the Securities and Exchange
Commission and/or State Blue Sky authorities) in connection with
the execution and delivery of this Agreement, the Loan or the
issuance and delivery of the Note or fulfillment of or compliance
with the terms and provisions hereof or of the Note.
SECTION 3.16 Holding Company Status. Neither Borrower is a
holding company, or a subsidiary or affiliate of a holding
company, or a public utility, within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or a public
utility within the meaning of the Federal Power Act, as amended.
SECTION 3.17 Investment Company Status. Neither Borrower
is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended, or an "investment adviser" within the
meaning of the Investment Advisers Act of 1940, as amended.
SECTION 3.18 Outstanding Debt. On the date of the Initial
Advance, the Borrowers and their Subsidiaries have no outstanding
Funded Liabilities or Current Liabilities, except as reflected in
the fiscal year end financial statements of the Borrowers and
their Subsidiaries referred to in Section 3.04 hereof and changes
in the ordinary course of business and matters that have been
disclosed to the Bank. There exists no default and, after giving
effect to the transactions contemplated in this Agreement, there
will exist no default under the provisions of any instrument
evidencing such Liabilities or of any agreement relating thereto.
SECTION 3.19 Consents and Approvals. No authorization,
license, consent, approval, or undertaking is required under any
applicable law in connection with the execution, delivery and
performance by the Borrowers of this Agreement, the Note, the
Security Documents or any of the other Loan Documents.
SECTION 3.20 Places of Business. The Places of Business
set forth in Exhibit "A" attached hereto are true and correct and
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set forth, whenever applicable, whether said Place of Business is
owned or leased by the Borrowers and, if leased, the name and
address of the Lessor.
SECTION 3.21 Priority of Security Interest. The Security
Interest is a first priority security interest and there will be
no other security interests or other encumbrances upon the
Collateral during the term of the Loan.
SECTION 3.22 Subsidiaries. The Subsidiaries of the
Borrowers as of the date of this Agreement are noted on Exhibit
"B".
ARTICLE FOUR
COVENANTS OF THE BORROWERS
SECTION 4.01 Affirmative Covenants. The Borrowers jointly
and severally covenant, for so long as any of the principal
amount of or interest on the Note is outstanding and unpaid or
any duty or obligation of the Borrowers or the Bank hereunder or
under any of the other Obligations remains unpaid or unperformed,
as follows:
(a) Accounting; Financial Statements; Etc. The Borrowers
will deliver or cause to be delivered to the Bank copies of each
of the following:
(i) as soon as practicable and in any event within
forty-five (45) days after the end of each quarter in each fiscal
year, internally generated financial statements of the Borrowers
and their Subsidiaries for the period from the beginning of the
current fiscal year to the end of such quarter, in reasonable
detail and certified by an authorized financial officer of the
Borrowers, subject to changes resulting from year-end
adjustments;
(ii) as soon as practicable and in any event within
ninety (90) days after the end of each fiscal year, an audited
consolidated profit and loss statement, reconciliation of surplus
statement, and source and application of funds statement of the
Borrowers and their Subsidiaries for such year, and an audited
consolidated balance sheet of the Borrowers and their
Subsidiaries as at the end of such year, setting forth in each
case in comparative form corresponding consolidated figures from
the preceding annual audit and certified to the Borrowers by
independent certified public accountants of recognized standing
selected by the Borrowers whose certificate shall be in scope and
substance satisfactory to the Bank;
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(iii) promptly upon transmission thereof, copies of
all such financial statements, proxy statements, notices, and
reports as it shall send to all stockholders and of all
registration statements (without exhibits) and all reports which
either Borrower is or may be required to file with the Securities
and Exchange Commission or any governmental body or agency
succeeding to the functions of such Commission;
(iv) promptly upon receipt thereof, a copy of each
other report submitted to the Borrower by independent accountants
in connection with any annual, interim or special audit made by
them of the books of the Borrowers;
(v) on a monthly basis, a Borrowing Base Certificate;
and
(vii) with reasonable promptness, information regarding
the hedging activities of the Borrowers and their Subsidiaries
including a summary of all futures long and short positions and
such other data and information as from time to time may be
required by the Bank.
Together with each delivery of financial statements required by
clause (ii) above, the Borrowers shall deliver to the Bank a
certificate of said accountants stating that, in making the audit
necessary to have the certification of such financial statements,
they have obtained no knowledge of an Event of Default or
Default, or, if any such Event of Default or Default exists,
specifying the nature and period of existence thereof. Such
accountants, however, shall not be liable to anyone by reason of
their failure to obtain knowledge of any such Event of Default or
Default which would not be disclosed in the course of an audit
conducted in accordance with GAAP. The Borrowers also covenant
that forthwith upon any officer of the Borrowers obtaining
knowledge of any Event of Default or Default under this Agreement
or any other obligation of the Borrowers, it shall deliver to the
Bank an Officer's Certificate specifying the nature thereof, the
period of existence thereof, and what action the Borrowers
proposes to take with respect thereto.
(b) Inspection. The Borrowers will permit the Bank to visit
and inspect any of the properties and places of business of the
Borrowers, including their books and records (and to make
extracts therefrom to the extent reasonably related to
credit-worthiness), and to discuss their affairs, finances and
accounts with their officers, all at such reasonable times and as
often as may reasonably be requested.
(c) Maintenance of Corporate Existences; Compliance with
Laws. Each Borrower shall at all times preserve and maintain in
full force and effect its corporate existence, powers, rights,
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licenses, permits and franchises in the jurisdiction of its
incorporation; continue to conduct and operate its business
substantially as conducted and operated during the present and
preceding fiscal year except as agreed to by the Bank; operate in
substantial compliance with all applicable laws, statutes,
regulations, certificates of authority and orders in respect to
the conduct of its business; and qualify and remain qualified as
a foreign corporation in each jurisdiction in which such
qualification is necessary or appropriate in view of its business
and operations.
(d) Notice of Default. The Borrowers shall immediately
notify the Bank in writing upon the happening, occurrence or
existence of any Event of Default or Default and shall provide
the Bank with such written notice, a detailed statement by a
responsible officer of the Borrowers of all relevant facts and
the action being taken or proposed to be taken by the Borrowers
with respect thereto.
(e) Maintenance of Properties. Each Borrower shall
maintain or cause to be maintained in good repair, working order
and condition all properties used in its business including, but
not limited to, any real property and all improvements located
thereon, and from time to time will make or cause to be made all
appropriate repairs, renewals, improvements and replacements
thereof so that the businesses carried on in connection therewith
may be properly conducted at all times. Neither Borrower will do
or permit any act or thing which might materially impair the
value or commit or permit any material waste of its properties or
any part thereof, or permit any unlawful occupation, business or
trade to be conducted on or from any of its properties. To the
extent either Borrower leases any of its Places of Business, it
shall maintain and keep current at all times all leases for said
Places of Business.
(f) Notice of Suit; Proceedings; Adverse Change. The
Borrowers shall promptly give the Bank notice in writing (a) of
all threatened or actual actions or suits (at law or in equity)
and of all threatened or actual investigations or proceedings by
or before any court, arbitrator or any governmental department,
commission, board, bureau, agency or other instrumentality,
state, federal or foreign, affecting the Borrowers or any
subsidiary or the rights or other properties of either Borrower
or any Subsidiary, (i) which involves potential liability of
either Borrower or any Subsidiary in an amount in excess of
$250,000.00 in any individual case or $250,000.00 in the
aggregate for all such cases, or (ii) which the Board of
Directors of either Borrower has reason to believe in good faith
is likely to materially and adversely affect the financial
condition of the Borrowers or to impair the right or ability of
the Borrowers to carry on their businesses as now conducted or to
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pay the Obligations or perform their duties under the Loan
Documents; (b) of any material adverse change in the condition
(financial or otherwise) of the Borrowers; and (c) of any seizure
or levy upon any material part of the properties of the Borrowers
under any process or by a receiver.
(g) Insurance. The Borrowers shall timely procure and
maintain and comply with such insurance and policies of insurance
(including without limitation public liability, property damage
and casualty business interruption) as may be required by law and
such other insurance, to such extent and against such hazards and
liabilities, as is customarily maintained by companies similarly
situated, and to furnish to the Bank upon its request evidence of
said insurance. In any event, the Borrowers shall all times
maintain at least the policies of insurance and the levels of
insurance coverage as are requested from time to time by the
Bank. The Bank shall be listed as "loss payee" or "mortgagee" on
all such policies of insurance relating to the Collateral and
certificates evidencing compliance with this paragraph 4.01(h)
shall be delivered to Bank prior to the Initial Advance Date and
from time to time thereafter upon the Bank's request.
(h) Debts and Taxes and Liabilities. Each Borrower shall
pay and discharge (i) all of its indebtedness and obligations in
accordance with their terms and before they shall become in
default, (ii) all taxes, assessments and governmental charges or
levies imposed upon it or upon its income and profits or against
its properties, prior to the date on which penalties attach
thereto, and (iii) all lawful claims which, if unpaid, might
become a lien or charge upon any of its properties; provided,
however, that the Borrowers shall not be required to pay any such
indebtedness, obligation, tax, assessment, charge, levy or claim
which is being contested in good faith by appropriate and lawful
proceedings diligently prosecuted and for which adequate reserves
(with respect to any material claims) have been set aside on
their books. Each Borrower shall also set aside and/or pay as
and when due all monies required to be set aside and/or paid by
any federal, state or local statute or agency in regard to
F.I.C.A., withholding, sales or excise or other similar taxes.
(i) Notification of Change of Name or Business Location.
The Borrowers shall notify the Bank of each change in the name of
the Borrowers and of each change of the location of the Principal
Place of Business and the office where the records of the
Borrowers are kept, and in such case, shall execute such
documents as the Bank may reasonably request to reflect said
change of name or change of location, as the case may be;
provided, however, the Principal Place of Business of the
Borrowers and the office where the records of the Borrowers are
kept may not be kept out of or removed from Polk County, Florida
without prior written notice to the Bank.
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(j) Notice of Adoption of Plan. As soon as possible and in
any event within thirty (30) days after either Borrower or any
Related Entity adopts a new Plan, the Borrowers or such Related
Entity shall notify the Bank of the adoption of the new Plan.
Adoption of a new Plan shall include the adoption of the new Plan
by either Borrower or such Related Entity as well as inclusion of
employees of either Borrower or such Related Entity under the
Plan of another corporation.
(k) Notice of Plan Events Termination and Litigation. As
soon as possible and in any event within thirty (30) days after
the Borrowers know or have reason to know that any Reportable
Event or a Prohibited Transaction with respect to any Plan has
occurred or that the Pension Benefit Guaranty Corporation or
either Borrower or any Related Entity has instituted or will
institute proceedings under ERISA to terminate a Plan, or a
partial termination of a Plan has or is alleged to have occurred,
or any litigation regarding a Plan or naming the trustee of a
Plan or either Borrower or any Related Entity with respect to a
Plan is threatened or instituted, the Borrowers will provide to
the Bank copies of the written statement of the chief financial
officer of the Borrowers setting forth details of such Reportable
Event, Prohibited Transaction, termination proceeding, partial
termination or litigation and the action being or proposed to be
taken with respect thereto, together with copies of the notice of
such Reportable Event or any other notices, applications or forms
submitted to the Pension Benefit Guaranty Corporation, Internal
Revenue Service or the United States Department of Labor, and
copies of any notices or correspondence received from the Pension
Benefit Guaranty Corporation, Internal Revenue Service or the
United States Department of Labor, and copies of any pleadings,
notices or other documents relating to such litigation.
(l) Plan Annual Reports. Promptly after the filing thereof
with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation, the Borrowers will provide to the Bank copies of
each annual report and annual premium filing form which is filed
with respect to each Plan for each plan year, including (i) a
statement of assets and liabilities of such Plan as of the end of
such plan year and statements of changes in fund balance and in
financial position, or a statement of changes in net assets
available for plan benefits, for such plan year, certified by the
trustee of the Plan or the independent certified public
accountants for such Plan and (ii) if required by law or
applicable regulations, an actuarial statement of such Plan
applicable to such plan year, certified by the actuary for the
Plan.
(m) Further Assurances; Additional Collateral Documents.
The Borrowers will, at their expense, execute, acknowledge and
deliver and cause to be executed, acknowledged and delivered, to
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the Bank all such instruments, including, without limitation,
financing statements, security agreements, assumptions and
continuation statements, deliver to the Bank all such legal
opinions, and take all such other action as the Bank may from
time to time request for the purpose of further assuring to the
Bank the security for the Obligations provided for, or intended
to be provided for, in this Agreement and the other Loan
Documents and to confirm the Obligations. Further, to the extent
either Borrower acquires from time to time any additional
property within the definition of the term Collateral, such
Borrower shall immediately execute and deliver to the Bank such
documents as are necessary to grant the Bank a valid and first
priority lien or security interest in such property.
(n) Subsidiaries. The Borrower shall give the Bank prompt
written notice of the organization of a Subsidiary, as well as
such other information in respect thereof as the Bank may
reasonably request.
(o) Use of Proceeds. The proceeds of the Loan shall be
used for general working capital purposes of the Borrower.
(p) Subordination of Loan; Etc. All loans or fees owed to
Affiliates of the Borrowers shall, at all times, be subordinate
to the Loan and the Borrowers shall cause its Affiliates from
time to time, to execute and deliver to the Bank subordination
agreements in form and content satisfactory to the Bank;
provided, however, so long as no Default exists or has occurred,
the Borrowers may pay (but not prepay) current principal and
interest on such loans to such Affiliates.
(q) Current Ratio. At all times during the term of this
Agreement, the Borrowers' Current Ratio shall equal or exceed
1.5:1.0.
(r) Cash Flow Before Debt Service to Debt Service Ratio.
As at the end of each fiscal year of the Borrowers during the
term of this Agreement, the ratio of the Borrowers' Cash Flow
Before Debt Service to its Debt Service shall be 1.25:1,
determined on a consolidated basis.
(s) Debt to Net Worth Ratio. At all times during the term
of this Agreement, the ratio of Borrowers' Total Liabilities to
Net Worth shall not exceed 1:1, determined on a consolidated
basis.
(t) Minimum Net Worth. At all times during the term of
this Agreement, the Net Worth of the Borrowers shall equal or
exceed $82,000,000.00.
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SECTION 4.02 Negative Covenants. Each Borrower covenants,
for so long as any of the principal amount of or interest on the
Note is outstanding and unpaid or any duty or obligation of
either Borrower or the Bank hereunder or under any of the other
Obligations remains unpaid or unperformed, as follows:
(a) Other Agreements. Neither Borrower will enter into any
arrangements, contractual or otherwise, which would materially
and adversely affect its duties or the rights of the Bank under
the Loan Documents or which is inconsistent with or limits or
abrogates the Loan Documents.
(b) Sale of Assets. Neither Borrower will sell, lease,
assign, transfer or otherwise dispose of all or a substantial
(being defined as 25% or more) part of its assets or properties,
tangible or intangible, to any Person without the prior written
consent of the Bank except for the sale of Inventory and Farm
Products in the ordinary course of business.
(c) Merger; Consolidation; Dissolution; Etc. Neither
Borrower will consolidate with or merge into any other
corporation, or permit another corporation to merge into it
(unless, in the case of a merger or consolidation involving
either Borrower, a Borrower is the surviving corporation), or
dissolve or take or omit to take any action which would result in
its dissolution, or acquire all or substantially all the
properties or assets of any other Person if the value of such
assets or the nature of such assets is material to the Borrowers'
financial condition, or enter into any arrangement, directly or
indirectly, with any Person whereby either Borrower shall sell or
transfer any property, real or personal, whether now owned or
hereafter acquired, and thereafter rent or lease such property or
other property which such Borrower intends to use for
substantially the same purpose or purposes as the property being
sold or transferred without the prior written consent of the
Bank.
(d) Sale of Collateral; Liens on Collateral. Neither
Borrower will sell, assign or discount any of the Collateral with
or without recourse, except for the collection or disposition of
Accounts or the sale of Inventory or Farm Products in the
ordinary course of business; or borrow from anyone on the
security of or create, incur or suffer to exist any Lien on any
of the Collateral or permit any Financing Statement (other than
the Bank's Financing Statement) to be on file with respect
thereto.
(e) Plan Liabilities. Neither Borrower nor any Related
Entity will permit the aggregate present value of accrued
benefits of any Plan, computed in accordance with actuarial
principles and assumptions applied on a uniform and consistent
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basis by an enrolled actuary of recognized standing acceptable to
the Bank, to exceed the aggregate value of assets of the Plans,
computed on a fair market value basis, or permit the aggregate
present value of vested benefits of the Plans, computed in
accordance with actuarial principles and assumptions applied on a
uniform and consistent basis by an enrolled actuary of recognized
standing acceptable to the Bank, to exceed the aggregate value of
assets of the Plans, computed on a fair market value basis.
(f) Fiscal Year. Neither Borrower will change its fiscal
year from a year ending September 30 without reasonable notice to
the Bank.
(g) Changes in Business. The primary business of each of
the Borrowers will remain the same as the business presently
conducted by it on the date of this Agreement.
(h) Prohibition Against Change in Majority Ownership:
(i) At all times during the term of this Agreement,
Ben Hill Griffin, Inc. and/or its Affiliates shall (i) own more
than fifty percent (50%) of the issued and outstanding stock of
Orange-Co, Inc. and (ii) possess the power to direct or cause the
direction of the management and policies of Orange-Co, Inc., and
(ii) At all times during the term of this Agreement,
Orange-Co of Florida, Inc. shall be an Affiliate of Orange-Co,
Inc.
ARTICLE FIVE
CONDITIONS OF LENDING
The obligations of the Bank to lend hereunder and advance any
monies under the Note and to make any Advance under Section 2.04
of this Agreement from time to time are subject to the following
conditions precedent:
SECTION 5.01 Representations and Warranties. The
representations and warranties set forth in the Loan Documents
are true and correct on and as of the date hereof, and on the
date of each Advance hereunder.
SECTION 5.02 No Default. On the date hereof and on the date
of each Advance, the Borrowers shall be in compliance with all
the terms and provisions set forth in the Loan Documents on their
part to be observed or performed, and no Event of Default or
Default, shall have occurred and be continuing at such time.
SECTION 5.03 Additional Working Capital Note. To the extent
the principal amount then outstanding under the Loan together
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with the Advance requested would exceed the face amount of the
Working Capital Note then outstanding (which collectively
includes all notes executed by the Borrowers in favor of the Bank
to evidence the Working Capital Loan), the Borrowers agree to
then execute and deliver to the Bank the additional note or notes
of the Borrowers in such face amount as is necessary so that the
total principal amount outstanding on the Working Capital Loan
after the making of said Advance shall not exceed the face amount
of the Working Capital Note (which collectively includes all
notes executed by the Borrowers in favor of the Bank concerning
the Working Capital Loan and will include the note or notes
described in this Section). At the time of the execution of said
additional note or notes, the Borrowers shall pay to the Bank all
documentary and other taxes required under applicable law.
SECTION 5.04 Officer's Certificate. Substantially
simultaneously with the execution hereof, and on each quarterly
anniversary date hereunder and on such other dates as the Bank
may request, the Borrowers shall deliver to the Bank an Officer's
Certificate, dated as of the date given, confirming compliance
with all of the conditions of this Agreement. Any request for an
Advance under Section 2.04 shall be deemed to be the certificate
hereunder and said request shall constitute a certification as to
the matters set forth in this Section 5.04.
SECTION 5.05 Opinion of Borrowers' Counsel. Prior to the
initial Advance, the Bank shall have received from counsel for
the Borrowers, a favorable opinion in form acceptable to the
Bank.
SECTION 5.06 Loan Documents. The Borrowers shall have
delivered or caused to be delivered to the Bank all the Loan
Documents, in form and substance satisfactory to the Bank, as the
Bank may request and all of the Loan Documents are in full force
and effect.
SECTION 5.07 Supporting Documents. On or prior to the date
hereof, the Bank shall have received the following supporting
documents, all of which shall be satisfactory in form and
substance to the Bank:
(a) a certificate or certificates, dated as of the date
hereof, of (i) the Secretary or any Assistant Secretary of each
Borrower certifying (A) that attached thereto is a true and
correct copy of certain resolutions adopted by the Board of
Directors of the Borrower authorizing the execution, delivery and
performance of the Loan Documents and the performance of the
obligations of the Borrower and the borrowings thereunder, which
resolutions have not been altered or amended in any respect, and
remain in full force and effect at all times since their
adoption; (B) that attached thereto is a true and correct copy of
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the Certificate of Incorporation of the Borrower, and that such
Certificate of Incorporation has not been altered or amended, and
no other charter documents have been filed, since the date of the
filing of the last amendment thereto or other charter document as
indicated on the certificate of the Secretary of State of the
State of Florida or other appropriate public official in any
other state of incorporation attached thereto: (C) that attached
thereto is a true and correct copy of the Bylaws of the Borrower
and that such Bylaws are in full force and effect and no
amendment thereto is pending which would in any way affect the
ability of the Borrower to enter into and perform the Obligations
contemplated hereby; and (D) the incumbency and signatures of the
officers of the Borrower signing the Loan Documents and any
report, certificate, letter or other instrument or document
furnished by the Borrower in connection therewith, and (ii)
another authorized officer of the Borrower certifying the
incumbency and signature of the Secretary or Assistant Secretary
of the Borrower; and
(b) a certificate or certificates of the Florida Secretary
of State or other appropriate public official in any other state
of incorporation, dated as of a recent date, as to the good
standing of the Borrowers.
SECTION 5.08 Loan Permitted by Applicable Laws. The Loan
from the Bank to the Borrowers on the terms and conditions herein
provided (including the use of the proceeds of the Loan by the
Borrowers) shall not violate any applicable law or governmental
regulation (including, without limitation, Regulations G, T and X
of the Board of Governors of the Federal Reserve System) and
shall not subject the Bank to any tax, penalty, liability or
other onerous condition under or pursuant to any applicable law
or governmental regulation, and the Bank shall have received such
certificates or other evidence as it may request to establish
compliance with this condition.
SECTION 5.09 Proceedings. All corporate and other
proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incident
thereto shall be satisfactory in substance and form to the Bank,
and the Bank shall have received all such counterpart originals
or certified or other copies of such documents as the Bank may
reasonably request.
SECTION 5.10 Subsequent Opinions. If, at the time of the
making of any Subsequent Advance, the Bank so requires as a
condition precedent to the making of any such Subsequent Advance,
the Bank shall have received from counsel for the Borrowers a
favorable opinion in form and substance satisfactory to the Bank
and covering such matters incident to such Subsequent Advance and
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the transactions contemplated by this Agreement as the Bank shall
reasonably specify.
ARTICLE SIX
EVENTS OF DEFAULT
SECTION 6.01 Events of Default. The following each and all
are Events of Default hereunder:
(a) Monetary Default. If a default shall occur in any
payment of the principal of or interest on the Loan when and as
the same shall become due and payable, whether on demand, at
maturity, by acceleration or otherwise; or
(b) Non-Monetary Default. If either Borrower shall default
in the performance of or compliance with any term or covenant
contained in one or more of the Loan Documents other than a term
or covenant a default in the performance of which or non
compliance with which is elsewhere specifically dealt with under
this Article Six; or
(c) Third Party Default. If either Borrower shall default
in the performance of any agreement with any Person other than
the Bank with respect to any Liabilities of such Borrower if the
effect of such default is to accelerate the maturity of such
liabilities or at maturity (giving effect to any applicable grace
periods) such liabilities shall not be paid as and when due and
payable unless such default is being contested in good faith by
such Borrower; or
(d) False Representation. If any representation or
warranty made in writing by or on behalf of either Borrower or in
any other Loan Document shall prove to have been false or
incorrect in any material respect on the date as of which made or
reaffirmed; or
(e) Bankruptcy or Insolvency. If either Borrower shall
admit in writing its inability, or be generally unable, to pay
its debts as they become due or shall make an assignment for the
benefit of creditors, file a petition in bankruptcy, petition or
apply to any tribunal for the appointment of a custodian,
receiver or trustee for such Borrower or a substantial part of
its assets, or shall commence any proceeding under any
bankruptcy, reorganization, arrangement, dissolution or
liquidation law or statute of any jurisdiction, whether now or
hereafter in effect, or if there shall have been filed any such
petition or application, or any such proceeding shall have been
commenced against either Borrower, in which an order for relief
is entered or which remains undismissed for a period of sixty
(60) days or more, or either Borrower by any act or omission
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shall indicate its consent to, approval of or acquiescence in any
such petition, application, or proceeding or order for relief or
the appointment of a custodian, receiver or any trustee for such
Borrower or any substantial part of any of its properties, or
shall suffer any such custodianship, receivership or trusteeship
to continue undischarged for a period of sixty (60) days or more;
or
(f) Default Under Loan Documents. If a Default occurs under
any one or more of the Loan Documents; or
(g) Dissolution. If any order, judgment, or decree is
entered in any proceedings against either Borrower decreeing the
dissolution of such Borrower and such order, judgment, or decree
remains unstayed and in effect for more than sixty (60) days; or
(h) Fraudulent Conveyance. If either Borrower shall have
concealed, removed, or permitted to be concealed or removed, any
part of its properties, with intent to hinder, delay or defraud
its creditors or any of them, or made or suffered a transfer of
any of its properties which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law, or shall have
made any transfer of its properties to or for the benefit of a
creditor at a time when other creditors similarly situated have
not been paid, or shall have suffered or permitted, while
insolvent, any creditor to obtain a lien upon any of its
properties through legal proceedings or distraint which is not
vacated within thirty (30) days from the date thereof; or
(i) Final Judgment. If a final judgment for the payment of
money in excess of an aggregate of $250,000.00 shall be rendered
against either Borrower, and the same shall remain undischarged
for a period of thirty (30) consecutive days during which
execution shall not be effectively stayed; or
(j) Reportable Event. If a Reportable Event shall have
occurred in connection with any Plan maintained by either
Borrower or any Related Entity.
ARTICLE SEVEN
RIGHTS UPON DEFAULT
Upon the occurrence and its continuing of any Event of
Default, the Bank shall have and may exercise any or all of the
rights set forth herein; provided, however, the Bank shall be
under no duty or obligation to do so:
SECTION 7.01 Acceleration. To declare the indebtedness
evidenced by the Note and all other Obligations to be forthwith
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due and payable, whereupon the Note and all other Obligations
shall become forthwith due and payable, both as to principal and
interest, without presentment, demand, protest or any other
notice or grace period of any kind, all of which are hereby
expressly waived, anything contained herein or in the Note or in
such other Obligations to the contrary notwithstanding and, upon
such acceleration, the unpaid principal balance and accrued
interest upon the Note shall from and after such date of
acceleration bear interest at the Default Rate.
SECTION 7.02 Right of Setoff. To exercise its right of
setoff as permitted under Section 2.07.
SECTION 7.03 Other Rights. To exercise such other rights as
may be permitted under any of the Loan Documents.
SECTION 7.04 Uniform Commercial Code. To exercise from time
to time any and all rights and remedies of a secured creditor
under the UCC as in effect from time to time in the State of
Florida and any and all rights and remedies available to it under
any other applicable law.
ARTICLE EIGHT
MISCELLANEOUS
SECTION 8.01 No Waiver; Cumulative Remedies. No failure or
delay on the part of the Bank in exercising any right, power or
remedy hereunder, or under the Note or the other Loan Documents
shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other
right, power or remedy hereunder or thereunder. The remedies
herein and therein provided are cumulative and not exclusive of
any remedies provided by law or in equity.
SECTION 8.02 Amendments; Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, the
Note or the other Loan Documents, nor consent to any departure by
either Borrower therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Bank, and then
such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 8.03 Addresses for Notices; Etc. All notices,
requests, demands and other communications provided for hereunder
shall be in writing (including telex or telegraphic
communications) and shall be sufficient if mailed, telexed or
telegraphed or delivered to the applicable party at the address
indicated below:
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If to the Borrowers: Orange-Co, Inc. and
Orange-Co of Florida, Inc.
2020 Highway 17 South
Bartow, Florida 33830
Attention: Mr. Dale A. Bruwelheide
Vice President and
Chief Financial Officer
If to the Bank: Sun Bank, National Association
200 South Orange Avenue
Orlando, Florida 32801
Attention: Ms. Molly A. Humes
Vice President
or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party
complying as to the delivery with the terms of this Section.
Except as otherwise expressly provided in this Agreement, all
such notices, requests, demands and other communications shall,
when mailed, telexed or telegraphed, be effective when deposited
in the mails (postage paid), sent over a telex owned or operated
by a party hereto with an answerback response set forth on the
sender's copy of the document or delivered to the Borrower
addressed as aforesaid or delivered to the other party and at the
address set forth above.
SECTION 8.04 Applicable Law. This Agreement, and each of
the Loan Documents and transactions contemplated herein (unless
specifically stipulated to the contrary in such document) shall
be governed by and interpreted in accordance with the laws of the
State of Florida.
SECTION 8.05 Survival of Representations and Warranties.
All representations, warranties, covenants and agreements
contained herein or made in writing by the Borrowers in
connection herewith shall survive the execution and delivery of
this Agreement, the Note and the other Loan Documents and be true
and correct during the term of the Loan.
SECTION 8.06 Time of the Essence. Time is of the essence of
this Agreement, the Note and the other Loan Documents.
SECTION 8.07 Headings. The headings in this Agreement are
intended to be for convenience of reference only, and shall not
define or limit the scope, extent or intent or otherwise affect
the meaning of any portion hereof.
SECTION 8.08 Severability. In case any one or more of the
provisions contained in this Agreement, the Note or the other
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Loan Documents shall for any reason be held to be invalid,
illegal or unenforceable in any respect, the same shall not
affect any other provision of this Agreement, the Note or the
other Loan Documents, but this Agreement, the Note and the other
Loan Documents shall be construed as if such invalid or illegal
or unenforceable provision had never been contained therein.
Provided, however, in the event said matter would adversely
affect the rights of the Bank under any or all of the Loan
Documents, the same shall be an Event of Default.
SECTION 8.09 Counterparts. This Agreement may be executed
in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
SECTION 8.10 Conflict. In the event any conflict arises
between the terms of this Agreement and the terms of any other
Loan Document, the Bank shall have the option of selecting which
conditions shall govern the loan relationship evidence by this
Agreement and, if the Bank does not so indicate, the terms of
this Agreement shall govern in all instances of such conflict.
SECTION 8.11 Term. The term of this Agreement shall be for
such period of time until the Loan and the Note have been repaid
in full, and all of the other Obligations have been paid to the
Bank in full.
SECTION 8.12 Expenses. The Borrowers agree, jointly and
severally, whether or not the transactions hereby contemplated
shall be consummated, to pay, and save the Bank harmless against
liability for the payment of, all out-of-pocket expenses arising
in connection with this transaction, all taxes, together in each
case with interest and penalties, if any, which may be payable in
respect of the execution, delivery and performance of this
Agreement or the execution, delivery, and performance of the Note
issued under or pursuant to this Agreement (excepting only any
tax on or measured by net income of the Bank determined
substantially in the same manner, other than the rate of tax, as
net income is presently determined under the IRS Code), the
reasonable legal fees and expenses (whether incurred at trial, in
any bankruptcy or appellate proceeding or otherwise) of counsel
to the Bank in connection with negotiation, preparation and
enforcement of this Agreement, the Note, the Security Agreements
or any of the other Loan Documents.
SECTION 8.13 Successors and Assigns. All covenants and
agreements in this Agreement contained by or on behalf of either
of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether
so expressed or not; provided, however, this clause shall not by
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itself authorize any delegation of duties by the Borrowers or any
other assignment which may be prohibited by the terms and
conditions of this Agreement.
SECTION 8.14 No Third Party Beneficiaries. The parties
intend that this Agreement is solely for their benefit and no
person not a party hereto shall have any rights or privileges
under this Agreement whatsoever either as the third party
beneficiary or otherwise.
SECTION 8.15. WAIVER OF JURY TRIAL. SUN BANK, NATIONAL
ASSOCIATION AND EACH OF THE BORROWERS HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING
OUT OF, UNDER OR IN CONJUNCTION WITH THIS AGREEMENT, AND ANY
OTHER AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH OR THEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR SUN
BANK, NATIONAL ASSOCIATION, MAKING THE LOAN.
SECTION 8.16 Entire Agreement. Except as otherwise
expressly provided, this Agreement and the other Loan Documents
embody the entire agreement and understanding between the parties
hereto and supersede all prior agreements and understandings
relating to the subject matter hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed, sealed and delivered, as
applicable, by their duly authorized officers on the day and year
first above written.
BORROWERS:
ORANGE-CO, INC., a Florida corporation
By: /s/ Dale A. Bruwelheide
------------------------------------
Dale A. Bruwelheide, Vice President
ATTEST:
/s/ John R. Alexander, Secretary
________________________________
John R. Alexander, Secretary
(CORPORATE SEAL)
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ORANGE-CO OF FLORIDA, INC., a Florida corporation
By: /s/ Dale A. Bruwelheide
-----------------------------------
Dale A. Bruwelheide, Vice President
ATTEST:
/s/ John R. Alexander, Secrerary
- --------------------------------
John R. Alexander, Secretary
(CORPORATE SEAL)
BANK:
SUN BANK, NATIONAL ASSOCIATION
By: /s/ Molly A. Humes
------------------------------
Molly A. Humes, Vice President
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EXHIBIT 10.15
THERMAL ENERGY SALES AGREEMENT
THIS THERMAL ENERGY SALES AGREEMENT (this "Agreement"), is
made and entered into as of the 27th day of May, 1993, by and
between ORANGE-CO OF FLORIDA, INC., a Florida corporation
("OCF"), and AP COGEN, LTD., a Florida limited partnership
("APC"). Capitalized terms used herein but not otherwise defined
herein have the meanings set forth in Article 1.
W I T N E S S E T H
WHEREAS, OCF owns and operates a citrus processing facility
located at 2020 U.S. Highway 17 South, in Bartow, Florida (the
"OCF Plant"), which utilizes thermal energy for industrial
purposes;
WHEREAS, APC plans to construct, own, and operate a combined
cycle facility on the APC Plant Site for the cogeneration of
thermal energy and electricity (the "Facility");
WHEREAS, APC intends for the Facility to be a qualifying
cogeneration facility under the laws and regulations promulgated
under the Public Utility Regulatory Policies Act of 1978, as such
laws, regulations and Act may be further amended or supplemented
from time to time, or any successor to such laws, regulations or
Act (a "Qualifying Facility"), which will require that the
Facility make available useful thermal energy equal to a
specified percentage of its total energy output and that such
thermal energy be used in accordance with certain specified
efficiencies for an industrial or commercial process or for a
heating or cooling application;
WHEREAS, APC and Florida Power Corporation, a Florida
corporation ("FPC"), are parties to a Dispatchable Contract for
the Purchase of Firm Capacity and Energy from a Qualifying
Facility, effective November 19, 1991, as amended from time to
time (the "Power Purchase Agreement"), for the sale and purchase
of a certain portion of the capacity and electric power output
from the Facility; and
WHEREAS, APC desires to sell and OCF desires to purchase, in
each case on the basis of the terms and provisions of this
Agreement, thermal energy generated by the Facility for use at
the OCF Plant;
NOW THEREFORE, in consideration of the covenants and
conditions hereinafter set forth, OCF and APC hereby agree as
follows:
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ARTICLE 1.
DEFINITIONS
SECTION 1.1 Certain Definitions. Unless the context
shall otherwise require, each of the following terms shall have,
for the purposes of this Agreement, the meaning set forth below
for such term:
AAA has the meaning given in Section 8.3.
Affiliate has the meaning ascribed thereto in Rule 405
promulgated under the Securities Act of 1933, as amended from
time to time.
Agreement has the meaning given in the first paragraph of
this Agreement.
AIC means the average FPC Inventory Chargeout Rate for a
specific year.
Annual Minimum Obligation has the meaning given in Section 3.1(a).
APC has the meaning given in the first paragraph of this Agreement.
APC Plant Site means the parcel of land described in Exhibit A.
Business Day means any Day on which commercial banks are not
authorized or required to close in Florida.
Calendar Year means any twelve (12) month period commencing
on January 1 and ending the following December 31.
Casualty means any destruction of, loss of, loss of the use
of, or damage to the OCF Plant resulting from any human action,
act of God, fire, explosion, earthquake, accident, or the
elements, whether or not covered by insurance, and whether or not
caused by default or negligence of either party, or their
respective employees, agents, contractors or visitors.
Condensate means Steam condensate which satisfies the
specifications in Exhibit B.
Condensate Transfer Point has the meaning given in Section 3.9.
Consumer Price Index means the Producer Price Index
applicable for the Tampa-St. Petersburg Metropolitan Area, or any
successor to such Index.
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Day means any twenty four (24) hour period commencing at
12:00 midnight, including Saturdays, Sundays and holidays except
that, in the event that a financial obligation falls due on a
Saturday, Sunday or a legal holiday in the State of Florida, the
obligation shall be deemed due on the next Business Day.
Dispatchable has the meaning given in the Power Purchase Agreement.
Facility has the meaning given in the Recitals to this Agreement.
FERC means the Federal Energy Regulatory Commission, or any
successor or replacement thereto.
Force Majeure has the meaning given in Section 6.1.
FPC has the meaning given in the Recitals to this Agreement.
FPC Inventory Chargeout Rate has the meaning given in Section 3.11(a).
FPC Payment Statement has the meaning given in Section 3.11(b).
Heat Transfer Point has the meaning given in Section 3.9.
Material Interruption means any interruption in the delivery
of Steam from the Facility in excess of one (1) hour that will
materially adversely affect OCF's operations.
Maximum Delivery Obligation has the meaning given in Section 3.2.
Natural Disaster Force Majeure has the meaning given in Section 6.4.
OCF has the meaning given in the first paragraph of this Agreement.
OCF Boilers means the boilers located at the OCF Plant which
are used by OCF to produce steam.
OCF Plant has the meaning given in the Recitals to this Agreement.
Peak Hours means (i) those hours each Day that are deemed to
be "On-Peak Hours" under the Power Purchase Agreement, and (ii)
any other time period, outside such "On-Peak Hours," that APC
produces and delivers electricity to FPC or any other customer.
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Person means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other
entity of whatever nature.
Power Purchase Agreement has the meaning given in the Recitals
to this Agreement.
Project Lender means any bank, financial institution or
other Person providing any financing for the acquisition,
development, construction, operation, modification or repair of
the Facility, including, without limitation, any subsequent
transferee of any rights of any such bank, financial institution
or other Person.
Purchaser Event of Default has the meaning given in Section 4.1.
Qualifying Facility has the meaning given in the Recitals to
this Agreement.
Seller Event of Default has the meaning given in Section 4.2.
Standby Boilers means a packaged boiler or boilers, to be
located at the APC Plant Site, with an aggregate rated Steam
generation capacity upon installation of a minimum of seventy
thousand (70,000) pounds per hour measured at the Heat Transfer Point.
Steam means the steam delivered to OCF by APC which, after
the Steam Commencement Date, shall satisfy the specifications for
steam in Exhibit C.
Steam Commencement Date means the date when APC notifies OCF
that APC is prepared to commence delivery of regular quantities of Steam.
Steam Cost has the meaning given in Section 3.11.
Substantial Taking means a taking of all or a substantial
part of the OCF Plant, as a result of the exercise of the right
of condemnation or eminent domain, including without limitation,
any inverse condemnation proceeding or conveyance in lieu of or
in anticipation of the exercise of any right of condemnation or
eminent domain.
Term has the meaning given in Section 2.1.
Termination Date has the meaning given in Section 5.2(a).
Termination Notice has the meaning given in Section 5.2(a).
SECTION 1.2 References to this Agreement. Any reference
herein to this Agreement shall be deemed to be a reference to
this Agreement as amended, modified and supplemented from time to
time in conformity with the provisions of Section 10.5.
References to Articles, Sections, Paragraphs, Clauses, Exhibits,
Appendices and Schedules without further reference are to
Articles, Sections, Paragraphs, Clauses, Exhibits, Appendices or
Schedules attached hereto
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and are incorporated herein and made a part hereof. References
in this Agreement to "hereby," "herein," "hereinafter,"
"hereinabove," hereinbelow," "hereof," "hereunder," or words of
similar import shall be to this Agreement in its entirety and not
only to the particular Article or Section in which such reference
appears.
SECTION 1.3 Articles and Sections. This Agreement, for
convenience only, has been divided into Articles and Sections and
it is understood that the rights, powers, privileges, duties, and
other legal relations of the parties hereto shall be determined
from this Agreement as an entirety and without regard to the
aforesaid division into Articles and Sections and without regard
to headings affixed to such Articles or Sections.
SECTION 1.4 Number and Gender. Whenever the context
requires, reference herein made to the single number shall be
understood to include the plural and likewise the plural shall be
understood to include the singular. Words denoting sex shall be
construed to include the masculine, feminine, and neuter, when
such construction is appropriate, and specific enumeration shall
not exclude the general, but shall be construed as cumulative.
Definitions of terms defined in the singular or plural shall be
equally applicable to the plural or singular, as the case may be.
SECTION 1.5 Participation in Preparation of Agreement.
The parties acknowledge and agree that each has participated in
the drafting of this Agreement.
ARTICLE 2.
TERM
SECTION 2.1 Term. This Agreement shall be binding as of
the date hereinabove written. The term of this Agreement shall
begin on the Steam Commencement Date and shall continue to
December 31, 2025, unless sooner terminated in the manner
provided herein (the "Term"). Notwithstanding the foregoing, the
Term shall be automatically extended on a day-for-day basis so
that the Term runs concurrently with the Power Purchase
Agreement, or any successor or replacement thereto, or any
additional agreement that APC may enter into to sell electricity
produced at the Facility; provided, however, in all events, the
Term shall expire no later than December 31, 2027, unless
extended by mutual agreement of the parties. Promptly following
the Steam Commencement Date, the parties shall enter into a
written stipulation of the Steam Commencement Date.
SECTION 2.2 APC Conditions Precedent.
(a) The obligations of APC under this Agreement are
expressly conditioned upon the occurrence of all of the following:
(i) FERC certifies the Facility as a
Qualifying Facility;
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(ii) APC obtains all federal, state and local
permits, certificates, approvals or consents which APC, in its
sole discretion, deems necessary to construct and operate the Facility;
(iii) The execution of a contract or, if
applicable, contracts, by APC relating to the purchase and
transportation of natural gas for the Facility with a supplier
and transporter of APC's choice upon terms and conditions
satisfactory to APC in its sole discretion, with all permits,
certificates, approvals or consents of any governmental authority
necessary for the performance of said contract(s) having been
obtained on terms acceptable to APC, in its sole discretion; and
(iv) APC acquires the APC Plant Site, on
terms and conditions satisfactory to APC in its sole discretion; and
(v) APC obtains adequate financing for the
cost of acquiring, constructing and installing the Facility, upon
terms and conditions satisfactory to APC in its sole discretion.
(b) APC shall diligently pursue the satisfaction of
the foregoing conditions. If any of the conditions are not
satisfied on or before June 30, 1996, unless such date is
extended by APC, APC thereafter may terminate this Agreement
without any further obligation of either party to the other hereunder.
ARTICLE 3.
MINIMUM AND MAXIMUM PURCHASE OBLIGATIONS;
STEAM OBLIGATIONS; PRICING
SECTION 3.1 Minimum Obligations.
(a) In each Calendar Year during the Term, OCF shall
have the obligation (the "Annual Minimum Obligation") to take and
pay for ninety-one million (91,000,000) pounds of Steam;
provided, however, only Steam delivered by APC to OCF during Peak
Hours during the period from January 1 through, and including,
May 31, and November 15 through, and including, December 31 of
each Calendar Year may be used to satisfy the Annual Minimum
Obligation; provided, further, if OCF processes citrus products
outside such period, any Steam delivered by APC to OCF during
Peak Hours outside of such period may be used to satisfy the
Annual Minimum Obligation. APC shall have Steam available for
delivery during at least thirty one hundred and sixty eight
(3168) Peak Hours during the period from January 1 through, and
including, May 31, and November 15 through, and including,
December 31 of each Calendar Year; provided, however, if OCF
processes citrus products outside such period, APC may satisfy
such obligation to have Steam available for delivery to OCF by
having Steam available for delivery to
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OCF during the Days,
outside of such period, that OCF is processing citrus products.
For purposes of this Section 3.1(a), APC shall be deemed to have
made Steam available for delivery to OCF during all periods when:
(i) the OCF Plant is shutdown or unable or
unwilling to accept Steam at a rate of at least ten thousand
(10,000) pounds an hour, regardless of whether APC is able to
deliver Steam to the OCF Plant during such period;
(ii) APC is unable to produce and/or deliver
Steam as a result of (A) OCF's failure to perform its obligations
under this Agreement, or (B) the negligence, gross negligence, or
willful misconduct of OCF or its agents, contractors or
employees; or
(iii) either party is unable to perform
its obligations under this Agreement due to an event of Force
Majeure.
If APC fails to satisfy such thirty one hundred sixty eight
(3168) hour obligation, APC's sole liability (except for any
liability that may occur under Section 7.3) shall be that the
Annual Minimum Obligation shall be reduced in accordance with the
following formula:
AAM = A x 91,000,000
----
3168
WHERE
AAM = The Annual Minimum Obligation for the Calendar Year during
which APC fails to satisfy the thirty one hundred sixty
eight (3168) Peak Hour delivery obligation.
A = The number of Peak Hours that APC is deemed to have made
Steam available for delivery to the OCF Plant during
such Calendar Year in accordance with this Section 3.1(a).
During the Calendar Year in which the Steam Commencement
Date occurs, the Annual Minimum Obligation shall be reduced to
the amount determined by the following formula:
X = A x (B/C)
WHERE
X = The Annual Minimum Obligation for the Calendar Year in
which the Steam Commencement Date occurs.
A = Ninety-One Million (91,000,000) pounds of Steam.
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B = The number of Days after the Steam Commencement Date that
OCF uses steam (either from the OCF Boilers, from APC,
or otherwise) at the OCF Plant.
C = The number of Days during the Calendar Year that OCF
uses steam (either from the OCF Boilers, from APC, or
otherwise) at the OCF Plant.
(b) In order to assure compliance with the Annual
Minimum Obligation and to facilitate the maintenance of the
Facility as a Qualifying Facility, the parties hereto agree to
meet at least quarterly to discuss OCF's Steam needs and APC's
requirements to maintain its status as a Qualifying Facility. If
APC is not able to maintain its status as a Qualifying Facility
even if OCF is in compliance with the requirements of Section
3.1, then should APC elect to install an additional system
requiring Steam at the OCF Plant because it is necessary in order
for the Facility to regain or to maintain its status as a
Qualifying Facility, then OCF agrees to cooperate fully with APC
in connection with: (i) providing data and other information
required by APC for the design and installation of such system
and any required interconnection facilities and any related
modifications to the Facility or the OCF Plant; (ii) providing
data and other assistance required by APC for the procurement of
all necessary governmental approvals for the System; and (iii)
providing the required space for such system and granting any
necessary easements and rights of way to install and to operate
such system. If APC elects to install the system, APC shall
provide OCF with written notice of its determination to install
the system. The system shall be designed, purchased, installed
and interconnected with the OCF Plant and the Facility at APC's
sole cost. APC shall only be required to install a system that
is sufficient in output to enable the Facility to regain or to
maintain its status as a Qualifying Facility. Such systems may
include a) "citrus" towers; b) pasteurizers; c) absorption
refrigeration units and d) waste heat evaporators. In addition,
all Steam required to operate such additional system(s) shall be
provided at no cost to OCF. Implementation of such alternative
systems shall be APC's sole and exclusive remedy under this
Agreement if the Facility is unable to maintain its Qualifying
Facility Status despite OCF's compliance with the requirements of
Section 3.1 and this Agreement, unless such failure is due to
OCF's negligence, gross negligence or willful misconduct.
SECTION 3.2 APC's Maximum Delivery Obligation. APC
shall not be obligated to deliver to OCF more than seventy
thousand (70,000) pounds per hour nor more than two hundred forty
million (240,000,000) pounds per Calendar Year of Steam (the
"Maximum Delivery Obligation"); provided, however, APC shall not
be required to deliver more than eighty million (80,000,000)
pounds of Steam during the non-Peak Hours in any Calendar Year.
Notwithstanding the foregoing, during the period from July 1
through, and including, October 15 of each Calendar Year, the
seventy thousand (70,000) pounds per hour Steam delivery
obligation shall be reduced to twenty thousand (20,000) pounds
per hour.
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In addition to the foregoing, APC shall not be obligated but
will make reasonable efforts to supply Steam in quantities above
two hundred forty million (240,000,000) pounds per Calendar Year
upon request by OCF provided that such quantities, when combined
with the Maximum Delivery Obligation quantities, do not exceed
seventy thousand (70,000) pounds per hour.
SECTION 3.3 Steam Condensate and Water Return.
(a) In each Calendar Year, OCF agrees to return and
deliver to APC at the Condensate Transfer Point, at OCF's sole
cost, Condensate in a quantity equivalent to, on average, at
least Sixty percent (60%) of the mass volume of the Steam
delivered to OCF during such Calendar Year. OCF's obligation to
deliver such Condensate shall be conditioned on APC delivering
Steam that meets the specifications for Condensate set forth in
Exhibit B. If OCF fails to return such a quantity of Condensate
during any such Calendar Year, OCF shall pay APC within Thirty
(30) Days after the end of the Calendar Year an amount equal to
the cost to APC of obtaining, treating and heating water required
to make up the difference between the mass volume of Condensate
actually returned by OCF to APC during such Calendar Year, and
the required Sixty percent (60%) quantity; provided, however,
OCF's maximum liability in a Calendar Year for failing to return
the required sixty percent (60%) quantity shall not exceed the
amount determined by the following formula:
$100,000 x A x 0.6-C
- -----
B 0.6
WHERE:
A = the total number of pounds of Steam purchased by OCF in
the applicable Calendar Year
B = 240,000,000
C = the percentage of the mass volume of Steam
delivered to OCF during the applicable Calendar Year
that is returned to APC in the form of Condensate.
For the purposes of the Agreement the maximum penalty for
Condensate not returned shall be one hundred thousand dollars
($100,000) per Calendar Year.
(b) If any portion of the Condensate becomes
contaminated prior to return to APC, OCF shall (i) notify APC
promptly of such contamination, and (ii) correct the source or
cause of such contamination as expeditiously as reasonably
practicable and dispose of such contaminated Condensate at OCF's
sole cost and expense. APC shall notify OCF promptly of any
contaminated Condensate delivered to APC by OCF, and OCF shall
correct the source or cause of such contamination as
expeditiously as reasonably practicable and dispose of such
contaminated Condensate at OCF's sole cost and expense.
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(c) Notwithstanding the provisions of paragraphs (a)
and (b) of this Section 3.3, APC shall pay the capital cost for a
"citrus tower" which has the capacity for treating two hundred
thousand (200,000) gallons per day of OCF's condensate. If OCF
should, in its sole discretion, decide to install a citrus tower
with a capacity in excess of two hundred thousand (200,000)
gallons per day, APC shall pay a pro rata portion of the capital
cost of such citrus tower, in an amount equal to two hundred
thousand (200,000), divided by the total treatment capacity,
multiplied by the total capital cost. In addition, all steam
required to operate the citrus tower shall be provided at no cost
to OCF. OCF shall notify APC of its intent to exercise its
options under this subsection by December 31, 1997. APC agrees
to pay such costs within thirty (30) Days after submission of
verifiable invoices during the design, manufacture and
installation of the "citrus tower".
SECTION 3.4 Additional OCF Operating
Responsibilities. In addition to the other obligations of OCF
set forth in this Agreement, OCF shall have the following
obligations with respect to APC ownership and operation of the
Facility:
(a) OCF shall perform or provide, as applicable, at
OCF's expense, all materials (including piping, valves and
pumps), and services, repairs and adjustments to such materials,
on the OCF Plant side of the Heat Transfer Point necessary to
receive and utilize Steam at the OCF Plant, unless, and to the
extent that, the need for any such service, repair or adjustment
is caused by any negligent act of an employee, agent or
contractor of APC or an Affiliate thereof.
(b) OCF shall provide APC with such easements,
licenses and other rights to OCF property as APC may reasonably
require in connection with the Facility, and shall cooperate with
APC in obtaining, at APC's expense, all other required easements,
licenses and other rights; provided, however, OCF shall not be
required to provide any easement, license or right which
materially interferes with the operation of the OCF Plant.
(c) APC shall pay for the acquisition and installation
of, but OCF shall own and control, all materials (including
collection tanks, transfer pumps, controls, meters, and valves)
in or adjacent to the OCF boiler house necessary to return
Condensate to the Condensate Transfer Point and direct
contaminated condensate to OCF's treatment and/or disposal
facilities. Except for the meters, which shall be handled in
accordance with Section 3.10, OCF shall perform all repairs,
maintenance and replacements of such materials; provided that APC
shall pay all reasonable costs thereof, except for such costs
caused by any negligent act of an employee, agent or contractor
of OCF.
SECTION 3.5 Permits and Governmental Notices.
(a) APC, at its own cost and expense, will secure all
permits needed from time to time to deliver Steam to OCF
hereunder and will maintain the Facility in good operating
condition, except (i) as provided in Section 3.4(a) and (ii) to
the extent such permits are obtainable only by OCF. OCF shall
provide APC with such assistance in obtaining such permits as may
be reasonably requested by APC.
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(b) OCF will secure all permits needed from time to
time hereunder to deliver Condensate from the OCF Plant to the
Condensate Transfer Point and maintain the OCF Plant in good
operating condition. APC shall provide OCF with such assistance
in obtaining such permits as may be reasonably requested by OCF.
(c) APC shall reimburse OCF for all reasonable third
party consultant costs and expenses incurred by OCF in connection
with Sections 3.5(a) and (b). APC shall have the right to assist
such third party consultants, and OCF shall advise APC of such
consultant's activities.
(d) If either party shall receive any notice from any
governmental authority regarding the operation of the Facility or
the OCF Plant, it shall as soon as practicable deliver a copy of
such notice to the other party and to the Project Lender.
(e) If a Project Lender, or any third party assignee
of a Project Lender, shall acquire title to the Facility, said
Project Lender, or assignee, shall be entitled to the benefits
and be subject to the obligations of APC under this Section 3.5,
including the obligation to pay all of the costs and expenses of
obtaining permits, and including, without limitation, the right
to
operate the Facility for the Term under the Permits of APC and to
request OCF's assistance in obtaining permits of APC for
modifications, replacements or additions to the Facility.
SECTION 3.6 Standby Boilers.
(a) APC shall procure, operate, maintain, repair and
replace, at its own expense, the Standby Boilers. In addition,
APC shall be responsible for obtaining all permits necessary to
operate such Standby Boilers.
(b) Any Standby Boiler that is acquired during the
Term as a replacement for an existing Standby Boiler shall not be
required to have a rated steam generation capacity upon
installation in excess of the rated steam generation capacity of
the Standby Boiler being replaced unless necessary to provide OCF
with the steam quantity required under this Agreement; provided,
however, the rated steam generation capacity of the replacement
Standby Boiler measured at the Heat Transfer Point shall not have
to exceed seventy thousand (70,000) pounds per hour.
(c) OCF acknowledges and agrees that APC, in its sole
and absolute discretion, may elect to generate Steam for delivery
to the OCF Plant from either the combustion turbine portion of
the Facility or the Standby Boilers.
(d) APC acknowledges and agrees that OCF will continue
to maintain its existing steam generating capacity for a period
of one year after APC commences deliveries of Steam to OCF, after
which OCF will no longer maintain any steam generating capacity
and will become fully-dependent upon APC Steam deliveries.
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SECTION 3.7 Delivery Obligation and Unplanned
Shutdowns. APC shall be obligated to deliver Steam to OCF in
accordance with this Section 3.7, in the amounts requested by
OCF, up to the Maximum Delivery Obligation, as adjusted by
Section 3.2.
(a) APC shall commence deliveries of Steam to OCF upon
at least three (3) hours prior notice of the time when OCF
desires for APC to commence Steam deliveries. Such notice shall
be by telephone or in person, with written confirmation. OCF
shall not cease operating the OCF Boilers until APC commences
continuous delivery of Steam.
(b) If APC fails to deliver Steam to the Heat Transfer
Point at the time requested in the notice referred to in Section
3.7(a), APC shall pay OCF damages, if any, pursuant to Section
7.3.
(c) If APC has actual knowledge of any material
inadequacy or unplanned Material Interruption of the Steam supply
caused by APC, or actual notice of any material inadequacy or
unplanned Material Interruption of the Steam supply caused by or
originating on the premises of OCF, APC shall, as soon as
reasonably practicable, but in any and all events within one (1)
hour of such actual knowledge or notice, as the case may be,
notify OCF by telephone or in person (with written confirmation)
of such unplanned Material Interruption or material inadequacy;
provided, however, that APC shall not be liable for any damages
if the unplanned Material Interruption or material inadequacy is
caused by OCF, its agents or employees or is due to the failure
of any equipment within the control of OCF, its agents or
employees. If OCF has actual knowledge of the occurrence of any
material inadequacy or unplanned Material Interruption of the
Steam supply from APC, OCF shall, as soon as reasonably
practicable, but in all events within one (1) hour of the time
OCF had such actual knowledge, notify APC by telephone or in
person (with written confirmation) of such material inadequacy or
unplanned Material Interruption.
(d) For purposes of this Agreement, APC shall be
deemed to have made Steam available to OCF during all periods
when:
(i) The OCF Plant is shut down or unable to
accept Steam;
(ii) APC is unable to produce and/or deliver Steam
as a result of (A) OCF's failure to perform its obligations under
this Agreement, or (B) the negligence or willful misconduct of
OCF or its employees, agents or contractors; or
(iii) APC is unable to perform its
obligations under this Agreement due to an event of Force
Majeure.
SECTION 3.8 Planned Shutdowns. APC shall have the
right to shut down the operation of the Facility for maintenance
purposes whenever, in APC's reasonable judgment, such shutdown is
desirable to prevent an unscheduled outage, or to perform regular
or necessary maintenance, repair or replacement, or to prevent
damage to or loss of persons, property or equipment. Such
shutdowns shall have no effect on APC's obligations under Section
3.7 to
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deliver Steam to OCF; provided, however, APC shall have no
obligation to deliver Steam if the generation and/or delivery of
such Steam could, in the reasonable judgment of APC, cause
Material damage to or loss of persons, property or equipment, or
in any event, during an event of Force Majeure.
SECTION 3.9 Deliveries and Transfer of Title. Steam
deliveries and transfer of title thereto to OCF shall be made at
the valve and flange where the Facility steam delivery pipe
connects to the point in the OCF Plant described in Exhibit D
(the "Heat Transfer Point"). Title to the Condensate shall pass
to APC when such Condensate has passed into the lines owned or
operated by APC, which point of passage (the "Condensate Transfer
Point") is described in Exhibit E hereto.
SECTION 3.10 Measurement. APC shall provide or cause to
be provided equipment suitable for accurately measuring the
quantities of Steam delivered hereunder to the Heat Transfer
Point and Condensate delivered to the Condensate Transfer Point.
OCF shall provide access to such measurement systems to
representatives of APC at all reasonable times for the purposes
of reading and inspecting said systems and for all other purposes
required hereunder. Maintenance, testing and adjustment of the
instrumentation systems shall be the responsibility of APC. APC
shall have an independent third party to test and calibrate the
instrumentation systems by comparison with accurate standards
from time to time as requested by OCF, but no less frequently
than at intervals of twelve (12) months. The cost of all such
tests shall be borne by APC; provided, however, that if any
special meter test made at OCF's request shall disclose that the
meters are recording accurately, OCF shall reimburse APC for the
cost of such tests. Meters registering not more than two percent
(2%) above or below normal shall be deemed to be accurate.
If the measurement made by the meters during a test varies
by more than two percent (2%) and, therefore, is not deemed to be
accurate, then adjustment shall be made and the parties shall
make payments, as applicable, to correct any overpayment or
underpayment that was made as a result of the inaccurate
measurements. The adjustment shall be made for correcting all
measurements made for:
(a) The actual period during which inaccurate
measurements were made, if the period can be determined, or if not:
(b) The period immediately preceding the test equal to
one-half (1/2) the time from the date of the last previous test,
provided that in the event that the previous test shall have
occurred more than six (6) months prior to the current test, such
previous test shall be deemed to have occurred six (6) months
prior to the current test for purposes of this Section 3.10.
SECTION 3.11 Price of Steam. The price to be paid by OCF
to APC for Steam (the "Steam Cost") shall be Fifty Cents ($.50)
per thousand (1,000) pounds of Steam for Steam delivered during
Peak Hours and Two Dollars
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($2.00) per thousand (1,000) pounds of
Steam for Steam delivered during non-Peak Hours up to and
including the Maximum Delivery Obligation. For Steam quantities
above the Maximum Delivery Obligation the price shall be Two
Dollars ($2.00) per thousand (1,000) pounds during Peak Hours and
Five Dollars ($5.00) per thousand (1,000) pounds during non-Peak
Hours.
(a) As of January 1, of each Calendar Year, commencing
in 1994, the Steam Cost shall escalate in accordance with this
Section 3.11(a). The Steam Cost shall escalate by the greater of
(a) the annual percentage change in FPC's average monthly
inventory chargeout price of coal burned at Crystal River Units 1
& 2 (the "FPC Inventory Chargeout Rate") or (b) two percent (2%)
per year.
(b) The FPC Inventory Chargeout Rate represents the
total costs of purchasing, transporting, storing, and delivering
coal to FPC's Crystal River Units 1 & 2. The information
required to determine the monthly FPC Inventory Chargeout Rates
is published monthly in FPC's payment statement to APC ("FPC
Payment Statement"), wherein the FPC Inventory Chargeout Rate is
provided on the page titled "Calculation of Energy Payment," on
the line titled "CR 1 & 2 Coal (Form A-5) ($/MMBTU)." APC shall
provide OCI with the monthly FPC Inventory Chargeout Rate. If,
in any month, or sequence of consecutive months, during the
twelve (12) month period used in calculating the "AIC" portion of
the FPC Inventory Chargeout Rate the AIC is zero (0), the AIC
shall be deemed to be equal to the arithmetic average of the
monthly FPC Inventory Chargeout Rates for each of the relevant
twelve (12) months for which non-zero (0) values are available.
(c) In the event that (i) FPC ceases to disclose the
FPC Inventory Chargeout Rate as part of the FPC Payment
Statement, or (ii) FPC changes the method by which it calculates
the FPC Inventory Chargeout Rate or the components of such rate,
then OCI and APC shall attempt to agree on the appropriate
substitute reference(s) or means to determine the FPC Inventory
Chargeout Rate shall be submitted to binding arbitration in
accordance with Article 8.
SECTION 3.12 Payment. On or before the fifth (5th) day of
each calendar month, APC will render a written statement to OCF
showing the total quantity of Steam delivered during the
immediately preceding calendar month. Between the fifth (5th) and
the tenth (10th) days of the month, the parties shall calculate
the Steam Cost in accordance with the terms of this Agreement.
Payment shall be made by OCF to APC on or before the fifteenth
(15th) day of each month, or the fifth (5th) day after
calculation of the Steam Cost, whichever shall occur later.
Should OCF fail to make timely payment of all or part of any such
amount, such unpaid amount shall be a late payment amount, as to
which APC shall charge interest at a rate per annum equal to the
reference rate of Bank of America, NT&SA, or any successor bank
thereto, plus three percent (3%). The parties hereby agree that
such charge represents a fair and reasonable estimate of the
costs APC will incur by reason of such late payments by OCF.
SECTION 3.13 Taxes. If APC is required at any time to pay
any sales, transaction, production, gathering, severance, or any
other tax, excise or assessment on or measured by the Steam sold
hereunder or the receipts therefrom (not including income, excess
profits, capital stock, franchise or general property taxes), APC
shall notify OCF in writing, stating the amount thereof, and OCF
shall reimburse APC for the amount of any such tax, excise or
assessment.
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ARTICLE 4.
EVENTS OF DEFAULT
SECTION 4.1 Purchaser Event of Default. Subject to
Article 6, a Purchaser Event of Default under this Agreement
shall be deemed to exist upon the occurrence of any one or more
of the following events:
(a) Failure by OCF to accept, purchase and use in its
business operations the Annual Minimum Obligation in accordance
with OCF's obligations under Article 3 of this Agreement for any
reason without rectifying, at its own cost, the consequences of
such failure in such a manner as may be required or permitted by
the FERC, and in the time required by such Commission;
(b) Failure by OCF to make payment of any amounts due
to APC under this Agreement, which failure continues for a period
of ten (10) days after written notice of such nonpayment;
(c) Failure by OCF to perform fully any material
provision (including any material misrepresentation) not
described in Sections 4.1 (a) and (b), and (i) such failure
continues for a period of thirty (30) days after written notice
of such nonperformance or (ii) if OCF shall commence within such
thirty (30) days and shall thereafter proceed with all due
diligence to cure such failure, such failure is not cured within
such longer period (not to exceed ninety (90) days) as shall be
necessary for OCF to cure the same with all due diligence; or
(d) If OCF shall file, or consent to the filing
against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation
or to take advantage of any bankruptcy or insolvency law of any
jurisdiction; or OCF shall make an assignment for the benefit of
its creditors; or OCF shall consent to the appointment of a
custodian, receiver, trustee, or other officer with similar
powers, for substantially all its property, or be adjudicated
insolvent; or an order for relief shall be entered against OCF in
any case or proceeding for liquidation or reorganization or
otherwise to take advantage of any bankruptcy or insolvency law
of any jurisdiction, or ordering the dissolution, winding up or
liquidation of all or any part of OCF's property; or any petition
for any such relief shall be filed against OCF and shall not be
dismissed within ninety (90) days.
SECTION 4.2 Seller Event of Default. Subject to
Article 6, a Seller Event of Default under this Agreement shall
be deemed to exist upon the occurrence of any one or more of the
following events:
(a) Failure by APC to make payment of any amounts due
to OCF under this Agreement, which failure continues for a period
of ten (10) Days after written notice of such nonpayment;
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(b) Failure by APC to perform fully any material
provision (including any material misrepresentations) of this
Agreement not described in Section 4.2(a), and (i) such failure
continues for a period of thirty (30) Days after written notice
of such nonperformance or (ii) if APC shall commence within such
thirty (30) Days and shall thereafter proceed with all due
diligence to cure such failure, such failure is not cured within
such longer period (not to exceed ninety (90) Days) as shall be
necessary for APC to cure the same with all due diligence, or
(c) If APC shall file, or consent to the filing
against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation
or to take advantage of any bankruptcy or insolvency law of any
jurisdiction; or APC shall make an assignment for the benefit of
its creditors; or APC shall consent to the appointment of a
custodian, receiver, trustee, or other officer with similar
powers, for substantially all its property, or be adjudicated
insolvent; or an order for relief shall be entered against APC in
any case or proceeding for liquidation or reorganization or
otherwise to take advantage of any bankruptcy or insolvency law
of any jurisdiction, or ordering the dissolution, winding up of
liquidation of all or any part of APC property; or any petition
for any such relief shall be filed against APC and shall not be
dismissed within ninety (90) Days.
(d) Failure by APC to deliver Steam or have Steam
available for delivery to OCF, in accordance with the
requirements and provisions of this Agreement, for a continuous
period of One (1) year, which failure continues for a period of
thirty (30) Days after written notice of such failure.
SECTION 4.3 Remedies for Breach.
(a) Upon the occurrence of any Purchaser Event of
Default or Seller Event of Default, the nondefaulting party may,
at its option, and in addition to any other rights the
nondefaulting party may have at law or in equity, terminate this
Agreement by notice to the other party, or enforce, by all proper
and legal suits and other means, its rights hereunder, including,
without limitation, the collection of sums due hereunder, without
terminating this Agreement, and should it be necessary for such
party to take any legal action in connection with such
enforcement, the defaulting party shall pay such other party all
costs, including reasonable attorneys' fees so incurred, all
without prejudice to any remedies that might otherwise be used by
either party for recovery of arrearages of sums due hereunder,
damages as herein provided, or breach of covenant; subject,
however, to the provisions of Section 4.4.
(b) If both parties agree that a Purchaser Event of
Default or a Seller Event of Default has occurred, then the
nondefaulting party may proceed to exercise such remedies as it
may be entitled to in law or at equity, without proceeding to
arbitration under Article 8. However, if one party believes in
good faith that no such Event of Default has occurred, and
promptly informs the party asserting the existence of such Event
of Default of such belief, then the parties shall arbitrate such
good faith dispute under Article 8.
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SECTION 4.4 Lender Protections.
(a) Project Lender shall have the right, but not the
obligation, at any time prior to termination of this Agreement
and without payment of any penalty, to pay all of the sums due
hereunder, to provide any insurance, to pay any taxes and make
any other payments in connection with the OCF Plant and the
Facility, to make any repairs and improvements and do any other
act or thing required of APC hereunder, and to do any act or
thing which may be necessary and proper to be done in the
performance and observance of the covenants, conditions and
agreements hereof to prevent the termination of this Agreement.
All payments so made and all things so done and performed by
Project Lender shall be as effective to prevent a termination of
this Agreement as the same would have been if made, done and
performed by APC instead of by Project Lender.
(b) Notwithstanding any Seller Event of Default by APC
in the performance or observance of any covenant, condition or
agreement of this Agreement on the part of APC to be performed or
observed, OCF shall have no right to terminate this Agreement
even though a Seller Event of Default under this Agreement shall
have occurred and be continuing, unless and until OCF shall have
given Project Lender written notice of such Seller Event of
Default and Project Lender shall have failed to remedy such
default or to acquire title to the Facility and APC's interest in
this Agreement or to commence appropriate proceedings to acquire
said title and interest within the time specified by Section
4.4(c). In accordance with and subject to the terms of Section
10.11, OCF shall contemporaneously give Project Lender at Project
Lender's address given to OCF by Project Lender from time to time
a copy of any notice OCF serves on APC under Section 4.2.
Failure to provide Project Lender with such notice pursuant to
Section 4.2 contemporaneously with the giving of notice to APC
shall delay, for the period of time during which such failure
continues, the commencement of the time provided in Section
4.4(c) during which Project Lender has to cure such default.
(c) (i) If the Seller Event of Default involves the
failure to pay taxes or any other sum to be paid hereunder, then
Project Lender shall have twenty (20) Days longer than the cure
period given to APC pursuant to Section 4.2(a) to cure such
default.
(ii) If the Seller Event of Default is a
nonmonetary Seller Event of Default, under Section 4.2(b), that
can be remedied by Project Lender without obtaining possession of
the Facility, then Project Lender shall have seventy-five (75)
Days longer than the cure period given to APC pursuant to Section
4.2(b) to cure such default. If the Seller Event of Default
cannot be cured within such seventy-five (75) Day period, then
the Seller Event of Default shall be deemed cured on completion
if within said seventy-five (75) Day period, (A) Project Lender
shall have commenced to cure said Seller Event of Default and
thereafter diligently prosecutes such cure to completion, and (B)
Project Lender shall assume and perform all other obligations of
APC susceptible of performance by Project Lender.
(iii) If the Seller Event of Default is a
nonmonetary default that only can be remedied by Project Lender
upon obtaining possession of the Facility, then Project Lender
shall have one hundred twenty (120) Days longer than the cure
period given to APC under this
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Agreement to cure such Seller
Event of Default. If the Seller Event of Default cannot be cured
within such time period, then the Seller Event of Default shall
be deemed cured if (A) within sixty (60) Days after the
expiration of the cure period given to APC to cure such default,
Project Lender shall have commenced foreclosure or other
appropriate proceedings in the nature thereof, (B) Project Lender
shall diligently and continuously prosecute any such proceedings
to completion, and (C) Project Lender shall assume and perform
all other obligations of APC susceptible of performance by
Project Lender.
(d) If Project Lender is prohibited by any process or
injunction issued by any court or by reason of any action by
reorganization or insolvency proceedings involving APC from
commencing or prosecuting foreclosure or other appropriate
proceedings in the nature thereof, the times specified in this
Section 4.4 for commencing or prosecuting such foreclosure or
other proceedings shall be extended for the period of such
prohibition; provided, however, Project Lender shall have fully
cured any Seller Event of Default involving the payment of any
monetary obligations of APC under this Agreement and shall
continue to pay such monetary obligations as and when the same
fall due; provided, further, that Project Lender shall diligently
proceed to pursue foreclosure or other appropriate proceedings
required to be commenced under this Section 4.4.
(e) Should this Agreement be terminated for any reason
other than a default of APC which has not been cured by APC or
Project Lender, if such default is susceptible to cure by Project
Lender, OCF shall, upon written request by Project Lender to OCF
received within sixty (60) Days after such termination, execute
and deliver a new Thermal Energy Sales Agreement with the Project
Lender for the remainder of the Term with the same covenants,
conditions and agreements (except for any requirements which have
been satisfied by APC prior to termination) as are contained
herein. OCF's obligation to enter into such new Thermal Energy
Sales Agreement with the Project Lender shall be conditioned as
follows: (i) Project Lender has remedied and cured all monetary
defaults hereunder and has remedied and cured or has commenced
and is diligently completing the cure of all nonmonetary defaults
of APC susceptible to cure by any party other than by APC, (ii)
that if more than one Project Lender requests such new Thermal
Energy Sales Agreement the holder of the most senior lien shall
prevail, and (iii) that Project Lender pays all costs and
expenses of OCF incurred in connection with the preparation and
execution of such new Thermal Energy Sales Agreement and any
conveyances related thereto. The obligation of OCF to execute a
new Thermal Energy Sales Agreement with Project Lender and to
comply with all other provisions of this Section 4.4 shall also
apply if this Agreement shall be rejected or disaffirmed in any
bankruptcy, debtor rehabilitation, reorganization or insolvency
proceeding affecting APC.
(f) OCF and APC shall cooperate in including in this
Agreement by suitable amendment from time to time any provision
which may be requested by any proposed Project Lender, for the
purpose of implementing the Project Lender protection provisions
of this Agreement and allowing such Project Lender reasonable
means to protect or preserve the lien of any mortgage, deed of
trust, or security interest on the occurrence of a default under
the terms of this Agreement; provided, however, that any such
amendment shall not in any way affect the Term hereby demised nor
affect adversely in any material respect any rights of OCF under
this Agreement.
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SECTION 4.5 Specific Performance and Injunctive
Relief. Without first having to proceed to arbitration pursuant
to Article 8 hereto each party shall be entitled to a decree
compelling specific performance with respect to, and shall be
entitled, without the necessity of filing any bond, to the
restraint by injunction of, any actual or threatened breach of,
any material obligation of the other party under this Agreement.
SECTION 4.6 Waiver of Breach. Either party may
waive a breach of any obligation arising hereunder by the other
party, provided that no waiver by or on behalf of either party of
any breach of any of the covenants, provisions, conditions,
restrictions or stipulations contained in this Agreement shall
take effect or be binding upon such party unless the waiver is
reduced to writing and executed by such party, and any such
waiver shall be deemed to extend only to the particular breach
waived and shall not limit or otherwise affect any rights that
such party may have with respect to any other or future breach.
ARTICLE 5.
CONTINUATION OF OCF PLANT AND THE FACILITY
SECTION 5.1 Qualifying Facility Status. OCF
acknowledges that it is essential that the OCF Plant remain in
operation and accept Steam from the Facility in order for the
Facility to retain its Qualifying Facility status. OCF
acknowledges that if the Facility should lose its Qualifying
Facility status as a result of OCF failing to accept the Annual
Minimum Obligation, APC would incur substantial losses.
SECTION 5.2 Shutdown of OCF Plant.
(a) Except for the provisions of Article 6 (Force
Majeure), OCF shall provide APC with written notice (the
"Termination Notice") at least eighteen (18) months prior to the
date (the "Termination Date") that OCF discontinues or materially
reduces the operation of the OCF Plant for at least a consecutive
one (1) year period. In the event OCF effects such a
discontinuation or material reduction, OCF shall use its best
efforts to (a) find a successor to own and/or operate the OCF
Plant and utilize Steam in sufficient quantities for the Facility
to maintain its Qualifying Facility status, or (b) find an
alternative user of thermal energy close enough in proximity to
the Facility so that Facility may provide such thermal energy on
a reasonably economical basis and on terms and conditions
reasonably satisfactory to APC and the Project Lender. If OCF is
able to locate such a successor to own and/or operate the OCF
Plant or locate an alternative user of thermal energy within six
(6) months of the delivery of the Termination Notice, then OCF
shall pay, as liquidated damages, any additional costs that APC
may incur with providing Steam or, if applicable, thermal energy
to such party. If OCF is unable to find such a successor to own
and/or operate the OCF Plant or an alternative user of thermal
energy within six (6) months of delivery of the Termination
Notice, then APC, at its sole option, shall have the right either
to (x) lease the OCF Plant from OCF for the remainder of the Term
at a rate equal to fifty percent (50%)
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of the fair market rental
(as applicable) value of the OCF Plant, which value shall be
determined by taking the average value determined by three
appraisers (one selected by APC, one selected by OCF, and one
selected by the two appraisers), (y) have OCF provide the land
necessary and suitable for an alternative steam user, subject to
the title to such land being acceptable to APC, and pay APC One
Million Dollars ($1,000,000) as liquidated damages, or (z) pay
APC One Million Dollars ($1,000,000) as liquidated damages to be
used to connect the Facility to an alternative thermal energy
user. If APC elects option (y), the maximum amount of the
liquidated damages shall be reduced (but not below zero) by the
fair market value of the land conveyed to APC. Unless the
parties are able to agree on the fair market value for such land,
the fair market value of such land shall be determined in
accordance with the same procedure as set forth above for
determining the fair market rental value of the OCF Plant. The
One Million Dollar ($1,000,000) liquidated damages cap set forth
in this Section 5.2 shall change, effective each January 1st
during the Term, by the same percentage change as occurred for
the prior Calendar Year for the Consumer Price Index. If OCF
provides the Termination Notice at least three (3) years prior to
the Termination Date, the One Million Dollar ($1,000,000)
liquidated damages cap, as changed in accordance with this
Section 5.2(a), shall be reduced by fifty percent (50%).
(b) If, prior to the delivery of the Termination
Notice, APC enters into an agreement to sell Steam to a third
party that is considered by the Project Lender to be an
acceptable replacement Steam user if OCF ceases purchasing Steam,
and if OCF subsequently is required to pay liquidated damages
under Section 5.2(a), then the liquidated damages cap set forth
in Section 5.2(a) shall be reduced to an amount determined by the
following formula:
X = A x B/(B+C)
WHERE
X = The reduced liquidated damages cap.
A = The liquidated damages cap for the Calendar Year
that OCF is obligated to pay liquidated damages.
B = The Annual Minimum Obligation in the Calendar Year
that OCF is obligated to pay liquidated damages.
C = The minimum annual quantity of Steam (in the Calendar
Year that OCF is obligated to pay liquidated damages)
that the third party is obligated to take and pay for
under a contract between APC and such third party.
SECTION 5.3 Damage to OCF Plant. If the OCF Plant
is damaged or destroyed by any Casualty, OCF shall repair and
restore it as nearly as reasonably practicable to its value,
condition and character immediately prior to such damage or
destruction, subject to such changes or alterations as may be
made at OCF's election in conformity with and subject to APC
reasonable approval with respect to changes or alterations
affecting the Facility. Such restoration shall be
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commenced and
prosecuted with due diligence and dispatch and in good faith. All
proceeds from insurance with respect to a Casualty to the OCF
Plant shall be applied to effect such repair and restoration. OCF
shall promptly advise APC of any Casualty to the OCF Plant.
SECTION 5.4 Condemnation of OCF Plant. If a
Substantial Taking occurs, OCF shall use the proceeds from such
Substantial Taking to acquire a site adjacent to the APC Plant
Site and to rebuild the OCF Plant as nearly as reasonably
practicable to its value, condition and character immediately
prior to such Substantial Taking, subject to such changes or
alterations as may be made at OCF's election in conformity with
and subject to APC's reasonable approval with respect to changes
or alterations affecting the Facility. Such rebuilding shall be
consummated and prosecuted with due diligence and dispatch and in
good faith. All proceeds from such Substantial Taking shall be
applied to effect such rebuilding. OCF shall promptly advise APC
of any proposed or actual Substantial Taking, shall offer APC the
opportunity to participate in any proceedings involving such
Substantial Taking, and shall not enter into any final agreement
establishing the amounts to be paid as a result of such
Substantial Taking without the prior written consent of APC,
which shall not be unreasonably withheld. If OCF is unable to
acquire a site adjacent to the APC Plant Site after a Substantial
Taking, OCF and APC shall negotiate in good faith a distribution
of any proceeds received as a result of the Substantial Taking
based upon the losses suffered or reasonably expected to be
suffered by each party resulting from such Substantial Taking.
SECTION 5.5 Continuation of Facility. Subject to
approval of the Project Lender, if APC shall discontinue the
operation of the Facility for a continuous two (2) year period,
OCF shall have the right to acquire the Facility for the balance
due under any financing agreement between APC and the Project
Lender.
ARTICLE 6.
FORCE MAJEURE
SECTION 6.1 Definition. Force Majeure shall mean an
event or occurrence that is not reasonably foreseeable by a
party, is beyond its reasonable control, and is not caused by its
negligence or lack of due diligence, including, but not limited
to, natural disasters (including, but not limited to, freezes,
diseases and other natural events which cause an extraordinary
reduction in the citrus available for processing in the OCF
Plant), fire, lightning, wind, perils of the sea, flood,
explosions, acts of God or the public enemy, failure of fuel
supply to the Facility, strikes, lockouts, vandalism, blockages,
insurrections, riots, war, sabotage, action of a court or public
authority, or accidents to or failure of equipment or machinery.
Notwithstanding anything else herein to the contrary, changes in
market conditions shall not constitute Force Majeure.
SECTION 6.2 Effect. Article 5 to the contrary
notwithstanding, and subject to Section 6.4, in the event that
either APC or OCF is rendered unable, by reason of an event of
Force Majeure, to perform, wholly or in part, any obligation or
commitment set forth in this Agreement, then, provided such party
gives prompt written notice describing the particulars of such
event,
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including, but not limited to, the nature of the
occurrence and its expected duration, and continues to furnish
timely, regular reports with respect thereto during the period of
the Force Majeure, the obligations of both parties, except for
obligations to pay money, shall be suspended to the extent and
for the period of such Force Majeure condition; provided,
however, that (a) the suspension of performance is of no greater
scope and of no longer duration than is required by the Force
Majeure and (b) the party whose performance is being excused
shall use its reasonable efforts to perform its obligations
hereunder and remedy its inability to perform. Both parties agree
and understand that maintaining the Qualifying Facility status of
the Facility is of primary importance to both parties, and if an
event of Force Majeure occurs that impacts on the continuation of
that Qualifying Facility status, APC may take such reasonable
steps as it deems necessary to protect that status.
SECTION 6.3 Termination for Force Majeure. In the
event the Power Purchase Agreement is terminated during the
continuance of an event of Force Majeure, then APC may terminate
this Agreement without any liability therefor upon Three Hundred
and Sixty-Five (365) Days' prior written notice.
SECTION 6.4 Natural Disasters Impacting the Citrus
Crop. By way of clarification of the sections of Article 6
contained above, where there is an extraordinary freeze, disease
or other natural event causing an extraordinary reduction in the
citrus crop (a "Natural Disaster Force Majeure"); (i) to the
extent that the Natural Disaster Force Majeure causes continuing
extraordinary adverse effects on the citrus crop (e.g., by
causing damage to the trees which affects the next year's crop),
the Natural Disaster Force Majeure event shall be deemed to
continue; (ii) OCF shall nevertheless be obligated to obtain the
appropriate pro-rata share of the citrus crop; (iii) OCF shall
cooperate with APC in finding an additional/alternative Steam use
or user for the OCF Plant to the extent that it is not being used
to process the appropriate pro-rata share of the citrus crop;
(iv) OCF shall make the OCF Plant available for such
additional/alternative steam user on a minimal-rent basis and
otherwise upon reasonable contractual terms; and (v) OCF shall
cooperate with APC in obtaining a waiver from the FERC from the
efficiency and use standards required for Qualifying Facilities.
ARTICLE 7.
INDEMNIFICATION
SECTION 7.1 Reciprocal Indemnification. Each of APC
and OCF, respectively, as indemnitor, will defend, protect,
indemnify, and hold harmless the other party, each of the other
party's Affiliates, the successors and assigns of such other
party and any of its Affiliates, and the shareholders, officers,
directors, partners, employees and agents of such other party and
any of its Affiliates, as indemnitees, from and against any and
all losses, damages or expenses (excluding consequential losses,
damages and expenses) and liability suffered or paid as a result
of any and all claims, demands, suits, causes of action,
proceedings, judgments and liabilities (including reasonable
counsel fees incurred in litigation or otherwise) assessed,
incurred or sustained by or against any such indemnitees with
respect to or resulting from injuries to or death of persons,
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including, but not limited to, employees of any indemnitees, and
damage to or destruction of property, including, but not limited
to, the property of any indemnitees, arising out of, or in any
way connected with, the failure to comply with any applicable
law, rule or regulation of any authority having proper
jurisdiction, or the performance or non-performance of any
provision of this Agreement, or any operations conducted by
indemnitor, its agents, or employees, excepting only such injury,
death, damage or destruction as may be caused by the gross
negligence or willful misconduct of the indemnitee, its agents,
or employees.
SECTION 7.2 Duty to Defend. Indemnitor, at its sole
cost and expense, shall be responsible for defending any claim,
demand, suit, cause of action or proceeding covered by the
indemnities set forth in Section 7.1. Indemnitor shall have the
right to control the defense of any claim, demand, suit, cause of
action, or proceeding, provided that indemnitor shall first
confirm in writing to indemnitee that such claim is within the
scope of the indemnities contained in Section 7.1 and that
indemnitor shall pay all amounts required to be paid in respect
of such claim, demand, suit, cause of action or proceeding. The
indemnitee shall have the right, but not the obligation, at its
sole cost and expense, to participate in the defense of any such
claim, demand, suit, cause of action or proceeding. Indemnitees
shall have the right at any time, by notice to indemnitor, to
assume exclusive control of the defense of any claim, demand,
suit, cause of action or proceeding insofar as the indemnitee is
concerned, at the sole cost and expense of indemnitor, if (a)
indemnitor fails to defend diligently such claim, demand, suit,
cause of action or proceeding, (b) there is a conflict in the
interests of indemnitor and indemnitee with respect to such
claim, demand, suit, cause of action or proceeding, or (c) at any
time during the tendency of such claim, demand, suit, cause of
action or proceeding indemnitor shall disaffirm its
responsibility for the claim involved. Indemnitor shall pay all
reasonable costs that may be incurred by indemnitee in such
defense or in enforcing this indemnity, including, without
limitation, reasonable attorneys' fees, within ten (10) days
after request therefor.
Indemnitor shall have the right to settle any claim, demand,
suit, cause of action, or proceeding which results only in the
payment of money. Indemnitor shall have no right, without the
prior written consent of indemnitee, to settle any claim, demand,
suit, cause of action, or proceeding which claim, demand, suit,
cause of action or proceeding or settlement thereof, involves
nonmonetary obligations of indemnitee.
SECTION 7.3 Loss of Citrus and Citrus-Related
Products, Property Damage and Incremental Operating Costs.
Without in any way limiting the generality of any indemnity
hereunder, and subject to the limitations and requirements of
Section 3.7, APC shall specifically indemnify and hold harmless
OCF from any verifiable and auditable out-of-pocket loss from a
reduction in value of any products of OCF, any verifiable and
auditable property damage, or verifiable and auditable out-of-
pocket incremental operating costs incurred, due to any material
inadequacy or unplanned Material Interruption exceeding the one
(1) hour time period specified in Section 3.7(c); provided,
however, OCF shall use its best efforts to minimize or reduce any
potential loss, damage, expense or cost that may be subject to
the indemnity provided under this Section 7.3. OCF agrees to
obtain at APC's expense (i.e., the difference between the
premiums for OCF's present business interruption insurance which
provides for a twenty-four (24) hour waiting
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period and the cost
of the policy hereunder) additional business interruption
insurance, if commercially available and obtainable at reasonable
rates, that will insure OCF for any losses incurred after a
twelve (12) hour waiting period, subject to the other limitations
and requirements of Section 3.7. Any such losses incurred by OCF
shall be deemed reduced or, if applicable, eliminated to the
extent that OCF has insurance coverage applicable to such losses,
or to the extent such losses are attributable to the negligence
or willful misconduct of OCF, its agents or employees.
Notwithstanding anything else herein to the contrary, APC's
maximum liability under this Section 7.3 shall be Fifty Thousand
Dollars ($50,000) per occurrence.
ARTICLE 8.
ARBITRATION
SECTION 8.1 Governing Provision. Any controversy or
dispute arising under, out of, or in connection with the making
or performance or the enforcement or interpretation of, this
Agreement shall be subject to arbitration in accordance with the
provisions of the Florida Arbitration Code, Fla. Stat. 682.01,
et. seq., as amended from time to time, except as otherwise
provided in this Article 8. Notwithstanding the foregoing, or any
other provision to the contrary contained in this Article 8,
neither party shall be compelled to arbitrate any claim or
dispute relating to a breach of this Agreement or the performance
or non-performance of any party's obligations hereunder brought
by the other party, if the sole remedy sought for such claim is
injunctive relief and reasonable attorneys' fees and costs
related thereto, but such other party may have full recourse to
the courts to petition for such injunctive relief.
SECTION 8.2 Demand for Arbitration. The parties
shall negotiate in good faith and attempt to resolve any dispute
which may develop hereunder; provided, however, in the event that
the parties are unable to resolve a dispute hereunder, either
party may serve upon the other a notice of intention to demand
that such matter be arbitrated by first giving written notice of
the existence of a dispute and a detailed description of its
nature. If one party refuses to meet to resolve the issue, then
only the other party may demand arbitration of that issue. I f
within not less than ten (10) days, but not more than twenty-five
(25) days, after the notice of intention to demand arbitration
the parties are still unable to resolve their dispute, then
either party may give a written notice to the other party
demanding arbitration.
SECTION 8.3 Selection of Arbitrators. The party
giving the notice shall request a list of seven arbitrators from
the American Arbitration Association in Tampa, Florida ("AAA").
The arbitration panel shall include (a) an attorney licensed to
practice law in the State of Florida (b) a person knowledgeable
with respect to the operation of steam generation and process
heat equipment and the measurement and utilization of steam and
process heat in manufacturing processes in the citrus processing
industry, and (c) a third person meeting the qualifications set
forth in clauses (a) or (b). The following criteria shall govern
the selection of arbitrators and shall be communicated to AAA:
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(x) None shall be an officer, director, employee,
partner, or otherwise affiliated with either party or any
Affiliate thereof.
(y) Each shall have the education, experience and
capabilities demonstrating an ability to comprehend and analyze
complex factual and contractual relationships and uncertainties.
Each party shall take turns selecting one of the names on
the list for elimination until only three (3) arbitrators are
left, and those persons shall arbitrate the dispute. OCF shall
have the first right to strike the name of an arbitrator the
first time the parties resort to arbitration, APC shall have the
first right to strike the second time the parties resort to
arbitration, and the parties shall alternate which one strikes
the first name thereafter. Each party shall exercise its right to
strike a name by the end of the next Business Day after receipt
of the notice of the other party's action to strike a name from
the list. A party failing to strike a name on its turn shall lose
its turn and the other party may proceed to strike another name.
SECTION 8.4 Hearing. The arbitration hearing shall
take place in Tampa, Florida no sooner than thirty (30), but no
more than sixty (60), days after the selection of the
arbitrators. The arbitrators shall give written notice of the
time and place of the hearing to both parties at least ten (10)
days prior to the hearing date. The arbitrators shall not be
authorized to alter, extend or modify the terms of this
Agreement. Upon rendering a decision, the arbitrators shall
promptly execute and acknowledge the decision and deliver a copy
to each party.
SECTION 8.5 Effect of Decision. The decision or
award of the arbitrator shall be final and binding on both
parties. Such decision or award may be enforced in any court
having jurisdiction of the party against whom enforcement is
sought. A judgment confirming the award may be rendered by the
circuit court in and for Hillsborough County, Florida, which the
parties agree is the court of appropriate jurisdiction. Failure
to comply with the arbitrators' decision hereunder shall
constitute an Event of Default entitling the prevailing party to
the remedies set forth in Article 4, in addition to those which
such party may otherwise be entitled to at law or in equity.
SECTION 8.6 Performance Pending Decision. Pending
resolution of any controversy or dispute hereunder, performance
by each party shall continue so as to maintain the status quo
prior to notice of such controversy or dispute. Resolution of any
controversy or dispute involving the payment of money by one
party to the other shall include payment of interest at a rate
per annum equal to the reference rate of Bank of America NT&SA,
or any successor bank thereto, in effect at the time the
adjudication is made, plus three percent (3%) (subject to and
limited by applicable usury laws), for the period commencing when
payment should have been made and ending on the date payment is
actually made.
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ARTICLE 9.
INSURANCE
SECTION 9.1 Coverage. As to all activities
hereunder, the following insurance shall be obtained from an
insurance carrier rated "A" by Bests or having an equivalent
rating by another mutually agreed-upon insurance rating service
and maintained in full force and effect for the benefit and
protection of the parties under this Agreement:
(a) Workers' Compensation Insurance. OCF and APC
shall carry and maintain in effect, with respect to its
employees, if any, Workers' Compensation Insurance and Employer's
Liability Insurance that equals or exceeds statutory requirements
in the State of Florida.
(b) Comprehensive General Liability. OCF and APC
shall carry and maintain in effect comprehensive general
liability insurance, including contractual liability insurance,
providing for a minimum of Five Million Dollars ($5,000,000)
combined single limit coverage for death, bodily injury, and
property damage arising from any one occurrence. Each party shall
name the other party as an additional insured under such
insurance.
(c) Automobile Liability. OCF and APC shall carry and
maintain in effect business automobile liability insurance
covering all owned, non-owned and hired automobiles, and shall
include Uninsured and Underinsured Motorists, with minimum
insurance limits of Five Million Dollars ($5,000,000) for bodily
injury and property damage arising from any one occurrence. This
should be in a "stacked" format if commercially available and if
there are five or more vehicles owned by each respective party.
In the event there are less than five vehicles or unstacked
limits are commercially unavailable, then the Five Million Dollar
coverage ($5,000,000) may be satisfied by adding this coverage to
the umbrella or excess liability policy following the coverage on
the primary automobile liability.
(d) Plant and Facility Insurance. OCF shall carry and
maintain all risk property damage insurance covering the
replacement cost of the OCF Plant. APC shall carry and maintain
all risk property damage insurance covering the replacement cost
of the Facility.
(e) Policy Terms. Each liability policy described
above which a party is required to carry shall be primary,
without right of contribution from any other insurance which may
be carried by either party. Each liability policy shall only
include coverages related to activities covered under this
Agreement. All insurance policies shall provide that the
insurance may not be canceled except upon thirty (30) Days prior
written notice to each party, except in the case of nonpayment,
in which case upon ten (10) Days prior written notice to each
party.
(f) Self-Insurance. If either party utilizes self-
insurance, or a self-insured retention to satisfy the insurance
requirements of this Agreement, the other party shall be notified
of such a decision and the amount of such self-insurance or
retention shall be secured by letter(s) of
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credit, cash or other
mutually agreed upon, generally accepted financial methods of
securing such self-insurance retentions. Such security shall
remain in place at all times that the party continues such self-
insurance or self-insured retention. The amount of such security
shall be equal to the amount of such self-insurance or retention.
SECTION 9.2 Certificate. Each party shall provide
the other party with written evidence of the other party's
procurement of the insurance required under Section 9.1, which
evidence shall be in the form of an insurance certificate
specifying the amount of coverage and expiration dates of all
policies in effect. Each such certificate shall indicate that no
insurance will be canceled or materially changed during the Term
without thirty (30) Days prior written notice to each party. No
party shall perform any act that would invalidate the policies
which the parties are obligated to obtain and maintain hereunder,
or to increase the premiums payable under such policies. Should
any party at any time neglect or refuse to provide any insurance
required hereunder, or should any insurance be canceled, the
other party shall have the right, but not the obligation, to
procure the required insurance and the party failing to obtain
and/or maintain the required insurance shall reimburse the other
party for the premiums thereto and any claim payments and defense
costs associated with the loss of such coverage.
SECTION 9.3 Waiver of Subrogation. All policies
obtained hereunder shall have a provision mutually waiving rights
of subrogation by the insurer against the parties hereto.
ARTICLE 10.
MISCELLANEOUS
SECTION 10. 1 Assignment and Subletting.
(a) APC shall have the right to assign its interest in
this Agreement (including, without limitation, any assignment by
operation of law), and APC shall be fully and completely
discharged from its obligations hereunder, provided that such
assignee shall assume and be bound by the terms of this
Agreement, and is reasonably deemed by OCF to be capable of
performing under this Agreement; provided, however, APC shall
have the right, without first having to obtain OCF's consent, to
assign its interest under this Agreement in connection with (i)
any assignment, collateral assignment or lease of this Agreement
by APC to any Project Lender (provided that any collateral
assignment by APC of its rights and obligations under this
Agreement to any Person shall not operate to diminish the
obligations of APC hereunder); and (ii) any assignment of this
Agreement to Orange Cogeneration Limited Partnership, a Delaware
limited partnership, or any Affiliate thereof. Any Project
Lender which has assumed APC's interest hereunder may transfer or
assign this Agreement, sublease or knowingly permit the sublease
of the Facility, without the prior written consent of OCF, and
any purchase money mortgage delivered in connection therewith
shall
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be entitled to the benefit of provisions benefiting Project
Lender hereunder, and any transferee from such Project Lender or
any purchaser at a foreclosure sale may do the same. Any Project
Lender or purchaser at a foreclosure sale shall have no liability
for the period after it assigns or transfers this Agreement.
(b) Nothing in this Agreement shall prevent OCF from
mortgaging, pledging, encumbering or hypothecating this Agreement
provided that any such mortgage, pledge, encumbrance or
hypothecation shall be made subject to this Agreement, and shall
not operate to diminish the obligations of OCF hereunder.
(c) Anything herein to the contrary notwithstanding,
OCF shall have the right to assign its interest in this Agreement
(including, without limitation, any assignment by operation of
law), and OCF shall be fully and completely discharged from its
obligations hereunder, provided that such assignee shall assume
and be bound by the terms of this Agreement, and is reasonably
deemed by APC and the Project Lender to be capable of performing
under the terms of this Agreement.
SECTION 10.2 Notices Concerning APC's Lenders. APC may,
from time to time, without notifying or obtaining the consent of
OCF, hypothecate, mortgage, pledge or alienate APC's rights under
this Agreement to a Project Lender. APC shall give prompt written
notice to OCF of:
(a) its entering into a credit agreement, and the
total amount of funds available thereunder, or of the nature of
the transaction;
(b) any amendments to said credit agreement; and
(c) the Project Lender's address for notices
hereunder; provided, however, that any failure by APC to give
such notice shall not be grounds for denying the Project Lender
the rights and protections it may have.
SECTION 10.3 Further Assurances. Each party further
agrees to execute, acknowledge, and deliver any further documents
or instruments that are necessary or desirable to carry out the
terms of this Agreement or that are reasonably requested by the
other party, or any Project Lender, including, without
limitation, a consent or consents to assignment or similar
documents, and will take any other action reasonably necessary
and proper to carry out the terms and provisions of this
Agreement or consistent with the terms of this Agreement that may
reasonably be requested by the other party, or any Project
Lender, for the purpose of consummating the transactions
described in this Agreement, including, without limitation,
cooperating in obtaining any and all required approvals,
consents, permits and authorizations.
SECTION 10.4 Successors and Assigns. All of the terms and
provisions of this Agreement and the parties' respective rights
and obligations hereunder shall be binding upon and inure to the
benefit of the parties hereto and their respective and permitted
successors and assigns.
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SECTION 10.5 Amendments. No provision of this Agreement
may be changed, waived, modified, discharged, or terminated
except by a written instrument executed by the parties hereto.
SECTION 10.6 Entire Agreement. This Agreement and the
documents delivered in connection with, and/or expressly referred
to in this Agreement, contain the entire agreement and
understanding between the parties with respect to the subject
matter of this Agreement and supersede all prior oral or written
negotiations, understandings and agreements. Neither party will
be bound by or will be deemed to have made any representations,
warranties or commitments except those contained in this
Agreement or in the documents delivered pursuant hereto.
SECTION 10.7 Severability. Should any provision of this
Agreement for any reason be declared invalid or unenforceable,
such decision shall not effect the validity of the remaining
portions, which shall nevertheless remain in full force and
effect as if this Agreement had been executed with the invalid
portion thereof eliminated. If any provision is held invalid or
unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other
circumstances. If any provision of this Agreement is
unenforceable under the law prevailing at a subsequent time, then
such originally unenforceable provision shall be deemed to take
effect at the time it becomes enforceable. As used herein, the
term "unenforceable" is used in its broadest and most
comprehensive sense and includes the concepts of void or
voidable.
SECTION 10.8 Waiver. Either party's delay or failure to
enforce or exercise any provision of this Agreement or rights
existing hereunder shall not in any way be construed as or
constitute a waiver of any such provision or right, or prevent
that party thereafter from enforcing each and every other
provision or right of this Agreement.
SECTION 10.9 Termination and Survival. This Agreement
shall terminate (i) upon expiration of the Term, (ii) in
accordance with Article 4, or (iii) in accordance with Section
6.3. Any provisions, agreements, warranties, or representations
contained in this Agreement which are expressly or by implication
to come into or remain in force following the termination or
expiration of this Agreement (including with limitation, Section
4.4(e), Article 7, Article 8, and Sections 10.9, 10.14, and
10.15) shall survive such termination or expiration.
SECTION 10.10 Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an
original instrument and which shall have the same force and
effect as the original instrument, and all of which shall
constitute one and the same agreement.
SECTION 10.11 Notices. Except as provided herein to the
contrary, any notice or other communication required or permitted
hereunder sell be in writing, and shall be deemed to have been
sufficiently given when delivered in person to an officer of
either party (or, if such party is a partnership, to a partner or
a corporate general partner of such partnership), by facsimile
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(receipt of which is verified by telephone), by overnight
carrier, or when deposited in the United States mails, postage
prepaid, for mailing by express, certified or registered mail,
return receipt requested, addressed as follows:
If to OCF: Orange-Co of Florida, Inc.
P.O. Box 2158
2020 U.S. Highway 17 South
Bartow, Florida 33830-2158
Attention: President
If to APC: A.P. Cogen, Ltd.
9355 Prestwick Club Drive
Duluth, Georgia 30136
Or to such other person or address as the respective party may
specify from time to time in a notice duly given as provided
herein.
SECTION 10.12 Choice of Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF FLORIDA, WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW.
SECTION 10.13 Attorneys' Fees. In the event any dispute
between the parties to this Agreement should result in litigation
or any other proceeding (including, without limitation,
arbitration), the prevailing party shall be reimbursed by the
nonprevailing party for all reasonable costs and expenses,
including, without limitation, reasonable attorneys' fees,
incurred by the prevailing party in connection with such
litigation or other proceeding and any appeal or enforcement
thereof.
SECTION 10.14 Exclusion of Consequential Damages.
Notwithstanding anything else herein to the contrary, neither
party shall be liable to the other for consequential damages;
provided, however, the damages provided for in the last sentence
of each of Sections 5.2(a) and 7.3 shall not be deemed to fall
within this exclusion.
SECTION 10. 15 Representations and Warranties.
(a) In order to induce APC to enter into this
Agreement, OCF represents and warrants that:
(i) It is an entity duly organized and validly
existing under the laws of its state of organization and has full
organizational power and authority to execute, deliver and
perform this Agreement. The execution, delivery and performance
of this Agreement have been duly authorized by all necessary
organizational action on its part to be performed. This Agreement
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constitutes its valid and legally binding obligation and is
enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general
application;
(ii) The execution, delivery and performance
of this Agreement will not violate or conflict with any provision
of law, regulation or order or any court or other agency of
government, its constituting documents, or any indenture,
agreement or other instrument to which it may be a party, or by
which it may be bound, or be in conflict with, result in a
breach of, or constitute (with due notice or lapse of time or
both) a default under or result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever, upon
any of its property or assets pursuant to any such indenture,
agreement or instrument;
(iii) It has good title to the OCF Plant,
free and clear of all liens, charges or encumbrances of any
nature whatsoever, except as set forth in Exhibit F.
(iv) The consolidated balance sheets of OCF
and its subsidiaries as of September 30, 1992 and the related
consolidated statements of income and cash flows for the fiscal
year then ended, copies of which have been furnished to APC,
fairly present the consolidated financial condition of OCF at
such date and the consolidated results of operations for the
period ended on such date, all in accordance with generally
accepted accounting principles consistently applied. Since
September 30, 1992, there has been no material adverse change in
OCF's consolidated financial condition or results of operations
and no event or condition has occurred which could impair OCF's
ability to perform its obligations under this Agreement; and
(v) There is no existing pending or
threatened litigation or governmental investigations which has
not been disclosed to APC in writing prior to the date of this
Agreement which could reasonably be expected to materially
adversely affect the Facility or the project related thereto,
including the development, construction, completion, project
financing or operation of such project.
(b) In order to induce OCF to enter into this
Agreement, APC represents and warrants that:
(i) It is an entity duly organized and validly
existing under the laws of its state of organization and has full
organizational power and authority to execute, deliver and
perform this Agreement. The execution, delivery and performance
of this Agreement have been duly authorized by all necessary
organizational action on its part to be performed. This Agreement
constitutes its valid and legally binding obligation and is
enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general
application; and
(ii) The execution, delivery and performance of
this Agreement will not violate or conflict with any provision of
law, regulation or order of any court or other agency of
government, its constituting documents, or any indenture,
agreement or other instrument to which it
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may be a party, or by
which it may be bound, or be in conflict with, result in a breach
of, or constitute (with due notice or lapse of time or both) a
default under or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever, upon any of
its property or assets pursuant to any such indenture, agreement
or instrument.
SECTION 10.16 Delivery of Financial Statements. Each party
shall deliver to the other party, as soon as available and in any
event within Ninety (90) Days after the end of each fiscal year
of such party, consolidated statements of income, retained
earnings and cash flow of such party and its subsidiaries for
such fiscal year and the related consolidated balance sheet of
such party and its subsidiaries as at the end of such fiscal
year, setting forth in each case in comparative form for the
corresponding figures for the preceding fiscal year, accompanied
by an opinion of independent certified public accountants of
recognized national standing, which opinion shall state that
those consolidated financial statements fairly present the
consolidated financial condition and results of operations of
such party and its subsidiaries as at the end of, and for, such
fiscal year in accordance with generally accepted accounting
principles, consistently applied.
SECTION 10.17 No Partnership or Joint Venture. OCF does
not in any way or for any purpose become, by nature of this
Agreement, an agent, partner or joint venturer of APC and APC
shall not be deemed an agent, partner or joint venturer of OCF
for any purpose.
SECTION 10.18 Estoppel Certificates. Each party shall,
from time to time, upon twenty (20) Days' prior written request
by the other party, execute, acknowledge and deliver to the other
party, or any other person, firm or corporation specified by such
party, a certificate signed by its authorized representative
stating that (a) this Agreement is unmodified and in full force
and effect, or if there have been modifications, that this
Agreement is in full force and effect as modified, and setting
forth such modifications; (b) the dates to which any payments
which are due hereunder have been made, (c) stating that to the
knowledge of the signer of such certificate no default exists
hereunder or specifying each such default of which the signer has
knowledge, and (d) stating that to the knowledge of the signer of
such certificate that the other party has observed and performed
all of the terms, covenants and conditions on its part to be
performed and, if not, specifying the same. The failure of either
party to deliver such certificate within such twenty (20) Day
period shall be conclusive upon the requesting party or any other
person, firm or corporation for whose benefit the statement was
requested, that this Agreement is in full force and effect
without modification, except as may be represented by the
requesting party, that there are no uncured defaults on the part
of the requesting party, that all sums due by the requesting
party prior to such time have been paid. Any certificate given
pursuant to this Section 10.18 may be relied upon by any actual
prospective mortgagee or purchaser of any interest in this
Agreement or the Facility.
SECTION 10.19 Compliance with Laws. Each party shall, at
its own cost and expense (except as herein otherwise specifically
provided), obey and comply with all laws, ordinances, rules,
requirements, regulations and orders of the federal, state,
county and city governments, or any of them, and of any and all
of their departments and bureaus, or of any other
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competent authority, as they may pertain to the Facility or the
OCF Plant, to the protection and maintenance thereof, to the
business operated therein, or the sanitary conditions thereof, or
otherwise to the performance of either party under this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of
the date first hereinabove written.
ORANGE-CO OF FLORIDA, INC., a Florida corporation
By: /s/ Gene Mooney
---------------
Name: Gene Mooney
Title: President
Witness: /s/ John R. Alexander
---------------------
AP COGEN, LTD., a Florida Limited Partnership
By: Energy Development Corporation, a Georgia corporation,
its General Partner
By: /s/ E. E. Heaton
----------------
Name: Eldon E. Heaton
Title: President
Witness: /s/ Patricia
-----------------------
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THIS DOCUMENT IS A COPY OF THE EXHIBIT 10.17 FILED ON FEBRUARY
14, 1994 PURSUANT TO A RULE 201.
EXHIBIT 10.17
MANAGEMENT SECURITY PLAN
OF
ORANGE-CO OF FLORIDA, INC.
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ORANGE-CO OF FLORIDA, INC.
TABLE OF CONTENTS
Article Subject Page
1 Definitions 1
2 Eligibility and Membership 2
3 Retirement Benefit and Benefit Upon
Separation from Service 2
4 Death Benefit 3
5 Beneficiary 5
6 Leave of Absence 5
7 Employer Liability 5
8 Termination of Employment 6
9 Termination of Participation 6
10 Termination, Amendment, Modification,
or Supplement of Plan 7
11 Other Benefits and Agreements 7
12 Restrictions on Alienation of Benefits 7
13 Administration of the Plan 7
14 Miscellaneous 9
15 Adoption of Plan by Subsidiary,
Affiliated or Associated Companies 9
Plan Agreement I-1
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MANAGEMENT SECURITY PLAN
OF
ORANGE-CO OF FLORIDA, INC.
Purpose and Effective Date
The purpose of this Plan is to provide specified benefits to a
select group of Management and highly compensated employees who
contribute materially to the continued growth, development and
future business success of Orange-co of Florida, Inc. The
effective date of this Plan is October 1, 1993.
Article 1
Definitions
For purposes hereof, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following
indicated meanings:
1.0 "Company" shall mean Orange-co of Florida, Inc..
1.1 "Beneficiary" shall mean the person or persons, or the
estate of a Participant, entitled to receive any
benefits under this Plan upon the death of a
Participant.
1.2 "Committee" shall mean the Administrative Committee
appointed to manage and administer the Plan in
accordance with the provisions of Article 13 of this
Plan.
1.3 "Employee" shall mean any person who is in the regular
full time employment of the Company or one of its
subsidiaries as determined by the personnel rules and
practices of the Company or the subsidiary. The term
does not include persons who are retained as
consultants or other independent contractors.
1.4 "Employer" shall mean the Company and any subsidiary
having one or more Employees who are eligible to
participate in the Plan and have been selected by the
Committee to participate. Where the context dictates,
the term "Employer" as used herein refers to the
particular Employer which has entered into a Plan
Agreement with a specific Participant.
1.5 "Covered Salary" shall mean that portion of a
Participant's base annual salary excluding bonuses or
other fringe benefits, if any, which the Participant
chooses as a basis for computation of the Retirement or
Death Benefit pursuant to the terms and conditions of
this Plan.
1.6 "Participant" shall mean an Employee who is selected
and elects to participate in the Plan as provided in
Article 2 hereof.
1.7 "Plan" shall mean the Management Security Plan of the
Employer which shall be evidenced by this instrument
and by each Plan Agreement.
1.8 "Plan Agreement" shall mean the form of written
agreement, attached
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hereto as Annex I, which is entered
into from time to time by and between an Employer and a
Participant.
1.9 "Retirement" and "Retire" shall mean severance from
employment with the Employer at or after the attainment
of sixty-five (65) years of age.
1.10 "Normal Retirement Date" shall be the first day of the
month following the month in which the Participant
attains his or her sixty-fifth (65th) birthday.
Article 2
Eligibility and Membership
2.0 The Committee shall have the sole discretion to
determine the Employees who are eligible to become
Participants in accordance with the purpose of the
Plan.
2.1 As a condition of participation, each Participant so
selected shall complete, execute and return to the
Committee a Plan Agreement in the form attached hereto
as Annex I and comply with such further conditions as
may be established by and in the sole discretion of the
Committee.
Article 3
Retirement Benefit and Benefit Upon
Separation from Service
3.0 If a Participant who has remained an employee until age
sixty-five (65) retires, and if the Plan and Plan
Agreement have been kept in force, the Employer will
pay or cause to be paid to such Participant the amount
per month specified in the Plan Agreement as a
Retirement Benefit. Such monthly payments shall
commence on the Normal Retirement Date and continue for
a total of one hundred and eighty (180) months.
3.1 A Participant who continues employment after age
sixty-five (65) may remain a Participant in the Plan
with the consent of the Employer.
3.2 If a Participant who is receiving Retirement Benefits
shall die after retirement but before the applicable
Retirement Benefit is paid in full, the unpaid
Retirement Benefit payments to which such Participant
is entitled shall continue and be paid to that
Participant's Beneficiary. Such payments shall be made
in accordance with the payment schedule applicable to
that Participant pursuant to Sections 3.0 or 3.1 of the
Plan.
3.3 No Death Benefit as defined in Article 4 shall be paid
to the Beneficiary of a Participant who dies after
Retirement but before the Retirement Benefit is paid in
full.
3.4 A Participant who ceases to be an Employee before
completion of one (1) continuous full year of
participation in the Plan except as a result of death,
retirement or total disability within the meaning of
Article 4 shall not be entitled to any benefits and the
Employer shall have no obligation to such Participant.
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3.5 A Participant who ceases to be an Employee after the
completion of one (1) full year of participation in the
Plan, but before Participant's Early Retirement Date,
shall receive a portion of his or her monthly
Retirement Benefit upon the earlier of (i)
Participant's death or (ii) attainment of age
sixty-five (65). Said portion shall be the monthly
amount of the Retirement Benefit set forth in
Participant's Plan Agreement multiplied by a fraction,
the numerator of which is the number of whole years
said Employee has been a Participant in the Plan and
the denominator of which is the number of whole years
between such Participant's age at entry into the Plan
and Participant's sixty-fifth (65th) birthday. If
increased amounts of participation have been added
since initial entry into this, successor, or
predecessor Plans, the reduced monthly Retirement
Benefit shall be determined by reducing each increment
of participation in accordance with the formula. The
resulting reduced monthly amount payable for one
hundred and eighty (180) months shall be the only
benefit to which such Participant shall be entitled.
3.6 If a Participant elects to continue employment beyond
age 65, the Committee, and only the Committee, will
specify the amount of Participant's Retirement Benefit,
which shall be evidenced by a new Plan Agreement to be
executed by the Participant.
Article 4
Death Benefit
4.0 If a Participant dies before Retirement and the Plan is
in effect at the time, the Employer will pay or cause
to be paid a Death Benefit to such Participant's
Beneficiary. The said Death Benefit shall be the full
amount or one hundred percent (100%) of the Employee's
Covered Salary as set forth in the Plan Agreement for
the first twelve (12) months after such death and fifty
percent (50%) of the said Employee's Covered Salary for
the next one hundred and eight (108) months or until
the Participant would have attained age sixty-five (65)
whichever is later. Such payments shall commence
effective the first day of the month following the date
of death.
4.1 The obligation of the Employer to pay the Death Benefit
shall exist only if
(a) at the time of death the Participant was an
Employee, totally disabled, or on an
authorized leave of absence,
(b) the Participant made all payments required by
Article 4 unless any unpaid amounts were
being waived as a result of disability,
(c) the Plan Agreement had been kept in force
until the time of death,
(d) the Participant's death was not a result of
suicide within two years after the date of
the original Plan Agreement, or within two
years of the date of any subsequent Plan
Agreement which is the result of additional
benefits granted because of an increase in
Employee's Covered Salary, but the amount of
the Death Benefit which the Employer shall
not be obligated to pay
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shall be limited to
benefits granted within two years prior to
the date of such suicide,
(e) the Participant's death was determined not to
be from a bodily or mental cause or causes,
the information about which was withheld, or
knowingly concealed, or falsely provided by
the Participant, when requested by the
Employer to furnish evidence of good health
upon the Participant's enrolling in the
Management Security Plan for any increments
of the Employee's Covered Salary, and
(f) proof of death in such form as determined
acceptable by the Committee is furnished.
4.2 Each Participant may be required to pay periodically to
the Employer a portion of the cost of Death Benefit
protection. The amount and time of such payment shall
be stated in the Plan Agreement and is dependent upon
the amount of the benefits therein specified, the
Participant's age and Covered Salary.
4.3 The amount to be paid by a Participant may be increased
by the Committee to reflect increases in the Employee's
Covered Salary.
4.4 Any increases in the Employee's Covered Salary and
amounts to be paid as a result thereof shall be
evidenced by the Plan Agreement.
4.5 The Participant's obligation to make the aforesaid
payments shall
(a) be stated in the Plan Agreement,
(b) commence on the date specified in the Plan
Agreement, and
(c) continue thereafter during the term of
participation except as otherwise provided in
Article 4 until the Participant's death,
retirement, other termination of employment
or no longer required by the Committee,
whichever first occurs; provided, however,
that if a Participant's retirement occurs
prior to such Participant having made one
hundred twenty (120) monthly payments, such
Participant shall nevertheless be required
(except as otherwise provided in Article 4)
to continue to make such payments until the
earlier of (i) Participant's death or (ii)
the such one hundred twentieth (120th)
monthly payment shall have been made. If
increased amounts of participation have been
added since initial entry into this,
successor, or predecessor Plans, the
aforementioned monthly payments associated
with each increased amount of participation
shall be continued for the required one
hundred and twenty month period beginning
with the effective date of each such
increase.
4.6 A Participant may, with the consent of his or her
Employer, increase or decrease the amount of the
benefits initially selected by him or her, which
increase or decrease shall be reflected in the Plan
Agreement in accordance with the rules adopted by the
Committee for this purpose.
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4.7 Payments by a Participant pursuant to Article 4 and the Plan
Agreement shall be made in the following manner and subject
to the following terms and conditions:
(a) A Participant shall authorize the Employer in
the Plan Agreement to deduct and retain a
monthly payment from the Participant's salary
equal to the amount of the Participant's
contribution.
(b) The amount retained by the Employer shall be
and become the property of that Employer
without obligation to use the same in any
specific manner and with no right of the
Participant to reimbursement at any time.
(c) A Participant who, prior to retirement, is
totally disabled for more than three (3)
months shall not be required to make any
payments as provided in Article 4 of this
Plan beginning with the fourth month
following the date such total disability
occurs until the earlier of Participant's
attaining age sixty-five (65) or until such
disability no longer exists.
(d) The Employer will be obligated to waive
payments of a totally disabled Participant
only if
(i) the Participant's disability was not caused by
illegal or criminal acts of the Participant or was
not intentionally self-inflicted, and
(ii) the Participant has made all payments required by
the Plan and Plan Agreement, and
(iii) the Participant's Plan Agreement was in force.
If all provisions of Article 4 are met, the Employer will be
obligated to waive payments of a totally disabled Participant on
authorized leave of absence at the time such disability occurred
until the earlier of Participant's attaining age sixty-five (65)
or until such disability no longer exists.
(e) If a Participant dies prior to Retirement
while payments are being waived, the Death
Benefit provided in Article 4.0 shall be paid
in accordance with the provisions of that
Article.
(f) The determination of what constitutes total
disability and the removal thereof for
purposes of this Article shall be made by the
Committee, in its sole discretion, and such
determination shall be conclusive.
Article 5
Beneficiary
5.0 A Participant shall designate his or her Beneficiary to
receive benefits under the Plan by completing the
Beneficiary Designation. If more than one Beneficiary
is named, the shares and preference of each shall be
indicated.
5.1 A Participant shall have the right to change the
Beneficiary by
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submitting to the Committee a new
Beneficiary Designation in the form prescribed by the
Committee.
5.2 No Beneficiary Designation shall be effective until
acknowledged in writing by the Employer; however, upon
the Employer's acknowledgement of approval, the
effective date of the Beneficiary Designation shall be
the date it was executed by the Participant.
5.3 If the Employer has any doubt as to the proper
Beneficiary to receive payments pursuant to this Plan,
it shall have the right to withhold such payments until
the matter is finally adjudicated.
5.4 Any payment made by the Employer in accordance with
this Plan and a Participant's Beneficiary Designation
shall fully discharge the Employer from all further
obligations with respect to such payment.
Article 6
Leave of Absence
6.0 If a Participant is authorized by the Employer for any
reason to take a leave of absence from employment, such
Participant shall be required to continue to make all
monthly payments in order to maintain the Plan
Agreement in force except as provided in Article 4.7(c)
and 4.7(d).
6.1 Failure to make any such payment shall cause a Plan
Agreement to terminate without the necessity of any
notice from either party to the other. From and after
such termination, neither party shall have any further
obligation to the other party under the Plan or Plan
Agreement.
Article 7
Employer Liability
7.0 Amounts payable to a Participant shall be paid from the
general assets of the Employer exclusively.
7.1 No person entitled to any payment shall have any claim,
right, security or other interest in any asset of the
Employer.
7.2 The Employer's liability for the payment of benefits
shall be evidenced only by this Plan and each Plan
Agreement entered into between the Employer and a
Participant.
7.3 The Employer shall require that an Employee satisfy
evidence of good health when enrolling for any
increment of the Employee's Covered Salary. The
Employee agrees to cooperate by:
(a) furnishing such information as the Employer
may require, including but not limited to
reports of physical examinations of any
previous employer,
(b) taking such additional physical examinations
as may be requested by the Employer, and
(c) doing any other act which may be requested by
the Employer.
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7.4 If the Employee does not cooperate in the completion of
such requirements, the Employer shall have no further
obligation to Employee under the Plan except as to any
benefits previously granted.
7.5 The Employer shall have no obligation of any nature
whatsoever to a Participant under the Plan and Plan
Agreement, except as otherwise especially provided in
the Plan, if the Participant's death was determined to
be from a bodily or mental cause or causes, the
information about which was withheld, or knowingly
concealed, or falsely provided by the Participant, when
requested by the Employer to furnish evidence of good
health upon the Participant's enrolling in the
Management Security Plan for any increments of the
Employee's Covered Salary.
Article 8
Termination of Employment
Neither the Plan nor Plan Agreement, either singly or
collectively, obligates the Employer to continue the employment
of a Participant or limits the right of the Employer at any time
and for any reason to terminate a Participant's employment.
Termination of a Participant's employment with the Employer for
any reason, whether by action of the Employer or Participant,
shall immediately terminate Participant's participation in the
Plan and Plan Agreement and all further obligations of either
party to the other, except as may be provided in Section 3.5. In
no event shall the Plan or the Plan Agreement, either singly or
collectively, by their terms or implications constitute an
employment contract of any nature whatsoever between the Employer
and a Participant.
Article 9
Termination of Participation
9.0 A Participant may terminate participation in the Plan
and Plan Agreement at any time by giving the Employer
written notice of such termination not less than 30
days prior to the anniversary date of the date of
execution of the most recently executed Plan Agreement
attached as Annex 1.
9.1 Participants who elect to terminate participation in
the Plan and Plan Agreement after one (1) full year of
participation but before eligibility for Retirement
will be entitled to the same benefits as a Participant
who ceases to be an Employee as described in Section
3.5. Such Participants will not be entitled to a Death
Benefit defined in Section 4.0.
Article 10
Termination, Amendment, Modification or Supplement of Plan
10.0 The Employer reserves the right to terminate this Plan.
10.1 The Employer reserves the right to totally or partially
amend, modify or supplement this Plan at any time.
10.2 The Employer reserves the right to terminate the Plan
Agreement of any Employee.
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10.3 The right to terminate, amend, modify or supplement the
Plan or terminate any Plan Agreement shall be exercised
for the Employer by the Committee.
10.4 No action to terminate, amend, modify or supplement the
Plan or terminate any Plan Agreement shall be taken
except upon written notice to each Participant to be
affected thereby not less than 30 days prior to such
action.
10.5 The Committee shall take no action to terminate the
Plan or a Plan Agreement with respect to a Participant
or Participant's Beneficiary after entitlement to any
benefits pursuant to Article 3 or Article 4 of this
Plan has occurred.
10.6 Upon the termination of this Plan or any Plan Agreement
by either the Committee or a Participant in accordance
with any provisions for such termination, neither the
Plan nor the Plan Agreement shall be of any further
force and effect and no party shall have any further
obligation under either this Plan or Plan Agreement so
terminated, except as may be provided for in Section
3.5 hereof.
Article 11
Other Benefits and Agreements
The benefits provided for a Participant and Participant's
Beneficiary under the Plan are in addition to any other benefits
available to such Participant under any other plan or program for
employees of the Employer and the Plan shall supplement and shall
not supersede, modify or amend any other such plan or program
except as may otherwise be expressly provided. Benefits under
the Plan shall not be considered compensation for the purpose of
computing contributions or benefits under any plan maintained by
the Employer which is qualified under Section 401(a) and 501(a),
Internal Revenue Code of 1954, as amended.
Article 12
Restrictions on Alienation of Benefits
No right or benefit under the Plan or a Plan Agreement shall be
subject to anticipation, alienation, sale, assignment, pledge,
encumbrance or change, and any attempt to anticipate, alienate,
sell, assign, pledge, encumber or change the same shall be void.
No right or benefit hereunder shall in any manner be liable for
or subject to the debts, contract, liabilities, or torts of the
person entitled to such benefit.
Article 13
Administration of the Plan
13.0 The general administration of this Plan, as well as
construction and interpretation thereof, shall be
vested in the Committee, the number of members of which
shall be designated and appointed from time to time by,
and shall serve at the pleasure of, the Board of
Directors of the Employer. Any member of the Committee
may resign by notice in writing filed with the
Secretary of the Committee. Vacancies shall be filled
promptly by the Board of Directors of the Employer, but
any vacancies remaining unfilled for ninety days may be
filled by a majority vote of the remaining members of
the Committee. Each
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person appointed a member of the
Committee shall signify acceptance by filing a written
acceptance with the Secretary of the Committee.
13.1 The Board of Directors shall designate one of the
members of the Committee as Chairman and shall appoint
a Secretary who need not be a member of the Committee.
The Secretary shall keep minutes of the proceedings of
the Committee and all data, records and documents
relating to the administration of the Plan by the
Committee. The Committee may appoint from its number
such subcommittees with such powers as the Committee
shall determine and may authorize one or more members
of the Committee or any agent to execute or deliver any
instrument or make any payment on behalf of the
Committee.
13.2 All resolutions or other actions taken by the Committee
shall be by the vote of a majority of those present at
a meeting at which a majority of the members are
present, or in writing by all the members in office at
the time if they act without a meeting.
13.3 Subject to the Plan, the Committee shall from time to
time establish rules, forms and procedures for the
administration of the Plan. Except as otherwise herein
expressly provided, the Committee shall have the
exclusive right to interpret the Plan and to decide any
and all matters arising thereunder or in connection
with the administration of the Plan. The Committee
shall have the exclusive right to determine (a)
disability in respect to a Participant, and (b) the
degree thereof, either or both determinations to be
made on the basis of such medical and/or other evidence
as the Committee, in its sole judgment, may require.
Such decisions, actions and records of the Committee
shall be conclusive and binding upon the Employers and
all persons having or claiming to have any right or
interest in or under the Plan.
13.4 The members of the Committee and the officers and
directors of the Employers shall be entitled to rely on
all certificates and reports made by any duly appointed
accountants and on all opinions given by any duly
appointed legal counsel. Such legal counsel may be
counsel for the Employer.
13.5 No member of the Committee shall be liable for any act
or omission of any other member of the Committee, nor
for any act or omission on his or her own part,
excepting his or her own willful misconduct. The
Employer shall indemnify and save harmless each member
of the Committee against any and all expenses and
liabilities arising out of his or her membership on the
Committee, excepting only expenses and liabilities
arising out of his or her own willful misconduct.
Expenses against which a member of the Committee shall
be indemnified hereunder shall include, without
limitation, the amount of any settlement or judgment,
costs, counsel fees and related charges reasonably
incurred in connection with a claim asserted or a
proceeding brought or settlement thereof. The
foregoing right of indemnification shall be in addition
to any other rights to which any such member may be
entitled as a matter of law or otherwise.
13.6 In addition to the powers hereinabove specified, the
Committee shall have the power to compute and certify
under the Plan the amount and kind of benefits from
time to time payable to Participants and their
Beneficiaries and to authorize all disbursements for
such purposes.
13.7 To enable the Committee to perform its functions, the
Employer shall
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supply full and timely information to
the Committee on all matters relating to the
compensation of all Participants, their retirement,
death or other cause for termination of employment, and
such other pertinent facts as the Committee may
require.
13.8 The Committee shall also have the power, in its sole
discretion, to change the manner and time of payments
to be made to a Participant or Participant's
Beneficiary from that set forth in the Participant's
Plan Agreement, if requested to do so by such
Participant or Beneficiary.
Article 14
Miscellaneous
14.0 Any notice which shall or may be given under the Plan
or a Plan Agreement shall be in writing and shall be
mailed by United States mail, postage prepaid. If
notice is to be given to the Employer, such notice
shall be addressed to the Employer at
Orange-co of Florida, Inc.
2020 U. S. Highway 17 South
Bartow, Florida 33830
marked for the attention of the Secretary, Administrative
Committee, Management Security Plan; or, if notice to a
Participant, addressed to the address shown on such
Participant's Plan Agreement.
14.1 Any party may change the address to which notices shall
be mailed from time to time by giving written notice of
such new address.
14.2 The Plan shall be binding upon the Employer and its
respective successors or assigns, and upon a
Participant, Participant's Beneficiary, assigns, heirs,
executors and administrators.
14.3 The Plan and Plan Agreement shall be governed by and
construed under the laws of the State of Florida, as in
effect at the time of their adoptions and execution,
respectively.
14.4 Masculine pronouns wherever used shall include feminine
pronouns and the singular shall include the plural.
Article 15
Adoption of Plan by Subsidiary,
Affiliated or Associated Employers
Any corporation which is a subsidiary of the Employer may, with
the approval of the Committee, adopt this Plan and thereby come
within the definition of Employer stated in Article 1 hereof.
COMPLETE
EXHIBIT 99.3
PROFIT SHARING PLAN AND TRUST
FOR EMPLOYEES OF
ORANGE-CO OF FLORIDA, INC.
SECTION INDEX PAGE
ARTICLE I
DEFINITIONS
1.1 "Active Participant" 1
1.2 "Aggregate Account" 1
1.3 "Aggregation Group" 1
1.4 "Anniversary Date" 1
1.5 "Annual Addition" 2
1.6 "Beneficiary" or "Beneficiaries" 2
1.7 "Break in Service" 2
1.8 "Cash Out" 2
1.9 "Code" 2
1.10 "Compensation" 2
1.11 "Defined Benefit Plan Fraction" 3
1.12 "Defined Contribution Plan Fraction" 3
1.13 "Determination Date" 4
1.14 "Employee" 4
1.15 "Employer" 4
1.16 "Employer Contribution Account" 5
1.17 "ERISA" 5
1.18 "Excess Amount" 5
1.19 "Fiduciary" 5
1.20 "Fiscal Year" 5
1.21 "Forfeiture" 5
1.22 "Highly Compensated Employee" 5
1.23 "Hour of Service" 6
1.24 "Investment Manager" 7
1.25 "Involuntary Cash Out" 7
1.26 "Key Employee" 7
1.27 "Limitation Year" 8
1.28 "Maximum Permissible Amount" 8
1.29 "Non-Highly Compensated Employee" 8
1.30 "Non-Key Employee" 8
1.31 "Owner-Employee" 9
1.32 "Participant" 9
1.33 "Participant Directed Account" 9
1.34 "Permissive Aggregation Group" 9
1.35 "Plan" 9
1.36 "Plan Administrator" or "Administrator" 9
1.37 "Plan Year" 9
1.38 "Qualifying Employer Real Property" 9
1.39 "Qualifying Employer Securities" 9
1.40 "Required Aggregation Group" 9
1.41 "Retirement Date" 9
1.42 "Segregated Account" 9
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1.43 "Shareholder-Employee" 10
1.44 "Total and Permanent Disability" 10
1.45 "Trustee" 10
1.46 "Trust Fund" or "Trust" 10
1.47 "Valuation Date" 10
1.48 "Vested Interest" 10
1.49 "Voluntary Cash Out" 10
1.50 "Year of Service" 10
ARTICLE II
ELIGIBILITY
2.1 Qualification as a Participant 11
2.2 Notice of Participation 11
2.3 Leave of Absence 11
2.4 Reparticipation 11
2.5 Omission of Eligible Employee 11
2.6 Inclusion of Ineligible Employee 12
ARTICLE III
TOP-HEAVY PROVISIONS
3.1 Special Top-Heavy Plan Requirements 12
3.2 Determination of Top-Heavy Status 12
ARTICLE IV
CONTRIBUTIONS
4.1 Employer Contributions 13
4.2 Maximum Limitation Applicable to
Combination of Defined Contribution Plans 13
4.3 Time of Payment of Employer Contributions 13
ARTICLE V
ALLOCATIONS
5.1 Minimum Allocations for Top-Heavy Plan Years 14
5.2 Allocation Formula 14
5.3 Overall Limitation of Benefits 15
5.4 Adjustment for Excess Annual Additions 16
5.5 Segregated Accounts for Participants 16
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ARTICLE VI
VALUATIONS
6.1 Valuation of the Trust Fund 16
6.2 Method of Valuation 16
ARTICLE VII
DETERMINATION OF AGGREGATE ACCOUNT
7.1 Determination of Vested Interest Upon Retirement 17
7.2 Determination of Vested Interest Upon Death;
Beneficiaries 17
7.3 Determination of Vested Interest Upon Total and
Permanent Disability 17
7.4 Determination of Vested Interest Upon Termination
of Employment 18
ARTICLE VIII
DISTRIBUTION OF BENEFITS
8.1 Distributable Events 20
8.2 Distribution of Aggregate Account 20
8.3 Cash Out of Vested Interest in Aggregate
Account Upon Termination of Employment 20
8.4 Commencement of Distributions 20
8.5 Distributions in Cash or in Kind 21
8.6 Distributions to Minors and Incompetents 21
8.7 Location of Participant or Beneficiary Unknown 21
8.8 Qualified Domestic Relations Orders 22
ARTICLE IX
MINIMUM DISTRIBUTIONS
9.1 Minimum Distributions 22
9.2 Required Beginning Date 22
9.3 Limits on Distribution Periods 22
9.4 Determination of Amount to be Distributed
Each Year 23
9.5 Death Distribution Provisions 23
9.6 Definitions 24
ARTICLE X
FIDUCIARY RESPONSIBILITY AND INVESTMENT OF PLAN FUNDS
10.1 Basic Responsibilities of Trustee 26
10.2 Assets Held as Single Fund 26
10.3 Powers of Trustee 26
10.4 Selection of Investment Objectives 27
10.5 Directed Investment by Investment Manager 28
10.6 Directed Investment by Participants 28
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10.7 Powers and Duties of Plan Administrator 30
10.8 Records and Reports 30
10.9 Compensation of the Trustee and Administrative
Expenses of the Trust 30
10.10 Communication to Trustee to be in Writing 31
10.11 Taxes 31
10.12 Fiduciary Responsibility 31
10.13 Removal and Resignation of Trustee 32
10.14 Bonding 32
ARTICLE XI
PARTICIPATING EMPLOYERS
11.1 Adoption by Other Employers 32
11.2 Contributions by Employer and Participating
Employers 32
11.3 Employee Transfers and Terminations 33
11.4 Designation of Employer as Agent 33
11.5 Expenses Shared by Participating Employers 33
11.6 Amendment 33
11.7 Discontinuance of Participation 33
ARTICLE XII
AMENDMENT AND TERMINATION
12.1 Right to Amend 34
12.2 Right to Terminate 34
12.3 Permanent Discontinuance of Contributions 34
ARTICLE XIII
MISCELLANEOUS
13.1 Exclusive Benefit of Participants 34
13.2 Plan Does Not Restrict Employer's Employment and
Business Policies 34
13.3 Rights Against Employer 34
13.4 Intention to Continue Plan 35
13.5 Assumption of Plan by Successor 35
13.6 Predecessor Employer 35
13.7 Controlled or Affiliated Service Groups 35
13.8 Leased Employees 36
13.9 Interest in Trust not Subject to
Creditors' Claims 36
13.10 Internal Revenue Service Approval of Employer's
Plan 36
13.11 Mistake of Fact 37
13.12 Disallowance of Deduction 37
13.13 Restrictions on Return of Contributions 37
13.14 Claims 37
13.15 Direct Rollovers 37
13.16 Agent for Service of Process 38
13.17 Masculine, Feminine 38
13.18 Applicable Law 38
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PROFIT SHARING PLAN AND TRUST
FOR EMPLOYEES OF
ORANGE-CO OF FLORIDA, INC.
THIS AGREEMENT is made and entered into this day of
December 20, 1994, by and between Orange-co of Florida, Inc., a
Florida corporation (the "Employer"), and B. H. Griffin, III (the
"Trustee").
WHEREAS, the Employer desires to recognize the contri
bution made to its successful operation by its employees and to
reward that contribution by means of a Profit Sharing Plan for
those employees who qualify as participants hereunder; and
WHEREAS, the Profit Sharing Plan provides for the
establishment of a Trust into which contributions may be made by
the Employer for later distribution to the participants, their
beneficiaries or their estates; and
WHEREAS, this Profit Sharing Plan is intended to be quali
fied under Section 401(a) of the Internal Revenue Code of 1986, as
amended, and the Trust is intended to be exempt from taxation under
Section 501(a) thereof.
NOW, THEREFORE, effective January 1, 1993 (the "Effective
Date"), the Employer hereby adopts this Profit Sharing Plan and
creates a Trust hereunder as the funding vehicle for the exclusive
benefit of the participants and their beneficiaries, and the
Trustee hereby accepts the Profit Sharing Plan and Trust on the
terms and conditions set forth herein.
ARTICLE I
DEFINITIONS
DEFINITIONS:
1.1 "Active Participant" means any Participant who, with
respect to a Plan Year, is eligible to participate in the Plan
under Article and (i) is eligible to receive an allocation of the
Employer contribution under Section or (ii) if the Plan is a Top-
Heavy Plan (as defined in Section ) for that Plan Year, is a Non-
Key Employee and is employed by the Employer on the last day of the
Plan Year. Notwithstanding the above, any Participant who is
considered an Active Participant solely because of clause (ii) of
the preceding sentence shall not be considered an Active
Participant for the Plan Year to the extent that the sum of the
allocations (other than earnings) to his Employer Contribution
Account for the Plan Year exceeds the lesser of three percent (3%)
of the Participant's Compensation or the greatest contribution
(expressed as a percentage of Compensation) made on behalf of any
Key Employee, taking into account the sum of all Employer
contributions (excluding earnings) allocated to such Key Employee's
Employer Contribution Account for that Plan Year. A Participant's
status as an Active Participant will be determined without regard
to such Participant's attainment of any age.
1.2 "Aggregate Account" means, with respect to a Par
ticipant, the value of all accounts established and maintained on
behalf of the Participant.
1.3 "Aggregation Group" means either a Permissive Aggre
gation Group or a Required Aggregation Group, as hereinafter
defined.
1.4 "Anniversary Date" means the last day of the Plan
Year.
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1.5 "Annual Addition" means the sum of the following
amounts credited to a Participant's accounts for a Limitation Year:
(a) Employer contributions;
(b) Forfeitures;
(c) amounts allocated to an individual medical
benefit account (as defined in Section 415(1)(2) of the Code) that
is part of a pension or annuity plan maintained by the Employer;
and
(d) amounts derived from contributions that are
attributable to post-retirement medical benefits allocated to the
separate account of a Key Employee (as defined in
Section 419A(d)(3) of the Code) under a welfare benefit fund (as
defined in Section 419(e) of the Code) maintained by the Employer.
1.6 "Beneficiary" or "Beneficiaries" means the person or
persons to whom a deceased Participant's Aggregate Account is
payable.
1.7 "Break in Service" means a twelve (12) consecutive
month period (the "computation period") during which an Employee
has not completed more than 200 Hours of Service with the Employer.
Notwithstanding the preceding sentence, a Break in Service shall
not result from an authorized leave of absence, as defined in
Section , and shall not occur in a computation period during which
an Employee becomes a Participant or in which he retires, dies or
suffers Total and Permanent Disability.
In determining whether an Employee incurred a Break in
Service for a computation period in which, or following which, a
maternity or paternity absence (as defined below) occurs, the Hours
of Service which normally would have been credited but for the
maternity or paternity absence (or 8 Hours of Service per day if
the Plan Administrator is unable to determine the Hours of Service
which normally would have been credited) shall be credited to the
computation period in which such absence begins, if the Employee
would incur a Break in Service if the hours were not so credited;
in all other cases the Hours of Service shall be credited to the
following computation period. Notwithstanding the above, the total
Hours of Service credited under a maternity or paternity absence
shall not exceed 201 hours.
A "maternity or paternity absence" is one in which an
Employee is absent from work because of (i) the pregnancy of the
Employee, (ii) the birth of a child of the Employee, (iii) the
placement of a child with the Employee in connection with the
adoption of such child by the Employee or (iv) the caring for the
child immediately following such birth or placement. As a con
dition of the receipt by an Employee of credit for Hours of Service
pursuant to this Section, the Administrator may require that the
Employee timely furnish such information as is reasonably necessary
to establish that the absence from work was for a cause stated in
subparagraphs (i) through (iv) above and to verify the number of
days attributable to such cause.
1.8 "Cash Out" means either an Involuntary Cash Out or
Voluntary Cash Out.
1.9 "Code" means the Internal Revenue Code of 1986, as
amended.
1.10 "Compensation" means, with respect to any Participant,
wages, tips and other payments described in Treasury Regulation
Section 1.415-2(d)(11)(i) (W-2 earnings) actually paid to such
Participant during the Plan Year for services rendered to the
Employer. Compensation shall not include contributions that are
made by the Employer on behalf of a Participant to a cafeteria
plan,
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as defined in Section 125 of the Code, or amounts contributed
pursuant to Sections 402(a)(8), 402(h) and 403(b) of the Code, and
shall not include (i) relocation expenses and (ii) taxable life
insurance premiums. For purposes of this Section, in the case of a
Participant's first year of participation or reparticipation in the
Plan, Compensation will be based on the Participant's Compensation
for that portion of the Plan Year during which he was a Partici
pant; however, for purposes of the minimum allocations required
under Section , the Participant's Compensation for the entire Plan
Year shall be taken into account.
Notwithstanding the foregoing, however, the Compensation of
each Participant taken into account under the Plan for any year
shall not exceed $200,000 for Plan Years beginning before
January 1, 1994, and $150,000 for Plan Years beginning after
December 31, 1993, as adjusted by the Secretary of the Treasury at
the time and in the manner prescribed under Section 415(d) of the
Code (the "compensation limitation"). For this purpose, the dollar
increase in effect on January 1 of any calendar year is effective
for Plan Years beginning in such calendar year. If any Plan Year
contains fewer than twelve (12) calendar months, then the annual
compensation limitation is an amount equal to the annual
compensation limitation for the calendar year in which the
compensation period begins, multiplied by the ratio obtained by
dividing the number of full months in the period by twelve (12).
In determining the Compensation of a Participant for purposes of
the compensation limitation, the rules of Section 414(q)(6) of the
Code shall apply, except that in applying such rules the term
"family" shall include only the spouse of the Participant and any
lineal descendants of the Participant who have not attained age 19
before the close of the Plan Year. If, as a result of the
application of such rules the compensation limitation is exceeded,
then the compensation limitation shall be prorated among the
affected individuals in proportion to each such individual's
Compensation prior to the application of the compensation
limitation.
1.11 "Defined Benefit Plan Fraction" means, for any Plan
Year, the following fraction:
(a) the numerator is the "projected annual benefit"
of the Participant under all defined benefit plans (whether or not
terminated) maintained by the Employer (determined as of the close
of the Plan Year); and
(b) the denominator is the lesser of (i) one hun
dred twenty-five percent (125%) of the dollar limitation determined
for the Limitation Year under Sections 415(b) and (d) of the Code,
or (ii) one hundred forty percent (140%) of the Participant's
average Compensation for the three (3) consecutive Years of Service
in which he received his highest compensation.
For purposes of paragraph (a) above, "projected annual
benefit" means the annual retirement benefit (adjusted to an
actuarially equivalent straight life annuity if such benefit is
expressed in any form other than a straight life annuity or
qualified joint and survivor annuity) to which the Participant
would be entitled under the terms of the Plan assuming (i) the
Participant will continue employment until his Retirement Date
under the Plan (or current age, if later), and (ii) the Parti
cipant's Compensation for the current Limitation Year and all other
relevant factors used to determine benefits under the Plan will
remain constant for all future Limitation Years.
1.12 "Defined Contribution Plan Fraction" means, for any
Plan Year, the following fraction:
(a) the numerator is the sum of the Annual Addi
tions to the Participant's account under all defined contribution
plans (whether or not terminated) maintained by the Employer for
the current and all prior Limitation Years, including Annual
Additions attributable to (i) the Participant's nondeductible
employee contributions to all defined benefit plans (whether or not
terminated) maintained by the Employer, (ii) all welfare benefit
funds (as defined in Section 419(e) of the Code)
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maintained by the
Employer, and (iii) all individual medical benefit accounts (as
defined in Section 415(1)(2) of the Code) maintained by the
Employer; and
(b) the denominator is the sum of the maximum
aggregate amounts for the current and all prior Limitation Years,
regardless of whether a defined contribution plan was maintained by
the Employer. The maximum aggregate amount in any Limitation Year
is the lesser of (i) one hundred twenty-five percent (125%) of the
dollar limitation in effect under Section 415(c)(1)(A) of the Code
or (ii) thirty-five percent (35%) of the Participant's Compensation
for such Limitation Year.
Notwithstanding the above, if the Participant was a
participant as of the end of the first day of the first Limitation
Year beginning after December 31, 1986 in one or more defined
contribution plans maintained by the Employer that were in
existence on May 6, 1986, then the numerator of this fraction will
be adjusted if the sum of the fraction and the Defined Benefit Plan
Fraction would otherwise exceed 1.0 under the terms of this Plan.
Under this adjustment, an amount equal to the product of (i) the
excess of the sum of such fractions over 1.0 times (ii) the de
nominator of the fraction will be permanently subtracted from the
numerator of the fraction. This adjustment is calculated using the
fractions as they would be computed as of the end of the last
Limitation Year beginning before January 1, 1987, and disregarding
any changes in the terms and conditions of the Plan made after
May 5, 1986, but using the Section 415 limitation applicable to the
first Limitation Year beginning on or after January 1, 1987.
1.13 "Determination Date" means, in the case of the first
Plan Year, the last day of such Plan Year. For all other Plan
Years it shall mean the last day of the preceding Plan Year.
1.14 "Employee" means any person who is employed by the
Employer and any person who is required to be considered an
Employee of the Employer under Section 414(n) of the Code, but
excludes the following:
(a) independent contractors;
(b) individuals included in a unit covered by a
collective bargaining agreement between the Employer and employee
representatives, if retirement benefits were the subject of good
faith bargaining (for this purpose, "employee representatives" does
not include any organization more than half of whose members are
employees who are owners, officers or executives of the Employer);
and
(c) nonresident aliens who receive no income from
the Employer which constitutes income from sources within the
United States.
"Employee" includes any employee of the Employer main
taining the Plan or any other employer required to be aggregated
with the Employer under Sections 414(b), 414(c), 414(m), 414(n) or
414(o) of the Code, but only to the extent such provisions require
that employees of another employer be treated as an employee of the
Employer.
1.15 "Employer" means the Employer that adopts this Plan
and any other employer that has adopted this Plan by resolution or,
in the case of an unincorporated trade or business, other
appropriate action (hereinafter a "Participating Employer"). All
members of a controlled group of corporations (as defined in
Section 414(b) of the Code), all trades or businesses--whether or
not incorporated--under common control (as defined in
Section 414(c) of the Code), all members of an affiliated service
group (as defined in Section 414(m) of the Code) and any other
entity required to be aggregated with the Employer pursuant to the
regulations issued under Section 414(o) of the Code shall be
treated as a single Employer, but only to the extent and for the
limited purposes specified in those provisions. For purposes of
Section 415 of the Code, the rules in Section 414(b) and 414(c) of
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the Code shall be modified as provided in Section 415(h) of the
Code. Further, except as specifically provided herein, the
employees of all members of a controlled group of corporations (as
defined in Section 414(b) of the Code), all trades or businesses--
whether or not incorporated--under common control (as defined in
Section 414(c) of the Code), all members of an affiliated service
group (as defined in Section 414(m) of the Code) and any other
entity required to be aggregated with the Employer pursuant to
Section 414(o) of the Code and the regulations issued thereunder
shall be treated as employed by the Employer, but only for Plan
Years with respect to which the Employer consents to the
participation of that organization in the Plan as a Participating
Employer.
1.16 "Employer Contribution Account" means the account
established and maintained for each Participant with respect to his
total interest in the Plan attributable to the Employer's
contributions made under Section and the earnings thereon.
1.17 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
1.18 "Excess Amount" means the excess of a Participant's
Annual Additions for the Limitation Year over the Maximum
Permissible Amount.
1.19 "Fiduciary" means any person who:
(a) exercises discretionary authority or control
with regard to the management of the Plan or the disposition of
Plan assets;
(b) renders investment advice for a fee or other
remuneration (direct or indirect) with respect to monies or other
property of the Plan; or
(c) has discretionary authority or responsibility
as to the administration of the Plan.
1.20 "Fiscal Year" means the Employer's accounting period
of twelve (12) months, commencing on October 1 of each year and
ending on the following September 30.
1.21 "Forfeiture" means that portion of a Participant's
Employer Contribution Account that is not vested, but only upon the
earlier of:
(a) the distribution of the entire vested portion
of the Participant's Employer Contribution Account; or
(b) the last day of the Plan Year in which the
Participant incurs five (5) consecutive Breaks in Service.
1.22 "Highly Compensated Employee" means any "highly
compensated active employee" or "highly compensated former
employee."
A "highly compensated active employee" includes any
Employee who performs services for the Employer during the deter
mination year and who, during the look-back year, (i) received
compensation (as defined below) from the Employer in excess of
$75,000 (as adjusted under Section 415(d) of the Code),
(ii) received compensation from the Employer in excess of $50,000
(as adjusted under Section 415(d) of the Code) and was a member of
the top-paid group for such year, or (iii) was an officer of the
Employer and received compensation during such year that is greater
than fifty percent (50%) of the dollar limitation in effect under
Section 415(b)(1)(A) of the Code. The term "Highly Compensated
Employee" also includes (i) Employees who are both described in the
preceding sentence if the term "determination year" is substituted
for the term "look-back year" and the
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Employee is one of the one
hundred (100) Employees who received the most compensation from the
Employer during the determination year, and (ii) Employees who are
five percent (5%) owners at any time during the look-back year or
determination year. If no officer has satisfied the compensation
requirement of (iii) above during either a determination year or
look-back year, then the highest paid officer for such year shall
be treated as a Highly Compensated Employee.
For purposes of this Section, the determination year shall
be the Plan Year, and the look-back year shall be the twelve (12)
month period immediately preceding the determination year. Notwith
standing the foregoing, the Employer may elect to compute the look-
back year on the basis of the calendar year ending with or within
the determination year, as provided under Treasury Regulation
Section 1.414(q)-1T Q&A-14(b) and subject to the provisions
thereof.
A "highly compensated former employee" includes any
Employee who separated from service (or was deemed to have sepa
rated) prior to the determination year, performs no service for the
Employer during the determination year and was a highly compensated
active employee for either the separation year or any determination
year ending on or after such employee's 55th birthday.
If, during a determination year or look-back year, an
active or former Employee is a family member of either a five
percent (5%) owner or a Highly Compensated Employee who is one of
the ten (10) most Highly Compensated Employees (ranked on the basis
of compensation paid by the Employer during such year), then the
family member and the five percent (5%) owner or top-ten Highly
Compensated Employee shall be aggregated. In such case, the family
member and five percent (5%) owner or top-ten Highly Compensated
Employee shall be treated as a single Employee receiving compen
sation and plan contributions or benefits equal to the sum of such
compensation and contributions or benefits of the family member and
five percent (5%) owner or top-ten Highly Compensated Employee.
For purposes of this Section, family member includes the spouse,
lineal ascendants and descendants of the Employee or former
Employee and the spouses of such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee,
including the determination of the number and identity of Employees
in the top-paid group, the top one hundred (100) Employees, the
number of Employees treated as officers and the compensation that
is considered, will be made in accordance with Section 414(q) of
the Code and the regulations issued thereunder. In determining
which Employees are members of the top-paid group, the Employer may
elect under Treasury Regulation Section 1.414(q)-1T Q&A-9(b)(2) to
exclude Employees based on a shorter period of service or lower age
than otherwise allowable, provided that any such election must be
uniform and consistent with respect to all situations in which
Section 414(q) of the Code is applicable to the Employer.
For purposes of this Section, "compensation" means
compensation within the meaning of Section 415(c)(3) of the Code,
without regard to Sections 125, 402(a)(8) and 402(h)(1)(B) of the
Code.
1.23 "Hour of Service" means:
(a) each hour for which an Employee is directly or
indirectly compensated or entitled to compensation from the
Employer for the performance of duties during the applicable
computation period;
(b) each hour for which an Employee is directly or
indirectly compensated or entitled to compensation from the
Employer--irrespective of whether the employment relationship has
terminated--for reasons other than the performance of duties (such
as vacation, holidays, sickness, disability, lay-off, military duty
or leave of absence) during the applicable computation period; and
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(c) each hour for which back pay is awarded or
agreed to by the Employer, without regard to mitigation of damages.
Hours of Service will be credited for employment with all
members of a controlled group of corporations (as defined in
Section 414(b) of the Code), all trades or businesses--whether or
not incorporated--under common control (as defined in
Section 414(c) of the Code) of which the Employer is a member, all
members of an affiliated service group (as defined in
Section 414(m) of the Code), and any other entity required to be
aggregated with the Employer pursuant to Section 414(o) of the Code
and the regulations thereunder.
Hours of Service will also be credited to any individual
considered an Employee for purposes of this Plan under Sec
tions 414(n) or 414(o) of the Code and the regulations issued there
under, but only for the purposes and to the extent required under
those provisions.
Notwithstanding paragraph (b) above, no more than 501 Hours
of Service are required to be credited to an Employee on account of
any single continuous period during which the Employee performs no
duties (whether or not such period occurs in a single computation
period), and an hour for which an Employee is directly or
indirectly paid, or entitled to payment, on account of a period
during which no duties are performed is not required to be credited
to the Employee if such payment is made or due under a plan
maintained by the Employer solely for the purpose of complying with
applicable worker's compensation, unemployment compensation or
disability insurance laws. In addition, Hours of Service are not
required to be credited hereunder for a payment which solely
reimburses an Employee for medical or medically related expenses
incurred by the Employee. For this purpose, the provisions of
Sections 2530.200b-2(b) and (c) of the Department of Labor Regu
lations are incorporated herein by reference.
For purposes of this Section, a payment shall be deemed to
be made by or due from the Employer regardless of whether such
payment is made by or due from the Employer directly or indirectly
through a trust, fund or insurer to which the Employer contributes
or pays premiums.
1.24 "Investment Manager" means any person, firm or
corporation that:
(a) is (i) registered as an investment adviser
under the Investment Advisers Act of 1940, (ii) a bank, as defined
in that Act, or (iii) an insurance company, as defined in that Act;
(b) has the power to manage, acquire or dispose of
Plan assets; and
(c) acknowledges in writing its Fiduciary status
with respect to the Plan.
1.25 "Involuntary Cash Out" means a distribution to a
Participant that meets the following conditions: (i) the Partici
pant's entire Vested Interest in his Aggregate Account
is distributed to him, (ii) the Vested Interest so distributed does
not exceed $3,500, and (iii) the distribution is made on account of
the Participant's termination of participation in the Plan.
1.26 "Key Employee" means any Employee or former Employee
(and his Beneficiary or Beneficiaries) who, at any time during the
Plan Year or any of the preceding four (4) Plan Years, is or was:
(a) an officer of the Employer if such individual's
Annual Compensation (as defined below) exceeded fifty percent (50%)
of the dollar limitation under Section 415(b)(1)(A) of the Code;
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(b) one of the ten (10) Employees owning (or con
sidered as owning within the meaning of Section 318 of the Code)
the largest interests in the Employer if such individual's Annual
Compensation exceeded one hundred percent (100%) of the dollar
limitation under Section 415(c)(l)(A) of the Code;
(c) a "Five Percent Owner" of the Employer, meaning
any person who owns (or is considered as owning within the meaning
of Section 318 of the Code) more than five percent (5%) of the
outstanding stock of the Employer, or stock possessing more than
five percent (5%) of the total combined voting power of all classes
of stock of the Employer. In determining percentage ownership for
purposes of this paragraph (c), Employers that would otherwise be
aggregated under Sections 414(b), (c) and (m) of the Code shall be
treated as separate Employers; or
(d) a "One Percent Owner" of the Employer, meaning
any person who owns (or is considered as owning within the meaning
of Section 318 of the Code) more than one percent (1%) of the
outstanding stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all classes of
stock of the Employer, having Annual Compensation from the Employer
of more than $150,000. In determining percentage ownership for pur
poses of this paragraph (d), Employers that would otherwise be
aggregated under Sections 414(b), (c) and (m) of the Code shall be
treated as separate Employers; however, in determining whether an
individual has Annual Compensation of more than $150,000, Annual
Compensation from each Employer required to be aggregated under
Sections 414(b), (c) and (m) of the Code shall be taken into
account.
For purposes of this Section, "Annual Compensation" means
compensation as defined in Section 415(c)(3) of the Code, but
includes amounts contributed by the Employer pursuant to a salary
reduction agreement (which are excludable from the Employee's gross
income under Sections 125, 402(a)(8), 402(h)(1)(B) or 403(b) of the
Code).
The rules applicable to Key Employees shall be determined
in accordance with Section 416(i)(1) of the Code and the
regulations issued thereunder.
1.27 "Limitation Year" means the Plan Year, unless another
twelve (12) consecutive month period is selected by the Employer.
All qualified plans maintained by the Employer must use the same
Limitation Year. If the Limitation Year is changed, the new
Limitation Year must begin on a date within the Limitation Year in
which the amendment implementing the change is made.
1.28 "Maximum Permissible Amount" means, with respect to
any Limitation Year, the maximum Annual Addition that may be
contributed or allocated to a Participant's account under the Plan,
which shall not exceed the lesser of (a) the defined contribution
dollar limitation (as determined under Section 415 (c)(1)(A) of the
Code), or (b) twenty-five percent (25%) of the Participant's
Compensation for that year. The compensation limitation referred
to in (b) above shall not apply to any contribution for medical
benefits (within the meaning of Sections 401(h) or 419A(f)(2) of
the Code) which is otherwise treated as an Annual Addition under
Sections 415(l)(1) or 419A(d)(2) of the Code. If a short
Limitation Year results from an amendment changing the Limitation
Year to a different twelve (12) consecutive month period, the
Maximum Permissible Amount will not exceed the defined contribution
dollar limitation multiplied by a fraction, the numerator of which
is the number of months in the short Limitation Year and the
denominator of which is twelve (12).
1.29 "Non-Highly Compensated Employee" means an Employee
who is not a Highly Compensated Employee.
1.30 "Non-Key Employee" means an Employee who is not a Key
Employee.
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1.31 "Owner-Employee" means an individual who is a sole
proprietor or a partner in a partnership who owns more than ten
percent (10%) of either the capital interest or the profits
interest of the partnership.
1.32 "Participant" means (i) any Employee who, with respect
to the Plan Year, is eligible to participate in the Plan as
provided in Section or (ii) any individual who has accrued
benefits under the Plan.
1.33 "Participant Directed Account" means one or more
accounts designated as such by the Plan Administrator over which
the Participant has the authority to direct investments pursuant to
Section .
1.34 "Permissive Aggregation Group" means a group of plans
not required to be included in a Required Aggregation Group. The
Employer may treat any plan not required to be included in an
Aggregation Group as being part of such group if the group would
continue to meet the requirements of Sections 401(a)(4) and 410 of
the Code with that plan being taken into account.
1.35 "Plan" means this document and all amendments thereto,
as well as the Trust used to fund benefits hereunder.
1.36 "Plan Administrator" or "Administrator" means the
Employer, or the individual or entity designated by the Employer to
administer the Plan.
1.37 "Plan Year" means the period of twelve (12) months,
commencing on January 1 of each year and ending on the following
December 31.
1.38 "Qualifying Employer Real Property" means parcels of
real property leased by the Plan to the Employer or its affiliate,
provided that:
(a) a substantial number of the parcels are geo-
graphically dispersed; and
(b) each parcel and its improvements are suitable
or readily adaptable to more than one use.
1.39 "Qualifying Employer Securities" means securities
consisting of stock or marketable obligations that are issued by
the Employer or its affiliates and that are described in
Section 407(d)(5) of ERISA.
1.40 "Required Aggregation Group" means:
(a) each plan of the Employer in which at least
one (1) Key Employee participates or participated at any time
during the determination period (regardless of whether the plan has
terminated); and
(b) each other qualified plan of the Employer which
enables a plan described in paragraph (a) above to meet the
requirements of Sections 401(a)(4) and/or 410 of the Code.
1.41 "Retirement Date" means the first day of the month
coinciding with or immediately preceding the date on which a
Participant reaches age sixty-five (65).
1.42 "Segregated Account" means an account the assets of
which are set apart and invested separately from the other assets
of this Plan.
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1.43 "Shareholder-Employee" means a Participant who is an
Employee or officer of an electing small business corporation under
Section 1362 of the Code and who owns (or is considered as owning
within the meaning of Section 318(a)(l) of the Code), on any day
during the Fiscal Year of such corporation, more than five
percent (5%) of the outstanding stock of the corporation.
1.44 "Total and Permanent Disability" means a physical or
mental condition of a Participant resulting from bodily injury,
disease or mental disorder which renders him incapable of
continuing his usual and customary employment with the Employer.
The disability of a Participant shall be determined by a licensed
physician chosen by the Plan Administrator; provided, however, that
if a Participant has been certified as eligible to receive a
disability benefit under Title II of the Federal Social Security
Act, such certificate shall be treated as conclusive proof that the
Participant is Totally and Permanently Disabled. The determination
of disability hereunder shall be applied uniformly to all
Participants.
1.45 "Trustee" means the person or entity designated as
Trustee on the first page of this Plan and any successors subse
quently named to serve in said capacity.
1.46 "Trust Fund" or "Trust" means the Trust which is
established to hold and invest contributions under this Plan,
together with investment gains and losses, as maintained by the
Trustee.
1.47 "Valuation Date" means the last day of the Plan Year,
or such other dates designated by the Plan Administrator.
1.48 "Vested Interest" means that portion of a Par
ticipant's Aggregate Account that is nonforfeitable.
1.49 "Voluntary Cash Out" means a distribution to a
Participant that meets the following conditions: (i) the Parti
cipant has voluntarily elected to receive a distribution of all or
a portion of the Vested Interest in his Aggregate Account, (ii) the
Vested Interest so distributed exceeds $3,500, and (iii) the
distribution is made on account of the Participant's termination of
participation in the Plan.
1.50 "Year of Service" means a period of twelve (12)
consecutive months (the "computation period") during which an
Employee completes at least 400 Hours of Service.
In determining Years of Service and Breaks in Service for
purposes of vesting, the computation period shall be the Plan Year,
and all Years of Service shall be taken into account (except as
otherwise provided herein). Notwithstanding anything contained
herein to the contrary, in determining an Employee's Years of
Service with the Employer any period in which the Employee is or
was covered under a collective bargaining agreement between
employee representatives and the Employer shall be taken into
account in accordance with the above rules, regardless of whether
that individual was excluded from participation in the Plan on
account of coverage under such collective bargaining agreement.
The Administrator may, in accordance with a uniform and non
discriminatory policy, elect to credit Hours of Service pursuant to
this Plan using one of the following methods:
(a) actual Hours of Service for which an Employee
is paid or entitled to payment.
(b) 190 Hours of Service for each month in which an
Employee is paid or entitled to payment for at least one Hour of
Service.
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(c) 95 Hours of Service for each semimonthly period
in which an Employee is paid or entitled to payment for at least
one Hour of Service.
(d) 45 Hours of Service for each week in which an
Employee is paid or entitled to payment for at least one Hour of
Service.
(e) 10 Hours of Service for each day in which an
Employee is paid or entitled to payment for at least one Hour of
Service.
ARTICLE II
ELIGIBILITY
2.1 Qualification as a Participant.
(a) Each individual who is an Employee, but not a
leased employee (as defined in Section (c)), on the Effective Date
set forth on the first page hereof shall participate in the Plan on
the Effective Date. Each additional Employee who is not a leased
employee shall participate as of the date he first renders an Hour
of Service to the Employer.
(b) The Plan Administrator shall determine the
eligibility of each Employee for participation in the Plan based
upon information furnished by the Employer, and that determination
shall be conclusive and binding upon all persons.
2.2 Notice of Participation. The Plan Administrator shall
give each Employee who qualifies as a Participant under Section
notice of his eligibility to participate and shall furnish the
Employee a written summary of the Plan as then in effect.
2.3 Leave of Absence.
(a) A nonpaid leave of absence for an Employee for
no longer than one (1) year may be authorized by the Employer on a
uniform and nondiscriminatory basis. During such a leave of
absence, the Employee shall retain full eligibility under this
Plan; provided, however, that if the Employee does not return to
active employment with the Employer within thirty (30) days fol
lowing the expiration of the leave of absence period, said Employee
shall be considered as having terminated employment as of the
commencement of the period of absence.
(b) To the extent required by law, the absence of a
Participant by reason of military duty in the armed forces of the
United States shall not be considered a Break in Service, provided
the Participant returns to active employment with the Employer
within ninety (90) days from the date of his separation from the
armed forces.
2.4 Reparticipation. A Participant shall commence par
ticipation in this Plan immediately upon his return to the
Employer's employ.
2.5 Omission of Eligible Employee. If, in any Plan Year,
an Employee who should be included as an Active Participant in the
Plan is erroneously omitted and the discovery of such omission is
not made until after a contribution by the Employer for the Plan
Year has been made, the Employer shall make a subsequent
contribution with respect to the omitted Employee in the amount
which the Employer would have contributed had he not been omitted.
Such contribution shall be made regardless of whether or not it is
deductible in whole or in part for tax purposes under the Code.
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2.6 Inclusion of Ineligible Employee. If, in any Plan
Year, an Employee who should not have been included as an Active
Participant in the Plan is erroneously included and the discovery
of such incorrect inclusion is not made until after a contribution
for the Plan Year has been made, the Employer shall not be entitled
to recover the contribution made with respect to the ineligible
person regardless of whether or not a deduction is allowable with
respect to such contribution. In such event, the amount
contributed with respect to the ineligible person shall be
forfeited in the Plan Year in which the discovery is made. Such
forfeited amount shall then be allocated to the Employer Contri
bution Accounts of Active Participants in accordance with
Section (a).
ARTICLE III
TOP-HEAVY PROVISIONS
3.1 Special Top-Heavy Plan Requirements. In any Plan Year
in which this Plan is determined to be a "Top-Heavy Plan" (as
defined in Section below), the following provisions shall apply
and shall supersede and override any other provisions in the Plan
to the contrary:
(a) the vesting requirements of Section (a); and
(b) the minimum contribution and allocation
requirements of Section .
3.2 Determination of Top-Heavy Status.
(a) This Plan shall be a Top-Heavy Plan for any
Plan Year in which, as of the Determination Date, any of the
following conditions exist:
(i) the Top-Heavy Ratio (as defined in
paragraph (c) below) exceeds sixty percent (60%) and the Plan
is not part of any Required Aggregation Group or Permissive
Aggregation Group; or
(ii) the Plan is part of a Required Aggregation
Group but not part of a Permissive Aggregation Group and the
Top-Heavy Ratio for the Required Aggregation Group of plans
exceeds sixty percent (60%); or
(iii) the Plan is part of a Required Aggregation
Group and a Permissive Aggregation Group and the Top-Heavy
Ratio for the Permissive Aggregation Group exceeds sixty
percent (60%).
(b) This Plan shall be a Super Top-Heavy Plan for
any Plan Year in which, as of the Determination Date, the Top-Heavy
Ratio exceeds ninety percent (90%).
(c) If the Employer maintains one or more defined
contribution plans (including a simplified employee pension plan)
and has not maintained any defined benefit plan which, during the
five (5) year period ending on the Determination Date, has had
accrued benefits, the Top-Heavy Ratio for this Plan alone or for
the Required or Permissive Aggregation Group (as appropriate) is a
fraction, the numerator of which is the sum of the account balances
of all Key Employees as of the Determination Date (including any
account balance distributed in the five (5) year period ending on
the Determination Date) and the denominator of which is the sum of
all account balances (including any account balance distributed in
the five (5) year period ending on the Determination Date), both
computed in accordance with Section 416 of the Code and the
regulations issued thereunder. Both the numerator and denominator
of the Top-Heavy Ratio shall be adjusted to reflect any
contribution not actually made as of the Determination Date but
which is required to be taken into account on that date under
Section 416 of the Code and the regulations issued thereunder.
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(d) If the Employer maintains one or more defined
contribution plans (including a simplified employee pension plan)
and maintains or has maintained one or more defined benefit plans
which, during the five (5) year period ending on the Determination
Date, has had any accrued benefit, the Top-Heavy Ratio for any
Required or Permissive Aggregation Group (as appropriate) is a
fraction, the numerator of which is the sum of account balances
under the aggregated defined contribution plan or plans for all Key
Employees, determined in accordance with paragraph (c) above, and
the present value of accrued benefits under the aggregated defined
benefit plan or plans for all Key Employees as of the Determination
Date, and the denominator of which is the sum of the account
balances under the aggregated defined contribution plan or plans
for all Participants, determined in accordance with paragraph (a)
above, and the present value of accrued benefits under the defined
benefit plan or plans for all Participants as of the Determination
Date, all determined in accordance with Section 416 of the Code and
the regulations issued thereunder. The accrued benefits under a
defined benefit plan in both the numerator and denominator of the
Top-Heavy Ratio shall be adjusted for any distribution of an
accrued benefit made in the five (5) year period ending on the
Determination Date.
(e) For purposes of paragraphs (c) and (d) above,
the value of account balances and the present value of accrued
benefits will be determined as of the most recent Valuation Date
that coincides with or falls within the twelve (12) month period
ending on the Determination Date, except as provided in Section 416
of the Code and the regulations issued thereunder for the first and
second Plan Years of a defined benefit plan. The account balances
and accrued benefits of a Participant who is not a Key Employee but
who was a Key Employee in a prior year or who has not been credited
with at least one (1) Hour of Service with an Employer maintaining
the plan at any time during the five (5) year period ending on the
Determination Date will be disregarded. The calculation of the Top-
Heavy Ratio and the extent to which distributions, rollovers and
transfers are taken into account will be made in accordance with
Section 416 of the Code and the regulations issued thereunder.
When aggregating plans, the value of account balances and accrued
benefits will be calculated with reference to the Determination
Dates that fall within the same calendar year.
The accrued benefit of a Participant other than a Key
Employee shall be determined under (a) the method, if any, that is
uniform for accrual purposes under all defined benefit plans
maintained by the Employer, or (b) if there is no method, as if
such benefit accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule of Section 411(b)(1)(C) of the
Code.
ARTICLE IV
CONTRIBUTIONS
4.1 Employer Contributions. For the Fiscal Year of the
Employer during which the Plan is adopted, and for each Fiscal Year
thereafter, the Employer shall contribute to this Plan an amount to
be determined by the Employer; provided, however, that such amount
shall not exceed fifteen percent (15%) of the aggregate Compensa
tion of all Active Participants, or such other amount allowable as
a deduction to the Employer under the Code. All contributions by
the Employer under this Section shall be made in cash or in such
other property as is acceptable to the Trustee.
4.2 Maximum Limitation Applicable to Combination of
Defined Contribution Plans. In the event the Employer maintains
this Plan and another defined contribution plan, the aggregate
amount of contributions to both such plans for any Fiscal Year
shall not exceed twenty-five percent (25%) of the total Compen
sation paid or accrued on behalf of all Active Participants for
that year, or such other percentage as may be permitted from time
to time by the Code.
4.3 Time of Payment of Employer Contributions. The
Employer shall pay to the Trustee its contribution to the Plan for
each Fiscal Year in one or more installments, the total amount
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to be deposited in the Trust within the time prescribed by law for
filing the Employer's federal income tax return for its Fiscal Year
(including extensions) coinciding with or within which the Plan
Year ends.
ARTICLE V
ALLOCATIONS
5.1 Minimum Allocations for Top-Heavy Plan Years.
(a) For each Plan Year in which the Plan is
determined to be a Top-Heavy Plan (as defined in Section ), the
Employer's contributions and Forfeitures allocated to the account
of each Participant who is a Non-Key Employee and is employed on
the last day of the Plan Year shall be the lesser of (i) three
percent (3%) of such Non-Key Employee's Compensation or (ii) the
largest allocation of the Employer's contribution and Forfeitures,
when expressed as a percentage of Compensation, that was allocated
to the account of any Key Employee. The minimum allocations
required under the preceding sentence shall be made to the accounts
of all Non-Key Employees who are Participants and who are employed
by the Employer on the last day of the Plan Year, including Non-Key
Employees who failed to complete a Year of Service during that Plan
Year, and those minimum allocations shall be determined without
regard to any Social Security contribution made by the Employer.
(b) If a Key Employee is a Participant in both a
defined benefit plan and a defined contribution plan that are part
of an Aggregation Group (but neither of which plans is a Super Top-
Heavy Plan within the meaning of Section (b)), and if the Employer
desires to avoid the adjustments in the Defined Benefit Plan
Fraction and Defined Contribution Plan Fraction, then the account
of each Non-Key Employee who is a Participant shall receive an
allocation of an additional one percent (1%) of Compensation.
(c) The minimum allocations required under para
graphs (a) and (b) above may not (to the extent required to be
fully vested under Section 416(b) of the Code) be forfeited under
Sections 411(a)(3)(B) or 411(a)(3)(D) of the Code.
(d) Notwithstanding anything contained in this
Section to the contrary, in any Plan Year in which a Non-Key
Employee is a Participant in both this Plan and another qualified
plan maintained by the Employer, and both such plans are Top-Heavy
Plans, the Employer shall be required to provide that Non-Key
Employee with a minimum allocation under this Plan only to the
extent that such benefit is not provided under the other plan.
Therefore, for Non-Key Employees who are participating in a defined
benefit plan or another defined contribution plan maintained by the
Employer and either the required minimum benefits are accruing on
behalf of, or the required minimum allocations are made with
respect to those Employees under such other plans, the provisions
for minimum allocations set forth herein shall not be applicable,
and no minimum contribution to this Plan shall be required on
behalf of such Non-Key Employees.
5.2 Allocation Formula.
(a) Subject to Section and paragraphs and , the
contribution made by the Employer for any Plan Year shall be
allocated to the Employer Contribution Account of each Active
Participant who is employed by the Employer on the last day of the
Plan Year in the ratio that his total Compensation for the Plan
Year bears to the total Compensation of all such Active
Participants for that Plan Year.
(b) Notwithstanding the foregoing, if the Plan
fails to comply with Sections 410(b) and 401(a)(26) of the Code on
account of the exclusion of Participants who were not employed on
the last day of the Plan Year, then any Employer contributions and
Forfeitures attributable to Employer
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contributions made with
respect to that Plan Year shall be allocated in accordance with the
above provisions on behalf of a sufficient number of individuals
who would have been Active Participants if the Plan did not require
that Participants be employed with the Employer on the last day of
the Plan Year in order to share in the allocation, to cause the
Plan to comply with Sections 410(b) and 401(a)(26) of the Code.
For purposes of this paragraph, individuals described above as
being eligible to be taken into account under this provision shall
be taken into account based on their relative Compensation,
beginning with the individual with the least Compensation and
progressing to the extent required above to the individual with the
greatest Compensation. For any Plan Year in which this Plan is a
Top-Heavy Plan, the amounts allocated to the accounts of Non-Key
Employees shall not be reduced below the benefits required under
Section , and no Employer contribution and Forfeiture shall be
required to be allocated hereunder on behalf of a Participant who
(without regard to this paragraph) was an Active Participant for
the Plan Year solely because he met the eligibility requirements of
Section , was a Non-Key Employee and was employed on the last day
of the Plan Year.
(c) As of each Valuation Date (and at such other
times as the Plan Administrator, in its discretion, deems appro
priate), before the allocation of Forfeitures and Employer
contributions, any earnings, gains or losses of the Trust Fund
shall be allocated to the accounts of Participants in the same
proportion that their nonsegregated accounts bear to the total of
all nonsegregated accounts as of such date. Each Segregated
Account maintained on behalf of a Participant shall be credited or
charged with its own separate earnings and losses. In the case of
a Participant whose accounts change from segregated to
nonsegregated (or vice versa), such Participant's nonsegregated
accounts shall receive a proportionate share of the earnings, gains
and losses of the Trust Fund for the period of time that the
accounts were nonsegregated.
(d) Notwithstanding anything to the contrary con
tained in this Section, if the employment of a Participant termi
nates by reason of death, Total and Permanent Disability or
attainment of Retirement Date, such Participant's Employer Con
tribution Account shall receive an allocation of the Employer
contribution for the Plan Year in which such termination occurs.
(e) As of each Valuation Date, any amounts which
became Forfeitures since the last Valuation Date shall first be
used, to the extent required, to restore amounts forfeited by
Participants, if any, pursuant to Section (c). The remaining
Forfeitures, if any, shall be allocated among the Employer Con
tribution Accounts of Active Participants for the Plan Year in
accordance with the allocation formula in paragraph (a) above;
provided, however, that in the event the allocation of Forfeitures
shall cause the Annual Addition to any Active Participant's account
to exceed the Maximum Permissible Amount, the Excess Amount shall
be reallocated in accordance with Section hereof.
5.3 Overall Limitation of Benefits.
(a) Notwithstanding anything to the contrary
contained in this Plan, the Annual Additions to a Participant's
Employer Contribution Account for a Plan Year shall not exceed the
Maximum Permissible Amount. For purposes of this limitation, all
defined contribution plans maintained by the Employer shall be
considered one plan.
(b) If an Employee is a Participant in one or more
defined benefit plans and one or more defined contribution plans
maintained by the Employer, the sum of the Defined Benefit Plan
Fraction and the Defined Contribution Plan Fraction for any Plan
Year may not exceed 1.0. If the sum of the Defined Benefit Plan
Fraction and the Defined Contribution Plan Fraction shall exceed
1.0 in a Plan Year for any Participant in this Plan, the Employer
shall adjust the numerator of either fraction so that the sum of
both fractions shall not exceed 1.0 in such year for that
Participant.
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5.4 Adjustment for Excess Annual Additions. If, as the
result of a reasonable error in the allocation of Forfeitures or in
estimating a Participant's Compensation, or other facts and
circumstances to which Treasury Regulation Section 1.415-6(b)(6)
applies, the Annual Addition to a Participant's Employer
Contribution Account shall exceed the Maximum Permissible Amount,
the Plan Administrator shall, pursuant to Treasury Regulation
Section 1.415-6(b)(6)(iii), hold the Excess Amount unallocated in
a suspense account (hereinafter called the "Section 415 Suspense
Account") and shall allocate and reallocate such excess in the next
Plan Year to the Participants in the Plan before the allocation of
any Employer contributions. Any Excess Amount held in the
Section 415 Suspense Account shall be used to reduce Employer
contributions for the next Plan Year (and succeeding Plan Years, as
necessary) for all of the Participants of the Plan. In no event
shall any Excess Amount in the Section 415 Suspense Account be
distributed to Participants or Beneficiaries. The Section 415
Suspense Account shall not share in the allocation of earnings or
losses of the Trust Fund.
5.5 Segregated Accounts for Participants. The amounts to
which a Participant, other than an Active Participant, is entitled
but which have not been paid out for any reason may, at the
election of the Participant and upon written direction by the Plan
Administrator to the Trustee, be set aside and held by the Trustee
in Segregated Accounts, in which event such Participant shall no
longer share in the allocation of the earnings or losses of the
Trust or in the appreciation or depreciation in the value of the
assets thereof, but shall only be credited or charged with the
earnings or losses and with the appreciation or depreciation of
that portion of the Trust Fund so set aside in the Segregated
Accounts. For purposes of this Section, the Employer shall
designate the investment objectives of Segregated Accounts, and the
Trustee may charge the Segregated Accounts with fees and costs
attributable to those accounts as well as an allocable portion of
the general expenses of the Trust Fund.
ARTICLE VI
VALUATIONS
6.1 Valuation of the Trust Fund. As of each Valuation
Date, and at such other times as may be requested by the Plan
Administrator, the Trustee shall determine the fair market value of
the assets comprising the Trust Fund. In determining the fair
market value of such assets, the Trust Fund shall be reduced by all
amounts that were paid out or set aside because of the
Participant's death, Total and Permanent Disability, attainment of
Retirement Date or termination of employment with the Employer
since the last Valuation Date.
6.2 Method of Valuation. In determining the fair market
value of securities held in the Trust Fund that are listed on a
registered stock exchange, the Trustee shall value such securities
based on the closing sales price at which they were last traded on
the exchange on the Valuation Date. If such securities were not
traded on the Valuation Date, or if the exchange on which they are
traded was not open for business on the Valuation Date, then the
securities shall be valued at the closing sales price at which they
were last traded prior to the Valuation Date. Any unlisted
security held in the Trust Fund shall be valued based on the
average of the closing bid and asked price for such security. In
determining the fair market value of other assets of the Trust
Fund, the Trustee may appraise the assets or, alternatively, may
employ one or more appraisers for that purpose and, in such event,
shall be entitled to rely on the values established by the
appraiser or appraisers. The fair market value of any life
insurance or annuity contract shall be deemed to be its cash
surrender value.
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ARTICLE VII
DETERMINATION OF AGGREGATE ACCOUNT
7.1 Determination of Vested Interest Upon Retirement. A
Participant shall become fully vested in his Employer Contribution
Account upon attaining his Retirement Date. A Participant who
continues in the employ of the Employer after his Retirement Date
shall remain a Participant in this Plan until the last day of the
Plan Year in which his termination actually occurs.
7.2 Determination of Vested Interest Upon Death;
Beneficiaries Beneficiaries;.
(a) In the event of the death of a Participant
prior to his Retirement Date or termination of employment with the
Employer, all amounts credited to his Employer Contribution Account
shall become fully vested. The deceased Participant's surviving
Beneficiary shall receive a distribution of the deceased
Participant's Aggregate Account in accordance with one of the forms
of distribution provided under Article .
(b) In the event of the death of a Participant
following his termination of employment with the Employer, the
Participant's Vested Interest in his Employer Contribution Account
shall be determined under Section (a).
(c) Each Employee, upon becoming a Participant, may
designate in writing a primary and secondary Beneficiary to receive
benefits from the Plan in the event of his death. Such designation
shall be made on forms provided by the Plan Administrator. Except
as otherwise provided in Article , a Participant may at any time
revoke his designation or change his Beneficiary by filing written
notice of such revocation or change with the Plan Administrator.
Notwithstanding anything in this Section to the contrary, in the
event of the death of a Participant, the surviving spouse of such
Participant is deemed to be the sole Beneficiary unless the sur
viving spouse has consented in writing to a different election, has
acknowledged the effect of such election and both the consent and
acknowledgment are witnessed by a notary public; provided, however,
that the consent of the spouse shall not be necessary if it is
established to the satisfaction of the Plan Administrator that
there is no spouse, that the spouse cannot reasonably be located,
or that such other circumstances exist as the Treasury Regulations
may prescribe. The consent of a spouse or the reasons for not
requiring such consent shall be applicable only to that spouse. If
the spouse of a Participant who originally cannot be found is later
located, or if a Participant remarries, it shall be the duty of
that individual to bring that fact to the attention of the
Administrator. Upon such notification, the Administrator shall
then, if applicable, make available to the spouse the consent
procedure described in this paragraph. If no Beneficiary is
designated by the Participant and if the Participant has no
surviving spouse, then the Participant's issue, per stirpes, shall
be the Beneficiary or Beneficiaries; if no issue of the Participant
are living, then the personal representative of the Participant
shall be the Beneficiary.
(d) Prior to making distributions under the Plan,
the Trustee may request the Administrator to provide proof of death
of the Participant and/or evidence of a claimant's status as
Beneficiary. In such event, the Administrator's determination of
death and of the right of any person to receive benefits hereunder
shall be conclusive and binding upon all parties.
7.3 Determination of Vested Interest Upon Total and
Permanent Disability.
(a) In the event of a Participant's Total and
Permanent Disability prior to his termination of employment with
the Employer, the Participant shall become fully vested in his
Employer Contribution Account. The Participant (or his properly
authorized guardian) may then elect to receive a distribution of
his Vested Interest in the Plan in accordance with one of the
distribution options specified in Article VIII.
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(b) In the event of the Total and Permanent Disa
bility of a Participant following his termination of employment
with the Employer, the Vested Interest of such Participant shall be
determined under Section (a) without regard to that disability, and
the Participant (or his properly authorized guardian) may then
elect to receive a distribution of his Vested Interest in the Plan
in accordance with one of the distribution options specified in
Article VIII.
7.4 Determination of Vested Interest Upon Termination of
Employment.
(a) In the case of a Participant who separates from
service prior to his Retirement Date for any reason other than
death or Total and Permanent Disability, the Vested Interest of
such Participant in his Employer Contribution Account shall be
determined on the basis of the number of the Participant's Years of
Service with the Employer, according to the following schedule:
Years of Service Vested Interest
0-2 Years 0%
3 Years 20%
4 Years 40%
5 Years 60%
6 Years 80%
7 or more Years 100%
Notwithstanding the foregoing, for any Plan Year in which
this Plan is a Top-Heavy Plan (as determined under Section ), a
Participant's Vested Interest in his Employer Contribution Account
shall be determined as provided in the preceding paragraph, except
under the following schedule:
Years of Service Vested Interest
1 Year 0%
2 Years 20%
3 Years 40%
4 Years 60%
5 Years 80%
6 or more Years 100%
(b) In the case of a Participant who has five (5)
or more consecutive one (1) year Breaks in Service, Years of
Service after such Breaks in Service will be disregarded for
purposes of determining the Participant's Vested Interest in his
Employer Contribution Account prior to such Breaks in Service. The
Participant's Years of Service before a Break in Service will count
in determining the Participant's Vested Interest in his Employer
Contribution Account after such Breaks in Service only if (i) such
Participant has any nonforfeitable interest in his account at the
time of separation from service, or (ii) upon returning to service
the number of consecutive Breaks in Service is less than the
aggregate number of the Participant's Years of Service before such
Breaks in Service.
(c) If a Participant receives a Cash Out and is
then re-employed by the Employer, the portion of such Participant's
Employer Contribution Account that was forfeited shall be
reinstated if he repays to the Plan the full amount of the
distribution attributable to Employer contributions before the
earlier of (i) five (5) years after the date on which the
Participant is re-employed or (ii) the date that the Participant
incurs five (5) consecutive one (1) year Breaks in Service
following the date of distribution. If the Participant repays the
full amount distributed to him, the undistributed portion of his
Employer Contribution Account shall be restored in full, unadjusted
by any gains or losses occurring subsequent to the Anniversary Date
or other Valuation Date preceding his termination. If a
Participant is deemed to receive a distribution pursuant to
Section , and the Participant is re-
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employed by the Employer before
the date he incurs five (5) consecutive one (1) year Breaks in
Service, then, upon such re-employment, his Employer Contribution
Account will be restored by the Employer to the balance in exis
tence on the date of the deemed distribution.
(d) The Vested Interest of a Participant who
terminated employment with the Employer but is later rehired by the
Employer prior to incurring a Break in Service shall, upon his
reemployment, be identical to his Vested Interest as it existed on
the date of his termination of employment; provided, however, that
if the Participant received a Cash Out, the Participant must repay
the full amount distributed to him in accordance with paragraph (c)
above.
(e) If a Participant is re-employed by the Employer
after a Break in Service has occurred, he shall receive credit for
Years of Service prior to his Break in Service in accordance with
the following rules:
(i) If a Participant incurs a Break in Service,
his pre-break and post-break service shall be used for computing
Years of Service for vesting purposes only after he has been
employed for one (1) Year of Service following the date of his
reemployment by the Employer.
(ii) In the case of a Participant who previously
had no Vested Interest, Years of Service before his Break in
Service shall not be taken into account if the number of his
consecutive Breaks in Service equals or exceeds the greater of
(A) five (5), or (B) the aggregate number of his pre-break Years
of Service;
(iii) Years of Service after the Participant has
incurred five (5) consecutive one (1) year Breaks in Service
shall not be taken into account for purposes of determining
his Vested Interest in contributions attributable to pre-break
service, but both pre-break and post-break service will count
for purposes of determining his Vested Interest in
contributions that accrue after such breaks.
(f) Separate accounts will be maintained for pre-
break contributions (if not distributed) and post-break contribu
tions made by the Employer on behalf of Participants who are
rehired before incurring five (5) consecutive one (1) year Breaks
in Service, and both accounts will share in the earnings and losses
of the Plan.
(g) A Participant's Vested Interest shall not be
reduced as the result of an amendment to this Plan. In the event
that the Plan is amended to change the vesting schedule, or is
amended in a way that directly or indirectly affects the computa
tion of a Participant's Vested Interest, then each Participant with
at least three (3) Years of Service as of the expiration date of
the election period set forth below may elect in writing to have
his Vested Interest computed without regard to such amendment. The
election period shall commence on the date the amendment is adopted
and shall end sixty (60) days after the latest of:
(i) the date of adoption of the amendment;
(ii) the effective date of the amendment; or
(iii) the date the Participant receives written
notice of the amendment from the Employer, Trustee or Plan
Administrator.
Notwithstanding the above, no election need be provided for
a Participant whose Vested Interest under this Plan, as amended,
cannot be less at any time than his Vested Interest determined
without regard to the amendment.
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ARTICLE VIII
DISTRIBUTION OF BENEFITS
8.1 Distributable Events. A Participant's Vested Interest
in his Aggregate Account shall become distributable to him in
connection with one of the following events:
(a) death,
(b) Total and Permanent Disability,
(c) attainment of age 70-1/2,
(d) attainment of his Retirement Date,
(e) termination of employment, or
(f) pursuant to the terms of a qualified domestic
relations order (subject to Section 8.8 below).
8.2 Distribution of Aggregate Account.c.:8.2 Distribution
of Aggregate Account. That portion of a Participant's Aggregate
Account to which he is entitled shall be distributed to him (or, in
the event of his death, to his Beneficiary) by the Trustee in one
lump sum distribution.
8.3 Cash Out of Vested Interest in Aggregate Account Upon
Termination of Employment.
(a) If the Vested Interest of a Participant who has
terminated employment with the Employer does not exceed (nor at the
time of any prior distribution exceeded) $3,500, such Participant
shall receive an Involuntary Cash Out. If the value of the Partici
pant's Vested Interest is zero, such Participant shall be deemed to
have received a distribution of his Vested Interest in his account
on the date he ceased to be an Employee.
(b) If the Vested Interest of a Participant who has
terminated employment with the Employer exceeds (or at the time of
any prior distribution exceeded) $3,500, then at the time permitted
by Section (b)(i), such Participant may elect to receive a
Voluntary Cash Out. If the Participant elects to receive a
Voluntary Cash Out of his entire Vested Interest, or at such
earlier time provided under Section , the nonvested portion of the
Participant's account balance shall become a Forfeiture. If the
Participant elects to receive less than his entire Vested Interest
derived from Employer contributions as a Voluntary Cash Out, the
nonvested portion will not be treated as a Forfeiture until
otherwise provided under Section above. If a Participant does not
elect to receive a Voluntary Cash Out, then the Vested Interest in
such Participant's Aggregate Account shall remain in the Plan until
such amounts otherwise become distributable under the terms hereof.
8.4 Commencement of Distributions.
(a) Unless a Participant or Beneficiary files a
written election to the contrary with the Plan Administrator, the
payment of benefits must begin within sixty (60) days after the end
of the Plan Year following the later of:
(i) the Participant's attainment of his Retirement
Date;
(ii) the tenth (10th) anniversary of the
Participant's participation in this Plan; or
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(iii) the Participant's termination of employment
with the Employer.
If the amount of the payment required to commence on a
certain date determined under this Section cannot be ascertained by
that date, or if it is not possible to make the payment on that
date because the Plan Administrator has been unable to locate the
Participant after making reasonable efforts to do so, a payment
retroactive to such date may be made no later than sixty (60) days
after the earliest date on which the amount of the payment can be
ascertained or the date on which the Participant is located,
whichever is applicable.
(b) Upon the occurrence of a distributable event,
as defined in Section , distributions will be made no later than as
soon as administratively feasible following the close of the Plan
Year in which the Participant terminates employment with the
Employer as a result of death, Total and Permanent Disability or
attainment of Retirement Date. If a Participant's employment shall
terminate for any other reason, distribution of the Vested Interest
of his Aggregate Account will be made no earlier than as follows:
(i) if the Vested Interest of the Participant's
Aggregate Account exceeds $3,500, at the earliest of the
following to occur: death, Disability or Normal Retirement
Age; or
(ii) if the Vested Interest of the
Participant's Aggregate Account does not exceed $3,500, at the
end of the second Plan Year that begins after the
Participant's termination of employment with the Employer.
8.5 Distributions in Cash or in Kind. All distributions
shall be in cash or in kind, subject to the approval of the
Participant or Beneficiary receiving the distribution, provided
that under the law and the terms of the investment that investment
may be held by such individual, and that the Participant's account
bears all costs and expenses allocable to the distribution.
8.6 Distributions to Minors and Incompetents. If the Plan
Administrator determines that any person entitled to receive
payments hereunder is a minor or is incompetent by reason of phys
ical or mental disability, it may direct the Trustee to make all
payments thereafter becoming due to such person to any other person
for the benefit of the minor or incompetent, without responsibility
to follow the actual application of amounts so paid. Payments
properly made pursuant to this direction shall completely discharge
the Trustee from all liability connected therewith.
8.7 Location of Participant or Beneficiary Unknown. In
the event that all or any portion of a distribution payable to a
Participant or his Beneficiary hereunder shall, at the expiration
of five (5) years after it shall become payable, remain unpaid
solely by reason of the inability of the Administrator, after
sending a registered letter, return receipt requested, to the last
known address, and after further diligent effort, to ascertain the
whereabouts of the Participant or Beneficiary, the amount so
distributable shall be forfeited and shall be allocated to the
Employer Contribution Accounts of Active Participants in accordance
with the provisions of Section (a). In the event a Participant or
Beneficiary is located subsequent to the reallocation of his
benefit, such benefit shall be restored by an additional contri
bution made by the Employer. Notwithstanding the above, if in
connection with the termination of the Plan the Plan Administrator
cannot ascertain the whereabouts of a Participant or Beneficiary
after sending a registered letter, return receipt requested, to the
last known address of such Participant or Beneficiary, and after
contacting known relatives of the Participant or Beneficiary, the
Trustee, upon confirmation of same by the Plan Administrator, may
(i) deposit those amounts in a federally insured savings account in
the name of the Participant or Beneficiary or (ii) request that the
Department of Banking and Finance of the State of Florida hold
those amounts under Chapter 717 of the Florida Statutes as
unclaimed property, and upon the grant of that request,
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the Trustee may submit those amounts to the Department of Banking
and Finance of the State of Florida in accordance with Chapter
717 of the Florida Statutes.
8.8 Qualified Domestic Relations Orders.
(a) Notwithstanding any other provisions of this
Article , the Trustee may make distributions pursuant to a
qualified domestic relations order (as defined in Section 414(p) of
the Code), provided that the Plan Administrator has properly
notified the Participant and any alternate payee of its receipt of
the order and has determined that the order is in fact a qualified
domestic relations order. The Plan Administrator shall adopt
reasonable procedures to determine the qualified status of such
orders and to administer distributions thereunder.
(b) During the period in which a determination is
being made as to whether the order is a qualified domestic rela
tions order, the Plan Administrator shall separately account for
the amounts that would have been payable to the alternate payee
during such period if the order had been determined to be a
qualified domestic relations order. The Plan Administrator may
direct the Trustee to hold those amounts in one or more funds, the
primary objective of which is the preservation of principal, or it
may continue to invest the amounts with the general assets of the
Trust. If within eighteen (18) months the order is determined to
be a qualified domestic relations order, then the Plan
Administrator shall pay the amount subject to the order to the
person entitled thereto; otherwise, those amounts shall be paid to
the person who would have been entitled to them had there been no
order.
(c) Benefits payable to an alternate payee under a
qualified domestic relations order may be paid upon the earlier of
(i) the date on which the Participant is entitled to a distribution
under the Plan, or (ii) the later of (A) the date the Participant
attains age fifty (50) or (B) the earliest date on which the
Participant could begin receiving benefits under the Plan if the
Participant separated from service with the Employer. However, not
withstanding the preceding sentence, if the qualified domestic
relations order specifically provides for an earlier distribution
pursuant to an agreement between the Participant and the alternate
payee, then the Trustee may make an earlier distribution to the
alternate payee; provided, however, that if the distribution to the
alternate payee exceeds $3,500, then the alternate payee must
consent in writing to such distribution.
ARTICLE IX
MINIMUM DISTRIBUTIONS
9.1 Minimum Distributions.
(a) This Section shall apply to distributions of a
Participant's interest and will take precedence over any
inconsistent provisions of this Plan.
(b) All distributions required under this
Article shall be determined and made in accordance with the
proposed regulations issued under Section 401(a)(9) of the Code,
including the minimum distribution incidental benefit requirement
of Section 1.401(a)(9)-2 of the proposed regulations.
9.2 Required Beginning Date. The entire interest of a
Participant must either be distributed or distribution of such
interest must begin no later than the Participant's Required
Beginning Date.
9.3 Limits on Distribution Periods. As of the first
Distribution Calendar Year, distributions may not be made over a
period that exceeds the following (or a combination thereof):
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(a) the life of the Participant;
(b) the life of the Participant and a Designated
Beneficiary;
(c) a period certain not extending beyond the Life
Expectancy of the Participant; or
(d) a period certain not extending beyond the joint
and last survivor expectancy of the Participant and a Designated
Beneficiary.
9.4 Determination of Amount to be Distributed Each Year.
If the Participant's interest is to be distributed in other than a
single sum, the following minimum distribution rules shall apply on
or after the Required Beginning Date:
(a) If a Participant's Benefit is to be distributed
over (i) a period not extending beyond the Life Expectancy of the
Participant or the joint life and last survivor expectancy of the
Participant and the Participant's Designated Beneficiary, or (ii) a
period not extending beyond the Life Expectancy of the Designated
Beneficiary, the amount required to be distributed for each
calendar year, beginning with the distribution for the first
Distribution Calendar Year, must at least equal the quotient
obtained by dividing the Participant's Benefit by the Applicable
Life Expectancy.
The amount to be distributed each year, beginning with
distributions for the first Distribution Calendar Year, shall not
be less than the quotient obtained by dividing the Participant's
Benefit by the lesser of (i) the Applicable Life Expectancy, or
(ii) if the Participant's spouse is not the Designated Beneficiary,
the applicable divisor determined from the table set forth in Q&A-4
of Section 1.401(a)(9)-2 of the proposed regulations.
Notwithstanding the above, distributions after the death of the
Participant shall be made using the Applicable Life Expectancy as
the relevant divisor without regard to Section 1.401(a)(9)-2 of the
proposed regulations. The minimum distribution required for the
Participant's first Distribution Calendar Year must be made on or
before the Participant's Required Beginning Date. The minimum
distribution for other calendar years, including the minimum
distribution for the Distribution Calendar Year in which the
Employee's Required Beginning Date occurs, must be made on or
before December 31 of that Distribution Calendar Year.
(b) If the Participant's Benefit is distributed in
the form of an annuity purchased from an insurance company, then
distributions thereunder shall be made in accordance with the
requirements of Section 401(a)(9) of the Code and the proposed
regulations issued thereunder.
9.5 Death Distribution Provisions.
(a) If a Participant dies after distribution of his
interest has begun, the remaining portion of such interest will
continue to be distributed at least as rapidly as under the method
of distribution being used prior to the Participant's death.
(b) If the Participant dies before distribution of
his interest begins, the distribution of the Participant's entire
interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death, except
to the extent that an election is made to receive distributions in
accordance with (i) or (ii) below:
(i) If any portion of the Participant's interest
is payable to a Designated Beneficiary, then distributions may be
made over the Life Expectancy or over a period certain not
greater than the Life Expectancy of the Designated Beneficiary,
commencing on or before December 31 of the calendar year
immediately following the calendar year in which the
Participant died.
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(ii) If the Designated Beneficiary is the
Participant's surviving spouse, then the date distributions are
required to begin under paragraph (a) above shall not be
earlier than the later of (A) December 31 of the calendar year
immediately following the calendar year in which the
Participant died or (B) December 31 of the calendar year in
which the Participant would have attained age 70-1/2.
If the Participant has not made an election pursuant to
this paragraph (b) by the time of his or her death, then the
Participant's Designated Beneficiary must elect the method of
distribution no later than the earlier of (i) December 31 of the
calendar year in which distributions would be required to begin
under this Section, or (ii) December 31 of the calendar year which
contains the fifth anniversary of the date of death of the
Participant. If the Participant has no Designated Beneficiary or
if the Designated Beneficiary does not elect a method of distri
bution, then the distribution of the Participant's entire interest
must be completed by December 31 of the calendar year containing
the fifth anniversary of the Participant's death.
(c) If the surviving spouse dies after the
Participant but before payments to such spouse begin, then the
provisions of paragraph (b) above (with the exception of clause
(ii) therein) shall be applied as if the surviving spouse were the
Participant.
(d) For purposes of this Section, any amount paid
to a child of the Participant will be treated as if it had been
paid to the surviving spouse if the amount becomes payable to the
surviving spouse when the child reaches the age of majority.
(e) For purposes of this Section, the distribution
of a Participant's interest is considered to begin on the Partici
pant's Required Beginning Date (or, if paragraph (c) above is
applicable, the date distribution is required to begin to the
surviving spouse pursuant to paragraph (b) above). If a distribu
tion in the form of an annuity irrevocably commences to the Partici
pant before the Required Beginning Date, then the date the
distribution is considered to begin is the date distribution
actually commences.
9.6 Definitions.
(a) "Applicable Life Expectancy" means the Life
Expectancy (or joint and last survivor expectancy) calculated using
the attained age of the Participant (or Designated Beneficiary) as
of the Participant's (or Designated Beneficiary's) birthday in the
applicable calendar year, reduced by one for each calendar year
which has elapsed since the date the Life Expectancy was first
calculated. If the Life Expectancy is being recalculated, the
Applicable Life Expectancy shall be the Life Expectancy as so
recalculated. The applicable calendar year shall be the first
Distribution Calendar Year and, if the Life Expectancy is being
recalculated, such succeeding calendar year.
(b) "Designated Beneficiary" means the individual
who is designated as the Beneficiary under the Plan in accordance
with Section 401(a)(9) of the Code and the proposed regulations
issued thereunder.
(c) "Distribution Calendar Year" means a calendar
year for which a minimum distribution is required. For distribu
tions beginning before the Participant's death, the first Distri
bution Calendar Year is the calendar year immediately preceding the
calendar year which contains the Participant's Required Beginning
Date. For distributions beginning after the Participant's death,
the first Distribution Calendar Year is the calendar year in which
distributions are required to begin.
(d) "Life Expectancy" means the life expectancy or
joint and last survivor expectancy computed by use of the expected
return multiples in Tables V and VI of Treasury Regulation
Section 1.72-9.
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Unless otherwise elected by the Participant (or spouse, in
the case of distributions described in Section (b)(ii) above) by
the time distributions are required to begin, Life Expectancies
shall be recalculated annually. Such election shall be irrevocable
as to the Participant (or spouse) and shall apply to all subsequent
years. The Life Expectancy of a nonspouse Beneficiary may not be
recalculated.
(e) "Participant's Benefit" means the account
balance as of the last Valuation Date in the calendar year immedi
ately preceding the Distribution Calendar Year (valuation calendar
year) increased by the amount of any contributions or Forfeitures
allocated to the account balance as of dates in the valuation
calendar year after the Valuation Date and decreased by
distributions made in the valuation calendar year after the Valu
ation Date; provided, however, that if any portion of the minimum
distribution for the first Distribution Calendar Year is made in
the second Distribution Calendar Year on or before the Required
Beginning Date, the amount of the minimum distribution made in the
second Distribution Calendar Year shall be treated as if it had
been made in the immediately preceding Distribution Calendar Year.
(f) "Required Beginning Date" means the first day
of April of the calendar year following the calendar year in which
the Participant attains age 70-1/2. Notwithstanding the foregoing,
the Required Beginning Date of a Participant who attained age 70-
1/2 before January 1, 1988 shall be determined as follows:
(i) The Required Beginning Date of a Participant
who is not a 5-percent owner (as defined in Section 416(i)(1)(B)(i)
of the Code) is the first day of April of the calendar year following
the calendar year in which the Participant retires or attains age
70-1/2, whichever occurs later.
(ii) The Required Beginning Date of a Participant
who is a 5-percent owner during any year beginning after
December 31, 1979 is the first day of April following the later of:
(A) the calendar year in which the Participant
attains age 70-1/2, or
(B) the earlier of the calendar year with or
within which ends the Plan Year in which the Participant becomes
a 5-percent owner, or the calendar year in which the Participant retires.
The Required Beginning Date of a Participant who is not a 5-
percent owner who attains age 70-1/2 during 1988 and who has not
retired as of January 1, 1989, is April 1, 1990.
For purposes of this Section, a Participant is treated as a
5-percent owner if such Participant is a 5-percent owner at any
time during the Plan Year ending with or within the calendar year
in which the Participant attains age 66-1/2 or any subsequent Plan
Year.
Once distributions have begun to a 5-percent owner under
this Section, they must continue, even if the Participant ceases to
be a 5-percent owner in a subsequent year.
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ARTICLE X
FIDUCIARY RESPONSIBILITY AND INVESTMENT OF PLAN FUNDS
10.1 Basic Responsibilities of Trustee. The Trustee shall
have the following categories of responsibilities:
(a) Consistent with the funding policy established
by the Employer, to invest, manage and maintain custody of the
Trust assets.
(b) At the direction of the Plan Administrator, to
distribute benefits to Participants or their Beneficiaries as
required under the terms of the Plan.
(c) To maintain records of receipts and disburse
ments on behalf of the Trust Fund and to furnish the Employer
and/or Plan Administrator with the information required hereunder.
If there shall be more than one Trustee, they shall act by
a majority of their number, but may authorize one or more of them
to act on their behalf.
10.2 Assets Held as Single Fund. The Trustee shall invest
and reinvest the Trust assets, together with the income thereof, in
its absolute discretion (except to the extent directed by an
Investment Manager under Section or by Participants under
Section ), without distinction between principal and income. All
contributions from time to time paid to the Trustee by or on behalf
of the Employer, along with the income therefrom, may after alloca
tion be held and administered by the Trustee as a single fund, and
the Trustee shall not be required to segregate or invest separately
any share of a Participant in the Trust, except as otherwise
provided in this Plan.
10.3 Powers of Trustee. In carrying out the Plan's funding
policy and method, as established by the Employer (and except as
directed by an Investment Manager or by the Participants), the
Trustee is authorized:
(a) to invest and reinvest the monies accumulated
in the Trust, without distinction between principal and income, in
common or preferred stocks (whether or not listed on any exchange),
bonds, notes, debentures, mortgages, equipment trust certificates,
investment trust certificates, mutual funds or other securities,
real estate, personal property, limited partnership units, stock
options (including puts and calls), guaranteed insurance contracts,
repurchase agreements, commercial paper and such other investments
(including its own savings accounts, certificates of deposit and
common or pooled investment funds) as it may deem suitable and
which are not prohibited under the Code or ERISA;
(b) to sell, exchange, convey, transfer or other
wise dispose of any property held by it, by private contract or at
public auction, and no person dealing with the Trustee shall be
required to see to the application of the purchase money or to
inquire into the validity, expediency or propriety of any such sale
or other disposition;
(c) to vote upon any stocks, bonds or other
securities and to give general or special proxies or powers of
attorney with or without power of substitution (provided, however,
that the Trustee shall have no responsibility for voting proxies
with respect to those assets of the Trust Fund that are managed by
an Investment Manager, or with respect to assets held in a
Participant Directed Account), to exercise any conversion
privileges, subscription rights or other options and to make
payments incidental thereto, to open and maintain margin accounts
in connection with the purchase of securities, to consent to or
otherwise participate in corporate reorganizations or other changes
affecting corporate securities, to delegate discretionary powers
and to pay any assessments or charges
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in connection therewith, and, generally, to exercise all of the powers
of owner with respect to stocks, bonds, securities and other property
held in the Trust;
(d) to negotiate, execute and deliver an option or
agreement for the purchase of securities, including bonds,
preferred or common stocks and mutual funds, and real or personal
property;
(e) to make, execute, acknowledge and deliver
documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry out the
powers granted herein;
(f) to register any investment held in the Trust in
its own name or in the name of a nominee and to hold any investment
in bearer form, but the books and records of the Trustee shall at
all times show that such investments are part of the Trust;
(g) to employ suitable agents and counsel and to
pay their reasonable expenses and compensation;
(h) to borrow on behalf of the Plan and to use
assets of the Trust as security for such loans;
(i) to purchase insurance on the life of any
Participant in accordance with the terms of the Plan;
(j) to invest funds in Qualifying Employer Real
Property and Qualifying Employer Securities, but not to exceed ten
percent (10%) of the fair market value of the assets of the Trust;
(k) to settle, compromise or submit to arbitration
any claims or debts due to or owed from the Plan;
(l) to commence or defend suits or administrative
proceedings, and to represent the Plan in connection therewith;
(m) to do all acts, whether or not specifically
authorized herein, which it deems necessary or proper for the
protection of the Trust assets and the administration of the Trust;
and
(n) to apply for and procure from an insurer, at
the direction of the Administrator, such annuity or other contracts
on the life of any Participant as the Administrator shall deem
proper, to exercise whatever rights and privileges may be granted
under such annuity or other contracts and to collect, receive and
settle for the proceeds of all such annuity or other contracts as
and when entitled to do so under the provisions thereof.
The Trustee may keep such portion of the Trust in cash or
cash equivalents as it deems appropriate and shall not be required
to pay interest on cash held by it pending investment.
10.4 Selection of Investment Objectives. Subject to the
provisions of Section (a), the Employer may designate in writing
the investment objectives of the Trust Fund, such as the proportion
or percentage of Trust assets, if any, to be placed in equity
investments (including equity funds of any collective, commingled
or common trust fund maintained by the Trustee), fixed income
investments (including fixed income funds of any collective,
commingled or common trust fund maintained by the Trustee) or life
insurance contracts. In the event the Employer fails to designate
in writing its preference regarding the investment of the assets of
the Trust, such assets shall be
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invested by the Trustee, the primary objective of which is the
preservation of principal, except as otherwise directed under
the terms of the Plan.
10.5 Directed Investment by Investment Manager.
(a) The Employer may appoint an Investment Manager
and, in such event, may direct, by written notice, the segregation
of any portion of the Trust in a separate investment account or
accounts for investment and reinvestment by the Investment Manager.
If the investment of the Trust is to be directed in whole or in
part by an Investment Manager, the Employer shall deliver to the
Trustee a copy of the document appointing the Investment Manager
and evidencing the Investment Manager's acceptance of such
appointment, an acknowledgment in writing by the Investment Manager
that it is a Fiduciary with respect to the Plan, and, if
applicable, a certificate evidencing the Investment Manager's
current registration under the Investment Advisers Act of 1940.
The Trustee shall be fully protected in relying upon those
instruments until otherwise notified in writing by the Employer.
(b) The Trustee shall follow the directions of the
Investment Manager regarding the investment and reinvestment of the
Trust (or such portion thereof as shall be under management by the
Investment Manager). The Trustee shall be under no duty or
obligation to review any investment to be acquired, held or
disposed of pursuant to such direction or to make any recommen
dations with respect to the disposition or continued retention of
any such investment, and the Investment Manager shall have sole
responsibility for voting proxies for those assets of the Trust
that it manages. The Trustee shall have no liability or
responsibility for acting or not acting pursuant to the direction
of, or for failing to act in the absence of any direction from the
Investment Manager, unless the Trustee knows that by such action or
failure to act it would be committing a breach of fiduciary duty or
participating in a breach of fiduciary duty by the Investment
Manager. The Employer hereby agrees to indemnify and hold the
Trustee harmless from and against any and all liability by reason
of its acting pursuant to the direction of the Investment Manager
or failing to act in the absence of such direction.
(c) An Investment Manager may from time to time
issue orders for the purchase or sale of securities directly to a
broker and, in order to facilitate such transaction, the Trustee
upon request shall execute and deliver the appropriate trading
authorizations. Notification of the issuance of each order shall
be given promptly to the Trustee by the Investment Manager, and the
execution of such orders shall be confirmed by notice to the
Trustee by the Investment Manager or the broker in accordance with
standard commercial practices. Upon such notification the Trustee
shall be authorized to pay for securities purchased against receipt
thereof and to deliver securities sold against payment therefor, as
the case may be.
(d) In the event that an Investment Manager shall
resign or be removed by the Employer, the Trustee, after written
notification of such removal or resignation, and upon acceptance by
the Trustee, shall manage the investment of the Trust unless and
until it is notified of the appointment of another Investment
Manager.
10.6 Directed Investment by Participants.
(a) The Employer, in its sole discretion, may
permit Participants (on a uniform and nondiscriminatory basis) to
direct the investment of the assets of any one or more of their
accounts. The Employer may, in its discretion, limit the invest
ment options available to Participants to those investments desig
nated by the Employer or it may permit the Participants to direct
the investment of the assets of their accounts in any manner
requested by the Participant; provided, however, that no
Participant may designate that any portion of his accounts be
invested in "collectibles," as that term is defined in
Section 408(m)(2) of the Code. If the Employer elects to limit
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the investment to certain designated alternatives, the Employer may
add or delete investment options from time to time. The Employer,
in its sole discretion, may determine each Plan Year whether
Participants shall be permitted to direct the investment of all or
any of their accounts, regardless of whether Participants were
permitted to direct the investment of any account in prior Plan
Years.
(b) In the event that the Employer permits Par
ticipants to direct the investment of one or more of their accounts
for a Plan Year, the following procedures shall apply:
(i) The Employer shall advise the Plan Ad
ministrator in writing of the accounts over which Participants
will be permitted to direct investments and the available
investment options, if any. The Plan Administrator shall then
communicate that information to the Participants and allow
them to make written investment elections in accordance with
its administrative policy. Upon receipt of those written
directions, the Plan Administrator shall forward them to the
Trustee, who shall make investments in accordance therewith
within a period of thirty (30) days after receipt thereof.
(ii) Pending receipt of the initial investment
direction from a Participant as provided in (i) above (or in
the absence of such direction), the Trustee shall invest the
entire amount of that Participant's Directed Account with the
nonsegregated accounts or, if there are no nonsegregated
accounts, in one or more funds the primary objective of which
is the preservation of principal, and such amounts shall
remain so invested until the Trustee receives from the Plan
Administrator written investment directions from the
Participant to the contrary. Once a Participant has selected
a particular investment with respect to all or a portion of
his Participant Directed Account, such portion shall remain so
invested until the Participant directs otherwise (in
accordance with this Section), and neither the Trustee nor the
Plan Administrator shall have any obligation or responsibility
to review or monitor the performance of that investment.
(iii) The Plan Administrator shall establish
reasonable procedures for notifying Participants of the
available investment alternatives and for implementing the
selection by Participants of the various investment options,
and either the Plan Administrator or Trustee may refuse to
carry out any investment election that is not made in accor
dance with those procedures. The Employer may change avail
able investment options or designate additional investment
options from time to time in it sole discretion.
(iv) The account of any Participant may be
charged for the expenses of carrying out the investment
elections of that Participant.
(c) Except as otherwise required by law, no
Participant shall be deemed a Fiduciary by reason of giving in
vestment directions hereunder, and no person who is otherwise a
Fiduciary shall be liable for any loss attributable to such
directed investments, or for the result of a Participant's exercise
of control over the investment of his or her accounts which would
otherwise constitute a breach of fiduciary responsibility. Neither
the Trustee, the Plan Administrator nor any other person shall be
under a duty to question the selection of an investment by a
Participant or to make suggestions to him in connection therewith.
Any loss occasioned by a Participant's selection of an investment
(or his failure to change a selection) shall not be the
responsibility of the Trustee, the Administrator or any other
person. Neither the Trustee nor the Administrator shall be liable
to any Participant for the failure to make an investment selected
by him if, in the exercise of due diligence, the Trustee has not
been able to (i) acquire such investment or other property on
reasonable terms, taking into account the price and conditions of
purchase, (ii) acquire securities or other property that satisfy
the specifications and parameters established by the Administrator
as an investment option available to Participants, or (iii) obtain
sufficient cash to make the investment in accordance with a
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Participant's election on account of the lack of funds in such
Participant's accounts or a lack of liquidity of existing
investments.
(d) Any increase in the cost of administration of
the Plan charged by the Trustee arising out of the segregation and
individual direction of account balances at the election of a
Participant may, upon the direction of the Employer, be paid by
that Participant or, if not so paid, withdrawn from the Participant's
account.
10.7 Powers and Duties of Plan Administrator. The primary
responsibility of the Plan Administrator is to administer this Plan
in accordance with its terms for the exclusive benefit of the
Participants and their Beneficiaries. In this regard, the
Administrator shall determine all questions arising in connection
with the administration, interpretation and application of the
Plan. Specifically, the Administrator is empowered:
(a) to determine the eligibility of Employees to
participate hereunder;
(b) to direct the Trustee with respect to the form
and timing of the distribution of benefits to Participants and
Beneficiaries;
(c) to interpret the provisions of the Plan and to
formulate rules and regulations for its operation;
(d) to communicate with the Participants as neces
sary and to assist any Participant regarding his rights, benefits
or options available under the Plan; and
(e) to perform all other functions required here
under and to take any further action, whether specified herein or
directed by the Employer or the Trustee, as may be necessary for
the proper administration of this Plan.
Any decision by or action of the Plan Administrator shall
be final and binding unless clearly arbitrary and capricious.
10.8 Records and Reports.
(a) The Trustee shall maintain records of the
disposition of the assets of the Trust, which shall be open to
inspection at all reasonable times to any person designated in
writing by the Employer. Within ninety (90) days following the
close of each Plan Year (or such later date as may be agreed upon
between the Trustee and the Employer), the Trustee shall file with
the Employer a written statement (i) setting forth all investments,
receipts, disbursements and other transactions effected during such
year, (ii) containing an exact description of all securities
purchased and sold and (iii) showing the cost or net proceeds of
sale, and listing the securities and other Plan assets held at the
end of the year, and the cost of each item as carried on the books
of the Trustee.
(b) The Plan Administrator shall maintain records
of the administration of this Plan, which shall be open to inspec
tion at all reasonable times to any person designated in writing by
the Employer. The Administrator shall be responsible for preparing
and filing all reports, tax returns and other materials required by
the Department of the Treasury and the Department of Labor, and for
supplying the Participants and Beneficiaries with all information
regarding the operation of the Plan and Trust as required by law.
10.9 Compensation of the Trustee and Administrative
Expenses of the Trust. Subject to the prohibited transaction rules
set forth in Section 4975 of the Code, the Trustee shall be
entitled to reasonable compensation for services rendered as may be
agreed with the Employer from time to
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time. The Trustee and the
Plan Administrator shall be entitled to payment of all reasonable
expenses incurred in the performance of their duties hereunder,
including taxes and fees for legal and accounting services. The
compensation and expenses of the Trustee and the Plan Administrator
may be charged against and paid out of the Trust upon either the
written request of the Employer or, if not paid within thirty (30)
days after an invoice for such compensation or expenses is
presented to the Employer, in the discretion of the Trustee.
10.10 Communication to Trustee to be in Writing. Any
determination or action of the Employer pursuant to the provisions
of this Plan shall be communicated in writing to the Trustee. The
Trustee shall be entitled to rely on all information received from
the Employer, and shall be under no duty to make a determination as
to its validity.
10.11 Taxes. The Trustee shall have the right to pay out
of the Trust all taxes imposed or levied with respect to Trust
assets, and in its discretion may contest the validity or amount of
any tax, assessment, claim or demand with respect to the Trust or
any part thereof.
10.12 Fiduciary Responsibility.
(a) The Trustee is designated as a Fiduciary of
this Plan and Trust and (except to the extent directed by an
Investment Manager under Section or by Participants under
Section ) is charged with the making of Trust investments and the
maintenance of the necessary records as specified in Section (a).
In this regard, all investments under the Plan shall be made by the
Trustee in a prudent manner, and in making investments all
Participants in similar circumstances shall be treated equally and
on a nondiscriminatory basis. In addition, the Trustee shall
maintain diversity in selecting Plan investments unless under the
circumstances it is clearly prudent not to do so. Although the
Employer has the right to recommend general areas of investment
under Section , its powers are advisory only and its recommenda
tions shall be reviewed by the Trustee and implemented only when
determined by the Trustee to be prudent and proper in light of the
current assets of the Trust, the probable benefit to the
Participants and whatever other factors the Trustee shall in its
discretion deem important.
(b) The Trustee shall not be liable for, and the
Employer shall indemnify and hold the Trustee harmless against any
liability, loss, expense, assessment or cost, including, but not
limited to, legal fees, expenses and costs incurred by the Trustee
(i) as a direct or indirect result of (A) the duties and
responsibilities allocated to it under this Plan, including action
taken at the direction of the Employer, the Plan Administrator or
their agents, (B) reliance on advice of counsel, (C) any failure to
act if action can reasonably be taken only after receipt from the
Employer, the Plan Administrator or their agents of specific
directions where such directions are either required under the Plan
or are requested by the Trustee, or (D) any act or failure to act
by the Trustee as a direct or indirect result of the failure of the
Employer, the Plan Administrator, any predecessor trustee,
custodian or other fiduciaries of the Plan to act in accordance
with its terms or applicable law and (ii) which are not
attributable to the Trustee's own negligence, willful misconduct or
lack of good faith.
(c) The Plan Administrator is designated as a
Fiduciary of this Plan and Trust. The Plan Administrator shall
have responsibility, subject to the terms hereof, for the admin
istration and operation of this Plan and the maintenance of the
necessary records as specified in Section (b). The Plan
Administrator may be removed by the Employer or may voluntarily
resign from said capacity. Such removal or resignation shall be in
writing and shall be effective only upon the appointment of a
successor and the written acceptance by the new Plan Administrator
of the responsibility and liability attaching to that position as
set forth herein. In the event of removal or resignation, the Plan
Administrator shall transfer to its successor such records as may
be reasonably required for the proper administration of the Plan.
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10.13 Removal and Resignation of Trustee.
(a) The Trustee may be removed by the Employer by
the delivery to the Trustee of a written directive to that effect.
The Trustee may resign by the delivery to the Employer of a written
resignation. Such removal or resignation shall become effective
thirty (30) days from the date of the delivery of the directive or
resignation, as the case may be, unless otherwise agreed by the
Employer and the Trustee. In the event of such removal or
resignation, the successor trustee, upon acceptance of the
appointment by an instrument in writing delivered to the Employer,
shall become vested with all the rights and shall assume all the
duties of the Trustee under this Plan and Trust.
(b) In the event of the death, incapacity, removal
or resignation of the Trustee and the appointment of (and
acceptance by) a successor, the Trustee (or his personal repre
sentative) shall endorse, transfer, assign, convey and deliver to
said successor all of the funds, securities and other property then
held by it in the Trust and such records as may be reasonably
required for the proper administration of the Trust. In addition,
the Trustee (or his personal representative) shall, as soon as
administratively feasible, file with the Employer a statement and
report of the operation of this Plan and Trust to the effective
date of such death, incapacity, removal or resignation.
(c) If the Employer fails to amend the Plan and
Trust and to appoint a successor trustee within ninety (90) days
from the date of death, incapacity, resignation or removal of the
Trustee, the Plan and Trust shall terminate and all benefits held
in the Trust for the benefit of Participants shall become nonfor
feitable and shall be distributed in accordance with Article .
10.14 Bonding. Every Fiduciary, unless exempted under
ERISA, shall be bonded in an amount equal to not less than ten
percent (10%) of the funds such Fiduciary handles; provided,
however, that the minimum bond shall be $1,000 and the maximum bond
$500,000. The amount of funds handled shall be determined at the
beginning of each Plan Year based on the funds handled by such
Fiduciary and his predecessors, if any, during the preceding Plan
Year or, if there is no preceding Plan Year, then by the amount of
funds to be handled during the current Plan Year. The bond shall
provide protection to the Plan against any loss by reason of acts
of fraud or dishonesty by the Fiduciary, alone or in connivance
with others, and shall be in a form approved by the Secretary of
Labor. Notwithstanding anything in this Plan to the contrary, the
cost of such bond may, at the election of the Employer, be paid
from the Trust Fund or by the Employer. No Fiduciary shall be
liable for the failure of any other Fiduciary to comply with the
bonding requirements of this Section.
ARTICLE XI
PARTICIPATING EMPLOYERS
11.1 Adoption by Other Employers. With the consent of the
Employer and the Trustee, any other corporation or entity, whether
or not a member of a controlled group of corporations or affiliated
service group of which the Employer is a member (as described in
Section ), may adopt this Plan and participate herein as a
"Participating Employer" by execution of a document acceptable to
the Employer evidencing said adoption.
11.2 Contributions by Employer and Participating Employers.
(a) Contributions made by the Employer or any
Participating Employer under this Plan and Forfeitures allocable to
such contributions shall be allocated separately on behalf of the
employees of that Employer or Participating Employer; however, all
contributions by the Employer and each Participating Employer shall
be deposited with and held by the Trustee subject to the terms and
conditions hereof and all assets held under the Plan shall be
available to pay benefits to any Participant and Beneficiary of the
Employer or any Participating Employer. The Plan Administrator
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shall keep books and records that reflect the total contributions
made by the Employer and Participating Employers hereunder and the
allocation of said contributions to the accounts of the
Participants.
(b) Notwithstanding paragraph (a) above, if one or
more corporations, partnerships or unincorporated trades or
businesses that adopts this Plan as a Participating Employer is a
member of a controlled group of corporations (as defined under
Section 414(b) or 414(c) of the Code) or affiliated service group
(as defined in Section 414(m) of the Code) with one or more other
corporations, partnerships or unincorporated trades or businesses
that has adopted this Plan, and if that entity is prevented in
whole or in part from making a contribution to this Plan, then all
or any portion of the contribution that such corporation,
partnership or unincorporated trade or business does not make may
be made for the benefit of the employees of that entity by the
other corporations, partnerships or unincorporated trades or
businesses, as permitted under the Code and applicable Treasury
Regulations.
11.3 Employee Transfers and Terminations. The transfer of
employment of any Participant from the Employer to a Participating
Employer or from a Participating Employer to the Employer shall not
affect a Participant's rights under this Plan. In such event, all
amounts credited to that Participant's Aggregate Account shall
remain intact and no part thereof shall be forfeited. In addition,
the Participant's Years of Service with the transferor or prede
cessor and his length of participation in this Plan shall continue
without interruption, and the transferee or successor shall be obli
gated to such Participant under the Plan in the same manner as the
former employer. The Employer or Participating Employer to whom a
Participant is transferred shall notify the Plan Administrator in
writing of the transfer.
11.4 Designation of Employer as Agent. With respect to all
dealings with the Trustee and Plan Administrator under this Plan,
each Participating Employer shall be deemed to have irrevocably
designated the Employer as its agent. Unless the context of the
Plan indicates the contrary, "Employer" shall be deemed to include
all Participating Employers.
11.5 Expenses Shared by Participating Employers. All
expenses of the Trust shall be paid by each Participating Employer
in the same proportion that the total amount credited to the Aggre
gate Accounts of all Participants employed by the Participating
Employer bears to the total amount credited to the Aggregate
Accounts of all Participants in this Plan, except that any such
expense specifically arising out of the adoption of this Plan by a
Participating Employer or resulting from the participation of its
employees shall be charged to and paid by that Participating
Employer.
11.6 Amendment. If one or more Participating Employers has
adopted this Plan, then any amendment to the Plan shall be
effective only upon its written adoption by each Participating
Employer.
11.7 Discontinuance of Participation. Any Participating
Employer may discontinue or revoke its participation in this Plan
by written notice to the Trustee and Plan Administrator. In such
event, the Trustee and Administrator shall transfer a portion of
the assets of the Trust to the successor trustee, representing the
allocable share of the account balances of the Participants
employed by that Participating Employer, and shall deliver copies
of the applicable records of the Plan to the successor admin
istrator designated in writing by the Participating Employer. If
no successors are designated within thirty (30) days of receipt of
the aforesaid written notice by the Trustee, this Plan and Trust
shall be deemed to have terminated as to that Participating
Employer and the account balances of employees of that
Participating Employer shall be distributed in accordance with
Article VII.
-217-
ARTICLE XII
AMENDMENT AND TERMINATION
12.1 Right to Amend.
(a) To the extent consistent with the requirements
of qualification for income tax purposes, the Employer reserves the
right to amend this Plan and Trust, either retroactively or
prospectively, by delivering to the Trustee and Plan Administrator
a written amendment. Any such amendment shall be effective only
upon its execution by the Employer and Trustee. An amendment which
materially affects the rights of the Participants hereunder shall
be communicated to the Participants in writing.
(b) Notwithstanding paragraph (a) above, neither
the Employer nor the Trustee shall have the power to amend this
Plan and Trust in such a manner as would decrease a Participant's
account balance (except to the extent permitted under
Section 412(c)(8) of the Code), eliminate an optional form of
benefit or distribution, cause or permit any part of the Trust to
be diverted to purposes other than for the exclusive benefit of the
Participants or their Beneficiaries or estates, or to take such
action as would cause or permit any portion of the assets of the
Trust to revert to or become the property of the Employer (except
as permitted under Sections , , and hereof); and provided,
further, that no amendment shall cause or permit the retroactive
diminution of any rights which the Participants have acquired with
respect to contributions made prior to the date of any such
amendment, unless the amendment is required to obtain approval from
the Internal Revenue Service for the continued qualification of
this Plan and Trust for tax purposes.
12.2 Right to Terminate. The Employer shall have the right
to terminate this Plan (with or without the termination of the
Trust) by delivering to the Trustee a written notice of termination
at least thirty (30) days prior to the effective date thereof. In
the event of the termination or partial termination of this Plan,
the account balances of all participating Employees affected by
such termination shall become fully vested and the provisions of
Article shall apply.
12.3 Permanent Discontinuance of Contributions. The
permanent discontinuance on the part of the Employer of further
contributions to this Plan shall constitute termination of the Plan
and shall result in the full vesting of the account balances of the
Employer's participating Employees. For purposes of this Section,
permanent discontinuance will not be deemed to have occurred merely
because of a temporary suspension of contributions by the Employer.
ARTICLE XIII
MISCELLANEOUS
13.1 Exclusive Benefit of Participants. Except as set
forth in Sections , , and hereof, no part of the Trust shall
revert to the Employer or be used or diverted for any purpose other
than for the exclusive benefit of the Participants or their
Beneficiaries.
13.2 Plan Does Not Restrict Employer's Employment and
Business Policies. Nothing in this Plan shall be construed as a
contract of employment or as modifying or limiting in any way the
right of the Employer to terminate the employment of any Employee,
to establish policy, or otherwise to conduct business in the same
manner as though this Plan and Trust had not been entered into.
13.3 Rights Against Employer. Neither the establishment of
this Plan, any allocation made hereunder, nor the accumulation of
benefits in the Trust shall be construed as giving any Participant
or any other person a legal or equitable right against the Trustee,
the Plan Administrator
-218-
or the Employer, or any member, officer, director, Employee, agent,
partner or stockholder thereof, except as expressly provided herein
or as required by law.
13.4 Intention to Continue Plan. The Employer expects to
continue this Plan and the payment of contributions hereunder
indefinitely; however, the permanence of the Plan is not assumed as
a contractual obligation and, in the event of the termination of
the Plan for any reason, the disposition of the funds in the Trust
shall be made in accordance with the applicable provisions hereof.
13.5 Assumption of Plan by Successor.
(a) If the Employer is merged or consolidated with
any other employer, or if any other employer acquires substantially
all the assets of the Employer, such surviving or purchasing
employer may elect to continue this Plan. In that event, the
Participants employed by the Employer who continue their employment
with such successor employer shall remain as Participants of this
Plan without a Break in Service. Those Participants employed by
the Employer who are not retained by the successor employer (or, if
the successor employer does not continue this Plan, all
Participants) shall be fully vested in their account balances,
which shall be paid in accordance with the provisions of Article .
(b) Upon any merger or consolidation with another
employer, or upon the transfer of assets or liabilities to another
plan, each Participant shall be entitled to receive immediately
thereafter a benefit which is at least equal in value to the
benefit he would have been entitled to receive immediately before
the merger, consolidation or transfer if the Plan had then
terminated.
13.6 Predecessor Employer. If, by adopting this Plan, the
Employer is maintaining the plan of a predecessor employer, then
service for such predecessor shall be treated as service for the
Employer.
13.7 Controlled or Affiliated Service Groups.
(a) The Employees of all corporations which are
members of a controlled group of corporations (as defined in
Section 414(b) of the Code, as modified by Section 415(h) of the
Code), the Employees of all trades or business--whether or not
incorporated--which are under common control (as defined in
Section 414(c) of the Code, as modified by Section 415(h) of the
Code), and the Employees of all members of an affiliated service
group (as defined in Section 414(m) of the Code) shall be treated
as employed by a single employer, but only for the specific pur
poses cited in those provisions of the Code.
(b) If this Plan provides contributions or benefits
for one or more Owner-Employees who control both the business for
which this Plan is established and one or more other trades or
businesses, this Plan and the plan established for such other
trades or businesses must, when examined as a single plan, satisfy
Sections 401(a) and (d) of the Code for the Employees of this and
all other trades or businesses.
If this Plan provides contributions or benefits for
one or more Owner-Employees who control one or more other trades or
businesses, the employees of the other trades or businesses must be
included in a plan that satisfies Sections 401(a) and (d) of the
Code and that provides contributions and benefits not less
favorable than those provided for the Owner-Employees under this
Plan.
If an individual is covered as an Owner-Employee under
the plan or plans of two or more trades or businesses that are not
controlled and the individual controls a trade or business, then
the contributions or benefits of an employee under the plan or
plans of the trades or businesses
-219-
that are controlled must be as favorable as those provided for him
under the most favorable plan of the trade or business that is not
controlled.
(c) For purposes of paragraph (b) above, an Owner-
Employee or two or more Owner-Employees will be considered to
"control" a trade or business if that Owner-Employee or the two or
more Owner-Employees together (i) own the entire interest in an
unincorporated trade or business or (ii) in the case of a
partnership, own more than fifty percent (50%) of either the
capital interest or the profits interest in the partnership. For
purposes of this paragraph (c), an Owner-Employee or two or more
Owner-Employees shall be treated as owning any interest in a part
nership that is owned, directly or indirectly, by a partnership
that such Owner-Employee or such two or more Owner-Employees are
considered to control within the meaning of the preceding sentence.
13.8 Leased Employees.
(a) A leased employee shall be treated as an
employee of the recipient employer; provided, however, that
contributions or benefits furnished by the leasing organization
that are attributable to services performed for the recipient
employer shall be treated as provided by the recipient employer.
(b) Paragraph (a) above shall not apply to any
leased employee if (i) such employee is covered by a money purchase
pension plan providing (A) a nonintegrated employer contribution
rate of at least ten percent (10%) of compensation, (B) immediate
participation, and (C) the full and immediate vesting of benefits,
and (ii) leased employees do not constitute more than twenty
percent (20%) of the recipient employer's Non-Highly Compensated
Employee work force. For purposes of this paragraph,
"compensation" shall include amounts contributed pursuant to a
salary reduction agreement which are excludable from the leased
employee's gross income under Sections 125, 402(a)(8), 402(h)(1)(B)
or 403(b) of the Code.
(c) For purposes of this Section, the term "leased
employee" means any person who, pursuant to an agreement between
the recipient and any other person or entity (the "leasing
organization"), has performed services for the recipient (or for
the Employer and related persons, determined in accordance with
Section 414(n)(6) of the Code) on a substantially full-time basis
for a period of at least one (1) year and such services are of a
type historically performed by employees in the business field of
the recipient employer.
13.9 Interest in Trust not Subject to Creditors' Claims.
Except to the extent required by law, neither the benefits,
payments, proceeds nor rights of any Participant hereunder shall be
subject to the claims of creditors, to attachment or garnishment or
other legal process, or to alienation, sale, transfer, pledge,
encumbrance or assignment, and any attempt by a Participant to
alienate, sell, transfer, pledge, encumber or assign any of the
benefits, payments or proceeds that he may expect to receive
hereunder shall be void. The preceding sentence shall also apply
to the creation, assignment or recognition of a right to any
benefit payable with respect to a Participant pursuant to a
domestic relations order unless such order is determined to be a
qualified domestic relations order, as defined in Section 414(p) of
the Code.
13.10 Internal Revenue Service Approval of Employer's
Plan. Notwithstanding anything to the contrary contained herein,
this Plan is created on the condition precedent that the Plan and
Trust meet the qualification requirements of Sections 401(a) and
501(a) of the Code, so as to permit the Employer to deduct for
income tax purposes all funds contributed by it to the Trust, and
so as to permit the Trust to be exempt from income taxation. If
such qualification is not obtained, this Plan shall, upon affir
mative action taken by the Employer within sixty (60) days of
receiving notice of disapproval, terminate, in which event the
Trustee shall immediately deliver to the Employer all of the assets
of the Trust.
-220-
13.11 Mistake of Fact. In the event the Employer shall
make a contribution to the Trust under a mistake of fact, the
Employer may make written demand for the repayment of the amount so
contributed at any time within one (1) year following the time of
payment, and the Trustee shall then return such amount to the
Employer within said one (1) year period.
13.12 Disallowance of Deduction. Any contribution by the
Employer to the Trust is conditioned upon the deductibility of the
contribution by the Employer under the Code and, to the extent that
any such deduction is subsequently disallowed, the Employer may,
within one (1) year following a final determination of the
disallowance, make written demand for the repayment of the
disallowed amount, and the Trustee shall then return such sum
within the said one (1) year period.
13.13 Restrictions on Return of Contributions.
(a) For purposes of Sections and above, the
amount that may be returned to the Employer shall be limited to the
excess of the amount contributed by the Employer to the Plan over:
(i) as to Section, the amount that would have been
contributed had the mistake of fact not occurred; or
(ii) as to Section , the amount of the
deduction allowed by the Internal Revenue Service during the Plan
Year of the disallowance.
(b) Earnings attributable to the contributions
returned under Sections and shall not revert to the Employer, but
any losses attributable thereto shall reduce the amount so
returned. Notwithstanding anything to the contrary contained in
Sections and , no amounts shall be returned to the Employer to the
extent that such return would cause the balance of the account of
any Participant to be reduced to less than the balance that existed
prior to the mistake of fact or the disallowance of the deduction.
13.14 Claims. A Participant or Beneficiary may file with
the Plan Administrator a written claim for benefits upon the oc
currence of any event which in the claimant's opinion gives rise to
the payment of benefits hereunder. In the event the Administrator
shall determine that the claimant is not entitled to the claimed
benefits, it shall so notify the claimant in writing within
ninety (90) days of receipt of the claim and shall set forth the
reasons for such determination, with specific reference to the
terms of the Plan upon which the denial is based. The claimant may
request that an adverse determination be reviewed by the Employer
and shall be given the opportunity within ninety (90) days of said
request to present any additional information which may establish
his right to the benefit so claimed. The decision of the Employer
with respect to any such appeal shall be rendered in writing and
shall be delivered to the claimant within sixty (60) days following
receipt of the appeal. The Employer's decision shall be final and
binding on all parties. The Administrator and the Employer shall
keep the Trustee fully advised in writing of the filing and
disposition of all claims hereunder.
13.15 Direct Rollovers.
(a) This Section applies to distributions made on
or after January 1, 1993. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a distributee's
election under this Section, a distributee may elect, at the time
and in the manner prescribed by the Plan Administrator, to have any
portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct
rollover.
-221-
(b) Definitions.
(i) Eligible rollover distribution: An eligible
rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee,
except that an eligible rollover distribution does not
include: any distribution that is one of a series of sub
stantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary,
or for a specified period of ten years or more; any
distribution to the extent such distribution is required under
Section 401(a)(9) of the Code; and the portion of any
distribution that is not includable in gross income (deter
mined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(ii) Eligible retirement plan: An eligible
retirement plan is an individual retirement account described
in Section 408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, an annuity
plan described in Section 403(a) of the Code, or a qualified
trust described in Section 401(a) of the Code that accepts the
distributee's eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
(iii) Distributee: A distributee includes an
employee or former employee. In addition, the employee's or
former employee's surviving spouse and the employee's or
former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined
in Section 414(p) of the Code, are distributees with regard to
the interest of the spouse or former spouse.
(iv) Direct rollover: A direct rollover is a
payment by the plan to the eligible retirement plan specified
by the distributee.
13.16 Agent for Service of Process. For all purposes
under this Plan and Trust, including the filing of claims pursuant
to Section , the Plan Administrator shall be the agent for service
of process.
13.17 Masculine, Feminine. In construing this Plan, the
masculine shall be read to include the feminine and vice versa,
except where the context expressly indicates otherwise.
13.18 Applicable Law. The provisions of this Plan and
Trust shall be construed, administered and enforced according to
the laws of the State of Florida, except to the extent that such
laws are inconsistent with or are superseded by the Code or ERISA.
-222-
IN WITNESS WHEREOF, this Plan and Trust has been executed
on the date set forth on the first page.
Signed, sealed and delivered
in the presence of:
EMPLOYER:
Orange-co of Florida, Inc.
Kay L. Hodgkins By: Gene Mooney
- --------------- ----------------
Kay L. Hodgkins Gene Mooney, President,
President
Gwen C. Banks
- --------------
Gwen C. Banks
Witnesses as to Employer
TRUSTEE:
Kay L. Hodgkins By: B.H. Griffin, III
- --------------- ----------------------
Kay L. Hodgkins B. H. Griffin, III
Gwen C. Banks
- --------------
Gwen C. Banks
Witnesses as to Trustee
-223-
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